The Unified Manual for Public Procurement<\/title>\n<style>html,body{margin:0;padding:0;background:#fff}<\/style><\/head><body>\n<div class=\"upm\">\n<link rel=\"stylesheet\" href=\"https:\/\/fonts.googleapis.com\/css2?family=Spectral:wght@400;600;700;800&family=Source+Serif+4:ital,opsz,wght@0,8..60,400;0,8..60,600;1,8..60,400&family=IBM+Plex+Sans+Condensed:wght@400;500;600&display=swap\">\n<style>\n.upm{\n --paper:#fff; --ink:#16202E; --ink-soft:#4B5566; --rule:#DAD6CB;\n --accent:#134A82; --accent-2:#A07817; --wash:#FBF6E7;\n --blue-900:#0B2745; --blue-700:#134A82; --blue-500:#2C6BB0;\n --gold-500:#E3B23C; --gold-400:#EBC55C; --gold-300:#F2D585; --gold-ink:#5F4C18;\n --sc-G:#8A5A12; --sc-W:#1F4E79; --sc-C:#6A2C70; --sc-NC:#1B6B4A; --sc-multi:#5A5F52;\n --tint-G:#FBF3E4; --tint-W:#EDF3FA; --tint-C:#F7EFF8; --tint-NC:#EBF6F0; --tint-M:#F5F5F2;\n all:initial; display:block; box-sizing:border-box;\n font-family:'Source Serif 4',Georgia,'Times New Roman',serif;\n color:var(--ink); background:var(--paper); 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margin:18mm 15mm}\n}\n<\/style>\n\n<section class=\"upm-hero\">\n <div class=\"upm-hero-in\">\n \n <h1>The Unified Manual for Public Procurement<\/em><\/h1>\n Four procurement Manuals merged into one continuous text. Where they agree,\n the provision is stated once. Where they differ, the divergence is set out openly, with the\n position of each Manual identified. Nothing has been dropped in the merging.<\/p>\n <div class=\"upm-src\">\n G<\/b> Goods, 2024<\/span>\n W<\/b> Works, 2025<\/span>\n C<\/b> Consultancy Services, 2025<\/span>\n NC<\/b> Non-Consultancy Services, 2025<\/span>\n <\/div>\n <div class=\"upm-cta\">\n <a class=\"upm-btn upm-btn-a\" href=\"Unified-Manual-for-Public-Procurement.pdf\" data-pdf=\"Unified-Manual-for-Public-Procurement.pdf\" download rel=\"noopener\"><svg viewBox=\"0 0 24 24\" fill=\"none\" stroke=\"currentColor\" stroke-width=\"2.2\" stroke-linecap=\"round\" stroke-linejoin=\"round\" aria-hidden=\"true\"><path d=\"M12 3v12m0 0l-4-4m4 4l4-4M4 19h16\"\/><\/svg>Download PDF 361 pp · 5.8 MB<\/span><\/a>\n <a class=\"upm-btn upm-btn-b\" href=\"#upm-ch00\">Start reading<\/a>\n <a class=\"upm-btn upm-btn-b\" href=\"#\" data-print>Print this page<\/a>\n <\/div>\n <\/div>\n<\/section>\n<div class=\"upm-shell\">\n<nav class=\"upm-nav\" aria-label=\"Chapters\"><h2>Chapters<\/h2><ol><li><a href=\"#upm-ch00\">00<\/span>How to Use this ManualTags, colour key, contents and the three master concordance tables<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch1\">1<\/span>Principles and PoliciesApplicability, the Five R's, Value for Money, MSE, Make in India, land border restrictions<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch2\">2<\/span>Need Assessment and PlanningIndent, Perspective Plan, Procurement Proposal, cost estimation, TS \/ DPR \/ ToR \/ Activities Schedule<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch3\">3<\/span>Bidders and GovernanceEligibility, Code of Integrity, Integrity Pact, grievances, registration, debarment<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch4\">4<\/span>Bidding Design and Modes of ProcurementTypes of contract, QCBS, tendering systems, channels; OTE, GTE, Rate Contract, LTE, SLTE, PAC, STE<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch5\">5<\/span>Bid Invitation ProcessModel Tender Documents, NIT, ITB, GCC, REoI and RfP, e-publishing, pre-bid, bid opening<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch6\">6<\/span>Securities, Prices, PaymentsBid and performance security, retention money, advances, price variation, ERV, taxes, Incoterms<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch7\">7<\/span>Bid Evaluation and Award of ContractShortlisting, Tender Committee and CEC, LCS, QCBS, SSS, FBS, abnormally low bids, cartels, award<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch8\">8<\/span>Special Types of ProcurementEmergencies, buy back, AMC, NPV, turnkey, consultants, NGOs, security, manpower, HaaS<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch9\">9<\/span>Contract ManagementAdministration, quality assurance, time and cost control, logistics, closure, breach, disputes<\/span><\/span><\/a><\/li><\/ol>Merging the Goods (2024), Works (2025), Consultancy Services (2025) and Non-Consultancy Services (2025) Manuals of the Department of Expenditure.<\/p><\/nav>\n<main class=\"upm-body\"><div class=\"upm-body-in\">\n<div class=\"upm-filter\">\nShow<\/b>\n<button type=\"button\" data-f=\"all\" class=\"on\">All four<\/button>\n<button type=\"button\" data-f=\"G\">Goods<\/button>\n<button type=\"button\" data-f=\"W\">Works<\/button>\n<button type=\"button\" data-f=\"C\">Consultancy<\/button>\n<button type=\"button\" data-f=\"NC\">Non-Consultancy<\/button>\nCommon text always stays visible<\/span>\n<\/div>\n<section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch00\">Front Matter<\/p><h1>How to Use this Manual<\/h1><\/header><div class=\"upm-key\">\nHow to read the colours<\/b>\n<div class=\"row\">\nPlain white \u2014 common to all four Manuals<\/span>\nGoods only<\/span>\nWorks only<\/span>\nConsultancy only<\/span>\nNon-Consultancy only<\/span>\nTwo or three Manuals<\/span>\n<\/div>\nAnything on a tinted background appears in the named Manual or Manuals\nalone<\/em>, and cannot be inferred from the others. Text on plain white applies to all four.\nA tinted section carries a label in its top-left corner; a single tinted paragraph, list item or\ntable row carries a coloured spine on its left. Grey callouts are ordinary notes \u2014 they carry no\ncolour, so colour never means two different things.<\/p>\n<\/div><h2>0.1<\/span>Purpose and Scope of this Manual<\/span><\/h2>\nThis Manual consolidates, into a single continuous text, the four procurement Manuals issued by the Department of Expenditure, Ministry of Finance, Government of India. It is written for officers preparing for departmental promotion and competitive examinations, and for practitioners who must work across more than one category of procurement.<\/p>\nEach of the four source Manuals is complete in itself, and each is written as though the other three did not exist. In practice they overlap heavily, diverge sharply at particular points, and use different chapter numbers for the same subject matter. A candidate who studies them separately must hold four parallel structures in mind and reconcile them under examination conditions.<\/p>\nThis Manual removes that burden. Where the four Manuals agree, the provision is stated once. Where they differ, the divergence is stated openly, with the position of each Manual identified. Nothing has been dropped in the process of merging: every provision of every source Manual appears somewhere in this text.<\/p>\n<h2>0.2<\/span>The Four Source Manuals<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Tag<\/th><th>Manual<\/th><th>Edition<\/th><\/tr><\/thead><tbody><tr><td>G<\/td><td>Manual for Procurement of Goods<\/td><td>Second Edition, 2024<\/td><\/tr><tr><td>W<\/td><td>Manual for Procurement of Works<\/td><td>Second Edition, 2025<\/td><\/tr><tr><td>C<\/td><td>Manual for Procurement of Consultancy Services<\/td><td>Second Edition, 2025<\/td><\/tr><tr><td>NC<\/td><td>Manual for Procurement of Non-Consultancy Services<\/td><td>2025<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>0.3<\/span>How to Read this Manual<\/span><\/h2>\nUntagged text applies to all four categories.<\/strong> Where a provision is confined to one or more categories, the relevant tag appears against the heading or in the body of the text:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Tag<\/th><th>Category<\/th><th>Meaning of the tag<\/th><\/tr><\/thead><tbody><tr><td>G<\/td><td>Goods<\/td><td>The provision appears only in the Goods Manual<\/td><\/tr><tr><td>W<\/td><td>Works<\/td><td>The provision appears only in the Works Manual<\/td><\/tr><tr><td>C<\/td><td>Consultancy Services<\/td><td>The provision appears only in the Consultancy Manual<\/td><\/tr><tr><td>NC<\/td><td>Non-Consultancy Services<\/td><td>The provision appears only in the Non-Consultancy Manual<\/td><\/tr><\/tbody><\/table><\/div>\nTags may be combined. A heading marked G + W<\/em> is common to Goods and Works but absent from the two services Manuals.<\/p>\nShaded panels<\/strong> carry three kinds of material: a divergence between the Manuals that a reader must not merge in the mind; a passage from a source Manual reproduced because its exact wording matters; or a caution that the source Manual itself states in emphatic terms.<\/p>\nBold within the running text<\/strong> marks the operative words of a provision \u2014 the words on which its legal effect turns. It is used sparingly and deliberately.<\/p>\nEvery chapter closes with a table of points of difference<\/strong> between the four Manuals. That table is the single most useful revision aid in this Manual, and should be read before and after the chapter body.<\/p>\n<h2>0.4<\/span>Contents<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Chapter<\/th><th>Title<\/th><th>What it covers<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Introduction \u2014 Principles and Policies<\/td><td>Applicability, categorisation, the Five R's, Value for Money, the five Fundamental Principles, Canons of Financial Propriety, procurement infrastructure, and the whole body of preferential and restricted purchase policy \u2014 MSE, Make in India, land border restrictions, Start-ups and DMI&SP<\/td><\/tr><tr><td>2<\/td><td>Need Assessment, Formulation of the Requirement, and Procurement Planning<\/td><td>The indent, the Perspective Plan and the Procurement Proposal; cost estimation; and the four different instruments by which a requirement is described \u2014 Technical Specifications, the DPR sequence, the Terms of Reference, and the Services and Activities Schedule<\/td><\/tr><tr><td>3<\/td><td>Participation of Bidders, Vendor Relationship Management and Governance<\/td><td>Eligibility and legal status of bidders, the Code of Integrity, the Integrity Pact, grievance redressal, conduct of public servants, registration and enlistment, debarment, and Indian agents<\/td><\/tr><tr><td>4<\/td><td>Bidding Design (Parts A and B)<\/em><\/td><td>Agency for procurement, admeasurement, types of contract, systems of selection including QCBS, tendering systems, channels of procurement; and the full range of modes of procurement from Open Tender to Direct Procurement<\/td><\/tr><tr><td>5<\/td><td>Bid Invitation Process<\/td><td>Model Tender Documents, the contents and sections of the tender document, the REoI and RfP, e-publishing, amendment and extension, pre-bid conferences, bid submission, and bid opening<\/td><\/tr><tr><td>6<\/td><td>Forms of Securities, Prices, Payment Terms and Price Variations<\/td><td>Bid security and performance security, Security Deposit, Insurance Surety Bond and e-BG, payment terms, advance payments, price variation, Exchange Rate Variation, taxes, and Incoterms<\/td><\/tr><tr><td>7<\/td><td>Bid Evaluation and Award of Contract (Parts A and B)<\/em><\/td><td>Shortlisting and EoI, the Tender Committee and the CEC, preliminary examination, techno-commercial and financial evaluation, LCS, QCBS, SSS and FBS, abnormally low bids, cartels, negotiations, and award<\/td><\/tr><tr><td>8<\/td><td>Special and Unique Types of Procurement<\/td><td>Emergencies and disaster management, buy back, capital goods, AMC, Net Present Value, turnkey; and the special engagements \u2014 individual consultants, NGOs, procurement agents, auditors, IT projects, security and manpower services<\/td><\/tr><tr><td>9<\/td><td>Contract Management (Parts A, B and C)<\/em><\/td><td>Contract administration and quality assurance; time control, cost control, logistics and closure; and breach, termination and the whole dispute resolution apparatus<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>0.5<\/span>Master Concordance \u2014 Chapter Numbering across the Four Manuals<\/span><\/h2>\nThe single most frequent source of error in examination is that the same subject carries a different chapter number in each Manual. This table should be memorised before anything else in this book.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Subject<\/th><th>This Manual<\/th><th>G<\/th><th>W<\/th><th>C<\/th><th>NC<\/th><\/tr><\/thead><tbody><tr><td>Introduction, principles and policies<\/td><td>1<\/td><td>1<\/td><td>1<\/td><td>1<\/td><td>1<\/td><\/tr><tr><td>Need assessment and procurement planning<\/td><td>2<\/td><td>2<\/td><td>2<\/td><td>2<\/td><td>2<\/td><\/tr><tr><td>Bidders, governance and debarment<\/td><td>3<\/td><td>3<\/td><td>8<\/td><td>3<\/td><td>3<\/td><\/tr><tr><td>Bidding design and modes of procurement<\/td><td>4<\/td><td>4<\/td><td>3<\/td><td>4<\/td><td>4<\/td><\/tr><tr><td>Bid invitation process<\/td><td>5<\/td><td>5<\/td><td>4<\/td><td>5<\/td><td>5<\/td><\/tr><tr><td>Securities, prices and payment terms<\/td><td>6<\/td><td>6<\/td><td>5<\/td><td>6<\/td><td>6<\/td><\/tr><tr><td>Shortlisting of consultants (EoI)<\/td><td>7A<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>7<\/td><td> \u2014 <\/td><\/tr><tr><td>Bid evaluation and award of contract<\/td><td>7<\/td><td>7<\/td><td>6<\/td><td>8<\/td><td>7<\/td><\/tr><tr><td>Special and unique types of procurement<\/td><td>8<\/td><td>8<\/td><td>none<\/td><td>9<\/td><td>8<\/td><\/tr><tr><td>Contract management and monitoring<\/td><td>9<\/td><td>9<\/td><td>7<\/td><td>10<\/td><td>9<\/td><\/tr><\/tbody><\/table><\/div>\nThree consequences follow, and each has been the subject of examination questions:<\/p>\n<ol class=\"lst\"><li>The Works Manual runs one chapter behind<\/strong> the others from Bidding Design onwards, because it places governance and debarment at the end, as Chapter 8, rather than early, as Chapter 3.<\/li><li>The Consultancy Manual runs one chapter ahead<\/strong> from Bid Evaluation onwards, because it inserts an entire chapter on Shortlisting of Consultants, which has no counterpart anywhere.<\/li><li>The Works Manual has no chapter on special types of procurement at all.<\/strong> Its variants \u2014 EPC, PPP, piece Work and stalled contracts \u2014 are dealt with inside its Bidding Design chapter.<\/li><\/ol>\n<h2>0.6<\/span>Master Concordance \u2014 Where the Four Manuals Stand Alone<\/span><\/h2>\nA provision found in only one Manual cannot be inferred from the others. The following are the principal bodies of material that exist in a single Manual, and they account for most of the difference in length between the four.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Body of material<\/th><th>Only in<\/th><th>Where in this Manual<\/th><\/tr><\/thead><tbody><tr><td>Reservation of Khadi, pharmaceuticals and 358 MSE-reserved items<\/td><td>G<\/td><td>1.11.1<\/td><\/tr><tr><td>Right to Information and proactive disclosures<\/td><td>G<\/td><td>1.16<\/td><\/tr><tr><td>Basic principles of undertaking works; administrative control<\/td><td>W<\/td><td>1.17, 1.18<\/td><\/tr><tr><td>Law of Agency<\/td><td>W + C + NC<\/td><td>1.15<\/td><\/tr><tr><td>Technical Specifications, Ecomark, BEE star ratings<\/td><td>G<\/td><td>2.4<\/td><\/tr><tr><td>The PPR, DPR, technical Sanction and Reference Documents sequence<\/td><td>W<\/td><td>2.5<\/td><\/tr><tr><td>Terms of Reference, activity-based and position-based<\/td><td>C<\/td><td>2.6<\/td><\/tr><tr><td>Services and Activities Schedule, Method Statement, KPIs<\/td><td>NC<\/td><td>2.7<\/td><\/tr><tr><td>Agency for Procurement \u2014 PWO, PSU, works Committee<\/td><td>W<\/td><td>4.1<\/td><\/tr><tr><td>Admeasurement of services, input and output<\/td><td>NC<\/td><td>4.2<\/td><\/tr><tr><td>Types of contract \u2014 Item Rate, Percentage Rate, Piece Work, EPC, PPP<\/td><td>W<\/td><td>4.3.3<\/td><\/tr><tr><td>Fixed Budget based Selection<\/td><td>C<\/td><td>4.4.5, 7.22<\/td><\/tr><tr><td>Quality Oriented Procurement and the Special Technical Committee<\/td><td>W + NC<\/td><td>4.4.4<\/td><\/tr><tr><td>Rate Contract, Approved Vendor List, Proprietary Article Certificate<\/td><td>G<\/td><td>4.10, 4.13, 4.16<\/td><\/tr><tr><td>Award of work through quotations; stalled contracts<\/td><td>W<\/td><td>4.20, 4.21<\/td><\/tr><tr><td>Accessibility standards under the RPwD Act<\/td><td>W<\/td><td>5.3.5<\/td><\/tr><tr><td>Fixed days for issue of NIT and tender opening<\/td><td>W<\/td><td>5.6<\/td><\/tr><tr><td>Incoterms, Exchange Rate Variation, Letter of Credit, customs<\/td><td>G<\/td><td>6.12, 6.15, 6.17<\/td><\/tr><tr><td>Mobilisation, plant and secured advances<\/td><td>W<\/td><td>6.13.2<\/td><\/tr><tr><td>Evaluation of the quality of technical proposals; the A\u2013E rating scale<\/td><td>C<\/td><td>7.17<\/td><\/tr><tr><td>Splitting of contracts; the option clause; variation of quantities<\/td><td>G<\/td><td>7.26 \u2013 7.28<\/td><\/tr><tr><td>Emergencies, buy back, capital goods, AMC, Net Present Value<\/td><td>G<\/td><td>8.1 \u2013 8.6<\/td><\/tr><tr><td>Logo design competitions; Digital India; financial advisors; auditors<\/td><td>C<\/td><td>8.14 \u2013 8.18<\/td><\/tr><tr><td>Housekeeping, manpower, private security, vehicle hiring, HaaS<\/td><td>NC<\/td><td>8.20 \u2013 8.24<\/td><\/tr><tr><td>Logistics \u2014 transport, title, receipt, storage, GRIR<\/td><td>G<\/td><td>9.30<\/td><\/tr><tr><td>Compensation Events; Time at Large; the three closure reconciliations<\/td><td>W<\/td><td>9.26, 9.27, 9.31<\/td><\/tr><tr><td>Contract Monitoring Committee; post-contract review<\/td><td>C + NC<\/td><td>9.2, 9.32<\/td><\/tr><tr><td>The AMRCD mechanism for CPSE disputes<\/td><td>W<\/td><td>9.47<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>0.7<\/span>Master Concordance \u2014 The Principal Numerical Divergences<\/span><\/h2>\nWhere the four Manuals prescribe different figures for the same thing, the difference is almost always examinable. These are collected here for revision; each is dealt with in its place in the text.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Provision<\/th><th>G<\/th><th>W<\/th><th>C<\/th><th>NC<\/th><th>See<\/th><\/tr><\/thead><tbody><tr><td>Open Tender Enquiry applies above<\/td><td>Rs 50 lakh<\/td><td>Rs 10 lakh<\/td><td>Rs 50 lakh<\/td><td>Rs 50 lakh<\/td><td>4.8<\/td><\/tr><tr><td>Special Limited Tender Enquiry above<\/td><td>Rs 50 lakh<\/td><td>Rs 10 lakh<\/td><td>Rs 50 lakh<\/td><td>Rs 50 lakh<\/td><td>4.15<\/td><\/tr><tr><td>QCBS \u2014 weight of quality<\/td><td>not used<\/em><\/td><td>not above 30%<\/td><td>70%<\/td><td>not above 30%<\/td><td>4.4.3, 7.20<\/td><\/tr><tr><td>Performance security<\/td><td>3 \u2013 5%<\/td><td>3 \u2013 10%<\/td><td> \u2014 <\/td><td>3 \u2013 5%<\/td><td>6.2<\/td><\/tr><tr><td>Firm price contracts up to<\/td><td>12 months<\/td><td>18 months<\/td><td>12 months<\/td><td>12 months<\/td><td>6.14.2<\/td><\/tr><tr><td>Consequence under a Bid Securing Declaration<\/td><td>suspended<\/td><td>debarred<\/td><td>suspended<\/td><td>suspended<\/td><td>6.1<\/td><\/tr><tr><td>Exemption from bid security<\/td><td>MSEs and Start-ups<\/td><td>Start-ups only<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>6.1<\/td><\/tr><tr><td>Liquidated damages per week<\/td><td>0.5%<\/td><td>1% for repair works up to Rs 20 lakh, otherwise 0.5%<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>9.24.2<\/td><\/tr><tr><td>Debarment for breach of the Code of Integrity<\/td><td>not less than 6 months<\/td><td>not less than 6 months<\/td><td>not exceeding 2 years<\/td><td>not less than 6 months<\/td><td>3.5.5<\/td><\/tr><tr><td>Reference to the Competition Commission signed by<\/td><td>Joint Secretary<\/td><td>Joint Secretary<\/td><td>Competent Authority<\/td><td>Joint Secretary<\/td><td>3.5.5<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>0.8<\/span>A Note on the Source Texts<\/span><\/h2>\nTwo errors in the source Manuals have been retained and flagged rather than silently corrected, because a candidate may be examined on the text as printed:<\/p>\n<ol class=\"lst\"><li>The Goods Manual states the threshold below which performance security is not necessary as \"Rupees 50 (twenty-five) lakh\"<\/em> \u2014 the figure and the word do not agree.<\/li><li>The Goods and Consultancy Manuals cite the rule on enlistment of Indian agents as \"Rule 52\"<\/em>; the Works and Non-Consultancy Manuals correctly cite Rule 152<\/strong> of the General Financial Rules, 2017.<\/li><\/ol>\nA third point of substance should also be noted. The Consultancy Manual assigns 70% weight to the technical score and 30% to cost, and then states two paragraphs later that \"the weightage of the cost element adopted in Consultancy services is as high as 70 per cent.\"<\/em> That sentence is correct in the Non-Consultancy Manual, where cost does carry 70%, but is internally inconsistent in the Consultancy Manual. Both sentences are reproduced in this Manual at paragraph 7.20.<\/p><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch1\">Chapter 1<\/p><h1>Introduction \u2014 Principles and Policies<\/h1><\/header><div class=\"upm-key\">\nHow to read the colours<\/b>\n<div class=\"row\">\nPlain white \u2014 common to all four Manuals<\/span>\nGoods only<\/span>\nWorks only<\/span>\nConsultancy only<\/span>\nNon-Consultancy only<\/span>\nTwo or three Manuals<\/span>\n<\/div>\nAnything on a tinted background appears in the named Manual or Manuals\nalone<\/em>, and cannot be inferred from the others. Text on plain white applies to all four.\nA tinted section carries a label in its top-left corner; a single tinted paragraph, list item or\ntable row carries a coloured spine on its left. Grey callouts are ordinary notes \u2014 they carry no\ncolour, so colour never means two different things.<\/p>\n<\/div>\n<h2>1.1<\/span>Procurement Rules and Regulations; and this Manual<\/span><\/h2>\n<ol class=\"lst\"><li>Various Ministries, Departments, attached and subordinate offices, local urban bodies, public sector enterprises, and other Government (including autonomous) bodies (hereinafter referred to as 'Procuring Entities<\/strong>') spend a sizeable amount of their budget on the Procurement of goods, works and services to fulfil their stated objectives, assigned duties\/ obligations\/ responsibilities\/ functions, and activities in alignment with desired policy outcomes.<\/li><li class=\"srcmark src-multi\" data-src=\" G C NC \">G<\/span>C<\/span>NC<\/span> The Ministries\/ Departments have been delegated full powers<\/strong> to make their own arrangements for the procurement of goods and services that are not<\/strong> available on the Government e-Marketplace (GeM). These powers must be exercised as per the Delegation of Financial Power Rules and in conformity with the 'Procurement Guidelines' described below. Common use Goods and Services available on GeM are required to be procured mandatorily<\/strong> through GeM as per Rule 149 of GFR, 2017<\/strong>.<\/li><\/ol>\nW<\/span> The Ministries\/ Departments have been delegated powers to make their own arrangements for procurement of works under the Delegation of Financial Power Rules, which have to be exercised in conformity with the 'Procurement Guidelines' described below.<\/p>\n<ol class=\"lst\"><li>To ensure that these procurements are made by following a uniform, systematic, efficient and cost-effective procedure, and also to ensure fair and equitable treatment of suppliers\/ bidders\/ contractors\/ consultants\/ service providers<\/strong>, there are guidelines comprising a hierarchy of Statutory framework, Rules and Regulations, Manuals of Procurement and Procurement Documents as detailed in Annexure 1 of the Manual for Procurement of Goods, Second Edition, 2024<\/strong> (hereinafter referred to as 'Procurement Guidelines<\/strong>').<\/li><\/ol>\n<aside class=\"note\">C<\/span> adds: there is a hierarchy of statutory provisions, rules, financial, vigilance, security, safety, counter-trade and other regulations; orders and guidelines of the Government about public procurement.<\/p><\/aside>\n<ol class=\"lst\"><li>At the apex of the Statutory framework governing public Procurement is Article 299 of the Constitution of India<\/strong>, which stipulates that contracts legally binding on the Government must be executed in writing by officers specifically authorised to do so. The Constitution also enshrines Fundamental Rights \u2014 in particular Article 14<\/strong> (Right to Equality before Law) and Article 19(1)(g)<\/strong> (Right to practise any profession, or to carry on any occupation, trade, or business) \u2014 which have implications for Public Procurement.<\/li><\/ol>\nFurther:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-multi\" data-src=\" G C NC \">G<\/span>C<\/span>NC<\/span> The Indian Contract Act, 1872<\/strong> and the Sale of Goods Act, 1930<\/strong> are significant legislations governing contracts of sale\/ purchase of goods in general.<\/li><li class=\"srcmark src-W\" data-src=\" W \">W<\/span> The Indian Contract Act, 1872<\/strong> is a significant legislation governing contracts in general.<\/li><\/ul>\nThere are other mercantile laws that may be attracted in Public Procurement transactions:<\/p>\n<ul class=\"lst\"><li>Arbitration and Conciliation Act, 1996<\/li><li>Mediation Act, 2023<\/strong>(in G, W, NC)<\/em><\/li><li>Competition Act, 2002<\/li><li>Information Technology Act, 2000<\/li><li>Indian Stamp Act, 1899 (in W, C, NC)<\/em><\/li><\/ul>\n \u2014 all as amended from time to time.<\/p>\n<ol class=\"lst\"><li>In the Central Government, there is no law exclusively governing public procurement<\/strong>. However, comprehensive Rules and Regulations in this regard are available in:<\/li><li class=\"srcmark src-W\" data-src=\" W \">General Financial Rules (GFR), 2017<\/strong> \u2014 especially [G, C, NC]<\/strong> Chapters 6 to 9; W<\/span> Chapters 5 to 9;<\/li><li>Delegation of Financial Powers Rules (DFPR) \u2014 [W, C, NC] cite DFPR, 2024;<\/li><li class=\"srcmark src-W\" data-src=\" W \">Government orders regarding purchase preference\/ restrictions, such as the Public Procurement (Preference to Make in India) Order, 2017<\/strong>; facilities to Micro and Small Enterprises<\/strong> and Start-ups<\/strong>; Restrictions on Entities from a Class of Countries (Rule 144(xi), GFR 2017)<\/strong>; and W<\/span> relaxation of the conditions of prior turnover and prior experience for start-up enterprises.<\/li><li>Without purporting to be a comprehensive compendium of all such 'Procurement Guidelines', this Manual is intended to serve as a portal to enter this vast area<\/strong> and draw attention to basic norms and practices governing public procurement.<\/li><\/ol>\n<h2>1.2<\/span>Clarification, Amendments and Revision of this Manual<\/span><\/h2>\nThe Procurement Policy Division, Department of Expenditure, Ministry of Finance<\/strong> would be the nodal authority<\/strong> for this Manual's revision, interpretation, and clarification.<\/p>\n<h2>1.3<\/span>Applicability of this Manual<\/span><\/h2><h3>1.3.1<\/span>Category of Procurements<\/span><\/h3>\nG<\/span> The Goods Manual applies to the Procurement of all \"Goods<\/strong>\" as defined in the 'Procurement Glossary' section. What is unique about the Procurement of goods (as compared to services and works) is the ability to precisely describe the technical specification and scope of the requirement<\/strong>. The other Manuals (Consultancy Services, Non-consultancy Services and Works) are generically based on the Goods Manual<\/strong>. Hence, for any topic for which guidance cannot be found in those Manuals, the Manual for Procurement of Goods shall apply mutatis mutandis<\/strong><\/em>. For the sake of brevity, those Manuals refer to some of the sections of the Goods Manual without reproducing them.<\/p>\nW<\/span> The Works Manual applies to procurement of all \"Works<\/strong>\" as defined in the 'Procurement Glossary' section.<\/p>\nC<\/span> The Consultancy Manual applies to procurement of \"Consultancy Services<\/strong>\" as defined in the 'Procurement Glossary' section. For any circumstances not covered, the Procuring Entity may refer to the Manual for Procurement of Goods, 2024.<\/p>\nNC<\/span> The Non-Consultancy Manual applies to procurement of \"Non-consultancy Services<\/strong>\" (including \"Outsourcing of Services\"<\/strong>) as defined in the 'Procurement Glossary' section. For any circumstances not covered, the Procuring Entity may refer to the Manual for Procurement of Goods, 2024 (Rule 206 of GFR, 2017<\/strong>).<\/p>\n<h3 class=\"src-W srchead\" data-src=\" W \">1.3.2<\/span>Classification of Works<\/span>W<\/span><\/h3><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\nThe civil works are classified in GFR 2017 (Rule 130)<\/strong> into three categories:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Meaning<\/th><\/tr><\/thead><tbody><tr><td>(a) Original Works<\/td><td>All new constructions, site preparation, additions and alterations to existing works. Also includes special repairs to newly purchased or previously abandoned buildings or structures, including remodelling or replacement.<\/td><\/tr><tr><td>(b) Minor Works<\/td><td>Works which add capital value to existing assets but do not create new assets.<\/td><\/tr><tr><td>(c) Repair Works<\/td><td>Works undertaken to maintain building and fixtures. Expenditure on Repair Work does not add to the value of the asset and only restores the functionality of the asset.<\/td><\/tr><\/tbody><\/table><\/div>\nRepair Work can be further categorised as:<\/p>\n<ol class=\"lst\"><li>Annual repairs<\/strong> \u2014 covering routine and yearly operation and maintenance work on buildings and fixtures;<\/li><li>Special repairs<\/strong> \u2014 undertaken as and when required, covering major repairs to existing buildings or structures. Some types of Special repairs may qualify to be categorised as 'Original Work' as mentioned above.<\/em><\/li><\/ol>\n<\/div><h3>1.3.3<\/span>Procuring Entities<\/span><\/h3>\n<ol class=\"lst\"><li>This Manual shall apply to all Procuring Entities covered by Rule 1 of GFR<\/strong>, i.e., all Central Government Ministries\/ Departments, attached and subordinate bodies. These provisions shall also apply, as per the same rule, to autonomous bodies<\/strong> except to the extent that the bye-laws of an autonomous body provide separate procurement guidelines* that the Government has approved.<\/li><\/ol>\n<aside class=\"note\">\\* Such approved guidelines must retain fundamental provisions relating to the Constitution and Government instructions relating to Preferential Procurement Policies, GTE and Land Border restriction, General Instructions on Procurement and Project Management (No. F.1\/1\/2021-PPD dated 20.10.2021).<\/p><\/aside>\n<ol class=\"lst\"><li class=\"srcmark src-W\" data-src=\" W \">W<\/span> \u2014 additional provisions on addressees:<\/li><li>This Manual inter alia<\/em> covers fundamental provisions relating to the Constitution; Government instructions relating to Preferential Procurement Policies; GTE; Land Border restriction; and General Instructions on Procurement and Project Management (No. F.1\/1\/2021-PPD dated 20.10.2021), which are mandatory for all entities of Central Government<\/strong>.<\/li><li>This Manual is addressed to Ministries\/ Departments, their attached and subordinate offices, and autonomous bodies whose in-house capabilities are limited to repair works of up to Rs 60 lakh<\/strong> and who assign larger repair works (and original works) to third parties (Public Works Organisations or CPSEs) \u2014 Rule 133 of GFR, 2017 (as amended)<\/em>. Refer para 3.1 of the Works Manual for further details.<\/li><li>This Manual may also be useful for Ministries\/ Departments, their attached and subordinate offices, and autonomous bodies who have in-house capabilities for direct execution of larger works<\/strong> but may not have their own detailed procurement guidelines.<\/li><li>The Manual does not purport to address<\/strong> procurement of larger works for which major works procuring Ministries\/ Departments \u2014 like the Central Public Works Department (CPWD); Military Engineering Service (MES); Border Roads Organisation (BRO); Ministries of Railways; Information & Broadcasting; and Departments of Posts and Space<\/strong>, etc. \u2014 already have their own detailed guidelines tailored to unique individual requirements. They may, however, ensure that their procurement guidelines comply with the mandatory provisions mentioned in sub-para (a) above.<\/li><\/ol>\n<h3>1.3.4<\/span>Statutory Bodies and CPSEs<\/span><\/h3>\nThese guidelines shall also be applicable to bodies substantially owned or controlled by, or receiving substantial financial assistance from<\/strong>, the Central Government \u2014 inter alia<\/em>:<\/p>\n<ul class=\"lst\"><li>Central Public Sector Enterprises (CPSEs or undertakings, including their subsidiary companies\/ Ventures);<\/li><li>Public Sector Banks (PSBs);<\/li><li>Public Sector Insurance Companies (PSICs);<\/li><li>Public Sector Financial Institutions (FIs);<\/li><li>Constitutional or Statutory Bodies;<\/li><li>Public Academic Institutions (National\/ Central institutes); and<\/li><li>Commissions created under the Constitution of India or specific legislations<\/li><\/ul>\n \u2014 except to the extent of deviations that have been approved by their competent authority (e.g., Board of Directors<\/strong> in CPSEs).<\/p>\n<h3>1.3.5<\/span>Indian Missions and CPSE Units Abroad<\/span><\/h3>\nWhile the applicability of the Manual in the case of Indian Missions abroad and CPSE Units abroad shall be as per paras 1.3.3 and 1.3.4 above respectively, the following is clarified:<\/p>\na) Adopting Financial Limits\/ Thresholds in Local Currency:<\/strong> For procurements done and for use outside India, in the host country's local currency, Indian Missions and CPSE units abroad may adopt General Financial Rules (GFR) financial limits\/ thresholds of procurements (as mentioned in this Manual at various instances, e.g., selection of mode of Procurement etc.) by using the latest INR-PPP conversion rates<\/strong> for the local currency as published by the IMF<\/strong> (International Monetary Fund). For convenience, such converted limits\/ thresholds may be reviewed annually<\/strong>. Even if the Procurement is to be done in a currency other than the local currency, the applicable financial limits\/ thresholds of procurements shall be in terms of the INR-PPP conversion rate for the local currency only<\/strong>. If the IMF does not publish the PPP conversion rate for local currency, then the conversion may be done to the currency most relevant to that mission\/ unit in consultation with the Financial Adviser<\/strong>.<\/p>\n<aside class=\"note\">Illustration (as given in all four Manuals):<\/strong> Financial limits in GFR are to be calculated for the Indian Mission in Bangladesh, where the relevant local currency is Bangladesh Taka (BT). Let the PPP conversion rate (as per international dollar) published by the IMF for INR and BT in a particular year be as follows:<\/p>\nRs. 22.947 = 1 USD = 31.98 BT<\/strong> The PPP-based conversion rate for BT\/INR may be calculated as 31.98 \u00f7 22.947 = 1.394<\/strong>. Thus, a threshold of INR 25,00,000<\/strong> (say the threshold for OTE) would then be 34,85,000 BT<\/strong>.<\/p><\/aside>\nb) Exemptions:<\/strong> For exemptions from restrictions relating to Global Tenders<\/strong>, bidders from Land-border countries<\/strong>, and eProcurement<\/strong> for bona fide procurements and use outside India by Indian Missions and CPSE Units abroad, please refer to paragraphs 4.3.2-4-g)<\/strong>(W cites 4.3.2-4-h)<\/em>, 1.11.4-3-f)ii)<\/strong>, and 4.17.1-4<\/strong>(W cites 4.17.1-5)<\/em> respectively, in the Manual for Procurement of Goods, 2024<\/strong>.<\/p>\n<h3>1.3.6<\/span>Portals<\/span><\/h3>\n<ul class=\"lst\"><li class=\"srcmark src-G\" data-src=\" G \">G<\/span> GeM portal, GePNIC portal (Government e-Procurement of NIC, eproc.gov.in), and various such platforms of different Organisations carry out a substantial proportion of Public Procurement. Hence, the procedures for such platforms should conform to these 'Procurement Guidelines'.<\/li><li class=\"srcmark src-W\" data-src=\" W \">W<\/span> Central Public Procurement Portal (CPPP of NIC, eproc.gov.in), and various such platforms.<\/li><li class=\"srcmark src-multi\" data-src=\" C NC \">C<\/span>NC<\/span> GeM portal, CPPP (Central Public Procurement Portal), and various such platforms \u2014 the procedures for such platforms should generally<\/strong> conform to these 'Procurement Guidelines'.<\/li><\/ul>\n<h3>1.3.7<\/span>Outsourced Procurement<\/span><\/h3>\nThese procurement guidelines would continue to apply<\/strong> if these procuring entities:<\/p>\n<ul class=\"lst\"><li>outsource the procurement process, or<\/li><li>bundle the procurement process with other contractual arrangements, or<\/li><li>utilise the services of a procurement support agency<\/strong> or procurement agents<\/strong> to carry out the Procurement on their behalf.<\/li><\/ul>\n<h3>1.3.8<\/span>Customisation<\/span><\/h3>\nThis Manual is to be taken as generic guidelines<\/strong>, which are necessarily broad in nature. (C<\/span>NC<\/span> add: Subject to the observance of these generic guidelines,)<\/em> Procuring Entities are advised to customise these Manuals, with the approval of competent authority and financial concurrence<\/strong>, to suit their local\/ specialised needs by issuing their own detailed Manuals (including customised formats); Model Tender Documents; Schedule of Procurement Powers; and Checklists \u2014 to serve as practical instructions for their officers and to ensure completeness of examination of cases.<\/p>\nFor procuring organisations that have their own detailed manuals or procedure orders, the initiation, authorisation, Procurement, and execution of contracts<\/strong> undertaken by them shall be regulated by detailed rules and orders contained in their respective regulations and by other special orders applicable to them.<\/p>\n<h3>1.3.9<\/span>Exemptions<\/span><\/h3>\nThese procurement guidelines would not apply to procurements by procuring entities mentioned above for their own use from their subsidiary companies, including Joint Ventures, where they have a controlling share.<\/p>\nMoreover, by a general or special notification, the Government may permit certain 'Procuring Entities' mentioned above, considering unique conditions under which they operate, for all or certain categories of procurement, to adopt detailed approved guidelines for procurement which may deviate in some respects but conform with all other essential aspects<\/strong> of these 'Procurement Guidelines'.<\/p>\n<h3>1.3.10<\/span>Procurements financed by Loans\/ Grants extended by International Funding Agencies<\/span><\/h3>\n<ol class=\"lst\"><li>For projects funded by the World Bank<\/strong>, Asian Development Bank<\/strong>, and other International Funding Agencies (IFA)<\/strong>, the Articles of Agreement, with the approval of the Ministry of Finance, stipulate either the Indian (or State) Government's own procurement procedures or<\/strong> the IFA's specific procurement procedures to be followed by the borrowers.<\/li><li>These guidelines would not<\/strong> be applicable to projects funded by the World Bank using the Investment Project Financing (IPF)<\/strong> instrument and similar instruments of other IFAs, as stipulated under Articles of Agreement as mentioned under sub-para (a) above. IFA's specific procurement procedures shall be applicable as permitted under Rule 264 of GFR, 2017<\/strong>.<\/li><li>However, for projects financed using instruments such as Program-for-Results (PforR)<\/strong> of the World Bank, and Results-based Lending (RBL)<\/strong> of the Asian Development Bank, and similar instruments of other IFAs, the application of these guidelines as expressly agreed in the legal agreements<\/strong> shall be followed.<\/li><\/ol>\n<h2>1.4<\/span>Categorisation of Procurements<\/span><\/h2><h3>1.4.1<\/span>Categories<\/span><\/h3>\nCategorisation of Procurements helps prepare guidelines for Procurements and Model Tender Documents, which cater to peculiar contractual conditions of the categories of procurements. G<\/span> These categories may be further sub-categorised, e.g., Capital Equipment procurement in Goods.<\/p>\nFollowing are the categories of procurements (please refer to their definitions in the 'Procurement Glossary' section):<\/p>\n<ul class=\"lst\"><li>a) Goods<\/li><li>b) Services<\/li><li>i) Consultancy Services, and<\/li><li>ii) Non-consultancy services (NC services)<\/li><li>c) Works<\/li><\/ul>\n<h3>1.4.2<\/span>Distinctive Features<\/span><\/h3>\nNormally, such categorisation is evident from their definition, and Procurement should be done accordingly, following the relevant guidelines and Model Tender Documents. The boundaries between such categorisation may not be clear-cut and may overlap<\/strong>. It may neither be possible nor necessary to distinguish precisely between the categories in overlapping areas. Though simplistic, the main distinguishing factors between these are:<\/p>\n<ol class=\"lst\"><li>While both Goods<\/strong> and Works<\/strong> lead to tangible outputs<\/strong> (with some exceptions like IPR materials), the main difference between goods and works is that the manufacture of goods is done on the supplier's own premises<\/strong> (other than installation\/ commissioning), whereas 'Works<\/strong>' is executed on the premises of the procuring entity<\/strong> (other than pre-fabricated components). Works may include incidental 'Goods' and vice versa.<\/li><li>The main difference between 'Goods<\/strong>' or 'Works<\/strong>' on the one hand and 'Services<\/strong>' on the other is the intangibility of the outputs of Services<\/strong>.<\/li><li>The main difference between Consultancy and Non-consultancy services is the level of intellectual input, which is predominant in Consultancy and not central to Non-consultancy. Another difference is that non-consultancy services are repetitive routines with measurable and standardised outputs, while consultancy services are one-off and non-routine, with outputs that are neither precisely measurable nor standardised.<\/li><\/ol>\n<h3>1.4.3<\/span>In Case of Doubt<\/span><\/h3>\nProcurement in cases of doubts about categorisation may be handled as follows:<\/p>\na) Simpler procedure rule:<\/strong> In the case of blurred border lines and grey areas, a simpler procurement procedure<\/strong> should be followed. In case of doubt between:<\/p>\n<ul class=\"lst\"><li>i) Goods<\/strong> and works\/ NC services\/ consultancy \u2192 process as Procurement of Goods<\/strong>;<\/li><li>ii) Works<\/strong> and NC service\/ consultancy \u2192 process as Procurement of Works<\/strong>;<\/li><li>iii) Non-consultancy and Consultancy services \u2192 process as Procurement of Non-consultancy services.<\/li><\/ul>\nb) IT Projects:<\/strong> The Procurement of IT projects should usually be carried out as a procurement of Consultancy services<\/strong>, as the outcomes\/ deliverables vary from one service provider to another. The IT Projects may include:<\/p>\n<ul class=\"lst\"><li>i) tailor-made\/ bespoke software development<\/strong>;<\/li><li>ii) cloud-based services;<\/li><li>iii) composite IT system integration services<\/strong> involving the design, development, deployment and commissioning of IT systems, including hardware supply, software development, bandwidth, and operation\/ maintenance of the system for a defined period after going live, etc.<\/li><\/ul>\nc) Composite Contracts<\/strong>(PPD's OM No. F6\/2\/2023-PPD dated 13.01.2023)<\/em>: Composite contracts may involve mixed elements of Goods, Works, and Services. For example, in the Procurement of large machinery, some works and services like Installation, Commissioning, Training, Annual Maintenance Contract (AMC) or a Comprehensive Maintenance Contract (CMC), and so on, may be incidental to the supply of goods. The relationship of primacy between the goods element and the works\/ services element may be examined, irrespective of the relative values.<\/strong><\/p>\n<ul class=\"lst\"><li>If the primary intention\/ objective is the Procurement of goods<\/strong> with services\/ works being incidental to it, it may be processed as Procurement of Goods<\/strong>.<\/li><li>However, if the primary intention\/ objective is Procurement of Works\/ Services<\/strong> with Procurement of goods being incidental, then it should generally be processed as Procurement of Works\/ Services<\/strong> (as the case may be), irrespective of the relative values<\/strong>.<\/li><li>A possible alternative approach could be to have separate but linked contracts<\/strong> for such elements of Goods, Works, and Services, but implementation may become challenging.<\/li><\/ul>\nW<\/span>C<\/span>NC<\/span> \u2014 further refinements:<\/p>\n<ul class=\"lst\"><li>i) Procurement of \"new product<\/strong>\" viz. Mechanical, Electrical or ICT assets etc. of the nature of Machinery and Plant<\/strong>, with incidental works\/ services like fabrication, installation, erection, commissioning, AMC\/CMC, should be handled as procurement of Goods<\/strong> \u2014 except for procurement of IT Projects as specified above.<\/li><li>ii) AMC\/ CMC of existing<\/strong> Mechanical, Electrical or ICT assets of the nature of Machinery and Plant should be treated as procurement of Non-Consultancy Services<\/strong>.<\/li><\/ul>\n<aside class=\"note\">Notes:<\/p>\n<ol class=\"lst\"><li>If the NC services primarily involve construction, fabrication, repair, maintenance, overhaul, renovation, decoration, installation, erection, excavation, dredging and so on of Civil assets, then it should be handled as procurement of Works.<\/li><li class=\"srcmark src-G\" data-src=\" G \">G<\/span> variant: *In case of fabrication, repair, maintenance, overhaul, renovation, decoration, installation, erection and so on, of mechanical, electrical or ICT assets \u2014 e.g. Annual Maintenance Contracts or installation\/ commissioning of Machinery and Plant \u2014 it may be handled as Procurement of Goods rather than Procurement of Services.*<\/li><li class=\"srcmark src-multi\" data-src=\" W C NC \">W<\/span>C<\/span>NC<\/span> Procurement of new mechanical and electrical works<\/strong> (not<\/strong> in the nature of Machinery and Plant) involving fabrication, installation, or erection of a mechanical or electrical nature should be treated as procurement of Works<\/strong>, if elements of procurement of Goods are incidental.<\/li><li class=\"srcmark src-multi\" data-src=\" W C NC \">W<\/span>C<\/span>NC<\/span> Repair, renovation, maintenance, overhauling, decoration, AMC\/ CMC or similar work for existing<\/strong> Mechanical, Electrical or ICT assets NOT<\/strong> of the nature of Machinery and Plant etc. should normally be handled as procurement of Services<\/strong>.<\/li><\/ol><\/aside>\nd) Consultancy vs Non-Consultancy \u2014 the \"primary objective\" test W<\/span>C<\/span>NC<\/span>:<\/strong> It is possible that, depending on the nature and complexity of the assignment, a task could be dealt with either<\/strong> as a consultancy or<\/strong> a non-consultancy service. In essence, if the intellectual and advisory part<\/strong> of services is the primary objective<\/strong> (irrespective of the relative value of this component), the selection needs to be dealt with in Consultancy mode<\/strong>.<\/p>\n<aside class=\"note\">Example given in the Manuals:<\/strong> If the task is looking at the condition of a dam (for dam safety) by physically inspecting the dam through underwater observation, this task is a collection of data using technologies and photography \u2014 but the actual analysis is an intellectual and advisory task<\/strong> and is the primary objective<\/strong> of the assignment. Therefore, the entire task<\/strong> needs to be dealt with as the selection of a consultant<\/strong>.<\/p><\/aside>\n<h2>1.5<\/span>Authorities Competent to Incur Expenditure on Procurements and Consultation with Financial Advisers<\/span><\/h2>\n<ol class=\"lst\"><li>The first step in procurement<\/strong> is the decision to procure<\/strong> something \u2014 goods, services, works, etc. \u2014 involving a formal decision to procure along with the exact or approximate expenditure<\/strong> to be incurred. A Competent Authority that is competent to incur expenditure may accord administrative sanction\/ approval<\/strong> to incur expenditure on a specific procurement in accordance with the Delegation of Financial Powers Rules (DFPR)<\/strong> by following the 'Procurement Guidelines' (Rule 145 of GFR 2017<\/strong>).<\/li><\/ol>\nEach 'Procuring Entity' may issue a Schedule of Procurement Powers (SoPP)<\/strong>, adding further details to the broad delegations in the DFPR based on assessing risks<\/strong> involved in different decisions\/ approvals at various stages of the Procurement Cycle.<\/p>\n<aside class=\"note\">Annexure references:<\/strong> DFPR extract \u2014 G<\/span> Annexures 2 and 3; [W, C, NC]<\/strong> Annexure 1. Suggested structure of SoPP \u2014 G<\/span> Annexure 4; [W, C, NC]<\/strong> Annexure 2.<\/p><\/aside>\n<ol class=\"lst\"><li>Being a decision with a financial bearing, it invariably requires consultation of the Financial Adviser<\/strong> (unless validly re-delegated within permissible limits or otherwise permitted by DoE through specific orders). The extent of involvement of the Financial Adviser and the Integrated Finance Division (IFD) in subsequent stages of procurement matters may be based on one of the following procedures<\/strong> (Para 19, Charter for Financial Advisers, 2023<\/strong>):<\/li><\/ol>\na) Normal Procedure: Under this procedure, the concurrence of the Financial Adviser\/ IFD shall be required on all procurement matters, except for matters where re-delegation has been done within the permissible limits under the rules\/ general orders\/ general instructions of DoE. Unless the Secretary of the Department approves a special procedure with the concurrence of DoE, this procedure shall be followed.<\/p>\nb) Special Procedure:<\/strong> With the prior concurrence of Secretary (Expenditure)<\/strong>, the Secretary of the Department may decide on a different level of involvement<\/strong> of the Financial Adviser\/ IFD specific to the Department. The procedure shall lay out the types\/ classes of cases where the Financial Adviser\/ IFD consultation would be required, which may be in terms of:<\/p>\n<ul class=\"lst\"><li>threshold financial limits,<\/li><li>stages in Procurement, or<\/li><li class=\"srcmark src-NC\" data-src=\" NC \">types of Procurement and contracts, viz. consultancy (NC<\/span> adds: \/ non-consultancy)<\/em>, goods and works contracts, etc.,<\/li><li>or any permutation thereof.<\/li><\/ul>\nG<\/span> clarification: It is further clarified that <\/strong>this system will be applicable only to Ministries\/ Departments etc. covered under the FA Charter. All other organisations, including CPSEs, are free to devise their own system.<\/p>\n<ol class=\"lst\"><li>In all procedures, payments under approved contracts shall not require IFD consultation, except in cases where the payments are in relaxation\/ variation to approved contract conditions.<\/li><\/ol>\n<h2>1.6<\/span>Basic Aims of Procurement \u2014 the Five R's of Procurement<\/span><\/h2>\nIn every Procurement, public or private, the basic aim is to achieve just the right balance between costs and requirements<\/strong> with respect to five parameters called the Five 'R's of Procurement<\/strong>. The entire process of Procurement \u2014 from the time the need for an item, facility or service is identified till the need is satisfied \u2014 is designed to achieve such a right balance. The word 'Right<\/strong>' is used in the sense of 'optimal balance<\/strong>'.<\/p>\n<aside class=\"note\">[W, C, NC] note:<\/strong> Although couched in the jargon of procurement of Goods, the Five R's are equally applicable<\/strong> to procurement of Works, Consultancy Services and Non-consultancy Services.<\/p><\/aside>\nThe Five R's are: 1. Right Quality; 2. Right Quantity; 3. Right Price; 4. Right Time and Place; and 5. Right Source.<\/p>\n<h3>1.6.1<\/span>Right Quality<\/span><\/h3>\nProcurement aims to buy just the right quality that will suit the needs \u2014 no more and no less<\/strong> \u2014 with precise specifications of the procuring entity's requirements, a proper understanding of the functional value and cost, and an understanding of the bidder's quality system and quality awareness. The concept of the right balance of quality can be further refined to the concept of utility\/ value<\/strong> (refer para 1.7 below). Technical specifications and quality assurance plans are the most vital ingredients for the right quality.<\/strong> In public procurement, it is essential to give due consideration to value for money<\/strong> while preparing the specifications.<\/p>\n<h3>1.6.2<\/span>Right Quantity<\/span><\/h3>\nThere are extra costs and systemic overheads<\/strong> involved with both<\/strong> procuring a requirement too frequently in small quantities and<\/strong> buying significant quantities for prolonged use. Hence, the right quantity should be procured (in the appropriate size of the contract), which balances extra costs associated with larger and smaller quantities<\/strong>.<\/p>\n<h3>1.6.3<\/span>Right Price<\/span><\/h3>\nIt is not correct to aim at the cheapest<\/strong> materials\/ facilities\/ services available. The price should be just right for the quality, quantity, and other factors involved<\/strong> \u2014 or should not be abnormally low<\/strong> for facilities, works, or services, which could lead to a situation of non-performance or failure of contract. The concept of price can be refined further to consider not only the initial price paid for the requirement but also other costs such as maintenance costs, operational costs, and disposal costs<\/strong> (also termed life cycle costing<\/strong> \u2014 refer para 1.7 below).<\/p>\n<h3>1.6.4<\/span>Right Time and Place<\/span><\/h3>\nIf an organisation needs the material (or facility or services) in three months, it will be costly to procure it too late or too early<\/strong>. Similarly, if the vendor delivers the materials\/ facilities\/ services in another city, extra time and money would be involved in logistics<\/strong>. An unrealistic time schedule<\/strong> for completion of a facility may lead to delays, claims, and disputes<\/strong>.<\/p>\n<h3>1.6.5<\/span>Right Source<\/span><\/h3>\nThe source of delivery of Goods, Works and Services must have just the right financial capacity and technical capability<\/strong> for our needs \u2014 demonstrated through satisfactory past performance of contracts of the same or similar nature<\/strong>. Buying a few packets of printer paper directly from a large manufacturer may not be the right strategy. On the other hand, if our requirements are large, buying such requirements through dealers or intermediaries<\/strong> may also not be right.<\/p>\n<aside class=\"note\">These advanced concepts are further explained in Appendix 1: Advanced Concepts of Value for Money<\/strong> of the Manual for Procurement of Goods, 2024.<\/em><\/p><\/aside>\n<h2>1.7<\/span>Refined Concepts of Cost and Value \u2014 Value for Money<\/span><\/h2>\nThe concept of price or cost has been further refined into:<\/p>\n<ul class=\"lst\"><li>Total Cost of Ownership (TCO),<\/li><li>Life Cycle Cost (LCC), or<\/li><li>Whole-of-Life (WOL) cost<\/li><\/ul>\n \u2014 to consider not only the initial acquisition cost<\/strong> but also the cost of operation, maintenance, and disposal<\/strong> during the lifetime of the external resource procured.<\/p>\nSimilarly, the concept of quality<\/strong> is linked to the need and is refined into the concept of utility\/ value<\/strong>.<\/p>\nThese two, taken together, are used to develop the concept of Value for Money (VfM)<\/strong> \u2014 also called Best Value for Money<\/strong> in certain contexts.<\/p>\nVfM means the effective, efficient, and economical use of resources, which may involve the evaluation of:<\/p>\n<ul class=\"lst\"><li>relevant costs and benefits<\/strong>, along with<\/li><li>an assessment of risks<\/strong>,<\/li><li>non-price attributes<\/strong> \u2014 e.g., goods and\/or services that contain recyclable content, are recyclable, minimise waste and greenhouse gas emissions, conserve energy and water, minimise habitat destruction and environmental degradation, are non-toxic, etc., and\/or<\/li><li>life cycle costs<\/strong>, as appropriate.<\/li><\/ul>\nPrice alone may not necessarily represent VfM.<\/p>\nIn public Procurement, VfM is achieved by attracting the widest competition by way of:<\/p>\n<ul class=\"lst\"><li>optimal description of need;<\/li><li>development of value-engineered specifications\/ Terms of Reference (ToR);<\/li><li>appropriate packaging\/ slicing<\/strong> of requirement;<\/li><li>selection of an appropriate mode of Procurement<\/strong> and tendering system<\/strong>.<\/li><\/ul>\n<aside class=\"note\">These advanced concepts are explained in Appendix 1: Advanced Concepts of Value for Money<\/strong> of the Manual for Procurement of Goods, 2024.<\/em><\/p><\/aside>\n<h2>1.8<\/span>Fundamental Principles of Public Procurement<\/span><\/h2>\nGeneral Financial Rules, 2017 (Rule 144)<\/strong> lay down the Fundamental Principles of Public Procurement. These principles and other additional obligations of procuring authorities in public Procurement can be organised into five fundamental principles of public Procurement<\/strong>, which all procuring authorities must abide by and be accountable for<\/strong>:<\/p>\n<ol class=\"lst\"><li>Transparency Principle<\/li><li>Professionalism Principle<\/li><li>Broader Obligations Principle<\/li><li class=\"srcmark src-multi\" data-src=\" W C \">Extended Legal Responsibilities Principle<\/strong>(C<\/span> terms it \"Extrinsic legal principle\"; W<\/span> terms it \"Extended legal principle\")<\/em><\/li><li>Public Accountability Principle<\/li><\/ol>\n<h3>1.8.1<\/span>Transparency Principle<\/span><\/h3>\nAll procuring authorities are responsible and accountable<\/strong> for ensuring transparency, fairness, equality, competition, and appeal rights<\/strong>. This involves simultaneous, symmetric, and unrestricted dissemination of information<\/strong> to all likely bidders, sufficient for them to know and understand the availability of bidding opportunities and the actual means, processes and time-limits prescribed for completion of registration of bidders, bidding, evaluation, grievance redressal, award, and management of contracts.<\/p>\nIt implies that such officers must ensure:<\/p>\n<ul class=\"lst\"><li>consistency<\/strong> (absence of subjectivity),<\/li><li>predictability<\/strong> (absence of arbitrariness),<\/li><li>clarity,<\/li><li>openness<\/strong> (absence of secretiveness), and<\/li><li>equal opportunities<\/strong> (absence of discrimination) in processes.<\/li><\/ul>\nIn essence, the Transparency Principle also enjoins upon the Procuring Authorities to do only that which they professed to do as pre-declared in the relevant published documents, and not to do anything that had not been so declared.<\/p>\nAs part of this principle, all procuring entities should ensure that offers are invited following a fair and transparent procedure and ensure publication of all relevant information on the Government e-Marketplace (GeM) and GeM-Central Public Procurement Portal (CPPP).<\/p>\n<h3>1.8.2<\/span>Professionalism Principle<\/span><\/h3>\n<ol class=\"lst\"><li>As per these synergic attributes, the procuring authorities have a responsibility and accountability to ensure professionalism, economy, efficiency, effectiveness, and integrity<\/strong> in the procurement process. They must avoid wasteful, dilatory, and improper practices<\/strong> violating the Code of Integrity for Public Procurement (CIPP)<\/strong>. They should, at the same time, ensure that the methodology adopted for Procurement is reasonable and appropriate for the cost and complexity<\/strong> and that it effectively achieves the planned objective of the Procurement. As part of this principle, the Government may prescribe professional standards and specify suitable training and certification requirements<\/strong> for officials dealing with procurement matters.<\/li><li>In reference to the above two principles \u2014 Transparency and Professionalism \u2014 it may be useful to refer to the following provision in the General Financial Rules, 2017:<\/li><\/ol>\n<aside class=\"note\">GFR, 2017, Rule 144 \u2014 Fundamental principles of public buying<\/strong>(for all procurements, including Procurement of works)<\/em>: Every authority delegated with the financial powers of procuring goods in the public interest shall have the responsibility and accountability to bring efficiency, economy, and transparency<\/strong> in matters relating to public procurement and for fair and equitable treatment of suppliers<\/strong> and promotion of competition<\/strong> in public procurement.<\/p><\/aside>\n<ol class=\"lst\"><li>The procedure to be followed in making public Procurement must conform to the following yardsticks<\/strong> (Rule 144, GFR 2017):<\/li><li>offers should be invited following a fair, transparent, and reasonable procedure<\/strong>;<\/li><li>the procuring authority should be satisfied that the selected offer adequately meets the requirement in all respects;<\/li><li>the procuring authority should satisfy itself that the price of the selected offer is reasonable and consistent with the quality required.<\/li><\/ol>\n<h3>1.8.3<\/span>Broader Obligations Principle<\/span><\/h3>\n<ol class=\"lst\"><li>Over and above transparency and professionalism, the procuring authorities also have the responsibility and accountability to conduct public Procurement in a manner that facilitates the achievement of the broader objectives, social policies and programme objectives<\/strong> of the Government \u2014 for example, economic growth, strengthening of local industry (Make in India), Ease of Doing Business, job and employment creation, and so on \u2014 to the extent these are specifically included in the 'Procurement Guidelines'. These policies are detailed in para 1.11<\/strong> below.<\/li><li>To support social policies<\/strong> \u2014 reservation of Procurement of specified goods from MSEs, weaker sections, backward regions<\/strong>, and reservation of Procurement of certain goods from MSEs.<\/li><li>To strengthen local industry and job\/ employment creation \u2014 preferential Procurement of locally manufactured goods or services (Rule 153(iii) of GFR, 2017) and support to Start-up enterprises (Rule 170(i), 173(i) of GFR, 2017).<\/li><li>To achieve programme objectives<\/strong> \u2014 reservation of Procurement of a specified class of goods from or through certain nominated CPSEs or Government Organisations<\/strong>.<\/li><li>On grounds of defence of India<\/strong> or matters directly or indirectly related thereto, including national security<\/strong> \u2014 impose restrictions, including prior registration and\/or screening<\/strong>, on Procurement from bidders from, or bidders having commercial arrangements with an entity from, a certain country or countries, or a class of countries \u2014 Rule 144(xi) of GFR, 2017<\/strong>.<\/li><li>Facilitating broader objectives of other Departments<\/strong> of Government \u2014 for example, ensuring tax or environmental compliance<\/strong> by participants, Energy Conservation<\/strong>, accessibility for People with Disabilities<\/strong>, etc. Procurement policies and procedures must comply with accessibility criteria<\/strong> that the Government may mandate from time to time.<\/li><\/ol>\n<aside class=\"note\">Footnote on accessibility criteria G<\/span>:<\/strong> Accessibility criteria for buildings and facilities are requirements that ensure that people with disabilities can access and use the buildings and facilities without barriers. These are contained in the National Building Code (NBC)<\/strong> and ISO 21542:2011<\/strong>. The \"Accessible India Campaign (Sugamya Bharat Abhiyan)<\/strong>\" is a nationwide campaign launched by the Department of Empowerment of Persons with Disabilities (DEPwD), Ministry of Social Justice & Empowerment, to provide universal accessibility to persons with disabilities.<\/p><\/aside>\n<h3>1.8.4<\/span>Extended Legal Responsibilities Principle<\/span><\/h3>\nProcuring authorities must fulfil additional legal obligations<\/strong> in public Procurement, over and above mere conformity to the mercantile laws (which even private sector procurements must comply with).<\/p>\nThe Constitution of India<\/strong> has certain provisions regarding fundamental rights and public Procurement. Courts have, over time, taken a broader view of public Procurement as a function of the 'State'<\/strong>, interpreting these to extend the responsibility and accountability of public procurement authorities. Courts in India thus exercise additional judicial review<\/strong> (beyond contractual issues) over public Procurement in relation to the manner of decision-making<\/strong> with respect to fundamental rights, fair play, and legality<\/strong>.<\/p>\nSimilarly, procuring authorities also have the responsibility and accountability to comply with the laws relating to Governance Issues<\/strong> like the Right to Information (RTI) Act<\/strong> and the Prevention of Corruption Act<\/strong>, and so on.<\/p>\n<aside class=\"note\">Details of such extended legal obligations are given in Appendix 2: Legal Aspects of Public Procurement<\/strong> of the Manual for Procurement of Goods, 2024. See also para 1.14 of this Unified Manual.<\/em><\/p><\/aside>\n<h3>1.8.5<\/span>Public Accountability Principle<\/span><\/h3>\n<ol class=\"lst\"><li>Procuring authorities are accountable for all the above principles to several statutory and official bodies in the Country \u2014 the Legislature and its Committees, Central Vigilance Commission, Comptroller and Auditor General of India, Central Bureau of Investigation and so on \u2014 in addition to administrative accountability. As a result, each individual public procurement transaction is liable to be scrutinised independently and in isolation, besides judging the overall outcomes of the procurement process over a period. Procuring authorities thus have responsibility and accountability for compliance with rules and procedures in each individual procurement transaction, as well as the achievement of overall procurement outcomes.<\/li><li>The procuring authority, at each stage of Procurement<\/strong>, must therefore place on record, in precise terms, the considerations that weighed with it<\/strong> while making the procurement decision \u2014 from need assessment to fulfilment of need (Rule 144(viii), GFR 2017<\/strong>).<\/li><li>Such records must be preserved, retained in easily retrievable form, and made available to such oversight agencies on demand. The procuring entity shall therefore maintain and retain audit trails, records and documents generated or received during its procurement proceedings in chronological order. The files shall be stored in an identified place and retrievable for scrutiny whenever needed without wasting time.<\/li><\/ol>\n<h2 class=\"src-multi srchead\" data-src=\" G W \">1.9<\/span>Standards (Canons) of Financial Propriety<\/span>G<\/span>W<\/span><\/h2><div class=\"srcblock src-multi\" data-src=\" G W \" data-label=\"Goods + Works only\">\nPublic Procurement, like any other expenditure in Government, must conform to the Standards (also called Canons) of Financial Propriety<\/strong>. It may be useful to refer to the relevant provisions in the General Financial Rules, 2017:<\/p>\n<aside class=\"note\">Rule 21 \u2014 Standards of Financial Propriety:<\/strong> Every officer incurring or authorising expenditure from public moneys should be guided by high standards of financial propriety<\/strong>. Every officer should also enforce financial order and strict economy<\/strong> and see that all relevant financial rules and regulations are observed, by his own office and by subordinate disbursing officers. Among the principles on which emphasis is generally laid are the following:<\/p>\ni) Every officer is expected to exercise the same vigilance in respect of expenditure incurred from public moneys as a person of ordinary prudence would exercise in respect of expenditure of his own money.<\/p>\nii) The expenditure should not be prima facie more than the occasion demands.<\/p>\niii) No authority should exercise its powers of sanctioning expenditure to pass an order which will be directly or indirectly to its own advantage.<\/p>\niv) Expenditure from public moneys should not be incurred for the benefit of a particular person or a section of the people, unless \u2014 a) a claim for the amount could be enforced in a Court of Law, or b) the expenditure is in pursuance of a recognised policy or custom.<\/p>\nv) (reproduced in W<\/span> only)<\/em> The amount of allowances granted to meet expenditure of a particular type should be so regulated that the allowances are not, on the whole, a source of profit to the recipients.<\/p>\nNote for students:<\/strong> Sub-clause (v)<\/strong> is reproduced only in the Works Manual; the Goods Manual stops at (iv). Both are extracts of the same Rule 21 of GFR 2017. This section does not<\/strong> appear at all in the Consultancy and Non-Consultancy Manuals.<\/p><\/aside>\n<\/div><h2>1.10<\/span>Public Procurement Infrastructure at the Centre<\/span><\/h2>\nPublic Procurement is a complex function<\/strong>, and the infrastructure needed to execute it is equally complex. In India, the following administrative, oversight, and digital infrastructure<\/strong> exists for Public Procurement:<\/p>\n<ol class=\"lst\"><li>Procurement Policy Division (PPD)<\/li><li>Central Public Procurement Portal (CPPP)<\/li><li>Government e-Marketplace (GeM)<\/li><li>Comptroller and Auditor General (CAG) of India<\/li><li>Lokpal\/ Lokayukta \u2014 Anti-corruption Ombudsman<\/li><li>Central Vigilance Commission (CVC)<\/li><li>Central Bureau of Investigation (CBI)<\/li><\/ol>\n<aside class=\"note\">The Works, Consultancy and Non-Consultancy Manuals list these seven institutions and cross-refer to the Goods Manual for details. The details below are from the Goods Manual.<\/em><\/p><\/aside>\n<h3>1.10.1<\/span>Procurement Policy Division (PPD)<\/span><\/h3>\nThe Procurement Policy Division (PPD) in the Department of Expenditure, Ministry of Finance has been created to encourage uniformity and harmonisation in public procurement processes by:<\/p>\n<ul class=\"lst\"><li>disseminating best practices<\/strong>,<\/li><li>providing guidance, oversight and capacity building,<\/li><li>issuing procurement manuals and Model Tender Documents.<\/li><\/ul>\nHowever, centralisation of Procurement or involvement in procurement processes is not the intended purpose of the creation of PPD.<\/p>\n<h3>1.10.2<\/span>Central Public Procurement Portal (CPPP)<\/span><\/h3>\nThe Central Public Procurement Portal (CPPP)<\/strong> has been designed, developed and hosted by the National Informatics Centre (NIC, Ministry of Electronics & Information Technology)<\/strong> in association with the Department of Expenditure to ensure transparency in the public procurement process.<\/p>\n<ul class=\"lst\"><li>Primary objective:<\/strong> to provide single-point access<\/strong> to the information on procurements made across various Ministries and Departments.<\/li><li>The CPPP has e-publishing<\/strong> and e-procurement<\/strong> modules.<\/li><li>It is mandatory<\/strong> for all Ministries\/ Departments of the Central Government, CPSEs<\/strong>, and Autonomous and Statutory Bodies<\/strong> to publish on the CPPP all their tender enquiries and information about the resulting contracts<\/strong>.<\/li><li>CPPP provides access to information on documents relating to pre-qualification, bidders' registration, Tender Documents, details of bidders, their pre-qualification, registration, exclusions\/ debarments, decisions taken regarding pre-qualification and selection of successful bids.<\/li><li>Implementing end-to-end e-procurement<\/strong> for all procurements is now mandatory<\/strong> \u2014 either through the CPPP portal or any other suitable GCQE-compliant<\/strong> portal.<\/li><\/ul>\n<aside class=\"note\">GCQE<\/strong> = Guidelines for Compliance to Quality Requirements of eProcurement, July 2021, issued by the Standardisation Testing and Quality Certification (STQC) Directorate<\/strong>, an attached office of MeitY.<\/p><\/aside>\n<h3>1.10.3<\/span>Government e-Marketplace (GeM)<\/span><\/h3>\nGeM is the 'National Public Procurement Portal', serving as an end-to-end online marketplace for various entities.<\/p>\n<ul class=\"lst\"><li>The Procurement of Goods and Services available on GeM (as per Rule 149 of GFR, 2017<\/strong>) is mandatory<\/strong> for Ministries\/ Departments (including attached\/ subordinate offices), CPSEs, autonomous bodies and local bodies<\/strong>.<\/li><li>GeM facilitates the Procurement of common-use goods and services<\/strong> by such entities.<\/li><li>The portal aims to enhance efficiency, transparency, and speed<\/strong> in public Procurement.<\/li><li>Through this paperless, contactless, and cashless<\/strong> platform, registered government buyers<\/strong> can seamlessly procure goods and services from registered sellers<\/strong>.<\/li><\/ul>\n<h3>1.10.4<\/span>Comptroller and Auditor General (CAG) of India<\/span><\/h3>\n<ol class=\"lst\"><li>The CAG of India<\/strong>, established under Articles 149\u2013151 of the Constitution of India<\/strong>, holds a pivotal role as the Supreme Audit Institution of India (SAII)<\/strong>. CAG plays a crucial role in promoting accountability, transparency, and good governance<\/strong> through high-quality auditing and accounting. It provides independent and timely assurance<\/strong> to the legislature, the public, and the executive that public funds are being collected and utilised effectively and efficiently.<\/li><li>The CAG's mandate encompasses a wide spectrum of audit and reporting responsibilities:<\/li><li>Government Departments and Entities;<\/li><li>Government Companies and Corporations;<\/li><li>Autonomous Bodies and Authorities<\/strong> that receive government funding (e.g., municipal bodies, IIMs, IITs, state health societies);<\/li><li>Special Requests and Initiatives<\/strong> \u2014 the CAG can audit the accounts of any other body or authority upon request of the President\/ Governor<\/strong>, or on its own initiative.<\/li><li>CAG conducts multiple types of audits, namely:<\/li><li>Compliance Audits<\/li><li>Financial Audits<\/li><li>Performance Audits<\/li><li>Thematic Audits<\/li><li>IT Audits<\/li><\/ol>\nThese audits, especially the performance audits, are noted to cover Procurement, but only with the perspective of identifying if any wastage, malpractice, and fraud have occurred.<\/p>\n<ol class=\"lst\"><li>To carry out its extensive audit mandate effectively, the CAG is endowed with significant powers:<\/li><li>Inspection Authority<\/strong> \u2014 power to inspect any office or organisation subject to its audit.<\/li><li>Transaction Examination<\/strong> \u2014 can examine all transactions and question the executive regarding financial matters.<\/li><li>Record Access<\/strong> \u2014 can call for records, papers, and documents from any audited entity.<\/li><li>Audit Extent and Manner<\/strong> \u2014 authority to decide the extent and manner of audit to ensure thorough scrutiny.<\/li><\/ol>\n<h3>1.10.5<\/span>Lokpal\/ Lokayukta \u2014 Anti-corruption Ombudsman<\/span><\/h3>\n<ol class=\"lst\"><li>The Lokpal and Lokayukta Act, 2013<\/strong> and its amendment in 2016<\/strong> (the Act) provides for a Lokpal in the Central (Union) Government<\/strong> and Lokayukta in the State Governments<\/strong> as the statutory anti-corruption Ombudsman<\/strong> to inquire into allegations of corruption against public servants and for related matters. Once appointed \u2014 by the President<\/strong> in the case of Lokpal, or the Governor<\/strong> in the case of Lokayukta \u2014 they cannot be transferred or removed except by impeachment proceedings<\/strong> undertaken by Parliament or the State legislatures respectively.<\/li><li>The Act outlines the Lokpal's and Lokayuktas' roles, powers, and responsibilities<\/strong>. It has a broad scope<\/strong> regarding the individuals it covers \u2014 extending to:<\/li><li>Union Ministers<\/strong> (including the serving and former Prime Ministers),<\/li><li>Members of Parliament, and<\/li><li>various categories of public servants<\/strong>, including those in Group 'A', 'B', 'C', or 'D'<\/strong> positions as defined in the Prevention of Corruption Act, 1988<\/strong>.<\/li><li>All entities (NGOs<\/strong>) receiving donations from foreign sources under the Foreign Contribution Regulation Act (FCRA)<\/strong>above Rs 10 lakh per year<\/strong> are also under the jurisdiction of Lokpal.<\/li><\/ol>\nThe Act grants Lokpal powers to sanction prosecution<\/strong> against public servants.<\/p>\n<ol class=\"lst\"><li>There are exceptions<\/strong> in matters related to international relations, external and internal security, public order, atomic energy, and space<\/strong>. To initiate an inquiry into such cases, at least two-thirds of Lokpal members must approve<\/strong>. The Act emphasises confidentiality<\/strong> \u2014 if Lokpal concludes a complaint is baseless, the inquiry records remain undisclosed<\/strong> to the public or any party involved.<\/li><li>One significant aspect of the Act is the requirement for public servants to declare their assets<\/strong> in a specified manner. This transparency measure aims to deter corruption and promote accountability<\/strong>.<\/li><li>Composition: One Chairperson and a maximum of eight other members.<\/li><li>The age<\/strong> of Lokpal (Chairperson or member) on the date of assuming office should not be under 45 years<\/strong>.<\/li><li>Of the eight members, four are judicial members who are or have been judges of the Supreme Court or a Chief Justice of a High Court.<\/li><li>The remaining four are non-judicial members \u2014 people of impeccable integrity and outstanding ability, having special knowledge and expertise of not less than twenty-five years in matters relating to anti-corruption policy, public administration, vigilance, finance including insurance and banking, law, and management.<\/li><li>Fifty per cent of the Members shall be from Scheduled Castes\/ Scheduled Tribes\/ Other Backward Classes\/ Minorities and women.<\/li><li>Selection Committee:<\/strong> The Chairperson and Lokpal members are selected through a selection committee consisting of:<\/li><li>the Prime Minister,<\/li><li>the Speaker of Lok Sabha,<\/li><li>the Leader of Opposition in Lok Sabha,<\/li><li>the Chief Justice of India (CJI)<\/strong> or a sitting Supreme Court judge nominated by CJI, and<\/li><li>another eminent jurist<\/strong> nominated by the President of India<\/strong> based on the recommendations of the first four members of the selection committee \"through consensus<\/strong>\".<\/li><li>Lokpal may refer complaints for investigation to the CBI. For such cases, CBI would work under Lokpal's supervision. It envisages a 'Directorate of Prosecution' under the overall control of the Director, CBI, with a fixed tenure of two years. The appointment of the Director of Prosecution is to be based on the recommendation of the Central Vigilance Commission. Transfer of CBI officers investigating cases referred by Lokpal shall be with the CVC's approval.<\/li><li>The Act lays down clear timelines for preliminary enquiry, investigation and trial and has provisions for attachment and confiscation of property acquired by corrupt means, even while prosecution is pending.<\/li><\/ol>\n<h3>1.10.6<\/span>Central Vigilance Commission (CVC)<\/span><\/h3>\n<ol class=\"lst\"><li>Under the Central Vigilance Commission Act, 2003, the CVC is a statutory body headed by the Central Vigilance Commissioner and comprising not more than two Commissioners. It is conceived to be the apex oversight institution, independent from any executive authority. There are two Chief Technical Examiners (CTE) who oversee public procurement.<\/li><li>All Central (Union) Government entities appoint a Chief Vigilance Officer (CVO)<\/strong> in consultation with the CVC. CVOs undertake system audits and preventive\/ forensic investigations<\/strong> in the Entity and report them to the CVC.<\/li><li>CVC only investigates and recommends<\/strong> punitive and follow-up actions to the concerned entity but has no punitive powers by itself<\/strong>. The recommendations are not binding<\/strong> on the entities, but CVC may report any deviations from recommendations to Parliament<\/strong>. It has an advisory role in Discipline and Appeal cases<\/strong> arising from its investigations. It plays a role in sanctioning prosecutions<\/strong> related to corruption and consultations in key appointments<\/strong>. CVC also has a role in the appointment of Independent External Monitors (IEM)<\/strong> under the Integrity Pact<\/strong> (wherever applicable) for Central (Union) Government Entities. CVC submits an annual report to Parliament<\/strong> regarding its investigations.<\/li><li>CVC has superintendence over the functioning of the CBI<\/strong> regarding the investigation of offences related to corruption in Central (Union) Government Agencies. CVC has jurisdiction over cases under the Lokpal and Lokayukta Act<\/strong>, Whistle Blowers Act<\/strong>, and Money Laundering Act<\/strong>.<\/li><li>It has the powers of a civil court<\/strong> when conducting any inquiry. CVC and CVOs do not have the powers of Police<\/strong> to arrest, seize properties, and enforce compliance from non-government agencies. Therefore, cases requiring such action are entrusted to the CBI<\/strong>.<\/li><li>To avoid conflict of interest, CVO and vigilance officers shall not associate with decision-making that may have vigilance sensitivities. Some organisations have a system wherein executive work \u2014 like the shortlisting of arbitrators or the debarment of firms \u2014 is entrusted fully\/ partially to vigilance. The same is not appropriate and is also against the CVC Vigilance Manual.<\/li><li>The following levels\/ categories of officials are covered under the jurisdiction of the CVC<\/strong>:<\/li><\/ol>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Coverage<\/th><\/tr><\/thead><tbody><tr><td>a) All India Services & Central Government<\/td><td>Members of All India Services serving in connection with the affairs of the Union, and Group 'A' officers<\/strong> of the Central Government. Officers of central services, even those working in state governments<\/strong>, are also under its jurisdiction.<\/td><\/tr><tr><td>b) Schedule 'A' and 'B' PSUs of the Central Government<\/td><td>Chief Executives and Executives on the Board and other officers of level E-8 and above<\/strong><\/td><\/tr><tr><td>c) Schedule 'C' and 'D' PSUs of the Central Government<\/td><td>Chief Executives and Executives on the Board and other officers of level E-7 and above<\/strong><\/td><\/tr><tr><td>d) Public Sector Banks<\/td><td>Officers of the rank of Scale V and above<\/strong><\/td><\/tr><tr><td>e) Reserve Bank of India, NABARD and SIDBI<\/td><td>Officers in Grade 'D' and above<\/td><\/tr><tr><td>f) General Insurance Companies<\/td><td>Managers and above<\/td><\/tr><tr><td>g) Life Insurance Corporation of India<\/td><td>Senior Divisional Managers and above<\/td><\/tr><tr><td>h) Societies and local authorities owned or controlled by the Central Government<\/td><td>Officers drawing a salary of Rs 8,700\/- per month and above<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h3>1.10.7<\/span>Central Bureau of Investigation (CBI)<\/span><\/h3>\n<ol class=\"lst\"><li>Under the Delhi Special Police Establishment Act, 1946<\/strong>, the CBI<\/strong> \u2014 a police organisation under the Department of Personnel, Ministry of Personnel, Pension & Public Grievances<\/strong> \u2014 is the only oversight agency with police powers<\/strong>. It investigates and prosecutes corruption cases<\/strong> (including those related to public procurement) requiring arrest, seizure of properties and enforcement of compliance from non-government agencies<\/strong>. The prosecutions are carried out under, inter alia<\/em>, the Prevention of Corruption Act, 1988<\/strong>. It takes up cases based on complaints received from stakeholders or the general public.<\/li><\/ol>\nJurisdiction: Though its jurisdiction is restricted to Delhi and UTs, under sections 5 & 6 of the Act, the Central Government can extend its powers and jurisdiction to a State with the consent of the government of that State for investigation of specified offences (generally related to All India Services or Members of Parliament). High Courts and the Supreme Court can also order the CBI to investigate cases outside its normal jurisdiction, for which no consent is required from the State.<\/p>\n<ol class=\"lst\"><li>The Delhi Special Police Establishment (DSPE), which forms a part of the CBI, has two Divisions:<\/li><\/ol>\n<div class=\"tblwrap\"><table><thead><tr><th>Division<\/th><th>Investigates<\/th><\/tr><\/thead><tbody><tr><td>(i) Anti-Corruption Division (ACD)<\/td><td>All cases registered under the Prevention of Corruption Act, 1988<\/strong>. If an offence under any section of the Indian Penal Code, 1860 (replaced by the Bharatiya Nyaya Sanhita (BNS), 2023<\/strong> from 1st July 2024<\/em>) or any other law is committed along with<\/strong> the offence of bribery and corruption, it shall also be investigated by the ACD. The ACD also investigates cases of serious irregularities allegedly committed by public servants<\/strong>.<\/td><\/tr><tr><td>(ii) Special Crimes Division (SCD)<\/td><td>All cases of Economic offences<\/strong> and all cases of conventional crime<\/strong>, such as offences relating to internal security, espionage, sabotage, narcotics and psychotropic substances, antiquities, murders and dacoities\/ robberies, cheating, criminal breach of trust, forgery, dowry deaths, suspicious deaths, etc.<\/td><\/tr><\/tbody><\/table><\/div>\n<ol class=\"lst\"><li>While the superintendence of DSPE<\/strong>, as far as it relates to investigation of offences under the Prevention of Corruption Act, 1988, vests in the CVC<\/strong>; for all other matters<\/strong>, the superintendence of DSPE vests in the Central Government<\/strong>.<\/li><li>The administration of DSPE vests in the Director of the CBI<\/strong>, who is appointed on the recommendations of a committee headed by the Central Vigilance Commissioner<\/strong>. He holds office for a period of not less than two years<\/strong>. The Director of CBI exercises, in respect of DSPE, powers exercisable by an Inspector General of Police<\/strong> regarding the police force in a State.<\/li><li>DSPE cannot conduct any inquiry or investigation<\/strong> into any offence alleged to have been committed under the Prevention of Corruption Act, 1988, except with the prior approval of the Central Government<\/strong>, where such allegation relates to employees at the level of Joint Secretary and above<\/strong> in the Central Government, or corporations established by or under any Central Act, Government companies, societies, and local authorities owned or controlled by it.<\/li><li>No such approval, however, is necessary for cases involving the arrest of a person on the spot on the charge of accepting or attempting to accept any gratification other than legal remuneration.<\/li><\/ol>\n<h2>1.11<\/span>Preferential \/ Mandatory \/ Restricted Purchase from Certain Sources<\/span><\/h2>\n<aside class=\"note\">Section titles in the four Manuals:<\/p>\nG<\/span>Reserved Items and Other Purchase\/ Price Preference Policies<\/em> \u00b7 W<\/span>Preferential\/ Restriction on Purchase from certain sources<\/em> \u00b7 C<\/span>Preferential Purchase from certain sources<\/em> \u00b7 NC<\/span>Preferential\/ Mandatory Purchase from certain sources<\/em><\/p><\/aside>\nThe Central Government may, by notification, provide for mandatory procurement of any goods or services from any category of bidders, or provide for preference to bidders on the grounds of promotion of locally manufactured goods or locally provided services (General Financial Rules, 2017, Rule 153).<\/p>\n<aside class=\"note\">Note: Before considering any Purchase Preference\/ Product Reservation mentioned below, the Procuring Entity should check the latest directives in this regard for necessary action. Product Reservation\/ Purchase Preference provision shall invariably be part of the Notice Inviting Tender (NIT) and Instructions to Bidders\/ Consultants (ITB\/ ITC).<\/p><\/aside>\nW<\/span>Presently the following policies are in vogue.<\/em><\/p>\n<h3 class=\"src-G srchead\" data-src=\" G \">1.11.1<\/span>Reservation of Procurement of Certain Class of Products from Certain Agencies<\/span>G<\/span><\/h3><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\"><h4>1.<\/span>Khadi Goods \/ Handloom Textiles<\/span><\/h4>\nOut of the total procurement of handloom origin textiles<\/strong> required by Central Government departments throughout the year, it shall be mandatory to make procurement of at least 20%<\/strong> from:<\/p>\n<ul class=\"lst\"><li>the Khadi & Village Industries Commission (KVIC), and\/or<\/li><li>Handloom Clusters<\/strong> such as Co-operative Societies, Self Help Group (SHG) Federations, Joint Liability Groups (JLG), Producer Companies (PC), Corporations etc., including Weavers having Pehchan Card<\/strong>.<\/li><\/ul>\n(Notified vide OM No. F.10\/2\/2019-PPD(Pt.) issued by Department of Expenditure dated 17.02.2020.)<\/em><\/p>\nKhadi and Handloom goods are also available on GeM. (GFR Rule 153(i)<\/strong>.)<\/p>\n<h4>2.<\/span>Pharmaceuticals from Pharmaceutical CPSEs<\/span><\/h4>\na) The Pharmaceuticals Purchase Policy, 2013<\/strong>(Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers, OM 50(9)\/2010-PI-IV dated 10.12.2013)<\/em> is intended to ensure:<\/p>\n<ul class=\"lst\"><li>i) Optimum utilisation of the installed capacity<\/strong> and the provision of a necessary fillip in reviving these ailing pharmaceutical CPSEs;<\/li><li>ii) Availability of quality medicines at low prices to the masses;<\/li><li>iii) Drug security of the nation.<\/li><\/ul>\nb) Salient features of this policy:<\/p>\n<ul class=\"lst\"><li>i) The Policy in respect of 103 medicines<\/strong>, originally valid for a period of five years<\/strong>, has now been renewed and extended<\/strong>(as approved by the Union Cabinet in its meeting held on 20.11.2019)<\/em>till the final closure\/ strategic disinvestment<\/strong> of the Pharma PSEs mentioned below.<\/li><li>ii) The Policy extends only to CPSEs under the administrative control of the Department of Pharmaceuticals, such as:<\/li><li>Indian Drugs and Pharmaceuticals Limited (IDPL)<\/li><li>Hindustan Antibiotics Limited (HAL)<\/li><li>Bengal Chemicals and Pharmaceuticals Limited (BCPL)<\/li><li>Karnataka Antibiotics and Pharmaceuticals Limited (KAPL)<\/li><li>Rajasthan Drugs and Pharmaceuticals Limited (RDPL)<\/li><\/ul>\nand their subsidiaries where the Government of India owns 51% or above shares.<\/p>\n<ul class=\"lst\"><li>iii) Applicable to purchases by Central Government Departments, their PSUs, Autonomous Bodies, etc. Also applicable to the purchase of medicines by State Governments under health programmes funded by the Government of India, such as the National Rural Health Mission.<\/li><li>iv) Pricing of the products would be done by the National Pharmaceutical Pricing Authority (NPPA) using the cost-based formula, as mentioned in the Drugs Price Control Order, 1995. A uniform discount of 16% would be extended to all products. All taxes, whatsoever, would have to be passed on to buyers.<\/li><li>v) Annual revision of prices<\/strong> would be linked to the Wholesale Price Index<\/strong>, as per provisions contained in the Drugs Prices Control Order, 2013<\/strong>.<\/li><li>vi) The procuring entity would purchase from pharma CPSEs and their subsidiaries subject to their meeting Good Manufacturing Practices (GMP) norms<\/strong> as per Schedule 'M' of the Drugs & Cosmetics Rules<\/strong>.<\/li><li>vii) In case pharma CPSEs and their subsidiaries fail to supply<\/strong> the medicines, the procuring entity would be at liberty to make purchases from other manufacturers<\/strong>. If the pharma CPSEs or their subsidiaries fail to perform<\/strong> as per the purchase order, they would also be subject to payment of liquidated damages or any other penalty<\/strong> as per the terms of the contract.<\/li><li>viii) The list of medicines<\/strong> (Annexure 29 of the Goods Manual) may be reviewed and revised by the Department of Pharmaceuticals<\/strong> as per requirement.<\/li><\/ul>\n<h4>3.<\/span>Reservation of specific items for procurement from Micro and Small Enterprises (MSE)<\/span><\/h4>\nTo enable wider dispersal of enterprises in the country, particularly in rural areas, the Central Government Ministries\/ Departments\/ Public Sector Undertakings shall continue to procure items reserved for procurement exclusively from MSE \u2014 presently 358 items (including eight items of Handicrafts), which have been reserved for exclusive purchase from them. The latest list can be found on the MSME Ministry's website.<\/p>\nThe Ministry of MSME has clarified that laminated paper Gr. I, II and III are not covered<\/strong> under the paper conversion product (Sl. No. 202) of the Public Procurement Policy (Policy Circular No. 21(6)\/2016-MA dated 26.05.2016)<\/em>.<\/p>\nNSIC may be contacted to locate the sources of such reserved items.<\/p>\n<\/div><h3>1.11.2<\/span>Public Procurement Policy for Micro and Small Enterprises (MSEs)<\/span><\/h3>\n(Rule 153(ii) of GFR 2017)<\/em><\/p>\n<h4>1.<\/span>The Policy<\/span><\/h4>\nFrom time to time, the Government of India lays down procurement policies to help inclusive national economic growth<\/strong> by providing long-term support to micro, small and medium enterprises<\/strong>, and to disadvantaged sections of society<\/strong>(C<\/span> adds: \"and to address environmental concerns\")<\/em>.<\/p>\nThe Procurement Policy for Micro and Small Enterprises, 2012 [amended 2018 and 2021]<\/strong> has been notified by the Government in exercise of the powers conferred in Section 11 of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006<\/strong>, which is mandatory to be followed<\/strong> by Central Government Ministries\/ Departments\/ Public Sector Undertakings. Details of the policy, along with the amendments issued in 2018<\/strong> and 2021<\/strong>, are available on the MSME website<\/strong>.<\/p>\n<h4>2.<\/span>Eligibility<\/span><\/h4>\n<ol class=\"lst\"><li>Micro and Small Enterprises (MSEs) registered under Udyam Registration are eligible to avail the benefits under the policy.<\/li><li>This Policy provides preferential procurement of goods produced and services rendered by MSEs. Traders\/ distributors\/ sole agents\/ Works Contracts are EXCLUDED from the purview of the policy.<\/li><li>i) (Notified by MSME Ministry vide S.O. 4926(E) dated 18.10.2022)<\/em> In case of an upward change in terms of investment in plant and machinery or equipment or turnover or both, and consequent re-classification, an enterprise shall continue to avail of all non-tax benefits of the category (micro, small, or medium) it was in before the re-classification, for a period of three years from the date of such upward change.<\/li><\/ol>\n<aside class=\"note\">C<\/span> adds: Non-tax benefits include benefits of various schemes of the Government, including <\/strong>Public Procurement Policy, Delayed Payments, etc.<\/p><\/aside>\n<ul class=\"lst\"><li>ii) MSEs would be treated as owned by SC\/ST or Women entrepreneurs where:<\/li><li>In the case of a proprietary MSE<\/strong> \u2014 the proprietor(s) are SC\/ST or Woman;<\/li><li>In the case of a partnership MSE<\/strong> \u2014 the SC\/ST or Women partners hold at least 51%<\/strong> shares in the unit;<\/li><li>In the case of Private Limited Companies<\/strong> \u2014 SC\/ST or Women promoters hold at least 51%<\/strong> share.<\/li><\/ul>\n<h4>3.<\/span>Applicability and Exemptions<\/span><\/h4>\n<ol class=\"lst\"><li>The policy is applicable to Central Government Ministries\/ Departments\/ Public Sector Undertakings.<\/li><li>The policy is not applicable to State Government Ministries\/ Departments\/ State PSEs<\/strong>, but they have similar policies applicable in their state.<\/li><li>Exemptions:<\/strong> Given their unique nature, defence armament imports shall not be included in computing the 25% goal for the Ministry of Defence<\/strong>. In addition, defence equipment like weapon systems, missiles, etc., shall remain out of the purview<\/strong> of such a reservation policy. Monitoring of goals<\/strong> set under the policy will be done, as far as they relate to the Defence sector, by the Ministry of Defence itself<\/strong>, in accordance with suitable procedures to be established by them.<\/li><\/ol>\n<h4>4.<\/span>Facilities for MSE<\/span><\/h4>\na) Reduced Transaction Costs:<\/strong> To reduce the transaction cost of doing business, MSEs will be facilitated by:<\/p>\n<ul class=\"lst\"><li>providing them tender documents free of cost,<\/li><li>exempting MSEs from payment of Earnest Money Deposits, and<\/li><li>adopting e-procurement<\/strong> to bring transparency in the tender process.<\/li><\/ul>\nHowever, exemption from paying Performance Bank Guarantee\/ Security Deposit is not covered under the policy.<\/p>\nb) Relaxation in Prior Turnover and Experience: The Procuring Entity may relax the condition of prior turnover and prior experience for start-up enterprises recognised by DPIIT, subject to meeting quality & technical specifications. Start-ups may be MSMEs\/ MSEs or otherwise. Such relaxation can be provided in the case of procurement of works as well.<\/p>\nIt is further clarified that such relaxation is not optional but normally has to be ensured<\/strong>, except in the case of procurement of items related to public safety, health, critical security operations and equipment<\/strong>, etc., where adequate justification exists<\/strong> for the Procuring Entity not to relax such criteria (Notified vide OM No. F.20\/2\/2014-PPD(Pt.) issued by Department of Expenditure dated 29.09.2016)<\/em>. The decision of the Procuring Entity in this regard shall be final.<\/strong> (Rule 173(i) of GFR 2017<\/strong>.)<\/p>\n<aside class=\"note\">Footnote [C, W, NC]:<\/strong> Such relaxation can be partial<\/strong> \u2014 e.g., 25% relaxation<\/strong> over specified turnover and experience.<\/p><\/aside>\nc) Timely Payments:<\/strong>Chapter V of the MSMED Act, 2006<\/strong> has provisions for ensuring timely payments to MSE suppliers:<\/p>\n<ul class=\"lst\"><li>The period agreed upon for payment must not exceed forty-five (45) days<\/strong> from the deemed acceptance<\/strong> of the materials supplied by the MSEs.<\/li><li>In case of any discrepancies in the supplies, the Procuring Entity shall raise an objection to the MSE supplier within 15 days from the date of receipt of materials. If such objection is not raised, then it will be taken as deemed acceptance.<\/li><li>For delays in payment<\/strong>, the buyer shall be liable to pay compound interest<\/strong> to the supplier on the delayed amount at three times the bank rate notified by the Reserve Bank<\/strong>.<\/li><li>For arbitration and conciliation<\/strong> regarding the recovery of such payments and interest, the Micro and Small Enterprises Facilitation Council<\/strong> has been set up in various states.<\/li><\/ul>\n<h4>5.<\/span>Purchase Preference<\/span><\/h4>\na) The 25% annual target:<\/strong> Under the amended Public Procurement Policy for MSEs, Order 2012, the Central Government Ministries\/ Departments\/ PSUs shall procure a minimum of 25 per cent of their annual value of goods or services from MSEs<\/strong> (in accordance with GFR 2017, Rule 153(ii)<\/strong>).<\/p>\n<ul class=\"lst\"><li>i) The annual goal of procurement from MSEs also includes sub-contracts to MSEs by large enterprises and consortia of MSEs formed by the National Small Industries Corporation. If a sub-contract is given to MSEs, it will be considered as procurement from MSEs.<\/li><li class=\"srcmark src-multi\" data-src=\" C NC \">ii) C<\/span>NC<\/span> \u2014 important clarification: The <\/strong>annual target of 25% procurement from MSEs is only a MINIMUM. The <\/strong>MSE purchase preference is mandatory for all procurements (except for exemptions as per sub-para 3-c above), <\/strong>even after this target is achieved. For example, <\/strong>it is not permissible for organisations to earmark only some goods\/ services to be procured exclusively from MSEs to achieve the annual target and not apply MSE procurement preferences to the rest of the goods\/ services.<\/li><\/ul>\nb) The L1+15% price band: In a tender, if the L1 price is from someone other than an MSE, participating MSEs quoting prices within a price band of L1 + 15% shall be allowed to supply up to 25% of the total tendered value by bringing down their price to the L1 price. If there is more than one eligible MSE within such price band who agrees to match the L1 price, the 25% quantity is to be distributed proportionately to them.<\/p>\n<aside class=\"note\">Note:<\/strong> If the procuring entity negotiates<\/strong> with the non-MSE L1 bidder, the price band (L1+15%<\/strong>) should be calculated based on the ORIGINAL L1 price, not the lower negotiated price<\/strong>, and such eligible MSE bidders shall be called to match the new negotiated L1 price<\/strong> as per the procedure mentioned above for placement of the 25% quantity.<\/p><\/aside>\n<ul class=\"lst\"><li>i) Non-divisible items:<\/strong> In case the tender item cannot be split or divided<\/strong>, etc., the MSE quoting a price within the band L1+15% may be awarded for full\/ complete supply of the total tendered value<\/strong>, considering the spirit of the Policy for enhancing Government procurement from MSEs.<\/li><li>ii) Sub-targets: Out of the target of 25% of annual procurement from MSEs (not in the specific tender):<\/li><li>a sub-target of 4% of annual procurement<\/strong> is earmarked for procurement from MSEs owned by SC\/ST entrepreneurs<\/strong>, and<\/li><li>3% of annual procurement is earmarked for procurement from MSEs owned by women entrepreneurs.<\/li><\/ul>\nHowever, in the event of failure of such MSEs to participate<\/strong> in the tender process or to meet tender requirements and L1 price, the 4% sub-target (SC\/ST) and 3% (women) will also be met from other MSEs<\/strong>.<\/p>\n<h4>6.<\/span>Developing MSE Vendors<\/span><\/h4>\nThe Central Ministries\/ Departments\/ PSUs shall take necessary steps to develop appropriate vendors<\/strong> by organising:<\/p>\n<ul class=\"lst\"><li>Vendor Development Programmes (VDP), or<\/li><li>Buyer-Seller Meets<\/li><\/ul>\nfocused on developing MSEs for procurement through the GeM Portal<\/strong>.<\/p>\nTo enhance the participation of MSEs owned by SCs\/ STs\/ Women<\/strong> in Government procurement, Central Government Ministries\/ Departments\/ CPSEs should conduct Special Vendor Development Programmes\/ Buyer-Seller Meets for SC\/ST and Women MSEs<\/strong>.<\/p>\n<h4>7.<\/span>Policy Implementation<\/span><\/h4>\n<ol class=\"lst\"><li>A Review Committee<\/strong> has been constituted under the Chairmanship of the Secretary, Ministry of MSME<\/strong>, to monitor and review the Public Procurement Policy for MSEs. M\/o MSME will review and\/or modify the composition of the Committee as and when required. This Committee will, inter alia<\/em>:<\/li><li>review the list of 358 items<\/strong> reserved for exclusive purchase from MSEs on a continuous basis,<\/li><li>consider requests from Central Government Departments\/ CPSEs for exemption from the 25% target on a case-to-case basis, and<\/li><li>monitor achievements<\/strong> under the Policy.<\/li><li>To monitor the progress of procurement by Central Government Ministries\/ Departments and CPSEs from MSEs, the Ministry of MSME launched the MSME 'Sambandh' Portal on 8th December 2017<\/strong> for uploading procurement details by all CPSEs on a monthly and annual basis<\/strong>, which the Ministry regularly monitors.<\/li><\/ol>\n<aside class=\"note\">Any payment grievances filed by the MSMEs against a Procuring Entity may be monitored and progress updated therein. Total value of month-end payments due to the MSMEs may be updated.<\/em><\/p><\/aside>\n<ol class=\"lst\"><li>To redress the grievances of MSEs related to non-compliance with the policy, a Grievance cell named \"CHAMPION Portal\"<\/strong> has been set up in the Ministry of MSME.<\/li><li class=\"srcmark src-G\" data-src=\" G \">G<\/span> A National SC\/ST Hub (NSSH)<\/strong> scheme was launched in October 2016<\/strong> to provide handholding support to SC\/ST entrepreneurs<\/strong>, and it is being coordinated\/ implemented by the NSIC<\/strong> under this Ministry.<\/li><li>Clarifications:<\/strong> The Office of the Development Commissioner (Micro, Small & Medium Enterprises) issued an FAQ on the Public Procurement Policy for MSE Order, 2012<\/strong>.<\/li><\/ol>\n<aside class=\"note\">Annexure references:<\/strong>G<\/span> Annexure 32 \u00b7 C<\/span> Annexure 19 \u00b7 NC<\/span> Annexure 13.<\/p><\/aside>\n<h3>1.11.3<\/span>Procurement Preference to Make in India (MII Policy)<\/span><\/h3>\n(Rule 153(iii) of GFR, 2017)<\/em><\/p>\n<h4>1.<\/span>Purpose<\/span><\/h4>\nTo encourage 'Make in India' and promote manufacturing and production of goods and services in India with a view to enhancing income and employment, the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, Government of India, issued the Public Procurement (Preference to Make in India) Order, 2017.<\/p>\n<aside class=\"note\">Latest revision to the Order notified vide OM No. P-45021\/2\/2017-PP (BE-II)-Part(4)Vol.II issued by DPIIT, dated 19.07.2024<\/strong>.<\/em><\/p>\nG<\/span> footnote: The earlier '<\/strong>Domestically Manufactured Electronic Products (DMEP)', also called <\/strong>Preference for Domestically Manufactured Electronic Goods (PMA), <\/strong>stands subsumed in the MII policy.<\/p><\/aside>\nThe Order is issued pursuant to Rule 153(iii) of GFR, 2017<\/strong> and is applicable to the procurement of Goods, Works, and Services<\/strong>.<\/p>\n<h4>2.<\/span>Definitions<\/span><\/h4>\nFor the purpose of this Order:<\/p>\n<ol class=\"lst\"><li>'L1<\/strong>' means the lowest tender or lowest bid, or the lowest quotation<\/strong> received in a tender, tender\/ bidding process or other procurement solicitation, as adjudged in the evaluation process<\/strong> as per the tender or other procurement solicitation.<\/li><li>'Local Content<\/strong>' means the amount of value added in India<\/strong>, which shall \u2014 unless otherwise prescribed by the Nodal Ministry \u2014 be:<\/li><\/ol>\n<aside class=\"note\">the total value of the item procured (excluding net domestic indirect taxes) MINUS the value of imported content in the item (including all customs duties), as a proportion of the total value, in percent.<\/p><\/aside>\nExplanatory notes for calculation of local content:<\/p>\n<ul class=\"lst\"><li>i) Imported items sourced locally from resellers\/ distributors shall be EXCLUDED from calculation of local content.<\/li><li>ii) The license fees\/ royalties paid\/ technical charges paid out of India shall be EXCLUDED from local content calculation.<\/li><li>iii) Procurement\/ supply of repackaged\/ refurbished\/ rebranded<\/strong> imported products, as commonly understood, shall be treated as reselling of imported products<\/strong> and shall be excluded<\/strong> from calculation of local content. Definitions:<\/li><li>'Refurbishing' means repair or reconditioning of an imported product \u2014 this does not amount to manufacture because no new goods come into existence.<\/li><li>'Repackaging' means repacking of imported goods from bulk pack to smaller packs \u2014 this would not ordinarily amount to manufacture of a new item.<\/li><li>'Rebranding' means relabelling or renaming or change in symbol or logo\/ makes or corporate image of a company\/ organisation\/ firm for an imported product \u2014 this would amount to rebranding.<\/li><li>iv) To ensure that imported items sourced locally from resellers\/ distributors are excluded from calculation of local content, procuring entities are to obtain from bidders the cost of such locally-sourced imported items (inclusive of taxes)<\/strong> along with a break-up on license\/ royalties paid\/ technical expertise cost etc. sourced from outside India<\/strong>. For items sold by a bidder as reseller<\/strong>, an OEM certificate for country of origin<\/strong> is to be submitted.<\/li><li>v) For contracts involving supply of multiple items<\/strong>, a weighted average of all items<\/strong> is to be taken while calculating the local content.<\/li><li class=\"srcmark src-multi\" data-src=\" W C NC \">W<\/span>C<\/span>NC<\/span> \u2014 Class definitions (these definitions appear in the Chapter 1 text of the Works, Consultancy and Non-Consultancy Manuals; in the Goods Manual they are in the Procurement Glossary):<\/em><\/li><\/ul>\n<div class=\"tblwrap\"><table><thead><tr><th>Term<\/th><th>Definition<\/th><\/tr><\/thead><tbody><tr><td>'Class-I local supplier'<\/td><td>A supplier or service provider whose goods, services or works offered for procurement meets the minimum local content as prescribed for 'Class-I local supplier' under this Order.<\/td><\/tr><tr><td>'Class-II local supplier'<\/td><td>A supplier or service provider whose goods, services or works offered for procurement meets the minimum local content as prescribed for 'Class-II local supplier' but less than that prescribed for 'Class-I local supplier' under this Order.<\/td><\/tr><tr><td>'Non-Local supplier'<\/td><td>A supplier or service provider whose goods, services or works offered for procurement has local content less than that prescribed for 'Class-II local supplier' under this Order.<\/td><\/tr><\/tbody><\/table><\/div>\n<ol class=\"lst\"><li>'Margin of purchase preference' means the maximum extent to which the price quoted by a \"Class-I local supplier\" may be above the L1 for the purpose of purchase preference. It has been fixed as 20 per cent.<\/li><li>'Nodal Ministry<\/strong>' means the Ministry or Department identified pursuant to this Order with respect to a particular item of goods or services or works.<\/li><li>'Procuring entity' means a Ministry or Department or attached or subordinate office of, or autonomous body controlled by, the Government of India, and includes Government companies as defined in the Companies Act.<\/li><li>'Works' means all works as per Rule 130 of GFR 2017 and will also include 'turnkey works'.<\/li><\/ol>\n<h4>2A. Special Treatment for Items Covered under the PLI Scheme<\/span><\/h4>\nThe manufacturers manufacturing an item under the Production Linked Incentive (PLI) scheme<\/strong> shall be treated as deemed Class-II local supplier<\/strong> for that item, unless<\/strong> they have minimum local content equal to or higher than<\/strong> that notified for Class-I local supplier for that item, provided<\/strong> the manufacturer has received incentive from the concerned PLI Ministry<\/strong> for the item. The above shall be applicable for the specific time period only<\/strong>, as notified by the concerned PLI Ministry.<\/p>\n<h4>3.<\/span>Eligibility of 'Class-I local supplier' \/ 'Class-II local supplier' \/ 'Non-local suppliers' for Different Types of Procurement<\/span><\/h4>\n<ol class=\"lst\"><li>In the procurement of all goods, services or works in respect of which the Nodal Ministry\/ Department has communicated that there is sufficient local capacity and local competition, only a 'Class-I local supplier' shall be eligible to bid, irrespective of purchase value.<\/li><li>Only 'Class-I local supplier' and 'Class-II local supplier' shall be eligible to bid in procurements undertaken by procuring entities, except when a Global Tender Enquiry has been issued. In global tender enquiries, 'Non-local suppliers' shall also be eligible to bid along with Class-I and Class-II local suppliers.<\/li><\/ol>\nIn procurement of all goods, services or works not covered by sub-para (a) above, and with estimated value of purchases less than Rs. 200 Crore, in accordance with Rule 161(iv) of GFR, 2017 (W<\/span> cites Rule 161(iv)(b))<\/em>, a Global Tender Enquiry shall not be issued except with the approval of the competent authority as designated by the Department of Expenditure.<\/p>\n<ol class=\"lst\"><li>For the purpose of this Order, works include Engineering, Procurement and Construction (EPC) contracts, and services include System Integrator (SI) contracts.<\/li><\/ol>\n<h4>3A. Mandatory Sourcing of Items with Sufficient Local Capacity and Competition, from Class-I Local Suppliers in SI\/ EPC\/ Turnkey Contracts\/ Service Tenders<\/span><\/h4>\n<ol class=\"lst\"><li>The items notified as having sufficient local capacity and competition shall mandatorily be sourced from Class-I local suppliers in si\/ EPC\/ turnkey Contracts\/ Services tenders. This provision will be applicable only for those items which have been notified by the Nodal Ministry as Class-I \u2014 i.e., having sufficient local capacity and competition, with specific HSN codes.<\/li><li>Notwithstanding the above, if in any project it is considered that it is not practically feasible<\/strong> to source such items from Class-I local suppliers, it may take relaxation from such stipulation with the approval of the Secretary of the administrative Ministry\/ Department concerned<\/strong>, or with the approval of the Competent Authority specified by the Administrative Ministry\/ Department, on a case-specific basis<\/strong>.<\/li><\/ol>\n<h4>4.<\/span>Purchase Preference<\/span><\/h4>\n<ol class=\"lst\"><li>Subject to the provisions of the Order and to any specific instructions issued by the Nodal Ministry, purchase preference shall be given to 'Class-I local supplier'<\/strong> in procurements undertaken by procuring entities in the manner specified hereunder.<\/li><li>Divisible procurements:<\/strong> In the procurements of goods or works covered by para 3(b) above which are DIVISIBLE in nature<\/strong>, the 'Class-I local supplier' shall get purchase preference over 'Class-II local supplier' as well as 'Non-local supplier', as per the following procedure:<\/li><\/ol>\n<aside class=\"note\">Notes:<\/p>\n1.<\/strong> If the procuring entity negotiates with the L1 bidder who is not a Class-I Local Supplier<\/strong>, the margin of purchase preference (L1+20%<\/strong>) should be calculated based on the ORIGINAL L1 price, not the lower negotiated price<\/strong>, and such eligible Class-I Local Suppliers shall be called to match the new negotiated L1 price<\/strong> as per the procedure mentioned above for placement of the 50% quantity.<\/p>\n2. Since, as per sub-para (c) below, the MII order is applicable 'where the bid is evaluated on price alone' \u2014 MII purchase preference would not be applicable where evaluation is based inter alia<\/em> on non-price criteria, e.g., QCBS or FBS in Services and Works.<\/p><\/aside>\n<ul class=\"lst\"><li>i) Among all qualified bids, the lowest bid will be termed L1. If L1 is a 'Class-I local supplier', the contract for the full quantity will be awarded to L1.<\/li><li>ii) If the L1 bid is not a 'Class-I local supplier':<\/li><li>50% of the order quantity shall be awarded to L1.<\/li><li>Thereafter, the lowest bidder among the 'Class-I local suppliers' will be invited to match the L1 price for the remaining 50% quantity<\/strong>, subject to the Class-I local supplier's quoted price falling within the margin of purchase preference (L1+20%)<\/strong>, and the contract for that quantity shall be awarded to such Class-I local supplier subject to matching the L1 price.<\/li><li>In case the lowest eligible Class-I local supplier fails to match the L1 price or accepts less than the offered quantity<\/strong>, the next higher Class-I local supplier within L1+20% shall be invited<\/strong> to match the L1 price for the remaining quantity, and so on, and the contract shall be awarded accordingly.<\/li><li>In case some quantity out of the 50% (for the eligible Class-I Local Suppliers) is still left uncovered, then such balance quantity may also be ordered on the L1 bidder.<\/li><li>Non-divisible procurements and services evaluated on price alone:<\/strong> In the procurements of goods or works covered by para 3(b) above which are not divisible in nature<\/strong>, and in the procurement of services where the bid is evaluated on price alone<\/strong>, the 'Class-I local supplier' shall get purchase preference over 'Class-II local supplier' as well as 'Non-local supplier', as per the following procedure:<\/li><li>Among all qualified bids, the lowest bid will be termed L1. If L1 is a 'Class-I local supplier', the contract will be awarded to L1.<\/strong><\/li><li>If L1 is not a 'Class-I local supplier'<\/strong>, the lowest bidder among the 'Class-I local suppliers' will be invited to match the L1 price<\/strong>, subject to the Class-I local supplier's quoted price falling within the margin of purchase preference (L1+20%<\/strong>), and the contract shall be awarded to such Class-I local supplier subject to matching the L1 price.<\/li><li>In case the lowest eligible Class-I local supplier fails to match<\/strong> the L1 price, the Class-I local supplier with the next higher bid within L1+20% shall be invited<\/strong> to match the L1 price, and so on, and the contract shall be awarded accordingly. In case none of the Class-I local suppliers within the margin of purchase preference matches the L1 price, the contract may be awarded to the L1 bidder.<\/strong><\/li><li>\"Class-II local supplier<\/strong>\" will not get a preference<\/strong> for any procurement undertaken by procuring entities.<\/li><\/ul>\n<h4>4A. Applicability in Tenders where the Contract is to be Awarded to Multiple Bidders<\/span><\/h4>\nIn tenders where the contract is awarded to multiple bidders<\/strong>, subject to matching of L1 rates or otherwise, the 'Class-I local supplier' shall get purchase preference over 'Class-II local supplier' as well as 'Non-local supplier', as per the following procedure:<\/p>\n<ul class=\"lst\"><li>i) In case there is sufficient local capacity and competition<\/strong> for the item to be procured, as notified by the Nodal Ministry, only Class-I local suppliers shall be eligible to bid<\/strong>. As such, the multiple suppliers who would be awarded the contract should be all and only 'Class-I Local suppliers'<\/strong>.<\/li><li>ii) In other cases<\/strong>, 'Class-II local suppliers' and 'Non-local suppliers' may also participate in the tender process along with 'Class-I local suppliers' as per provisions of the Order.<\/li><li>iii) If 'Class-I Local suppliers' qualify for the award of contract for at least 50% of the tendered quantity in any tender, the contract may be awarded to all the qualified bidders as per the award criteria stipulated in the tender documents.<\/li><li>iv) However, in case 'Class-I Local suppliers' do not qualify for the award of contract for at least 50% of the tendered quantity, purchase preference should be given to the 'Class-I local supplier' over Class-II local suppliers\/ Non-local suppliers, provided their quoted rate falls within the 20% margin of purchase preference of the HIGHEST quoted bidder considered for award of contract \u2014 so as to ensure that the Class-I Local suppliers, taken in totality, are considered for award of contract for at least 50% of the tendered quantity.<\/li><li>v) Only those 'Class-I local suppliers' whose quoted rates fall within the 20% margin of purchase preference would be eligible for purchase preference, subject to meeting the prescribed criteria for award of contract as also the constraint of maximum quantity that can be sourced from any single supplier.<\/li><li>First, purchase preference must be given to the lowest quoting eligible 'Class-I local supplier'.<\/li><li>If the lowest quoting Class-I local supplier does not qualify<\/strong> for purchase preference because of the aforesaid constraints, or does not accept the offered quantity<\/strong>, an opportunity may be given to the next higher eligible Class-I local supplier<\/strong>, and so on.<\/li><li>In case the quantity thus allocated to eligible Class-I local suppliers is short of 50%<\/strong> of the tendered quantity, then this shortfall quantity may be distributed among all other qualified bidders<\/strong> as per the award criteria stipulated in the tender documents.<\/li><li>vi) To avoid any ambiguity during the bid evaluation process, the procuring entities may stipulate their own tender-specific criteria<\/strong> for the award of contracts amongst different bidders, including the procedure for purchase preference to 'Class-I local supplier', within the broad policy guidelines stipulated in the sub-paras above.<\/li><\/ul>\n<h4>5.<\/span>Exemption of Small Purchases<\/span><\/h4>\nNotwithstanding anything contained above, procurements where the estimated value to be procured is less than Rs. 5 lakh shall be EXEMPT from the Order. However, it shall be ensured by procuring entities that procurement is not split for the purpose of avoiding the provisions of this Order.<\/p>\n<h4>5A. Exemption in Sourcing of Spares and Consumables of Closed Systems<\/span><\/h4>\nProcurement of spare parts, consumables for closed systems, and Maintenance\/ Service contracts with the Original Equipment Manufacturer\/ Original Equipment Supplier\/ Original Part Manufacturer shall be exempted from this Order.<\/p>\n<h4>6.<\/span>Minimum Local Content<\/span><\/h4>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Minimum Local Content<\/th><\/tr><\/thead><tbody><tr><td>Class-I local supplier<\/td><td>50%<\/td><\/tr><tr><td>Class-II local supplier<\/td><td>20%<\/td><\/tr><\/tbody><\/table><\/div>\nThe Nodal Ministry\/ Department may prescribe only a higher percentage<\/strong> of the minimum local content requirement to categorise a supplier as Class-I\/ Class-II local supplier. For items for which the Nodal Ministry\/ Department has not prescribed a higher minimum local content<\/strong> notification under the Order, it shall be 50% and 20%<\/strong> for Class-I and Class-II local supplier respectively.<\/p>\n<aside class=\"note\">Important: Local content is not related to the nationality of the firm \u2014 a foreign-owned firm may also become a Class-I or Class-II local supplier by adding local value addition.<\/p><\/aside>\n<h4>7.<\/span>Requirement for Declaration\/ Specification in Advance<\/span><\/h4>\nThe minimum local content, the margin of purchase preference, and the procedure for preference to Make in India shall be declared in the Notice Inviting Tenders or other forms of procurement solicitation, and shall not be varied during a particular procurement transaction.<\/p>\n<h4>8.<\/span>Government e-Marketplace<\/span><\/h4>\nIn respect of procurement through GeM, GeM shall, as far as possible, specifically mark the items that meet the minimum local content while registering the item for display, and shall, wherever feasible, make provision for automated comparison with purchase preference and without purchase preference, and for obtaining consent of the local supplier in those cases where purchase preference is to be exercised.<\/p>\n<h4>9.<\/span>Verification of Local Content<\/span><\/h4>\n<ol class=\"lst\"><li>The Class-I\/ Class-II local supplier shall, at the time of tender, bidding or solicitation<\/strong>, be required to indicate the percentage of local content<\/strong> and provide self-certification<\/strong> that the item offered meets the local content requirement for Class-I\/ Class-II local supplier, as the case may be. They shall also give details of the location(s) at which the local value addition is made<\/strong>.<\/li><li>In cases of procurement for a value more than Rs. 10 crore<\/strong>, the Class-I\/ Class-II local supplier shall be required to provide a certificate from the statutory auditor or cost auditor of the company<\/strong> (in the case of companies), or from a practising cost accountant or practising chartered accountant<\/strong> (in respect of suppliers other than companies), giving the percentage of local content<\/strong>.<\/li><li>The bidder shall give self-certification for local content in the quoted item (goods\/ works\/ services) at the time of tendering. However, at the time of execution of the project, for all contracts above INR 10 Crore, the contractor\/ supplier shall be required to give local content certification duly certified by a cost\/ chartered accountant in practice.<\/li><\/ol>\nFor cases where it is not possible<\/strong> to provide certification by Cost\/ Chartered Accountant at the time of execution of the project, the supplier shall be permitted to provide the certificate after completion of the contract<\/strong>, within the limit acceptable to the procuring entity.<\/p>\nIn case the contractor\/ supplier does not meet the stipulated local content requirement and the category of the supplier changes from Class-I to Class-II\/ Non-local, or from Class-II to Non-local \u2014 a penalty up to 10% of the contract value may be imposed. However, the contract once awarded shall not be terminated on this account.<\/p>\n<ol class=\"lst\"><li>Decisions on complaints<\/strong> relating to the implementation of this Order shall be made by the competent authority empowered to investigate procurement-related complaints<\/strong> relating to the procuring entity.<\/li><li>Nodal Ministries may constitute committees with internal and external experts for independent verification of self-declarations and auditor's\/ accountant's certificates \u2014 on a random basis and in the case of complaints.<\/li><li>Nodal Ministries and procuring entities may prescribe fees for such complaints.<\/li><li>False declarations will be in breach of the Code of Integrity under Rule 175(1)(i)(h) of the GFR<\/strong>, for which a bidder or its successors can be DEBARRED for up to two years<\/strong> as per Rule 151(iii) of the GFR<\/strong>, along with such other actions as may be permissible under law. The Department of Expenditure shall issue suitable instructions for the effective and smooth operation of this process, so that:<\/li><li>i) The fact and duration of debarment<\/strong> for violation of the Order by any procuring entity are promptly brought to the notice of the Member-Convenor of the Standing Committee and the Department of Expenditure<\/strong> through the concerned Ministry\/ Department or in some other manner;<\/li><li>ii) On a periodical basis, such cases are consolidated, and a centralised or decentralised list of such suppliers with the period of debarment is maintained and displayed on the website(s);<\/li><li>iii) With respect to procuring entities other than the one that has carried out the debarment, the debarment takes effect PROSPECTIVELY from the date of uploading on the website(s), in such a manner that ongoing procurements are not disrupted;<\/li><li>iv) A supplier who has been debarred by any procuring entity for violation of the Order shall not be eligible for preference under the Order for procurement by any other procuring entity for the duration of the debarment<\/strong>. The debarment for such other procuring entities shall take effect prospectively from the date on which it comes to the notice of other procuring entities<\/strong> in the manner prescribed above.<\/li><\/ol>\n<h4>10.<\/span>Specifications in Tenders and Other Procurement Solicitations<\/span><\/h4>\n<ol class=\"lst\"><li>Every procuring entity shall ensure that the eligibility\/ qualification conditions with respect to previous experience fixed in any tender or solicitation do not require proof of supply in other countries or proof of exports.<\/li><li>Procuring entities shall endeavour to see that eligibility\/ qualification conditions \u2014 including on matters like turnover, production capability, and financial strength<\/strong> \u2014 do not result in unreasonable exclusion of Class-I\/ Class-II local suppliers<\/strong> who would otherwise be eligible, beyond what is essential for ensuring quality or creditworthiness<\/strong> of the supplier.<\/li><li>Procuring entities shall review all existing eligibility norms and conditions<\/strong> with reference to sub-paragraphs (a) and (b) above.<\/li><li>Specifying foreign certifications\/ unreasonable technical specifications\/ brands\/ models in the tender document is a restrictive and discriminatory practice against local suppliers. If foreign certification is required to be stipulated because of the non-availability of Indian Standards and\/or for any other reason, the same shall be done only after written approval of the Secretary of the Department concerned, or any other Authority designated such power by the Secretary of the Department concerned.<\/li><li class=\"srcmark src-multi\" data-src=\" G C \">G<\/span>C<\/span> \"All administrative Ministries\/ Departments whose procurement exceeds Rs. 1000 Crore per annum<\/strong> shall notify\/ update their procurement projections every year<\/strong>, including those of the PSEs\/ PSUs, for the next five years on their respective website<\/strong>.\"<\/li><\/ol>\n<h4>11.<\/span>Reciprocity Clause<\/span><\/h4>\n<ol class=\"lst\"><li>When a Nodal Ministry\/ Department identifies that Indian suppliers of an item are not allowed to participate and\/or compete in procurement by any foreign government due to restrictive tender conditions which have the direct or indirect effect of barring Indian companies \u2014 such as registration in the procuring country, execution of projects of specific value in the procuring country, etc. \u2014 it shall provide such details to all its procuring entities, including CMDs\/ CEOs of PSEs\/ PSUs, State Governments and other procurement agencies under their administrative control, and GeM, for appropriate reciprocal action.<\/li><li>Entities of countries identified by the Nodal Ministry\/ Department as not allowing Indian companies to participate in their Government procurement for any item related to that Nodal Ministry shall not be allowed to participate in Government procurement in India for all items related to that Nodal Ministry\/ Department, except for the list of items published by the Ministry\/ Department permitting their participation.<\/li><li>The stipulation in (b) above shall be part of all tenders invited by the Central Government procuring entities<\/strong> stated in (a) above. All purchases on GeM shall also necessarily have the above provisions<\/strong> for items identified by the Nodal Ministry\/ Department.<\/li><li>State Governments should be encouraged to incorporate similar provisions in their respective tenders.<\/li><li>The term 'entity<\/strong>' of a country shall have the same meaning as under the FDI (Foreign Direct Investment) Policy of DPIIT<\/strong>, as amended from time to time.<\/li><\/ol>\n<h4>12.<\/span>Action for Non-Compliance with the Provisions of the Order<\/span><\/h4>\nIn case restrictive or discriminatory conditions against domestic suppliers are included in tender documents, an inquiry shall be conducted by the Administrative Department undertaking the procurement (including procurement by any entity under its administrative control) to fix responsibility for the same. Thereafter, appropriate action \u2014 administrative or otherwise \u2014 shall be taken against erring officials of procuring entities under relevant provisions. Intimation on all such actions shall be sent to the Standing Committee.<\/p>\n<h4>13.<\/span>Assessment of Supply Base by Nodal Ministries<\/span><\/h4>\nThe Nodal Ministry shall keep in view the domestic manufacturing\/ supply base and assess the available capacity and the extent of local competition while identifying items and prescribing the higher minimum local content or the manner of its calculation \u2014 with a view to avoiding cost increase from the operation of this Order.<\/p>\n<h4>14.<\/span>Increase in Minimum Local Content<\/span><\/h4>\nThe Nodal Ministry may annually review the local content requirements with a view to INCREASING them, subject to the availability of sufficient local competition with adequate quality.<\/p>\n<h4>15.<\/span>Manufacture under Licence\/ Technology Collaboration Agreements with Phased Indigenisation<\/span><\/h4>\n<ol class=\"lst\"><li>While notifying the minimum local content, Nodal Ministries may make special provisions for exempting suppliers from meeting the stipulated local content if the product is being manufactured in India under a licence from a foreign manufacturer who holds intellectual property rights, and where there is a technology collaboration agreement\/ transfer of technology agreement for indigenous manufacture of a product developed abroad with clear phasing of increase in local content.<\/li><li>In the procurement of all goods, services or works in respect of which there is a substantial quantity of public procurement, and for which the Nodal Ministry has not notified that there is sufficient local capacity and local competition, the concerned Nodal Ministry shall notify an upper threshold value of procurement beyond which foreign companies shall enter into a JOINT VENTURE with an Indian company to participate in the tender. Procuring entities, while procuring such items beyond the notified threshold value, shall prescribe in their respective tenders that foreign companies may enter into a joint venture with an Indian company to participate in the tender. The procuring Ministries\/ Departments shall also make special provisions to exempt such joint ventures from meeting the stipulated minimum local content requirement, which shall be increased in a phased manner.<\/li><\/ol>\n<h4>16.<\/span>Powers to Grant Exemption and to Reduce Minimum Local Content<\/span><\/h4>\n<ol class=\"lst\"><li>The Administrative Department undertaking the procurement (including procurement by any entity under its administrative control), with the approval of their Minister-in-charge, may \u2014 by written order, for reasons to be recorded in writing:<\/li><li>i) reduce the minimum local content below the prescribed level; or<\/li><li>ii) reduce the margin of purchase preference below 20 per cent; or<\/li><li>iii) exempt any item or supplying entities from the operation of this Order or any part of the Order.<\/li><li>The Administrative Department, while seeking exemption under this para, shall certify that such item(s) has not been notified by the Nodal Ministry\/ Department concerned.<\/li><li>A copy of every such order shall be provided to the Standing Committee and the concerned Nodal Ministry\/ Department. The Nodal Ministry\/ Department will continue to have the power to vary its notification on Minimum Local Content.<\/li><\/ol>\n<h4>17.<\/span>Directions to Government Companies<\/span><\/h4>\nWith respect to Government companies and other procuring entities not governed by the General Financial Rules, the administrative Ministry or Department shall issue policy directions requiring compliance with this Order.<\/p>\n<h4>18.<\/span>Standing Committee<\/span><\/h4>\n<ol class=\"lst\"><li>A Standing Committee<\/strong> is constituted with the following membership:<\/li><\/ol>\n<div class=\"tblwrap\"><table><thead><tr><th>Position<\/th><th>Member<\/th><\/tr><\/thead><tbody><tr><td>Chairman<\/td><td>Secretary, Department for Promotion of Industry and Internal Trade (DPIIT)<\/td><\/tr><tr><td>Member<\/td><td>Secretary, Commerce<\/td><\/tr><tr><td>Member<\/td><td>Secretary, Ministry of Electronics and Information Technology<\/td><\/tr><tr><td>Member<\/td><td>Joint Secretary (Public Procurement), Department of Expenditure<\/td><\/tr><tr><td>Member-Convenor<\/td><td>Joint Secretary (DPIIT)<\/td><\/tr><\/tbody><\/table><\/div>\n<ol class=\"lst\"><li>The Secretary of the Department concerned with a particular item shall be a member<\/strong> in respect of issues relating to such item. The Chairman of the Committee may co-opt technical experts<\/strong> as relevant to any issue or class of issues under its consideration.<\/li><\/ol>\n<h4>19.<\/span>Functions of the Standing Committee<\/span><\/h4>\nThe Standing Committee shall meet as often as necessary, but not less than once every six months. The Committee:<\/p>\n<ol class=\"lst\"><li>shall oversee the implementation<\/strong> of this Order and the issues arising from it, and make recommendations<\/strong> to Nodal Ministries and procuring entities;<\/li><li>shall annually assess and periodically monitor compliance with this Order;<\/li><li>shall identify Nodal Ministries and the allocation of items among them for the issue of notifications on minimum local content;<\/li><li>may require the furnishing of details or returns<\/strong> regarding compliance with this Order and related matters;<\/li><li>may, during the annual review or otherwise, assess issues where the manner of implementation of the Order results in any restrictive practices, cartelisation, or increase in public expenditure, and suggest remedial measures;<\/li><li>may examine cases covered by para 15 above relating to manufacture under licence\/ technology transfer agreements, with a view to satisfying itself that adequate mechanisms exist for enforcement of such agreements and for attaining the underlying objective of progressive indigenisation;<\/li><li>may consider any other issue<\/strong> relating to this Order that may arise.<\/li><\/ol>\n<h4>20.<\/span>Removal of Difficulties<\/span><\/h4>\nMinistries\/ Departments and the Boards of Directors of Government companies<\/strong> may issue such clarifications and instructions<\/strong> as may be necessary for the removal of any difficulties<\/strong> arising in the implementation of the Order.<\/p>\n<h4>21.<\/span>Ministries Having Existing Policies<\/span><\/h4>\nWhere any Ministry or Department has its own policy for preference to local content approved by the Cabinet after 1st January 2015<\/strong>, such policies will PREVAIL over the provisions of the Order<\/strong>. All other existing orders on preference to local content shall be reviewed by the Nodal Ministries and revised as needed<\/strong>(W<\/span> adds: \"to conform to this Order, within two months of the issue of this Order\")<\/em>.<\/p>\n<h4>22.<\/span>Faqs<\/span><\/h4>\nPlease refer to the FAQs related to the PPP-MII Order issued by DPIIT.<\/p>\n<aside class=\"note\">Annexure references:<\/strong>G<\/span> Annexure 28 \u00b7 W<\/span> Annexure 18 \u00b7 C<\/span> Annexure 26 \u00b7 NC<\/span> Annexure 22.<\/p><\/aside>\n<h3>1.11.4<\/span>Restrictions\/ Prior Registration on Entities from a Class of Countries<\/span><\/h3>\n(Rule 144(xi), GFR 2017 \u2014 the \"Land Border\" Order)<\/em><\/p>\n<h4>1.<\/span>Requirement of Registration<\/span><\/h4>\nRule 144 of GFR, 2017 has been amended to include a new sub-para (xi)<\/strong> as follows:<\/p>\n<aside class=\"note\">\"Notwithstanding anything contained in these Rules, the Department of Expenditure may, by order in writing, impose restrictions, including prior registration and\/or screening, on procurement from bidders from, or bidders having commercial arrangements with an entity from, a country or countries, or a class of countries, on grounds of defence of India, or matters directly or indirectly related thereto including national security; No procurement shall be made in violation of such restrictions.\"<\/p><\/aside>\n<h4>2.<\/span>Detailed Provisions<\/span><\/h4>\n(Notified by the Department of Expenditure's OM No. F.7\/10\/2021-PPD(1) dated 23.02.2023)<\/em><\/p>\n<ol class=\"lst\"><li>Any bidder from a country that shares a land border with India will be eligible to bid in any procurement \u2014 whether of goods, services (including consultancy services and non-consultancy services) or works (including turnkey projects) \u2014 only IF the bidder is REGISTERED with the Competent Authority (see sub-para 10 below).<\/li><li>Any bidder (including an Indian bidder) who has a Specified Transfer of Technology (ToT) arrangement with an entity from a country that shares a land border with India<\/strong> will be eligible to bid in any procurement \u2014 whether of goods, services (including consultancy and non-consultancy services) or works (including turnkey projects) \u2014 only if the bidder is registered with the Competent Authority<\/strong>. (See also sub-para 5 below.)<\/li><li>Effective dates:<\/li><\/ol>\n<div class=\"tblwrap\"><table><thead><tr><th>Provision<\/th><th>Applicable from<\/th><\/tr><\/thead><tbody><tr><td>Registration for bidders under para (a)<\/td><td>23.07.2020<\/td><\/tr><tr><td>Registration for bidders under para (b) \u2014 ToT arrangements<\/td><td>All procurements where tenders are issued\/ published after 01.04.2023<\/td><\/tr><\/tbody><\/table><\/div>\n<ol class=\"lst\"><li>In tenders issued after 23.07.2020 or 01.04.2023, as the case may be, the requirements for registration of bidders and other relevant provisions of this Order shall be incorporated in the tender conditions.<\/li><\/ol>\n<h4>3.<\/span>Applicability<\/span><\/h4>\nApart from Ministries\/ Departments, attached and subordinate bodies, notwithstanding anything contained in Rule 1 of the GFRs 2017<\/strong>, the Order shall also<\/strong> be applicable:<\/p>\n<ol class=\"lst\"><li>to all Autonomous Bodies;<\/li><li>to public sector banks and public sector financial institutions;<\/li><li>to all Central Public Sector Enterprises;<\/li><li>to all procurement in Public Private Partnership projects receiving financial support from the Government or public sector enterprises\/ undertakings;<\/li><li>to Union Territories, the National Capital Territory of Delhi, and all agencies\/ undertakings thereof.<\/li><\/ol>\nf) The Order is not applicable:<\/p>\n<ul class=\"lst\"><li>i) In projects that receive international funding with the approval of the Department of Economic Affairs (DEA)<\/strong>, Ministry of Finance \u2014 the procurement guidelines applicable to the project shall normally be followed, notwithstanding anything contained in this Order and without reference to the Competent Authority<\/strong>. Exceptions to this shall be decided in consultation with DEA.<\/strong><\/li><li>ii) On procurements made by Indian missions and by offices of government agencies\/ undertakings located outside India.<\/li><li>iii) On bidders (or entities) from those countries \u2014 even if sharing a land border with India \u2014 to which the Government of India has extended lines of credit, or in which the Government of India is engaged in development projects. Updated lists are given on the Ministry of External Affairs' website.<\/li><li>iv) On procurement of spare parts and other essential service support like AMC\/ CMC, including consumables for closed systems, from Original Equipment Manufacturers (OEMs) or their authorised agents<\/strong> \u2014 exempted from the requirement of registration as mandated under Rule 144(xi) of GFR, 2017 (Notified vide OM No. F.12\/1\/2021-PPD(Pt.) dated 02.03.2021)<\/em>.<\/li><li>v) A bidder is permitted to procure raw materials, components, sub-assemblies, etc. from vendors from countries that share a land border with India. Such vendors will not be required to be registered with the Competent Authority, as it is not regarded as \"sub-contracting\". However, if a bidder proposes to supply FINISHED GOODS procured directly\/ indirectly from vendors from countries sharing a land border with India, such vendors WILL be required to be registered with the Competent Authority (Notified vide OM No. F.18\/37\/2020-PPD dated 08.02.2021)<\/em>.<\/li><\/ul>\n<h4>4.<\/span>Definitions<\/span><\/h4>\na) \"Bidder\"<\/strong> \u2014 for the purpose of the Order (including the terms 'bidder<\/strong>', 'consultant<\/strong>', 'vendor<\/strong>' or 'service provider<\/strong>' in certain contexts) means any person, firm or company, including any member of a consortium or joint venture<\/strong> (that is, an association of several persons, or firms or companies), every artificial juridical person<\/strong> not falling in any of the descriptions of bidders stated hereinbefore, including any agency, branch or office controlled by such person<\/strong>, participating in a procurement process.<\/p>\nb) \"Tender\"<\/strong> \u2014 for the purpose of the Order will include other forms of procurement<\/strong>, except where the context requires otherwise.<\/p>\nc) \"Transfer of Technology\" \u2014 means dissemination and transfer of all forms of commercially usable knowledge, such as transfer of know-how, skills, technical expertise, designs, processes and procedures, and trade secrets, which enables the acquirer of such technology to perform activities using the transferred technology independently.<\/p>\n<aside class=\"note\">Matters of interpretation of this term shall be referred to the Registration Committee constituted by DPIIT<\/strong>, and the interpretation of the Committee shall be final<\/strong>.<\/em><\/p><\/aside>\nd) \"Specified Transfer of Technology\" \u2014 means a transfer of technology in the sectors and\/or technologies specified in sub-para 5 below, occurring on or after 23.07.2020.<\/p>\ne) \"Bidder (or entity) from a country which shares a land border with India\" \u2014 means:<\/p>\n<ul class=\"lst\"><li>i) An entity incorporated, established, or registered in such a country; or<\/li><li>ii) A subsidiary<\/strong> of an entity incorporated, established, or registered in such a country; or<\/strong><\/li><li>iii) An entity substantially controlled through entities<\/strong> incorporated, established, or registered in such a country; or<\/strong><\/li><li>iv) An entity whose beneficial owner is situated in such a country; or<\/li><li>v) An Indian (or other) AGENT of such an entity; or<\/li><li>vi) A natural person who is a citizen of such a country; or<\/li><li>vii) A consortium or joint venture where any member<\/strong> of the consortium or joint venture falls under any of the above.<\/li><\/ul>\nf) \"Agent\" \u2014 for the purpose of the Order, is a person employed to do any act for another, or to represent another in dealings with third persons.<\/p>\n<aside class=\"note\">Notes:<\/p>\n1. A person who procures and supplies FINISHED GOODS from an entity from a country that shares a land border with India will \u2014 regardless of the nature of his legal or commercial relationship with the producer of the goods \u2014 be deemed to be an AGENT for the purpose of this Order.<\/p>\n2. However, a bidder who only procures raw material, components, etc. from an entity from a country that shares a land border with India and then manufactures or converts them into other goods will not be treated as an Agent.<\/p><\/aside>\ng) \"Beneficial owner\"<\/strong> \u2014 for the purposes of point (e)(iv) will be as follows:<\/p>\n<ul class=\"lst\"><li>i) In the case of a company or Limited Liability Partnership, the beneficial owner is the natural person(s) who, whether acting alone or together, or through one or more juridical person(s), has a controlling ownership interest, or who exercises CONTROL through other means.<\/li><\/ul>\n<aside class=\"note\">Explanation:<\/p>\n<ol class=\"lst\"><li>\"Controlling ownership interest<\/strong>\" means ownership of, or entitlement to, more than twenty-five per cent (25%)<\/strong> of shares or capital or profits of the company;<\/li><li>\"Control\" shall include the right to appoint the majority of the directors, or to control the management or policy decisions \u2014 including by virtue of their shareholding or management rights or shareholders' agreements or voting agreements.<\/li><\/ol><\/aside>\n<ul class=\"lst\"><li>ii) In the case of a partnership firm<\/strong>, the beneficial owner is the natural person(s) who, whether acting alone or together, or through one or more juridical persons, has ownership of\/ entitlement to more than fifteen per cent (15%) of capital or profits<\/strong> of the partnership.<\/li><li>iii) In the case of an unincorporated association or body of individuals<\/strong>, the beneficial owner is the natural person(s) who, whether acting alone or together, or through one or more juridical persons, has ownership of or entitlement to more than fifteen per cent (15%) of the property or capital or profits<\/strong> of such association or body of individuals.<\/li><li>iv) Where NO natural person is identified under (i), (ii) or (iii) above, the beneficial owner is the relevant natural person who holds the position of senior managing official.<\/li><li>v) In the case of a TRUST<\/strong>, the identification of beneficial owner(s) shall include identification of:<\/li><li>the author of the trust,<\/li><li>the trustee,<\/li><li>the beneficiaries with fifteen per cent (15%) or more interest in the trust, and<\/li><li>any other natural person exercising ultimate effective control over the trust through a chain of control or ownership.<\/li><li>vi) To determine nationality<\/strong> while assessing the beneficial ownership of the bidder, the nationality mentioned in the beneficial owner's PASSPORT<\/strong> should be considered. In case of the possibility of dual citizenship<\/strong>, nationality on all the passports should be considered through a suitable declaration<\/strong>. If nationality in any of the passports<\/strong> of the person whose beneficial ownership is being assessed is recorded to be from a country sharing a land border with India, the provisions contained under this Order shall apply<\/strong>.<\/li><\/ul>\n<aside class=\"note\">Hong Kong and Macau are to be considered as part of China for the purpose of this Order.<\/p><\/aside>\n<h4>5.<\/span>Sensitive Sectors\/ Technologies<\/span><\/h4>\n(Relevant only for the provisions on ToT arrangements \u2014 refer sub-para 2(b) above)<\/em><\/p>\n<ol class=\"lst\"><li>Certain sectors and technologies have been identified as sensitive from the national security point of view:<\/li><li>Sectors listed in Schedule I \u2192 Category-I sensitive sectors<\/li><li>Sectors listed in Schedule II \u2192 Category-II sensitive sectors<\/li><li>Technologies listed in Schedule III \u2192 sensitive technologies<\/li><\/ol>\nList of Category-I Sensitive Sectors (Schedule-I)<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>S. No.<\/th><th>Sector<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Atomic Energy<\/td><\/tr><tr><td>2<\/td><td>Broadcasting\/ Print and Digital Media<\/td><\/tr><tr><td>3<\/td><td>Defence<\/td><\/tr><tr><td>4<\/td><td>Space<\/td><\/tr><tr><td>5<\/td><td>Telecommunications<\/td><\/tr><\/tbody><\/table><\/div>\nList of Category-II Sensitive Sectors (Schedule-II)<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>S. No.<\/th><th>Sector<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Power and Energy (including exploration\/ generation\/ transmission\/ distribution\/ pipeline)<\/td><\/tr><tr><td>2<\/td><td>Banking and Finance, including Insurance<\/td><\/tr><tr><td>3<\/td><td>Civil Aviation<\/td><\/tr><tr><td>4<\/td><td>Construction of ports and dams & river valley projects<\/td><\/tr><tr><td>5<\/td><td>Electronics and Microelectronics<\/td><\/tr><tr><td>6<\/td><td>Meteorology and Ocean Observation<\/td><\/tr><tr><td>7<\/td><td>Mining and extraction (including deep sea projects)<\/td><\/tr><tr><td>8<\/td><td>Railways<\/td><\/tr><tr><td>9<\/td><td>Pharmaceuticals & Medical Devices<\/td><\/tr><tr><td>10<\/td><td>Agriculture<\/td><\/tr><tr><td>11<\/td><td>Health<\/td><\/tr><tr><td>12<\/td><td>Urban Transportation<\/td><\/tr><\/tbody><\/table><\/div>\nList of Sensitive Technologies (Schedule-III)<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>S. No.<\/th><th>Technology<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Additive Manufacturing (e.g., 3D Printing)<\/td><\/tr><tr><td>2<\/td><td>Any equipment having electronic programmable components or autonomous systems (e.g., SCADA systems)<\/td><\/tr><tr><td>3<\/td><td>Any technology used for uploading and streaming data, including broadcasting, satellite communication, etc.<\/td><\/tr><tr><td>4<\/td><td>Chemical Technologies<\/td><\/tr><tr><td>5<\/td><td>Biotechnologies, including Genetic Engineering and Biological Technologies<\/td><\/tr><tr><td>6<\/td><td>Information and Communication Technologies<\/td><\/tr><tr><td>7<\/td><td>Software<\/td><\/tr><\/tbody><\/table><\/div>\n<ol class=\"lst\"><li>For Category-I sensitive sectors<\/strong>, bidders with a ToT arrangement in any technology<\/strong> with an entity from a country that shares a land border with India shall require registration<\/strong>.<\/li><li>For Category-II sensitive sectors<\/strong>, bidders with a ToT arrangement in the sensitive technologies listed in Schedule III<\/strong> with an entity from a country that shares a land border with India shall require registration<\/strong>.<\/li><li>In Category-II sensitive sectors, the Secretary (or an officer not below the rank of Joint Secretary to the Government of India, so authorised by the Secretary) of the Ministry\/ Department of the Government of India is empowered, after due consideration, to WAIVE the requirement of registration for a particular item\/ application or a class of items\/ applications, even if included in Schedule III. The Ministry\/ Department concerned shall INFORM DPIIT and the National Security Council Secretariat (NSCS) of their decision to waive the requirement of registration. Ministries\/ Departments are not required to consult DPIIT\/ nscs before deciding, and are only required to inform DPIIT\/ nscs of the decision. If DPIIT\/ NSCS raises any point, it should be considered in future procurements, and the ongoing procurement for which the waiver was granted need not be interrupted or altered.<\/li><li>Based on security considerations<\/strong>, a Ministry\/ Department in a Category-II sensitive sector, or other Ministries\/ Departments, may recommend to DPIIT the inclusion of any other technology in the list of sensitive technologies<\/strong> \u2014 either generally or for their Ministry\/ Department.<\/li><\/ol>\n<h4>6.<\/span>Sub-contracting in Works Contracts<\/span><\/h4>\nIn works contracts, including turnkey contracts, contractors shall not be allowed to sub-contract works to any contractor from a country that shares a land border with India unless such contractor is REGISTERED with the Competent Authority. The definition of \"contractor from a country which shares a land border with India\" shall be as in sub-para 4(e) above. This shall not apply to sub-contracts already awarded on or before the date of the Order (i.e., 23rd July 2020).<\/p>\n<aside class=\"note\">[Note: Procurement of raw material, components, etc. does not constitute sub-contracting.]<\/p><\/aside>\n<h4>7.<\/span>Model Clauses\/ Certificate Regarding Compliance<\/span><\/h4>\nAn undertaking\/ certificate shall be taken from bidders in the tender documents that the extant guidelines for participation in the tenders (which should include conditions for implementation of this Order) have been complied with. If such a certificate is given by a bidder whose bid is accepted and is found to be FALSE, this would be grounds for DEBARMENT and further legal action in accordance with law.<\/p>\nModel Clauses and Model Certificates<\/strong>, which may be inserted in tenders\/ obtained from Bidders, are given in the Annexures. While adhering to the substance<\/strong> of the Order, procuring entities are free to appropriately modify the wording of these clauses<\/strong> based on their past experience, local needs, etc.<\/p>\n<aside class=\"note\">Annexure references:<\/strong>G<\/span> Annexure 33 \u00b7 W<\/span> Annexure 19 \u00b7 C<\/span> Annexure 17 \u00b7 NC<\/span> Annexure 11.<\/p><\/aside>\n<h4>8.<\/span>Validity of Registration<\/span><\/h4>\n<ul class=\"lst\"><li>With respect to tenders, registration should be valid at the time of SUBMISSION of bids AND at the time of ACCEPTANCE of bids.<\/li><li>With respect to supplies other than by tender, registration should be valid at the time of placement of the order.<\/li><li>If the bidder was validly registered at the time of acceptance\/ placement of the order, registration shall not be a relevant consideration during contract execution.<\/li><\/ul>\n<h4>9.<\/span>Government e-Marketplace<\/span><\/h4>\nGeM shall REMOVE non-compliant entities from GeM unless\/ until they are registered in accordance with this Order.<\/p>\n<h4>10.<\/span>Competent Authority and Procedure for Registration<\/span><\/h4>\n<ol class=\"lst\"><li>The Competent Authority<\/strong> for the purpose of registration under this Order shall be the Registration Committee constituted by DPIIT<\/strong>(Notified vide OM No. F.6\/18\/2019-PPD issued by Department of Expenditure dated 23.07.2020)<\/em>.<\/li><\/ol>\n<aside class=\"note\">Footnote on States: (i) In respect of application of the Order to procurement by\/ under State Governments, all functions assigned to DPIIT shall be carried out by the State Government concerned through a specific department or authority designated by it. The composition of the Registration Committee shall be as decided by the State Government. However, the requirement of political and security clearance as per para 10(d) shall remain, and no registration shall be granted without such clearance. (ii) Registration granted by State Governments shall be valid only for procurement by that State Government and its agencies\/ public enterprises etc., and shall not be valid for procurement in other states or by the Government of India and their agencies\/ public enterprises etc.<\/p><\/aside>\n<ol class=\"lst\"><li>The Registration Committee<\/strong> shall have the following members:<\/li><li>i) An officer not below the rank of Joint Secretary, designated for this purpose by DPIIT, who shall be the Chairperson;<\/li><li>ii) Officers (ordinarily not below the rank of Joint Secretary) representing the Ministry of Home Affairs, Ministry of External Affairs, and those Departments whose sectors are covered by applications under consideration;<\/li><li>iii) Any other officer whose presence is deemed necessary by the Chairperson of the Committee.<\/li><li>DPIIT has laid down the method of application, format, etc. for such bidders as covered by the Order.<\/li><li>On receipt of an application seeking registration from a bidder covered by sub-para 2(a) and 2(b) above, the Competent Authority shall first seek POLITICAL and SECURITY CLEARANCES from the Ministry of External Affairs and Ministry of Home Affairs<\/strong>, as per guidelines issued from time to time. Registration shall not be given unless political and security clearance have both been received.<\/strong><\/li><li>The Ministry of External Affairs and Ministry of Home Affairs may issue guidelines for internal use regarding the procedure for scrutiny of such applications.<\/li><li>The decision of the Competent Authority to register such bidder may be for all kinds of tenders or for a specified type(s) of goods or services, and may be for a specified or unspecified duration of time, as deemed fit. The decision of the Competent Authority shall be final.<\/li><li>Registration granted by the Competent Authority of the Government of India shall be valid not only for procurement by the Central Government and its bodies specified in sub-para 3 above, BUT also for procurement by State Governments and their agencies\/ public enterprises, etc. No fresh registration at the State level shall be required.<\/li><li>The Competent Authority is empowered to CANCEL the registration already granted if it determines that there is sufficient cause. Such cancellation by itself, however, will not affect the execution of contracts already awarded. Pending cancellation, it may also SUSPEND the registration of a bidder, and the bidder shall not be eligible to bid in any further tenders during the period of suspension.<\/li><li>For national security reasons, the Competent Authority shall not be required to give reasons for rejection\/ cancellation of registration of a bidder.<\/li><\/ol>\n<h4>11.<\/span>Clarifications Regarding Applicability of the Restrictions under Rule 144(xi)<\/span><\/h4>\n<ol class=\"lst\"><li>Proprietary purchases are not excluded<\/strong> from the provisions of Rule 144(xi) of GFR, 2017.<\/li><li>The rule is applicable to all purchases irrespective of the order value.<\/li><li>Sub-contracting is not permitted<\/strong> by any contractor to a contractor from a country sharing a land border with India unless registered with the competent authority<\/strong>. However, it is to be noted that procurement of raw materials, components, sub-assemblies, etc. does not constitute sub-contracting<\/strong>. In case a bidder has proposed to supply finished goods<\/strong> procured directly\/ indirectly from vendors from countries that share a land border with India, such vendor will be required to be registered<\/strong> with the Competent Authority.<\/li><li>There is NO bar on the contractor from procuring raw material from a firm that has been ACQUIRED by another firm belonging to a country that shares a land border with India.<\/li><li>Contract Manufacturing outside India: If the bidder is getting the subject product manufactured outside India, this is treated as contract manufacturing, and the beneficial ownership of the actual manufacturing entity must be verified. If the actual manufacturer does not meet the beneficial ownership criteria \u2014 then the bidder must submit DPIIT registration of such manufacturer to participate in the procurement.<\/li><li>The Hiring of Services:<\/strong> Suppose a Bidder (Indian\/ Foreign) who is not<\/strong> from a country sharing a land border with India offers services to a procuring entity by arranging equipment from another company<\/strong>. Then the following scenarios may appear:<\/li><\/ol>\n<div class=\"tblwrap\"><table><thead><tr><th>S. No.<\/th><th>Scenario<\/th><th>Applicability of Rule 144(xi)<\/th><\/tr><\/thead><tbody><tr><td>a)<\/td><td>The equipment\/ goods have been purchased or will be purchased from a company (manufacturer) from a country that shares a land border with India.<\/td><td>The bidder has procured certain goods<\/strong> to offer the requisite services to a procuring entity. In such case, the bidder does not fall within the definition of the term \"bidder\"<\/strong> as defined under para 4(e) above. Hence, the provisions of Rule 144(xi) of GFR, 2017 do not apply<\/strong> to this case.<\/td><\/tr><tr><td>b)<\/td><td>By entering into an MOU\/ lease agreement with the company (who OWNS the equipment\/ goods) from a country that shares a land border with India.<\/td><td>Here, the bidding vendor proposes to hire services from a company that belongs to a country that shares a land border with India<\/strong>. This prima facie<\/em> becomes a case of INDIRECT SUPPLY of services<\/strong> by a company that owns the equipment\/ goods by introducing an intermediary<\/strong>. The intermediary merely acts as an AGENT<\/strong> to the company providing services of the equipment. In such a case, the company owning the equipment and indirectly supplying the services shall be required to be registered<\/strong> with the competent authority \u2014 thereby requiring the fulfilment of the provisions of Rule 144(xi).<\/td><\/tr><tr><td>c)<\/td><td>By entering into an MOU\/ lease agreement with company 'X' (the present owner of the equipment) from a country that does not share a land border with India. The equipment has been purchased from the manufacturer company 'Y', which is from a country that SHARES a land border with India.<\/td><td>In this case, the actual supplier of services, prima facie<\/em>, shall be 'X'. The status of 'X' in this case does not attract the provisions of Rule 144(xi).<\/td><\/tr><\/tbody><\/table><\/div>\n<h4>12.<\/span>Illustrative Examples of the Applicability of Restrictions under Rule 144(xi)<\/span><\/h4>\na) The \"sister company \/ offshore production unit\" example:<\/p>\nA vendor, say 'Party A' from India, is procuring an item from their sister company 'Party B', which is registered in a country that does not share a land border with India. Both Party A and Party B are owned by an entity, say 'Party C'. Party C does not belong to a country sharing a land border with India. However, Party B has its production facility in a country sharing a land border with India, and the manufactured item will be procured by Party A from Party B from that production facility. The production unit is wholly owned by Party B.<\/p>\nParty A claims that Rule 144(xi) does not apply to it because neither Party A nor Party B is:<\/p>\n<ul class=\"lst\"><li>i) An entity incorporated, established or registered in such a country \u2014 as Party A is registered in India and Party B is registered in a country not sharing a land border with India;<\/li><li>ii) A subsidiary of an entity incorporated, established or registered in such a country \u2014 as they are 100% owned subsidiaries of Party C, which is incorporated, registered and established in a country not sharing a land border with India;<\/li><li>iii) An entity controlled through entities incorporated, established or registered in such a country \u2014 as they are 100% owned by Party C;<\/li><li>iv) An entity whose beneficial owner is situated in such a country \u2014 as their beneficial owner is Party C;<\/li><li>v) An Indian (or other) agent of such an entity;<\/li><li>vi) A natural person who is a citizen of such a country;<\/li><li>vii) A consortium or joint venture where any member falls under any of the above \u2014 though it has a wholly owned subsidiary<\/strong> in a country that shares a land border with India, it is not a JV or consortium<\/strong> (a subsidiary does not qualify as a JV or consortium<\/strong>);<\/li><li>viii) In addition, Party A claims that they are not procuring finished goods directly\/ indirectly from vendors from countries sharing land borders with India, as the item is being manufactured in their own production units.<\/li><\/ul>\n<aside class=\"note\">ix) clarification:<\/strong> In light of the above facts and claims, it is important to clarify to procurers that Party A acts as an AGENT for Party B<\/strong>, which manufactures goods in a country sharing a land border with India. Party B supplies goods manufactured at premises established in a country that shares a land border with India.<\/strong> In such a case, registration is required for party b<\/strong> (and not necessarily for Party A<\/strong>, who is only an agent and not from a country sharing a land border with India).<\/p><\/aside>\nb) IT goods and services examples:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Scenario<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>i) The contractor is only supplying the servers as-is from an OEM that belongs to a country sharing a land border with India, and there is NO value addition done by the contractor<\/td><td>The contractor acts as an AGENT for the OEM, and registration of both the OEM and the agent (contractor) is required as per Rule 144(xi) of GFR 2017.<\/td><\/tr><tr><td>ii) The contractor supplies value-added services on hardware and the contractor outsources the procurement of hardware<\/td><td>OEM registration is not required.<\/td><\/tr><tr><td>iii) There is deployment of IT services that includes both hardware and software customisation, and the contractor has sourced hardware which is made in the country sharing a land border with India<\/td><td>The requirement of registration as per Rule 144(xi) is not applicable.<\/td><\/tr><\/tbody><\/table><\/div>\n<h3>1.11.5<\/span>Support to Start-up Enterprises<\/span><\/h3><h4>1.<\/span>Definition of Start-up Enterprises<\/span><\/h4>\n<ol class=\"lst\"><li>As defined by DPIIT<\/strong>, an entity shall be considered a 'Start-up<\/strong>':<\/li><li>i) Up to a period of ten YEARS from the date of incorporation\/ registration<\/strong>, if it is incorporated as a private limited company<\/strong> (as defined in the Companies Act, 2013) or<\/strong> registered as a partnership firm<\/strong> (registered under section 59 of the Partnership Act, 1932) or<\/strong> a limited liability partnership<\/strong> (under the Limited Liability Partnership Act, 2008) in India<\/strong>; and<\/strong><\/li><li>ii) Turnover of the entity for any of the financial years since incorporation\/ registration has not exceeded one hundred crore rupees; and<\/li><li>iii) The entity works towards INNOVATION, DEVELOPMENT, or IMPROVEMENT of products, processes, or services, or a scalable business model with a high potential for EMPLOYMENT GENERATION or WEALTH CREATION.<\/li><li>Provided that an entity formed by SPLITTING UP or RECONSTRUCTING an existing business shall not be considered a 'Start-up'.<\/li><li>Provided further that<\/strong>, in order to obtain benefits, a Start-up so identified under the above definition shall be required to be RECOGNISED as a Start-up by DPIIT<\/strong>.<\/li><\/ol>\n<h4>2.<\/span>Support to Start-ups<\/span><\/h4>\nThe Government of India has ordered the following support to Start-ups (as defined by DPIIT):<\/p>\na) Exemption from submission of Bid Security: Such Start-ups shall be EXEMPTED from payment\/ submission of Earnest Money Deposit\/ Bid Security.<\/p>\nb) Relaxation in Prior Turnover and Experience: The Procuring Entity reserves its right to relax the condition of prior turnover and prior experience for start-up enterprises recognised by DPIIT, subject to meeting quality & technical specifications. Start-ups may be MSMEs\/ MSEs or otherwise. Such relaxation can be provided in the case of procurement of works as well.<\/p>\nIt is further clarified that such relaxation is not optional but normally has to be ensured, except in the case of procurement of items related to public safety, health, critical security operations and equipment, etc., where adequate justification exists for the Procuring Entity not to relax such criteria. The decision of the Procuring Entity in this regard shall be final. (Rule 173(i) of GFR 2017.)<\/p>\n<aside class=\"note\">Footnote:<\/strong> Such relaxation can be PARTIAL<\/strong> \u2014 e.g., 25% relaxation<\/strong> over specified turnover and experience.<\/p>\nW<\/span>C<\/span> additional clarification: The <\/strong>benefits under Start-up policy will be applicable only for the particular industry\/ sector for which they are registered with DPIIT (<\/strong>necessary certificate to be obtained from the bidder in this regard).<\/p><\/aside>\n<h3 class=\"src-multi srchead\" data-src=\" G W \">1.11.6<\/span>Domestically Manufactured Iron & Steel Products (DMI&SP) Policy<\/span>G<\/span>W<\/span><\/h3><div class=\"srcblock src-multi\" data-src=\" G W \" data-label=\"Goods + Works only\">\n<aside class=\"note\">Critical note for students:<\/strong> The two Manuals reproduce two different versions<\/strong> of this Policy.<\/p>\n<ul class=\"lst\"><li>The Goods Manual, 2024<\/strong> reproduces the DMI&SP Policy, 2019<\/strong> (first notified May 2017, revised May 2019, amended December 2020, extended by Ministry of Steel notification dated 8 March 2024 till November 2024).<\/li><li>The Works Manual, 2025 reproduces the DMI&SP Policy \u2014 REVISED, 2025, notified by the Ministry of Steel vide notification no. G.S.R. 341(E) dated 26th May 2025, and presents it as applicable to EPC tenders.<\/li><\/ul>\nThe 2025 version is the later instrument<\/strong>. Both are set out below in full, because the Goods Manual has not yet been updated to the 2025 version and each is examinable in its own right.<\/p>\nThis Policy does not appear in the Consultancy Services or Non-Consultancy Services Manuals.<\/p><\/aside>\n<h4 class=\"src-G srchead\" data-src=\" G \">PART A \u2014 DMI&SP POLICY, 2019 (as reproduced in the Goods Manual, 2024)<\/span>G<\/span><\/h4><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\n1. Background: The DMI&SP policy provides a preference for Domestically Manufactured Iron and Steel Products in Government procurement. By promoting domestically manufactured iron and steel products as well as capital goods used for manufacturing iron and steel products, the Policy contributes to the growth of the Indian iron and steel industry. It was first notified in May 2017, revised in May 2019, and further amended in December 2020. The Ministry of Steel notified on March 8, 2024 the extension of this Policy till November 2024.<\/p>\n2. Applicability:<\/p>\na) Iron & Steel Products:<\/p>\n<ul class=\"lst\"><li>i) The Policy applies to the government procurement of iron & steel products (listed in Appendix A of the Policy, produced in compliance with prescribed quality standards) by every Ministry or Department of Government and all agencies\/ entities under their administrative control, and to projects funded by these agencies. All Central Sector Schemes (CS)\/ Centrally Sponsored Schemes (CSS) for which States and Local Bodies make procurement would come within the purview of this Policy if the Government of India fully\/ partly funds that project\/ scheme.<\/li><li>However, this Policy shall not apply to purchasing iron & steel products with a view to COMMERCIAL RESALE or to use in producing goods for COMMERCIAL SALE.<\/li><li>The Policy also applies to private agencies' purchase of iron & steel products to fulfil an EPC contract and\/or any other requirement of the Ministry or Department of Government or their PSEs.<\/li><li>ii) The Policy shall apply to projects where the procurement value of iron and steel products exceeds Rs. 5 lakh. The Policy shall also be applicable for other procurements (non-project) where the ANNUAL procurement value of iron and steel products for that Government organisation is more than Rs. 5 lakh. However, it shall be ensured by procuring entities that procurement is not SPLIT to avoid the provisions of this Policy.<\/li><\/ul>\nb) Capital Goods for Manufacturing Iron & Steel Products:<\/p>\n<ul class=\"lst\"><li>i) For government procurement of capital goods for manufacturing iron & steel products listed in Appendix B of the Policy (produced in compliance with prescribed quality standards, as applicable), the policy is applicable \u2014 irrespective of the project size \u2014 to all public sector steel manufacturers and all agencies\/ entities under their administrative control, but not for commercial resale. The Policy also applies to the purchase of capital goods for manufacturing iron & steel products by private agencies for fulfilling an EPC contract and\/or any other requirement of public sector steel manufacturers and all agencies\/ entities under their administrative control.<\/li><li>ii) NO Global Tender Enquiry (GTE) shall be invited for tenders related to the procurement of Capital Goods for manufacturing iron & steel products (Appendix-B) having estimated value UP TO Rs. 200 Crore, except with the approval of the competent authority as designated by the Department of Expenditure.<\/li><\/ul>\n3. Waivers: Waivers shall be granted by the Ministry of Steel, subject to the conditions below. The exclusion requests shall be submitted to the Standing Committee along with sufficient proof of unavailability of domestically manufactured iron & steel products: a) Where specific grades of steel are not manufactured in the country; or b) Where the quantities as per the demand of the project cannot be met through domestic sources.<\/p>\n4. Purchase Preferences: a) NO Global Tender Enquiry (GTE) shall be invited for tenders related to the procurement of iron and steel products (Appendix-A). The procurement process shall be open only to the manufacturers\/ suppliers capable of meeting\/ exceeding the domestic value-addition targets. Manufacturers\/ suppliers not meeting the domestic value addition targets shall not be eligible to participate in the bidding. b) Purchase preference shall be provided to domestically manufactured capital goods listed in Appendix B if their quoted price falls within 20% of the price quoted for corresponding imported capital goods. If the procuring company considers that the procured quantity cannot be divided in the prescribed ratio of 50:50, they shall have the right to award the contract to the eligible domestic manufacturer for a quantity not less than 50%, as may be divisible. The contract can be awarded to the eligible domestic manufacturer for the entire quantity if the tendered capital goods are NON-DIVISIBLE. If none of the eligible manufacturers meets domestic value addition requirements and matches the L1 bid, the original bidder holding the L1 bid shall secure the order for the entire procurement value.<\/p>\n5. Clause in Tender Document:<\/strong> The tender document for procurement of both Goods as well as for EPC contracts<\/strong> should explicitly outline the eligibility\/ qualification criteria for adherence to minimum prescribed domestic value addition<\/strong> by the bidder for iron and steel products and capital goods (as indicated in Appendix A and Appendix B).<\/p>\n6. Standing Committee: A Standing Committee under the Ministry of Steel (MoS), chaired by the Secretary (Steel), shall be constituted to oversee implementation. The Committee shall comprise experts from Industry\/ Industry Association\/ Government Institution or Body\/ Ministry of Steel. Its mandate: a) Monitoring the implementation of the Policy; b) Review and notify the Iron & Steel products list and the domestic value addition requirement criteria mentioned in Appendix A and Appendix B; c) Issue necessary clarifications for implementation of the Policy, including grant of exclusions to procuring agencies as per section 3; d) Constitute a separate committee to carry out grievance redressal; e) The Standing Committee shall submit its recommendations for approval to the Ministry of Steel.<\/p>\n7. Certification of Local Content:<\/strong> a) To qualify as domestically manufactured iron and steel products\/ capital goods for purchase preference under this Policy, a minimum domestic value addition of 20% to 50% is specified in Appendix A<\/strong> (domestically manufactured iron and steel products) and 50% for Appendix B<\/strong> (capital goods for manufacturing iron & steel products). The domestic value-addition is based on SELF-CERTIFICATION.<\/strong> b) For products in Appendix A<\/strong>, each domestic manufacturer shall furnish the Affidavit of self-certification in the prescribed format<\/strong> to the procuring agency declaring that the iron & steel products are domestically manufactured in terms of the domestic value addition prescribed. It shall be the responsibility of the domestic manufacturer to ensure that the products supplied are indeed domestically manufactured<\/strong> in terms of the domestic value addition prescribed for the product. c) For capital goods in Appendix B<\/strong>, the bidder shall furnish the certification issued by the STATUTORY AUDITOR of the domestic manufacturer<\/strong> declaring that the capital goods are domestically manufactured in terms of the domestic value addition prescribed. The bidder shall also be required to provide a domestic value addition certificate on a HALF-YEARLY basis (September 30 and March 31), within 60 days of commencement of each half-year<\/strong>, duly certified by the Statutory Auditors of the domestic manufacturer, to the concerned procuring agencies till the completion of the supply<\/strong> \u2014 that the claims of domestic value addition made for the product during the preceding 6 months are in accordance with the Policy. d) Bidders who are selling agents\/ authorised distributors\/ authorised dealers\/ authorised supply houses<\/strong> of the domestic manufacturers of iron & steel products are ELIGIBLE to bid on behalf of the domestic manufacturers<\/strong> under the Policy. However, this shall be subject to the following conditions:<\/p>\n<ul class=\"lst\"><li>i) The bidder shall furnish the authorisation certificate issued by the domestic manufacturer<\/strong> for selling domestically manufactured iron & steel products;<\/li><li>ii) In case the procurement is covered under Appendix A<\/strong>, the bidder shall furnish the Affidavit of self-certification issued by the domestic manufacturer<\/strong> to the procuring agency;<\/li><li>iii) In case the procurement is covered under Appendix B<\/strong>, the bidder shall furnish the certification issued by the statutory auditor to the domestic manufacturer<\/strong>;<\/li><li>iv) The bidder shall be responsible for furnishing other documents required to be issued by the domestic manufacturer to the procuring agency as per the Policy.<\/li><\/ul>\n8. Complaints and Penalties: a) Complaints relating to mis-declaration made to the procuring agency or Ministry of Steel shall be dealt with in the prescribed time frame by examining the documents at the bidder's cost. A refundable cautionary deposit is required for complaints to the Ministry of Steel. b) Each procuring agency shall define the penalties in the tender document in case of wrong declaration by the bidder of the prescribed domestic value addition. The penalties may include forfeiting the EMD, other financial penalties, and debarment of the manufacturer\/ service provider.<\/p>\n9. Specifications in Tenders and Other Procurement Solicitations:<\/strong> a) Every procuring entity shall ensure that the eligibility conditions with respect to previous experience do not require proof of supply in other countries or proof of exports<\/strong>. b) Procuring entities shall endeavour to see that eligibility conditions \u2014 including on turnover, production capability and financial strength<\/strong> \u2014 do not result in unreasonable exclusion of local suppliers<\/strong> who would otherwise be eligible, beyond what is essential for ensuring quality or creditworthiness. c) Procuring entities shall review all existing eligibility norms and conditions<\/strong> with reference to (a) and (b) above. d) Reciprocity:<\/strong> If the Ministry of Steel<\/strong> is satisfied that Indian suppliers of iron and steel products are not allowed to participate and\/or compete in procurement by any foreign government<\/strong> due to restrictive tender conditions which have the direct or indirect effect of barring Indian companies \u2014 such as registration in the procuring country, execution of a project of specific value in the procuring country, etc. \u2014 it may, if deemed appropriate, RESTRICT or EXCLUDE bidders from that country<\/strong> from eligibility for procurement of that item and\/or other items relating to the Ministry of Steel. e) For the purpose of (d) above, a supplier or bidder shall be considered to be from a country<\/strong> if:<\/p>\n<ul class=\"lst\"><li>(i) the entity is incorporated in that country, or<\/li><li>(ii) a majority of its shareholding or effective control of the entity is exercised from that country, or<\/li><li>(iii) more than 50% of the value of the item being supplied has been added in that country.<\/li><\/ul>\nIndian suppliers shall mean those entities that meet any of these tests with respect to India. The term 'entity' of a country shall have the same meaning as under the FDI Policy of DPIIT, as amended from time to time. f) In case restrictive or discriminatory conditions against domestic suppliers are included in tender documents, an inquiry shall be conducted by the Administrative Department undertaking the procurement to fix responsibility. Thereafter, appropriate action \u2014 administrative or otherwise \u2014 shall be taken against erring officials. Intimation on all such action shall be sent to the Standing Committee under the DMI&SP Policy.<\/p>\n<\/div><h4 class=\"src-W srchead\" data-src=\" W \">PART B \u2014 DMI&SP POLICY (REVISED), 2025 \u2014 as applicable to EPC tenders<\/span>W<\/span><\/h4><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n1. Background: a) This policy, issued by the Ministry of Steel vide notification no. G.S.R. 341(E) dated 26th May 2025, provides preference for Domestically Manufactured Iron and Steel Products (DMI&SP) in Government procurement. b) The policy applies to procurement of iron & steel products notified in Appendix A. In Appendix B, the minimum domestic content and an exempted list of capital goods for manufacturing iron & steel products which can be imported have been listed. Appendix C contains the policy for promoting the procurement of technology from indigenous technology suppliers.<\/p>\n2. Definitions:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Term<\/th><th>Definition<\/th><\/tr><\/thead><tbody><tr><td>Bidder<\/td><td>May be a domestic\/ foreign manufacturer of iron & steel, or their selling agents\/ authorised distributors\/ authorised dealers\/ authorised supply houses, or any other company engaged in the bidding of projects funded by Government agencies.<\/td><\/tr><tr><td>Domestically Manufactured Iron & Steel Products<\/td><td>Those iron and steel products that are manufactured by entities that are registered and established in India, INCLUDING in Special Economic Zones (SEZs).<\/td><\/tr><tr><td>Domestic Manufacturer<\/td><td>A manufacturer of iron & steel products conforming to guidelines in section 7 and the definition of 'manufacturer<\/strong>' as per the Central Excise Act<\/strong>.<\/td><\/tr><tr><td>Domestic value addition<\/td><td>The amount of value added in India = total value of the item to be procured (excluding net domestic indirect taxes) MINUS the value of imported content in the item (including all customs duties), as a proportion of the total value of the item to be procured, in percent. The definition shall be in line with DPIIT guidelines and shall be suitably amended in case of any future changes by DPIIT. For the purpose of this policy document, \"domestic value addition\" and \"local content\" have been used INTERCHANGEABLY. % Domestic value addition = {Total value of the item to be procured (excluding net domestic indirect taxes) \u2212 Value of imported content in the item (including all customs duties)} \u00d7 100 \u00f7 {Total value of the item to be procured}<\/td><\/tr><tr><td>Finished Steel<\/td><td>Flat and long products<\/strong>, which can be subsequently processed into manufactured items.<\/td><\/tr><tr><td>Government<\/td><td>For the purpose of the Policy, means Government of India<\/strong>.<\/td><\/tr><tr><td>Government agencies<\/td><td>Include Government PSUs, Societies, Trusts, and Statutory bodies set up by the Government of India.<\/td><\/tr><tr><td>Indigenous Technology<\/td><td>A technology shall be deemed to be Indigenous technology if at least 51% of the entity's equity is held by Indian residents, AND the IPR is owned or co-owned by an Indian entity or licensed exclusively to them, AND the core engineering R&D and project execution capabilities reside in India.<\/td><\/tr><tr><td>L1<\/td><td>The lowest tender or the lowest bid, or the lowest quotation<\/strong> received in a tender, bidding process, or other procurement solicitation, as adjudged in the evaluation process.<\/td><\/tr><tr><td>MoS<\/td><td>Ministry of Steel, Government of India.<\/td><\/tr><tr><td>Margin of purchase preference<\/td><td>The maximum extent to which the price quoted by a domestic supplier may be above L1<\/strong> for the purpose of purchase preference. In the case of DMI&SP policy, the margin of purchase preference shall be 20% for items in Appendix B<\/strong>.<\/td><\/tr><tr><td>Melt & Pour<\/td><td>The steel that has been produced in a steel-making furnace and poured into its first solid shape. The location where this process takes place is called the country of melt and pour (COM). The COM is the original location where crude steel is first produced in a liquid state and poured into its first solid shape. The first solid shape can be a semi-finished product \u2014 like a slab, billet, ingot \u2014 or a finished steel mill product.<\/td><\/tr><tr><td>Net Selling Price<\/td><td>The invoiced price excluding net domestic taxes and duties.<\/td><\/tr><tr><td>Semi-Finished Steel<\/td><td>Ingots, billets, blooms, and slabs<\/strong>, which can be subsequently processed into finished steel.<\/td><\/tr><\/tbody><\/table><\/div>\n3. Exclusions: a) Waivers may be granted by the Ministry of Steel to all such Government procurements subject to the below conditions: b) Where specific grades of steel are not manufactured in the country, or c) Where the quantities as per the demand of the project cannot be met through domestic sources. d) Exemption requests shall be submitted to the Standing Committee along with sufficient proof of unavailability of iron & steel products domestically.<\/p>\n4. Standing Committee: a) A Standing Committee chaired by the Secretary (Steel) shall oversee the implementation of the policy. b) The Committee shall comprise experts drawn from Industry\/ Industry Association\/ Government Institution or Body\/ Ministry of Steel. Mandate:<\/p>\n<ul class=\"lst\"><li>i) Monitor the implementation of the policy;<\/li><li>ii) Review and notify the list of Iron & Steel products, the domestic content requirement criteria and policy directives as mentioned in Appendix A, Appendix B and Appendix C;<\/li><li>iii) Issue necessary clarifications<\/strong> for implementation of the policy, including grant of exclusions<\/strong> to procuring agencies as per Para 3;<\/li><li>iv) Constitute a grievance redressal committee<\/strong> for preliminary examination of complaints related to implementation of this policy;<\/li><li>v) Issue directions for suitable action to Ministries\/ Departments concerned in case of non-compliance with this policy by the procuring agency, and advise.<\/li><li>Wherever a procuring entity concludes that an unreasonably high price has been quoted by the SOLE bidder\/ manufacturer, the matter may be referred to the committee. In such cases, the procuring entity would be required to substantiate its case with complete and thorough documentation.<\/li><li>Specifying foreign certifications\/ unreasonable technical specifications in the bid document is a restrictive and discriminatory practice against local suppliers. If foreign certification is required to be stipulated because of non-availability of Indian Standards and\/or for any other reason, the same shall be done only after written approval of the Committee.<\/li><\/ul>\n5. Applicability: a) The policy applies to every Ministry or Department of Government and all agencies\/ entities under their administrative control, and to projects funded by these agencies, for the purchase of iron & steel products for government projects. All Central Sector Schemes (CS)\/ Centrally Sponsored Schemes (CSS) for which procurement is made by States and Local Bodies come within the purview of this Policy if that project\/ scheme is fully\/ partly funded by the Government of India. b) The policy applies to public sector steel manufacturers and agencies\/ entities under their administrative control for purchase of capital goods (Appendix-B) for manufacturing iron & steel products. c) Appendix-B contains the exemption list of capital goods used in manufacturing iron & steel products which can be imported, and the minimum domestic content requirement for respective packages. The domestic value addition for Capital Goods, as indicated, is subject to change; for example, if some capital goods components can be manufactured in the country, the domestic value addition percentage may go up. d) A purchase preference of 20% is applicable for capital goods used in steel manufacturing.<\/p>\n<aside class=\"note\">Example given in the Manual: If the lowest bidder (L1) for an importable capital good is a foreign company with a quoted price of INR 100 crores for the product package, under the policy a procurement preference of 20% will be applicable to a domestic supplier of the same capital good.<\/p><\/aside>\n<ol class=\"lst\"><li>Appendix-C contains directives and methodology for steelmaking CPSEs to procure from indigenous technology suppliers.<\/li><li>The policy shall apply to projects AND non-projects where the total procurement value of iron and steel products (Appendix-A) in a contract is greater than rs. 5 lakh, on an ITEMISED BASIS.<\/li><li>NO Global Tender Enquiry (GTE) shall be invited<\/strong> for tenders related to the procurement of iron and steel products (Appendix-A)<\/strong>. NO GTE shall be invited<\/strong> for tenders related to the procurement of Capital Goods for manufacturing iron & steel products (Appendix-B) having estimated value UP TO Rs. 200 Crore<\/strong>, except with the approval of the competent authority as designated by the Department of Expenditure.<\/li><li>The policy applies to the purchase of iron & steel products by PRIVATE agencies for fulfilling an EPC contract and\/or any other requirement of a Ministry or Department of Government or their PSUs.<\/li><\/ol>\n6. Tender Procedure for Procurement: a) Procuring agencies shall follow standard procurement procedures, in accordance with instructions of the Ministry of Finance and CVC, while adhering to DMI&SP policy. b) The tender document, for procurement of both Goods as well as for EPC contracts, should explicitly outline the qualification criteria for adherence to the requirement as mentioned in Appendix A and Appendix B. c) Domestic manufacturers of products under Appendix-A and Appendix-B shall SELF-CERTIFY the local content as per Form-1 placed in the policy, at the time of bidding. d) Bidders who are selling agents\/ authorised distributors\/ authorised dealers\/ authorised supply houses of the domestic manufacturers of iron & steel products covered by Appendix-A are eligible to bid with self-certification on behalf of the domestic manufacturers under the policy, subject to the bidder furnishing an authorisation certificate issued by the domestic manufacturer at the time of delivery. e) For products covered under Appendix B, the bidder shall furnish certification issued by the statutory auditor or cost auditor of the company (in the case of companies), or from a practising cost accountant or practising chartered accountant (in respect of suppliers other than companies), declaring that the capital goods to be used in the iron & steel industry are domestically manufactured in terms of the domestic value addition prescribed. f) If Indian suppliers of an item are not allowed to participate and\/or compete in procurement by any foreign government, due to restrictive tender conditions which have the direct or indirect effect of barring Indian companies \u2014 such as registration in the procuring country, execution of projects of specific value in the procuring country, etc. \u2014 it shall provide such details to the procuring entities for appropriate RECIPROCAL action. g) Entities of countries identified by the Ministry of Steel as not allowing Indian companies to participate in their Government procurement for any item related to the Ministry of Steel shall not be allowed to participate in Government procurement in India for all items related to the Ministry of Steel, except for the list of items published by the Ministry of Steel permitting their participation. h) The stipulation above shall be part of all tenders, including those on the GeM portal, invited by the Central Government procuring entities. i) In case restrictive or discriminatory conditions against domestic suppliers are included in bid documents, an inquiry shall be conducted by the Administrative Department undertaking the procurement to fix responsibility. Thereafter, appropriate action \u2014 administrative or otherwise \u2014 shall be taken against erring officials. Intimation on all such action shall be sent to the Standing Committee under the DMI&SP policy. j) A supplier DEBARRED by any procuring entity for violation of this Order shall not be eligible for preference under this Order for procurement by any OTHER procuring entity for the duration of the debarment. The debarment for such other procuring entities shall take effect prospectively from the date on which it comes to the notice of other procurement entities. k) Grievance redressal timelines: In case the matter is referred to the Ministry of Steel, the grievance redressal committee set up under the MoS shall dispose of the complaint within 4 WEEKS of its reference and receipt of all documents from the bidder, after taking into consideration the view of the Government Agency. The bidder shall be required to furnish the necessary documentation in support of domestic value addition claimed in iron & steel products to the grievance redressal committee under MoS within 2 WEEKS of the reference of the matter. l) The procuring agency shall define the penalties in the tender document in case of a wrong declaration by the bidder of the prescribed domestic value addition. The penalties may include forfeiting of the EMD, other financial penalties, and BLACKLISTING of such manufacturer\/ service provider, etc., in terms of extant rules.<\/p>\n7. Implementation Monitoring by the Ministry of Steel: a) The policy provisions shall be applicable for 5 YEARS from the date of publication and may further be extended at the discretion of the Ministry of Steel. b) MoS shall be the NODAL MINISTRY to monitor the implementation of the policy. c) Agencies covered under the DMI&SP policy shall send a declaration on a QUARTERLY basis indicating the extent of compliance to the policy and reasons for non-compliance thereof, during the preceding financial year.<\/p>\n8. Conclusion \u2014 Applicability to EPC Tenders W<\/span>:<\/p>\nPara 6(b) of the policy above makes it explicitly applicable to both Goods and EPC tenders. Except for the rare cases of EPC tenders for setting up of Steel Manufacturing facilities (where Appendix B and C shall also be applicable), normally only Appendix A shall be applicable in EPC tenders, and these products can only be procured from domestic sources. Purchase preference of 20% is applicable only to capital goods as per Appendix B and not to Appendix A.<\/p>\n<aside class=\"note\">Appendix A, B & C and Form 1 of this policy are given in Annexures 20 and 21<\/strong> of the Works Manual.<\/p><\/aside>\n<\/div><\/div><h2 class=\"src-multi srchead\" data-src=\" C NC \">1.12<\/span>When is Procurement of Services Justified<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\"><h3 class=\"src-C srchead\" data-src=\" C \">1.12.1<\/span>Consultancy Services<\/span>C<\/span><\/h3><div class=\"srcblock src-C\" data-src=\" C \" data-label=\"Consultancy Manual only\">\nRules 178 & 180 of GFR 2017 permit Ministries\/ Departments to hire external professionals, consultancy firms or consultants (referred to as 'consultant' hereinafter) for a specific job, which is well defined in terms of content and time frame for its completion.<\/p>\nEngagement of consultants may be resorted to in situations requiring high quality services for which the Procuring Entity does not have the requisite expertise. Approval of the competent authority should be obtained before engaging consultant(s).<\/p>\nThe need for Procurement of Consultancy Services may be justified on consideration of:<\/p>\n<ol class=\"lst\"><li>The assignment should be well defined in terms of content and time frame for its completion;<\/li><li>The inadequacy of Capability or Capacity of required expertise IN-HOUSE;<\/li><li>The need to have qualified consultants for providing a specialised high-quality service;<\/li><li>Need for impartial advice<\/strong> from a consultant (acting independently from any affiliation) to avoid conflicts of interest<\/strong>;<\/li><li>The need, in some cases, for Transfer of Knowledge\/ Training\/ Capacity and capability building as a by-product of such engagement;<\/li><li>Need to acquire information about\/ identifying and implementing new methods and systems;<\/li><li>Need for planning and implementing ORGANISATIONAL CHANGE;<\/li><li>There may be internal capacity\/ capability to do the job, BUT there are considerations of ECONOMY, SPEED, and EFFICIENCY in relation to additional requirement\/ commitment\/ usage of:<\/li><li>i) Staff\/ Management\/ Organisation;<\/li><li>ii) Technological and Material Resources;<\/li><li>iii) Money<\/strong>; and<\/li><li>iv) Time\/ Speed of execution.<\/li><\/ol>\n<\/div><h3 class=\"src-NC srchead\" data-src=\" NC \">1.12.2<\/span>Non-Consultancy Services<\/span>NC<\/span><\/h3><div class=\"srcblock src-NC\" data-src=\" NC \" data-label=\"Non-Consultancy Manual only\">\nIn the interest of economy, efficiency and to provide more effective delivery of public services, Rule 198 of GFR, 2017 permits Ministries\/ Departments to procure\/ outsource NC services (e.g. non-core, auxiliary and support services). Approval of the competent authority should be obtained before engaging service providers.<\/p>\nThe need for Procurement of NC services may be justified on consideration of:<\/p>\n<ol class=\"lst\"><li>Economy, speed and efficiency and more effective delivery of public services relating to additional requirement\/ commitment\/ usage of:<\/li><li>Staff\/ Management\/ Organisation;<\/li><li>Technological and Material Resources;<\/li><li>Money<\/strong>; and<\/li><li>Time\/ Speed of execution.<\/li><li>An administrative policy decided by the Ministry\/ Department to outsource specific (or a class of) services.<\/li><\/ol>\n<\/div><\/div><h2 class=\"src-multi srchead\" data-src=\" C NC \">1.13<\/span>Principles for Public Procurement of Services<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\">\nOther principles of Public Procurement as mentioned in para 1.8 above are also equally applicable to Procurement of Consultancy and Non-consultancy services. To ensure value for money during procurement of services, the following additional principles shall be considered:<\/p>\n<div class=\"tblwrap\"><table><thead><tr class=\"\" ><th>#<\/th><th>Consultancy Services C<\/span><\/th><th>Non-Consultancy Services NC<\/span><\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>Services to be procured should be justifiable<\/strong> in accordance with para 1.12 above<\/td><td>Services to be procured should be justifiable<\/strong> in accordance with para 1.12 above<\/td><\/tr><tr><td>b<\/td><td>Terms of Reference \u2014 a document covering well-defined scope of work\/ description of services and the time frame for which services are to be availed \u2014 should be consistent with the overall objectives of the Procuring Entity<\/td><td>In Non-consultancy Services, the Activities Schedule \u2014 a document covering well-defined scope of work\/ description of services and the time frame for which services are to be availed \u2014 should be consistent with the overall objectives of the Procuring Entity<\/td><\/tr><tr><td>c<\/td><td>Equal opportunity to all qualified Consultants to compete should be ensured<\/td><td>Equal opportunity to all qualified service providers to compete should be ensured<\/td><\/tr><tr><td>d<\/td><td>Engagements should be economical and efficient<\/strong><\/td><td>Engagements should be economical and efficient<\/strong><\/td><\/tr><tr><td>e<\/td><td>Transparency and integrity in the Consultancy process \u2014 that is, proposed, awarded, administered, and executed according to the highest ethical standards<\/td><td>Transparency and integrity in the selection process \u2014 that is, proposed, awarded, administered, and executed according to the highest ethical standards<\/td><\/tr><tr><td>f<\/td><td>Additionally, in procurement of consultancy services, consultants should be of HIGH QUALITY<\/strong>, in line with the justification as per para 1.12 above (Rule 180 of GFR 2017)<\/em><\/td><td> \u2014 <\/td><\/tr><\/tbody><\/table><\/div>\nC<\/span> \u2014 the two-stage requirement: In Procurement of Consultancy, these considerations can be <\/strong>best addressed through unrestricted competition among qualified shortlisted firms or individuals, in which <\/strong>selection is based on the QUALITY of the proposal and, where appropriate, on the COST of services to be provided. <\/strong>Hence Procurement of Consultancy needs to be done in a two-STAGE PROCESS.<\/p>\n<\/div><h2>1.14<\/span>Legal Aspects Governing Public Procurement<\/span><\/h2>\nA public procurement contract, besides being a commercial transaction, is also a legal transaction. There are several laws that may affect various commercial aspects of public procurement contracts. A public procurement professional is expected to be generally aware of the implications of the following basic laws affecting procurement; however, he or she is not expected to be a legal expert. In different contexts of the scope of work, an additional set of laws may be relevant.<\/p>\n<aside class=\"note\">G<\/span> The Goods Manual places this material in Appendix 2: Legal Aspects of Public Procurement<\/strong>, covering: (1) Relevant Provisions of the Constitution of India; (2) Salient Features of the Indian Contract Act; (3) Salient Features of the Sale of Goods Act, 1930; (4) Salient Features of the Indian Arbitration & Conciliation Act, 1996; (5) The Mediation Act, 2023; (6) Salient Features of the Competition Act, 2002 relating to Anti-competitive Practices; (7) Salient Features of the Whistle Blowers Protection Act, 2011 and the Whistle Blowers Protection (Amendment) Act, 2015.<\/p>\nC<\/span>NC<\/span> cross-refer to Appendix 2 of the Goods Manual<\/strong> without listing the statutes.<\/p><\/aside>\nW<\/span> \u2014 the list of applicable laws, as enumerated in the Works Manual:<\/p>\n<ol class=\"lst\"><li>The Constitution of India<\/li><li>Indian Contract Act, 1872<\/li><li>Arbitration and Conciliation Act, 1996<\/strong>, as amended by the Arbitration and Conciliation (Amendment) Acts, 2015, 2019 and 2021<\/strong><\/li><li>Competition Act, 2002<\/strong>, as amended by the Competition (Amendment) Acts, 2007 and 2023<\/strong><\/li><li>The Information Technology Act, 2000<\/strong> (IT Act \u2014 regarding e-procurement and e-auction<\/strong>, popularly called the Cyber Law<\/strong>), as amended by the Information Technology (Amendment) Acts 2008 and 2015<\/strong>, and as modified by the Jan Vishwas (Amendment of Provisions) Act, 2023<\/strong><\/li><li>Right to Information (RTI) Act, 2005<\/li><li>Central Vigilance Commission Act, 2003<\/li><li>Delhi Special Police Establishment Act, 1946<\/strong> (DSPE \u2014 basis of the Central Bureau of Investigation)<\/li><li>Prevention of Corruption Act, 1988<\/strong>, as amended by the Prevention of Corruption (Amendment) Act, 2018<\/strong><\/li><li>Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) \u2014 replaces the Code of Criminal Procedure, 1973; Section dealing with sanction for prosecution \u2014 \u00a7218<\/li><li>Insolvency and Bankruptcy Code, 2016<\/strong>, as amended by the Insolvency and Bankruptcy Code (Amendment) Acts 2018, 2019, 2020 and 2021<\/strong> \u2014 governs insolvency and liquidation of business enterprises<\/strong> \u2014 and other allied laws applicable to business entities participating in works contracts<\/li><li>Various labour laws<\/strong> applicable at the works' site<\/li><li>Various building and safety acts, codes, standards<\/strong> applicable in the context of the scope of work; and<\/li><li>Various environmental and mining laws, codes, standards<\/strong> applicable in the context of the scope of work.<\/li><\/ol>\n<h2 class=\"src-multi srchead\" data-src=\" W C NC \">1.15<\/span>The Law of Agency<\/span>W<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\" data-src=\" W C NC \" data-label=\"Works + Consultancy + Non-Consultancy only\">\nIn addition to the laws applicable to Public Procurement referred to above, the Law of Agency (Sections 182 to 238 of the Indian Contract Act, 1872)<\/strong> implies that the contractor\/ consultant\/ service provider would be an AGENT of the Procuring Entity<\/strong>, acting as a 'Principal<\/strong>', to execute the works\/ carry out the service on its behalf<\/strong>.<\/p>\nHence, there exists a PRINCIPAL\/ EMPLOYER and AGENT relationship<\/strong> between the Procuring Entity and such contractor\/ consultant\/ service provider.<\/p>\nAs per this law, the principal\/ employer (i.e., the Procuring Entity) is vicariously, legally and financially liable for the actions of its Agents.<\/p>\n<aside class=\"note\">Example given in the Manuals:<\/strong> A violation of certain labour laws<\/strong> in deputing staff for the Procuring Entity's contract by the agent (contractor\/ consultant\/ service provider) may render the Procuring Entity legally and financially liable\/ answerable for such violations<\/strong>, under certain circumstances.<\/p><\/aside>\nThe Procuring Entities need to be AWARE of such eventualities. Standard\/ Model Bidding\/ Tender Documents should take care of this aspect.<\/p>\n<aside class=\"note\">Note:<\/strong> This section does not<\/strong> appear in the Goods Manual.<\/p><\/aside>\n<\/div><h2 class=\"src-G srchead\" data-src=\" G \">1.16<\/span>Right to Information and Proactive Information Disclosures<\/span>G<\/span><\/h2><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\nSection 4(1)(b) of the RTI Act lays down the information to be disclosed by public authorities on a SUO-MOTU or PROACTIVE basis, and Section 4(2) and Section 4(3) prescribe the method of its dissemination \u2014 to enhance transparency and also to reduce the need for filing individual RTI applications.<\/p>\nThe Department of Personnel & Training, Ministry of Personnel, Public Grievances & Pensions<\/strong>, Government of India, has issued \"Guidelines on suo motu disclosure under Section 4 of the RTI Act<\/strong>\" vide their OM No. 1\/6\/2011-IR dated April 15, 2013<\/strong>. The relevant guidelines relating to information disclosure relating to procurement are reproduced below:<\/p>\n<aside class=\"note\">\"Information relating to procurement made by public authorities \u2014 including publication of notice\/ tender enquiries, corrigenda thereon, and details of bid awards detailing the name of the Vendor\/ Contractor of goods\/ services being procured or the works contracts entered, or any such combination of these, and the rate and total amount at which such procurement or works contract is to be done \u2014 should be disclosed.<\/p>\nAll information disclosable as per Ministry of Finance, Department of Expenditure's O.M. No. 10\/1\/2011-PPC dated 30th November 2011 (and 05th March 2012) on Mandatory Publication of Tender Enquiries on the Central Public Procurement Portal, and O.M. No. 10\/3\/2012-PPC dated 09th January 2014 on implementation of comprehensive end-to-end e-procurement, should be disclosed under Section 4 of the Right to Information Act.\"<\/p><\/aside>\n<\/div><h2 class=\"src-W srchead\" data-src=\" W \">1.17<\/span>The Basic Principles of Undertaking Works<\/span>W<\/span><\/h2><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n<ol class=\"lst\"><li>No new works should be sanctioned without:<\/li><li>Careful assessment of the assets or facilities already available, and the time and cost required to complete the new works;<\/li><li>A concept plan\/ preliminary drawing having been approved by the Authority competent to accord sanction. While designing projects, to the extent possible, principles of life cycle costing may also be considered.<\/li><li>As budgetary resources are limited and granted on an annual basis, adequate provisions should be ensured for works and services already in progress before new works are undertaken.<\/li><li>NO project or work will be SPLIT UP to bring it within the sanctioning powers of a lower authority.<\/li><li>(Rule 137, GFR 2017)<\/em> For the purpose of approval and sanctions, a group of works which forms one PROJECT shall be considered as one WORK<\/strong>. The approval or sanction of the higher authority for such a project consisting of a group of works should not be circumvented by resorting to approval of individual works using the powers of approval or sanction of a lower authority<\/strong>.<\/li><li>(MoF OM No. F.1(26)-E-II(A)\/66 dated 04.01.1967 & 27.10.1967)<\/em>If the component parts of a project are MUTUALLY INDEPENDENT of each other<\/strong> and are not dependent on the execution of one or more such component parts, each such part should be treated as a SEPARATE PROJECT<\/strong>.<\/li><li>In case the functioning of a project is DEPENDENT on the execution of one or more other projects, the entire group of such projects should be taken as a SINGLE scheme\/ project and provision made accordingly.<\/li><\/ol>\nIf, however, a scheme consists of revenue component, capital expenditure and loan content, etc., the provision for which is required to be exhibited separately under respective Heads of Account, there is no objection to the provision being made in the relevant Heads of Account; but the authorities concerned should ensure that the sanction of the Competent Authority is obtained for the integrated scheme as a whole, depending on the total COST of the scheme. It will not be permissible in such cases to split up a scheme, treating each part as a scheme, in order to avoid the sanction of a higher authority.<\/p>\n<ol class=\"lst\"><li>(Rule 138, GFR 2017)<\/em> Any anticipated or actual SAVINGS from a sanctioned estimate for a definite project shall not, without special authorisation, be applied to carry out ADDITIONAL WORK not contemplated in the original project.<\/li><li>(Rule 136(3), GFR 2017)<\/em> Any development of a project considered necessary while a work is in progress, which is not contingent on the execution of the work first sanctioned, shall have to be covered by a SUPPLEMENTARY ESTIMATE.<\/li><li>The construction period and sanctioned cost stipulated in the sanction of the Project will not be exceeded as far as possible.<\/li><li>(Rule 135(2), GFR 2017)<\/em> Ministry or Department shall put in place, as far as possible, empowered project teams for all large value projects, and these teams should be tasked only with project execution and not given other operational duties.<\/li><li>The competent financial authority according the administrative approval should be KEPT INFORMED of the physical and financial progress of the work till their completion, through regular periodical reports.<\/li><li>(Rule 135(1) and 139(i), GFR 2017)<\/em> Subject to the observance of general rules (Rules 130\u2013141, Rule 144 of GFR, 2017), the initiation, authorisation, procurement and execution of works allotted to a particular Ministry or Department shall be regulated by detailed rules and orders contained in the respective departmental regulations and by other special orders applicable to them. The detailed procedure relating to expenditure on such works shall be prescribed by departmental regulations framed in consultation with the accounts officer, generally based on the procedures and the principles underlying the financial and accounting rules prescribed for similar works carried out by the Central Public Works Department (CPWD).<\/li><li>(Rule 136(1) and 139(vi), GFR 2017)<\/em> NO works shall be commenced or liability incurred in connection with it until:<\/li><li>Feasibility Study Report\/ Preliminary Project Report (PPR) has been prepared in case of works of substantial value;<\/li><li>A proper Detailed Project Report (DPR) has been prepared by a competent agency;<\/li><li>Administrative Approval (A\/A)<\/strong> has been obtained from the appropriate authority, in each case;<\/li><li>Expenditure Sanction (E\/S)<\/strong> to incur expenditure has been obtained from the competent authority;<\/li><li>Technical approval has been obtained of the detailed and coordinated design of all the Architectural, Civil, Electrical, Mechanical, Horticulture and any other services included in the scope of the sanction, and of the Detailed Cost Estimates containing the detailed specifications and quantities of various items prepared on the basis of the schedule of rates maintained by CPWD or other Public Works Organisations;<\/li><li>Funds to cover the work, which will be executed at least during the current year, have been provided by competent authority;<\/li><li>Tenders have been invited and processed in accordance with rules;<\/li><li>Award of work and execution of Contract Agreement;<\/li><li>A work order has been issued;<\/li><li>Statutory and other clearances: Time taken in the grant of statutory and other clearances also contributes to the time and cost overrun in public projects. These clearances are required to achieve specific objectives like concern for the environment, aviation safety, preservation of national heritage, conservation of forest and wildlife, etc. Public Authorities\/ Project Executing Authorities should plan for obtaining all necessary clearances quickly and proper efforts be made for the same, which also should be duly recorded. The progress regarding follow-up of obtaining the statutory clearances should be closely monitored.<\/li><li>Land acquisition: The process of land acquisition shall be started by the Procuring Entity well ahead and completed entirely, or at least substantially, before the work is started. Availability of auxiliary services has been ensured \u2014 like roads\/ access, power, water, solid & liquid waste disposal system, street lighting and other civic services.<\/li><li>It is desirable to have 100% of the required land in possession before award of contract; however, it may not always be possible to have the entire land due to prevailing circumstances.<\/li><li>Also, it may not be prudent to put the entire process of award of contract on hold for want of the remaining portion of land, which \u2014 in the assessment of the public authority or project executing authority \u2014 could possibly be acquired in a targeted manner after award of the contract, without affecting progress.<\/li><li>Minimum necessary encumbrance-free land should be available before award of contract. The minimum may be determined based on the circumstances of each case or general guidelines issued by the concerned authorities. Such land, non-availability of which will prevent essential components of work from execution, should be insisted upon.<\/li><li>Public Authorities\/ Project Executing Authorities should plan for acquiring balance land quickly and proper efforts be made for the same, which also should be duly recorded. The progress regarding land acquisition should be closely monitored.<\/li><\/ol>\n<\/div><h2 class=\"src-W srchead\" data-src=\" W \">1.18<\/span>Administrative Control and Powers to Sanction<\/span>W<\/span><\/h2><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n1. Administrative control of works includes (Rule 131, GFR 2017)<\/em>: a) Assumption of full responsibility for construction, maintenance and upkeep; b) Proper utilisation of buildings and allied works; c) Provision of funds for execution of these functions.<\/p>\n2. Powers to Sanction Works (Rule 132, GFR 2017)<\/em>: The powers delegated to various subordinate authorities to accord administrative approval, sanction expenditure and re-appropriate funds for works are regulated by the Delegation of Financial Powers Rules (DFPR) and other orders contained in the respective departmental regulations. The powers of the Department relating to works are detailed in Rule 133(1) and 133(2) of GFR, 2017.<\/p>\n3. Work under the administrative control of the Public Works Departments (Rule 134, GFR 2017)<\/em>: Works not specifically allotted to any Ministry or Department shall be included in the Grants for Civil Works to be administered by the Central Public Works Department. NO such work may be financed partly from funds provided in the departmental budget and partly from the budget for civil works.<\/p>\n<\/div><h2>1.19<\/span>Public Procurement Cycle<\/span><\/h2>\nThe procurement process for goods, works and\/or services typically involves the following cycle of activities, undertaken in the order stated below<\/strong>. Details and procedures of the various stages of the procurement cycle are described in the subsequent Chapters.<\/p>\nCommon four-stage spine (all four Manuals):<\/p>\nNeed Assessment \u2192 Bid Invitation Process \u2192 Bid Evaluation and Award of Contract \u2192 Contract Management<\/p>\n<h3 class=\"src-G srchead\" data-src=\" G \">1.19.1<\/span>Goods<\/span>G<\/span><\/h3><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\n<div class=\"tblwrap\"><table><thead><tr><th>Stage<\/th><th>Content<\/th><\/tr><\/thead><tbody><tr><td>a) Need Assessment<\/td><td>Need assessment, formulation of Specifications and Procurement Planning (including market consultation, if required)<\/td><\/tr><tr><td>b) Bid Invitation Process<\/td><td>Preparing tender documents, publication, receipt and opening of bids<\/td><\/tr><tr><td>c) Bid Evaluation and Award of Contract<\/td><td>Evaluation of bids and award of contract<\/td><\/tr><tr><td>d) Contract Management<\/td><td>Contract management and closure<\/strong><\/td><\/tr><tr><td>e) Disposal of Scrap<\/td><td>Disposal of Scrap through various modes of disposal<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h3 class=\"src-W srchead\" data-src=\" W \">1.19.2<\/span>Works<\/span>W<\/span><\/h3><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\nFollowing are the stages in planning, sanctioning and execution of work:<\/p>\n1. Need Assessment: a) Perspective Planning for works; b) Preparation of Preliminary Project Report (PPR) or Rough Cost Estimate; c) Acceptance of necessity and issue of in-Principle Approval; d) Preparation of Detailed Project Report (DPR) or Preliminary Estimate (PE); e) Administrative Approval and Expenditure Sanction (A\/A & E\/S) or 'Go ahead' Approval; f) Detailed Design, Estimate and Technical Sanction; g) Appropriation\/ re-appropriation of funds.<\/p>\n2. Bid Invitation Process:<\/strong> Preparation of Bid documents, Publication, Receipt and Opening of Bids.<\/p>\n3. Bid Evaluation and Award of Contract: a) Preliminary Examination and Evaluation of technical proposals \u2014 consideration of quality; b) Evaluation of financial proposals; c) Selection of winning proposal and award of the contract to the selected firm.<\/p>\n4. Contract Management: Execution and Monitoring of works and Quality Assurance.<\/p>\n<aside class=\"note\">Note W<\/span>: For repair works up to Rs. 60 (Sixty) lakh, expenditure sanction may be given on the basis of the Preliminary Project Report itself. Annexure 11 of the Works Manual shows the above-mentioned process of procurement of Public Works as a flow-chart.<\/p><\/aside>\n<\/div><h3 class=\"src-C srchead\" data-src=\" C \">1.19.3<\/span>Consultancy Services<\/span>C<\/span><\/h3><div class=\"srcblock src-C\" data-src=\" C \" data-label=\"Consultancy Manual only\">\nThe entire process of procurement and implementation of Consultancy services shall include the following steps:<\/p>\n1. Need Assessment: a) Preparation of Procurement Proposal (Concept Paper) and obtaining in-principle approvals; b) Preparation of the Terms of Reference (ToR), cost estimate and seeking administrative and budgetary approval; c) Developing a Procurement Plan.<\/p>\n2. Shortlisting of Qualified Consultants \u2014 EOI process.<\/p>\n3. RfP Invitation Process:<\/strong> Preparing 'Request for Proposal (RfP) Document<\/strong>', publication, receipt and opening of bids.<\/p>\n4. Bid Evaluation and Award of Contract: a) Preliminary Examination and Evaluation of technical proposals \u2014 consideration of quality; b) Evaluation of financial proposals; c) Selection of winning proposal; NEGOTIATIONS and award of the contract to the selected firm.<\/p>\n5. Contract Management: Execution and Monitoring of Consultancy Assignments.<\/p>\n<\/div><h3 class=\"src-NC srchead\" data-src=\" NC \">1.19.4<\/span>Non-Consultancy Services<\/span>NC<\/span><\/h3><div class=\"srcblock src-NC\" data-src=\" NC \" data-label=\"Non-Consultancy Manual only\">\nThe entire process of procurement and implementation of Non-consultancy services shall include the following steps:<\/p>\n1. Need Assessment:<\/strong> a) Preparation of Procurement Proposal (Concept Paper)<\/strong> and obtaining in-principle approvals; b) Preparation of the Services and Activities Schedule, cost estimate<\/strong> and seeking administrative and budgetary approval; c) Developing a Procurement Plan<\/strong>.<\/p>\n2. Bid Invitation Process:<\/strong> Preparing tender documents, publication, receipt and opening of bids.<\/p>\n3. Bid Evaluation and Award of Contract:<\/strong> a) Preliminary Examination and Evaluation of technical proposals \u2014 consideration of quality; b) Evaluation of financial proposals; c) Selection of winning proposal and award of the contract to the selected firm.<\/p>\n4. Contract Management: Execution and Monitoring of Service Contract.<\/p>\n<aside class=\"note\">Comparison at a glance \u2014 what differs between the four cycles:<\/p>\n<ul class=\"lst\"><li>Only Goods has a fifth stage: Disposal of Scrap.<\/li><li>Only Works<\/strong> breaks Need Assessment into seven sanctioning steps<\/strong> (PPR \u2192 in-principle approval \u2192 DPR\/PE \u2192 A\/A & E\/S \u2192 Technical Sanction \u2192 appropriation of funds).<\/li><li>Only Consultancy<\/strong> has a separate stage for Shortlisting\/ EoI<\/strong>, and an RfP Invitation Process<\/strong> in place of the ordinary Bid Invitation Process, and expressly includes Negotiations<\/strong> before award.<\/li><li>CS and NC both begin with a Procurement Proposal (Concept Paper).<\/li><\/ul><\/aside>\n<\/div><h2>1.20<\/span>Nomenclature Conundrum<\/span><\/h2>\n<ol class=\"lst\"><li>There is NO standardised nomenclature in Public Procurement in India, and a mix of American, European, and British\/ Indian nomenclature has become common.<\/li><\/ol>\n'Tender<\/strong>' is taken to mean:<\/p>\n<ul class=\"lst\"><li>(i) the 'Tender Document' or 'Tender Process', as well as<\/li><li>(ii) the 'Bid<\/strong>' submitted by the 'bidders<\/strong>'.<\/li><\/ul>\nThe Tender Document floated by the Procuring Entity is also called a Bid (or Bidding) Document. Similarly, participants in a 'tender' are alternatively called BIDDERS and TENDERERS. This duality is reflected in \"Notice Inviting Tenders\" and \"Instructions to Bidders\", etc.<\/p>\n<ol class=\"lst\"><li>An attempt is made in these Manuals to standardise:<\/li><li>the term 'Tender<\/strong>' for the 'Tender Document<\/strong>' (document prepared and published by the Procuring Entity \u2014 instead of bid\/ bidding document) or the 'Tender Process<\/strong>'; and<\/li><li>'Bid<\/strong>' for the bid submitted by the bidders \u2014 and hence 'bidder<\/strong>' is used instead of 'tenderer<\/strong>'.<\/li><\/ol>\nSimilar attempts are made to standardise other nomenclature in these documents without DISTURBING the nomenclature (e.g., 'Pre-qualification Bidding') already embedded in the CPPP or GeM portals.<\/p>\n<h1>Appendix to Chapter 1 \u2014 Points of Difference Between the Four Manuals<\/span><\/h1>\nA ready-reckoner of every place in Chapter 1 where the four Manuals genuinely differ, rather than merely rename.<\/em><\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Delegation of powers for procurement<\/td><td>G\/C\/NC:<\/strong> \"full powers<\/strong>\" for goods and services not on GeM; GeM mandatory under Rule 149. W:<\/strong> \"powers\" under DFPR only \u2014 no GeM mandate stated<\/strong><\/td><\/tr><tr><td>2<\/td><td>Relevant GFR chapters<\/td><td>G, C, NC:<\/strong> Chapters 6 to 9<\/strong>. W:<\/strong> Chapters 5 to 9<\/strong><\/td><\/tr><tr><td>3<\/td><td>Sale of Goods Act, 1930<\/td><td>Cited in G, C, NC<\/strong>; NOT<\/strong> in W<\/strong><\/td><\/tr><tr><td>4<\/td><td>Mediation Act, 2023<\/td><td>Cited in G, W, NC<\/strong>; NOT<\/strong> in C<\/strong>'s para 1.1 list<\/td><\/tr><tr><td>5<\/td><td>Indian Stamp Act, 1899<\/td><td>Cited in W, C, NC<\/strong>; NOT<\/strong> in G<\/strong><\/td><\/tr><tr><td>6<\/td><td>Classification of Works<\/strong> (Original\/ Minor\/ Repair \u2014 Rule 130)<\/td><td>W only<\/td><\/tr><tr><td>7<\/td><td>Rs 60 lakh in-house repair-work threshold<\/td><td>W only<\/td><\/tr><tr><td>8<\/td><td>Portals named<\/td><td>G:<\/strong> GeM + GePNIC<\/strong>. W:<\/strong>CPPP only<\/strong>. C\/NC:<\/strong> GeM + CPPP (\"generally<\/strong> conform\")<\/td><\/tr><tr><td>9<\/td><td>Composite contract refinements<\/strong> (new product vs AMC\/CMC; Notes 1\u20133)<\/td><td>W, C, NC<\/strong>; G<\/strong> has only the shorter version<\/td><\/tr><tr><td>10<\/td><td>Consultancy-vs-NC \"primary objective\" test (dam safety example)<\/td><td>W, c, nc; Not in G<\/td><\/tr><tr><td>11<\/td><td>FA Charter applies only to Ministries\/ Departments; CPSEs free to devise own system<\/td><td>G only<\/td><\/tr><tr><td>12<\/td><td>Standards (Canons) of Financial Propriety<\/td><td>G, W only<\/strong> \u2014 absent from C<\/strong> and NC<\/strong><\/td><\/tr><tr><td>13<\/td><td>Rule 21 clause (v)<\/strong> \u2014 allowances not a source of profit<\/td><td>W only<\/td><\/tr><tr><td>14<\/td><td>National SC\/ST Hub (NSSH)<\/td><td>G only<\/td><\/tr><tr><td>15<\/td><td>\"25% is only a minimum; MSE preference mandatory for all procurements\"<\/td><td>C, NC only<\/td><\/tr><tr><td>16<\/td><td>Non-tax benefits explained (schemes, delayed payments)<\/td><td>C only<\/td><\/tr><tr><td>17<\/td><td>Definitions of Class-I \/ Class-II \/ Non-local supplier in Chapter 1<\/td><td>W, C, NC<\/strong>; in G<\/strong> these are in the Glossary<\/strong><\/td><\/tr><tr><td>18<\/td><td>\"Rs 1000 Crore per annum \u2192 five-year procurement projections on website\"<\/td><td>G, C<\/td><\/tr><tr><td>19<\/td><td>Start-up benefits limited to the DPIIT-registered industry\/ sector<\/td><td>W, C<\/td><\/tr><tr><td>20<\/td><td>\"Relaxation can be partial \u2014 e.g. 25%\" footnote<\/td><td>W, C, NC<\/td><\/tr><tr><td>21<\/td><td>DMI&SP Policy<\/td><td>G:<\/strong> 2019 version. W:<\/strong>Revised 2025<\/strong> version (G.S.R. 341(E) dated 26.05.2025), framed for EPC tenders. Absent from C and NC<\/strong><\/td><\/tr><tr><td>22<\/td><td>\"When is procurement justified\"<\/td><td>C, NC only<\/td><\/tr><tr><td>23<\/td><td>\"Principles for Public Procurement of Services\"<\/td><td>C, NC only<\/td><\/tr><tr><td>24<\/td><td>Two-stage process mandated for Consultancy<\/td><td>C only<\/td><\/tr><tr><td>25<\/td><td>Enumerated list of 14 applicable laws<\/td><td>W only<\/strong> (G places them in Appendix 2; C\/NC cross-refer)<\/td><\/tr><tr><td>26<\/td><td>Law of Agency<\/td><td>W, c, nc; Not in G<\/td><\/tr><tr><td>27<\/td><td>RTI and Proactive Disclosures<\/td><td>G only<\/td><\/tr><tr><td>28<\/td><td>Basic Principles of Undertaking Works (13 principles)<\/td><td>W only<\/td><\/tr><tr><td>29<\/td><td>Administrative Control and Powers to Sanction<\/td><td>W only<\/td><\/tr><tr><td>30<\/td><td>Procurement Cycle \u2014 fifth stage \"Disposal of Scrap\"<\/td><td>G only<\/td><\/tr><tr><td>31<\/td><td>Procurement Cycle \u2014 Shortlisting\/ EoI as a separate stage; RfP in place of Bid Invitation; Negotiations named<\/td><td>C only<\/td><\/tr><tr><td>32<\/td><td>Procurement Cycle \u2014 Procurement Proposal (Concept Paper) as first step<\/td><td>C, NC<\/td><\/tr><tr><td>33<\/td><td>Repair works up to Rs 60 lakh \u2014 expenditure sanction on PPR alone<\/td><td>W only<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 1<\/p>\n<aside class=\"note\">Next:<\/strong> Chapter 2 \u2014 Need Assessment, Formulation of Specifications\/ Estimates\/ ToR\/ Activities Schedule, and Procurement Planning<\/em> (merging Goods Ch. 2, Works Ch. 2, Consultancy Ch. 2 and Non-Consultancy Ch. 2).<\/p><\/aside><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch2\">Chapter 2<\/p><h1>Need Assessment, Formulation of the Requirement, and Procurement Planning<\/h1><\/header>\nMerging: Goods Ch. 2 (Need Assessment, Formulation of Specifications and Procurement Planning) \u00b7 Works Ch. 2 (Need Assessment and Procurement Planning) \u00b7 Consultancy Ch. 2 \u00b7 Non-Consultancy Ch. 2<\/em><\/p><h2>The Central Idea of this Chapter<\/span><\/h2>\nThis is the chapter where the four Manuals genuinely diverge the most.<\/strong> Chapter 1 was largely common text; Chapter 2 is not. The reason is simple:<\/p>\n<aside class=\"note\">Every procurement must be described before it can be tendered \u2014 but the INSTRUMENT of description is different in each of the four categories.<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Initiating document<\/th><th>Description-of-requirement instrument<\/th><th>Approval architecture<\/th><\/tr><\/thead><tbody><tr><td>Goods<\/td><td>Indent \/ Purchase Requisition (Annexure 5)<\/td><td>Technical Specifications (TS)<\/td><td>Technical + Administrative + Budgetary sanction; signing of Indent<\/td><\/tr><tr><td>Works<\/td><td>Requisition \u2192 Perspective Plan<\/td><td>PPR\/ Rough Cost Estimate \u2192 DPR\/ Preliminary Estimate \u2192 Detailed Designs & Detailed Estimates<\/td><td>In-Principle Approval \u2192 A\/A and E\/S \u2192 Technical Sanction \u2192 Appropriation of funds<\/td><\/tr><tr><td>Consultancy<\/td><td>Procurement Proposal (Concept Paper) (Annexure 3)<\/td><td>Terms of Reference (ToR) (Annexure 4)<\/td><td>In-principle approval \u2192 Final Administrative and Budgetary Approval<\/td><\/tr><tr><td>Non-Consultancy<\/td><td>Procurement Proposal (Concept Paper) (Annexure 3)<\/td><td>Services and Activities Schedule (Annexure 4)<\/td><td>In-principle approval \u2192 Final Administrative and Budgetary Approval<\/td><\/tr><\/tbody><\/table><\/div>\nEverything else in this chapter \u2014 cost estimation principles, procurement planning, packaging\/slicing, cartel mitigation, annual procurement plans, risks and mitigations \u2014 is largely common and is stated once below.<\/p>\n<h2>Concordance for Chapter 2<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>Goods<\/th><th>Works<\/th><th>CS<\/th><th>NCS<\/th><\/tr><\/thead><tbody><tr><td>2.1<\/td><td>Need Assessment and the Initiating Document<\/td><td>2.1<\/td><td>2.1<\/td><td>2.1, 2.2<\/td><td>2.1, 2.2<\/td><\/tr><tr><td>2.2<\/td><td>Matters decided during Need Assessment<\/td><td>2.1-2<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>2.3<\/td><td>Estimation of Cost<\/td><td>2.1-2-f)<\/td><td>2.2, 2.4<\/td><td>2.4<\/td><td>2.3.2<\/td><\/tr><tr><td>2.4<\/td><td>Formulation of the Requirement \u2014 Goods: Technical Specifications<\/strong><\/td><td>2.2<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>2.5<\/td><td>Formulation of the Requirement \u2014 Works: PPR, DPR, designs, Estimates, Sanctions<\/td><td> \u2014 <\/td><td>2.2\u20132.8<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>2.6<\/td><td>Formulation of the Requirement \u2014 Consultancy: Terms of Reference<\/strong><\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>2.3<\/td><td> \u2014 <\/td><\/tr><tr><td>2.7<\/td><td>Formulation of the Requirement \u2014 NC: Services and Activities Schedule<\/strong><\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>2.3.1<\/td><\/tr><tr><td>2.8<\/td><td>Obtaining Sanctions\/ Approvals<\/td><td>2.3<\/td><td>2.3, 2.5, 2.7<\/td><td>2.5<\/td><td>2.3.3<\/td><\/tr><tr><td>2.9<\/td><td>Need Assessment & Formulation \u2014 Risks and Mitigations<\/td><td>2.4<\/td><td> \u2014 <\/td><td>2.6<\/td><td>2.3.4<\/td><\/tr><tr><td>2.10<\/td><td>Procurement Planning<\/td><td>2.5.1<\/td><td>2.9<\/td><td>2.7.1<\/td><td>2.4.1<\/td><\/tr><tr><td>2.11<\/td><td>Procurement Planning \u2014 Risks and Mitigations<\/td><td>2.5.2<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>2.4.2<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>2.1<\/span>Need Assessment and the Initiating Document<\/span><\/h2><h3 class=\"src-G srchead\" data-src=\" G \">2.1.1<\/span>Goods \u2014 the Indent<\/span>G<\/span><\/h3><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\n<ol class=\"lst\"><li>Procurements should be initiated only on the basis of an INDENT (please refer to Annexure 5 \u2014 Purchase Requisition (Indent) for Goods (Non-stock)) from the user Department.<\/li><li>The authority in the user Department initiating the indent for procurement shall first determine the need (including anticipated quantum) for the subject matter of the procurement.<\/li><li>Description and Specification of Need assessment is of FUNDAMENTAL IMPORTANCE in ensuring value for money, transparency, competition, and a level playing field in procurement.<\/li><li>The user department shall maintain all documents relating to the determination and technical\/ financial\/ budgetary approvals needed for procurement.<\/li><\/ol>\n<\/div><h3 class=\"src-W srchead\" data-src=\" W \">2.1.2<\/span>Works \u2014 Perspective Planning for Works<\/span>W<\/span><\/h3><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n<ol class=\"lst\"><li>Each Ministry\/ Department shall prepare a perspective plan for undertaking different types of works. There shall also be a provision for ANNUAL REVIEW of the plan for making modifications, if any.<\/li><li>During procurements, in place of considering only the initial acquisition cost<\/strong>, other costs like cost of operation, maintenance, and disposal during the lifetime<\/strong> of the external resource procured should also be considered. This practice refers to the concept of Total Cost of Ownership (TCO) or Life Cycle Cost (LCC) or Whole-of-Life (WOL)<\/strong>, as mentioned under para 1.7<\/strong> above.<\/li><\/ol>\n<\/div><h3 class=\"src-multi srchead\" data-src=\" C NC \">2.1.3<\/span>Consultancy and Non-Consultancy Services \u2014 the Procurement Proposal<\/span>C<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\">\n<ol class=\"lst\"><li>Procurement Proposal:<\/strong> A critical part of the procurement of Services process is preparing an appropriately staffed and budgeted Procurement Proposal\/ Concept Paper<\/strong> \u2014 which serves the function that an INDENT serves in procurement of Goods<\/strong>. The authority in the user Department initiating the procurement proposal shall first determine the need (including anticipated quantum)<\/strong> for the subject matter of the procurement.<\/li><\/ol>\nPurpose\/ Objective Statement of Services, Service Outcome Statement, and justification for the procurement of Services are important parts of the procurement proposal.<\/p>\n<ol class=\"lst\"><li>The description instrument:<\/li><li class=\"srcmark src-C\" data-src=\" C \">C<\/span>Terms of Reference<\/strong> containing Scope of Work, Time-frame, Key Staff, Deliverables\/ Milestones<\/strong> is of fundamental importance in ensuring value for money, transparency, competition, and a level playing field in procurement of Consultancy Services.<\/li><li class=\"srcmark src-NC\" data-src=\" NC \">NC<\/span>Services and Activity Schedule<\/strong> containing Service Outcomes, Description\/ Scope of Services, Quantum and Length (Duration\/ Frequency\/ Shifts) of activities<\/strong> is of fundamental importance in ensuring value for money, transparency, competition, and a level playing field in procurement of NC Services.<\/li><\/ol>\nThe user Department shall maintain all documents relating to the determination and technical\/ financial\/ budgetary approvals of the need for procurement.<\/p>\n<h4 class=\"src-multi srchead\" data-src=\" C NC \">2.1.3.1<\/span>Preparing the Procurement Proposal\/ Concept Paper<\/span>C<\/span>NC<\/span><\/h4><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\">\nAs a first step towards procurement of services, a formal written brief Proposal and Justification for the Services should be prepared (suggested format at Annexure 3: Format of Procurement Proposal). It is akin to the Indent for Materials\/ Material Requisition in the case of Procurement of Goods.<\/p>\nThe User should prepare, in simple and concise language, the requirement, purpose\/ objectives and the scope\/ outcomes of the assignment\/ Services, and justify the procurement based on analysis of in-house available capacity\/ capability.<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-C\" data-src=\" C \">C<\/span>The eligibility and PRE-QUALIFICATION criteria to be met by the consultants<\/strong> should also be clearly identified at this stage.<\/li><li class=\"srcmark src-NC\" data-src=\" NC \">NC<\/span>The eligibility and QUALIFICATION criteria to be met by the service providers<\/strong> should also be clearly identified at this stage.<\/li><\/ul>\nJustifications for procurement of Services as given in para 1.12 may be kept in view. It is the basic document for initiating procurement of services. It is also the document from which the subsequent detailing of the ToR C<\/span> \/ Services and Activities Schedule NC<\/span> is drawn up.<\/p>\nA procurement proposal should contain:<\/p>\n1. Purpose\/ Objective Statement of Services: The user should prepare a \"Purpose\/ Objective Statement of Services\". One of the important contents of this statement is the description of service to describe the subject matter of procurement, which would be used in all subsequent documents. Bringing out the background and context, this should justify how the proposed procurement of services would fit in with the short-term and strategic goals of the Procuring Entity. Making such a statement is important to put the need for services in clear perspective. It may seem elementary or academic, but is a necessary and critical first step in properly designing a procurement proposal.<\/p>\n2. Service Outcome Statement:<\/strong> Once the \"Purpose\/ Objective of Services\" has been clearly defined, the next step is to formulate a 'Service Outcome Statement<\/strong>'. This should list out QUALITATIVELY and QUANTITATIVELY the outcomes expected<\/strong> from the Procurement of Services, as well as the expected Time-frame<\/strong> and a rough estimate of cost<\/strong> of Procurement of services (including related costs to be incurred by the organisation<\/strong>).<\/p>\nAt this stage, it is not necessary to go into details of all the activities<\/strong> required to achieve the service outcomes, but it should list at least the BROAD activities<\/strong>, which would help in putting a rough estimate to the cost of the assignment.<\/p>\nA 'Service Outcome Statement' should provide a concrete basis for subsequently defining the type and amount of work that needs to be done by the Consultant\/ service provider, and the time-frame within which the output needs to be received by the user. The estimated cost is needed to ascertain the level of administrative\/ financial approvals necessary as per the SoPP.<\/p>\n3. Justification for the Procurement of Services: The Concept Paper\/ Procurement Proposal should analyse the capabilities\/ capacities REQUIRED to carry out the assignment. It should also analyse the AVAILABLE IN-HOUSE capabilities\/ capacities and COMPARE these with the ones required for the assignment. Based on this assessment, the Procurement should be justified in the light of para 1.12.<\/p>\n<\/div><h4 class=\"src-multi srchead\" data-src=\" C NC \">2.1.3.2<\/span>In-principle Approval for initiating procurement of Services<\/span>C<\/span>NC<\/span><\/h4><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\">\nBased on the justification contained in the Procurement Proposal, in-principle administrative approval and BUDGETARY SANCTION for initiating procurement of such services should be accorded by the Competent Authority (CA) as laid down in the SoPP.<\/p>\nFurther stages May be proceeded with only after such approvals. (C<\/span> cites Rule 180 of GFR 2017.)<\/em><\/p>\n<\/div><\/div><h2 class=\"src-G srchead\" data-src=\" G \">2.2<\/span>Matters Decided During Need Assessment<\/span>G<\/span>of general application<\/span><\/h2><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\nDuring need assessments, the following matters are decided to comply with the 'Procurement Guidelines':<\/p>\n<h3>a) Expression\/ Description of the Need<\/span><\/h3>\nThe expression\/ description of the need is an important determinant of Value for Money (VfM) and wide competition<\/strong>. Therefore, to the extent practicable, it should be:<\/p>\n<ul class=\"lst\"><li>i) Unambiguous, complete, using common terminology prevalent in the relevant trade;<\/li><li>ii) In accordance with the guidelines prescribed, if any, in this regard;<\/li><li>iii) Except in the case of proprietary purchase from a selected single source, reference to trademark, brand\/ trade names, catalogue numbers, or other details that limit any materials or items to specific manufacturer(s) should be AVOIDED as far as possible. Where unavoidable, such item descriptions should always be followed by the words \"or substantially equivalent.\"<\/li><\/ul>\n<h3>b) Method of Satisfying the Need<\/span><\/h3>\nThe method of satisfying the need \u2014 owning\/ leasing\/ hiring\/ outsourcing or through Public Private Partnership (PPP)<\/strong>, and so on \u2014 may be determined:<\/p>\n<ul class=\"lst\"><li>as per policies declared in this regard, or<\/li><li>based on a techno-economic evaluation (using life cycle cost if feasible) of various alternative methods of satisfaction of the need, and compatibility and inter-operability with existing infrastructure or systems.<\/li><\/ul>\nThere are now new procurement approaches like:<\/p>\n<ul class=\"lst\"><li>Hardware as a Service (HaaS)<\/strong>, also known as Infrastructure as a Service (IaaS)<\/strong> \u2014 it allows customers to outsource their IT infrastructures, such as servers, networking, processing, storage, virtual machines, and other resources. Customers access these resources on the Internet using a pay-as-per-use model.<\/em><\/li><li>Software as a Service (SaaS)<\/strong> \u2014 the SaaS provider is responsible for operating, managing, and maintaining the application software hosted on the cloud and the infrastructure on which it runs. The customer simply creates an account, pays a fee and uses the software over an internet connection by way of a web browser, mobile app or thin client.<\/em><\/li><\/ul>\n<h3>c) Quantity of the Subject Matter of Procurement, Commensurate with Economy<\/span><\/h3>\n<ul class=\"lst\"><li>i) Care should be taken to avoid purchasing quantities in excess of the requirement to avoid inventory carrying costs. Where scales of consumption or usage limits of requirements have been laid down by the Competent Authority, the officer signing the indent should also CERTIFY that the prescribed scales or limits are not exceeded. It is also necessary to round off the calculated quantity to the nearest wagon load\/ truckload\/ package to economise on transportation.<\/li><li>ii) An appropriate size of the tender has a great impact on value for money and the level of competition. A balance is achieved by judicious packaging requirements of different users or slicing requirements into smaller tenders (see para 2.10 below on the merits and demerits of packaging and slicing).<\/li><li>iii) units of quantity are an important parameter. Some items may be manufactured in metric tons but used in units of numbers or units of length (for example, steel sheets\/ structurals). For the sake of transparency, it is important to buy an item in units of manufacture. For example, it is better to buy steel\/ structurals in units of WEIGHT, since it has a tolerance in weight per unit of length; this usually works to the disadvantage of the buyer if it is bought in units of length. The buying and issuing units of an item may be different \u2014 but should be standardised.<\/li><\/ul>\n<h3>d) Time-schedule and Place of Product\/ Work\/ Service Delivery<\/span><\/h3>\nNeed assessment and generation of indent for procurement should be done sufficiently in advance of the time when goods are required. Delays in need assessment have an ADVERSE IMPACT on value for money and transparency.<\/p>\nGreat care is required to be exercised in filling up REALISTIC DATES for the requirement of material. The procuring entity should be allowed time in accordance with the established lead times.<\/p>\nIn urgent cases, the procuring entity may entertain indents providing shorter periods, but such urgencies must be approved by the authority empowered to grant administrative approval for the indent, and must be accompanied by PROPER JUSTIFICATION.<\/p>\n<h3>e) Formulation of Specifications<\/span><\/h3>\nFormulation of Specifications ensures value for money, transparency, a level playing field, and the widest competition. (Detailed at paras 2.4 to 2.7 below, category-wise.)<\/em><\/p>\n<h3>f) Estimation of Cost<\/span><\/h3>\n(Detailed at para 2.3 below.)<\/em><\/p>\n<\/div><h2>2.3<\/span>Estimation of Cost<\/span><\/h2><h3 class=\"src-G srchead\" data-src=\" G \">2.3.1<\/span>Why the Estimate Matters<\/span>G<\/span>of general application<\/span><\/h3><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\nThe estimated cost in the indent is a VITAL ELEMENT in:<\/p>\n<ul class=\"lst\"><li>various procurement processes,<\/li><li>approvals, and<\/li><li>the establishment of reasonable prices at the time of evaluation of the bids.<\/li><\/ul>\nTherefore, it should be worked out REALISTICALLY and OBJECTIVELY.<\/p>\nFollowing are some suggested methods of cost estimates. These are neither mandatory nor comprehensive nor in any order of preference. These methods are not mutually exclusive, and TRIANGULATION from different methods would give a more accurate estimate of cost.<\/p>\n<h4>A. Where historical cost data IS available<\/span><\/h4>\nLast purchase price<\/strong> (or estimated rate in past indents) of this or similar or nearly equivalent requirements \u2014 after due updation<\/strong> as per D below.<\/p>\n<h4>B. Where NO historical cost data is available \u2014 Costing Analysis<\/span><\/h4>\nCosting analysis through internal or external expert costing agencies provides a reliable estimate of cost.<\/p>\n<h4>C. Where NO historical cost data is available AND Costing Analysis is NOT feasible<\/span><\/h4>\nIn such situations, a rough assessment of cost can be arrived at \u2014 but should be used with CAUTION for evaluation of the reasonableness of bids:<\/p>\n<ol class=\"lst\"><li>Rough assessment from the price of the assembly\/ machine of which the item is a part, or vice versa;<\/li><li>Published catalogues\/ Maximum Retail Price (MRP) printed on the item is the main source for establishing the estimated cost of items. It may be noted that MRPs usually include SIGNIFICANT MARGINS for distributors, wholesalers, and retailers;<\/li><li>As a LAST RESORT, a rough assessment of the opportunity cost of not using this item at all;<\/li><li>Market Survey: For commercially available goods, a formal market survey online (GeM portal or other commercial market apps) or a physical survey of the market can provide a reasonable estimate of cost;<\/li><li>Budgetary Quotes: For equipment\/ craft that are custom-built to the buyer's specifications, the best way to get a rough assessment of costs is by obtaining budgetary quotes from potential parties.<\/li><li>Ideally, there should be three quotes.<\/li><li>However, there is a need to have a time schedule for receipt of quotes<\/strong> to ensure some timeframe for this activity.<\/li><li>An attempt should be made to obtain as many budgetary quotes as possible from reputed\/ potential firms, and a time (if feasible, ten to twenty-one days) should be indicated.<\/li><li>In the event of receipt of less than three budgetary quotes, two EXTENSIONS (if feasible, of five days each) may be considered.<\/li><li>In the event of the non-availability of three quotes within the above extended period, the estimates should be prepared based on the number of budgetary quote(s) received \u2014 which May even be one.<\/li><li>Where more than one budgetary quote is received, the estimate should be framed on an AVERAGE of the quotes, which will reduce variations and fluctuations.<\/li><li>CAUTION: Budgetary quotes are not exact estimates \u2014 the bidder who EXPECTS to be short-listed may quote HIGH rates, and the bidder who does not expect to be shortlisted may quote ABNORMALLY LOW prices to queer the pitch for others.<\/li><\/ol>\n<h4>D. Updation of Historical Data<\/span><\/h4>\nHistorical cost data can be supplemented with escalations to cater for inflation, price increases of raw materials, labour, energy, statutory changes, price indices, and so on, to make them usable in conditions prevailing currently. In the case of foreign currencies, the rate should be reduced to a common denomination of Indian Rupees.<\/p>\nPrice indices can be obtained from the following websites<\/strong>(some may require prior free registration, and some have paid subscriptions)<\/em>:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Purpose<\/th><th>Source<\/th><\/tr><\/thead><tbody><tr><td>Price indices of indigenous items<\/strong><\/td><td>http:\/\/www.eaindustry.nic.in\/home.asp.in \u2014 Ministry of Industry<\/td><\/tr><tr><td>Metals and other minerals<\/td><td>http:\/\/www.mmronline.com\/ \u00b7 http:\/\/www.metalprices.com\/index.asp \u00b7 http:\/\/www.asianmetal.com\/<\/td><\/tr><tr><td>Price trends of non-ferrous metals<\/td><td>London Metal Exchange<\/strong> \u2014 https:\/\/www.lme.com\/ (often show volatile trends<\/em>)<\/td><\/tr><tr><td>General economic\/ trade intelligence<\/td><td>http:\/\/www.tradeintelligence.com\/ \u00b7 http:\/\/www.cmie.com\/ (Centre for Monitoring Indian Economy<\/strong>)<\/td><\/tr><tr><td>Price trends of different countries<\/td><td>http:\/\/www.imf.org\/external\/pubs\/ft\/weo\/2015\/01\/ \u2014 International Monetary Fund<\/strong><\/td><\/tr><tr><td>Industry chambers<\/td><td>www.ieema.org \u2014 Indian Electrical and Electronics Manufacturers' Association<\/td><\/tr><tr><td>Commodity Prices<\/td><td>Multi Commodity Exchange of India Limited (MCX) \u2014 https:\/\/www.mcxindia.com\/home<\/td><\/tr><tr><td>Cross-commodity price reporting agency (PRA)<\/td><td>Fastmarkets<\/strong> \u2014 https:\/\/www.fastmarkets.com\/<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h3 class=\"src-C srchead\" data-src=\" C \">2.3.2<\/span>Cost Estimation for Consultancy Services<\/span>C<\/span><\/h3><div class=\"srcblock src-C\" data-src=\" C \" data-label=\"Consultancy Manual only\">\nPreparation of a well-thought-through cost estimate is ESSENTIAL if realistic budgetary resources are to be earmarked.<\/p>\na) Categories:<\/strong> Costs shall be divided into Two broad categories<\/strong>:<\/p>\n<ul class=\"lst\"><li>(a) fee or remuneration<\/strong> (according to the type of contract used); and<\/li><li>(b) reimbursable costs.<\/li><\/ul>\nDepending on the nature of the assignment, cost estimates may be prepared either in local currency or with a combination of local plus foreign currencies. Cost estimate should provide for forecast of inflation during the period of assignment.<\/p>\nb) Estimated Resources:<\/strong> The cost estimate shall be based on the Procuring Entity's assessment of the resources needed<\/strong> to carry out the assignment:<\/p>\n<ul class=\"lst\"><li>i) Staff time;<\/li><li>ii) Logistical support<\/strong> (City, National and International Travels\/ Trips and durations); and<\/li><li>iii) Physical inputs<\/strong> (for example, vehicles, laboratory equipment);<\/li><li>iv) Miscellaneous<\/strong> (Support services, contingencies, and Profit element, taxes, and duties).<\/li><\/ul>\nc) Rates:<\/strong> Costs are normally estimated using UNIT RATES<\/strong> (staff remuneration rates, reimbursable expenses) and quantities<\/strong> (exceptionally, some items may be estimated on a lump-sum basis or percentage basis<\/strong> \u2014 Contingencies and support services). Rates of payment should be identified (including applicable taxes, if any) in LOCAL and FOREIGN currency<\/strong> for Staff Time, Logistics Costs and Costs of various physical inputs\/ support services.<\/p>\nd) Staff Costs: The estimate of staff cost is based on an estimate of the personnel time (staff-months or staff-hours) required for carrying out the assignment, taking into account the time required by each expert, his or her BILLING RATE, and the related DIRECT COST component.<\/p>\nIn general, staff remuneration rates include: Basic salary, social charges, overheads, fees or profit, and ALLOWANCES.<\/p>\nIt is useful to prepare a bar chart<\/strong> indicating:<\/p>\n<ul class=\"lst\"><li>the duration of each main activity (WORK SCHEDULE), and<\/li><li>time to be spent by different members of the consultancy team (STAFFING SCHEDULE),<\/li><\/ul>\ndistinguishing tasks to be carried out by FOREIGN and LOCAL consultants. Due consideration should be given to the expected breakdown of a consultant's time in the home office and client's countries, and away-from-home-office allowance.<\/p>\ne) Logistic Costs: The number of trips required should be estimated as required to carry out various activities. Travel costs may be included for city travel, National and International travel and stay.<\/p>\nf) Physical Inputs Costs: Assessment of such costs would depend on the technical requirements of equipment.<\/p>\ng) Miscellaneous costs: Support services may be taken as a percentage of staff costs. Contingencies and Profit elements are usually taken as a percentage of the total cost of the Consultancy. To this would be added the taxes and duties likely to be incurred by the consultants.<\/p>\nCost categories for breaking down an assignment C<\/span>: Although assignments vary in size, length, and nature, it is possible to make a cost estimate by breaking down the assignment's activities into the following cost categories: a) Professional and support staff; b) Travel, Hotel, and transport; c) Mobilisation and demobilisation; d) Office rent, Furniture\/ Equipment, supplies, Utilities, IT equipment and communication; e) Assignment-related surveys, training programmes; f) Translation, report printing; g) Contingencies: miscellaneous, insurance, shipping; and h) Indirect local taxes and duties in connection with carrying out the services.<\/p>\n<aside class=\"note\">A MISMATCH between the cost estimate and the ToR is likely to MISLEAD CONSULTANTS on the desired scope, depth, and details of service required, and this could lead to SERIOUS PROBLEMS during contract negotiations or during implementation of the assignment.<\/p><\/aside>\n<\/div><h3 class=\"src-NC srchead\" data-src=\" NC \">2.3.3<\/span>Cost Estimation for Non-Consultancy Services<\/span>NC<\/span><\/h3><div class=\"srcblock src-NC\" data-src=\" NC \" data-label=\"Non-Consultancy Manual only\">\nPreparation of a well-thought-through cost estimate is essential if realistic budgetary resources are to be earmarked. The cost estimate shall be based on the Procuring Entity's assessment of the resources needed to carry out the services: managerial and staff time and physical inputs (for example, materials, consumables, tools and machines).<\/p>\nCosts shall be divided into three broad categories.<\/strong>Profit element, Taxes and duties should be ADDED to the estimated costs:<\/strong> a) Remunerations for Personnel deployed<\/strong>; b) Reimbursable:<\/strong> Travel, logistics, Consumables, Materials, Tools, Hiring of third-party services, etc.; c) Administrative and Miscellaneous:<\/strong> Mobilisation, demobilisation, Temporary Structures, Administrative expenses, office and IT equipment, contingencies, financing costs, Costs for hiring\/ depreciation\/ financing of machinery and equipment, etc.<\/p>\nRates:<\/strong> Costs are normally estimated using unit rates<\/strong> (staff remuneration rates, reimbursable expenses) and quantities<\/strong> (exceptionally some items may be estimated on a lump-sum basis or percentage basis<\/strong> \u2014 Contingencies and support services).<\/p>\nStaff Costs: The estimate of staff cost is based on an estimate of the personnel time (staff-months\/ weeks\/ days) required for delivering the services, considering the time required by each staff, his remuneration rate (or the minimum wage rate, if applicable), and the related direct cost component. In general, staff remuneration rates include basic salary, social charges, overheads, fees or profit and allowances.<\/p>\n<aside class=\"note\">A MISMATCH between the cost estimate and the Services and Activities Schedule is likely to mislead service providers on the desired scope, quantum, and frequency of service required, and this could lead to SERIOUS PROBLEMS during contract implementation.<\/p>\nNote the difference:<\/strong>C<\/span> uses TWO<\/strong> cost categories (fee\/ remuneration + reimbursable), with profit\/ taxes folded into \"Miscellaneous\". NC<\/span> uses THREE<\/strong> categories (Remuneration + Reimbursable + Administrative & Miscellaneous), with profit, taxes and duties added on top<\/strong>. NC<\/span> alone refers to the minimum wage rate<\/strong>.<\/p><\/aside>\n<\/div><h3 class=\"src-W srchead\" data-src=\" W \">2.3.4<\/span>Cost Estimation for Works<\/span>W<\/span><\/h3><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n(Works cost estimation is embedded in the PPR \u2192 DPR \u2192 Detailed Estimates sequence \u2014 see para 2.5 below, and the reference documents at para 2.5.7.)<\/em><\/p>\n<\/div><h2 class=\"src-G srchead\" data-src=\" G \">2.4<\/span>Formulation of the Requirement \u2014 GOODS: Technical Specifications (TS)<\/span>G<\/span><\/h2><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\"><h3>2.4.1<\/span>Value for Money and Technical Specifications<\/span><\/h3>\nThe procuring authority should ensure that specifications are developed to ensure VfM, a level playing field and wide competition in procurement [Rule 173(ix) of GFR 2017].<\/p>\nThe TS constitute the BENCHMARKS against which the procuring entity will verify the technical responsiveness of bids and, subsequently, evaluate the bids. Therefore, well-defined TS will facilitate:<\/p>\n<ul class=\"lst\"><li>the preparation of responsive bids by bidders, as well as<\/li><li>the examination, evaluation, and comparison of the bids by the procuring entity.<\/li><\/ul>\nIt would also help in ensuring the QUALITY of the supplied goods.<\/p>\nThe procuring authority should ensure that the specification should:<\/p>\n1. Ensure a level playing field and the widest competition;<\/p>\n2. Be unambiguous, precise, objective, functional, broad-based\/ generic, standardised (for items procured repeatedly) and measurable. TS should be broad enough to avoid restrictions on workmanship, materials and equipment commonly used in manufacturing similar kinds of goods;<\/p>\n3. Set out the required technical, qualitative and performance characteristics to meet just the bare essential specific needs of the procuring entity, without including SUPERFLUOUS and NON-ESSENTIAL features, which may result in unwarranted expenditure;<\/p>\n4. Standards:<\/p>\n<ul class=\"lst\"><li>Normally, these standards should be based on national technical regulations or recognised national standards (Bureau of Indian Standards \u2014 BIS) or building codes, wherever such standards exist. Preference should be given to procure the goods which carry the BIS mark.<\/li><li>In the absence of national standards, TS may be based on the relevant INTERNATIONAL standards.<\/li><li>Provided that an indenting authority may, for reasons to be recorded in writing, base the TS on equivalent international standards even in cases where BIS standards exist.<\/li><li>For any deviations from Indian standards or for any additional parameters for better performance, specific reasons for deviations\/ modifications should be duly recorded with the approval of the Competent Authority.<\/li><li>Where the technical parameters are only MARGINALLY different, Indian standards may be specified, and the Departmental specifications could cover only such additional details as packing, marking, inspection, and so on, as are specially required for a particular end use.<\/li><\/ul>\n<aside class=\"note\">Footnote: It has been reiterated by the Department of Expenditure vide OM F.No. 12\/17\/2019-PPD dated 12.05.2020 that wherever Indian Technical specifications and Quality Certifications exist, the procuring entity should prescribe them. In those rare or exceptional cases where, despite the existence of Indian technical specifications, the procuring entity intends to specify foreign Technical Certifications and Accreditations, it must record its reasons in writing for adoption of such other technical specifications. This may also be subject to matter of audit.<\/p><\/aside>\n5. Units: All dimensions incorporated in the specifications shall be indicated in metric units. If, for some unavoidable reason, dimensions in FPS units are to be mentioned, the corresponding equivalents in the metric system must also be indicated. In the case of Government of India funded projects ABROAD, the technical specifications may be framed based on the requirements and standards of the host beneficiary Government, where such standards exist \u2014 provided that a procuring entity may, for reasons to be recorded in writing, adopt any other technical specification;<\/p>\n6. Make use of best practices: Examples of specifications from successful similar procurements in other organisations or sectors may provide a sound basis for drafting the TS;<\/p>\n7. Avoid obsolescence: Commensurate with VfM, avoid procurement of obsolete goods, and require that all goods and materials be NEW, UNUSED and of the most recent or current models, and that they incorporate all recent improvements in design and materials, unless provided for otherwise in the tender documents;<\/p>\n<h3 class=\"src-G srchead\" data-src=\" G \">2.4.2<\/span>Environmental Issues, Green Procurement, Sustainable Development Goals<\/span>G<\/span><\/h3><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\na) Comply with sustainability criteria and legal requirements of environment or pollution control and other mandatory and statutory regulations or internal guidelines, if any, applicable to the goods to be purchased.<\/p>\nb) While specifying packaging requirements in the supply of Goods\/ Works\/ Services, the procuring entity may emphasise packaging that has minimal impact on the environment without compromising on safety and security.<\/p>\nc) Ecomark:<\/strong> The procuring Entity may include a requirement for the Ecomark Label<\/strong>, to the extent feasible, in their Description\/ Specification of the goods being procured.<\/p>\nThe Government of India has promulgated the Ecomark Certification Rules, 2023<\/strong> for:<\/p>\n<ul class=\"lst\"><li>labelling environmentally friendly products<\/strong> that meet the approved environment criteria, and<\/li><li>ensuring environmental performance of such products with respect to resource efficiency, circular economy and environmental impacts \u2014 in particular the impact on climate change, the impact on nature and biodiversity, generation of waste, emissions to all environmental media, pollution through physical effects, and use and release of hazardous substances<\/li><\/ul>\n \u2014 thereby supporting the principles of 'LiFE (Lifestyle for Environment)'.<\/p>\nObjective: to encourage consumers to adopt such products and the manufacturers to transition to the production of Ecomark-certified products to promote sustainability. It shall be applicable to any product that is produced or supplied for distribution or use in the market, unless otherwise excluded under the Ecomark Certification Rules. It would also prevent misleading information on the environmental aspects of products.<\/p>\nd) Efficiency factors: Specifications should emphasise factors such as efficiency, optimum fuel\/ power consumption, use of environmentally friendly materials, reduced noise and emission levels, low maintenance cost, and so on.<\/p>\ni) Bureau of Energy Efficiency (BEE): The Government of India set up the BEE (https:\/\/beeindia.gov.in\/en) on 1 March 2002, under the provisions of the Energy Conservation Act, 2001, with the primary objective of reducing the energy intensity of the Indian economy. The Bureau initiated the Standards & Labelling Programme for equipment and appliances in 2006 to provide the consumer with an informed choice about energy saving and, thereby, the cost-saving potential of the relevant marketed product.<\/p>\nii) Coverage: The scheme is invoked for 34 equipment\/ appliances, out of which labelling is mandatory for 11 equipment\/ appliances, i.e.:<\/p>\n<aside class=\"note\">Frost-Free Refrigerator \u00b7 Stationary Storage Type Electric Water Heater \u00b7 Colour Television \u00b7 Room Air Conditioner (RAC \u2014 Variable Speed; Fixed Speed; Cassette; Floor Standing Tower; Ceiling; Corner) \u00b7 TFL \u00b7 LED Lamps \u00b7 Distribution Transformer \u00b7 Direct Cool Refrigerator \u00b7 Ceiling Fan<\/p><\/aside>\nThe other appliances are presently under the VOLUNTARY labelling phase.<\/p>\niii) Star ratings: The energy efficiency labelling programmes under BEE are intended to reduce the energy consumption of appliances without DIMINISHING the services they provide to consumers. The higher the stars, the more EFFICIENT the appliance. The threshold ratings prescribed by the Ministry of Finance are:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Appliance<\/th><th>Threshold Star Rating<\/th><\/tr><\/thead><tbody><tr><td>Split Air Conditioners<\/td><td>5 Star<\/strong> (under normal conditions where annual usage is expected to be more than 1000 Hrs<\/strong>) 3 Star<\/strong> (where usage of AC is limited<\/strong>, e.g., in conference rooms)<\/td><\/tr><tr><td>Frost Free Refrigerators<\/td><td>4 Star<\/td><\/tr><tr><td>Ceiling Fans<\/td><td>5 Star<\/td><\/tr><tr><td>Water Heaters<\/td><td>5 Star<\/td><\/tr><\/tbody><\/table><\/div>\niv) Building it into the TS:<\/strong> The procuring Entity should try to build either the BEE Star rating<\/strong>, where applicable, and minimum energy efficiency<\/strong>, where such star ratings are not yet available, into the TS<\/strong> (in accordance with Rule 173(xvii) of GFR 2017<\/strong>). Such benchmarking illustrates the use of neutral and dependable benchmarking<\/strong> in the procurement of sustainable, environmentally favourable goods by way of appropriately formulated Technical Specifications.<\/p>\nIn a similar fashion, to implement sustainability goals, TS may include an Environmental Product Declaration (EPD) as defined by ISO 14025 as a Type III declaration that \"quantifies environmental information on the life cycle of a product to enable comparisons between products fulfilling the same function\". Voluntary environmental standards can also be used to specify environmental sustainability criteria.<\/p>\n<\/div><h3 class=\"src-G srchead\" data-src=\" G \">2.4.3<\/span>Discourage Procurement Involving Evaluation of Samples\/ Demonstration of Equipment<\/span>G<\/span><\/h3><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\nAccording to the existing guidelines on public procurement of goods, purchase in accordance with a sample, or requiring demonstration of equipment, should not be usually undertaken.<\/p>\na) Calling for a sample along with the tender, or requiring a demonstration of equipment after bid opening, and deciding based on evaluation of the sample\/ demonstration of equipment should not be done.<\/p>\nb) Built-in sample clauses: In certain specifications, there may be a built-in sample clause. Usually, such clauses are stipulated to illustrate INDETERMINABLE CHARACTERISTICS such as shade\/ tone, make-up, feel, finish, workmanship, and so on. In some specifications there may not be a sample clause, but such indeterminable characteristics are left to be agreed between the seller and buyer. One way to procure\/ indigenise certain spares whose drawings\/ specifications are not available is to procure in accordance with an available sample of the part. In such cases, the supply must conform to an agreed reference sample only, whereas the remaining characteristics must conform to the drawings\/ specifications.<\/p>\nc) The reference-sample procedure: However, NO sample should be called for or evaluated along with the bids. If desired:<\/p>\n<ul class=\"lst\"><li>Three COPIES of the purchaser's REFERENCE SAMPLE with seal\/ label may be DISPLAYED<\/strong> for prospective bidders to illustrate the desired indeterminable characteristics, which final supplies from successful bidder(s) will have to meet in addition to the specifications\/ drawings<\/strong>.<\/li><li>If required, in addition to the purchaser's reference sample, the provision for the submission of a PRE-PRODUCTION SAMPLE matching the purchaser's sample by the successful bidder(s) may be stipulated for indeterminable characteristics before giving clearance for bulk production of the supply.<\/li><li>On placement of the contract, the three copies of the purchaser's reference sample are distributed as follows:<\/li><li>One copy \u2192 to the CONTRACTOR<\/strong> for preparing pre-production sample\/ supplies;<\/li><li>One copy \u2192 to the CONSIGNEE<\/strong> for matching with the pre-production sample\/ supplies;<\/li><li>One copy \u2192 kept secure under lock and key in the SAMPLE ROOM of the procuring entity.<\/li><li>The Indent for items that are to be procured in accordance with a sample must be accompanied by three sealed reference samples, as far as possible.<\/li><\/ul>\nd) Demonstration: If a demonstration of equipment (say, entirely newly developed equipment) is considered necessary, it may be planned only during the PRE-BID stage \u2014 but the evaluation of tenders should not be based on this.<\/p>\n<\/div><h3 class=\"src-G srchead\" data-src=\" G \">2.4.4<\/span>Essential Technical Particulars<\/span>G<\/span><\/h3><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\nThe essential Technical particulars to be specified in the tender document<\/strong> shall include the following, to the extent applicable for a particular purchase<\/strong>:<\/p>\n<ol class=\"lst\"><li>Scope of supply and END USE<\/strong> of the required goods;<\/li><li>All essential technical, qualitative, functional, environmental and performance characteristics and requirements \u2014 such as material composition, physical dimensions and tolerances, workmanship, and manufacturing process wherever applicable; test schedule, if any \u2014 including guaranteed or acceptable MAXIMUM or MINIMUM values, as appropriate.<\/li><\/ol>\n<aside class=\"note\">Whenever necessary, the user may include an additional format for guaranteed technical parameters (as an attachment to the bid submission sheet), where the bidder shall provide detailed information on such technical performance characteristics in reference to the corresponding acceptable or guaranteed values.<\/p><\/aside>\n<ol class=\"lst\"><li>Drawings;<\/li><li>Requirement of the BIS mark, where applicable \u2014 mentioning all parameters where such a specification provides options;<\/li><li>Requirement of a PRE-PRODUCTION SAMPLE, if any, at the post-contract stage before bulk production;<\/li><li>Specific requirements of PRESERVATION, PACKING and MARKING, if any;<\/li><li>INSPECTION PROCEDURE for goods ordered and criteria of conformity;<\/li><li>Requirements of SPECIAL TESTS or type test certificate or TYPE APPROVAL for compliance of statutory requirements with reference to pollution, emission, noise, if any;<\/li><li>Other additional work and\/or related services required to achieve full delivery\/ completion, installation, commissioning, training, technical support, after-sales service, and Annual Maintenance Contract (AMC) requirements, if any;<\/li><li>WARRANTY requirements;<\/li><li>QUALIFICATION CRITERIA of the bidders, if any;<\/li><li>Any other aspects PECULIAR to the goods in question \u2014 such as the shelf life of the equipment, and so on.<\/li><\/ol>\n<\/div><\/div><h2 class=\"src-W srchead\" data-src=\" W \">2.5<\/span>Formulation of the Requirement \u2014 WORKS: PPR, DPR, Designs, Estimates and Sanctions<\/span>W<\/span><\/h2><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n<aside class=\"note\">This is the longest and most legally-loaded part of any of the four Chapter 2s. It runs through a seven-step sanctioning sequence: PPR \u2192 In-Principle Approval \u2192 DPR\/PE \u2192 A\/A and E\/S \u2192 Detailed Designs & Technical Sanction \u2192 Appropriation of funds \u2192 Tendering.<\/p><\/aside>\n<h3>2.5.1<\/span>Preparation of Preliminary Project Report (PPR) or Rough Cost Estimate<\/span><\/h3>\nWHO prepares it:<\/p>\n<ul class=\"lst\"><li>If the work is to be executed under its OWN arrangement by the Ministry\/ Department \u2014 a PPR or Rough Cost Estimate shall be prepared by the WORKS COMMITTEE, based on Land, Site Details, functional and space requirements (or Various Facilities, Special Requirements\/ Features and Broad Specifications for specialised Equipment and Plants), Layout Plans etc. \u2014 with the technical details\/ documents mentioned below being prepared by (or under the guidance of) the TECHNICAL MEMBER(S) of the Works Committee.<\/li><li>If the Work is executed through a Public Works Organisation (PWO) or a Public Sector Undertaking (PSU) \u2014 on requisition from the Ministry\/ Department for procurement of works, the PWO or PSU to whom the work is entrusted for execution shall prepare such PPR or Rough Cost Estimate and submit it to the requiring Department\/ Ministry.<\/li><\/ul>\nWHAT it triggers: Based on the PPR and Rough Cost Estimate, the competent authority in the Administrative Ministry\/ Department grants IN-PRINCIPLE APPROVAL, indicating approval of the CONCEPT and SCOPE of the project at the ROUGH COST assessed.<\/p>\n<aside class=\"note\">Ministry of Finance (DoE) has issued detailed instructions regarding appraisal and approval of Public Funded projects\/ schemes<\/strong> \u2014 OM No. 24(35)\/PF-II\/2012 dated 05.08.2016<\/strong> (where \"Schemes\"<\/strong> refers to a collection of Projects\/Works of either Central Sector Schemes or Centrally Sponsored Schemes, and \"Project\"<\/strong> refers to work which can be standalone or part of a scheme). It is suggested that the website of the Department of Expenditure be checked for the latest instructions (https:\/\/doe.gov.in\/appraisal-and-approval).<\/em><\/p><\/aside>\nThe Preliminary Project Report shall provide the following details:<\/p>\n<ol class=\"lst\"><li>Background of the work\/ project justifying the NEED for the work;<\/li><li>Details of SCOPE of the project;<\/li><li>EXCLUSIONS (if any)<\/strong> \u2014 this will cover part of the work which is not included<\/strong> in this particular project estimate;<\/li><li>Availability of LAND \u2014 there should be a clear indication about the availability of land required for completion of the whole project. The land shall be made available free of all encumbrances;<\/li><li>Availability of AUXILIARY SERVICES \u2014 like roads, power, water, solid & liquid waste disposal system, street lighting and other civic services shall be ensured;<\/li><li>Reference to Concept Plans\/ Preliminary Drawings, if any, and their acceptance \u2014 this shall indicate the details of Concept Plans\/ Preliminary Drawings prepared and their approval by the requisitioning authority;<\/li><li>AGENCY of Procurement \u2014 through direct procurement, outsourcing to PWO\/ PSUs or otherwise;<\/li><li>Rough Cost Estimate: Ministries\/ Departments may carefully assess alternative technological options, their area requirements, and obtain Rough Cost on the basis of prevailing plinth area rates (or any other reliable basis) without preparation of drawings, to enable the competent authority to accord in-principle approval;<\/li><li>If relevant, cost benefit analysis of the project, including evaluation of options for cost sharing\/ recovery (user charges) for infrastructure\/ services. Principles of Life Cycle Cost may also be considered, to the extent feasible;<\/li><li>CASH FLOW \u2014 this will show year-wise requirement;<\/li><li>Source & availability of funds \u2014 the manner of transferring the fund to the executing agency to be spelt out;<\/li><li>Appendices:<\/li><li>i) Requisition of the Department\/ Ministry;<\/li><li>ii) Concept Plans\/ Preliminary Drawings;<\/li><li>iii) Reference to approval of Concept Plans\/ Preliminary Drawings;<\/li><li>Any other relevant documents;<\/li><li>PRESENTATION on the findings of the feasibility study\/ PPR: As directed in the Department of Expenditure's General Instructions on Procurement and Project Management (OM No. F.1\/1\/2021-PPD dated 29.10.2021), a presentation may be made by a team (which may include engineers\/ consultants\/ outside experts, finance officers etc.) before the public authority\/ designated competent authority. This is to provide an opportunity to the public authority to have an overall assessment of the situation, appraisal of various options, as well as likely challenges and mitigation measures. In the case of VERY LARGE projects, such presentation may be made to the HEAD of the public authority. The record of discussions during the presentation may become part of the DPR and tender file\/ project record.<\/li><\/ol>\n<h3>2.5.2<\/span>Acceptance of Necessity and Issue of In-Principle Approval<\/span><\/h3>\nApproval of the competent financial authority for accepting the necessity of works and its SCOPE should be sought on the basis of the PPR or Rough Cost Estimate, and In-Principle Approval of the concerned Ministry\/ Department shall be made available for preparation of the Detailed Project Report or Preliminary Estimates.<\/p>\n<h3>2.5.3<\/span>Preparation of Detailed Project Report (DPR)\/ Preliminary Estimates (PE)<\/span><\/h3>\n1. On receipt of In-Principle Approval of the project, the procuring entity shall finalise the Detailed Project Report with due care and accuracy, using the latest technological tools, collecting all relevant ground information, including consultation with the field units wherever applicable, giving reference to the documents mentioned below. The DPR should provide a level playing field to the bidders and should ensure, as far as feasible, the widest possible competition.<\/p>\nThe DPR shall contain:<\/p>\n<ol class=\"lst\"><li>Reference to Concept plan\/ preliminary drawings and their acceptance;<\/li><li>Details of SCOPE of the project, indicating clearly the list of Engineering Services (Mechanical\/ Electrical\/ Plumbing) as well as Operation and Maintenance \u2014 included or not included in the DPR\/PE;<\/li><li>Preliminary estimated cost \u2014 this will also include the expected ESCALATION for the period of completion of the project, and also the departmental or lump sum charges to be paid to the executing agency (PWO or PSUs). Cash flow projection should show year-wise requirement. While designing the projects, if and to the extent possible, principles of Life Cycle Cost may also be considered;<\/li><li>Time of completion \u2014 this will consist of two PARTS: one for PRE-CONSTRUCTION activity till award of the work, and the other for the EXECUTION;<\/li><li>Details of LAND required along with land plan Schedule<\/strong> to implement timely land acquisition procedures;<\/li><li>Environmental Impact Assessment (EIA) of the project and approval thereof, wherever applicable;<\/li><li>Social Impact Assessment and Resettlement and Rehabilitation: Social Impact Assessment needs to be done, based on baseline socio-economic survey and census survey data, to identify the Project Affected People (PAPs). A Resettlement and Rehabilitation Plan should be prepared for the PAPs in accordance with the LARR Act 2013 or the National Policy on Resettlement and Rehabilitation (NPRR), and State Governments' framework of resettlement policies and other social safeguard policies designed to protect the rights of the affected persons and communities as applicable;<\/li><li>List of Approvals of STATUTORY BODIES required;<\/li><li>Annual plan allocation and cash flow;<\/li><li>Systems to be adopted for PROJECT MONITORING;<\/li><li>Works accounting system;<\/li><li>QUALITY ASSURANCE system\/ mechanism;<\/li><li>Bidding systems<\/strong> \u2014 Single, two parts, pre-qualification, Post-qualification;<\/li><li>WHO prepares: In case the work is being executed by the Ministry\/ Department themselves, DPR and PE will be prepared by the Ministry\/ Department itself. In case the Work is assigned to a PWO or PSU, that agency shall prepare the DPR and PE;<\/li><li>EXEMPTION: For repair works costing up to rs. 60 (SIXTY) LAKH, preparation of DPR and pe May be dispensed with, since repair work does not need detailed designing. Sanction may be accorded by the competent authority based on the PPR itself.<\/li><\/ol>\n2. The consultant-quality problem: A major reason for problems in works contracts \u2014 in particular relating to construction of roads, highways, ports, runways, dams etc. on item-rate or percentage rate basis \u2014 is the OUTSOURCING of preparation of Detailed Project Reports to consultants without sufficient relevant experience, or without giving them sufficient TIME to do so.<\/p>\n<ul class=\"lst\"><li>It is therefore essential to STIPULATE & ENSURE successful project design\/ supervision experience while selecting consultants, especially for large works contracts.<\/li><li>DPR in such contracts is required to be based on proper ground investigation at each specified stretch (normally 50 METRES), called a \"REACH\", and the Consultant be directed to exercise such due diligence.<\/li><li>Wherever consultants are appointed for preparation of DPR, field units of the public authorities should also be associated with the process. The inputs from these field units can be useful in proposing best solutions for design and execution of the work, as they are the custodian of legacy data, which may not be available with the consultants, as they may not be operating regularly in that geographical region.<\/li><\/ul>\n3. Involvement of the Ministry\/ Department: The involvement of the Ministry\/ Department in providing proper inputs, including USER REQUIREMENTS, during the preparation of the DPR and before accepting the draft DPR, is PARAMOUNT in ensuring successful implementation.<\/p>\n<ul class=\"lst\"><li>Proper FIELD SURVEYS and INVESTIGATIONS of ground conditions are CRITICAL in preparation of a reliable DPR.<\/li><li>Providing scientifically valid data to bidders will depend on the quality of the investigations done by the DPR consultant.<\/li><li>As a corollary, the Ministry\/ Department must INSIST on a qualified team of engineers with experience for carrying out DPR studies.<\/li><li>It is also essential that the Ministry\/ Department insists that the Consultant offers them TECHNOLOGY OPTIONS at the EARLY stage of preparation of the DPR, so that a cost-efficient choice may be made using principles of life cycle costing.<\/li><\/ul>\n4. Consequences of a defective DPR: In case the deviations between the actual ground situation and the situation recorded in such DPR result in significant COST and TIME OVER-RUNS, the Engineer, while doing valuation of variations, must bring to the Procuring Entity's notice the reach-wise differences, and the Ministry\/ Department May consider stringent action against the consultant who has prepared such DPRs \u2014 including debarment from future consultancy contracts, after following due procedure. Such clauses May be included in the contracts for preparation of DPR.<\/p>\n5. Presentation on the DPR: A presentation may be made about the DPR before the public authority, for projects above a THRESHOLD VALUE as decided by Project Executing Authorities. The presentation may include:<\/p>\n<aside class=\"note\">salient features of the project including general layout, architectural drawings, broad specifications, cash flow (over the life of the project), composition of the project team, quality management plan for the project, important milestones in the project execution, obligations of the authority and the contractor\/ concessionaire, and possible risks and mitigation measures.<\/p><\/aside>\nIn the case of very large projects, such presentation may be made to the HEAD of the public authority. The record of discussions during the presentation shall become part of the tender file\/ project record.<\/p>\n<h3>2.5.4<\/span>Administrative Approval and Expenditure Sanction (A\/A and E\/S)<\/span><\/h3>\n1. A\/A and E\/S will be accorded to the execution of work by the competent financial authority in the Ministry\/ Department after due examination of the Detailed Project Report and Preliminary Estimates.<\/p>\nPOST-SANCTION CHANGES in scope and specification lead to delay, loss of quality and contractual penalties. Therefore, such A\/A and E\/S shall be accorded after carefully assessing their requirements.<\/p>\nThe estimates framed by a PWO or other engineering organisation May be modified for such sanction only with their concurrence.<\/p>\n2. The sanction order should contain:<\/p>\n<ul class=\"lst\"><li>SCOPE of work,<\/li><li>estimated cost, and<\/li><li>TIME SCHEDULE for completion of work, and<\/li><li>funding sources along with the break-up of the share of each funding agency.<\/li><\/ul>\n3. A Department of Government of India may sanction expenditure on any scheme or project as per the powers delegated from time to time by the Finance Ministry (DoE's O.M. No. 24(35)\/PF-II\/2012 dated 05.08.2016)<\/em>, subject TO its outlay having been APPROVED by the Competent Authority in accordance with the appraisal and approval process prescribed by the Finance Ministry from time to time. (Rule 16, DFPR 2024)<\/em><\/p>\n<h3>2.5.5<\/span>Detailed Designs, Detailed Estimates and Technical Sanction<\/span><\/h3>\n1. Except where the work is to be undertaken in the EPC (Turnkey) mode, on receipt of sanction of the project (based on DPR or PE) and assurance of funds, the procuring entity, in consultation with the Works Committee, shall prepare and accord TECHNICAL SANCTION to:<\/p>\n<ul class=\"lst\"><li>the detailed and coordinated DESIGN of all the Architectural, Civil, Electrical, Mechanical, Horticulture and any other services included in the scope of the sanction, and<\/li><li>the detailed cost estimates containing the detailed SPECIFICATIONS and QUANTITIES of various items, prepared on the basis of the Schedule of Rates maintained by CPWD or other Public Works Organisations<\/li><\/ul>\n \u2014 so as to ensure that proposals are STRUCTURALLY SOUND and that the estimates are accurately calculated based on adequate data.<\/p>\nIn case the work is to be executed through a PWO or PSU, preparation of detailed design\/ estimates and technical sanction shall be done\/ accorded by that organisation.<\/p>\n2. Architectural and structural drawings: Architectural and structural drawings (\"fit for construction\") are among the CORE REQUIREMENTS for projects.<\/p>\n<ul class=\"lst\"><li>Finalisation of these drawings at the EARLIEST \u2014 preferably at the time of preparation of the cost estimate itself \u2014 can help to determine quantities of various items of the work.<\/li><li>Adverse consequences of not preparing these drawings before invitation of tenders may manifest in the form of delay in execution of the work and deviations in quantities of the items of work.<\/li><li>Hence, APPROVED architectural and structural drawings should be available before invitation of tenders.<\/li><li>\"Fit for construction\" (sometimes called \"Good for construction\") drawings means the architectural and structural drawings approved by the project executing authority as well as by the authority governing the extant Rules\/ laws, including byelaws, such as local authorities.<\/li><\/ul>\n3. Enlarging the Schedule of Rates: Endeavour may be made to enlarge the base of the 'Schedule of Rates' published by various organisations, to bring a maximum number of items under its ambit. For NON-SCHEDULED ITEMS, rates may be finalised by a COMMITTEE constituted by the organisation concerned\/ consultants, as the case may be.<\/p>\n<h3>2.5.6<\/span>Appropriation of Funds<\/span><\/h3>\nBefore taking up the execution of work, it shall be ensured that proper funds are available to meet the expenditure on the work.<\/p>\nIt should also be emphasised that the DPR CONSULTANT is able to provide realistic year-wise requirement of funds. This information is necessary so that concerned Ministries\/ organisations may be intimated regarding the same, which will enable them to include such funds projection in their BUDGET.<\/p>\n<h3>2.5.7<\/span>Reference Documents Used in Preparation of Estimates<\/span><\/h3>\nFor preparation of estimates and during execution of work<\/strong>, the following reference documents are used by PWOs. These may be SEPARATE for different regions, and for various types of works \u2014 Building, Electrical and Mechanical.<\/strong>(Annexure 12 of the Works Manual lists further resources regarding Procurement of Works.)<\/em><\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Document<\/th><th>Purpose<\/th><th>Example<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Plinth Area Rates<\/td><td>Provide a quick but fairly accurate method of estimation of cost of buildings<\/td><td>CPWD DPAR \u2014 Delhi Plinth Area Rates<\/td><\/tr><tr><td>2<\/td><td>Schedule of Rates<\/td><td>For each kind of work commonly executed, to facilitate the preparation of estimates, and also to serve as a guide in settling rates in connection with contract agreements \u2014 maintained up to date<\/td><td>CPWD DSR \u2014 Delhi Schedule of Rates<\/td><\/tr><tr><td>3<\/td><td>Analysis of Rates<\/td><td>By taking market rates of labour, materials, cartage<\/strong> etc. and their quantities<\/strong> for each kind of work commonly executed<\/td><td>CPWD Analysis of Rates<\/td><\/tr><tr><td>4<\/td><td>Specifications<\/td><td>Describing inputs, processes, tests and mode of measurement<\/strong> for each kind of work commonly executed<\/td><td>CPWD Specifications<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Repeated instruction: Endeavour may be made to enlarge the base of the 'Schedule of Rates' published by various organisations to bring a maximum number of items under its ambit. For non-scheduled items, rates may be finalised by a committee constituted by the organisation concerned\/ consultants, as the case may be.<\/p><\/aside>\n<\/div><h2 class=\"src-C srchead\" data-src=\" C \">2.6<\/span>Formulation of the Requirement \u2014 CONSULTANCY: Terms of Reference (ToR)<\/span>C<\/span><\/h2><div class=\"srcblock src-C\" data-src=\" C \" data-label=\"Consultancy Manual only\"><h3>2.6.1<\/span>What the ToR Is and Why It Matters<\/span><\/h3>\n1. The ToR is akin to description, Quantity and Technical Specification in Procurement of Goods. This is the first STEP in the selection of the consultants once a need has been identified.<\/p>\nIt explains:<\/p>\n<ul class=\"lst\"><li>the purpose\/ objectives of the assignment,<\/li><li>scope of work,<\/li><li>activities,<\/li><li>tasks to be performed,<\/li><li>respective responsibilities of the Procuring Entity AND consultant,<\/li><li>expected results, and<\/li><li>deliverables of the assignment.<\/li><\/ul>\nIt is important for an understanding of the assignment and its correct execution to ensure that the objectives of the assignment are achieved.<\/p>\n<ul class=\"lst\"><li>It reduces the risk for the PROCURING ENTITY of unnecessary extra work, delays, and additional expenses.<\/li><li>In addition, it helps reduce for the bidders the risk of ambiguities during the preparation of bidders' proposals, contract negotiation, and execution of Consultancy.<\/li><\/ul>\n2. The balance to strike: Hence the ToR should be COMPREHENSIVE and UNAMBIGUOUS. HOWEVER, it should not be too detailed and inflexible, so that competing consultants may be in a position to propose their own methodology and staffing. Bidders shall be encouraged to comment on the ToR in their proposals.<\/p>\n<h3>2.6.2<\/span>Contents of the ToR<\/span><\/h3>\nThe ToR shall include:<\/p>\n<ol class=\"lst\"><li>Procuring Entity's organisation background and Project background;<\/li><li>Purpose and Service Outcomes Statement of the assignment;<\/li><li>Detailed scope of work Statement, including schedule for completing the assignment;<\/li><li>Expected requirement of KEY PROFESSIONALS and kind of EXPERTISE;<\/li><li>Capacity-building programme and transfer of knowledge, if any;<\/li><li>Deliverables<\/strong> \u2014 List of reports<\/strong> (or documents, data, maps, surveys, designs, drawings), schedule of deliveries<\/strong>, and period of performance<\/strong>;<\/li><li>Background material<\/strong> \u2014 Data, reports, records of previous surveys, and so on \u2014 available and to be provided to the consultant<\/strong>;<\/li><li>FACILITIES such as local conveyance, office space, office machines, secretarial assistance, utilities, local services, etc., which would be provided to the consultant by the Procuring Entity;<\/li><li>Institutional and organisational arrangement; and<\/li><li>Procedure for REVIEW of the work of the consultant after award of contract.<\/li><\/ol>\n(A template for developing a ToR is given at Annexure 4<\/strong> of the Consultancy Manual. Rule 185 of GFR 2017<\/strong>.)<\/em><\/p>\n<h3>2.6.3<\/span>Detailed Guidance on Key ToR Elements<\/span><\/h3><h4>a) Detailed Scope of Work<\/span><\/h4>\nAs part of the ToR, at its simplest, the 'Detailed Scope of Work<\/strong>' will contain:<\/p>\n<ul class=\"lst\"><li>the TYPE and VOLUME of activity<\/strong> to be undertaken, and<\/li><li>the TIME-FRAME of activity involved<\/li><\/ul>\nto achieve the Purpose and Service Outcomes<\/strong> as envisaged in the 'Brief Proposal and Justification of the Services'.<\/p>\nMethod: Starting from END-OUTCOMES BACKWARDS, the process to achieve the outcomes is BROKEN DOWN into a discrete number of interrelated tasks, which the consultant will have to undertake.<\/p>\n<aside class=\"note\">Critical Rule: In Consultancy Services, the 'Detailed Scope of Work' should describe only the activities \u2014 not the APPROACH or METHODOLOGY by which the results are to be achieved, since these are the task of the consultants. However, SUGGESTIONS may be provided on the approach or the methodology that the consultants COULD or should use to execute the assignment.<\/p><\/aside>\nAfter the tasks are identified, a LOGICAL SEQUENCING of the tasks must be determined. Usually a simple BAR CHART (or GANTT CHART) is the best way to illustrate required outputs over time and their relationship to each other. The 'Detailed Scope of Work' contains such a sequence of tasks over a timeline, and also tangible outputs and activities such as reports, workshops, or seminars.<\/p>\n<h4>b) Expected Requirement of Key Professionals and Kind of Expertise<\/span><\/h4>\nExcept in very complex consultancies, it is DESIRABLE not to distinguish the tasks of individual experts, but instead to prepare a longer and more detailed description of what the consultancy team, as a whole, will provide \u2014 without splitting up tasks.<\/p>\n<aside class=\"note\">These are generally known as \"activity-based<\/strong>\" ToR, as opposed to \"position-based<\/strong>\" ToR.<\/p><\/aside>\nThe ToR would list a range of tasks without regard to who will have the responsibility to undertake them. In most cases, where the number of experts is small, the work to be done is not clearly defined, and a degree of flexibility is required \u2014 this is ACCEPTABLE.<\/p>\nIn consultancy services, key professionals are usually named, and their credentials carry weightage in technical evaluation.<\/p>\n<h4>c) Deliverables and Reports Requirements<\/span><\/h4>\nThe assignment's deliverables and reporting should be clearly specified. In particular, for inception and progress reports, there should be a BALANCE between keeping the Procuring Entity well informed and not forcing consultants to spend an excessive amount of time preparing minor reports.<\/p>\nThe ToR should indicate: the FORMAT, FREQUENCY, and CONTENT of reports, as well as the number of copies, the LANGUAGE, and the names of the prospective recipients of the reports.<\/p>\n<aside class=\"note\">For all MAJOR reports, an EXECUTIVE SUMMARY is recommended as a SEPARATE SECTION.<\/p><\/aside>\nDepending on the assignment, the following reports are usually required:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Report<\/th><th>Timing<\/th><th>Purpose and Content<\/th><\/tr><\/thead><tbody><tr><td>i) Inception Report<\/td><td>About six WEEKS after the commencement date<\/td><td>Any major inconsistency in the toR, STAFFING PROBLEMS, or deficiency in the Procuring Entity's assistance that have become apparent during this period should be included. The inception report is designed to give the Procuring Entity confidence that the assignment can be carried out as planned and as agreed upon in the contract, and should bring to its attention major problems that might affect the direction and progress of the work.<\/td><\/tr><tr><td>ii) Progress Reports<\/td><td>Monthly or bimonthly, depending on the assignment. \u2022 Feasibility studies and design assignments \u2192 two-month intervals is satisfactory \u2022 Technical assistance and implementation supervision (e.g. construction) \u2192 best submitted MONTHLY<\/td><td>Keep the Procuring Entity regularly informed about the progress of the assignment. They may also provide WARNINGS of anticipated problems or serve as a reminder for payment of invoices due. Progress reports may include a BAR CHART showing details of progress and any changes in the assignment schedule. Photographs with time-stamping are a quick and easy way of conveying the status of a project, and their use in progress reports should be encouraged. For technical assistance services, progress reports also serve as a means of setting out the WORK PROGRAM for the following months. Each team member usually contributes to the preparation of the monthly report.<\/td><\/tr><tr><td>iii) Interim Reports<\/td><td>If the assignment is PHASED<\/td><td>Required to inform the Procuring Entity of preliminary results, alternative solutions, and major decisions that need to be made. Since the recommendations of an interim report may affect later PHASES of the assignment and even influence the results of the project, the Procuring Entity should DISCUSS the draft interim reports with consultants in the field. The Procuring Entity should not take more than 15 (FIFTEEN) DAYS to review and approve draft interim reports.<\/td><\/tr><tr><td>iv) Final Report<\/td><td>Due at the COMPLETION of the assignment<\/td><td>The Procuring Entity and consultants should DISCUSS the report while it is still in draft form. The consultants alone are responsible for their findings; although changes may be SUGGESTED in the course of the discussions, consultants should not be forced to make such changes. If the consultants do not accept comments or recommendations from the Procuring Entity, these should be noted in the report. The consultants should include in the report the reasons for not accepting such changes.<\/td><\/tr><\/tbody><\/table><\/div>\n<h4>d) Background Material and Records of Previous Surveys<\/span><\/h4>\nThis would vary from project to project, but TRANSPARENCY DEMANDS that such information should be transparently and equitably shared with all prospective bidders.<\/p>\n<h4>e) Facilities to be Provided by the Procuring Entity<\/span><\/h4>\nFacilities such as local conveyance, office space, secretarial assistance<\/strong> etc. which can be provided to the consultant.<\/p>\n<aside class=\"note\">This aspect has a great bearing on the cost that will be quoted by the bidders. This can have implications in vitiating the selection process either way \u2014 a facility to be provided may not get declared, or a declared facility may not be provided ultimately. So great care and reality check is necessary while preparing this statement.<\/p><\/aside>\n<h4>f) Procedure for Review of the Consultancy after Award of Contract<\/span><\/h4>\nIn consultancy services, the contract Monitoring Committee (CMC), and the procedure for review and approval of the work of the consultant after the award of contract, should also be declared and adhered to.<\/p>\n<\/div><h2 class=\"src-NC srchead\" data-src=\" NC \">2.7<\/span>Formulation of the Requirement \u2014 NON-CONSULTANCY: Services and Activities Schedule<\/span>NC<\/span><\/h2><div class=\"srcblock src-NC\" data-src=\" NC \" data-label=\"Non-Consultancy Manual only\"><h3>2.7.1<\/span>What the Services and Activities Schedule Is<\/span><\/h3>\n1. The Services and Activities Schedule is akin to description, Quantity and Technical Specification in Procurement of Goods. This is the first STEP in the selection of the Service Provider once a need has been identified.<\/p>\nIt explains:<\/p>\n<ul class=\"lst\"><li>the background and context,<\/li><li>purpose\/ objectives of the services,<\/li><li>scope, quantum, duration\/ frequency of activities\/ tasks to be performed,<\/li><li>respective responsibilities of the Procuring Entity and service provider,<\/li><li>expected outcomes, and<\/li><li>deliverables of the Service.<\/li><\/ul>\nIt is important for an understanding of the service requirement and its correct execution to ensure that the outcomes of the service are achieved. It reduces the risk for the Procuring Entity of unnecessary extra work, delays, and additional expenses. In addition, it helps reduce for the bidders the risk of ambiguities during the preparation of bidders' proposals and contract execution. Hence, the Services and Activities Schedule should be COMPREHENSIVE and UNAMBIGUOUS.<\/p>\nThe OBJECTIVES of the Services and Activities Schedule are:<\/p>\n<ul class=\"lst\"><li>a) To provide sufficient information on the quantum, scope, duration\/ frequency and TIMELINES of Services to be performed, to enable bids to be prepared efficiently and accurately; and<\/li><li>b) When a Contract has been entered into, to provide a PRICED Services and Activities Schedule for use in the PERIODIC VALUATION of Services executed.<\/li><\/ul>\n<h3>2.7.2<\/span>Contents of the Services and Activities Schedule<\/span><\/h3>\nBesides detailing the activities, quantum and time frame<\/strong>, the Services and Activities Schedule should contain the following sections also:<\/p>\n<h4>a) Background<\/span><\/h4>\n<ul class=\"lst\"><li>i) Procuring Entity's organisation and Project background;<\/li><li>ii) Purpose and Service Outcomes Statement;<\/li><li>iii) Short Description and Scope of Services<\/strong> (including any incidental works\/ goods<\/strong>) that would help the bidders understand the service requirement;<\/li><li>iv) Contract period (and provision of extension, if any), duration\/ frequency\/ timeline of outcomes\/ deliverables;<\/li><li>v) Type of Contract\/ BOQ \u2014 Time-based, Unit-Rate, Indefinite delivery, Lumpsum or Percentage-Based;<\/li><li>vi) Expected requirement of RESOURCES: Man-power, Materials, Equipment;<\/li><li>vii) FACILITIES such as office space, office machines, utilities, local services, etc., which would be provided to the Service Provider by the Procuring Entity;<\/li><li>viii) INSURANCES required, if any;<\/li><li>ix) Statutory and Contractual OBLIGATIONS to be complied with by the Service Providers;<\/li><li>x) Institutional and organisational arrangement for Services \u2014 Counterpart Contract Management Team, Chain of Command, Interim\/ ultimate beneficiaries\/ stakeholders of Services; and<\/li><li>xi) Procedure for REVIEW of the Service delivery after award of contract, including service Level Agreement, if any.<\/li><\/ul>\n<h4>b) Description of Services<\/span><\/h4>\nA brief description of the service required is important information that would help the bidders understand the service requirement. It should cover background about the Procuring Entity's organisation and about the project\/ service. The Purpose and Service Outcome statement should be INCLUDED in the description of services (as finalised for initiating the procurement) to help the service providers understand the requirement.<\/p>\n<h4>c) Services and Activities Schedule<\/span><\/h4>\nIn order to attain the objectives, Services should be itemised in sufficient detail to DISTINGUISH:<\/p>\n<ul class=\"lst\"><li>between the different CLASSES of Services, or<\/li><li>between Services of the same NATURE carried out in different LOCATIONS or in other circumstances which may give rise to different considerations of cost.<\/li><\/ul>\nThere may be more than one schedule of Services, based on grouping similar services in one Schedule. Each Service should be described and broken down into DISCRETE ACTIVITIES required to deliver the service.<\/p>\nThe description\/ Scope of Service and Activities should indicate WHAT IS \u2014 and, more important, what is not \u2014 included in the scope, and the conditions under which services are to be performed.<\/p>\nConsistent with these requirements, the layout and content of the Services and Activities Schedule should be as simple and brief as possible. All information relevant for the bidder to quote a price may be included \u2014 e.g., the location, frequency\/ shifts\/ length and quantum, and time-frame\/ duration of completion of activities to be performed.<\/p>\n<aside class=\"note\">Simplification technique: In a Services and Activities Schedule containing scores of items, evaluation can be SIMPLIFIED if the system used in WORKS CONTRACTS is borrowed, if feasible \u2014 where the Schedule of Rates (SoR) for each activity is specified in the bid documents by the Procuring Entity, and only a percentage +\/- above the soR (separately for different Schedules or combined) is asked to be quoted by the bidders.<\/p><\/aside>\n<h4>d) Performance Standards and Quality Assurance<\/span><\/h4>\nPerformance standards\/ Service Levels; functional\/ materials\/ technical specifications (indicating QUANTITATIVE and QUALITATIVE parameters\/ limits\/ thresholds for performance) should be specified OVERALL for the Service AND for each activity, materials, tools and machines to be used in the activity.<\/p>\nIt should also include:<\/p>\n<ul class=\"lst\"><li>i) Any reporting requirement, periodic meetings or other submissions;<\/li><li>ii) Any service Level Agreement, if required<\/strong> \u2014 say, for the outsourcing of services;<\/li><li>iii) key performance indicators indicating how MEASUREMENT, REPORTING, and TRACKING of performance parameters would be done for Quality Assurance and Monitoring of Service (indicate procedure for quality assurance and monitoring of services, including institutional or third-PARTY arrangements for this purpose);<\/li><li>iv) Procedure for RESOLUTION and ESCALATION procedures in case of DEFICIENCY in performance\/ quality\/ service levels;<\/li><li>v) METHOD STATEMENT (Sequencing and inter-dependencies of activities), methodology, Service Level Agreement, arrangements to ensure environmental, social, gender, health, and SAFETY requirements if relevant. The Method Statement must be supplemented by information in sub-schedules for work plan; and<\/li><li>vi) Schedule for Forms of BOQ\/ Contract based on INPUT-ADMEASUREMENT \u2014 Key Inputs deployments (Personnel Deployment, Critical Equipment Deployment and Critical Materials Deployment) May not be essential \u2014 but list these if required to achieve the performance standards and quality. If the service is not dependent on any of the key inputs, that May be omitted.<\/li><\/ul>\n<h4>e) Labour\/ Personnel Schedule<\/span><\/h4>\nIf labour\/ personnel are used in the activity, these may be QUANTIFIED, specifying PLACE, SHIFTS and frequency of utilisation in the Services and Activities Schedule.<\/p>\nIn case any KEY PROFESSIONALS or PROJECT MANAGER is required, their qualification and experience required may also be mentioned.<\/p>\n<aside class=\"note\">Any RELIEVERS and LEAVE RESERVE for deploying the personnel should be included in the rate for such personnel and would not be separately payable.<\/p><\/aside>\n<h4>f) Critical Material Schedule<\/span><\/h4>\nIn case any Materials\/ Consumables\/ tools of trade are to be consumed\/ deployed, a SEPARATE Materials Schedule should be included, indicating the specification and quantity of such materials\/ consumables\/ tools to be consumed\/ deployed per unit activity\/ day\/ location\/ per manpower deployed.<\/p>\nThe price of all these materials\/ tools etc. is to be shown as a separate lump-sum cost in the financial bid by the bidder.<\/p>\n<h4>g) Critical Equipment Schedule<\/span><\/h4>\nAny ESSENTIAL equipment or machinery \u2014 Trucks, Cranes, Washing Machines, Vessels\/ crafts, plant and machinery, etc. \u2014 that the service provider must HAVE and should DEPLOY as a QUALIFYING REQUIREMENT must be mentioned, along with specifications, capacity, age of equipment etc.<\/p>\nIt should be ensured that OPERATORS for such equipment must be mentioned in the Labour\/ Personnel Schedule.<\/p>\nIn case of INPUT ADMEASUREMENT, indicate only Critical Equipment (not others) required to carry out the Services to required standards and quality. CATEGORISE the equipment \u2014 IT Equipment\/ Motor Vehicles, Cranes, Washing Machines, vessels\/ crafts, plant & machinery etc. Give estimated number LOCATION-WISE, CATEGORY-WISE.<\/p>\n<aside class=\"note\">This schedule May not be essential for output-admeasurement BOQ\/ contracts, but list these if required. If the service is not dependent on Critical Equipment, this may be OMITTED.<\/p><\/aside>\n<h4>h) Statutory and Contractual Obligations to be Complied with by the Contractor<\/span><\/h4>\nThe service provider mostly works within the premises of the Procuring Entity, along with the staff of the Procuring Entity.<\/p>\nMany services are subject to various STATUTORY PROVISIONS relating to:<\/p>\n<aside class=\"note\">labour, taxation, Workmen's Safety, Child and Women Labour, Private Security Agencies, Environmental Protection, Mining, Forest clearance, Employment reservations, etc.<\/p><\/aside>\nThe bidder must have:<\/p>\n<ul class=\"lst\"><li>a Service Tax Number,<\/li><li>ESI<\/strong> registration,<\/li><li>EPF Registration Certificate,<\/li><li>Registration Declaration of ownership under the Indian Registration Act, 1908,<\/li><li>a Labour Licence, and<\/li><li>PAN (Income Tax).<\/li><\/ul>\nMoreover, the Procuring Entity itself may have its OWN regulations about safety, security, confidentiality, etc. All such statutory and contractual obligations must be listed, so that price implications and compliance are taken care of by the bidder.<\/p>\n<aside class=\"note\">In the case of SECURITY SERVICES contracts, the bidder must have a valid LICENCE to run the business of a private security agency in the state, issued by the appropriate authority for operating Security Services.<\/p><\/aside>\n<h4>i) Facilities and Utilities to be Provided by the Procuring Entity at the Site<\/span><\/h4>\nIt should be mentioned if any facility\/ utility \u2014 IT\/ Communication Services, Emergency Medical, Room, Furniture, Electricity connection, Water connection, etc. \u2014 would be made available to the successful bidder to carry out the service.<\/p>\nIn case it is proposed to CHARGE for the Electricity\/ Water supplied to the service provider, the same may be mentioned, including the rate of charges.<\/p>\n<aside class=\"note\">This aspect has a great bearing on the cost that will be quoted by the bidders. This can have implications in vitiating the selection process either way \u2014 a facility to be provided may not get declared, or a declared facility may not be provided ultimately. So great care and reality check is necessary while preparing this Statement.<\/p><\/aside>\nSPECIALLY MENTION facilities and utilities which WILL not be provided, or the facilities which would be provided on a CHARGEABLE basis.<\/p>\nIt should be clearly MENTIONED that the service provider will not be allowed to use any of the Procuring Entity's facility\/ area which are not LISTED in this section.<\/p>\n<h4>j) Institutional Arrangements and Procedure for Review of Work of Service Provider after the Award of Contract<\/span><\/h4>\nInstitutional arrangements like the placement in a Department, name of Project Manager, and chain of command for reporting may be specified. The process of Review of Service Outcomes and deployment of personnel and resources should be clearly brought out.<\/p>\n(A template for the Services and Activities Schedule is given in Annexure 4<\/strong> of the Non-Consultancy Manual.)<\/em><\/p>\n<\/div><h2>2.8<\/span>Obtaining Technical, Administrative and Budgetary Sanctions\/ Approvals<\/span><\/h2><h3 class=\"src-G srchead\" data-src=\" G \">2.8.1<\/span>Goods \u2014 Sanctions and Signing of Indents<\/span>G<\/span><\/h3><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\nProcuring Entities may lay down a Schedule of powers for administrative and budgetary approval of indents generated for the procurement of goods (please refer to Annexure 4 for the suggested Structure of SoPP).<\/p>\nBefore granting such approvals, it should be CERTIFIED that:<\/p>\n<ul class=\"lst\"><li>Funds in the budget are available, and<\/li><li>liability for this indent is noted against the total available budget.<\/li><\/ul>\nIn case the delivery schedule is URGENT (or shorter than the usual lead time), an URGENCY CERTIFICATE should be recorded to JUSTIFY the urgency.<\/p>\nThe indenting authority may submit an indent in the form of a PURCHASE REQUISITION (Annexure 5) to the procuring entity, giving it ADEQUATE TIME for procurement.<\/p>\nMonitoring registers:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Register<\/th><th>Maintained by<\/th><th>Format<\/th><\/tr><\/thead><tbody><tr><td>Progress of Indents submitted<\/strong><\/td><td>Indentors<\/strong> \u2014 Indentors should monitor the progress of the Indents they submit<\/em><\/td><td>Annexure 6<\/strong> \u2014 Purchase Requisition Register for Indentors<\/td><\/tr><tr><td>Progress of Indents received<\/strong><\/td><td>Procuring authority<\/strong> \u2014 on receipt from the indenting authority, the progress of such Indents should be monitored<\/em><\/td><td>Annexure 7<\/strong> \u2014 Purchase Requisition Register for Procuring Entity<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h3 class=\"src-W srchead\" data-src=\" W \">2.8.2<\/span>Works \u2014 the Sanctioning Sequence<\/span>W<\/span><\/h3><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n(See paras 2.5.2, 2.5.4, 2.5.5 and 2.5.6 above \u2014 In-Principle Approval \u2192 A\/A and E\/S \u2192 Technical Sanction \u2192 Appropriation of Funds.)<\/em><\/p>\n<\/div><h3 class=\"src-multi srchead\" data-src=\" C NC \">2.8.3<\/span>Consultancy and Non-Consultancy \u2014 Final Administrative and Budgetary Approvals<\/span>C<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\">\n1. Compatibility with budget and iteration:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-C\" data-src=\" C \">C<\/span> The scope of the work described in the ToR shall be compatible with the available budget.<\/li><li class=\"srcmark src-NC\" data-src=\" NC \">NC<\/span> The Services and Activities Schedule shall be compatible with the available budget.<\/li><\/ul>\nThe most important step is to determine whether all TASKS required to achieve the desired output have been INCLUDED.<\/p>\nThe NEXT STEP is to determine whether an ADEQUATE BUDGET has been ALLOCATED to implement the ToR\/ services as designed\/ proposed.<\/p>\n<aside class=\"note\">Since the budget may be fixed or limited, a series of iterations may be required before a final, acceptable toR\/ Services and Activities Schedule is formulated.<\/p><\/aside>\nThe Competent Authority's approval may be taken for the ToR\/ the Procurement before proceeding ahead.<\/p>\nAfter administrative approval, provision May be made in the budget; or, if that is not feasible, additional confirmation at the time of seeking Administrative approval may be taken from the CA for inclusion in the revised estimate stage of budget.<\/p>\nProcurement May be initiated only after such budgetary provisions\/ confirmations.<\/p>\n2. Schedule of powers: Procuring Entities may lay down a Schedule of powers for administrative and budgetary approval of procurement proposals for services. Before granting such approvals, it should be CERTIFIED that funds in the budget are available and liability for this procurement proposal is noted against the total available budget.<\/p>\n<\/div><h2>2.9<\/span>Need Assessment and Formulation of the Requirement \u2014 Risks and Mitigations<\/span><\/h2>\n<aside class=\"note\">Section titles:<\/strong>G<\/span>Need Assessment and Technical Specification \u2013 Risks and Mitigations<\/em> \u00b7 C<\/span> and NC<\/span>Need assessment, Formulation of Terms of Reference, and Procurement Planning \u2013 Risks and Mitigations<\/em> \u00b7 W<\/span> \u2014 no corresponding risk table in Chapter 2.<\/em><\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>The need is either ARTIFICIALLY CREATED or EXAGGERATED<\/strong>, with the intention to channel benefits to an individual or an organisation<\/strong>. For example, demand is created for a good that is not needed<\/strong>, simply to benefit the company's owner.<\/td><td>Keep records and involve stakeholders: Records of decision-making and data used should be kept. Involve PROCUREMENT and FINANCE functions at this stage also. END-USER and STAKEHOLDER CONSULTATIONS should be part of the process.<\/td><\/tr><tr><td>2<\/td><td>DELAYS in the Assessment of Need and generation of the Indent\/ Purchase Proposal for Procurement may lead to SHORTCUT procurement procedures that DILUTE TRANSPARENCY and PREVENT the achievement of value for money. It may also lead to delays in the delivery of goods\/ services.<\/td><td>Need assessment should be done sufficiently in advance of the time when goods\/ services are required. In the case of URGENT requirements, the URGENCY CERTIFICATE should be approved by an authority empowered to grant administrative approval for the indent, RECORDING JUSTIFICATION \u2014 why the need could not be formulated earlier.<\/td><\/tr><tr><td>3<\/td><td>The estimate of the costs may be INADEQUATE. This may lead to an inadequate response from the bidders and may delay the finalisation of procurement. It may also adversely affect the QUALITY of supplies.<\/td><td>Estimates of procurement should be prepared with DUE DILIGENCE, keeping inflation, technology changes, profit margins, etc., in view.<\/td><\/tr><tr class=\"srcmark src-G\" data-src=\" G \"><td>4<\/strong>G<\/span><\/td><td>Need Description\/ Specifications involving SUBJECTIVITY: Procurements where samples are asked to be submitted along with the offer, and the evaluation is based on the SUBJECTIVE EVALUATION of samples \u2014 which may lead to allegations of corruption.<\/td><td>If required, a STOCK SAMPLE for INDETERMINABLE PARAMETERS \u2014 such as shade\/ tone, size, make-up, feel, finish, and workmanship \u2014 may be DISPLAYED during procurement, to which the offers must conform. If necessary, provide for submission of a PRE-PRODUCTION SAMPLE by the successful bidder(s) before giving clearance for bulk production of the supply. (See para 2.4.3.)<\/em><\/td><\/tr><tr><td>5<\/td><td>Need Description\/ Specifications\/ Terms of Reference\/ Activity Schedule are DISPROPORTIONATE to the need identified, or made to tilt in favour of one or a group of vendor(s) or contractor(s) to artificially restrict competition.<\/td><td>Use a formal market discovery tool: A pre-bid conference and\/or well-publicised EoI may be used to discover the market. Otherwise, encourage and invite comments on the technical and commercial conditions in the tender document, or hold a pre-bid conference.<\/td><\/tr><tr><td>6<\/td><td>ASYMMETRIC DISSEMINATION of vital need information: Dialogue for determining solutions available in the market is held only with SELECTED prospective bidders, giving them an UNDUE ADVANTAGE in preparing for the bidding. Selected prospective bidders get access to INSIDE INFORMATION that has not been disclosed, or DISCLOSED LATE, to others.<\/td><td>(Same mitigation as Risk 5 above \u2014 formal market discovery tool.)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>2.10<\/span>Procurement Planning<\/span><\/h2><h3 class=\"src-multi srchead\" data-src=\" W C NC \">2.10.1<\/span>The Requirement is Usually Part of a Larger Project<\/span>W<\/span>C<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\" data-src=\" W C NC \" data-label=\"Works + Consultancy + Non-Consultancy only\">\nThe Works\/ Consultancy Services\/ NC Services may be part of a LARGER PROJECT in which there may be other components of Work, Goods, or Consultancy\/ NC services.<\/p>\nOnce a project or a programme is identified, the Procuring Entity needs to develop a synchronised procurement plan for all the various components of the project\/ programme. This will also require:<\/p>\n<ul class=\"lst\"><li>planning of the SEQUENCE and CONTENTS of the different components,<\/li><li>adoption of the most appropriate method of selection and type of contract, and<\/li><li>ensuring that selection of the contractor\/ consultant\/ service provider is initiated and completed in a timely manner to meet the overall requirements of project implementation.<\/li><\/ul>\n<aside class=\"note\">Example C<\/span>: If a consultant is required for a large road project construction supervision, the entire sequence of preparation of the feasibility report, detailed design and bidding document, time required for inviting bids for construction work, and award of contract has to be considered \u2014 so that the construction supervision consultant is mobilised before the award of the construction contract.<\/p>\nExample W<\/span>NC<\/span>: If a contractor\/ service provider is required for HOUSEKEEPING SERVICES for a hostel still under construction, the entire sequence of preparation of feasibility report, detailed design and bidding document, the time required for inviting bids for construction work, and award of contract has to be considered \u2014 so that the housekeeping contractor is mobilised at the right time when the hostel is ready for occupation.<\/p><\/aside>\nProcurement planning is a crucial stage of decision-making for a better outcome and for VfM considerations.<\/p>\n<\/div><h3 class=\"src-G srchead\" data-src=\" G \">2.10.2<\/span>Critical Review of the Indent<\/span>G<\/span><\/h3><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\nWithin 10 (ten) working days of receipt of the indent from the user Department, the procuring authorities should CRITICALLY REVIEW the description and TS enclosed with the indent for:<\/p>\n<ul class=\"lst\"><li>completeness\/ approvals\/ funding,<\/li><li>VfM<\/strong>, and<\/li><li>possibility of the widest competition<\/li><\/ul>\n \u2014 and seek clarifications from the indenting officer, if needed, before initiating such procurement.<\/p>\n<\/div><h3>2.10.3<\/span>Reassessment of Quantity and Packaging\/ Bundling\/ Slicing of Requirement<\/span><\/h3>\ni) The general rule (Rule 157 of GFR 2017)<\/em>: The procuring authority shall normally neither package nor divide its procurement, or take any other action to LIMIT COMPETITION among bidders, or to avoid the necessity of obtaining the sanction of a higher authority required with reference to the estimated value of the total demand.<\/p>\nii) the exception: Provided that \u2014 in the interest of efficiency, economy, timely completion or supply, wider competition, or access to MSEs (W<\/span> says: access to SMALLER CONTRACTORS)<\/em> \u2014 a procuring authority May, for reasons to be recorded in writing, divide its procurement into APPROPRIATE PACKAGES, or club requirements of other users for procurement.<\/p>\niii) Market-facing considerations: Packaging of the contract and procurement planning should be done while keeping in view:<\/p>\n<ul class=\"lst\"><li>Market conditions and availability,<\/li><li>the possibility of eliciting the interest of the qualified firms,<\/li><li>EFFECTIVE COMPETITION for the type and size of the contract, and<\/li><li class=\"srcmark src-W\" data-src=\" W \">access to MSEs<\/strong>(W<\/span>: smaller contractors)<\/em>.<\/li><\/ul>\n<aside class=\"note\">An exceptionally large value package contract May restrict competition to big firms.<\/p><\/aside>\niv) Mixed-category requirements:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-G\" data-src=\" G \">G<\/span> Some requirements, e.g., IT Systems, may have elements of Goods, Works, and Services. It could be either SLICED into separate Goods, Works and Services elements, or COMBINED into a single package.<\/li><li class=\"srcmark src-multi\" data-src=\" W C NC \">W<\/span>C<\/span>NC<\/span> For example, for a particular contract, material to be procured may constitute more THAN 50 (fifty) per cent of the total cost of works, or there are services which are a mix of consultancy services with a substantial element of goods, such as procurement of an IT system. Such procurement could be done as a single composite contract comprising all components, or divided into separate procurements\/ contracts for each category of procurement.<\/li><\/ul>\nv) The test to apply: In all such situations, the DOMINANT ASPECT of the requirement, and the value for Money aspects of a composite all-inclusive contract versus dividing the contract into respective categories, should be carefully examined at the time of need assessment\/ procurement planning. This is a crucial stage of decision-making in procurement planning for a better outcome and for VfM considerations.<\/p>\n<h3>2.10.4<\/span>Eligibility for Participation in Tender<\/span><\/h3>\nDetermine and declare in documents any limitation on the participation of bidders as per the Government's procurement policy regarding preference for certain sections of industry, if any.<\/p>\nThe procuring entity shall not establish any requirement aimed at LIMITING the participation of bidders in the procurement process that discriminates against or amongst bidders, or against any category thereof \u2014 except to lay down a reasonable and justifiable eligibility or pre-qualification criteria for the bidders.<\/p>\n<h3>2.10.5<\/span>Type of Contract, System of Tendering and Mode of Procurement<\/span><\/h3>\na) Type of Contract [W only]: Decide upon the type of contract suitable to the procurement requirement \u2014 Lump sum; Item Rate; Percentage Rate; Piece Work; EPC or PPP.<\/p>\nb) Selection of a system of tendering: single\/ two stage; single\/ two bids; suitability for e-procurement or reverse auction.<\/p>\nc) Select the mode of procurement: open tenders, limited tenders, single tenders, and so on.<\/p>\n<h3>2.10.6<\/span>Time Frame<\/span><\/h3>\nDecisions on the TIMEFRAME for completing various stages of procurement \u2014 from the date of issuing the tender to the date of issuing the contract \u2014 which should be DECLARED in the pre-qualification\/ bidder registration or tender documents. (Rule 144(ix), GFR 2017)<\/em><\/p>\nThe procuring entity should endeavour to adhere to the time limit so decided, and RECORD REASONS for any modification of such limits.<\/p>\n<h3 class=\"src-W srchead\" data-src=\" W \">2.10.7<\/span>Availability of Land and Statutory Clearances<\/span>W<\/span><\/h3><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n<ol class=\"lst\"><li>It is DESIRABLE to have 100% of the required land in possession before award of contract; however, it may not always be possible to have the entire land due to prevailing circumstances. Also, it may not be prudent to put the entire process of award of contract ON HOLD for want of the remaining portion of land, which in the assessment of the public authority or the project executing authority could possibly be acquired in a targeted manner after award of the contract, without affecting progress.<\/li><li>Minimum necessary encumbrance-free land should be available before award of contract. The minimum may be determined based on the circumstances of each case, or general guidelines issued by the concerned authorities. Only such land, non-availability of which will prevent essential components of work from execution, should be INSISTED UPON.<\/li><li>Time taken in the grant of statutory and other clearances also contributes to the time and cost of public projects. These clearances are required to achieve specific objectives like concern for the environment, aviation safety, preservation of national heritage, conservation of forest and wildlife, etc. Public Authorities\/ Project Executing Authorities should PLAN for obtaining all necessary clearances QUICKLY and CLOSELY MONITOR the progress.<\/li><\/ol>\n<\/div><h3 class=\"src-W srchead\" data-src=\" W \">2.10.8<\/span>Architectural and Structural Drawings<\/span>W<\/span><\/h3><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\nArchitectural and structural drawings (\"fit for construction\") are among the CORE REQUIREMENTS for projects. Finalisation of these drawings at the EARLIEST \u2014 preferably at the time of preparation of the cost estimate itself \u2014 can help to determine QUANTITIES of various items of the work.<\/p>\nADVERSE CONSEQUENCES of not preparing these drawings before invitation of tenders may manifest in the form of delay in execution of the work and deviations in quantities of the items of work.<\/p>\nHence, APPROVED architectural and structural drawings should be available before invitation of tenders.<\/strong>(\"Fit for construction\", sometimes called \"Good for construction\", drawings means the architectural and structural drawings approved by the project executing authority as well as by the authority governing the extant rules\/ laws, including byelaws, such as local authorities.)<\/em><\/p>\n<\/div><h3>2.10.9<\/span>Annual Procurement Plans<\/span><\/h3>\nW<\/span>C<\/span>NC<\/span> \u2014 the mandatory 30-day rule:<\/strong>GFR 2017 [Rule 144(x)] mandates that all ministries\/ departments shall prepare an annual procurement plan within 30 (thirty) days of budget approval, before the commencement of the year, and the same should also be placed on their website.<\/p>\n[All four] \u2014 publication: The procuring entity shall\/ may publish information regarding the planned procurement activities for the forthcoming year or years on:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-G\" data-src=\" G \">G<\/span> the Government e-Marketplace (GeM), GeM-Central Public Procurement portal, and the website\/ e-procurement portal used by the procuring entity;<\/li><li class=\"srcmark src-multi\" data-src=\" W NC \">W<\/span>NC<\/span>CPPP and website\/ e-procurement portal used by the procuring entity<\/strong>;<\/li><li class=\"srcmark src-C\" data-src=\" C \">C<\/span> the central public procurement portal and website\/ e-Procurement portal used by the procuring entity<\/li><\/ul>\n \u2014 with a caveat that such publication shall not be construed as an initiation of a procurement process, and shall not cast any obligation on the Procuring Entity to issue the tender document or confer any right on prospective bidders. (Rule 144(x), GFR 2017)<\/em><\/p>\n[All four] \u2014 the integrated plan: An integrated annual procurement plan should be prepared for goods, works and services for the ensuing financial year, based on:<\/p>\n<ul class=\"lst\"><li>The latest cost estimates, and<\/li><li>a realistic time Schedule for procurement activities and contract implementation<\/li><\/ul>\n \u2014 and thus Schedule and stagger the procurements over the year, with a view to:<\/p>\n<ul class=\"lst\"><li>Ensure an even load on the Procuring Entity and the market, and<\/li><li>Co-ordinate matching procurements of Goods, Works, and Services for a project.<\/li><\/ul>\n<h3>2.10.10<\/span>Mitigating Cartel Formation<\/span><\/h3>\n<aside class=\"note\">Need assessment and procurement planning is the main stage where this menace can be addressed effectively.<\/p><\/aside>\na) Inadequate competition due to an inadequate number of suppliers\/ contractors\/ consultants\/ service providers in the list\/ panel of registered vendors \u2014 may empower bidders to conspire against the Procuring Entity:<\/p>\n<ul class=\"lst\"><li>i) new firms May be encouraged to register themselves<\/strong> for the subject goods\/ category\/ services.<\/li><li>ii) Review the description of requirement:<\/li><li class=\"srcmark src-G\" data-src=\" G \">G<\/span> A review of TECHNICAL SPECIFICATIONS (especially TAILOR-MADE specifications) may be done to examine why a commercially available alternative cannot be used instead, or at least review its features so that more suppliers become eligible. Consider using SUBSTITUTE ITEMS or new developments in the market.<\/li><li class=\"srcmark src-W\" data-src=\" W \">W<\/span> Various items in the BOQ May be reviewed (using packaging\/ slicing) so that more contractors become eligible. Insisting on costly machinery to be used May reduce competition and encourage cartel formation.<\/li><li class=\"srcmark src-multi\" data-src=\" C NC \">C<\/span>NC<\/span> Various services and activities in the Services and Activities Schedule may be reviewed so that more consultants\/ service providers become eligible. Insisting on costly machinery to be used may reduce competition and encourage cartel formation.<\/li><\/ul>\nb) Pre-bid conferences: Processes \u2014 e.g., PRE-BID CONFERENCES, where a considerable number of competing bidders come together on a platform \u2014 May facilitate such cartel formation. This may be AVOIDED as far as feasible, or be held only VIRTUALLY.<\/p>\nHOWEVER, a pre-bid conference May be advantageous in the case of:<\/p>\n<aside class=\"note\">Turnkey contract(s), sophisticated and costly equipment, large works, and complex consultancy\/ service assignments.<\/p><\/aside>\nG<\/span> adds:<\/strong>Pre-bid conferences must be done wherever necessary.<\/p>\nc) Varying quantity and conditions: Tendering similar quantities\/ works\/ services with similar conditions, year on year, provides a stable conspiring environment for the bidders to come to an agreement for quoting prices and quantities. Therefore, the following action can be considered to vary quantity and conditions to make it difficult for cartels:<\/p>\n<ul class=\"lst\"><li>i) change the mode of procurement \u2014 OTE instead of LTE, or GTE instead of OTE; or bypass the pre-qualification stage and vice versa.<\/li><li>ii) change the quantity\/ packaging:<\/li><li class=\"srcmark src-G\" data-src=\" G \">G<\/span> Change the quantity to be procured by PACKAGING\/ SLICING the tendered quantity, or by clubbing more than one similar item in a tender (or vice versa).<\/li><li class=\"srcmark src-W\" data-src=\" W \">W<\/span> Change the packaging\/ slicing by clubbing\/ slicing WORKS in a tender.<\/li><li class=\"srcmark src-multi\" data-src=\" C NC \">C<\/span>NC<\/span> Change the packaging\/ slicing by clubbing\/ slicing SERVICES\/ ACTIVITIES in a tender.<\/li><li>iii) change the pre-qualification criteria, especially in the case of slicing\/ packaging, to broaden the target bidders.<\/li><\/ul>\n<h3 class=\"src-multi srchead\" data-src=\" G W \">2.10.11<\/span>Strategising Large Procurement<\/span>G<\/span>W<\/span><\/h3><div class=\"srcblock src-multi\" data-src=\" G W \" data-label=\"Goods + Works only\">\nLarge procurements warrant strategies to achieve competition and VfM. Large procurements require the application of mind during need assessment, cost estimation and procurement planning \u2014 where the blind application of Rules May not bring VfM.<\/p>\nFormal market research can reveal important parameters of the market<\/strong> that can be used for designing optimal procurement strategies<\/strong> \u2014 alternative methods of procurement, slicing\/ packaging, mitigating cartels, optimising various features\/ specifications of the item\/ work \u2014 to maximise VfM and competition.<\/strong><\/p>\nSome of the market parameters to look for are:<\/p>\n<div class=\"tblwrap\"><table><thead><tr class=\"\" ><th>#<\/th><th>Parameter<\/th><th>G<\/span> \u2014 Goods<\/th><th>W<\/span> \u2014 Works<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>Capacity vs demand<\/td><td>Total Production Capacities and total demand for the ITEM in the country and abroad. Is there an unbalanced demand\/ supply?<\/td><td>Total Production Capacities and total demand for similar works in the region or the State. Is there an unbalanced demand\/ supply?<\/td><\/tr><tr><td>b<\/td><td>Volumes of procurement<\/td><td>How SIGNIFICANT is our requirement vis-\u00e0-vis the market? Would CLUBBING DEMANDS increase BARGAINING POWER? Can we COLLABORATE with another large public-sector buyer? Has there been a recent major procurement that may CONSTRICT available capacity?<\/td><td>(same)<\/em><\/td><\/tr><tr><td>c<\/td><td>Level of competition<\/td><td>Location-wise number of SUPPLIERS, co-ordination\/ cartelisation among them, major suppliers\/ buyers CONTROLLING the market<\/td><td>Location-wise number of CONTRACTORS, co-ordination\/ cartelisation among them, major contractors\/ buyers controlling the market<\/td><\/tr><tr><td>d<\/td><td>Bottlenecks<\/td><td>SUPPLY CHAIN constraints, RAW MATERIALS bottlenecks, LOGISTICS, GEOPOLITICAL issues<\/td><td>MANPOWER constraints, SKILLS\/ MANPOWER bottlenecks, LOGISTICS, GEOPOLITICAL issues<\/td><\/tr><tr><td>e<\/td><td>Specifications\/ statutory constraints<\/td><td>Specifications and variations: Patents, manufacturing processes, pollution, and other LEGAL RESTRICTIONS, etc. Should we tinker with specifications to get VfM?<\/td><td>Statutory Constraints: Patents, construction processes, pollution, and other legal restrictions, etc. Should we tinker with specifications to get VfM?<\/td><\/tr><tr><td>f<\/td><td>Pricing Trends [G only]<\/td><td>seasonality of prices \u2014 is it the appropriate time to enter the market?<\/td><td> \u2014 <\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h2 class=\"src-multi srchead\" data-src=\" G NC \">2.11<\/span>Procurement Planning \u2014 Risks and Mitigations<\/span>G<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\" data-src=\" G NC \" data-label=\"Goods + Non-Consultancy only\">\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>Packaging, bundling, and slicing of requirements are done to avoid open competition or reduce competition. Or it is TOO LARGE to make it difficult for MSEs to participate. Possible CLUBBING\/ COLLABORATION among different units having the same NEEDS has not been explored.<\/td><td>Lay down a clear policy for packaging and bundling of requirements. In LARGE PACKAGES, the affordability of EMD and the resultant restriction on competition may be kept in view, and bidders May be allowed to bid for slices of the package by depositing proportional EMD.<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>Appendix to Chapter 2 \u2014 Points of Difference Between the Four Manuals<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Chapter title<\/td><td>G:<\/strong>Need Assessment, Formulation of Specifications and Procurement Planning<\/em> \u00b7 W:<\/strong>Need Assessment and Procurement Planning<\/em> \u00b7 C\/NC:<\/strong>Need assessment and Procurement Planning<\/em><\/td><\/tr><tr><td>2<\/td><td>Number of sections<\/td><td>G: 5 \u00b7 W: 9 (the most) \u00b7 C: 7 \u00b7 NC: 4 (the fewest)<\/td><\/tr><tr><td>3<\/td><td>Initiating document<\/td><td>G: Indent\/ purchase Requisition (Annexure 5) \u00b7 W: Requisition + Perspective Plan \u00b7 C\/NC: Procurement Proposal (Concept Paper) (Annexure 3)<\/td><\/tr><tr><td>4<\/td><td>Description-of-requirement instrument<\/td><td>G: Technical Specifications (TS) \u00b7 W: PPR \u2192 DPR\/PE \u2192 Detailed Designs & Detailed Estimates \u00b7 C: Terms of Reference (ToR) \u00b7 NC: Services and Activities Schedule<\/td><\/tr><tr><td>5<\/td><td>Perspective Plan with annual review<\/td><td>W only<\/td><\/tr><tr><td>6<\/td><td>\"Matters decided during need assessment\"<\/strong> (method of satisfying need, HaaS\/ SaaS, units of quantity, wagon-load rounding)<\/td><td>G only<\/td><\/tr><tr><td>7<\/td><td>Detailed cost-estimation methods<\/strong> (last purchase price, costing analysis, MRP, market survey, budgetary quotes with 3-quote\/ 10\u201321 day\/ two 5-day extension rule, price-index websites)<\/td><td>G only<\/td><\/tr><tr><td>8<\/td><td>Cost categories<\/td><td>C:<\/strong>TWO<\/strong> (fee\/ remuneration + reimbursable) \u00b7 NC:<\/strong>THREE<\/strong> (Remuneration + Reimbursable + Administrative & Miscellaneous), with profit, taxes and duties added on top<\/strong><\/td><\/tr><tr><td>9<\/td><td>Minimum wage rate referenced in staff costing<\/td><td>NC only<\/td><\/tr><tr><td>10<\/td><td>Green procurement \u2014 Ecomark Rules 2023, BEE star ratings table, EPD\/ISO 14025<\/td><td>G only<\/td><\/tr><tr><td>11<\/td><td>Samples and demonstration of equipment \u2014 three-copy reference-sample procedure<\/td><td>G only<\/td><\/tr><tr><td>12<\/td><td>Essential Technical Particulars (12-item list)<\/td><td>G only<\/td><\/tr><tr><td>13<\/td><td>PPR \/ Rough Cost Estimate with 14-item content list<\/td><td>W only<\/td><\/tr><tr><td>14<\/td><td>In-Principle Approval as a distinct sanction step<\/td><td>W only<\/strong> (C\/NC have an in-principle approval<\/em> on the Concept Paper, but not the works sequence)<\/td><\/tr><tr><td>15<\/td><td>DPR\/PE with 15-item content list; EIA; Social Impact Assessment & LARR Act 2013<\/td><td>W only<\/td><\/tr><tr><td>16<\/td><td>50-metre \"reach\" ground investigation rule; debarment of DPR consultants<\/td><td>W only<\/td><\/tr><tr><td>17<\/td><td>A\/A and E\/S; sanction order contents; Rule 16 DFPR 2024<\/td><td>W only<\/td><\/tr><tr><td>18<\/td><td>Technical Sanction; \"fit for construction\" drawings; Schedule of Rates enlargement<\/td><td>W only<\/td><\/tr><tr><td>19<\/td><td>Appropriation of funds as a distinct step<\/td><td>W only<\/td><\/tr><tr><td>20<\/td><td>Reference documents (Plinth Area Rates, Schedule of Rates, Analysis of Rates, Specifications)<\/td><td>W only<\/td><\/tr><tr><td>21<\/td><td>Rs 60 lakh repair-works exemption from DPR\/PE<\/td><td>W only<\/td><\/tr><tr><td>22<\/td><td>Activity-based vs position-based ToR; four report types (Inception\/ Progress\/ Interim\/ Final); 6-week inception; 15-day interim review; \"consultants alone are responsible for their findings\"<\/td><td>C only<\/td><\/tr><tr><td>23<\/td><td>Contract Monitoring Committee (CMC)<\/td><td>C only<\/td><\/tr><tr><td>24<\/td><td>Performance Standards & QA, KPIs, SLA, Method Statement<\/td><td>NC only<\/td><\/tr><tr><td>25<\/td><td>Labour\/ Personnel Schedule; relievers and leave reserve not separately payable<\/td><td>NC only<\/td><\/tr><tr><td>26<\/td><td>Critical Material Schedule; Critical Equipment Schedule; input- vs output-admeasurement<\/td><td>NC only<\/td><\/tr><tr><td>27<\/td><td>Statutory obligations list (ESI, EPF, labour Licence, PAN, Private Security Agency licence)<\/td><td>NC only<\/td><\/tr><tr><td>28<\/td><td>\"Borrow the Works SoR + percentage above\/below\" simplification for large activity schedules<\/td><td>NC only<\/td><\/tr><tr><td>29<\/td><td>10 working days for critical review of indent<\/td><td>G only<\/td><\/tr><tr><td>30<\/td><td>Access to MSEs vs access to smaller contractors (packaging exception)<\/td><td>G\/C\/NC: MSEs \u00b7 W: smaller contractors<\/td><\/tr><tr><td>31<\/td><td>Type of contract decision in planning (Lump sum\/ Item Rate\/ Percentage Rate\/ Piece Work\/ EPC\/ PPP)<\/td><td>W only<\/td><\/tr><tr><td>32<\/td><td>Land availability & statutory clearances in procurement planning<\/td><td>W only<\/td><\/tr><tr><td>33<\/td><td>Annual Procurement Plan \u2014 express 30-day-from-budget-approval mandate<\/td><td>W, C, NC<\/strong> (G<\/strong> states the publication obligation under Rule 144(x) but not the 30-day deadline)<\/td><\/tr><tr><td>34<\/td><td>Strategising Large Procurement (market research parameters)<\/td><td>G + W only<\/td><\/tr><tr><td>35<\/td><td>\"Pricing Trends \/ seasonality\" as a market parameter<\/td><td>G only<\/td><\/tr><tr><td>36<\/td><td>Procurement Planning \u2014 Risks and Mitigations table<\/td><td>G + NC only<\/td><\/tr><tr><td>37<\/td><td>Need Assessment \u2014 Risks and Mitigations table<\/td><td>G, C, NC \u2014 absent from W<\/td><\/tr><tr><td>38<\/td><td>Subjectivity-of-samples risk row in the risk table<\/td><td>G only<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 2<\/p>\n<aside class=\"note\">Next:<\/strong> Chapter 3 \u2014 Vendor Governance: Supplier\/ Contractor Relationship Management, Participation of Bidders, Code of Integrity, Integrity Pact, Grievance Redressal, Registration\/ Enlistment, Debarment and Indian Agents<\/em> (merging Goods Ch. 3, Works Ch. 8<\/strong>, Consultancy Ch. 3 and Non-Consultancy Ch. 3).<\/p><\/aside><\/div><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch3\">Chapter 3<\/p><h1>Participation of Bidders, Vendor Relationship Management and Governance Issues<\/h1><\/header>\nMerging: Goods Ch. 3 (Supplier Relationship Management) \u00b7 Works Ch. 8<\/strong> (Registration\/ Enlistment of Contractors and Governance Issues) \u00b7 Consultancy Ch. 3 (Participation of Bidders and Governance Issues) \u00b7 Non-Consultancy Ch. 3 (Participation of Bidders and Governance Issues)<\/em><\/p><h2>Structural Warning for Students<\/span><\/h2>\nThis block of subject matter is CHAPTER 3 in the Goods, Consultancy and Non-Consultancy Manuals \u2014 but CHAPTER 8 in the Works Manual.<\/p>\nThe Works Manual moves the entire vendor-governance block to the END<\/strong> of the Manual (after Contract Execution), whereas the other three place it before Bidding Design<\/strong>. The content<\/em> is substantially the same; only the location<\/em> differs. Any exam question citing \"para 8.2\" of Works corresponds to \"para 3.2\" of Goods.<\/p>\n<h2>Concordance for Chapter 3<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>Goods<\/th><th>Works<\/th><th>CS<\/th><th>NCS<\/th><\/tr><\/thead><tbody><tr><td>3.1<\/td><td>Supplier\/ Contractor Relationship Management<\/td><td>3.1<\/td><td>8.1<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>3.2<\/td><td>Eligibility Criteria for Participation in Tender Process<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>3.1<\/td><td>3.1<\/td><\/tr><tr><td>3.3<\/td><td>Legal Status of Bidders<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>3.2<\/td><td>3.2<\/td><\/tr><tr><td>3.4<\/td><td>Governance Issues \u2014 Canons of Financial Propriety; RTI<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>3.3.1, 3.3.2<\/td><td>3.3.1, 3.3.2<\/td><\/tr><tr><td>3.5<\/td><td>Code of Integrity for Public Procurement (CIPP)<\/td><td>3.2<\/td><td>8.2<\/td><td>3.3.3<\/td><td>3.3.3<\/td><\/tr><tr><td>3.6<\/td><td>Integrity Pact (IP)<\/td><td>3.3<\/td><td>8.3<\/td><td>3.4<\/td><td>3.4<\/td><\/tr><tr><td>3.7<\/td><td>Grievances and its Redressal<\/td><td>3.4<\/td><td>8.4<\/td><td>3.5<\/td><td>3.5<\/td><\/tr><tr><td>3.8<\/td><td>Conduct of Public Servants \u2014 Risks and Mitigations<\/td><td>3.5<\/td><td>8.5<\/td><td>3.6<\/td><td>3.6<\/td><\/tr><tr><td>3.9<\/td><td>Development of New Sources and Registration\/ Empanelment\/ Enlistment\/ Pre-qualification<\/td><td>3.6<\/td><td>8.6<\/td><td>3.7<\/td><td>3.7<\/td><\/tr><tr><td>3.10<\/td><td>Debarment<\/td><td>3.7<\/td><td>8.7<\/td><td>3.8<\/td><td>3.8<\/td><\/tr><tr><td>3.11<\/td><td>Enlistment of Indian Agents<\/td><td>3.8<\/td><td>8.8<\/td><td>3.9<\/td><td>3.9<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Note on the order of the last four topics: In all four Manuals, the sequence Development of New Sources\/ Registration \u2192 Debarment \u2192 Enlistment of Indian Agents appears in the same relative order as the closing sections of the chapter. This is a reliable memory anchor.<\/p><\/aside>\n<h2 class=\"src-multi srchead\" data-src=\" G W \">3.1<\/span>Supplier\/ Contractor Relationship Management<\/span>G<\/span>W<\/span><\/h2><div class=\"srcblock src-multi\" data-src=\" G W \" data-label=\"Goods + Works only\">\nSupplier Relationship Management G<\/span> \/ Contractor Relationship Management W<\/span> comprises the following three functions:<\/p>\n<ol class=\"lst\"><li>Ensuring COMPLIANCE of suppliers\/ contractors to the Code of Integrity for Public Procurement and Integrity Pact (CIPP), if stipulated in Tender\/ Bid Documents;<\/li><li>REMOVAL from the list of registered\/ enlisted suppliers\/ contractors, and DEBARMENT of firms;<\/li><li>Development of new sources and registration\/ enlistment of suppliers\/ contractors.<\/li><\/ol>\n<aside class=\"note\">C<\/span>NC<\/span> do not<\/strong> carry a corresponding \"Relationship Management\" heading. They instead open the chapter with Eligibility Criteria<\/strong> and Legal Status of Bidders<\/strong> (paras 3.2 and 3.3 below), which have no counterpart in the Goods or Works Manuals in this chapter<\/strong>.<\/p><\/aside>\n<\/div><h2 class=\"src-multi srchead\" data-src=\" C NC \">3.2<\/span>Eligibility Criteria for Participation in Tender Process<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\">\n1.<\/strong>Normally, participation in the Tender Process should be open to all bidders.<\/strong> However, the procuring entity should lay down 'Eligibility<\/strong>' criteria, based on the requirement of the procurement and Government Policies.<\/p>\n<aside class=\"note\">The critical distinction:<\/p>\n'ELIGIBILITY' and 'QUALIFICATION' criteria (Experience; Performance and Financial Capabilities) are entirely different criteria and should not be mixed up.<\/p>\n<ul class=\"lst\"><li>'ELIGIBILITY' criteria regulate the participation of bidders in the Tender process.<\/li><li>'QUALIFICATION' criteria are for EVALUATION of bidders for award of the contract.<\/li><\/ul><\/aside>\nTiming rule: The bidder should meet the eligibility criteria as of the date of his bid submission \u2014 AND should continue to meet these till the award of the contract. Otherwise, his bid would be rejected as non-responsive and would not be evaluated for award of contract.<\/p>\nThe bidder shall be required to DECLARE FULFILMENT of Eligibility Criteria in his bid document.<\/p>\nSome of the eligibility criteria relate to the following issues (for details refer to the relevant Model Tender Documents)<\/em>:<\/p>\na) Legal status of the bidder:<\/strong> a natural person<\/strong>, or a private entity<\/strong>, or a public entity<\/strong> (State-owned enterprise or institution), or a Joint Venture\/ Consortium<\/strong> (an association of several persons, firms, or companies \u2014 hereinafter JV\/C<\/strong>).<\/p>\n<aside class=\"note\">NC<\/span> adds a restriction:<\/strong>JV\/C may be permitted to participate in the procurement of Non-consultancy services only in specific situations where the credentials required are not likely to be available with an individual bidder.<\/strong>Participation of JV\/C is SPECIFICALLY DISCOURAGED in the case of quality Oriented Procurement (QOP) with QCBS evaluation.<\/p><\/aside>\nb) Participation of demerged entities [NC only]: (by virtue of a corporate restructuring exercise etc.) Tender documents must clearly mention if \u2014 and under what conditions \u2014 the demerged entity will be permitted to use the credentials of the original\/ parent entity (for the initial five years from the incorporation of the demerged entities) to satisfy the eligibility criteria, or not, in the specific tender.<\/p>\n<aside class=\"note\">Footnote NC<\/span>:<\/em> As per DoE's OM No. F.8\/78\/2023-PPD dated 12.10.2023, in suitable cases the procuring entity may consider the credentials based on the merit and circumstances of the case \u2014 like type of procurement, nature of demerger, number of eligible bidders available, etc.<\/p><\/aside>\nc) Requirement of various REGISTRATIONS\/ LICENCES from various statutory authorities required for the subject matter of procurement: GSTIN, PAN, EPF, ESI, labour, Private Security Agencies (PASARA), etc.<\/p>\nd) Submission of requisite BID SECURITY (or Bid Security Declaration, if allowed) or proof of exemption therefrom.<\/p>\nE) free from financial insolvency, debarment or convictions.<\/p>\nF) a consistent history of litigation or arbitration by the bidder May result in disqualification.<\/p>\ng) Free from 'conflict of interest' with other bidders, which may affect fair competition.<\/p>\nh) Restriction on participation as per Government Policies:<\/p>\n<ul class=\"lst\"><li>i) For Class-II Local Suppliers and Non-Local bidders as per the Make-in-India policy;<\/li><li>ii) Any bidder from a country sharing a land border with India (but not in development partnership with India), or any bidder (INCLUDING INDIAN) with a Specified Transfer of Technology (ToT) arrangement with such a country, shall be eligible subject to certain conditions.<\/li><\/ul>\n<\/div><h2 class=\"src-multi srchead\" data-src=\" C NC \">3.3<\/span>Legal Status of Bidders<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\"><h3>3.3.1<\/span>Individual Persons<\/span><\/h3>\n1. Individual consultants C<\/span> \/ Individual service providers NC<\/span>:<\/p>\nIndividual consultants\/ service providers are recruited for similar activities as Consultancy firms\/ Service providing firms when a full team is not considered necessary.<\/p>\nThey may be:<\/p>\n<ul class=\"lst\"><li>independent experts not permanently associated with any particular firm, or<\/li><li>employees of a firm recruited on an INDIVIDUAL basis, or<\/li><li>employees of an agency, institution, or university.<\/li><\/ul>\nThey are normally recruited for:<\/p>\n<aside class=\"note\">project implementation supervision \u00b7 training \u00b7 provision of specific expert advice on a highly technical subject \u00b7 policy guidance \u00b7 special studies \u00b7 compliance supervision \u00b7 implementation monitoring<\/p><\/aside>\nThey are not normally recruited for PROJECT PREPARATION, unless the proposed project is simple and, generally, a repeat of an already established and successful project.<\/p>\n<aside class=\"note\">If more than three experts are required, then the assignment should normally be undertaken by a team from a firm.<\/p><\/aside>\nAs with firms, individual consultants\/ service providers are classed as either INTERNATIONAL or NATIONAL, depending on their level of EXPERTISE and their international experience and exposure.<\/p>\n2. Retired Government Servants:<\/p>\nC<\/span> \u2014 the GFR bar:<\/strong>Rule 177 of GFR, 2017 says that <\/strong>consulting services do not include direct engagement of retired Government servants.<\/strong>They should not be engaged as consultants against regular vacant posts under this rule. Such engagements should be handled as a PERSONNEL MATTER.<\/p>\nC<\/span>NC<\/span> \u2014 the permitted mode: As Consultants\/ Service Providers, <\/strong>retired Government servants CAN be hired\/ engaged only:<\/p>\n<ul class=\"lst\"><li>for a SPECIFIC TASK, and<\/li><li>for a specific duration.<\/li><\/ul>\nThey should be assigned clear output-related goals.<\/p>\nRemuneration:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Type of engagement<\/th><th>Remuneration<\/th><\/tr><\/thead><tbody><tr><td>Full-TIME basis (when they are not allowed to concurrently do any other assignment), on a monthly basis<\/td><td>Last pay drawn minus pension, as per extant DOPT guidelines<\/td><\/tr><tr><td>PART-TIME, NON-EXCLUSIVE engagements<\/td><td>The Procuring Ministry\/ Department may fix remuneration on a per day\/ month or lump-sum basis<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h3>3.3.2<\/span>Private and Public Entities<\/span><\/h3>\n1. Consultancy Firms C<\/span> \/ Service Providing Firms NC<\/span>: The MAIN SOURCE of consultants\/ service providers is firms of diverse specialisations that provide consultancy\/ non-consultancy services. Such firms are normally classified as either:<\/p>\n<ul class=\"lst\"><li>INTERNATIONAL \u2014 firms that have international experience and are capable of undertaking work at international level at international rates; or<\/li><li>NATIONAL \u2014 firms that may not have international exposure and normally undertake assignments only within that country, usually at significantly lower rates.<\/li><\/ul>\n2. Non-Governmental Organisations (NGO): There may be a DISTINCT ADVANTAGE in the use of NGOs in Projects which emphasise experience in community participation and in-depth local knowledge \u2014 for example, Projects related to Corporate Social Responsibility (CSR) or Government Social Initiatives like 'Swachh Bharat Abhiyan', etc.<\/p>\n3. Specialised Agencies and Institutions:<\/strong> Specialised agencies or institutions \u2014 including Government\/ Semi-Government agencies, universities, research and professional institutions<\/strong> \u2014 may also from time to time be recruited to provide Consultancy\/ Non-consultancy services.<\/p>\nThese services may be provided by INDIVIDUALS (as discussed above) or by TEAMS. Nonetheless, there are at times DISTINCT ADVANTAGES to using such agencies. Experts and teams from such agencies and institutions may undertake a variety of roles across the whole field of possible services \u2014 these may range from PROJECT PREPARATION through PROJECT SUPERVISION and POLICY ADVICE to project benefit monitoring and evaluation.<\/p>\n<h3>3.3.3<\/span>Association of Several Bidders<\/span><\/h3><h4>1.<\/span>Sub-contracting<\/span><\/h4>\nA bidder who is capable of being selected for award of contract on his own credentials may propose to sub-contract a PART of the contract for SPECIALISED ITEMS of services, as a financial or technical strategy.<\/p>\n<ul class=\"lst\"><li>The names and details of the sub-contracts are to be clearly stated in the bid submitted by the Bidder.<\/li><li>Provided further that such sub-contractor should not circumvent the eligibility criteria.<\/li><li>Qualifications of these sub-contractors shall not be considered in evaluation of qualification criteria for the bid.<\/li><li>DESPITE any approval granted by the Procuring Entity for such arrangements, the bidder\/ contractor shall be solely and directly responsible for executing sub-contracted portions of the contract.<\/li><li>The total VALUE of the sub-contracting portion of services must not exceed the per cent of the contract price as specified in the Tender Document\/ Contract \u2014 if not so specified, 25 (twenty-five) per cent.<\/li><li>Sub-contracting by the contractor without the approval of the Procuring Entity shall be a breach of contract.<\/li><\/ul>\n<h4 class=\"src-multi srchead\" data-src=\" C NC \">2.<\/span>Consortium of Consultants C<\/span> \/ Consortium of Service Providers<\/span>NC<\/span><\/h4><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\">\na) Why consortia form: In large and complex assignments, consultants\/ service providers may associate with each other to form a consortium:<\/p>\n<ul class=\"lst\"><li>to COMPLEMENT their respective areas of expertise,<\/li><li>to INCREASE the technical responsiveness of their proposal, and<\/li><li>to make larger pools of experts available, or for other reasons.<\/li><\/ul>\nSuch an association may be for the LONG TERM (independent of any particular assignment) or for a SPECIFIC assignment.<\/p>\nb) Legal character:<\/strong> Such associations are called Consortium or Joint Ventures (JVs)<\/strong> for the purpose of this Manual.<\/p>\n<ul class=\"lst\"><li>In case of consortium or JVs, all members shall sign the contract and shall be jointly and severally liable for the entire assignment.<\/li><\/ul>\n<aside class=\"note\">(NC<\/span> phrasing: \"The consortium may take the form of a Joint Venture (JV) \u2014 in which case, all members of the JV shall sign the contract and shall be jointly and severally liable for the entire assignment.\")<\/em><\/p><\/aside>\n<ul class=\"lst\"><li>HOWEVER, the Procuring Entity only deals with the lead member of consortiums\/ JVs for all purposes.<\/li><li>After the short list is finalised and the Request for Proposal (RfP) is issued, any association in the form of a consortium\/ JV or sub-consultancy among the short-listed firms shall be PERMISSIBLE in accordance with provisions stated in the RfP. Under such circumstance, one of the shortlisted consultants must become the lead member of the consortium\/ JV.<\/li><\/ul>\nc) What the bid document must specify: Bid documents should clearly specify whether consortiums\/ JVs are ALLOWED to bid \u2014 in the case of complex and large assignments, say above certain values (say Rs. 5 crore).<\/p>\n<ul class=\"lst\"><li>Maximum number of partners in a consortium\/ JV shall be LIMITED (say \u2014 three).<\/li><li>In case consortiums\/ JVs are permitted to bid, it should be clarified:<\/li><li>WHAT qualifications are to be met COLLECTIVELY (clubbed together)<\/strong> by the consortium\/ JV partners \u2014 say, experience of similar consultancy\/ non-consultancy service<\/em>; and<\/li><li>WHAT each partner has to meet individually and separately \u2014 say, financial capacity<\/em>.<\/li><li>In the case of each member meeting credentials individually, it should also be specified that:<\/li><\/ul>\n<aside class=\"note\">Each PARTNER should meet AT least 25%, and the lead partner at least 50%, out of the qualifying limit (say financial capacity\/ turnover).<\/p><\/aside>\nd) Ensuring the consortium actually performs: If consortiums\/ JVs are allowed, measures should be taken to ensure that all the consortium\/ JV partners are present and deliver services all through the contract period.<\/p>\n<ul class=\"lst\"><li>An IMPLEMENTATION BOARD with participation of all consortium\/ JV partners may be provided for, wherein the project Manager from the Procuring Entity shall also be ALLOWED AUDIENCE when required.<\/li><li>MEETING of consortium\/ JV partners with the project executing authority for quarterly progress review may be made a criterion linked to achievement of key dates or even payment.<\/li><\/ul>\n<\/div><\/div><h2 class=\"src-multi srchead\" data-src=\" C NC \">3.4<\/span>Governance Issues in Procurement \u2014 Financial Propriety and RTI<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\">\n<aside class=\"note\">C<\/span>NC<\/span> open their governance section by re-stating two topics that the Goods and Works Manuals place in CHAPTER 1<\/strong> \u2014 see paras 1.9<\/strong> and 1.16<\/strong> of this Unified Manual.<\/p><\/aside>\n<h3>3.4.1<\/span>Standards (Canons) of Financial Propriety<\/span><\/h3>\nPublic Procurement, like any other expenditure in Government, must conform to the Standards (also called Canons) of Financial Propriety \u2014 Rule 21 of GFR, 2017.<\/p>\n<aside class=\"note\">The four principles reproduced in the CS and NC Manuals are (i) to (iv):<\/p>\ni) Every officer is expected to exercise the same vigilance in respect of expenditure incurred from public moneys as a person of ordinary prudence would exercise in respect of expenditure of his own money.<\/p>\nii) The expenditure should not be prima facie more than the occasion demands.<\/p>\niii) No authority should exercise its powers of sanctioning expenditure to pass an order which will be directly or indirectly to its own advantage.<\/p>\niv) Expenditure from public moneys should not be incurred for the benefit of a particular person or a section of the people, unless \u2014 (a) a claim for the amount could be enforced in a Court of Law, or (b) the expenditure is in pursuance of a recognised policy or custom.<\/p>\nCross-reference:<\/strong> The Works Manual (para 1.9) additionally reproduces clause (v)<\/strong> \u2014 the amount of allowances granted to meet expenditure of a particular type should be so regulated that the allowances are not, on the whole, a source of profit to the recipients<\/em>. Neither the Goods Manual (para 1.9) nor the CS\/NC Manuals (para 3.3.1) reproduce clause (v).<\/strong><\/p><\/aside>\n<h3>3.4.2<\/span>Right to Information and Proactive Information Disclosures<\/span><\/h3>\nSection 4(1)(b) of the RTI Act lays down the information to be disclosed by public authorities on a suo-motu or proactive basis, and Section 4(2) and Section 4(3) prescribe the method of its dissemination \u2014 to enhance transparency and to reduce the need for filing individual RTI applications.<\/p>\nThe DoPT has issued \"Guidelines on suo motu disclosure under Section 4 of the RTI Act\" vide OM No. 1\/6\/2011-IR dated April 15, 2013. The relevant guideline relating to procurement:<\/p>\n<aside class=\"note\">\"Information relating to procurement made by public authorities \u2014 including publication of notice\/ tender enquiries, corrigenda thereon, and details of bid awards detailing the name of the Vendor\/ Contractor of goods\/ services being procured or the works contracts entered, or any such combination of these, and the rate and total amount at which such procurement or works contract is to be done \u2014 should be disclosed. All information disclosable as per Ministry of Finance, Department of Expenditure's O.M. No. 10\/1\/2011-PPC dated 30th November 2011 (and 05th March 2012) on Mandatory Publication of Tender Enquiries on the Central Public Procurement Portal, and O.M. No. 10\/3\/2012-PPC dated 09th January 2014 on implementation of comprehensive end-to-end e-procurement, should be disclosed under Section 4 of the Right to Information Act.\"<\/p>\nPlacement note: This appears at para 1.12 in the Goods Manual and at para 3.3.2 in the CS and NC Manuals. It does not appear in the Works Manual at all.<\/p><\/aside>\n<\/div><h2>3.5<\/span>Code of Integrity for Public Procurement (CIPP)<\/span><\/h2>\n(Rule 175 of GFR 2017)<\/em><\/p>\n<h3>3.5.1<\/span>Introduction<\/span><\/h3>\nPublic Procurement is perceived to be prone to corruption and ethical risks. To mitigate this, the officials of Procuring Entities involved in procurement AND the bidders\/ suppliers\/ contractors\/ consultants\/ service providers must abide by the following Code of Integrity for Public Procurement (CIPP).<\/p>\nDeclarations by officials: All Procuring officials May be asked to sign declarations to this effect PERIODICALLY and in various procurement decisions.<\/p>\n<ul class=\"lst\"><li>[G, C, NC] \u2014 including Need Assessment<\/em><\/li><li class=\"srcmark src-W\" data-src=\" W \">W<\/span> \u2014 including Preparation of Estimates<\/strong><\/em><\/li><\/ul>\nDeclarations by bidders:<\/strong> The bidders\/ suppliers\/ contractors\/ consultants\/ service providers should be asked to sign a declaration about abiding by the CIPP<\/strong> \u2014 W<\/span> adds: including sub-contractors engaged by them<\/em> \u2014 <\/strong>in registration\/ enlistment applications AND in tender\/ bid documents, with a <\/strong>WARNING that, in case of any transgression of this code:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-G\" data-src=\" G \">G<\/span> \u2014 it would be liable for punitive actions as detailed below<\/em>;<\/li><li class=\"srcmark src-W\" data-src=\" W \">W<\/span> \u2014 its name is not only liable to be removed from the list of enlisted contractors, but it would be liable for other punitive actions such as cancellation of contracts, debarment or action in Competition Commission of India<\/strong>, and so on<\/em>;<\/li><li class=\"srcmark src-multi\" data-src=\" C NC \">C<\/span>NC<\/span> \u2014 its name is not only liable to be removed from the list of registered suppliers\/ contractors\/ service providers, but it would be liable for other punitive actions as detailed below<\/em>.<\/li><\/ul>\n<h3>3.5.2<\/span>The Code \u2014 Seven Prohibited Practices<\/span><\/h3>\nProcuring authorities, as well as bidders, suppliers, contractors, consultants and service providers, should observe the highest standard of ethics and should not INDULGE in the following PROHIBITED PRACTICES \u2014 either directly or indirectly \u2014 at any stage during the procurement process or the execution of resultant contracts:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Practice<\/th><th>Definition<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>\"CORRUPT practice\"<\/td><td>making offers, solicitation or acceptance of a BRIBE, REWARDS or GIFTS or any material benefit, either directly or indirectly, in exchange for an unfair advantage in the procurement process, or to otherwise INFLUENCE the procurement process or contract execution<\/td><\/tr><tr><td>ii<\/td><td>\"FRAUDULENT practice\"<\/td><td>any OMISSION or MISREPRESENTATION that may mislead or attempt to mislead so that financial or other benefits may be obtained, or an obligation avoided. This includes making FALSE DECLARATIONS or providing FALSE INFORMATION for participation in a procurement process, or to secure a contract, or in the execution of the contract<\/td><\/tr><tr><td>iii<\/td><td>\"ANTI-COMPETITIVE practice\"<\/td><td>any collusion, bid rigging or anti-competitive arrangement, or any other practice coming under the purview of the Competition Act, 2002, between two or more bidders \u2014 with or without the knowledge of the procuring entity \u2014 that may IMPAIR the transparency, fairness and progress of the procurement process, or to establish bid prices at artificial, non-competitive levels<\/td><\/tr><tr><td>iv<\/td><td>\"COERCIVE practice\"<\/td><td>any COERCION or any threat to impair or harm, directly or indirectly, any party or its property, to influence the procurement process or affect the execution of a contract<\/td><\/tr><tr><td>v<\/td><td>\"Conflict of interest\" (coi)<\/td><td>any PERSONAL, FINANCIAL, or BUSINESS RELATIONSHIP between the BIDDER and any personnel of the Procuring Entity who are directly or indirectly related to the procurement or execution process of the contract, which can affect the decision of the procuring entity directly or indirectly<\/td><\/tr><tr><td>vi<\/td><td>\"Undue advantage\"<\/td><td>Improper use of information obtained by the bidder from the procuring entity with an intent to gain an unfair advantage in the procurement process or for personal gain. This also includes if the bidder (or his allied firm) provided services for the need assessment\/ procurement planning of the tender process in which he is participating<\/td><\/tr><tr><td>vii<\/td><td>\"OBSTRUCTIVE practice\"<\/td><td>MATERIALLY IMPEDE the procuring entity's INVESTIGATION of a procurement process \u2014 either by deliberately destroying, falsifying, altering; or by concealing evidence material to the investigation; or by making false statements; or by THREATENING, HARASSING or intimidating any party to prevent it from disclosing its knowledge of matters relevant to such investigation or from pursuing the investigation; or by impeding the Procuring Entity's rights of audit or access to information<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Footnote on \"Undue Advantage\": \"Need assessment\/ procurement planning\" here means, inter alia<\/em>, need assessment, preparation of feasibility\/ cost estimates\/ Detailed Project Report (DPR), design\/ technical specifications, terms of reference (ToR)\/ Activity Schedule\/ schedule of requirements, or the Tender Document, etc. For \"allied firm\", see the Procurement Glossary.<\/p><\/aside>\n<h3>3.5.3<\/span>Obligations for Proactive Disclosures<\/span><\/h3>\nWhether asked or not, in a tender document:<\/p>\na) Declaration of Conflict of Interest: Procuring authorities, as well as bidders, suppliers, contractors, consultants and service providers, should suo-moto proactively declare any conflict of interest as per item (v) above \u2014 PRE-EXISTING or as soon as these arise at any STAGE in any procurement process or execution of a contract.<\/p>\nb) Declaration of previous transgressions: Bidders must DECLARE any PREVIOUS TRANSGRESSIONS with respect to the prohibited practices above with any entity in any country during the last three years, or of being debarred by any other Procuring Entity.<\/p>\nc) Declaration of commissions\/ fees to agents: The bidder\/ contractor must disclose any commissions or fees that may have been paid or are to be paid to AGENTS, REPRESENTATIVES, or COMMISSION AGENTS concerning the selection process or execution of the Contract. The information disclosed must INCLUDE:<\/p>\n<ul class=\"lst\"><li>the name and address<\/strong> of the agent, representative or commission agent,<\/li><li>the AMOUNT and CURRENCY, and<\/li><li>the purpose<\/strong> of the commission or fee<\/li><\/ul>\n \u2014 in a format given in the tender document.<\/p>\n<aside class=\"note\">IMPORTANT FOOTNOTE (in all four Manuals): To encourage voluntary disclosures, such declarations would not mean automatic disqualification for the bidder making such declarations. The declared conflict of interest May be evaluated, and MITIGATION STEPS, if possible, may be taken by the procuring entity. Similarly, voluntary reporting of previous transgressions of the Code of Integrity elsewhere may be evaluated, and \u2014 barring cases of debarment \u2014 an alert watch May be kept on the bidder's actions in the tender and subsequent contract.<\/p><\/aside>\n<h3>3.5.4<\/span>Professionalism and Unfair Competitive Advantage [C ONLY]<\/span><\/h3>\n<aside class=\"note\">This sub-section appears only in the Consultancy Services Manual. It has no counterpart in the Goods, Works or Non-Consultancy Manuals.<\/p><\/aside>\nA) professionalism: The consultant is required to provide professional, objective, and impartial advice \u2014 at all times holding the Procuring Entity's interest paramount above his\/ its own corporate interests and above any consideration for future work \u2014 strictly avoiding any conflicts of interest.<\/p>\nb) Unfair Competitive Advantage: Fairness and transparency in the selection process require that the consultants or their affiliates competing for a specific assignment do not derive an unfair competitive advantage from having provided consultancy services related to the assignment in question.<\/p>\nSuch unfair competitive advantage is BEST AVOIDED by full TRANSPARENCY and by providing equal opportunity, so that all firms or individuals interested or involved have full INFORMATION about a service assignment and its NATURE, SCOPE, and background information. To that end, the request for proposals and all information should be made available to all short-listed consultants simultaneously.<\/p>\nc) The three disqualification rules: Therefore, without limitation on the generality of the foregoing, and unless stated otherwise in the RfP document, Consultants (including their experts and sub-consultants) or their allied firm shall not be eligible for any assignment that:<\/p>\n<ul class=\"lst\"><li>i) by its NATURE, may be in conflict with another assignment of the consultant or its allied firm \u2014 for the same or for another procuring Entity;<\/li><li>ii) a consultant or any of its affiliates\/ allied firms that has been engaged by the client to provide goods, works, or non-consultancy services for a project, shall be disqualified from providing consultancy service resulting from or directly related to those goods, works, or non-consultancy services;<\/li><li>iii) conversely, a consultant or any of its affiliates\/ allied firms hired to provide consultancy services for the preparation or implementation of a project shall be disqualified from subsequently providing goods or works or non-consultancy services resulting from or directly related to the consultancy services for such preparation or implementation.<\/li><\/ul>\n<h3>3.5.5<\/span>Punitive Provisions<\/span><\/h3>\n(Rule 175(2) of GFR, 2017)<\/em><\/p>\nWithout prejudice to \u2014 and in addition to \u2014 the rights of the procuring entity to other penal provisions as per the tender\/ bid documents or contract, IF the procuring entity CONCLUDES that a (prospective) bidder\/ supplier\/ contractor\/ consultant\/ service provider, directly or through an agent, has violated this code of integrity in COMPETING FOR the contract or in EXECUTING a contract, the procuring entity May take appropriate measures including one or more of the following:<\/p>\n<h4>1.<\/span>If his bids are UNDER CONSIDERATION in any procurement<\/span><\/h4>\n<ol class=\"lst\"><li>Forfeiture and\/ or encashment of Bid Security;<\/li><li>Calling off of any pre-contract negotiations; And<\/li><li>REJECTION and EXCLUSION of the bidder from the procurement process.<\/li><\/ol>\n<h4>2.<\/span>If a contract has ALREADY BEEN AWARDED<\/span><\/h4>\n<ol class=\"lst\"><li>CANCELLATION of the relevant contract and recovery of compensation for loss incurred by the procuring entity;<\/li><li>FORFEITURE and\/ or ENCASHMENT of any other security or bond relating to the procurement;<\/li><li>Recovery of payments \u2014 including advance payments, if any \u2014 made by the procuring entity, along with interest thereon at the prevailing rate.<\/li><\/ol>\n<aside class=\"note\">(C<\/span> omits the words \"including advance payments\" in this clause.)<\/em><\/p><\/aside>\n<h4>3.<\/span>Provisions IN ADDITION to the above<\/span><\/h4>\n<ol class=\"lst\"><li>REMOVAL from the list of registered suppliers\/ enlisted contractors and\/ or DEBARMENT of the bidder from participation in FUTURE PROCUREMENTS of the procuring entity:<\/li><li>[G, W, NC] \u2014 for a period not less than six months;<\/li><li class=\"srcmark src-C\" data-src=\" C \">C<\/span> \u2014 for a period not exceeding two years.<\/strong><\/li><\/ol>\n<aside class=\"note\">Note the divergence:<\/strong> the Consultancy Manual states a ceiling<\/strong> (not exceeding two years), whereas the other three state a FLOOR<\/strong> (not less than six months).<\/p><\/aside>\n<ol class=\"lst\"><li>In case of ANTI-COMPETITIVE PRACTICES, information for further processing May be filed with the Competition Commission of India:<\/li><li>[G, W, NC] \u2014 under the signature of a joint Secretary level officer;<\/li><li class=\"srcmark src-C\" data-src=\" C \">C<\/span> \u2014 by the Competent Authority.<\/strong><\/li><li>Initiation of suitable disciplinary or criminal proceedings against any individual or staff found responsible.<\/li><\/ol>\n<h2>3.6<\/span>Integrity Pact (IP)<\/span><\/h2>\n1. What it is: The pre-bid Integrity Pact is a tool to help governments, businesses, and civil society fight corruption in public contracting.<\/p>\nIt binds both buyers and sellers to ethical conduct and transparency in all activities \u2014 from:<\/p>\n<aside class=\"note\">pre-selection of bidders \u2192 bidding \u2192 contracting \u2192 implementation \u2192 completion \u2192 operation related to the contract.<\/p><\/aside>\nThis removes the insecurity of bidders that, while they themselves May abjure bribery, their competitors May resort to it and win contracts by unfair means.<\/p>\n2. Who must incorporate it, and at what threshold: Ministries\/ Departments and their attached\/ subordinate offices (including autonomous bodies) should incorporate the Integrity Pact (OM No. 14(12)\/2008-E-II(A) dated 19th July 2011)<\/em> in the procurements\/ contracts:<\/p>\n<ul class=\"lst\"><li>of the NATURE and of a THRESHOLD VALUE,<\/li><li>decided by the ministries\/ departments,<\/li><li>with the approval of the minister in charge.<\/li><\/ul>\n<aside class=\"note\">As guidance, the threshold should cover the bulk \u2014 80\u201390% (eighty to ninety per cent) by value \u2014 of its annual procurement expenditure.<\/p><\/aside>\nFormat and customisation:<\/p>\n<ul class=\"lst\"><li>[G, W] \u2014 The procuring entities May make suitable changes in the format, wherever required, based on the specific situation in which the pact is to be used. The pact May also be updated, wherever necessary, to incorporate latest procurement instructions.<\/li><li>[C, NC] \u2014 Ministries\/ Departments including their attached\/ subordinate offices AND CPSEs may use this format of Integrity Pact, with the suitable changes specific to the situations in which the pact is to be used.<\/li><\/ul>\n<aside class=\"note\">Annexure references for the IP Format:<\/strong>G<\/span> Annexure 30 \u00b7 W<\/span> Annexure 14 \u00b7 C<\/span> Annexure 18 \u00b7 NC<\/span> Annexure 12.<\/p><\/aside>\n3. Extension to PSBs, PSICs and FIs: CVC issued a revised standard operating procedure (CVC Circular No. 04\/06\/23 \u2014 015\/VGL\/091 dated 14.06.2023)<\/em> and has further stated (CVC Circular No. 06\/05\/21 \u2014 015\/VGL\/091 dated 03.06.2021)<\/em> That, in view of the increasing procurement activities of public sector banks (PSBs), public sector insurance companies (PSICs) and public sector financial institutions (FIs), they shall also adopt and implement the suggested format of Integrity Pact.<\/p>\n<aside class=\"note\">C<\/span> \u2014 additional provision found only in the consultancy Manual:<\/p>\nIn the case of sub-contractors, the Integrity Pact shall be a tri-partite arrangement, to be signed by (1) the organisation, (2) the contractor, and (3) the sub-contractor.<\/p>\nSee Annex-2 to the Integrity Pact Annexure for details.<\/strong>(Note: G<\/span> titles Annex-2 as \"Extract of Standard Operating Procedure\"; W<\/span>, C<\/span>, NC<\/span> title it \"Appointment and Role of IEMs\".)<\/em><\/p><\/aside>\n<h2>3.7<\/span>Grievances and its Redressal<\/span><\/h2>\n1. Procuring Entities shall provide a suitable clause in their tender documents for the redressal of grievances of bidders. The following is a suggested mechanism of redressal.<\/p>\n2. Who may apply, and within what time:<\/p>\nAny supplier, contractor, or consultant that claims to have suffered or is likely to suffer loss or injury as a result of a decision\/ action\/ omission of the Procurement Entity May make an application for its review:<\/p>\n<ul class=\"lst\"><li>Within a period of five (5) days from its date,<\/li><li>to the DESIGNATED OFFICER named in the tender documents in this regard (or the head of the Procuring Entity, if not so specified),<\/li><li>specifying the ground(s) and the relevant clauses of the tender documents.<\/li><\/ul>\nDe-briefing: Unsuccessful bidders May seek de-briefing regarding the rejection of their bid \u2014 in writing or electronically \u2014 within five (5) days of the declaration of techno-commercial or financial evaluation results.<\/p>\n3. Only a directly affected bidder can represent:<\/p>\n<ol class=\"lst\"><li>Only a bidder who has participated in the concerned procurement process \u2014 i.e., pre-qualification, bidder registration or bidding, as the case may be \u2014 can make such representation.<\/li><li>In case the PRE-QUALIFICATION bid has been evaluated before the bidding of Technical\/ financial bids, an application for review in relation to the technical\/ financial bid may be filed only by a bidder who has qualified in the pre-qualification bid.<\/li><li>In case the TECHNICAL bid has been evaluated before the opening of the FINANCIAL bid, an application for review in relation to the financial bid may be filed only by a bidder whose technical bid is found to be acceptable.<\/li><\/ol>\nD) decisions not subject to review:<\/strong> The following decisions of the procuring entity, in accordance with the provisions of internal guidelines, shall not be subject to review:<\/strong><\/p>\n<ul class=\"lst\"><li>i) determination of the need for procurement;<\/li><li>ii) selection of the mode of procurement or tendering system;<\/li><li>iii) choice of selection procedure;<\/li><li>iv) complaints against specifications \u2014 except under the premise that they are either VAGUE or too specific to limit competition, which may be permissible;<\/li><li>v) provisions limiting the participation of bidders in the procurement process in terms of government policies;<\/li><li>vi) provisions regarding purchase preferences to specific categories of bidders in terms of policies of the Government;<\/li><li>vii) the decision to enter into negotiations with the L1 bidder;<\/li><li>viii) cancellation of the procurement process \u2014 except where it is intended to SUBSEQUENTLY RE-TENDER the same requirements;<\/li><li>ix) issues related to ambiguity in contract terms shall not be taken up after a contract has been signed; all such issues should be HIGHLIGHTED before the vendor\/ contractor consummates the contract.<\/li><\/ul>\n<aside class=\"note\">(In the Works Manual this is numbered as a separate para 4, not as a sub-item of the \"not subject to review\" list.)<\/em><\/p><\/aside>\n4. This grievance redressal is BESIDE the avenue of complaints to the vigilance Department of the procuring organisation.<\/p>\n5. If received DURING the processing of the tender: The designated officer shall FORWARD the application to the tC\/ convener of TC for its examination on merits and action as considered necessary.<\/p>\n<ul class=\"lst\"><li>An interim reply May be sent that the application will be kept in view in the tender evaluation, and a final response shall be given only after the declaration of the award of the contract.<\/li><li>The Tender Committee shall place the application on record \u2014 including its analysis and action taken thereon \u2014 in the TC minutes\/ report to the Competent Authority.<\/li><li>After the award, the TC convener shall respond to the aggrieved party.<\/li><\/ul>\n6. If received after the declaration of the award of the contract: The designated officer shall FORWARD the application to the COMPETENT AUTHORITY of the tender for his examination on merits and action as considered necessary.<\/p>\n<aside class=\"note\">Such post-award grievance must be redressed and closed within 30 days of receipt of the grievance.<\/p><\/aside>\nIf the Competent Authority finds the complaint to have substance, appropriate and feasible remedial measures should be initiated.<\/p>\n7. If the grievance is resolved, or if the grievance is found to be unwarranted, the aggrieved party shall be informed by the TC convener of the final decision \u2014 without disclosing confidential details.<\/p>\n8. Remedial actions available: Based on such representation, if the Competent Authority is satisfied that there has been a contravention of procurement guidelines in the case, he May initiate such action as, in his opinion, is necessary to rectify the contravention \u2014 INCLUDING:<\/p>\n<ol class=\"lst\"><li>If the grievance is due to inadequacy of procurement guidelines or a lack of understanding of the staff \u2014 remedial action to address such lacunae May be initiated without repercussions to the concerned staff;<\/li><li>Annulment or reconsideration of the procurement proceedings;<\/li><li>Cancellation of the resultant procurement contract, if legally feasible;<\/li><li>In case any individual staff is found responsible \u2014 suitable disciplinary proceedings should be initiated against such staff under the conduct Rules;<\/li><li>In case the complicity of any bidder is proved:<\/li><li>i) REMOVAL of the concerned firm from the list of registered firms;<\/li><li>ii) DEBARMENT of the bidders, if warranted;<\/li><li>iii) reporting the matter to the Competition Commission of India (CCI) in case of anti-competitive actions by the bidder;<\/li><li>Handing over the case to the CVO if there are aspects that require INVESTIGATIONS.<\/li><\/ol>\n<h2>3.8<\/span>Conduct of Public Servants in Public Procurement \u2014 Risks and Mitigations<\/span><\/h2>\n<aside class=\"note\">(Notified vide OM No. F.11\/13\/2017-PPD<\/strong> issued by Department of Expenditure dated 24.10.2017<\/strong>.)<\/em><\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>HOSPITALITY: Hospitality \u2014 including facilitation of travel, lodging, boarding and ENTERTAINMENT during official or unofficial programs \u2014 from suppliers\/ contractors may tend to cross the limits of ethical\/ occasional\/ routine\/ modest\/ normal business practice. Officials sent to the firm's premises for INSPECTIONS\/ MEETINGS may mistakenly presume entitlement to hospitality from the firm, even if other arrangements are available at the location.<\/td><td>Hospitality must never be solicited, directly or indirectly. The frequency, scale and number of officials availing hospitality should not be allowed to identify the recipient in a public way with any particular contractor, supplier or service provider, or raise doubts about its neutrality. It should not involve significant travel, overnight accommodation, or trips abroad. Particular care should be taken in relation to offers of hospitality from firms (say, participating in current or imminent tenders or their execution) who stand to derive a personal or commercial benefit from their relationship with the recipient.<\/td><\/tr><tr><td>2<\/td><td>GIFTS: Gifts from suppliers\/ contractors may tend to cross the limits of ethical\/ occasional\/ routine\/ modest\/ normal business practice \u2014 especially during the festive season. Since the VALUE of the gift May not be known to the recipient, it may cause an inadvertent violation of conduct Rules.<\/td><td>Gifts must never be solicited, directly or indirectly. An official should not accept and retain gifts that are more valuable than the limit as laid down in the conduct Rules. Cash, gift cheques or any vouchers that May be exchanged for cash May not be accepted, regardless of the amount. Particular care should be taken in relation to gifts from firms (say, participating in current or imminent tenders or their execution) who stand to derive a personal or commercial benefit from their relationship with the recipient. Any gift received inadvertently in violation of the above must immediately either be returned, or else reported and deposited in toshakhana\/ treasury.<\/td><\/tr><tr class=\"srcmark src-G\" data-src=\" G \"><td>3<\/td><td>Private purchases from official suppliers: Procuring Officials may mistakenly consider it innocuous to seek discounts in private procurements from suppliers\/ contractors having OFFICIAL DEALINGS or its ALLIED FIRMS \u2014 G<\/span> adds: especially from rate Contract holders.<\/td><td>Officials involved in Public Procurement must never indulge in any non-official pecuniary transaction with the contractors, suppliers, or service providers with whom they have official dealings \u2014 including seeking or accepting special facilities or discounts on private purchases (G<\/span> adds: particularly the same items that are being ordered officially on rate contracts)<\/em>.<\/td><\/tr><tr><td>4<\/td><td>sponsorship of events: Procuring officials May mistakenly consider it innocuous to seek financial favours \u2014 donations, advertisements for souvenirs, and contributions in cash or kind \u2014 in relation to sponsoring cultural, social, charitable, religious, or sporting events, in the false belief that, since they are personally not benefitted, it would not be a violation of CIPP.<\/td><td>Officials involved in Public Procurement must never indulge in any non-official pecuniary transaction with the contractors, suppliers, or service providers with whom they have official dealings \u2014 including soliciting of sponsorship for unofficial and private cultural, social, sporting, religious, charitable, or similar organisations or events.<\/td><\/tr><tr><td>5<\/td><td>conflict of interest (coi):<\/strong> The CIPP defines COI as \"\u2026any personal, financial, or business relationship between the bidder and any personnel of the procuring entity who are directly or indirectly related to procurement or execution process of the contract, which can affect the decision of the procuring entity directly or indirectly\u2026\u2026\"<\/em>There may be DILEMMAS regarding which officers are 'RELATED' to the tender or execution process, and even in respect of minor, routine transactions.<\/strong><\/td><td>(See detailed mitigation below the table.)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<h3>3.8.1<\/span>Detailed Mitigation for Conflict of Interest<\/span><\/h3>\n<aside class=\"note\">interpretation of conflict of interest would depend on the organisational structure and its unique circumstances and cannot be laid down universally. However, some illustrative examples are given below to provide context.<\/p><\/aside>\na) which OFFICERS are 'related' to the tender or execution process: This would depend on the ORGANISATIONAL STRUCTURE and the sensitivity of their role in procurement. It may cover KEY OFFICIALS (and any external consultants\/ advisors) involved in:<\/p>\n<ul class=\"lst\"><li>making a RECOMMENDATION,<\/li><li>various APPROVALS, or<\/li><li>making a MAJOR DECISION<\/li><\/ul>\nat any STAGE in procurement \u2014 i.e., during:<\/p>\n<aside class=\"note\">need determination\/ indenting \u2192 Tender Document preparation\/ preparation of comparative tabulation \u2192 Technical and Financial evaluation of Bids \u2192 negotiation\/ signing of Contract \u2192 execution of the contract \u2192 payments to the contractor.<\/p><\/aside>\nB) illustration \u2014 coi (actual, potential, or perceived) can arise if such officers (or his close family) have:<\/p>\n<ul class=\"lst\"><li>i) substantial business interests in the firm \u2014 e.g., shares more than 0.1% of market cap \u2014 or have taken a loan or other FINANCIAL OBLIGATION (say DISCOUNTS) from the firm or its personnel, etc.;<\/li><li>ii) business relationships with the firm \u2014 say, previously worked for the firm, or availed hospitality\/ gifts beyond the limits laid down in the Code of Conduct of the organisation, etc.;<\/li><li>iii) FAMILIAL RELATIONSHIP with the personnel of the firm;<\/li><li>iv) close personal friendships or REGULAR (say, more than once in a quarter) social interactions \u2014 e.g., clubs, games, social associations \u2014 with the Firm's personnel, etc.<\/li><\/ul>\n<aside class=\"note\">DEFINITIONAL FOOTNOTE (in all four Manuals): For the purpose of COI \u2014 <\/p>\n<ul class=\"lst\"><li>\"Firm\" includes its allied firms also.<\/li><li>\"FIRM'S PERSONNEL\" for this purpose shall mean SENIOR EXECUTIVES (or the team handling the bidding) at the bidding firm.<\/li><li>\"CLOSE FAMILY\" for this purpose shall be the officer's spouse, parents, children, and their families.<\/li><li>As far as extended family \u2014 siblings\/ uncles\/ aunts\/ cousins and their families \u2014 is concerned, the situation would depend on the closeness of relationships and whether the officer would in normal course be aware of their activities.<\/li><\/ul><\/aside>\nC) resolution of coi:<\/p>\nIt shall be the responsibility of such officials to declare coi \u2014 to the extent he is aware of it in normal course \u2014 with reference to a procurement process, to the Competent Authority\/ next higher officer.<\/p>\nThe competent officer may EVALUATE:<\/p>\n<ul class=\"lst\"><li>the level of coi, and<\/li><li>the sensitivity of the function assigned to the official.<\/li><\/ul>\nHe may then EITHER DETERMINE:<\/p>\n<ul class=\"lst\"><li>I) that the coi is insignificant enough to influence the type of function performed by the official \u2014 and ask the officer to continue his function; Or<\/li><li>ii) that if the coi or the type of function is significant \u2014 nominate any alternative officer to perform the function (partly or fully) of this official in that procurement process.<\/li><\/ul>\n<h2>3.9<\/span>Development of New Sources and Registration\/ Empanelment\/ Enlistment\/ Pre-qualification<\/span><\/h2>\n(Rule 150 of GFR 2017)<\/em><\/p>\n<aside class=\"note\">Section titles: G<\/span>Development of New Sources and Registration\/ Empanelment\/ Pre-qualification of Suppliers \u00b7 W<\/span> *Development of New Sources and Registration\/ Enlistment of Contractors<\/strong> \u00b7 C<\/span>NC<\/span><\/em>Development of New Sources and Registration\/ Empanelment\/ Pre-qualification of Firms*<\/p><\/aside>\n<h3>3.9.1<\/span>The Three (or Two) Concepts Distinguished<\/span><\/h3><h4 class=\"src-multi srchead\" data-src=\" G C NC \">A. The Goods\/ CS\/ NC formulation \u2014 THREE concepts<\/span>G<\/span>C<\/span>NC<\/span><\/h4><div class=\"srcblock src-multi\" data-src=\" G C NC \" data-label=\"Goods + Consultancy + Non-Consultancy only\">\nNormally, in open tendering, there should be no restriction of prior registration. Entities may provide for registration after selection in unrestricted open tendering.<\/p>\nDifferences may be noted between REGISTRATION, EMPANELMENT and PRE-QUALIFICATION:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Concept<\/th><th>Purpose<\/th><\/tr><\/thead><tbody><tr><td>A) registration<\/td><td>To establish GENUINE IDENTIFICATION of the firm \u2014 e.g., for e-procurement portals, preferential procurement, and so on<\/td><\/tr><tr class=\"srcmark src-multi\" data-src=\" C NC \"><td>b) empanelment<\/td><td>To establish PRIMA-FACIE CAPABILITY for RESTRICTED TENDERING (not open tendering) \u2014 e.g., limited tendering panels (C<\/span>NC<\/span> add: also useful in special limited tenders)<\/em>. (It means maintaining a CLASSIFIED LIST of firms based on their EXPERIENCE, usually required in case of limited tenders.)<\/em><\/td><\/tr><tr><td>c) pre-qualification<\/td><td>wherever the nature of the requirement dictates competition only among prequalified bidders (without vitiation of prices offered by unqualified bidders), prequalification May be done with open tendering in the prequalification bidding stage<\/td><\/tr><tr><td>d) approved list\/ multi-use list<\/td><td>If there are FREQUENT REQUIREMENTS of such nature, prequalification may be done through an OPEN PROCESS with an EXTENDED VALIDITY of the Shortlist of Qualified Bidders \u2014 called the List of Approved Sources in some organisations (e.g., Ministry of Railways) \u2014 for example, one year or longer. The use of a List of Qualified Bidders is also known as a MULTI-USE LIST in many countries \u2014 as distinct from empanelment (e.g., Limited Tender Panel, which does not undergo a formal open tender pre-qualification\/ EoI process). In such long-term multi-use lists or approved lists, if any competent bidder applies for inclusion at any time, it should be examined as per the criteria of the original multi-use list.<\/td><\/tr><\/tbody><\/table><\/div>\nHowever, since in common parlance \"registration\" is a word used interchangeably by most departments for all the above three concepts, this usage is being retained \u2014 though the distinction would be clear from the context of usage.<\/p>\n<\/div><h4 class=\"src-W srchead\" data-src=\" W \">B. The Works formulation \u2014 TWO concepts<\/span>W<\/span><\/h4><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\nThe terms 'ENLISTMENT' and 'REGISTRATION' may be differentiated as follows:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Term<\/th><th>Meaning<\/th><\/tr><\/thead><tbody><tr><td>A) registration<\/td><td>simply registering the contractor, without any verification<\/td><\/tr><tr><td>b) enlistment<\/td><td>including the name of the contractor in the list after verification of credentials<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h3>3.9.2<\/span>Registration \u2014 General Provisions<\/span><\/h3>\na) Who may register, and why G<\/span>C<\/span>NC<\/span>: For goods and services not available on GeM, and for Works, the head of Ministry\/ Department May periodically register suppliers of goods and services that the Department or Office SPECIFICALLY REQUIRES.<\/p>\nEnsuring an up-to-date and current list of registered, capable and competent suppliers\/ consultants\/ service providers facilitates efficiency, economy, and promotion of competition in public procurement \u2014 especially while floating a limited tender\/ local purchase\/ direct contracting.<\/p>\nFor such tenders, it May be possible to skip bidder qualification, to avoid unnecessary repetition\/ duplication of efforts \u2014 thereby saving time, especially in the case of emergency procurement.<\/p>\nRegistration of the supplier\/ consultant\/ service provider should be done following a fair, transparent, and reasonable procedure and after giving due publicity.<\/p>\nSuch registered suppliers should be on-boarded on GeM as and when the item or service gets listed on GeM (Amended vide DoE OM No. F.1\/26\/2018-PPD dated 02.04.2019)<\/em>.<\/p>\nThe list of registered firms for the subject matter of procurement should be exhibited on the websites of the Procuring Entity\/ their e-procurement portals.<\/p>\nb) Registration on e-procurement portals W<\/span>: All the Ministries\/ Departments shall register the prospective contractors on their e-procurement portal or in the CPPP (in case they do not have their own e-procurement portal) before submitting their bids.<\/p>\nThe contractor May be an individual, sole proprietorship firm, partnership firm, limited liability partnership, private or public limited company.<\/p>\nFor registration, the Ministries\/ Departments\/ CPSUs shall capture at least: a) Name of contractor; b) Address and Contact details; c) Permanent Account Number (PAN); d) Details of Digital Signature Certificate (DSC); and e) GSTIN.<\/p>\nDepending on the requirement of the respective procurement portal, the Ministries\/ Departments can capture any other information as may be considered necessary.<\/p>\nc) Enlistment practice in works departments W<\/span>: Some departments \u2014 such as the Central Public Works Department (CPWD) and Military Engineering Services (MES) \u2014 are enlisting the contractors after verification of their credentials.<\/p>\n<ul class=\"lst\"><li>Public authorities May empanel\/ register contractors of those specific types of work which are required by them regularly.<\/li><li>PERFORMANCE of such empanelled contractors should be reviewed periodically.<\/li><li>The list of empanelled\/ registered contractors shall be updated on a regular basis.<\/li><li>The category\/ Class of contractors May be upgraded\/ downgraded, or contractors May be de-listed, based on their performance.<\/li><li>Empanelment of contractors shall be done in a fair and equitable manner, preferably online, after giving due publicity.<\/li><li>The practice of inviting bids for works tenders only from empanelled contractors May be confined to tenders up to a certain threshold value (say Rs 20 crore), as decided by the project executing authorities.<\/li><li>It is expected that ministries\/ departments will also develop their own enlistment process \u2014 as has been done by CPWD, Ministry of railways (MoR) and Ministry of road transport & highways (MoRTH) \u2014 to reduce the time required for verification of credentials of the contractors after opening of the bids.<\/li><li>The lists of such enlisted contractors can be used by any Ministry\/ Department\/ cpsu.<\/li><\/ul>\nd) Sharing of information through CPPP W<\/span>: The ministries\/ departments will also share the information of registered and enlisted contractors with each other through the Central Public Procurement Portal (CPPP).<\/p>\n<ul class=\"lst\"><li>They will also ensure that whenever a contractor is debarred, the information regarding the same is made available immediately to all the ministries\/ departments through the CPPP.<\/li><li>The reasons for the debarment and the order of such debarment May also be displayed on the CPPP.<\/li><li>NIC\/ MeitY shall make appropriate changes in the CPPP so that each contractor can be uniquely identified by PAN.<\/li><li>All the Ministries\/ Departments May take cognizance of the information regarding debarment of contractors and use it as an input for the decision-making process as per their own procurement policies.<\/li><\/ul>\ne) Entities with their own policies: Ministries\/ Departments with a significant volume of procurements May follow their own policies and procedures for registration\/ enlistment of vendors\/ contractors, if they already exist. The policies and procedures described below are for the non-mandatory generic guidance of Ministries\/ Departments that DO not have their own policies\/ procedures.<\/p>\nThe Ministry\/ Department shall notify the authorities competent to deal with the applications and grant registrations\/ enlistments, along with their jurisdictions.<\/p>\nThe appellate authority shall be at least one level above the registering authority, or as designated by the Ministry\/ Department.<\/p>\nf) Cross-use of lists and EMD exemption: All Ministries\/ Departments May use such lists prepared by other ministries\/ departments as and when necessary.<\/p>\nRegistered suppliers\/ firms are ordinarily exempted from furnishing earnest money deposit\/ Bid Security with their tenders for items and monetary limits for which they are registered.<\/p>\n<aside class=\"note\">(NC<\/span> phrases this as: \"empanelled<\/strong> Firms are ordinarily exempted \u2026 for items and Monetary Limits for which they are empanelled<\/strong>.\")<\/em><\/p><\/aside>\n<h3>3.9.3<\/span>Categories for Registration\/ Enlistment<\/span><\/h3><h4 class=\"src-G srchead\" data-src=\" G \">G<\/span> \u2014 Categories for Registration of Suppliers of Goods<\/span><\/h4><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\nIn case of procurement of goods, the Administrative Department shall register firms as suppliers of goods in different trade groups of goods in the following BROAD CATEGORIES: a) MANUFACTURERS who supply INDIGENOUS items; b) AGENTS\/ DISTRIBUTORS of such manufacturers who desire to market their production only through their agents; c) FOREIGN MANUFACTURERS with\/ without their accredited agent in India; d) stockists of imported spares or other specified items; e) suppliers of imported goods having REGULAR ARRANGEMENTS with foreign manufacturers.<\/p>\n<\/div><h4 class=\"src-W srchead\" data-src=\" W \">W<\/span> \u2014 Categories for Enlistment of Contractors<\/span><\/h4><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\nIn case of procurement of works, the Administrative Department shall enlist firms as contractors in different types\/ categories of works \u2014 civil, electrical, horticulture, nursery, etc.<\/p>\nThe contractor may be a private, partnership, pvt ltd, corporate, PSU or a JOINT VENTURE company.<\/p>\n<\/div><h3 class=\"src-G srchead\" data-src=\" G \">3.9.4<\/span>Registration of Manufacturers<\/span>G<\/span><\/h3><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\nOne of the main prerequisites for registration as a manufacturer is that the firm should possess its own in-house testing facilities.<\/p>\n<aside class=\"note\">MSE relaxation: In the case of MSE units, the firm does not need its own testing facilities, but regular arrangements with other reputed Government or government-approved or private agencies in its area for product testing.<\/p><\/aside>\nBefore the manufacturer is included in the list of registered suppliers, the Procuring Entity shall verify the bona fides and standing of the firm. The procuring Entity May also seek assistance from the inspection wing of other inspecting agencies.<\/p>\nIso-certified firms: In the case of firms that have an established quality maintenance system with ISO 9001-2000 certification (latest version) from authorised agencies, the Procuring Entity May consider the registration of such firms without carrying out a capacity assessment.<\/p>\n<aside class=\"note\">Even in the case of firms that have an established quality maintenance system with ISO 9001-2000 certification from authorised agencies, it is necessary for the Procuring Entity to verify the quality processes put in place.<\/p><\/aside>\n<\/div><h3>3.9.5<\/span>Grades\/ Classes (Monetary\/ Tendering Limits)<\/span><\/h3>\nRegistration\/ enlistment should be done by grading the firms (grade a, b, and so on) based on their capability to execute contracts\/ orders of different monetary limits in the relevant category of requirements.<\/p>\nThe monetary limits should be carefully fixed while keeping in view:<\/p>\n<ul class=\"lst\"><li>The banker's reports,<\/li><li>the capacity and capability of the firm, and<\/li><li>other FINANCIAL INFORMATION indicated in the BALANCE SHEETS, such as profit and loss statements.<\/li><\/ul>\n<h4 class=\"src-G srchead\" data-src=\" G \">G<\/span> \u2014 Example of gradation for Goods (NOT mandatory)<\/span><\/h4><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\n<div class=\"tblwrap\"><table><thead><tr><th>Grade<\/th><th>Monetary Limit<\/th><\/tr><\/thead><tbody><tr><td>Grade A<\/td><td>Rs. 25 (Rupees twenty-five) lakh AND above<\/td><\/tr><tr><td>Grade B<\/td><td>Rupees five lakh to Rs. 25 (Rupees twenty-five) lakh<\/td><\/tr><tr><td>Grade C<\/td><td>Rupees one lakh and up to Rupees five lakh<\/td><\/tr><\/tbody><\/table><\/div>\nAdditional rule G<\/span>: The firms that are registered for the supply of orders valued above rupees five lakh should invariably be manufacturers or their authorised agents.<\/p>\nWherever practical, the Procuring Entity shall register the manufacturers and not agents or intermediaries.<\/p>\nA sole selling agent\/ authorised agent could be considered for registration, subject to the conditions that:<\/p>\n<ul class=\"lst\"><li>The Procuring Entity is satisfied that he is the sole selling agent of the manufacturers;<\/li><li>The Procuring Entity ascertains the financial and technical capabilities of the manufacturers;<\/li><li>The availability of a suitable arrangement with the sole selling agent for after-sales service shall also be ensured; And<\/li><li>the Procuring Entity shall also satisfy itself that a valid legal agreement exists between the applicant unit and its sole selling agent during the period for which he is registered.<\/li><\/ul>\n<\/div><h4 class=\"src-W srchead\" data-src=\" W \">W<\/span> \u2014 Class of Enlistment (Tendering Limits) for Works<\/span><\/h4><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n(A sample classification \u2014 Source: Rules for Enlistment of Contractors in CPWD, 2024)<\/em><\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Class<\/th><th>Tendering Limit<\/th><th>Class<\/th><th>Tendering Limit<\/th><\/tr><\/thead><tbody><tr><td>Class-I (Super)<\/td><td>Rs 650 crore<\/td><td>Class-II<\/td><td>Rs 15 crore<\/td><\/tr><tr><td>Class-I (AAA)<\/td><td>Rs 260 crore<\/td><td>Class-III<\/td><td>Rs 4 crore<\/td><\/tr><tr><td>Class-I (AA)<\/td><td>Rs 130 crore<\/td><td>Class-IV<\/td><td>Rs 1.30 crore<\/td><\/tr><tr><td>Class-I (A)<\/td><td>Rs 75 crore<\/td><td>Class-V<\/td><td>Rs 40 lakh<\/td><\/tr><tr><td>Class-I<\/td><td>Rs 50 crore<\/td><td><\/td><td><\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h3>3.9.6<\/span>Procedure for Registration\/ Enlistment<\/span><\/h3>\na) Fair procedure and publicity: Registration\/ enlistment of the suppliers\/ contractors should be done following a fair, transparent, and reasonable procedure and after giving due publicity.<\/p>\n<aside class=\"note\">W<\/span> adds: Enlistment should be done by any Ministry\/ Department in case it desires to enlist contractors for works <\/strong>which are exclusively needed by it, by keeping <\/strong>Fundamental principles of Public Procurement in view \u2014 especially the transparency principle (transparency, fairness, equality, competition and appeal rights) \u2014 <\/strong>with the approval of the CA, after carefully assessing and verifying credentials, capability, quality control systems, past performance, after-sales service facilities, financial background, and so on.<\/p><\/aside>\nDetails of the procedure for registration\/ enlistment of new firms May be uploaded on the website and published in the form of a booklet for information of the suppliers\/ contractors. Timeframes and criteria for registration\/ enlistment of new suppliers\/ contractors May be clearly indicated.<\/p>\nb) Identifying possible sources:<\/strong> Possible sources for any category\/ group of requirements can be identified based on internal and external references.<\/strong> Data on new suppliers\/ contractors can be obtained from:<\/p>\n<aside class=\"note\">the response received from suppliers\/ contractors \u00b7 open tender advertisements \u00b7 pre-qualification bids \u00b7 Expression of Interest (EoI) \u00b7 various enquiries on the website \u00b7 dedicated websites \u00b7 exhibitions \u00b7 buyer-seller meets \u00b7 various publications of NSIC G<\/span>, the Development Commissioner of the Small Industries Service Institute G<\/span>, BIS \u00b7 trade journals, and so on.<\/p><\/aside>\nThe e-procurement and GeM portals pre-register suppliers online. Such data can be a source of information on prospective suppliers\/ contractors.<\/p>\nc) Updating the list and inviting EoI: The list of registered\/ enlisted contractors shall be updated on a regular basis (ANNUALLY) G<\/span>. New supplier(s)\/ contractor(s) May be considered for registration\/ enlistment at any time, provided they fulfil all the required conditions.<\/p>\nFor any larger-scale or critical registration or development of new suppliers\/ contractors, the Procuring Entity should call for eoI by publicising its need for the development of sources.<\/p>\nD) CIPP undertaking: While registering the firms, an undertaking May be obtained from them that they will abide by the CIPP enclosed with the application, with a clear warning that, in case of transgression of the Code of Integrity, their names are likely to be deleted from the list of registered suppliers\/ enlisted contractors \u2014 besides any other penalty or more severe action as deemed fit.<\/p>\nE) GCC undertaking: Along with the new\/ renewal application for registration\/ enlistment, the suppliers\/ contractors should also be asked to declare that, if awarded a contract in any LTE in which they participate, they bind themselves to abide by the Procuring Entity's general conditions of contract (GCC). Such GCC should be part of the application.<\/p>\nF) the participation Rule: Registered vendors\/ enlisted contractors must participate in relevant limited tenders. In case they do not respond to at least three (3) tenders in a year on being invited to do so \u2014 if there were at least 6 invitations to them \u2014 they May be removed from the list of registered vendors\/ enlisted contractors.<\/p>\ng) Eligibility for registration\/ enlistment:<\/p>\n<ul class=\"lst\"><li>i) any firm situated in India or abroad that is in the business of providing goods\/ works\/ services of specified categories of interest shall be eligible for registration\/ enlistment;<\/li><li class=\"srcmark src-G\" data-src=\" G \">ii) G<\/span><\/strong>where registration is granted based on partly outsourced arrangements\/ agreements, it shall always be the responsibility of the registered unit to keep such arrangements\/ agreements renewed\/ alive, and to keep their registration valid for the period for which it has been granted.<\/strong>Any failure in this regard May make the registration null and void\/ ineffective retrospectively from any such dates which the registering authority considers appropriate;<\/li><li>iii) Suppliers\/ contractors should possess a valid digital signature certificate (DSC) Class III with the company name at the time of registration\/ enlistment\/ renewal, to enable them to participate in e-PROCUREMENTS;<\/li><li>iv) the firm should also have good internal governance \u2014 such as a whistleblower policy, commitment to esg (environmental, social, and governance) code of conduct, code of business ethics, etc.;<\/li><li class=\"srcmark src-W\" data-src=\" W \">V) the firm against whom punitive action has been taken shall not be eligible for re-registration\/ re-enlistment during the currency of the punitive action. Registration\/ enlistment requests May not be entertained from firms (or their allied firms) who are de-registered\/ banned (W<\/span> Phrasing: \"From such firms, stakeholders of whom have any interest in de-enlisted\/ banned firms\")<\/em>.<\/li><\/ul>\nH) assessment of capacity and capability: The application form, complete in all respects and accompanied by the requisite processing fee and prescribed documents, shall be submitted by the firms to the registering\/ enlisting authority.<\/p>\nThe application form, duly filled in, when received from the firms, shall be scrutinised carefully to assess the capacity and capability of the firms \u2014 INCLUDING:<\/p>\n<aside class=\"note\">credentials \u00b7 manufacturing capability G<\/span>\/ capability W<\/span> \u00b7 quality control system \u00b7 past performance \u00b7 after-sales service facilities G<\/span> \u00b7 financial background, and so on, of the applicant.<\/p><\/aside>\n<ul class=\"lst\"><li>References shall be made to other firms of the standing of whom the applicant firm claims to be a supplier\/ contractor.<\/li><li>Likewise, the applicant firm's bankers May also be requested to advise about the firm's financial standing.<\/li><\/ul>\ni) If registration cannot be granted: In cases where the firm is not considered capable and registration\/ enlistment cannot be granted, the concerned authority shall communicate the deficiencies and shortcomings directly to the firms, under intimation to the appellate authority.<\/p>\nWhere a request for re-verification and review is made by the firm \u2014 along with any fee as prescribed and within the period prescribed by the Department \u2014 a review shall be undertaken.<\/p>\n<aside class=\"note\">Timing variant:<\/strong>C<\/span>NC<\/span> expressly add that such a request can be made only after six months<\/strong>. W<\/span> says the period is \"say, within six months<\/strong>\". G<\/span> does not specify the period.<\/p><\/aside>\nRequests for re-verification after the expiry of the said period would be treated as a fresh application, and a processing fee, if any is prescribed, charged accordingly.<\/p>\nj) Grant of registration\/ enlistment: If considered to be CAPABLE after carefully assessing and verifying credentials, the firm May be granted registration\/ enlistment with the approval of the ca.<\/p>\nk) Scope of registration:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-G\" data-src=\" G \">G<\/span> Registration should be for specific trade groups of goods\/ works\/ services. For this purpose, all goods\/ works\/ services should be divided into trade groups, and the information published on the relevant portals\/ websites.<\/li><li class=\"srcmark src-W\" data-src=\" W \">W<\/span> Enlistment should be for a specific category of works.<\/li><\/ul>\nl) Validity period and provisional status:<\/p>\n<div class=\"tblwrap\"><table><thead><tr class=\"srcmark src-multi\" data-src=\" G W \"><th><\/th><th>G<\/span> \u2014 Goods<\/th><th>W<\/span> \u2014 Works<\/th><\/tr><\/thead><tbody><tr><td>Validity<\/td><td>a specified period (one to three years)<\/td><td>A specified period (say three years), and would be considered for EXTENSION (on application by the contractor\/ service provider) based on satisfactory performance of the firm<\/td><\/tr><tr><td>Renewal<\/td><td>At the end of this period, the registered supplier(s) willing to continue with registration is to apply afresh for renewal of registration<\/td><td> \u2014 <\/td><\/tr><tr><td>Provisional status<\/td><td>the registration would be initially treated as provisional, and it would be treated as confirmed only after the firm has satisfactorily executed one order of the relevant category and value from the Procuring Entity<\/td><td>Same rule, but \"one CONTRACT of the relevant category and value\"<\/td><\/tr><tr><td>Extension not a right<\/td><td>the extension of validity of registration is not a matter of right, and the Procuring Entity reserves the right not to extend such registration without assigning any reason<\/td><td>(same)<\/em><\/td><\/tr><tr><td>New entrants<\/td><td>New supplier(s) May also be considered for registration at any time, provided they fulfil all the required conditions<\/td><td> \u2014 <\/td><\/tr><\/tbody><\/table><\/div>\nm) Unique number and website display: All registered suppliers\/ enlisted contractors should be allocated a unique registration\/ enlistment number.<\/p>\nThe list of registered suppliers\/ enlisted contractors \u2014 indicating the names and addresses with details of the requirements and monetary value they will supply\/ execute, as well as the VALIDITY PERIOD, and so on, for which they are registered\/ enlisted \u2014 shall be exhibited on the websites of the Procuring Entity.<\/p>\nn) EMD exemption and its limits G<\/span>: Within the monetary limits so prescribed, and also for the category of registration, the registered firm May be exempted from depositing the earnest money deposit (EMD).<\/p>\nIn other categories and higher monetary limits, the supplier would be treated as any unregistered supplier and not be entitled to the privileges of a registered supplier.<\/p>\n<aside class=\"note\">However: The monetary limit or category so laid down does not debar a firm from getting orders more than the monetary limit or for other categories \u2014 provided the Procuring Entity is satisfied with the capacity and capability of the firm \u2014 but a requisite Security Deposit should be obtained, as is being done in the case of unregistered firms.<\/p><\/aside>\nO) monitoring performance and removal: The performance and conduct of every registered supplier\/ enlisted contractor are to be monitored\/ watched by the relevant Department.<\/p>\nThe Procuring Entity should also reserve the right to remove firms who do not perform satisfactorily \u2014 even during the validity of registration\/ enlistment (after giving due opportunity to the supplier\/ contractor to make a representation) \u2014 if they:<\/p>\n<ul class=\"lst\"><li>Fail to abide by the terms and conditions of the registration\/ enlistment, or<\/li><li>fail to execute contracts on time, or<\/li><li class=\"srcmark src-multi\" data-src=\" G W \">supply substandard goods G<\/span> \/ do substandard work W<\/span>, or<\/li><li>make any false declaration to any Government agency, or<\/li><li class=\"srcmark src-multi\" data-src=\" G W \">G<\/span> For on public interest considerations \/ W<\/span> For any ground which, in the opinion of the Government, is not in public interest.<\/li><\/ul>\nP) right of reassessment: The Procuring Entity shall retain its option to reassess firms already registered\/ enlisted at any later date, to satisfy itself with:<\/p>\n<ul class=\"lst\"><li>The current financial soundness\/ creditworthiness,<\/li><li>facilities available, and so on.<\/li><\/ul>\nThereafter, the Procuring Entity May decide to retain them as registered suppliers for the requirements and monetary limit that were earlier considered, or with necessary changes as deemed fit.<\/p>\nIn case of adverse reports from the team of Procuring Entity officers who reassess the firm, the Procuring Entity shall:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-multi\" data-src=\" G W \">G<\/span>W<\/span> \u2014 DELETE such firm from the registered suppliers'\/ enlisted contractors' list<\/strong>;<\/li><li class=\"srcmark src-multi\" data-src=\" C NC \">C<\/span>NC<\/span> \u2014 delete or downgrade such firm from the registered suppliers'\/ service providers' list.<\/li><\/ul>\n<aside class=\"note\">Cross-reference note C<\/span>NC<\/span>:<\/strong>\"Further details about the procedure for registration are given in para 3.6 of the Manual for Procurement of Goods, 2024<\/strong>.\"<\/em> \u2014 i.e., the Consultancy and Non-Consultancy Manuals reproduce only paras (a), (f) and (i)\u2013(p) above, and cross-refer to the Goods Manual for the full procedure<\/strong>.<\/p><\/aside>\n<h2>3.10<\/span>Debarment<\/span><\/h2>\n(Rule 151 of GFR 2017)<\/em><\/p>\n<aside class=\"note\">Section titles: G<\/span>Debarment of Suppliers \u00b7 W<\/span> *Debarment of Contractors<\/strong> \u00b7 C<\/span><\/em>Debarment of Suppliers *(an apparent carry-over from the Goods Manual \u2014 the CS Manual's subject is consultants)* \u00b7 NC<\/span> *Debarment of Service Providers<\/strong><\/p><\/aside>\n<h3>3.10.1<\/span>GFR Provisions<\/span><\/h3>\nRegistration of suppliers\/ contractors\/ consultants\/ service providers AND their eligibility to participate in a Procuring Entity's procurements is subject to:<\/p>\n<ul class=\"lst\"><li>Compliance with the Code of Integrity for Public Procurement, and<\/li><li>satisfactory performance in contracts.<\/li><\/ul>\nRule 151 of GFR, 2017 states the following regarding 'debarment from bidding':<\/p>\n<aside class=\"note\">A) a bidder shall be debarred if he has been convicted of an offence:<\/p>\n<ul class=\"lst\"><li>i) under the prevention of Corruption Act, 1988; or<\/li><li class=\"srcmark src-multi\" data-src=\" G W C NC \">ii) the Indian Penal Code (IPC), 1860 \u2014 (G<\/span> footnote: this law has been replaced by the bharatiya Nyaya Sanhita (BNS), 2023 from 1st July 2024; W<\/span>, C<\/span>, NC<\/span> cite the BNS directly)<\/em> \u2014 or any other law for the time being in force, for causing any loss of life or property, or causing a threat to public health, as part of the execution of a Public Procurement contract.<\/li><\/ul>\nB) a bidder debarred under sub-section (a), or any successor of the bidder, shall not be eligible to participate in a procurement process of ANY<\/em> Procuring Entity for a period not exceeding three years, commencing from the date of debarment.<\/p>\n<aside class=\"note\">W<\/span> footnote: *\"<\/strong>Now two years is applicable as mentioned below in para 8.7.2-3-a).\"*<\/p><\/aside>\nc) a Procuring Entity May debar a bidder or any of its successors from participating in any procurement process undertaken by it for a period not exceeding two years, if it determines that the bidder has breached the Code of Integrity.<\/p>\n<aside class=\"note\">W<\/span>NC<\/span> add: *\"<\/strong>The Ministry\/ Department will maintain such list, which will also be displayed on their website.\"*<\/p><\/aside>\nd) the bidder shall not be debarred unless such bidder has been given a reasonable opportunity to represent against such debarment.<\/p><\/aside>\n<h3>3.10.2<\/span>Current Guidelines on Debarment<\/span><\/h3>\n1. Origin: PPD, DoE did consultations on the issue of Debarment with major procuring Ministries\/ Departments and issued the following 'debarment guidelines' in supersession of all earlier instructions on this subject (Notified vide OM No. F.1\/20\/2018-PPD issued by Department of Expenditure dated 02.11.2021)<\/em>.<\/p>\nPublic Procurement organisations who have existing guidelines for debarment (by any name) should revise their guideline in conformity with these guidelines issued by PPD, DoE.<\/p>\n2. Two types of debarment:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Type<\/th><th>Who issues the order<\/th><\/tr><\/thead><tbody><tr><td>I) debarment limited to a single Ministry<\/td><td>The Ministry itself can issue the appropriate Orders, thereby banning all its business dealing with the debarred firm<\/td><\/tr><tr><td>ii) Debarment EXTENDING beyond the jurisdiction of the Ministry \u2014 i.e., covering all Central ministries\/ departments<\/td><td>the requisite orders shall be issued by the Department of Expenditure (DoE), Ministry of Finance (MoF)<\/td><\/tr><\/tbody><\/table><\/div>\n3. Definitions:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Term<\/th><th>Definition<\/th><\/tr><\/thead><tbody><tr><td>\"Firm\" \/ \"bidder\"<\/td><td>have the same meaning for the purpose of these guidelines, which includes an individual or person, a company, a cooperative society, a hindu undivided family, and an association or body of persons \u2014 whether incorporated or not \u2014 engaged in trade or business<\/td><\/tr><tr><td>\"Allied firm\"<\/td><td>All concerns which come within the sphere of effective influence of the debarred firms shall be treated as allied firms. In determining this, the factors listed in its definition in the 'Procurement Glossary' section may be kept in view<\/td><\/tr><tr><td>\"Banning of a firm\", \"suspension\", \"black-listing\"<\/td><td>convey the same meaning as \"debarment\"<\/td><\/tr><\/tbody><\/table><\/div>\n4. Alignment obligation: All ministries\/ departments must align their existing debarment guidelines with these guidelines. Further, tender\/ bidding documents must also be suitably amended, if required.<\/p>\n<h3>3.10.3<\/span>Debarment by a SINGLE Ministry\/ Department<\/span><\/h3>\nOrders for Debarment of a firm(s) shall be passed by a Ministry\/ Department, keeping in view the following:<\/p>\na) Grounds and duration: A bidder (including its successors\/ allied firms) May be debarred from participating in any procurement process for a period not exceeding two years (along with such other actions as may be permissible under law) for the following reasons:<\/p>\n<ul class=\"lst\"><li>i) If it is determined that the bidder has breached the Code of Integrity as per Rule 175 of GFRs 2017.<\/li><li>ii) false declaration of local content by Class-I\/ Class-II local suppliers under the Public Procurement (Preference to Make in India) Order 2017, dated 16\/09\/2020 or later \u2014 shall also be treated as a breach of the Code of Integrity. A supplier who has been debarred by any procuring entity as per this sub-para:<\/li><li>The fact and duration of debarment for this reason by any procuring entity must be promptly brought to the notice of the member-convenor of the standing committee (joint Secretary, DPIIT, under the Make in India order) and the Department of Expenditure, through the concerned Ministry\/ Department or in some other manner;<\/li><li>The standing committee shall consolidate such cases, and a centralised list or decentralised list of such suppliers with the period of debarment must be maintained on a periodical basis and displayed on the website(s);<\/li><li>Such suppliers \u2014 though debarred by a single Ministry\/ Department \u2014 shall not be eligible for preference under the Make in India order for procurement by any other<\/em> Procuring Entity for the duration of the debarment. This shall be effective from the date of uploading such debarment to the website(s).<\/li><li>iii) for any other actions or omissions by the firm that, in the opinion of the Ministry\/ Department, warrants debarment.<\/li><\/ul>\n<aside class=\"note\">Footnote \u2014 the illustrative list of \"other actions or omissions\" (given in all four Manuals):<\/p>\n<ul class=\"lst\"><li>Supply of substandard material;<\/li><li>NON-SUPPLY of material;<\/li><li>Abandonment of works;<\/li><li>Substandard quality of works;<\/li><li>Failure to abide by \"bid securing declaration\";<\/li><li>Conviction under the Prevention of Corruption Act, 1988;<\/li><li>CONVICTION under any law for causing any loss of life or property, or causing a threat to public health, as part of executing a public procurement contract;<\/li><li>Employs a Government servant who has been dismissed or removed on account of corruption;<\/li><li>Employs a non-official convicted for an offence involving corruption or abetment of such an offence, in a position where he could corrupt Government servants; Or<\/li><li>employs a Government officer within one year of his retirement who has had business dealings with him in an official capacity before retirement.<\/li><\/ul><\/aside>\nB) jurisdiction of the order: The debarment order shall not be circulated to other ministries\/ departments. It will only be applicable to all the attached\/ subordinate offices, autonomous bodies, Central public sector undertakings (CPSEs), etc., of the Ministry\/ Department issuing the debarment order.<\/p>\n<aside class=\"note\">(Format of Debarment Order \u2014 G<\/span> Annexure 38 \u00b7 W<\/span> Annexure 16 \u00b7 C<\/span> Annexure 28 \u00b7 NC<\/span> Annexure 24.)<\/em><\/p><\/aside>\nc) Reasonable opportunity: The concerned Ministry\/ Department, before ISSUING the debarment order against a firm, must ensure that reasonable opportunity has been given to the concerned firm to represent against such debarment \u2014 including a personal hearing if requested by the firm.<\/p>\n<aside class=\"note\">(Format of Show-cause Notice for Debarment \u2014 G<\/span> Annexure 37 \u00b7 W<\/span> Annexure 15 \u00b7 C<\/span> Annexure 27 \u00b7 NC<\/span> Annexure 23.)<\/em><\/p><\/aside>\nd) Competent Authority: The Secretary of the Ministry\/ Department May nominate an officer at the rank of Joint Secretary\/ Additional Secretary as Competent Authority (ca) to debar the firms.<\/p>\ne) List maintenance: The Ministry\/ Department will maintain a list of such debarred firms, which will also be displayed on its website. Such a list on the website shall be automatically binding on the departments, subordinate and attached offices, autonomous bodies, and CPSEs under the Ministry \u2014 but in case of doubt, it can be confirmed by the issuing authority.<\/p>\nF) concurrent debarments: More than one Ministry\/ Department May concurrently debar the same firm.<\/p>\nG) not a vigilance function: Debarment is an executive function and should not be allocated to the vigilance Department.<\/p>\nH) timeline for the debarment process: The period of debarment starts from the date of issue of the debarment order; Therefore, the process of debarment should be conducted expeditiously.<\/p>\nConsidering the QUASI-JUDICIAL NATURE of such proceedings and the need to afford a fair hearing to the firm, the following timeline is SUGGESTED \u2014 which May be suitably modified considering the specifics of an organisation:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>Activity<\/th><th>Time<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>Noticing of delinquency of the firm by the Procuring Entity<\/td><td>zero-day<\/td><\/tr><tr><td>ii<\/td><td>Evaluation of evidence and proposal to ca for debarment of the firm<\/td><td>2 WEEKS<\/td><\/tr><tr><td>iii<\/td><td>Issue of show cause notice to the firm, calling for written and oral submission<\/td><td>1 WEEK<\/td><\/tr><tr><td>iv<\/td><td>time for submission, including reminders, etc.<\/td><td>3 WEEKS<\/td><\/tr><tr><td>v<\/td><td>evaluation of firm's submission and giving oral hearing to the firm<\/td><td>3 WEEKS<\/td><\/tr><tr><td>vi<\/td><td>Final ORDER, indicating an opportunity to the firm \u2014 2 weeks \u2014 to appeal to the Secretary of the Ministry\/ Department as APPELLATE AUTHORITY<\/td><td>2 WEEKS<\/td><\/tr><tr><td><\/td><td>total from zero-day, after which the debarment period starts<\/td><td>12 WEEKS<\/td><\/tr><tr><td>vii<\/td><td>receipt of appeal and disposal of the same by the appellate authority<\/td><td>4 WEEKS<\/td><\/tr><\/tbody><\/table><\/div>\n<h3>3.10.4<\/span>Debarment by CPSEs, Attached Offices\/ Autonomous Bodies, and GeM<\/span><\/h3>\nministries\/ departments, at their option, May also delegate powers to debar bidders to their CPSEs, attached offices\/ autonomous bodies, etc.<\/p>\nIn such cases, the broad principles for debarment in para 3.10.3(a) to (h) above are to be kept in mind.<\/p>\nDebarments by such bodies shall be applicable only to the procurements made by such bodies.<\/p>\nSimilarly, the Government E-marketplace (GeM) can also debar bidders for up to two years on its portal.<\/p>\n<h3>3.10.5<\/span>Debarment ACROSS ALL Ministries\/ Departments<\/span><\/h3>\nIn the following situations, the Ministry\/ Department May consider debarring the firm from taking part in any tendering procedure floated by ALL<\/em> The Central Government ministries\/ departments:<\/p>\na) Ground \u2014 conviction (Rule 151(i) of GFRs, 2017), for debarment up to three years:<\/p>\n<ul class=\"lst\"><li>i) under the prevention of Corruption Act, 1988; or<\/li><li>ii) the IPC, 1860\/ Bharatiya Nyaya Sanhita, 2023, or any other law for the time being in force, for causing any loss of life or property, or causing a threat to public health, as part of the execution of a Public Procurement contract.<\/li><\/ul>\nB) the reference to DoE: The Ministry\/ Department concerned should, after obtaining the approval of the Secretary concerned, forward to DoE a self-contained note setting out all the facts of the case and the justification for the proposed debarment, along with all the relevant papers and documents.<\/p>\nC) prior opportunity is mandatory: The Ministry\/ Department, before forwarding the proposal to DoE, must ensure that reasonable opportunity has been given to the concerned firm to represent against such debarment \u2014 including a personal hearing if requested by the firm.<\/p>\n<aside class=\"note\">If DoE realises that sufficient opportunity has not been given to the firm to represent against the debarment, such debarment requests received from ministries\/ departments shall be rejected.<\/p><\/aside>\nD) interim debarment: The firm shall remain debarred during the interim period till the final decision is taken by DoE \u2014 only in the Ministry\/ Department forwarding such proposal<\/em>.<\/p>\nFor this purpose, the proposing Ministry shall issue an interim order debarring the firm from taking part in tendering procedures floated by their Ministry\/ Department, following the procedure laid down in para 3.10.3 above.<\/p>\nSuch order inter alia must mention that the Government reserves its right to further debar the firm from taking part in any tendering procedure floated across all the Central Government ministries\/ departments, following due procedure.<\/p>\nE) doe's powers and timeline: DoE can also give additional opportunity, at their option, to the firm to represent against proposed debarment. DoE can also take suo-moto<\/em> Action to debar the firms in certain circumstances.<\/p>\nDoE shall complete the process of debarment within 12 weeks after receiving the proposal from the concerned Ministry\/ Department.<\/p>\nF) doe's order: DoE will issue the necessary orders for debarment for a period not exceeding three years for offences mentioned in Rule 151(i) of gfrs, 2017 \u2014 after satisfying itself that the proposed debarment across all the ministries\/ departments is in accordance with the said Rule. This scrutiny is intended to ensure uniformity of treatment in all cases.<\/p>\nG) the Central list: DoE will maintain a list of such debarred firms, which will be displayed on the gem-Central Public Procurement Portal (CPPP). This list on CPPP shall be applicable to all ministries\/ departments, attached and subordinate offices, CPSEs, and autonomous bodies \u2014 but in case of doubt, they May confirm it from the issuing authority.<\/p>\nH) absolute bar: No contract of any kind whatsoever shall be placed on the firm debarred by DoE \u2014 including its allied firms \u2014 during the period of debarment, by any Ministry\/ Department\/ attached\/ subordinate offices of the Government of India, including autonomous bodies, CPSEs, etc., after the issue of a debarment order.<\/p>\n<h3>3.10.6<\/span>Review and Revocation of Orders<\/span><\/h3>\nA) automatic revocation on expiry: An order for debarment passed shall be deemed to have been automatically revoked on the expiry of the period of debarment specified therein \u2014 and it will not be necessary to issue a specific formal order of revocation.<\/p>\nb) Early review\/ revocation: The AUTHORISED ENTITY (DoE, Ministry\/ Department, or CPSEs, Attached Offices\/ Autonomous Bodies, GeM, etc.) that ISSUED the order of debarment can review or revoke the debarment order before the period of debarment is over:<\/p>\n<ul class=\"lst\"><li>Suo-moto (based on new facts that come to light), or<\/li><li>on an appeal by the debarred bidder.<\/li><\/ul>\nAfter a review, an order for modification of the period of debarment or revocation of debarment \u2014 if there is adequate justification for the same \u2014 can be issued.<\/p>\nApproval levels:<\/p>\n<ul class=\"lst\"><li>Ordinarily, such modification\/ revocation of the Order should be done with the approval of the Secretary concerned of doE or the Ministry\/ Department that issued such orders.<\/li><li>In case of debarments done by CPSEs, attached offices\/ autonomous bodies, GeM, etc., such modification\/ revocation of the debarment orders should be done only with the approval of at least a board-level officer.<\/li><\/ul>\n<h3>3.10.7<\/span>Other Provisions (Common to BOTH Types of Debarment)<\/span><\/h3>\na) Contents of the order: The debarment order shall MENTION:<\/p>\n<ul class=\"lst\"><li>The reason(s) in brief that led to the debarment of the firm,<\/li><li>The jurisdictional extent to which the order shall be applicable, and<\/li><li>The validity period of debarment.<\/li><\/ul>\nB) the bar on contracts, and the two cut-off dates: No contract of any kind whatsoever shall be placed with a debarred firm \u2014 including its allied firms \u2014 after the issue of a debarment order by the entities in the jurisdiction mentioned in the order.<\/p>\nBids from only such firms shall be considered for placement of contract which are:<\/p>\n<ul class=\"lst\"><li>Neither debarred on the date of opening of tender<\/strong> \u2014 opening of the first bid, normally called the technical bid, in case of two-packet\/ two-stage tendering<\/em> \u2014 <\/li><li>nor debarred on the date of contract<\/strong> \u2014 i.e., date of issue of the Letter of Acceptance<\/em>.<\/li><\/ul>\nEven in the cases of risk purchase, no contract should be placed on such debarred firms.<\/p>\nC) treatment of a debarred firm's bid: If any debarred firm submits the bid, it will be ignored. In case such firm is lowest (L-1), the next lowest firm shall be considered as L-1. Bid Security submitted by such debarred firms shall be returned to them.<\/p>\nd) No retrospective effect on existing contracts: Contracts concluded before the issue of the debarment order shall not be affected by the debarment orders.<\/p>\nE) automatic extension to allied firms and JV partners: The debarment shall be automatically extended to all its allied firms. In case a joint venture\/ consortium is debarred, all partners will also stand debarred for the period specified in the debarment order. The names of partners should be clearly specified in the \"debarment order\".<\/p>\nF) no impact on other legal rights: Debarment in any manner does not impact any other contractual or other legal rights of the procuring entities.<\/p>\ng) Commencement \u2014 two different dates:<\/p>\n<ul class=\"lst\"><li>For the issuing entity: The period of debarment shall start from the date of issue of the debarment order.<\/li><li>For other procuring entities: The debarment takes effect prospectively from the date of uploading on the website(s), in such a manner that ongoing procurements are not disrupted.<\/li><\/ul>\nH) minimum period: Ordinarily, the period of debarment should not be less than six months.<\/p>\ni) GeM Suspension under the Incidence Management Policy [W + C + NC \u2014 not in G]:<\/p>\nThe GeM portal also has a provision for suspension<\/em> \u2014 debarring vendors'\/ service providers' participation in procurements of ALL<\/em> The buyers \u2014 under its incidence management policy.<\/p>\n<aside class=\"note\">(Reference: https:\/\/assets-bg.gem.gov.in\/resources\/pdf\/incident_management_policy_v12.1.pdf)<\/em><\/p><\/aside>\nthe reasons and periods for suspension are different than in the provisions mentioned above.<\/p>\nHowever, if a Procuring Entity feels that the period of suspension by GeM is not adequate, it May also debar the firm as per the procedure mentioned in this section for a more appropriate period \u2014 but such debarment shall be applicable ONLY<\/em> To procurements by that Procuring Entity.<\/p>\nj) Undertakings from bidders on debarment status [G \u2014 not in W\/C\/NC]:<\/p>\nIt is noticed that many procuring entities take undertakings from the bidders with respect to their debarment status\/ period. Such undertakings, if taken, must be in conformity with the debarment guidelines, as above, to avoid any possible confusion.<\/p>\nk) Alignment obligation W<\/span>C<\/span>NC<\/span>: All ministries\/ departments must align their existing debarment guidelines in conformity with these guidelines. Further, bidding documents must also be suitably amended, if required.<\/p>\n<h3>3.10.8<\/span>Safeguarding the Procuring Entity's Interests during Debarment<\/span><\/h3>\n<aside class=\"note\">This is the closing caution of the debarment section in all four manuals.<\/p><\/aside>\nSuppliers\/ contractors\/ consultants\/ service providers are important assets for the procuring entities, and punishing delinquent suppliers should be the last resort<\/em>.<\/p>\n<ul class=\"lst\"><li>It takes a lot of time and effort to develop, register and mature a new supplier.<\/li><li>In case of a shortage of suppliers in a particular group of materials\/ equipment\/ services, such punishment May also hurt the interest of the Procuring Entity<\/em>.<\/li><\/ul>\nTherefore:<\/p>\n<ol class=\"lst\"><li>The Procuring Entity May always seek the views of the concerned Department regarding the repercussions of such punitive action on the continuity of procurements.<\/li><li>The Procuring Entity May give due weightage to the past performance of the supplier\/ consultant\/ service provider.<\/li><li>In case of a shortage of suppliers and in cases of less serious misdemeanours, the Procuring Entity May:<\/li><li>Pragmatically analyse the circumstances,<\/li><li>reform the supplier, and<\/li><li>get a written commitment from the supplier that his performance will improve.<\/li><li>If this fails, efforts should be made to see if:<\/li><li>[G, c, nc] \u2014 a shorter period of debarment can serve the purpose;<\/li><li class=\"srcmark src-W\" data-src=\" W \">W<\/span> \u2014 A temporary<\/em> Debarment can serve the purpose.<\/li><\/ol>\n<h2>3.11<\/span>Enlistment of Indian Agents<\/span><\/h2>\n(Rule 152 of GFR 2017)<\/em><\/p>\nministries\/ departments, if they so require, May enlist Indian agents who desire to quote directly on behalf of their foreign principals.<\/p>\n<aside class=\"note\">Footnote in all four Manuals:<\/em> Rule 152 of GFR, 2017 amended vide OM No. F.26\/2\/2016-PPD issued by Department of Expenditure dated 25.07.2017.<\/p>\n(The Goods and Consultancy Manuals print this footnote as \"Rule 52\" \u2014 an evident typographical error for Rule 152<\/strong>, which is correctly printed in the Works and Non-Consultancy Manuals.)<\/em><\/p><\/aside>\nDetailed guidelines on Indian Agents of foreign suppliers are contained in Annex-1 to the Integrity Pact Annexure of each Manual \u2014 \"Guidelines for Indian Agents of Foreign Suppliers\"<\/em>.<\/p>\n<h1>Appendix to Chapter 3 \u2014 Points of Difference Between the Four Manuals<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Chapter number<\/td><td>G\/C\/NC: Chapter 3<\/strong> (before Bidding Design) \u00b7 w: Chapter 8<\/strong> (after Contract Execution)<\/td><\/tr><tr><td>2<\/td><td>Chapter title<\/td><td>G:<\/strong>Supplier Relationship Management<\/em> \u00b7 W:<\/strong>Registration\/ Enlistment of Contractors and Governance Issues<\/em> \u00b7 C\/NC:<\/strong>Participation of Bidders and Governance Issues<\/em><\/td><\/tr><tr><td>3<\/td><td>Relationship Management section<\/td><td>G (3.1) + W (8.1) only \u2014 absent in C\/NC<\/td><\/tr><tr><td>4<\/td><td>Eligibility Criteria for Participation<\/td><td>C (3.1) + NC (3.1) only \u2014 absent in G\/W<\/td><\/tr><tr><td>5<\/td><td>Legal Status of Bidders<\/strong> (individuals, firms, NGOs, specialised agencies, sub-contracting, consortium\/ JV)<\/td><td>C (3.2) + NC (3.2) only<\/td><\/tr><tr><td>6<\/td><td>JV\/C discouraged in QCBS\/ QOP procurement<\/td><td>NC only<\/td><\/tr><tr><td>7<\/td><td>Demerged entities \u2014 five-year use of parent credentials (DoE OM F.8\/78\/2023-PPD dated 12.10.2023)<\/td><td>NC only<\/td><\/tr><tr><td>8<\/td><td>Rule 177 GFR bar on direct engagement of retired Government servants as consultants<\/td><td>C only<\/strong> (NC states the substance without citing Rule 177)<\/td><\/tr><tr><td>9<\/td><td>Canons of Financial Propriety re-stated in this chapter<\/td><td>C (3.3.1) + NC (3.3.1)<\/strong> \u2014 in G\/W<\/strong> it is at para 1.9<\/td><\/tr><tr><td>10<\/td><td>RTI and Proactive Disclosures re-stated in this chapter<\/td><td>C (3.3.2) + NC (3.3.2) \u2014 in G it is at para 1.12; absent from W entirely<\/td><\/tr><tr><td>11<\/td><td>CIPP broken into four numbered sub-sections<\/strong> (Introduction; the Code; Proactive Disclosures; Punitive Provisions)<\/td><td>W only<\/strong> (8.2.1\u20138.2.4)<\/td><\/tr><tr><td>12<\/td><td>CIPP declaration signed at \"Need Assessment\" vs \"Preparation of Estimates\"<\/td><td>G\/C\/NC: Need Assessment \u00b7 W: Preparation of Estimates<\/td><\/tr><tr><td>13<\/td><td>CIPP declaration expressly extended to SUB-CONTRACTORS engaged by the bidder<\/td><td>W only<\/td><\/tr><tr><td>14<\/td><td>Professionalism and Unfair Competitive Advantage; the three consultancy disqualification rules<\/td><td>C only<\/td><\/tr><tr><td>15<\/td><td>Punitive debarment period under CIPP<\/td><td>G\/w\/nc: Not less than six months (a floor) \u00b7 c: Not exceeding two years (a ceiling)<\/td><\/tr><tr><td>16<\/td><td>CCI reference filed by whom<\/td><td>G\/W\/NC: Joint Secretary level officer \u00b7 C: the Competent Authority<\/td><\/tr><tr><td>17<\/td><td>\"Recovery of payments including advance payments\"<\/td><td>G, W, NC \u2014 C omits \"including advance payments\"<\/td><\/tr><tr><td>18<\/td><td>Integrity Pact \u2014 tri-partite arrangement with sub-contractors<\/td><td>C only<\/td><\/tr><tr><td>19<\/td><td>IP format may be updated to incorporate latest procurement instructions<\/td><td>G + W<\/strong> \u00b7 C\/NC<\/strong> instead say Ministries and CPSEs<\/strong> may use the format with suitable changes<\/td><\/tr><tr><td>20<\/td><td>Annex-2 to Integrity Pact<\/td><td>G:<\/strong>Extract of Standard Operating Procedure<\/em> \u00b7 W\/C\/NC:<\/strong>Appointment and Role of IEMs<\/em><\/td><\/tr><tr><td>21<\/td><td>Grievance redressal \u2014 \"ambiguity in contract terms\" placed as a separate paragraph<\/td><td>W<\/strong> (para 4) \u00b7 G\/C\/NC<\/strong> place it as item (ix) within the \"not subject to review\" list<\/td><\/tr><tr><td>22<\/td><td>Rate Contract holders named in the \"private purchases\" risk row<\/td><td>G only<\/td><\/tr><tr><td>23<\/td><td>Registration\/ Empanelment\/ Pre-qualification \u2014 three concepts distinguished<\/td><td>G, C, NC<\/td><\/tr><tr><td>24<\/td><td>Registration vs Enlistment \u2014 two concepts distinguished<\/td><td>W only<\/td><\/tr><tr><td>25<\/td><td>Mandatory pre-bid registration on e-procurement portal\/ CPPP with five data fields (Name, Address, PAN, DSC, GSTIN)<\/td><td>W only<\/td><\/tr><tr><td>26<\/td><td>CPWD\/ MES enlistment practice; MoR and MoRTH cited; Rs 20 crore ceiling on empanelled-only tendering<\/td><td>W only<\/td><\/tr><tr><td>27<\/td><td>Sharing of registered\/ enlisted\/ debarred contractor data through CPPP; unique identification by PAN by NIC\/ MeitY<\/td><td>W only<\/td><\/tr><tr><td>28<\/td><td>Five categories for registration of suppliers of goods (manufacturers, agents, foreign manufacturers, stockists, importers)<\/td><td>G only<\/td><\/tr><tr><td>29<\/td><td>Categories of works for enlistment (Civil, Electrical, Horticulture, Nursery)<\/td><td>W only<\/td><\/tr><tr><td>30<\/td><td>In-house testing facility prerequisite; MSE relaxation; ISO 9001-2000 treatment<\/td><td>G only<\/td><\/tr><tr><td>31<\/td><td>Grade A\/B\/C monetary limits (Rs 25 lakh \/ Rs 5\u201325 lakh \/ Rs 1\u20135 lakh)<\/td><td>G only<\/td><\/tr><tr><td>32<\/td><td>CPWD Class-I(Super) to Class-V tendering limits (Rs 650 crore down to Rs 40 lakh)<\/td><td>W only<\/td><\/tr><tr><td>33<\/td><td>Sole selling agent registration conditions; above-Rs-5-lakh manufacturers-or-authorised-agents rule<\/td><td>G only<\/td><\/tr><tr><td>34<\/td><td>Partly outsourced arrangements \u2014 registration void retrospectively<\/td><td>G only<\/td><\/tr><tr><td>35<\/td><td>Re-verification request permitted only after six MONTHS<\/td><td>C + NC<\/strong> state it expressly \u00b7 W<\/strong> says \"say, within six months\" \u00b7 G<\/strong> silent<\/td><\/tr><tr><td>36<\/td><td>Validity of registration<\/td><td>G: one to three years<\/strong>, apply afresh for renewal \u00b7 W: say three years<\/strong>, extension on application based on satisfactory performance<\/td><\/tr><tr><td>37<\/td><td>EMD exemption within monetary limit; treated as unregistered beyond it; security deposit instead<\/td><td>G only<\/td><\/tr><tr><td>38<\/td><td>Adverse reassessment consequence<\/td><td>G\/W: DELETE from list \u00b7 C\/NC: DELETE or downgrade<\/em><\/td><\/tr><tr><td>39<\/td><td>Full registration procedure reproduced<\/td><td>G (16 sub-paras) + W (17 paras) \u00b7 C\/NC reproduce an abridged version and cross-refer to para 3.6 of the Goods Manual<\/td><\/tr><tr><td>40<\/td><td>Debarment section title<\/td><td>G: Suppliers \u00b7 W: Contractors \u00b7 C: \"Suppliers\" (apparent template carry-over) \u00b7 NC: Service Providers<\/td><\/tr><tr><td>41<\/td><td>Rule 151(a)(ii) statute cited<\/td><td>G: IPC 1860 (with BNS footnote) \u00b7 W\/C\/NC: Bharatiya Nyaya Sanhita directly<\/td><\/tr><tr><td>42<\/td><td>\"Ministry\/ Department will maintain such list \u2026 displayed on their website\" added to Rule 151(c)<\/td><td>W + NC<\/td><\/tr><tr><td>43<\/td><td>Footnote that \"now two years is applicable\" against the three-year period in Rule 151(b)<\/td><td>W only<\/td><\/tr><tr><td>44<\/td><td>GeM Suspension under Incidence Management Policy<\/td><td>W + C + NC \u2014 absent from G<\/td><\/tr><tr><td>45<\/td><td>Undertakings from bidders regarding debarment status must conform to the Guidelines<\/td><td>G only<\/td><\/tr><tr><td>46<\/td><td>Closing safeguard \u2014 remedy if reform fails<\/td><td>G\/C\/NC: a SHORTER PERIOD of debarment \u00b7 W: a TEMPORARY debarment<\/td><\/tr><tr><td>47<\/td><td>Rule number cited for Indian Agents footnote<\/td><td>G + C print \"Rule 52\" (evident typo) \u00b7 W + NC correctly print \"Rule 152\"<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 3<\/p>\n<aside class=\"note\">Next:<\/strong> Chapter 4 \u2014 Bidding Design: Modes of Procurement, Types of Contracts, Systems of Selection, Tendering Systems and Channels of Procurement<\/em> (merging Goods Ch. 4<\/strong>, Works Ch. 3<\/strong>, Consultancy Ch. 4<\/strong> and Non-Consultancy Ch. 4<\/strong>).<\/p>\nAnother numbering trap ahead:<\/strong> this block is Chapter 4<\/strong> in Goods, Consultancy and Non-Consultancy, but Chapter 3<\/strong> in Works.<\/p><\/aside><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch4\">Chapter 4 \u2014 Part a<\/p><h1>Bidding Design<\/h1><\/header>Part I<\/span>Contracts, Selection Systems and Channels<\/em><\/p>\n<h3>Agency for Procurement \u00b7 Admeasurement \u00b7 Types of Contracts \u00b7 Systems of Selection \u00b7 Tendering Systems \u00b7 Channels of Procurement<\/span><\/h3>\nMerging: Goods Ch. 4<\/strong> (Modes of Procurement and Tendering Systems) \u00b7 Works Ch. 3<\/strong> (Bidding Design for Works) \u00b7 Consultancy Ch. 4<\/strong> (Bidding Design for Consultancy Services) \u00b7 Non-Consultancy Ch. 4<\/strong> (Bidding Design for Non-Consultancy Services)<\/em><\/p><h2>Structural Warning for Students<\/span><\/h2>\nThis block is CHAPTER 4 in Goods, Consultancy and Non-Consultancy \u2014 but CHAPTER 3 in Works.<\/p>\n(The reverse of the trap in the previous chapter, where governance was Ch. 3 in three Manuals but Ch. 8 in Works.)<\/em><\/p>\nThis is also the chapter of greatest substantive divergence between the four Manuals. Three whole apparatus exist in only one Manual each:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Apparatus<\/th><th>Exists only in<\/th><\/tr><\/thead><tbody><tr><td>Agency for Procurement (pWO\/ PSU\/ works Committee)<\/td><td>Works<\/td><\/tr><tr><td>Admeasurement of Services (input vs output)<\/td><td>Non-Consultancy<\/td><\/tr><tr><td>Rate Contract \/ Framework Agreement, Approved Vendor List, Proprietary Article Certificate, Direct Procurement<\/td><td>Goods<\/strong>(covered in Part B)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nAnd \"Types of Contracts\" does not exist at all in the Goods Manual<\/strong> \u2014 goods procurement has no contract-type taxonomy, because it uses Rate Contracts and supply orders instead.<\/p>\nBecause of the volume, this chapter is issued in two parts<\/strong>:<\/p>\n<ul class=\"lst\"><li>PART A (this document)<\/strong> \u2014 Agency, Admeasurement, Types of Contracts, Systems of Selection, Tendering Systems, Channels of Procurement.<\/li><li>PART B<\/strong> \u2014 Modes of Procurement (OTE, GTE, rc\/fa, eRA, PQB, AVL, LTE, SLTE, PAC, STE, direct Procurement, Quotations, Stalled Contracts).<\/li><\/ul>\n<h2>Concordance for Chapter 4 \u2014 Part A<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>Goods<\/th><th>Works<\/th><th>CS<\/th><th>NCS<\/th><\/tr><\/thead><tbody><tr><td>4.1<\/td><td>Agency for Procurement<\/td><td> \u2014 <\/td><td>3.1<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>4.2<\/td><td>Admeasurement of Services<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>4.1<\/td><\/tr><tr><td>4.3<\/td><td>Types of Contracts<\/td><td> \u2014 (none)<\/td><td>3.2<\/td><td>4.1<\/td><td>4.2<\/td><\/tr><tr><td>4.4<\/td><td>Systems of Selection<\/td><td> \u2014 (none)<\/td><td>3.3<\/td><td>4.2<\/td><td>4.3<\/td><\/tr><tr><td>4.5<\/td><td>Tendering Systems<\/td><td>4.14\u20134.16<\/td><td>3.4<\/td><td>4.4<\/td><td>4.5<\/td><\/tr><tr><td>4.6<\/td><td>Channels of Procurement<\/td><td>4.17<\/td><td>3.5<\/td><td>4.5<\/td><td>4.6<\/td><\/tr><tr><td>Part B<\/em><\/td><td>Modes of Procurement<\/td><td>4.1\u20134.13<\/td><td>3.6\u20133.14<\/td><td>4.3<\/td><td>4.4<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.1<\/span>Agency for Procurement [W ONLY]<\/span><\/h2>\n1. The three routes (Rule 133 of GFR, 2017)<\/em>: Rule 133 permits Ministries\/ Departments at its discretion to assign execution of their original and repair works as follows: a) directly by the Ministry\/ Department; b) public works organisations (PWO); c) public sector undertaking (PSU)\/ Organisations set up to execute Works.<\/p>\n2. Directly by the Ministry\/ Department: A Ministry or Department at its discretion May directly execute repair works estimated to cost up to rupees sixty (60) LAKH, after following the due procedure 'laid down for Execution of Works' (Rules 139, 159 and 160 of GFR 2017)<\/em>.<\/p>\n<h3>4.1.1<\/span>Public Works Organisations (PWO)<\/span><\/h3>\nA Ministry or Department May, at its discretion, assign:<\/p>\n<ul class=\"lst\"><li>REPAIR WORKS estimated to cost above Rupees SIXTY (60) LAKH, and<\/li><li>original\/ minor works of any value<\/li><\/ul>\nto any public Works Organisation (PWO) such as:<\/p>\n<aside class=\"note\">Central Public Works Department (CPWD) \u00b7 State Public Works Department \u00b7 other Central Government organisations authorised to carry out civil or electrical works such as Military Engineering Service (MES), Border Roads Organisation (BRO), etc. \u00b7 or the Ministry\/ Department's construction wings of the Ministries of Railways, Defence, Environment & Forests, Information & Broadcasting, and the Departments of Posts and Space, etc.<\/p><\/aside>\n<h3>4.1.2<\/span>Public Works PSU\/ Organisations<\/span><\/h3>\nAs an alternative, a Ministry or Department May assign repair works estimated to cost above rupees sixty (60) lakh and original works of any value to: A) any public sector undertaking (PSU) set up by the Central or State Government to carry out civil or electrical works; Or b) to any other Central\/ State Government organisation\/ PSU which May be notified by the Ministry of housing and urban affairs (MoHUA) for such purpose, after evaluating their financial strength and technical competence.<\/p>\n<h3>4.1.3<\/span>Procedure for Assigning Work to PWO or PSU\/ Organisations<\/span><\/h3>\n1. Competition among PSUs \u2014 and the PMC characterisation: For the assignment of work to PSUs, the Ministry\/ Department shall ensure competition among all such eligible PSUs\/ ORGANISATIONS.<\/p>\nThis competition shall be essentially on the lump sum service charges to be claimed for execution of work.<\/p>\nThe award of work to a PSU should be taken as project management consultancy (pmc), and the concerned PSU shall be treated as a consultancy firm. Relevant methods (QCBS, LCS etc.) for procurement of consultancy will be applicable.<\/p>\n<aside class=\"note\">For better understanding of the selection methodology of consultant(s), Rule 192 to Rule 194 of GFR 2017<\/strong> and the Manual for Procurement of Consultancy Services, 2025<\/strong> may be referred.<\/em><\/p><\/aside>\n2. Nomination basis: In exceptional cases, for assignment of work on nomination basis to a PSU, the conditions for nomination basis would apply. The work under these circumstances shall also be assigned only on a lump sum basis.<\/p>\n3. Sanctions and execution<\/strong>(Rule 140, GFR 2017)<\/em>: For original works and repair works entrusted under paras 4.1.1 and 4.1.2 above, the administrative approval and expenditure sanction shall be accorded and funds allotted by the concerned authority<\/strong> in accordance with the sanctioning sequence of Chapter 2.<\/p>\nThe PWO or the PSU or any organisation allotted work shall then execute the work entrusted to it in accordance with the Rules and procedures prescribed in their own organisation.<\/p>\n4. Memorandum of Understanding (MoU): An MoU May be drawn with the PWO or the PSU for proper execution of work.<\/p>\nThe MoU should spell out:<\/p>\n<ul class=\"lst\"><li>the OBLIGATIONS on the part of the PWO or PSU regarding execution of works as per proper specifications, and<\/li><li>for maintaining proper quality and speed of execution of works;<\/li><li>Different stages at which funds shall be released to the PWO should also be clearly spelt out.<\/li><\/ul>\nSuch MoU would normally be for a specific standalone work, but could also be for a project consisting of a collection of related works.<\/p>\n5. Long-term framework MoU: In case of MoU with PWOs, it could also be a long-term framework moU.<\/p>\n<aside class=\"note\">A Sample MoU delineating the complete procedure of assignment of work to PWO\/ PSUs and its monitoring is at Annexure 10 of the Works Manual. The Procuring entity may CHANGE the MoU format to suit their requirement, and if felt necessary May also get the moU document vetted from the Ministry of law or its own legal cell.<\/p><\/aside>\n6. The Works Committee: For execution of any work under Paras 4.1.1 and 4.1.2 above, the Ministry\/ Department shall constitute a \"Works Committee\" \u2014 whether on an ad hoc or standing basis \u2014 comprising:<\/p>\n<ul class=\"lst\"><li>representatives of the ADMINISTRATIVE WING,<\/li><li>representatives of the FINANCE WING, and<\/li><li>an officer possessing technical skills and experience of framing estimates and execution of works.<\/li><\/ul>\nIf need be, members May be co-opted from: the User Department; CPWD\/ PWOs\/ PSUs; or any technically sound Government agency such as a relevant National Institute of Technology (NIT)\/ Indian Institute of Technology (IIT) or a relevant National Research Institute, etc.<\/p>\nThe Works Committee shall:<\/p>\n<ul class=\"lst\"><li>Ensure observance of due process in the planning and execution of works;<\/li><li>Check the reasonability of the estimates and other technical details; And<\/li><li>monitor the execution of the works.<\/li><\/ul>\n<h2>4.2<\/span>Admeasurement of Services [NC ONLY]<\/span><\/h2>\nNon-consultancy services are bid and contracted on the total price (UNIT RATE \u00d7 quantum) of the delivered services (of requisite performance standards) \u2014 much like procurement of goods and works.<\/p>\nThe QUANTUM of services can be ascertained by EITHER:<\/p>\n<ul class=\"lst\"><li>measuring the INPUTS DEPLOYED by the service provider \u2192 INPUT ADMEASUREMENT; or<\/li><li>measuring the output of services delivered \u2192 output admeasurement.<\/li><\/ul>\n<h3>4.2.1<\/span>Input Admeasurement<\/span><\/h3>\n1. The quantum of services can be ascertained by measurement of the inputs \u2014 personnel, equipment, materials, and miscellaneous inputs \u2014 deployed during a period (say per month) by the service provider.<\/p>\n2. What the contract specifies:<\/p>\n<ul class=\"lst\"><li>the UNIT RATE, and<\/li><li>the ESTIMATED QUANTUM (per period \u2014 say per day\/ month) of various inputs<\/strong> required to be deployed to deliver the required quantum of services of requisite performance standards.<\/li><li>The contract would also specify the SERVICE CHARGES (including profits, overheads, etc.) and taxes over and above such input unit rates.<\/li><\/ul>\nFinancial evaluation is based on the total price of the indicated quantum of various inputs at the contracted unit rate, plus service charges and taxes.<\/p>\n3. The monitoring burden: Input admeasurement requires more vigilant and constant monitoring of inputs deployed. The Procuring Entity must also monitor the performance standards, methodology employed and productivity of inputs to ensure Value for Money.<\/p>\n4. Where used: Input admeasurement is frequently used in time-based and indefinite delivery types of contracts for Services like:<\/p>\n<aside class=\"note\">upkeep and maintenance of office\/ buildings\/ estates (other than Civil & Electrical Works, etc.) \u00b7 Security Services \u00b7 Horticultural Services \u00b7 Janitor\/ Cooking\/ Catering\/ Management Services for Hostels and Guest Houses \u00b7 Cleaning\/ Housekeeping Services \u00b7 Errand\/ Messenger Services, etc.<\/p><\/aside>\n5. Input Admeasured Contracts \u2014 Risks and Mitigations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>a) The quality and scope of the Output\/ deliverables is not linked to the payment. There may be a tendency for the service provider to IGNORE the quality and scope of the services. Disputes may arise due to different possible interpretations of quality and scope of contract.<\/td><td>The contract should include provision for evaluation of quality, methodology and scope of deliverables, and a certificate for its acceptability may be recorded. Payments should be released only against such certificates. Therefore, the service Level Agreement (SLA) becomes very important in such contracts.<\/td><\/tr><tr><td>b) productivity of inputs deployed is not linked to the payment. There may be a tendency for the service provider to use paid staff in a dilatory and un-productive manner. This may lead to time and cost over-runs.<\/td><td>Such contracts need to be closely monitored and administered by the Procuring Entity to ensure that the progress of the contract is commensurate with the time spent, and that the resources for which payment is claimed have actually efficiently and productively been deployed on the contract during the period. It may be worthwhile to lay down productivity linkage between the quantum of the output of services and input deployed in a period (say, cleaning of a quantum of area per day per cleaner deployed) as part of Performance Standards. A system of MONTHLY REPORTING of payouts and the quantum of work achieved by the service provider to the CA should be instituted to enable supervision. Such contracts should include an upper limit of total payments to be made to the service providers, to safeguard against excessive prolonging of time and payments. After this limit is reached \u2014 or the period of completion is exceeded \u2014 the ca should review the justification for the extension of the contract.<\/td><\/tr><\/tbody><\/table><\/div>\n<h3>4.2.2<\/span>Output-Admeasurement<\/span><\/h3>\n1. Alternatively, the quantum of services can be ascertained by measurement of the quantum of outputs delivered of the required performance standards \u2014 numbers, length, area, volume, weight, value, etc., or a combination thereof \u2014 say, the area of office cleaned, or tonne-kilometre of transportation, or value of goods inspected.<\/p>\n<aside class=\"note\">Since contracts based on Output admeasurement specify the unit rate of service output, they are also referred to as unit-rate contracts.<\/p><\/aside>\n2. Financial evaluation: The contract specifies a unit rate of the output of services, and the financial evaluation is done based on the total price of the indicated quantum of service at the contracted unit rate plus taxes.<\/p>\n<aside class=\"note\">In actual practice, this could be more complex \u2014 as in taxi hiring for 8 hours with a maximum of 250 km included in the price, but every additional km\/ hour May be charged extra. There May also be additional charges for night duty, etc.<\/p><\/aside>\n3. Why it is preferred: Output admeasurement contracts are simpler to administer, since the Procuring Entity will only ascertain performance standards and the quantum. It need not monitor the inputs deployed and the methodology employed. Therefore, wherever feasible, output admeasurement should be the preferred choice.<\/p>\n4. However, in many services, it May be part of the quality assurance plan and SLA to ensure that a specified quantum of inputs is deployed for the services \u2014 although payments are still based on output admeasurement.<\/p>\n5. Where used: Depending on the situation, output admeasurement may be suitable mainly for lump-sum and percentage-based types of contracts, and in special circumstances for time-based and indefinite delivery types.<\/p>\nSuitable for Services like:<\/p>\n<aside class=\"note\">transport services \u00b7 logistics \u00b7 clearing and forwarding \u00b7 courier services \u00b7 drilling \u00b7 aerial photography \u00b7 satellite imagery \u00b7 mapping, and similar operations.<\/p><\/aside>\n6. Output Admeasurement Contracts \u2014 Risks and Mitigations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>a) insufficient deployment of resources: Service Provider may not deploy sufficient resources, which may lead to POOR QUALITY and TIME OVER-RUN.<\/td><td>Stipulate in the tender document that the quantum of input deployments (personnel, equipment, materials, etc.) shall also be quoted \u2014 but shall be used only to monitor performance standards.<\/td><\/tr><tr><td>b) The QUALITY of the Output\/ deliverables is not linked to the payment.<\/strong> There may be a tendency for the service provider to Cut corners on quality of the output\/ deliverables by saving on resources employed.<\/strong> Disputes may arise due to different possible interpretations of quality and scope of Output\/ deliverables.<\/td><td>Such contracts should be used mainly for contracts in which the quality and scope of the required output are clearly defined and are measurable. The contract should include provision for evaluation of quality and scope of deliverables, and a certificate for its acceptability may be recorded. Payment should be made only against certificate of acceptance of deliverables. It's important to include a service Level Agreement in such contracts.<\/td><\/tr><tr><td>c) time and cost over-run: As time is not linked to the payment, there may be a tendency for the service provider to save on deployment of resources, which may result in time-over-run.<\/td><td>While the payments are not linked to time, the contract should be monitored per month to ensure that the output per month is in line with planned and estimated time-line. This type of contract should include an upper limit of total payments to safeguard against excessive prolonging of time and payments. After this limit is reached, or the period of completion is exceeded, the CA should review the justification for the extension of the contract.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.3<\/span>Types of Contracts<\/span><\/h2>\n<aside class=\"note\">The goods Manual has no \"types of contracts\" SECTION. Goods procurement instead uses Rate Contract\/ Framework Agreement, Approved Vendor List and Proprietary Article Certificate \u2014 treated as modes of procurement<\/em> in Part B.<\/p><\/aside>\n<h3 class=\"src-multi srchead\" data-src=\" W C NC \">4.3.1<\/span>The Common Opening Proposition<\/span>W<\/span>C<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\" data-src=\" W C NC \" data-label=\"Works + Consultancy + Non-Consultancy only\">\n1. There are various alternative bases for linking payments to the performance of a contract (called types of contracts) \u2014 each having different risks and mitigation measures.<\/p>\n<ul class=\"lst\"><li>Bids are called and evaluated based on the type of contract.<\/li><li class=\"srcmark src-multi\" data-src=\" C NC \">C<\/span>NC<\/span> add:<\/strong>The BOQ of the financial bid is designed specifically for each type of contract.<\/li><li>The choice of the type of contract should be based on value-for-money (VfM), with due regard to the nature of work\/ requirement.<\/li><li>Adoption of an inappropriate type of contract could lead to a situation of lack of competition, contractual disputes and non-performance\/ failure of the contract.<\/li><li class=\"srcmark src-W\" data-src=\" W \">W<\/span> adds:<\/strong>Standard forms for all the types of contracts mentioned below are available with public works organisations like CPWD, and the same May be used for calling the tenders.<\/li><\/ul>\n<\/div><h3>4.3.2<\/span>The Three Taxonomies Compared<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr class=\"srcmark src-multi\" data-src=\" W C NC \"><th>W<\/span> \u2014 WORKS (7 types)<\/th><th>C<\/span> \u2014 CONSULTANCY (5 types)<\/th><th>NC<\/span> \u2014 NON-CONSULTANCY (4 types)<\/th><\/tr><\/thead><tbody><tr><td>a) Lump sum (Firm Fixed Price) contract<\/td><td>a) Lump sum (Firm Fixed Price) contract<\/td><td>a) Lump sum (Firm Fixed Price) contract<\/td><\/tr><tr><td>b) Item Rate (Unit Rate) contract<\/td><td>b) Time based (Retainer-ship) contract<\/td><td>b) Time based contract<\/td><\/tr><tr><td>c) Percentage Rate contract<\/td><td>c) Percentage (Success Fee) contract<\/td><td>c) Percentage (Success Fee) contract<\/td><\/tr><tr><td>d) Piece Work contract<\/td><td>d) Retainer-ship cum Success fee-based contract<\/td><td>d) Indefinite delivery contract<\/td><\/tr><tr><td>e) Engineering, Procurement and Construction (EPC) contract<\/td><td>e) Indefinite delivery contract<\/td><td><\/td><\/tr><tr><td>f) Public Private Partnership (PPP)<\/td><td><\/td><td><\/td><\/tr><\/tbody><\/table><\/div>\n<h3 class=\"src-W srchead\" data-src=\" W \">4.3.3<\/span>WORKS \u2014 the Seven Types<\/span>W<\/span><\/h3><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\"><h4>A. Lump Sum (Fixed Price) Contract<\/span><\/h4>\n1. In this type of contract, bidders are required to quote a lump sum fixed price figure for completing the works in accordance with the given designs, specifications and functional requirements.<\/p>\n<ul class=\"lst\"><li>Bidder's price is deemed to include all elements of cost \u2014 no arithmetical correction or price adjustments are allowed during evaluation and execution.<\/li><li>Lump sum contracts are easy to administer because it is a fixed price for a fixed scope, and payments are linked to clearly specified outputs\/ milestones.<\/li><\/ul>\n2. Quality risk: There may be a tendency for the Contractor to cut corners on quality and scope of work by saving on resources employed. Disputes may arise due to different possible interpretations of quality and scope of work. The contract should include provision for evaluation of quality and scope of work, and a certificate for its acceptability May be recorded.<\/p>\n3. Time risk: As time is not linked to the payment, there may be a tendency for the Contractor to save on deployment of resources, which may result in time over-run. While the payments are not linked to time, the assignment should be monitored per month to ensure that the progress of work per month is in line with the planned and estimated timeline.<\/p>\n4. Where suitable: Lump sum service contracts should be used mainly for assignments in which the quality, scope and timing of the work are clearly defined.<\/p>\nLump sum contracts May be used where the works can be defined in their full physical and qualitative characteristics, and risk for change in quantity or specification, and unforeseen difficulties and site conditions (for example, hidden foundation problems) are minimal.<\/p>\nThus suitable for:<\/p>\n<aside class=\"note\">stereotype\/ repetitive residential buildings or other structures for which STANDARD DRAWINGS are normally available; also for minor bridge works, chimneys, bins\/ silos, overhead tanks, etc. \u2014 whether on the Department's design or that of the contractor.<\/p><\/aside>\nIn the latter case, the Department shall spell out the requirements in detail to enable the contractor to prepare his designs and drawings accordingly and submit them to the Procuring Entity for check and approval before construction.<\/p>\n5. Schedule of Rates still relevant: A Schedule of Rates (sor) May still be specified in order to regulate the amounts to be added to or deducted from the fixed sum on account of additions and alterations to drawings, designs and specifications not covered by the contract.<\/p>\n6. Payment: The contractor shall be paid from time to time as per the Schedule specified in the contract, or the full amount on completion of the work. The billing Schedule shall be commensurate with the actual work done, and the risk of front-loading strictly guarded against.<\/p>\n7. Measurements: Detailed measurements of work done in a lump sum contract are not required to be recorded \u2014 except in respect of additions and omissions. No reference is made in the contract to the departmental estimate of the work, prevailing sor, or the quantities of work to be done. Payment of additions and omissions is regulated by the prevailing sor as agreed upon while approving the tender or the rates.<\/p>\n<h4>B. Item Rate (Unit Rate) Contract<\/span><\/h4>\n1. For item rate tenders, contractors are required to quote a rate for each individual item (detailed sub-activity) comprising a work, on the basis of the Bill of Quantities (BOQ) provided by the Procuring Entity in the bid documents.<\/p>\nThis is the most commonly used contract type for civil works.<\/p>\n2. Payment and variations: The payment is made at the rate set out in the contract for the measured quantity.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Extent of variation in BOQ quantities<\/th><th>Treatment<\/th><\/tr><\/thead><tbody><tr><td>REASONABLE variations \u2014 typically \u00b110% to \u00b115%<\/td><td>Can be allowed during the execution in terms of the contract<\/td><\/tr><tr><td>SLIGHTLY LARGER variation \u2014 typically \u00b125% to \u00b130%<\/td><td>competent Authority's sanction is required<\/td><\/tr><tr><td>Where the variation exceeds the prescribed limit<\/td><td>The contract generally provides that either (a) the Procuring Entity May revise the rate with mutual agreement (often based on analysis of current market rates), or (b) the work beyond the limit May be treated as a new item, requiring approval at appropriate levels<\/td><\/tr><\/tbody><\/table><\/div>\n3. Where suitable: Suitable for all types of major works such as buildings, bridges, culverts, roads, sewer lines, irrigation works \u2014 and carries the least risk of uncertainty for the parties.<\/p>\n4. Prerequisite: Specifications, design, drawings and contract conditions \u2014 including availability of land, forest clearance, social and environmental impact assessment, where applicable \u2014 have to be critically appraised before the initiation of the procurement process, in order to minimise the incidence of internal inconsistencies, variations, and situations of claims\/ disputes or contract failure.<\/p>\n<h4>C. Percentage Rate Contract<\/span><\/h4>\n1. For percentage Rate Contract, the contractors are required to quote a rate as an overall percentage above or below the total estimated cost.<\/p>\n2. Where suitable: This type works best when the work does not involve major design process and directions, and simple drawings are sufficient for execution. It saves on the time and effort of detailed design before the procurement process.<\/p>\nCan be used for:<\/p>\n<aside class=\"note\">Small and routine types of original works for which estimates can be made based on available Schedule of Rates, and all repair works \u2014 e.g. levelling and development works, including storm water drainage, water supply and sewer lines.<\/p><\/aside>\n3. Billing: Bills for percentage rate contracts shall be prepared at the estimated rates for individual items only, and the percentage excess or less shall be added or subtracted from the gross amount of the bill. The payment is made for the measured quantity.<\/p>\nContract provisions are made to determine the price of the items not included in sor. In the absence of a standard Schedule of Rates, a project-specific Schedule of items and their rates is drawn.<\/p>\n<aside class=\"note\">Note: Percentage rate contracts should not be confused with lump-sum contracts, since the pricing structure in both cases is fundamentally different.<\/p><\/aside>\n<h4>D. Piece Work Agreement<\/span><\/h4>\n1. In a piece work agreement, bidders quote and are paid for each piece (or unit) of a work element \u2014 neither the complete work as in lump-sum contract, nor as granular a work element as in item Rate Contract \u2014 without necessarily providing detailed quantities upfront.<\/p>\nThe Procuring Entity has flexibility to put an end to the piece work agreement at his option at any time. It incentivises productivity of the contractor and cost control for the Procuring Entity.<\/p>\n2. Two main uses:<\/p>\nA) anticipatory work commencement: In cases where it is necessary to start the work in anticipation of formal acceptance of a detailed contract, a piece work agreement May be drawn \u2014 and the agreement May be cancelled as soon as the regular contract is signed.<\/p>\nb) for ongoing requirements: For ongoing requirements \u2014 i.e., pipes, laying of sewerage, maintenance of colonies\/ facilities etc. \u2014 quotations are called periodically, and a running piece work agreement is drawn up as a result of those quotations, usually for a period of one year. The agreement provides for payment of stipulated rates only when it refers to such quantity of time, and also stipulates that the Procuring Entity May put an end to the agreement at his option at any time.<\/p>\n3. Important provisions of such contracts:<\/p>\nA) quality assurance: Contractor might prioritise speed over quality to maximise earnings. Therefore, the contract must clearly define the quality standards each unit of work must meet to be acceptable. Implement processes for inspecting and approving completed work before payment. Define the scope of work meticulously to prevent misunderstandings. Maintain open lines of communication with contractors to address issues promptly. Establish KPIs to monitor progress and quality.<\/p>\nB) payment terms: Specify the payment rate per unit of work and any conditions that might affect this rate. Outline when payments will be made (e.g., upon completion of each unit, weekly, monthly).<\/p>\nC) termination clauses: Include a clause that allows the Procuring Entity to terminate the contract at their option at any time. Specify any notice period required and obligations upon termination.<\/p>\nD) labour laws: There's a potential for unfair labour practices if not properly managed. Therefore, the contract must stipulate strict compliance with local labour regulations, including minimum wage requirements and worker protections.<\/p>\nE) documentation: Keep thorough records of work completed and payments made for transparency and legal purposes.<\/p>\n<h4>E. Engineering, Procurement and Construction (EPC) Contracts<\/span><\/h4>\n1. What it is: The EPC approach \u2014 also called 'design & build' contracts \u2014 relies on assigning the responsibility for investigations, design and construction to the contractor for a lump sum price determined through competitive bidding.<\/p>\nThe objective is to ensure implementation of the project to specified standards with a fair degree of certainty relating to costs and time, while transferring the construction risks to the contractor.<\/p>\n2. Policy push: On the recommendations of niti aayog, the cabinet committee on economic affairs (ccea) has recommended that item rate contracts May be substituted by EPC contracts wherever appropriate (NITI Aayog OM No. N-14070\/14\/2016-PPPAU dated September 05, 2016)<\/em>.<\/p>\n3. Output specifications, not construction specifications: Unlike the normal practice of construction specifications, the technical parameters in the EPC agreement are based mainly on output specifications\/ performance standards.<\/p>\nThe Procuring Entity specifies only the core requirements of design and construction that have a bearing on the quality, durability, reliability, maintainability and safety of assets \u2014 and enough room is left for the contractor to add value. The contractor has full freedom to design and plan the construction Schedule using best practices.<\/p>\n4. Risk allocation:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Risk<\/th><th>Borne by<\/th><\/tr><\/thead><tbody><tr><td>Soil conditions and weather; Commercial and technical risks relating to design and construction<\/td><td>the contractor<\/td><\/tr><tr><td>delays in handing over the land \u00b7 approvals from local authorities \u00b7 environment clearances \u00b7 shifting of utilities \u00b7 approvals in respect of engineering plans<\/td><td>the Procuring Entity<\/td><\/tr><\/tbody><\/table><\/div>\n5. Selection, price and the 10% variation ceiling: Selection of the contractor is based on open competitive bidding. All project parameters \u2014 contract period, price adjustments and technical parameters \u2014 are to be clearly stated upfront, and short-listed bidders are required to specify only the lump sum price for the project. The bidder who seeks the lowest payment is awarded the contract.<\/p>\nThe contract price is subject to adjustment on account of price variation during the contract period as per a specified formula.<\/p>\nIt also lays down a ceiling of 10 (ten) per cent of contract price to cater for any changes in the scope of project, the cost of which the Procuring Entity will bear.<\/p>\n<ul class=\"lst\"><li>Once this ceiling is reached, no further variations shall be issued under the existing contract.<\/li><li>Any additional requirement beyond this limit must be procured separately through a competitive bidding process, so as to preserve transparency, fairness, and Value for Money.<\/li><li>In exceptional cases where continuity of work demands that the existing contractor execute such additional scope, this shall be permitted only through a formally approved supplemental agreement, with revised price and timelines duly concurred by the Competent Authority and finance.<\/li><li>The original contractor shall, however, be required to extend reasonable cooperation to ensure coordination with any other agency engaged for excess works.<\/li><\/ul>\nSuggested eligibility criteria for EPC tenders:<\/p>\nA) technical capacity: The bidder has received payments for construction of eligible projects over the past five financial years preceding the bid due date. The payment amounts should be at least:<\/p>\n<ul class=\"lst\"><li>i) 60% of the estimated project cost from one eligible project; or<\/li><li>ii) 40% of the estimated project cost from each of two eligible projects; or<\/li><li>iii) 30% of the estimated project cost from each of three eligible projects.<\/li><\/ul>\nb) financial capacity: The bidder should possess a minimum net worth of at least 15% of the estimated project cost at the close of the preceding financial year. If the bid due date falls within three months of the closing of the latest financial year, that year can be ignored for calculation purposes.<\/p>\nC) eligible works for EPC tenders specifically refer to construction projects directly awarded by either a Government Ministry or Department, or by a public listed company. The latter should be listed on major Indian stock exchanges, such as the nse or the bse.<\/p>\nIn the case of awards from public listed companies, the tender documents need to clearly outline specific financial requirements. This includes detailing the average annual turnover of the company over a defined period \u2014 typically the past three or five years. Additionally, the tender should specify a minimum duration for which the company must have been registered \u2014 for example, a period of five years. This stipulation is aimed at ensuring that the awards considered for eligibility come from established and financially sound entities.<\/p>\n6. Design review process: The selected Contractor carries out survey and investigations and also develops designs and drawings in conformity with the specifications and standards laid down in the Agreement.<\/p>\nThe Procuring Entity's engineer (also called owner's engineer) reviews the design and drawings to ensure that these conform to the scope of the project, design standards and specifications.<\/p>\nAny comments by the Procuring Entity on the design proposals submitted by the contractor are to be communicated in totality once, in a time-bound manner as indicated in the Schedule. The contractor is free to proceed with construction after the expiry of the specified period, in case no remarks\/ clearances are given by the Procuring Entity.<\/p>\n7. Shifting of utilities: The contractor is also responsible for shifting of any utility (electric lines, water pipes, telephone cables etc.) to an appropriate location or alignment \u2014 if the utilities are under the purview of the Procuring Entity and adversely affect or infringe the execution of works.<\/p>\nThis requirement should be part of the tender document, so as to avoid such a requirement at a later stage that May lead to amending the scope of work.<\/p>\nFor utilities not owned by the Procuring Entity, the concerned organisation under whose ambit such utilities fall shall be intimated by the Procuring Entity for shifting, and the price of shifting shall be paid to the organisation by the Procuring Entity. If there is delay in shifting of the utilities for which the contractor is not accountable, reasonable time extension May be given to the contractor.<\/p>\n8. Liquidated Damages and bonus: The contractor is liable to pay Liquidated Damages (LD) for each day of delay beyond the specified date of completion \u2014 subject to the total amount of damages not exceeding 10 (ten) per cent of the contract price.<\/p>\nHowever, the contractor is entitled to time extension arising out of delays on account of change of scope and Force Majeure, or delays caused by or attributable to the Procuring Entity.<\/p>\nIf so provided in the Bid Document, the Procuring Entity is also liable to pay a bonus (normally should not exceed ten per cent) to the Contractor for completion of the project before the scheduled completion date.<\/p>\nIf delays have happened in achieving the individual milestones but the overall project completion is within time, then LD deducted should be refunded (without any interest).<\/p>\n9. Supervision: Monitoring and supervision of construction are undertaken through the Procuring Entity's engineer \u2014 a qualified firm selected through a transparent process \u2014 acting as a single window for coordination with the contractor.<\/p>\n10. Staged payment, defects liability and grace period: Each item of work is further sub-divided into stages, and payment based on output specifications and performance standard is to be made for each completed stage of work.<\/p>\n<ul class=\"lst\"><li>A defects liability period of two years May be specified in the agreement<\/strong> in order to provide additional comfort to the Procuring Entity.<\/li><li>A grace period of say 30 days for achieving the individual project milestones as per payment schedule May be provided in the tender document, so that any unavoidable delay may be covered during the grace period. The applicability of Liquidated Damages would be beyond the grace period.<\/li><\/ul>\n11. Model documents: FIDIC (F\u00e9d\u00e9ration Internationale Des Ing\u00e9nieurs-Conseils \u2014 an International Federation of Consulting Engineers, known by its French acronym) has also published such contractual frameworks.<\/p>\nModel EPC contract documents have been developed for highways and railways and published by the erstwhile planning commission. NHAI has already adopted these documents, and all construction contracts are currently being structured on this model. The Ministry of railways has also started using such documents. Model bidding documents and Model EPC contracts, suitably revisited or modified wherever required to suit the requirements of particular sectors, may be adopted.<\/p>\n12. Capability of the Owner's Engineer: The selected Procuring Entity's Engineer (Consultant) has to have good experience in design, project supervision and works management.<\/p>\nThe Procuring Entity organisation must have an experienced team (Works Committee) to super-check the quality of supervision exercised by the owner's engineer \u2014 including quality of design review, site supervision, quality audits, etc. Periodic audits of the Procuring Entity's engineer's functioning are desirable.<\/p>\n13. Third-party consultant: In complex projects, a third-party consultant be deployed for specific tasks like design audit, quality audits, safety audits, etc., to cross-check the Procuring Entity's engineer's diligence in the process.<\/p>\n14. Change of Scope and the right to match: The tender document should consist of provisions of change of scope in terms of specifications, omission of any work from the Scope of the Project, or any additional work. However, the total value of all change of scope orders should be limited (SAY 10%) of the contract price.<\/p>\nIn the event the parties are unable to agree to the proposed change of scope, the Procuring Entity May award such works or services to any other party \u2014 preferably on the basis of open competitive bidding.<\/p>\nThe contractor should have the option of matching the first-ranked bid in terms of the selection criteria, subject to payment of a certain percentage (say 2%) of the bid amount to the Procuring Entity. Such an option is possible when the contractor also participated in the bidding process and its bid did not exceed the first-ranked bid by more than 10%.<\/p>\n15. Sub-contracting: Sub-contracting by the EPC contractor must be limited and should not exceed 50% of the contract price. Any work to be sub-contracted by the main contractor must be brought to the notice of the Procuring Entity.<\/p>\n16. Qualification of sub-contractor: Preceding 3 years, at least one work of a similar nature with a contract value exceeding 40% of the value of the sub-contract to be awarded, and received payments in respect thereof for an amount equal to at least 80% of such contract.<\/p>\nProvided, however, that in any event the contractor shall communicate the name and particulars to the Procuring Entity for any sub-contract, including the relevant experience, prior to entering into any such sub-contract. Overall responsibility of all works lies on the contractor.<\/p>\n17. General Instructions on Procurement and Project Management on EPC (OM No. F.1\/1\/2021-PPD dated 29.10.2021)<\/em>:<\/p>\n<ol class=\"lst\"><li>In EPC contracts, since primary responsibility to execute the work lies with the EPC contractor, success of the project also depends upon the quality of the tender document \u2014 wherein enough clarity on the broad framework for execution of the work and the obligations of the contractor needs to be built in.<\/li><li>Milestones for payment to the contractor should be fixed in a manner that facilitates smooth cash flow for the contractor as well as for progress of the work. Milestones fixed should avoid excessive front loading or back loading \u2014 i.e., amount of payment should be commensurate with stage-wise quantum of work\/ cost incurred. Milestones for payment should also be linked with the deliverables.<\/li><li>In case of EPC contracts, only general arrangement drawings and architectural control parameters should be part of the EPC tender document. Timelines for submission of drawings by the contractors and approval thereof by the Competent Authority should be clearly prescribed in the tender document, wherein damages for non-adherence of such timelines May also be incorporated.<\/li><li>EPC contracts shall specify broad technical specification and key output parameters. Over-specification of design May lead to increase in cost. Technical specifications shall be framed in such a manner as to allow sufficient freedom to the contractor to optimise design. Provisions on the following should be included in commercial conditions:<\/li><li>i) limitation of liability for procuring entity as well as contractor;<\/li><li>ii) deviation limits and procedure for change of scope;<\/li><li>iii) contract closing timelines and procedure to ensure timely closing of contract;<\/li><li>iv) performance parameters and Liquidated Damages for shortfall in performance;<\/li><li>v) RISK MATRIX and RESPONSIBILITIES of the contractor and the procuring entity.<\/li><li>In addition, a latent defect period beyond the defect liability period May be included to protect the procuring entity and public authority interest in case of any design\/ engineering defect after the defect liability period is over, wherever appropriate.<\/li><li>To mitigate the risk involved in the methodology proposed by the contractor, the project executing authority shall either have an in-house engineering, quality assurance and project management expert, or alternatively hire an experienced engineer to intensively examine the proposal submitted by the contractor. Project executing authorities are to ensure that optimal technological solutions are provided by the contractor.<\/li><li>To ensure quality, regular inspection and quality checks must be carried out. The project executing authority shall carry out stage inspections in manufacturing of critical equipment\/ critical activities of the project.<\/li><\/ol>\n<aside class=\"note\">Note: In this sub-para 17, instructions containing \"shall\" are mandatory; Any deviation from these instructions shall require relaxation from the Ministry of Finance (for ministries\/ departments etc.) or from the board of directors (for CPSEs).<\/p><\/aside>\n<h4>F. Public Private Partnership (PPP)<\/span><\/h4>\nPPP means an arrangement between:<\/p>\n<ul class=\"lst\"><li>A Government\/ statutory entity\/ government-owned entity on one side \u2014 the Sponsoring (PPP) Authority, or simply the Authority<\/em>; and<\/li><li>A private sector entity on the other \u2014 a legal entity in which 51% or more of equity is with the private partner\/s \u2014 the concessionaire<\/em><\/li><\/ul>\n \u2014 for the creation and\/ or management of public assets and\/ or public services, through investments being made and\/ or management being undertaken by the concessionaire, for a specified period of time (concession period) on commercial terms, where:<\/p>\n<ul class=\"lst\"><li>there is a well-defined allocation of risk between the concessionaire and the Authority; and<\/li><li>the concessionaire \u2014 who is chosen on the basis of a transparent and open competitive bidding \u2014 receives performance-linked payments that conform (or are benchmarked) to specified and pre-determined performance standards, measurable by the authority or its representative.<\/li><\/ul>\n<aside class=\"note\">For further information, PPP instructions issued by the Department of economic affairs (DEA), Ministry of Finance, from time to time, may be referred. The provisions contained within this Manual are also applicable to works procurement carried out under PPP mode.<\/p><\/aside>\n<h4 class=\"src-W srchead\" data-src=\" W \">G. Comparison of Types of Contracts<\/span>W<\/span><\/h4><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n<div class=\"tblwrap\"><table><thead><tr><th>Contract Type<\/th><th>Payment Structure<\/th><th>Scope Flexibility<\/th><th>Risk to Contractor<\/th><th>Common Use Cases<\/th><\/tr><\/thead><tbody><tr><td>Lump Sum Contract<\/td><td>Fixed price for the entire project<\/td><td>Low<\/td><td>High<\/strong> (if costs are underestimated)<\/td><td>Simple, well-defined projects<\/td><\/tr><tr><td>Item Rate Contract<\/td><td>Payment based on rates for units of work\/ materials<\/td><td>High<\/td><td>Medium<\/td><td>Projects with variable quantities<\/td><\/tr><tr><td>Percentage Rate Contract<\/td><td>Payment based on a percentage of a standard schedule<\/td><td>Medium<\/td><td>Medium<\/td><td>Projects with standardised rates<\/td><\/tr><tr><td>Piece Work Contract<\/td><td>Fixed rate per unit of work completed<\/td><td>Medium<\/td><td>Depends on productivity<\/td><td>Discrete unit work, as in repair works<\/td><\/tr><tr><td>EPC Contract<\/td><td>Payment for design, procurement, and construction<\/td><td>Low<\/strong> (complete facility delivery)<\/td><td>High<\/strong> (responsible for entire project)<\/td><td>Large, complex projects<\/td><\/tr><tr><td>PPP Contract<\/td><td>Payment based on performance and availability of services<\/td><td>Medium<\/td><td>Shared between public and private entities<\/td><td>Infrastructure projects, public services<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><\/div><h3 class=\"src-multi srchead\" data-src=\" C NC \">4.3.4<\/span>CONSULTANCY and NON-CONSULTANCY \u2014 the Service Contract Types<\/span>C<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\"><h4>A. Lump Sum (Firm Fixed Price) Contract<\/span><\/h4>\n1. The lump sum (firm fixed price) contract is the simplest\/ simpler form of contract, and wherever feasible the Procuring Entity shall use this form of contract.<\/p>\nConsultants\/ service providers are required to quote a lump sum fixed price figure for completing the services in accordance with:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-C\" data-src=\" C \">C<\/span> the given Terms of Reference<\/strong>;<\/li><li class=\"srcmark src-NC\" data-src=\" NC \">NC<\/span> the given activity and services Schedule<\/strong>.<\/li><\/ul>\nThe proposal is deemed to include all prices \u2014 no arithmetical correction or price adjustments are allowed during evaluation.<\/p>\n<aside class=\"note\">NC<\/span> adds:<\/strong>This type of contract is based on output admeasurement.<\/p><\/aside>\nThe Terms of Reference\/ Schedule of Requirement shall indicate the scope and quantum of services required.<\/p>\n2. Why easy to administer: Lump sum contracts are easy to administer because there is a fixed price for a fixed scope, and payments are linked to clearly specified outputs\/ milestones\/ deliverables \u2014 C<\/span>such as reports, documents, drawings, bills of quantities, software programs and so on.<\/em><\/p>\nBidders quote a lump sum price for the required quantum of services. They May also be asked to quote a unit rate for the consultancy output\/ service, to be used in case of variation, etc.<\/p>\n3. The Schedule of requirement shall indicate the quantum of the outputs\/ services, its performance standards, and the timeline\/ milestones of its delivery. Contract May specify parts of payments to be released at specified timelines\/ milestones.<\/p>\n4. Where used:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-C\" data-src=\" C \">C<\/span> Widely used for simple planning and feasibility studies, environmental studies, detailed design of standard or common structures, preparation of data processing systems, and so forth.<\/li><li class=\"srcmark src-NC\" data-src=\" NC \">NC<\/span> Not many services are amenable to lump-sum type of contracts. Depending on the situation, such contracts may be used for transport services, logistics, clearing and forwarding, courier services, drilling, aerial photography, satellite imagery, mapping, and similar operations.<\/li><\/ul>\n5. Lump Sum Contracts \u2014 Risks and Mitigations C<\/span>(NC<\/span> cross-refers to its Output Admeasurement risk table):<\/em><\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. The quality and scope of the Output\/ deliverables is not linked to the payment.<\/strong> There may be a tendency for the consultant to Cut corners on quality and scope of the output\/ deliverables by saving on resources employed.<\/strong> Disputes may arise due to different possible interpretations of quality and scope of assignment.<\/td><td>Lump sum service contracts should be used mainly for assignments in which the quality, scope, and timing of the required output are clearly defined. The contract should include provision for evaluation of quality and scope of deliverables, and a certificate for its acceptability may be recorded. Payment should be made only against certificate of acceptance of deliverables.<\/td><\/tr><tr><td>2. Time over-run:<\/strong> As time is not linked to the payment, there may be a tendency for the consultant to save on deployment of resources, which may result in time-over-run.<\/strong><\/td><td>While the payments are not linked to time, the assignment should be monitored per month to ensure that the output per month is in line with the planned and estimated timeline.<\/td><\/tr><\/tbody><\/table><\/div>\n<h4 class=\"src-multi srchead\" data-src=\" C NC \">B. Time-Based Contract \u2014 \"Retainer-ship\" C<\/span> \/ \"Unit-rate\"<\/span>NC<\/span><\/h4><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\">\n1. C<\/span> In <\/strong>Time-based (Retainer-ship) contracts, payments are based on agreed hourly, daily, weekly, or monthly rates for staff (who in consultancy contracts are <\/strong>normally named) <\/strong>and on reimbursable items using actual expenses and\/ or agreed unit prices.<\/p>\n<aside class=\"note\">These are also called RETAINER-SHIP CONTRACTS, since the consultants are retained for a pre-decided contract period.<\/p><\/aside>\nThe rates for staff include: Salary, social costs, overhead, fee (or profit), and \u2014 where appropriate \u2014 special allowances.<\/p>\n1. NC<\/span> In <\/strong>Time-based (unit-rate) contracts, payments are based on agreed unit prices.<\/strong>This type of contract can be based either on input (more often) or output admeasurement.<\/strong>Payments are usually released every month for the quantum of inputs\/ output actually performed.<\/p>\n2. C<\/span> The <\/strong>Schedule of requirement shall indicate the quantum of inputs required \u2014 man-hours of different key and non-key personnel \u2014 qualifications of key personnel, reimbursable items, and the timeline\/ milestones of its deliverables.<\/p>\n3. When to use time-based rather than lump sum \u2014 and the key distinction from Indefinite Delivery C<\/span>:<\/p>\nBoth time-based contracts AND indefinite delivery contracts are used when a lump sum contract is not feasible, due to difficulties in specifying:<\/p>\n<ul class=\"lst\"><li>the SCOPE\/ LENGTH of consultancy services, or<\/li><li>the quantum of individual activities<\/li><\/ul>\n \u2014 either because the inputs required for attaining the objectives of the requirement is difficult to assess, or because the services are tied up to contracts\/ activities by others for which the completion period May vary.<\/p>\n<aside class=\"note\">The distinction:<\/p>\n<ul class=\"lst\"><li>TIME-BASED contracts are suitable for consultancy services that are CONTINUOUSLY NEEDED.<\/li><li>INDEFINITE DELIVERY type of contracts is suitable for services which are infrequently needed, but the consultant needs to be always on beck and call.<\/li><\/ul><\/aside>\n4. Where used C<\/span>: Widely used for complex studies, supervision of construction, advisory services, and most training assignments, etc.<\/p>\n5. Time-Based Contracts \u2014 Risks and Mitigations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. The quality and scope of the Output\/ deliverables \u2014 as in Lump-sum Contracts \u2014 is not linked to the payment. There may be a tendency for the consultant to cut corners on quality, scope, and timing of the output\/ deliverables by saving on resources employed.<\/td><td>The contract should include provision for evaluation of quality and scope of deliverables, and a certificate for its acceptability may be recorded. Payments should be released only against such certificates.<\/td><\/tr><tr><td>2. Performance in each time period is not linked to the payment. There May be a tendency for the consultant to use paid staff in a dilatory and un-productive manner.<\/td><td>Contracts need to be closely monitored and administered by the Procuring Entity to ensure that the progress of assignment is commensurate with the time spent, and that the resources for which payment is claimed have actually efficiently and productively been deployed on the assignment during the period. A system of MONTHLY REPORTING of payouts and quantum of work achieved by the consultant to the CA should be instituted to enable supervision.<\/td><\/tr><tr><td>3. Time and cost over-run is a major risk in Time-based contracts, as the payment is based on time, and delay May result in unanticipated benefit to the consultant and the assignment may get delayed.<\/td><td>This type of contract should include an upper limit of total payments to be made to the consultants for the assignment, to safeguard against excessive prolonging of time and payments. After this limit is reached, or the period of completion is exceeded, the ca should review justification for extension of the contract.<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h4>C. Percentage (Success\/ Contingency Fee) Contract<\/span><\/h4>\n1. Percentage (success\/ contingency fee) contracts directly relate the fees paid to the consultant\/ service provider to the estimated or actual project cost, or actual value of assets\/ transactions to be handled \u2014 e.g., project cost, or the cost of the goods procured or inspected.<\/p>\n<aside class=\"note\">Since the payment is made after the successful realisation of objectives, it is also called a success (or contingency) fee contract.<\/p><\/aside>\nThe payment is made based on the value of assets\/ transactions handled during the period.<\/p>\n2. The Schedule of Requirement shall indicate the estimated value of assets\/ transactions to be handled, as well as the contract period (one year, unless otherwise stipulated) over which such volume shall be availed.<\/p>\nHowever, there shall be no firm commitment to avail the entire value of transactions within the contract period.<\/p>\nThe final selection is made among the technically qualified consultants who have quoted the lowest percentage, while the notional value of assets is fixed.<\/p>\n3. Where used C<\/span>: Commonly used for appropriate architectural services; Procurement and inspection agents.<\/p>\n4. Percentage Contracts \u2014 Risks and Mitigations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>Quality and Scope not linked to payment (as in Lump-sum)<\/em><\/td><td>Contract should include provision for evaluation of quality, scope and the timing of deliverables, and certificate for its acceptability may be recorded. Payment should be made only against certificate of acceptance of deliverables.<\/td><\/tr><tr><td>Time over-run<\/strong> \u2014 time not linked to payment<\/td><td>Assignment should be monitored per month to ensure output per month is in line with planned and estimated timeline.<\/td><\/tr><tr><td>Bias against economic solutions: Since the percentage payment is linked to the total cost of the project, in the case of architectural or engineering services, percentage contracts implicitly lack incentive for economic design and are hence discouraged.<\/td><td>Therefore, the use of such a contract for architectural services is recommended only if it is based on a fixed target cost and covers precisely defined services.<\/td><\/tr><\/tbody><\/table><\/div>\n<h4>D. Retainer and Success (Contingency) Fee Contract [C ONLY]<\/span><\/h4>\n1.<\/strong> In Retainer and Success (Contingency) fee contracts, the remuneration of the consultant includes:<\/strong><\/p>\n<ul class=\"lst\"><li>A retainer (time-based, monthly payment), and<\/li><li>a success fee (percentage-based) \u2014 the latter being normally expressed as a percentage of the estimated or actual project cost.<\/li><\/ul>\n<aside class=\"note\">Thus, this type of contract is a combination of time-based and percentage contracts.<\/p><\/aside>\n2. Where used: Widely used when consultants (banks or financial firms) are preparing companies for sales or mergers of firms \u2014 notably in privatisation operations. It can also be used for assignments related to organisational restructuring\/ change.<\/p>\n3. Risks and Mitigations: All RISKS as applicable to both Percentage Contracts AND Time-Based contracts are encountered in this case. The same mitigation strategies as in both Percentage and Time-Based contracts may be adopted.<\/p>\n<h4>E. Indefinite Delivery Contract (Price Agreement)<\/span><\/h4>\n1. These contracts are used when the Procuring Entity needs to have \"on call\" specialised services, the extent and timing of which cannot be defined in advance.<\/p>\n<aside class=\"note\">This is akin to the system of 'rate contracts' or framework contracts in the procurement of goods.<\/p><\/aside>\nC<\/span> adds:<\/strong>There is no commitment from the Procuring Entity for the quantum of work that May be assigned to the consultant.<\/p>\nThe Procuring Entity and the firm agree on the unit rates to be paid, and payments are made periodically on the basis of the time\/ quantum of service actually used during the period.<\/p>\nNC<\/span> adds:<\/strong>This type of contract can be based either on input (more often) or output admeasurement.<\/p>\n2. Schedule of requirement: Shall indicate only a tentative estimate of the volume of required service\/ outputs\/ inputs, as well as the contract period (one year, unless otherwise stipulated) over which such volume is likely to be availed.<\/p>\nThe services shall be availed on-call, as and when needed by the Procuring Entity, without any commitment regarding the volume of services.<\/p>\nThe consultant\/ service provider shall be selected based on the total price (unit rate multiplied by indicative volume) of such services\/ inputs \u2014 including service charges and taxes \u2014 over the period of contract.<\/p>\n3. NC<\/span> \u2014 the cross-monitoring rule: In case of OUTPUT ADMEASUREMENT contracts, if expressly STIPULATED in the Tender Document, the quantum of input deployments (Personnel, equipment etc.) shall also be called for \u2014 but shall be used only to monitor performance standards.<\/p>\nSimilarly, in case of input admeasurement contracts, the quantum of services to be delivered per quantum of inputs deployed per day\/ month May also be called for, to evaluate the quality and productivity of deployed inputs.<\/p>\n4. Where used: Commonly used to RETAIN \"ADVISERS\" or avail services 'ON-CALL' \u2014 for example:<\/p>\n<aside class=\"note\">expert adjudicators for dispute resolution panels \u00b7 institutional reforms C<\/span> \u00b7 procurement advice \u00b7 technical troubleshooting \u00b7 Document Management \u00b7 Taxi Services C<\/span> \u00b7 Temporary Manpower Deployment C<\/span>, and so forth \u2014 normally over a period of a year or more.<\/p><\/aside>\n5. Indefinite Delivery Contracts \u2014 Risks and Mitigations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. Quality and Scope of the Output\/ deliverables not linked to payment<\/td><td>Contract should include provision for evaluation of quality and scope of deliverables, with certificate for acceptability; Payments released only against such certificates.<\/td><\/tr><tr><td>2. Performance in each time period not linked to payment<\/strong> \u2014 tendency to use resources in a dilatory and un-productive manner<\/td><td>Close monitoring and administration; Monthly reporting of payouts and quantum of work achieved to the CA.<\/td><\/tr><tr><td>3. Time and cost over-run is a major risk<\/strong>, as the output may not be achieved in the estimated time<\/td><td>Upper limit of total payments; after the limit is reached or the period exceeded, CA should review justification for extension.<\/td><\/tr><tr class=\"srcmark src-C\" data-src=\" C \"><td>4. Risk of over-utilisation C<\/span>: Indefinite Delivery Contracts are at risk of being over-utilised in excess of actual need, since the scrutiny of service need May not be as intense as in case of other types of contracts.<\/td><td>The need assessment of utilised services should be subject to some scrutiny, to ensure that there is no abnormal unexplainable trend in utilisation. Such contracts need to be closely monitored to ensure that there is no indiscriminate or unwarranted usage, and a maximum contract value May be laid down to keep control over usage, with approval of ca obtained to extend beyond such limit. A system of MONTHLY REPORTING to CA should be instituted. In the report, a monthly payout benchmark May be kept, above which the report May be required to be sent to a level above ca.<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h2>4.4<\/span>Systems of Selection<\/span><\/h2>\n<aside class=\"note\">The goods Manual has no \"systems of selection\" SECTION. Goods procurement is price-based by default (L1 among technically responsive offers), so no lCS\/ QCBS\/ FBS\/ SSS taxonomy is required. The taxonomy exists in Works, Consultancy and Non-Consultancy only.<\/p><\/aside>\n<h3 class=\"src-multi srchead\" data-src=\" W C NC \">4.4.1<\/span>The Common Rationale<\/span>W<\/span>C<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\" data-src=\" W C NC \" data-label=\"Works + Consultancy + Non-Consultancy only\">\n1. Why different systems exist: The relative importance of quality and price aspects May vary from contractor to contractor\/ assignment to assignment, depending on:<\/p>\n<ul class=\"lst\"><li>The complexities\/ criticality of quality requirements;<\/li><li>The internal capability of the Procuring Entity to engage and supervise the contract; As well as<\/li><li>the value of procurements.<\/li><\/ul>\nHence different systems of selection are designed to achieve appropriate relative importance (weightage) of quality and price aspects.<\/p>\nThe decision on the system of selection is normally preceded by an assessment of the capacity of the user to engage and supervise the implementation of the proposed contract. The selection method chosen depends to some extent on this assessment. Selection of the system of selection should also consider the likely field of bidders.<\/p>\n2. The four systems:<\/p>\n<div class=\"tblwrap\"><table><thead><tr class=\"\" ><th><\/th><th>W<\/span> \u2014 Works<\/th><th>C<\/span> \u2014 Consultancy<\/th><th>NC<\/span> \u2014 Non-Consultancy<\/th><\/tr><\/thead><tbody><tr><td>a)<\/td><td>Price based System \u2014 Least Cost Selection (LCS)<\/td><td>Price based System \u2014 LCS<\/td><td>Price based System \u2014 LCS<\/td><\/tr><tr><td>b)<\/td><td>Quality and Cost Based Selection (QCBS)<\/td><td>QCBS<\/td><td>QCBS<\/td><\/tr><tr><td>c)<\/td><td> \u2014 <\/td><td>Fixed Budget based Selection (FBS) (C only)<\/em><\/td><td> \u2014 <\/td><\/tr><tr><td>d)<\/td><td>Direct Selection: Single Source Selection (SSS)<\/td><td>Direct Selection: SSS<\/td><td>Direct Selection: SSS<\/td><\/tr><\/tbody><\/table><\/div>\n3. The default rule \u2014 and it differs by category:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-W\" data-src=\" W \">W<\/span> In the procurement of WORKS, the NORMAL system of selection used is PRICE-BASED \u2014 least Cost Selection (L1) \u2014 as in the procurement of Goods, for technically responsive offers. Under VERY SPECIAL circumstances, Single Source Selection may also be used. HOWEVER, the QCBS method has been ALLOWED to be used for procurement of Works for highly technically complex and critical assignments where it is justifiable to pay appropriately higher prices for a higher quality proposal.<\/li><li class=\"srcmark src-C\" data-src=\" C \">C<\/span> \u2014 the two-stage rule:<\/strong>Since the quality and scope of a consultancy assignment are not tangibly identifiable and consistently measurable, the technical and financial capability of consultants becomes an important \u2014 though indirect \u2014 determinant for quality and scope of performance. In such a situation, <\/strong>value for Money is achieved by encouraging wide and open competition among equally competent consultants.<\/li><\/ul>\nThus, selection of consultants is normally done in a two-stage process:<\/p>\n<ul class=\"lst\"><li>First stage: Likely capable sources are shortlisted, on the basis of qualification and experience requirements for the given assignment \u2014 if need be, through an 'Expression of Interest' (EoI) through advertisement.<\/li><\/ul>\n<aside class=\"note\">The shortlist should include a sufficient number \u2014 not fewer than three (3) and not more than eight (8) eligible firms. In rare cases where fewer than three consultants become eligible as per short-listing criteria, and the criteria cannot be relaxed, procurement May be continued with the approval of the Competent Authority.<\/p><\/aside>\n<ul class=\"lst\"><li>Second stage: The shortlisted consultants are invited to submit their technical and financial (RfP) proposals, generally in separate sealed envelopes. Evaluation of the technical proposal is carried out by evaluators without access to the financial part of the proposal. Financial proposals are opened after evaluation of quality.<\/li><\/ul>\n<\/div><h3>4.4.2<\/span>Price Based System \u2014 Least Cost Selection (LCS)<\/span><\/h3>\n(Rule 193 of GFR 2017)<\/em><\/p>\n1. How it works: In this method of selection, bidders submit both a technical proposal and a financial proposal at the same time.<\/p>\n<ul class=\"lst\"><li>Minimum qualifying marks for the quality of the technical proposal are prescribed as a benchmark \u2014 normally 75 (seventy-five) out of a maximum of 100 (hundred) \u2014 and indicated in the tender document\/ RfP, along with a scheme for allotting marks for various technical criteria\/ attributes.<\/li><li>Alternatively \u2014 since in LCS selection, technical offers do not require to be ranked (or to have weighted technical score added to financial score, as in QCBS) \u2014 it would suffice in appropriately simple cases if the evaluation criteria is only a fail\/ pass criteria prescribing only the minimum qualifying benchmark.<\/li><\/ul>\n<aside class=\"note\">Thus, in LCS, simplified evaluation criteria May also be used, where instead of a marking scheme, a minimum fail\/ pass benchmark of technical evaluation may be prescribed \u2014 e.g., must have completed at least two similar assignments; must have a turnover of at least rs 10 (Rupees Ten) CRORE<\/strong>, etc. Any bidder that passes these benchmarks is declared as technically qualified for the opening of their financial bids.<\/p><\/aside>\n<ul class=\"lst\"><li>The technical proposals are opened first and evaluated, and the offers that qualify as per these technical evaluation criteria will only be considered as technically responsive; the rest will be considered technically non-responsive and will be dropped from the list.<\/li><li>Financial proposals are then opened for only eligible and responsive offers (financial bids of other unresponsive bidders remain unopened) and ranked.<\/li><li>The L-1 offer out of the responsive offers is selected on price criteria alone, without giving any additional weightage to marks\/ ranking of the technical proposal.<\/li><\/ul>\nThis system of selection is roughly the same as the price-based selection of an l-1 OFFER (among the technically responsive offers) in the procurement of goods\/ works.<\/p>\n2. Where suitable W<\/span>: LCS is considered suitable for engaging contractors in most works procurement assignments that are of a standard or routine nature \u2014 such as construction works or non-complex engineering projects \u2014 where well-established practices and standards exist.<\/p>\n3. The default Rule: It is the simplest and the quickest system of selection, and under normal circumstances this method of evaluation shall be used as default, since it allows for minimum satisfactory technical efficiency with economy. Justification must be provided if a selection method other than LCS is to be used.<\/p>\n4. LCS \u2014 Risks and Mitigations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>a) technical criteria May not be relevant to the realisation of the quality of the assignment.<\/td><td>Technical criteria selected should be relevant and proportional to the requirement of quality of the assignment, and the selection process should be rigorous enough to ensure that \u2014 on the one hand \u2014 no technically unsatisfactory bids should be able to get past a loose criterion, and \u2014 on the other hand \u2014 no technically satisfactory offer should get ruled out by tight criteria.<\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>b) marking subjectivity: The scheme of marking or its application may be subjective.<\/td><td>It is important to lay down as objective a scheme of marking as possible. Cases where subjectivity is unavoidable (as in evaluation of methodology etc.) \u2014 a system of grading responses and their marking May be laid down in the bidding documents. The Procuring Entity should also have a system of conciliation and moderation of widely disparate markings by different members of the evaluation committee. W<\/span> adds: *As mentioned above, in most works procurement a fail\/ pass criteria is sufficient, and it avoids subjectivity.*<\/td><\/tr><\/tbody><\/table><\/div>\n<h3>4.4.3<\/span>Quality and Cost Based Selection (QCBS)<\/span><\/h3>\n(Rule 192 of GFR 2017)<\/em><\/p>\n1. What it is: In the QCBS system of selection, both the quality of the proposal and the cost are considered as deciding factors. This approach is employed when the quality of deliverables is crucial, but the cost of service or work cannot be ignored.<\/p>\n2. The mechanics:<\/p>\n<ul class=\"lst\"><li>Quality\/ technical scores are assigned to proposals based on specified quality criteria.<\/li><li>Minimum qualifying marks \u2014 normally 70\u201380 (seventy to eighty) out of a maximum of 100 (hundred) marks \u2014 as a benchmark for the quality of the technical proposal is prescribed, and proposals below this benchmark are not considered for financial evaluation.<\/li><li>The financial proposals are also given a cost-score based on the relative ranking of prices \u2014 with 100 (hundred) marks for the lowest and pro-rated lower marks for higher-priced offers.<\/li><li>The total score shall be obtained by weighting the quality and cost scores and adding them.<\/li><li>The proposed weightings for quality and cost shall be specified in the RfP\/ tender document.<\/li><li>The firm obtaining the highest total score shall be selected.<\/li><li>It May be noted that, theoretically, a QCBS system with a weight of 100% (hundred percent) for the 'cost' approximates the price-based LCS system.<\/li><li>This method of selection shall be used for highly technically complex and critical assignments where it is justifiable to pay an appropriately higher price for a higher quality of proposal.<\/li><\/ul>\n<aside class=\"note\">The Single Most Important Numerical Divergence in this Chapter<\/p>\nthe weightage ratio is inverted between consultancy on the one hand and works\/ non-consultancy on the other:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>Cost weightage<\/th><th>Technical\/ Quality weightage<\/th><th>Ceiling on non-financial parameters<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-C\" data-src=\" C \"><td>C<\/span> Consultancy<\/td><td>30%<\/strong> (example)<\/td><td>70% \u2014 but should never be more than 80%<\/td><td>(quality-dominant)<\/em><\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> WORKS<\/td><td>80%<\/strong> (example)<\/td><td>20% \u2014 but should never be more than 30%<\/td><td>the maximum weight of the non-financial parameters shall in no case exceed 30%<\/td><\/tr><tr class=\"srcmark src-NC\" data-src=\" NC \"><td>NC<\/span> Non-consultancy<\/td><td>80%<\/strong> (example)<\/td><td>20% \u2014 but should never be more than 30%<\/td><td>shall in no case exceed 30%<\/td><\/tr><\/tbody><\/table><\/div>\nC<\/span> further permits: *The ratio of weightages for cost and Technical score <\/strong>Could also be 40:60 (forty: sixty) OR 50:50 (fifty: fifty), etc. <\/strong>However, the weight for the \"COST\" shall be chosen, considering the complexity of the assignment and the relative importance of quality.*<\/p>\nW<\/span> and NC<\/span> state the converse: However, the weight for the \"QUALITY\" shall be chosen, considering the complexity of the assignment and the relative importance of quality.<\/strong><\/p><\/aside>\n3. The suggestive weighting table [C only]:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Description<\/th><th>Remarks<\/th><th>Quality\/ Cost Score Weighting (%)<\/th><\/tr><\/thead><tbody><tr><td>Highly complex\/ downstream consequences\/ specialised assignments<\/td><td>Use QCBS with higher technical weightage<\/td><td>80\/20<\/td><\/tr><tr><td>Moderate complexity<\/td><td>Majority of cases will follow this range<\/td><td>75\u201365 \/ 25\u201335<\/td><\/tr><tr><td>Assignments of a standard or routine nature, such as auditors\/ procurement agents handling the procurement<\/td><td>Use of LCS is appropriate<\/td><td>60\u201350 \/ 40\u201350<\/td><\/tr><\/tbody><\/table><\/div>\n<h3 class=\"src-multi srchead\" data-src=\" W NC \">4.4.4<\/span>The Quality Oriented Procurement (QOP) Framework<\/span>W<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\" data-src=\" W NC \" data-label=\"Works + Non-Consultancy only\">\n<aside class=\"note\">This apparatus \u2014 QOP declaration, Competent Authority, and the Special Technical Committee \u2014 exists in the WORKS and NON-CONSULTANCY Manuals only. It does not exist in the Consultancy Manual (where QCBS is the norm, not the exception) nor in the Goods Manual.<\/p>\nIn this section, instructions containing \"shall\" are mandatory; Any deviation shall require relaxation from the Ministry of Finance (for ministries\/ departments etc.) or from the board of directors (for CPSEs).<\/p>\n(Source: General Instructions on Procurement and Project Management \u2014 DoE's OM No. F.1\/1\/2021-PPD dated 29.10.2021.)<\/em><\/p><\/aside>\n<h4>A. When QCBS may be used<\/span><\/h4>\nProcuring entities are ALLOWED to use QCBS for procurement of works and non-consultancy services in the following cases:<\/p>\nA) where the procurement has been declared to be a Quality Oriented Procurement (QOP) by the Competent Authority; Or<\/p>\nb) [NC only \u2014 the value route]: For procurement of non-consulting services, where the estimated value of procurement (including all taxes and option clause) does not exceed rs 10 CRORE \u2014 this method of selection shall be used for highly technically complex and critical assignments where it is justifiable to pay an appropriately higher price for higher quality of proposal.<\/p>\nC) the prohibitions: QCBS shall not be used in procurements planned to be done:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-W\" data-src=\" W \">W<\/span>through two-STAGE BIDDING<\/strong>(where the Procuring Entity is unable to define the technical specifications or performance parameters with adequate clarity)<\/em>, or through REVERSE AUCTION, or through LIMITED TENDERS<\/strong>;<\/li><li class=\"srcmark src-NC\" data-src=\" NC \">NC<\/span> through REVERSE AUCTION or through LIMITED TENDERS.<\/li><\/ul>\n<aside class=\"note\">NC<\/span> \u2014 the CROSSING-Rs-10-CRORE Rule: In cases where the <\/strong>estimated value was less than rs 10 crore, but on tendering \u2014 following the QCBS process \u2014 it is proposed to place a contract for more than rs 10 crore, the following procedure shall be adopted:<\/p>\n<ul class=\"lst\"><li>i) In case the DIFFERENCE between estimated value (including taxes etc.) and value of the proposed contract (including taxes etc.) is less THAN 10% of the estimated value \u2014 there will be no bar on placement of contract.<\/li><li>ii) in all other cases, the procurement process is to be scrapped and restarted \u2014 either as QOP or on a non-qcbs basis.<\/li><\/ul><\/aside>\nThe PRINCIPLES of QCBS shall be as provided in RULE 192(i), (ii), and (iii) of the GFR. (Refer to the Manual for Procurement of Consultancy Services for such principles.)<\/em> However, the maximum weight of the non-financial parameters shall in no case exceed 30%.<\/p>\n<h4>B. The Competent Authority for allowing QCBS<\/span><\/h4>\nA) for declaring a procurement as QOP:<\/p>\ni) Where the procuring entity\/ project executing authority is covered by RULE 1 OF GFR (as amended by OM No. F.1\/1\/2021-PPD dated 08.03.2024)<\/em>:<\/p>\n<ol class=\"lst\"><li>Secretary of the Ministry\/ Department to which the procuring entity belongs; or<\/li><li>Secretary of the public authority, with the concurrence of the Procuring Entity\/ project executing authority;<\/li><\/ol>\n<aside class=\"note\">Note: The Procuring entity\/ project executing authority will themselves decide the level at which such concurrence is to be given. Such concurrence need not be obtained at the level of Secretary in charge of the Procuring entity\/ project executing authority.<\/p><\/aside>\n<ol class=\"lst\"><li>Where the public authority is any Indian Institute of Technology (IIT) or Indian Institute of Science (IISc) \u2014 the director of such IIT\/ IISc. (This provision is applicable for procurement declared as QOP on or before 31.03.2027 and will be reviewed thereafter.)<\/em><\/li><\/ol>\nii) where the Procuring Entity is a CPSE \u2014 the board of directors of the CPSE.<\/p>\niii) in case the authority to approve procurement on a nomination basis is lower than the Secretary of the Ministry\/ Department (or board of directors in case of CPSEs), such authority will also be competent to approve the procurement as QOP.<\/p>\nB) [nc only] for non-consulting services not exceeding Rs. 10 crore in value:<\/strong> where the procuring entity\/ project executing authority is covered by Rule 1 of GFR<\/strong>(i.e., Central Government Ministries\/ Departments, attached\/ subordinate bodies, and Autonomous Bodies \u2014 except those Autonomous Bodies with separate Financial Rules approved by the Government)<\/em> \u2014 by the officer or authority so designated.<\/strong><\/p>\n<aside class=\"note\">DEFINITIONS used in this framework W<\/span>NC<\/span>:<\/p>\n<ul class=\"lst\"><li>\"Public authority\"<\/strong> means the client organisation<\/strong>, which may be asking a \"Procuring Entity\"\/ \"Project Executing Authority\"\/ \"Project Executing Agency\" to execute a project or work on their behalf. For example, if a university executes works through CPWD, then the university is the public authority, and CPWD is the Procuring Entity<\/strong>. (The public authority and the project executing authority may also be the same.)<\/em><\/li><li>\"PROCURING ENTITY\"\/ \"project executing authority\"\/ \"project executing agency\" means Central Government Ministries\/ Departments, Attached\/ Subordinate bodies including Autonomous Bodies, or CPSEs (etc.) executing projects\/ works.<\/li><\/ul><\/aside>\n<h4>C. The Special Technical Committee (STC)<\/span><\/h4>\na) Composition \u2014 in all cases of QOP, an STC shall be constituted with the following composition:<\/p>\n<ul class=\"lst\"><li>I) two or more persons who have expert knowledge and\/ or long experience relevant to the procurement in question;<\/li><li>ii) one or more persons with extensive experience in handling public projects and\/ or public finance in the Government or State\/ Central public sector;<\/li><li>iii) one or more persons with experience in financial management\/ financial administration\/ audit\/ accountancy;<\/li><li>iv) not more than one member representing the Procuring Entity, who May inter alia provide administrative support to the committee;<\/li><li>V) any person who is a member of the STC shall not associate himself in any manner with any bidder for the procurement concerned.<\/li><\/ul>\nB) appointment: The names of members of the STC shall be decided either by the Competent Authority specified above, or by any other authority to whom such power is delegated by the Competent Authority. However, powers shall not be delegated to the officer or authority competent to finalise the particular procurement.<\/p>\nSitting fee May be paid to the members of the STC. Incidental costs, including travel, shall be paid by the Procuring Entity.<\/p>\nC) mandate \u2014 the STC shall make specific recommendations on the following matters:<\/p>\n<ul class=\"lst\"><li>I) the weight to be given to non-financial parameters (not exceeding 30%).<\/strong> However, the weight for the \"technical\" shall be chosen considering the complexity of the assignment and the relative importance of quality. The proposed weightings for quality and cost shall be specified in the Tender Document.<\/strong><\/li><li>ii) the specific quality\/ technical parameters, their weights, their scoring methodology, the minimum qualification score, etc., and other relevant criteria necessary for ensuring fair and transparent quality\/ technical evaluation of the bids.<\/li><\/ul>\nD) binding force: The recommendations of the STC shall be followed, except where there are special grounds in public interest for deviating from them. However, every case of deviation from the recommendations of the STC shall require approval of the Competent Authority who approved the declaration of the procurement as QOP.<\/p>\n<h4>D. Grounds for Declaring a Procurement to be QOP<\/span><\/h4>\nA procurement should be declared as a QOP only if there is enough justification in terms of:<\/p>\n<ul class=\"lst\"><li>Value addition, or<\/li><li>enhancement of delivery, or<\/li><li>paramount importance of quality.<\/li><\/ul>\nReasons for not adopting two-cover\/ pre-qualification-based\/ least-cost system shall be documented.<\/p>\n<h4>E. Tender Documents \u2014 Fixing\/ Selection of the Evaluation\/ Qualification Criteria<\/span><\/h4>\nTo ensure quality, some of the criteria used in marking May be made mandatory \u2014 and if a bidder does not meet those, then bids shall not be evaluated further.<\/p>\nWeightage May also be given for the timely completion of past projects of a similar nature by the bidder.<\/p>\n<h4>F. Pre-bid Meeting<\/span><\/h4>\nIn all cases of QOP, a pre-bid meeting shall be held, in which the technical criteria \u2014 including the marking scheme \u2014 shall be discussed with the potential bidders.<\/p>\nIf any changes in the criteria are necessitated by such consultation, such changes shall require the recommendation of the STC.<\/p>\n<h4>G. Fixing of Scoring\/ Marking Criteria<\/span><\/h4>\nA) objectivity: The scoring should not be a variable that relies on the subjective opinion of the evaluating panel. The marking scheme should enable the achievement of almost similar scores irrespective of the persons\/ experts involved in the evaluation process. When the outcomes are consistent with the available information, the QCBS parameters are more reliable. Unambiguous descriptions and criteria help to avoid grey areas, so as to ensure that there is only one possible score for the item. As far as possible, the criteria should be so specific and clear that bidders can self-mark their own bids.<\/p>\nB) the minimum threshold and why it must be set high: It is better to specify minimum marks for meeting the qualifying criteria specified. In QCBS selection, minimum qualifying marks (normally 70\u201380 out of a maximum of 100 marks) as a qualifying benchmark shall be prescribed and indicated in the tender document, along with a scheme for allotting marks for various technical criteria\/ attributes. Bids scoring less than the minimum threshold shall not be considered for further evaluation.<\/p>\n<aside class=\"note\">Since the weightage of the cost element adopted is as high as 70 (seventy) per cent, financial considerations would dominate the selection \u2014 though to a lower extent as compared to LCS. In such cases, it is essential to ensure that the minimum qualifying benchmark in the technical evaluation is set sufficiently high to weed out low-quality bids with low prices.<\/p><\/aside>\nC) fixed vs relative parameters: Examples of fixed quality parameters that ought not to be considered for relative scoring include organisations' ISO\/ standards' accreditation, etc. These are required to establish the credentials of the contractor but cannot be used for relative comparison between various bidders.<\/p>\nD) past performance: Bidders should be asked to produce certificates for past performance. A format May be given in the tender itself outlining the contract details, completion, sustainability etc., and bidders May be asked to fill it and give evidence to that effect.<\/p>\nE) presentations: Bidders May be asked to submit a detailed presentation on their proposals in the form of a soft copy along with the bid, so as to facilitate better understanding of their proposal and to ensure commitment.<\/p>\nF) KPIs: Besides the BOQ output criteria for payment, key performance indicators (KPIs) May be specified with minimum achievement levels for payment, so as to ensure quality compliance.<\/p>\n<h4 class=\"src-multi srchead\" data-src=\" W C NC \">H. Caution against Joint Ventures\/ Consortium in QCBS Procurements<\/span>W<\/span>C<\/span>NC<\/span><\/h4><div class=\"srcblock src-multi\" data-src=\" W C NC \" data-label=\"Works + Consultancy + Non-Consultancy only\">\nA) since quality is given weightage in the evaluation itself, in QCBS procurement, therefore, JVs May be avoided as far as possible. JVs could, however, become necessary in high technology or innovative projects where a single entity May not be able to execute the work alone.<\/p>\nB) if JVs are allowed, measures should be taken to ensure that all the JV partners are present and execute work all through the contract period. An implementation board with the participation of all JV partners May be provided for, wherein the Project Manager from the Procuring Entity shall also be allowed an audience when required. Meeting of JV partners with the project executing authority for quarterly progress review May be made a criterion linked to the achievement of key dates or even payment.<\/p>\n<\/div><h4>I. QCBS \u2014 Risks and Mitigations<\/span><\/h4>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>A) inappropriate selection of QCBS:<\/strong> There is a possibility that the QCBS system is selected where LCS or other systems would have been more appropriate<\/strong>, considering the quality requirements or the capability of the Procuring Entity to monitor the assignment.<\/td><td>The selection of QCBS should be justified and applied only under the circumstances mentioned above.<\/td><\/tr><tr><td>b) weightage of technical: Cost may not be proportional to quality requirements.<\/td><td>Weightage different from 70:30 (seventy: Thirty) should be adequately examined and justified.<\/td><\/tr><tr><td>c) technical criteria May not be relevant to the realisation of the quality of the assignment.<\/td><td>Technical criteria selected should be relevant and proportional to the requirement of quality of assignment, and the selection process should be rigorous enough to ensure that no technically unsatisfactory bids get past a loose criterion, and no technically satisfactory offer gets ruled out by tight criteria.<\/td><\/tr><tr><td>D) marking subjectivity:<\/strong> The scheme of marking or its application may be subjective.<\/td><td>Lay down as objective a scheme of marking as possible. Where subjectivity is unavoidable (as in evaluation of methodology etc.), a system of grading responses and their marking may be laid down in the bidding documents. The Procuring Entity should also have a system of conciliation and moderation of widely disparate markings by different members of the evaluation committee.<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h3>4.4.5<\/span>Fixed Budget based Selection (FBS) [C ONLY]<\/span><\/h3>\n1. Its status: GFR 2017 provides three methods for selection\/ evaluation of consultancy proposals \u2014 viz. QCBS, LCS and SSS. The Fixed Budget Based Selection (FBS) method is now also allowed for selection of consultants (General Instructions on Procurement and Project Management \u2014 DoE's OM No. F.1\/1\/2021-PPD dated 29 October 2021)<\/em>.<\/p>\n2. How it works: In FBS, the selection process considers both the quality of proposals and the cost. FBS is a competitive method, encouraging consultants to provide high-quality services within the defined budget constraints:<\/p>\nA) fixed budget: In the Request for Proposal (RfP) document, a specific fixed budget is specified. Consultants must adhere to this budget, and their proposed cost cannot exceed it.<\/p>\nb) quality assessment: Consultants submit their proposals, and the evaluation considers the quality of these proposals. The proposal that scores the highest in quality \u2014 and is within the specified budget \u2014 is selected for award of contract. This assessment ensures that the selected consultant meets the project's requirements effectively, within the stipulated budget.<\/p>\n3. FBS May be used when: A) the type of consulting services required is simple and\/ or repetitive and can be precisely defined; And b) the budget can be reasonably estimated, and set based on credible cost estimates and\/ or previous selections which have been successfully executed; And c) the budget is sufficient for the consultant to perform the assignment.<\/p>\n<h3>4.4.6<\/span>Direct Selection: Single Source Selection (SSS)<\/span><\/h3>\n(Rule 194 of GFR 2017)<\/em><\/p>\n1. When permissible: Under some special circumstances, it May become necessary to select a particular contractor\/ consultant\/ service provider where adequate justification is available for such single-source selection, in the context of the overall interest of the Procuring Entity.<\/p>\n<aside class=\"note\">Direct selection is also called the nomination mode of procurement.<\/p><\/aside>\nThe selection by SSS\/ nomination is permissible under exceptional circumstances such as:<\/p>\n<ol class=\"lst\"><li>Tasks that represent a natural continuation of previous work carried out by the firm;<\/li><li>In case of an emergency situation; Situations arising after natural disasters; Situations where timely completion of the assignment is of utmost importance;<\/li><li>Situations where execution of the assignment May involve the use of proprietary techniques, or only one contractor\/ consultant has the requisite expertise;<\/li><li>At times, other PSUs or Government organisations are used to provide technical expertise. It is possible to use the expertise of such institutions on an SSS basis;<\/li><li>Under some special circumstances, it may become necessary to select a particular contractor\/ consultant where adequate justification is available in the context of the overall interest of the Ministry or Department. Full justification for Single Source Selection should be recorded in the file, and approval of the Competent Authority obtained before resorting to such single-source selection.<\/strong><\/li><\/ol>\n2. Safeguards: The Procuring Entity shall ensure fairness and equity, and shall have a procedure in place to ensure that: A) the prices are reasonable and consistent with market rates for tasks of a similar nature; And b) the required work\/ services are not split into smaller-sized procurement.<\/p>\n3. Mandatory reporting of nomination awards: All works\/ purchase\/ consultancy\/ non-consultancy contracts awarded on a nomination basis should be brought to the notice of the following authorities for information: a) THE SECRETARY, in the case of Ministries\/ Departments; b) the board of directors or equivalent managing body, in case of Public Sector Undertakings, Public Sector Banks, Insurance companies, etc.; c) the chief executive of the organisation where such a managing body is not in existence.<\/p>\n<ul class=\"lst\"><li>I) the report relating to such awards on a nomination basis shall be submitted to the Secretary\/ board\/ chief executive\/ equivalent managing body every quarter.<\/li><li>ii) the audit committee or similar unit in the organisation May be required to check at least 10% of such cases.<\/li><\/ul>\n4. SSS \u2014 Risks and Mitigations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>a) inappropriate selection of SSS: There is a possibility that the SSS system is selected where LCS or other systems would have been more appropriate, considering the quality requirements or the capability of the Procuring Entity to monitor the assignment. The assignment May be split into parcels to avoid competitive selection systems, or to avoid obtaining higher-level approvals for SSS.<\/td><td>Full JUSTIFICATION for single source selection should be recorded in the file, and approval of the Competent Authority obtained \u2014 the Schedule of Procurement Powers (SoPP) should severely restrict powers for SSS selection. In direct selection, the Procuring Entity should ensure fairness and equity, and the required work\/ services are not split into smaller-sized procurement to avoid competitive processes.<\/td><\/tr><tr><td>b) cost May be unreasonably high: The single contractor\/ consultant is likely to charge unreasonably high prices.<\/td><td>The Procuring Entity must have a procedure in place to ensure that the prices are reasonable and consistent with market rates for tasks of a similar nature. If necessary, negotiations May be held with the contractors\/ consultants to examine reasonableness of quoted price.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.5<\/span>Tendering Systems<\/span><\/h2><h3>4.5.1<\/span>The Common Rationale<\/span><\/h3>\nTendering systems are designed to achieve an appropriate balance between the countervailing needs for the 'right quality' and the 'RIGHT PRICE' \u2014 while the mode of procurement addresses the 'RIGHT SOURCE', and the TENDER DOCUMENT addresses the 'RIGHT QUANTITY' and 'right time and place' \u2014 under different complexities\/ criticality of Technical requirements and value of procurements.<\/p>\n<aside class=\"note\">C<\/span> variant of the same proposition: *Tendering systems are designed to achieve an appropriate balance between the countervailing needs for <\/strong>Right Quality, Right Source, AND the Right Price\u2026 <\/strong>In certain critical and complex requirements, the technical and financial capability of the source of supply becomes an important determinant for Value for Money.*<\/p><\/aside>\nplease note that the selection of a tendering system has to be based on the two factors mentioned above; Hence, just a value threshold for their use is discouraged. Selection should be based on professional judgement of the two factors mentioned above. (Stated expressly in G<\/span>, W<\/span> and NC<\/span>.)<\/em><\/p>\n<h3>4.5.2<\/span>The Systems Listed<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr class=\"srcmark src-multi\" data-src=\" G W C NC \"><th><\/th><th>G<\/span> Goods<\/th><th>W<\/span> Works<\/th><th>C<\/span> Consultancy<\/th><th>NC<\/span> Non-Consultancy<\/th><\/tr><\/thead><tbody><tr><td>1. Single-Stage Tendering System<\/td><td><\/td><td><\/td><td><\/td><td><\/td><\/tr><tr><td> \u2014 a) Single Stage Single Envelope System<\/td><td><\/td><td><\/td><td><\/td><td><\/td><\/tr><tr><td> \u2014 b) Single Stage Two Envelopes System (Two Bid System) (Rule 163 of GFR 2017)<\/em><\/td><td><\/td><td><\/td><td><\/td><td><\/td><\/tr><tr><td> \u2014 c) Single Stage Two Envelopes System with PRE-QUALIFICATION<\/td><td><\/td><td><\/td><td>[C ONLY]<\/td><td><\/td><\/tr><tr><td>2. Two Stage Bidding \u2014 Expression of Interest Tenders \u2014 Market Exploration\/ Short-listing (Rule 164 of GFR 2017)<\/em><\/td><td><\/td><td><\/td><td><\/td><td><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Cross-reference note: The WORKS, CONSULTANCY and NON-CONSULTANCY Manuals all state expressly: \"Details of these Bidding Systems are explained in CHAPTER 4 of the Manual for procurement of goods, 2024, which may be referred to. For the sake of brevity, these are not repeated here.\"<\/em><\/p>\nThe full text below is therefore drawn from the GOODS Manual and applies to all four categories.<\/p>\nC<\/span> adds: *For guidance on the preparation of the <\/strong>Request for Expression of Interest (REoI) document for the procurement of consultancy services, please refer to para 5.2 of the Consultancy Manual.*<\/p><\/aside>\n<h3>4.5.3<\/span>Single-Stage Tendering System<\/span><\/h3>\nIn single-stage tendering, bids are invited at a single stage of submission. The bids can be stipulated to be either in a single envelope or in multiple envelopes.<\/p>\n<h4>A. Single Stage Single Envelope System<\/span><\/h4>\n1. In a single-stage single-envelope system, eligibility, technical\/ commercial details, and financial details are submitted together in the same envelope.<\/p>\nEvaluation is in the sequence of evaluated responsive prices (from L1 onwards), and their technical\/ commercial compliance is checked.<\/p>\nThe lowest-priced bid that meets the eligibility\/ qualification criteria, technical and commercial conditions laid down in the tender documents is declared as successful.<\/p>\n2. Where suitable: This tendering system is SUITABLE where:<\/p>\n<ul class=\"lst\"><li>The technical requirement is simple or moderately complex;<\/li><li>The capability of the source of supply is not too crucial; And<\/li><li>the value of procurement is not too high.<\/li><\/ul>\nThis is the simplest and the quickest tendering system and should be the default system of tendering.<\/p>\n<h4>B. Single Stage Two Envelopes System (Two Bid System)<\/span><\/h4>\n(Rule 163 of GFR 2017)<\/em><\/p>\n1. When used: In technically complex requirements \u2014 but where the capability of the source of supply is still not critical, and the value of procurement is not high \u2014 a Single-stage two-envelopes system may be followed.<\/p>\n2. Composition of the two envelopes (off-line tenders): Bidders should be asked to bifurcate their quotations into two separately sealed envelopes:<\/p>\n<ul class=\"lst\"><li>The first envelope \u2014 called the techno-commercial bid \u2014 contains the eligibility, technical quality and performance aspects, commercial terms and conditions and documents sought in the tender, except the price and relevant financial details<\/em>.<\/li><li>The second envelope \u2014 called the financial bid \u2014 contains the price quotation along with other financial details.<\/li><li>Both the envelopes are to be submitted together in a sealed outer envelope.<\/li><li>In e-procurement, the bidder would be asked to upload two files, mutatis mutandis<\/em>.<\/li><\/ul>\n3. First opening: The techno-commercial bids are to be opened in the first instance on the pre-announced bid opening date and time, and scrutinised and evaluated by the TC with reference to parameters prescribed in the tender documents; And responsive, eligible, and technically compliant bidders are decided.<\/p>\n4. Second opening: Thereafter, the financial bids of ONLY<\/em> The techno-commercially compliant offers are to be opened on a pre-announced date and time for further scrutiny, evaluation, ranking and placement of the contract.<\/p>\n<ul class=\"lst\"><li>In e-procurement, financial bids of technically non-compliant offers would remain encrypted and unopened.<\/li><li>In off-line tenders, the financial bids of technically non-compliant bidders should be returned unopened to the respective bidders by registered acknowledgement due\/ reliable courier, or any other mode with proof of delivery.<\/li><\/ul>\n<h3>4.5.4<\/span>Two-Stage Bidding \u2014 Expression of Interest (EoI) Tenders \u2014 Market Exploration<\/span><\/h3>\n(Rule 164 of GFR 2017)<\/em><\/p>\n1. The problem it solves: In the case of green-field\/ blue-sky projects, where the equipment\/ plant to be procured is COMPLEX, the procuring organisation May not possess the full knowledge of either the various technical solutions available or the likely sources for such products in the market.<\/p>\nTo meet the desired objectives of a transparent procurement that ensures value for money and simultaneously ensures the upgradation of technology & CAPACITY BUILDING, it would be prudent to invite an Expression of Interest (EoI) bids as a first stage of the two-stage tendering system \u2014 to explore the market and finalise specifications based on technical discussions\/ presentations with the experienced manufacturers\/ suppliers in a transparent manner.<\/p>\n<aside class=\"note\">In less complex cases, a market consultation through a pre-nit conference May suffice instead of two-stage tendering.<\/p><\/aside>\n2. The four situations in which EoI bids May be invited: A) it is not feasible for the Procuring Entity to formulate detailed specifications or identify specific characteristics for the subject matter of procurement without receiving inputs regarding its technical aspects from bidders; B) the character of the subject matter of procurement is subject to rapid technological advances, market fluctuations, or both; C) the Procuring Entity seeks to enter into a contract for research, experiment, study, or development \u2014 except where the contract includes the production of requirements in quantities sufficient to establish their commercial viability or to recover research and development costs; Or d) the bidder is expected to carry out a detailed survey or investigation and undertake a comprehensive assessment of risks, costs and obligations associated with the particular procurement.<\/p>\n<h4>A. The Procedure of Two-Stage Bidding<\/span><\/h4>\n1. First stage: The Procuring Entity shall invite EoI bids containing the broad objectives, technical and financial qualification criteria, terms and conditions of the proposed procurement, etc. \u2014 without a bid price<\/em>.<\/p>\nOn receipt of the Expressions of Interest, manufacturers\/ suppliers which are prima facie<\/em> Considered technically and financially capable of supplying the material or executing the proposed work shall be shortlisted.<\/p>\n2. Technical discussions: Thereafter, technical discussions\/ presentations May be held with the short-listed manufacturers\/ suppliers \u2014 giving equal opportunity to all such bidders to participate in the discussions.<\/p>\nDuring these technical discussions, the procurement agency May also add other stakeholders who could add value to the decision-making on the various technical aspects and evaluation criteria.<\/p>\nA proper record of discussions\/ presentations and the process of decision-making should be kept.<\/p>\n3. Framing specifications: Based on the discussions\/ presentations so held, one or more acceptable technical solutions could be decided upon \u2014 by laying down detailed technical specifications for each acceptable technical solution, quality benchmarks, warranty requirements, delivery milestones, etc. \u2014 in a manner consistent with the objectives of transparent procurement.<\/p>\nAt the same time, care should be taken to make the specifications generic in nature, to provide equitable opportunities to the prospective bidders.<\/p>\n4. The limit on revision:<\/strong> In revising the relevant terms and conditions of the procurement, if found necessary because of discussions with the shortlisted bidders, the Procuring Entity shall not modify the fundamental nature<\/em> Of the procurement itself.<\/strong><\/p>\n5. Second stage: The Procuring Entity shall invite only those bidders whose bids at the first stage were not rejected, to participate in a two-envelope tendering in response to a revised set of terms and conditions of the procurement.<\/p>\n6. Right of withdrawal without penalty: Any bidder invited to bid but not in a position to supply the subject matter of procurement due to modification in the specifications or terms and conditions May withdraw from the tendering proceedings without forfeiting any Bid Security<\/em> That he May have been required to provide, or being penalised in any way \u2014 by declaring his intention to withdraw from the procurement proceedings with adequate justification.<\/p>\n7. 'Non-committal' EoI: If the Procuring Entity is of the view that after the EoI stage there is a likelihood of further participation by many more bidders \u2014 and to avoid getting trapped into a legacy technology \u2014 the second-stage tendering May not be restricted only to the shortlisted bidders of the EoI stage, and it May be so declared in the EoI document ab initio<\/em>.<\/p>\nThereafter, in the second stage, normal OTE\/ GTE tendering May be performed. Such a variant of EoI is called a 'non-committal' EoI.<\/p>\nInstances of 'non-committal EoI' should be rare, since it May de-incentivise the participants from giving a diligent\/ sincere EoI. There should not be any bid-security requirement in such non-committal EoI.<\/p>\n<h4>B. Invitation of EoI Tenders<\/span><\/h4>\nIn EoI tenders, an advertisement inviting Expression of Interest should be published. The invitation to the EoI document should contain: a) a copy of the advertisement; b) objectives and scope of the requirement \u2014 a brief description of objectives and the broad scope of the requirement; it may also include the validity period of empanelment; c) instructions to the bidders \u2014 including the nature of supply, fees for empanelment (if EoI is for empanelment), last date of submission, place of submission and any other related instructions; d) formats for submission \u2014 the format in which the bidders are expected to submit their EoI; e) QUALIFICATION CRITERIA \u2014 the invitation to EoI should clearly lay down the qualification criteria that should be applied for shortlisting. The required supporting documents need to be clearly mentioned.<\/p>\n<h4>C. Evaluation of EoI<\/span><\/h4>\nThe bidders should be evaluated for shortlisting \u2014 inter alia<\/em> \u2014 based on their past experience of performance in a similar context, financial strength, and technical capabilities, among others.<\/p>\nEach bidder should be assigned scores based on the sum of marks obtained for each parameter multiplied by the weightage assigned to that parameter.<\/p>\nAll bidders who secure the minimum required marks (normally 60 (sixty) per cent) should be shortlisted. The minimum qualifying marks should be specified in the EoI document.<\/p>\nALTERNATIVELY, instead of weighted evaluation, the EoI document May specify a 'FAIL-PASS CRITERIA' with the minimum qualifying requirement for each of the criteria \u2014 such as minimum years of experience, minimum number of assignments executed and minimum turnover. Under such circumstances, all bidders who meet the minimum requirement as specified should be shortlisted.<\/p>\nThe shortlist should normally comprise at least four firms.<\/p>\n<aside class=\"note\">(Contrast C<\/span> at para 4.4.1-3 above, where the consultancy shortlist is not fewer than three and not more than eight<\/strong>.)<\/em><\/p><\/aside>\nAn example of EoI Qualification criteria G<\/span>:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Criteria<\/th><th>Sub-criteria<\/th><th>Weightage*<\/th><th>Break-up of Weightage<\/th><\/tr><\/thead><tbody><tr><td>Past experience of the firm with similar requirements<\/td><td><\/td><td>A\\*<\/td><td><\/td><\/tr><tr><td>Financial strength of the vendor<\/td><td><\/td><td>B\\*<\/td><td><\/td><\/tr><tr><td><\/td><td>Turnover figures for the last three years<\/td><td><\/td><td>B1\\*<\/td><\/tr><tr><td><\/td><td>Net profit figures for the last three years<\/td><td><\/td><td>B2\\*<\/td><\/tr><tr><td>Quality accreditations, licensing requirements<\/td><td><\/td><td>C\\*<\/td><td><\/td><\/tr><tr><td>Manufacturing capabilities\/ tie-ups<\/td><td><\/td><td>D\\*<\/td><td><\/td><\/tr><tr><td>After-sales support infrastructure<\/td><td><\/td><td>E\\*<\/td><td><\/td><\/tr><tr><td>Product support<\/td><td><\/td><td>F\\*<\/td><td><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">\\* weightage (out of 100) should be pre-decided and declared in EoI documents by the ca, based on an assessment of the required profiles of the potential bidders. The marking\/ grading scheme for allotting marks (out of 100) for various parameters should also be laid down.<\/p><\/aside>\n<h2>4.6<\/span>Channels of Procurement<\/span><\/h2>\nPublic Procurement can be performed\/ channelled by way of:<\/p>\n<aside class=\"note\">Manual bids \u00b7 e-procurement platforms \u00b7 GeM portal \u00b7 or through third-party agencies.<\/p>\nPlacement note: Electronic Reverse Auction (eRA) appears under CHANNELS in the Works (3.5.2) and Non-Consultancy (4.6.2) Manuals, but under modes of procurement in the Goods Manual (4.5). It is absent from the Consultancy Manual. eRA is covered in PART B of this chapter with the modes of procurement.<\/p><\/aside>\n<h3>4.6.1<\/span>Electronic Procurement (e-Procurement)<\/span><\/h3>\n(Rule 160 of GFR 2017)<\/em><\/p>\n1. What it is: Electronic procurement (e-procurement) is the use of information and communication technology (especially the internet) by the buyer (through a third-party e-procurement portal) in conducting procurement processes with the vendors\/ contractors for the acquisition of goods (supplies), works and services \u2014 aimed at open, non-discriminatory, and efficient procurement through transparent procedures.<\/p>\n<aside class=\"note\">A generic description of how e-Procurement is conducted is detailed in 'Appendix 3: Electronic Procurement (e-Procurement) and e-Auction' of the Manual for Procurement of Goods, 2024.<\/em><\/p><\/aside>\n2. The mandate \u2014 and its two exceptions: It is mandatory for ministries\/ departments to receive all bids through e-procurement portals that are gcqe compliant<\/em>, for all procurements.<\/p>\nThis condition will NOT<\/em> Be applicable for:<\/p>\n<ul class=\"lst\"><li>the procurement made without QUOTATION (under RULE 154 of GFR, 2017); or<\/li><li>through PURCHASE COMMITTEE (under RULE 155 of GFR, 2017).<\/li><\/ul>\n<aside class=\"note\">GCQE = Guidelines for Compliance to Quality Requirements of eProcurement, JULY 2021, issued by the Standardisation Testing and Quality Certification (STQC) Directorate \u2014 an attached office of MeitY.<\/p><\/aside>\n3. No mixing of Manual and electronic bids: Normally, in e-procurement, no physical\/ off-line tender documents are provided, nor are any Manual bids accepted. It is not a good practice to call both electronic and Manual bids in the same tender.<\/p>\n4. Exemption \u2014 Global Tender Enquiry: In Global Tender Enquiry (by any mode \u2014 open tender, limited tender or single tender), e-procurement May not be mandatorily insisted upon. However, e-publishing would still be mandatory.<\/p>\n5. Exemption \u2014 national security and missions abroad: In individual cases where national security and strategic considerations demand confidentiality, ministries\/ departments May exempt such cases from e-procurement \u2014 after seeking the approval of the concerned Secretary and with the concurrence of financial advisers.<\/p>\nIn case of tenders floated by Indian missions and CPSE units abroad, the Competent Authority for deciding the tender May exempt such cases from e-procurement.<\/p>\n6. The portals: Note the different names used by the four Manuals for the NIC portal:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-G\" data-src=\" G \">G<\/span>\"The National Informatics Centre (NIC) has an e-Procurement portal called Government e-procurement of NIC (gepnic)<\/strong>.\"<\/em><\/li><li class=\"srcmark src-C\" data-src=\" C \">C<\/span>\"National Informatics Centre (NIC) has an eProcurement portal called the Central Public Procurement Portal (CPPP)<\/strong>.\"<\/em><\/li><\/ul>\nThere are other service providers in the public sector (e.g., MSTC) and private sector that can be utilised for e-PROCUREMENT. Details about the process of e-procurement are available from the service providers.<\/p>\n7. Which portal a Ministry should use: Ministries\/ departments that do not have a large volume of procurement, or carry out procurements required only for the day-to-day running of offices, and have not initiated e-procurement through any other solution so far \u2014 May use the e-procurement solution developed by NIC.<\/p>\nOther ministries\/ departments May either use the e-procurement solution developed by NIC, or engage any other service provider \u2014 G<\/span> adds: (Gcqe compliant)<\/em> \u2014 following due process.<\/p>\n8. These instructions will not apply to procurements made by ministries\/ departments through Government E-marketplace (GeM).<\/p>\n<h3>4.6.2<\/span>Mandatory Procurement of Goods and Services through GeM<\/span><\/h3>\n(Rule 149 of GFR 2017)<\/em><\/p>\n1. What an online marketplace is: An online marketplace (or e-commerce marketplace) is a type of e-commerce site where several sellers offer products or services, and all the buyers can select the product\/ services offered by any one of the sellers based on his own criteria.<\/p>\nIn an online marketplace, the purchaser's transactions are processed by the marketplace operator, and then products\/ services are delivered and fulfilled directly by the participating retailers. Other capabilities might include auctioning (forward or reverse), catalogues, ordering, posting requirements by purchasers, payment gateways, etc.<\/p>\nIn general, because online marketplaces aggregate products from a wide array of providers, selection is usually wider, availability is higher, and prices are more competitive than in vendor-specific online retail stores.<\/p>\n2. The mandate: The Government of India has established the Government E-marketplace (GeM) for common-use goods and services. The procurement process on GeM is end-to-end \u2014 from placement of contract orders to payment to suppliers. This is to ensure better transparency and higher efficiency. All the processes will be electronic and online.<\/p>\nThe procurement of goods and services through the GeM portal by ministries\/ departments (including attached\/ subordinate offices), CPSEs, and autonomous bodies is mandatory<\/em> for goods or services available therein, as per Rule 149 of GFR, 2017.<\/p>\n3. Supplier registration: Products and services are listed on GeM by various suppliers, as on other e-commerce portals. Supplier registration on geM is online and automatic, based on:<\/p>\n<aside class=\"note\">PAN Card \u00b7 Aadhaar Card \u00b7 GST Certification \u00b7 Bank Account and Financial Information \u00b7 Corporate Registration Documents (Udyam registration for MSEs) \u00b7 VAT or TIN Number \u00b7 Proof of Address \u00b7 Contact Details, etc.<\/p><\/aside>\n4. Demand aggregation: The best prices for a user can be available if the same requirements and demands of various organisations are aggregated. This Acts as an incentive for the supplier to quote their best price. For the same products, the demand of various Government departments can be clubbed together, and Reverse Auction can be done based on aggregate demand, which will provide the best prices to the Government.<\/p>\n5. The GeM monetary thresholds \u2014 Rule 149 of GFR, 2017:<\/p>\n<aside class=\"note\">\"Government e-Market Place (GeM): GeM SPV (Special Purpose Vehicle) will ensure adequate publicity, including periodic advertisement of the items to be procured through GeM for the prospective suppliers. Suppliers' credentials on GeM shall be certified by GeM SPV. The GeM portal shall be utilised by the Government buyers for direct online purchases as follows:<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>Value<\/th><th>Procedure<\/th><\/tr><\/thead><tbody><tr><td>a) UP TO Rs. 50,000\/-<\/td><td>through any of the available suppliers on the GeM, meeting the requisite quality, specification, and delivery period. Note 1: In the case of automobiles, direct procurement under this sub-para is permitted without any ceiling limit<\/em>. Note 2: In case the item is available on GeM, it is not permitted<\/em> To purchase the same under Rule 154 of the GFR, 2017.<\/td><\/tr><tr><td>B) above Rs. 50,000\/- and up to Rs. 10,00,000\/-<\/td><td>through the GeM seller having the lowest price amongst the available sellers, of at least three different manufacturers<\/em>, ON GeM \u2014 meeting the requisite quality, specification, and delivery period. The tools for online bidding and online Reverse Auction available on GeM can be used by the buyer even for procurements less than Rs. 10,00,000\/-. Note 1: In case the item is available on GeM, it is not permitted<\/em> To purchase the same under Rule 155 of the GFR, 2017.<\/td><\/tr><tr><td>c) above Rs. 10,00,000\/-<\/td><td>through the supplier having the lowest price meeting the requisite quality, specification, and delivery period \u2014 after mandatorily<\/em> Obtaining bids, using online bidding or Reverse Auction tool provided on GeM.<\/td><\/tr><\/tbody><\/table><\/div>\nD) the invitation for the online e-bidding\/ Reverse Auction will be available to all the existing sellers or other sellers registered on the portal who have offered their goods\/ services under the particular product\/ service category, as per the terms and conditions of GeM.<\/p>\nE) the above-mentioned monetary ceiling is applicable ONLY<\/em> for purchases made through GeM. For purchases, if any, outside GeM, relevant GFR Rules shall apply.<\/p>\nF) the ministries\/ departments shall work out their procurement requirements of goods and services on either \"opex\" model or \"capex\" model as per their requirement\/ suitability at the time of preparation of budget estimates (be), and shall project their annual procurement plan of goods and services on GeM portal within 30 (thirty) days of budget approval.<\/p>\ng) it is the responsibility of the Procuring Entity to do due diligence to ensure the reasonableness of rates. The government buyers may ascertain the reasonableness of prices before placing an order using the BUSINESS ANALYTICS (ba) tools available on geM \u2014 including the last purchase price on geM, the department's own last purchase price, etc.<\/p>\nH) demand for goods shall not be divided into small quantities to make piecemeal purchases, to avoid procurement through L-1 buying\/ bidding\/ Reverse Auction on GeM, or the necessity of obtaining the sanction of higher authorities required with reference to the estimated value of the total demand.\"<\/p>\n6. GeM Portal: https:\/\/gem.gov.in \u2014 Detailed instructions for user organisation registration, supplier registration, listing of products, terms and conditions, online bidding, Reverse Auction, demand aggregation, call centre, etc., are available on this portal.<\/p>\n7. Uploading of non-availability report \u2014 gemar&pts: It is mandatory for a buyer to generate a \"GeM availability report and past transaction summary\" (gemar&pts) with a unique id on the GeM portal using his login credentials, for procurement outside<\/em> GeM (for example, for procurement through the Central Public Procurement Portal)<\/em>(Notified vide OM No. F.6.18.2019-PPD dated 11th June 2021)<\/em>.<\/p>\nThe past transaction summary will be provided, where available.<\/p>\n\"Gemar&pts\" shall be a pre-requisite for arriving at a decision by the Competent Authority for procurement of required goods and services by floating a bid outside GeM, and its unique id would be required to be furnished on the publishing portal along with the tender proposed to be published.<\/p>\n8. Interaction with Rules 154 and 155:<\/p>\n<ul class=\"lst\"><li>Purchase of goods without quotation<\/em> Can be resorted to for value up to Rs. 50,000\/- only on each occasion \u2014 without inviting quotations or bids \u2014 based on a certificate to be recorded by the Competent Authority, only when the required goods are not available on GeM<\/em>.<\/li><li>In case a certain item is not available on the GeM portal, purchase of goods costing above Rs. 50,000\/- and up to Rs. 5,00,000\/- on each occasion May be made on the recommendations of a duly constituted local Purchase Committee<\/em>.<\/li><\/ul>\n9. Buying outside GeM when the item is on GeM: Where an item is available on GeM, and the Ministry\/ Department\/ organisation wants to buy outside the GeM in view of any compelling circumstances, the approval of the standing committee of GeM (SCoGeM)<\/em> And the Secretary concerned<\/em> Shall be required (OM No. F.6\/15\/2018-PPD dated 05.02.2020)<\/em>.<\/p>\n10. Receipt of Materials and Payment Procedures:<\/strong> Further details are given in Annexure 36<\/strong> of the Goods Manual.<\/p>\n11. Push Button Procurement (PBP) on GeM<\/strong>(Notified vide OM No. F.6\/7\/2022-PPD dated 06.09.2022)<\/em>:<\/p>\na) The rationale: As per Rule 144(vii) and Rule 149 of GFR, 2017, the procuring entity should satisfy itself that the price of the selected offer is reasonable. SOMETIMES \u2014 ESPECIALLY INFREQUENTLY \u2014 Government buyers find it difficult to certify the reasonableness of rates. Such users normally do not possess the requisite skills to make procurement decisions. It delays the procurement process.<\/p>\nAt the same time, for typically low-value procurements, efforts expended in assessing the reasonability of rates May be disproportionate. Additionally, with developments in technology and e-procurement becoming the norm, the availability of market activities and the capability to analyse them artificially have provided an opportunity to automate decision-making activities, such as the assessment of the reasonability of rates in such cases.<\/p>\nb) The seven conditions of PBP:<\/p>\n<ul class=\"lst\"><li>I) PBP will be made only on GeM through bidding<\/em> \u2014 PBP through direct purchase, L-1, custom-bid, etc., are not permitted<\/em>.<\/li><li>ii) the total procurement value of the specific case is permitted up to rupees five (5) lakh, inclusive of all taxes.<\/li><li>iii) this will be an additional<\/em> Method of procurement, and procuring entities are free to use or not to use this additional method.<\/li><li>iv) this method can be used only if at least five bids<\/em> Are received. In case fewer than five bids are received, the procurement is to restart using the usual procurement modes. However, buyers will have a choice to extend the PBP date once by three (3) days<\/em> At the time of preparation of the tender document, in case of lesser participation.<\/li><li>V) no splitting of requirements is to be done to bring procurement under this method.<\/li><li>vi) once a bid is invited on GeM, the contract will be placed directly by GeM without any human intervention<\/em> [provided condition (iv) above is complied with].<\/li><li>vii) GeM will permit this method only for such categories where at least ten sources<\/em> Are listed.<\/li><\/ul>\nc) GeM has published a Manual on PBP for buyers on its website.<\/p>\n<h3>4.6.3<\/span>Procurement through Centralised Agencies or other Organisations<\/span><\/h3>\nDepartments\/ Organisations that have not built up their own capability for procurement May engage procurement agents \u2014 for individual procurement or as outsourcing of service \u2014 with the approval of the Competent Authority.<\/p>\nMany canalised agencies authorised by the Government, and some CPSEs, provide end-to-end procurement services \u2014 i.e., framing procurement documents, bidding process, evaluation, and contract management.<\/p>\nPossibilities of other ministries\/ departments or their attached and subsidiary offices undertaking such procurement may also be explored.<\/p>\n<h1>Appendix to Chapter 4 \u2014 Part a: Points of Difference<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Chapter number<\/td><td>G\/C\/NC: Chapter 4 \u00b7 W: CHAPTER 3<\/td><\/tr><tr><td>2<\/td><td>Chapter title<\/td><td>G:<\/strong>Modes of Procurement and Tendering Systems<\/em> \u00b7 W\/C\/NC:<\/strong>Bidding Design for \u2026<\/em><\/td><\/tr><tr><td>3<\/td><td>Agency for Procurement (PWO \/ PSU \/ MoHUA notification \/ Works Committee \/ Sample MoU)<\/td><td>W ONLY<\/td><\/tr><tr><td>4<\/td><td>Rs 60 lakh direct-execution ceiling for repair works<\/td><td>W ONLY<\/td><\/tr><tr><td>5<\/td><td>Award to a PSU treated as project management consultancy; competition on lump sum service charges<\/td><td>W ONLY<\/td><\/tr><tr><td>6<\/td><td>Admeasurement of Services \u2014 input vs output<\/td><td>nc only<\/td><\/tr><tr><td>7<\/td><td>\"Types of Contracts\" section<\/td><td>absent from goods entirely<\/strong>; W has 7, C has 5, NC has 4<\/td><\/tr><tr><td>8<\/td><td>Item Rate, Percentage Rate, Piece Work, EPC, PPP<\/td><td>W ONLY<\/td><\/tr><tr><td>9<\/td><td>BOQ variation bands (\u00b110\u201315% allowed; \u00b125\u201330% needs CA sanction)<\/td><td>W ONLY<\/td><\/tr><tr><td>10<\/td><td>EPC 10% change-of-scope ceiling; LD capped at 10%; bonus \u226410%; 2-year defects liability; 30-day grace period; sub-contracting \u226450%<\/td><td>W ONLY<\/td><\/tr><tr><td>11<\/td><td>EPC technical capacity thresholds (60% one project \/ 40% two \/ 30% three); net worth 15%<\/td><td>W ONLY<\/td><\/tr><tr><td>12<\/td><td>Right of the EPC contractor to MATCH the first-ranked bid on payment of ~2%<\/td><td>W ONLY<\/td><\/tr><tr><td>13<\/td><td>Retainer-ship cum Success (Contingency) Fee Contract<\/td><td>C ONLY<\/td><\/tr><tr><td>14<\/td><td>\"Risk of over-utilisation\" as a fourth risk row in Indefinite Delivery contracts<\/td><td>C ONLY<\/td><\/tr><tr><td>15<\/td><td>Consultancy staff \"normally NAMED\" in Time-Based contracts<\/td><td>C ONLY<\/td><\/tr><tr><td>16<\/td><td>Percentage contract discouraged for architectural services unless on fixed target cost<\/td><td>C<\/strong> (NC carries the type but not this caution in the same terms)<\/td><\/tr><tr><td>17<\/td><td>\"Systems of Selection\" section<\/td><td>absent from goods entirely<\/td><\/tr><tr><td>18<\/td><td>QCBS weightage \u2014 inverted<\/td><td>C: Technical 70% \/ Cost 30%, technical never more than 80% \u00b7 W & NC: Cost 80% \/ Technical 20%, non-financial never EXCEEDING 30%<\/td><\/tr><tr><td>19<\/td><td>QCBS suggestive weighting table (80\/20 \u00b7 75-65\/25-35 \u00b7 60-50\/40-50)<\/td><td>C ONLY<\/td><\/tr><tr><td>20<\/td><td>Fixed Budget based Selection (FBS)<\/td><td>C ONLY<\/td><\/tr><tr><td>21<\/td><td>Quality Oriented Procurement (QOP) declaration framework<\/td><td>w + nc only<\/td><\/tr><tr><td>22<\/td><td>Special Technical Committee (STC) \u2014 composition, appointment, mandate, binding force<\/td><td>w + nc only<\/td><\/tr><tr><td>23<\/td><td>IIT\/ IISc Director as Competent Authority for QOP, valid up to 31.03.2027<\/td><td>w + nc only<\/td><\/tr><tr><td>24<\/td><td>Rs 10 crore value route to QCBS for NC Services, and the \"crossing Rs 10 crore\" 10% rule<\/td><td>nc only<\/td><\/tr><tr><td>25<\/td><td>QCBS prohibited in two-STAGE BIDDING<\/td><td>W ONLY<\/strong> (NC prohibits only Reverse Auction and Limited Tenders)<\/td><\/tr><tr><td>26<\/td><td>Mandatory pre-bid meeting in all QOP cases; changes to criteria need STC recommendation<\/td><td>w + nc only<\/td><\/tr><tr><td>27<\/td><td>Consultancy shortlist: Not fewer than 3, not more than 8<\/td><td>C ONLY<\/td><\/tr><tr><td>28<\/td><td>EoI shortlist should normally comprise at least four firms; minimum 60% marks<\/td><td>G<\/strong> (applied by cross-reference to W\/C\/NC)<\/td><\/tr><tr><td>29<\/td><td>\"Single Stage Two Envelopes System with PRE-QUALIFICATION\" listed as a distinct tendering system<\/td><td>C ONLY<\/td><\/tr><tr><td>30<\/td><td>Full text of the tendering systems<\/td><td>G ONLY<\/strong> \u2014 W, C and NC all expressly cross-refer to Goods Ch. 4 \"for the sake of brevity\"<\/td><\/tr><tr><td>31<\/td><td>NIC portal named<\/td><td>g: Gepnic \u00b7 c: CPPP<\/td><\/tr><tr><td>32<\/td><td>eRA placed under CHANNELS<\/td><td>W (3.5.2) + NC (4.6.2) \u00b7 G places it under MODES (4.5) \u00b7 absent from c<\/td><\/tr><tr><td>33<\/td><td>GeM monetary thresholds, GeMAR&PTS, SCoGeM approval, Push Button Procurement<\/td><td>G ONLY<\/strong> in full (C\/NC reproduce parts; W does not)<\/td><\/tr><tr><td>34<\/td><td>Automobiles exempt from the Rs 50,000 direct-purchase ceiling on GeM<\/td><td>G ONLY<\/td><\/tr><tr><td>35<\/td><td>PBP conditions \u2014 Rs 5 lakh cap, at least 5 bids, one 3-day extension, at least 10 listed sources, no human intervention<\/td><td>G ONLY<\/td><\/tr><tr><td>36<\/td><td>Nomination awards reported QUARTERLY; audit committee to check AT least 10% of such cases<\/td><td>W + C + NC<\/strong> (common)<\/td><\/tr><tr><td>37<\/td><td>\"Justification must be provided if a selection method other than LCS is used\"<\/td><td>W<\/strong> (states it as an express default rule)<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 4 \u2014 part a<\/p>\n<aside class=\"note\">Next:<\/strong>Chapter 4 \u2014 part b: Modes of procurement<\/strong> \u2014 Open Tender Enquiry \u00b7 Global Tender Enquiry and the Rs 200 crore restriction \u00b7 Rate Contract\/ Framework Agreement \u00b7 Electronic Reverse Auction \u00b7 Pre-qualification Bidding \u00b7 Approved Vendor List \u00b7 Limited Tender Enquiry \u00b7 Special Limited Tender Enquiry (Rs 50 lakh in Goods vs Rs 10 lakh in Works)<\/strong> \u00b7 Proprietary Article Certificate \u00b7 Single Tender Enquiry\/ Selection by Nomination \u00b7 Direct Procurement without Quotation \u00b7 Direct Procurement by Purchase Committee \u00b7 Award of Work through Quotations \u00b7 Award of works in stalled contracts.<\/p><\/aside>Part II<\/span>Modes of Procurement<\/em><\/p>\nMerging: Goods Ch. 4<\/strong> paras 4.1\u20134.13 \u00b7 Works Ch. 3<\/strong> paras 3.6\u20133.14 \u00b7 Consultancy Ch. 4<\/strong> para 4.3 \u00b7 Non-Consultancy Ch. 4<\/strong> para 4.4<\/em><\/p><h2>The Most Important Caution in this Chapter<\/span><\/h2>\n<aside class=\"note\">the works, consultancy and non-consultancy Manuals all carry the following sentence, word for word:<\/p>\n\"Applicability, Terms and Conditions, Risks, and mitigations of these modes of procurement (including restrictions regarding GTE mode for procurements below Rs 200 Crore) are detailed in CHAPTER 4 of the Manual for procurement of goods, 2024, which may be referred to. For the sake of brevity, these are not repeated here.\"<\/em><\/p>\nConsequently, the detailed text of every mode of procurement below is drawn from the GOODS Manual and applies mutatis mutandis<\/em> to Works, Consultancy and Non-Consultancy \u2014 except where the Works Manual has chosen to reproduce and vary the text (OTE, GTE, PQB, LTE, SLTE, STE), and except for the two modes that exist only in the Works Manual (Award of Work through Quotations; Award of works in stalled contracts).<\/p>\nA student who reads only the Works\/ CS\/ NC Manuals will not find the text of Rate Contract, AVL, PAC, eRA, Direct Procurement or the GTE exemptions at all. It is reproduced here in full so that this Unified Manual is self-sufficient.<\/p><\/aside>\n<h2>The Threshold Divergence Table \u2014 the Single Most Examinable Page in this Chapter<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr class=\"srcmark src-multi\" data-src=\" G W C NC \"><th>Threshold<\/th><th>G<\/span> GOODS<\/th><th>W<\/span> WORKS<\/th><th>C<\/span> CONSULTANCY<\/th><th>NC<\/span> NON-CONSULTANCY<\/th><\/tr><\/thead><tbody><tr><td>OTE (Open Tender Enquiry) applies above<\/td><td>Rs. 50 lakh<\/td><td>Rs. 10 lakh<\/td><td>Rs. 50 lakh<\/td><td>Rs. 50 lakh<\/td><\/tr><tr><td>LTE (Limited Tender Enquiry) is the default up to<\/td><td>Rs. 5 lakh to Rs. 50 lakh<\/td><td>up to Rs. 10 lakh<\/td><td>up to Rs. 50 lakh<\/td><td>up to Rs. 50 lakh<\/td><\/tr><tr><td>SLTE (Special LTE) applies for procurements more THAN<\/td><td>Rs. 50 LAKH<\/td><td>Rs. 10 LAKH<\/td><td>Rs. 50 lakh<\/td><td>Rs. 50 lakh<\/td><\/tr><tr><td>Rule cited for the LTE\/SLTE threshold<\/td><td>Rule 162<\/td><td>Rule 139(v) AND Rule 162<\/td><td>Rule 162<\/td><td>Rule 162<\/td><\/tr><tr><td>GTE restriction<\/td><td>No GTE up to Rs. 200 crore<\/td><td>Same \u2014 Rs. 200 crore<\/td><td>Same<\/td><td>Same<\/td><\/tr><tr><td>Direct Procurement without Quotation<\/td><td>up to Rs. 50,000<\/strong>(Rs. 1,00,000 for Scientific Ministries)<\/em><\/td><td>(subsumed in \"Award of Work through Quotations\")<\/em><\/td><td>up to Rs. 50,000<\/td><td>up to Rs. 50,000<\/td><\/tr><tr><td>Direct Procurement by Purchase Committee<\/td><td>above Rs. 50,000 and up to Rs. 5,00,000<\/strong>(up to Rs. 10 lakh for Scientific Ministries)<\/em><\/td><td>(not carried)<\/em><\/td><td>up to Rs. 5 lakh<\/td><td>up to Rs. 5 lakh<\/td><\/tr><tr><td>Award of Work through Quotations<\/td><td>(not carried)<\/em><\/td><td>up to Rs. 5 lakh \u2014 works only<\/td><td>(not carried)<\/em><\/td><td>(not carried)<\/em><\/td><\/tr><tr><td>Rate Contract viability threshold<\/td><td>aggregate requirement more than Rs. 50 lakh p.a.<\/td><td>(cross-refers)<\/em><\/td><td>(cross-refers)<\/em><\/td><td>(cross-refers)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Footnote common to all four Manuals: \"Various thresholds for these Modes of procurements have been REVISED UPWARDS vide PPD's OM No. F.1\/3\/2014-PPD dated 10.07.2024.\"<\/em><\/p><\/aside>\n<h2>Concordance for Chapter 4 \u2014 Part B<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Mode<\/th><th>Goods<\/th><th>Works<\/th><th>CS<\/th><th>NCS<\/th><\/tr><\/thead><tbody><tr><td>4.7<\/td><td>Modes of Procurement \u2014 the taxonomy<\/td><td>4.1<\/td><td>3.6<\/td><td>4.3<\/td><td>4.4<\/td><\/tr><tr><td>4.8<\/td><td>Open Tender Enquiry (OTE)<\/td><td>4.2<\/td><td>3.7<\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><\/tr><tr><td>4.9<\/td><td>Global Tender Enquiry (GTE) + Rs 200 crore restriction<\/td><td>4.3<\/td><td>3.8<\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><\/tr><tr><td>4.10<\/td><td>Rate Contract (RC)\/ Framework Agreement (FA)<\/td><td>4.4<\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><\/tr><tr><td>4.11<\/td><td>Electronic Reverse Auction (eRA)<\/td><td>4.5<\/td><td>3.5.2 (under Channels)<\/em><\/td><td>absent<\/td><td>4.4-3-a)-iii + 4.6.2<\/td><\/tr><tr><td>4.12<\/td><td>Pre-qualification Modes \u2014 PQB<\/td><td>4.6<\/td><td>3.9<\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><\/tr><tr><td>4.13<\/td><td>Approved Vendor List (AVL)<\/td><td>4.7<\/td><td>(cross-ref only)<\/em><\/td><td>(cross-ref only)<\/em><\/td><td>(cross-ref only)<\/em><\/td><\/tr><tr><td>4.14<\/td><td>Limited Tender Enquiry (LTE)<\/td><td>4.8<\/td><td>3.10<\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><\/tr><tr><td>4.15<\/td><td>Special Limited Tender Enquiry (SLTE)<\/td><td>4.9<\/td><td>3.11<\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><\/tr><tr><td>4.16<\/td><td>Proprietary Article Certificate (PAC)<\/td><td>4.10<\/td><td>absent<\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><\/tr><tr><td>4.17<\/td><td>Single Tender Enquiry (STE)\/ Selection by Nomination<\/td><td>4.11<\/td><td>3.12<\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><\/tr><tr><td>4.18<\/td><td>Direct Procurement without Quotation<\/td><td>4.12<\/td><td><\/td><td>(listed only)<\/em><\/td><td>4.4-7<\/td><\/tr><tr><td>4.19<\/td><td>Direct Procurement by Purchase Committee<\/td><td>4.13<\/td><td><\/td><td>(listed only)<\/em><\/td><td>4.4-7<\/td><\/tr><tr><td>4.20<\/td><td>Award of Work through Quotations<\/td><td><\/td><td>3.13<\/td><td><\/td><td><\/td><\/tr><tr><td>4.21<\/td><td>Award of works in stalled contracts<\/td><td><\/td><td>3.14<\/td><td><\/td><td><\/td><\/tr><tr><td>4.22<\/td><td>Mode selection by value \u2014 Non-Consultancy Services<\/td><td><\/td><td><\/td><td><\/td><td>4.4-5 to 4.4-7<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.7<\/span>Modes of Procurement \u2014 the Taxonomy<\/span><\/h2>\n1. The balance to be struck: Offers from prospective bidders in Public Procurement must be invited according to a procedure that achieves a balance between the need for the widest competition, on the one hand, and the complexity \u2014 G<\/span>NC<\/span> Add: Time, effort, and cost \u2014 of the procedure, on the other hand.<\/p>\nDifferent modes of procurement (W<\/span>, C<\/span>, NC<\/span> add: and tendering systems)<\/em> are used to suit various procurement circumstances to achieve this balance. Various modes of procurement vary the extent of competition (width and specificity of catchment area of bidders) to suit different procurement situations.<\/p>\nMode of procurement addresses the 'right source' of the 5Rs.<\/p>\n2. Delegation:<\/strong>There are laid-down delegations of powers to approve different modes of procurement to various competent authorities as shown in DFPR<\/strong>(G<\/span> Annexures 2 and 3 \u00b7 W<\/span>, C<\/span>, NC<\/span> Annexure 1)<\/em>. Each Procuring Entity May also publish its own Schedule of Procurement Powers (SoPP) delegating such powers within the entity<\/strong>(G<\/span> Annexure 4 \u00b7 W<\/span>, C<\/span>, NC<\/span> Annexure 2)<\/em>.<\/p>\n<h3>4.7.1<\/span>The Five (or Six) Families of Modes \u2014 Compared Across the Four Manuals<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr class=\"srcmark src-multi\" data-src=\" G W C NC \"><th>Family<\/th><th>G<\/span> GOODS<\/th><th>W<\/span> WORKS<\/th><th>C<\/span> CONSULTANCY<\/th><th>NC<\/span> NON-CONSULTANCY<\/th><\/tr><\/thead><tbody><tr><td>A) advertised modes<\/strong>(widest possible competition through wide publicity \u2014 Rule 161)<\/em><\/td><td>OTE \u00b7 GTE \u00b7 Rate Contracts<\/strong> \u00b7 eRA<\/strong><\/td><td>OTE \u00b7 GTE<\/td><td>OTE (above Rs 50 lakh)<\/em> \u00b7 GTE (restricted below Rs 200 cr)<\/em><\/td><td>OTE (above Rs 50 lakh)<\/em> \u00b7 GTE \u00b7 eRA<\/strong><\/td><\/tr><tr><td>b) pre-qualification modes<\/strong>(restricted to shortlisted pre-qualified bidders; shortlisting itself through wide publicity akin to advertised tenders)<\/em><\/td><td>PQB \u00b7 AVL<\/td><td>PQB \u00b7 AVL (cross-ref to Goods para 4.7)<\/em><\/td><td>PQB \u00b7 AVL (cross-ref)<\/em><\/td><td>PQB \u00b7 AVL (cross-ref)<\/em><\/td><\/tr><tr><td>c) restricted modes<\/strong>(restricted to known, selected bidders; shortlisting based on less rigorous checks of capability and past experience \u2014 Rule 162)<\/em><\/td><td>LTE (up to Rs 50 lakh<\/strong>)<\/em> \u00b7 SLTE (above Rs 50 lakh<\/strong>)<\/em><\/td><td>LTE (up to Rs 10 lakh<\/strong>)<\/em> \u00b7 SLTE (above Rs 10 lakh<\/strong>)<\/em><\/td><td>LTE (up to Rs 50 lakh)<\/em> \u00b7 SLTE (above Rs 50 lakh)<\/em><\/td><td>LTE (up to Rs 50 lakh)<\/em> \u00b7 SLTE (above Rs 50 lakh)<\/em><\/td><\/tr><tr><td>d) nomination modes<\/strong>(from a single source in special circumstances \u2014 Rule 166)<\/em><\/td><td>PAC<\/strong> \u00b7 STE without PAC<\/td><td>STE or Selection by Nomination only \u2014 NO PAC<\/td><td>PAC \u00b7 STE without PAC<\/td><td>PAC \u00b7 STE without PAC (NC cites RULE 204 GFR, not Rule 166)<\/em><\/td><\/tr><tr><td>e) shopping modes<\/strong>(without tendering or calling for formal bids, for small-value procurements \u2014 Rules 154, 155)<\/em><\/td><td>Direct Procurement without Quotation \u00b7 Direct Procurement by Purchase Committee<\/td><td>\"Award of Work through Quotations\/ Shopping Modes\" \u2014 Procurement of Works through Quotations<\/td><td>Direct Procurement without Quotation \u00b7 by Purchase Committee<\/td><td>Direct Procurement without Quotation \u00b7 by Purchase Committee<\/td><\/tr><tr><td>f) framework agreements\/ rate contracts<\/strong>(listed as a SEPARATE family)<\/em><\/td><td>(RC is under Advertised Modes)<\/em><\/td><td>listed separately as family (f)<\/td><td>listed separately as family (f)<\/td><td>listed separately as family (f)<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">note the three structural differences:<\/p>\n<ol class=\"lst\"><li>Goods<\/strong> places Rate Contract and eRA inside the ADVERTISED family<\/strong>; Works, CS and NC<\/strong> create a separate sixth family<\/strong> called Framework Agreements\/ Rate Contracts<\/em> and do not list eRA as an advertised mode (NC lists eRA as advertised mode (a)(iii))<\/em>.<\/li><li>Works has NO Proprietary Article Certificate (PAC) mode at all<\/strong> \u2014 its nomination family contains only STE or Selection by Nomination<\/em>.<\/li><li>NC cites Rule 204 of GFR for its Nomination mode with an additional sentence not found elsewhere: \"If, in an exceptional situation, it becomes necessary to procure a non-consulting service from a specifically chosen contractor, the Competent Authority in the Ministry or Department May do so in consultation with the Financial Adviser. In such cases, detailed justification, the circumstances leading to the selection, and the special interest or purpose served by this procurement must form an integral part of the proposal.\"<\/em><\/li><\/ol><\/aside>\nW<\/span> additional footnote: *\"<\/strong>Please also refer to RULE 139 of GFR 2017 regarding the thresholds for modes of procurement pertaining to Works.\"*<\/p>\nW<\/span> descriptions of AVL and Framework Agreements:<\/p>\n<ul class=\"lst\"><li>AVL: \"Procurement is restricted to contractors who have been pre-approved and included on a long-term multi-use list based on their demonstrated ability to meet the required standards.\"<\/em><\/li><li>Framework Agreements: \"Also known as RATE CONTRACTS, are agreements with contractors to execute works at pre-agreed rates during a specified validity period.\"<\/em><\/li><\/ul>\n<h2>4.8<\/span>Open Tender Enquiry (OTE)<\/span><\/h2>\n(Rule 161 of GFR 2017)<\/em><\/p>\n1. What it is: In Open Tender Enquiry (OTE) \u2014 also known as national competitive bidding (ncb), or simply advertised tender enquiry, but this Manual would stick to OTE \u2014 an attempt is made to attract the widest possible competition by publishing the NIT simultaneously on the designated websites.<\/p>\nThis is the default mode of procurement and gives the best Value for Money, but the procedure is relatively complex and prolonged. The systemic cost of this procedure May be high enough to be unviable for smaller-value procurements.<\/p>\n2. When OTE procedures \u2014 through e-procurement or through traditional tendering \u2014 should be adopted:<\/p>\na) Procurements exceeding the threshold of:<\/p>\n<ul class=\"lst\"><li>[G, C, NC] \u2014 Rs. 50 lakh (Rupees Fifty Lakh);<\/li><li class=\"srcmark src-W\" data-src=\" W \">W<\/span> \u2014 Rs. 10 lakh (Rupees Ten Lakh) in works procurement;<\/li><\/ul>\nB) all requirements with clear technical specifications;<\/p>\nc)<\/strong>G<\/span> For requirements that are ordinarily available in the open market<\/strong>, it is necessary to evaluate competitive offers to decide the most suitable and economical option available;<\/p>\nW<\/span> For requirements that can ordinarily be fulfilled by the players available in the open market<\/strong>, it is necessary to evaluate competitive offers to decide the most suitable and economical option available;<\/p>\nd) G<\/span> When requirements are not available from known sources, or sources are presently limited and need to be made broad-based. In such situations, even for procurements below Rs. 50 lakh, the OTE mode May be used if warranted.<\/p>\nW<\/span> When the requirement cannot be fulfilled from known contractors, or contractors are presently limited and the requirement is to be made broad-based. In such situations, even for procurements below Rs. 10 lakh, the OTE mode May be used if warranted.<\/p>\n<h3>4.8.1<\/span>Terms and Conditions<\/span><\/h3>\n1. No restriction on participation:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-G\" data-src=\" G \">G<\/span> There should be no restriction on participation by prospective bidders who meet the eligibility criteria. Especially, prior registration with the Procuring Entity should not be insisted upon. However, bidders who are already registered are also free to participate.<\/li><li class=\"srcmark src-W\" data-src=\" W \">W<\/span> Participation should not be restricted to only bidders enlisted with the Procuring Entity. Bidders already enlisted are also free to participate. However, a requirement that successful un-enlisted bidders May have to get enlisted with the Procuring Entity before the contract is placed on them<\/em> May be mentioned in the tender document.<\/li><\/ul>\n2. Advertisement:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-G\" data-src=\" G \">G<\/span> Advertisements in such cases should be given on the GOVERNMENT e-MARKETPLACE (GeM) as well as<\/em> ON GeM-Central Public Procurement Portal (CPPP) at www.eprocure.gov.in.<\/li><li class=\"srcmark src-W\" data-src=\" W \">W<\/span> Advertisements in such cases should be given on the GeM-Central Public Procurement Portal (GeM-CPPP) at www.eprocure.gov.in. (no separate GeM mention)<\/em><\/li><\/ul>\nan organisation that has its own website should also publish all its advertised tender enquiries on the website. The Procuring Entity should also post the complete tender document on its website and gem-cppp to enable prospective bidders to make use of the document by downloading it. The advertisements for the tender invitations should give the complete web address from which the tender documents can be downloaded.<\/p>\nWhile it is no longer mandatory to issue advertisements in newspapers, there is no bar to issuing such advertisements if the procuring entities consider them necessary.<\/p>\nTo promote wider participation and ease of bidding, no cost of tender documents May be charged<\/em> for the tender documents downloaded by the bidders.<\/p>\n3. Free availability: The sale\/ availability for downloading of tender documents against NIT should not be restricted and should be available freely. Tender documents should preferably be sold\/ made available for download up to the date of tender opening (W<\/span>: \"up to the tender closing date and time\")<\/em>.<\/p>\n4. Model Tender Document:<\/strong> The tender documents should be prepared based on the relevant approved Model Tender Document (MTD) for the procurement category.<\/strong>(Further details on preparing tender documents are provided in G<\/span> Chapter 5 \u00b7 W<\/span> Chapter 4.)<\/em><\/p>\n5. Records in off-line tenders: The Procuring Entity shall maintain proper records about the number of tender documents sold, the list of parties to whom sold, details of the amount received through sale, and the number of unsold tender documents \u2014 which are to be cancelled after the opening of the tenders.<\/p>\n6. Currency: In domestic tenders, bids can be submitted only in INR, and any bid in foreign currency should be summarily rejected. Foreign bidders can also participate if they submit a bid in INR. However, purchase preference for local content as per the PPP-MII shall apply.<\/p>\n7. Consortium bidding in domestic open tenders: In the case of a domestic open tender for projects (including turnkey projects) allowing consortium bidding, a foreign bidder can be a consortium member \u2014 subject to the condition that the consortium as a whole<\/em> Meets the minimum local content criteria, as per the Make in India order, 2017.<\/p>\nThe leader of the consortium can be a foreign party, and the bids are to be solicited in Indian rupee only \u2014 i.e., no payment can be made in foreign currency to the foreign consortium member.<\/p>\n<h3>4.8.2<\/span>OTE \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. The crux of this mode is attracting bids from all possible prospective bidders. The risk is that this May not be achieved, even after incurring the extra cost of open tendering. This could be due to: a) Insufficient publicity; b) Hindrances in the availability of tender documents; c) Insufficient time for bid preparation; or d) Due to the onerous cost of tender documents or EMD<\/td><td>it should be ensured that the NIT on the website is easily searchable and visible, not hidden under layers of clicks. The matter should not be left entirely to the website or media publicity alone. Due diligence should be done to locate likely bidders. All registered vendors\/ contractors \u2014 in particular past successful vendors\/ contractors \u2014 should be given intimation about forthcoming tenders via sms\/ mail\/ email. Further, a limited or open tender that results in only one effective offer<\/em> Shall be treated as a Single Tender Enquiry situation, with relevant powers of approval, etc. It should also be ensured that there is no impediment to the issue\/ access of tender documents. Ordinarily, the due date fixed for the opening of the tender shall be a minimum of 21 (twenty-one) days from the date of advertisement, which may vary considering the nature of the material called for and delivery requirements. The due date may be subsequently extended with the approval of the ca only if it is felt necessary to have better competition. The tender documents shall be priced minimally (if at all priced), keeping in view the value of the tender as well as the cost of preparation and publicity of the tender documents. EMD should be sufficient to ensure that bidders honour their bids but, at the same time, should not be large enough to reduce competition.<\/td><\/tr><tr><td>2. Lack of clarity in description\/ specification of requirement, or undue stringency in qualifying criteria or other conditions<\/td><td>Mitigations of such risks can be addressed at the time of need assessment and procurement planning (please refer to Chapter 2) to attract adequate competition.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.9<\/span>Global Tender Enquiry (GTE)<\/span><\/h2>\n(Rule 161 of GFR 2017)<\/em><\/p>\n1. What it is: GTE \u2014 also known as international competitive bidding (icb), but this Manual would stick to GTE \u2014 is like OTE, but through appropriate advertising and provision for payment in foreign currencies through Letter of Credit, it is aimed at inviting the participation of inter alia<\/em> Foreign firms.<\/p>\nBids in foreign currency in any other mode of procurement shall be summarily rejected.<\/p>\nSubject to restriction on GTE (Para 4.9.2 below), GTE can ALSO<\/em> Be in SLTE, LTE or STE mode if justified with proper approvals as per SoPP.<\/p>\nThe point of balance between VfM and the cost\/ complexity of the procedure is further aggravated as compared to OTE. The development of local industry also needs to be kept in mind.<\/p>\n2. Hence, GTE may be viable only in the following situations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr class=\"srcmark src-multi\" data-src=\" G W \"><th><\/th><th>G<\/span> GOODS<\/th><th>W<\/span> WORKS<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>Where goods of required specifications\/ quality May not be available within the country, and alternatives available in the country are not suitable for the purpose, it is necessary to also look for suitable competitive offers from abroad<\/td><td>Where required technology\/ specifications\/ quality are not available within the country and alternatives available in the country are not suitable for the purpose<\/td><\/tr><tr><td>b<\/td><td>non-existence of a local branch of the global principal of the manufacturer\/ vendors\/ contractors<\/td><td>non-existence of a local branch of the global principal of the contractors<\/td><\/tr><tr><td>c<\/td><td>requirement for compliance with specific international standards in technical specifications<\/td><td>requirement for compliance with specific international standards in technical specifications<\/td><\/tr><tr><td>d<\/td><td>absence of a sufficient number of competent domestic bidders likely to comply with the required technical specifications, and in case of suspected cartel formation among indigenous bidders<\/em><\/td><td>in case the requirement cannot be executed by indigenous contractors at reasonable rates<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<h3 class=\"src-G srchead\" data-src=\" G \">4.9.1<\/span>Terms and Conditions<\/span>G<\/span>reproduced in abridged form in W<\/span><\/h3><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\n1. Advertisement<\/strong> \u2014 as in OTE (see para 4.8.1-2 above)<\/em>.<\/p>\n2. Free availability of documents \u2014 as in OTE.<\/p>\n3. Pricing of documents \u2014 the tender documents shall be priced minimally (if at all priced), keeping in view the value of the tender as also the cost of preparation and publicity of the tender documents.<\/p>\n4. Language and standards: GTE tender documents must be in english and must contain technical specifications that are in accordance with national requirements or else based on an international trade standard.<\/p>\n5. E-procurement: In Global Tender Enquiry, e-procurement May not be mandatorily insisted upon. (But e-publishing remains mandatory \u2014 see Part A, para 4.6.1-4.)<\/em><\/p>\n6. Notice period: The due date fixed for the opening of the tender shall be a minimum of four weeks<\/em> From the date of advertisement \u2014 which may vary considering the nature of the material called for and the time required to prepare the bids. The due date may be subsequently extended with the approval of the CA to promote better competition and also considering the delivery requirement.<\/p>\n<aside class=\"note\">(Contrast OTE: minimum 21 days.)<\/em><\/p><\/aside>\n7. Incoterms: Relevant INCOTERMS (presently 2020 version) should be included in the tender.<\/p>\n8. Currency of Bidding G<\/span>: In GTE, foreign bidders have the flexibility to quote prices and receive payments in either<\/em> Indian rupees OR<\/em> Freely convertible currencies such as US dollars, euros, pound sterling, yen, other relevant currencies, or a combination thereof.<\/p>\nHowever, prices for goods, works, or services (including agency commission) performed or sourced in India<\/em> Must be quoted and paid for in Indian rupees.<\/p>\nIndian bidders are required to quote in INR only. During the evaluation, all quoted prices are converted into Indian Rupees.<\/p>\n<aside class=\"note\">Footnote: The Central Board of Indirect Taxes and Customs (CBIC)<\/strong> issues an Exchange Rate Notification under the Customs Act, 1962<\/strong>, which lists currencies and exchange rates for imported goods in Schedule I<\/strong> \u2014 which may indicate relevant currencies.<\/em><\/p><\/aside>\n9. Agency Commission G<\/span>: The amount of agency commission \u2014 normally not exceeding five per cent<\/em> \u2014 payable to the Indian agent (who shall provide self-attested documentary evidence about their identity and business details to establish that they are a bona fide business and conform to regulations) should not be more than what is specified in the agency agreement (a certified copy should be submitted along with the financial bid) between the bidder and the Indian Agent.<\/p>\nAgency commission shall be paid by the Procuring Entity in India in equivalent Indian rupees<\/em> On satisfactory completion of the project or supplies of goods and spares.<\/p>\nThe Indian agent will be required to submit a certificate along with their agency commission bill, confirming that the amount claimed as agency commission in the bill has been spent\/ will be spent strictly to render services to the foreign principal, in terms of the agency agreement.<\/p>\nThe Procuring Entity or their authorised agencies and\/ or any other authority of the Government of India shall have rights to examine the books of the Indian agent, and defects or misrepresentations in respect of the afore-indicated confirmation coming to light during such examinations will make the foreign principal (i.e., the contractor) AND<\/em> Their Indian agent liable to be debarred from having business dealings with the purchaser, following laid-down procedures for such debarment.<\/p>\n10. Delivery Terms G<\/span>: The delivery terms are to be expressed in terms of INCOTERMS.<\/p>\nAs per the revised policy of the Government<\/strong>(Ministry of Shipping's No. SC-18013\/1\/2013-ASO-I dated 08.09.2015)<\/em>:<\/p>\n<ul class=\"lst\"><li>All Public Procurement import contracts involving ocean freight of dry or liquid bulk cargoes<\/em> Are to be finalised only on a FOB (free on board)\/ FAS (free alongside ship)<\/em> BASIS, and in case of any departure therefrom, prior approval of the concerned administrative Ministry\/ Department May be obtained.<\/li><li>However, imports involving ocean freight of general liner cargoes, project cargoes, heavy lift, container, break bulk cargoes<\/em>, etc., can now be made on FOB\/ FAS\/ CFR (cost & freight)\/ CIF (cost, insurance & freight)\/ DDP (delivery duty paid at named place)<\/em> BASIS.<\/li><li>All importing Government departments\/ pses can now make their own shipping arrangements without needing to route their requirements through the chartering wing of the Ministry of shipping<\/em>.<\/li><li>As per the extant directive of the Government, airlifting of imported goods from abroad will be done only through an Indian carrier<\/em>, wherever applicable.<\/li><\/ul>\n11. Insurance G<\/span>: Wherever necessary, the goods supplied under the contract shall be fully insured in a freely convertible currency against loss or damage incidental to manufacture or acquisition, transportation, storage and delivery as specified in the contract.<\/p>\n<ul class=\"lst\"><li>If considered necessary, the insurance may be done for coverage on an \"all RISKS\" basis, including war risks and strike clauses.<\/li><li>The amount covered under insurance should be sufficient to cover the overall expenditure incurred by the purchaser for receiving the goods at the destination.<\/li><li>Insurance for imported goods\/ equipment would need to be arranged very carefully and only for cases where the value of individual shipments is expected to be more than rupees five crore<\/em>.<\/li><li>Procuring entities with substantial import contracts May arrange \"open cover (all risk)\" annual insurance for all imports during the year with insurance companies, instead of insurance for each import separately.<\/li><li>Where delivery of imported goods is required by the purchaser on CIF\/ CIP\/ DDP<\/em> Basis, the supplier shall arrange and pay for marine\/ air insurance, making the purchaser the beneficiary.<\/li><li>Where delivery is on a FOB\/ FAS<\/em> Basis, marine\/ air insurance shall be the purchaser's responsibility.<\/li><\/ul>\n12. Taxes on imports G<\/span>: Import of goods or services or both attracts integrated tax (IGST). The IGST rate and GST cess shall be applicable on the 'customs assessable value' PLUS<\/em> The 'basic customs duty applicable thereon'.<\/p>\nForeign bidders shall indicate the break-up of prices for: Freight, insurance, customs duty, port handling charges, clearing agency charges, related ITC (hs) code, IGST\/ GST cess, and related HSN code, as relevant to the quoted price basis.<\/p>\n<\/div><h3>4.9.2<\/span>Restrictions on Global Tenders up to Rs. 200 Crore<\/span><\/h3>\n1. The bar: No Global Tender Enquiry (GTE) shall be invited up to Rs. 200 crore, or any limit as May be prescribed by the Department of Expenditure from time to time.<\/p>\n2. The relaxation route: In exceptional cases where the Ministry or Department feels that there are special reasons for inviting GTE for tenders below such limit \u2014 including those in SLTE\/ LTE mode or on a single tender basis<\/em> \u2014 it May record its detailed justification and seek prior approval for relaxation<\/em> From the Competent Authority specified by the Department of Expenditure.<\/p>\na) The GTE Portal: The agencies\/ subordinate offices under the administrative control of a Ministry\/ Department that require to float a GTE for procurement of certain products\/ items\/ services shall submit their applications and comments online<\/em> Through the GTE portal under the e-samiksha platform via https:\/\/esamiksha.gov.in\/GTE_NFEProposalForm.aspx<\/em> OR https:\/\/cabsec.gov.in\/more\/globaltenderenquiryproposal\/<\/em> \u2014 starting from 5TH May 2022. No physical application will be received.<\/p>\nb) 'GTE portal', a user-friendly IT application under the e-Samiksha platform, was developed by the cabinet secretariat (ID No. 213\/2\/1\/2021-C.A.IV dated 02.05.2022)<\/em>. For more details, refer to GTE Guidelines on the eSamiksha portal.<\/p>\n3. The two mandatory pre-conditions before sending a GTE proposal:<\/p>\nA) a domestic open tender MUST<\/em> Be floated first<\/strong> to identify the domestic manufacturers\/ service providers for the items\/ services for which approval is being sought for issuance of Global Tenders.<\/p>\n<aside class=\"note\">If the Ministry\/ Department has not floated a domestic open tender after 15.05.2020<\/em> for the items to be procured through GTE, such proposals will not be entertained<\/em>.<\/p><\/aside>\nThe proposal must contain the details of domestic open tenders issued after 15.05.2020, covering:<\/p>\n<aside class=\"note\">Tender number \u00b7 date of opening \u00b7 number of offers received \u00b7 details of offers received \u00b7 reasons why domestic suppliers were not considered, etc.<\/p><\/aside>\nB) the proposal must contain details of deliberations with DPIIT\/ relevant industrial bodies regarding the identification of domestic manufacturers\/ service providers.<\/p>\n4. The eight exemptions from the Rs. 200 crore restriction:<\/p>\n<aside class=\"note\">It is emphasised that these exemptions are only from restrictions on GTE<\/em>, and the local content preferences and other features of MII policy would still be applicable<\/em>.<\/p><\/aside>\na) specialised research equipment: For procurement of specialised equipment required for research purposes, and spares and consumables for such equipment, for the use of educational and research institutes \u2014 the Secretary of the Ministry\/ Department concerned shall be the Competent Authority to approve the issue of GTEs, subject to fulfilment of conditions in sub-para 5 below. The equipment should be of a specialised nature and required for research purposes, not the routine equipment used in offices<\/em>. (OM No. 4\/1\/2021-PPD dated 11.06.2021)<\/em><\/p>\nb) ICT items: Gtes for procurement of ICT items, software and hardware such as blade servers, SAN storage, LAN switches, mobile testing devices, cloud orchestration & system software, network & web apts, mobile testing tools, integrated backup system (ibs), etc. Can be issued with the approval of the Secretary concerned, instead of Secretary (coordination)<\/em>, until further orders. (OM No. F.4\/1\/2022-PPD dated 29.08.2022)<\/em><\/p>\nc) nomination-basis procurements<\/strong>(as no competitive tenders are invited)<\/em>, inter alia<\/em> including:<\/p>\n<ul class=\"lst\"><li>I) procurement of spare parts of the equipment\/ plants & machinery, etc., on a nomination basis from original equipment manufacturers (OEMs) or original equipment suppliers (OES) or original part manufacturers (opms). (For this purpose, 'Spares' shall be taken to include CONSUMABLES for such equipment.)<\/em>(OM No. 12\/17\/2019-PPD dated 29.10.2020)<\/em><\/li><li>ii) procurement of services like Annual Maintenance Contract (AMC) and auxiliary\/ add-on components for existing equipment\/ plant & machinery, etc., which are procured from OEM\/ OES\/ OPM on a nomination basis. (OM No. F.4\/1\/2021-PPD dated 01.09.2021)<\/em><\/li><\/ul>\nd) PRE-15.05.2020 contractual commitments: Where procuring entities need to issue GTEs to fulfil contractual commitments\/ obligations entered by them before 15.05.2020 \u2014 i.e., a bid has been submitted by them to their clients before 15.05.2020. Similarly, where procuring entities need to issue GTEs in view of existing collaboration agreements they entered with foreign suppliers before 15.05.2020. (OM No. 4\/1\/2021-PPD dated 12.03.2021)<\/em><\/p>\ne) medical devices and drugs: Based on the reference received from the Ministry of Health & Family Welfare (MoH&fw), GTE can be floated for 354 medical devices<\/em> AND 120 DRUGS<\/em> (placed in Annexure 31 of the Goods Manual). These exemptions for medical devices and drugs are provided UP TO 31.03.2027<\/em> Till further orders. It is further clarified that:<\/p>\n<ul class=\"lst\"><li>I) the machine system includes spare parts and accessories, which May be procured by procuring entities together or separately.<\/li><li>ii) the Procuring Entity concerned May frame the detailed technical specifications for the above devices as per their requirement. (OM No. 4\/1\/2023-PPD(pt.) dated 28.06.2024 for devices; OM No. F.4\/1\/2023-PPD(pt) dated 07.06.2024 for drugs)<\/em><\/li><\/ul>\nf) mdb\/ bfa-funded projects: Projects funded by multilateral development banks (MDBs like The World Bank, Asian Development Bank, etc.)\/ bilateral funding agencies (BFAs), where the procurement is governed by the conditions negotiated in the loan agreement, and where the project executing agencies from time to time further award works to various Autonomous Bodies\/ CPSEs etc. \u2014 the Secretary of the Ministry\/ Department responsible for execution of such project shall be the Competent Authority for approval for issuance of GTEs by such autonomous bodies\/ CPSEs. (OM No. F.7\/12\/2021-PPD-I dated 27.07.2021)<\/em><\/p>\ng) semiconductor equipment: Procurement of SEMI-CONDUCTOR EQUIPMENT for the purpose of MANUFACTURING ELECTRONICS, and procurements by public-funded semiconductor and display fab facilities (including such facilities in institutes of high learning) \u2014 UP TO 31.03.2025. (OM No. F.4\/1\/2022-PPD-II dated 01.04.2022 and OM No. F.4\/1\/2023-PPD dated 23.03.2023)<\/em><\/p>\nh) procurement abroad for use abroad: GTE restriction up to Rs. 200 crore is not applicable<\/em> for bona-fide procurements done outside India for use outside India<\/em>, by CPSEs having international operations or by Indian missions abroad. Such entities should ensure that the bulk of procurement is done in India (and exported for their use abroad), as far as feasible \u2014 so as not only to promote Make in India but also to improve export performance.<\/p>\n5. The seven conditions attached to exemption 4(a) \u2014 Educational and Research Institutions<\/p>\nEducational, Research institutions, and other units will make full efforts towards reducing imports in the following manner. This will result in substantial effects both within the institutions and through impact on the eco-system:<\/p>\n<ol class=\"lst\"><li>Efforts should be made to promote technology transfer through agreements, or to encourage technological collaboration with foreign manufacturing in India with the start-ups set up in research parks.<\/li><li>Sharing and updating information about the availability of research equipment across various Indian institutes on a single portal \u2014 the I-STEM<\/em> portal has been developed for this purpose \u2014 so that the needy institutes can utilise those.<\/li><li>Without compromising quality, institutes should indicate alternative\/ equivalent technical specifications that could suit their requirement, so that there are more chances for local manufacturers to participate in the tender process.<\/li><li>Regular interaction between academia and Indian industry organisations at the level of the institution about the requirement of equipment of foreign origin and for encouraging domestic manufacturing.<\/li><li>Regular requirements of proprietary\/ non-proprietary research consumables May be assessed, and domestic alternatives May be explored for use.<\/li><li>The office of psa initiates a national-level programme for indigenous development of scientific equipment.<\/li><li>Without compromising quality, institutes should be flexible with specifications so that domestic manufacturers are encouraged to meet requirements.<\/li><\/ol>\n6. Guidelines for resorting to GTE (research institutions): a) market assessment should be done by the concerned institution, as certified by the head of the institution. Only after no Indian manufacturer is found<\/em> Should a GTE be issued. B) in case no Indian manufacturer\/ suppliers are found, procurement May be done through GTE, subject to compliance with provisions of GFR and the requirement of procurement through GeM. C) dean (r&d) or an appropriate authority within the institute will issue certificates as per sub-para 7 below before inviting GTE<\/em>. As a reporting matter in the board of governors, such certificates should be tabled and shared with the office of the psa, DPIIT, and the concerned administrative Ministry. d) The information about the procurement of equipment should be shared across various educational and research institutes through the i-stem portal. This will allow the equipment to be used by other institutions for research purposes too. e) analyse the equipment being procured time and again from abroad and help develop them in India by identifying potential manufacturers and providing them with technical assistance and expertise. This programme will be coordinated by the empowered technology group (constituted by Cabinet and chaired by the principal scientific adviser \u2014 psa). Half-yearly reports on this action are to be shared by the institutes with the office of the psa, DPIIT, and concerned administrative Ministry. f) preference for local suppliers over foreign suppliers, as per the existing Government of India guidelines, should be observed as applicable.<\/p>\n7. The three certificates to be issued: A) certification that locally available alternatives with equivalent specifications are not suitable for research purposes. B) the non-availability of such equipment for research purposes with nearby research institutes or within the institute. C) certification of the requirement of proprietary items of foreign origin for research purposes (where applicable).<\/p>\n<h3>4.9.3<\/span>GTE \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>Risks are the same as in OTE<\/td><td>the same mitigation as in the case of OTE also applies here.<\/td><\/tr><tr><td>The involvement of foreign bidder agents in GTE procurements is also a major risk area.<\/td><td>Procurements should preferably be made directly from the manufacturers<\/em>. Either the agent on behalf of the foreign principal OR<\/em> The foreign principal directly could bid in a tender \u2014 but not both<\/em>. Further, in cases where agents participate in a tender on behalf of one manufacturer, they should NOT<\/em> Be allowed to quote on behalf of another manufacturer along with the first manufacturer. Commissions and scope of services to\/ by the agents should be explicit and transparent in the bids\/ contracts.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2 class=\"src-G srchead\" data-src=\" G \">4.10<\/span>Rate Contract (RC)\/ Framework Agreement (FA)<\/span>G<\/span>text; W\/C\/NC list it as a separate family and cross-refer<\/span><\/h2><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\"><h3>4.10.1<\/span>Definition<\/span><\/h3>\nA Rate Contract (commonly known as rc) is an agreement between the purchaser and the supplier for the supply of specified goods (and allied services, if any) at a set price and terms & conditions (as incorporated in the agreement) during the period covered by the Rate Contract.<\/p>\n<aside class=\"note\">Rc is most frequently used in the procurement of goods but can also be used mutatis mutandis<\/em> In works, services, and consultancy \u2014 where it is commonly known as a framework Agreement (fa)<\/em>.<\/p><\/aside>\nNo quantity is mentioned, nor is any minimum drawable quantity guaranteed in the Rate Contract.<\/p>\nThe Rate Contract is a standing offer<\/em> From the supplier firm. The firm and\/or the purchaser are entitled to withdraw\/ cancel the Rate Contract by serving an appropriate notice on each other, giving suitable notice (say thirty days).<\/p>\nHowever, once a supply order (also called withdrawal order<\/em>) is placed in terms of the Rate Contract, during the validity period of the Rate Contract, on the supplier for the supply of a definite quantity \u2014 that supply order becomes a valid and binding contract<\/em>.<\/p>\n<h3>4.10.2<\/span>The Nine Items Amenable to Rate Contract<\/span><\/h3>\nThe following types of items can be advantageously procured through Rate Contracts:<\/p>\n<ol class=\"lst\"><li>Goods that are regularly or repetitively required by more than one Procuring Entity\/ organisation.<\/li><li>The quantities required cannot be accurately forecast.<\/li><li>Individual requirements of procuring entities may be small, but the total aggregate requirements of all the procuring entities are more than rs. 50 lakh per annum.<\/li><li>The item has detailed specifications, drawings, and descriptions.<\/li><li>Prices of the items are stable \u2014 or, if prices are variable, they can be determined through a Price Variation Clause.<\/li><li>Items are not scarce\/ critical\/ 'perpetually in short supply' goods or services.<\/li><li>Demand for the item is not seasonal<\/em>, since Rate Contract holders May shy away from supplying the item during high seasonal demands and dump supplies during low demand season.<\/li><li>Spares used for maintenance of expensive equipment\/ machines, from OEMs, to facilitate uninterrupted supply of genuine spares.<\/li><li>Consumables used by advanced research, development and scientific institutes\/ organisations of the Government of India<\/strong>(e.g., glass wares, plastic wares, chemicals, bio-chemicals etc. \u2014 the examples are illustrative, not exhaustive).<\/em><\/li><\/ol>\n<h3>4.10.3<\/span>Merits of Rate Contract<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>a) Benefits to USERS<\/th><th>b) Benefits to SUPPLIERS<\/th><\/tr><\/thead><tbody><tr><td>I) competitive and economical price due to aggregation of demands<\/td><td>i) reduces marketing costs and efforts<\/td><\/tr><tr><td>ii) saves time, effort, person-hours, and related costs involved in the time-consuming and repetitive tender process \u2014 thus reduces lead time for procurement<\/td><td>ii) eliminates repetitive tendering and follow-up actions with multiple authorities<\/td><\/tr><tr><td>iii) availability of quality goods with full quality assurance backup<\/td><td>iii) provides single-point contact for govt. Supplies<\/td><\/tr><tr><td>iv) enables procurement as and when required \u2014 thus reduces inventory carrying cost<\/td><td>iv) aggregation of govt. Demand leads to economic production<\/td><\/tr><tr><td>V) advantageous even to small users and those located in remote areas<\/td><td>V) improves the credentials of the company<\/td><\/tr><tr><td>vi) provides one single point of contact to procure such items<\/td><td>vi) promotes quality discipline<\/td><\/tr><\/tbody><\/table><\/div>\n<h3>4.10.4<\/span>Terms and Conditions<\/span><\/h3><h4>1.<\/span>Conclusion of Rate Contracts, including Parallel Rate Contracts<\/span><\/h4>\na) any organisation can enter a Rate Contract for items amenable to the Rate Contract for its procuring entities' use (e.g., in different geographical regions\/ subsidiaries). A Central purchase organisation can also enter a Rate Contract for several organisations that require the subject goods. No indents are required to enter a Rate Contract; Only an estimate of the annual requirements<\/em> Of different ultimate users is needed.<\/p>\nInspection and testing of such goods or services, wherever required, may be arranged by the agency entering into the rate contract.<\/p>\nThe agency entering the Rate Contract should post the descriptions, specifications, prices and other salient details of the entire rate-contracted goods or services, appropriately updated, on its website for use by the procuring entities.<\/p>\nB) mode: Rate Contract enquiries should preferably<\/em> BE THROUGH e-procurement or Open Tender Enquiry \u2014 but Limited Tender Enquiry\/ Single Tender Enquiry can also be used if justified by the nature of the requirement. Specific special terms and conditions for the Rate Contract should be added to the Tender Documents.<\/p>\nC) past performance review: Performance against earlier\/ current rate contracts of past\/ current Rate Contract holders shall be critically reviewed<\/em> Before they are considered for award of new rate contracts. Specific performance and achievement criteria as on a selected cut-off date are to be evolved for this purpose and incorporated in the tender enquiry document. The tenderers will be asked to furnish the relevant details (along with their bids) to enable the purchaser to judge their performance and achievement against the past\/ current rate contracts.<\/p>\nd) Evaluation: Procedures stipulated for evaluation of bids and award of contract shall be applicable mutatis mutandis<\/em> In the finalisation of Rate Contract \u2014 including provisions for negotiations\/ counter-offer and splitting of contracts (parallel contracts).<\/p>\nE) parallel rate contracts: Depending on the anticipated demand of the item, location of the users, capacity of the responsive bidders, reasonableness of the prices quoted, etc. \u2014 parallel rate contracts May be awarded to more than one (preferably at least three<\/em>) supplier. For transparency and to avoid criticism, all such parallel rate contracts are to be issued simultaneously<\/em>, as far as feasible.<\/p>\n<h4>2.<\/span>Period of Rate Contract<\/span><\/h4>\nA Rate Contract should typically be for one year<\/em> for stable technology products. However, in exceptional cases, a shorter or longer period of not more than two years<\/em> May be considered.<\/p>\nAs far as possible, the validity period of rate contracts should be fixed in such a way as to ensure that new budgetary levies would not affect the price<\/em> And thereby frustrate the contracts.<\/p>\nAttempts should also be made to stagger<\/em> The period of rate contracts for different items throughout the year.<\/p>\n<h4>3.<\/span>The Nine Special Conditions Applicable for Rate Contract<\/span><\/h4>\n<aside class=\"note\">Some conditions of rate contracts differ from the usual conditions suitable for ad hoc contracts.<\/p><\/aside>\nA) the Procuring Entity May prescribe the amount of Bid Security in the tender document.<\/p>\nB) no quantity is mentioned in the Schedule of requirement; Only the anticipated drawable quantity is mentioned without commitment<\/em>.<\/p>\nC) the purchaser reserves the right to conclude one or more than one Rate Contract for the same item.<\/p>\nD) the purchaser and the supplier May short-close<\/em> The Rate Contract by serving suitable notice to each other. The prescribed notice period is generally fifteen to thirty days<\/em>.<\/p>\ne) Re-negotiation and repeat bidding: The purchaser can re-negotiate the price with the Rate Contract holders even during the validity<\/em> If market conditions change significantly \u2014 or undertake repeat competitive bidding through open\/ advertised tenders on the same terms and conditions, including specifications, during the validity period of existing valid r\/cs. In such cases, the existing r\/c holders can bid, apart from the new eligible bidders, and equal and fair opportunity would be provided. If the prices received are found lower than the existing r\/c prices, new r\/cs May be awarded at reduced prices, and existing r\/cs at higher prices May be short-closed \u2014 giving adequate notice \u2014 if they do not match such reduction in prices under the fall clause.<\/p>\nF) in an emergency, the purchaser May purchase the same item through an ad hoc contract with a new supplier.<\/p>\nG) the purchaser and the authorised users of the Rate Contract are entitled to place supply orders up to the last day of the validity<\/em> Of the Rate Contract \u2014 and though supplies against such supply orders will be delivered beyond<\/em> The validity period of the Rate Contract, the terms & conditions of the Rate Contract will guide all such supplies.<\/p>\nh) the fall clause \u2014 the price safety mechanism in rate contracts:<\/p>\nThe fall clause provides that if the Rate Contract holder reduces its price, or sells, or even offers to sell<\/em> The rate-contracted goods or services (following conditions of sale similar to those of the rate contract) at a price lower than the Rate Contract price, to any person or organisation<\/em> During the currency of the Rate Contract \u2014 the Rate Contract price will be automatically reduced with effect from that date<\/em> for all subsequent supplies under the Rate Contract, and the Rate Contract amended accordingly.<\/p>\nOther parallel Rate Contract holders, if any, are also to be allowed to reduce their price by notifying the reduced price to them, giving 07 (seven) days<\/em> To intimate their revised prices, if they so desire, in a sealed cover to be opened in public on the specified date and time, and further action taken as per standard practice.<\/p>\n<aside class=\"note\">The abuse warning: On many occasions, the parallel Rate Contract holders attempt to grab more orders by unethical means<\/em> By announcing a price reduction (after getting the Rate Contract) under the guise of the fall clause. This situation must be handled similarly. It is, however, very much necessary that the purchase organisations keep a particular watch on the performance of such Rate Contract holders who reduce their prices on one pretext or another. If their performances are not up to the mark, appropriately severe action should be taken against them \u2014 including deregistering<\/em> THEM, suspending business deals<\/em> With them, debarring them for up to two years<\/em> From participating in the tender enquiry floated by the concerned purchase organisation, etc.<\/p><\/aside>\nThe four exceptions \u2014 the provisions of the fall clause will NOT<\/em> Apply to:<\/p>\n<ul class=\"lst\"><li>I) export\/ deemed export by the supplier;<\/li><li>ii) sale of goods or services as original equipment<\/em> At prices lower than the price charged for routine replacement<\/em>;<\/li><li>iii) sale of goods (such as drugs) which have expiry dates<\/em>;<\/li><li>iv) sale of goods or services at lower prices \u2014 <\/li><li>1) on or after the date of completion of placement of order of goods by the Procuring Entity, under the existing or previous rate contracts;<\/li><li>2) under any previous contracts entered with the Central or State Government departments, including new undertakings (excluding joint sector companies and\/ or private parties<\/em>) and bodies.<\/li><\/ul>\nI) the fall clause certificate: The Rate Contract holder shall furnish the following certificate to the concerned paying authority along with each bill<\/em> for payment of supplies made:<\/p>\n<aside class=\"note\">\"I\/We certify that there has been no reduction in the sale price of the goods of description identical to the goods supplied under this contract, and such goods have not been offered\/ sold by me\/ us to any person\/ organisation \u2014 including the purchaser or any department of Central Government or any [State Government\/ PSU], as the case may be \u2014 up to the date of bill\/ the date of completion of supplies against all supply orders placed during the currency of the Rate contract, at a price lower than the price charged under the contract.\"<\/em><\/p><\/aside>\n<h4>4.<\/span>Performance Security<\/span><\/h4>\nDepending on the anticipated overall drawable annual quantity against a rate contract, and the anticipated number of parallel rate contracts to be issued for an item \u2014 the Department May consider obtaining Performance Security @ 3% to 5% of the value of supply order<\/em> In the supply orders issued against rate contracts on the Rate Contract holder.<\/p>\n<h4>5.<\/span>Placement of Supply Orders<\/span><\/h4>\na) Who may place them: Procuring entities nominated (CALLED direct demanding officers \u2014 DDO<\/em>) in the Rate Contract can place supply\/ withdrawal orders in terms of the rate contract during the validity period of the rate contract on the Supplier for the supply of definite quantities. An indent with required administrative and financial approvals is required before<\/em> A supply order can be placed.<\/p>\nAlternatively, the organisation managing the Rate Contract can centrally administer the placement of withdrawal orders against indents from the constituents.<\/p>\nb) The mandatory-use rule and its small-value escape: Once a Rate Contract is available, all nominated procuring entities (DDOs) must mandatorily<\/em> Procure the item only through supply orders on the Rate Contract holders.<\/p>\nIn case of an emergency, if a Procuring Entity directly procures rate-contracted goods or services from the suppliers \u2014 the prices to be paid for such goods or services shall not exceed<\/em> Those stipulated in the Rate Contract, and the other salient terms and conditions of the purchase should be in line with those specified in the Rate Contract. However, they May be permitted to procure a small value of their requirements directly \u2014 say up to Rs. One lakh at one time and not more than Rs. 5 lakh annually<\/em> \u2014 following relevant procedures.<\/p>\nC) upper threshold on supply orders: The Procuring Entity May stipulate an upper threshold of value for supply orders received against the Rate Contract by the rc holder. Except with prior approval of the Procuring Entity, the contractor shall not comply<\/em> With the supply orders received from the ddos exceeding such threshold amount.<\/p>\nD) the five criteria for choosing among parallel rc holders: All parallel rcs for an item \u2014 even at differential rates<\/em> \u2014 are assumed to be at reasonable rates. The Procuring Entity can select any rc holder, following transparent and equitable criteria. The following factors May be kept in view:<\/p>\n<ul class=\"lst\"><li>I) the Rate Contract price.<\/li><li>ii) the past performance of firms with reference to their capacity, quality of supplies, as well as timely delivery of the goods.<\/strong>Procuring Entities should maintain suitable records for past performance with respect to timely delivery and quality.<\/em><\/li><li>iii) there is a need for reputed brands in the case of sensitive, critical, and vital requirements.<\/li><li>iv) the proximity of the Rate Contract holder, where proximity is considered crucial for timely delivery, ease of progressing, and from the point of view of logistics and contract management, etc.<\/li><li>v) the delivery dates committed by various Rate Contract holders with respect to the delivery requirements of the Procuring Entities.<\/li><\/ul>\nE) the delivery-time problem in rate contracts: In rate contracts, if the time FOR delivery is not fixed by mutual agreement<\/em>, IT IS not the essence of the contract<\/em> AND IS not binding<\/em> On the supplier. Therefore, no Liquidated Damages can be levied<\/em> for non-supply or delay in supply against such orders.<\/p>\nThat being so, under section 46 of the contract Act, the goods are only to be delivered within a \"Reasonable time\"<\/em> \u2014 which is a rather vague concept.<\/p>\nBut where there has been an unreasonable delay in delivery, the direct demanding officer (DDO) has the right to give the contractor notice, fixing a reasonable time FOR delivery of the goods and stipulating that delivery within the time specified shall be the essence of the contract<\/em>. If the goods are not delivered within this period, the supply order can be cancelled by the agency that finalised the Rate Contract<\/em> (Since he alone, not the DDO<\/em>, is a party to the Rate Contract), and deficient performance is noted for future rate contracts.<\/p>\nf) The cure \u2014 obtaining a prior delivery commitment: However, in cases where the delivery date stipulated in the relevant order has been expressly agreed to by the supplier in writing before placing the relevant order<\/em> \u2014 Liquidated Damages CAN<\/em> Be recovered (by the agency that entered into the Rate Contract) from the supplier on account of delay in delivery beyond the stipulated delivery date \u2014 provided the agency that finalised the Rate Contract has not in any way interfered with the supplier's discretion to meet the said supply order by directing the supplier to give priority to some other supply orders. Therefore, it is advisable that, before placing the supply order<\/em> On a Rate Contract holder, a commitment is obtained from him for the delivery period.<\/p>\ng) Approval before ordering: Before creating the supply order, approval of the ca (depending on the value of procurement) May be taken by submitting information about all the available parallel rcs<\/em> And justifying the selection of a particular rc holder.<\/p>\nh) The ten essential details of a supply order:<\/p>\n<aside class=\"note\">i) Rate Contract No. and date; ii) QUANTITY (where there is more than one consignee, the quantity to be despatched to each consignee is to be indicated)<\/em>; iii) Price; iv) date of delivery by which supplies are required (a definite delivery date based on the delivery period stipulated in the rate contract is to be provided)<\/em>; v) Full address of the purchase organisation along with telephone no., fax no., and e-mail address; vi) Complete and correct designation and full postal address of the consignee(s)\/ goods receiving officer(s) along with telephone no., fax no., and e-mail address; vii) nearest railway siding (NRS) of the consignee(s), if applicable; viii) Despatch instructions; ix) Designation and address of the INSPECTING OFFICER, if any; x) Designation and address of the PAYING AUTHORITY to which the Supplier will raise the bills. Copies of supply orders are to be endorsed to all concerned.<\/strong><\/p><\/aside>\n<h4>6.<\/span>Renewal of Rate Contracts<\/span><\/h4>\nIt should be ensured that new rate contracts are made operative right after the expiry of the existing rate contracts without any gap<\/em> for all rate-contracted items.<\/p>\nIn case it is not possible to conclude new rate contracts for some special reasons, timely steps are to be taken to extend the existing rate contracts with the same terms, conditions, etc., for a suitable period, with the consent of the Rate Contract holders<\/em>.<\/p>\nRate contracts of the firms who do not agree<\/em> To such extension are to be left out.<\/p>\nAlso, while extending the existing rate contracts, it shall be ensured that the price trend is not lower<\/em>.<\/p>\n<h3>4.10.5<\/span>RC \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. A Rate Contract is not the right mode<\/em> For critical, strategic, and vital requirements, since the buyer-seller relationship is TRIPARTITE, and the timely supply of requirements and penalties thereof cannot be strictly enforced as in other modes. In situations where items have inadequate annual or seasonal capacities in the market, the rc holders May dump material<\/em> On the Procuring Entity during the wrong seasons and starve<\/em> Them during working seasons. This happens in, say, CEMENT \u2014 where government buyers are likely to be saddled with huge supplies during the rainy season, but RC holders may divert the bulk of supplies to the private market during the working season.<\/em> RC Purchase is not SUITABLE for requirements of dynamic technological and price changes \u2014 e.g., PCs, laptops, tablets, servers, and mobile phones \u2014 where the price of older models may crash as soon as a new model is announced. RC holders may slow down supplies initially but dump supplies when prices crash in the market.<\/td><td>Rcs May be avoided for critical\/ strategic and vital requirements. For seasonal and short-supply items, procuring entities May monitor and provide clauses to prevent dumping and starving of supplies. In technologically fast-changing products, the Procuring Entity May keep an eye on market prices and re-negotiate them as soon as market prices fall significantly due to new arrivals.<\/td><\/tr><tr><td>2. The existence of rcs May not be adequately made known to possible users. Moreover, the reverse risk is that many different offices May keep procuring the same item independently \u2014 thus missing the potential benefits of bulk prices and simplified processes if such items were brought under an rc.<\/td><td>The descriptions, specifications, and other salient details of all rcs should be appropriately updated and made available on the Procuring Entity website as well as the e-procurement portal. The e-procurement system should be able to offer alerts<\/em> About the availability of rc if an attempt is made to float a tender for the same item. To derive benefit from bulk prices in rc, all offices should furnish to the rc agency their annual requirement of items to enable the finalising of RCs after inviting quotations.<\/td><\/tr><tr><td>3. Rc procurements are at risk of being ordered more than actual requirements<\/em>, since the procurement scrutiny may not be as intense as in the case of other modes of procurement.<\/td><td>The quantity being ordered should be subject to the same level of scrutiny<\/em> As in other modes of procurement, to ensure that there is no abnormal, unexplainable trend in procurement.<\/td><\/tr><tr><td>4. Wherever there are PARALLEL RCs for the same item from several firms, there May be intense and often unhealthy lobbying (including corrupt practices) from them to seek orders.<\/td><td>1. Procuring entities must put in place adequate guidelines to handle rc procurements \u2014 including a transparent system of choosing the rc holders by rotation<\/em> In a transparent manner in case of parallel rcs. (Suggested criteria at para 4.10.4-5-d.)<\/em> The delegation of powers in this regard should also be restricted, keeping these risks in view. 2. The Procuring Entity should maintain suitable records of rc firms for past performance with respect to timely delivery and quality. 3. Wherever there are FAILURES against the rate contract in terms of timely delivery and quality of goods, such failures should be reported to the agency that entered the Rate Contract, and direct alternate procurement action May be taken to ensure the timely availability of quality materials to meet the needs of the Procuring Entity.<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h2>4.11<\/span>Dynamic Price Discovery \u2014 Electronic Reverse Auction (eRA)<\/span><\/h2>\n(Rule 167 of GFR 2017)<\/em><\/p>\n<aside class=\"note\">PLACEMENT NOTE: eRA appears as a mode of procurement in the Goods Manual (4.5), as a channel of procurement in the Works Manual (3.5.2), as both an advertised mode and a channel in the Non-Consultancy Manual (4.4-3-a-iii and 4.6.2), and is entirely absent from the consultancy Manual.<\/p>\nNC<\/span> states expressly: *\"<\/strong>electronic Reverse Auction (era): Not appropriate where QCBS system of evaluation is used in the procurement of non-consultancy services.\"*<\/p><\/aside>\n<h3>4.11.1<\/span>What eRA Is<\/span><\/h3>\nElectronic Reverse Auction (eRA \u2014 a type of auction classified as a dynamic procurement mode<\/em>) is an online real-time purchasing technique used to select a successful bid.<\/p>\neRA IS AN iterative process with automatic evaluation of bids<\/em>, where bidders can offer successively more favourable bids to displace the lowest bid at any given moment within the duration of the era.<\/p>\nThe following four parameters are announced before the start<\/em> Of the online Reverse Auction:<\/p>\n<aside class=\"note\">1. The starting price \u00b7 2. Minimum bid decrement \u00b7 3. Duration of the auction \u00b7 4. The maximum number of automatic extensions<\/p><\/aside>\nif a new lower bid is received within the last few minutes (pre-announced, say five minutes<\/em>) of closing time, the closing time May get automatically extended by a few minutes (pre-announced, say ten minutes<\/em>) for others to respond. A maximum number of such extensions May be pre-announced (say 50<\/em>).<\/p>\nThe most favourable bid at the end of the stipulated\/ extended time is declared as successful. It has, however, to be ensured that the entire process is conducted transparently and fairly.<\/p>\n<h3>4.11.2<\/span>The Four Reasons Why Caution Is Advised<\/span><\/h3>\nElectronic reverse auctions can be a powerful tool for procuring goods and services, but they also come with potential risks and drawbacks:<\/p>\nA) quality and supplier relationships: In an era, the focus is on price, and suppliers May be forced to cut corners<\/em> To win bids \u2014 affecting the overall quality of the product or service. Additionally, aggressive bidding can strain supplier relationships<\/em>, leading to long-term negative effects.<\/p>\nb) value for Money: While reverse auctions can drive down immediate costs, THEY may not optimise Value for Money<\/em>. Factors like Total Cost of Ownership, lifecycle costs, innovation, reliability, sustainability, and strategic alignment May get overlooked.<\/p>\nC) lack of technology development: Suppliers May hesitate to invest in innovation or process improvements if they are constantly pressured to lower prices. This can hinder long-term competitiveness and limit the introduction of new technologies or ideas in hi-tech goods and services.<\/p>\nD) risk of supplier dropouts: Aggressive bidding can lead to suppliers dropping out of the market segment<\/em>, reducing competition. If critical suppliers exit, it can disrupt the supply chain and impact availability.<\/p>\n<aside class=\"note\">Thus, while electronic reverse auctions can drive cost savings, they should be used judiciously<\/em>, considering the broader implications beyond price alone. Therefore, era should not be used indiscriminately or as a default mode of procurement<\/em>.<\/p><\/aside>\n<h3>4.11.3<\/span>Where eRA Is Appropriate, Where Caution Is Needed, and Where It Is Inappropriate<\/span><\/h3><h4>A) a Reverse Auction Would Be Appropriate Where:<\/span><\/h4>\n<ul class=\"lst\"><li>I) items are commodities, commercially-off-the-shelf items;<\/li><li>ii) it is feasible to formulate a detailed description of the subject matter of the procurement;<\/li><li>iii) there is a competitive market of bidders (say more than five<\/em>) anticipated to be qualified to participate in the era, so that effective competition is ensured;<\/li><li>iv) the criteria to be used by the Procuring Entity in determining the successful bid are quantifiable and can be expressed in monetary terms<\/em>.<\/li><\/ul>\n<h4>B) Where Caution is Needed in Using Reverse Auction:<\/span><\/h4>\n<ul class=\"lst\"><li>i) In the case of repetitive\/ regularly procured items, future procurements May be affected, as there may not be the same type of price reduction in future procurements as in the first Reverse Auction. Procuring entities May face a situation of not being able to justify the higher rates received subsequently<\/em>.<\/li><li>ii) where it is proposed to issue parallel orders by splitting the total order quantity among more than one supplier, a Reverse Auction May be avoided. However, in such a case, if the Reverse Auction is resorted to, then there should be adequate suppliers available \u2014 i.e., if the quantity is to be split into n parts, then suppliers available should be at least N+3<\/em>.<\/li><\/ul>\n<h4>C) Reverse Auction Would NOT<\/em> Be Appropriate For:<\/span><\/h4>\n<ul class=\"lst\"><li>I) the requirement is not of high enough value to generate competitive pressures on bidders;<\/li><li>ii) items of strategic\/ critical\/ vital\/ high technically complex nature; Items that are in short supply in the market;<\/li><li>iii)<\/strong>where the QCBS<\/em> System of selection is used<\/strong>(wherever permissible in case of Consultancy, Non-consultancy Services or Works)<\/em>;<\/li><li>iv) where FBS (Fixed Budget Based Selection)<\/em> System of selection is used in consultancy services, wherein the only parameter for evaluation is quality\/ technical criteria;<\/li><li>V) in engineered products having complexity in design;<\/li><li>vi) EPC contracts and complex works contracts;<\/li><li>vii) items where there are only a few suppliers.<\/li><\/ul>\n<h3>4.11.4<\/span>Terms and Conditions<\/span><\/h3><h4>A. The Procedure<\/span><\/h4>\ni) STAND-ALONE eRA: The procuring entity shall solicit bids through an invitation to the electronic Reverse Auction<\/em>, to be published or communicated in accordance with provisions like e-procurement. The invitation shall, in addition to the information as specified in e-procurement, include details relating to:<\/p>\n<aside class=\"note\">1) access to and registration for the auction; 2) opening and closing of the auction; 3) norms for the conduct of the auction; 4) any other information that May be relevant to the method of procurement.<\/p><\/aside>\nii) era preceded by PQB: If the consideration of quality requires competition only among qualified bidders, era May be preceded by a stage of PQB (on the same platform as era) to shortlist qualified bidders, who would only be allowed to participate in the era process that follows.<\/p>\niii) tender-cum-e-Reverse Auction (the combined procedure): Procuring entities May combine a full two-envelope e-procurement process with Reverse Auction. Then, after an e-procurement process, the e-Reverse Auction process is mandatorily conducted<\/em>, taking the L1 price as the benchmark (upper limit)<\/em>, after the financial bid opening (declaration of L-1 landed price\/s) \u2014 provided the number of valid bidders is not less than a stipulated number (3 if not specified)<\/em>.<\/p>\niv) the shortlisting formula for the combined procedure: Unless otherwise stipulated, the following procedure shall be followed for elimination\/ shortlisting of bidders (from among those qualified in the preceding e-Procurement process) eligible to participate in e-Reverse Auction:<\/p>\n1) the bids disallowed from participating in the Reverse Auction shall be the highest bidder(s)<\/em> In the tabulation of prices in the financial bid. If the highest bidders quote the same rate<\/em>, the price offer received LAST<\/em>, as per the time log of the portal, shall be removed first \u2014 on the principle of last in, first out<\/em> By the system.<\/p>\n2) the three bands:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Number of valid bidders<\/th><th>Consequence<\/th><\/tr><\/thead><tbody><tr><td>Less THAN the minimum stipulated number (or 3 if not specified)<\/td><td>a Reverse Auction shall NOT<\/em> Be conducted, and the financial bids from the e-procurement process shall be evaluated and finalised<\/td><\/tr><tr><td>4 TO 6 valid bidders<\/td><td>THE lowest three (3)<\/em> Bidders shall be allowed to participate in the Reverse Auction<\/td><\/tr><tr><td>More THAN 6 valid bidders<\/td><td>ONLY 50% of the bidders<\/em> (Rounded up to the next integer) shall be allowed to participate<\/td><\/tr><\/tbody><\/table><\/div>\n3) the preference override: However, if MSE bidders or class-i local suppliers<\/em> Under the Make in India policy do not meet the above criteria, but their prices in financial bids are within the policy's margin of preference<\/em>, they shall be allowed to participate. Such bidders would be over and above<\/em> The shortlist mentioned above.<\/p>\n<h4>B. The e-Reverse Auction Process (e-RAP)<\/span><\/h4>\n<aside class=\"note\">If the portal e-rap process is different from the one described below for the combined procedure, the portal provisions shall prevail<\/em>.<\/p><\/aside>\nI) there shall be no participation fees<\/em> for the e-Reverse Auction.<\/p>\nii) where pre-qualification precedes the era, an electronic invitation shall be issued, giving sufficient notice period<\/em> To the successful bidders, so that they can formulate pricing strategies. The starting price shall be decided by the Procuring Entity.<\/p>\niii) in case of the combined procedure, upon opening the financial bids, a Reverse Auction platform shall be created. The Reverse Auction shall start within the specified period (two hours if not specified<\/em>) of the bid. Unless modified by the Procuring Entity, THE L-1 landed price<\/em> In the financial bid (as per the calculation schema based on the Tender Document evaluation criteria) shall be the start bid price<\/em> On which the auction shall be initiated.<\/p>\niv) the decrement value: The Procuring Entity shall specify the decrement value before starting<\/em> THE e-Reverse Auction \u2014 or, if not specified, 0.5% of the start bid price<\/em>, rounded off to the next unit, tens, hundreds, thousands, etc., with a minimum of Rs. 1<\/em>. The reduction in bids shall have to be made as per decrement value or in multiples thereof.<\/p>\n<aside class=\"note\">A bid decrement that is too small<\/em> May prolong the auction, and a decrement that is too large<\/em> May restrict competition.<\/p><\/aside>\nV) the timing parameters and their defaults:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Parameter<\/th><th>Default if not specified<\/th><\/tr><\/thead><tbody><tr><td>Initial period of the reverse auction<\/td><td>two hours<\/td><\/tr><tr><td>Last-minute-bidding period<\/td><td>five minutes<\/strong> before the auction closing time<\/td><\/tr><tr><td>Auto-extension period<\/td><td>ten minutes<\/td><\/tr><tr><td>Maximum number of auto-extensions<\/td><td>50<\/td><\/tr><\/tbody><\/table><\/div>\nall times and periods are as per the server time stamp<\/em>.<\/p>\n<aside class=\"note\">The design cautions: The last-minute-bidding period should not be so small<\/em> That unscrupulous bidders May catch others off guard, preventing competitive responses. The auto-extension period should be sufficient to allow bidders to consider their next move<\/em>. The number of auto-extensions should not be too large<\/em> To prolong the auction, leading to bidder fatigue<\/em>.<\/p><\/aside>\nvi) service disruption: In case of service disruption at the service provider's end during the Reverse Auction, the Reverse Auction process shall start all over again<\/em>, with the last recorded lowest price of the prematurely ended e-rap as the 'start bid' price<\/em>.<\/p>\nThe prices quoted in the prematurely ended e-rap shall be binding on all the bidders<\/em> for consideration if the restarted process does not trigger within the stipulated time (or by 5.00 pm on the same day, if not stipulated<\/em>).<\/p>\nDisruption and restarting of e-rap shall be intimated to all the bidders through system\/ sms\/ e-mail through the e-procurement portal.<\/p>\nvii) What is displayed: Bidders must submit only the landed price<\/em> In the Reverse Auction, and only the item-wise L-1 price shall be displayed<\/em>, without disclosing the number of bids and names of the bidders. The landed price would not be the same for two bidders<\/em>, even if any bidder makes such an attempt.<\/p>\nWhile evaluating the bids, the exchange rate captured by the e-procurement system shall be considered for converting foreign currency into Indian rupees.<\/p>\nviii) Post-closure publication: After the auction's closing time, the bid history<\/em> Showing all the last valid bids offered, along with the names of the bidders<\/em>, shall be published. All bidders shall have the facility to see and get a print of the same for their records.<\/p>\nix) binding force: All electronic bids submitted during the Reverse Auction process shall be legally binding<\/em> On the bidder. Only the chronologically last bid<\/em> Submitted by a bidder until the end of the auction shall be considered the valid financial bid of that bidder, and consideration of the same for entering into a contract by the Procuring Entity shall be binding on the bidder.<\/p>\nX) non-participation in the combined procedure: If a bidder does NOT<\/em> Submit his bid in the Reverse Auction, the price quoted in the financial bid in the preceding e-procurement shall be considered the valid price of that bidder. The status of the bidder (L-1, L-2, etc.) shall be evaluated considering either the bid price submitted in the Reverse Auction, or the price quoted in the financial bid \u2014 whichever is lower<\/em>.<\/p>\nxi) purchase preference: Short-listed MSE or class-i local suppliers, eligible for any purchase preference policy as per the tender document, shall get an opportunity to match the L-1 prices concluded after the Reverse Auction<\/em>, if their final prices in the Reverse Auction fall within the permitted percentage.<\/p>\nxii) there shall NOT<\/em> Be any negotiation after the e-Reverse Auction process is closed.<\/p>\nxiii) the breakup of landed price: The successful L-1 bidder, after the Reverse Auction, must upload within a stipulated period (within 2 working days, if not specified<\/em>) THE breakup of landed prices<\/em> In the shortfall documents, at which the contract shall be awarded.<\/p>\nWhile giving the breakup, the bidder shall include the same taxes and duties<\/em> As quoted while submitting the financial bid. If the L-1 bidder FAILS<\/em> To submit the breakup of the landed price within the stipulated period, the Procuring Entity shall place an order based on the breakup of the financial bid submitted by the bidder<\/em>, and the same shall be binding on the bidder.<\/p>\nxiv) Monitoring for abuse: The Procuring Entity shall monitor whether there is improper use<\/em> Of the Reverse Auction \u2014 including, for example, evidence of predatory pricing, collusion, interference with the proper operation of the technology<\/em>, etc. Bidders (including their subsidiaries<\/em>) found to have engaged in collusive activities or other improper practices will be treated in accordance with the cartel\/ pool-rate provisions of the evaluation Chapter.<\/p>\n<h2>4.12<\/span>Pre-qualification Modes of Procurement<\/span><\/h2><h3>4.12.1<\/span>Why Pre-qualification Modes Exist<\/span><\/h3>\nWhere the procurement is significantly complex<\/em>, and the capability of the source of supply is crucial<\/em> for the successful performance of the contract, it May be necessary to ensure that:<\/p>\n<ul class=\"lst\"><li>There is competition only among bidders equally capable<\/em> Of performing the contract, and<\/li><li>incapable bidders don't queer the pitch<\/em> By their low-quality\/ low-price bids.<\/li><\/ul>\nIn such a situation, a pre-qualification of bidders May be required to shortlist bidders who are equally capable of performing the contract. Evaluation of techno-commercial and financial bids is restricted to this shortlist only.<\/p>\n<h3>4.12.2<\/span>Pre-qualification Bidding (PQB)<\/span><\/h3>\n1. What it is: In the situations mentioned above, where THE time, effort and money required from the bidder<\/em> To participate in a tender is high, a two-phase pre-qualification bidding<\/em> May be considered.<\/p>\nPre-qualification Bids (PQBs) should meet the norms of transparency, fairness, and maintenance of competition<\/em>.<\/p>\n<aside class=\"note\">Although there is a separate phase of PQB bidding, it is not semantically counted as a two-stage bidding<\/em>.<\/p><\/aside>\n2. The two phases:<\/p>\n<ul class=\"lst\"><li>In the first PQB phase, competent, qualified bidders are shortlisted by using a pre-qualification criterion (PQC), covering:<\/li><\/ul>\n<aside class=\"note\">I) past experience of similar contracts \u00b7 ii) performance capability \u00b7 iii) financial strength<\/p><\/aside>\nno techno-commercial or financial details are asked for in the first phase of PQB.<\/p>\n<ul class=\"lst\"><li>In the second phase, tender documents (techno-commercial and financial) are issued as usual through e-procurement\/ e-publishing; Bids only from shortlisted qualified bidders<\/em> Are evaluated, and others are rejected.<\/li><\/ul>\n3. Where PQB is NOT<\/em> Desirable:<\/p>\nSince the two-phase PQB system May strain the transparency principle<\/em>, and there is a heightened risk of anti-competitive practices<\/em>, two-phase PQB should be done only as an exception<\/em> Under specified circumstances.<\/p>\nHence, the procuring entities May lay down restricted powers to approve such modes at sufficiently high levels in SoPP<\/em>. It should NOT<\/em> Be a routine\/ normal mode of procurement, and qualification criteria as part of a single\/ two\/ multiple envelopes system should suffice in such situations.<\/p>\nPQB bidding as a separate phase is contraindicated<\/em> In the following circumstances:<\/p>\n<ul class=\"lst\"><li>A) where procurement is being done through limited tender enquiries<\/em>;<\/li><li>B) where the requirement is technically and commercially not complex enough<\/em> That pre-qualification of the bidder is not crucial for the performance of the contract \u2014 for example, commercial off-the-shelf (cots) requirements;<\/li><li>C) where the procurement is significantly complex and the time, effort and money required from the bidder to participate in a tender is not significant<\/em> \u2014 clear-cut, fail-pass pre-qualification criteria can be specified in single-stage tendering<\/em> (Instead of two-phase tendering).<\/li><\/ul>\n4. Pre-qualification criteria (PQC) \u2014 the two-sided test:<\/p>\n<aside class=\"note\">PQC should be unrestrictive enough not to leave out even one capable vendor\/ contractor<\/em> \u2014 otherwise, it can lead to higher procurement\/ works\/ services prices.<\/p>\nHowever, on the other hand, these criteria should be restrictive enough so as not to allow even one incapable vendor\/ contractor<\/em> And thus vitiate fair competition for capable vendors\/ contractors, to the detriment of the buyer's objectives. A misjudgement in either direction<\/em> May be detrimental.<\/p><\/aside>\n(A sample PQC is given in Annexure 12<\/strong> of the Goods Manual.)<\/em><\/p>\nDue consideration should be given while framing PQC to its effect on the adequacy of competition.<\/p>\nPQC should NOT<\/em> Result in unreasonable exclusion of 'class-i local supplier'\/ 'class-ii local supplier' who would otherwise be eligible, beyond what is essential for ensuring the quality or creditworthiness of the supplier.<\/p>\nTo encourage MSEs, local bidders and past successful bidders, a call May be taken as to whether PQC should apply to full quantity\/ packages<\/em> OR BE proportional to part quantity\/ package quoted<\/em> By a bidder.<\/p>\nIn case the requirement is suddenly multiple times the past procurements<\/em>, blind adoption of past pqcs (fractions\/ percentages) May lead to the disqualification of successful past vendors<\/em>, leading to inadequate competition.<\/p>\nPQC should, therefore, be carefully decided for each procurement<\/em> With the approval of ca for acceptance of the tender.<\/p>\nIt should be clarified in the PQB documents that bidders have to submit authenticated documents<\/em> In support of eligibility criteria.<\/p>\n5. Advertisement and Notification \u2014 and the notice periods:<\/p>\nThe invitation for the first-phase PQB shall be processed (advertised, tender document preparation, publicity, evaluation, and so on) in the same manner as a normal GTE or OTE<\/em> (As the situation calls for) tender, ensuring the widest possible coverage.<\/p>\nThe PQC and evaluation criteria should be clearly noted in the PQB documents<\/em>.<\/p>\nThe PQB documents should also indicate a complete Schedule of requirements<\/em> for which this PQB is being done, including approximate likely quantities<\/em> Of requirements.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Situation<\/th><th>Minimum period for submission of PQBs<\/th><\/tr><\/thead><tbody><tr><td>Normal (domestic)<\/td><td>3 WEEKS<\/td><\/tr><tr><td>Where FOREIGN BIDDERS are also involved<\/td><td>4 WEEKS<\/td><\/tr><tr><td>in case of urgency duly approved by ca<\/td><td>may be reduced to 10 (ten) DAYS<\/td><\/tr><\/tbody><\/table><\/div>\n6. Evaluation: At least in high-value and critical procurements, the credentials regarding experience and past performance submitted by the successful bidder May be verified as per PQC \u2014 as far as reasonably feasible \u2014 from the parties for whom work has been claimed to be done<\/em>.<\/p>\nThe procuring entity shall evaluate the qualifications of bidders only in accordance with the PQC specified<\/em>, and shall give due publicity to the particulars of the bidders that are qualified<\/em> On the relevant portals\/ websites.<\/p>\n7. Subsequent Procurement Tender \u2014 the single-use and six-month rules:<\/p>\nThe pre-qualification shortlist shall be for a single subsequent procurement<\/em>.<\/p>\nIn this subsequent procurement, bids are invited from these qualified bidders only, and all other bids May be treated as unsolicited offers, which are normally rejected<\/em>.<\/p>\nThis second phase of the procurement process is handled as a normal two-envelope tender.<\/p>\nThe time gap between the pre-qualification approval and the floating of the linked main procurement tender should normally be less than six months<\/em>.<\/p>\n<h3>4.12.3<\/span>Single Stage Pre-qualification<\/span><\/h3>\n1. When to use it instead: In the situation described above \u2014 i.e., significantly complex procurement; the capability of the source of supply is crucial; the necessity to ensure competition only among equally capable bidders \u2014 but where the time, effort and money required from the bidder to participate in a tender is not very high<\/em>:<\/p>\nInstead of a separate phase of pre-qualification bidding, a clear-cut, fail-pass pre-qualification criteria (PQC)<\/em> Can be asked to be submitted as the first (additional) envelope in a single-stage three-envelopes system<\/em>, so that a bidder's risk of having his bid rejected on the grounds of qualifications is remote if he exercises due diligence<\/em>.<\/p>\nIn e-procurement, separate files shall be uploaded by the bidder, mutatis mutandis<\/em>.<\/p>\n2. The terminological point: Strictly SPEAKING, this is not a pre-qualification but a post-qualification<\/em> Of bidders (i.e., after the techno-commercial and financial bids have been received).<\/p>\nIn respect of pre-qualification, in the first instance on the pre-announced bid opening date, only the PQB envelopes<\/em> (Also containing the EMD and other eligibility documents<\/em>) are opened and evaluated to shortlist the responsive bidders who pass the pre-qualification.<\/p>\n3. The rest of the procedure: The rest of the procedure is the same as the two-envelope system (techno-commercial and financial bids) for only qualified bidders.<\/p>\n<ul class=\"lst\"><li>In e-procurement, the other two envelopes of unqualified<\/em> Bidders would remain encrypted and unopened<\/em>.<\/li><li>In off-line tenders, the other two envelopes of unqualified bidders are returned unopened<\/em> To the respective bidders by registered acknowledgement due\/ reliable courier, or any other mode with proof of delivery.<\/li><\/ul>\n<h3>4.12.4<\/span>PQB Tendering \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. Pre-qualification criteria: PQB has the potential of getting misused or being applied without considering the restrictive nature of competition<\/em>. PQC should be relevant to the quality requirements, and neither very stringent nor very lax in restricting\/ facilitating the entry of bidders. These criteria should be clear, unambiguous, exhaustive, and yet specific. Also, there should be FAIR COMPETITION.<\/td><td>Lay down criteria for when prequalification in single-stage or two-stage tendering is warranted. Also, model PQC criteria for diverse types of procurements should be laid down<\/em> on the lines of Annexure 12.<\/td><\/tr><tr><td>2. Dangers of anti-competitive bidding: Since in a two-stage PQB, shortlisted bidders are announced<\/em>, there is a heightened possibility of these bidders forming a cartel and quoting anti-competitive prices<\/em> In the second stage of tendering.<\/td><td>Two-stage PQB should be done only in appropriately justified situations<\/em>. Alternatively, a single-stage multiple-envelope system<\/em> May be used for prequalification \u2014 in which the chances of anti-competitive behaviour and cycle time<\/em> Are significantly lower.<\/td><\/tr><tr><td>3. Two-phase PQB is a time-consuming process.<\/td><td>(as above)<\/em><\/td><\/tr><tr><td>4. Contentious and disputes: Both the successful and unsuccessful bidders tend to view the PQB process as a means for creating rights\/ privileges\/ entitlement<\/em> for them \u2014 by way of hair-splitting, contentious or viciously legalistic interpretations of PQC criteria<\/em>, disregarding the very rationale of the PQB and PQC.<\/td><td>In the PQC, a caveat against such tendencies<\/em> May be included \u2014 asserting the right of the procuring agency to interpret the PQC on common usage of terminologies and phrases in Public Procurement<\/em>, instead of legalistic and hair-splitting judgements \u2014 and that their decision in this regard would be final<\/em>.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2 class=\"src-G srchead\" data-src=\" G \">4.13<\/span>Approved Vendor List (AVL)<\/span>G<\/span>text; W\/C\/NC list it and cross-refer to Goods para 4.7<\/span><\/h2><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\"><h3>4.13.1<\/span>Strategic, Safety and Security Requirements \u2014 the Justification<\/span><\/h3>\nMany organisations have regular and continuous<\/em> Requirements of tailor-made items<\/em> (for which the Procuring Entity is the monopoly buyer<\/em>), which are critical for the safety and security of its operations<\/em>, and where large investments and gestation periods<\/em> Are needed for developing manufacturing and quality control infrastructure\/ processes for its production.<\/p>\nIn view of heavy investments, vendors need regular and sustained offtake for financial viability<\/em>.<\/p>\nSuch procurement needs to be done over an extended period of time only from vendors who have undergone rigorous pre-qualification<\/em>.<\/p>\nThe firms are assessed for requisite infrastructure to produce consistent quality goods up to the assessed production capacity, with regular monitoring of the quality assurance system.<\/p>\nIt May even involve, if required, extended field trials of products and inspection of manufacturing\/ quality assurance facilities and processes<\/em>. Such time-consuming pre-qualification would not be feasible for each individual procurement<\/em>.<\/p>\n<aside class=\"note\">Examples given in the Manual: Railway signalling equipment \u00b7 locomotive assemblies \u00b7 track fittings. A quality glitch in these would be disastrous<\/em>.<\/p><\/aside>\n<h3>4.13.2<\/span>What an AVL Is<\/span><\/h3>\nIn such situations, a separate phase of PQB tendering is done with a much more stringent PQC<\/em> \u2014 but the resultant shortlist of qualified vendors is kept valid for an extended period (say 2 to 5 years)<\/em> As stipulated in the PQB documents.<\/p>\nThese are called approved vendor lists (AVL)<\/em>. In some countries, these May be referred to as multi-use lists<\/em>.<\/p>\n<h3>4.13.3<\/span>The Two Categories of Approved Vendors<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Basis of approval<\/th><th>Upgrade path<\/th><\/tr><\/thead><tbody><tr><td>\"Developmental vendors\" (may be named 'Temporarily or Provisionally Approved Vendors' in some organisations)<\/em><\/td><td>Approval is granted based on an assessment of infrastructure facilities available and satisfactory production of samples as per specification \u2014 but their capability to consistently produce the quality material giving satisfactory service life in the field<\/em> Is yet to be established<\/td><td>after these development vendors demonstrate a capability to produce consistent quality goods with required service life over a period (say 2 years)<\/em>, they are upgraded<\/td><\/tr><tr><td>\"Approved vendors\"<\/strong>(the regular category)<\/em><\/td><td>Demonstrated consistent quality over the qualifying period<\/td><td> \u2014 <\/td><\/tr><\/tbody><\/table><\/div>\n<h3>4.13.4<\/span>Procurement Restricted to AVL \u2014 and the 20:80 Split<\/span><\/h3>\nin all subsequent procurements, eligibility criteria restrict participation to the \"Approved Vendor List\" (regular and developmental)<\/em>, and all other bids are treated as unsolicited offers, which are normally rejected<\/em>.<\/p>\nOnly a part \u2014 say not more than 20%<\/em> \u2014 of the total tendered quantity is distributed among development vendors<\/em>, provided they quote lower than<\/em> The regular approved vendors.<\/p>\nThe rest of the quantity (say 80% or more<\/em>) is awarded to 'approved vendors'.<\/p>\nThis ensures that development vendors are able to demonstrate their capabilities for upgradation to the regular approved vendor category.<\/p>\nThus, it should be ensured that development orders are for a viable quantity<\/em> for production and for the purpose of proving their capability.<\/p>\n<h3>4.13.5<\/span>Benefits of AVL<\/span><\/h3>\nAn AVL is a powerful tool that contributes to cost control, reliability, and overall efficiency<\/em> In procurement for strategic, safety and security goods.<\/p>\nIt ensures that vendors have undergone rigorous vetting<\/em> And have demonstrated stability and reliability<\/em>.<\/p>\nWorking with approved vendors instils confidence in the quality<\/em> Of materials and components purchased and reduces the chances of defects<\/em>. Downtime due to failures and repairs is also minimised.<\/p>\n<h3>4.13.6<\/span>Monitoring and Updation<\/span><\/h3>\nAn AVL is a dynamic tool<\/em>, and its effectiveness depends on proactive management and adaptability<\/em>. Updating an AVL over time is crucial to maintain its effectiveness and relevance.<\/p>\n<ul class=\"lst\"><li>If a new vendor applies for inclusion in AVL, it May be added to AVL if it meets the PQC in the original PQB<\/em>.<\/li><li>Key performance indicators (KPIs) for vendors should be part of the PQB document \u2014 including on-time delivery, product quality, and responsiveness<\/em>.<\/li><li>These metrics May be used to conduct periodic reviews of the AVL (e.g., annually or biannually)<\/em>, and vendors who consistently fail to meet standards or demonstrate poor performance May be downgraded or removed<\/em> From the AVL.<\/li><li>Audits of existing vendors May be conducted to assess financial stability, production capabilities, and adherence to contractual terms<\/em>.<\/li><li>The procuring Entity should MONITOR industry trends, technological advancements, and new suppliers<\/em>.<\/li><li>Feedback May be gathered from stakeholders who use or maintain the goods<\/em>. Their insights can highlight areas for improvement or identify potential issues with specific vendors.<\/li><li>Vendors May be given support to enhance their capabilities and training, share best practices, and encourage continuous improvement<\/em>.<\/li><\/ul>\n<h3>4.13.7<\/span>Where AVL Is Not<\/em> Desirable<\/span><\/h3>\nThe same contra-indications as in PQB are much more accentuated<\/em> In the case of AVL, as the list is used over prolonged periods.<\/p>\nHence, the AVL mode for an item should be approved at the highest level<\/em> In the procuring organisation.<\/p>\nSince the AVL system strains the transparency principle<\/em> And there is a heightened risk of cartelisation and collusion<\/em>, AVL should NOT<\/em> Be a routine\/ normal mode of procurement and should be done only as an exception \u2014 otherwise, PQB modes of procurement May be used.<\/p>\nAVL is contraindicated in the following seven circumstances: A) where the requirement is not related to strategic, safety or security<\/em>. B) where the item is not tailor-made<\/em>, nor is the Procuring Entity a monopoly buyer<\/em>. C) where the item is not regularly and continuously procured<\/em>. D) where the requirement is technically and commercially not complex enough<\/em>. e) where large investment and prolonged gestation period are not required<\/em> In developing manufacturing\/ quality assurance facilities\/ processes. F) where the technology is not stable<\/em> And is evolving\/ changing at a fast pace. G) where procurement can be done through limited tender enquiries<\/em>.<\/p>\n<h3>4.13.8<\/span>AVL \u2014 Risks and Mitigations<\/span><\/h3>\n<aside class=\"note\">The same risks and mitigations as in PQB apply in this case to a deeper level<\/em>.<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. Dependency on vendors: It can shift the balance of power to the hands of the vendor \u2014 leading to many disadvantages: 1.1 anti-competitive practices: These approved vendors can easily form a cartel and indulge in anti-competitive practices. This includes a significant risk of collusion due to power in the hands of the procurement entity's personnel who inspect\/ monitor the facilities\/ quality. 1.2 cost escalation: Over time, vendor costs May increase, affecting overall procurement expenses. 1.3 supplier ethics and compliance: Approved vendors May engage in unethical practices or violate compliance standards.<\/td><td>1. Diversify the AVL by including multiple reliable vendors for critical goods. Maintain a backup list of development vendors<\/em> To mitigate sudden disruptions. Regularly monitor and update the AVL. 1.1 be alert about cartel\/ pool rates. Include a cartel clause<\/em> And take mitigation measures. The personnel in such jobs May be rotated frequently<\/em> And should not be allowed to be in the same position for more than 3 years<\/em>. If the same personnel who created<\/em> The AVL are also given the task of monitoring<\/em> it, it May create a conflict of interest<\/em>. So, personnel for these two tasks should be different<\/em>. The KPIs and PQC should be objectively measurable<\/em>. Every three years, a fresh PQB<\/em> May be done for new vendors. 1.2 benchmark costs periodically against market trends. Negotiate long-term contracts with price stability clauses<\/em>. 1.3 conduct due diligence on vendors' ethical practices<\/em>. Include compliance clauses for the Code of Integrity<\/em> In contracts and monitor adherence.<\/td><\/tr><tr><td>2. Lack of monitoring and updation: AVL is a dynamic tool that needs constant monitoring and updating. 2.1 complacency: Once vendors are approved, complacency May set in, leading to reduced performance. 2.2 quality fluctuations: Even approved vendors May occasionally deliver subpar quality due to production issues or changes in their processes.<\/td><td>2. Monitor and update the AVL lists. 2.1 continuously engage with vendors, encourage innovation, and set improvement targets. 2.2 regularly audit vendors to ensure consistent quality.<\/td><\/tr><tr><td>3. Market dynamics: Market dynamics (e.g., price fluctuations and technological advancements) impact vendor capabilities and competitiveness. 3.1 innovation gap: Sticking to the same vendors May hinder access to innovative solutions. A non-approved vendor offers an innovative solution that could significantly improve operations.<\/em><\/td><td>3. Stay informed about industry trends and adjust the AVL accordingly. 3.1 encourage vendors to propose new technologies or approaches. Consider adding emerging vendors to the AVL. Evaluate the benefits and risks. Seek approval for a temporary exception<\/em>, or consider adding the vendor to the AVL.<\/td><\/tr><tr><td>4. Inadequate or too-many vendors on AVL: Both an inadequate number of vendors AND too many vendors on AVL may be detrimental to the intended benefits. Too many vendors May force vendors to cartelise for survival<\/em> \u2014 having invested heavily in creating infrastructure. Too few vendors May create supply chain disruption and increased prices<\/em>.<\/td><td>Such situations may be specially monitored. In the PQB document, an upper limit May be indicated for the maximum number of suppliers to be taken on AVL<\/em>. A large number of vendors getting cleared for AVL is an indication that this item is not a fit case for AVL mode<\/em>. In case of inadequate numbers on AVL, a repeat PQB<\/em> May be done, and efforts May be made to induce new vendors with technological and preferential help in setting up infrastructure<\/em>.<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h2>4.14<\/span>Limited Tender Enquiry (LTE)<\/span><\/h2>\n(Rule 162 of GFR 2017)<\/em><\/p>\n<h3>4.14.1<\/span>What LTE Is<\/span><\/h3>\nLTE is a restricted competition procurement<\/em>, where a pre-selected panel of vendors is directly approached<\/em> for bidding.<\/p>\n<div class=\"tblwrap\"><table><thead><tr class=\"srcmark src-multi\" data-src=\" G W \"><th><\/th><th>G<\/span> GOODS<\/th><th>W<\/span> WORKS<\/th><\/tr><\/thead><tbody><tr><td>Who is on the panel<\/td><td>vendors on the list of registered suppliers<\/em> For the subject matter of procurement \u2014 for goods and services not available on the GeM portal<\/em><\/td><td>bidders enlisted with the Procuring Entity<\/em>, along with those enlisted with other public works organisations\/ works PSUs<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nbids from uninvited bidders are treated as unsolicited<\/em> And are not entertained, except in exceptional circumstances.<\/p>\nHowever, ministries\/ departments should evolve a system by which requests for registration\/ enlistment of interested\/ unsolicited firms should be decided before the bid in the next round of tendering<\/em>.<\/p>\nThis mode provides a short and simple procedure<\/em> But May not provide as good a VfM as in the case of open tendering \u2014 but it is still a good balance for procurements below a threshold.<\/p>\n<h3>4.14.2<\/span>When LTE Is the Default Mode \u2014 THE THRESHOLD DIVERGENCE<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Threshold<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span> GOODS<\/td><td>LTE procedures should be the default mode<\/em> Of procurement when the estimated value of procurement is between Rs. 5 lakh to Rs. 50 lakh<\/em> (Rupees Five Lakh to Fifty Lakh)<\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> WORKS<\/td><td>LTE procedures should be the default mode of procurement when the estimated value of procurement is up to Rs. 10 lakh<\/em> (Rupees Ten Lakh) \u2014 OR when limited numbers of tenderers are known to possess requisite skills, technology and resources, by reason of their highly complex or specialised nature<\/em>, OR FOR works of a secret nature<\/em><\/td><\/tr><tr class=\"srcmark src-multi\" data-src=\" C NC \"><td>C<\/span> Consultancy \/ NC<\/span> Non-consultancy<\/td><td>Used for procurements up to Rs. 50 lakh<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">NOTE:<\/strong> The Works Manual adds two additional, NON-MONETARY grounds<\/strong> for using LTE which do not appear in the Goods Manual \u2014 high complexity\/ specialised nature<\/strong> and works of a secret nature<\/strong>.<\/p><\/aside>\n<h3>4.14.3<\/span>Terms and Conditions<\/span><\/h3>\n1. Prior approval of the panel: The shortlist of vendors\/ contractors from the list of registered suppliers\/ enlisted contractors for the subject matter of procurement, to whom it is proposed to send tender documents, shall be approved by the Competent Authority before floating the tender<\/em>.<\/p>\n2. Rotation where the panel is large: In case the number of registered\/ enlisted bidders for an item\/ work is large and unwieldy<\/em>, A transparent system of rotation of invitation to bid<\/em> May be used to keep the invited shortlist to a manageable number (SAY 8 TO 12<\/em>).<\/p>\n3. Despatch and mandatory publication: In off-line tendering, copies of the tender documents should be sent free of cost<\/em> (Except in case of priced specifications\/ drawings) directly by speed post\/ courier\/ e-mail<\/em> To the panel.<\/p>\nFurther, the Procuring Entity should also mandatorily publish its limited tender enquiries<\/em>:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-G\" data-src=\" G \">G<\/span> \u2014 ON GeM as well as<\/em> ON GeM-CPPP<\/strong>;<\/li><li class=\"srcmark src-W\" data-src=\" W \">W<\/span> \u2014 ON GeM-CPPP<\/strong>.<\/li><\/ul>\nApart from that, the organisations should publish the tender enquiries on its own\/ the department's or ministry's website.<\/p>\n4. The minimum number Rule: The minimum number of bidders to whom LTE should be sent is more than three<\/em>.<\/p>\nIn case less than three<\/em> Approved vendors\/ contractors are available, LTE May be sent to the available approved vendors\/ contractors with the approval of the ca, duly recording the reasons<\/em>.<\/p>\nEfforts should then be made to identify a higher number of approved suppliers\/ contractors<\/em> By the supplier registration\/ enlistment section, to obtain more responsive bids on a competitive basis.<\/p>\n5. Simplified tender document:<\/strong>A simplified tender document with brief terms and conditions<\/em> Should be used, instead of a detailed tender document.<\/strong>(G<\/span> Annexure 8 \u2014 Limited Tender Form \u00b7 C<\/span> Annexure 15 \u00b7 NC<\/span> Annexure 9.)<\/em><\/p>\nin any case, all registered vendors\/ contractors who are normally invited to quote in such limited tenders have already acknowledged acceptance of the \"general conditions of contract\" as part of the registration application<\/em>, which is applicable to such procurements \u2014 in addition to these brief \"terms and conditions\" in the LTE tender form.<\/p>\nIf necessary, specifications and drawings or any other document<\/em> May be enclosed with the limited tender form.<\/p>\n6. Currency: In domestic tenders, any bid in foreign currency should be summarily rejected<\/em>.<\/p>\n7. The security exemption: Since selected bidders are normally registered\/ enlisted with the Procuring Entity, bid Security (EMD) and Performance Security are normally not taken in LTE<\/em>.<\/p>\n<aside class=\"note\">(Contrast SLTE<\/strong> at para 4.15.2-4 below, where both ARE taken<\/strong>.)<\/em><\/p><\/aside>\n<h3>4.14.4<\/span>LTE \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. A major risk in this mode is that the demand May be artificially split to avoid OTE or higher-level approvals<\/em>.<\/td><td>The e-procurement portal May be programmed to raise an alert<\/em> If the same item is repeatedly attempted to be procured through LTE.<\/td><\/tr><tr><td>2. There is a risk that LTE May not attract enough bids<\/em>, and sometimes there May be a single acceptable offer<\/em>. It could be due to tender documents not reaching the targeted bidders \u2014 intentionally or otherwise<\/em>. It could also be due to bidders not getting adequate time to submit bids. This could also be due to an insufficient database of registered\/ known vendors<\/em>.<\/td><td>To ensure sufficient response, in addition to mails\/ emails to selected vendors, web-based publicity should be given for limited tenders<\/em> \u2014 with suitable clarifications that unsolicited bids shall not be considered<\/em>. Sufficient time should be allowed for the submission of bids \u2014 say two weeks<\/em>. A shorter or longer period, if considered sufficient, could be allowed if justified according to the urgency\/ complexity of the requirement. Further, a limited or open tender that results in only one effective offer<\/em> Shall be treated as a single Tender Enquiry situation<\/em>, with relevant powers of approval, etc.<\/td><\/tr><tr><td>3. There is also a risk that the selection of vendors May not be transparent<\/em>. At the evaluation stage, some invited bidders May be passed over on the grounds of being ineligible\/ unreliable<\/em>. On the other hand, unsolicited bidders May also quote<\/em>, causing a dilemma of transparency regarding the consideration of such offers.<\/td><td>Maintenance of a panel of registered suppliers for each subject matter of procurement is a sine qua non<\/em> for LTE (Rule 150 GFR 2017). Such panels of vendors should be reviewed every year<\/em> To ensure an adequate number of registered suppliers. The panel should not be changed after the LTE tender has been published<\/em>. ALL past successful vendors\/ bidders should invariably be invited<\/em>. In case it is proposed to exclude any registered\/ approved vendor\/ contractor from being shortlisted for inviting LTE, detailed reasons \u2014 such as failure in supply \u2014 should be duly recorded, and approval of the ca should be taken before exclusion<\/em>. Bidders should be selected with due diligence to ensure that bidders who do not meet eligibility criteria are not shortlisted. At the evaluation stage, in LTE, passing over of a duly shortlisted bidder on grounds of poor past performance or eligibility May raise questions about transparency<\/em>.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.15<\/span>Special Limited Tender Enquiry (SLTE)<\/span><\/h2>\n<aside class=\"note\">The Headline Divergence<\/p>\n<div class=\"tblwrap\"><table><thead><tr class=\"srcmark src-multi\" data-src=\" G W C NC \"><th><\/th><th>G<\/span> GOODS<\/th><th>W<\/span> WORKS<\/th><th>C<\/span> \/ NC<\/span><\/th><\/tr><\/thead><tbody><tr><td>Section title<\/td><td>SLTE for Procurements more than Rs. 50 (Rupees Fifty) Lakh<\/strong><\/em><\/td><td>SLTE for Procurements more than Rs. 10 (Rupees Ten) Lakh<\/strong><\/em><\/td><td>SLTE \u2014 above Rs. Fifty lakh<\/strong> in exceptional circumstances<\/em><\/td><\/tr><tr><td>Rule cited<\/td><td>Rule 162 of GFR 2017<\/td><td>Rule 139(v) AND Rule 162 of GFR 2017<\/td><td>Rule 162<\/td><\/tr><\/tbody><\/table><\/div><\/aside>\n<h3>4.15.1<\/span>What SLTE Is and When It May Be Used<\/span><\/h3>\nLTE\/ SLTE mode is permissible in certain special circumstances for values higher than the LTE threshold, where normally OTE should have been done<\/em>.<\/p>\nPowers to sanction procurement on an LTE\/ SLTE basis in such exceptional cases May be laid down in SoPP, based on a certificate of urgency signed by the indentor<\/em>.<\/p>\nThis mode has the merit of being quicker<\/em>, but the VfM obtained May be less than in the case of OTE<\/em>; Hence, it should be restricted to the following four situations:<\/p>\n1. Urgency: The Competent Authority in the Ministry\/ Department certifies<\/em> That there is an existing or prospective urgency for operational or technical requirements<\/em>, and any additional expenditure involved by not procuring through advertised tender enquiry is justified in view of urgency<\/em>. The Ministry\/ Department should also put on record the nature of the urgency and reasons why the procurement could not be anticipated earlier<\/em>.<\/p>\n2. Public interest: There are sufficient reasons to be recorded in writing by the Competent Authority, indicating that it will not be in the public interest<\/em> To procure the goods\/ works through advertised tender enquiry.<\/p>\n3. Known sources: The sources of supply are definitely known<\/em>, and the possibility of fresh source(s) beyond those being tapped is remote<\/em>.<\/p>\n4. Policy: Government policy designates procurement from specific agencies<\/em>.<\/p>\n<h3>4.15.2<\/span>Terms and Conditions<\/span><\/h3>\n1. The tender process would be the same as in the case of a normal LTE<\/em> Described above. However, the tender documents are more detailed, as in the case of OTE<\/em>.<\/p>\n2. The indentor's certificate: The indentor should certify that there is an existing or prospective urgency for operational or technical requirements, and that any additional expenditure involved by not procuring through an advertised tender enquiry is justified in view of urgency. The indentor should also put on record the nature of the urgency and reasons why the procurement could not be anticipated.<\/p>\n3. Currency: In domestic tenders, any bid in foreign currency should be summarily rejected.<\/p>\n4. The security Rule \u2014 the opposite of LTE: Unlike LTE, bid Security and Performance Security are taken in SLTE, as in OTE tenders<\/em>.<\/p>\n<h3>4.15.3<\/span>SLTE \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>Risks as applicable in both LTE and OTE<\/em> Are also applicable here. In addition, there is a risk that this mode May be used unjustifiably to avoid open tendering (OTE)<\/em>.<\/td><td>All mitigation strategies of LTE and OTE shall also apply here. In addition, the checks and balances systems should be tighter<\/em> By way of enhanced and severely restricted delegation of powers for certification of urgency and approval of this mode of procurement<\/em>. A system of reports from the authority signing the urgency certificate<\/em>, AND post facto review of utilisation of received goods\/ works\/ services to tackle the expressed urgency<\/em>, May be laid down.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.16<\/span>Proprietary Article Certificate (PAC) Procurement<\/span><\/h2>\n(Rule 166(i) and (iii) of GFR 2017)<\/em><\/p>\n<aside class=\"note\">PAC exists in the goods, consultancy and non-consultancy Manuals \u2014 but is entirely absent from the works Manual<\/em>, whose nomination family contains only STE or selection by nomination<\/em>.<\/p><\/aside>\n<h3>4.16.1<\/span>When PAC May Be Certified<\/span><\/h3>\nIn the procurement of goods, certain items are procured only from original equipment manufacturers (OEMs) or manufacturers having proprietary rights (or their authorised dealers\/ stockists) against a PAC certificate<\/em>. (Format at Annexure 9 of the Goods Manual.)<\/em><\/p>\nthis mode May be the shortest<\/em>, but since it May provide lesser VfM than LTE\/ OTE<\/em> AND strains the transparency principle<\/em>, it should be used only in justifiable situations.<\/p>\nSuch situations may arise on the following three grounds where a PAC can be certified:<\/p>\n1. Sole manufacturer: It is in the user department's knowledge that only a particular firm is the manufacturer<\/em> Of the required goods.<\/p>\n2. Standardisation and warranty: For standardisation of machinery or components or spare parts to be compatible with the existing sets of machinery\/ equipment<\/em> (On the advice of a competent technical expert), or if it is a condition of the manufacturer's warranty that only OEM spares are to be used during the warranty period<\/em> \u2014 the required goods are to be purchased only from a selected firm duly approved by the Competent Authority.<\/p>\n3. Research continuity: In case of advanced educational, research, development and scientific institutes\/ organisations of national importance<\/em>, specialised equipment and their spares\/ consumables May have to be procured from the same original vendor<\/em> \u2014 on the advice of a competent technical expert and approved by the project in-charge \u2014 to maintain consistency\/ reproducibility\/ continuity of established\/ standardised methods\/ protocols to attain objectives of such projects<\/em>.<\/p>\n<h3>4.16.2<\/span>Terms and Conditions<\/span><\/h3>\n1. The certificate and its effect on powers: Users should enclose, with their indent, a PAC certificate signed by the appropriate authority as per DFPR\/ SoPP, with the concurrence of associated finance<\/em>, for sourcing an item from OEM or PAC firms or their authorised agents.<\/p>\nOnce a PAC is thus signed, the powers of procurement are the same as in normal conditions<\/em> As per the delegation of powers.<\/p>\n<aside class=\"note\">(Contrast STE<\/strong> at para 4.17.2-1 below, where powers are more restricted<\/strong>.)<\/em><\/p><\/aside>\n2. Proprietary items shall be purchased only from a nominated manufacturer, or its authorised dealer as recorded in the PAC certificate<\/em>.<\/p>\n3. In certain unavoidable cases, the procuring authority May have no alternative but to waive payment of EMD\/ SD<\/em> for procurement on a proprietary basis.<\/p>\n<h3>4.16.3<\/span>PAC \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. There is a risk that this mode May get used unjustifiably to restrict competition<\/em>. Such risks get aggravated in case of secrecy about such procedures<\/em>, as alternative vendors\/ contractors may not even come to know about such opportunities.<\/td><td>The delegation of powers should be restricted for signing the PAC<\/em>. Even in PAC procurements, the NIT and the award of contract should be put on gem-cppp and Procuring Entity websites<\/em>.<\/td><\/tr><tr><td>2. Once approved, there is a risk of a nexus getting developed<\/em>, and the mode May continue to be used for many years without fresh application of mind<\/em>.<\/td><td>No item should be procured on a PAC basis for more than three years<\/em>, after which a mandatory OTE mode May be used to test the market<\/em>. The procuring entity may also keep an eye on the GeM portal for other vendors<\/em> Who can supply such items.<\/td><\/tr><tr><td>3. The bidder May charge a price higher than the market<\/em>.<\/td><td>To the extent feasible, the PAC firm should be asked to accept a \"Fall clause\"<\/em> \u2014 undertaking that if it supplies or quotes a lower rate to other governments, the public sector, or private organisations, it shall reimburse the excess<\/em>. If the price offered is not acceptable, negotiation May be held with the PAC firm<\/em>.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.17<\/span>Single Tender Enquiry (STE) \/ Selection by Nomination<\/span><\/h2>\n(Rule 166 of GFR 2017 \u00b7 NC<\/span> cites Rule 204)<\/em><\/p>\n<h3>4.17.1<\/span>What STE Is and When It May Be Used<\/span><\/h3>\nG<\/span> A tender invitation to one firm only without a PAC certificate<\/em> is called a single tender.<\/p>\nW<\/span> The selection by direct negotiation\/ nomination<\/em> is called a single tender.<\/p>\nThis mode May be the shortest, but since it May provide lesser VfM as compared to LTE\/ OTE<\/em> And May also strain the transparency principle<\/em>, it should be resorted to only under the following conditions:<\/p>\n<h4 class=\"src-G srchead\" data-src=\" G \">G<\/span> GOODS \u2014 ONE ground only (where a PAC cannot be certified)<\/em><\/span><\/h4><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\n1. In the case of an existing or prospective emergency relating to operational or technical requirements to be certified by the indentor<\/em>, the required goods are necessary to be purchased from a particular source \u2014 subject to the reason for such decision being recorded and approval of the Competent Authority obtained<\/em>.<\/p>\n<\/div><h4 class=\"src-W srchead\" data-src=\" W \">W<\/span> WORKS \u2014 SIX grounds<\/span><\/h4><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n1. Unforeseeable urgency: There is an urgent need for the work<\/em>, and engaging in a competitive tendering process would therefore be impractical<\/em> \u2014 provided that the circumstances giving rise to the urgency were neither foreseeable by the Procuring Entity nor the result of dilatory conduct on its part<\/em>.<\/p>\n2. Natural continuation \u2014 and the 25% cap: Works that represent a natural continuation of previous work carried out by the firm<\/em>, when \u2014 considering the limited size of the additional work in relation to the original procurement<\/em> And the reasonableness of the price<\/em> \u2014 it will be cost-effective to resort to single-source procurement.<\/p>\n<aside class=\"note\">However, the incremental work should not be more than 25 (twenty-five) per cent of the original contract value<\/em>.<\/p><\/aside>\n3. Emergency\/ disaster: In case of an emergency situation, situations arising after natural disasters, situations where timely completion of the work is of utmost importance<\/em> \u2014 subject to the reason for such decision being recorded and approval of the Competent Authority obtained.<\/p>\n4. Proprietary techniques\/ sole expertise: Situations where execution of the work May involve use of proprietary techniques<\/em>, OR only one contractor has the requisite expertise<\/em>.<\/p>\n5. National defence\/ security: The procurement entity engages in procurement involving national defence or national security<\/em> And determines that single-source procurement is the most appropriate method of procurement.<\/p>\n6. Overall interest: Under some special circumstances, it May become necessary to select a particular agency where adequate justification is available for such single-source selection in the context of the overall interest of the Ministry or Department<\/em>.<\/p>\n<\/div><h3>4.17.2<\/span>Terms and Conditions<\/span><\/h3>\n1. The restricted-powers Rule: The reasons for an STE AND<\/em> The selection of a particular firm must be recorded and approved by the ca<\/em> As per the delegation of powers laid down in DFPR\/ SoPP \u2014 prior to single tendering<\/em>. Unlike in PAC, the powers of procurement of STE are more restricted<\/em>.<\/p>\n2. G<\/span><\/strong>other terms and conditions of PAC procurement mentioned above would also apply in this case.<\/p>\n2. W<\/span> \u2014 Fairness and no-splitting: The Procuring Entity shall ensure fairness and equity<\/em> And shall have a procedure in place to ensure that:<\/p>\n<ul class=\"lst\"><li>The prices are reasonable and consistent with market rates<\/em> for work of a similar nature; And<\/li><li>the required work is not split into smaller-sized procurements<\/em>.<\/li><\/ul>\n3. The mandatory quarterly reporting of nomination awards W<\/span>C<\/span>NC<\/span>:<\/p>\nIn case of single tender procurements:<\/p>\nA) a report relating to such awards on a nomination basis shall be submitted every quarter<\/em> TO:<\/p>\n<ul class=\"lst\"><li>i) THE SECRETARY, in case of Ministries\/ Departments;<\/li><li>ii) the board of directors or equivalent managing body, in case of Public Sector Undertakings, Public Sector Banks, Insurance companies, etc.;<\/li><li>iii) the chief executive of the organisation where such a managing body is not in existence.<\/li><\/ul>\nb) THE audit committee or similar unit<\/em> In the organisation May be required to check at least 10% of such cases<\/em>.<\/p>\n<aside class=\"note\">Note:<\/strong> This reporting requirement appears in the Works, Consultancy and Non-Consultancy<\/strong> Manuals in the Modes\/ SSS sections. The Goods Manual carries it in the context of nomination-basis awards generally.<\/p><\/aside>\n<h3>4.17.3<\/span>STE \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span><\/td><td>THE same but more heightened risks than PAC<\/em> Are present in this mode. The selection of a single vendor May be non-transparent and unjustified<\/em>.<\/td><td>The same mitigation strategies as in the case of PAC should apply. Procurements on an STE basis should be made from reputed firms after determining the reasonableness of rates<\/em>. The procurement powers for STE should be severely restricted<\/em>.<\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span><\/td><td>risks as applicable in both LTE and OTE are also applicable here. In addition, there is a risk that this mode May be used unjustifiably to avoid open tendering (OTE)<\/em>, thereby making the selection of the contractor non-transparent and unjustified<\/em>.<\/td><td>All mitigation strategies of LTE and OTE would apply here also. In addition, the systems of checks and balances should be tighter by way of enhanced and severely restricted delegation of powers in this regard for certification of urgency<\/em> And approval of this mode. A system of reports from the authority signing the urgency certificate, and post facto review of utilisation of executed works and receipt of incidental goods\/ services<\/em> To tackle the expressed urgency, May be laid down. Audit should take up the bulk of such cases<\/em> for review to judge the genuineness of urgency certification<\/em>.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.18<\/span>Direct Procurement without Quotation<\/span><\/h2>\n(Rule 154 of GFR 2017)<\/em><\/p>\n<h3>4.18.1<\/span>What It Is and When It May Be Used<\/span><\/h3>\ndirect procurement of goods without formal quotations is normally done for the smallest value procurements<\/em>. This is also called petty purchase<\/em>.<\/p>\nIt should be used for off-the-shelf goods with simple and standard specifications<\/em>, and when the required goods (of required specification or within the required delivery period, etc.) are not available on GeM<\/em>.<\/p>\nHowever, for procurement outside GeM, it is mandatory<\/em> for a buyer to generate a \"GeM availability report and past transaction summary\" (gemar&pts) with a unique id on the GeM portal using his login credentials.<\/p>\nThe procedure is the simplest and quickest<\/em>, BUT VfM May be poor<\/em>; Hence, it is suitable only for low-value, urgent and simple requirements<\/em> In the following three situations:<\/p>\n1. The value threshold and the scientific-ministry enhancement:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Limit per case\/ occasion<\/th><\/tr><\/thead><tbody><tr><td>General<\/td><td>Rs. 50,000 (Rupees Fifty Thousand) for each requirement\/ case<\/td><\/tr><tr><td>scientific ministries\/ departments \u2014 for scientific equipment and computers<\/td><td>ENHANCED to Rs. 1,00,000\/- (Rupees One Lakh) on each occasion (OM No. F.20\/42\/2021-PPD dated 20.05.2024)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">which ministries\/ departments count as \"scientific\" for this purpose:<\/p>\n(i) Department of Science and Technology \u00b7 Department of Biotechnology \u00b7 Department of Scientific & Industrial Research \u00b7 Department of Atomic Energy \u00b7 Department of Space \u00b7 Ministry of Earth Sciences \u00b7 Defence Research & Development Organisation \u00b7 Indian Council of Agricultural Research (ICAR), including its affiliated institutions and Universities \u00b7 Department of Health Research (DHR), including Indian Council of Medical Research (including all Autonomous Bodies under these Ministries\/ Departments)<\/em><\/p>\n(ii) Educational and Research Institutes conducting post-graduate\/ doctoral level courses or research, under any Ministry\/ Department.<\/p>\n(iii) it is also clarified that gfrs are not applicable to the projects executed by state-level institutions or by private universities\/ institutions\/ organisations \u2014 even if they are funded by the ministries\/ departments\/ organisations mentioned above<\/em>.<\/p>\n(iv) in such cases, it is for the Ministry\/ Department\/ organisation to put in appropriate financial controls<\/em> To achieve the intended purpose.<\/p><\/aside>\n2. The requirement is urgent but was not covered in the procurement plan<\/em>.<\/p>\n3. The requirement is for off-the-shelf goods of simple and standard specifications<\/em>. Examples of procurement are the day-to-day needs of the office and field units, and so on.<\/em><\/p>\n<h3>4.18.2<\/span>Terms and Conditions<\/span><\/h3>\n1. Who does it and the certificate: The competent officer of the Procuring Entity can initiate and complete this purchase after diligent enquiries from the market<\/em> And filling out the certificate prescribed (G<\/span> Annexure 10 \u00b7 C<\/span> Annexure 13 \u00b7 NC<\/span> Annexure 7)<\/em>.<\/p>\nSuch powers, to a limited extent, can also be given to various user sections for operational needs<\/em>.<\/p>\n2. The imprest system: Normally, an imprest amount (with facilities for cheque payments) sufficient for two months' estimated procurements<\/em> Can be sanctioned, so that officers can handle such procurements. The imprest amount can be recouped on a monthly basis by submission of expense vouchers<\/em>.<\/p>\n3. Records: IN A summary form<\/em>, records should be kept of the vendors\/ contractors approached and the prices they indicate<\/em>.<\/p>\n4. The essence of the mode: Selection of sellers by diligent market enquiry<\/em> is of the essence of this mode of procurement.<\/p>\n5. Where to survey: In larger cities, reputed shopping malls<\/em> May also be included in the market survey. Reputed internet shopping portals<\/em> May also be explored.<\/p>\n<h3>4.18.3<\/span>Direct Procurement without Quotations \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. The main risk is the splitting of demand to avoid higher approvals or higher modes of procurement<\/em>.<\/td><td>Supervisors should carry out periodic reviews<\/em> Of such procurements to ensure that the demand is not split into small quantities for the sole purpose of avoiding the necessity of getting approval from the higher authority, or for avoiding LTE or OTE mode. AN annual review<\/em> Of such procurements shall be carried out to ensure that future anticipated requirements are clubbed and procured through LTE\/ OTE\/ rc<\/em>. To keep better control, an annual ceiling May be fixed for each office<\/em> for such a mode of procurement \u2014 say, rupees five lakh for each office per year<\/em>. Each office should maintain records to monitor such limits.<\/td><\/tr><tr><td>2. Over a period, intentionally or otherwise, the due diligence of enquiries from the market May degenerate into a mechanical obtaining of quotations<\/em>, leading to the development of nexus and crony suppliers<\/em>. Vendor selection May be manipulated with fake supporting vouchers<\/em>. Since such small-value materials do not undergo accounting and inventory control<\/em>, there is a risk of the development of a nexus, leakages, and fake procurements and payments<\/em>. The same set of vendors May get patronised repeatedly for a wide variety of requirements. Since only cursory visual inspections<\/em> Are done, quality May be at risk.<\/td><td>Supervisors should cross-check a percentage of cases in the market<\/em> for prices, fake vouchers, and so on. Supervisors should also check that the same vendor(s) is not being patronised repeatedly<\/em>. for the sake of transparency, payments should be made by cheque or through electronic clearance service<\/em> \u2014 except that cash payment May be allowed up to Rs. 5,000 (rupees five thousand)<\/em>. Staff involved with such procurements should not continue in the same role for long and should be rotated frequently<\/em>.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.19<\/span>Direct Procurement by Purchase Committee<\/span><\/h2>\n(Rule 155 of GFR 2017)<\/em><\/p>\n<h3>4.19.1<\/span>What It Is and When It May Be Used<\/span><\/h3>\nthis mode of procurement is made by a local Purchase Committee consisting of three members of an appropriate level, constituted by hod<\/em>.<\/p>\nThis procedure is slightly more complex<\/em> And is likely to provide BETTER VfM<\/em> Than direct procurement without quotation; Hence, it is suitable for marginally higher thresholds<\/em>.<\/p>\nIt is used in the following conditions:<\/p>\n1. The value band and the scientific-ministry enhancement:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Limit per occasion<\/th><\/tr><\/thead><tbody><tr><td>General<\/td><td>Above Rs. 50,000\/- and up to rs. 5,00,000\/- (Rupees Five Lakh) only, on each occasion<\/td><\/tr><tr><td>scientific ministries\/ departments<\/td><td>ENHANCED to Rs. Ten LAKH (above Rs. 1 lakh, as in para 4.18.1-1 above) on each occasion (same OM and same list of qualifying Ministries as at para 4.18.1)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n2. GeM condition: Only in case when a certain item is not available on the GeM portal<\/em> (of required specification or within the required delivery period, etc.). However, for procurement outside geM, it is mandatory for a buyer to generate a GeMAR&PTS<\/em> With a unique id on the GeM portal.<\/p>\n3. Extension to small works and services: This mode of procurement is described in the parlance of procurement of goods; However, in principle, it is equally applicable to contingency expenditure on small works\/ services<\/em>.<\/p>\n<h3>4.19.2<\/span>Terms and Conditions<\/span><\/h3>\n1. The controlling Ministry May lay down an annual ceiling value per office\/ unit<\/em> for such procurements.<\/p>\n2. In case of emergency procurement<\/em>, the facility for withdrawing the requisite advance cash amount and its subsequent account<\/em> May also be considered.<\/p>\n3. This is intended to be a fast-track, simple mode<\/em> Of procurement. The committee will survey the market<\/em> To ascertain the reasonableness of rate, quality and specifications<\/em> And identify the appropriate supplier.<\/p>\n4. The essence \u2014 market survey, NOT<\/em> A mini-lte: The selection of suitable products and suppliers by actual market survey (not by calling tenders like a mini-lte)<\/em> is the essence of this mode.<\/p>\nTherefore, there is no question of obtaining quotations by email or otherwise<\/em>.<\/p>\nThe committee shall survey the market to ascertain the reasonableness of rate, quality and specifications and identify the appropriate supplier. The survey May include online internet shopping portals<\/em>, besides physical local market surveys.<\/p>\nFor organisations in smaller towns\/ hinterlands, surveys in nearby bigger cities\/ metros May also be included<\/em> As part of the survey, depending on the ease of logistics.<\/p>\n5. The certificate:<\/strong>Before recommending the placement of the purchase order, members of the committee will jointly record the certificate prescribed<\/strong><\/em>(G<\/span> Annexure 11 \u00b7 C<\/span> Annexure 14 \u00b7 NC<\/span> Annexure 8)<\/em>.<\/p>\n6. The committee shall survey the market to ascertain the reasonableness of rate, quality, and specifications; Identify the appropriate supplier; And jointly record a certificate before placing the purchase order<\/em>.<\/p>\n<h3>4.19.3<\/span>Direct Procurement by Purchase Committee \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>Risks are the same as in the case of direct procurement without quotation mentioned above \u2014 with mitigation due to the involvement of three members<\/em>. Over a period, intentionally or otherwise, the due diligence of enquiries from the market May degenerate into a system of floating and obtaining limited tenders<\/em> \u2014 leading to delays and the development of nexus and crony suppliers<\/em>.<\/td><td>Mitigation strategies are also the same as in direct procurement without quotation.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.20<\/span>Award of Work through Quotations [W ONLY]<\/span><\/h2>\n<aside class=\"note\">This mode exists only in the works Manual<\/em>. It is the Works analogue of the Goods \"Shopping Modes\", but it is structured differently \u2014 it uses quotations from at least three contractors<\/em>, whereas the Goods Purchase Committee mode expressly forbids obtaining quotations.<\/p><\/aside>\n1. The threshold and the permitted works: Use of quotations up to Rs. Five lakh in each instance<\/em> Shall be adopted for procurement of minor civil works<\/em> LIKE:<\/p>\n<aside class=\"note\">Construction of boundary walls \u00b7 installation of safety barriers or guardrails \u00b7 repairing\/ maintenance\/ plumbing works, etc.<\/p><\/aside>\n \u2014 for which there is an established market<\/em>.<\/p>\nProcuring Entity shall not divide its procurement into separate contracts to bring the amount less than the amount set forth for such purpose<\/em>.<\/p>\n2. The minimum of three: Procuring Entity shall request quotations from as many contractors as practicable, but positively from at least three contractors<\/em>.<\/p>\nEach contractor from whom a quotation is requested shall be informed whether any elements other than the charges for the works to be executed \u2014 such as transportation and insurance charges, duties and taxes \u2014 are to be included in the price<\/em>.<\/p>\n3. One quotation only, no revision: Each contractor is permitted to give only one price quotation<\/em> AND IS not permitted to change its quotation<\/em>.<\/p>\n4. Emergent cases only: Award of work through quotations shall be resorted to only in emergent cases<\/em>, AND suitable reasons shall be recorded<\/em>.<\/p>\n<h2>4.21<\/span>Award of Works in Stalled Contracts [W ONLY]<\/span><\/h2>\n<aside class=\"note\">This provision exists only in the works Manual<\/em> And has no counterpart in any other category.<\/p><\/aside>\n1. The problem: Where a contractor abandons or stops the work mid-way<\/em> \u2014 either due to insolvency or a dispute or other reason<\/em> \u2014 engagement of the new contractor takes considerable time<\/em>, and in the meanwhile:<\/p>\n<ul class=\"lst\"><li>Public money is locked up in assets which cannot be utilised<\/em>,<\/li><li>apart from inconvenience and loss of amenities to the general public<\/em> Due to such half-completed works.<\/li><\/ul>\n2. The solution \u2014 and its two conditions: Notwithstanding anything in the GFR or the Manual, procuring entities should devise methods (including limited\/ single tenders) to deal with part-completed contracts<\/em>, wherever the work is abandoned by the contractor mid-way.<\/p>\nHowever, for issuance of limited\/ single tenders in such cases:<\/p>\n<ul class=\"lst\"><li>Condition 1 \u2014 the 20% billing test: At least 20% of work should have been billed<\/em> By the contractor who has abandoned the work.<\/li><li>Condition 2 \u2014 elevated approval: Procurement approval of such limited\/ single tender should be at the next higher level<\/em>, or such level as May be prescribed.<\/li><\/ul>\n<h2>4.22<\/span>Mode Selection by Value \u2014 Non-Consultancy Services [NC ONLY]<\/span><\/h2>\n<aside class=\"note\">The Non-Consultancy Manual alone adds three paragraphs mapping the modes onto value bands.<\/p><\/aside>\n<h3>4.22.1<\/span>Higher Value Non-consultancy Services<\/span><\/h3>\n(Rule 201(ii) of GFR, 2017)<\/em><\/p>\nin procurements of non-consultancy services above Rs. 50 (rupees fifty) lakh<\/em>, it should normally be by an advertised mode (i.e., OTE)<\/em>.<\/p>\nServices which are available on GeM have to be mandatorily procured through that portal<\/em>.<\/p>\n<h3>4.22.2<\/span>Lower Value Non-consultancy Services<\/span><\/h3>\n(Rules 199 and 201(i) of GFR 2017)<\/em><\/p>\nfor procurement below Rs. 50 (rupees fifty) lakh<\/em>, LTE can be issued to a selected shortlist of likely service providers<\/em>.<\/p>\nThe three-step shortlisting procedure:<\/p>\n1. The long list: To start with, preparation of a long list of potential service providers<\/em> May be done on the basis of formal or informal enquiries<\/em> FROM:<\/p>\n<aside class=\"note\">Other ministries or departments or organisations involved in similar activities \u00b7 chambers of commerce & industry \u00b7 association of non-consultancy firms, etc.<\/p><\/aside>\n2. The moderated long list: The Procuring Entity should scrutinise the preliminary long list<\/em> Of likely service providers as identified above, and shortlist the prima facie eligible and capable service providers<\/em> From the long list.<\/p>\nThe number of service providers in this moderated long-list should be more than three<\/em>.<\/p>\n3. The standing panel: To smoothen this shortlisting of service providers, procuring entities who do frequent procurement<\/em> OF non-consultancy services May consider the preparation of a panel of qualified service providers, after evaluation of their credentials \u2014 on the lines of registration of vendors in the procurement of goods<\/em>.<\/p>\nServices that are available on GeM have to be mandatorily procured through that portal.<\/p>\n<h3>4.22.3<\/span>Small Value Non-consultancy Services<\/span><\/h3>\nThe rationale: In small-value procurement of non-consultancy services, the service provider May neither be capable of handling the bidding process<\/em>, nor May procurement be done by shopping mode of procurement.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Value<\/th><th>Mode to be used<\/th><\/tr><\/thead><tbody><tr><td>UP TO Rs. 50,000 (Fifty thousand)<\/td><td>THE 'Direct procurement without quotation'<\/em> Mode of procurement used in procurement of goods May very well be utilised in such cases (certificate at Annexure 7)<\/em><\/td><\/tr><tr><td>UP TO Rs. 5 (Rupees Five) LAKH<\/td><td>THE 'Direct procurement by a Purchase Committee'<\/em> Mode, as used in procurement of goods, May be utilised (certificate at Annexure 8)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nin all such modes of procurement, the procedure prescribed in the Manual for procurement of goods, 2024, May be followed<\/em>.<\/p>\n<h1>Appendix to Chapter 4 \u2014 Part B: Points of Difference<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>SLTE threshold<\/td><td>G\/C\/NC: above Rs. 50 LAKH \u00b7 W: above Rs. 10 LAKH<\/td><\/tr><tr><td>2<\/td><td>OTE threshold<\/td><td>G\/C\/NC: above Rs. 50 lakh \u00b7 W: above Rs. 10 lakh<\/td><\/tr><tr><td>3<\/td><td>LTE default band<\/td><td>G: Rs. 5 lakh to Rs. 50 lakh \u00b7 W: up to Rs. 10 lakh \u00b7 C\/NC: up to Rs. 50 lakh<\/td><\/tr><tr><td>4<\/td><td>Rule cited for LTE\/ SLTE threshold<\/td><td>G\/C\/NC: Rule 162 \u00b7 W: Rule 139(v) AND Rule 162<\/td><\/tr><tr><td>5<\/td><td>Additional non-monetary grounds for LTE (high complexity\/ specialised nature; works of a SECRET nature)<\/td><td>W ONLY<\/td><\/tr><tr><td>6<\/td><td>LTE panel drawn also from OTHER Public Works Organisations\/ Works PSUs<\/td><td>W ONLY<\/td><\/tr><tr><td>7<\/td><td>proprietary Article Certificate (PAC) as a mode<\/td><td>g, c, nc \u2014 absent from works entirely<\/td><\/tr><tr><td>8<\/td><td>STE grounds<\/td><td>G: One ground (emergency, indentor-certified)<\/strong> \u00b7 W: Six grounds<\/strong> including national defence\/ security and natural continuation<\/td><\/tr><tr><td>9<\/td><td>25% cap on incremental work under \"natural continuation\" STE<\/td><td>W ONLY<\/td><\/tr><tr><td>10<\/td><td>Rule cited for Nomination modes<\/td><td>G\/W\/C: Rule 166 \u00b7 NC: Rule 204, with an added requirement of consultation with the Financial Adviser and detailed justification forming an integral part of the proposal<\/td><\/tr><tr><td>11<\/td><td>Award of work through quotations (up to Rs. 5 lakh, at least 3 contractors, one quotation each, emergent cases only)<\/td><td>W ONLY<\/td><\/tr><tr><td>12<\/td><td>Award of works in stalled contracts (20% billing test; next-higher-level approval)<\/td><td>W ONLY<\/td><\/tr><tr><td>13<\/td><td>Direct Procurement without Quotation \/ by Purchase Committee<\/td><td>G (full text), C, NC \u2014 not in Works<\/td><\/tr><tr><td>14<\/td><td>Scientific Ministries enhancement (Rs. 1 lakh \/ Rs. 10 lakh) with the four-part qualifying list<\/td><td>G ONLY<\/td><\/tr><tr><td>15<\/td><td>RATE CONTRACT full text \u2014 items amenable, merits, fall clause, parallel RCs, DDO, renewal<\/td><td>G ONLY<\/strong> (W\/C\/NC list \"Framework Agreements\/ Rate Contracts\" as a separate sixth family and cross-refer)<\/td><\/tr><tr><td>16<\/td><td>Rate Contract listed under ADVERTISED modes vs as a SEPARATE FAMILY<\/td><td>G: under Advertised \u00b7 W\/C\/NC: separate family (f)<\/td><\/tr><tr><td>17<\/td><td>Approved Vendor List full text \u2014 Developmental vs Approved Vendors, 20:80 split, 3-year rotation rule, fresh PQB every three years<\/td><td>G ONLY<\/strong> (W\/C\/NC cross-refer to Goods para 4.7)<\/td><\/tr><tr><td>18<\/td><td>eRA \u2014 placement<\/td><td>g: A mode (4.5) \u00b7 w: A channel (3.5.2) \u00b7 nc: Both (4.4-3-a-iii and 4.6.2) \u00b7 c: Absent entirely<\/td><\/tr><tr><td>19<\/td><td>eRA expressly stated as inappropriate where QCBS is used in NC services<\/td><td>nc only<\/strong> (the general eRA text in G also excludes QCBS and FBS)<\/td><\/tr><tr><td>20<\/td><td>GTE viability ground (d)<\/td><td>G: absence of sufficient competent domestic bidders AND *suspected cartel formation \u00b7 W: requirement cannot be executed by indigenous contractors *at reasonable rates<\/strong><\/td><\/tr><tr><td>21<\/td><td>GTE Terms \u2014 Currency of Bidding, Agency Commission (5%), Delivery Terms\/ Incoterms, Insurance (Rs. 5 crore threshold, Open Cover), IGST break-up<\/td><td>G ONLY<\/td><\/tr><tr><td>22<\/td><td>The eight GTE exemptions (research equipment, ICT items, nomination-basis spares\/AMC, pre-15.05.2020 commitments, 354 medical devices + 120 drugs to 31.03.2027, MDB\/BFA projects, semiconductor to 31.03.2025, procurement abroad for use abroad)<\/td><td>G ONLY<\/td><\/tr><tr><td>23<\/td><td>The seven conditions + six guidelines + three certificates for research-institution GTE<\/td><td>G ONLY<\/td><\/tr><tr><td>24<\/td><td>Advertisement portals in OTE\/ LTE<\/td><td>G: GeM AND<\/em> GeM-CPPP \u00b7 W: GeM-CPPP only<\/td><\/tr><tr><td>25<\/td><td>Requirement that successful un-enlisted bidders get enlisted before contract placement<\/td><td>W ONLY<\/td><\/tr><tr><td>26<\/td><td>PQB\/ Single-Stage Pre-qualification full text \u2014 PQC two-sided test, 3\/4-week and 10-day notice, single-use shortlist, six-month gap<\/td><td>G ONLY<\/td><\/tr><tr><td>27<\/td><td>Mode selection by value bands for NC Services (above Rs 50 lakh \u2192 OTE; below \u2192 LTE with 3-step shortlisting; small value \u2192 Goods shopping modes)<\/td><td>nc only<\/td><\/tr><tr><td>28<\/td><td>\"More than three\" in the moderated long-list of NC service providers<\/td><td>nc only<\/td><\/tr><tr><td>29<\/td><td>Quarterly reporting of nomination awards + audit committee to check at least 10% of cases<\/td><td>W, C, NC<\/strong> state it in the modes\/ SSS sections<\/td><\/tr><tr><td>30<\/td><td>Common footnote: thresholds revised upwards vide PPD's OM No. F.1\/3\/2014-PPD dated 10.07.2024<\/td><td>all four<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 4 \u2014 part b (and of Chapter 4)<\/p>\n<aside class=\"note\">Next:<\/strong>Chapter 5 \u2014 bid invitation process<\/strong>(Goods Ch. 5 \u00b7 Works Ch. 4<\/strong> \u00b7 Consultancy Ch. 5 \u00b7 Non-Consultancy Ch. 5)<\/em> \u2014 one of only two chapters whose title is word-for-word identical in all four Manuals<\/strong>. Note that Works again runs one chapter number behind, and that Consultancy alone splits the tender document into REoI<\/strong> and RfP<\/strong> as separate sections.<\/p><\/aside><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch5\">Chapter 5<\/p><h1>Bid Invitation Process<\/h1><\/header>\nMerging: Goods Ch. 5 \u00b7 Works Ch. 4 \u00b7 Consultancy Ch. 5 \u00b7 Non-Consultancy Ch. 5<\/em><\/p><h2>Structural Notes for Students<\/span><\/h2>\n1. This is one of only two chapters whose title is word-for-word identical in all four Manuals (the other being Chapter 6, Forms of Securities\u2026)<\/em>. BUT the Works Manual numbers it CHAPTER 4, not Chapter 5.<\/p>\n2. Four common anchors run through all four Manuals, in the same order:<\/p>\n<aside class=\"note\">Preparation\/ Floating of Tender Documents \u2192 Obtaining Tender Documents and Submitting Bids \u2192 Opening of Bids \u2192 Transparency and Protecting Third-Party Rights of Bidders \u2192 Risks and Mitigations<\/p><\/aside>\n3. But the four Manuals organise the material very differently:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>Number of sections<\/th><th>Distinctive feature<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span> Goods<\/td><td>5<\/td><td>The base text; leanest treatment<\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> Works<\/td><td>15<\/strong>the most granular<\/em><\/td><td>Promotes each sub-topic to a full section; adds fixed NIT\/ opening days, accessibility standards, entry window for sub-contractors<\/td><\/tr><tr class=\"srcmark src-C\" data-src=\" C \"><td>C<\/span> Consultancy<\/td><td>8<\/td><td>ALONE splits the tender document into two separate documents \u2014 REoI (5.2) and RfP (5.3)<\/td><\/tr><tr class=\"srcmark src-NC\" data-src=\" NC \"><td>NC<\/span> Non-Consultancy<\/td><td>5<\/td><td>Places the entire document-composition detail inside<\/em> 5.1 as sub-paras 5.1.3 to 5.1.12; adds Performance Standards\/ Method Statement<\/strong> and minimum-wage restrictions<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>Concordance for Chapter 5<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>Goods<\/th><th>Works<\/th><th>CS<\/th><th>NCS<\/th><\/tr><\/thead><tbody><tr><td>5.1<\/td><td>Model Tender Documents<\/td><td>5.1.1<\/td><td>(in 4.2)<\/em><\/td><td>5.1.1<\/td><td>5.1.1<\/td><\/tr><tr><td>5.2<\/td><td>Tender Documents \u2014 the fundamental document<\/td><td>5.1.2<\/td><td>4.1<\/td><td>5.1.2<\/td><td>5.1.2<\/td><\/tr><tr><td>5.3<\/td><td>Contents\/ Sections of Tender Documents<\/td><td>5.1.3<\/td><td>4.2<\/td><td>(see 5.4, 5.5)<\/em><\/td><td>5.1.3<\/td><\/tr><tr><td>5.3.1<\/td><td>Notice Inviting Tender (NIT)<\/td><td>5.1.3-2<\/td><td>4.2.1<\/td><td>(RFPL \u2014 5.3.2-2)<\/em><\/td><td>5.1.4<\/td><\/tr><tr><td>5.3.2<\/td><td>Instructions to Bidders (ITB) and AITB<\/td><td>5.1.3-3<\/td><td>4.2.2<\/td><td>(ITC \u2014 5.3.2-3)<\/em><\/td><td>5.1.5<\/td><\/tr><tr><td>5.3.3<\/td><td>General and Special Conditions of Contract<\/td><td>5.1.3-4<\/td><td>4.2.3<\/td><td>5.3.2-4<\/td><td>5.1.6<\/td><\/tr><tr><td>5.3.4<\/td><td>Schedule of Requirements<\/td><td>5.1.3-5<\/td><td>4.2.4<\/td><td>(ToR)<\/em><\/td><td>5.1.7<\/td><\/tr><tr><td>5.3.5<\/td><td>Technical Specifications\/ Drawings\/ QA<\/td><td>5.1.3-6<\/td><td>4.2.5<\/td><td> \u2014 <\/td><td>5.1.8<\/td><\/tr><tr><td>5.3.6<\/td><td>Qualification Criteria<\/td><td>5.1.3-7<\/td><td>4.2.6<\/td><td>5.2.2-6<\/td><td>5.1.9<\/td><\/tr><tr><td>5.3.7<\/td><td>Evaluation Criteria<\/td><td>5.1.2-6<\/td><td>4.2.7<\/td><td>5.3.2-6<\/td><td>(within 5.1.12)<\/em><\/td><\/tr><tr><td>5.3.8<\/td><td>Submission Forms and Formats<\/td><td>5.1.3-8<\/td><td>4.2.8<\/td><td>5.3.3<\/td><td>5.1.11<\/td><\/tr><tr><td>5.3.9<\/td><td>Financial Bid (BOQ Excel Sheet)<\/td><td>5.1.3-8-b<\/td><td>4.2.9<\/td><td>5.3.3-2<\/td><td>5.1.10<\/td><\/tr><tr><td>5.4<\/td><td>REoI Document<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>5.2<\/td><td> \u2014 <\/td><\/tr><tr><td>5.5<\/td><td>RfP Document<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>5.3<\/td><td> \u2014 <\/td><\/tr><tr><td>5.6<\/td><td>Mandatory e-Publishing<\/td><td>5.1.4<\/td><td>4.3<\/td><td>5.4<\/td><td>5.1.13<\/td><\/tr><tr><td>5.7<\/td><td>Amendment of Tender Documents<\/td><td>5.1.5<\/td><td>4.4<\/td><td>5.4.2<\/td><td>5.1.14<\/td><\/tr><tr><td>5.8<\/td><td>Extension of Deadline of Bid Submission<\/td><td>5.1.6<\/td><td>4.5<\/td><td>5.4.3<\/td><td>5.1.15<\/td><\/tr><tr><td>5.9<\/td><td>Availability and Cost of Tender Documents<\/td><td>5.2.1<\/td><td>4.6.1<\/td><td>5.5.1<\/td><td>5.2.1<\/td><\/tr><tr><td>5.10<\/td><td>Participation of Bidders \u2014 Eligibility<\/td><td>5.2.2<\/td><td>4.6.2<\/td><td>5.5.2<\/td><td>5.2.2<\/td><\/tr><tr><td>5.11<\/td><td>Pre-NIT and Pre-bid Conferences<\/td><td>5.2.3<\/td><td>4.7<\/td><td>5.5.3<\/td><td>5.2.3<\/td><\/tr><tr><td>5.12<\/td><td>Site Visit<\/td><td> \u2014 <\/td><td>4.7-3<\/td><td>5.5.4<\/td><td>5.2.4<\/td><\/tr><tr><td>5.13<\/td><td>Clarification of Tender Documents<\/td><td>5.2.4<\/td><td>4.8<\/td><td>5.5.5<\/td><td>5.2.5<\/td><\/tr><tr><td>5.14<\/td><td>Withdrawal\/ Amendment\/ Modification by Bidders<\/td><td>5.2.5<\/td><td>4.9<\/td><td>5.5.6<\/td><td>5.2.6<\/td><\/tr><tr><td>5.15<\/td><td>Sealing\/ Marking of Bids in off-line Tenders<\/td><td>5.2.6<\/td><td>4.10<\/td><td>5.5.7<\/td><td>5.2.7<\/td><\/tr><tr><td>5.16<\/td><td>Uploading\/ Submission of Bids<\/td><td>5.2.7<\/td><td>4.11<\/td><td>5.5.8<\/td><td>5.2.8<\/td><\/tr><tr><td>5.17<\/td><td>Bid Validity<\/td><td>5.2.8<\/td><td>4.12<\/td><td>5.5.9<\/td><td>5.2.9<\/td><\/tr><tr><td>5.18<\/td><td>Opening of Bids<\/td><td>5.3<\/td><td>4.13<\/td><td>5.6<\/td><td>5.3<\/td><\/tr><tr><td>5.19<\/td><td>Transparency and Third-Party Rights<\/td><td>5.4<\/td><td>4.14<\/td><td>5.7<\/td><td>5.4<\/td><\/tr><tr><td>5.20<\/td><td>Risks and Mitigations<\/td><td>5.5<\/td><td>4.15<\/td><td>5.8<\/td><td>5.5<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>5.1<\/span>Model Tender Documents<\/span><\/h2>\nthe Department of Expenditure (DoE), Ministry of Finance, Government of India, has issued model tender documents (MTD) for:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Date of issue<\/th><\/tr><\/thead><tbody><tr><td>Procurement of GOODS<\/td><td>October 2021<\/td><\/tr><tr><td>Procurement of NON-CONSULTANCY SERVICES<\/td><td>October 2021<\/td><\/tr><tr><td>Procurement of CONSULTANCY SERVICES<\/td><td>April 2023<\/strong>(includes a Model REoI<\/strong>)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nprocuring entities are URGED<\/em> To customise the relevant MTD to prepare tender documents for their procurements. Guidance notes annexed to the MTDs<\/em> Detail the process of customisation of MTD for an organisation and for each procurement.<\/p>\n<aside class=\"note\">W<\/span> \u2014 the Works position is different: The Works Manual does <\/strong>not refer to a DoE Model Tender Document. Instead: *\"<\/strong>The bid documents must be based on relevant standard bidding documents (SBD) FOR \u2014 the type of contract (Lump Sum, Item Rate etc.); Estimated value range; Bidding system (Single Envelope\/ Two Envelope\/ PQB) etc.*<\/p>\nSBD for e-procurement would be slightly different from the traditional SBD.<\/strong>To ensure uniformity, the standard provisions in most sections of the SBD are to be used unaltered. Any modification to suit a unique requirement of the specific procurement is to be done through variable sections \u2014 such as Appendix to instructions to bidders or special conditions of contract<\/strong> (these variable sections may have different nomenclatures in some organisations). Normally, if the organisation does not have its own SBD, it May follow those of other public works organisations like CPWD.<\/strong><\/p>\nBefore floating the tender, the bid document should be got approved by the Competent Authority.<\/strong>\"<\/p><\/aside>\n<h2>5.2<\/span>Tender Documents \u2014 the Fundamental Document<\/span><\/h2>\n1. Why it matters: The tender document is the fundamental document<\/em> In the Public Procurement process, as \u2014 after the award of the contract \u2014 it becomes part of the contract agreement<\/em>.<\/p>\nA carefully prepared tender document avoids delays and complaints<\/em>. This will also attract more bidders to formulate and submit their competitive bids with confidence<\/em>.<\/p>\nHence, it is worth spending time and effort on this \u2014 even in cases of urgency<\/em>.<\/p>\n<aside class=\"note\">W<\/span> adds two important sentences not in the other three:<\/p>\na) \"all necessary provisions governing the contract should be clearly provided in the tender document. Examples are technical specifications, drawings, commercial terms and conditions including payment terms, obligations of the procuring entity and the contractor, timeframe\/ milestones for execution of the project, tax implications, compliance framework for statutory and other norms, reporting on progress\/ quality of the work, dispute resolution.\"<\/em><\/p>\nb) \"Comprehensive survey & soil investigation report, area grading & mapping of underground facilities \u2014 where the project is to be executed \u2014 May be made available and made part of the tender document.\"<\/em><\/p><\/aside>\n2. Clarity requirement: Provisions\/ clauses in the tender document should be clear, self-contained, and comprehensive without any ambiguity<\/em> \u2014 to avoid differences in interpretation and possible disputes, time overrun, cost overrun and quality compromises<\/em>.<\/p>\n<h3>5.2.1<\/span>The Essential Aspects Every Tender Document Must Address<\/span><\/h3>\n(Rule 173 of GFR 2017)<\/em><\/p>\nWhile tender documents should be complete in themselves and may be slightly different for various categories of procurement, these must necessarily address the essential aspects below. Model Tender Documents issued by the DoE \u2014 which comply with all these requirements \u2014 may be used, with due customisation:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>Requirement<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-W\" data-src=\" W \"><td>a)<\/td><td>description of the subject matter of procurement, its specifications\/ drawings including the quality\/ nature\/ quality assurance, quantity, time and place or places of delivery\/ completion W<\/span> Variant: *\u2026Quantity, time and location where the construction is to be effective, any incidental services to be performed*<\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>a-bis)<\/td><td>W<\/span> Only: The facilities and the inputs which will be provided to the contractor by the Ministry\/ Department<\/td><\/tr><tr><td>b)<\/td><td>limitation or preference for participation by bidders in terms of Government policies<\/td><\/tr><tr><td>c)<\/td><td>the procedure, as well as the date, time, and place for obtaining, submitting, and opening of the bids<\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>d)<\/td><td>suitable provisions for enabling a bidder to question (W<\/span>: \"Seek clarification\/ question\")<\/em> The bidding conditions, bidding process and\/ or rejection of its bid. These provisions should include a time frame in which the Procuring Entity will address the bidder's questions<\/em><\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>e)<\/td><td>criteria for determining the responsiveness<\/em> Of bids; Criteria as well as factors to be considered for evaluating the bids on a common platform<\/em>; And the criteria for awarding the contract to the responsive, most advantageous (lowest\/ highest as the case May be) bidder \u2014 should be clearly indicated<\/strong> W<\/span> Footnote on \"highest\":\"<\/strong>Highest, here, refers to the selection of the contractor using the quality and Cost Based Selection (QCBS) methodology \u2014 wherein the contractor securing the HIGHEST MARKS by combining the technical and financial evaluation scores is identified as the <\/em>Highest scorer or the h1 BIDDER*, and is eligible for award of contract.\"*<\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>f)<\/td><td>THE eligibility<\/em> Criteria should take care of the supplier's\/ contractor's eligibility to participate in the tender process (W<\/span>: \"to receive such a government contract\")<\/em><\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>f-bis)<\/td><td>W<\/span> Only: Requirements as to documentary evidence<\/em>, which must be submitted by contractors to demonstrate their qualifications<\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>g)<\/td><td>THE qualification<\/em> Criteria should consider their capability to perform the resultant contract successfully, balancing considerations of quality, time, and cost<\/strong><\/em> W<\/span> variant: *\u2026should take care of the contractor's <\/strong>past performance, experience, technical competence, financial strength to handle the contract successfully, <\/strong>compliance with environmental protection regulations\/ environment management system and so on*<\/td><\/tr><tr><td>h)<\/td><td>commercial terms and conditions \u2014 e.g., payment terms, tax implications, respective obligations of the Procuring Entity and the suppliers, and compliance framework for statutory and other norms. The provision of price variation<\/em>, wherever considered appropriate, and the methodology for calculation<\/em>, shall be clearly stipulated<\/td><\/tr><tr><td>i)<\/td><td>the tender document should include a clause that \"If a firm quotes nil charges\/ consideration, the bid shall be treated as unresponsive and will not be considered.\"<\/em><\/td><\/tr><tr><td>j)<\/td><td>procedures for redressal of grievances or complaints from aggrieved bidders<\/td><\/tr><tr><td>k)<\/td><td>if applicable, the integrity Pact clause and format<\/em> To be signed shall be included<\/td><\/tr><tr><td>l)<\/td><td>suitable provision for settlement of disputes<\/em>, if any, emanating from the resultant contract<\/td><\/tr><tr><td>m)<\/td><td>essential terms of the procurement contract, including a suitable clause mentioning that the resultant contract will be interpreted under Indian laws<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<h3>5.2.2<\/span>Delegation, Eligibility vs Qualification vs Evaluation, and Time<\/span><\/h3>\n3. Delegation: Procuring entities May issue instructions regarding the appropriate delegation of authority for approval of the tender documents before these are floated\/ uploaded<\/em>.<\/p>\n4. The three-filter structure \u2014 the single most important conceptual point in this chapter:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Filter<\/th><th>Function<\/th><\/tr><\/thead><tbody><tr><td>Eligibility criteria<\/td><td>specify the criteria that a bidder should meet to be considered a responsive bid<\/em> To be evaluated further, beyond the preliminary evaluation\/ screening of bids<\/td><\/tr><tr><td>qualification criteria<\/td><td>determine the capability of bidders (who have passed the eligibility criteria) to perform the contract<\/em>. Only those bidders who meet the qualification criteria go to the next step of evaluation for award of contract<\/td><\/tr><tr><td>evaluation criteria<\/td><td>THE final filter<\/em> Used to select the bidders (who have passed the qualification criteria) for the award of the contract<\/td><\/tr><\/tbody><\/table><\/div>\n5. Qualification Criteria \u2014 the broad-basing rule: Qualification criteria should be clear and fair<\/em> in regard to the specific circumstances of the procurement. Public authorities should also keep the experience, technical and financial criteria broad-based<\/em>, so that bidders with experience in items\/ goods of a similar nature (W<\/span>: \"in execution of works of a similar nature\")<\/em> Can participate.<\/p>\nAppropriate parameters should be prescribed to enable the selection of the right type of bidders in the public interest<\/em>, balancing considerations of quality, time, and cost.<\/p>\n6. Evaluation Criteria \u2014 the permitted additional criteria:<\/strong> Depending on the requirement and VfM considerations, the Procuring Entity may consider including, besides price<\/strong>, one or more additional criteria:<\/p>\n<div class=\"tblwrap\"><table><thead><tr class=\"srcmark src-multi\" data-src=\" G W \"><th>G<\/span> GOODS<\/th><th>W<\/span> WORKS<\/th><\/tr><\/thead><tbody><tr><td>Quality \u00b7 technical merit \u00b7 aesthetic and functional characteristics \u00b7 environmental characteristics \u00b7 running costs \u00b7 cost-effectiveness \u00b7 after-sales service and technical assistance \u00b7 delivery date and delivery period or period of completion<\/td><td>quality of workmanship \u00b7 technical merit \u00b7 aesthetic and functional characteristics \u00b7 environmental characteristics \u00b7 period of completion<\/td><\/tr><\/tbody><\/table><\/div>\nno criteria shall be used for the evaluation of tenders that cannot be verified<\/em>.<\/p>\n7. Default method: Open online tendering should be the default method<\/em> To ensure efficiency of procurement.<\/p>\n8. The time-allowed Rule: The Procuring Entity should allow enough time to the bidders to prepare their proposals<\/em>. The time allowed shall depend on the assignment, but:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Situation<\/th><th>Minimum period<\/th><\/tr><\/thead><tbody><tr><td>Normally<\/td><td>not less than three weeks<\/td><\/tr><tr><td>Where participation of INTERNATIONAL service providers\/ contractors is contemplated<\/td><td>not less than four weeks<\/td><\/tr><\/tbody><\/table><\/div>\n9. The four reserved rights: Tender documents should invariably<\/em> Reserve the Procuring Entity's right \u2014 without assigning any reason<\/em> \u2014 to: A) reject any or all of the bids; Or b) cancel the tender process; Or c) abandon the procurement of the goods\/ works\/ services; Or d) issue another tender for identical or similar goods\/ works\/ services.<\/p>\n<h2>5.3<\/span>Contents\/ Sections of the Tender Document<\/span><\/h2>\n(Rule 168 of GFR 2017)<\/em><\/p>\n<h3>5.3.0<\/span>The Section Structure<\/span><\/h3>\n<aside class=\"note\">G<\/span> and W<\/span> use the same ten sections \u2014 but note the ORDER of the last two is REVERSED.<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr class=\"srcmark src-multi\" data-src=\" G W \"><th>Section<\/th><th>G<\/span> GOODS<\/th><th>W<\/span> WORKS<\/th><\/tr><\/thead><tbody><tr><td>I<\/td><td>Notice Inviting Tender (NIT) and its Appendix: Tender Information Summary (TIS)<\/td><td>(same)<\/em><\/td><\/tr><tr><td>II<\/td><td>Instructions to Bidders (ITB)<\/td><td>(same)<\/em><\/td><\/tr><tr><td>III<\/td><td>Appendix to Instructions to Bidders (AITB)<\/td><td>(same)<\/em><\/td><\/tr><tr><td>IV<\/td><td>General Conditions of Contract (GCC)<\/td><td>(same)<\/em><\/td><\/tr><tr><td>V<\/td><td>Special Conditions of Contract (SCC)<\/td><td>(same)<\/em><\/td><\/tr><tr><td>VI<\/td><td>Schedule of Requirements<\/td><td>(same)<\/em><\/td><\/tr><tr><td>VII<\/td><td>Technical Specifications and Quality Assurance<\/td><td>DRAWING, Technical Specifications and Quality Assurance<\/td><\/tr><tr><td>VIII<\/td><td>Qualification and Evaluation Criteria<\/td><td>(same)<\/em><\/td><\/tr><tr><td>IX \/ X<\/td><td>(i) Financial Bid (BOQ Excel Sheet) then (j) Submission forms and formats<\/td><td>(i) Submission forms and formats then (j) Financial Bid (BOQ Excel Sheet) \u2014 order reversed<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">W<\/span> caveat: *\"<\/strong>The contents of Bid Documents would therefore VARY, but will GENERALLY comprise the following (some of these sections May be named or organised differently in some organisations).\"*<\/p><\/aside>\n<h3>5.3.1<\/span>Notice Inviting Tender (NIT)<\/span><\/h3>\n1. Legal importance: NIT is of legal importance<\/em>, since it is this part of the tender document that solicits offers from the bidders<\/em>. G<\/span> adds: *The model NIT format in MTD should be used to publish the tender notice.*<\/p>\n2. Function and alerts: THE NIT (and its Appendix TIS) must contain sufficient information in brief<\/em> for a prospective bidder to decide whether to participate<\/em> In the tender and, if he decides to participate, how to go about it<\/em>.<\/p>\nTo ensure competition, the attention of all likely bidders<\/em> \u2014 for example, registered vendors\/ contractors, past suppliers\/ contractors, and other known potential suppliers\/ contractors \u2014 should be invited to the NIT through email\/ smss\/ letters<\/em>.<\/p>\nIn e-procurement, the website May be programmed to generate these alerts automatically<\/em>.<\/p>\n3. The mandatory note for limited tenders: In case of procurement through a limited tender, the NIT May be uploaded on geM (Goods only)<\/em> As well as on gem-cppp and the Procuring Entity's website, with a note saying<\/em>:<\/p>\n<aside class=\"note\">\"This notice is being published for information only and is not an open invitation to quote in this limited tender. Participation in this tender is by invitation only and is limited to the selected Procuring Entity's registered suppliers\/ contractors. Unsolicited offers are liable to be ignored. However, suppliers\/ contractors who desire to participate in such tenders in future May apply for registration with Procuring Entity as per procedure.\"<\/em><\/p><\/aside>\n4. Audit trails: Time-stamped audit trails for the e-publication shall be maintained by the procurement portal. Printouts May be taken only in case of off-line tenders<\/em>, if required \u2014 apart from ensuring maintenance of time-stamped audit trail of e-publication. The complete details of the dates on which advertisements appeared on the website should be indicated when sending cases to higher authorities.<\/p>\n<h3>5.3.2<\/span>Instructions to Bidders (ITB) and its Appendix (AITB)<\/span><\/h3>\nITB contains all relevant information as well as guidance to the prospective bidders regarding:<\/p>\n<aside class=\"note\">Obtaining tender documents \u00b7 preparing and submitting a response \u00b7 the process of establishing the eligibility\/ qualification credentials of the bidders \u00b7 as well as evaluation and comparison of tenders and award of contract<\/p>\nW<\/span> and C<\/span> add to this list:<\/strong>Code of Integrity in Public Procurement (CIPP) \u00b7 the process of grievance redressal *(and C<\/span> further adds: <\/strong>Declaration of results)*<\/p><\/aside>\nITB should NOT<\/em> Contain information on processes after the announcement of the award<\/em>, which should be covered in GCC \u2014 for example, the arbitration clause, resolution of disputes, and so on.<\/p>\nITB also contains an introduction\/ overview of the contents of the tender document.<\/p>\n<aside class=\"note\">W<\/span> adds: *\"<\/strong>it mentions the type of entities that May participate, specifically if consortium\/ JV are permitted to participate. It also excludes insolvent, bankrupt, debarred, and convicted firms with conflict of interest from participation. Restriction of participation of bidders from certain countries with land borders with India is also applicable.\"*<\/p><\/aside>\nthe AITB device: Instead of modifying ITB every time<\/em>, any changes warranted by exceptional circumstances May be indicated \u2014 with the prior approval of ca<\/em> \u2014 in a separate Appendix to ITB (AITB), and ITB May be included unchanged in every tender document<\/em>.<\/p>\nIt should also be indicated therein that the provisions in the AITB shall supersede the corresponding provisions in the ITB<\/em>.<\/p>\n<h3>5.3.3<\/span>General and Special Conditions of Contract (GCC and SCC)<\/span><\/h3>\nThe general conditions of contract (GCC) details the terms and conditions that would govern the resultant contract.<\/p>\nGCC covers all information on aspects after the announcement of the tender award till the closure of the contract and dispute resolution<\/em>. It should NOT<\/em> Cover any aspect up to the announcement of the award.<\/p>\nThe SCC device: Instead of modifying the GCC every time, any changes warranted by exceptional circumstances May be indicated in a separate section \u2014 special conditions of contract (SCC)<\/em> \u2014 with the prior approval of the ca, and GCC May be included unchanged in every tender document.<\/p>\nIt is also to be indicated therein that the provisions in the SCC will supersede the corresponding provisions in the GCC<\/em>.<\/p>\n<aside class=\"note\">W<\/span> Only \u2014 the four circumstances warranting an SCC clause: \"Conditions in SCC shall be need-based and specific, and the circumstances warranting them shall be duly considered, including but not limited to the following:\"<\/em><\/p>\na) where the wording in GCC specifically requires<\/em> That further information is to be included in SCC, and the conditions would not be complete without that information<\/em>;<\/p>\nB) where the wording in GCC indicates that supplementary<\/em> Information May be included in SCC, but the conditions would still be complete without that information<\/em>;<\/p>\nc) where THE type, circumstances or locality of the works<\/em> Requires additional clauses or sub-clauses; And<\/p>\nd) where the laws of the country, or exceptional circumstances<\/em>, necessitate alterations in GCC. Such alterations are effected by stating in SCC that a particular clause, or part of a clause in GCC, is deleted, and giving the substitute clause or part<\/em>, as applicable.<\/p><\/aside>\n<h3>5.3.4<\/span>Schedule of Requirements<\/span><\/h3><h4 class=\"src-G srchead\" data-src=\" G \">G<\/span> Goods<\/span><\/h4><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\nThis section describes the list of goods required, quantities, delivery requirements, destination, and scope of supply<\/em> (Concomitant accessories, spare parts, and incidental works\/ services).<\/p>\nIf there is no separate section on technical specifications (TS) and quality assurance (QA), then TS and QA May also be included here.<\/p>\nIt must be clarified whether the evaluation of eligibility\/ qualifications\/ financial bids would be done item-by-item in a Schedule<\/em> OR on the total of all items in a Schedule<\/em> \u2014 and, if there is more than one Schedule, whether the same would be done on a schedule-by-schedule basis<\/em> Or on the total of all schedules put together<\/em>.<\/p>\n<\/div><h4 class=\"src-W srchead\" data-src=\" W \">W<\/span> Works<\/span><\/h4><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n1. For works procurement, this section should detail the scope of work, including the description of the works to be undertaken, quantities, quality standards, site location, and delivery requirements\/ milestones<\/em>. If there are no separate sections on TS and QA, these details should be incorporated here, specifying the standards and methodologies to be employed.<\/p>\n2. It should be clarified how the evaluation will be conducted \u2014 whether item-by-item, by lot, or for the entire scope of work<\/em>. Additionally, if the procurement involves multiple lots or sections of work<\/em>, it should be stated whether evaluations will be done on a lot-by-lot basis<\/em> Or based on the total of all lots or sections combined<\/em>.<\/p>\n3. This ensures transparency and clarity<\/em>, enabling bidders to understand the scope fully and submit their bids accordingly.<\/p>\n4. Identification of milestones<\/em> May be done in an optimal and sequential manner<\/em>, and the same May be stipulated in the tender document along with enabling provisions<\/em>.<\/p>\n<\/div><h4 class=\"src-NC srchead\" data-src=\" NC \">NC<\/span> NON-CONSULTANCY \u2014 Schedule of Requirements and Services and Activities Schedule<\/span><\/h4><div class=\"srcblock src-NC\" data-src=\" NC \" data-label=\"Non-Consultancy Manual only\">\nSchedule of Requirements and its sub-schedule \u2014 Service and Activities Schedule<\/em> \u2014 describes the background, purpose\/ objectives, description\/ scope, deliverables\/ outcomes, quantum, timelines of services required, etc.<\/p>\nThe requirements May consist of more than one Schedule<\/em>. Each Schedule May contain more than one service<\/em>.<\/p>\nIn case of multiple schedules of requirement in a tender of services, it should be clarified how bids for multiple schedules would be evaluated for award of contract \u2014 either Schedule by Schedule or in total<\/em>.<\/p>\nBidders must fill up compliance<\/em> Regarding these schedules.<\/p>\n<\/div><h3>5.3.5<\/span>Technical Specifications, Drawings and Quality Assurance<\/span><\/h3><h4 class=\"src-G srchead\" data-src=\" G \">G<\/span> Goods<\/span><\/h4><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\nTechnical specifications and quality assurance lays down the technical specifications and quality assurance requirements of the goods required. It would also stipulate, if required, any compliance required by Central and State pollution control boards<\/em>.<\/p>\n<\/div><h4 class=\"src-W srchead\" data-src=\" W \">W<\/span> Works \u2014 and the Accessibility Mandate<\/span><\/h4><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n1. Construction drawings, technical specifications and quality assurance plan<\/em> Lay down the technical specifications and quality assurance requirements of the works to be executed. It would also stipulate, if required, any compliance required by Central and State Pollution Control Boards.<\/p>\n2. The mandatory accessibility clause \u2014 W<\/span> ONLY: \"The bidder shall ensure that all products, services, platforms, infrastructure, and other deliverables under contract must comply with applicable accessibility standards and guidelines as notified under the <\/em>rights of persons with disabilities Act, 2016, and the <\/em>rights of persons with disabilities Rules, 2017 As amended \u2014 including but not limited to:\"<\/em><\/p>\na) harmonised guidelines and standards for universal accessibility in India, issued by the Ministry of housing and urban affairs<\/em>.<\/p>\nb) IS 17802 (PART 1):2021 \u2014 Accessibility for ICT Products and Services Part I: Requirements<\/em>; and IS 17802 (PART 2):2022 \u2014 Accessibility for ICT Products and Services Part 2: Determination of Conformance<\/em> \u2014 issued by the bureau of Indian Standards<\/em>; and<\/p>\nc) any other relevant guidelines, notifications, or instructions from time to time by the Department of empowerment of persons with disabilities, Ministry of social justice and empowerment<\/em>, Government of India.<\/p>\n<\/div><h4 class=\"src-NC srchead\" data-src=\" NC \">NC<\/span> NON-CONSULTANCY \u2014 Performance Standards and Quality Assurance; Method Statement; Work Plan; Critical Material Schedule<\/span><\/h4><div class=\"srcblock src-NC\" data-src=\" NC \" data-label=\"Non-Consultancy Manual only\">\n1. Performance Standards and Quality Assurance STIPULATES THE quantitative\/ qualitative parameters\/ limits\/ thresholds for performance standards\/ service levels and functional\/ technical specifications<\/em> To which the service must be performed.<\/p>\nIt shall stipulate procedures for the measurement, reporting and monitoring<\/em> Of performance parameters \u2014 including institutional or third-party arrangements<\/em> for this purpose.<\/p>\nIt shall also stipulate the procedure for resolution and escalation in case of deficiency<\/em> In performance\/ quality\/ service levels.<\/p>\nIn the case of long-term and complex services<\/em>, it May stipulate a service-level agreement (SLA)<\/em> Which must be complied with during delivery of services.<\/p>\nPerformance standards shall also include statutory compliance required for occupational safety, health and working conditions<\/em> Requirements during delivery of services.<\/p>\n2. Procuring Entity May, if considered necessary, specify sub-schedules: Method statement, work plan, and critical material schedules<\/em> Required for the performance of services to desired quality and standards. Otherwise, these May be left to be quoted by the bidder<\/em>.<\/p>\n3. Bidders must fill up the relevant forms regarding this Schedule.<\/p>\n<\/div><h3>5.3.6<\/span>Qualification Criteria<\/span><\/h3>\n1. The general Rule (all four): If it is intended to use qualification criteria to evaluate a tender and determine whether a bidder has the required qualifications to perform the contract successfully, this point May be clearly specified in ITB\/ AITB or as a separate section<\/em> OF THE tender document.<\/p>\nThe bidder must ensure that he provides convincing proof<\/em> Of having fulfilled these criteria.<\/p>\nAny criteria not specified in the tender<\/em> Cannot be used for evaluation or qualification.<\/p>\n2. The content of Pre\/ Post Qualification Criteria: PQC shall be based entirely upon the capability and resources required to perform the particular contract satisfactorily<\/em>, considering:<\/p>\n<aside class=\"note\">Bidders' experience and past performance \u00b7 capabilities with respect to personnel, equipment and manufacturing facilities \u00b7 financial standing \u00b7 and relevant compliance with environmental protection regulations\/ environment management system<\/p><\/aside>\nTHE quantity, delivery, and value<\/em> Of the procurement shall be kept in view while the pre\/ post qualification criteria are fixed.<\/p>\nThere should be NO<\/em> Pre\/ post qualification criteria that would be advantageous to foreign manufactured goods at the cost of domestically manufactured goods<\/em>. (C<\/span> variant: \"advantageous to FOREIGN CONSULTANTS at the cost of domestically delivered services\".)<\/em><\/p>\n3. Relaxation for start-ups (all four)<\/em>: The condition of prior turnover and prior experience<\/em> May be relaxed for start-ups \u2014 only to start-ups recognised by DPIIT<\/em> \u2014 subject to meeting quality & technical specifications<\/em> And making suitable provisions in the tender document (Rule 173(i) of GFR 2017; OM No. F.20\/2\/2014-PPD (Pt.) dated 20.09.2016)<\/em>.<\/p>\nStart-ups May be MSMEs\/ MSEs or otherwise. Such relaxation can be provided in the case of procurement of works as well.<\/p>\nIt is further clarified that such relaxation is not optional but has to be ensured<\/em> \u2014 except in case of procurement of items related to public safety, health, critical security operations and equipment<\/em>, etc., where adequate justification exists for the Procuring Entity not to relax such criteria.<\/p>\n4. Demerged entities \u2014 W<\/span>, C<\/span>, NC<\/span> ONLY (DoE's OM No. F.8\/78\/2023-PPD dated 12.10.2023)<\/em>:<\/p>\nW<\/span> formulation:<\/strong>Demerged entities (by virtue of a corporate restructuring exercise etc.) May be permitted<\/em> To participate in the tender by using the credentials of the original\/ parent entity to satisfy the eligibility criteria \u2014 at least for the initial five years from the incorporation of the demerged entities<\/em>.<\/p>\nProcuring entities may, in suitable cases, consider the credentials based on the merit and circumstances of the cases<\/em> \u2014 like type of procurement, nature of demerger, number of eligible bidders available, etc.<\/p>\nTender documents must clearly mention<\/em> If the credentials of the demerged entity will be considered or not in the specific tender, and May give the conditions under which demerged entities May become eligible.<\/p>\n5. Entry window for sub-contractors in smaller contracts \u2014 W<\/span> ONLY:<\/p>\n<aside class=\"note\">It is of utmost importance<\/em> To develop new contractors and also to provide avenues to sub-contractors, since they May not get opportunities to accumulate the required credentials to compete in normal tenders<\/em>.<\/p>\nTo enable a window of entry for such sub-contractors, in small value contracts (e.g., repair contracts up to Rs. 60 lakh)<\/em>, the requirements regarding general construction experience, particular construction experience and available bid capacity<\/em> MAY not be insisted upon<\/em> \u2014 provided the bidders fulfil other criteria regarding financial\/ personnel\/ equipment capabilities<\/em>.<\/p>\nHowever, to avoid overstretching of their resources, no such contractors May be allowed to hold more than 2 contracts under relaxed credentials, at any given time<\/em>.<\/p><\/aside>\n6. The non-consultancy qualification criteria \u2014 NC<\/span> Only, with its three numbered criteria and worked example:<\/p>\nUnless otherwise stipulated, the Qualification Criteria shall include:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Criterion<\/th><th>Content<\/th><\/tr><\/thead><tbody><tr><td>Criteria 1: Experience and past performance<\/td><td>i) Experience of providing similar services ii) VOLUME of similar services: (1) 3 services > each 40% of the estimated cost; OR (2) 2 services > each 50% of the estimated cost; OR (3) 1 service > 80% of the estimated cost<\/td><\/tr><tr><td>Criteria 2: PERFORMANCE CAPABILITY \u2014 Managerial and Equipment<\/td><td>i) CONTRACT MANAGER \u2014 5 years' experience (3 as a manager) ii) Ownership\/ proposals for acquisition\/ hiring the essential equipment<\/td><\/tr><tr><td>criteria 3: Financial capability<\/td><td>i) Avg annual turnover AT least 3\u20137 TIMES the estimated cost ii) Financial Liquidity<\/td><\/tr><\/tbody><\/table><\/div>\nthe worked example given in the nc Manual:<\/p>\na) Past Experience:<\/p>\n<ul class=\"lst\"><li>i) The bidder must have at least three years' experience<\/em> (Ending month of March prior to the bid opening) of providing similar types of services to Central\/ State Government\/ PSUs\/ nationalised banks\/ reputed organisations<\/em>. Services rendered with a list of such organisations, with duration of service, shall be furnished.<\/li><li>ii) the bidder must have successfully executed\/ completed similar services (the definition of \"similar services\" should be clearly DEFINED)<\/em> Over the last seven financial years<\/em> Previous to the current financial year:<\/li><li>(1) three similar completed services with annualised value not less than 40% (forty per cent) of the estimated annualised cost; OR<\/li><li>(2) two similar completed services with annualised value not less than 50% (fifty per cent) of the estimated annualised cost; OR<\/li><li>(3) one similar completed service with annualised value not less than 80% (eighty per cent) of the estimated annualised cost.<\/li><\/ul>\nb) Performance Capability:<\/p>\n<ul class=\"lst\"><li>I) managerial capability: A contract Manager with five years' experience<\/em> In services of an equivalent nature and volume, including no less than three years as manager<\/em>.<\/li><li>ii) equipment capability: Ownership\/ proposals for the timely acquisition (own, lease, hire, etc.) of the essential equipment listed in the tender information summary (TIS)<\/em>.<\/li><\/ul>\nc) Financial Capability:<\/p>\n<ul class=\"lst\"><li>I) average annual gross billing during the last three years, ending 31ST March of the previous financial year, should be at least 3 times (for 1\u20133 year contracts) to 7 times (for contracts longer than 3 years)<\/em> The estimated annual cost \u2014 as far as feasible based on the nature of service and market condition.<\/li><\/ul>\n<aside class=\"note\">The reason given: \"Generally, the financial capability required in non-consultancy services as a multiple of annual tender value should be <\/em>higher than the multiple in works, because the service provider has to <\/em>sustain the services over a long period of time. That is why a multiple of 3 to 7 is mentioned above.\"<\/em><\/p><\/aside>\n<ul class=\"lst\"><li>ii) liquid assets and\/ or credit facilities \u2014 net of other contractual commitments and exclusive of any advance payments<\/em> Which May be made under the contract \u2014 of no less than the amount specified in the tender document.<\/li><\/ul>\nThe upper-cap Rule NC<\/span>: In higher-value procurements, the minimum annual turnover should not be blindly a multiplier<\/em> Of the assignment value \u2014 but there May be an upper cap on demanded turnover<\/em>, so as not to restrict competition only to the big or foreign firms.<\/p>\n<h3 class=\"src-W srchead\" data-src=\" W \">5.3.7<\/span>Evaluation Criteria \u2014 the Works elaboration<\/span>W<\/span><\/h3><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n1.<\/strong> These criteria can include:<\/p>\n<aside class=\"note\">The quality of work \u00b7 cost considerations \u00b7 technical excellence \u00b7 aesthetic and functional attributes of the proposed construction, aligning with the project's overall goals \u00b7 environmental considerations (reflecting the commitment to sustainability) \u00b7 running costs \u00b7 cost-effectiveness<\/p><\/aside>\nand \u2014 critically in safeguarding the Procuring Entity's interests:<\/p>\n<aside class=\"note\">Defect liability period (DLP) \u00b7 warranty period post-installation and commissioning \u00b7 long-term service agreements<\/p><\/aside>\n \u2014 ensuring that any defects identified within a specified period post-completion are rectified at the contractor's expense<\/em>, and that the project's integrity is maintained over time.<\/p>\nIt's crucial that the evaluation criteria \u2014 including those for the defect liability and warranty periods as well as long-term service commitments \u2014 are tangible and verifiable<\/em>. This ensures a transparent, equitable, and objective assessment process, enabling a holistic evaluation that considers not only the initial project execution but also its long-term sustainability, operational efficiency, and maintenance.<\/p>\nThe inclusion of the projected delivery date and completion timeline<\/em> Ensures the project adheres to strategic planning and timelines.<\/p>\n2. Conditional discounts \u2014 W<\/span> Only: Conditional discounts, or discounts offered post tender opening<\/em>, if any, shall not be considered during evaluation<\/em>. However, such discounts shall be availed if the bidder becomes otherwise eligible for award of contract<\/em>.<\/p>\n<\/div><h3>5.3.8<\/span>Submission Forms and Formats<\/span><\/h3>\nThis section contains the relevant forms for tender submission:<\/p>\n<aside class=\"note\">Various declarations by the bidder \u00b7 formats for the Bank Guarantee \u00b7 financial bid forms (BOQ excel sheet) \u00b7 exception and deviation forms \u00b7 contract forms and manufacturer's authorisation form \u00b7 Integrity Pact (if applicable), and so on.<\/p><\/aside>\n<h3>5.3.9<\/span>Financial Bid (BOQ Excel Sheet)<\/span><\/h3>\n1. Preparation by the Procuring Entity: The Procuring Entity should select an appropriate format of BOQ from the e-procurement portal<\/em> And upload it after filling up the entries for the complete Schedule of requirements and various price components (W<\/span> Adds: \"\/ Schedule of Rates\")<\/em> \u2014 to enable the system to automatically calculate the all-inclusive price of a bid and generate a comparative tabulation of all bids<\/em>.<\/p>\n<aside class=\"note\">W<\/span> footnote: *For reference, <\/strong>CPWD Schedule of Rates (SOR) can be referred, which serves as a comprehensive reference for construction projects. This schedule includes <\/strong>both BASIC RATES and FINISHED RATES for various items of work.*<\/p>\nC<\/span> and NC<\/span> add: \"Any procurement portal that does not have a facility for financial bids to be uploaded in excel format (providing detailed break-up in line with the type of contract and system of selection) should <\/em>endeavour to build such functionality \u2014 which is crucial for non-consultancy and consultancy services.\"<\/em><\/p><\/aside>\n2. The \"not entered = not paid\" Rule \u2014 C<\/span> and NC<\/span> Only: The bidder should fill in rates and prices for ALL<\/em> Items described in the excel sheet\/ services and activities Schedule.<\/p>\nItems for which no rate or price is entered<\/em> By the bidder will not be paid for<\/em> By the Procuring Entity when executed, and shall be deemed covered by the other rates and prices<\/em>.<\/p>\nThe priced schedule contains sections on remuneration for staff deployed, reimbursable expenses and miscellaneous expenses<\/em>.<\/p>\nAll duties, taxes, and other levies payable by the consultant\/ service provider under the contract \u2014 or for any other cause \u2014 as in the month prior to the month of the deadline for submission of bids<\/em> \u2014 should be included in the total bid price.<\/p>\nEven in tenders for lump-sum contracts<\/em>, for the purpose of determining the remuneration due for additional elements of work\/ additional services during the contract<\/em>, the bidder shall provide a breakdown of the lump-sum price<\/em>.<\/p>\nC<\/span> adds: *Bidding Documents should include a clause that \"<\/strong>if a firm quotes NIL service charges\/ consideration, the bid shall be treated as unresponsive and will not be considered\".*<\/p>\n3. Uploading discipline (all four): Bidders are to upload only the downloaded BOQ (in excel format)<\/em> After entering the relevant fields \u2014 without any alteration\/ deletion\/ modification of other portions of the excel sheet<\/em>.<\/p>\nThe quoted price shall be considered to include all relevant financial implications \u2014 including inter alia<\/em>:<\/p>\n<aside class=\"note\">The scope of the goods\/ works\/ services \u00b7 location of the bidder \u00b7 location of the consignee(s)\/ Procuring Entity \u00b7 terms of delivery \u00b7 extant Rules and regulations relating to taxes, duties, customs, transportation, environment, labour of the bidder's country and in India<\/p>\n(W<\/span> variant: applicable taxes, duties, permits, transportation, environment, and labour costs in accordance with the prevailing market rates and relevant regulations of India.)<\/em><\/p><\/aside>\n4. Restrictions regarding personnel deployed \u2014 NC<\/span> ONLY:<\/p>\nA) the minimum wage floor: The quoted rates shall not be less than the minimum wage fixed\/ notified by the Central\/ State Government (whichever is higher)<\/em> \u2014 where the service is performed \u2014 and shall include all statutory obligations and service charges\/ margin (including transaction charges) over such minimum wage<\/em>.<\/p>\nB) the 'nil' price Rule: Bids without any element of cost over and above such minimum wage<\/em> Shall be treated as 'Nil' price quotations and would be rejected<\/em>.<\/p>\nC) LCS for manpower outsourcing: Least cost system (LCS) should be considered for procurement of manpower outsourcing service<\/em>, wherever appropriate \u2014 especially in high-value cases<\/em>.<\/p>\nD) liability and character verification: The service provider shall be liable for all kinds of dues payable in respect of all personnel<\/em> Provided under the contract, and the Procuring Entity shall not be liable for any dues<\/em> for availing the services of the personnel. The service provider should ensure that the persons to be deployed are not alcoholics or drug addicts<\/em> And do not indulge in any activity prejudicial to the interest of the Procuring Entity. The service provider shall ensure to get the police verification for all the manpower deployed<\/em> By them, and the contractor should ensure that the manpower deputed should bear good moral character<\/em>.<\/p>\n<h2>5.4<\/span>Preparation of the Request for Expression of Interest (REoI) Document [C ONLY]<\/span><\/h2>\n<aside class=\"note\">This entire section exists only in the consultancy services Manual<\/em>. There is no counterpart in Goods, Works or Non-Consultancy.<\/p><\/aside>\n<h3>5.4.1<\/span>Basic Considerations<\/span><\/h3>\n1. DoE has issued Model Tender Documents for Procurement of Consultancy Services, which includes a MODEL REoI<\/em>.<\/p>\n2. Why two stages: It is important to hire consultants who have a reputation for relevant quality and competence<\/em>; hence Procurement of Consultancy is done in a two-stage process<\/em>:<\/p>\n<ul class=\"lst\"><li>The first stage (expression of Interest<\/em> Stage) \u2014 to shortlist such qualified consultants in a transparent and open<\/em> Manner.<\/li><li>In the next stage (RfP<\/em> Stage) \u2014 there is competition only among qualified shortlisted firms or individuals<\/em>, in which selection is based on the quality of the proposal<\/em> And, where appropriate, on the cost of services<\/em> To be provided.<\/li><\/ul>\n3. Therefore, the process of shortlisting is one of the most difficult and time-consuming tasks<\/em> In the selection process of a consultant. This could be eased by writing a clear description of service (objectives and scope) and shortlisting criteria<\/em>.<\/p>\n<h3>5.4.2<\/span>Contents of the REoI<\/span><\/h3>\nThe EoI document shall contain the following sections:<\/p>\nPart i: REoI process<\/p>\n<ul class=\"lst\"><li>Section I: Request for Expression of Interest (REoI)<\/li><li>Section II: Appendix<\/li><li>Section III: Qualification Criteria<\/li><\/ul>\npart II: Schedule of requirements<\/p>\n<ul class=\"lst\"><li>Section IV: Terms of Reference<\/li><\/ul>\npart III: EoI submission formats<\/p>\n<ul class=\"lst\"><li>Form 1: EoI Form (Covering Letter)<\/strong> \u2014 Form 1.1: Consultant Information \u00b7 Form 1.2: Eligibility Declarations<\/em><\/li><li>Form 2: Qualification Criteria \u2013 Compliance<\/strong> \u2014 Form 2.1: Performance Capability Statement \u00b7 Form 2.2: Financial Capability Statements \u00b7 Form 2.2.1: Financial Statement \u00b7 Form 2.2.2: Average Annual Turnover<\/em><\/li><li>Form 3: Checklist for Consultants<\/li><li>Other Annexures:<\/strong>Annexure 1: Authorisation to Attend Pre-EoI Conference \u00b7 Annexure 2: Code of Integrity<\/em><\/li><\/ul>\nSection-wise description:<\/p>\n<ul class=\"lst\"><li>Section I \u2014 REoI: A formal invitation<\/em> for Expression of Interest from interested bidders.<\/li><li>Section II \u2014 Appendix: Where variable parameters and information related to this specific REoI process<\/em> Are summarised.<\/li><\/ul>\nSection III \u2014 qualification criteria:<\/p>\na)<\/strong> This section lays down the qualification criteria which shall be applied by the Procuring Entity for shortlisting the consultants. The REoI should ask for sufficient information<\/em> So that the Procuring Entity May evaluate the consultant's capabilities and eligibility<\/em> To undertake the assignment.<\/strong> The Consultants must be asked:<\/p>\n<ul class=\"lst\"><li>I) requisite experience during a specified period (say 5 years) with volume of assignments similar in nature in general and specific sectors relevant to the subject assignment<\/em>;<\/li><li>ii) financial capability: Turnover (overall and from consultancy services)<\/em>.<\/li><\/ul>\nb) Relaxation for Start-ups<\/strong> \u2014 (as at para 5.3.6-3 above)<\/em>.<\/p>\nc) Qualification Criteria shall be based entirely upon capability and resources; there should be no qualification criteria advantageous to FOREIGN CONSULTANTS at the cost of domestically delivered services.<\/p>\nd) Qualification of demerged entities<\/strong> \u2014 (as at para 5.3.6-4 above)<\/em>.<\/p>\nE) what the REoI must NOT<\/em> ASK FOR \u2014 a critical restriction:<\/p>\n<aside class=\"note\">In addition, the consultants should indicate information relating to their eligibility and any conflict of interest<\/em> that they know may impact objective performance and impartial advice. CONSULTANTS should NOT<\/em> Be asked about their approach to the services<\/em>, or to submit any curricula vitae of key personnel<\/em> \u2014 because these documents will be dealt with in the RfP<\/em>. No legal documents \u2014 such as certificates of incorporation of the firm, powers of attorney, financial statements, or translations of standard brochures<\/em> \u2014 should be requested.<\/p>\nGiven the often-large number of submissions, the advertisement should stress the importance of brevity<\/em> Of the information to be sent. It may indicate the extent of dispensation, if any, allowed for start-ups.<\/p>\nUnless otherwise stated in Section II: Appendix, consultants May associate with other firms to enhance their qualifications \u2014 BUT should indicate clearly whether the association is in the form of a joint venture\/ consortium (JV\/C) and\/ or a sub-consultancy<\/em>.<\/p><\/aside>\nSection IV \u2014 terms of Reference (ToR): This section describes the background, purpose\/ objectives, description\/ scope of work, deliverables\/ outcomes, inputs to be provided by the Procuring Entity, and timelines of Consultancy Services (hereinafter called the 'Service') required.<\/p>\nThe 'service' May include incidental goods, works, and other services<\/em> If so indicated therein. Any generic reference to the 'Service' shall be deemed to include such incidental Goods, Works, and other Services. This may also include the place of execution of the assignment.<\/p>\n<h3>5.4.3<\/span>Important Provisions of the REoI<\/span><\/h3>\n1.<\/strong> REoI contains all relevant information and guidance regarding \u2014 obtaining tender documents, preparing and submitting a responsive bid, the process of establishing eligibility\/ qualification credentials, evaluation and comparison of tenders, code of Integrity in Public Procurement (CIPP), the process of grievance redressal, and declaration of results.<\/strong><\/p>\n2. Eligibility Criteria:<\/strong> Provisions relating to eligibility criteria, conflict of interest and applicable preferential policies<\/strong> regulate the participation of bidders of various categories and their agents.<\/p>\n<ul class=\"lst\"><li>It mentions the type of entities which may participate, specifically if JV\/C are permitted<\/em> to participate.<\/li><li>It shall also mention that the consulting company should be registered under the applicable Act with registered offices in India<\/em>.<\/li><li>It also excludes insolvent, bankrupt, debarred, convicted firms, and firms with conflict of interest from participation.<\/strong> Restriction of participation of bidders from certain countries having land borders with India also applies.<\/li><li>In case jv\/cs are permitted, it should be made clear if the experience of the bidders as a member of JV\/C would be considered or not<\/em>. If yes, then the manner of aggregating qualifications<\/em> Of members of JV\/C \u2014 say, only pro-rata experience proportionate to his percentage share declared in JV\/C MoU<\/em> \u2014 May be mentioned.<\/li><\/ul>\n3. Preferential Procurement Policies: applicable policies are mentioned (MSEs, Start-ups, Make in India etc.).<\/p>\n4. EoI validity: Eois shall remain valid for a period not less than 60 (sixty) days<\/em> From the deadline for the EoI submission.<\/p>\n<aside class=\"note\">(Contrast RfP validity: not less than 90 days<\/strong> \u2014 para 5.5.4-5 below.)<\/em><\/p><\/aside>\n5. Qualification Criteria:<\/strong> the qualification criteria for shortlisting the bidders and its scoring\/ marking scheme<\/strong> is detailed. It also specifies, if JV\/C are permitted, how credentials of members would be considered in evaluation.<\/p>\n6. ToR at the eoI STAGE \u2014 the \"not yet ready\" rule: At the EoI stage, ToR is relevant for bidders to decide whether they are interested in bidding<\/em> for this assignment. It is also relevant to decide the specific sector of experience required in the qualification criteria<\/em>.<\/p>\nNormally, ToR should be ready before REoI is floated<\/em>. However, if a detailed ToR is not ready<\/em>, at least the following should be included in the REoI: Description\/ scope of work, deliverables\/ outcomes, inputs to be provided by the Procuring Entity, and timelines<\/em> Of the required 'service'.<\/p>\nREoI should contain a clause retaining the right to make minor adjustments to ToR at the RfP stage<\/em>.<\/p>\n<h2>5.5<\/span>Preparation of the Request for Proposals (RfP) Document [C ONLY]<\/span><\/h2>\n(Rule 186 of GFR 2017)<\/em><\/p>\n<h3>5.5.1<\/span>What the RfP Is<\/span><\/h3>\nthe request for proposals (RfP) is the bidding document in which the technical and financial proposals from the consultants are obtained<\/em>.<\/p>\nFor procurement of consultancy services, the RfP is sent only to the short-listed consultants<\/em>.<\/p>\nIt contains the following sections:<\/p>\n<ul class=\"lst\"><li>Section I: Request for Proposal Letter (RFPL) and its Appendix: Tender Information Summary (TIS)<\/li><li>Section II: Instructions to Consultants (ITC)<\/li><li>Section III: Appendix to Instructions to Consultants (AITC)<\/li><li>Section IV: General Conditions of Contract (GCC)<\/li><li>Section V: Special Conditions of Contract (SCC)<\/li><li>Section VI: Terms of Reference (ToR)<\/strong> \u2014 Section VI-A: List of Key Experts and Required Qualifications<\/em><\/li><li>Section VII: Evaluation\/ Scoring Criteria<\/li><\/ul>\n<h3>5.5.2<\/span>Section-by-Section<\/span><\/h3>\n1. Section I \u2014 RFPL and TIS: Provides a synopsis of information relevant for a consultant to decide on participating in the RfP. RFPL states the intention of the Procuring Entity to enter into a contract<\/em> for the provision of consultancy services, details of the Procuring Entity, and date, time, and address for submission of proposals<\/em>.<\/p>\nIt plays the role played by NIT<\/em> In procurement of goods and services.<\/p>\n2. Section II \u2014 ITC and Section III \u2014 AITC:<\/strong> Contains all necessary information that would help the consultants prepare responsive proposals.<\/p>\nIt shall bring in as much transparency as possible<\/em> To the selection procedure by providing information on the evaluation process<\/em>, and by indicating the evaluation criteria and factors and their respective weights and minimum passing quality score<\/em>.<\/p>\nStandard information includes clauses relating to the procedure of bid submission, pre-bid meeting, seeking clarifications<\/em>, and so on \u2014 BUT should NOT<\/em> Contain information on processes after the announcement of the award, which should be covered in GCC.<\/p>\nThe assignment\/ job-specific information in AITC includes: Date and time of bid submission, contact address, qualification criteria, method of selection, evaluation process, factors of evaluation and their respective weights<\/em>, and so on.<\/p>\nThe ITC shall specify the proposal validity period \u2014 normally 90 (ninety) days<\/em>.<\/p>\n3. Sections IV and V \u2014 GCC and SCC: (as at para 5.3.3 above)<\/em>.<\/p>\n4. Section VI \u2014 ToR and Section VI-A \u2014 List of Key Experts:<\/p>\nA) ToR describes the background, purpose\/ objectives, description\/ scope, deliverables\/ outcomes, timelines, Procuring Entity's inputs and counterpart personnel, statutory requirements of services required, etc.<\/p>\nB) the budget-disclosure Rule: Since cost is part of the selection criterion, the ITC shall not indicate the budget<\/em> \u2014 except in case of fixed budget system of selection<\/em> \u2014 but shall indicate the expected input of key professionals (staff time)<\/em>.<\/p>\nSection VI-A: 'List of Key Experts and Required Qualifications' describes the team composition, expertise, experience, and professional qualifications required for each key expert<\/em>. Consultants, however, shall be free to prepare their own estimates of staff time<\/em> Necessary to carry out the assignment.<\/p>\nC) consultants May be encouraged to provide comments and suggestions<\/em> On ToR, counterpart staff, key experts and facilities to be provided by the Procuring Entity.<\/p>\nD) simplified technical proposal (stp) vs full technical proposal (ftp):<\/p>\n<aside class=\"note\">In the LCS<\/em> system of evaluation \u2014 since the technical scores are not ranked or weighted and added to financial scores<\/em> \u2014 it would suffice if, instead of a detailed marking scheme for the criteria\/ sub-criteria, minimum fail-pass qualifying benchmarks<\/em> Are laid down for each criteria\/ sub-criteria.<\/p>\nFor such an assignment, technical evaluation can be carried out by following a simplified procedure<\/em>, and only a simplified technical proposal (stp)<\/em> \u2014 instead of a full technical proposal (ftp)<\/em> \u2014 May be called for and indicated in the data sheet of the RfP document.<\/p>\nStp should be used when the assignment is:<\/p>\n<ul class=\"lst\"><li>I) unlikely to have significant downstream impact<\/em>;<\/li><li>ii) OF A routine nature<\/em>, where ToR already defines details of tasks to be performed and required output, and approach, methodology, organisation, and staffing could be evaluated without use of sub-criteria<\/em>; and<\/li><li>iii) that characteristics of work do not require further detailed evaluation of the consultant's experience<\/em> (e.g., engagement of accountants, auditors, consultant engineers etc.).<\/li><\/ul>\nSTP reduces the time and cost required to prepare the proposal<\/em> And could be evaluated faster<\/em> By the evaluation committee. For example, the following parameters can be used:<\/p>\n<ul class=\"lst\"><li>I) minimum experience, including number of assignments handled by the firm similar to the area of assignment;<\/li><li>ii) turnover and other financial parameters of the firm, if required;<\/li><li>iii) minimum educational qualifications of each of the key professionals;<\/li><li>iv) minimum requirement of experience of the key professionals in an area similar to the proposed assignment;<\/li><li>V) all the firms which meet the minimum qualifying standards\/ criteria so prescribed will stand technically qualified for consideration of their financial bids<\/em>.<\/li><\/ul><\/aside>\n5. Section VII \u2014 Evaluation\/ Scoring Criteria: Stipulates the scoring scheme for evaluating various technical criteria. These may cover scoring of criteria relating to:<\/p>\n<aside class=\"note\">The consultant's experience \u00b7 technical approach and methodology \u00b7 understanding of requirements \u00b7 qualification and experience of key experts (key experts need not be a permanent employee of the consultant)<\/em> \u00b7 transfer of knowledge, etc.<\/p><\/aside>\nIt may also lay down a minimum technical score to qualify for the next stage of financial evaluation<\/em>. In a specific evaluation scheme, instead of a scheme of scoring, a scheme may be laid down to evaluate criteria on a pass\/ fail basis<\/em>.<\/p>\n<h3 class=\"src-C srchead\" data-src=\" C \">5.5.3<\/span>Standard Formats for Technical and Financial Proposals<\/span>C<\/span><\/h3><div class=\"srcblock src-C\" data-src=\" C \" data-label=\"Consultancy Manual only\">\n1. Technical proposal forms:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Form<\/th><th>Content<\/th><\/tr><\/thead><tbody><tr><td>T-1<\/td><td>Proposal Form<\/strong> \u2014 to serve as a covering letter to BOTH<\/strong> the Techno-commercial and Financial Proposals<\/em> \u2014 (T-1A: Consultant's Commercial Information)<\/em><\/td><\/tr><tr><td>T-2<\/td><td>Consultant's Organisation and Experience<\/td><\/tr><tr><td>T-3<\/td><td>Comments and Suggestions on Terms of Reference, Counterpart Staff, and Inputs to be Provided by the Procuring Entity<\/td><\/tr><tr><td>T-4<\/td><td>Description of Approach, Methodology and Work Plan in Responding to the Terms of Reference<\/td><\/tr><tr><td>T-5<\/td><td>Work Schedule and Planning for Deliverables<\/td><\/tr><tr><td>T-6<\/td><td>Team Composition, Assignment, and Key Experts' Inputs<\/strong> \u2014 (Annex to T-6: Key Experts' Curriculum Vitae \u2014 CV)<\/em><\/td><\/tr><tr><td>T-7<\/td><td>Terms and Conditions \u2013 Compliance<\/td><\/tr><tr><td>T-8<\/td><td>Checklist for Consultants<\/td><\/tr><tr><td>T-9<\/td><td>Bank Guarantee Format for Earnest Money Deposit<\/td><\/tr><tr><td>T-10<\/td><td>Integrity Pact<\/td><\/tr><\/tbody><\/table><\/div>\n2. Financial proposal (BOQ excel sheet) \u2014 (see para 5.3.9 above)<\/em>.<\/p>\n3. OTHER FORMATS \u2014 Contract Form and its Appendices:<\/p>\n<aside class=\"note\">Appendix A: Terms of Reference \u00b7 Appendix B: Key Experts \u00b7 Appendix C: Remuneration Cost Estimates \u00b7 Annex to Appendix C: Breakdown of Agreed Fixed Rates in Consultant's Contract \u00b7 Appendix D: Reimbursable Expenses Cost Estimates \u00b7 Appendix E-1: Bank Guarantee Format for Performance Security \u00b7 Appendix E-2: Bank Guarantee Format for Advance Payment<\/p>\nPlus: Authorisation to Attend Pre-Proposal Conference<\/strong>(to be filled up, if required, by the Consultant)<\/em>.<\/p><\/aside>\n<\/div><h3 class=\"src-C srchead\" data-src=\" C \">5.5.4<\/span>Important Provisions of the ITC<\/span>C<\/span><\/h3><div class=\"srcblock src-C\" data-src=\" C \" data-label=\"Consultancy Manual only\">\n2. Eligibility to participate \u2014 the closed-list rule: As the RfP follows the earlier EoI shortlisting process, this invitation is open only to consultants who have been shortlisted therein or are specifically invited to participate<\/em>.<\/p>\nIT IS not permissible<\/em> for the shortlisted consultants to transfer this RfP to any other firm<\/em> Without the permission of the Procuring Entity.<\/p>\nProposals from consultants who have not been shortlisted shall not be entertained<\/em>.<\/p>\nThe shortlisted consultant must continue to meet the eligibility criteria prescribed in the EoI document<\/em> (based inter alia on which they were shortlisted) \u2014 including restrictions on consultants from specified countries \u2014 as of the date of his proposal submission<\/em>, and should continue to meet these till the award of the contract<\/em>. Consultants must provide evidence of their continued eligibility if requested.<\/p>\n3. Association among shortlisted consultants \u2014 and the 14-day approval rule:<\/p>\nUnless otherwise stipulated in TIS\/ AITC, if a shortlisted Consultant considers that it may enhance its expertise by associating with other consultants in the form of a joint venture or as sub-consultants<\/em>, it may do so with either:<\/p>\n<ul class=\"lst\"><li>(a) NON-SHORTLISTED Consultant(s), or<\/li><li>(b) SHORTLISTED Consultants<\/li><\/ul>\n \u2014 without vitiating the shortlisting criteria of the REoI.<\/p>\nThe lead member Rule:<\/p>\n<ul class=\"lst\"><li>The shortlisted consultant shall be the lead member<\/em> When associating with non-shortlisted<\/em> Firms as a joint venture.<\/li><li>IF shortlisted<\/em> Consultants associate with each other<\/em>, any of them can be a lead member<\/em>.<\/li><\/ul>\nA shortlisted consultant must obtain the Procuring Entity's written approval not later than 14 days before the RfP submission deadline<\/em>, in all such cases.<\/p>\nSuch approval shall be denied<\/em> IF:<\/p>\n<ul class=\"lst\"><li>(i) a shortlisted consultant proposes to associate with an ineligible consultant<\/em> \u2014 or, in case of an ineligible joint venture, any of its members<\/em>;<\/li><li>(ii) because of the change, the consultant no longer substantially meets the qualification criteria<\/em> Outlined in the REoI document; Or<\/li><li>(iii) if, in the opinion of the Procuring Entity, a substantial reduction in competition May result<\/em>.<\/li><\/ul>\n4. Preferential Procurement Policies:<\/strong> applicable policies are mentioned (MSEs, Start-ups, Make in India etc.).<\/p>\n5. RfP validity: RfP shall remain valid for a period not less than 90 (ninety) days<\/em> From the deadline for the RfP submission.<\/p>\n6. Evaluation\/ scoring criteria \u2014 the three heads, and the presentation rule:<\/p>\nEvaluation shall, inter alia, consider the Consultant's:<\/p>\n<ul class=\"lst\"><li>(i) \"specific experience of the consultant (as a firm) relevant to the assignment\";<\/li><li>(ii) \"adequacy and quality of the proposed methodology, and work plan\";<\/li><li>(iii) \"key experts' qualifications and competence for the assignment\".<\/li><\/ul>\nIt also specifies, if JV\/C are permitted, how credentials of members of JV\/C would be considered.<\/p>\nThe presentation Rule: The Procuring Entity May ask all shortlisted consultants<\/em> To deliver a presentation on their technical proposals.<\/p>\n<ul class=\"lst\"><li>This presentation shall only cover contents of the technical proposals already submitted<\/em> By the consultant.<\/li><li>Unless otherwise provided, no marks shall be assigned to the presentation<\/em>.<\/li><li>Opportunities for such presentations shall be provided in a manner to provide a level playing field<\/em> To all shortlisted consultants \u2014 including time limits<\/em> for such presentations.<\/li><\/ul>\n<\/div><h2>5.6<\/span>Uploading of Tender Documents: Mandatory e-Publishing<\/span><\/h2>\n(Rule 159 of GFR 2017)<\/em><\/p>\n1. The mandate and its reach: IT IS mandatory<\/em> for all ministries\/ departments of the Central Government, their attached and subordinate offices, and autonomous\/ statutory bodies to publish their tender enquiries, corrigenda thereof, and details of bid awards<\/em> Online on the gem-Central Public Procurement Portal (CPPP) \u2014 and also on their own website.<\/p>\nThese instructions apply to ALL<\/em> Of the following \u2014 whether they are advertised, issued to a limited number of parties, or to a single party:<\/p>\n<aside class=\"note\">Tender enquiries \u00b7 requests for proposals \u00b7 requests for expressions of interest \u00b7 notice for pre-qualification\/ registration \u00b7 or any other notice inviting bids or proposals in any form<\/p><\/aside>\nthe exclusions differ by Manual:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>These instructions would NOT apply to<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-multi\" data-src=\" G C NC \"><td>G<\/span>, C<\/span>, NC<\/span><\/td><td>the purchase of goods without quotations<\/em>, or the purchase of goods by the purchase Committee<\/em><\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span><\/td><td>works procurement through quotation<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n2. The national security exemption \u2014 and its quarterly reporting obligation:<\/p>\nIndividual cases where confidentiality is required for reasons of national security<\/em> Would be exempted from the mandatory e-publishing requirement.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Body<\/th><th>Who approves the exemption<\/th><\/tr><\/thead><tbody><tr><td>Ministry\/ Department<\/td><td>THE Secretary<\/em> Of the Ministry\/ Department, with the concurrence of the concerned Financial Adviser<\/em><\/td><\/tr><tr><td>Autonomous and Statutory bodies<\/td><td>THE head of the body<\/em>, with the concurrence of the head of the finance<\/em> \u2014 in each such case<\/td><\/tr><\/tbody><\/table><\/div>\nstatistical information on the number of cases in which exemption was granted and the value of the concerned contract<\/em> Should be intimated on a quarterly basis<\/em> To the Ministry of Finance, Department of Expenditure.<\/p>\n3. Fixed days for issuance of NIT and tender opening \u2014 W<\/span> ONLY:<\/p>\n<aside class=\"note\">In order to increase certainty in the procurement process<\/em>, all ministries\/ departments shall fix days in every month<\/em> for issuance of notice inviting tender (NIT), and tender opening, across various locations, divisions or levels.<\/p>\nExample given: The tenders may be released by the Ministries\/ Departments three times a month \u2014 i.e., on the 10th, 20th and 30th of every month \u2014 and the bid submission dates are so determined that bids are opened only on fixed scheduled dates, viz., the 7th, 17th and 27th of every month.<\/em><\/p>\nIn case there are practical difficulties due to large volume of tenders<\/em> In having fixed days across the whole organisation, the ministries\/ departments\/ cpsus May decide to have region-wise, zone-wise, or division-wise<\/em> Fixed days.<\/p>\nFor procurement of highly technological and complex works<\/em>, tender submission dates May be extended in order to reply to queries in the pre-bid meetings or any other justifiable reason.<\/p><\/aside>\nExample 1 \u2014 fixation of days by CPWD:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Region<\/th><th>Days for Issuance of NITs<\/th><th>Days for Tender Opening<\/th><\/tr><\/thead><tbody><tr><td>Delhi<\/td><td>Monday<\/td><td>Monday<\/td><\/tr><tr><td>Northern<\/td><td>Tuesday<\/td><td>Tuesday<\/td><\/tr><tr><td>Southern<\/td><td>Wednesday<\/td><td>Wednesday<\/td><\/tr><tr><td>Eastern<\/td><td>Thursday<\/td><td>Thursday<\/td><\/tr><tr><td>Western<\/td><td>Friday<\/td><td>Friday<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Note 1: One WEEK in the case of works with estimated cost put to tender up to Rs. 2 crore<\/em>, and two WEEKS in the case of works with estimated cost more than Rs. 2 crore<\/em>. If there is a holiday on a particular day, the day of inviting\/ uploading NIT May be proposed to an earlier day, and opening of tender May be postponed to the next day.<\/p>\nNote 2: However, in case of exigencies of work<\/em>, THE chief engineer\/ chief Project Manager or equivalent<\/em> Can allow to call and open tenders on another day instead of specific fixed days.<\/p><\/aside>\n<h2>5.7<\/span>Amendment of Tender Documents<\/span><\/h2>\n(Rule 173(iii) of GFR 2017)<\/em><\/p>\n1. At any time prior to the date of submission of bids<\/em>, the Procuring Entity May \u2014 suo motu<\/em> Or in response to a clarification sought by a prospective bidder (directly or in a pre-bid conference) \u2014 amend tender documents by issuing a corrigendum<\/em>.<\/p>\nCopies of such amendment\/ modification should be uploaded on the e-publishing portal and the Procuring Entity's own website<\/em>.<\/p>\nIn case of off-line tenders<\/em>, the copies of such amendment\/ modification are to be simultaneously despatched, free of cost, by registered\/ speed post\/ courier\/ e-mail<\/em>, to all the parties who have already purchased the tender documents \u2014 and copies of such amendments are also to be prominently attached in the unsold sets<\/em> Of the tender documents.<\/p>\nWhen the amendment\/ modification changes the requirement significantly<\/em> And\/ or when there is not much time left<\/em> for the bidders to respond and prepare a revised tender, the time and date of submission of tenders are also to be suitably extended (not less than 3 days)<\/em>.<\/p>\n2. The 21-DAY re-publication Rule \u2014 W<\/span> ONLY:<\/p>\n<aside class=\"note\">When the proposed amendment\/ modification substantially changes the procurement requirements originally envisaged<\/em>, and\/ or when insufficient time remains<\/em> for the tenderers to respond \u2014 the time and date of submission of tenders should also be extended suitably.<\/p>\nNormally, the extended time duration shall be 21 DAYS<\/em>, or consistent with the original bid submission duration.<\/p>\nDepending on the circumstances, such an amendment May also need fresh publication of the revised tender document<\/em>, following the same procedure as the original tender publication.<\/p>\nThis is crucial as the amendment May enable a new bidder to meet the qualifying criteria<\/em>, AND TO ensure a level playing field<\/em>.<\/p><\/aside>\n<h2>5.8<\/span>Extension of Deadline of Bid Submission<\/span><\/h2>\n1. Ordinary extension: To give sufficient time to bidders to prepare and submit their bids, the Procuring Entity may \u2014 suo motu<\/em>, or based on a justifiable request of bidder(s)<\/em>, or due to significant modification of tender documents<\/em> \u2014 extend the time and date of submission of tenders suitably (not less than three (3) days<\/em>), along with suitable changes in the corresponding time-frames for:<\/p>\n<aside class=\"note\">Receipt of tender \u00b7 bid validity period \u00b7 and validity period of the corresponding EMD\/ Bid Security<\/p><\/aside>\nDepending on the situation, such an amendment May also need fresh publication<\/em>, adopting the same procedure as for publication of the original tender enquiry.<\/p>\n2. Auto-extension of bids in case of lack of response \u2014 an important and easily-missed provision:<\/p>\nA) the information blackout: The e-procurement portal\/ GeM should not provide anybody \u2014 including the Procuring Entity \u2014 with the bid count before the tender opening time, even at their request<\/em>.<\/p>\nb) The set-up: The e-Procurement portal\/ GeM May facilitate the Procuring Entity in specifying, at the time of tender upload<\/em>:<\/p>\n<ul class=\"lst\"><li>THE minimum number of bids<\/em> Considered sufficient; And<\/li><li>THE pre-specified number of days for automatic extension<\/em> Of bid opening (not less than 7 days<\/em>).<\/li><\/ul>\nC) the declaration: The system shall declare in the tender details that in case of low competition (without specifying the number)<\/em>, the tender closing time shall be automatically extended by the specified number of days.<\/p>\nD) the operation: If bids received till the bid opening time are less than the specified minimum bids<\/em>, the system should automatically extend<\/em> The tender opening by the specified number of days \u2014 without seeking any input from or sharing any information with anyone, including the Procuring Entity<\/em>.<\/p>\nPurchasers and bidders shall only be informed<\/em> That \"due to less competition, the tender closing time has been extended up to (date and time).\"<\/p>\ne) ONCE only \u2014 G<\/span> Only: However, this automatic extension of bid opening shall be done only once, not repeatedly<\/em>.<\/p>\n<aside class=\"note\">(The Goods Manual states this twice \u2014 \"the system should automatically extend (only ONCE)\" and again in this sentence. The Works Manual omits the \"only once\" restriction entirely.)<\/em><\/p><\/aside>\nf) the 'one' device: If a Procuring Entity wants to go ahead even with low competition<\/em> (E.g., due to urgency), they May mention 'ONE'<\/em> As the minimum bid \u2014 so that if no bid is received, the tender is automatically extended; Otherwise, it is not<\/em>.<\/p>\nG) GeM and e-procurement portals shall update their systems accordingly<\/em>.<\/p>\n<h2>5.9<\/span>Availability and Cost of Tender Documents<\/span><\/h2>\n(Rule 161(v) of GFR 2017)<\/em><\/p>\n1. Availability window: Tender documents should preferably be sold or available for download after the date and time of the start of availability till the deadline for availability<\/em> As mentioned in the tender document (say up to the date of opening of tenders<\/em>) \u2014 and this should be clearly indicated in the documents<\/em>.<\/p>\nThe organisation should also post the complete tender document on the website<\/em> (W<\/span> adds: \"and on GeM-CPPP\") AND permit prospective bidders to make use of the document downloaded from the website<\/em>.<\/p>\nW<\/span> adds: *The advertisement for invitation of tenders should <\/strong>give the complete web-address from where bid documents can be downloaded.*<\/p>\n2. The cost Rule: Normally, no tender document fee should be charged<\/em>.<\/p>\nIn exceptional cases, a Procuring Entity May fix a bare minimum cost<\/em> Of tender documents to defray the expenses\/ effort of preparing documents, drawings<\/em>, ETC.<\/p>\nThe cost of the tender document is to be submitted to the authority nominated therein by the prospective bidder in the form of a demand draft\/ banker's cheque\/ pay order\/ online payment gateway<\/em>.<\/p>\n3. Who is exempt from the tender document cost \u2014 the two Manuals differ:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Firms eligible for exemption<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span> GOODS<\/td><td>MSEs AND<\/em> The Procuring Entity's registered units<\/strong>(for relevant items and monetary limit)<\/em><\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> WORKS<\/td><td>only the Procuring Entity's registered units (for relevant grades of work and monetary limit)<\/em> \u2014 MSEs are not named<\/td><\/tr><\/tbody><\/table><\/div>\nSuch firms HAVE TO submit\/ upload scanned copies of documents in support of this exemption<\/em>.<\/p>\n<h2>5.10<\/span>Participation of Bidders \u2014 Eligibility Criteria<\/span><\/h2>\n1. The general rule: The tender document May lay down eligibility criteria<\/em> For participating in the tender process \u2014 e.g., restrictions on participation by bidders relating to:<\/p>\n<aside class=\"note\">Type of commercial entity (G<\/span> adds: e.g., the bidders must be a private or public registered entity)<\/em> \u00b7 insolvency \u00b7 ineligibility\/ debarment\/ convictions\/ conflict of interest \u00b7 Class of bidders (as per Make in India order) \u00b7 bidders from countries having land borders with India, etc.<\/p><\/aside>\nExcept for the eligibility criteria, participation shall be open to all bidders in open\/ global tender enquiries<\/em>.<\/p>\nIn the case of the second stage<\/em> (Of two-stage bidding or PQB) or limited tenders<\/em>, participation shall be open only to such bidders who have been previously shortlisted or specifically invited<\/em>.<\/p>\n2. Purchase preference policies: The Procuring Entity May reserve its right to grant preferences to eligible bidders under various Government policies\/ directives (policies relating to Make in India, MSME, Start-ups, etc.)<\/em>.<\/p>\n3. The additional works eligibility heads \u2014 W<\/span> ONLY (not in the Goods list)<\/em>:<\/p>\nA) legal status of the bidder: Individual bidder \u2014 a natural person, or a private entity, or a public entity (state-owned enterprise or institution), or a joint venture\/ consortium (JV\/C).<\/p>\nB) the Rs. 10 crore JV threshold: For package size exceeding certain values [say \u2014 Rs. 10 (ten) crore]<\/em>, JV\/C May be permitted to participate in the procurement of works in specific situations where the credentials required are not likely to be available with an individual bidder<\/em>.<\/p>\n<ul class=\"lst\"><li>Maximum number of partners in JV shall be limited (say \u2014 three)<\/em>.<\/li><li>In case of JV, all the partners shall be jointly and severally liable<\/em> for the successful completion of the work.<\/li><li>Participation of JV\/C is specifically discouraged<\/em> In the case of quality Oriented Procurement (QOP) with QCBS evaluation<\/em>.<\/li><\/ul>\nC) registrations\/ licences: GSTIN, PAN, EPF, ESI, labour, Private Security Agencies (PASARA), etc.<\/p>\nD) submission of requisite bid Security<\/em> (Or Bid Security declaration, if allowed) or proof of exemption therefrom.<\/p>\ne) FREE FROM financial insolvency, debarment, or convictions<\/em>.<\/p>\nf) A consistent history of litigation or arbitration<\/em> By the bidder May result in disqualification.<\/p>\nG) restriction as per Government policies:<\/strong> for Class-II Local Suppliers and Non-Local bidders under Make-in-India; and bidders from land-border countries or with a Specified ToT arrangement.<\/p>\n4. Conflict of interest \u2014 the four (or three) situations:<\/p>\nBidders having a conflict of interest shall not be eligible to participate<\/em> In the tender process \u2014 unless the conflict stemming from such relationship has been resolved in a manner acceptable to the Procuring Entity<\/em> Throughout the tender process and execution of the contract.<\/p>\n<aside class=\"note\">W<\/span> adds: *\"<\/strong>Such conflict of interest can lead to anti-competitive practices to the detriment of the Procuring Entity's interests.\"*<\/p><\/aside>\nThe bidder shall be considered to have a conflict of interest in the following situations:<\/p>\nA) personnel relationship: If its personnel have a close personal, financial, or business relationship<\/em> With any personnel of the Procuring Entity who are directly or indirectly related to the procurement or execution process of the contract, which can affect the decision of the Procuring Entity directly or indirectly.<\/p>\nB) prior involvement: The bidder (or his allied firm<\/em>) provided services for the need assessment\/ procurement planning<\/em> Of the tender process in which it is participating.<\/p>\n<aside class=\"note\">Footnote (all Manuals): \"need assessment\/ procurement planning\" means, inter alia, need assessment, preparation of feasibility\/ cost estimates\/ Detailed Project Report (DPR), design\/ technical specifications, terms of reference (ToR)\/ Activity Schedule\/ schedule of requirements or the Tender Document, etc.<\/em><\/p><\/aside>\nC) the agency Rule \u2014 G<\/span> Only: A principal can authorise only one agent<\/em>, and an agent should not represent or quote on behalf of more than one principal<\/em>. However, this shall not debar more than one authorised distributor<\/em> (With or without the OEM) from quoting equipment manufactured by an OEM in procurements under a Proprietary Article Certificate<\/em>.<\/p>\nD) multiple bids \u2014 and the two Manuals differ on the consequence:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>Consequence of participating in more than one bid<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span> GOODS<\/td><td>participation in any capacity by a bidder (including as a partner\/ JV member or sub-contractor in another bid or vice versa) in more than one bid shall result in the disqualification of all bids in which he is a party<\/em><\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> WORKS<\/td><td>\u2026Shall result in the *disqualification of <\/strong>the bid in which he is a main\/ principal\/ lead bidder*<\/td><\/tr><\/tbody><\/table><\/div>\nHOWEVER (both Manuals): This DOES NOT<\/em> Limit the participation of an entity as a sub-contractor in more than one bid<\/em>, if he is not bidding independently in his own name or as a member of a JV\/ consortium<\/em>.<\/p>\n5. OEM\/ agents of supplier \u2014 G<\/span> ONLY:<\/p>\nA) the manufacturer's authorisation requirement: Except in the case of commercially-off-the-shelf (cots)<\/em> Items, when a firm sends a quotation for an item manufactured by some different company<\/em>, the firm is also required to attach, in its quotation:<\/p>\n<ul class=\"lst\"><li>THE manufacturer's authorisation certificate<\/em>; and<\/li><li>THE manufacturer's confirmation of extending the required warranty support<\/em> for that product<\/strong>(in addition to the bidder's own confirmation of the required warranty)<\/em>, as per formats given in Tender Documents.<\/li><\/ul>\nThis is necessary to ensure a quotation from a responsible party offering a genuine product backed by a warranty obligation from the concerned manufacturer<\/em>.<\/p>\nB) tender-specific authorisation for large contracts: In the case of large contracts, especially capital equipment<\/em>, the manufacturer's authorisation must be insisted upon on a tender-specific basis \u2014 not general authorisation\/ dealership<\/em> \u2014 by clearly declaring it in the tender documents.<\/p>\n<h2>5.11<\/span>Pre-NIT and Pre-bid Conferences<\/span><\/h2>\n(Rule 173(x) of GFR 2017)<\/em><\/p>\n<h3>5.11.1<\/span>Pre-Notice Inviting Tender (NIT) Conference \u2014 Market Consultation<\/span><\/h3>\nIN complex and innovative procurement cases<\/em>, or where the Procuring Entity May not have the required knowledge to formulate tender provisions<\/em>, A pre-nit conference (before finalising\/ publishing NIT)<\/em> May help the Procuring Entity in obtaining inputs from the industry<\/em>.<\/p>\nSuch conferences should be widely publicised<\/em> So that different potential suppliers\/ contractors can attend (DoE's OM No. F.1\/1\/2021-PPD dated 29.10.2021, para 9.2)<\/em>.<\/p>\nAll inputs received from the probable bidders in such a conference shall be compiled\/ minuted<\/em>, and requirements finalised (with the approval of the technical committee, if formed, by the Competent Authority<\/em>).<\/p>\nIn a more complex, large, and green-field\/ blue-sky project, two-stage tendering (with EoI) would be more appropriate and transparent<\/em>.<\/p>\n<h3>5.11.2<\/span>Pre-bid Conference<\/span><\/h3>\nWhen it must be provided for:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Trigger<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span> GOODS<\/td><td>in case of turnkey contract(s) and sophisticated and costly equipment, large works and complex consultancy assignments<\/em><\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> WORKS<\/td><td>in case of turnkey contract(s) or contract(s) of special nature<\/em> for procurement of sophisticated and costly work\/ services\/ equipment<\/em> \u2014 or wherever felt necessary'<\/td><\/tr><\/tbody><\/table><\/div>\na suitable provision shall be kept in the tender documents for one or more pre-bid conferences (after the NIT and tender documents have been published)<\/em> \u2014 FOR clarifying issues\/ clearing doubts<\/em>, if any, and for ensuring a level playing field<\/em>, relating to the specifications and other allied technical\/ commercial details.<\/p>\nA) who May attend, and the deemed-no-issue Rule:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-G\" data-src=\" G \">G<\/span> Participation in the pre-bid conference May be restricted to prospective bidders who have downloaded the tender document<\/em>.<\/li><li>Participation is not mandatory<\/em>.<\/li><li>However, if a bidder chooses not to (or fails to) participate in the pre-bid conference or does not submit a written query, it shall be assumed that they have no issues regarding the techno\/ commercial conditions<\/em>.<\/li><\/ul>\nB) the timing Rules:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Event<\/th><th>Timing<\/th><\/tr><\/thead><tbody><tr><td>Date of the pre-bid meeting<\/td><td>normally after 15 to 21 (fifteen to twenty-one) days<\/em> Of the issue of the tender document \u2014 and should be specified therein<\/em><\/td><\/tr><tr><td>Last date for written queries and for registration for participation<\/td><td>mentioned in the tender document \u2014 7 days before the date of the conference, if not specified<\/em><\/td><\/tr><tr><td>Mode<\/td><td>the pre-bid conference May also be held online<\/em> At the discretion of the Procuring Entity<\/td><\/tr><\/tbody><\/table><\/div>\nc) Timelines to be declared: Timelines for response to the pre-bid conference \u2014 E.G., replies to questions, issue of minutes of the pre-bid conference, corrigenda<\/em>, etc. \u2014 should be mandatorily mentioned in the tender document and complied with<\/em>.<\/p>\nD) identity requirement: Delegates participating in the pre-bid conference must provide a photo identity and an authorisation letter as per the specified format from their company\/ principals<\/em> \u2014 otherwise, they shall not be allowed to participate<\/em>.<\/p>\nE) the seven-day minutes Rule: After the pre-bid conference, minutes of the pre-bid conference shall be published on the Procuring Entity's portal within seven days of the conference<\/em>.<\/p>\nIf required, a clarification letter and corrigendum<\/em> To the tender document shall be issued, containing amendments to various provisions \u2014 which shall form part of the tender document<\/em>.<\/p>\nTo give reasonable time to the prospective bidders to take such clarifications into account in preparing their bids, the Procuring Entity May suitably extend, as necessary, the deadline for the bid submission<\/em>.<\/p>\n<h2 class=\"src-multi srchead\" data-src=\" W C NC \">5.12<\/span>Site Visit<\/span>W<\/span>C<\/span>NC<\/span>NOT in Goods<\/span><\/h2><div class=\"srcblock src-multi\" data-src=\" W C NC \" data-label=\"Works + Consultancy + Non-Consultancy only\">\nThe bidder\/ consultant, at its own cost, responsibility and risk<\/em>, MAY visit and examine the site of work\/ required services and its surroundings<\/em>, and obtain all information that May be necessary for preparing the bid and entering into a contract<\/em> for the works\/ services.<\/p>\n<aside class=\"note\">This provision does not appear in the Goods Manual \u2014 a site visit has no analogue in a supply contract.<\/p><\/aside>\n<\/div><h2>5.13<\/span>Clarification of Tender Documents<\/span><\/h2>\nA prospective bidder requiring clarification on the tender documents May ask questions in writing\/ electronically<\/em> From the office\/ contact person as mentioned in the tender document.<\/p>\nThe three time limits:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>Time limit<\/th><\/tr><\/thead><tbody><tr><td>Questions must be raised<\/td><td>before the clarification end date<\/em> Mentioned in the tender document \u2014 or, if not mentioned, before 7 days of the deadline for the bid submission<\/em><\/td><\/tr><tr><td>Holiday rule<\/td><td>this deadline shall not be extended in case of any intervening holidays<\/em><\/td><\/tr><tr><td>Response by the Procuring Entity<\/td><td>a response will be sent in writing\/ digitally at least 5 days prior to the date of opening of the tenders<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nONLY material queries and their responses<\/em> Shall be uploaded on the website \u2014 without revealing the identity of the bidder making the query<\/em>.<\/p>\nWhen the response to clarification changes the requirement significantly<\/em> And\/ or when there is not much time left<\/em> for the bidders to respond, the time and date of submission of tenders May also be suitably extended (not less than 3 days)<\/em>.<\/p>\n<h2>5.14<\/span>Withdrawal\/ Amendments\/ Modifications to Bids by Bidders<\/span><\/h2>\n1. What is permitted before the deadline: The bidder, after submitting its bid, is permitted to substitute\/ alter\/ modify it, superseding the earlier bid<\/em> \u2014 so long as such revised bid is uploaded\/ received duly sealed and marked like the original bid, up to the deadline of submission of bids<\/em>.<\/p>\nResubmission of a bid shall require uploading all documents, including the financial bid, afresh<\/em>.<\/p>\nThe system shall consider only the last bid submitted<\/em> As a valid bid.<\/p>\nThe bidder May withdraw his bid before the bid submission deadline<\/em> \u2014 and it shall be marked as withdrawn and shall not be opened<\/em> During the bid opening.<\/p>\n2. What is prohibited after the deadline \u2014 and the penalty:<\/p>\nAny such action after the bid-submission deadline is not permitted<\/em>.<\/p>\nWithdrawal\/ amendment\/ modification\/ alteration\/ impairment\/ derogation of a bid, in any respect<\/em>, by its bidder between the deadline for submission of bids and the expiration of the period of bid validity<\/em> \u2014 his Bid Security\/ EMD shall be forfeited<\/em>, besides imposition of any other punitive remedy available to the Procuring Entity.<\/p>\nIn such cases, tender evaluation shall be proceeded with in terms of the evaluation chapter.<\/p>\n<h2>5.15<\/span>Sealing\/ Marking of Bids in Off-line Tenders<\/span><\/h2>\n1. The tender document should indicate the manner of submission\/ uploading of bids<\/em>.<\/p>\n2. The double-envelope discipline: In the case of off-line tenders, the total number of bid copies<\/em> (for example, duplicate or triplicate, and so on) required to be submitted should be specified.<\/p>\nThe bidder is to:<\/p>\n<ul class=\"lst\"><li>Seal the original and each copy<\/em> Of the bid in separate envelopes<\/em>, duly marking the same as \"original<\/em>\", \"duplicate<\/em>\", and so on;<\/li><li>Print the address of the purchasing office and the tender reference number<\/em> On the envelopes;<\/li><li>Further, the sentence \"Not to be opened before (the due date and time of tender opening)\"<\/em> is also to be printed on these envelopes;<\/li><li>The inner envelopes are then to be put inside a bigger outer envelope<\/em>, which will also be duly sealed, marked, and so on, as above.<\/li><\/ul>\nIf the outer envelope is not sealed and marked properly<\/em> As above, the Procuring Entity does not assume any responsibility for its misplacement, premature opening, late opening<\/em>, and so on.<\/p>\n<h2>5.16<\/span>Uploading\/ Submission of Bids<\/span><\/h2><h3>5.16.1<\/span>Uploading Bids in e-Procurement<\/span><\/h3>\n<aside class=\"note\">Different e-Procurement portals may have different provisions, but the following is the generic description. (Portals must be GCQE-compliant<\/strong> \u2014 Guidelines for Compliance to Quality Requirements of eProcurement, July 2021, STQC Directorate, MeitY.)<\/em><\/p><\/aside>\na) the Procuring Entity is neither a party nor a principal<\/em> In the relationship between the bidder and the organisation hosting the e-procurement portal (hereinafter called the portal).<\/p>\nBidders must acquaint and train themselves<\/em> With the Rules, regulations, procedures, and implied conditions\/ agreements of the portal. Bidders intending to participate shall be required to register with the portal, and must comply with its conditions \u2014 including registration and a compatible digital signature certificate (DSC). In the case of downloaded documents, the bidder must not make any changes to the contents of the documents while uploading<\/em> \u2014 except for filling in the required information.<\/p>\nB) any query\/ clarification\/ complaint regarding downloading tender documents and uploading bids on the e-procurement portal May be addressed to the portal's help desk<\/em>.<\/p>\nC) the primacy Rule: In case of conflict between the provisions of the portal and the tender document<\/em>, provisions of the portal shall prevail<\/em>.<\/p>\nD) no extension for office closure: Bids must be uploaded by the submission deadline. If the office happens to be closed on the deadline to submit the bids, this deadline shall not be extended<\/em>.<\/p>\ne) ONLY one copy<\/em> Of the bid can be uploaded, and the bidder shall digitally sign all statements, documents, and certificates<\/em> Uploaded by him \u2014 owning sole and complete responsibility for their correctness\/ authenticity<\/em> As per the provisions of the IT ACT 2000<\/em>, as amended.<\/p>\nf) The protected Price Schedule: The Bidder shall write his name in the space provided in the specified location only<\/em>. Bidder shall type rates in figure only<\/em> in the rate column of respective item(s) \u2014 without any blank cell or zero values in the rate column<\/em>, and without any alteration\/ deletion\/ modification of other portions of the excel sheet. If space is inadequate, the Bidder may upload additional documents under \"Additional Documents\" in the \"bid Cover Content\".<\/p>\nG) the server clock Rule: The date and time of the e-procurement server clock<\/em> \u2014 which is also displayed on the bidders' dashboard \u2014 shall be used as the reference time<\/em> for deciding the closing time of bid submission. No request on the account that the server clock was not showing the correct time, and that a particular bidder could not submit their bid because of this, shall be entertained. Failure or defects on the internet, or heavy traffic at the server, shall not be accepted as a reason for a complaint<\/em>. The Procuring Entity shall not be responsible for any failure, malfunction or breakdown of the electronic system<\/em> Used during the e-tender process.<\/p>\nh) Encryption: The bidder should ensure the correctness of the bid before uploading, and take a printout of the system-generated submission summary to confirm the successful bid upload<\/em>. All bids uploaded by the bidder to the portal shall be automatically encrypted<\/em>. The encrypted bid can only be decrypted\/ opened by the authorised persons on or after the due date and time<\/em>.<\/p>\ni) Scanned documents: Bidder must upload scanned copies of originals<\/em> (or self-attested copies of originals \u2014 as specified), and should ensure the clarity\/ legibility<\/em> of the scanned documents. The Procuring Entity reserves its right to call for verification of originals<\/em> Of all such self-certified documents from the bidders at any stage of evaluation<\/em> \u2014 especially from the successful bidder(s) before the issue of Letter of Award (LoA)<\/em>.<\/p>\nj) physical submission of originals \u2014 the one case where the deadline DOES extend: If so specified in the tender document, originals (or self-attested copies) of specified scanned, uploaded documents must be physically submitted before the deadline specified for it (before the bid submission deadline, if not so specified<\/em>), sealed in double cover, and acknowledgement must be obtained.<\/p>\nFailure to do so is likely to result in the bid being rejected<\/em>. If the office is closed on the deadline for the physical submission of originals<\/em>, IT shall stand extended to the next working day<\/em> At the same time and venue.<\/p>\n<aside class=\"note\">(Contrast sub-para (d) above \u2014 for electronic<\/strong> submission, office closure does NOT<\/strong> extend the deadline.)<\/em><\/p><\/aside>\nk)<\/strong>no Manual bids shall be made available or accepted for submission in e-procurement<\/strong>(except for originals of scanned copies as per sub-para (j) above)<\/em>.<\/p>\n<h3>5.16.2<\/span>Submission of Bids in the Offline Tender Process<\/span><\/h3>\n<aside class=\"note\">In offline tenders, receipt and custody of bids shall be done transparently to maintain the credibility of the process<\/em>.<\/p><\/aside>\nA) the technical and financial proposals shall be submitted at the same time<\/em>. To safeguard the integrity of the process, the technical and financial proposals shall be submitted in separate sealed envelopes and kept in an outer sealed envelope<\/em>.<\/p>\nb) the tender box and its two locks: The procuring entity shall maintain tender boxes<\/em> for receiving the bids at suitable locations, which would facilitate security and easy access for bidders<\/em>.<\/p>\nIf required, tender boxes should be separate for each day of the week of tender opening<\/em>, and should be sealed by the Bid Opening Committee (boc) of the day<\/em>. The tender box shall have two locks<\/em>. The key of one lock will be with the head of the office<\/em>, and the other key with the official nominated by him<\/em>.<\/p>\nc) Courier and prohibited modes: Bids received by courier<\/em> Shall be deposited in the tender box by the despatch section<\/em> Till the date and time of bid opening. Bids sent by telex, cable or facsimile are to be ignored and rejected<\/em>.<\/p>\nD) bulky\/ oversized bids: For bulky\/ oversized bids that cannot be dropped into tender boxes<\/em>, the officials authorised to receive such bids shall maintain proper records and provide a signed receipt with the date and time<\/em> To the bearer of the bid. He will also sign on the cover, duly indicating the date and time of receipt<\/em>. Names and designations of at least two such authorised officers<\/em> Should be mentioned in the tender documents.<\/p>\n<h3>5.16.3<\/span>Bid Security<\/span><\/h3>\nA self-attested scan of the original Bid Security\/ BSD<\/em> Should be uploaded along with bids. Bids not complying with these provisions shall be rejected<\/em>.<\/p>\nIn off-line tenders, bid Security or \u2014 if permitted \u2014 bid securing declaration (BSD) must accompany the bid<\/em> As per instructions in the tender document.<\/p>\n<h2>5.17<\/span>Bid Validity<\/span><\/h2>\nA bid shall remain valid for the period mentioned in the tender document \u2014 90 days if not so specified<\/em>.<\/p>\nA bid that is valid for a shorter period shall be rejected as non-responsive<\/em>.<\/p>\nIn case the day up to which the bids are to remain valid falls on \u2014 or is subsequently declared \u2014 a holiday\/ closed day<\/em> for the Procuring Entity, the bid validity shall automatically be deemed to be extended up to the next working day<\/em>.<\/p>\nThe validity period should not be unreasonably long<\/em>, as keeping the tender unconditionally valid for acceptance for a longer period entails the risk of getting higher prices from the bidders<\/em>.<\/p>\n<aside class=\"note\">C<\/span> comparison: EoI validity <\/strong>not less than 60 days; RfP validity <\/strong>not less than 90 days.<\/p><\/aside>\n<h2>5.18<\/span>Opening of Bids<\/span><\/h2>\n1. Timing and the holiday Rule: Immediately after the deadline for bid submission, the Procuring Entity shall proceed to the bid opening.<\/p>\nIf the specified date of bid opening falls on \u2014 or is subsequently declared \u2014 a holiday or closed day<\/em> for the Procuring Entity, the bids shall be opened at the appointed time on the next working day<\/em>.<\/p>\nComposition of the Bid Opening Committee (boc): In offline tenders, the boc shall comprise one officer each from the Procuring Entity and associated\/ integrated finance<\/em>.<\/p>\n2. E-procurement: All tenders uploaded by bidders are received, safeguarded, and opened online on the portal<\/em>.<\/p>\n3. The offline bid-opening procedure \u2014 ten steps:<\/p>\nA) letters of authority: The authorised representatives of bidders who intend to attend the tender opening in OTE\/ GTE\/ SLTE<\/em> ARE TO bring letters of authority<\/em> From the corresponding bidder with them. The prescribed format should be given in the tender document. All bid-opening activities should be carried out demonstrably before such a gathering<\/em>.<\/p>\n(Bid Opening Attendance Sheet cum Report \u2014 G<\/span> Annexure 13 \u00b7 W<\/span> Annexure 3 \u00b7 C<\/span> Annexure 5 \u00b7 NC<\/span> Annexure 5.)<\/em><\/p>\nb) opening the tender box \u2014 and the treatment of LATE and WRONGLY-DROPPED bids:<\/p>\n<ul class=\"lst\"><li>At a prescheduled date and time, the BOC of the day should get the tender box opened after ensuring and demonstrating that the seal on the box has not been tampered with<\/em>.<\/li><li>All bids should be collected from the tender box. Bids for tenders not opening on that day should be put back into the box and the box resealed<\/em>.<\/li><li>Sometimes, tenders are dropped wrongly<\/em> Into this tender box. Such wrongly dropped tenders, with appropriate endorsement<\/em>, should be put into the appropriate box<\/em> \u2014 OR sent to the Tender Committee (TC) concerned if the date of opening is over<\/em>.<\/li><li>The bids for different tenders opening on the day (including oversized bids, which were submitted to designated officers<\/em>) should be sorted, and a count for each tender should be announced and recorded<\/em> \u2014 particularly noting any modifying\/ altering\/ withdrawal of bids<\/em>.<\/li><li>Boc should ensure and demonstrate that bid envelopes are duly sealed and untampered<\/em>.<\/li><li>Late bids should be separately counted but kept aside and not opened<\/em>. In the case of an advertised tender enquiry or Limited Tender Enquiry, late bids (i.e., bids received after the specified date and time for receipt of bids) should not be considered<\/em> \u2014 Rule 165 of GFR 2017.<\/li><\/ul>\nC) the two-stage opening: The technical bids will be opened on the pre-announced date, and the financial proposals shall remain sealed and shall be opened publicly in due course of time only for those firms that have technically qualified<\/em>.<\/p>\nD) serial numbering and initialling: After opening, every tender shall be numbered serially<\/em> (say 3\/14 \u2014 if it is the third bid out of 14 total), initialled, and dated on the first page<\/em> By the boc.<\/p>\n<ul class=\"lst\"><li>Each page of the price Schedule or letter attached to it shall also be similarly initialled \u2014 particularly the prices, delivery period, and so on, which shall also be circled and initialled along with the date<\/em>.<\/li><li>Any other page containing significant information should also be dealt with similarly.<\/li><li>Blank pages, if any, should be crossed out across and marked accordingly<\/em> By the boc.<\/li><li>The original (and duplicate, if any) copies in a tender set are to be marked accordingly by the boc.<\/li><\/ul>\ne) the alterations protocol \u2014 one of the most detailed procedural rules in the Manuals:<\/p>\n<ul class=\"lst\"><li>Erasure\/ cutting\/ overwriting\/ use of whitener\/ columns left unfilled in tenders, if any, shall be initialled along with the date and time and numbered<\/em> By the officials opening the tenders.<\/li><li>THE total number of such noticed alterations (or the absence of any alteration) should be explicitly marked on the first page of the bid<\/em>.<\/li><li>Wherever quantity\/ amount is written only in figures<\/em>, the boc should write them in words<\/em>.<\/li><li>ALL rebates\/ discounts<\/em> Should be similarly circled, numbered, and signed<\/em>.<\/li><li>In the absence of any alteration\/ overwriting\/ whitener\/ blanks, the remark \"no corrections noted\"<\/em> Should be written. Similarly, the absence of discounts should be marked with \"no discounts noted\"<\/em>.<\/li><\/ul>\nF) what the boc announces \u2014 and what it May not do: The boc is to announce the salient features of the tenders<\/em> \u2014 such as description and specification of the goods, quoted price, terms of delivery, delivery period, discount (if any), whether EMD furnished or not, and any other distinctive feature<\/em> \u2014 for the information of the representatives attending the tender opening. Clarifications by the bidders shall not be allowed or recorded<\/em> During the bid opening. The boc has no authority to reject any tender at the tender opening stage<\/em>.<\/p>\ng) Samples: PROPER sealing and codification<\/em> Needs to be done on reference samples, as well as for samples that accompany the bid. These should be kept for reference under lock and key<\/em>. Details should be recorded in the sample register<\/em> Maintained in the opening section.<\/p>\n<aside class=\"note\">Footnote (in both G and W): Please note that calling for a sample along with the bid for evaluation is strictly discouraged.<\/em><\/p><\/aside>\nh) Financial instruments: Should BE noted in the bid opening report\/ register and handed over to the finance section for safe custody and monitoring<\/em>.<\/p>\ni) The Bid Opening Report: A bid opening report containing the names of the bidders (serial number wise) and salient features of the tenders, as read out during the public opening<\/em>, will be prepared by the tender opening officers and duly signed by them along with the date and time<\/em>.<\/p>\nThe tenders that have been opened, the list of the representatives attending<\/em> The tender opening, and the bid opening report are to be handed over to the nominated procuring officer \u2014 and an acknowledgement shall be obtained from him<\/em>.<\/p>\nj) A similar procedure shall later be followed during financial bid opening<\/em> In case of multiple-envelope bidding.<\/p>\n<h2>5.19<\/span>Transparency and Protecting Third-Party Rights of Bidders<\/span><\/h2>\n1. The public interest: Objectives of transparency in e-PROCUREMENT ARE amply served if data relating to the tender and award of contract are accessible to the public<\/em>.<\/p>\n2. The participating bidders' interest: As far as the bidders who have participated in a tender (participating bidders<\/em>) are concerned \u2014 for transparency, a comparative summary of technical (compliance details) and of financial bids (including QCBS calculations, wherever applicable)<\/em> Should also be accessible to them.<\/p>\nBUT not necessarily to the public at large<\/em> \u2014 unless sought and if permissible under the RTI Act<\/em>.<\/p>\n3. The trade-secrets concern: Bidders May have genuine concerns about techno-commercial and operational trade secrets<\/em> If their full technical and financial bids are accessible to their competitors or the public at large.<\/p>\nThis concern May get aggravated in complicated EPC\/ PPP\/ consultancy procurements<\/em>.<\/p>\nTechnical\/ financial bids should not be made accessible to the public at large<\/em>, AND a call needs to be taken based on the sensitivity of details in the bids to restrict access of even participating bidders to full technical\/ financial bids of their competitors<\/em>.<\/p>\nThe decision of the Procuring Entity to share or not share the full technical bids with other participating bidders should be clearly brought out in the tender documents<\/em>.<\/p>\n4. The reserved right: However, a clause May be added to the tender documents reserving the right of the Procuring Entity and the e-procurement portal to provide access to bidders' technical\/ financial bids to other participating bidders<\/em> \u2014 in addition to the comparative summary of technical and financial bids of all participating bidders.<\/p>\n<h2>5.20<\/span>Bid Invitation Process \u2014 Risks and Mitigations<\/span><\/h2>\n<aside class=\"note\">This five-row table is reproduced in essentially identical terms in all four Manuals.<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>exceptions to an open tender process are abused<\/em>, leading to single-source processes<\/em>.<\/td><td>Rigorously follow the conditions under which open tendering can be dispensed with.<\/td><\/tr><tr><td>2<\/td><td>WHEN short-lists<\/em> Are used, the process of preparation of short-lists May be non-transparent<\/em>, AND all eligible firms May not be included, and some ineligible firms May get included<\/em>.<\/td><td>Registration of bidders\/ contractors: All major procuring departments must keep a list of registered bidders for use in restricted tendering<\/em>. Publicise even restricted bids<\/em> On your website. Bidders for LTE\/ SLTE May be transparently selected with the approval of ca<\/em>.<\/td><\/tr><tr class=\"srcmark src-multi\" data-src=\" G W \"><td>3<\/td><td>pre-qualification criteria: PQB has the potential of getting misused or being applied without considering the restrictive nature of competition<\/em>. PQC should be relevant to the quality requirements, and neither very stringent nor very lax in restricting\/ facilitating the entry of bidders. These criteria should be clear, unambiguous, exhaustive, and yet specific. Also, there should be FAIR COMPETITION.<\/td><td>G<\/span>:<\/strong>Lay down criteria when PQB tendering<\/em> is warranted. Also, model PQC criteria for diverse types of procurements should be laid down<\/em>. W<\/span> variant:<\/strong>Lay down criteria when two-stage tendering<\/em> is warranted. Also lay down model PQC criteria for diverse types of procurements.<\/strong><\/td><\/tr><tr><td>4<\/td><td>invitation to tender (an open bid) is not well publicised or gives insufficient time<\/em> \u2014 thereby restricting the number of bidders that participate<\/em>.<\/td><td>Publicity and adequate time for bid submission must be ensured. Higher-level approval should be obtained for a shorter bid submission period<\/em>.<\/td><\/tr><tr><td>5<\/td><td>evaluation criteria are not set from the beginning<\/em>, OR ARE not objective<\/em>, OR not clearly stated<\/em> In the tender documents \u2014 thereby making them prone to being abused<\/em>.<\/td><td>Objective, relevant and clearly stated evaluation criteria must be specified in the tender document<\/em>.<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>Appendix to Chapter 5 \u2014 Points of Difference Between the Four Manuals<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Chapter number<\/td><td>G\/C\/NC: Chapter 5 \u00b7 W: CHAPTER 4<\/td><\/tr><tr><td>2<\/td><td>Chapter title<\/td><td>IDENTICAL in all four \u2014 one of only two such chapters<\/strong>(W spells its risk section \"Bidding<\/strong> Invitation Process\", as do C and NC; G says \"Bid<\/strong> Invitation Process\")<\/em><\/td><\/tr><tr><td>3<\/td><td>Number of sections<\/td><td>G: 5 \u00b7 W: 15 (most granular) \u00b7 C: 8 \u00b7 NC: 5<\/td><\/tr><tr><td>4<\/td><td>Model Tender Documents<\/td><td>G\/C\/NC cite DoE MTDs (Goods & NCS Oct 2021; Consultancy April 2023)<\/em> \u00b7 W refers instead to \"relevant standard bidding documents\" and says to follow CPWD's if the organisation has none<\/td><\/tr><tr><td>5<\/td><td>Survey & soil investigation report, area grading, mapping of underground facilities to be part of the tender document<\/td><td>W ONLY<\/td><\/tr><tr><td>6<\/td><td>\"Facilities and inputs which will be provided to the contractor by the Ministry\/ Department\" as an essential aspect<\/td><td>W ONLY<\/td><\/tr><tr><td>7<\/td><td>\"Requirements as to documentary evidence\" as an essential aspect<\/td><td>W ONLY<\/td><\/tr><tr><td>8<\/td><td>Footnote defining \"HIGHEST\" bidder as the H1 QCBS scorer<\/td><td>W ONLY<\/td><\/tr><tr><td>9<\/td><td>Order of the last two tender-document sections<\/td><td>G: Financial Bid then Submission Forms \u00b7 W: Submission Forms then Financial Bid<\/td><\/tr><tr><td>10<\/td><td>Section VII titled \"DRAWING, Technical Specifications and Quality Assurance\"<\/td><td>W<\/strong> (G omits \"Drawing\")<\/td><\/tr><tr><td>11<\/td><td>The four circumstances warranting an SCC clause<\/td><td>W ONLY<\/td><\/tr><tr><td>12<\/td><td>Evaluation by item\/ lot\/ entire scope; milestone identification \"in an optimal and sequential manner\"<\/td><td>W ONLY<\/td><\/tr><tr><td>13<\/td><td>ACCESSIBILITY MANDATE \u2014 RPwD Act 2016 & Rules 2017; Harmonised Guidelines (MoHUA); IS 17802 Parts 1 & 2<\/td><td>W ONLY<\/td><\/tr><tr><td>14<\/td><td>Performance Standards & QA; Method Statement; Work Plan; Critical Material Schedule; SLA; Occupational Safety, Health and Working Conditions<\/td><td>nc only<\/td><\/tr><tr><td>15<\/td><td>The three NC Qualification Criteria and the 3\u00d740% \/ 2\u00d750% \/ 1\u00d780% volume test<\/td><td>nc only<\/td><\/tr><tr><td>16<\/td><td>Contract Manager \u2014 5 years' experience, 3 as manager<\/td><td>nc only<\/td><\/tr><tr><td>17<\/td><td>Turnover multiple of 3\u20137 times, with the stated reason that NC needs a higher multiple than Works<\/td><td>nc only<\/td><\/tr><tr><td>18<\/td><td>Upper cap on demanded turnover in higher-value procurements<\/td><td>nc only<\/td><\/tr><tr><td>19<\/td><td>Entry window for sub-contractors \u2014 repair contracts up to Rs. 60 lakh; no more than 2 contracts under relaxed credentials<\/td><td>W ONLY<\/td><\/tr><tr><td>20<\/td><td>Demerged entities \u2014 five-year use of parent credentials<\/td><td>W, C, NC<\/strong> \u2014 not in Goods<\/em><\/td><\/tr><tr><td>21<\/td><td>Conditional discounts not considered at evaluation but availed if bidder otherwise eligible<\/td><td>W ONLY<\/td><\/tr><tr><td>22<\/td><td>REoI DOCUMENT \u2014 contents, forms, EoI validity 60 days, \"do not ask for CVs or approach at EoI stage\", right to make minor ToR adjustments at RfP stage<\/td><td>C ONLY<\/td><\/tr><tr><td>23<\/td><td>RfP DOCUMENT \u2014 rFPL\/ ITC\/ AITC, rfP validity 90 days, budget not to be disclosed except in FBS, STP vs FTP, 14-day association approval, presentation carries no marks<\/td><td>C ONLY<\/td><\/tr><tr><td>24<\/td><td>\"Any procurement portal without Excel BOQ facility should endeavour to build it\"<\/td><td>C + NC<\/td><\/tr><tr><td>25<\/td><td>\"Items for which no rate is entered will not be paid for and are deemed covered\"; lump-sum breakdown requirement<\/td><td>C + NC<\/td><\/tr><tr><td>26<\/td><td>Minimum wage floor; 'NIL' price rejection; LCS for Manpower Outsourcing; police verification and good moral character of deployed manpower<\/td><td>nc only<\/td><\/tr><tr><td>27<\/td><td>e-Publishing exclusion<\/td><td>G\/C\/NC: purchase without quotation & by purchase committee \u00b7 W: works procurement through quotation<\/td><\/tr><tr><td>28<\/td><td>Fixed days for NIT issuance and tender opening; CPWD region-wise table; Rs. 2 crore one-week\/ two-week rule<\/td><td>W ONLY<\/td><\/tr><tr><td>29<\/td><td>21-day extension norm and fresh publication where amendment substantially changes requirements<\/td><td>W ONLY<\/td><\/tr><tr><td>30<\/td><td>Auto-extension \"only ONCE, not repeatedly\"<\/td><td>G states it twice; W OMITS the restriction<\/td><\/tr><tr><td>31<\/td><td>Exemption from tender document cost<\/td><td>G: MSEs and<\/em> registered units \u00b7 W: registered units only (for relevant grades of work)<\/td><\/tr><tr><td>32<\/td><td>Legal status of bidder; Rs. 10 crore JV threshold; max 3 JV partners; JV discouraged in QOP\/QCBS; PASARA and other licences; litigation history disqualification<\/td><td>W ONLY<\/strong>(in this chapter)<\/em><\/td><\/tr><tr><td>33<\/td><td>Consequence of participating in more than one bid<\/td><td>g: Disqualification of ALL<\/em> BIDS in which he is a party \u00b7 W: disqualification of the bid in which he is main\/ principal\/ lead bidder<\/td><\/tr><tr><td>34<\/td><td>One-Principal-one-agent rule and the PAC exception for multiple authorised distributors<\/td><td>G ONLY<\/td><\/tr><tr><td>35<\/td><td>OEM authorisation certificate + warranty confirmation; tender-specific authorisation for capital equipment<\/td><td>G ONLY<\/td><\/tr><tr><td>36<\/td><td>Pre-bid conference trigger<\/td><td>G: turnkey, sophisticated\/ costly equipment, large works, complex consultancy \u00b7 W: adds \"or wherever felt necessary\"<\/td><\/tr><tr><td>37<\/td><td>Participation restricted to those who downloaded the Tender Document<\/td><td>G<\/strong> (W does not state this restriction)<\/td><\/tr><tr><td>38<\/td><td>site visit<\/td><td>W, C, NC \u2014 absent from Goods<\/td><\/tr><tr><td>39<\/td><td>Bid Opening Committee = one officer each from Procuring Entity and Integrated Finance<\/td><td>stated in G<\/strong><\/td><\/tr><tr><td>40<\/td><td>Risk table row 3 mitigation<\/td><td>G: \"when PQB tendering<\/em> is warranted\" \u00b7 W: \"when Two-STAGE tendering<\/em> is warranted\"<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 5<\/p>\n<aside class=\"note\">next: Chapter 6 \u2014 forms of securities, prices, payment terms and price variations (Goods Ch. 6 \u00b7 Works Ch. 5 \u00b7 Consultancy Ch. 6 \u00b7 Non-Consultancy Ch. 6)<\/em> \u2014 the second and last chapter whose title is word-for-word identical in all four Manuals, though its contents diverge sharply: Goods alone carries Incoterms 2020 and Exchange Rate Variation; Works alone carries Mobilisation and Secured Advances and the six-fold breakdown of securities; CS and NC carry the leanest version.<\/p><\/aside><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch6\">Chapter 6<\/p><h1>Forms of Securities, Prices, Payment Terms and Price Variations<\/h1><\/header>\nMerging: Goods Ch. 6 \u00b7 Works Ch. 5 \u00b7 Consultancy Ch. 6 \u00b7 Non-Consultancy Ch. 6<\/em><\/p><h2>Structural Notes<\/span><\/h2>\n1. This is the second and last chapter whose title is WORD-FOR-WORD IDENTICAL in all four Manuals. BUT the Works Manual numbers it CHAPTER 5, not Chapter 6.<\/p>\n2. Despite the identical title, this chapter has the sharpest content divergence of any \"common\" chapter. Three whole bodies of material exist in one Manual only:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Body of material<\/th><th>Exists only in<\/th><\/tr><\/thead><tbody><tr><td>Terms of Payment for Domestic Goods \u00b7 Terms of Payment for IMPORTED Goods \u00b7 Letter of Credit \u00b7 Air Freight Charges \u00b7 Exchange Rate Variation (ERV) \u00b7 INCOTERMS 2020 \u00b7 Customs Duty \u00b7 Insurance Surety Bond and e-BG (full text) \u00b7 Warranty Bank Guarantee<\/td><td>GOODS<\/td><\/tr><tr><td>Security Deposit\/ Retention Money \u00b7 Insurances and Indemnities \u00b7 Variations and Measurement Books \u00b7 Interim Payment Certificates \u00b7 MOBILISATION ADVANCE \u00b7 Plant\/ Machinery\/ Shuttering Advance \u00b7 SECURED ADVANCE against material at site<\/td><td>WORKS<\/td><\/tr><tr><td>The multi-year performance-security reduction rule for SERVICE contracts (5\u20137 years)<\/td><td>CS + NC<\/td><\/tr><\/tbody><\/table><\/div>\n3. The seven common anchors<\/strong>, present in all four in the same order:<\/p>\n<aside class=\"note\">Forms of Security \u2192 Payment Clause \u2192 Advance Payment \u2192 Firm\/ Variable Price \u2192 Statutory Taxes\/ Duties\/ Levies \u2192 Recovery of Public Money from the bill \u2192 Payment against Time-Barred Claims<\/p><\/aside>\n<h2>Concordance for Chapter 6<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>Goods<\/th><th>Works<\/th><th>CS<\/th><th>NCS<\/th><\/tr><\/thead><tbody><tr><td>6.1<\/td><td>Bid Security\/ EMD<\/td><td>6.1.1<\/td><td>5.1.1<\/td><td>6.1.1<\/td><td>6.1.1<\/td><\/tr><tr><td>6.2<\/td><td>Performance Security\/ Guarantee<\/td><td>6.1.2<\/td><td>5.1.2<\/td><td>6.1.2<\/td><td>6.1.2<\/td><\/tr><tr><td>6.3<\/td><td>Security Deposit\/ Retention Money<\/td><td> \u2014 <\/td><td>5.1.3<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>6.4<\/td><td>Insurance Surety Bond (ISB)<\/td><td>6.1.3<\/td><td>(cross-ref)<\/em><\/td><td>(cross-ref)<\/em><\/td><td>(cross-ref)<\/em><\/td><\/tr><tr><td>6.5<\/td><td>Electronic Bank Guarantee (e-BG)<\/td><td>6.1.4<\/td><td>(cross-ref)<\/em><\/td><td>(cross-ref)<\/em><\/td><td>(cross-ref)<\/em><\/td><\/tr><tr><td>6.6<\/td><td>Warranty Bank Guarantee<\/td><td>6.1.5<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>6.7<\/td><td>Verification of Bank Guarantees<\/td><td>6.1.6<\/td><td>5.1.4<\/td><td>6.1.3<\/td><td>6.1.3<\/td><\/tr><tr><td>6.8<\/td><td>Safe Custody and Monitoring<\/td><td>6.1.7<\/td><td>5.1.5<\/td><td>6.1.4<\/td><td>6.1.4<\/td><\/tr><tr><td>6.9<\/td><td>Insurances and Indemnities<\/td><td> \u2014 <\/td><td>5.1.6<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>6.10<\/td><td>Payment Clause \/ Payment Terms<\/td><td>6.2<\/td><td>5.2<\/td><td>6.2<\/td><td>6.2<\/td><\/tr><tr><td>6.11<\/td><td>Terms of Payment \u2014 Domestic Goods<\/td><td>6.3<\/td><td> \u2014 <\/td><td>6.3 (generic)<\/em><\/td><td>6.3 (generic)<\/em><\/td><\/tr><tr><td>6.12<\/td><td>Terms of Payment \u2014 Imported Goods; LC<\/td><td>6.4<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>6.13<\/td><td>Advance Payment<\/td><td>6.5<\/td><td>5.3<\/td><td>6.4<\/td><td>6.4<\/td><\/tr><tr><td>6.14<\/td><td>Prices, Firm Price and Variable Price<\/td><td>6.6<\/td><td>5.4<\/td><td>6.5<\/td><td>6.5<\/td><\/tr><tr><td>6.15<\/td><td>Exchange Rate Variation (ERV)<\/td><td>6.7<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>6.16<\/td><td>Statutory Taxes\/ Duties\/ Levies<\/td><td>6.8<\/td><td>5.5<\/td><td>6.6<\/td><td>6.6<\/td><\/tr><tr><td>6.17<\/td><td>Incoterms 2020<\/td><td>6.9<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>6.18<\/td><td>Recovery of Public Money from the bill<\/td><td>6.10<\/td><td>5.6<\/td><td>6.7<\/td><td>6.7<\/td><\/tr><tr><td>6.19<\/td><td>Payment against Time-Barred Claims<\/td><td>6.11<\/td><td>5.7<\/td><td>6.8<\/td><td>6.8<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>6.1<\/span>Bid Security \/ Earnest Money Deposit (EMD)<\/span><\/h2>\n(Rule 170 of GFR 2017)<\/em><\/p>\n1. Purpose and when taken: To safeguard against a bidder's withdrawing or altering its\/ his bid during the bid validity period<\/em> \u2014 in the case of advertised (OTE and GTE) tenders or Special Limited Tender Enquiry<\/em> \u2014 Bid Security (also known as earnest money deposit \u2014 EMD<\/em>) is to be obtained from the bidders along with their bids<\/em>.<\/p>\n2. The amount: The amount of Bid Security should ordinarily range between two (2) to five (5) per cent of the estimated value<\/em> Of the goods\/ works to be procured.<\/p>\nThe amount, rounded off to the nearest thousands of rupees<\/em>, as determined by the Procuring Entity, is to be indicated in the tender documents<\/em>.<\/p>\n<aside class=\"note\">W<\/span> Adds an upper ceiling provision: \"The Procuring Entity May, if considered justified, stipulate an upper ceiling on the Bid Security amount, in larger tenders \u2014 so as not to restrict competition.\"<\/em><\/p><\/aside>\n3. Forms of Bid Security \u2014 and the issuing-bank divergence:<\/p>\nBid security may be obtained in the form of:<\/p>\n<aside class=\"note\">Insurance surety bonds \u00b7 account payee demand draft \u00b7 banker's cheque \u00b7 Bank Guarantee (including e-Bank Guarantee) \u00b7 or payment online in an acceptable form<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Which banks may issue<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span> GOODS<\/td><td>from any of the commercial banks<\/em><\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> WORKS<\/td><td>issued\/ CONFIRMED by any of the scheduled banks<\/em> (as defined in <\/strong>section 2(e) of the RBI Act 1934)<\/strong> W<\/span> Footnote: \"a Bank Guarantee merely advised by a scheduled bank is not acceptable, in lieu of being confirmed.<\/em>\"<\/td><\/tr><\/tbody><\/table><\/div>\nthe Rs. 5 lakh threshold: In case the Bid Security is more than a threshold (rupees five lakh)<\/em>, and in case of foreign bidders in GTE tenders<\/em>, it May be in the form of a bank Guarantee<\/em> (In equivalent foreign exchange amount, in case of GTE) issued\/ confirmed from any of the commercial\/ scheduled banks in India in an acceptable form.<\/p>\n4. Validity: The Bid Security is normally to remain valid for a period of 45 (forty-five) days beyond the final bid validity period<\/em>.<\/p>\n5. Bid securing declaration (BSD) \u2014 and the divergence in consequence:<\/p>\nIn place of a Bid Security, procuring entities \u2014 after seeking approval from the Competent Authority<\/em> \u2014 May consider asking bidders to submit a bid securing declaration (BSD)<\/em>, accepting that:<\/p>\n<ul class=\"lst\"><li>If they withdraw or modify their bids during the period of validity<\/em>; or<\/li><li>if they are awarded the contract and they fail to submit Performance Security, or to sign the contract<\/em>, before the deadline defined in the tender documents<\/li><\/ul>\n \u2014 it shall be considered as a violation of the Code of Integrity<\/em>, and they shall be:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Consequence<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-multi\" data-src=\" G C NC \"><td>G<\/span>, C<\/span>, NC<\/span><\/td><td>\"\u2026Shall be suspended<\/strong> for the time period specified in the BSD\"<\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> WORKS<\/td><td>\"\u2026Shall be debarred<\/strong> for the time period specified in the BSD\"<\/td><\/tr><\/tbody><\/table><\/div>\n \u2014 from being eligible to submit bids\/ proposals for contracts with the Procuring Entity.<\/p>\n6. Exemptions from Bid Security \u2014 and the MSE divergence:<\/p>\nIn appropriate cases, submission of the bid security may be exempted with the Competent Authority's (ca's) approval<\/em> \u2014 especially in the case of:<\/p>\n<aside class=\"note\">Indigenisation\/ development tenders \u00b7 limited tenders \u00b7 G<\/span> Procurements directly from the manufacturer or authorised agents \u00b7 bidders that are currently registered, and will also continue to remain registered during the bid validity period<\/em> With the concerned Ministry\/ Department\/ Procuring Entity<\/p><\/aside>\nthe statutory exemptions:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Who is exempt from payment of EMD<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span> GOODS<\/td><td>BOTH \u2014 micro and Small Enterprises (MSEs)<\/em> as defined in the MSE Procurement Policy, AND<\/strong>registered startups<\/em> as recognised by DPIIT<\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> WORKS<\/td><td>ONLY \u2014 registered startups<\/em> as recognised by DPIIT (MSEs are not named)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nIn case the bidder falls into these categories, the bidder should furnish a certified copy of its valid registration details<\/em>.<\/p>\nThe scope of the registered-bidder exemption:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-G\" data-src=\" G \">G<\/span>:<\/strong>\"except for MSEs<\/em>, this exemption is valid for the trade group and monetary value<\/strong> Of registration only.\"<\/li><li class=\"srcmark src-W\" data-src=\" W \">W<\/span>:<\/strong>\"This exemption is valid for the monetary value<\/strong> Of registration only.\"<\/li><\/ul>\n7. Forfeiture: A bidder's Bid Security shall be forfeited<\/em> IF:<\/p>\n<ul class=\"lst\"><li>The bidder withdraws or amends its bid<\/em>, OR impairs or derogates from the tender in any respect<\/em>, within the period of validity of the tender; Or<\/li><li>THE successful bidder fails to furnish the required Performance Security or to sign the contract<\/em> Within the specified period.<\/li><\/ul>\n8. Return of bid securities \u2014 the three timelines:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Situation<\/th><th>When returned<\/th><\/tr><\/thead><tbody><tr><td>UNSUCCESSFUL bidders<\/td><td>as soon as possible after the expiry of the final bid validity period \u2014 and, at the latest, by the 30TH day after the award of the contract<\/em><\/td><\/tr><tr><td>SUCCESSFUL bidder<\/td><td>UPON receipt of Performance Security<\/em><\/td><\/tr><tr><td>In two-packet or two-stage tendering \u2014 unsuccessful bidders of the first stage<\/td><td>within 30 days of declaration of the result of the first stage<\/em> (i.e., technical evaluation, etc.) (OM No. F.1\/2\/2022-PPD dated 01.04.2022)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>6.2<\/span>Performance Security \/ Performance Guarantee<\/span><\/h2>\n(Rule 171 of GFR 2017)<\/em><\/p>\n1. Purpose: TO ENSURE due performance of the contract<\/em>, Performance Security (or performance Bank Guarantee \u2014 PBG<\/em>, OR security Deposit \u2014 SD<\/em>) is to be obtained from the successful bidder awarded the contract.<\/p>\n<aside class=\"note\">G<\/span> \u2014 the goods-specific caveat: \"Unlike contracts of works and plants, in the case of contracts for goods, the need for Performance Security <\/em>depends on the market conditions and commercial practice for the particular kind of goods.\"<\/em><\/p><\/aside>\n2. The quantum \u2014 the key numerical divergence<\/strong>(OM No. F.1\/2\/2023-PPD dated 01.01.2024)<\/em>:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Performance Security<\/th><\/tr><\/thead><tbody><tr><td>GOODS<\/td><td>Three (3) TO five (5) PER CENT of the value of the contract<\/td><\/tr><tr><td>WORKS<\/td><td>Three (3) TO ten (10) PER CENT of the value of the contract<\/td><\/tr><tr><td>non-consultancy services<\/td><td>Three (3) TO five (5) PER CENT of the contract value<\/strong>(the NC Manual expressly notes \"3 to 10% for Works\")<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">W<\/span> \u2014 the high-value moderation Rule:\"<\/strong>to ensure competition, in <\/em>higher-value tenders (say > Rs. 50 crore), Performance Security amount May be based on an <\/em>appropriate lower percentage from the band of 3% to 10%*.\"*<\/p><\/aside>\n3. The upper ceiling \u2014 the illustrative example given in G<\/span> and NC<\/span>:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Tender value<\/th><th>Illustrative ceiling on Performance Security<\/th><\/tr><\/thead><tbody><tr><td>Up to Rs. 50 crore<\/td><td>Rs. 75 LAKH<\/td><\/tr><tr><td>above Rs. 50 crore but below Rs. 300 crore<\/td><td>Rs. 3 CRORE<\/td><\/tr><tr><td>higher than Rs. 300 crore<\/td><td>The Procuring Entity may decide the amount \u2014 but not less than Rs. 3 crore<\/em> mentioned above<\/td><\/tr><\/tbody><\/table><\/div>\nhowever, procuring entities are free to decide their own upper limits\/ quantum<\/em> for Performance Security (NC<\/span> Adds: \"Or dispense with it\")<\/em> \u2014 with the approval of Competent Authority and finance concurrence, based on their perception of performance risks vis-\u00e0-vis need for competition<\/em>.<\/p>\n4. Forms of Security:<\/strong> Performance security may be furnished in the form of:<\/p>\n<aside class=\"note\">Insurance Surety Bond \u00b7 account payee demand draft \u00b7 Bank Guarantee (including e-Bank Guarantee) issued\/ confirmed from any of the commercial\/ scheduled banks in India \u00b7 or online payment in an acceptable form<\/p><\/aside>\n \u2014 safeguarding the purchaser's\/ Procuring Entity's interest in all respects.<\/p>\n5. GTE contracts and URDG 758: In the case of GTE tenders, the Performance Security should be in the same currency as the contract<\/em> And must conform to the uniform Rules for demand guarantees (URDG 758)<\/em> \u2014 an international convention regulating international securities.<\/p>\n<aside class=\"note\">Footnote (all Manuals): A set of rules developed by the International Chamber of Commerce<\/strong>, first adopted in 1992<\/strong>. The latest version URDG 758<\/strong> provides a framework for harmonising international trading practices and establishes agreed-upon rules for independent guarantees and counter-guarantees among trading partners.<\/em><\/p><\/aside>\n6. Joint ventures \u2014 W<\/span> and NC<\/span>: In case of a JV, the BG towards Performance Security shall be provided by all partners in proportion to their participation in the project<\/em>.<\/p>\n7. The no-retention Rule for goods \u2014 G<\/span> Only: Unlike the procurement of works, in the procurement of goods, the concept of taking part of the performance guarantee as money retained from the first or progressive bills of the supplier is not acceptable<\/em>.<\/p>\n8. The value threshold below which Performance Security is not needed:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Provision<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span> GOODS<\/td><td>\"Submission of Performance Security is not necessary<\/strong> for a tender value up to rupees 50 lakh.\"<\/strong> (The Goods Manual prints \"Rupees 50 (twenty-five) lakh\" \u2014 an evident typographical inconsistency<\/strong> between the figure and the word.)<\/em><\/td><\/tr><tr class=\"srcmark src-NC\" data-src=\" NC \"><td>NC<\/span> Non-consultancy<\/td><td>\"Submission of Performance Security May not be insisted upon<\/strong> In lower-valued contracts (say up to rupees 50 (fifty) lakh).\"<\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> WORKS<\/td><td>(no such threshold stated)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n9. Exemption from submission of Performance Security:<\/p>\nProcuring Entity may EXEMPT the following entities (on their specific requests or otherwise<\/em>): A) govt. Ministries, departments, attached and subordinate offices, autonomous bodies<\/p>\n<aside class=\"note\">Footnote in all Manuals: \"there is no bar from taking Performance Security from CPSEs.<\/em>\"<\/p><\/aside>\n<ol class=\"lst\"><li class=\"srcmark src-multi\" data-src=\" G NC \">G<\/span> and NC<\/span> ONLY:<\/strong>THE OEM in whose favour PAC<\/em> is issued, in tenders issued against PAC.<\/li><\/ol>\n<aside class=\"note\">(Absent from Works \u2014 consistent with the fact that Works has no PAC mode at all<\/strong> \u2014 see Chapter 4 Part B.)<\/em><\/p><\/aside>\n10. When furnished and how long valid:<\/p>\nPerformance Security is to be furnished by a specified date \u2014 generally 14 (fourteen) to 28 (twenty-eight) days after notification of the award<\/em>(G<\/span> and NC<\/span> add: \"depending on the amount\")<\/em>.<\/p>\nIt should remain valid for a period of 60 (sixty) days<\/em> \u2014 or any other period mentioned in the tender documents \u2014 beyond the date of completion of all contractual obligations<\/em>, including:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-multi\" data-src=\" G NC \">G<\/span>, NC<\/span>:<\/strong>Warranty obligations;<\/li><li class=\"srcmark src-W\" data-src=\" W \">W<\/span>:<\/strong>Defect liability period (DLP)\/ warranty period.<\/li><\/ul>\n11. Multi-year contracts \u2014 the proportionate-reduction Rule, and its two versions:<\/p>\nG<\/span> \u2014 GOODS version:<\/strong>In the case of goods contracts (e.g., rate contracts and other long-term contracts<\/em>) spanning over multiple years, procuring entities May consider proportionately reducing Performance Security in proportion to the balance contract period<\/em>, wherever feasible \u2014 instead of retaining the full Performance Security over the complete contract period, which May be of 2\u20133 years or more<\/em>.<\/p>\nC<\/span> + NC<\/span> \u2014 the SERVICES version, with its stated rationale:<\/p>\n<aside class=\"note\">In the case of service contracts spanning over multiple years, care needs to be taken to decide on the amount of Performance Security being sought along with the duration<\/em>.<\/p>\nIt has been observed that procuring entities retain the Performance Security over the complete service contract period, which May be of 5\u20137 years or more<\/em>. This practice puts the service provider in a difficult situation, as they have to block a substantial amount of their working capital as security for the entire duration of the contract<\/em>.<\/p>\nIn such cases the following is suggested:<\/p>\nA) the balance to be struck: The right quantum of Performance Security has to strike a balance between protecting the Procuring Entity's interest in case of default in performance<\/em> VS. Avoiding increase in tendered price and\/ or reduced competition<\/em>.<\/p>\nIf the security is LOW<\/em>, the Procuring Entity May be adversely affected if and when default occurs<\/em>. If it is HIGH<\/em>, THE extra financial cost of furnishing such security will be factored in by bidders when quoting prices, and hence the cost May increase<\/em>.<\/p>\nB) sufficient flexibility is already available in the GFR<\/em> To design the Performance Security for procurement of services \u2014 both value and duration<\/em> \u2014 duly considering the market conditions and commercial practice for the particular kind of service.<\/p>\nC) procuring entities May consider proportionately reducing Performance Security in proportion to the balance service period<\/em>, wherever feasible. Wherever it is decided to take lower or proportionally reducing ps<\/em>, tender conditions May be suitably modified for the future cases<\/em>.<\/p><\/aside>\n12. Replacement of existing securities \u2014 W<\/span> and NC<\/span>: Securities in the existing<\/em> Contracts in the form of Bank Guarantee May be permitted by the Procuring Entity to be replaced by the contractors with insurance surety bonds or e-Bank Guarantee<\/em>. Adequate safeguards \u2014 such as requiring prior submission of new forms of security before releasing the original forms of security<\/em> \u2014 should be ensured.<\/p>\n13. Forfeiture and refund \u2014 and the \"partial execution\" rule:<\/p>\nThe Performance Security will be forfeited and credited to the Procuring Entity's account in the event of a breach of contract<\/em> By the contractor.<\/p>\nIt should be refunded to the contractor without interest<\/em> After he duly performs and completes the contract in all respects\u2026<\/p>\n<aside class=\"note\">G<\/span> Only \u2014 the parenthesis that matters: *\"\u2026(<\/strong>full Performance Security should be forfeited, even if the contractor has partially executed the work)\u2026\"*<\/p><\/aside>\n\u2026BUT not later than 60 (sixty) days<\/em> Of completion of all such obligations including the warranty (W<\/span>: \"of completion of the Defect Liability Period (DLP)\/ warranty period\")<\/em> Under the contract.<\/p>\n14. Monitoring and transparency: The senior officers should monitor the return of bid\/ performance securities<\/em>, and delays should be avoided. If feasible, the details of these securities May be listed in the e-procurement portal\/ website of the Procuring Entity to make the process transparent and visible<\/em>.<\/p>\n<h2>6.3<\/span>Security Deposit \/ Retention Money [W ONLY]<\/span><\/h2>\n<aside class=\"note\">This instrument exists only in the works Manual<\/em>. Note that the Goods Manual expressly says the retention concept is \"not ACCEPTABLE\" in goods procurement (para 6.2-7 above).<\/p><\/aside>\nIN addition<\/em> To Performance Security, contracts for works usually provide for a percentage \u2014 usually five per cent \u2014 of each running bill (periodic\/ interim payment) to be withheld as Security Deposit\/ retention money until final acceptance<\/em>.<\/p>\nThe earnest money, instead of being released, May form part of the Security Deposit<\/em>.<\/p>\nThe contractor's option to replace retention money \u2014 at two stages:<\/p>\nThe contractor may, at his option<\/em>, replace the retention amount with an unconditional BG\/ Insurance Surety Bond<\/em> From a bank acceptable to the Procuring Entity at the following stages:<\/p>\nA) after the amount reaches half the value of the limit<\/em> Of retention money; And<\/p>\nb) after the amount reaches the maximum limit<\/em> Of retention money.<\/p>\nThe two-halves release Rule:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Half<\/th><th>When released<\/th><\/tr><\/thead><tbody><tr><td>One-HALF of the retention money (or BG which replaced it)<\/td><td>shall be released on the issue of the taking-over certificate<\/em>. If the taking-over certificates (TOCs) are issued in parts<\/em>, then in such proportions as the engineer May determine<\/em>, having regard to the value of such part or section<\/td><\/tr><tr><td>the other half<\/td><td>shall be released upon expiration of 60 (sixty) days<\/em> \u2014 or any other period mentioned in the tender document \u2014 after the DLP\/ warranty period of the works, or final payment, whichever is earlier<\/em> \u2014 ON certification by the engineer<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nin the event of different defect liability periods\/ warranty periods being applicable to different sections or parts or equipment incidental to works<\/em>, the expiration of defect liability period\/ warranty period shall be the latest of such periods<\/em>.<\/p>\n<h2 class=\"src-G srchead\" data-src=\" G \">6.4<\/span>Insurance Surety Bond (ISB)<\/span>G<\/span>text; W\/C\/NC cross-refer to Goods para 6.1.3<\/span><\/h2><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\nAn Insurance Surety Bond (isb) is a three-party agreement<\/em> That provides financial assurance to one party (the beneficiary) by another party (the surety or bonding company) on behalf of a third party (the principal).<\/p>\nIsb ensures that the principal fulfils their contractual obligations<\/em>.<\/p>\n<aside class=\"note\">The key distinction from a Bank Guarantee: Unlike a Bank Guarantee, it is a type of premium-based insurance product<\/em> AND does not require a deposit of a collateral amount by the principal with the surety<\/em>.<\/p><\/aside>\nThe three parties:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Party<\/th><th>Who it is<\/th><\/tr><\/thead><tbody><tr><td>1. Principal<\/td><td>The party that obtains<\/em> the surety bond \u2014 typically the contractor or service provider<\/em> who provides the Bid\/ performance security to the Procuring Entity<\/td><\/tr><tr><td>2. Beneficiary<\/td><td>The party (procuring Entity<\/em>) that requires<\/em> the Insurance surety bond. The beneficiary seeks financial protection in case the principal fails to meet their obligations<\/td><\/tr><tr><td>3. Surety insurer<\/td><td>The bond-issuing entity (bank or insurance company)<\/em>. They act as a guarantor<\/em>, assuring the beneficiary that the principal will perform as promised<\/td><\/tr><\/tbody><\/table><\/div>\nthe default procedure and its two timelines:<\/p>\nIf the principal defaults, the surety insurer assesses the extent of default and determines the amount payable<\/em> Under the bond. If the principal does not pay within 14 DAYS<\/em>, the surety insurer pays within 45 calendar days<\/em> Of receiving the necessary documentation.<\/p>\n<\/div><h2 class=\"src-G srchead\" data-src=\" G \">6.5<\/span>Electronic Bank Guarantee (e-BG)<\/span>G<\/span>text; W\/C\/NC cross-refer to Goods para 6.1.4<\/span><\/h2><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\n1. What it is: Electronic Bank Guarantee is a dematerialised Bank Guarantee processed on national e-governance services limited (NeSL)<\/em> \u2014 AN information utility registered with the insolvency and bankruptcy board of India<\/em>, under the aegis of the insolvency and bankruptcy code.<\/p>\nIt handles all lifecycle events of e-bg<\/em> \u2014 execution by the issuing bank, intimation to and verification by the beneficiary, amendment, invocation or release by the beneficiary, cancellation, etc.<\/p>\nThe facility is available 24\/7, including non-working days<\/em>. Beneficiaries and banks can continue to use their own BG templates<\/em>.<\/p>\nAll bidders May be encouraged to submit e-bgs instead of traditional paper-based bank guarantees<\/em>.<\/p>\n2. Creation of e-BG: The procuring Entity should ensure that the bidder\/ contractor is informed (in the tender documents) of its unique identity number (UIN \u2014 which can be allotted by its bank) and email id<\/em>.<\/p>\nA clause regarding e-bgs May be included in the tender<\/em>, acknowledging and accepting the use of e-bgs as a valid form of Bank Guarantee for the tender process. The Procuring Entity May reserve the right to verify the authenticity of e-bgs<\/em> And take necessary actions in case of discrepancies.<\/p>\nThe UIN and email id of the beneficiary are specified by the issuing bank when creating the e-bg on the NeSL portal<\/em>, upon being approached by the bidder\/ contractor. On creation of e-bg, it is stored on the NeSL portal<\/em>.<\/p>\n3. Intimation to Beneficiary: NeSL shall send a notification to the email id of the beneficiary provided by the issuing bank<\/em> (As well as the beneficiary's registered email id) during issuance or subsequent event of e-bg (amendment\/ invocation, release\/ cancellation, etc.).<\/p>\nThe Procuring Entity can receive the email notification without registration<\/em> \u2014 BUT such an email shall not have the e-bg document attachment<\/em>.<\/p>\nThe issuing Bank can also arrange to forward the e-bg to the beneficiary through the applicant or any other mechanism<\/em>.<\/p>\n4. Registration and login: Beneficiaries and their authorised representatives must register with NeSL using UIN and email id<\/em>. They must log in to the NeSL portal using the same details to view, download, verify, or release\/ invoke<\/em> THE e-BG.<\/p>\nIntegration with Government procurement portals (CPPP, GeM, State govt procurement portals<\/em>) IS being explored<\/em> To facilitate e-bg access without needing to log into the NeSL portal.<\/p>\n5. EASY VERIFICATION \u2014 the significant benefit: Verification of the e-BG stored in NeSL is sufficient<\/em>, AND verification with the issuing bank is not required<\/em>. This is a significant benefit for procuring entities<\/em>.<\/p>\n6. Invocation and release: The e-bg process through NeSL facilitates beneficiaries submitting requests for invocation or any other consents through digitally signed submission in the NeSL portal \u2014 without the need to approach the issuing bank<\/em>.<\/p>\n<\/div><h2>6.6<\/span>Warranty Bank Guarantee [G ONLY]<\/span><\/h2>\nIn the case of works and capital equipment<\/em>, there is usually a defect liability\/ warranty clause<\/em> Against defects arising from design, material, workmanship, or any omission on the part of the vendor\/ contractor<\/em> During a specified period of months from the date of commissioning or the date of dispatch in case of goods \u2014 whichever is earlier<\/em>.<\/p>\nThe general Rule: In such cases, the performance guarantee is to be valid up to 60 (sixty) days beyond the warranty period<\/em>.<\/p>\nThe permitted alternative \u2014 the swap:<\/p>\nIt is normally permissible in such a situation to allow:<\/p>\n<ul class=\"lst\"><li>THE performance guarantee<\/em> To be valid up to 60 (sixty) days beyond the delivery\/ commissioning period<\/em>; AND<\/li><li>the contractor to submit a fresh warranty Bank Guarantee of 10 (ten) per cent of the value of the goods<\/em>, in the currency of the contract, valid up to 60 (sixty) days beyond the warranty period<\/em>.<\/li><\/ul>\nIn such cases, the performance guarantee is to be returned only after satisfactory delivery\/ commissioning and receipt of such a warranty Bank Guarantee<\/em>.<\/p>\nWhen no warranty clause is called for: In the procurement of goods other than capital equipment<\/em> \u2014 and in the case of low-value capital goods, say up to rupees one lakh<\/em> \u2014 a warranty clause is not called for<\/em>.<\/p>\n<h2>6.7<\/span>Verification of Bank Guarantees<\/span><\/h2>\n1. The general Rule: Bank guarantees submitted by the bidders\/ suppliers\/ contractors\/ consultants\/ service providers as EMD\/ performance securities need to be immediately verified from the issuing bank before acceptance<\/em>.<\/p>\nThere May not be any need to get the Bank Guarantee vetted by legal\/ finance authority if it is in the specified format<\/em>.<\/p>\n The five verification guidelines<\/strong>(for BGs against EMD\/ performance security\/ advance payments and for various other purposes)<\/em>:<\/p>\nA) BG shall be as per the prescribed formats<\/em>.<\/p>\nB) the BG contains the name, designation and code number of the bank officer(s) signing the guarantee(s)<\/em>.<\/p>\nc) THE address and other details (including telephone no.) of the controlling officer of the bank<\/em> Are obtained from the branch of the bank issuing the BG \u2014 this should be included in all bgs<\/em>.<\/p>\nd) the confirmation channels \u2014 and the Works addition:<\/p>\nThe confirmation from the issuing branch of the bank is obtained in writing<\/em> Through:<\/p>\n<aside class=\"note\">G<\/span>:<\/strong>Registered post\/ speed post\/ courier\/ SFMS<\/em> On the official portal of the Procuring Entity<\/p>\nW<\/span>:<\/strong>Registered post\/ speed post\/ courier\/ official email-id of the bank<\/em>\/ SFMS on the official portal of the Procuring Entity<\/p><\/aside>\nthe bank should be advised to confirm the issuance of the bgs \u2014 specifically quoting the letter of the Procuring Entity \u2014 on the printed official letterhead of the bank<\/em>, indicating the address and other details (including telephone nos.) of the bank and the name, designation and code number of the officer(s) confirming the issuance<\/em>.<\/p>\nE) the interim route: Pending receipt of confirmation as above, confirmation can also be obtained with the help of the responsible officer at the field office which is close to the issuing branch of the bank<\/em> \u2014 who should personally obtain the confirmation<\/em> From the issuing branch and forward the confirmation report<\/em> To the concerned Procuring Entity.<\/p>\n2. Genuineness: BANK GUARANTEES \u2014 either received in physical form or electronic form<\/em> \u2014 should be verified for their genuineness following the prescribed method<\/em>, and the organisations should do due diligence on the genuineness of the bank guarantees before acceptance<\/em>.<\/p>\n3. What is not acceptable: Corporate guarantee or indemnity bond shall NOT<\/em> Be accepted for bid Security (EMD) or Performance Security, or in lieu of any other Bank Guarantee<\/em> (e.g., for advance payment\/ warranty obligations).<\/p>\n4. Please note the ease with which an e-bg can be verified<\/em> (para 6.5-5 above).<\/p>\n<h2>6.8<\/span>Safe Custody and Monitoring of EMDs, Performance Securities and Other Instruments<\/span><\/h2>\n1. The mechanism: A suitable mechanism for safe custody and monitoring<\/em> Of emds, performance securities, and other instruments should be developed and implemented by each Procuring Entity<\/em>.<\/p>\nThe ministries\/ departments shall also make institutional arrangements for taking all necessary actions on time<\/em> FOR:<\/p>\n<aside class=\"note\">Extension \u00b7 G<\/span> Forfeiture\/ encashment \u00b7 W<\/span> Encashment \u00b7 or refund of emds and performance securities, as the case May be.<\/p><\/aside>\n2. The monthly review Rule: Monitoring should also include a monthly review of all bank guarantees and other instruments expiring in the next three months<\/em> \u2014 along with a review of the progress of the corresponding contracts<\/em>.<\/p>\n3. The extension Rule and the absolute prohibition: Extension of bank guarantees and other instruments, where warranted, should be sought immediately and implemented within their validity period<\/em>.<\/p>\n<aside class=\"note\">\"bank Guarantee should never be handed over to the supplier\/ contractor for the purpose of extension of validity<\/strong>.\"<\/p><\/aside>\nsuch a system of monitoring of securities and other instruments May be computerised with automatic alerts about lapse of validity<\/em>, ETC.<\/p>\n<h2>6.9<\/span>Insurances and Indemnities [W ONLY]<\/span><\/h2><h3>6.9.1<\/span>Insurances<\/span><\/h3>\nIN works and services contracts<\/em>, the contractor must take insurances against vicarious liabilities that May arise for the Procuring Entity<\/em> \u2014 i.e., under labour laws and workmen compensation<\/em>.<\/p>\n<aside class=\"note\">(This connects directly to the Law of Agency<\/strong> at para 1.15 of this Unified Manual \u2014 the Procuring Entity is vicariously liable for the acts of its agent.)<\/em><\/p><\/aside>\n<h3>6.9.2<\/span>Indemnity\/ Indenture Bonds<\/span><\/h3>\na) why they are needed: The Procuring Entity is potentially liable for injury, damage, or loss relating to a third party due to actions by the contractor during execution of the contract<\/em>.<\/p>\nViolation of laws and regulations (e.g., environmental issues<\/em>) also May result in liabilities for the Procuring Entity.<\/p>\nThe Procuring Entity also needs to be protected against damage to its assets during contract execution<\/em>. For such potential liabilities, instead of insurance, an indemnity bond May suffice<\/em>.<\/p>\nB) the statutory definition: Indemnity bonds are defined under section 124 of the Indian Contract Act<\/em>:<\/p>\n<aside class=\"note\">\"A contract by which one party promises to indemnify the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person, is called a contract of indemnity.\"<\/em><\/p><\/aside>\nit is also called an indenture bond<\/em> \u2014 especially in the context of secured advance payments in works contracts<\/em>.<\/p>\nAn indemnity bond is a bond intended to provide financial reimbursement to the holder for any actual or claimed harm\/ loss caused by the issuer's conduct or another person's conduct<\/em>.<\/p>\nIn many cases this could be an alternative to a BG \u2014 especially where the financial implication of default cannot be estimated<\/em>.<\/p>\nSome government departments (forest, mines, geology, environment, traffic<\/em>) may also ask for such bonds to allow a Contractor to carry out work related to their jurisdiction.<\/p>\nC) the three parties:<\/p>\n<ul class=\"lst\"><li>i) ISSUER<\/strong> \u2014 is legally required to obtain<\/em> a bond.<\/li><li>ii) HOLDER<\/strong> \u2014 is the party that imposes the bonding<\/em>. In some cases, as an added confidence, a third party 'surety provider' (usually a bank) is added<\/em>.<\/li><li>iii) SURETY (say a bank or the holding company of the issuer)<\/em> \u2014 guarantees the financial compensation if the issuer dithers or fails to guarantee.<\/li><\/ul>\nd) the critical weakness \u2014 why a BG is safer:<\/p>\nWhen getting indemnity bonds, the issuer signs an indemnity agreement with the surety provider, naming the holder as the beneficiary<\/em>, and submits it to the holder. It states that the full financial responsibility in case of bond claims belongs to the issuer rather than the surety<\/em>.<\/p>\nIn case the issuer does not perform his obligations and dithers or fails to compensate<\/em> The holder as per the indemnity bond, the only recourse is a civil case in the courts<\/em>.<\/p>\nSince this is a long-drawn and expensive proposition<\/em>, a BG is considered a safer option than an indemnity bond<\/strong>.<\/p>\n<h2>6.10<\/span>Payment Clause \/ Payment Terms<\/span><\/h2><h3>6.10.1<\/span>Elements of Price<\/span><\/h3>\n1. What determines the elements: The elements of price included in the quotation of a bidder depend on:<\/p>\n<aside class=\"note\">THE nature of the goods to be supplied\/ services to be performed<\/em> And the allied services \u00b7 the location of the supplier\/ consultant<\/em> \u00b7 THE location of the user<\/em> \u00b7 terms of delivery<\/em> \u00b7 extant Rules and regulations about taxes, duties<\/em> And so on, of the seller's country and the buyer's country<\/p><\/aside>\n2. The category-specific elements:<\/p>\nG<\/span> GOODS:<\/p>\n<ul class=\"lst\"><li>Indigenous goods: The main elements May include raw material, production cost, overhead, packing and forwarding charges, margin of profit, transit insurance, excise duty and other taxes and duties as applicable.<\/li><li>Imported goods:<\/strong> in addition to elements similar to the above (other than excise duty and taxes<\/em>), there may be customs duty, import duty, landing and clearing charges, and commission to Indian agents<\/strong>.<\/li><li>Further, depending on the nature of the goods, there may be cost elements towards installation and commissioning, operator's training<\/em>, and so on.<\/li><\/ul>\nNC<\/span> Non-consultancy \u2014 the admeasurement-driven price structure (unique to nc):<\/p>\n<aside class=\"note\">In case of non-consultancy services, the elements of price would depend on whether it is an input or output admeasurement contract<\/em>:<\/p>\n<ul class=\"lst\"><li>In case of input admeasurement<\/em> \u2014 unit price of each element, service charges and taxes thereon<\/em> Shall be the elements of the price Schedule. There May be miscellaneous costs also, other than inputs<\/em>.<\/li><li>In case of output admeasurement<\/em> \u2014 unit price of services delivered and taxes thereon<\/em> Shall be the elements of the price Schedule.<\/li><\/ul><\/aside>\n3. C<\/span> + NC<\/span> \u2014 the necessity of specifying delivery terms: It is therefore necessary that \u2014 to enable the bidders to frame their quotations properly in a meaningful manner<\/em> \u2014 the tender documents should clearly specify the desired terms of delivery and also the respective duties and responsibilities to be performed by the consultant\/ service provider and the Procuring Entity<\/em>.<\/p>\n4. Cost break-up (all four): Where the price has several components \u2014 such as the price of the goods, cost of installation and commissioning, operators' training<\/em>, and so on \u2014 bidders should be asked to furnish a cost break-up indicating the applicable prices and taxes for each of such components along with the overall price<\/em>. THE payment Schedule and terms will be linked to this cost break-up<\/em>.<\/p>\n5. CURRENCY \u2014 the general rule (all four):<\/p>\nThe tender documents are to specify the currency (currencies) in which the tenders are to be priced<\/em>.<\/p>\nAs a general Rule:<\/p>\n<ul class=\"lst\"><li>Domestic bidders are to quote and accept their payment in Indian currency<\/em>;<\/li><li>Indian agents of foreign suppliers\/ consultants\/ service providers are to receive their agency commission in Indian currency<\/em>;<\/li><li>Costs of imported goods\/ services directly imported against the contract<\/em> MAY BE quoted in foreign currency (currencies) and paid accordingly in that currency<\/em>;<\/li><\/ul>\n<aside class=\"note\">(NC<\/span> phrases this as: \"costs of services which are delivered from abroad or by foreign nationals against the contract\")<\/em><\/p><\/aside>\n<ul class=\"lst\"><li>the portion of the allied work and services to be undertaken in India<\/em> (like installation and commissioning of equipment) are to be quoted and paid in Indian currency<\/em>.<\/li><\/ul>\nG<\/span> \u2014 the additional GTE currency Rule: For domestic bidding<\/em>, regardless of whether the bidder is foreign or Indian, the currency of the bid and payment should be entirely in Indian rupees<\/em>. In GTE, foreign bidders have flexibility to quote in INR or freely convertible currencies<\/em> \u2014 but prices for goods, works or services (including agency commission) performed or sourced in India must be quoted and paid for in Indian rupees<\/em>. Indian bidders are required to quote in INR only<\/em>.<\/p>\n<h3 class=\"src-G srchead\" data-src=\" G \">6.10.2<\/span>Payment to Suppliers \u2014 the Ten Obligations<\/span>G<\/span><\/h3><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\nThe governing principle: In a supply contract, the delivery of goods is the essence of the contract for the purchaser<\/em>. Similarly, receiving timely payment for the supplies is the essence of the seller's contract<\/em>.<\/p>\nA healthy buyer-supplier relationship is based on the twin foundation of timely and quality supply on the one hand, and prompt and full payment to the supplier on the other<\/em>.<\/p>\nIt should be ensured that all payments due to the firm \u2014 including the release of the Performance Security \u2014 are made on a priority basis without avoidable delay<\/em> As per the tender\/ contract conditions:<\/p>\nA) as far as possible, the payment terms and time Schedule should be given in the contract and must be adhered to<\/em>. Any foreseeable payment delays should be communicated to the suppliers in advance<\/em>.<\/p>\nB) the tax certificate obligation: Prompt and timely provision of statutory certificates to the seller for taxes deducted at source is as much a part of the payment as the amount actually released<\/em>.<\/p>\nA detailed payment advice showing the calculations and reasons for the amounts disallowed and taxes deducted must be issued to the supplier along with payment<\/em>. As soon as possible \u2014 but not later than the date of submission of tax returns<\/em> \u2014 the Procuring Entity must provide the statutory certificates for the taxes deducted, so that he can claim set-offs and refunds<\/em> From the concerned authorities. As far as MSME suppliers<\/em> Are concerned, the MSME Act 2006<\/em> Has provisions for timely payments within 45 days<\/em>, AND A levy of penal interest for delayed payment<\/em>, AND arbitration\/ conciliation for related complaints by Micro and Small Enterprises facilitation councils<\/em>.<\/p>\nC) release of payment and settlement of the final bill should be processed through the associated\/ integrated finance<\/em> As per the terms and conditions of the contract.<\/p>\nD) the absolute bar: No payments to contractors by way of compensation or otherwise \u2014 outside the strict terms of the contract or more than the contract rates \u2014 should be allowed<\/em>.<\/p>\nE) before the payment is made, the invoice should be cross-checked with the actual receipt of material\/ assets\/ services<\/em>, to ensure that the payment matches the actual performance<\/em>.<\/p>\nF) the contractor's certificate: While claiming the payment, the contractor must certify on the bill that the payment being claimed is strictly within the terms of the contract, and that all the obligations on his part for claiming this payment have been fulfilled<\/em>.<\/p>\nThere should also be a suitable provision for verification of the authenticity of the person signing the invoice<\/em>, and so on, to claim the payment.<\/p>\n<\/div><h3>6.10.3<\/span>Payment Terms in WORKS [W ONLY]<\/span><\/h3>\n<aside class=\"note\">The Works Manual replaces the \"Payment Clause\" with a six-part \"Payment Terms\" section built around the construction cycle.<\/p><\/aside>\n1. Variations in works contract:<\/p>\nVariations can include:<\/p>\n<aside class=\"note\">Changes in the quantity, character, quality, or kind of work<\/em> \u00b7 changes in levels, lines, positions, and dimensions<\/em> \u00b7 additional work necessary for completion<\/em> \u00b7 and changes in the sequence or timing<\/em> Of construction<\/p><\/aside>\nA written procedure must be part of the contract for issuing variation instructions<\/em>.<\/p>\nThe engineer needs prior approval from the Procuring Entity before instructing a variation<\/em> \u2014 except in certain situations specified in the SCC.<\/p>\nVariations are tracked using a variations register<\/em>. The register is updated monthly and summarised<\/em> To keep all involved agencies informed.<\/p>\nThe engineer must balance the risks of quick finalisation against the costs of delays<\/em>.<\/p>\nVariations involving extra costs are valued as per the contract's relevant clauses<\/em>. The engineer consults with the Procuring Entity and contractor to agree on suitable rates for items beyond the sor<\/em>.<\/p>\nThe financial implications of variations are kept up to date<\/em>, AND any significant cost and time overruns due to deviations must be reported to the Procuring Entity<\/em>.<\/p>\n2. Measurement and payment \u2014 the Measurement Book regime:<\/p>\nAll items with financial value shall be recorded in Measurement Books (mb) or level field books<\/em>, to maintain a complete record of the work performed<\/em> Under the contract.<\/p>\nMeasurements and levels are taken and signed jointly by the designated official and the contractor<\/em>.<\/p>\nThe contractor shall \u2014 without extra charge<\/em> \u2014 provide all assistance with every appliance, labour and other things necessary for measurements and recording levels<\/em>.<\/p>\nThe contractor shall not cover (or place it beyond reach) the work without written consent from the Procuring Entity<\/em> \u2014 otherwise the contractor shall have to uncover it at their own expense, or they will not be paid for that work<\/em>.<\/p>\nOrganisations are encouraged to implement electronic Measurement Books (e-mbs) and integrate them with it-based project monitoring systems<\/em>.<\/p>\n3. Interim payments and the Interim Payment Certificate (IPC):<\/p>\nPayment provisions \u2014 including amounts to be paid, Schedule of payments, and payment procedures<\/em> \u2014 shall be indicated in the tender document and also in the contract.<\/p>\nPayment terms prescribed in the tender document should be such that the payment made to contractors at every stage is commensurate with the quantum of work done<\/em> \u2014 subject to any requirements for initial mobilisation.<\/p>\nEach month, the contractor submits a statement showing the amounts they consider themselves entitled to<\/em>.<\/p>\nThe engineer issues an interim Payment Certificate (IPC)<\/em> AFTER:<\/p>\n<aside class=\"note\">Verifying the quantity of work completed<\/em> \u00b7 reconciling field measurements<\/em> \u00b7 reviewing claims for extra work<\/em> \u00b7 checking retention amounts<\/em> \u00b7 AND making price adjustments<\/em><\/p><\/aside>\ninterim monthly payments are made based on the IPC \u2014 net of retentions, recovery of advances, and statutory deductions<\/em>.<\/p>\n<aside class=\"note\">The critical saving clause: \"recording of measurements of any item of work in the Measurement Book and\/ or its payment in the interim, on account or final bill, shall not relieve the contractor from liabilities from any over-measurement or defects noticed till completion of the defects liability period \u2014 and IPC or final completion certificates issued are subject to modification in this regard<\/strong>.\"<\/p><\/aside>\n4. Delay in payments to contractors \u2014 the four hard timelines:<\/p>\nDelays in eligible payments to contractors can lead to project delays, cost overruns, and disputes<\/em>.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>Timeline<\/th><\/tr><\/thead><tbody><tr><td>Ad-hoc payment of at least 75%<\/em> of the eligible running account bill<\/td><td>must be made within 10 working days<\/em> Of bill submission<\/td><\/tr><tr><td>The REMAINING payment<\/td><td>should be made within 28 working days<\/em><\/td><\/tr><tr><td>if payments are delayed beyond 10 working days<\/td><td>A written explanation must be submitted to the next higher authority within three working days<\/em><\/td><\/tr><tr><td>if bills are delayed by more than 30 working days<\/td><td>public authorities May include a provision for interest payments \u2014 at the rate of interest in general provident fund<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n5. Final bills: The final bill must be submitted by the contractor in the same manner as interim bills<\/em>, within a specified time after the physical completion of work and the issuance of the final certificate of completion (FCC)<\/em> By the Department\/ Ministry.<\/p>\nPayment is made after verifying the bill on the personal certificate of the officer-in-charge<\/em>, who confirms that the work has been executed as per the contract specifications and industry standards<\/em>.<\/p>\nFinal payment should be paid to the contractor within three months after completion of work<\/em>.<\/p>\n<h3>6.10.4<\/span>Modes of Payment (common to all four)<\/em><\/span><\/h3>\nA) electronic by default: Procuring entities should make payments through the electronic clearance system (ECS)<\/em> \u2014 e.g., real-time gross settlement systems (RTGS), national electronic funds transfer (NEFT), or electronic payment gateways<\/em>.<\/p>\nAs per RBI guidelines, the ECS mandate in rbi's format May be obtained at the time of supplier\/ contractor\/ consultant\/ service provider registration and in the tender document<\/em>. The Format is available with all Banks.<\/p>\nb) The exception: HOWEVER, if ECS payments are not feasible<\/em>, payments May be made in exceptional circumstances by cheque\/ demand draft drawn on a Government treasury or branch of RBI, or any scheduled bank authorised by RBI for transacting Government business<\/em>.<\/p>\nC) payment to the supplier's bank \u2014 G<\/span> Only: Such payment can also be made to the supplier's bank<\/em>, if the bills are endorsed in favour of the bank with a pre-receipt embossed on the bills with the words \"received payment\"<\/em>, and the supplier authenticates both the endorsement and pre-receipt<\/em>. In addition, an irrevocable power of attorney is to be granted by the supplier in favour of the bank<\/em>.<\/p>\nD) TReDS (all four): Trade receivables discounting system (TReDS) is an electronic platform for facilitating the financing\/ discounting of trade receivables of MSMEs through multiple financiers<\/em>.<\/p>\nThese receivables can be due from corporates and other buyers, including Government departments and PSUs<\/em>.<\/p>\nPayments can also be made through this platform to MSE suppliers\/ contractors\/ consultants\/ service providers<\/em>.<\/p>\n<h2>6.11<\/span>Terms of Payment<\/span><\/h2><h3 class=\"src-G srchead\" data-src=\" G \">6.11.1<\/span>Terms of Payment for DOMESTIC GOODS<\/span>G<\/span><\/h3><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\n1. The governing consideration: Terms of payment May be decided by the Procuring Entity safeguarding its interest<\/em>, based on the terms of delivery, nature of goods, type of inspection, mode of transport and risks<\/em> In such situations.<\/p>\n2. The four standard payment patterns:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Terms of delivery<\/th><th>Payment term<\/th><\/tr><\/thead><tbody><tr><td>FOR destination\/ delivery at site (no installation)<\/em><\/td><td>100% on receipt and acceptance of goods by the consignee and on the production of all required documents by the supplier<\/td><\/tr><tr><td>fOR dispatching station<\/strong>(no installation)<\/em><\/td><td>60 TO 90% ON proof of dispatch<\/em> And other related documents; Balance on receipt at site and acceptance by the consignee<\/em>(depending on the value and nature of the goods, mode of transportation, and so on)<\/em><\/td><\/tr><tr><td>fOR dispatching station<\/strong>(with installation and commissioning)<\/em><\/td><td>60% on proof of dispatch along with other specified documents \u00b7 30% on receipt of the goods at the site by the consignee \u00b7 balance 10% on successful installation and commissioning and acceptance by the consignee<\/em><\/td><\/tr><tr><td>fOR destination\/ delivery at site<\/strong>(with installation and commissioning)<\/em><\/td><td>90% on receipt and acceptance of goods by the consignee at destination and on production of all required documents \u00b7 balance 10% on successful installation and commissioning and acceptance<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">the note that matters: \"generally \u2014 especially for goods requiring installation and commissioning at the site by the supplier \u2014 the desirable terms of delivery are FOR destination\/ delivery at the site, so that the supplier remains responsible for the safe arrival of the ordered goods at the site. Therefore, unless otherwise decided, ex-works or FOR dispatching station terms should be avoided<\/strong>.\"<\/p><\/aside>\n3. The six documents for payment for domestic goods:<\/p>\n<ol class=\"lst\"><li>Supplier's invoice<\/strong>indicating, inter alia, description and specification of the goods, quantity, unit price, total value<\/em>;<\/li><li>Packing list;<\/li><li>Insurance certificate;<\/li><li>Proof of dispatch: Railway receipt\/ consignment note;<\/li><li>Quality assurance certificates:<\/strong>(a) manufacturer's guarantee certificate or in-house inspection certificate; Or (b) inspection certificate issued by purchaser's inspector<\/em>;<\/li><li>Any other document(s) as and if required in terms of the contract.<\/li><\/ol>\n<\/div><h3 class=\"src-multi srchead\" data-src=\" C NC \">6.11.2<\/span>Terms of Payment for SERVICES<\/span>C<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\">\n1. The standard term:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-C\" data-src=\" C \">C<\/span> Consultancy:<\/strong>The usual payment term is 100 (hundred) per cent on receipt and acceptance of deliverables by the Procuring Entity<\/strong><\/em>, and on production of all required documents by the consultant.<\/li><li class=\"srcmark src-NC\" data-src=\" NC \">NC<\/span> Non-consultancy:<\/strong>The usual payment term is 100 (hundred) per cent on acceptance of delivered services by the ultimate user<\/strong><\/em>, and on production of all required documents by the service provider.<\/li><\/ul>\n<aside class=\"note\">Note the divergence: acceptance by the procuring Entity<\/em> (C) vs. by the ultimate user<\/em> (NC).<\/p><\/aside>\n2. Payment provisions \u2014 including amounts to be paid, Schedule of payments, and payment procedures<\/em> \u2014 shall be indicated in the RfP\/ tender document and also in the contract<\/em>.<\/p>\nPayments May be made at regular intervals (as under time-based contracts)<\/em> OR for agreed outputs (as under lump sum contracts)<\/em>.<\/p>\n<\/div><h2>6.12<\/span>Terms of Payment for IMPORTED GOODS, and the Letter of Credit [G ONLY]<\/span><\/h2><h3>6.12.1<\/span>Terms of Payment<\/span><\/h3>\nUsual payment terms, unless otherwise directed by ca<\/em>:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Situation<\/th><th>Payment<\/th><\/tr><\/thead><tbody><tr><td>Installation, erection, and commissioning are NOT<\/em> the responsibility of the supplier<\/td><td>100% net price is to be paid against the production of stipulated documents<\/em><\/td><\/tr><tr><td>Installation, erection and commissioning ARE<\/em> the responsibility of the supplier<\/td><td>80\u201390% of the net price against production of stipulated documents; Balance within 21\u201330 (twenty-one to thirty) days of successful installation and commissioning at the consignee's premises and acceptance by the consignee<\/em><\/td><\/tr><tr><td>agency commission<\/td><td>THE entire 100% agency commission is paid (in equivalent non-convertible Indian rupees based on bc selling rate of exchange) after all other payments have been made to the supplier in terms of the contract<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<h3>6.12.2<\/span>Modes of Payment for Imported Goods<\/span><\/h3>\n1. Statutory compliance: It should be ensured that the imports into India conform with the export-import policy in force<\/em>; FEMA; FEMA (current account transactions) Rules, 2000; And directions issued by RBI under FEMA from time to time<\/em>.<\/p>\n2. The LC route: For imported goods, payment usually happens through the letter of Credit (LC)<\/em> Opened by the State bank of India or any other commercial bank<\/em> As decided by the Procuring Entity.<\/p>\nThe amount of LC should be equal to the total payable amount<\/em> And be released as per the clauses mentioned above. If the LC is not opened, payment can also be made to the seller through a direct bank transfer<\/em> \u2014 for which the buyer has to ensure that payment is released only after the receipt of prescribed documents<\/em>.<\/p>\n3. LC for domestic bidders too: To have uniform payment clauses in GTE tenders for foreign and domestic bidders<\/em>, the Procuring Entity May include a provision in its tender conditions \u2014 on the merits of the case, especially high-value contracts for sophisticated equipment\/ machinery<\/em> \u2014 allowing payment through LC to domestic bidders also<\/em>.<\/p>\n<h3>6.12.3<\/span>Documents for Payment for Imported Goods<\/span><\/h3>\nThe documents needed from the supplier are to be clearly specified in the contract<\/em>. The paying authority also verifies the documents received from the supplier with corresponding stipulations made in the contract before releasing the payment<\/em>. Documents are specified in the Letter of Credit but usually are:<\/p>\n<ol class=\"lst\"><li>Supplier's original invoice<\/strong> giving full details of the goods, including quantity, value, and so on;<\/li><li>Packing list;<\/li><li>Certificate of country of origin<\/em> Of the goods<\/strong> \u2014 to be given by the seller, or a recognised chamber of commerce, or another agency designated by the local Government<\/em> for this purpose;<\/li><li>Quality assurance certificates:<\/strong>(a) certificate of pre-dispatch inspection by the purchaser's representative; Or (b) manufacturer's test certificate and guarantee<\/em>;<\/li><li>Certificate of insurance;<\/li><li>Bill of Lading\/ airway bill\/ rail receipt<\/strong> or any other dispatch document issued by a Government agency (like the Department of Posts) or a duly authorised agency, indicating:<\/li><\/ol>\n<aside class=\"note\">A) name of the vessel\/ carrier \u00b7 b) Bill of Lading\/ airway bill \u00b7 c) port of loading \u00b7 d) date of shipment \u00b7 e) port of discharge and expected date of arrival of goods \u00b7 f) any other document(s) as required<\/p><\/aside>\n<h3>6.12.4<\/span>Air Freight Charges and Air Freight Consolidators<\/span><\/h3>\ngoods that are required to be airlifted are to be dispatched on a 'charge forward basis'<\/em>. All air freight charges shown on the relevant consignment note as chargeable to the consignee<\/em> Are to be paid to the airline in rupees<\/em>.<\/p>\nThe consolidator device: Some organisations need to import sophisticated instruments, tools, and kindred goods<\/em>. These are small in size and very delicate\/ fragile in nature<\/em>. Such goods invariably need to be airlifted<\/em> \u2014 but, quite naturally, form a small part of the air cargo carried by aircraft<\/em>.<\/p>\nFor such imports, procuring entities May engage air freight consolidators<\/em>, WHO consolidate the small air cargo of different customers and airlift them from one airport to another<\/em>.<\/p>\nThe hiring of airfreight consolidators' services should be done transparently, following standard principles of Public Procurement<\/em>.<\/p>\n<h3>6.12.5<\/span>Letter of Credit (LC)<\/span><\/h3>\n1. The four parties to the LC:<\/p>\nThe purchaser forwards a request to its bank (called the issuing bank<\/em>) in their prescribed format, along with all relevant details, including an authenticated copy of the contract<\/em>.<\/p>\nBased on this, the issuing bank opens the LC \u2014 promising to pay the specified amount to the supplier's (beneficiary's) bank <\/strong>based solely on the documents presented by the supplier as specified in the LC conditions, without physically ascertaining the shipment of goods<\/em>.<\/strong><\/p>\nThe issuing bank arranges with a bank in the supplier's region (called the advising bank<\/em>) to notify the supplier and his bank of the availability of the LC<\/em>.<\/p>\nSince the supplier May not be comfortable with the issuing bank<\/em>, it May ask a bank he trusts (called the confirming bank<\/em>) TO add a guarantee to ensure payments by the issuing bank<\/em>.<\/p>\n2. The five risks involved:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Risk<\/th><th>Description<\/th><\/tr><\/thead><tbody><tr><td>A) commercial risk<\/td><td>non-payment due to buyer's financial distress<\/em><\/td><\/tr><tr><td>b) global risk<\/td><td>political instability \u00b7 currency fluctuations \u00b7 import\/ export restrictions \u00b7 disruptions in international logistics<\/td><\/tr><tr><td>c) documentary risk<\/td><td>discrepancies in submitted documents, or interpretation of documents and LC conditions by various parties involved<\/em><\/td><\/tr><tr><td>d) BANK RISK<\/td><td>BANK insolvency or non-performance<\/em><\/td><\/tr><tr><td>e) FRAUD<\/td><td>shipment May not be physically dispatched<\/em>, OR dispatched in damaged condition or with inadequate packaging<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n3. The four precautions:<\/p>\nA) care should be taken to ensure that all details in the LC<\/em> \u2014 such as product description, quantity, payment terms, documents to be produced, LD clause, and shipping terms<\/em> \u2014 ARE accurate and identical to those shown in the contract, to avoid discrepancies<\/em>.<\/p>\nB) frequent amendments can lead to delays and complications<\/em>. Suppliers May use their own delays in supplies by asking for unnecessary amendments to LC (or contract)<\/em>.<\/p>\nC) provisions of uniform customs and practices for documentary credits (UCP 600)<\/em> Should be adhered to while opening the LC for import into India.<\/p>\n<aside class=\"note\">Footnote: The Uniform Customs and Practice for Documentary Credits (UCPDC or simply UCP)<\/strong> is a set of rules regarding techniques and methods for handling LCs in international trade finance, standardised by the International Chamber of Commerce<\/strong> \u2014 the current version being UCP 600<\/strong>.<\/em><\/p><\/aside>\nD) the seller must present documents in time within the tenure of the LC<\/em> To receive payment, and the documents submitted must match the LC requirements<\/em>.<\/p>\n4. The six charges and who bears them:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Charge<\/th><th>Borne by<\/th><\/tr><\/thead><tbody><tr><td>A) opening charges<\/strong>(including commitment fees<\/strong> \u2014 charged for the LC's validity period \u2014 and usance fees<\/strong>, if the LC allows deferred payment)<\/em><\/td><td>the Procuring Entity<\/td><\/tr><tr><td>b) advising fee<\/td><td>paid by the issuing bank to the advising bank \u2014 and is included in charges to the Procuring Entity<\/em><\/td><\/tr><tr><td>c) confirming bank's fee (if applicable)<\/em><\/td><td>paid to the confirming bank by the supplier<\/em><\/td><\/tr><tr><td>d) extension\/ amendment fee<\/strong>(when an LC needs to be extended or amended due to changes in delivery dates, terms, or other conditions)<\/em><\/td><td>THE party requesting<\/em> The extension or amendment (purchaser or seller)<\/td><\/tr><tr><td>e) retirement charges<\/td><td>levied by the supplier's (beneficiary's) bank on the supplier<\/em> To handle payment from the issuing bank<\/td><\/tr><tr><td>f) other charges<\/td><td>reimbursements for foreign trade law-related obligations<\/em>, if any, to be borne by the party of that country<\/em>.<\/strong>For example, if there are specific legal requirements related to foreign exchange regulations or documentation in the exporting country, the Seller<\/strong> may need to cover these. If there are specific taxes for foreign exchange remittances<\/strong>, then the purchaser<\/strong> may bear such charges.<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n5. The seven types of LC:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Type<\/th><th>Meaning<\/th><\/tr><\/thead><tbody><tr><td>A) revocable LC<\/td><td>CAN BE modified or cancelled without notice<\/em><\/td><\/tr><tr><td>b) irrevocable LC<\/td><td>cannot be amended, modified, or cancelled after issue without agreement and notice to the seller<\/em>. Generally, the irrevocable LC is opened<\/em>, so that the supplier is fully assured of his payment on fulfilling his obligations<\/td><\/tr><tr><td>c) confirmed LC<\/td><td>an intermediate bank in the supplier's country (confirming bank<\/em>) adds its confirmation at the request of the seller \u2014 guaranteeing that payment would be made as per LC conditions, even if the issuing bank or seller's bank demurs<\/em><\/td><\/tr><tr><td>d) unconfirmed LC<\/td><td>there is no additional confirmation beyond the issuing bank<\/em><\/td><\/tr><tr><td>e) transferable LC<\/td><td>the seller can transfer part of the LC to another party<\/em> (e.g., as a payment to his supply chain)<\/td><\/tr><tr><td>f) back-to-back LC<\/td><td>AN intermediary (second beneficiary)<\/em> is involved in this<\/td><\/tr><tr><td>g) revolving LC<\/td><td>covers multiple transactions over an extended period<\/em>. Specifically used for repeated shipments of the same product between the same buyer (importer) and seller (exporter)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n6. Deduction of Liquidated Damages (LD) under the LC:<\/p>\nTHE delivery Schedule and LD clause (including the amount of LD) are part of the LC conditions<\/em>.<\/p>\nIf the documents submitted (inspection certificate and dispatch documents<\/em>) show that these conditions of LC are violated, LD as per the LC conditions is deducted from the payment made to the supplier<\/em>.<\/p>\nIn case the delivery date of the contract is extended to take care of a delay in supply for which the supplier is responsible<\/em>, THE tenure of the LC is also to be extended<\/em> \u2014 BUT the expense incurred for such an extension (of LC) is to be borne by the supplier<\/em>.<\/p>\n<h2>6.13<\/span>Advance Payment<\/span><\/h2>\n(Rule 172(1) of GFR 2017)<\/em><\/p>\n<h3 class=\"src-multi srchead\" data-src=\" G C NC \">6.13.1<\/span>The Common Conditions<\/span>G<\/span>C<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\" data-src=\" G C NC \" data-label=\"Goods + Consultancy + Non-Consultancy only\">\n1. The governing principle and its economic rationale:<\/p>\nOrdinarily, payments for services rendered or supplies made should be released only after the services have been rendered or supplies made<\/em>.<\/p>\nHowever, in exceptional situations where substantial funds are to be sunk by the contractor before payment becomes due<\/em> \u2014 considering the lower cost of funds for the Government entity as compared to the higher cost of funds for the bidder<\/strong> \u2014 advance payment with safeguards (BG or Insurance Surety Bond or Letter of Credit)<\/em> May be considered.<\/p>\nG<\/span> \u2014 the two permitted situations: A) advance payment demanded by firms holding maintenance contracts for servicing of air-conditioners, computers, other costly equipment<\/em>, etc.; B) advance payment demanded by firms against fabrication contracts, turn-key contracts, or supply of complicated tailor-made goods<\/em>, and so on.<\/p>\n2. The quantum \u2014 the three ceilings:<\/p>\nThe quantum of such advance payments should not exceed the quantum of funds to be sunk by the contractor before payment becomes due in the contract<\/em>. The quantum should not generally exceed the following limits:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Recipient<\/th><th>Ceiling<\/th><\/tr><\/thead><tbody><tr><td>Private firms<\/td><td>thirty (30) per cent of the contract value<\/td><\/tr><tr><td>a State or Central Government agency or pse<\/td><td>forty (40) per cent of the contract value<\/td><\/tr><tr><td>In the case of a MAINTENANCE CONTRACT<\/td><td>the amount should not exceed the amount payable for six months<\/em> Under the contract<\/td><\/tr><\/tbody><\/table><\/div>\nin exceptional cases, the competent Authority May relax the ceilings<\/em> Mentioned above, with prior concurrence of the associated\/ integrated finance<\/em>.<\/p>\n3. INTEREST-FREE ADVANCE \u2014 and the default penalty:<\/p>\nSince the provision of advance payment leverages the difference in interest rate<\/em> As argued above, and considering the additional cost of Bank Guarantee for advances for the bidder<\/em> \u2014 interest-free advance payments May be considered with the approval of Competent Authority and finance concurrence<\/em>.<\/p>\nWhere an interest-free advance is permitted, a clause in the tender enquiry and the contract May be stipulated that \u2014 if the contract is terminated due to default of the contractor<\/em> \u2014 the advance payment would be deemed as an interest-bearing advance at the interest rate prevailing on the date of release of advance payment (e.g., the general provident fund \u2014 GPF \u2014 rate), plus 2%, to be compounded quarterly<\/strong>.<\/p>\nIn appropriate cases, the competent authority may stipulate advance payments with suitable interest rates (e.g., the GPF rate) to be recovered along with the instalments of recovery of advance payment<\/em>.<\/p>\n4. INSTALMENTS \u2014 the minimum-two rule: The advance payment should not be made in less than two instalments<\/em>, as per the expected infusion of funds required in the contract \u2014 except in exceptional circumstances, for the reasons to be recorded<\/em>. This will keep a check on contractor mis-utilisation of full advance when the contract is delayed considerably<\/em>.<\/p>\n5. RECOVERY \u2014 the \"whichever is earlier\" rule: ADVANCE PAYMENTS \u2014 especially interest-free advances<\/em> \u2014 should be recovered (from either running bills or from the performance\/ advance payment bank guarantees<\/em>) in instalments linked to milestones or specified periods \u2014 whichever is earlier<\/em>.<\/p>\nThis would ensure that even if the contractor is not executing the work or executing it at a slow pace, recovery of advance could commence \u2014 and the scope for misuse of such advance could be reduced<\/em>.<\/p>\n6. BANK GUARANTEE \u2014 the 110% rule and its exemptions:<\/p>\nWhile making any advance payment, adequate safeguards in the form of a Bank Guarantee (or e-Bank Guarantee) of at least 110% of the advance should be obtained from the firm<\/em>.<\/p>\nIn case the advances are to be paid\/ recovered in instalments, an equal number of part bgs (with proportionate amount and validity) May be taken instead of a lumpsum BG<\/em> \u2014 WITH each BG released after a related recovery is made<\/em>.<\/p>\nAN indemnity bond is not to be considered in place of a Bank Guarantee<\/em>.<\/p>\nThe two exemptions from the BG requirement:<\/p>\n<ul class=\"lst\"><li>No Bank Guarantee should be insisted on in case advance is being given to Central Ministry\/ Department, their attached\/ subordinate offices, or the autonomous bodies attached with them<\/em>;<\/li><li>The BG May also not be taken wherever a contract has been placed on a CPSE on nomination basis<\/em>.<\/li><\/ul>\n7. What is NOT<\/em> An advance payment \u2014 an important distinction:<\/p>\n\"milestone\/ stage payments or part payments against proof of dispatch documents should not be considered as advance payments for the purpose of this Para \u2014 as these payments are made after the sinking of funds by the contractor for achieving these milestones\/ stages\/ dispatches<\/strong>.\" (Rule 172(2) GFR 2017)<\/em><\/p>\nthese should be provisioned in the tender document\/ contract<\/em>, including Bank Guarantee to be taken, if any, in case of milestone\/ stage payments.<\/p>\n8. The pre-declaration Rule: Provision of advance payment should be anticipated at the procurement planning stage<\/em>.<\/p>\nTHE quantum of advance payment and related conditions should be declared in the tender documents<\/em> \u2014 with the approval of Competent Authority and concurrence of associated\/ integrated finance.<\/p>\nIF not so declared<\/em>, the condition of advance payment for a particular bid should not be agreed to<\/em>.<\/p>\n9. Documents for advance payments: Documents needed from the supplier for advance payment release are to be clearly specified in the contract<\/em>. The paying authority should also verify the documents received from the supplier with corresponding stipulations made in the contract before releasing the payment<\/em>.<\/p>\n10. Insurance \u2014 G<\/span> ONLY:<\/p>\nIN every case where advance payment or payment against dispatch documents is to be made, or LC is to be opened<\/em>, THE condition of insurance should invariably be incorporated in the terms and conditions<\/em>.<\/p>\nWherever necessary, the goods supplied under the contract shall be fully insured in a freely convertible currency against loss or damage incidental to manufacture or acquisition, transportation, storage and delivery<\/em>.<\/p>\nIf considered necessary, insurance may cover \"All risks\", including war risks and strike clauses<\/em>. The amount covered should be sufficient to cover the overall expenditure incurred by the Procuring Entity for receiving the goods at the destination<\/em>.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Delivery basis<\/th><th>Who arranges and pays for marine\/ air insurance<\/th><\/tr><\/thead><tbody><tr><td>CIF\/ CIP\/ DDP<\/td><td>the supplier shall arrange and pay \u2014 making the purchaser the beneficiary<\/em><\/td><\/tr><tr><td>FOB\/ FAS<\/td><td>marine\/ air insurance shall be the purchaser's responsibility<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h3>6.13.2<\/span>Advance Payments in Works \u2014 the Three Distinct Advances [W ONLY]<\/span><\/h3>\n<aside class=\"note\">The Works Manual replaces the general advance-payment regime with three separate, purpose-specific advances. None of these exist in the Goods, Consultancy or Non-Consultancy Manuals.<\/p><\/aside>\n<h4>A. Mobilisation Advance<\/span><\/h4>\n1. The 10% Rule: If considered justified in certain specialised and capital-intensive works<\/em>, the contract May provide for an interest-bearing mobilisation advance<\/em> To be paid to the contractor exclusively for the costs of mobilisation, at 10 (ten) per cent of the contract price<\/strong>, on the provision by the contractor of an unconditional BG<\/em>.<\/p>\nSuch bgs shall remain effective until the advance payment has been fully repaid<\/em> \u2014 but the amount thereof shall be progressively reduced by the amount repaid by the contractor<\/em>, as indicated in the interim payment certificates.<\/p>\n2. The two instalments of 5% each:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Instalment<\/th><th>When paid<\/th><\/tr><\/thead><tbody><tr><td>FIRST 5%<\/td><td>ON commencement of the work<\/em> And provision by the contractor of the unconditional BG in respect of the advance<\/td><\/tr><tr><td>second 5%<\/td><td>ON certification by the engineer of the contractor's having achieved a financial progress of 10 (ten) per cent of the contract price<\/em> \u2014 as also provision of a BG by the contractor for this part of the advance<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">what mobilisation expenditure does NOT<\/em> Include: \"mobilisation expenditure mentioned herein shall not include the margin money and bank commission, and so on, paid by the contractor for procurement of bgs against Performance Security and mobilisation advance<\/strong>.\"<\/p><\/aside>\n3. Need-based: Provision of mobilisation advance should essentially be need-based<\/em>. Suitable delegation of authority May be done in the organisation<\/em> To take the decision for grant of the mobilisation advance \u2014 whether interest-free or interest-bearing<\/em>.<\/p>\n4. Interest-free mobilisation advance and the time-based recovery Rule:<\/p>\nInterest-free mobilisation advance May also be given wherever the situation warrants in specific cases<\/em> \u2014 BUT it should be clearly stipulated in the tender document<\/em>.<\/p>\nAND its recovery should be time-based, not linked with progress of work<\/strong>.<\/p>\nThis would ensure that even if the contractor is not executing the work or executing it at a slow pace, recovery of advance could commence, and scope for misuse of such advance could be reduced<\/em>.<\/p>\n5. Part bank guarantees \u2014 one per instalment: Part 'bank guarantees' (bgs) against the mobilisation advance should be taken in as many numbers as the proposed recovery instalments<\/em>, and should be equivalent to the amount of each instalment<\/em>.<\/p>\nThis would ensure that \u2014 at any point of time, even if the contractor's money on account of work done is not available with the organisation<\/em> \u2014 recovery of such advance could be ensured by encashing the BG for the work supposed to be completed within a particular period of time<\/em>.<\/p>\n6. There should be a clear stipulation of interest to be charged on delayed recoveries<\/em> \u2014 either due to the late submission of bill by the contractor or any other reason<\/em>, besides the reason giving rise to the encashment of BG.<\/p>\n7. THE amount of mobilisation advance, interest to be charged (if any), its recovery Schedule, and any other relevant detail should be explicitly stipulated in the tender document upfront<\/em>.<\/p>\n8. Relevant format for BG should be provided in the tender document<\/em>, which should be enforced strictly<\/em> \u2014 and the authenticity of such bgs should also be invariably verified from the issuing bank, confidentially and independently by the organisation<\/em>.<\/p>\n9. In case of 'Machinery and equipment advance'<\/em>, insurance and hypothecation to the employer should be ensured<\/em>.<\/p>\n10. The utilisation certificate Rule: Utilisation certificate from the contractor for the mobilisation advance should be obtained<\/em>. Preferably, mobilisation advance should be given in instalments<\/em> \u2014 AND subsequent instalments should be released only after getting a satisfactory utilisation certificate from the contractor for the earlier instalment<\/em>.<\/p>\n<h4>B. Plant, Machinery and Shuttering Material Advance<\/span><\/h4>\n1. The 5% advance and its five conditions:<\/p>\nAnother interest-bearing advance of five (5) per cent of the contract price<\/em> \u2014 depending on the merits of the case \u2014 May be paid against the new key construction equipment purchased for the work and brought to the site<\/strong>, if so provided in the bid documents and so requested by the contractor.<\/p>\nThe advance should normally not be more than 50 (fifty) per cent of the depreciated cost<\/em> Of such plant and machinery, which should be hypothecated to the govt. Before the payment of advance is released<\/em>.<\/p>\nThis advance shall be subject to the following conditions:<\/p>\n<ul class=\"lst\"><li>(i) the contractor shall produce satisfactory proof of payment<\/em>;<\/li><li>(ii) such equipment is considered necessary by the engineer for the works<\/em>;<\/li><li>(iii) the equipment has been verified to have been brought to site<\/em>;<\/li><li>(iv)<\/strong>the contractor gives an undertaking on stamp paper that the equipment will work <\/strong>only on that job And will <\/strong>not be removed from the site without obtaining written approval from the engineer<\/em>; and<\/strong><\/li><li>(v) the contractor furnishes a BG to cover the advance<\/em>.<\/li><\/ul>\nNo advance shall be admissible on equipment purchased under a hire-purchase scheme\/ financing arrangement, or on hired equipment<\/em>.<\/p>\n2. Rate of interest: The rate of interest shall be stipulated in the bid documents (say 10 (ten) per cent per annum)<\/em>, or as May be notified by the procuring agency from time to time.<\/p>\n3. Repayment: The repayment of advances shall be done through proportionate percentage deductions from running bill (periodic\/ interim payment)<\/em>. THE time of commencement of repayment, rate of deductions from interim payments, and time by which the advance should be fully repaid<\/em> Will be as specified in the contract.<\/p>\n4. The misappropriation consequence: All advances shall be used by the contractor exclusively for mobilisation expenditure, including the acquisition of construction-related plant and equipment<\/em>.<\/p>\nShould the contractor misappropriate any portion of the advance<\/em>, it shall become due and payable immediately, and no further advance will be made to the contractor thereafter<\/strong>. In such cases, the contractor shall also be liable for appropriate action under the contract<\/em>.<\/p>\n<h4>C. Secured Advance Against Material Brought to Site<\/span><\/h4>\n1. The 75% Rule and the 90-DAY condition:<\/p>\nSecured advance on the security of materials \u2014 which are not combustible, fragile or perishable in nature<\/strong> \u2014 brought to the site but not yet incorporated in the works<\/em> Will be made up to:<\/p>\n<aside class=\"note\">75 (seventy-five) per cent of invoice value<\/strong>, OR<\/strong>75 (seventy-five) per cent of the corresponding value of the materials determined on the basis of BOQ rates<\/strong> \u2014 whichever is less<\/strong><\/p><\/aside>\n \u2014 subject to the condition that their quantities are not excessive and shall be used within a period of 90 (ninety) days<\/em>, and subject to other stipulations in the contract.<\/p>\nThe safeguards:<\/p>\n<ul class=\"lst\"><li>The contractor will be required to sign an indenture bond, hypothecating the goods to the Procuring Entity<\/em>, and also be responsible for their safe custody<\/em>.<\/li><li>Before the advance is released, the Procuring Entity May inspect the site to ensure that the contractor has safeguarded the materials against pilferage and deterioration<\/em>.<\/li><li>It May be ensured that the contractor has not taken any loan\/ limit from banks against hypothecation of the materials against which the secured advance is claimed<\/em>. AN undertaking in this regard May also be taken from the contractor<\/em>.<\/li><\/ul>\n2. The \"paid stock only\" Rule:<\/p>\nGenerally, as per the provisions of the contracts, the contractors are required to submit proof of cost of materials and the delivery of material at site<\/em> while claiming such advances.<\/p>\nTHE stock register should be maintained from the commencement of the contract<\/em> And \u2014 unless otherwise prescribed in the contracts \u2014 the stock so considered for advance should generally be only paid stock (and not brought on credit)<\/strong>.<\/p>\nWhere the materials are supplied from a captive source of the contractor<\/em>, THE reasonableness of the valuation of such materials May be ensured<\/em>.<\/p>\n3. The 120-DAY absolute recovery Rule:<\/p>\nThe advance will be repaid from each succeeding running bill (periodic\/ interim payment) to the extent materials for which advance has been previously paid have been incorporated into the works<\/em>.<\/p>\n<aside class=\"note\">\"in all cases, the repayment of the advance will be effected after expiry of a period of 120 days since payment of advance \u2014 whether the material is consumed in the work or not<\/strong>.\"<\/p><\/aside>\n<h2>6.14<\/span>Prices, Firm Price and Variable Price<\/span><\/h2><h3>6.14.1<\/span>Prices and the Bar on Undue Profiteering [G ONLY]<\/span><\/h3>\n1. Independent pricing: The prices should be arrived at independently \u2014 without restricting competition, any consultation, communication, or agreement with any other bidder or competitor<\/em>.<\/p>\n2. Without undue profiteering \u2014 the price ceilings:<\/p>\nA) the price quoted by the bidder shall not be higher than the controlled price fixed by law<\/em> for the goods, if any.<\/p>\nWhere there is no controlled price, it shall not exceed the prices or contravene the norms for fixation of prices, if any, laid down by Government<\/em>.<\/p>\nWhere the Government has fixed no such prices or norms, it shall not exceed the price appearing in any agreement, if any, relating to price regulation by any industry<\/em>.<\/p>\n<aside class=\"note\">In any case \u2014 save for special reasons stated in the bid, if any<\/em> \u2014 the price charged shall not be higher than the maximum retail price (MRP)<\/strong>.<\/p><\/aside>\nB) the disclosure obligation and its consequence: If the price quoted is higher than the controlled price<\/em>, the bidder shall specifically mention this fact in his bid, giving reasons for quoting a higher price(s)<\/em>. IF HE fails to do so or makes any misstatement<\/em>, it shall be lawful for the Procuring Entity either<\/em>:<\/p>\n<ul class=\"lst\"><li>TO revise the price at any stage to bring it in conformity with the sub-clause above<\/em>; or*<\/li><li>TO terminate the contract for default<\/em> As per the contract, and avail all the remedies available therein \u2014 in addition to other punitive actions for violation of Code of Integrity<\/em>.<\/li><\/ul>\n3. Price Components: The price Schedule should show all the specified components of prices<\/em>. The price components for goods offered from India<\/em> And those offered from abroad should be indicated separately<\/em> In the applicable price schedules.<\/p>\n<ul class=\"lst\"><li>The components should include, as applicable: GST, transportation, insurance, and price of incidental works\/ services<\/em> as mentioned in the Schedule of Requirements.<\/li><li>For goods offered from abroad<\/em>, the price components (indicating the currency, in the case of GTE<\/em>) should include: Customs duty, marine insurance, freight, and agency commission<\/em>, as applicable.<\/li><\/ul>\n<h3>6.14.2<\/span>Fixed Price \u2014 the Threshold Divergence<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Rule<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-multi\" data-src=\" G C NC \"><td>G<\/span> GOODS \u00b7 C<\/span> Consultancy \u00b7 NC<\/span> Non-consultancy<\/td><td>short-term contracts where the delivery period does not extend beyond 12 (twelve) months<\/em> Should normally be concluded on a firm and fixed price<\/em> (and not subject to variation on any account) by inviting tenders accordingly<\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> WORKS<\/td><td>short-term contracts where the delivery\/ completion period does not extend beyond 18 (eighteen) months<\/em> Should normally be concluded with a firm and fixed price<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">W<\/span> states the corollary expressly: *\"<\/strong>provision of price variation \u2026 shall not be applicable in the contracts where period of completion is eighteen months or less.\"*<\/p><\/aside>\n<h3>6.14.3<\/span>Variable Price and the Price Variation Clause (PVC)<\/span><\/h3>\n1. When a PVC May be provided:<\/p>\nG<\/span>, C<\/span>, NC<\/span>:<\/strong>In tenders with deliveries longer than 12 (twelve) months<\/em>, a Price Variation Clause (PVC) May be provided to protect the purchaser's interests \u2014 particularly for high-value (more than rupees three crore) procurements<\/em>.<\/p>\nHowever, even for shorter deliveries or lower value<\/em>, the PVC May be stipulated for items with inputs (raw material, labour<\/em>, ETC.) prone to short-term price volatility<\/strong> \u2014 especially for critical or high-value items\/ services<\/em>.<\/p>\n<aside class=\"note\">The two-sided reason: \"otherwise, there is a possibility of the contract failing [if prices rise], or the purchaser having to pay a higher price if market prices fall<\/strong>.\"<\/p><\/aside>\nW<\/span> adds the competitive rationale: *\"<\/strong>provision of price variation \u2026 will deal with rise and fall of the prices in construction materials, labour and other key inputs. \u2026 the provision of price variation clauses enables contractors to factor this reduced risk and quote more competitive prices.\"*<\/p>\n2. The \"provide your own formula\" Rule: Where it is decided to conclude the contract with a variable price, an appropriate clause incorporating a suitable price variation formula<\/em> (to take care of the changes in the input cost of labour, material, and fuel\/ power<\/em> Components) should be provided in the tender documents.<\/p>\n<aside class=\"note\">\"it is best to proactively provide our own PVC formula and base dates of indices in the tender document \u2014 to discourage different bidders from quoting different formulae and different base dates, which May lead to problems in bringing their prices on a common comparable footing<\/strong>.\"<\/p><\/aside>\n3. Sources of indices and weighting: The variations are to be calculated periodically (usually quarterly)<\/em> By using indices published by:<\/p>\n<aside class=\"note\">Governments \u00b7 chambers of commerce \u00b7 London metal exchange \u00b7 any other neutral and fair source of indices<\/em><\/p><\/aside>\nsuitable weights are to be assigned to the applicable elements \u2014 i.e., Fixed overheads and various applicable inputs (material\/ fuel\/ labour \u2014 for which reliable indices are available)<\/em>.<\/p>\nIf the production of goods\/ delivery of services\/ works needs more than one raw material<\/em>, the input cost of material May be further sub-divided into various categories of material, for which cost indices are published<\/em>.<\/p>\n<aside class=\"note\">W<\/span> adds:\"<\/strong>indices shall be appropriate for their purpose and shall relate to the contractor's proposed source of supply of inputs, on the basis of which his contract price shall have been computed.\"<\/em>W<\/span> also assigns weightages specifically to material\/ labour\/ petroleum, oils and lubricants (pol)<\/em> and cost indices\/ base prices.<\/strong><\/p><\/aside>\n4. The twelve essential elements of a PVC<\/strong>(common to all four, with minor wording variations)<\/em>:<\/p>\nI) base date & time lag: The price agreed upon should specify the base date \u2014 that is, the month and year to which the contract\/ bid price is linked<\/em> \u2014 to enable variations to be calculated with reference to the price indices prevailing in that month and year. This base date should be a few weeks\/ months (the period is called time-lag) prior to the last date of submission of bids, when the last published price indices would be available<\/em>. Time lag applies both for the base date and the date of supply\/ delivery date<\/em>, AND must be specified in the tender documents<\/em>.<\/p>\nii) ignorable variation: The price variation formula must also stipulate a minimum percentage of variation of the contract price, only above which the price variation will be admissible<\/em>.<\/p>\n<aside class=\"note\">For example \u2014 where the resultant increase is lower than, say, two per cent of the contract price, no price adjustment will be made in favour of the supplier\/ contractor.<\/em><\/p><\/aside>\niii) inordinate variation \u2014 the ceiling and the frustration route:<\/p>\nIn rare cases, prices May go up to such an extent that it May render the contract unviable for either party, thus frustrating the contract<\/em>. Therefore, the Price Variation Clause should provide for a ceiling \u2014 a percentage per annum, or an overall ceiling, or both (say 20%\/ 25% of the original price)<\/strong> \u2014 on price variations, beyond which the price variation would be capped at this level<\/em>. As soon as it comes to light that price variations are likely to go beyond this ceiling \u2014 and if the supplier\/ contractor is not agreeable to the price variation being capped<\/em> \u2014 HE MAY notify the purchaser under 'frustration of contract' provisions in the tender document\/ clause, for short-closing the contract<\/em>.<\/p>\n<aside class=\"note\">G<\/span> cross-reference: A provision for this exists in the Model Tender Document for Procurement of Goods \u2014 clause 12.2.2.<\/em>G<\/span> and C<\/span> add the escape valve: \"However, if the short-closing is not in the interest of the Procuring Entity, the Competent Authority \u2014 with the concurrence of associated\/ integrated finance \u2014 May allow the continuation of the contract by relaxing\/ removing the cap on the price variation.\"<\/em><\/p><\/aside>\niv) no PVC on advance\/ stage payments: Where advance or stage payments are made<\/em>, there should be a further stipulation that no price variations will be admissible on such portions of the price, after the dates of such payment<\/strong>.<\/p>\nV) LD is calculated on the varied price: Where deliveries are accepted beyond the scheduled delivery date, subject to levy of Liquidated Damages as provided in the contract \u2014 the LD (if a percentage of the price) will be recoverable on the price as varied by the operation of the PVC<\/strong>.<\/p>\nvi) the asymmetric default Rule \u2014 the single most important PVC provision:<\/p>\n<aside class=\"note\">No upward price variation will be admissible beyond the original scheduled delivery date for defaults on the part of the supplier\/ contractor<\/strong> (e.g., when an extension of the delivery date is with LD).<\/p>\nHowever, a downward price variation would be availed by the purchaser, as per the Denial Clause in the letter of extension of the delivery period.<\/strong><\/p><\/aside>\nvii) price variation May be allowed beyond the original scheduled delivery date<\/em> \u2014 BY specific alteration of that date through an amendment to the contract<\/em> \u2014 in cases of force Majeure or defaults by Government<\/strong>.<\/p>\nviii) import\/ duty disclosure \u2014 W<\/span> Only: Where contract execution depends on imported (subject to customs duty and foreign exchange fluctuations) and\/ or locally sourced and\/ or locally manufactured (subject to excise duty and other duties and taxes)<\/em> Goods\/ works\/ services \u2014 the percentage and element of duties and taxes included in the price should be specifically stated, along with the selling rate of foreign exchange element taken into account in the calculation of the price of the imported item<\/em>.<\/p>\nix) the clause should also contain the mode and terms of payment of the price variation admissible<\/em>.<\/p>\nX) the downward-benefit provision: The buyer should ensure a provision in the contract for the benefit of any reduction in the price in terms of the PVC being passed on to him<\/strong>.<\/p>\nxi) An illustrative PVC clause is available at:<\/strong>G<\/span> Annexure 18 \u00b7 W<\/span> Annexure 5 \u00b7 C<\/span> Annexure 16 \u00b7 NC<\/span> Annexure 10.<\/p>\nxii) the final-payment certificate \u2014 W<\/span> ONLY:<\/p>\n<aside class=\"note\">Care should be exercised in contracts providing for price variation to finalise the price before final payment is made<\/em>, after obtaining data and documents in support of claims for escalation, if any. Where no such claims are submitted by the suppliers<\/em>, AN examination of whether there has been a downward trend in the cost \u2014 which the contractor May not bring out \u2014 is required<\/em>.<\/p>\nAt any rate, an undertaking should be obtained from the contractor<\/em> To the following effect, in case it becomes necessary to make the final payment before he has submitted the required data\/ documents:<\/p>\n<aside class=\"note\">\"It is certified that there has been no decrease in the price of price variation indices and, in the event of any decrease of such indices during the currency of this contract, we shall promptly notify this to the purchaser and offer the requisite reduction in the contract rate.\"<\/em><\/p><\/aside>\nnotwithstanding the above formalities, it should be appreciated that it is in the interest of the purchaser to be vigilant about downward variation \u2014 and it is, therefore, the basic responsibility of the purchase officers to make sure that the benefits of downward variation, wherever it occurs, are fully availed of<\/strong>.<\/p><\/aside>\n5. The statutory-regulation adjustment \u2014 W<\/span> ONLY:<\/p>\n<ul class=\"lst\"><li>To the extent that full compensation for any rise or fall in costs to the contractor is not covered by the provisions of the contract<\/em>, THE unit rates and prices included in the contract shall be deemed to include amounts to cover the contingencies of such uncovered portion of rise or fall of costs<\/em>.<\/li><li>IF any statutory regulations or bye-laws come into force after submission of the bids<\/em>, which cause additional or reduced cost to the contractor<\/em> In the execution of the contract \u2014 such statutory additional or reduced cost (except which are covered in cost indices<\/strong>) shall be added to or deducted from the contract price<\/em>.<\/li><\/ul>\n<h2>6.15<\/span>Exchange Rate Variation (ERV) [G ONLY]<\/span><\/h2>\n<aside class=\"note\">This entire section exists only in the goods Manual. It has no counterpart in Works, Consultancy or Non-Consultancy \u2014 because only goods procurement routinely involves a domestic contract with a substantial imported component.<\/p><\/aside>\n1. The two triggers:<\/p>\nIn case of domestic tender contracts<\/strong> Involving:<\/p>\n<ul class=\"lst\"><li>Substantial import content (say > 25% of the total price)<\/strong>, AND<\/strong><\/li><li>a long delivery period (exceeding one year from the date of the contract)<\/strong><\/li><\/ul>\n \u2014 an appropriate exchange Rate Variation (ERV) clause<\/em> May be formulated by the Procuring Entity in consultation with its associated\/ integrated finance<\/em>, as needed, and incorporated in the tender enquiry document<\/em>.<\/p>\nIn that clause, the bidders are to be asked to indicate:<\/p>\n<ul class=\"lst\"><li>THE import content and the currency(ies) used for calculating the value of import content(s)<\/em> In their total quoted price;<\/li><li>THE base exchange rate for each such foreign currency<\/em> Used for converting the foreign exchange content into Indian rupees; And<\/li><li>THE extent of foreign Exchange Rate Variation (ERV) risk they are willing to bear<\/em>.<\/li><\/ul>\n2. The base date, the variation window, and the 2.5% band:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Element<\/th><th>Rule<\/th><\/tr><\/thead><tbody><tr><td>Base date<\/td><td>THE deadline of bid submission<\/em> \u2014 OR seven days prior to it<\/em> (the purchase organisation is to adopt a suitable date)<\/td><\/tr><tr><td>variation window<\/td><td>between the above base date and the date of remittance to the foreign principal<\/em>, OR the mid-point of manufacture of the foreign component<\/em> (the purchase organisation is to choose the appropriate date)<\/td><\/tr><tr><td>applicable exchange rate<\/td><td>according to the \"Bill currency selling\"<\/strong> Exchange rate as quoted by a source as specified \u2014 if not specified, authorised exchange bankers approved by RBI<\/em> \u2014 in the tender document on the dates in question<\/td><\/tr><tr><td>the dead band<\/td><td>no variation in price in this regard will be allowed if the variation in the rate of exchange remains within the limit of plus\/ minus 2.5 per cent<\/strong> (or any other percentage fixed by the Procuring Entity)<\/td><\/tr><\/tbody><\/table><\/div>\nERV shall be applicable only for components used to manufacture supplied goods imported after the contract date<\/em>.<\/p>\n3. Who bears it \u2014 and the asymmetric default Rule:<\/p>\nANY increase or decrease in the landed price of import content (including customs duty)<\/em> By reason of the variation in the rate of exchange shall be charged to the buyer's account during the original delivery period<\/em>.<\/p>\n<aside class=\"note\">\"in case the delivery period is revised\/ extended, ERV will not be admissible if this is due to the supplier's default \u2014 however, ERV benefits arising out of downward trends should be passed on to the Procuring Entity<\/strong>.\"<\/p>\n(Note the parallel with the PVC denial rule at para 6.14.3-4-vi above.)<\/em><\/p><\/aside>\n4. The four documents for claiming ERV: A) a bill of ERV claim enclosing the working sheet<\/em>; B) banker's certificate\/ debit advice detailing the foreign exchange paid and exchange rate<\/em>; C) copies of the import order placed on the supplier<\/em>; D) supplier's invoice for the relevant import order<\/em>.<\/p>\n<h2>6.16<\/span>Statutory Taxes \/ Duties \/ Levies<\/span><\/h2><h3>6.16.1<\/span>Goods and Services Tax (GST)<\/span><\/h3>\n1. GST registration status and GSTIN (the 15-digit registration number) \u2014 the nine rules:<\/p>\nA) all bidders should ensure that they are GST compliant<\/em>, and that their quoted tax structure\/ rates are as per the GST Act\/ Rules<\/em>.<\/p>\nB) bidder should be registered under GST<\/em> And furnish their GSTIN number and GST registration certificate<\/em> In their offer \u2014 unless they are specifically exempted from registration<\/em> Under a specific notification\/ circular\/ section\/ Rule issued by statutory authorities.<\/p>\nC) multiple verticals: If the bidder has multiple business verticals in a State and has separate registrations for each vertical<\/em>, THE GSTIN of each vertical concerned with the supply and service involved \u2014 as per the scope of the Schedule of requirements and price Schedule \u2014 shall be quoted<\/em>.<\/p>\nD) multiple states: If the supply\/ service is from multiple states<\/em>, the bidder should mention GST registration numbers for each State separately<\/em>.<\/p>\nE) composition scheme: If the bidder has opted for a composition levy under section 10 of CGST<\/em>, he should declare the fact while bidding, along with GSTIN and GST registration certificate<\/em>.<\/p>\nf) exemption from registration \u2014 and the Reverse Charge Mechanism:<\/p>\nIf a bidder is not liable to take GST registration<\/em> (i.e., having turnover below threshold<\/em>), he shall submit an undertaking\/ indemnification against tax liability<\/em>. The bidder claiming exemption shall submit a valid certificate from a practising chartered accountant (ca)\/ cost accountant with the unique document identification number (din)<\/em>, to the effect that the bidder fulfils all conditions prescribed in the notification exempting him from registration<\/em>.<\/p>\nSuch bidder\/ dealer shall not charge any GST and\/ or GST cess in the bill\/ invoice<\/em>. In such a case, applicable GST shall be deposited under reverse charge mechanism (rcm)<\/em> \u2014 or otherwise as per GST Act \u2014 by the Procuring Entity directly to concerned authorities<\/em>. Bidder should note that his offer would be loaded with the payable GST under the rcm<\/em>. Further, the bidder should notify and submit to the Procuring Entity within 15 days of becoming liable for registration under GST<\/em>.<\/p>\nG) bidders must also consider the benefits of input tax credit<\/em> Under the GST legislation, as amended from time to time, on input goods\/ capital goods\/ input services<\/em> While quoting the prices.<\/p>\nH) the jurisdictional assessing officer Rule: In their bids, the bidders shall indicate the details of their GST jurisdictional assessing officers (designation, address, email id)<\/em>. In case of a contract award, the purchaser shall immediately forward a copy of the loa\/ purchase order to the jurisdictional assessing officer<\/em> Mentioned in the bidder's bid.<\/p>\nI) the Procuring Entity's state-wise gstins shall be indicated in tender documents<\/em>.<\/p>\n2. HSN code and GST rate \u2014 the four rules:<\/p>\na)<\/strong>if provided in the tender document, the HSN (harmonized system of nomenclature) code for the goods is <\/strong>only indicative. <\/strong>The bidder shall be responsible for ensuring that they quote the correct HSN code and corresponding GST rate<\/em>.<\/strong><\/p>\nB) the separate-disclosure Rule: As per the GST Act, the bid and contract must show the GST tax rates (and GST cess if applicable) and GST amount explicitly and separately from the bid\/ contract price (exclusive of GST)<\/em>.<\/p>\nSo, if a bidder asks for GST (and GST Cess if applicable) to be paid extra, the rate and nature of such applicable taxes should be shown separately<\/em>.<\/p>\nBidders should quote 'GST' if payable extra on the total basic rate of each cost element<\/em>, AND quote GST in '%' inclusive of cess<\/em>.<\/p>\nC) if the price is stated to include<\/em> GST, the bidder must declare the current GST rate (and GST cess, as applicable) included in the price<\/em>.<\/p>\nD) the blank-column Rule \u2014 a trap for bidders: If GST, other taxes, or duties are not specified, or the column is left blank<\/em> In the price Schedule, it shall be presumed that no such tax\/ levy is applicable or payable by the Procuring Entity. No Statutory Variation in GST shall be paid in such a case<\/strong>.<\/p>\n3. Refund from supplier: Sometimes, the supplier \u2014 after claiming and receiving reimbursements for GST from the purchaser<\/em> \u2014 applies to the concerned authorities for refunds, on genuine grounds, of certain portions of such duties and taxes paid by it, and receives the allowable refunds<\/em>. Such refunds contain the purchaser's share also<\/strong> (Out of the payments already made by the purchaser to that supplier). The tender enquiry document and the contract are to contain suitable provisions for obtaining such refunds from the supplier<\/em>.<\/p>\n4. The three statutory duties\/ taxes\/ levies to be entirely borne by the bidder \u2014 including any statutory variations thereon, for which the Procuring Entity would not be responsible:<\/p>\nA) personal and corporate tax: Bidder shall bear all personal\/ corporate taxes imposed on owners\/ company\/ joint venture\/ subcontractors or their employees<\/em>.<\/p>\nB) taxes on sub-contractors, vendors: Bidder shall bear all taxes \u2014 including GST<\/em> \u2014 as May be imposed on the contractor or supply-chain (sub-contractors, vendors, etc.)<\/em>.<\/p>\nC) duties\/ taxes on raw materials: The Procuring Entity is not liable for any claim from the contractor on account of fresh imposition and\/ or increase (including statutory increase) of GST, customs duty, or other duties on raw materials and\/ or components used directly in the manufacture of the contracted goods, taking place during the pendency of the contract<\/strong> \u2014 unless such liability is expressly agreed to in terms of the contract<\/em>.<\/p>\n5. Applicability to imported goods\/ services: Following the implementation of GST, the import of commodities shall not be subject to erstwhile applicable duties<\/em> LIKE safeguard duty, education cess, basic customs duty, anti-dumping duty<\/em>, ETC. All these supplementary customs duties are subsumed under GST<\/strong>.<\/p>\nIf imported into India, the supply of commodities, services, or both shall be considered as supply under inter-state commerce\/ trade, and shall attract integrated tax (IGST)<\/em>. THE IGST rate and GST cess shall be applicable on the 'customs assessable value' plus the 'basic customs duty applicable thereon'<\/em>.<\/p>\n<h3>6.16.2<\/span>Customs Duty on Imported Goods [G ONLY]<\/span><\/h3>\n1. The disclosure and the import-in-whose-name Rule: Regarding imported goods, the bidder shall specify the rate and the total amount of customs duty payable thereon<\/em>. Bidder shall also indicate the corresponding Indian tariff classification (ITC-HS)<\/em> Applicable for the goods. Any material imported directly from the supplier or manufacturer should be under the name of the Procuring Entity<\/em>. In this regard, all formalities will be completed by the Procuring Entity by engaging a customs house agent (CHA) and bearing the cost thereof<\/em>.<\/p>\n2. The three customs-duty exemptions: The Government has allowed exemption from payment of customs duty on certain types of goods for use by the following organisations: a) scientific and technical instruments imported by research institutes<\/em>; B) hospital equipment imported by Government hospitals<\/em>; C) consumable goods imported by a public-funded research institution or a university<\/em>.<\/p>\n3. The two certificates required: However, to avail of such exemptions, the organisations are required to produce \u2014 at the appropriate time<\/em> \u2014 :<\/p>\n<aside class=\"note\">A \"Customs Duty Exemption\" certificate<\/strong><\/strong>AND A \"Not Manufactured in India\" certificate<\/strong><\/p><\/aside>\n4. The MOOWR scheme 2019:<\/p>\nTHE manufacturing and other operations in a warehouse regulations (MOOWR) scheme 2019<\/em> Was introduced by the Central board of indirect taxes and customs (CBIC)<\/em> TO promote India as a global manufacturing hub and bolster the \"Make in India\" initiative<\/em>.<\/p>\nThis scheme allows importers to bring raw materials and capital goods into the country without paying customs duties<\/em>.<\/p>\n<aside class=\"note\">Notably, the MOOWR scheme is unique in that it is delinked from export obligations<\/strong> \u2014 extending benefits even to importers who intend to use goods for sale within the domestic market<\/em>.<\/p><\/aside>\nThese imported materials can then be utilised for manufacturing and other operations within private bonded warehouses<\/em>. Under the MOOWR Scheme: a) import duty is deferred<\/strong> When raw materials and capital goods are imported into India; B) if these materials are used for exports<\/strong>, THE deferred duty is exempt<\/strong>; C) if the inputs are utilised for goods sold in the domestic market (i.e., domestic tariff area)<\/strong>, import duty for such inputs used for domestic clearance must be paid<\/em>; D) import duty on capital goods<\/strong> is paid if they are cleared for the domestic market<\/em>.<\/p>\n5. THE relevant contemporary instructions covering these aspects should be incorporated in the tender enquiry document and the resultant contract<\/em>.<\/p>\n<h3>6.16.3<\/span>Deduction of Income Tax, etc., from Payments<\/span><\/h3>\nIf applicable under relevant tax laws and Rules, the Procuring Entity shall deduct from all payments and deposit required taxes to respective authorities<\/em>.<\/p>\n<h3>6.16.4<\/span>Statutory Variation Clause<\/span><\/h3>\n<aside class=\"note\">The Goods and Works Manuals cross-refer to their contract-management chapters. The Consultancy and Non-Consultancy Manuals set out the clause in full \u2014 reproduced here.<\/p><\/aside>\nUnless otherwise stated in the contract, statutory Variation in applicable GST rate<\/strong> \u2014 only during the period from the date of submission of the tender to the date of acceptance of the tender (that is, placement of the contract), and during the original\/ re-fixed delivery period of the contract<\/strong> \u2014 shall be borne by the Procuring Entity<\/strong>.<\/p>\nThe benefit of any reduction in the GST rate must be passed on to the Procuring Entity during the original and extended delivery period<\/em>.<\/p>\n<aside class=\"note\">(Note the asymmetry: increases are borne by the Procuring Entity only during the original\/ re-fixed<\/strong> period, but reductions must be passed on during the original AND extended<\/strong> period.)<\/em><\/p><\/aside>\nhowever, GST rate amendments shall be considered for the quoted HSN code only<\/strong>, against documentary evidence<\/em> \u2014 provided such an increase in GST rates is after the tender submission date<\/em>.<\/p>\nHowever, the statutory Variation shall not be applicable for any misquotation of the HSN number or incorrect GST rate by the bidder<\/strong>.<\/p>\n<aside class=\"note\">Note on \"re-fixed delivery period\": \"Re-fixed delivery period means the fresh delivery period which is arrived at by recasting the original contractual delivery period, after taking care of the lost period for which the supplier\/ service provider was not responsible.\"<\/em><\/p><\/aside>\n<h2>6.17<\/span>Incoterms 2020 \u2014 Terms of Delivery [G ONLY]<\/span><\/h2>\n<aside class=\"note\">This section exists only in the goods Manual. Incoterms govern the passing of title and risk in a sale of goods; they have no analogue in works or services contracts.<\/p><\/aside>\n1. The eleven INCOTERMS \u2014 seven for any mode, four for sea\/ inland waterway:<\/p>\n<h3>A. Rules for Any Mode of Transport (Seven)<\/em><\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>Incoterm<\/th><th>Applicable to<\/th><\/tr><\/thead><tbody><tr><td>EXW \u2014 ex-works<\/strong>(named place of delivery)<\/em><\/td><td>the seller makes the goods available at their premises or another named place<\/em><\/td><\/tr><tr><td>FCA \u2014 free carrier<\/strong>(named place of delivery)<\/em><\/td><td>the seller delivers the goods \u2014 cleared for export<\/em> \u2014 at a named place to a carrier or to another party nominated by the buyer<\/em><\/td><\/tr><tr><td>CPT \u2014 carriage paid to<\/strong>(named place of delivery)<\/em> \u2014 earlier C&F \u2014 Cost and Freight<\/strong><\/em><\/td><td>the seller is responsible for export clearance and freight costs for carriage to the named place of destination<\/em><\/td><\/tr><tr><td>CIP \u2014 carriage and insurance paid to (named place of delivery)<\/em><\/td><td>in addition to CPT responsibilities, the seller is required to obtain *insurance for the goods while in transit for 110% of the contract value under institute cargo clauses (a) of the institute of London underwriters\u200c<\/td><\/tr><tr><td>DAP \u2014 delivered at place<\/strong>(named place of delivery)<\/em><\/td><td>the seller delivers the goods \u2014 ready for unloading<\/strong> \u2014 at the named place of destination<\/td><\/tr><tr><td>DPU \u2014 delivered at place unloaded (named place of delivery)<\/em> \u2014 earlier DAT \u2014 Delivered At Terminal<\/em><\/td><td>in addition to DAP responsibilities, the seller is required to unload the goods<\/strong> At the named place of destination<\/td><\/tr><tr><td>DDP \u2014 delivered duty paid<\/strong>(named place of delivery)<\/em><\/td><td>in addition to DAP responsibilities, the seller is required to clear the goods through customs and pay import duties and taxes<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h3>B. Rules for Sea and Inland Waterway Transport (Four)<\/em><\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>Incoterm<\/th><th>Applicable to<\/th><\/tr><\/thead><tbody><tr><td>FAS \u2014 free alongside ship<\/td><td>alongside the buyer's vessel at the named port of shipment, the seller is to clear the goods for export<\/em>. However, if the parties wish the buyer<\/em> To clear the goods for export, explicit wording should be added to the contract<\/strong><\/td><\/tr><tr><td>FOB \u2014 free on-board<\/td><td>seller to arrange for export clearance and deliver goods on board a vessel that is to be designated by the buyer<\/em><\/td><\/tr><tr><td>CFR \u2014 cost and freight<\/td><td>in addition to FOB responsibilities, the seller pays for the carriage of the goods up to the named port of destination<\/em><\/td><\/tr><tr><td>CIF \u2014 cost, insurance and freight<\/td><td>in addition to CFR responsibilities, the seller is required to obtain *insurance for the goods while in transit for 110% of the contract value under institute cargo clauses (a)*<\/td><\/tr><\/tbody><\/table><\/div>\n2. History and the title-of-goods principle:<\/p>\nIN USE SINCE 1936<\/em>, INCOTERMS have been last revised in 2020<\/em>. Out of the 11 INCOTERMS options, seven apply to all modes of transportation, whereas four apply only to sea and inland waterway transportation<\/em>.<\/p>\nIncoterms rules describe the tasks, costs and risks involved in the delivery of goods from the seller to the buyer<\/em>.<\/p>\n<aside class=\"note\">The governing principle: \"the risk to goods (damage, loss, shortage, and so on) is the responsibility of the person who holds the 'title of goods' at that point in time. This May be different from the actual physical possession of such goods<\/strong>.\"<\/p><\/aside>\nnormally, unless otherwise defined, the title of goods passes from the supplier to the purchaser in accordance with the terms of delivery (for, CFR, among others)<\/em>. The terms of delivery, therefore, specify when the ownership and title of goods pass from the seller to the buyer, along with the associated risks<\/em>.<\/p>\nThe four allocations made by terms of delivery: A) control and care of the goods while in transit<\/em>; B) carrier selection, transfers, and related issues; C) costs of freight, insurance, taxes, duties and forwarding fees<\/em>; D) documentation, problem resolution and other related issues.<\/p>\n3. The spectrum: The options range from one extreme \u2014 the buyer takes full responsibility from the point of departure (EXW)<\/strong> \u2014 to the other extreme \u2014 the seller is responsible all the way through delivery to the buyer's location (DDP)<\/strong>(Annexure 19 of the Goods Manual)<\/em>.<\/p>\n4. The four special definitions within INCOTERMS:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Term<\/th><th>Special meaning<\/th><\/tr><\/thead><tbody><tr><td>Delivery<\/td><td>THE point in the transaction where the risk of loss or damage to the goods is transferred from the seller to the buyer<\/em><\/td><\/tr><tr><td>FREE<\/td><td>seller has an obligation to deliver the goods to a named place for transfer to a carrier<\/em><\/td><\/tr><tr><td>carrier<\/td><td>any person who, in a contract of carriage, is nominated by seller\/ buyer for transport by any mode<\/em><\/td><\/tr><tr><td>to clear for export<\/td><td>TO file the shipper's export declaration and get an export permit<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n5. The Indian national-transport terms: Within national transportation, certain terms have assumed acceptance due to usage<\/em>:<\/p>\n<ul class=\"lst\"><li>Free on rail (for)* has two versions: *For\/ dispatching* and *for\/ destination<\/strong>(the buyer is responsible from the nominated point mentioned till arrival point, as in DAP above<\/strong>)<\/em>;<\/li><li>On similar lines, infrequently, free on truck (fot) is also used in road transport<\/em>.<\/li><\/ul>\n<h2>6.18<\/span>Recovery of Public Money from the Supplier's\/ Contractor's\/ Consultant's\/ Service Provider's Bill<\/span><\/h2>\n<aside class=\"note\">Section titles: G<\/span>\u2026from Suppliers' Bill<\/em> \u00b7 W<\/span>\u2026from Contractor's Bill<\/em> \u00b7 C<\/span>\u2026from Consultant's Bill<\/em> \u00b7 NC<\/span>\u2026from Service Provider's Bill<\/em>.<\/p><\/aside>\nSometimes, requests are received from a different Ministry\/ Department<\/em> FOR withholding some payment from a supplier\/ contractor out of the payment or securities due to it against a contract<\/strong>.<\/p>\nSuch requests are to be examined by the Procuring Entity (which has received the request) on the merits of the case for further action<\/em>.<\/p>\n<aside class=\"note\">The liability Rule: \"it will, however, be the responsibility of the Ministry\/ Department asking for withholding of payment to defend the Government against any legal procedure arising out of such withholding, and for payment of any interest thereof<\/strong>.\"<\/p><\/aside>\n<h2>6.19<\/span>Payment against Time-Barred Claims<\/span><\/h2>\n1. The three-year Rule: Ordinarily, all claims against the Government are time-barred after a period of three years, calculated from the date when the payment falls due<\/em> \u2014 unless the payment claim has been under correspondence<\/strong>.<\/p>\n2. The admission-of-liability exception: However, the limitation is saved if there is an admission of liability to pay \u2014 and a fresh period of limitation starts from the time such admission is made<\/strong>.<\/p>\n3. The procedure: THE drill to be followed while dealing with time-barred claims will be decided by the Procuring Entity concerned, in consultation with the paying authority<\/em>.<\/p>\n4. The absolute bar on the paying authority: The paying authority is to ensure that no payment against such a time-barred claim is made till a decision has been taken in this regard by the ca<\/strong>.<\/p>\n<h1>Appendix to Chapter 6 \u2014 Points of Difference Between the Four Manuals<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Chapter number<\/td><td>G\/C\/NC: Chapter 6 \u00b7 W: CHAPTER 5<\/td><\/tr><tr><td>2<\/td><td>Chapter title<\/td><td>IDENTICAL in all four \u2014 the second and last such chapter<\/td><\/tr><tr><td>3<\/td><td>Issuing banks for Bid Security<\/td><td>g: *Commercial banks \u00b7 W: *SCHEDULED BANKS* (s.2(e) RBI Act 1934), with the footnote that a BG *MERELY ADVISED* is not acceptable in lieu of being *CONFIRMED<\/strong><\/td><\/tr><tr><td>4<\/td><td>Consequence under a Bid Securing Declaration<\/td><td>G\/C\/NC: bidder shall be *SUSPENDED \u00b7 W: bidder shall be *DEBARRED<\/strong><\/td><\/tr><tr><td>5<\/td><td>Who is EXEMPT from EMD<\/td><td>G: *MSEs <\/strong>AND DPIIT-recognised Start-ups \u00b7 W: *only DPIIT-recognised Start-ups<\/strong><\/td><\/tr><tr><td>6<\/td><td>Scope of the registered-bidder EMD exemption<\/td><td>G: valid for trade group and monetary value<\/em> \u00b7 W: valid for monetary value<\/em> only<\/td><\/tr><tr><td>7<\/td><td>Upper ceiling on Bid Security in larger tenders<\/td><td>W ONLY<\/td><\/tr><tr><td>8<\/td><td>performance Security quantum<\/td><td>G: 3\u20135%<\/strong> \u00b7 W: 3\u201310%<\/strong> \u00b7 NC: 3\u20135%<\/strong>(NC expressly notes \"3 to 10% for Works\")<\/em><\/td><\/tr><tr><td>9<\/td><td>Lower percentage from the 3\u201310% band for tenders > Rs 50 crore<\/td><td>W ONLY<\/td><\/tr><tr><td>10<\/td><td>Rs 75 lakh \/ Rs 3 crore illustrative ceiling table<\/td><td>G + NC<\/td><\/tr><tr><td>11<\/td><td>\"\u2026or dispense with it\" \u2014 power to waive performance security entirely<\/td><td>nc only<\/td><\/tr><tr><td>12<\/td><td>Threshold below which Performance Security not needed<\/td><td>G: Not necessary up to Rs 50 lakh (printed as \"Rs. 50 (twenty-five) lakh\" \u2014 a source typo)<\/em> \u00b7 nc: May not be insisted upon up to Rs 50 lakh \u00b7 W: no threshold<\/td><\/tr><tr><td>13<\/td><td>OEM in whose favour PAC issued \u2014 exempt from Performance Security<\/td><td>G + NC<\/strong>(absent from W, consistent with Works having no PAC mode)<\/em><\/td><\/tr><tr><td>14<\/td><td>Validity beyond completion of obligations<\/td><td>G\/NC: including warranty<\/em> obligations \u00b7 W: including defect liability period (DLP)\/ warranty<\/em><\/td><\/tr><tr><td>15<\/td><td>\"Full performance security should be forfeited even IF the Contractor has PARTIALLY EXECUTED the work\"<\/td><td>G ONLY<\/td><\/tr><tr><td>16<\/td><td>Retention of part of Performance Guarantee from progressive bills<\/td><td>G: expressly \"not acceptable<\/em>\" for goods \u00b7 W: this IS the Security Deposit\/ Retention Money regime<\/td><\/tr><tr><td>17<\/td><td>Multi-year proportionate reduction of Performance Security<\/td><td>G: framed for Rate Contracts, 2\u20133 years<\/em> \u00b7 C\/NC: framed for service contracts of 5\u20137 years or more<\/em>, with the working-capital rationale<\/td><\/tr><tr><td>18<\/td><td>JV \u2014 BG in proportion to participation<\/td><td>W + NC<\/td><\/tr><tr><td>19<\/td><td>Replacement of existing BGs with ISB\/ e-BG<\/td><td>W + NC<\/td><\/tr><tr><td>20<\/td><td>Security Deposit\/ retention money (5% of each running bill; two-stage replacement; two-halves release)<\/td><td>W ONLY<\/td><\/tr><tr><td>21<\/td><td>Insurance Surety Bond full text (three parties; 14-day\/ 45-day rule)<\/td><td>G ONLY<\/strong>(others cross-refer)<\/em><\/td><\/tr><tr><td>22<\/td><td>Electronic Bank Guarantee full text (NeSL, UIN, 24\/7, verification without issuing bank)<\/td><td>G ONLY<\/strong>(others cross-refer)<\/em><\/td><\/tr><tr><td>23<\/td><td>Warranty Bank Guarantee (10% of value; no warranty clause for non-capital goods or capital goods up to Rs 1 lakh)<\/td><td>G ONLY<\/td><\/tr><tr><td>24<\/td><td>BG confirmation channel includes the official email-id of the bank<\/em><\/td><td>W ONLY<\/td><\/tr><tr><td>25<\/td><td>Insurances and indemnities; Indemnity Bond under s.124 Contract Act; \"a BG is safer than an indemnity bond\"<\/td><td>W ONLY<\/td><\/tr><tr><td>26<\/td><td>Price elements driven by INPUT vs OUTPUT admeasurement<\/td><td>nc only<\/td><\/tr><tr><td>27<\/td><td>Payment to the supplier's bank on endorsement + irrevocable power of attorney<\/td><td>G ONLY<\/td><\/tr><tr><td>28<\/td><td>Ten payment obligations incl. MSME 45-day rule and statutory tax certificates<\/td><td>G ONLY<\/td><\/tr><tr><td>29<\/td><td>VARIATIONS; variations register; MEASUREMENT BOOKS and e-MBs; Interim Payment Certificate<\/td><td>W ONLY<\/td><\/tr><tr><td>30<\/td><td>DELAY-IN-PAYMENT TIMELINES \u2014 75% within 10 working days; balance within 28; explanation within 3; interest at GPF rate beyond 30 working days; final payment within 3 months<\/td><td>W ONLY<\/td><\/tr><tr><td>31<\/td><td>Acceptance for payment of services<\/td><td>c: By the *Procuring Entity \u00b7 nc: By the *ultimate user<\/strong><\/td><\/tr><tr><td>32<\/td><td>Terms of Payment for DOMESTIC GOODS (the four patterns) and for imported goods; LC; Air Freight Consolidators<\/td><td>G ONLY<\/td><\/tr><tr><td>33<\/td><td>Advance payment ceilings \u2014 30% private \/ 40% Govt agency or PSE \/ 6 months for maintenance contracts; 110% BG; two-instalment rule; GPF+2% compounded quarterly on default<\/td><td>G + C + NC<\/td><\/tr><tr><td>34<\/td><td>MOBILISATION ADVANCE (10% in two 5% instalments; time-based recovery if interest-free; part BGs per instalment; utilisation certificates)<\/td><td>W ONLY<\/td><\/tr><tr><td>35<\/td><td>Plant, machinery and shuttering advance (5%; not more than 50% of depreciated cost; five conditions; stamp-paper undertaking; no advance on hired\/ hire-purchase equipment)<\/td><td>W ONLY<\/td><\/tr><tr><td>36<\/td><td>Secured advance against material at site (75% of invoice or BOQ value whichever less; 90-day use; indenture bond; Paid stock only; 120-day absolute recovery)<\/td><td>W ONLY<\/td><\/tr><tr><td>37<\/td><td>fixed-price threshold<\/td><td>g\/c\/nc: *12 months \u00b7 w: *18 months<\/strong><\/td><\/tr><tr><td>38<\/td><td>Undue profiteering \/ MRP ceiling \/ controlled price disclosure<\/td><td>G ONLY<\/td><\/tr><tr><td>39<\/td><td>PVC weightages include POL (Petroleum, Oils and Lubricants)<\/em><\/td><td>W ONLY<\/td><\/tr><tr><td>40<\/td><td>PVC element on import\/ excise duty disclosure and FX selling rate<\/td><td>W ONLY<\/td><\/tr><tr><td>41<\/td><td>The final-payment \"no decrease in indices\" undertaking and the vigilance-about-downward-variation duty<\/td><td>W ONLY<\/td><\/tr><tr><td>42<\/td><td>Relaxing the PVC cap where short-closing is not in the Procuring Entity's interest<\/td><td>G + C<\/td><\/tr><tr><td>43<\/td><td>Exchange Rate Variation (ERV) \u2014 25% import content, >1 year delivery, \u00b12.5% dead band, four claim documents<\/td><td>G ONLY<\/td><\/tr><tr><td>44<\/td><td>GST \u2014 full nine-rule registration regime, HSN\/ rate rules, refund-from-supplier, three bidder-borne taxes<\/td><td>G<\/strong>(fullest); C\/W\/NC carry shorter versions<\/em><\/td><\/tr><tr><td>45<\/td><td>CUSTOMS DUTY, the three exemptions, the two certificates, and the MOOWR Scheme 2019<\/td><td>G ONLY<\/td><\/tr><tr><td>46<\/td><td>Statutory Variation Clause reproduced in full with the \"re-fixed delivery period\" note<\/td><td>C + NC<\/strong>(G and W cross-refer to their contract-management chapters)<\/em><\/td><\/tr><tr><td>47<\/td><td>INCOTERMS 2020 \u2014 all eleven terms, the title-of-goods principle, the four special definitions, FOR\/ FOT<\/td><td>G ONLY<\/td><\/tr><tr><td>48<\/td><td>Recovery of Public Money \u2014 section title<\/td><td>G: Suppliers' \u00b7 W: Contractor's \u00b7 C: Consultant's \u00b7 NC: Service Provider's<\/td><\/tr><tr><td>49<\/td><td>Payment against Time-Barred Claims \u2014 three-year rule, admission-of-liability exception, no payment till CA decides<\/td><td>COMMON to all four \u2014 and the closing section of the chapter in every Manual<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 6<\/p>\n<aside class=\"note\">Next:<\/strong>Chapter 7 \u2014 bid evaluation and award of contract<\/strong>(Goods Ch. 7 \u00b7 Works Ch. 6<\/strong> \u2014 <\/em>Evaluation of Bids and Award of Work \u00b7 Consultancy Ch. 8 \u2014 <\/strong>RfP<\/strong> Evaluation and Award of Contract \u00b7 Non-Consultancy Ch. 7)<\/em>.<\/p>\nTwo traps ahead:<\/strong> the Consultancy Manual places this at Chapter 8<\/strong> (because it inserts a whole Chapter 7 on Shortlisting\/ EoI<\/strong> first), and it alone uses a Consultancy Evaluation Committee (CEC)<\/strong> rather than a Tender Committee. The Works evaluation chapter is by far the most elaborate, carrying Abnormally Low Bids, Cartel Formation\/ Pool Rates, Handling Dissent among the Tender Committee, and Audit Trails<\/strong> \u2014 none of which appear in the others in the same form.<\/p><\/aside><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch7\">Chapter 7 \u2014 Part a<\/p><h1>Shortlisting, the Evaluation Committee, and Preliminary Examination<\/h1><\/header>Part I<\/span>Shortlisting, Committees and Preliminary Examination<\/em><\/p>\nMerging: Goods Ch. 7<\/strong> (Bid Evaluation and Award of Contract) \u00b7 Works Ch. 6<\/strong> (Evaluation of Bids and Award of Work) \u00b7 Consultancy Ch. 7<\/strong> (Shortlisting of Consultants, EoI) and Ch. 8<\/strong> (RfP Evaluation and Award of Contract) \u00b7 Non-Consultancy Ch. 7<\/strong> (Bid Evaluation and Award of Contract)<\/em><\/p><h2>Structural Warnings for Students<\/span><\/h2>\n1. Three different Chapter numbers for the same block:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Chapter<\/th><th>Title<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span> Goods<\/td><td>Chapter 7<\/td><td>Bid Evaluation and Award of Contract<\/em><\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> Works<\/td><td>Chapter 6<\/td><td>Evaluation of Bids and Award of Work<\/strong><\/em><\/td><\/tr><tr class=\"srcmark src-C\" data-src=\" C \"><td>C<\/span> Consultancy<\/td><td>Chapter 8<\/td><td>RfP<\/strong> Evaluation and Award of Contract<\/em><\/td><\/tr><tr class=\"srcmark src-NC\" data-src=\" NC \"><td>NC<\/span> Non-Consultancy<\/td><td>Chapter 7<\/td><td>Bid Evaluation and Award of Contract<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nWhy consultancy is one Chapter ahead: The Consultancy Manual inserts an entire Chapter 7 \u2014 shortlisting of consultants, Expression of Interest (EoI)<\/em> before its evaluation chapter. That chapter has NO counterpart in any other Manual and is reproduced in full at para 7.1 below.<\/p>\n2. The committee is different in consultancy:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Evaluating body<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-multi\" data-src=\" G W NC \"><td>G<\/span>, W<\/span>, NC<\/span><\/td><td>tender Committee (TC)<\/strong> \u2014 also called Tender Evaluation Committee (TEC)<\/em> in some organisations<\/td><\/tr><tr class=\"srcmark src-C\" data-src=\" C \"><td>C<\/span><\/td><td>consultancy Evaluation Committee (CEC)<\/td><\/tr><\/tbody><\/table><\/div>\n3. Because of the volume (423 KB across the four Manuals), this chapter is issued in two parts:<\/p>\n<ul class=\"lst\"><li>PART A (this document)<\/strong> \u2014 Shortlisting\/ EoI \u00b7 Bid Evaluation Process \u00b7 Composition and Role of the Committee \u00b7 Dissent, Independence and Confidentiality \u00b7 Timely Processing \u00b7 Extension of Bid Validity \u00b7 Lack of Competition \u00b7 Committee Report \u00b7 Preliminary Examination.<\/li><li>PART B<\/strong> \u2014 Techno-commercial Evaluation \u00b7 Evaluation of Quality (Technical Proposals) \u00b7 Financial Evaluation \u00b7 lCS\/ QCBS\/ SSS\/ FBS \u00b7 Reasonableness of Prices \u00b7 Abnormally Low Bids \u00b7 Cartel Formation \u00b7 Negotiations \u00b7 Cancellation and Re-tender \u00b7 Award of Contract \u00b7 Audit Trails \u00b7 Risks and Mitigations.<\/li><\/ul>\n<h2>Concordance for Chapter 7 \u2014 Part A<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>Goods<\/th><th>Works<\/th><th>CS<\/th><th>NCS<\/th><\/tr><\/thead><tbody><tr><td>7.1<\/td><td>Shortlisting of Consultants \u2014 EoI<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>Ch. 7 entire<\/td><td> \u2014 <\/td><\/tr><tr><td>7.2<\/td><td>Bid Evaluation Process \u2014 importance<\/td><td>7.1-1<\/td><td>6.1.1<\/td><td>8.1.1<\/td><td>7.1.1<\/td><\/tr><tr><td>7.3<\/td><td>Evaluation in Different Tendering Systems<\/td><td>(in 7.1)<\/em><\/td><td>6.1.2<\/td><td>8.1.2<\/td><td>7.1.2<\/td><\/tr><tr><td>7.4<\/td><td>Preparation and Vetting of Comparative Statement<\/td><td>7.2<\/td><td>6.1.3<\/td><td>8.1.3<\/td><td>7.1.3<\/td><\/tr><tr><td>7.5<\/td><td>The Stages of Evaluation<\/td><td> \u2014 <\/td><td>6.1.4<\/td><td>8.1.4<\/td><td>7.1.4<\/td><\/tr><tr><td>7.6<\/td><td>Contacting Procuring Entity during evaluation<\/td><td>7.3.6<\/td><td>6.1.5<\/td><td>8.1.5<\/td><td>7.1.5<\/td><\/tr><tr><td>7.7<\/td><td>Composition of the Committee; SoPP<\/td><td>7.1-2, 7.1-3<\/td><td>6.2.1<\/td><td>8.2.1<\/td><td>7.2.1<\/td><\/tr><tr><td>7.8<\/td><td>Role of the Committee<\/td><td>7.1-2-c<\/td><td>6.2.2<\/td><td>8.2.2<\/td><td>7.2.2<\/td><\/tr><tr><td>7.9<\/td><td>Handling Dissent among the Committee<\/td><td>7.6.12<\/td><td>6.2.3<\/td><td>8.2.3<\/td><td>7.2.3<\/td><\/tr><tr><td>7.10<\/td><td>Independence, Impartiality, Confidentiality, No COI<\/td><td>7.6.13<\/td><td>6.2.4<\/td><td>8.2.4<\/td><td>7.2.4<\/td><\/tr><tr><td>7.11<\/td><td>Timely Processing of Tenders<\/td><td>7.6.1<\/td><td>6.2.5<\/td><td>8.2.5<\/td><td>7.2.5<\/td><\/tr><tr><td>7.12<\/td><td>Extension of Bid\/ Tender Validity Period<\/td><td>7.6.2<\/td><td>6.2.6<\/td><td>8.2.6<\/td><td>7.2.6<\/td><\/tr><tr><td>7.13<\/td><td>Consideration of Lack of Competition<\/td><td>7.6.10<\/td><td>6.2.7<\/td><td>8.2.7<\/td><td>7.2.7<\/td><\/tr><tr><td>7.14<\/td><td>Committee Recommendations\/ Report<\/td><td>7.6.14<\/td><td>6.2.8<\/td><td>8.2.8<\/td><td>7.2.8<\/td><\/tr><tr><td>7.15<\/td><td>Preliminary Examination<\/td><td>7.3<\/td><td>6.3<\/td><td>8.3<\/td><td>7.3.1<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>7.1 Shortlisting of Consultants \u2014 Expression of Interest (EoI) [C ONLY]<\/span><\/h1>\n<aside class=\"note\">this entire section is the consultancy manual's Chapter 7. It has no counterpart in the goods, works or non-consultancy Manuals.<\/p><\/aside>\n<h2>7.1.1<\/span>Basic Considerations<\/span><\/h2>\n1. Why two stages are necessary: Due to the inherent complexities of evaluation of physically non-measurable scope and quality standards of consultancy proposals<\/em>, IT IS too time-consuming and expensive<\/em> for the Procuring Entity to invite \u2014 as well as for the consultancy firms to prepare \u2014 and evaluate proposals from all consultants who want to compete<\/em>.<\/p>\nTherefore, procurement of consultancy is done in a two-stage process<\/em>.<\/p>\n2. The first stage: The qualified firms with requisite experience, technical and financial capabilities<\/em> \u2014 who can be trusted to deliver the required services at the desired level of quality<\/em> \u2014 ARE shortlisted transparently<\/em>. This shortlisting is done through the expression of Interest (EoI) process<\/em>.<\/p>\n<aside class=\"note\">The caution: \"care should be taken to avoid stipulation of shortlisting qualification criteria disproportionate to the requirement of the services, that May lead to restricted shortlist and lack of competition in the second stage<\/strong>.\"<\/p><\/aside>\nadequate time should be allowed for getting responses from interested consultants. The Procuring Entity shall make available copies of the EoI document to the interested consultants on its website and e-procurement portal (GeM\/ CPPP)<\/em>.<\/p>\n3. The second stage: In the second stage \u2014 request for proposals (RfP)<\/em> \u2014 proposals containing technical and financial bids<\/em> Are invited from such shortlisted bidders<\/em>. Selection of the winning bidder is based on the quality of the proposal and, where appropriate, on the cost of services<\/em> To be provided.<\/p>\n<h2>7.1.2<\/span>The Four Modes of EoI<\/span><\/h2><h3>A. Open Tender Enquiry (OTE) \u2014 Rule 183(ii) of GFR 2017<\/em><\/span><\/h3>\nFor procurement above Rs. 50 (rupees fifty) lakh<\/em>, shortlisting is done in an openly advertised competitive (OTE mode) shortlisting process called Expression of Interest (EoI)<\/em> \u2014 giving equal opportunity to all interested bidders<\/em> To be considered for shortlisting.<\/p>\nUnder EoI, the \"Request for Expression of Interest\" (REoI)<\/em> is advertised on the Central Public Procurement Portal (CPPP)<\/em> at www.eprocure.gov.in AND ON Government E-marketplace (GeM)<\/em>.<\/p>\nAn organisation having its own website should also publish all its advertised tender enquiries on the website<\/em>. The advertisements should give the complete web address from where the bidding documents can be downloaded<\/em>.<\/p>\nA complete ToR should be ready before requesting EoI.<\/strong><\/p>\nAttention of known reputed consultants May also be separately drawn<\/em> Wherever possible.<\/p>\nThe advertisement must include, among other things:<\/p>\n<aside class=\"note\">THE last date of submission of EoI<\/em> \u00b7 how to get\/ download a copy of the EoI document including ToR<\/em> \u00b7 contact information of the Procuring Entity with the name of contact person<\/em>, and so on<\/p><\/aside>\n<h3>B. Global Tender Enquiry (GTE)<\/span><\/h3>\nin case it is felt that likely consultants May not be available in India<\/em>, the EoI process May be done on global Tender Enquiry (GTE) process<\/em> \u2014 BY sending REoI notice to foreign embassies in India and Indian embassies in relevant countries<\/em>.<\/p>\n<aside class=\"note\">Subject to the restriction on GTE for tenders below Rs. 200 Crore<\/strong> \u2014 see Chapter 4 Part B, para 4.9.2.<\/em><\/p><\/aside>\n<h3>C. Limited Tender Enquiry (LTE) \u2014 Rule 183(i) of GFR 2017<\/em><\/span><\/h3>\nIn procurements of consultancy services below Rs. 50 (rupees fifty) lakh<\/em>, shortlisting is done without a formal published Expression of Interest<\/strong> \u2014 akin to a limited Tender Enquiry (LTE) process<\/em>.<\/p>\nThe three-step procedure:<\/p>\n<ol class=\"lst\"><li>To start with, the preparation of a long list of potential consultants<\/em> May be done on the basis of formal or informal enquiries<\/em> FROM: Other ministries or departments or organisations involved in similar activities \u00b7 chambers of commerce & industry \u00b7 association of consultancy firms<\/em>, etc.<\/li><li>The Procuring Entity should scrutinise the preliminary long list<\/em> AND shortlist the prima facie eligible and capable contractors<\/em> From the long list.<\/li><li>The number of consultants in this moderated long-list should not be less than three<\/em>. In case sufficient consultants cannot be located, then the responses May be called from a lesser number of consultants \u2014 but not less than three in any case, after taking ca's approval<\/strong>.<\/li><\/ol>\nThe panel device: To smoothen this shortlisting for projects below Rs. 50 lakh, procuring entities who do frequent procurement of consultancy services<\/em> May consider preparation of a panel of qualified consultants, after evaluation of their credentials \u2014 on the lines of registration of vendors in procurement of goods<\/em>.<\/p>\nIF THE complexity of the project so justifies<\/em>, A formal EoI May be advertised even for procurements below Rs. 50 lakh, with the approval of ca<\/strong>.<\/p>\n<h3>D. Special Limited Tender Enquiry (SLTE) \u2014 Rule 162 of GFR 2017<\/em><\/span><\/h3>\nLTE mode for EoI \u2014 even for values higher than Rs. 50 lakh<\/em>, where normally OTE should have been done \u2014 is permissible in certain exceptional circumstances<\/em>.<\/p>\nPowers to sanction procurement on LTE basis in such exceptional cases May be laid down in SoPP, based on a certificate of urgency signed by the indentor<\/em>.<\/p>\nThis mode has the merit of being quicker, but VfM obtained May be less than in case of OTE<\/em>; Hence it should be restricted to the following four situations: A) the Competent Authority certifies that there is an existing or prospective urgency for operational or technical requirements<\/em>, and any additional expenditure involved by not procuring through advertised tender enquiry is justified in view of urgency. The Ministry\/ Department should also put on record the nature of the urgency and reasons why the procurement could not be anticipated earlier<\/em>. b) THE sources of supply are definitely known<\/em>, and the possibility of fresh source(s) beyond those being tapped is remote<\/em>. c) THERE ARE sufficient reasons, to be recorded in writing by the Competent Authority<\/em>, indicating that it will not be in public interest<\/em> To procure the services through advertised tender enquiry. D) Government policy designates procurement from specific agencies<\/em>.<\/p>\n<h2>7.1.3<\/span>Evaluation of the REoI<\/span><\/h2><h3>A. General Norms<\/span><\/h3>\n<aside class=\"note\">For the role of the evaluation committee, general norms of evaluation, preliminary examination of bids, and evaluation of qualifications<\/em>, the provisions of paras 7.2 to 7.15 of this Unified Manual (CS paras 8.1\u20138.4) apply mutatis mutandis<\/em>.<\/p><\/aside>\n<h3>B. Evaluation of Responsiveness and Eligibility<\/span><\/h3>\n1. ONLY substantively responsive eois<\/em> Shall be evaluated for shortlisting. A substantively responsive EoI is complete and conforms to the REoI document's essential terms and conditions<\/em>.<\/p>\n2. The pass\/ fail Rule: The Procuring Entity shall determine whether the consultants are eligible as per laid-down eligibility criteria. The eligibility evaluation shall be on a \"pass\" or \"fail\" basis. A consultant must achieve a \"pass\" on all the criteria to proceed to the next step. Any consultant not achieving a 'pass' in any of the eligibility criteria shall be rejected as non-responsive<\/strong>.<\/p>\n<h3>C. Evaluation of Qualification \u2014 the Nine Rules<\/span><\/h3>\n1. The Procuring Entity shall evaluate the consultants for shortlisting, inter alia<\/em>, based on their past experience of handling general and similar consultancy assignments, and financial capability of the firm<\/em>.<\/p>\n2. No borrowed credentials: The determination shall not consider the qualifications of other firms \u2014 such as the consultant's subsidiaries, parent entities, affiliates, or any other entity different from the consultant<\/strong>. Assignments completed by the consultant's individual experts working privately or through other consulting firms<\/em>cannot be claimed as the relevant experience of the consultant, or that of the consultant's partners or sub-consultants<\/strong>.<\/p>\n3. The Procuring Entity reserves the right to waive minor deviations in the qualification criteria<\/em>, if they do not materially affect the capability of a consultant to perform the contract<\/em>.<\/p>\n4. Key experts are not evaluated at EoI stage \u2014 and the reason: The qualification and experience of key experts are not included in the shortlisting criteria but shall be evaluated at the RfP stage<\/em>.<\/p>\n<aside class=\"note\">Since the bidders who meet the REoI qualification can well manage to attract the right key experts during RfP.<\/strong><\/p><\/aside>\n5. In case a particular certification\/ licence is required<\/em> To perform the assignment, that May also be included in eligibility or qualification criteria<\/em>.<\/p>\n6. The suggested qualification criteria table and weightages:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Criteria \/ Sub-criteria<\/th><th>Suggested Values<\/th><th>Sub-criteria weight<\/th><th>Criteria weight<\/th><\/tr><\/thead><tbody><tr><td>Criteria 1 \u2014 general and similar experience<\/strong>(Bidders providing Consultancy services for at least the specified period and having completed the specified volume of general and similar consultancy assignments during the specified period)<\/em><\/td><td><\/td><td><\/td><td>70%<\/td><\/tr><tr><td>Similar assignments<\/em><\/td><td>define based on value, general and specific sector of work, region, key activities\/ methodologies\/ technologies<\/em> etc.<\/td><td><\/td><td><\/td><\/tr><tr><td>Consultants must have at least \u03b1 years' experience in Consultancy Services<\/td><td>\u03b1 = 7<\/td><td>20%<\/td><td><\/td><\/tr><tr><td>During the last \u03b1 years, Consultancy Assignments completed or substantially completed (at least \u03b3 payments received)<\/em> should be at least \u03b2<\/td><td>\u03b1 = 7 \u00b7 \u03b3 = 80% \u00b7 \u03b2 = 7<\/td><td>50%<\/td><td><\/td><\/tr><tr><td>Out of the Consultancy Assignments mentioned above, \u03b4 should be similar<\/em> assignments<\/td><td>\u03b4 = 2<\/td><td>30%<\/td><td><\/td><\/tr><tr><td>criteria 2 \u2014 financial capability<\/strong>(Overall financial strength of the consultant in terms of turnover, profitability, and cash flow \u2014 liquid assets \u2014 situation)<\/em><\/td><td><\/td><td><\/td><td>30%<\/td><\/tr><tr><td>turnover:<\/strong>Minimum average annual turnover of at least Rs. \u03b8 Crores, at least \u03ba of which should be from Consultancy Service Contracts (total payments received for contracts in progress or completed) within the last \u03b1 years<\/em><\/td><td>\u03b8 = 200% of the value of assignment \u00b7 \u03ba = 50% \u00b7 \u03b1 = 7<\/td><td>70%<\/td><td><\/td><\/tr><tr><td>financial viability \u2014 net worth: The Net Worth of the Bidder firm should not be negative on 'The Relevant Date' and should not have eroded by more than \u03be in the last 3 YEARS<\/em><\/td><td>\u03be = 30%<\/td><td>30%<\/td><td><\/td><\/tr><tr><td>relaxation for start-ups:<\/strong>Qualification criteria can be relaxed up to \u03bb% for start-ups, subject to meeting the quality and technical specifications during the RfP<\/em><\/td><td>\u03bb = 20% (twenty per cent)<\/td><td><\/td><td><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">note on evidence: \"during the RfP process, the consultant shall be asked to furnish documentary evidence to demonstrate his compliance to criteria 1 and criteria 2<\/strong>.\"<\/p>\nthe \"relevant date\" when the specified period ends:<\/p>\n<ol class=\"lst\"><li>For all annual reports<\/em> \u2014 periods mentioned are ending with the financial year of the company<\/em> [say 2023-24];<\/li><li>FOR other statements<\/em> \u2014 THE latest statement available on the last date of bid submission<\/em>.<\/li><\/ol><\/aside>\n7. Qualification criteria shall be based entirely upon the capability and resources required to perform the particular contract satisfactorily<\/em>, considering bidders' experience and past performance, capabilities with respect to personnel, equipment and manufacturing facilities, financial standing and relevant compliance with environmental protection regulations<\/em>. There should be no qualification criteria that would be advantageous to foreign consultants at the cost of domestically provided consultancy<\/em>.<\/p>\n8. Demerged entities: Tender documents must clearly mention if (and under what conditions) the demerged entity will be permitted to use credentials of original\/ parent entity (for initial five years from the incorporation of the demerged entities)<\/em> To satisfy the qualification criteria or not.<\/p>\n9. The turnover-multiple caution \u2014 an express criticism of prevailing practice:<\/p>\n<aside class=\"note\">\"it is also noted that, while shortlisting\/ selecting consultants, some procuring entities are keeping the minimum qualifying financial turnover at the level of 5\u201310 times of the estimated cost of the consultancy work. This, prima facie, appears high<\/strong>.\"<\/p>\n\"higher qualification criteria increase the likelihood of adequate experience\/ capacity but reduce the competition; If set unduly high, they May increase the cost without any improvement in quality<\/strong>.\"<\/strong>(DoE OM No. F.18\/13\/2020-PPD dated 13.07.2020)<\/em><\/p>\nit is suggested that the criteria should be fixed on a reasonable basis while drafting tender documents<\/em>, and such higher minimum qualifying turnover should be kept only if adequately justified<\/em>.<\/p>\n\"in higher-value procurements, the minimum annual turnover should not be blindly a multiplier of the assignment value \u2014 but there May be an upper cap on demanded turnover, so as not to restrict competition only to the big four or five consultancy firms<\/strong>.\"<\/p><\/aside>\n<h3>D. Simplified vs Marking-Scheme Evaluation at EoI<\/span><\/h3>\n10. The default \u2014 simplified criteria: In EoI, simplified evaluation criteria should be used, instead of marking schemes<\/em>. A fail-pass, minimum benchmark in each criteria\/ sub-criteria<\/em> Can be specified.<\/p>\n<aside class=\"note\">e.g., must have past experience of at least two similar projects; firm must have a turnover of at least Rs 10 (Rupees Ten) Crores, and so on. Any firm which passes these benchmarks is declared as qualified.<\/em><\/p><\/aside>\n11. The complex-case alternative \u2014 with a worked example: However, in a complex situation, marks\/ scores May be assigned to the response of each consultant based on weightages assigned to each of the criteria in the EoI<\/em>.<\/p>\n<aside class=\"note\">Worked example given in the Manual \u2014 in case of number of assignments in last 7 years<\/em>, out of a maximum of 35 marks for the sub-criteria, scoring can be: a) 3 marks per assignment up to 7 ASSIGNMENTS (BENCHMARK); and b) 3.5 marks for additional assignments, subject to a maximum of 35.<\/p><\/aside>\n12. The purpose of scoring \u2014 not merely disqualification: \"this exercise of scoring is not merely for disqualification of firms below a threshold, but to establish the relative strengths and weaknesses of the applicants \u2014 in order to arrive at a robust short list of qualified consultants who have the required experience and qualifications to deliver the required services at the desired level of quality<\/strong>.\"<\/p>\n13. The 75% threshold: The Procuring Entity shall shortlist all the consultants who secure the minimum required marks \u2014 normally 75% (seventy-five per cent)<\/em>. THE minimum qualifying requirement shall be specified in the EoI document<\/em>.<\/p>\n<h2>7.1.4<\/span>The EoI Evaluation Report<\/span><\/h2>\n1. The shortlist size Rule \u2014 minimum three, maximum eight:<\/p>\nThe short list of firms is required for the selection of consultancy services in a competitive process with:<\/p>\n<aside class=\"note\">A minimum of three (Rule 184 of GFR 2017)<\/strong> AND generally not more than eight<\/strong> \u2014 to avoid inordinate delays in evaluation of the subsequent RfP<\/em>.<\/p><\/aside>\nIf there are a larger number of consultants meeting the evaluation criteria<\/em>, the shortlist shall be restricted to a specified number of consultants<\/em> \u2014 if not specified, eight (8) consultants<\/strong> \u2014 based on higher average turnover<\/strong> (or any other criteria, if so stipulated therein).<\/p>\n2. National-only shortlists: The short list May comprise only national consultants<\/em> (firms registered or incorporated in the country and having registered office in India<\/em>) FOR small assignments<\/em> \u2014 AND indicated in the EoI<\/em>.<\/p>\nThis situation is applicable where:<\/p>\n<ul class=\"lst\"><li>Qualified national firms are available at a competitive cost; Or<\/li><li>the nature of the assignment is such that a foreign consultant's inclusion is not justified<\/em>(for example, a training or outreach to be carried out in local language)<\/em>; or<\/li><li>foreign consultants have not expressed any interest<\/em>.<\/li><\/ul>\n3. CONCURRENT ASSIGNMENTS \u2014 the capacity check: IF THE same firm is considered for concurrent assignments *(for example, a construction supervision consultant for different stretches\/ packages of rehabilitation\/ reconstruction of a road contract)*, the Procuring Entity shall *assess the firm's overall capacity to perform multiple contracts before including it in more than one short list*. HOWEVER, <\/strong>this needs to be pre-declared in the EoI documents<\/em>.<\/p>\n4. The evaluation committee May submit its EoI evaluation report to ca for approval<\/em>. THE tender Committee format at Annexure 6<\/em> Can be used mutatis mutandis<\/em> for this purpose.<\/p>\n<h2>7.1.5<\/span>Declaration of Shortlist and Issue of RfP<\/span><\/h2>\n1. Provisional shortlisting: Eois of consultants that succeed in the above evaluation shall be shortlisted. Provisionally shortlisted consultants will be informed of the condition(s) that must be met before submitting their proposal in the RfP process<\/em>.<\/p>\n2. Validity of the shortlist \u2014 the six-month rule: Only shortlisted (including provisionally shortlisted) consultants shall be invited to participate in the following RfP process<\/em>.<\/p>\nSuch shortlisting shall remain valid for a period specified in the REoI \u2014 six months from the date of declaration, if not so specified<\/strong>.<\/p>\n<aside class=\"note\">\"it's important that the RfP is issued as early as possible after shortlisting \u2014 since the qualification data on which shortlisting is based May tend to become outdated. In case such delay is more than 6 months, it would be better to re-invite EoI<\/strong>.\"<\/p><\/aside>\n3. Publication and the advertising bar: After the EoI evaluation report is accepted by the Competent Authority, the name and address of the shortlisted consultant(s) shall be published in the portal and notice board\/ bulletin\/ website of the Procuring Entity<\/em>.<\/p>\nAll consultants shall be advised about shortlisting of their eois or otherwise<\/em> \u2014 without disclosing the comparative position of their eois with that of others<\/strong>.<\/p>\nShortlisted consultants must not advertise or publish the same in any form without the prior written consent of the Procuring Entity.<\/strong><\/p>\n4. Shortlisting confers no rights: \"shortlisting a consultant is an administrative process and does not confer any legal or contractual rights on the shortlisted bidder. Since original documents\/ certificates are not being called for and examined at this stage, all shortlisting shall be conditional upon final verification of such documents\/ certificates during the RfP process<\/strong>.\"<\/p>\n<h2 class=\"src-C srchead\" data-src=\" C \">7.1.6<\/span>Shortlisting \u2014 Risks and Mitigation<\/span>C<\/span><\/h2><div class=\"srcblock src-C\" data-src=\" C \" data-label=\"Consultancy Manual only\">\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. Conflict of interest situations: It is possible that conflict of interest situations are not reported or declared by the participating consultants<\/em> \u2014 or sometimes by members of the evaluation committee<\/em>.<\/td><td>These situations need to be dealt with by signing declarations in specified formats<\/em> \u2014 both at the EoI bid stage as also in the technical proposal<\/strong> \u2014 AND by CEC members before undertaking the evaluation of proposals<\/strong>.<\/td><\/tr><tr><td>2. \"Qualifications leasing\":<\/strong>Local bidders with insufficient qualifications May show association with well-qualified (foreign or local) consultants \u2014 <\/strong>just to use their qualification documents to get the contract. These well-qualified consultants <\/strong>lease their qualification \u2014 but do not, or only minimally, contribute experience or key personnel at the execution stage<\/em>.<\/strong><\/td><td>This issue needs to be dealt with from the EoI stage<\/strong> BY: \u2022 very clearly identifying the qualified applicant<\/em>; and \u2022 putting on record\/ contract the guaranteed contribution from the partner with qualification<\/em>.<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>7.2 Bid Evaluation Process \u2014 the Governing Principle<\/span><\/h1>\nThe evaluation of bids is one of the most significant processes of procurement and must be transparent<\/em>.<\/p>\nAll bids are to be evaluated strictly based on the terms and conditions incorporated in the tender document and those stipulated by the bidders in their bids<\/strong>.<\/p>\nNo hearsay information or hitherto undeclared condition should be brought in while evaluating the bids.<\/strong><\/p>\nSimilarly, no tender enquiry condition (especially the significant\/ essential ones) should be overlooked\/ relaxed while evaluating the bids<\/strong>.<\/p>\n<aside class=\"note\">The aim: \"the aim should be to ensure that no bidder gets undue advantage at the cost of other bidders and\/ or at the cost of the Procuring Entity<\/strong>.\"<\/p><\/aside>\nG<\/span> \u2014 the single-vendor caution on preferences: \"care should be taken to ensure that preferences provided to any category of bidders on certain specified grounds do not result in a single vendor selection<\/strong>.\"<\/p>\nW<\/span> \u2014 the permitted evaluation factors: The Contracting Authority may include quality, price, technical merit, aesthetic and functional characteristics, environmental characteristics, running costs, cost-effectiveness, after-sales service and technical assistance, delivery date and delivery period or period of completion<\/em>, etc. \"no criteria shall be used for evaluation of tenders that cannot be verified or [are] not stated in the contract \u2014 with the exception of provisions of laws in force<\/strong>.\"<\/p>\n<h1 data-src=\"WCNC\">7.3 Evaluation in Different Tendering Systems<\/span>W<\/span>C<\/span>NC<\/span><\/h1>\n1. Single-stage single-envelope tendering: The evaluation of eligibility\/ qualification of bidders, technical, commercial, and financial aspects is done simultaneously<\/em>.<\/p>\nTHE lowest-priced bid that meets the eligibility\/ qualification criteria and technical and commercial conditions<\/em> Laid down in the tender documents is declared as successful<\/em>.<\/p>\n2. Single-stage two-envelope tendering \u2014 and the sanctity of the sealed financial bid:<\/p>\nInitially, only the techno-commercial bids would be opened and evaluated<\/em> for bids which successfully meet the eligibility\/ qualification criteria and techno-commercial aspects.<\/p>\nFinancial bids of such successful bidders only<\/em> Would be opened. The TC shall evaluate financial bids with a view to select the lowest (L1) bidder<\/em> Who meets the eligibility\/ qualification criteria and techno-commercial aspects.<\/p>\nEvaluators of technical proposals shall not have access to the financial proposals until the technical evaluation is concluded.<\/strong><\/p>\n<aside class=\"note\">The custody safeguard \u2014 an important practical instruction: \"it is of utmost importance that the authenticity, integrity, and sanctity of unopened financial bids must be ensured before their opening. All the financial bids May preferably be put in a large envelope, which May be dated, sealed, and signed (including by some of the bidders present) \u2014 to show that none of the bids were accessed during the custody<\/strong>.\"<\/p><\/aside>\n3. Two-stage bids: In two-stage bids, the PQB\/ EoI stage would have already been evaluated<\/em>, AND this second stage is for evaluation of responses to the second-stage two envelopes from the shortlisted qualified bidders<\/em>, following the procedure described in sub-para 2 above.<\/p>\n<h1>7.4 Preparation and Vetting of Comparative Statement<\/span><\/h1>\nExcept in cases up to Rs. 50 lakh (rupees fifty lakh)<\/strong>, the Procuring Entity should prepare a comparative statement of quotations (technical and financial) received in the order in which bids were opened<\/em>.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Type of bid<\/th><th>What the comparative statement contains<\/th><\/tr><\/thead><tbody><tr><td>Techno-commercial bid<\/td><td>information about deciding the responsiveness and eligibility of bids<\/em>, AND evaluating the technical suitability of offers<\/em><\/td><\/tr><tr><td>financial bid<\/td><td>information about rates quoted (including taxes), discounts if any<\/em>, AND any other information that has implications on the ranking of bids<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nthe concerned officers should sign the comparative statement<\/em> So prepared. It May also be vetted by the associated\/ integrated finance for veracity of information<\/em>.<\/p>\n<aside class=\"note\">W<\/span> \u2014 the e-procurement exemption:<\/strong>\"however, in case the comparative statement is prepared by the e-procurement portal, vetting by associated\/ integrated finance is not required<\/strong>.\"<\/p><\/aside>\n<h1 data-src=\"WCNC\">7.5 The Stages of Evaluation<\/span>W<\/span>C<\/span>NC<\/span><\/h1>\nthe evaluation of the bids shall be carried out in two stages<\/strong>:<\/p>\nAT THE first stage<\/em>, evaluation of responsiveness and technical bids<\/em> is taken up.<\/p>\nEvaluators of technical bids shall not have access to the financial bids until the technical evaluation is concluded<\/em> \u2014 AS THE envelope containing the financial bid is not opened till the technical evaluation is complete<\/em>.<\/p>\nThe financial bid of only such bidders will be opened which obtain minimum qualifying marks\/ standards prescribed for the technical bid<\/strong>.<\/p>\nThe evaluation shall be carried out in full conformity with the provisions of the tender document<\/strong>.<\/p>\n<h1>7.6 Contacting the Procuring Entity during the Evaluation<\/span><\/h1>\nFrom the time of bid submission to awarding the contract<\/em>, no bidder shall contact the Procuring Entity on any matter relating to the submitted bid<\/strong>.<\/p>\nIf a bidder needs to contact<\/em> The Procuring Entity for any reason relating to this tender and\/ or its bid, it should do so only in writing or electronically<\/strong>.<\/p>\n<aside class=\"note\">G<\/span> adds: \"The Procuring Entity shall keep these communications in view during the evaluation of bids, but is not expected to respond until the evaluation is complete.\"<\/em><\/p><\/aside>\nany effort by a bidder to influence the Procuring Entity during the processing of bids, evaluation, bid comparison or award decisions<\/strong> Shall be construed as a violation of the Code of Integrity<\/strong> \u2014 and the bid shall be liable to be rejected as non-responsive, in addition to other punitive actions<\/strong> for violation of the Code of Integrity as per the tender document.<\/p>\n<h1>7.7 Composition of the Tender Committee (TC)\/ Consultancy Evaluation Committee (CEC), and the SoPP<\/span><\/h1>\n<\/div><h2>7.7.1<\/span>The Direct Acceptance Threshold<\/span><\/h2>\nThere are delegations up to a threshold value \u2014 called the direct acceptance threshold<\/strong> \u2014 below which the evaluation of the bids May be entrusted solely and directly to the individual Competent Authority, without the involvement of a Tender Committee or any evaluation report<\/em>.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>The threshold<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span> GOODS<\/td><td>Tender Committee required for all cases having financial implications of more than Rs. 50 (rupees fifty) lakh<\/strong><\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> WORKS<\/td><td>\"\u2026direct acceptance threshold \u2014 normally LTE threshold of Rs 50 lakhs<\/strong>\"<\/td><\/tr><tr class=\"srcmark src-C\" data-src=\" C \"><td>C<\/span> Consultancy<\/td><td>CEC required for all cases having financial implications of more than Rs. 50 lakh<\/strong> *(including SLTE or Nomination Basis)*; for cases less than Rs. 50 lakh<\/strong>, direct acceptance<\/td><\/tr><tr class=\"srcmark src-NC\" data-src=\" NC \"><td>NC<\/span><\/td><td>(same as Goods)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nhe would carry out all the steps in the evaluation described in this Chapter, instead of the TC\/ CEC<\/em>, AND directly record reasons and decisions in the file itself<\/em> (or online, where such systems exist).<\/p>\nHe May ask for a technical suitability report from user departments if needed<\/strong>.<\/p>\nIn procurements above such a threshold \u2014 including nomination and SLTE modes<\/em> \u2014 evaluation is to be done by a Tender Committee\/ CEC.<\/p>\n<h2>7.7.2<\/span>Composition<\/span><\/h2>\n1. The three-member norm: TC\/ CEC should normally comprise three members, including<\/em>:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-C\" data-src=\" C \">A finance member<\/strong>(nominated by the Financial Adviser)<\/em> \u2014 C<\/span>: \"Financial Adviser or his representative\"<\/em>; and<\/li><li>A representative of the user<\/strong><\/li><\/ul>\n \u2014 as per soPP.<\/p>\n2. SIZE: \"TC\/ CEC should not be large\/ very large, as it May slow down the evaluation process<\/strong>.\"<\/p>\nhowever, suitable domain\/ technical experts May be included in the committee to render assistance in the evaluation of the bids<\/em>(W<\/span> adds: \"from the user department (or otherwise)\")<\/em>.<\/p>\n<aside class=\"note\">The no-second-committee Rule (in all four): \"there is no need to constitute any other committee for technical evaluation, preliminary evaluation, etc<\/strong>.\"<\/p><\/aside>\n3. The two independence Rules under Rule 173(xxii) of GFR 2017:<\/p>\n<aside class=\"note\">\"no member of the Tender Committee should be reporting directly to any other member of such committee, in case the estimated value of the procurement exceeds Rs. 50 lakhs<\/strong>.\"<\/p>\nW<\/span> and C<\/span> extend this to the accepting authority<\/em> as well: \"no member of the tender committee (or the accepting authority<\/strong>) should be reporting directly to any other member\u2026\"<\/p>\nG<\/span> and C<\/span> both urge extension below the threshold:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-G\" data-src=\" G \">G<\/span>: *\"<\/strong>this provision should be ensured in the constitution of all purchase committees, irrespective of the value of procurement.\"*<\/li><li class=\"srcmark src-C\" data-src=\" C \">C<\/span>: *\"<\/strong>Though the GFR stipulates this provision only when the estimated value of procurement exceeds Rs 50 lakh, it is desirable that the same provision should be followed in the constitution of all purchase committees irrespective of the value of procurement.\"*<\/li><\/ul>\nthe second Rule \u2014 recommending authority \u2260 accepting authority: \"the Tender Committee to consider bids May be so constituted that an authority holding powers for recommending the bids by virtue of his position as a member of the Tender Committee shall not also be the accepting authority for such tenders<\/strong>.\"<\/p><\/aside>\n4. The convenor: THE representative of the Procuring Entity will work as the convenor (member Secretary)<\/em> Of the TC\/ CEC.<\/p>\n5. Constitution at one level higher, and pre-nomination: \"tender committees May be constituted with the approval of one level higher than the Competent Authority<\/strong>.\"<\/p>\n\"it is advantageous for organisations doing procurements regularly to have pre-nominated (by designation) tender committees for various categories and value-slabs of procurements, included in the SoPP<\/strong>.\"<\/p>\n6. C<\/span> \u2014 the convenor's additional duty at the outset: \"he shall distribute the RfP to the CEC members and request them to familiarise themselves with the characteristics and requirements of the assignment, the selection procedures, and the evaluation criteria and sub-criteria. The convenor of the CEC should also call a meeting of the CEC members to review any questions they May have on the evaluation principles, procedures, and objectives<\/strong>.\"<\/p>\n<h2>7.7.3<\/span>The Schedule of Procurement Powers (SoPP) \u2014 the Six Approval Stages<\/span><\/h2>\nthe Competent Authority's written approval must be taken at various stages of procurement, before proceeding ahead<\/strong> \u2014 e.g.:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Stage requiring CA's written approval<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>i<\/td><td>administrative\/ financial sanctions\/ issue of tender (G<\/span> adds: including Tender Documents)<\/em><\/td><\/tr><tr class=\"srcmark src-G\" data-src=\" G \"><td>ii<\/td><td>approval of techno-commercial evaluation and opening of price bids<\/em> In case of a two-packet system (G<\/span> adds: and similar approvals in case of PQB modes and Two-Stage Tendering)<\/em><\/td><\/tr><tr><td>iii<\/td><td>price negotiations, if permitted under specified circumstances<\/em><\/td><\/tr><tr><td>iv<\/td><td>approval of financial evaluation and award of contract<\/em> To the selected bidder(s)<\/td><\/tr><tr><td>v<\/td><td>cancellation of procurement and re-tendering<\/td><\/tr><tr><td>vi<\/td><td>in some particular decisions during contract execution<\/em> \u2014 e.g., the exercise of the option clause or any variation beyond the laid-down percentage \u00b7 forfeiture\/ release of performance securities \u00b7 premature termination\/ foreclosure of contract<\/em>, etc.<\/td><\/tr><\/tbody><\/table><\/div>\nThe minister\/ board-level simplification (in all four):<\/p>\n<aside class=\"note\">\"wherever such Competent Authority is a minister of the Central Government (or board of directors in a CPSE), obtaining approvals at so many stages May delay the process and unnecessarily overburden them. Therefore, in such cases, their approval May only be obtained at the \"approval of financial evaluation and award of contract\". Powers for approvals at intermediate stages May be delegated to appropriate levels in such cases<\/strong>.\"<\/p><\/aside>\nthe Procuring Entity should lay down a Schedule of Procurement Powers (SoPP) detailing such thresholds<\/em>. It can also lay down the powers, jurisdiction, and composition of various levels of the Tender Committee and corresponding Competent Authority<\/em> for various categories of procurement and different threshold values.<\/p>\n<aside class=\"note\">(Suggested SoPP format \u2014 G<\/span> Annexure 4 \u00b7 W<\/span>, C<\/span>, NC<\/span> Annexure 2. The exact values of thresholds must be decided by the Procuring Entity in conformity with DFPR.<\/strong>)<\/em><\/p><\/aside>\n<h1>7.8 Role of the Tender Committee\/ CEC<\/span><\/h1>\n1. Custody: The member Secretary of the TC\/ CEC<\/strong> (OR THE competent Authority, in direct acceptance cases<\/em>) SHALL:<\/p>\n<ul class=\"lst\"><li>Receive the bids opened, along with other documents, from the Bid Opening Committee\/ tender opening officials<\/em>; and<\/li><li>BE responsible for the safe custody of the documents and for the processing involved at all steps in finalising the procurement<\/strong>.<\/li><\/ul>\n2. Scope of responsibility \u2014 and note how much wider the CEC's is:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>The Committee shall be responsible for<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span><\/td><td>ALL aspects and stages of the tender evaluation<\/em><\/td><\/tr><tr class=\"srcmark src-multi\" data-src=\" W NC \"><td>W<\/span>, NC<\/span><\/td><td>all aspects and stages of the evaluation of technical and financial proposals, negotiations, and final award of contract<\/em><\/td><\/tr><tr class=\"srcmark src-C\" data-src=\" C \"><td>C<\/span><\/td><td>all aspects and stages of the consultant selection<\/strong> \u2014 that is: Evaluation of EoI \u00b7 shortlisting of consultants \u00b7 deciding tors \u00b7 issuance of RfP \u00b7 evaluation of technical and financial proposals \u00b7 negotiations \u00b7 and final selection of the consultant<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n3. The personal-discharge Rule \u2014 one of the most important governance provisions in the chapter:<\/p>\n<aside class=\"note\">\"TC\/ CEC duties are to be discharged personally by the nominated officers. They May take help of their subordinate officers by way of reports\/ evaluations \u2014 but they would still be answerable for such decisions.<\/strong><\/p>\n TC\/ CEC members cannot co-opt or nominate others to attend deliberations on their behalf.<\/strong><\/p>\n TC\/ CEC deliberations are best held across the table \u2014 and not through circulation of notes<\/strong>.\"<\/p><\/aside>\n4. The four pre-evaluation checks: After the proposals have been opened, the evaluation process can begin. Before starting the evaluation<\/strong>, the TC\/ CEC members should ensure that they: A) have no conflict of interest<\/strong>(W<\/span> adds: \"as defined in the tender document\")<\/em>; B) understand the evaluation criteria<\/strong> \u2014 C<\/span>: \"understand the rating and scoring system\"<\/em>; C) have been provided with evaluation worksheets<\/strong>; and d) AGREE ON how to evaluate the proposals<\/strong>.<\/p>\n<h1>7.9 Handling Dissent among the Tender Committee\/ CEC<\/span><\/h1>\n<aside class=\"note\">NOTE: The Consultancy Manual heads this section \"Handling Dissent among Tender Committee<\/em>\" \u2014 an apparent carry-over, since its committee is the CEC.<\/p><\/aside>\n1. Resolve by discussion, not by correspondence:<\/p>\n<aside class=\"note\">\"all members of the TC should resolve their differences through personal discussions \u2014 instead of making to-and-fro references in writing<\/strong>.\"<\/p><\/aside>\nin cases where it is not possible to come to a consensus<\/em> And differences persist amongst TC members:<\/p>\n<ul class=\"lst\"><li>THE reasons for dissent of a member should be recorded in a balanced manner, along with the majority's views on the dissent note<\/strong>;<\/li><li>THE final recommendations should be that of the majority view<\/strong>.<\/li><li>\"however, such situations should be rare.<\/strong>\"<\/li><li>the Competent Authority (ca) can overrule such dissent notes after recording reasons for doing so clearly. His decision would be final<\/strong>.<\/li><\/ul>\n2. Where the ca disagrees with the committee \u2014 the send-back procedure:<\/p>\n<aside class=\"note\">\"in cases where the ca does not agree with the majority or unanimous recommendations of the TC, he should record his views and, if possible, firstly send it back to TC to reconsider along the lines of the tender accepting authority's views.<\/strong><\/p>\nHowever, if the TC \u2014 after considering the views of the ca \u2014 sticks to its own earlier recommendations, the ca can finally decide as deemed fit, duly recording detailed reasons.<\/strong><\/p>\n He will be responsible for such decisions. However, such situations should be rare<\/strong>.\"<\/p><\/aside>\n<h1>7.10 Independence, Impartiality, Confidentiality and 'No Conflict of Interest' at All Stages of Evaluation of Bids<\/span><\/h1>\n1. No communication with bidders: Members of the TC\/ CEC should not have any conflict of interest, and should not directly engage in any communication with bidders \u2014 from the date of their appointment to the date on which the contract is awarded<\/strong>.<\/p>\n2. Confidentiality and its one exception:<\/p>\nInformation relating to the evaluation of bids and the committee's deliberations<\/em> Should be confidential, and not be shared with persons not officially connected with the process \u2014 until the award of the contract is notified to the successful firm<\/strong>.<\/p>\n<aside class=\"note\">The exception: \"\u2026Except that after technical evaluation, the list of successful bidders May be published, as required in the tender document.\"<\/em><\/p>\nthe absolute bar: \"under no circumstances should the tender file or confidential information contained therein be provided for scrutiny or for decision to any person\/ office who is not involved in decision-making<\/strong>.\"<\/p><\/aside>\n3. The declaration requirement \u2014 extended to non-members:<\/p>\n\"all technical, commercial and finance officials who have contributed to the techno-commercial or financial evaluation of bids \u2014 even though they May not be part of the TC \u2014 should:<\/strong><\/p>\n<ul class=\"lst\"><li>Deal with the procurement in an independent, impartial manner<\/strong>;<\/li><li>Have no conflict of interest with any of the bidders involved;<\/strong><\/li><li>Maintain confidentiality of the information processed during the evaluation process and not allow it to reach any unauthorised person<\/strong>.\"<\/li><\/ul>\nthey should sign a declaration at the end of their reports\/ notings<\/strong> Stating that:<\/p>\n<aside class=\"note\">\"I declare that i have no conflict of interest with any of the bidders in this tender.\"<\/strong><\/p><\/aside>\nTC members May also make such a declaration at the end of their reports.<\/em><\/p>\n4. Handling external references, grievances and directives during processing:<\/p>\n<aside class=\"note\">\"during the processing of the tender, all references\/ grievances\/ complaints\/ directives\/ requests for information from any sources \u2014 including higher-level officials\/ authorities within the Ministry or from outside \u2014 May be forwarded to the TC\/ convener of TC for its examination on merits and action as considered necessary \u2014 maintaining independence, impartiality, confidentiality and 'no conflict of interest'.<\/strong><\/p>\n An interim reply May be provided that the tender is still under consideration, and that a final response would be given after the declaration of the award of contract<\/strong>.\"<\/p><\/aside>\n<h1>7.11 Timely Processing of Tenders<\/span><\/h1>\n(Rule 174(i) of GFR 2017)<\/em><\/p>\n1. The 90 \u2192 60 \u2192 75 day Rule:<\/p>\n<aside class=\"note\">\"delays in finalising procurement deprive the public of the intended benefits and result in lost revenues and cost over-run.<\/strong><\/p>\nCurrently, the ministries\/ departments are generally awarding the contracts in 90 days from the date of tender opening \u2014 for which the ministries\/ departments are asking for a validity of offer by the contractors for 90 days.<\/strong><\/p>\n In order to further shorten the period for award of contract, the ministries\/ departments should try to shorten the procurement decision period to 60 days from the date of opening of the tenders in most of the cases.<\/strong><\/p>\n Only in exceptional cases \u2014 like two-packet\/ two-stage bidding \u2014 the period May be extended. However, in no case should this time period exceed 75 days<\/strong>.\"<\/p><\/aside>\n2. The CPWD example \u2014 maximum days for award of contract W<\/span>:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Procuring Officer<\/th><th>Limit of procurement (Rs. crore)<\/th><th>Maximum days for decision for award of contract<\/th><\/tr><\/thead><tbody><tr><td>Assistant Engineer<\/td><td>0.06<\/td><td>10 DAYS<\/td><\/tr><tr><td>Executive Engineer<\/td><td>1.00<\/td><td>15 DAYS<\/td><\/tr><tr><td>Superintending Engineer<\/td><td>10.00<\/td><td>30 DAYS<\/td><\/tr><tr><td>Chief Engineer<\/td><td>30.00<\/td><td>45 DAYS<\/td><\/tr><tr><td>Additional Director General and above<\/td><td>More than 30.00<\/td><td>60 DAYS<\/td><\/tr><\/tbody><\/table><\/div>\n3. The published Schedule and the accountability Rule:<\/p>\n\"the complete time Schedule of finalising the tender process \u2014 from the date of issuing the tender to the date of issuing the contract \u2014 should be published in the bid documents<\/strong>.\"<\/p>\n<aside class=\"note\">\"every official in the chain of the procurement operation is accountable for acting in a specified time, so that the tender is finalised on time. Any deviation from the Schedule May be monitored and explained, by way of a system of management reporting<\/strong>.\"<\/strong>(Appendices 4 and 5 of the Goods Manual.)<\/em><\/p>\na simple practical device: \"as a check, the proposed Schedule of tender process May be printed on the inside cover of the procurement file \u2014 where the actual date of completion of various stages May be recorded<\/strong>.\"<\/p><\/aside>\n4. The fixed weekly TC meeting day:<\/p>\n<aside class=\"note\">\"it has been also noted that delay in decision-making after opening of certain tenders is taking place because the tender committees are not meeting frequently.<\/strong><\/p>\nIn order to ensure that most of the tenders are decided as per the new timelines, it has been decided that the ministries\/ departments May notify at least one day of every week for the meeting of TC.<\/strong><\/p>\n Instructions May be issued by the concerned organisation that on such pre-fixed days, no member of the TC shall normally take leave or proceed on tour, etc<\/strong>.\"<\/p><\/aside>\n<h1>7.12 Extension of Bid\/ Tender Validity Period<\/span><\/h1>\n(Rule 174(iii) of GFR 2017)<\/em><\/p>\n1. The primary obligation: The entire process of scrutiny and evaluation of tenders, preparation of ranking statement and notification of award<\/em>must be done expeditiously and within the original tender validity period<\/strong>.<\/p>\n2. The extension procedure and its five Rules:<\/p>\nIf, due to some exceptional and unforeseen reasons<\/em>, the purchase organisation is unable to decide on the placement of the contract within the original validity period, it May:<\/p>\n<ul class=\"lst\"><li>Preferably request \u2014 before expiry of the original validity period<\/strong> \u2014 all the responsive tenderers<\/strong> To extend their tenders up to a specified period;<\/li><li>While asking for such extension, the tenderers are also to be asked to extend their offers \"as it is\", without any changes therein<\/strong>;<\/li><li>They May also be requested to extend the validity of the EMD for the corresponding additional period<\/strong> (which is to be specified in the request);<\/li><li>\"a tenderer May not agree to such a request \u2014 and this will not lead to forfeiture of its EMD<\/strong>\";<\/li><li>But the tenderers who do agree to extend the validity are to do so without changing any terms, conditions, and so on, of their original tenders<\/strong>;<\/li><li>Reasons for seeking extension of bid validity should be recorded by the procuring officers<\/strong>.<\/li><\/ul>\n3. TREATMENT OF \"not-EXTENDED\" AND \"WITHDRAWN\" BIDS \u2014 the three scenarios:<\/p>\n<aside class=\"note\">Definitions used:<\/strong>\"not-extended bids<\/em>\" = <\/strong>refusal by tenderer(s) to extend validity. <\/strong>\"withdrawn bids<\/em>\" = <\/strong>withdrawal of offer within validity.<\/p><\/aside>\nA) if it happens before completion of the techno-commercial evaluation<\/strong>:<\/p>\n<aside class=\"note\">Then the techno-commercial evaluation (including the not-extended and withdrawn bids) shall be completed<\/strong>. If a not-extended or withdrawn bid qualifies in techno-commercial evaluation<\/em>, the financial bid(s) of such bidders shall also be opened<\/strong>, and action shall be taken as per sub-para (b) below.<\/p><\/aside>\nB) if it happens after techno-commercial evaluation but before completion of financial bid evaluation<\/strong>:<\/p>\n<aside class=\"note\">Financial bid evaluation (including not-extended and withdrawn bids<\/strong>) shall be completed.<\/p>\n<ul class=\"lst\"><li>i) IF A withdrawn bid happens to be the L-1 bidder<\/strong> \u2014 (the lowest acceptable bidder, who is techno-commercially qualified for the supply of a bulk quantity, and would have been awarded a contract but for his refusal to extend validity)<\/em> \u2014 the tender must be re-tendered<\/strong>.<\/li><li>ii) since this May take some time, the Procuring Entity May cover their immediate short-term needs through an appropriate mode of procurement<\/strong>.<\/li><li>iii) the critical Rule: \"however, such L1 price of the not-extended or withdrawn bids shall not be taken as precedence for determining price estimates or reasonableness<\/strong>.\"<\/li><\/ul><\/aside>\nc) in case of QCBS<\/strong> System of evaluation:<\/p>\n<aside class=\"note\">The proposal obtaining the highest total combined score<\/strong> In evaluation of quality and cost is identified, which is ranked as H-1<\/strong>. If a not-extended or withdrawn bid happens to be the H-1 bidder, the tender must be re-tendered<\/strong>.<\/p><\/aside>\n<h1>7.13 Consideration of Lack of Competition in OTE\/ GTE and LTE<\/span><\/h1>\n(Rule 173(xx) and (xxi) of GFR 2017)<\/em><\/p>\n1. What counts as adequate competition:<\/p>\n\"the number of bids received which can indicate adequate competition depends on the parameters of procurement (value, specification, mode of procurement, tendering system, etc.) and the market situation. This has to be judged by the Tender Committee<\/strong>.\"<\/p>\n<aside class=\"note\">the benchmark: \"however, less than three independent bids (without suspicion of the cartel) May indicate a lack of competition<\/strong>.\"<\/p>\nthe mandatory paragraph: \"TC must record a paragraph in its report about the adequacy or otherwise of competition in the tender<\/strong>.\"<\/p><\/aside>\n2. THE 'single offer' situation \u2014 and the express criticism of routine re-tendering:<\/p>\nSometimes, against advertised\/ limited tender cases, the Procuring Entity May not receive a sufficient number of bids<\/em> And\/ or \u2014 after analysing the bids \u2014 ends up with only one responsive bid \u2014 a situation referred to as <\/strong>'Single offer'<\/em>.<\/p>\n<aside class=\"note\">AS PER Rule 173(xxi) of GFR 2017<\/em>, such a situation of 'single offer' is to be treated as single tender<\/strong>. The contract May be placed on the 'single offer' bidder, provided the quoted price is reasonable<\/strong>. However, restricted powers of single tender mode of procurement would apply<\/strong>.<\/p><\/aside>\nThe pre-retender check: \"before re-tendering, the Procuring Entity is first to check whether \u2014 while floating\/ issuing the enquiry \u2014 all necessary requirements and formalities such as standard conditions, industry-friendly specification, wide publicity, sufficient time for bidding, and so on, were fulfilled. If not, a fresh enquiry is to be issued after rectifying the deficiencies<\/strong>.\"<\/p>\n<aside class=\"note\">The express criticism \u2014 a passage worth memorising:<\/p>\n\"it has become a practice among some procuring entities to routinely assume that open tenders which result in single bids are not acceptable, and to go for re-tender as a safe course of action. This is not correct.<\/strong><\/p>\nRe-bidding has costs:<\/strong><\/p>\nFirstly, the actual costs of re-tendering;<\/strong><\/p>\nSecondly, the delay in execution of the work, with consequent delay in the attainment of the purpose for which the procurement is being done; And<\/strong><\/p>\nthirdly, the possibility that the re-bid May result in a higher bid.<\/strong><\/p>\n Lack of competition shall not be determined solely on the basis of the number of bidders<\/strong>.\"<\/p><\/aside>\nthe three conditions under which a single-bid process is valid:<\/p>\n<aside class=\"note\">\"even when only one bid is submitted, the process May be considered valid provided the following conditions are satisfied:<\/strong><\/p>\nA) the procurement was satisfactorily advertised, and sufficient time was given for submission of bids<\/strong>;<\/p>\nb) THE qualification criteria were not unduly restrictive<\/strong>; and<\/p>\nc) prices are reasonable in comparison to market values<\/strong>.\"<\/p><\/aside>\n3. The powers and the fallback: However, as far as delegation\/ Schedule of Procurement Powers<\/em> is concerned, the Competent Authority would be as in single tender mode<\/strong>. In case of price not being reasonable, negotiations (being L1) or re-tender May be considered as justifiable<\/strong>.<\/p>\n4. Unsolicited offers against LTEs \u2014 the general rule and its three exceptions:<\/p>\n\"unsolicited offers against ltes should be ignored; However, ministries\/ departments should evolve a system by which interested firms can enlist and bid in the next round of tendering.<\/strong>\"<\/p>\nhowever, under the following exceptional circumstances, these May be considered for acceptance at the next higher level of competency<\/strong>: A) inadequate competition; B) non-availability of suitable quotations from registered contractors; C) urgent demand, and capacity\/ capability of the firm offering the unsolicited [offer] being known<\/em>, etc.<\/p>\n<h1>7.14 Tender Committee\/ CEC Recommendations and Report<\/span><\/h1>\n1. What the committee must recommend:<\/p>\nThe TC has to make formal recommendations<\/strong> for the award of the contract to the bidder:<\/p>\n<ul class=\"lst\"><li>Whose bid has been determined to be substantially responsive<\/strong>; and<\/li><li>THE lowest evaluated bid<\/strong>;<\/li><li>Provided further that the bidder is determined to be qualified to perform the contract satisfactorily, and his credentials have been verified<\/strong>.<\/li><\/ul>\n<aside class=\"note\">(TC Minutes Format \u2014 G<\/span> Annexure 14 \u00b7 W<\/span> Annexure 4 \u00b7 C<\/span> Annexure 6 (CEC) \u00b7 NC<\/span> Annexure 6.)<\/em><\/p><\/aside>\n2. The good-practice Rule on deviations:<\/p>\n\"it is a good practice that TC should spell out salient terms and conditions of the offer(s) recommended for acceptance.<\/strong><\/p>\n<aside class=\"note\">It should also be ensured by the TC that any deviation\/ variation quoted by the contractor in his bid are not left un-deliberated and ruled upon in the TC \u2014 otherwise, there May be delay in acceptance of the contract by the contractor<\/strong>.\"<\/p><\/aside>\nthese recommendations are submitted for approval to the tender accepting authority<\/strong>.<\/p>\n3. No separate fa consultation \u2014 and the four-fold responsibility of the ca:<\/p>\n<aside class=\"note\">\"since a nominee of the Financial Adviser of the Department is usually a member of the Tender Committee, there is no need for the ca to consult the fa of the Department before accepting the TC recommendations.<\/strong><\/p>\n In any purchase decision, the responsibility of the ca is not discharged merely by selecting the cheapest offer or accepting TC recommendations \u2014 but [by] ensuring whether:<\/strong><\/p>\nA) offers have been invited in accordance with this Manual, and after following fair and reasonable procedures in prevailing circumstances;<\/strong><\/p>\nB) he is satisfied that the selected offer will adequately meet the requirement for which it is being procured;<\/strong><\/p>\nC) the price of the offer is reasonable and consistent with the quality required; And<\/strong><\/p>\nd) the accepted offer is the most appropriate, taking all relevant factors into account, in keeping with the standards of financial propriety<\/strong>.\"<\/p><\/aside>\n4. After the acceptance of these recommendations by the tender accepting authority, the letter (notification) of award (LoA) can be issued<\/strong>.<\/p>\n<h1>7.15 Preliminary Examination<\/span><\/h1>\n<h2>7.15.1<\/span>Unresponsive Bids<\/span><\/h2>\nThe definition: \"a substantively responsive bid is complete and conforms to the tender document's essential terms, conditions, and requirements \u2014 without substantive deviation, reservation, or omission<\/strong>.\"<\/p>\n\"only substantively responsive bids shall be considered for further evaluation. Other bids shall be treated as unresponsive and ignored. All bids received shall first be scrutinised to identify unresponsive bids, if any<\/strong>.\"<\/p>\nthe nine grounds on which a bid May be declared unresponsive:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Ground<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>the bid is not in the prescribed format<\/em>, OR IS unsigned<\/em>, OR not signed as per the stipulations<\/em> In the tender document<\/td><\/tr><tr><td>2<\/td><td>the required EMD has not been provided<\/em>, OR exemption from EMD is claimed without acceptable proof of exemption<\/em><\/td><\/tr><tr><td>3<\/td><td>the bidder is not eligible to participate<\/em> As per the eligibility criteria laid down (including conflict of interest and other provisions of CIPP<\/em>).<\/strong> In case procurement is on a limited tender basis<\/em>, or where procurement is restricted to pre-approved vendors<\/em>, it should be especially ensured that there is no conflict of interest<\/strong><\/td><\/tr><tr class=\"srcmark src-G\" data-src=\" G \"><td>4<\/strong>G<\/span> ONLY<\/td><td>the bidder has *quoted for goods manufactured by a different firm, <\/strong>without the required authority letter from the proposed manufacturer<\/td><\/tr><tr><td>5<\/td><td>the bid departs from the essential requirements<\/em> Specified in the tender document (for example, the bidder has not agreed to give the required performance security)<\/em><\/td><\/tr><tr><td>6<\/td><td>against a Schedule in the list of requirements, the bidder has not quoted for the entire requirement as specified in that Schedule<\/strong>. Worked example: \"in a schedule, it has been stipulated that the bidder will SUPPLY the equipment, INSTALL and COMMISSION it, and also TRAIN the purchaser's operators for operating the equipment. The bidder has, however, quoted only for the supply of the equipment.\"<\/em><\/td><\/tr><tr><td>7<\/td><td>bidder has quoted conditional bids, or more than one bid, or alternative bids<\/strong> \u2014 unless permitted explicitly in the tender document<\/em><\/td><\/tr><tr class=\"srcmark src-NC\" data-src=\" NC \"><td>8<\/td><td>THE bid validity is shorter than the required period<\/strong>. However, in case of STE\/ PAC procurement<\/strong> *(NC<\/span>: \"in case of STE procurement\")*, shorter bid validity May be accepted<\/strong><\/td><\/tr><tr class=\"srcmark src-G\" data-src=\" G \"><td>9<\/td><td>non-submission, or submission of illegible scanned copies<\/strong> Of stipulated documents\/ declarations<\/strong>(G<\/span> adds: \"if so stipulated in the Tender Document\")<\/em><\/td><\/tr><tr class=\"srcmark src-NC\" data-src=\" NC \"><td>10<\/strong>NC<\/span> ONLY<\/td><td>the bid has unresolved substantive deviations<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>7.15.2<\/span>Non-conformities between Figures and Words \u2014 the Four Correction Rules<\/span><\/h2>\n\"sometimes, non-conformities\/ errors are also observed in responsive tenders between the quoted prices in figures and words. This situation normally does not arise in the case of e-procurement.<\/strong>\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Discrepancy<\/th><th>Which prevails<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>between the unit price<\/em> And the total price<\/strong><\/em>(the total obtained by multiplying the unit price by the quantity)<\/em><\/td><td>THE unit price shall prevail<\/strong>, and the total price corrected accordingly<\/strong><\/td><\/tr><tr><td>2<\/td><td>an error in a TOTAL<\/em> Corresponding to the addition or subtraction of sub-totals<\/em><\/td><td>THE sub-totals shall prevail<\/strong>, and the total shall be corrected<\/strong><\/td><\/tr><tr><td>3<\/td><td>between WORDS<\/em> AND figures<\/em><\/td><td>THE amount in words shall prevail<\/strong><\/td><\/tr><tr><td>4<\/td><td>The procedural consequence<\/td><td>such a discrepancy in an offer should be conveyed to the bidder, asking him to respond by a target date<\/strong>. If the bidder does not agree to the Procuring Entity's observation, the bid is liable to be rejected<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>7.15.3<\/span>Discrepancies between Original and Additional\/ Scanned Copies of a Bid<\/span><\/h2>\n\"normally, as far as feasible, no submission of original documents in physical format should be asked for in e-procurement \u2014 other than: Cost of tender documents (if any), Bid Security, and statutory certificates (if any)<\/strong>.\"<\/p>\nin e-procurement, there could be discrepancies between the uploaded scanned copies and the originals submitted by the bidder<\/em>. In off-line tenders, discrepancies May be observed between the original copy and other copies of the responsive bids<\/em>.<\/p>\n<aside class=\"note\">The Rule: \"if discrepancies exist between the uploaded scanned or other copies and the originals submitted by the bidder, the original copy's text, etc., shall prevail<\/strong>.\"<\/p><\/aside>\nthis issue is also to be addressed with the bidder in the same manner as above<\/em>, and subsequent actions shall be taken accordingly.<\/p>\n<aside class=\"note\">The integrity consequence: \"any substantive discrepancy shall be construed as a violation of the Code of Integrity \u2014 and the bid shall be liable to be rejected as non-responsive, in addition to other punitive actions under the tender document<\/strong>.\"<\/p><\/aside>\n<h2>7.15.4<\/span>Deviations, Reservations and Omissions \u2014 Substantive or Minor<\/span><\/h2>\n1. The three definitions:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Term<\/th><th>Definition<\/th><\/tr><\/thead><tbody><tr><td>\"Deviation\"<\/td><td>IS A departure from the requirements<\/strong> Specified in the tender document<\/td><\/tr><tr><td>\"Reservation\"<\/td><td>IS THE setting of limiting conditions, or withholding from complete acceptance<\/strong> Of the requirements specified in the tender document<\/td><\/tr><tr><td>\"Omission\"<\/td><td>IS THE failure to submit part, or all, of the information or documentation<\/strong> Required in the tender document<\/td><\/tr><\/tbody><\/table><\/div>\n2. The three-limb test for a substantive<\/em> Deviation:<\/p>\n<aside class=\"note\">\"a deviation\/ reservation\/ omission from the requirements of the tender document shall be considered a substantive deviation as per the following norm \u2014 and the rest shall be considered a minor deviation:<\/strong><\/p>\nA) which affects in any substantive way the scope, quality, or performance of the product;<\/strong><\/p>\nB) which limits in any substantive way \u2014 inconsistent with the tender document \u2014 the Procuring Entity's rights, or the bidder's obligations under the contract; Or<\/strong><\/p>\nc) whose rectification would unfairly affect the competitive position of other bidders presenting substantively responsive bids<\/strong>.\"<\/p><\/aside>\n3. The consequence and its one exception: \"the decision of the Procuring Entity shall be final in this regard. Bids with substantive deviations shall be rejected as non-responsive.<\/strong>\"<\/p>\n<aside class=\"note\">the exception: \"however, bids with deviations May [be] accepted in case of STE\/ PAC procurement \u2014 with approval of competent financial authority, with reasons recorded for accepting such deviations<\/strong>.\"<\/p><\/aside>\n4. THE \"better than asked for\" RULE \u2014 a provision often missed:<\/p>\n<aside class=\"note\">\"variations and deviations and other offered benefits (techno-commercial or financial) above the scope\/ quantum of the goods specified in the tender document shall not influence evaluation of bids.<\/strong><\/p>\n [But] if the bid is otherwise successful, the Procuring Entity shall avail of such benefits \u2014 and these will become part of the contract<\/strong>.\"<\/p><\/aside>\n5. Examples of minor issues: During the preliminary examination, some minor infirmity and\/ or irregularity and\/ or non-conformity<\/em> May also be found in some bids. Such minor issues could be:<\/p>\n<aside class=\"note\">Missing pages\/ attachments \u00b7 illegibility in a submitted document \u00b7 or non-submission of the requisite number of copies of a document<\/strong><\/p><\/aside>\n6. Considering minor deviations \u2014 and the judicial precedent cited:<\/p>\n<aside class=\"note\">\"there have also been cases where the bidder submitted the amendment Bank Guarantee but omitted to submit the main portion of the document. The court ruled that this was a minor irregularity.<\/strong><\/p>\nThe court has consistently taken the view that the Procuring Entity is entitled to consider and allow minor deviations that do not amount to substantive deviations.<\/strong>\"<\/p><\/aside>\nthe four-fold test for accepting a minor deviation: \"the Procuring Entity reserves the right to accept bids with such minor issues \u2014 provided they:<\/strong><\/p>\n<ul class=\"lst\"><li>Do not constitute any substantive deviation;<\/strong><\/li><li>Do not have a fiscal impact;<\/strong><\/li><li>Do not prejudice, or affect the ranking order of the bidders; And<\/strong><\/li><li>do not grant the bidder any undue advantage vis-\u00e0-vis other bidders and the Procuring Entity<\/strong>.\"<\/li><\/ul>\nwherever necessary, the Procuring Entity shall convey its observation on such 'minor' issues to the bidder<\/em>. If the bidder does not reply by the specified date, or gives an evasive reply without clarifying the point at issue in clear terms \u2014 that bid shall be liable to be rejected as non-responsive<\/strong>.<\/p>\n<h2>7.15.5<\/span>Clarification of Bids \/ Shortfall Documents<\/span><\/h2>\n1. The clarification procedure and its three absolute bars:<\/p>\nDuring the evaluation and comparison of bids, the purchaser May \u2014 at his discretion<\/strong> \u2014 ask the bidder for clarifications on the bid<\/em>.<\/p>\nThe request for clarification shall be given in writing by registered\/ speed post\/ courier\/ email<\/strong>, asking the bidder to respond by a specified date \u2014 mentioning therein that if the bidder does not comply or respond by the date, his tender will be liable to be rejected<\/strong>.<\/p>\n<aside class=\"note\">The three bars:<\/p>\n<ul class=\"lst\"><li>\"no change in prices or substance of the bid, which May grant any undue advantage to such bidder, shall be sought, offered, or permitted.<\/strong>\"<\/li><li>\"no post-bid clarification at the initiative of the bidder shall be entertained.<\/strong>\"<\/li><\/ul><\/aside>\n2. The shortfall-documents Rule \u2014 the \"historical documents\" test:<\/p>\n<aside class=\"note\">\"the Procuring Entity reserves its right to \u2014 but without any obligation to do so \u2014 seek any shortfall information\/ documents:<\/strong><\/p>\n\u2022 only in case of historical documents that pre-existed at the time of the bid opening; And<\/strong><\/p>\n\u2022 which have not undergone change since then; And<\/strong><\/p>\n\u2022 which does not grant any undue advantage to any bidder.<\/strong>\"<\/p><\/aside>\nprovision May be made by e-procurement portals for requesting shortfall documents from the bidders. The system May further allow shortfall documents to be taken from any bidders only once after the technical bid opening<\/strong>.<\/p>\n<aside class=\"note\">Worked example: \"If the permanent account number or registration with GST has been asked to be submitted, and the bidder has not provided them \u2014 these documents may be asked for with a target date as above.\"<\/em><\/p><\/aside>\nThe qualification-documents Rule \u2014 and the crucial worked example:<\/p>\n<aside class=\"note\">\"as far as the submission of documents is concerned regarding qualification criteria \u2014 after submission of the bid, only related shortfall documents should be asked for and considered.<\/strong><\/p>\n for example: If the bidder has submitted a supply order without its completion\/ performance certificate, the certificate can be asked for and considered.<\/strong><\/p>\n However, no new supply order should be asked for to qualify the bidder<\/strong>.\"<\/p><\/aside>\n<h2>7.15.6<\/span>Evaluation of Eligibility<\/span><\/h2>\nthe Procuring Entity shall determine \u2014 to its satisfaction<\/strong> \u2014 whether the bidders are eligible as per the eligibility criteria in the tender document<\/strong> To participate in the tender process.<\/p>\nTenders that do not meet the required eligibility criteria prescribed shall be rejected as unresponsive.<\/strong><\/p>\n<h1>Appendix to Chapter 7 \u2014 Part a: Points of Difference<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Chapter number<\/td><td>G: Ch. 7 \u00b7 W: Ch. 6 \u00b7 C: Ch. 8 \u00b7 NC: Ch. 7<\/td><\/tr><tr><td>2<\/td><td>Chapter title<\/td><td>G\/NC: *Bid Evaluation and Award of Contract \u00b7 W: *Evaluation of Bids and Award of Worksuffix<\/strong> \u00b7 C: RfP Evaluation and Award of Contract<\/strong><\/td><\/tr><tr><td>3<\/td><td>Whole additional Chapter \u2014 Shortlisting of Consultants, EoI<\/td><td>C only (its Chapter 7)<\/td><\/tr><tr><td>4<\/td><td>the evaluating body<\/td><td>g\/w\/nc: *Tender Committee (TC) \u00b7 c: *Consultancy Evaluation Committee (CEC)<\/strong><\/td><\/tr><tr><td>5<\/td><td>Scope of the Committee's responsibility<\/td><td>G: all aspects of tender evaluation \u00b7 W\/NC: adds negotiations and final award \u00b7 C: adds evaluation of EoI, shortlisting, deciding ToRs, and issuance of RfP<\/em><\/td><\/tr><tr><td>6<\/td><td>EoI shortlist size<\/td><td>C only: minimum three (Rule 184 GFR) and generally not more than eight; if more qualify, restrict to eight based on higher Average Turnover<\/td><\/tr><tr><td>7<\/td><td>EoI shortlist validity<\/td><td>C only: Six months if not specified; beyond 6 months, better to re-invite EoI<\/td><\/tr><tr><td>8<\/td><td>EoI minimum qualifying marks<\/td><td>C only: normally 75%<\/td><\/tr><tr><td>9<\/td><td>Start-up relaxation at EoI<\/td><td>C only: up to \u03bb = 20%<\/td><\/tr><tr><td>10<\/td><td>The turnover-multiple criticism (5\u201310 times \"appears high\"); upper cap so as not to restrict competition to \"the big four or five Consultancy Firms\"<\/td><td>C ONLY<\/td><\/tr><tr><td>11<\/td><td>Key Experts not evaluated at EoI stage<\/td><td>C ONLY<\/td><\/tr><tr><td>12<\/td><td>\"Qualifications leasing\" risk<\/td><td>C ONLY<\/td><\/tr><tr><td>13<\/td><td>Direct acceptance threshold<\/td><td>G\/C\/NC: Rs 50 lakh \u00b7 W: \"normally LTE threshold of Rs 50 lakhs<\/em>\"<\/td><\/tr><tr><td>14<\/td><td>Rule 173(xxii) extended to the ACCEPTING AUTHORITY<\/td><td>W + C<\/strong>(G states it only for committee members)<\/em><\/td><\/tr><tr><td>15<\/td><td>Express urging to apply Rule 173(xxii) below the threshold too<\/td><td>G + C<\/td><\/tr><tr><td>16<\/td><td>Convenor's duty to distribute the RfP and call a familiarisation meeting<\/td><td>C ONLY<\/td><\/tr><tr><td>17<\/td><td>\"Understand the evaluation criteria\" vs \"understand the rating and scoring system\"<\/td><td>G\/W\/NC vs C<\/td><\/tr><tr><td>18<\/td><td>The large-envelope custody safeguard for unopened financial bids<\/td><td>W + C + NC<\/td><\/tr><tr><td>19<\/td><td>Comparative statement \u2014 vetting by Finance not required if prepared by the e-Procurement portal<\/td><td>W ONLY<\/td><\/tr><tr><td>20<\/td><td>The permitted evaluation factors list, and \"no criteria that cannot be verified OR are not stated in the contract\"<\/td><td>W ONLY<\/td><\/tr><tr><td>21<\/td><td>Caution that preferences must not result in single-vendor selection<\/td><td>G ONLY<\/td><\/tr><tr><td>22<\/td><td>CPWD table of maximum days for award (10\/15\/30\/45\/60 days)<\/td><td>W ONLY<\/td><\/tr><tr><td>23<\/td><td>\"Notify at least one day every week for TC meeting; no leave or tour on such days\"<\/td><td>W<\/strong>(also in C\/NC in similar terms)<\/em><\/td><\/tr><tr><td>24<\/td><td>Print the tender schedule on the inside cover of the Procurement File<\/td><td>W<\/td><\/tr><tr><td>25<\/td><td>Withdrawn L-1 bid \u2192 must re-tender; and such L1 price not to be taken as precedence for price estimates or reasonableness<\/td><td>Common \u2014 but the QCBS\/H-1 variant is in W, C, NC<\/td><\/tr><tr><td>26<\/td><td>Withdrawn\/ not-extended H-1 bid in QCBS \u2192 must re-tender<\/td><td>W + C + NC<\/strong>(no QCBS in Goods)<\/em><\/td><\/tr><tr><td>27<\/td><td>Ground 4 for unresponsiveness \u2014 quoting for goods of a different manufacturer without authority letter<\/td><td>G ONLY<\/td><\/tr><tr><td>28<\/td><td>Ground 10 \u2014 \"unresolved substantive deviations\"<\/td><td>nc only<\/td><\/tr><tr><td>29<\/td><td>Shorter bid validity acceptable in STE\/ PAC<\/em><\/td><td>G<\/strong> \u00b7 NC says only \"STE\"<\/strong>(consistent with Works and NC treatment of PAC)<\/em><\/td><\/tr><tr><td>30<\/td><td>Bids with deviations may be accepted in STE\/ PAC with CFA approval<\/td><td>G<\/td><\/tr><tr><td>31<\/td><td>The amendment-Bank-Guarantee judicial precedent on minor irregularity<\/td><td>G + W + NC<\/td><\/tr><tr><td>32<\/td><td>Shortfall documents may be taken only ONCE after technical bid opening<\/td><td>G<\/strong>(stated expressly)<\/em><\/td><\/tr><tr><td>33<\/td><td>\"No new supply order should be asked for to qualify the bidder\"<\/td><td>G + W<\/td><\/tr><tr><td>34<\/td><td>Unsolicited offers against LTE \u2014 three exceptional circumstances for acceptance at next higher level<\/td><td>W<\/strong>(fullest statement)<\/em><\/td><\/tr><tr><td>35<\/td><td>The express criticism of routine re-tendering on single bids, and the three validity conditions<\/td><td>W<\/strong>(fullest); echoed in G\/C\/NC<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 7 \u2014 part a<\/p>\n<aside class=\"note\">Next:<\/strong>Chapter 7 \u2014 part b: Techno-commercial evaluation, financial evaluation and award of contract<\/strong> \u2014 Evaluation of Eligible Techno-commercial Bids \u00b7 Evaluation of the Quality \u2013 Technical Proposals (C only, with its rating\/grading schemes to mitigate subjectivity)<\/strong> \u00b7 Ranking of Financial Bids \u00b7 LCS \u00b7 QCBS \u00b7 SSS \u00b7 FBS \u00b7 GTE evaluation \u00b7 Rate Contract evaluation \u00b7 Reasonableness of Prices \u00b7 Abnormally Low Bids<\/strong> \u00b7 Cartel Formation\/ Pool Rates\/ Bid Rigging<\/strong> \u00b7 Negotiations for Reduction of Prices \u00b7 Variation of Quantities and the Option Clause \u00b7 Splitting\/ Parallel Contracts \u00b7 Cancellation and Re-tender \u00b7 Negotiations to Freeze Description of Service (C only)<\/strong> \u00b7 LoA \u00b7 Publication of Award \u00b7 Framing of Contract \u00b7 Audit Trails<\/strong> \u00b7 Risks and Mitigations.<\/p><\/aside>Part II<\/span>Evaluation, Negotiation and Award<\/em><\/p>\nMerging: Goods Ch. 7<\/strong> (paras 7.4\u20137.8) \u00b7 Works Ch. 6<\/strong> (paras 6.4\u20136.6) \u00b7 Consultancy Ch. 8<\/strong> (paras 8.4\u20138.8) \u00b7 Non-Consultancy Ch. 7<\/strong> (paras 7.3.4\u20137.6)<\/em><\/p><h2>Concordance for Chapter 7 \u2014 Part B<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>Goods<\/th><th>Works<\/th><th>CS<\/th><th>NCS<\/th><\/tr><\/thead><tbody><tr><td>7.16<\/td><td>Evaluation of Eligible Techno-commercial Bids<\/td><td>7.4.2<\/td><td>6.4.1<\/td><td>8.3<\/td><td>7.3.4<\/td><\/tr><tr><td>7.17<\/td><td>Evaluation of the Quality \u2014 Technical Proposals<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.4<\/td><td> \u2014 <\/td><\/tr><tr><td>7.18<\/td><td>General Norms for Ranking of Financial Bids<\/td><td>7.5<\/td><td>6.4.2<\/td><td>8.5.1<\/td><td>7.4.1<\/td><\/tr><tr><td>7.19<\/td><td>Least Cost Selection (LCS)<\/td><td>(the default)<\/em><\/td><td>6.4.3<\/td><td>8.5.2<\/td><td>7.4.2<\/td><\/tr><tr><td>7.20<\/td><td>Quality and Cost Based Selection (QCBS)<\/td><td> \u2014 <\/td><td>6.4.5<\/td><td>8.5.3<\/td><td>7.4.4<\/td><\/tr><tr><td>7.21<\/td><td>Single Source Selection (SSS)<\/td><td> \u2014 <\/td><td>6.4.4<\/td><td>8.5.4<\/td><td>7.4.3<\/td><\/tr><tr><td>7.22<\/td><td>Fixed Budget Selection (FBS)<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.5.5<\/td><td> \u2014 <\/td><\/tr><tr><td>7.23<\/td><td>GTE Tenders \u2014 evaluation<\/td><td>7.5.2<\/td><td>6.4.6<\/td><td>8.5.6<\/td><td>7.4.5<\/td><\/tr><tr><td>7.24<\/td><td>Concurrent Application of MSE and MII Policies<\/td><td>7.5.1<\/td><td> \u2014 <\/td><td>8.5.8<\/td><td>7.4.6<\/td><\/tr><tr><td>7.25<\/td><td>Evaluation in Rate Contracts<\/td><td>7.5.3<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>7.26<\/td><td>Variation of Quantities at the Time of Award<\/td><td>7.6.3<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>7.27<\/td><td>Option Clause<\/td><td>7.6.4<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>7.28<\/td><td>Splitting of Contracts\/ Parallel Contracts<\/td><td>7.6.5<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>7.29<\/td><td>Reasonableness of Prices<\/td><td>7.6.6<\/td><td>6.4.7<\/td><td> \u2014 <\/td><td>7.4.7<\/td><\/tr><tr><td>7.30<\/td><td>Consideration of Abnormally Low Bids<\/td><td>7.6.7<\/td><td>6.4.8<\/td><td>8.5.7<\/td><td>7.4.8<\/td><\/tr><tr><td>7.31<\/td><td>Cartel Formation\/ Pool Rates\/ Bid Rigging<\/td><td>7.6.8<\/td><td>6.4.9<\/td><td>8.5.7<\/td><td>7.4.9<\/td><\/tr><tr><td>7.32<\/td><td>Negotiations for Reduction of Prices<\/td><td>7.6.9<\/td><td>6.4.10<\/td><td>8.5.7<\/td><td>7.4.10<\/td><\/tr><tr><td>7.33<\/td><td>Negotiations to Freeze Description of Service<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.6<\/td><td> \u2014 <\/td><\/tr><tr><td>7.34<\/td><td>Cancellation of Procurement\/ Rejection of All Bids\/ Re-tender<\/td><td>7.6.11<\/td><td>6.4.11<\/td><td>8.5.9<\/td><td>7.4.11<\/td><\/tr><tr><td>7.35<\/td><td>LoA to Successful Bidder<\/td><td>7.7.1<\/td><td>6.5.1<\/td><td>8.7.1<\/td><td>7.5.1<\/td><\/tr><tr><td>7.36<\/td><td>Publication of Award; Return of EMD<\/td><td>7.7.2<\/td><td>6.5.2<\/td><td>8.7.2<\/td><td>7.5.2<\/td><\/tr><tr><td>7.37<\/td><td>Performance Security<\/td><td>7.7.3<\/td><td>6.5.3<\/td><td> \u2014 <\/td><td>7.5.3<\/td><\/tr><tr><td>7.38<\/td><td>Acknowledgement and Execution of Contract<\/td><td>7.7.4<\/td><td>6.5.4<\/td><td> \u2014 <\/td><td>7.5.4<\/td><\/tr><tr><td>7.39<\/td><td>Framing of Contract<\/td><td>7.7.5<\/td><td>6.5.5<\/td><td> \u2014 <\/td><td>7.5.5<\/td><\/tr><tr><td>7.40<\/td><td>Audit Trails \u2014 Procurement Records<\/td><td>7.7.6<\/td><td>6.5.6<\/td><td> \u2014 <\/td><td>7.5.6<\/td><\/tr><tr><td>7.41<\/td><td>Risks and Mitigations<\/td><td>7.8<\/td><td>6.6<\/td><td>8.8<\/td><td>7.6<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>7.16 Evaluation of Eligible Techno-commercial Bids<\/span><\/h1>\n<h2>7.16.1<\/span>Evaluation of Qualification Criteria<\/span><\/h2>\n1. What is ascertained: In evaluating the techno-commercial bid, conformity to the eligibility\/ qualification criteria, technical specifications, and quality assurance; And commercial conditions of the offered goods to those in the tender document<\/strong> is ascertained.<\/p>\nAdditional factors incorporated in the tender document shall also be considered in the manner indicated therein<\/em>.<\/p>\nThis determination will, inter alia<\/em>, consider the bidder's financial, technical, and production capabilities<\/strong> To satisfy all the Procuring Entity's requirements as incorporated in the tender document.<\/p>\nSuch determination shall be based upon scrutiny and examination of all relevant data and details submitted by the bidder in its bid<\/strong>, as well as such other allied information as deemed appropriate by the Procuring Entity<\/em>.<\/p>\n<aside class=\"note\">The no-borrowed-credentials Rule: \"the determination shall not consider the qualifications of other firms \u2014 such as the bidder's subsidiaries, parent entities, allied firms, subcontractors (*other than specialised subcontractors, if permitted in the bidding document*), or any other firm(s) different from the bidder<\/strong>.\"<\/p><\/aside>\n2. Start-up relaxation: The condition of prior turnover and prior experience May be relaxed for start-ups<\/em> (Only to start-ups recognised by DPIIT), subject to meeting quality & technical specifications and making suitable provisions in the tender document (Rule 173(i) of GFR 2017)<\/em>. Such relaxation is not optional but has to be ensured<\/strong> \u2014 except for items related to public safety, health, critical security operations and equipment<\/em>, where adequate justification exists.<\/p>\n<h2>7.16.2<\/span>Evaluation of Technical Suitability<\/span><\/h2>\nTHE description, specifications, drawings, and other technical terms and conditions<\/strong> Are examined by the TC in general, and by a technical member of the TC in particular<\/strong>.<\/p>\n<aside class=\"note\">The absolute bar: \"nobody outside the TC should be allowed to determine this evaluation<\/strong>.\"<\/p><\/aside>\nthe alternative-offers Rule: \"the tender document should clearly State whether alternative offers\/ makes\/ models would be considered or not \u2014 and, in the absence of an express statement to the effect, these should not be allowed<\/strong>.\"<\/p>\nan important document is the exceptions\/ deviation form submitted by the bidder<\/strong>. It is important to judge whether an exception\/ deviation is minor or major<\/strong>. Minor exceptions\/ deviations May be waived following the criteria in part a, Para 7.15.4-6.<\/p>\n<h2 class=\"src-G srchead\" data-src=\" G \">7.16.3<\/span>Evaluation of Bids involving Samples\/ Demos<\/span>G<\/span><\/h2><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\n<aside class=\"note\">Cross-reference: calling for a sample along with the bid for evaluation is strictly DISCOURAGED \u2014 see Chapter 2, para 2.4.3.<\/em><\/p><\/aside>\n\"evaluation of techno-commercial bids should not be done based on the evaluation of samples or demos \u2014 in view of the subjectivity involved<\/strong>.\"<\/p>\nThe permitted alternative \u2014 the reference-sample route:<\/p>\n<ul class=\"lst\"><li>IF A purchaser's reference sample has been displayed<\/em> for prospective bidders to illustrate the desired indeterminable characteristics<\/em>, the contract should mention that final supplies must meet such characteristics of the reference sample, in addition to the specifications\/ drawings<\/strong>.<\/li><li>If required, a provision for the submission of a pre-production sample matching the purchaser's reference sample by the successful bidder(s) May be stipulated before giving clearance for bulk production<\/strong>.<\/li><\/ul>\nThere should be a time limit for submission and approval of the pre-production sample<\/strong>.<\/p>\n<aside class=\"note\">The exit provision: \"in case the contractor is not able to come up with a satisfactory pre-production sample matching the purchaser's reference sample within the stipulated time-limit or a reasonable extension thereof \u2014 a provision should be provided for cancellation of the contract without repercussion on either side<\/strong>.\"<\/p><\/aside>\n<\/div><h2>7.16.4<\/span>Evaluation of Commercial Conditions \u2014 and the SEVEN \"CRITICAL PROVISIONS\"<\/span><\/h2>\nbidder must comply with all the commercial and other clauses<\/em> Of the tender document.<\/p>\nThe Procuring Entity shall evaluate the commercial conditions quoted by the bidder to confirm that all terms and conditions stipulated in the tender document have been accepted without substantive omissions\/ reservations\/ exception\/ deviation<\/strong>.<\/p>\n<aside class=\"note\">The deeming provision: \"deviations from, or objections or reservations to, critical provisions identified in the tender documents will be deemed to be a material deviation.<\/strong><\/p>\n If critical provisions are not explicitly stated in the tender document, then these shall be taken to be:<\/strong><\/p>\n1. Governing laws and jurisdiction<\/strong><\/p>\n2. Contractor's obligations and restrictions of its rights<\/strong><\/p>\n3. Performance bond\/ security<\/strong><\/p>\n4. Force Majeure<\/strong><\/p>\n5. Taxes & duties<\/strong><\/p>\n6. Code of Integrity<\/strong>\"<\/p><\/aside>\nONLY minor deviations May be accepted\/ allowed \u2014 provided these do not constitute substantive deviations<\/strong>.<\/p>\n<h2>7.16.5<\/span>Declaration of Successful Bidders<\/span><\/h2>\n1. Single-envelope tenders: In a single envelope\/ cover tender, TC proceeds to evaluate the price aspects without a reference to ca at this stage<\/strong>.<\/p>\n2. Multiple-envelope tenders \u2014 the technical evaluation report:<\/p>\nThe TC prepares a recommendation for a techno-commercial bid to declare successful bidders<\/strong>.<\/p>\n\"for each proposal, the report also should substantiate the results of the evaluation and indicate technical weaknesses or deviations from the terms set out in the tender documents \u2014 and comment on their acceptability<\/strong>.\"<\/p>\n<aside class=\"note\">the critical limit on the ca's power: \"the ca May ask the TC to explain the report \u2014 but should not request that evaluation be changed<\/strong>.\"<\/p><\/aside>\nit should review the tc's evaluation of each proposal<\/em> (On technical, contractual, and other aspects).<\/p>\nThe ca should decide how any acceptable deviation in each proposal should be handled during contract formulation, in case that proposal is ranked first<\/strong>.<\/p>\n<aside class=\"note\">Confidentiality and retention: \"the technical evaluation report is a confidential document, and its contents shall not be disclosed. All records relating to the evaluation shall be retained until completion of the project and its audit<\/strong>.\"<\/p><\/aside>\n3. Announcement and the two timelines:<\/p>\nAfter the approval of ca, the results of the techno-commercial bid evaluation are to be announced (including informing the failed bidders)<\/strong>.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Event<\/th><th>Timeline<\/th><\/tr><\/thead><tbody><tr><td>Return of Bid securities of unsuccessful bidders of the first stage<\/td><td>within 30 days of declaration of result of the first stage<\/strong> (i.e., technical evaluation)<\/td><\/tr><tr><td>Opening of FINANCIAL BIDS<\/td><td>Date\/ time and place (or on the portal in e-procurement) ANNOUNCED, in the presence of technically suitable bidders who are willing to attend<\/strong>. Such a date should be two to five (5) days after the announcement<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h1>7.17 Evaluation of the Quality \u2014 Technical Proposals [C ONLY]<\/span><\/h1>\n<aside class=\"note\">This entire section exists only in the consultancy Manual. It is the apparatus that gives effect to QCBS in consultancy, and it has NO counterpart in Goods, Works or Non-Consultancy.<\/p><\/aside>\n<h2>7.17.1<\/span>Responsiveness to the ToR<\/span><\/h2>\nThe CEC shall evaluate each proposal on the basis of its responsiveness to the ToR<\/strong>.<\/p>\nProposals not responding to the ToR fully and properly will be summarily rejected as being non-responsive<\/strong> \u2014 before taking up the appraisal of the technical proposal for evaluation of quality<\/strong>.<\/p>\n<aside class=\"note\">The price-leakage Rule: \"a technical proposal pre-disclosing any material pricing information shall also be rejected<\/strong>.\"<\/p><\/aside>\n<h2>7.17.2<\/span>Criteria and Sub-criteria \u2014 the Four Heads and the Absolute-Grading Rule<\/span><\/h2>\n1. The four criteria, totalling 100 marks: CEC shall evaluate the quality of the technical proposal by awarding marks so as to make the total maximum technical score of 100 (one hundred)<\/strong>, FOR:<\/p>\nA) the consultant's relevant experience<\/strong> for the assignment;<\/p>\nb) THE quality of the methodology<\/strong> Proposed;<\/p>\nc) THE qualifications of the key staff<\/strong> PROPOSED; and<\/p>\nd) capability for transfer of knowledge<\/strong> (if relevant).<\/p>\n<aside class=\"note\">The absolute-grading Rule \u2014 one of the most important principles in the chapter:<\/p>\n\"each proposal should be judged on its own merits and assigned an absolute \u2014 not comparative \u2014 grade against predefined criteria and sub-criteria.<\/strong><\/p>\nA comparative evaluation would single out the best proposal on a relative scale \u2014 but still could leave the Procuring Entity with a poor proposal<\/strong>.\"<\/p><\/aside>\n2. The model scheme of maximum\/ minimum marks:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Rated Criteria<\/th><th>Range of Percentage for Score<\/th><\/tr><\/thead><tbody><tr><td>1. Consultancy firm's experience relevant to assignment<\/td><td>5\u201310%<\/td><\/tr><tr><td>2. Proposed approach, methodology, work plan, and understanding of requirements<\/td><td>20\u201350%<\/td><\/tr><tr><td>3. Qualification and adequacy of experience of key staff<\/td><td>30\u201360%<\/td><\/tr><tr><td>4. Transfer of knowledge, if relevant\\*<\/td><td>0\u201310%<\/td><\/tr><tr><td>overall<\/td><td>100%<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">\\ If this criterion is not required, the marks can be <\/em>adjusted against some other criteria*.<\/p><\/aside>\nThe four explanatory Rules:<\/p>\n<ul class=\"lst\"><li>\"the weight given to the firm's experience can be relatively modest \u2014 since this criterion has already been considered when short-listing the consultant<\/strong>.\"<\/li><li>\"more weight shall be given to the methodology in the case of more complex assignments<\/strong> (for example, <\/strong>multidisciplinary feasibility or management studies).\"<\/strong><\/li><li>\"evaluation of only the key personnel is recommended. Since key personnel ultimately determine the quality of performance, more weight shall be assigned to this criterion if the proposed assignment is complex<\/strong>.\"<\/li><li>\"the CEC shall review the qualifications and experience of proposed key personnel in their curricula vitae \u2014 which must be accurate, complete, and signed by an authorised official of the consultant *and* the individual proposed<\/strong>.\"<\/li><li>\"the experience criteria mentioned in point 1 above holds true for a consultancy firm and not for an individual consultant<\/strong>.\"<\/li><\/ul>\n3. SUB-CRITERIA \u2014 kept to the minimum, with worked examples:<\/p>\n\"the CEC shall normally divide the above criteria into sub-criteria. However, the number of sub-criteria should be kept to the minimum that is considered essential<\/strong>.\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Criterion<\/th><th>Suggested sub-criteria and weights<\/th><\/tr><\/thead><tbody><tr><td>methodology<\/td><td>a) understanding of ToR \u2014 30% weightage b) acceptability and detailing of methodology and work plan \u2014 *50% weight<\/strong> <\/strong>c) innovation, if it is important \u2014 <\/em>20% weightage*<\/td><\/tr><tr><td>suitability of the key professionals<\/td><td>a) EDUCATIONAL QUALIFICATIONS \u2014 *20% weightage b) professional experience in the required area of assignment \u2014 *80% weight<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nthe simplified alternative: \"similar to in LCS and EoI, a simplified evaluation criteria laying down minimum qualifying fail-pass benchmarks for each criteria\/ sub-criteria (instead of marking schemes) May also be used in appropriate cases. All offers that pass the qualifying benchmarks are declared as technically qualified and their financial bids are opened<\/strong>.\"<\/p>\n<h2>7.17.3<\/span>Rating\/ Grading Schemes to Mitigate Subjectivity<\/span><\/h2>\n1. The problem stated:<\/p>\n<aside class=\"note\">\"technical proposals for consultancy services are an intellectual product. Their evaluation must be based on individual professional judgement of competent evaluators \u2014 and should not be reduced to a purely arithmetical exercise.<\/strong><\/p>\n The difficulty is to ensure that this judgement is not exercised in an unreasonable or arbitrary manner. It is important that subjectivity \u2014 implicit to any individual professional judgement \u2014 be complemented by transparency, consistency, and fairness.<\/strong><\/p>\n The individual evaluator entrusted with the evaluation, when required, should be able to explain \u2014 to the satisfaction of a qualified reviewer from the higher authority, or to enforcement agencies \u2014 the reason for his\/ her scoring and recommendation<\/strong>.\"<\/p><\/aside>\n2. Why slabs rather than a full range:<\/p>\n\"precise and exact markings of criteria and sub-criteria specified in technical evaluation \u2014 especially of unquantifiable criteria, e.g., evaluation of methodology \u2014 May neither be feasible nor warranted, especially when there is bound to be variation among marks by different members of CEC.<\/strong><\/p>\n<aside class=\"note\"> Instead of assigning marks over the full range of attributes, it is more appropriate to divide the range into 4\u20135 slabs of ratings<\/strong>.\"<\/p><\/aside>\n3. The five-grade rating scale \u2014 reproduced in full:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Rating<\/th><th>Assessment<\/th><th>Detailed Evaluation (in case of unquantifiable Criteria)<\/th><th>Marks<\/th><\/tr><\/thead><tbody><tr><td>A<\/td><td>very good<\/td><td>The consultants have outstanding, advanced expertise in specific problem areas<\/em> of the assignment, that can promise an excellent execution<\/em> of the assignment. The consultants' staff includes top experts in the field<\/em>. The consultants are considered world-class specialists<\/em> in the approaches and methodologies dealing with specific issues in the assignment. The consultants operate according to well-established quality management (ISO 9002 etc.) procedures<\/em>.<\/td><td>Full marks<\/td><\/tr><tr><td>B<\/td><td>GOOD<\/td><td>The consultants have extensive experience in the field<\/em> of the assignment, and have worked in regions and sectors with similar physical and institutional conditions, including similar critical issues<\/em>. Permanent staff are adequate and highly qualified<\/em>. The consultants have experience with advanced approaches and methodologies<\/em>.<\/td><td>80% of full marks<\/td><\/tr><tr><td>C<\/td><td>satisfactory<\/td><td>The consultants have experience in the field of assignments similar to the one being considered \u2014 but have not dealt with critical issues specific to it<\/em>(such as, for instance, delicate social or environmental issues)<\/em>. The consultants are experienced in the use of standard approaches and methodologies<\/em>. The consultants' permanent staff are adequate<\/em>.<\/td><td>60% of full marks<\/td><\/tr><tr><td>D<\/td><td>unsatisfactory<\/td><td>The consultant has experience which is not considered adequate for the quality needed by the project<\/em>.<\/td><td>30% of full marks<\/td><\/tr><tr><td>E<\/td><td>not relevant<\/td><td>The consultant's experience has no, or little, relevance to the project under consideration<\/em>.<\/td><td>10% of full marks<\/td><\/tr><\/tbody><\/table><\/div>\n4. The first reading \u2014 without scoring:<\/p>\n<aside class=\"note\">\"each member of the CEC should first read all proposals, without scoring them.<\/strong><\/p>\nThis first review helps determine whether the proposals are free of significant omissions or deviations from the ToR; It also allows CEC members to assess the overall clarity of the proposals and identify elements that will require special attention in the evaluation<\/strong>.\"<\/p><\/aside>\n5. The grading system must be defined before<\/em> The proposals are opened:<\/p>\nAfter the review, the CEC meets to define the grades of the rating system to be adopted<\/strong> (if not detailed in the RfP), according to the criteria and sub-criteria set out in the rfP.<\/p>\n\"to discourage subjectivity and avoid the use of points and fractions of points, the rating system provides a few grades (from three to four) for each criterion and sub-criterion<\/strong>.\"<\/p>\n\"minimum qualifying marks or relative qualifying method for quality of the technical proposal will be prescribed and indicated in the RfP<\/strong>.\"<\/p>\n<aside class=\"note\">the anti-bias Rule: \"the grading system must be defined before the technical proposals are opened \u2014 to prevent bias (or perceived bias) occurring because of the cec's knowledge of the opened proposal contents.<\/strong><\/p>\nIt is recommended that the evaluation and scoring of technical proposals be carried out only after defining the grading system<\/strong>.\"<\/p><\/aside>\nthe three reasons why undefined grading distorts evaluation:<\/p>\na) \"evaluators May differ, even widely, in their definition, understanding, or interpretation of the same criterion \u2014 and also because of their subjective experience and understanding of the ToR<\/strong>\";<\/p>\nb) \"disparities in evaluators' relative generosity or severity in judgment and ratings can easily be magnified by the lack of common definitions of the requirements to be considered for each criterion and sub-criterion<\/strong>\";<\/p>\nc) \"large differences in scores caused by inadequate understanding of the ToR or improper use of the evaluation criteria and sub-criteria are difficult to reconcile and explain<\/strong>.\"<\/p>\n<h2>7.17.4<\/span>Individual Scoring of Proposals<\/span><\/h2>\n\"CEC members should carry out the evaluation independently and score the proposal based on the rating criteria.<\/strong><\/p>\n The CEC evaluation should be based on the proposal as submitted. Under no circumstances can the CEC request information or clarifications that May change the proposals. Issues to be clarified with the selected consultant will have to be discussed during negotiations.<\/strong><\/p>\nIndividual evaluators' results are recorded on pre-established worksheets.<\/strong><\/p>\n After each member has independently rated all criteria and sub-criteria, it is good practice to read each proposal again \u2014 to ensure that scores reliably reflect the quality of the proposal<\/strong>.\"<\/p>\n<h2>7.17.5<\/span>Joint Review and Mitigation<\/span><\/h2>\n1. The reconciliation procedure:<\/p>\n<aside class=\"note\">\"the CEC should conduct a joint review and discuss the merits of individual evaluations and scores.<\/strong><\/p>\n Some evaluators tend to be generous while others will be rigid in their judgment and ratings. Such disparity does not matter \u2014 provided each evaluator is consistent and differences in scores are not too large.<\/strong><\/p>\n Large differences should be reviewed and explained \u2014 because they often are caused by improper or inaccurate use of the rating system.<\/strong><\/p>\nReconciling differences that are considered too large by the CEC May result in members revising some of their ratings and scores. As such, any changes should be recorded.<\/strong><\/p>\n If a discussion is needed to reach a final decision, an independent party should prepare minutes.<\/strong><\/p>\nFinally, the scores given by different members May be averaged out.<\/strong><\/p>\nDuring the meeting, the CEC should also comment on the strengths and weaknesses of all proposals that have met the minimum technical score indicated in the RfP. This will help identify any elements in the winning proposal that should be clarified during negotiations<\/strong>.\"<\/p><\/aside>\n2. The minimum qualifying mark and the debriefing duty:<\/p>\n\"eventually, for each of the technical proposals, the CEC should calculate the average of the scores allocated to each criterion by all members, establish the technical ranking of the proposals, identify the best, and propose it for award.<\/strong><\/p>\n The evaluation also establishes whether a proposal passes the minimum qualifying mark (or technical score \u2014 normally 75 (seventy-five)) provided for in the RfP.<\/strong><\/p>\n If one or more proposals fail to meet the minimum qualifying mark, both individual and joint assessments must be carefully reviewed and justified.<\/strong><\/p>\n Short-listed consultants are usually discouraged when their proposals are rejected \u2014 particularly when they are only a few points below the minimum mark; Therefore, the Procuring Entity should be prepared to debrief consultants to explain the evaluation of their proposals<\/strong>.\"<\/p>\n<h1>7.18 General Norms for Ranking of Financial Bids<\/span><\/h1>\n1. The basis \u2014 total outgo from the buyer's pocket:<\/p>\nUnless otherwise stipulated, evaluation of the financial bids shall be on the price criteria only<\/strong>. Financial bids of all techno-commercially suitable bids are evaluated and ranked to determine the lowest-priced bidder, based on the total outgo from the buyer's pocket<\/strong> \u2014 including:<\/p>\n<aside class=\"note\">GST \u00b7 transportation \u00b7 insurance \u00b7 price of incidental works\/ services \u00b7 customs duty \u00b7 marine insurance and freight \u00b7 agency commission, as applicable.<\/p>\nG<\/span> \u2014 the CPSE input tax credit Rule:<\/strong>\"for CPSEs availing input tax credit, the price shall be \"net of GST\" \u2014 considering the input tax credit on the GST portion to be availed by the CPSE<\/strong>.\"<\/p><\/aside>\n2. Evaluation of multiple schedules\/ items\/ destinations \u2014 the three cases G<\/span>:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Case<\/th><th>How ranking is done<\/th><\/tr><\/thead><tbody><tr><td>a) The list of requirements contains more than one Schedule\/ package<\/em><\/td><td>responsive, technically suitable bids shall be evaluated and compared separately for each Schedule<\/strong>. <\/strong>The bid for a Schedule will not be considered if the complete list of goods in that Schedule is not included in the bid<\/strong>. However, bidders have the option to quote for any one or more schedules<\/em>, and to offer *unconditional discounts for individual schedules*<\/td><\/tr><tr><td>b) There is only a list of items without grouping into schedules<\/em><\/td><td>ranking shall be done for each item separately<\/strong>. Bidder has the option to quote for any one or more items and to offer unconditional discounts for individual items. HOWEVER, bidder shall quote for all the destinations included in an item quoted<\/strong><\/td><\/tr><tr><td>c) There is only one item with several destinations<\/em><\/td><td>ranking shall be done separately for each destination<\/strong> included in that item; the Bidder has the option to quote for any one or more destinations, and to offer unconditional discounts for individual destinations<\/td><\/tr><\/tbody><\/table><\/div>\ndiscounts as above shall be considered for deciding the lowest evaluated bid. However, any conditional discounts are not considered for the ranking<\/strong>.<\/p>\n3. No loading unless pre-announced: \"unless explicitly announced beforehand in the tender documents, the quoted price should not be loaded based on deviations in commercial conditions. If it is decided to incorporate such clauses, these should be unambiguous and clear \u2014 and thereafter, there should be no relaxation during evaluation<\/strong>.\"<\/p>\nAdditionally, while purchasing sophisticated and costly equipment, machinery<\/em>, and so on, the procuring entity also gives special importance to factors such as high-quality performance, environmentally friendly features, low running cost, low maintenance cost. To take care of this, relevant details, and the criteria adopted to assess the benefit of such features, are to be clearly stipulated in the tender document, so that the bidders are aware of it and quote accordingly<\/em>.<\/p>\n4. The comparison basis: Unless otherwise stipulated, the comparison of the responsive bids shall be on total outgo from the Procuring Entity's pocket \u2014 to be paid to the supplier or any third party, including all elements of costs<\/strong> As per the terms of the proposed contract.<\/p>\nTherefore, it should normally be on a CIF\/ FOR destination basis, duly delivered, commissioned<\/strong>, as the case May be: A) goods manufactured in India, or goods of foreign origin already located in India \u2014 GST and any other duties\/ levies contractually payable (to the bidder) are to be added<\/em>; B) goods of foreign origin offered from abroad \u2014 customs duty and other similar import duties\/ taxes contractually payable are to be added<\/em>.<\/p>\n5. Purchase preferences: As per policies of the Government from time to time, the purchaser reserves his option to give price\/ purchase preferences as indicated in the tender document<\/em>.<\/p>\n6. VARIABLE-PRICE BIDS \u2014 the \"as on deadline\" rule: If the bids have been invited on a variable price basis<\/em>, they will be evaluated, compared, and ranked based on the position prevailing on the deadline of bid submission \u2014 and not based on any future date<\/strong>. If a bidder submits a firm price quotation against the requirement of a variable price quotation, that bid shall be prima facie acceptable and considered further \u2014 taking the price variation asked for by the bidder as nil<\/strong>.<\/p>\n7. Tie at the l-1 POSITION \u2014 the four-step tie-breaker G<\/span>:<\/p>\n\"rarely, there May be a tie at the lowest bid (L-1) position between two or more start-up\/ non-start-up bidders.<\/strong><\/p>\n it must be first determined whether it is a case of cartel formation or anti-competitive practices \u2014 and if so, it shall be dealt with accordingly.<\/strong><\/p>\nIf this is not a case of cartel formation, the decision will be taken in the following manner:<\/strong>\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>Rule<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>if one of the L1 bidders is an MSE owned by sc\/st or a woman entrepreneur<\/strong>, then the 25% quantity order reserved for MSEs will be placed on that MSE<\/strong>, subject to fulfilment of other tender conditions<\/td><\/tr><tr><td>ii<\/td><td>if one of the L1 bidders is an MSE, other than an MSE owned by sc\/st or a woman entrepreneur<\/strong>, then an order shall be placed on such MSE bidders<\/td><\/tr><tr><td>iii<\/td><td>in all other scenarios, the order shall be placed on the L1 bidder having a higher turnover in the previous financial year<\/strong>.<\/strong> In case there is a tie at L-1 between only start-up bidders and none of them has past turnover<\/strong>, the order will be placed on the start-up that was registered earlier with DPIIT<\/strong><\/td><\/tr><tr><td>iv<\/td><td>for tenders issued through the GeM PORTAL<\/strong>: THE tie-breaker methodology available on the GeM portal is to be followed<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n8. Ambiguous price bids: \"if the price bid is ambiguous, so that it May very well lead to two equally valid total price amounts \u2014 then the bid should be treated as unresponsive<\/strong>.\"<\/p>\n9. Suo motu and conditional discounts after bid opening \u2014 the two-limbed Rule:<\/p>\n<aside class=\"note\">\"sometimes, certain bidders offer suo motu discounts\/ rebates after the opening of the tender (techno-commercial or financial).<\/strong><\/p>\n Such discounts\/ rebates should not be considered for ranking the offer \u2014 but if such a firm does become L1 at its original offer, such suo motu discounts\/ rebates must be incorporated in the contracts.<\/strong><\/p>\nThis also applies to conditional rebates \u2014 for example, rebates for faster payments<\/strong>.\"<\/p><\/aside>\n10. C<\/span> \u2014 additional financial-opening Rules for consultancy:<\/p>\n<ul class=\"lst\"><li>The financial proposals shall be opened publicly in the presence of representatives of the technically qualified consultants who choose to attend<\/strong>. The evaluation committee demonstrably verifies that the financial proposals have remained sealed<\/strong> And then opens them.<\/li><li>THE name of the consultant, quality scores, and proposed prices shall be read aloud and recorded<\/strong>. No modification to financial proposals is permitted<\/strong>. When electronic submission is used, this information shall be posted online<\/strong>.<\/li><li>The arithmetic-correction Rule differs by contract type:<\/li><\/ul>\n<div class=\"tblwrap\"><table><thead><tr><th>Contract type<\/th><th>Rule<\/th><\/tr><\/thead><tbody><tr><td>Time-based contract<\/td><td>ANY arithmetical errors shall be corrected, and prices shall be adjusted if they fail to reflect all inputs<\/strong> That are included in the respective technical proposals<\/td><\/tr><tr><td>lump-sum contract<\/td><td>the consultant is deemed to have included all prices<\/strong> In its financial proposal \u2014 so neither arithmetical correction nor any other price adjustment shall be made<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<ul class=\"lst\"><li>for the purpose of evaluation, the total cost shall include all taxes and duties for which the Procuring Entity makes payments to the consultant, and other reimbursable expenses \u2014 such as travel, translation, report printing, or secretarial expenses<\/strong>.<\/li><li>THE GST misclassification Rule<\/strong>: \"the offers shall be evaluated based on the GST rate quoted by each bidder\u2026 the Procuring Entity shall not be responsible for any misclassification of HSN number or incorrect GST rate if quoted by the bidder. Any increase in GST rate due to misclassification of HSN number shall have to be absorbed by the consultant<\/strong>.\"<\/li><li>if GST is quoted extra, but with the provision that it shall be charged as applicable at the time of delivery<\/strong>, the offer shall be evaluated for comparison purposes by loading the maximum existing rate of GST for the product\/ HSN code<\/strong>.<\/li><\/ul>\n<h1>7.19 Least Cost Selection (LCS)<\/span><\/h1>\nUnder the LCS procedures, the financial proposals will be ranked in terms of their total evaluated cost<\/strong>.<\/p>\nTHE least cost proposal will be ranked as L-1<\/strong>, and the next higher and so on will be ranked as L-2, L-3<\/strong>, etc.<\/p>\nTHE least cost proposal (L-1) will be considered for award of contract<\/strong>.<\/p>\nC<\/span>:<\/strong>The CEC will put up a report on financial evaluation of the technically qualified consultants to the competent finance authority<\/strong>, along with the recommendation that the least cost proposal (L-1) can be approved\/ invited for negotiation and for final award of contract<\/strong>.<\/p>\n<aside class=\"note\">In the <\/strong>GOODS Manual, LCS is not named as a system \u2014 <\/strong>L1 selection among technically responsive bids is simply the default.<\/strong><\/p><\/aside>\n<h1>7.20 Quality and Cost Based Selection (QCBS)<\/span><\/h1>\n(Rule 192 of GFR 2017)<\/em><\/p>\n<aside class=\"note\">The Inverted Weightage \u2014 the Single Most Examinable Point in this Chapter<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>Technical\/ Quality weightage<\/th><th>Cost weightage<\/th><th>Ceiling<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-C\" data-src=\" C \"><td>C<\/span> Consultancy<\/td><td>70%<\/td><td>30%<\/td><td>\"or any other respective weightages as declared in the RfP (Example, 60:40, 50:50 \u2014 but not greater than 80%<\/strong>)\"<\/em><\/td><\/tr><tr class=\"srcmark src-multi\" data-src=\" W NC \"><td>W<\/span> WORKS \u00b7 NC<\/span> Non-consultancy<\/td><td>not more than 30%<\/td><td>70% or more<\/td><td>the maximum weight of non-financial parameters shall in no case exceed 30%<\/strong><\/em><\/td><\/tr><\/tbody><\/table><\/div>\nnote the identical sentence appearing in both \u2014 pointing in opposite directions:<\/p>\nC<\/span>:\"<\/strong>since the weightage of the cost element adopted in consultancy services is as high as 70 (seventy) per cent, financial considerations would dominate the selection\u2026\"<\/em> *(an evident <\/strong>internal inconsistency in the CS Manual, since it has just stated that technical carries 70% and cost 30%)*<\/p>\nNC<\/span>: *\"<\/strong>since the weightage of the cost element adopted in nc services is as high as 70 (seventy) per cent, financial considerations would dominate the selection\u2026\"<\/em>(consistent with NC's own 70% cost weighting)*<\/p><\/aside>\n<h2>7.20.1<\/span>The Qualifying Benchmark<\/span><\/h2>\nin QCBS selection, minimum qualifying marks \u2014 normally 70\u201380 (seventy to eighty) out of a maximum of 100 marks<\/strong> \u2014 as a qualifying benchmark for quality of the technical proposal shall be prescribed and indicated in the tender document<\/strong>, along with a scheme for allotting marks for various technical criteria\/ attributes<\/strong>.<\/p>\nBids scoring less than the minimum threshold shall not be considered for further evaluation<\/strong>.<\/p>\n<aside class=\"note\">The reason the benchmark must be set high: \"since the weightage of the cost element adopted is as high as 70 per cent, financial considerations would dominate the selection \u2014 though to a lower extent as compared to LCS. In such cases, it is essential to ensure that the minimum qualifying marks in the evaluation is set sufficiently high \u2014 to weed out low-quality bids with low prices<\/strong>.\"<\/p><\/aside>\n<h2>7.20.2<\/span>The Two Scores and the Weighted Total<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Score<\/th><th>How computed<\/th><\/tr><\/thead><tbody><tr><td>technical\/ quality score<\/td><td>the proposal with the highest technical marks shall be given a score of 100<\/strong>, and other proposals given technical scores proportional to their marks w.r.t. The highest technical marks<\/strong><\/td><\/tr><tr><td>financial score<\/td><td>the proposal with the lowest cost May be given a financial score of 100<\/strong>, and other proposals given financial scores inversely proportional to their prices w.r.t. The lowest offer<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nTHE total score shall be obtained by weighing the quality and cost scores and adding them up<\/strong>.<\/p>\nThe proposal obtaining the highest total combined score will be ranked as H-1<\/strong>, followed by H-2, H-3<\/strong>, etc. THE H-1 proposal shall be recommended for award of contract<\/strong>(C<\/span> adds: \"will be invited for negotiations, if required\")<\/em>.<\/p>\n<aside class=\"note\">The tie-breaker: \"in the event two or more bids have the same score in final ranking \u2014 the bid with the higher technical score will be H-1<\/strong>.\"<\/p><\/aside>\n<h2>7.20.3<\/span>The QCBS Formula<\/span><\/h2>\nAN evaluated bid score (b)<\/strong> Will be calculated for each responsive bid using the following formula \u2014 which permits a comprehensive assessment of the bid price and the technical merits of each bid<\/strong>:<\/p>\n<aside class=\"note\">B = (C_low \/ C) \u00d7 X + (T \/ T_high) \u00d7 (1 \u2212 X)<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>Symbol<\/th><th>Meaning<\/th><\/tr><\/thead><tbody><tr><td>C<\/td><td>evaluated bid price<\/td><\/tr><tr><td>C_low<\/td><td>THE lowest<\/strong> Of all evaluated bid prices among responsive bids<\/td><\/tr><tr><td>T<\/td><td>THE total technical score<\/strong> Awarded to the bid<\/td><\/tr><tr><td>T_high<\/td><td>the technical score achieved by the bid that was scored best<\/strong> Among all responsive bids<\/td><\/tr><tr><td>X<\/td><td>THE weightage for the price<\/strong> As specified in the bds\/ tender document<\/td><\/tr><\/tbody><\/table><\/div>\nthe bid with the best evaluated bid score (b) among responsive bids shall be the most advantageous bid<\/strong>.<\/p>\n<h2>7.20.4<\/span>the Worked Examples \u2014 and How the Same Numbers Produce Different Winners<\/span><\/h2>\n<aside class=\"note\">This is the clearest demonstration of why the inverted weightage matters. The Consultancy and Non-Consultancy Manuals use identical input data<\/strong> \u2014 and reach different answers<\/strong>.<\/p><\/aside>\n<h3 class=\"src-C srchead\" data-src=\" C \">A. THE CONSULTANCY EXAMPLE \u2014 weightage 70 technical: 30 cost<\/span>C<\/span><\/h3><div class=\"srcblock src-C\" data-src=\" C \" data-label=\"Consultancy Manual only\">\nMinimum qualifying marks for technical qualification: 75<\/strong>. Three proposals A, B, C received.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>A<\/th><th>B<\/th><th>C<\/th><\/tr><\/thead><tbody><tr><td>Technical marks awarded<\/td><td>75<\/td><td>80<\/td><td>90<\/td><\/tr><tr><td>Technical points (T\/T_high)<\/td><td>75\/90 = 83<\/strong><\/td><td>80\/90 = 89<\/strong><\/td><td>90\/90 = 100<\/strong><\/td><\/tr><tr><td>Quoted price<\/td><td>Rs. 100<\/td><td>Rs. 104<\/td><td>Rs. 106<\/td><\/tr><tr><td>Financial points (C_low\/C)<\/td><td>100\/100 = 100<\/strong><\/td><td>100\/104 = 96<\/strong><\/td><td>100\/106 = 94<\/strong><\/td><\/tr><tr><td>Combined score (Tech \u00d7 0.70 + Fin \u00d7 0.30)<\/td><td>83\u00d70.70 + 100\u00d70.30 = 88.10<\/strong><\/td><td>89\u00d70.70 + 96\u00d70.30 = 91.10<\/strong><\/td><td>100\u00d70.70 + 94\u00d70.30 = 98.20<\/strong><\/td><\/tr><tr><td>RANK<\/td><td>H-3<\/td><td>H-2<\/td><td>H-1<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">the result: \"proposal c, at the evaluated cost of Rs. 106 (the highest-priced bid), was therefore declared as winner and recommended for negotiations\/ approval<\/strong>.\"<\/p><\/aside>\n<\/div><h3 class=\"src-NC srchead\" data-src=\" NC \">B. THE NON-CONSULTANCY EXAMPLE \u2014 same data, weightage 30 technical: 70 cost<\/span>NC<\/span><\/h3><div class=\"srcblock src-NC\" data-src=\" NC \" data-label=\"Non-Consultancy Manual only\">\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>A<\/th><th>B<\/th><th>C<\/th><\/tr><\/thead><tbody><tr><td>Technical marks awarded<\/td><td>75<\/td><td>80<\/td><td>90<\/td><\/tr><tr><td>Technical points<\/td><td>83<\/td><td>89<\/td><td>100<\/td><\/tr><tr><td>Quoted price<\/td><td>Rs. 100<\/td><td>Rs. 104<\/td><td>Rs. 106<\/td><\/tr><tr><td>Financial points<\/td><td>100<\/td><td>96<\/td><td>94<\/td><\/tr><tr><td>Combined score (Tech \u00d7 0.30 + Fin \u00d7 0.70)<\/td><td>83\u00d70.30 + 100\u00d70.70 = 95<\/strong><\/td><td>89\u00d70.30 + 96\u00d70.70 = 94<\/strong><\/td><td>100\u00d70.30 + 94\u00d70.70 = 96<\/strong><\/td><\/tr><tr><td>RANK<\/td><td>H-2<\/td><td>H-3<\/td><td>H-1<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Note how the inversion completely re-orders B and A \u2014 B falls from H-2 to H-3, and A rises from H-3 to H-2.<\/p><\/aside>\n<\/div><h3 class=\"src-W srchead\" data-src=\" W \">C. THE WORKS EXAMPLE \u2014 weightage 30 technical: 70 cost, with different data<\/span>W<\/span><\/h3><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\nMinimum qualifying marks: 75<\/strong>.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>A<\/th><th>B<\/th><th>C<\/th><\/tr><\/thead><tbody><tr><td>Technical marks awarded<\/td><td>80<\/td><td>75<\/td><td>90<\/td><\/tr><tr><td>Normalised technical score<\/td><td>80\u00d7100\/90 = 88.89<\/strong><\/td><td>75\u00d7100\/90 = 83.33<\/strong><\/td><td>90\u00d7100\/90 = 100.00<\/strong><\/td><\/tr><tr><td>Quoted price<\/td><td>Rs. 120<\/td><td>Rs. 100<\/td><td>Rs. 105<\/td><\/tr><tr><td>Normalised financial score<\/td><td>100\u00d7100\/120 = 83.33<\/strong><\/td><td>100\u00d7100\/100 = 100.00<\/strong><\/td><td>100\u00d7100\/105 = 95.24<\/strong><\/td><\/tr><tr><td>Combined score (Tech \u00d7 0.30 + Fin \u00d7 0.70)<\/td><td>85.00<\/td><td>95.00<\/td><td>96.67<\/td><\/tr><tr><td>RANK<\/td><td>H-3<\/td><td>H-2<\/td><td>H-1<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">the result: \"bid c at the evaluated cost of Rs. 105 (rupees one hundred and five, the second lowest bid) was therefore declared as winner and recommended for approval<\/strong>.\"<\/p><\/aside>\n<\/div><h2 class=\"src-NC srchead\" data-src=\" NC \">7.20.5<\/span>Additional QCBS Rules in Non-Consultancy<\/span>NC<\/span><\/h2><div class=\"srcblock src-NC\" data-src=\" NC \" data-label=\"Non-Consultancy Manual only\">\na) the evaluation committee: \"for evaluation, a suitable committee shall be constituted. However, members of the STC [Special Technical Committee] shall not be involved<\/strong>.\"<\/p>\nb) joint ventures: \"joint ventures May be avoided in general in non-consultancy services \u2014 and particularly in the QCBS system<\/strong>.\"<\/p>\nc) the MII disapplication \u2014 an important consequence:<\/p>\n<aside class=\"note\">\"since the MII order is applicable 'where the bid is evaluated on price alone' \u2014 MII purchase preference would not be applicable where evaluation is based inter alia on non-price criteria \u2014 e.g., QCBS or FBS in services and works<\/strong>.\"<\/p><\/aside>\n<h1>7.21 Single Source Selection (SSS)<\/span><\/h1>\nthe single source in case of SSS selection shall be called for further negotiation, if need be \u2014 after opening and evaluation of its financial proposals<\/strong>.<\/p>\n<h1>7.22 Fixed Budget Selection (FBS) [C ONLY]<\/span><\/h1>\nUnder FBS, the selection of the consultant shall be made by one of the following two methods<\/strong>:<\/p>\nA) the competitive quality-only method: By a competitive selection process, based only on quality<\/strong>, using specific marking criteria for quality in the manner indicated in Rule 192(i) of the GFR<\/strong>.<\/p>\n<aside class=\"note\">\"the proposal with the highest technical score that meets the fixed budget requirement shall be considered for placement of contract<\/strong>.\"<\/p><\/aside>\nb) the empanelment method \u2014 for repetitive or multiple assignments: BY empanelling consultants for a period, using suitable eligibility\/ qualification criteria<\/strong>.<\/p>\n<aside class=\"note\">Thereafter, selection of a specific consultant for a specific assignment from such panel shall be based on overall considerations of public interest \u2014 including timeliness, practicability, number of other assignments already given to that consultant in the past<\/strong>, etc. \"in such cases, the budget for each assignment shall also be fixed by the Procuring Entity<\/strong>.\"<\/p><\/aside>\n<h1 data-src=\"G\">7.23 GTE Tenders \u2014 Special Aspects of Financial Evaluation<\/span>G<\/span>fullest text<\/span><\/h1>\n1. Currency of bid and conversion:<\/p>\nIn GTE, foreign bidders have the flexibility to quote prices and receive payments in either Indian rupees or freely convertible currencies<\/strong> (US Dollars, Euros, Pound Sterling, Yen, other relevant currencies, or a combination).<\/p>\nHowever, prices for goods, works, or services (including agency commission) performed or sourced in India must be quoted and paid for in Indian rupees<\/strong>. Indian bidders are required to quote in INR only<\/strong>.<\/p>\n<aside class=\"note\">The conversion Rule: \"all offers are to be converted to Indian rupees based on the \"bill currency selling\" exchange rate on the deadline of bid submission \u2014 quoted by a source as specified (if not specified, authorised exchange bankers approved by RBI) in the tender document<\/strong>.\"<\/p><\/aside>\n2. The loading sequence to arrive at DDP\/ FOR destination cost \u2014 a step-by-step calculation:<\/p>\nA) taxes on import: Import of goods or services or both attracts integrated tax (IGST)<\/strong>. The IGST rate and GST cess shall be applicable on the 'Customs assessable value' plus the 'basic customs duty applicable thereon'<\/strong>. The offers would be compared based on the principle of the total outgo from the Procuring Entity's pockets<\/strong>.<\/p>\nB) the dual-quotation requirement: \"the foreign bidders are normally asked, in the tender documents, to quote both on a FAS\/ FOB basis and also on a CFR\/ CIF basis \u2014 duly indicating the break-up of prices for freight, insurance, and so on \u2014 with purchasers reserving the right to order on either basis. They should also indicate the customs tariff number and customs duty applicable in India<\/strong>.\"<\/p>\nthe seven-step loading:<\/p>\n<aside class=\"note\">In the case of FAS\/ FOB<\/em> offers, the freight and insurance shall be (after ascertaining, if not quoted) added to make up the CIF COST.<\/p>\nTo arrive at the DDP\/ for\/ (FOT) destination cost, the following is to be added over and above CIF:<\/p>\n<ol class=\"lst\"><li>One per cent as port handling charges<\/strong>;<\/li><li>Customs duty, countervailing duty, and surcharges \u2014 as applicable on the date of opening of the bid<\/strong>;<\/li><li>Clearing agency charges<\/strong>;<\/li><li>Inland freight<\/strong>; and<\/li><li>GST, as assessed<\/strong>.<\/li><li>For bids with letter of Credit (LC)<\/em> Payment \u2014 the likely LC charges (as ascertained from the Procuring Entity's bankers) should also be loaded<\/strong>.<\/li><\/ol><\/aside>\nc) the comparison basis \u2014 two cases:<\/p>\n<ul class=\"lst\"><li>IF both Indian and foreign bidders have quoted<\/strong>, the comparison would be made based on DDP\/ for\/ FOT destination, including all applicable taxes and duties<\/strong> (on the principle of the total outgo from the Procuring Entity's pockets).<\/li><li>In case there are no domestic bidders<\/strong>, a comparison of offers can be made based on CIF\/ landed costs \u2014 since the rest of the costs would be the same for all bidders<\/strong>.<\/li><\/ul>\n<h1>7.24 Evaluation of Concurrent Application: MSE and Make in India Policies<\/span><\/h1>\n\"the concurrent application of the two procurement preference orders \u2014 i.e., the MSE procurement order of 2012 and the PPP-MII order \u2014 May create confusion for the procuring entities on how to evaluate the bids falling within the purview of both policies.<\/strong><\/p>\nTo bring predictability both to the procuring entities and bidders, DoE has issued guidelines in this regard<\/strong>.\" (OM No. F.1\/4\/2021-PPD dated 18.05.2023.)<\/em><\/p>\n<aside class=\"note\">These guidelines, with worked examples, are at: G<\/span> Annexure 34 and its Annex \u00b7 C<\/span> Annexure 25 \u00b7 NC<\/span> Annexure 21.<\/p><\/aside>\n<h1>7.25 Evaluation in Rate Contracts [G ONLY]<\/span><\/h1>\n1. If stipulated in the tender documents that this is a tender process to enter \"Rate Contract(s)\"<\/strong>, THEN additional clauses (including Performance Security, fall clause, etc.) shall be incorporated therein<\/strong>, and the evaluation would be done accordingly.<\/p>\n2. Procedures stipulated in this Chapter shall be applicable mutatis mutandis<\/strong>. The procedure for negotiations\/ counter-offers and splitting of contracts (parallel contracts) is slightly different in Rate Contract<\/strong>. One-time or standing approval of the Secretary of the Department May be taken for this procedure<\/strong>.<\/p>\n3. The counter-offer procedure for parallel rate contracts:<\/p>\nA) initially, the Rate Contract would be awarded to the L-1 bidder<\/strong>. Then the price of L-1 shall be counter-offered to the higher-quoting responsive bidders (under intimation to L-1)<\/strong> \u2014 asking them to send their revised bids online on the e-procurement portal<\/strong>, to be opened at a specified place, date, and time. The L-1 bidder would be specifically informed that it May, if it desires, reduce its price<\/strong>, and send its revised bid accordingly.<\/p>\nThe bidders who accept the counter-offered rate or a rate lower than that would be awarded parallel rate contracts<\/strong>. If L-1 bidder lowers its rate in its revised offer, the same would also be accepted with effect from that date, and its Rate Contract would be amended accordingly<\/strong>.<\/p>\nB) where L-1'S price is not reasonable: \"price negotiation with the bidders should be severely discouraged. However, in the case where parallel rate contracts are necessary \u2014 even if the lowest responsive bidder (L-1) price is not reasonable \u2014 negotiation May be conducted with the L-1 bidder in the first instance.<\/strong><\/p>\n<aside class=\"note\">If the L1 bidder agrees to bring down the price to the desired level, a Rate Contract would be concluded with it, and parallel rate contracts would be concluded as above.<\/strong><\/p>\n If, however, L1 bidder does not agree to reduce its price in the first instance itself \u2014 then the price which has been decided as reasonable shall be counter-offered to all the higher-quoting responsive bidders (including L-1)<\/strong> for further action on the above lines.\"<\/p><\/aside>\nc) all such parallel rate contracts would be released transparently and simultaneously<\/strong>.<\/p>\n4. The catalogue basis \u2014 for products that cannot be equitably compared:<\/p>\nIf stipulated in the tender document, in the case of:<\/p>\n<aside class=\"note\">Vehicles \u00b7 machine tools \u00b7 information technology products \u00b7 OEM\/ specialised equipment and their spares\/ consumables<\/strong> and similar products<\/p><\/aside>\n \u2014 where the design feature, performance parameters, etc., differ significantly among the products of different manufacturers \u2014 and even between different models of the same manufacturer<\/strong> \u2014 and where equitable comparison of prices is not feasible<\/strong>:<\/p>\n<aside class=\"note\">Rate contracts May be concluded on a percentage rebate on net dealer price (NDP) or MRP basis \u2014 generally known as \"catalogue basis\"<\/strong>.<\/p><\/aside>\n5. Period: A Rate Contract shall be for the period specified in the tender document \u2014 or one year if not so specified<\/strong>.<\/p>\n<h1>7.26 Variation of Quantities at the Time of Award [G ONLY]<\/span><\/h1>\n<aside class=\"note\">\"at the time of awarding the contract, the quantity to be procured must be re-judged based on the current data \u2014 since the ground situation May have very well changed.<\/strong><\/p>\nIf so provided in the tender document, and if warranted, the tendered quantity can be increased or decreased by the percentage specified therein \u2014 15 (fifteen)% if percentage not specified \u2014 for ordering, at the discretion of the Procuring Entity.<\/strong><\/p>\n Any larger variation May throw up issues about transparency<\/strong>.\"<\/p><\/aside>\n<h1>7.27 Option Clause [G ONLY]<\/span><\/h1>\n1. When and at what percentage:<\/p>\nNormally, for raw materials\/ consumables of regular and year-on-year recurrent requirements<\/strong>, all tenders of value above Rs. 50 (rupees fifty) lakh<\/strong> \u2014 to take care of any change in the requirement during the currency of the contract \u2014 a plus\/ minus option clause [normally 25 (twenty-five) per cent]<\/strong> May be incorporated in the tender document.<\/p>\nHowever, the ca May approve the inclusion of such a clause in lower denomination tenders, if such items have a history of frequent disruptions in the continuity of supplies<\/strong>.<\/p>\nThe model clause:<\/p>\n<aside class=\"note\">\"The purchaser reserves the right to increase\/ decrease the ordered quantity by up to [25] per cent at any time, till the final delivery date (or the extended delivery date of the contract), by giving reasonable notice \u2014 even though the quantity ordered initially has been supplied in full before the last date of the delivery period (or the extended delivery period).\"<\/strong><\/p><\/aside>\n2. The hedging caution: \"the higher the option limit, the more uncertainty there is for the bidders in formulating their prices \u2014 and the more chance of hedging the prices quoted to take care of such uncertainties; Hence, the option limit should be carefully considered only in justifiable requirements<\/strong>.\"<\/p>\n3. There should be no option clause in development orders<\/strong>.<\/p>\n4. The ca-determination Rule: \"the quantum of the option clause will be excluded from the value of tenders for the purpose of determining the level of ca in the original tender<\/strong>.\"<\/p>\n<h1>7.28 Splitting of Contracts \/ Parallel Contracts [G ONLY]<\/span><\/h1>\n1. The default: \"unless otherwise stipulated in TIS\/ AITB, there shall be no parallel orders or splitting quantities among more than one bidder<\/strong>.\"<\/p>\n<\/div><h2>7.28.1<\/span>Case A \u2014 Splitting WITHOUT prior declaration<\/span><\/h2>\n\"however, after due processing, if it is discovered that the quantity to be ordered is more than what the L1 bidder alone is capable of supplying, and there was no prior declaration in the tender documents to split the quantities \u2014 then the quantity being finally ordered May be distributed among the other bidders in a manner that is fair, transparent and equitable, based on objective data available in the bids (e.g., eligibility criteria, quantity\/ delivery):<\/strong><\/p>\nA) as far as feasible, counter-offer the L1 rate to such firms;<\/strong><\/p>\nB) if distribution at the counter-offered rate is not feasible, then distribution May be done at the rates quoted by such bidders \u2014 if their rates are still within the zone of reasonableness<\/strong>.\"<\/p>\n<h2>7.28.2<\/span>Case B \u2014 Splitting WITH prior declaration, and the 70:30 \/ 50:30:20 ratios<\/span><\/h2>\nin case of:<\/p>\n<aside class=\"note\">THE critical\/ vital\/ safety\/ security nature of the item<\/strong> \u00b7 large quantity under procurement<\/strong> \u00b7 urgent delivery requirements<\/strong> \u00b7 inadequate vendor capacity<\/strong><\/p><\/aside>\n \u2014 it May be advantageous to decide in advance to have more than one source of supply<\/strong>.<\/p>\nIn such cases, a parallel contract clause should be added to the tender documents<\/strong>, clearly stating that the Procuring Entity reserves the right to split the contract quantity.<\/p>\nTHE manner of deciding the relative share of L1 and the rest should be clearly defined, along with the minimum number of suppliers sought<\/strong>.<\/p>\n<aside class=\"note\">The standard ratios:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Number of sources<\/th><th>Ratio<\/th><\/tr><\/thead><tbody><tr><td>Splitting in two<\/td><td>70: 30<\/td><\/tr><tr><td>Splitting in three<\/td><td>50: 30: 20<\/td><\/tr><\/tbody><\/table><\/div>\n\"A different ratio May also be justified.\"<\/strong><\/p><\/aside>\nthe variation latitude: \"these ratios are approximate, and the Procuring Entity May marginally vary quantities to suit: Capacity\/ past performance of the bidder \u00b7 unit loads of packing or transportation \u00b7 relative ranking of the bids \u00b7 delivery period offered \u00b7 existing load of bidder \u00b7 and other similar factors affecting smooth supplies<\/strong>.\"<\/p>\n<aside class=\"note\">The anti-cartel safeguard \u2014 critically important:<\/p>\n\"since such predefined splitting of quantity can potentially encourage cartel formation \u2014 the Procuring Entity May stipulate that bidders must quote at least for a minimum percentage (say, a minimum of the ratio of distribution \u2014 i.e., 30% or 20% in case of 70:30 and 50:30:20 respectively) of the total tender quantity \u2014 to be considered a responsive bidder<\/strong>.\"<\/p><\/aside>\n<h2>7.28.3<\/span>The Five Allocation Guidelines (applicable in BOTH cases)<\/span><\/h2>\na) L1 should be awarded at least the percentage mentioned above, or his quoted quantity\/ spare supply capacity \u2014 whichever is lower<\/strong>.<\/p>\nB) in case the quantity thus allocated for L1 is less than the prescribed percentage \u2014 higher percentages than those stipulated for L2 (and L3, and so on) May be considered<\/strong> To cover the entire tender quantity.<\/p>\nC) for the rest of the contract quantity, the lowest rate accepted will be counter-offered to the L2 party<\/strong>. On acceptance, the order will be placed on L2 for the respective (or increased) percentage or the quoted quantity\/ spare supply capacity, whichever is lower<\/strong> \u2014 and so on to other higher bidders. In case of non-acceptance by L2, a similar offer shall be made to L3 and L4, and so on.<\/p>\nD) in case of shortfalls, the percentage of allocation of bidders in sequence May be proportionately increased<\/strong> \u2014 and, if unavoidable, more bidders than the minimum number specified May be considered, keeping the sanctity of ranking of bidders<\/strong>.<\/p>\n<aside class=\"note\">\"if it is still not possible to cover the entire tender quantity, there would be no alternative but to re-tender the uncovered quantity<\/strong>.\"<\/p><\/aside>\ne) in case higher-priced bidders do not agree to match the L1 price, action as per case a(b) above May be considered.<\/p>\n<h2>7.28.4<\/span>The Two Pre-conditions Before Splitting<\/span><\/h2>\n\"in either situation, before splitting the quantity, distribution shall be subject to:<\/strong><\/p>\nI) purchase preference to MSME and 'class-i local supplier' (under Make in India order); And<\/strong><\/p>\nii) rates of L1 being considered reasonable \u2014 and if it is not reasonable, negotiation (if permissible) with the L1 party May be carried out before splitting of quantities, with the approval of the ca \u2014 otherwise there would be no alternative but to re-tender the requirement<\/strong>.\"<\/p>\n<h1>7.29 Reasonableness of Prices<\/span><\/h1>\n1. The mandatory declaration: \"in every recommendation of the TC for an award of contract, it must be declared that the rates recommended are reasonable<\/strong>.\"<\/p>\nif the rates received are considered abnormally low or unreasonably high<\/strong>, action May be taken as per Paras 7.30 and 7.32 respectively \u2014 or, as per Para 7.34, reject any or all bids; Abandon\/ cancel the tender process and issue another tender<\/strong>.<\/p>\n2. No blind reliance on the estimate: \"in large-value tenders, blind reliance on the cost estimate is not recommended for assessing reasonableness. More than one method of estimation of cost May be used to triangulate a reasonable price<\/strong>.\"<\/p>\n3. The seven cautions on using last purchase price (lpp):<\/p>\nWhere there is no estimated cost, a comparison with the last purchase price (lpp \u2014 the price paid in the latest successful contract)<\/strong> is the basis for judging reasonableness. The following points May be kept in mind:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Caution<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>THE basic price, taxes, duties, transportation charges, packing and forwarding charges should be indicated separately<\/strong> \u2014 and the comparison should be on basic price<\/strong><\/td><\/tr><tr><td>b<\/td><td>where the firm holding the lpp contract has defaulted<\/strong>, the fact should be highlighted \u2014 and the price paid against the latest contract placed prior to the defaulting lpp contract, where supplies have been completed, should be used<\/strong><\/td><\/tr><tr><td>c<\/td><td>where the supply against the lpp contract is yet to commence<\/strong> (i.e., delivery is not yet due), it should be taken as lpp with caution \u2014 especially if the supplier is new<\/strong>; the price paid against the previous contract may also be kept in view<\/td><\/tr><tr><td>d<\/td><td>where the price indicated in the lpp is subject to variation, or if it is more than a year old<\/strong> \u2014 THE updated basic lpp, as computed in case of the Price Variation Clause (PVC), May also be indicated<\/strong><\/td><\/tr><tr><td>e<\/td><td>in the case of wholly imported stores<\/strong>, the comparison of the last purchase rate should be made with the net CIF value at the current foreign exchange rate<\/strong><\/td><\/tr><tr><td>f<\/td><td>\"it is natural to have marginal differences in prices obtained at different cities\/ offices for the same item, due to their different circumstances. The prices obtained are greatly influenced by quantity, delivery period, and terms of the contract<\/strong>\"<\/td><\/tr><tr><td>g<\/td><td>\"prices paid in emergencies, or prices offered in a distress sale, are not accurate guidelines for future use. Such purchase orders and TC proceedings should indicate that: \"These prices are not valid lpp for comparison in future procurement.\"<\/strong>\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>7.30 Consideration of Abnormally Low Bids (ALB)<\/span><\/h1>\n1. The definition:<\/p>\n<aside class=\"note\">\"an abnormally low bid (alb) is one in which the bid price, in combination with other elements of the bid, appears so low that it raises material concerns as to the capability of the bidder to perform the contract at the offered price<\/strong>.\"<\/p><\/aside>\nthe procedure:<\/p>\n<ul class=\"lst\"><li>The Procuring Entity May seek written clarifications from the bidder \u2014 including detailed price analyses of its bid price in relation to<\/strong>:<\/li><\/ul>\n<aside class=\"note\">Scope \u00b7 Schedule \u00b7 W<\/span>resource mobilisation<\/strong> \u00b7 allocation of risks and responsibilities \u00b7 and any other requirements of the tender document<\/p><\/aside>\n<ul class=\"lst\"><li>if, after evaluating the price analyses, the Procuring Entity determines that the bidder has substantially failed to demonstrate its capability to deliver the contract at the offered price<\/strong> \u2014 the Procuring Entity May reject the bid\/ proposal, and evaluate the next higher bidder (and so on)<\/strong>.<\/li><\/ul>\n<aside class=\"note\">The critical Rule on what rate applies to the next bidder: \"\u2026At his\/ their own quoted rate (if considered reasonable) \u2014 and not by counter-offering the rate of the alb \u2014 for the award of contract<\/strong>.\"<\/p><\/aside>\n2. No normative percentage:<\/p>\n<aside class=\"note\">\"however, it would not be advisable to fix a normative percentage below the estimated cost, which would automatically be considered an abnormally low bid<\/strong>.\"<\/p><\/aside>\n\"due care should be taken while formulating the specifications [W<\/span>: \"preparing the drawings, formulating specifications\"] at the time of preparation of the tender document \u2014 to safeguard against the submission of abnormally low bids<\/strong>.\"<\/p>\n3. Predatory pricing:<\/strong> \"in the case of predatory pricing as well, procuring entities May refer to the above consideration of abnormally low bids to assist themselves in the finalisation of tenders<\/strong>.\" (OM No. F.12\/17\/2019-PPD dated 06.02.2020.)<\/em><\/p>\n4. The additional Security Deposit Rule \u2014 a common misconception corrected:<\/p>\n<aside class=\"note\">\" no provisions should be kept in the tender documents regarding the additional Security Deposit\/ Bank Guarantee (BG) in case of abnormally low bids.<\/strong><\/p>\n Wherever there are compelling circumstances to ask for an additional Security Deposit\/ BG in the case of albs, the same should be taken only with the approval of \u2014 the next higher authority competent to finalise the particular tender, or the Secretary of the Ministry\/ Department \u2014 whichever is lower<\/strong>.\" (OM No. F.9\/4\/2020-PPD dated 12.11.2020.)<\/em><\/p><\/aside>\n<h1>7.31 Cartel Formation \/ Pool Rates \/ Bid Rigging<\/span><\/h1>\n<h2 class=\"src-G srchead\" data-src=\" G \">7.31.1<\/span>The Statutory Definition<\/span>G<\/span><\/h2><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\n\"the Competition Act defines bid rigging as agreements that have the effect of eliminating or reducing competition, or adversely affecting or manipulating the process of bidding<\/strong>.\"<\/p>\nthe forms of bid rigging:<\/p>\n<aside class=\"note\">Collusive bidding<\/strong>(dividing the market, setting prices, or limiting production \u2014 involves misrepresentation of independent bids<\/strong>)<\/em> \u00b7 bid rotation\/ suppression<\/strong> \u00b7 complementary bidding<\/strong>, etc.<\/p><\/aside>\n<\/div><h2>7.31.2<\/span>The Five Tell-tale Signs of a Cartel<\/span><\/h2>\nSometimes, a cartel of bidders quotes equal\/ marginally different rates (pool rates)<\/strong> Against a tender, whereas possibly:<\/p>\n<div class=\"tblwrap\"><table><thead><tr class=\"srcmark src-multi\" data-src=\" G W \"><th>#<\/th><th>G<\/span> GOODS<\/th><th>W<\/span> WORKS<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>rates quoted (and breakup thereof) are equal \u2014 despite their manufacturing\/ logistics costs being different due to their scale of production\/ location<\/strong><\/td><td>quoted prices and scope of works: Prices quoted (and their detailed breakdowns) are suspiciously similar \u2014 despite significant differences in the proposed approach to completing the works<\/strong>. *Look for <\/strong>variations in methodologies, materials, or timelines that could justify price differences*<\/td><\/tr><tr><td>b<\/td><td>the rate manages to be L1<\/strong><\/td><td>the rates quoted by two or more bidders manage to be L1<\/strong><\/td><\/tr><tr><td>c<\/td><td>in a variation, the rates May not be exactly equal, but May be close enough to make the cartel members L1, L2, L3<\/strong>, etc.<\/td><td>(same)<\/em><\/td><\/tr><tr><td>d<\/td><td>respective quoted quantities by these bidders are much less than the tendered quantity \u2014 leaving no option but to distribute quantities among these bids<\/strong><\/td><td> \u2014 <\/td><\/tr><tr><td>e<\/td><td>their bids have other uncanny similarities \u2014 i.e., the same layout or typographical errors<\/strong>. \"bids from the same IP address raise suspicion \u2014 but by itself May not be a strong indicator of a cartel. In such cases, other factors mentioned in this Para should be assessed to judge cartelisation<\/strong>.\"<\/td><td>unexplained similarities in bids: Bids from different contractors exhibit unusual similarities beyond pricing<\/strong> \u2014 including identical typos, grammatical errors, formatting, or even the use of uncommon terminology<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>7.31.3<\/span>Why It Matters Even When Rates Are Reasonable<\/span><\/h2>\n<aside class=\"note\">\"if this rate is unreasonably high, this May be an attempt to force acceptance of higher rates by undermining the negotiating power of the buyer as per Rules.<\/strong><\/p>\n Even when rates are reasonable, this May be an attempt to force the Procuring Entity to distribute quantities as decided by the bidders among them \u2014 even in tenders where splitting of quantities is not envisaged<\/strong>.\"<\/p><\/aside>\nthe evidentiary difficulty G<\/span>:<\/p>\n<aside class=\"note\">\"cartels, by their very nature, are secretive \u2014 and thus it May not be possible to find the direct concrete evidence of their presence.<\/strong><\/p>\n The orders of the Competition Commission of India (CCI) clearly mention reliance on circumstantial evidence \u2014 both economic and conduct-based \u2014 to conclude the existence of a cartel agreement<\/strong>.\"<\/p><\/aside>\nthe legal characterisation: Such cartel formation\/ pool rates abuse the transparency of Public Procurement and are a violation of the Code of Integrity for Public Procurement<\/strong>. Such tactics leading to an \"Appreciable adverse effect on competition\" (AAEC) is an offence under the Competition Act, 2002<\/strong>, as amended by the Competition (Amendment) Act, 2007.<\/p>\n<h2>7.31.4<\/span>The Cartel Formation\/ Pool Rates Clause \u2014 Two Preventive Measures<\/span><\/h2>\nTo discourage such practices, the Procuring Entity May include in all tender documents a cartel formation\/ pool rates clause<\/strong>, reserving its rights to take the following actions without assigning any reasons<\/strong>:<\/p>\nA) the minimum-quantity requirement:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Minimum percentage a bidder must bid for<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span> GOODS<\/td><td>\"more than a minimum specified percentage \u2014 say 25% \u2014 of the tendered quantity; Otherwise, their offer shall be rejected<\/strong>\"<\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> WORKS<\/td><td>\"for those works procurements where schedules or division of work is possible \u2014 more than a minimum specified percentage, say 20% or 30%<\/strong>\"<\/td><\/tr><\/tbody><\/table><\/div>\nb) the warning: Warn that the Procuring Entity May take any\/ all punitive actions available under the Code of Integrity<\/strong> \u2014 including removal from the list\/ panel of registered sources or debarment<\/strong> \u2014 besides reporting the transgression to the competition commission, and concerned trade associations like FICCI, ASSOCHAM, NSIC<\/strong> for suitable punitive action.<\/p>\nc) the negotiation bar \u2014 reproduced verbatim in the cartel section:<\/p>\n<aside class=\"note\">\"In no case, including where cartel rates are suspected, should negotiations be extended to those who had either not tendered originally, or whose tender was rejected because of unresponsiveness of bid, unsatisfactory credentials, inadequacy of capacity or unworkable rates.\"<\/strong><\/p><\/aside>\n<h2>7.31.5<\/span>The Four Ways to Decide a Tender Where a Cartel Is Suspected<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Permitted action<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>reject all bids from the suspected cartel formation and decide the tender accordingly<\/strong><\/td><\/tr><tr><td>ii<\/td><td>place an order on any one or more firms from among the cartel, for any quantity, with the exclusion of the rest \u2014 with or without negotiation or counter-offering<\/strong> NOTE: \"the selection of firms for this May be based on a transparent logistics parameter \u2014 i.e., quicker delivery, nearer location of source, relatively better past performance, etc<\/strong>.\"<\/td><\/tr><tr><td>iii<\/td><td>whenever a tender is floated for purchase exclusively from an Approved Vendor List<\/strong> [W: pre-qualified\/ approved sources<\/em>], and cartel formation is suspected among all such sources \u2014 the Procuring Entity May place orders on bidders who are not in the Approved Vendor List, for any quantity<\/strong><\/td><\/tr><tr><td>iv<\/td><td>wherever a specified ratio for splitting of quantities among 2\/3 sources<\/strong> is stipulated, and cartel formation is suspected among the lower 2\/3 bidders \u2014 place orders on any number of bids beyond such ratios<\/strong>, or decide the tender as per (i) or (ii) above<\/td><\/tr><\/tbody><\/table><\/div>\nW<\/span> \u2014 the additional remedial measures:<\/p>\n<aside class=\"note\">\"in case of evidence of cartel formation, detailed cost analysis May be done by associating experts if necessary.<\/strong><\/p>\n New firms May also be encouraged to get themselves enlisted for the subject works \u2014 to break the monopolistic attitude of the firms forming a cartel.<\/strong><\/p>\n Changes in the mode of procurement (post-qualification instead of pre-qualification) and packaging\/ slicing of the work May also be tried<\/strong>.\"<\/p><\/aside>\n<h1>7.32 Negotiations for Reduction of Prices<\/span><\/h1>\n(Rule 173(xiv) of GFR 2017)<\/em><\/p>\n<h2>7.32.1<\/span>The General Rule and the Two Absolute Bars<\/span><\/h2>\n<aside class=\"note\">\"negotiation with bidders for price reduction after bid opening must be severely discouraged.<\/strong><\/p>\nHowever, in exceptional circumstances where price negotiation is necessary due to some unavoidable circumstances \u2014 it should be held only with the lowest acceptable bidder (L1) \u2014 who is techno-commercially responsive for the supply of a bulk quantity, and on whom the contract would have been placed but for the decision to negotiate<\/strong>.\"<\/p>\nthe absolute bar: \"in no case \u2014 including where cartel rates are suspected \u2014 should negotiations be extended to those who:<\/strong><\/p>\n\u2022 had either not tendered originally; Or<\/strong><\/p>\n\u2022 whose bid was rejected because of: Unresponsiveness of bid \u00b7 unsatisfactory credentials \u00b7 inadequacy of capacity \u00b7 or unworkable rates<\/strong>.\"<\/p><\/aside>\n<h2>7.32.2<\/span>The Four Exceptional Circumstances<\/span><\/h2>\n\"price negotiations May not be considered except under the following exceptional circumstances:<\/strong>\"<\/p>\na) where THE L1 price is not considered to be reasonable<\/strong>, AND:<\/p>\n<ul class=\"lst\"><li>I) the procurement is done on a nomination basis<\/strong>; or<\/li><li>ii) procurement is from single or limited sources<\/strong>; or<\/li><li>iii) in situations where the requirements are urgent, and the delay in re-tendering for the entire requirement due to the unreasonableness of the quoted rates would jeopardise essential operations, maintenance, and safety<\/strong>:<\/li><\/ul>\n<aside class=\"note\">\"negotiations with L1 bidder(s) May be done for a bare minimum quantum of immediate requirements. The balance bulk requirement should, however, be procured through a re-tender, following the normal tender process<\/strong>.\"<\/p><\/aside>\nb) where there is suspicion of cartel formation \u2014 which should be recorded<\/strong>.<\/p>\n<h2>7.32.3<\/span>Who Decides, and the Recording Duty<\/span><\/h2>\n\"the decision whether to invite fresh tenders or to negotiate (and with whom) should be made by the tender accepting authority, based on the recommendations of the TC.<\/strong><\/p>\n Convincing reasons must be recorded by the authority recommending negotiations.<\/strong><\/p>\n The ca should exercise due diligence while accepting a tender, ordering negotiations, or calling for a re-tender \u2014 and a definite timeframe should be indicated<\/strong>.\"<\/p>\n<h2>7.32.4<\/span>What Counts as a Negotiation \u2014 and What Does Not<\/span><\/h2>\n<aside class=\"note\">\"normally, all counter-offers are considered negotiations by other means, and the principles of negotiations should apply to such counter-offers<\/strong>.\"<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>Situation<\/th><th>Is it a negotiation?<\/th><\/tr><\/thead><tbody><tr><td>a counter-offer TO L1<\/strong> To arrive at an acceptable rate<\/td><td>YES \u2014 shall amount to a negotiation<\/strong><\/td><\/tr><tr><td>A COUNTER-OFFER (at the rates accepted by L1) to L2, L3, and so on, in case of splitting of quantities<\/strong> (and in parallel Rate Contracts)<\/td><td>NO \u2014 shall not be deemed to be a negotiation<\/strong><\/td><\/tr><tr><td>dynamic bids in the reverse Auction<\/strong> Process<\/td><td>NO \u2014 are not to be considered as negotiations<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>7.32.5<\/span>The Four-Step Negotiation Procedure<\/span><\/h2>\nafter the ca has decided to call a specific bidder for negotiation:<\/p>\nA) extend validity first: \"it must be understood that if the period of validity of the original offer expires before the close of negotiations, the original offer will not be available for acceptance. The period of validity of the original offer must, therefore, be extended \u2014 wherever necessary \u2014 before negotiations<\/strong>.\"<\/p>\nb) the invitation letter: The bidder should be addressed as per the prescribed format, so that the rates originally quoted by him shall remain open for acceptance in the event of failure of the contemplated negotiation<\/strong>.<\/p>\n<aside class=\"note\">(Invitation and Declaration for Negotiations \u2014 G<\/span> Annexure 15 \u00b7 W<\/span> Annexure 6 \u00b7 NC<\/span> Annexure 14. Absent from the Consultancy Manual<\/strong> \u2014 see para 7.33.)<\/em><\/p><\/aside>\nc) the signed declaration: \"a negotiation meeting should be started only after obtaining a signed declaration from the negotiating supplier<\/strong>.\"<\/p>\nd) the revised bid \u2014 and the \"price only\" rule:<\/p>\n<aside class=\"note\">\"revised bids should be obtained in writing from the selected bidders at the end of the negotiations in the prescribed format.<\/strong><\/p>\n The bidder should not be permitted to change any other condition of his bid other than lowering the price.<\/strong><\/p>\nThe revised bids so obtained should be read out to the bidders or their representatives present immediately after completing the negotiations. If necessary, the negotiating party May be given some time to submit its revised offer.<\/strong><\/p>\nIn case the selected bidder prefers to send a revised bid instead of being present at the negotiation, the offer should be considered.<\/strong><\/p>\n In case a bidder does not submit the revised bid, decision shall be taken based on its original bid<\/strong>.\"<\/p>\n(Format of Revised Offer in Negotiations \u2014 G<\/span> Annexure 16 \u00b7 W<\/span> Annexure 7 \u00b7 NC<\/span> Annexure 15.)<\/em><\/p><\/aside>\n<h1>7.33 Negotiations to Freeze Description of Service [C ONLY]<\/span><\/h1>\n<aside class=\"note\">This section replaces price negotiation in the Consultancy Manual. It is the reason the Consultancy Manual carries NO \"Invitation and Declaration for Negotiations\" or \"Format of Revised Offer\" annexure \u2014 negotiation in consultancy is about SCOPE, not RATE.<\/p><\/aside>\n1. Why it is called \"negotiation\" at all:<\/p>\n<aside class=\"note\">\"in the consultancy services contract, the accepted ToR and methodology etc. Are laid down in the form of 'description of service'.<\/strong><\/p>\nTherefore, before the contract is finally awarded, discussions May be necessary with the selected bidder to freeze these aspects \u2014 especially when it is discouraged during evaluation of technical proposals to seek clarifications on these matters.<\/strong><\/p>\n However, such technical discussions do not amount to negotiations in the sense the word is used in procurement of goods and works.<\/strong><\/p>\n However, in procurement of consultancy, this discussion is termed as negotiations \u2014 since these discussions May have some financial ramifications, at least for the bidder<\/strong>.\"<\/p><\/aside>\n2. What May be discussed \u2014 and the anti-dilution rule:<\/p>\n\"negotiations are not an essential part of the selection process. In many cases, however, it is felt necessary to conduct negotiations with the selected consultant for discussions of:<\/strong><\/p>\n<aside class=\"note\">The ToR \u00b7 methodology \u00b7 staffing \u00b7 Procuring Entity's inputs \u00b7 and special conditions of the contract<\/strong><\/p>\n\"these discussions shall not substantially alter (or dilute) the original ToR or terms of the offer \u2014 lest the quality of the final product, its cost, and the initial evaluation be vitiated.<\/strong><\/p>\nThe final ToR and the agreed methodology shall be incorporated in \"description of services\" \u2014 which shall form part of the contract<\/strong>.\"<\/p><\/aside>\n3. FINANCIAL NEGOTIATIONS \u2014 the three strict limits:<\/p>\n<aside class=\"note\">\"financial negotiations shall only be carried out if:<\/strong><\/p>\n\u2022 due to negotiations, there is any change in the scope of work which has a financial bearing on the final prices; Or<\/strong><\/p>\n\u2022 if the costs\/ cost elements quoted are not found to be reasonable.<\/strong><\/p>\nIn such negotiations, the selected firm May also be asked to justify and demonstrate that the prices proposed in the contract are not out of line with the rates being charged by the consultant for other similar assignments.<\/strong><\/p>\n However, in no case should such financial negotiation result in an increase in the financial cost as originally quoted by the consultant, and on which basis the consultant has been called for the negotiations.<\/strong><\/p>\n If the negotiations with the selected consultant fail \u2014 the Procuring Entity shall cancel the bidding procedure and re-invite the bids<\/strong>.\"<\/p><\/aside>\n<h1>7.34 Cancellation of Procurement Process \/ Rejection of All Bids \/ Re-tender<\/span><\/h1>\n(Rule 173(xix) of GFR 2017)<\/em><\/p>\n1. The right and its limits:<\/p>\nThe Procuring Entity has the right to cancel the process of procurement or reject all bids at any time before intimating acceptance of a successful bid<\/strong>.<\/p>\n<aside class=\"note\">\"however, such rejections should be well considered, and normally be in cases where all the bids are either:<\/strong><\/p>\n\u2022 substantially in deviation from the specifications; Or<\/strong><\/p>\n\u2022 considered unreasonably high in cost \u2014 and, if in the latter case, the lowest qualified bidder during negotiations fails to reduce the costs to a reasonable level.<\/strong><\/p>\n If it is decided to re-invite the bids, the specifications should be critically reviewed\/ modified \u2014 so as to address the reasons for not receiving any acceptable bid in the earlier invitation<\/strong>.\"<\/p><\/aside>\nthe six grounds for cancellation:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Ground<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>IF THE quantity and quality of requirements have changed substantially<\/strong>, or there is an un-rectifiable infirmity in the tender process<\/strong><\/td><\/tr><tr><td>b<\/td><td>WHEN none of the bids is substantially responsive<\/strong> To the requirements of the procurement documents<\/td><\/tr><tr><td>c<\/td><td>none of the technical proposals meets the minimum technical qualifying score<\/strong><\/td><\/tr><tr><td>d<\/td><td>IF effective competition is lacking<\/strong>. <\/strong>However, lack of competition shall not be determined solely based on the number of bidders<\/strong><\/td><\/tr><tr><td>e<\/td><td>the bids'\/ proposals' prices are substantially higher than the updated cost estimate or available budget<\/strong><\/td><\/tr><tr><td>f<\/td><td>if the bidder whose bid has been found to be the lowest evaluated bid fails to sign the procurement contract, or fails to provide the Performance Security, or otherwise withdraws from the procurement process<\/strong> \u2014 the Procuring Entity shall re-tender the case<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n2. The balancing test \u2014 and the irreversibility Rule:<\/p>\n<aside class=\"note\">\"in cases where responsive bids are available, the aim should be to finalise the tender by taking mitigating measures \u2014 even in the conditions described above.<\/strong><\/p>\nIf it is decided to re-invite the tender, the justification should balance the perceived risks in the finalisation of the tender (marginally higher rates) against the certainty of resultant delays, cost escalations, and loss of transparency in the re-invited tender.<\/strong><\/p>\n it May be noted that once a tender is re-tendered, the bids in the old tender cannot be revived and reconsidered, as per the Indian Contract Act \u2014 even if prices received in the new tender turn out to be higher<\/strong>.\"<\/p><\/aside>\n3. Approval and communication: The ca should accord approval for re-tendering based on the reasons\/ proper justification in writing<\/strong>.<\/p>\nThe decision to cancel shall be immediately communicated to all bidders that participated<\/strong>; Bids, if not opened, would not be opened<\/strong> and, in off-line tenders, be returned unopened<\/strong>. EMD, cost of tender document (if any) etc. Should be promptly returned<\/strong>.<\/p>\n4. The pre-retender check: \"before re-tendering, the Procuring Entity is first to check whether \u2014 while floating\/ issuing the enquiry \u2014 all requirements and formalities such as standard conditions, industry-friendly qualification criteria, technical and commercial terms, wide publicity, sufficient time for tendering, and so on, were fulfilled. If not, a fresh enquiry is to be issued after rectifying the deficiencies<\/strong>.\"<\/p>\n<h1>7.35 Letter of Award (LoA) to the Successful Bidder<\/span><\/h1>\n1. The notification and when the contract is legally formed:<\/p>\nPrior to the expiry of the period of bid validity<\/strong>, the successful bidder will be notified \u2014 briefly indicating relevant details such as quantity, specification of the goods ordered, prices<\/em>, and so on \u2014 in writing by a registered letter or any other acknowledgeable and foolproof method<\/strong> That his bid has been accepted.<\/p>\n<aside class=\"note\">The legal point: \"legal communication of acceptance of the offer is considered complete as soon as it is submitted to postal authorities<\/strong>.\"<\/p><\/aside>\nin the same communication, the successful bidder is to be instructed to furnish the required Performance Security within a specified period (generally 14 to 28 days, depending on the amount)<\/strong>.<\/p>\n<aside class=\"note\">When the LoA itself forms the contract:<\/p>\n\"the Letter of Award (LoA) shall constitute the legal formation of the contract if it is not conditional on submission of Performance Security (as in tenders below Rs 50 lakh).<\/strong><\/p>\n In case Performance Security is stipulated, it would amount to a contract only after the furnishing of Performance Security.<\/strong><\/p>\nThe Procuring Entity, at its discretion, May directly issue the contract \u2014 subject only to the furnishing of Performance Security \u2014 skipping the issue of LoA<\/strong>.\"<\/p><\/aside>\n2. Verification of originals before the LoA:<\/p>\nBefore issuing an LoA, the Procuring Entity May \u2014 at its discretion<\/strong> \u2014 ask the bidder to submit for verification the originals of all such documents whose scanned copies were submitted online<\/strong>.<\/p>\nIf so decided, the photocopies shall be verified and signed by the competent officer and kept in the records as part of the contract agreement<\/strong>.<\/p>\n<aside class=\"note\">The consequence of failure: \"if the bidder fails to provide such originals \u2014 or in case of substantive discrepancies in such documents \u2014 it shall be construed as a violation of the Code of Integrity. Such a bid shall be liable to be rejected as unresponsive, in addition to other punitive actions. The evaluation of responsive bids shall proceed with the subsequent ranked offers<\/strong>.\"<\/p><\/aside>\n3. The value of the contract should include taxes\/ duties\/ levies<\/strong>, IF ANY.<\/p>\n4. The no-third-party Rule \u2014 a point frequently tested:<\/p>\n<aside class=\"note\">\"in some cases, the successful bidder (an OEM or an agent representing a principal firm) requests that the contract be placed on their subsidiary or an authorised dealer.<\/strong><\/p>\n This is legally not acceptable \u2014 as the contract can only be placed on the bidder in whose name the bid has been submitted, not on any third party<\/strong>.\"<\/p><\/aside>\n5. The GeM seller id requirement: \"it shall be mandatory for the successful bidder to register on GeM and obtain a unique GeM seller id \u2014 before the placement of LoA or the contract. This id shall be incorporated into the contract<\/strong>.\"<\/p>\n6. C<\/span> \u2014 the cross-checking duty at RfP stage: \"before a final award is announced, the technical and financial credentials of the selected bidders\/ consultant should be cross-checked to the extent feasible. This is especially important at RfP stage \u2014 since normally such a verification is not done at the EoI stage<\/strong>.\"<\/p>\n<h1>7.36 Publication of Award of Contract and Return of EMD<\/span><\/h1>\n(Rule 173(xviii) of GFR 2017)<\/em><\/p>\n1. Mandatory publication: The details of the award of the contract and the name of the successful bidder should be mentioned mandatorily on the CPPP\/ GeM (as relevant), and in the notice board\/ bulletin\/ website of the concerned Ministry or Department\/ e-procurement portal<\/strong>.<\/p>\n2. THE EXCEPTION \u2014 and the special CPSE six-month rule:<\/p>\n<aside class=\"note\">\"in case publication of such information is sensitive from commercial or security aspects \u2014 dispensation May be sought from publishing of such results, by obtaining sanction from the Secretary of the Department with the concurrence of associated finance.<\/strong><\/p>\n Open, transparent declaration of price, sources, and delivery Schedule of CPSE suppliers as per extant instructions adversely impacts the ability of CPSEs to compete in the highly competitive market. CPSEs are denied a level playing field.<\/strong><\/p>\nAt the time of tender formulation, commercial organisations like CPSEs will disclose whether the subject of procurement is for commercial resale.<\/strong><\/p>\n Contract award details of such cases May be shared on electronic procurement portals such as GeM, CPPP, etc., after six (06) months of finalisation of procurement.<\/strong><\/p>\nSuch a system shall protect the financial data of the CPSEs for a reasonable time, while also complying with the requirement of transparency<\/strong>.\"<\/p><\/aside>\n3. Return of bid securities: Upon the successful bidder furnishing the signed agreement and Performance Security<\/strong>, each unsuccessful bidder will be promptly notified, and their Bid Security shall be returned without interest within 30 (thirty) days of notice of award of contract<\/strong>.<\/p>\nThe successful supplier's Bid Security shall be adjusted against the SD, or returned as per the terms of the tender documents<\/strong>.<\/p>\n<h1>7.37 Performance Security at the Award Stage<\/span><\/h1>\nThe supplier receiving the LoA is required to furnish the required Performance Security (if it is part of tender conditions) in the prescribed form, within the period prescribed in the tender document (generally 14 to 28 days, depending on the amount)<\/strong>.<\/p>\nThe escalation sequence on failure:<\/p>\n<aside class=\"note\">\"in case Performance Security is not submitted within the stipulated time, the Procuring Entity May pursue the contractor up to a reasonable grace period for submission.<\/strong><\/p>\n In case the firm fails to submit the requisite Performance Security even thereafter \u2014 or fails to sign the contract \u2014 it May be treated as a withdrawal of an offer by the L1 bidder, and the tender May be re-invited \u2014 besides taking necessary punitive actions including forfeiture of EMD, deregistration and debarment against such bidders<\/strong>.\"<\/p><\/aside>\n<h1>7.38 Acknowledgement of Contract by the Successful Bidder and Execution<\/span><\/h1>\n1. After the successful bidder is notified, he will be sent an agreement in duplicate for signature and return \u2014 incorporating all agreements between the parties<\/strong>.<\/p>\n2. The acknowledgement timelines and exemptions:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Situation<\/th><th>Timeline<\/th><\/tr><\/thead><tbody><tr><td>OTE<\/td><td>acknowledge and unconditionally accept, sign, date and return the agreement within 14 (fourteen) days<\/strong> From the date of issue of the contract<\/td><\/tr><tr><td>GTE<\/td><td>within 28 (twenty-eight) days<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nwhen acknowledgement is not required:<\/p>\n<ul class=\"lst\"><li>IN low-value contracts below rupees two and a half lakh<\/strong>;<\/li><li>When the bidder's offer has been accepted in its entirety without any modifications<\/strong>;<\/li><li>\"if both parties simultaneously sign the contract across the table \u2014 further acknowledgement from the supplier is not required<\/strong>.\"<\/li><\/ul>\nif the supplier raises issues: \"while acknowledging the contract, the supplier May raise issues and\/ or ask for modifications against some entries; Such aspects shall be immediately investigated for necessary action \u2014 and thereafter, the supplier's unconditional acceptance of the contract must be obtained<\/strong>.\"<\/p>\nit should also be made known that if he does not furnish the required Performance Security or does not sign the contract within the stipulated target dates \u2014 such non-compliance will constitute sufficient ground for punitive actions<\/strong>.<\/p>\n\"the Procuring Entity May also consider getting the contract digitally signed<\/strong>.\"<\/p>\n3. Who May sign: \"all contracts shall be signed and entered into after receipt and verification of the requisite Performance Security \u2014 by an authority empowered to do so by or under the orders of the president<\/strong> [Article 299 of the Constitution].\"<\/p>\n<h1>7.39 Framing of Contract<\/span><\/h1>\nthe contract should be strictly as per the bid conditions and the accepted offer<\/strong>.<\/p>\n<aside class=\"note\">See the Risks table at para 7.41 \u2014 risk row 6 addresses the danger that *\"although there is a standard contract form in the tender documents, the contract may be drafted in a fashion that favours or discourages the successful bidder.\"*<\/p><\/aside>\n<h1>7.40 Audit Trails \u2014 Procurement Records<\/span><\/h1>\n1. The obligation: The Procuring Entity must maintain and retain audit trails, records and documents generated or received during its procurement proceedings \u2014 in chronological order<\/strong>. The files should be stored in an identified place and retrievable for scrutiny whenever needed, without wasting time<\/strong>.<\/p>\n2. The e-procurement dispensation:<\/p>\n<aside class=\"note\">\"however, many organisations now process procurements on their own or e-procurement portals. In such cases, taking printouts and making a physical file just for records May be counter-productive \u2014 provided the portals have provisions for audit trails<\/strong>.\"<\/p><\/aside>\nThe nine categories of documents to be maintained (electronically or physically): a) documents pertaining to the determination of the need<\/strong> for procurement; B) description of the subject matter<\/strong> Of the procurement; C) statement of the justification for the choice of a mode of procurement other than open competitive tendering<\/strong>; D) documents relating to pre-qualification and registration of bidders<\/strong>, if applicable; e) PARTICULARS OF issue, receipt, opening of the bids and the participating bidders at each stage<\/strong>; f) requests for clarifications and any reply thereto \u2014 including the clarifications given during pre-bid conferences<\/strong>; g) bids evaluated and documents relating to their evaluation<\/strong>; h) contracts and contract amendments<\/strong>; i) complaint handling; Correspondence with clients, consultants, and banks<\/strong>.<\/p>\n3. The physical-file structure \u2014 and the two-volume practice:<\/p>\nIn organisations where physical files are still maintained, the procurement file should start with the indent<\/strong> And related documents, followed by:<\/p>\n<aside class=\"note\">Procurement planning \u00b7 copy of tender document and documents relating to its formulation, publishing and issue\/ uploading \u00b7 bid opening \u00b7 bids received \u00b7 correspondence and documents (including technical evaluation and TC report) \u00b7 and finally, the contract copy<\/p><\/aside>\nin case of bulky bids received, all bids May be kept in a separate volume \u2014 with a copy of accepted bids later being put on the main volume<\/strong>.<\/p>\n<aside class=\"note\">The two-volume safeguard: \"to maintain the integrity of the records relating to procurement, these files should be kept secure \u2014 and for contract management, a new volume of files May be opened, to obviate frequent exposure of sensitive procurement files.<\/strong><\/p>\nIn the contract management volume, copies of successful bids, Tender Committee reports, and contract May also be kept for ready reference \u2014 besides correspondence and documents relating to contract management and its closure<\/strong>.\"<\/p><\/aside>\n<h1>7.41 Evaluation of Bids and Award of Contract \u2014 Risks and Mitigations<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>evaluation of bids is subjective, or leaves room for manipulation and biased assessments<\/em>. Some TC members May not be independent or neutral, or May have a conflict of interest (coi)<\/em>.<\/td><td>TC should give an undertaking at the appropriate time that none of the members has any coi<\/strong> With the companies\/ agencies participating. Any member having a coi should refrain from participating in the TC<\/strong>. \"some members of a TC May be subordinate to, or related to, others in a strictly hierarchical organisation \u2014 so that they are not free to express independent views. Such a situation must be avoided when constituting the TC<\/strong>.\"<\/td><\/tr><tr><td>2<\/td><td>discriminating against a best value bid<\/em>: \"in case a bidder's bid (not in the good books of the Procuring Entity) becomes the best value bid as per the evaluation criteria, some of the following actions May have risks of misuse. There is also a reverse risk in these actions if a favourite becomes the best value bid<\/strong>.\"<\/td><td>(Mitigation for each type is at rows 3\u20136 below.)<\/em><\/td><\/tr><tr><td>3<\/td><td>unwarranted re-tendering: Rejecting all bids and calling for re-tendering on the pretext of prices being high, change of specifications, budget not being available<\/em>, and so on.<\/td><td>Refer to para 7.34 for safeguards. <\/strong>\"in case a procurement is re-bid more than once, approval of one level above the ca May be taken<\/strong>.\" Also see the complaint mechanism.<\/td><\/tr><tr><td>4<\/td><td>sudden quantity reduction\/ increase or splitting of quantity\/ work at the time of award<\/em>. \"many organisations have provisions for change\/ splitting in the bid quantity at the time of award. Some organisations vary quantity even without such provisions<\/strong>.\"<\/td><td>bid conditions must specify a limit beyond which the originally announced quantity\/ scope cannot be reduced\/ increased<\/strong>. <\/strong>If parallel contracts are envisaged, clear criteria for the splitting May be specified in the tender documents beforehand<\/strong>.<\/td><\/tr><tr><td>5<\/td><td>unwarranted negotiations: Negotiations are called without justification. Sometimes, a counter-offer is made to discourage the lowest acceptable bidder<\/em>.<\/td><td>Normally, there should be no post-tender negotiations<\/strong>. In certain exceptional situations \u2014 procurement of proprietary items \u00b7 items with limited sources of supply \u00b7 items where there is suspicion of a cartel formation<\/em> \u2014 negotiations May be held with L-1<\/strong>. In case of L-1 backing out, there should be re-tendering<\/strong>.<\/td><\/tr><tr><td>6<\/td><td>unwarranted delays in finalising or varying the terms of the contract agreement: \"even after the TC recommendations are accepted, the signing of the contract is delayed on one pretext or the other. Although there is a standard contract form in the tender documents, the contract May be drafted in a fashion that favours or discourages the successful bidder<\/strong>.\"<\/td><td>A target timeline for the finalisation of procurement should be laid down<\/strong>. <\/strong>Delays and reasons thereof should be brought out before the ca on the file at the time of tc's acceptance or contract signing<\/strong>. \"the contract should be strictly as per the bid conditions and accepted offer<\/strong>.\"<\/td><\/tr><tr><td>7<\/td><td>anti-competitive practices: \"bidders which would otherwise be expected to compete, secretly conspire to frustrate the buyer's attempts to get VfM in a tender process. Anti-competitive conspiracies can take many forms. Sometimes, the officers involved in procurement May be part of such collusion<\/strong>.\" (The five named forms are set out below the table.)<\/em><\/td><td>\"these strategies, in turn, May result in patterns that procurement officials can detect \u2014 and steps can be taken to thwart such attempts.<\/strong>\" <\/strong>\"such anti-competitive activities come under the purview of competition law, which provides stringent penalties.<\/strong>\" \"regular training should be held for officers involved in procurement \u2014 to detect and mitigate such practices, and also to use the competition law against such bidders<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h2 class=\"src-G srchead\" data-src=\" G \">The Five Named Forms of Anti-Competitive Conduct<\/span>G<\/span><\/h2><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\n<div class=\"tblwrap\"><table><thead><tr><th>Form<\/th><th>Definition<\/th><\/tr><\/thead><tbody><tr><td>1. Bid coordination<\/td><td>\"the bidders collude to quote the same or similar rates that are much higher than the reasonable price \u2014 to force the buyer to settle the procurement at exorbitant prices<\/strong>.\"<\/td><\/tr><tr><td>2. Cover bidding<\/td><td>\"cover bidding is designed to give the appearance of genuine competition, by way of supporting bids for the leading bid-rigger<\/strong>.\"<\/td><\/tr><tr><td>3. Bid suppression<\/td><td>\"bid suppression means that a company does not submit a bid for final consideration, in support of the leading bid-rigger<\/strong>.\"<\/td><\/tr><tr><td>4. Bid rotation<\/td><td>\"in bid-rotation schemes, conspiring firms continue to bid \u2014 but they agree to take turns being the winning (i.e., lowest qualifying) bidder in a group of tenders of a similar nature<\/strong>.\"<\/td><\/tr><tr><td>5. Market allocation<\/td><td>\"competitors carve up the market and agree not to give competitive bids for certain customers, or in certain geographic areas<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>Appendix to Chapter 7 \u2014 Part B: Points of Difference<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>QCBS weightage \u2014 inverted<\/td><td>C: Technical 70% \/ Cost 30% \u00b7 W & NC: Technical \u226430% \/ Cost \u226570%<\/td><\/tr><tr><td>2<\/td><td>The identical sentence \"since the weightage of the COST element \u2026 is as high as 70 per cent\" appears in both C and NC<\/td><td>An evident internal inconsistency in the CS Manual<\/em>, which has just assigned 70% to TECHNICAL<\/td><\/tr><tr><td>3<\/td><td>QCBS worked example \u2014 the winner<\/td><td>C: Proposal C at Rs. 106, the HIGHEST-priced<\/em> bid \u00b7 W: Bid C at Rs. 105, the second-lowest<\/em> bid \u00b7 NC: same data as C but H-1\/H-2\/H-3 order changes<\/td><\/tr><tr><td>4<\/td><td>QCBS tie-breaker<\/td><td>Common: the bid with the higher TECHNICAL score becomes H-1<\/em><\/td><\/tr><tr><td>5<\/td><td>evaluation of the quality \u2014 technical proposals<\/strong>(four criteria; absolute-not-comparative grading; 5-grade A\u2013E rating scale at 100\/80\/60\/30\/10%; first reading without scoring; grading defined before opening; individual scoring; joint review and averaging; 75 minimum qualifying mark; debriefing duty)<\/em><\/td><td>C ONLY<\/td><\/tr><tr><td>6<\/td><td>The model marks scheme (5\u201310% \/ 20\u201350% \/ 30\u201360% \/ 0\u201310%)<\/td><td>C ONLY<\/td><\/tr><tr><td>7<\/td><td>Methodology sub-criteria (30\/50\/20) and Key Professionals sub-criteria (20\/80)<\/td><td>C ONLY<\/td><\/tr><tr><td>8<\/td><td>Fixed budget selection (FBS) \u2014 the two methods<\/td><td>C ONLY<\/td><\/tr><tr><td>9<\/td><td>negotiations to freeze description of service<\/strong>(and the consequent absence of negotiation annexures in CS)<\/em><\/td><td>C ONLY<\/td><\/tr><tr><td>10<\/td><td>\"In no case should financial negotiation result in an INCREASE in the financial cost as originally quoted\"<\/td><td>C ONLY<\/td><\/tr><tr><td>11<\/td><td>Arithmetic correction permitted in TIME-BASED contracts but not in LUMP-SUM contracts<\/td><td>C ONLY<\/td><\/tr><tr><td>12<\/td><td>\"A technical proposal pre-disclosing any material pricing information shall also be rejected\"<\/td><td>C ONLY<\/td><\/tr><tr><td>13<\/td><td>MII purchase preference not applicable where evaluation uses QCBS or FBS<\/td><td>NC<\/strong>(stated expressly)<\/em><\/td><\/tr><tr><td>14<\/td><td>\"Members of the STC shall not be involved\" in the QCBS evaluation committee<\/td><td>nc only<\/td><\/tr><tr><td>15<\/td><td>evaluation in rate contracts<\/strong>(counter-offer procedure for parallel RCs; Catalogue basis on NDP\/MRP; one-year default period)<\/em><\/td><td>G ONLY<\/td><\/tr><tr><td>16<\/td><td>variation of quantities at award \u2014 15% default<\/td><td>G ONLY<\/td><\/tr><tr><td>17<\/td><td>OPTION CLAUSE \u2014 25%, above Rs 50 lakh, none in development orders, excluded from CA determination<\/td><td>G ONLY<\/td><\/tr><tr><td>18<\/td><td>Splitting\/ parallel contracts \u2014 70:30 and 50:30:20 ratios; the minimum-quote anti-cartel safeguard; five allocation guidelines<\/td><td>G ONLY<\/td><\/tr><tr><td>19<\/td><td>Tie at l-1 \u2014 the four-step tie-breaker (SC\/ST or Women MSE \u2192 other MSE \u2192 higher turnover \u2192 earlier DPIIT registration; GeM methodology on GeM)<\/td><td>G ONLY<\/td><\/tr><tr><td>20<\/td><td>Evaluation of multiple schedules\/ items\/ destinations \u2014 the three cases<\/td><td>G ONLY<\/td><\/tr><tr><td>21<\/td><td>\"Net of GST\" for CPSEs availing Input Tax Credit<\/td><td>G ONLY<\/td><\/tr><tr><td>22<\/td><td>GTE loading sequence \u2014 1% port handling, customs\/CVD\/surcharges, clearing agency, inland freight, GST, LC charges; CIF comparison where no domestic bidders<\/td><td>G ONLY<\/td><\/tr><tr><td>23<\/td><td>Evaluation of bids involving samples\/ demos; pre-production sample; cancellation without repercussion<\/td><td>G ONLY<\/td><\/tr><tr><td>24<\/td><td>The six \"critical provisions\" deemed material if deviated from<\/td><td>G<\/strong>(fullest statement)<\/em><\/td><\/tr><tr><td>25<\/td><td>\"The CA may ask the TC to explain the report but should not request that evaluation be changed\"<\/td><td>G<\/td><\/tr><tr><td>26<\/td><td>Financial bid opening to be 2\u20135 days after announcement of techno-commercial results<\/td><td>G<\/td><\/tr><tr><td>27<\/td><td>Abnormally Low Bids \u2014 \"resource mobilisation\" included in the price-analysis heads<\/td><td>W<\/strong>(G omits it)<\/em><\/td><\/tr><tr><td>28<\/td><td>ALB \u2014 \"due care while preparing the drawings, formulating specifications\"<\/td><td>W<\/strong>(G says only \"formulating the specifications\")<\/em><\/td><\/tr><tr><td>29<\/td><td>Cartel sign \u2014 \"quoted quantities much less than tendered quantity\" and \"same IP address raises suspicion but is not by itself a strong indicator\"<\/td><td>G ONLY<\/td><\/tr><tr><td>30<\/td><td>Cartel sign \u2014 \"prices suspiciously similar despite significant differences in the proposed approach\"<\/td><td>W ONLY<\/td><\/tr><tr><td>31<\/td><td>Minimum quote percentage to defeat cartels<\/td><td>G: say 25% \u00b7 W: say 20% or 30%, where schedules or division of work is possible<\/td><\/tr><tr><td>32<\/td><td>Cartel remedies \u2014 detailed cost analysis by experts; encouraging new firms to enlist; switching to post-qualification; packaging\/ slicing<\/td><td>W ONLY<\/td><\/tr><tr><td>33<\/td><td>Reporting cartels to FICCI, ASSOCHAM, NSIC by name<\/td><td>G ONLY<\/td><\/tr><tr><td>34<\/td><td>Reasonableness \u2014 the seven LPP cautions, incl. \"these prices are not valid LPP for comparison in future procurement\"<\/td><td>G ONLY<\/td><\/tr><tr><td>35<\/td><td>The five named forms of anti-competitive conduct (Bid Coordination, Cover Bidding, Bid Suppression, Bid Rotation, Market Allocation)<\/td><td>G ONLY<\/td><\/tr><tr><td>36<\/td><td>\"Once a Tender is re-tendered, the bids in the old tender cannot be revived, as per the Indian Contract Act\"<\/td><td>G<\/td><\/tr><tr><td>37<\/td><td>\"In case a procurement is re-bid more than once, approval of one level above the ca may be taken\"<\/td><td>G<\/td><\/tr><tr><td>38<\/td><td>LoA constitutes legal formation of contract if not conditional on performance security; acceptance complete on submission to postal authorities<\/td><td>G<\/td><\/tr><tr><td>39<\/td><td>Contract cannot be placed on a subsidiary or authorised dealer \u2014 only on the bidder in whose name the bid was submitted<\/td><td>G<\/td><\/tr><tr><td>40<\/td><td>Mandatory GeM Seller ID before LoA<\/td><td>G<\/td><\/tr><tr><td>41<\/td><td>CPSE commercial-resale disclosure and the six-month deferred publication of award details<\/td><td>G ONLY<\/td><\/tr><tr><td>42<\/td><td>Acknowledgement within 14 days (OTE)\/ 28 days (GTE); exemption below Rs 2.5 lakh<\/td><td>G<\/td><\/tr><tr><td>43<\/td><td>Audit Trails \u2014 the nine document categories and the two-volume file practice<\/td><td>G<\/strong>(also in W and NC)<\/em><\/td><\/tr><tr><td>44<\/td><td>Cross-checking credentials before final award \"especially important at RfP stage since verification is not done at EoI stage\"<\/td><td>C ONLY<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 7 (parts a and b)<\/p>\n<aside class=\"note\">Next:<\/strong>Chapter 8<\/strong> \u2014 but note the divergence: Goods Ch. 8<\/strong> is Procurements with Unique Features<\/em>; Consultancy Ch. 9<\/strong> is Special Types of Engagements<\/em>; Non-Consultancy Ch. 8<\/strong> is Special Types of Non-Consultancy Procurements<\/em>; and the Works Manual has NO such chapter at all<\/strong> \u2014 its Chapter 7 is Execution and Monitoring of Works and Quality Assurance<\/em>, which corresponds to the contract-management chapters of the other three.<\/p><\/aside><\/div><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch8\">Chapter 8<\/p><h1>Special and Unique Types of Procurement<\/h1><\/header>\nMerging: Goods Ch. 8<\/strong> (Procurements with Unique Features) \u00b7 Consultancy Ch. 9<\/strong> (Special Types of Engagements) \u00b7 Non-Consultancy Ch. 8<\/strong> (Special Types of Non-Consultancy Procurements)<\/em><\/p><h2>Structural Warning \u2014 the Works Manual Has No Such Chapter<\/span><\/h2>\nthree of the four Manuals carry a \"special types\" Chapter. The works Manual does not.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Chapter<\/th><th>Title<\/th><th>Sections<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span> Goods<\/td><td>Chapter 8<\/td><td>Procurements with Unique Features<\/em><\/td><td>7<\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> Works<\/td><td> \u2014 NONE \u2014 <\/td><td>(its Chapter 7 is Execution and Monitoring of Works and Quality Assurance<\/strong> \u2014 which corresponds to the CONTRACT MANAGEMENT chapters of the other three)<\/em><\/td><td> \u2014 <\/td><\/tr><tr class=\"srcmark src-C\" data-src=\" C \"><td>C<\/span> Consultancy<\/td><td>Chapter 9<\/td><td>Special Types of Engagements<\/em><\/td><td>10<\/td><\/tr><tr class=\"srcmark src-NC\" data-src=\" NC \"><td>NC<\/span> Non-Consultancy<\/td><td>Chapter 8<\/td><td>Special Types of Non-Consultancy Procurements<\/em><\/td><td>12<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">why works has none:<\/strong> The Works Manual handles its variations \u2014 EPC, PPP, piece Work, stalled contracts<\/strong> \u2014 inside its Bidding Design chapter (Ch. 3)<\/strong>, covered at Chapter 4 Parts A and B of this Unified Manual. It has no separate \"special engagements\" chapter.<\/p><\/aside>\n<h2>The Three Chapters Barely Overlap<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr class=\"srcmark src-multi\" data-src=\" G C NC \"><th><\/th><th>GOODS G<\/span><\/th><th>CONSULTANCY C<\/span><\/th><th>NON-CONSULTANCY NC<\/span><\/th><\/tr><\/thead><tbody><tr><td>Organising principle<\/td><td>transaction-structure variants<\/strong>(how the deal is shaped)<\/em><\/td><td>categories of provider<\/strong>(who is engaged)<\/em><\/td><td>categories of provider + named services (who, and for what)<\/em><\/td><\/tr><tr><td>Contents<\/td><td>Emergencies\/ Disaster \u00b7 Buy Back \u00b7 Capital Goods \u00b7 AMC \u00b7 NPV \u00b7 Turnkey \u00b7 Books & Print Media<\/td><td>SSS \u00b7 Individual Consultants \u00b7 Specialised Agencies \u00b7 NGOs \u00b7 Procurement Consultants \u00b7 Financial Advisors \u00b7 Auditors \u00b7 Logo Design Competitions \u00b7 Integrated IT Projects \u00b7 Digital India<\/td><td>EoI Shortlisting \u00b7 SSS \u00b7 Individual Service Providers \u00b7 Specialised Agencies \u00b7 NGOs \u00b7 Procurement Agents \u00b7 Inspection Agents \u00b7 Housekeeping \u00b7 Manpower Outsourcing \u00b7 Private Security \u00b7 Vehicle Hiring \u00b7 HaaS<\/td><\/tr><\/tbody><\/table><\/div>\nthe goods Chapter has ZERO<\/em> Overlap with the other two. Consultancy and non-consultancy share only four topics: SSS \u00b7 Individual providers \u00b7 Specialised Agencies\/ Institutions \u00b7 NGOs.<\/p>\n<h2>Concordance for Chapter 8<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>G<\/th><th>C<\/th><th>NC<\/th><\/tr><\/thead><tbody><tr><td>Part i \u2014 goods-only<\/td><td><\/td><td><\/td><td><\/td><td><\/td><\/tr><tr><td>8.1<\/td><td>Handling Procurement in Emergencies and Disaster Management<\/td><td>8.1<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>8.2<\/td><td>Buy Back Offer<\/td><td>8.2<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>8.3<\/td><td>Capital Goods\/ Equipment (M&P, IT Systems)<\/td><td>8.3<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>8.4<\/td><td>Annual Maintenance Contract (AMC)<\/td><td>8.4<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>8.5<\/td><td>Net Present Value (NPV)<\/td><td>8.5<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>8.6<\/td><td>Turnkey Contract<\/td><td>8.6<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>8.7<\/td><td>Procurement of Books and Print Media<\/td><td>8.7<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>part II \u2014 common to c and nc<\/td><td><\/td><td><\/td><td><\/td><td><\/td><\/tr><tr><td>8.8<\/td><td>EoI for Shortlisting of Service Providers<\/td><td> \u2014 <\/td><td>(Ch. 7)<\/em><\/td><td>8.1<\/td><\/tr><tr><td>8.9<\/td><td>Single Source Selection (SSS)<\/td><td> \u2014 <\/td><td>9.1<\/td><td>8.2<\/td><\/tr><tr><td>8.10<\/td><td>Selection of Individual Consultants\/ Service Providers<\/td><td> \u2014 <\/td><td>9.2<\/td><td>8.3<\/td><\/tr><tr><td>8.11<\/td><td>Selection of Specialised Agencies\/ Institutions<\/td><td> \u2014 <\/td><td>9.3<\/td><td>8.4<\/td><\/tr><tr><td>8.12<\/td><td>Selection of Non-governmental Organisations (NGO)<\/td><td> \u2014 <\/td><td>9.4<\/td><td>8.5<\/td><\/tr><tr><td>8.13<\/td><td>Procurement Consultants\/ Agents<\/td><td> \u2014 <\/td><td>9.5<\/td><td>8.6<\/td><\/tr><tr><td>part III \u2014 consultancy-only<\/td><td><\/td><td><\/td><td><\/td><td><\/td><\/tr><tr><td>8.14<\/td><td>Financial Advisors<\/td><td> \u2014 <\/td><td>9.6<\/td><td> \u2014 <\/td><\/tr><tr><td>8.15<\/td><td>Auditors<\/td><td> \u2014 <\/td><td>9.7<\/td><td> \u2014 <\/td><\/tr><tr><td>8.16<\/td><td>Public Competition for Design of Symbols\/ Logos<\/td><td> \u2014 <\/td><td>9.8<\/td><td> \u2014 <\/td><\/tr><tr><td>8.17<\/td><td>Procurement of Integrated IT Projects<\/td><td> \u2014 <\/td><td>9.9<\/td><td>(8.12.1)<\/em><\/td><\/tr><tr><td>8.18<\/td><td>Hiring Consultants for Digital India Projects<\/td><td> \u2014 <\/td><td>9.10<\/td><td> \u2014 <\/td><\/tr><tr><td>part IV \u2014 non-consultancy-only<\/td><td><\/td><td><\/td><td><\/td><td><\/td><\/tr><tr><td>8.19<\/td><td>Inspection Agents<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.7<\/td><\/tr><tr><td>8.20<\/td><td>Housekeeping Services<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.8<\/td><\/tr><tr><td>8.21<\/td><td>Manpower Outsourcing Services<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.9<\/td><\/tr><tr><td>8.22<\/td><td>Private Security Manpower Services<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.10<\/td><\/tr><tr><td>8.23<\/td><td>Vehicle Hiring for Office Use<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.11<\/td><\/tr><tr><td>8.24<\/td><td>IT Hardware as a Service (HaaS)<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.12<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>Part I \u2014 Procurements with Unique Features [GOODS ONLY]<\/span><\/h1>\n<h1>8.1 Handling Procurement in Emergencies and Disaster Management<\/span><\/h1>\n<h2>8.1.1<\/span>Procurements in Emergencies\/ Urgencies<\/span><\/h2>\n\"there are sufficient fast-track procurement modes and flexibilities in the procurement guidelines to tackle procurements in operational emergencies\/ urgencies. Enhanced delegations of procurement powers May be incorporated in SoPP to handle such situations<\/strong>.\"<\/p>\nthe four modes, in order of speed:<\/p>\nA) procurement through the GeM PORTAL<\/strong>;<\/p>\nb) direct procurement without quotation<\/strong>;<\/p>\nc) direct procurement by Purchase Committee<\/strong>;<\/p>\nd) SLTE\/ limited\/ Single Tender Enquiry \u2014 with reduced time for submission of bids<\/strong>.<\/p>\n<h2>8.1.2<\/span>Procurement in Crisis Situations \u2014 Disaster Management\/ Pandemic<\/span><\/h2>\n<aside class=\"note\">\"normal procurement modes, thresholds and bid systems are not tailored for procurement in crises like disaster management\/ pandemic. Hence, during such a situation, the following dispensations May be allowed with the approval of competent authorities<\/strong>.\"<\/p><\/aside>\n1. The declaration order: \"an order May be issued by the Competent Authority \u2014 declaring the crisis, and promulgating the start of procurement procedures under the crisis, with an estimated validity period till which these would apply<\/strong>.\"<\/p>\n2. NEED ASSESSMENT \u2014 the aggregation task: \"the most crucial task is to consolidate and aggregate the requirements from all jurisdictions. Specifications should be rationalised considering the market situation. A centralised list May be prepared containing the quantities (unit-wise) and specifications of each item. Such lists May be preserved for future use<\/strong>.\"<\/p>\n3. Prolonged or endemic crises: \"if a crisis is likely to extend over a prolonged period \u2014 or if such disasters are endemic to the region (floods\/ cyclones) \u2014 rate contracts May be entered into to cater to such situations<\/strong>.\"<\/p>\n4. \"this is not the time for complex methods\" \u2014 the eight dispensations:<\/p>\n<aside class=\"note\">\"this is not the time for complex methods, e.g., Reverse Auction, etc. The use of the following modes of procurement is suggested in order of speed.<\/strong><\/p>\n To speed up procurement, advance cash May be drawn for direct procurement modes and made available to the committees\/ officer \u2014 with accounts and vouchers to be submitted after purchase<\/strong>.\"<\/p><\/aside>\na) procurement through the GeM portal \u2014 which responds to such situations as COVID-19<\/strong>;<\/p>\nB) direct procurement without quotation;<\/p>\nC) direct procurement by Purchase Committee;<\/p>\nD) SLTE\/ limited\/ Single Tender Enquiry, with reduced time for submission of bids;<\/p>\ne) \"other than these, unlisted but fast modes of procurement \u2014 e.g., enhancement of quantity or repeat orders at the same terms in existing contracts \u2014 May be pursued. All contracts May be placed with clauses for quantity enhancements and repeat orders<\/strong>.\";<\/p>\nf) \"all procurement May be done using single-stage, single-envelope tendering systems<\/strong>.\";<\/p>\ng) \"even if pre-qualification is felt necessary, self-declaration in a single envelope May be called for \u2014 instead of a time-consuming pre-qualification bid<\/strong>.\";<\/p>\nh) \"pre-bid conferences May be replaced by informal market research<\/strong>.\"<\/p>\n5. Enhanced delegations: \"enhanced delegations of procurement powers in SoPP May be considered, with the approval of the Secretary of the Department<\/strong>.\"<\/p>\n6. \"deliveries that suit the urgent\/ emergent and disaster management situation May only be allowed<\/strong>.\"<\/p>\n7. Reasonableness of prices in a crisis: \"the reasonableness of prices in such situations May be judged by keeping in mind that prices in such situations May be higher than in normal procurement \u2014 to cater to express deliveries\/ disruptions, etc<\/strong>.\"<\/p>\n8. Model documents disapplied: \"model tender documents or general conditions of contract should not apply to emergency procurements<\/strong>.\"<\/p>\n9. Shortened timelines and alternative bid channels: \"minimum timelines for bid submission May be shortened (say 1\u20133 days). Bids by phone, email, and in-person May also be considered<\/strong>.\"<\/p>\n10. Single offer acceptable, no re-tender: \"norms of minimum bids in a tender May be relaxed \u2014 and even a single offer May be accepted without re-tendering. No tender should normally be allowed to be discharged or re-invited<\/strong>.\"<\/p>\n11. The seven norms that May be dispensed with or relaxed:<\/p>\n<aside class=\"note\">\"in emergency procurements, time-consuming norms for the following May be dispensed with or relaxed:<\/strong><\/p>\n<ol class=\"lst\"><li>Tender document costs<\/strong><\/li><li>earnest money deposit (EMD)<\/strong><\/li><li>security Deposit (SD or performance guarantee)<\/strong><\/li><li>vendor registration fee<\/strong><\/li><li>verification of eligibility\/ qualification \u2014 by putting the onus on the vendors to self-declare his eligibility, qualifications, and capability, with penalties for false declarations<\/strong>*<\/li><li>liquidated Damages (LD) or other penalties<\/strong><\/li><li>negotiations<\/strong><\/li><\/ol>\n Delegation in this regard May be enhanced and delegated to cutting-edge levels<\/strong>.\"<\/p><\/aside>\n12. Minimal documentation: \"documents required for various stages \u2014 bids, qualification, eligibility, inspection, and payment \u2014 must be barely minimum<\/strong>.\"<\/p>\n13. Inspection: \"instead of physical inspections, vendors' self-declaration of quality May be accepted<\/strong>.\"<\/p>\n14. THE GeM exception in a crisis \u2014 a rare permitted departure:<\/p>\n<aside class=\"note\">\"putting GeM at the centre of all such emergency procurement would help in transparency and price monitoring.<\/strong><\/p>\n However, in urgent\/ emergent and disaster management situations, in case of procurement below Rs. 50,000 \u2014 if deliveries are not suitable on GeM, procurement May be done locally as per sub-para 4 above \u2014 even if the items are available on GeM, as an exception to the Rule.<\/strong><\/p>\n Prior or post facto sanction May be taken from the Secretary of the Department<\/strong>.\"<\/p><\/aside>\n15. Ensuring transparency, integrity, and accountability:<\/p>\nA) as far as feasible, procurement May be done on the GeM portal<\/strong>.<\/p>\nB) the separate record-keeping team: \"all procuring agencies should constitute a separate team (without hampering people involved in procurement) to keep a record of justification and quantum of emergency procurements \u2014 for future accountability<\/strong>.\"<\/p>\nc) after the crisis is over \u2014 the four closing actions:<\/p>\n<aside class=\"note\">i) \"the Competent Authority May issue an order signalling the end of the crisis and the emergency procurement procedures<\/strong>.\";<\/p>\nii) \"special time-bound internal and external audits of all emergency procurements should be done with a large sampling size when normalcy returns. If need be, public or private agencies May be hired to assist with this large volume of audits<\/strong>.\";<\/p>\niii) \"any undelivered contract, if any, May be reviewed for cancellation<\/strong>.\";<\/p>\niv) \"unutilised stocks, if any, May be reviewed for gainful use<\/strong>.\"<\/p><\/aside>\n16. Getting ready for future disasters: \"such emergency procurement systems and lists May be formalised for future disasters \u2014 e.g., the enhanced delegations May be integrated into the normal SoPP as delegations in defined crisis<\/strong>.\"<\/p>\n<h1 data-src=\"G\">8.2 Buy Back Offer<\/span>G<\/span><\/h1>\n(Rule 176 of GFR 2017)<\/em><\/p>\nwhen it is decided to replace an existing old item(s) with a new\/ better version<\/strong>, the Department May trade the existing old item while purchasing the new one<\/strong>, by issuing suitable tender documents for this purpose.<\/p>\nWhat the tender document must incorporate:<\/p>\n<aside class=\"note\">THE condition of the old item \u00b7 its location \u00b7 and the mode of its handing over to the successful bidder<\/strong>.<\/p>\nThe two-price requirement \u2014 the key mechanism:<\/p>\n\"further, the bidder should be asked to quote the prices for the item (to be offered by them):<\/strong><\/p>\n\u2022 with a rebate for the old item; And also<\/strong><\/p>\n\u2022 without any rebate (in case they do not want to lift the old item).<\/strong><\/p>\n This will provide an option for the Department to either trade or not trade the old item while purchasing the new one<\/strong>.\"<\/p><\/aside>\n<h1 data-src=\"G\">8.3 Capital Goods\/ Equipment (Machinery and Plant \u2014 M&P, IT Systems, etc.)<\/span>G<\/span><\/h1>\n<h2>8.3.1<\/span>What Counts as Capital Goods<\/span><\/h2>\n\"capital goods are machinery and plants (m&p) which create new fixed assets\/ utility\/ functionality or benefits for the organisation, and have a long and useful life.<\/strong><\/p>\n This also refers to it procurements of IT systems \u2014 comprising one or more of: Hardware \u00b7 networking \u00b7 tailor-made and customised software \u00b7 installation\/ commissioning \u00b7 training \u00b7 AMC\/ CMC \u00b7 cloud services \u00b7 and other services<\/strong>.\"<\/p>\n<h2>8.3.2<\/span>The Seven Distinctive Features<\/span><\/h2>\n1. Investment decision and item-specific budget:<\/p>\n<aside class=\"note\">\"since the cost is generally high, there are detailed procedures for approval of technical, administrative, and budgetary provisions \u2014 before an indent is generated.<\/strong><\/p>\n Unlike consumable items (which are procured if a non-specific budgetary provision is there), capital goods are procured after an item-specific budgetary provision is included in the budget.<\/strong><\/p>\n Thus, the acquisition of capital goods is also an investment decision, and May require some form of investment justification. Some of the higher-value capital goods May be accounted for in the capital block of the organisation. However, these features May not apply to capital goods of smaller values<\/strong>.\"<\/p><\/aside>\n2. The alternatives to outright purchase \u2014 with the staff-car illustration:<\/p>\n<aside class=\"note\">\"there are also alternatives to outright purchasing\/ owning such equipment \u2014 like hiring\/ hire-purchase\/ leasing, or acquiring the functionality as a service.<\/strong><\/p>\nFor example, instead of buying a staff car, a monthly service\/ hiring contract can be entered into to provide vehicles as per requirements. The car can also be wet leased (including maintenance), and a service contract for drivers\/ cleaners can be entered into separately.<\/strong><\/p>\n This can be especially advantageous in equipment that undergo obsolescence quickly \u2014 e.g., IT equipment<\/strong>.\"<\/p><\/aside>\n3. The embedded works and services:<\/p>\nThe procurement involves elements of works and services like:<\/p>\n<aside class=\"note\">Installation \u00b7 commissioning \u00b7 training \u00b7 prolonged trials \u00b7 warranty \u00b7 after-sales services like post-warranty maintenance and assured availability of spares<\/strong><\/p><\/aside>\n\"all such elements have costs that May be quoted explicitly or implicitly.<\/strong><\/p>\nA suitable warranty clause should indicate the period of warranty and service levels, as well as penalties for delays in the restoration of defects.<\/strong><\/p>\n Clauses for including essential initial spares for two years' maintenance, to be supplied along with equipment, May be provided.<\/strong><\/p>\n If necessary, an appropriate number of years \u2014 say three to five or more years, depending on the lifespan of the equipment \u2014 AMC May be included in the procurement, detailing its conditions<\/strong>.\"<\/p>\n4. Total Cost of Ownership:<\/p>\n<aside class=\"note\">\"the cost of operations, maintenance, and disposal of the equipment over its life cycle May far outweigh the initial procurement cost.<\/strong><\/p>\nHence, Total Cost of Ownership (TCO) becomes an important consideration \u2014 which can be addressed in Public Procurement by way of:<\/strong><\/p>\n\u2022 appropriate description, specification, and contract conditions \u2014 like the inclusion of the cost of supply of initial essential spares; And<\/strong><\/p>\n\u2022 Net Present Value (NPV) of annual maintenance contracts (AMC) for a specified number of years \u2014 within the estimated cost and also the evaluation criteria of the procurement contract<\/strong>.\"<\/p><\/aside>\n5. When a turnkey contract is better: \"in case the plant and equipment (or an IT system) consists of several machines\/ components\/ systems that work in tandem \u2014 or if it includes services\/ works to be done by a third party \u2014 an all-encompassing turnkey contract May be a better alternative<\/strong>.\"<\/p>\n6. The evaluation complexity and its three remedies:<\/p>\n<aside class=\"note\">\"because of the complexity of specification evaluation, the technical suitability of offers in the procurement of capital goods involves complex issues about acceptance of alternatives, deviations, and compliance with various particulars of specification.<\/strong><\/p>\n Remedy 1: Acceptance or otherwise of alternatives should be made explicit.<\/strong><\/p>\n Remedy 2: A statement of deviation \u2014 including the detailed justification for the deviations from each clause of specification \u2014 should be requested from the bidder in the tender documents.<\/strong><\/p>\n Remedy 3: A Schedule of guaranteed particulars of specification, indicating the values of each parameter, May be included in the specification \u2014 where the bidder can quote the offered value of the parameters.<\/strong><\/p>\nIn complex cases, a pre-bid conference May help in reducing disputes and complexity at the time of evaluation<\/strong>.\"<\/p><\/aside>\n7. Fit for pre-qualification bidding: \"experience, capacity, and financial strength of a supplier are important determinants of quality and after-sales support for capital goods; Such procurements are a fit for pre-qualification bidding<\/strong>.\"<\/p>\n<h1 data-src=\"G\">8.4 Annual Maintenance Contract (AMC)<\/span>G<\/span><\/h1>\n(Rule 169 of GFR 2017)<\/em><\/p>\n1. When an AMC starts: \"some goods \u2014 especially sophisticated equipment and machinery \u2014 need proper maintenance for trouble-free service. For this purpose, the purchase organisation May enter into a maintenance contract.<\/strong><\/p>\n<aside class=\"note\"> it must, however, be kept in mind that the maintenance contract is to start after the expiry of the warranty period \u2014 during which period the goods are to be maintained free of cost by the supplier<\/strong>.\"<\/p><\/aside>\n2. With whom: \"the maintenance contract May be entered into either with the OEM manufacturer\/ supplier of the goods, or with a competent and eligible firm \u2014 not necessarily the manufacturer\/ supplier of the goods in question. The purchase organisation should decide this aspect on a case-to-case basis on merit<\/strong>.\"<\/p>\n3. AMC as part of the equipment procurement \u2014 the NPV evaluation rule:<\/p>\n<aside class=\"note\">\"if the maintenance contract is to be made a part of the procurement of equipment, then suitable clauses are to be incorporated in the tender enquiry document itself.<\/strong><\/p>\nWhile evaluating the offers, the cost component towards the maintenance of the goods for the specified number of years is also to be added to the evaluated tender value on an overall basis \u2014 to decide the inter se ranking of the responsive bidders.<\/strong><\/p>\n Equipment with a lower quoted price May carry a higher maintenance liability. Therefore, the total cost (all-inclusive, based on total outgo from the pocket) on purchase and maintenance of the equipment over the period of the maintenance contract should be assessed to consider its suitability for purchase.<\/strong><\/p>\n While evaluating the bidders for maintenance of goods covering a longer period (say, three to five or more years, depending on the life span of the equipment) \u2014 the quoted prices pertaining to maintenance in future years are to be discounted to the Net Present Value (NPV) as appropriate, for comparing the tenders on an equitable basis and deciding the lowest evaluated responsive tender<\/strong>.\"<\/p><\/aside>\n4. AMC procured separately \u2014 and the OEM-authorisation rule:<\/p>\n\"if the maintenance contract is to be entered into with a competent and eligible supplier separately, then a separate tender enquiry is to be floated\u2026 here, the OEM supplier of the goods May also quote \u2014 and his quotation, if received, is to be considered along with other quotations received.<\/strong><\/p>\n<aside class=\"note\"> In some situations, OEM manufacturers\/ suppliers of goods authorise certain service providers to provide AMC support. In such cases, the service provider must produce such authorisation\/ letter from the OEM \u2014 confirming technical and spares support to the service provider<\/strong>.\"<\/p><\/aside>\n5. Payment periodicity: \"the terms of payment for the maintenance service will depend on the nature of the goods to be maintained as well as the nature of the services desired. Generally, payment for maintenance is made on a half-yearly or quarterly basis<\/strong>.\"<\/p>\n6. The Service Level Agreement (SLA) \u2014 what it must contain:<\/p>\nA SLA May be incorporated in complex and large maintenance contracts<\/strong>. SLA should indicate guaranteed levels of service parameters<\/strong> LIKE:<\/p>\n<aside class=\"note\">Percentage uptime to be ensured<\/strong> \u00b7 performance output levels to be ensured from the equipment<\/strong> \u00b7 a channel for registering service requests<\/strong> \u00b7 response time for resolving the request<\/strong> \u00b7 channel for escalation of a service request in case of delay or unsatisfactory resolution<\/strong> \u00b7 monitoring of service levels<\/strong><\/p><\/aside>\nthis would also include:<\/p>\n<aside class=\"note\">Provision of helplines \u00b7 complaint registration and escalation procedures \u00b7 response time \u00b7 percentage of uptime and availability of equipment \u00b7 non-degradation in performance levels after maintenance \u00b7 maintenance of an inventory of common spares \u00b7 use of genuine spares<\/strong><\/p><\/aside>\nthe maintenance contract May also include penalties (Liquidated Damages) for unacceptable delays in responses and degradation in the performance output of machines \u2014 including provisions for terminations<\/strong>.<\/p>\n7. What is included in the maintenance charge \u2014 the four ambiguities to resolve:<\/p>\n<aside class=\"note\">\"it should be indicated in the tender documents whether the maintenance charges would be inclusive of:<\/strong><\/p>\n1. Visiting charges<\/strong><\/p>\n2. Price of spares<\/strong> \u2014 (\"Many times, consumables such as rubber gasket, bulbs, and so on, are not included \u2014 even though major parts May be included\")<\/em><\/p>\n3. Price of consumables (fuel, lubricants, cartridges, and so on)<\/strong><\/p>\n If the costs of spares are to be borne by the Procuring Entity, then a guaranteed price list should be asked for along with the bids.<\/strong><\/p>\n4. It should also be clarified whether room\/ space, electricity, water connection, and so on would be provided free of cost to the contractor<\/strong>.\"<\/p><\/aside>\n8. The most-favoured-customer clause: \"a suitable provision should be incorporated in the tender enquiry document and the resultant maintenance contract, indicating that the prices charged by the maintenance contractor should not exceed the prevailing rates charged by him from others for similar services. While claiming payment, the contractor is also to give a certificate to this effect in his bill<\/strong>.\"<\/p>\n9. Performance security: If the goods to be maintained are sophisticated and costly<\/strong>, the tender enquiry document should also have a provision for obtaining Performance Security<\/strong>. The amount will depend on the nature of the goods, the period of maintenance<\/strong>, and so on.<\/p>\n10. Goods taken away for repair \u2014 the Rs 1 lakh BG rule:<\/p>\n<aside class=\"note\">\"sometimes, the maintenance contractor May have to take the goods or some components of the goods to his factory for repair, and so on.<\/strong><\/p>\n On such occasions, before handing over the goods or components valuing more than rupees one lakh \u2014 a suitable Bank Guarantee is to be obtained from the firm to safeguard the purchaser's interest<\/strong>.\"<\/p><\/aside>\n11. Withdrawal of the maintenance contract \u2014 and the model clause:<\/p>\n\"sometimes, during the tenure of a maintenance contract \u2014 especially with a longer tenure \u2014 it May become necessary for the purchase organisation to withdraw the maintenance contract due to some unforeseen reasons.<\/strong><\/p>\n<aside class=\"note\"> Depending on the cost and nature of the goods to be maintained, a suitable notice period (say one to three months) for such cancellation to come into effect is to be provided in the documents<\/strong>.\"<\/p>\nthe model clause:<\/p>\n\"The purchaser reserves its right to terminate the maintenance contract at any time after giving due notice, without assigning any reason. The contractor will not be entitled to claim any compensation against such termination. However, while terminating the contract, if any payment is due to the contractor for maintenance services already performed in terms of the contract, these would be paid to it\/ him as per the contract terms.\"<\/strong><\/p><\/aside>\n<h1 data-src=\"G\">8.5 Net Present Value (NPV)<\/span>G<\/span><\/h1>\n<h2>8.5.1<\/span>The Concept and the Formula<\/span><\/h2>\n\"net Present Value (NPV) \u2014 or net present worth (npw) \u2014 of equipment procurement is the sum of the present values of the net cash flows for all the years of the equipment's economic life.<\/strong><\/p>\nThe net cash flows are discounted to arrive at the NPV of equipment, by applying a predetermined discount rate<\/strong>.\"<\/p>\n<aside class=\"note\">NPV = CF\u2080 + CF\u2081\/(1+r)\u00b9 + CF\u2082\/(1+r)\u00b2 + CF\u2083\/(1+r)\u00b3 + \u2026 + CF\u2099\/(1+r)\u207f<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>Symbol<\/th><th>Meaning<\/th><\/tr><\/thead><tbody><tr><td>r<\/td><td>THE discount rate (in fraction)<\/strong><\/td><\/tr><tr><td>CF\u2080<\/td><td>THE quoted price<\/strong><\/td><\/tr><tr><td>CF\u2081, CF\u2082, CF\u2083 \u2026 CF\u2099<\/td><td>THE Costs in the 1st, 2nd, 3rd \u2026 nth YEARS<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">the suggested discount rate: \"one possible rate to be used is the interest rate of the general provident fund (GPF)<\/strong>.\"<\/p><\/aside>\n<h2>8.5.2<\/span>Two Practical Rules<\/span><\/h2>\n1. Terminal disposal value: \"the terminal disposal value of the equipment is also to be taken as negative expenditure \u2014 but since these are most likely to be the same for all bidders, and there is uncertainty in estimating this \u2014 it is usually not included in calculating NPV in procurement decisions<\/strong>.\"<\/p>\n2. Calculation: \"the above formula for NPV need not be manually calculated; It can be calculated using the NPV function in excel<\/strong>.\"<\/p>\n<h2>8.5.3<\/span>THE SOLVED EXAMPLE \u2014 where the HIGHEST-priced offer becomes L1<\/span><\/h2>\n<aside class=\"note\">\"the discounting rate is taken as 7%. There are three offers against a tender for vehicles at different quoted costs:<\/strong><\/p>\n\u2022 offer 1 (lowest quoted price) incurs the highest operating cost;<\/strong><\/p>\n\u2022 offer 2 (higher quoted price) incurs a somewhat lesser operating cost;<\/strong><\/p>\n\u2022 offer 3 (highest quoted price) incurs the least operating cost.<\/strong><\/p>\nThe free warranty is for 2 years, and the firms have quoted 5 years' AMC after that. In this evaluation, NPV expenditures up to the AMC duration (2-YEAR warranty and 5 years' AMC) were made<\/strong>.\"<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>Row<\/th><th>Expenses<\/th><th>Offer 1<\/th><th>Offer 2<\/th><th>Offer 3<\/th><\/tr><\/thead><tbody><tr><td>2<\/td><td>Initial investment, including costs of initial spares, installation\/ commissioning, Training, etc.<\/td><td>\u20b9 4,00,000<\/td><td>\u20b9 5,00,000<\/td><td>\u20b9 6,00,000<\/td><\/tr><tr><td>3<\/td><td>Annual expenditure on operation (fuel, consumables)<\/td><td>\u20b9 1,50,000<\/td><td>\u20b9 1,00,000<\/td><td>\u20b9 50,000<\/td><\/tr><tr><td>4<\/td><td>Free Warranty \u2014 1st Year<\/td><td>\u20b9 0<\/td><td>\u20b9 0<\/td><td>\u20b9 0<\/td><\/tr><tr><td>5<\/td><td>Free Warranty \u2014 2nd Year<\/td><td>\u20b9 0<\/td><td>\u20b9 0<\/td><td>\u20b9 0<\/td><\/tr><tr><td>6<\/td><td>AMC in 3rd Year<\/td><td>\u20b9 40,000<\/td><td>\u20b9 50,000<\/td><td>\u20b9 60,000<\/td><\/tr><tr><td>7<\/td><td>AMC in 4th Year<\/td><td>\u20b9 40,000<\/td><td>\u20b9 50,000<\/td><td>\u20b9 60,000<\/td><\/tr><tr><td>8<\/td><td>AMC in 5th Year<\/td><td>\u20b9 40,000<\/td><td>\u20b9 50,000<\/td><td>\u20b9 60,000<\/td><\/tr><tr><td>9<\/td><td>AMC in 6th Year<\/td><td>\u20b9 40,000<\/td><td>\u20b9 50,000<\/td><td>\u20b9 60,000<\/td><\/tr><tr><td>10<\/td><td>AMC in 7th Year<\/td><td>\u20b9 40,000<\/td><td>\u20b9 50,000<\/td><td>\u20b9 60,000<\/td><\/tr><tr><td>11<\/td><td>NPV<\/td><td>\u20b9 13,51,644.26<\/td><td>\u20b9 12,17,992.50<\/td><td>\u20b9 10,84,340.74<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">THE RESULT \u2014 the whole point of the exercise:<\/p>\n\"it May be seen that offer 3, with the highest quoted price, has the lowest NPV \u2014 due to low operating costs, despite a higher AMC fee. This offer May, therefore, be considered an L1 offer<\/strong>.\"<\/p><\/aside>\nThe excel formula (for column B; mutatis mutandis<\/em> for C and D):<\/p>\n<aside class=\"note\"><code>NPV = NPV(0.07, (B3+B4), (B3+B5), (B3+B6), (B3+B7), (B3+B8), (B3+B9), (B3+B10)) + B2<\/code><\/p><\/aside>\n<h1 data-src=\"G\">8.6 Turnkey Contract<\/span>G<\/span><\/h1>\n\"in the context of the procurement of goods, a turnkey contract May include:<\/strong><\/p>\n<aside class=\"note\">The manufacture, supply, assembly, installation\/ commissioning of equipment \u2014 *(or a group of plant and machines working in tandem \u2014 even though some of the machines May not be manufactured by the supplier himself)* \u2014 <\/strong>and some incidental works or services*.\"<\/strong><\/p><\/aside>\nwhat the Procuring Entity specifies:<\/p>\n<aside class=\"note\">\"generally, in the tender enquiry documents for a turnkey contract, the purchase organisation specifies the performance and output required from the plant proposed to be set up, and broadly outlines the various parameters it visualises for the desired plant.<\/strong><\/p>\n The inputs and other facilities that the purchase organisation will provide to the contractor are also indicated in the tender document.<\/strong><\/p>\n The contractor will design the plant and provide a quote accordingly<\/strong>.\"<\/p><\/aside>\nthe contractor's four responsibilities:<\/p>\n<ol class=\"lst\"><li>Supplying the required goods, machinery, equipment, etc., needed for the plant<\/strong>;<\/li><li>Assembling, installing, and erecting the same at the site as needed<\/strong>;<\/li><li>Commissioning the plant to meet the required output<\/strong>, etc., as specified in the tender enquiry documents.<\/li><\/ol>\n<h1 data-src=\"G\">8.7 Procurement of Books and Print Media<\/span>G<\/span><\/h1>\n1. The categories and the selection factors:<\/p>\n\"the procurement of print media encompasses various categories such as books, journals, magazines, and newspapers \u2014 each serving distinct purposes like knowledge dissemination and education.<\/strong><\/p>\n<aside class=\"note\"> While books are often acquired for libraries or educational curricula \u2014 newspapers, magazines, etc., have a wider applicability<\/strong>.\"<\/p><\/aside>\nthe six factors for deciding procurement:<\/p>\n<aside class=\"note\">Author \u00b7 publisher \u00b7 subject matter \u00b7 content quality \u00b7 edition \u00b7 market availability<\/strong><\/p><\/aside>\n2. The method \u2014 net discount over published price:<\/p>\n<aside class=\"note\">\"once the category and specifications are determined, quotations May be solicited from vendors in the form of *net discount over the (published) price<\/strong>.*<\/p>\n The vendor offering the most competitive discount \u2014 referred to as L1 \u2014 is typically chosen<\/strong>.\"<\/p><\/aside>\n3. The one-year onboarding and Rate Contract:<\/p>\n<aside class=\"note\">\"additionally, the onboarding of the vendor should be for at least 1 year \u2014 to ensure stability and continuity in the procurement process.<\/strong><\/p>\n Rate contracts can be utilised for these procurements \u2014 providing a framework for consistent pricing and terms over the specified duration.<\/strong><\/p>\nThis process ensures that the Procuring Entity obtains the desired print media at the best possible price \u2014 balancing considerations of quality, content, and vendor stability<\/strong>.\"<\/p><\/aside>\n<h1>Part II \u2014 Common to Consultancy and NON-CONSULTANCY<\/span><\/h1>\n<h1 data-src=\"NC\">8.8 Expression of Interest (EoI) for Shortlisting of Service Providers<\/span>NC<\/span><\/h1>\n<aside class=\"note\">In the Consultancy Manual this occupies an entire chapter (Ch. 7 \u2014 reproduced at Chapter 7 Part A, para 7.1 of this Unified Manual). In the Non-Consultancy Manual it is compressed into para 8.1 \u2014 and it is framed as an EXCEPTION, not the norm.<\/p><\/aside>\n<h2>8.8.1<\/span>Why NC Normally Does NOT Use EoI \u2014 and When It Does<\/span><\/h2>\n<aside class=\"note\">\" Unlike procurement of consultancy services, procurement of non-consultancy services is done by a simpler process \u2014 akin to those of procurement of goods and works *(rule 206 of GFR 2017)*. It is normally done in single-stage two-envelope tendering containing technical and financial bids.<\/strong><\/p>\n In highly technical and complex services, where quality is important \u2014 *(say in studies like seismic surveys, airborne data acquisition, etc.)* \u2014 there is a danger of low-quality bids getting selected for award of contract by quoting unsustainably low price.<\/strong><\/p>\nIn such situations, to ensure that competition is not vitiated by low-quality bids \u2014 competition May be restricted only among equally qualified bidders.<\/strong><\/p>\nTherefore, instead of publicly inviting all interested bidders to present their bids \u2014 the EoI shortlisting process (similar to procurement of consultancy services) involves obtaining a limited number of proposals from pre-qualified firms that, in the Procuring Entity's view of experience, are capable and can be trusted to deliver the required services at the desired level of quality<\/strong>.\"<\/p><\/aside>\n<h2>8.8.2<\/span>The Two-Phase Process<\/span><\/h2>\n\"these considerations can be best addressed through competition exclusively between qualified shortlisted firms or individuals \u2014 in which selection is based on the quality of the proposal and, where appropriate, on the cost of services to be provided.<\/strong><\/p>\nSuch procurement needs to be done in a two-phase process:<\/strong><\/p>\n<aside class=\"note\">\u2022 first phase (the EoI stage) \u2014 the qualified firms are shortlisted transparently;<\/strong><\/p>\n\u2022 second phase \u2014 bids (technical and financial) are solicited from such shortlisted bidders to select the winning bidder.<\/strong><\/p><\/aside>\n Care should be taken to avoid formation of unreasonable qualification criteria prior to shortlisting of bidders, that May lead to restricted participation<\/strong>.\"<\/p>\n<h2>8.8.3<\/span>The Modes \u2014 Rule 183(ii) of GFR 2017<\/span><\/h2>\nfor procurement above Rs. 50 (rupees fifty) lakh<\/strong>, shortlisting is done in an openly advertised competitive shortlisting process called Expression of Interest (EoI)<\/strong>.<\/p>\nTHE \"Request for Expression of Interest\" (REoI) is advertised on CPPP and on GeM<\/strong>. An organisation having its own website should also publish all its advertised tender enquiries on the website.<\/p>\n\"a complete services and activities Schedule should be ready before requesting EoI. Attention of known reputed service providers May also be separately drawn wherever possible<\/strong>.\"<\/p>\n GTE route:<\/strong>\"in case it is felt that likely service providers May not be available in India \u2014 the EoI process May be done on Global Tender Enquiry (GTE) process, by sending REoI notice to foreign embassies in India and Indian embassies in relevant countries<\/strong>.\"<\/strong>(Subject to the Rs. 200 crore GTE restriction<\/strong> \u2014 Chapter 4 Part B, para 4.9.2.)<\/em><\/p>\n<h1 data-src=\"CNC\">8.9 Single Source Selection (SSS)<\/span>C<\/span>NC<\/span><\/h1>\n<h2>8.9.1<\/span>The Three Objections to SSS<\/span><\/h2>\n<aside class=\"note\">\"selection of consultants through direct negotiations:<\/strong><\/p>\n1. Does not provide the benefits of competition in regard to quality and cost;<\/strong><\/p>\n2. Lacks transparency in selection; And<\/strong><\/p>\n3. Could encourage unacceptable practices.<\/strong><\/p>\n The reasons for SSS and the selection of a particular consultant must be recorded and approved by the ca as per the delegation of powers laid down in DFPR\/ SoPP \u2014 prior to single tendering.<\/strong><\/p>\n Powers of procurement of SSS must be severely restricted.<\/strong><\/p>\nTherefore, single-source selection shall be used only in exceptional circumstances, where it is inescapable over competitive selections<\/strong>.\"<\/p><\/aside>\n<h2>8.9.2<\/span>Continuity for Downstream Work \u2014 the pre-declaration rule<\/span><\/h2>\n<aside class=\"note\">\"when, in a project, continuity for downstream work is essential \u2014 the initial RfP shall outline this prospect; And, if practical, the factors used for the selection of the consultant should take the likelihood of continuation into account.<\/strong><\/p>\n Continuity in the technical approach, experience acquired, and continued professional liability of the same consultant May make continuation with the initial consultant preferable to a new competition \u2014 subject to satisfactory performance in the initial assignment.<\/strong><\/p>\nFor such downstream assignments, the Procuring Entity shall ask the initially selected consultant to prepare technical and financial proposals on the basis of ToR furnished by the Procuring Entity \u2014 which shall then be negotiated<\/strong>.\"<\/p><\/aside>\n<h2>8.9.3<\/span>the Two Cases Where SSS is NOT<\/em> Permitted for Downstream Work<\/span><\/h2>\n<aside class=\"note\">\" IF:<\/strong><\/p>\n\u2022 the initial assignment was not awarded on a competitive basis; Or<\/strong><\/p>\n\u2022 the downstream assignment is substantially larger in value;<\/strong><\/p>\n \u2014 a competitive process shall normally be followed, in which the consultant carrying out the initial work is not excluded from consideration if it expresses interest<\/strong>.\"<\/p><\/aside>\n<h2>8.9.4<\/span>The Justification, the Qualification Check and the Monthly Report<\/span><\/h2>\n4. For selecting a consultant under this method, the Procuring Entity should prepare a full justification and take the approval of the Competent Authority as per the SoPP<\/strong>.<\/p>\n5. The shortlisting-criteria test: \"while selecting the consultant under this method, the Procuring Entity shall ensure that the consultant has the requisite qualification and experience to undertake the assignment. Normally the Procuring Entity shall adopt the same short-listing criteria as applied to similar assignments while evaluating the EoI<\/strong>.\"<\/p>\n6. The monthly reporting duty:<\/p>\n<aside class=\"note\">\"it's the cfa's (competent financial authority's) responsibility to ensure that a statement of all selections by nominations, every month, are to be reported to Secretary\/ head of Ministry\/ Department<\/strong>.\"<\/p>\nNote the difference from the QUARTERLY nomination reporting requirement at Chapter 4 Part B, para 4.17.2-3 \u2014 that one goes to the Secretary\/ Board\/ Chief Executive every quarter, with the audit committee checking at least 10% of cases. This SSS provision requires a MONTHLY statement.<\/p><\/aside>\n<h1 data-src=\"CNC\">8.10 Selection of Individual Consultants \/ Individual Service Providers<\/span>C<\/span>NC<\/span><\/h1>\n<h2>8.10.1<\/span>The Three Conditions for Employing an Individual<\/span><\/h2>\n\"individual consultants are normally employed on assignments for which:<\/strong><\/p>\na) teams of personnel are not required<\/strong>;<\/p>\nb) no additional outside professional support is required<\/strong>; and<\/p>\nc) the experience and qualifications of the individual are the paramount requirement<\/strong>.\"<\/p>\n<h2>8.10.2<\/span>The Selection Process \u2014 Five Steps<\/span><\/h2>\n\"the procedures for selecting individual consultants are similar to, but much simpler than, those for selecting teams of consultants from a firm<\/strong>.\"<\/p>\na) the package: Preparing a consultancy services package including:<\/p>\n<aside class=\"note\">The ToR \u00b7 time frame \u00b7 number of person-months \u00b7 budget \u00b7 EoI short-listing criteria<\/strong> \u2014 AND getting it approved by the ca<\/strong>.<\/p><\/aside>\nB) advertising: Advertisement should be given on CPPP<\/strong> AND ON GeM<\/strong>. An organisation having its own website should also publish all its advertised tender enquiries on the website.<\/p>\nc) method of selection \u2014 comparison of at least three candidates:<\/p>\n<aside class=\"note\">\"they shall be selected through comparison of qualifications of at least three candidates \u2014 among those who have expressed interest in the assignment, or have been approached directly by the Procuring Entity.<\/strong><\/p>\n Capability is judged on the basis of:<\/strong><\/p>\n\u2022 academic background;<\/strong><\/p>\n\u2022 experience; And<\/strong><\/p>\n\u2022 as appropriate, knowledge of the local conditions \u2014 such as local language, culture, administrative system, and Government organisation.<\/strong><\/p>\nSelection will be carried out by the CEC, which will award marks for educational qualifications and experience, and select the most suitable candidate.<\/strong><\/p>\n The CEC May also interview candidates and award marks for their performance in the interview \u2014 and recommend the remuneration to be paid<\/strong>.\"<\/p><\/aside>\nd) DIRECT NEGOTIATION \u2014 the three exceptional cases:<\/p>\n<aside class=\"note\">\"individual consultants May be selected on a direct negotiation basis, with due justification, in exceptional cases such as:<\/strong><\/p>\nA) tasks that are a continuation of previous work that the consultant has carried out, and for which the consultant was selected competitively;<\/strong><\/p>\nB) emergency situations resulting from natural disasters; And<\/strong><\/p>\nc) when the individual is the only consultant qualified for the assignment.<\/strong><\/p>\nIndividual consultants May be (among others): Independent consultants \u00b7 consultants recruited from firms \u00b7 or consultants recruited from academic, Government, or international agencies<\/strong>.\"<\/p><\/aside>\ne) staff or associates of consultancy firms \u2014 the conflict-of-interest extension:<\/p>\n<aside class=\"note\">\"if the candidate is permanent staff or associate of a consultancy firm \u2014 the conflict-of-interest provisions described in these guidelines shall apply to the parent firm<\/strong>.\"<\/p><\/aside>\n<h2>8.10.3<\/span>Retired Government Servants<\/span><\/h2>\na) the GFR bar: \"Rule 177 of GFR, 2017 says that consulting services do not include direct engagement of retired Government servants. They should not be engaged as consultants against regular vacant posts under this Rule. Such engagements should be handled as a personnel matter<\/strong>.\"<\/p>\nb) the governing instruction: \"engagement\/ hiring of retired Government servants should be regulated as per doe's OM f.no. 3-25\/2020-E.IIIA dated 9TH December 2020<\/strong>.\"<\/p>\n<aside class=\"note\">(See also Chapter 3, para 3.3.1-2 of this Unified Manual for the remuneration rules<\/strong> \u2014 full-time engagement at last pay drawn minus pension<\/strong>; part-time non-exclusive engagement on a per day\/ month or lump-sum basis.)<\/em><\/p><\/aside>\n<h1 data-src=\"CNC\">8.11 Selection of Specialised Agencies \/ Institutions<\/span>C<\/span>NC<\/span><\/h1>\n1. Who they are: \"from time to time, ministries\/ departments May need to recruit a specialised agency or institution to undertake a specific consultancy\/ non-consultancy service, for which it is particularly well suited.<\/strong><\/p>\n<aside class=\"note\">Such agencies May be: Government\/ semi-government agencies \u00b7 universities \u00b7 or professional institutions<\/strong>.\"<\/p><\/aside>\n2. When SSS is worth considering: \"in some cases, the agency or institution has access to special expertise or special back-up and support facilities \u2014 that make it worthwhile considering recruitment on an SSS basis.<\/strong><\/p>\n<aside class=\"note\"> In such cases, there must be full justification that the use of SSS is in the best interests of the Procuring Entity<\/strong>.\"<\/p><\/aside>\n3. The government-agency Rule: \"in cases of Government and semi-government agency, SSS would be an appropriate method of recruitment<\/strong>.\"<\/p>\n4. \"individual consultants recruited from agencies and institutions May be selected in the same way as any other individual consultants<\/strong>.\"<\/p>\n<h1 data-src=\"CNC\">8.12 Selection of Non-Governmental Organisations (NGO)<\/span>C<\/span>NC<\/span><\/h1>\n1. When an ngo-only shortlist is permitted \u2014 and the mandatory QCBS:<\/p>\n<aside class=\"note\">\"non-governmental organisations (NGOs \u2014 not-for-profit organisations) May be hired for consultancy\/ nc services \u2014 if they express interest and\/ or if the Procuring Entity finds their qualifications satisfactory.<\/strong><\/p>\n Assignments which emphasise experience in and bonding with grassroot historically disadvantaged communities \u2014 e.g., experience in community participation and in-depth local knowledge \u2014 are typically attributed to NGOs, and short lists May comprise NGOs entirely.<\/strong><\/p>\n In this case, QCBS should be followed \u2014 and the evaluation criteria of proposals should reflect the ngo-unique qualifications, such as the following<\/strong>:\"<\/p><\/aside>\nthe five ngo-unique qualification criteria:<\/p>\na) history of work with grassroots communities, and evidence of satisfactory performance<\/strong>;<\/p>\nb) familiarity with participatory development approaches and low-cost technologies<\/strong>;<\/p>\nc) experienced staff conversant with the cultural and socioeconomic dimensions of beneficiaries<\/strong>;<\/p>\nd) committed leadership and adequate management<\/strong>;<\/p>\ne) capacity to co-opt beneficiary participation<\/strong>.<\/p>\n2. When SSS May be used for an NGO \u2014 with the worked illustration:<\/p>\n<aside class=\"note\">\"procuring entities May select NGOs using SSS \u2014 provided the approvals and procedures laid down for the same are followed.<\/strong><\/p>\n for example, SSS May be adopted to hire a local NGO for a very small assignment in a remote area \u2014 where only one NGO is available, and competition is impractical<\/strong>.\"<\/p><\/aside>\n<h1 data-src=\"CNC\">8.13 Procurement Consultants \/ Procurement Agents<\/span>C<\/span>NC<\/span><\/h1>\n<aside class=\"note\">This is the clearest illustration in the entire Manual family of how the same ENGAGEMENT may be a Consultancy or a Non-Consultancy service depending on its scope. Both Manuals carry near-identical text.<\/p><\/aside>\n<h2>8.13.1<\/span>Consultancy or Non-Consultancy \u2014 THE 30% QUALITY-WEIGHTAGE TEST<\/span><\/h2>\n\"hiring of procurement agents (pas) can either be done as a consultancy service or non-consultancy service \u2014 depending on the objectives and scope of assignment<\/strong>.\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>AS CONSULTANCY<\/th><th>AS NON-CONSULTANCY<\/th><\/tr><\/thead><tbody><tr><td>When<\/td><td>if the role primarily involves intellectual analysis, strategic planning, spend analysis, cost control, and advisory functions<\/strong><\/td><td>if their responsibilities are only outsourcing of routine procedures, without intellectual decision-making<\/strong><\/td><\/tr><tr><td>Illustration<\/td><td>\"when they are asked to design\/ implement a new system, or improve Value for Money, or develop strategic procurement, or carry out market building\/ sourcing<\/strong>\"<\/td><td>\"when they only operate the existing procedures, and crucial decisions are made by the client himself<\/strong>\"<\/td><\/tr><tr><td>the test<\/td><td>WHERE quality weightage of more than 30% is called for<\/strong><\/td><td>WHERE quality weightage can be 30% or less<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>8.13.2<\/span>Procurement of Specific Items<\/span><\/h2>\n\"when procurement consultants are specifically used for handling the procurement of specific items, and generally working from their own offices \u2014 they are paid:<\/strong><\/p>\n<aside class=\"note\">A percentage (either fixed or inversely proportional) of the value of the procurements handled \u2014 or of savings realised \u2014 or a combination of a percentage and a fixed fee<\/strong>.\"<\/p><\/aside>\nC<\/span> \u2014 the cost-weightage cap and its reason:<\/p>\n<aside class=\"note\">\"in such cases, they are selected under QCBS \u2014 with cost being given a weight of less than 50 (fifty) per cent.<\/strong><\/p>\n If the weight of the cost element adopted were as high as 50 per cent \u2014 financial considerations would dominate the selection, creating the risk of an unacceptably lower service quality.<\/strong><\/p>\n In such cases, it is essential to ensure that the quality threshold in the evaluation is set sufficiently high.<\/strong><\/p>\nThey shall be selected following the appropriate procedures for other consultancy assignments \u2014 using QCBS and time-based contracts<\/strong>.\"<\/p><\/aside>\nNC<\/span> \u2014 the shorter version: \"Procurement Agents as outsourcing of Non-consultancy services may be hired\u2026 they are paid a percentage (either fixed or inversely proportional) of the value of the procurements handled, or a combination of a percentage and a fixed fee. In such cases, they may be selected under QCBS.\"<\/em><\/p>\n<h2>8.13.3<\/span>Outsourcing of the Whole Procurement Function<\/span><\/h2>\n<ul class=\"lst\"><li class=\"srcmark src-C\" data-src=\" C \">C<\/span>:<\/strong>\"when procurement agents provide services for procurement for a whole project in a specific unit of the Procuring Entity \u2014 it is usually a non-consultancy service, unless the intellectual-analysis criterion is met<\/strong>.\"<\/li><li class=\"srcmark src-NC\" data-src=\" NC \">NC<\/span>:<\/strong>\"when pas provide support for a whole project in a specific unit of the Procuring Entity \u2014 they are usually paid based on the staff-months of effort provided, and they shall be selected following the appropriate procedures using QCBS and time-based contracts<\/strong>.\"<\/li><\/ul>\n<h1>Part III \u2014 CONSULTANCY-ONLY Engagements<\/span><\/h1>\n<h1>8.14 Financial Advisors [C ONLY]<\/span><\/h1>\n<h2>8.14.1<\/span>The Two Types of Assignment<\/span><\/h2>\n\"procuring entities May hire financial institutions to implement two main types of assignment:<\/strong><\/p>\na) in the preparation of studies and financial consultancy<\/strong>; or<\/p>\nb) as advisers on financial restructuring, mergers and acquisitions (m&a), or demerger<\/strong>, etc.\"<\/p>\n<h2>8.14.2<\/span>The Two Different Selection Regimes<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Type<\/th><th>Selection method<\/th><\/tr><\/thead><tbody><tr><td>TYPE (a) \u2014 studies and financial consultancy<\/td><td>the advisers can be selected under any of the methods<\/strong> (whichever is considered most suitable, depending on the scope of work)<\/td><\/tr><tr><td>TYPE (b) \u2014 restructuring, M&A, demerger<\/td><td>QCBS SHALL<\/strong> BE ADOPTED \u2014 whereby the RfP specifies technical evaluation criteria similar to those relevant to standard Consultancy assignments<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>8.14.3<\/span>The Two-Part Remuneration \u2014 Retainer plus Success Fee<\/span><\/h2>\nin type (b), the financial proposal would include two distinct forms of remuneration<\/strong>:<\/p>\na) <\/strong>A lump-sum retainer fee \u2014 to reimburse the consultant for services made available<\/strong>; and<\/p>\nb) <\/strong>A success fee \u2014 which is either fixed or, preferably, expressed as a percentage of the value of the privatisation transaction<\/strong>.<\/p>\nThe weighting between them:<\/p>\n<aside class=\"note\">\"depending on the type of activity and the circumstances of the Procuring Entity, the RfP specifies the relative weights assigned in the financial evaluation to the retainer and to the success fee, respectively.<\/strong><\/p>\n In some cases, the Procuring Entity offers a fixed retainer fee \u2014 and the consultant must compete only on the success fee as a percentage of the value of the privatisation transaction.<\/strong><\/p>\n for QCBS (notably for large contracts), cost May be given a weight higher than recommended for standard assignments (such as 30 (thirty) per cent) \u2014 or the selection May be based on LCS selection.<\/strong><\/p>\nThe RfP shall specify clearly how proposals will be presented and how they will be compared<\/strong>.\"<\/p><\/aside>\n<h2>8.14.4<\/span>When a Success Fee Is Appropriate<\/span><\/h2>\n<aside class=\"note\">\"success fees are most appropriate when:<\/strong><\/p>\n\u2022 it is relatively easy to measure results in meeting the Procuring Entity's objective (successful sale of assets); And<\/strong><\/p>\n\u2022 when the success is at least partly related to the efforts of the consultant involved.<\/strong><\/p>\n Therefore, success fees are more likely to be adopted at the transaction stage \u2014 because by that time the Procuring Entity's objective is to maximise revenue<\/strong>.\"<\/p><\/aside>\n<h1>8.15 Auditors [C ONLY]<\/span><\/h1>\n1. The fiduciary rationale:<\/p>\n<aside class=\"note\">\"quality audits of federal or State expenditures are an important accountability mechanism for ensuring financial integrity. Therefore, public organisations have a vital fiduciary responsibility to ensure that their audit is of the highest quality<\/strong>.\"<\/p><\/aside>\n2. What the ToR and the technical qualifications must cover:<\/p>\n\"auditors typically carry out auditing tasks under well-defined ToR and professional standards<\/strong>.\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Element<\/th><th>What it must consider\/ cover<\/th><\/tr><\/thead><tbody><tr><td>THE ToR<\/td><td>applicable statutory, Government, organisational requirements \u00b7 and applicable auditing and accounting standards<\/strong><\/td><\/tr><tr><td>scope of audit<\/td><td>the jurisdiction \u00b7 type of audit \u00b7 contract period \u00b7 and any additional services<\/strong><\/td><\/tr><tr><td>technical qualifications<\/td><td>licensing requirement \u00b7 general and similar experience \u00b7 quality certifications \u00b7 quality and adequacy of staffing \u00b7 financial capability \u00b7 auditing approach \u00b7 and scheduling of the auditor<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">the independence requirement: \"auditors' independence and lack of conflict of interest is also an important requirement<\/strong>.\"<\/p><\/aside>\n\"a presentation or interview also May be part of the RfP process. A pre-proposal conference May also be considered<\/strong>.\"<\/p>\n3. The QCBS recommendation \u2014 with its stated reason:<\/p>\n<aside class=\"note\">\" Since in recent times the quality of audit has been a matter of concern \u2014 selection of auditors May preferably be done as a consultancy service on QCBS basis, with emphasis on weightage of quality<\/strong>.\"<\/p><\/aside>\n<h1>8.16 Public Competition for Design of Symbols\/ Logos [C ONLY]<\/span><\/h1>\n(Rule 196 of GFR 2017)<\/em><\/p>\n1. The three governing principles:<\/p>\n\"certain ministries\/ departments are required to conduct competitions for the design of logos\/ symbols for their use \u2014 which should be conducted in a transparent, fair, and objective manner.<\/strong><\/p>\nThe following guidelines shall be followed by all ministries\/ departments, as well as their attached\/ subordinate offices and the autonomous bodies\/ organisations controlled by them<\/strong>:\"<\/p>\na) design competitions should be conducted in a transparent, fair, and objective manner<\/strong>;<\/p>\nb) wide publicity should be given to the competition \u2014 so as to ensure that the information is accessible to all possible participants<\/strong>. This should include publication on the website of the Ministry\/ Department\/ PSU\/ organisation concerned, as also the Central Public Procurement Portal<\/strong>. THE existing e-publishing module can be utilised<\/strong>;<\/p>\nC) the two statutes to be kept in view: \"Provisions of any applicable laws \u2014 including the official languages Act and the emblems and names (prevention of improper use) Act \u2014 should be kept in view while conducting the competition\"<\/strong>;<\/p>\n2. The eleven contents of the detailed competition notice:<\/p>\n\"a detailed competition notice should be drawn up and made public. The notice should, inter alia, [give] details on the following<\/strong>:\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Content of the Competition Notice<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>THE objectives of the design competition, and the key features expected in the proposed design<\/strong><\/td><\/tr><tr><td>ii<\/td><td>qualification criteria, if any, for participation<\/strong><\/td><\/tr><tr><td>iii<\/td><td>THE process of evaluation and evaluation criteria \u2014 whether it would be single or multi-stage<\/strong>. \"for symbols\/ logos intended to represent a drive\/ project\/ entity of national importance \u2014 it May be decided to have the selection through public voting. If so, the modalities should be clearly specified<\/strong>.\"<\/td><\/tr><tr><td>iv<\/td><td>THE manner of submission of entries, and the format\/ details etc. Expected with the design<\/strong><\/td><\/tr><tr><td>v<\/td><td>whether one participant can submit multiple designs<\/strong><\/td><\/tr><tr><td>vi<\/td><td>THE last date and time for submission<\/strong><\/td><\/tr><tr><td>vii<\/td><td>details of entry fees, if any, and the manner of submission<\/strong><\/td><\/tr><tr><td>viii<\/td><td>expected date for announcement of results, and the manner in which the results will be intimated<\/strong><\/td><\/tr><tr><td>ix<\/td><td>THE number of prizes to be awarded, and the amount payable for the successful design(s)<\/strong><\/td><\/tr><tr><td>x<\/td><td>\"it May be clearly stipulated that the intellectual property rights of the successful design(s) would rest with the sponsoring agency. The status of the unsuccessful designs \u2014 and whether it is intended to return them \u2014 should be indicated clearly<\/strong>.\"<\/td><\/tr><tr><td>xi<\/td><td>if the selection is to be done by a jury of experts nominated for the purpose \u2014 the composition of the jury May also be notified<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n3. After the competition: \"once the competition is over and the winning entry selected \u2014 this again should be notified in the public domain. If the selection has been by a jury of experts nominated for the purpose, the composition of the jury May be notified<\/strong>.\"<\/p>\n4. The customisation caveat: \"it is evident that every competition would have distinct features \u2014 and therefore, the aforesaid guidelines should be used as a general principle while preparing the detailed procedure\/ Rules for each such competition<\/strong>.\"<\/p>\n<h1>8.17 Procurement of Integrated IT Projects [C, with NC cross-reference]<\/span><\/h1>\n<h2>8.17.1<\/span>The Consultancy Characterisation and the Three Types<\/span><\/h2>\n\"procurement of integrated IT projects should normally be carried out as procurement of consultancy services \u2014 as the outcomes\/ deliverables vary from one service provider to another<\/strong>.\"<\/p>\nthe IT projects May include:<\/p>\na) bespoke software development<\/strong>;<\/p>\nb) cloud-based services<\/strong>; and<\/p>\nc) composite IT system integration services<\/strong> \u2014 involving <\/strong>design, development, deployment, commissioning of IT system including supply of hardware, development of software, bandwidth, and operation\/ maintenance of the system for a defined period after go-live, etc.<\/strong><\/p>\n<h2>8.17.2<\/span>QCBS with Quality Weightage up to 80%<\/span><\/h2>\n<aside class=\"note\">C<\/span>:<\/strong>\" Since quality is of prime importance in procurement of IT services \u2014 QCBS selection with due emphasis on quality weightage (even up to 80%, depending on quality requirements) May be used. In cloud services in particular, alternative pricing models May be allowed to be quoted<\/strong>.\"<\/p>\nNC<\/span> \u2014 para 8.12.1, cross-referring:<\/strong>\"procurement of it project\u2026 involve considerable intellectual inputs, hence these should be handled as procurement of consultancy services. Such procurements are done using QCBS selection method with 80%: 20% weightages for quality: Price<\/strong>.\"<\/p><\/aside>\n<h2>8.17.3<\/span>Caution against Restrictive and Discriminatory Qualification Conditions<\/span><\/h2>\n<aside class=\"note\">\"the Ministry of electronics & information technology (MeitY) has cautioned that qualification conditions for cloud service providers should not be restrictive\/ discriminatory \u2014 like insistence on 'gartner's magic quadrant' etc., and very high financial turnover \u2014 which impede the domestic service providers and do not add value to the users.<\/strong>(D.O. No. 10(13)\/2022-EG-II dated 25.08.2022)<\/em><\/p>\n They have also cited that DPIIT has a similar advisory that such discrimination against domestic players is a violation of the Make in India order, which provides purchase preference to local content requirement.<\/strong>(OM No. P-45021\/121\/2018-(B.E.-II) dated 20.06.2019)<\/em><\/p><\/aside>\n<h3>The Three Categories of Restrictive and Discriminatory Conditions \u2014 with Named Examples<\/span><\/h3>\na) restrictive and discriminatory eligibility criteria in tender conditions:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Example cited<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>mandatory presence in gartner magic quadrant<\/strong> \u2014 IT and Telecom Products<\/td><\/tr><tr><td>ii<\/td><td>mandatory USFDA\/ European ce<\/strong> \u2014 Medical Devices<\/td><\/tr><tr><td>iii<\/td><td>excessive turnover requirement \u2014 Rs. 1000 cr for procurement of Rs. 70 cr<\/strong><\/td><\/tr><tr><td>iv<\/td><td>excessive past experience \u2014 10 YEARS<\/strong><\/td><\/tr><tr><td>v<\/td><td>export experience to G8 countries<\/strong><\/td><\/tr><tr><td>vi<\/td><td>additional requirement of bank Guarantee for local supplier<\/strong><\/td><\/tr><tr><td>vii<\/td><td>delayed payment terms to local suppliers<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nb) restrictive and discriminatory specifications \u2014 foreign brands specified:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Brands named in the Manual<\/th><\/tr><\/thead><tbody><tr><td>Telecom products<\/td><td>cisco \u00b7 nec \u00b7 alcatel \u00b7 siemens<\/strong><\/td><\/tr><tr><td>IT products<\/td><td>hp \u00b7 dell \u00b7 lenovo<\/strong><\/td><\/tr><tr><td>LIFTS<\/td><td>otis \u00b7 mitsubishi \u00b7 schindler \u00b7 kone \u00b7 johnson<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nc) restrictive\/ discriminatory specifications or pre-approved foreign brands in works\/ turnkey projects:<\/p>\ni) local manufacturer not included in pre-approved list<\/strong>;<\/p>\nii) specification tailor-made to suit foreign products<\/strong>;<\/p>\niii) foreign technical standards indicated in the specification<\/strong>;<\/p>\niv) technical parameters to favour foreign products<\/strong> \u2014 viz.<\/em> \"(\u2013) 25-DEGREE temperature compatibility \u2014 for EPBX equipment being procured for an airport in Central India<\/strong>.\"<\/p>\n<h2>8.17.4<\/span>Bespoke Software Development<\/span><\/h2>\n\"bespoke software development involves creating customised software solutions tailored to specific organisational needs. Unlike off-the-shelf software, bespoke applications are designed from scratch \u2014 considering unique requirements, workflows, and business processes<\/strong>.\"<\/p>\na) DEFINING REQUIREMENTS \u2014 and the agile mandate: \"engage stakeholders, gather functional and non-functional requirements, and define clear objectives. Stipulate an agile development approach that allows iterative development, frequent feedback, and adaptability. Agile ensures alignment with evolving requirements and minimises risks<\/strong>.\"<\/p>\nb) technical qualifications: Evaluate bidders based on expertise, track record, and ability to deliver custom solutions<\/strong> \u2014 considering technical proficiency, domain knowledge, scalability, security, and support and project management capabilities<\/strong>.<\/p>\n<h2>8.17.5<\/span>Cloud-Based Services<\/span><\/h2>\nA) defining requirements:<\/p>\n<ul class=\"lst\"><li>I) slas and data privacy: Define slas regarding uptime, performance, and support<\/strong>. Address data privacy and compliance requirements \u2014 especially if handling sensitive information<\/strong>.<\/li><li>ii) migration strategy: \"plan the migration process carefully. Assess existing applications for cloud readiness, choose the right migration approach (lift-and-shift, re-architecting, or hybrid), and ensure minimal disruption<\/strong>.\"<\/li><\/ul>\nb) the three cloud service models:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Model<\/th><th>Meaning<\/th><\/tr><\/thead><tbody><tr><td>Software as a service (SaaS)<\/td><td>ready-to-use applications hosted by the provider<\/strong><\/td><\/tr><tr><td>platform as a service (PaaS)<\/td><td>development platforms and tools for building custom applications<\/strong><\/td><\/tr><tr><td>infrastructure as a service (IaaS)<\/td><td>virtualised computing resources (servers, storage, networking)<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nc) technical qualifications: Evaluate cloud providers based on reliability, security, compliance, data sovereignty<\/strong>. Consider well-established cloud services providers<\/strong>.<\/p>\n<h2>8.17.6<\/span>Composite IT System Integration Services<\/span><\/h2>\n\"composite IT system integration involves connecting disparate systems, applications, and data sources to create a cohesive ecosystem<\/strong>.\"<\/p>\na) defining requirement:<\/p>\n<ul class=\"lst\"><li>I) integration strategy: Define the integration scope \u2014 APIs, middleware, and data synchronisation<\/strong>. Consider whether real-time or batch processing is required<\/strong>.<\/li><li>ii) interoperability and scalability: Ensure that integrated components can communicate seamlessly<\/strong>. Scalability is crucial to accommodate future growth and changing business needs<\/strong>.<\/li><li>iii) testing and maintenance: Specify testing requirements \u2014 unit, integration, and end-to-end testing<\/strong>. Also outline ongoing maintenance and support expectations<\/strong>.<\/li><\/ul>\nB) technical qualification: Select vendors with expertise in integrating complex systems<\/strong>. Look for experience in integrating diverse technologies (ERP, CRM, legacy systems)<\/strong>.<\/p>\n<h1>8.18 Hiring Consultants for Digital India Projects [C ONLY]<\/span><\/h1>\n<h2>8.18.1<\/span>Overview and the NeGD Framework<\/span><\/h2>\n<aside class=\"note\">\"the Digital India initiative, under the Ministry of electronics and information technology (MeitY), seeks to transform India into a digitally empowered society and knowledge economy.<\/strong><\/p>\n The hiring of consultants is pivotal for implementing large-scale e-governance and technology projects that support this vision.<\/strong><\/p>\n National E-governance Division (NeGD) \u2014 an autonomous business division within Digital India corporation \u2014 has established a robust framework for hiring consultants through empanelment of qualified consulting organisations<\/strong>.* (F.No. N-22018\/33\/2022-NeGD dated 17.05.2024)<\/em><\/p><\/aside>\n<h2>8.18.2<\/span>Empanelment \u2014 the Three-plus-Two Year Validity<\/span><\/h2>\n<aside class=\"note\">\"NeGD has empanelled consulting organisations through a competitive request for empanelment (rfe) process.<\/strong><\/p>\n This empanelment is valid for three years, extendable by two years.<\/strong><\/p>\nThe empanelment framework simplifies the hiring process \u2014 ensuring quick access to skilled professionals while maintaining cost and quality control.<\/strong><\/p>\nThis ensures the availability of specialised skills, adherence to national standards, and alignment with the programme's vision. Government entities are encouraged to utilise this framework<\/strong>.\"<\/p><\/aside>\n<h2>8.18.3<\/span>The Three Pre-defined Categories<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Scope of services<\/th><\/tr><\/thead><tbody><tr><td>category a \u2014 project\/ programme management and advisory services<\/td><td>i) developing project proposals, roadmaps, and templates<\/strong>; <\/strong>ii) managing e-governance projects \u2014 including agile methodologies, bid processes, and change management<\/strong>; iii) conducting audits (security, performance, and quality) and risk assessments<\/strong><\/td><\/tr><tr><td>category b \u2014 digital ecosystem and architecture development<\/td><td>i) designing digital ecosystem blueprints in line with national standards<\/strong>; <\/strong>ii) preparing implementation plans \u2014 including business requirements, data governance strategies, and technology modernisation approaches<\/strong>; iii) supporting the adoption of scalable and agile solutions<\/strong><\/td><\/tr><tr><td>category c \u2014 technology management and emerging technologies<\/td><td>i) advising on emerging technologies such as AI, blockchain, IoT, and quantum computing<\/strong>; ii) ensuring technology compliance, and managing cybersecurity and GIS solutions<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>8.18.4<\/span>The Hiring Process \u2014 Four Steps<\/span><\/h2>\na) request for proposals or concept notes: \"ministries, departments, and other Government organisations leveraging negd's empanelment notify empanelled agencies about specific assignments. Agencies submit technical proposals or concept notes, which are evaluated on merit<\/strong>.\"<\/p>\nb) selection and deployment: \"selected agencies deploy consultants with expertise relevant to the project. Consultants are required to provide their own equipment, and work collaboratively with Government teams at designated project sites<\/strong>.\"<\/p>\nc) terms of engagement: \"empanelled consultants operate on a time-limited project basis, without implying employment obligations by NeGD. Sub-contracting of services is prohibited<\/strong>.\"<\/p>\nd) compliance and terms \u2014 the four obligations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Obligation<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>intellectual property rights: \"all intellectual property generated during the project belongs to NeGD or the client organisation<\/strong>.\"<\/td><\/tr><tr><td>ii<\/td><td>performance standards: \"consultants must adhere to timelines and quality benchmarks specified in the work order<\/strong>.\"<\/td><\/tr><tr><td>iii<\/td><td>penalties and termination: \"delays or non-performance can result in penalties up to 10% of the project value \u2014 or termination of the engagement<\/strong>.\"<\/td><\/tr><tr><td>iv<\/td><td>confidentiality: \"consultants must maintain confidentiality of all project-related data<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>Part IV \u2014 NON-CONSULTANCY-ONLY Services<\/span><\/h1>\n<h1>8.19 Inspection Agents [NC ONLY]<\/span><\/h1>\n1. Why it is a non-consultancy service:<\/p>\n<aside class=\"note\">\"hiring of inspection agents (ias) \u2014 to inspect and certify goods before shipment, or on arrival in the Procuring Entity's country \u2014 is generally a non-consultancy service, where their responsibilities are:<\/strong><\/p>\n\u2022 only operational\/ procedural;<\/strong><\/p>\n\u2022 for standardised goods\/ commodities;<\/strong><\/p>\n\u2022 without intellectual decision-making \u2014 i.e., when they only inspect within the established protocols; Repetitive work without intellectual inputs \u2014 <\/strong><\/p>\n Where quality weightage can be 30% or less<\/strong>.\"<\/p><\/aside>\n2. Selection and payment: \"inspection agents May be selected using QCBS. Payment is usually based on a percentage of the value of goods inspected and certified<\/strong>.\"<\/p>\n<h1>8.20 Housekeeping Services [NC ONLY]<\/span><\/h1>\n<aside class=\"note\">\"in the case of housekeeping\/ cleaning services, the GeM platform provides for options based on:<\/strong><\/p>\n(a) floor area-wise cleaning; And<\/strong><\/p>\n(b) MANPOWER.<\/strong><\/p>\n Usually, the floor area-wise cleaning option is more cost-effective.<\/strong><\/p>\n Accordingly, before a tender is floated, an exercise May be undertaken to determine the option which is considered beneficial for the Procuring Entity \u2014 duly recording reasons for such decision on file<\/strong>.\"<\/p><\/aside>\n<h1>8.21 Manpower Outsourcing Services [NC ONLY]<\/span><\/h1>\n(DoE, MoF's OM No. F.6\/1\/2023-PPD dated 06.01.2023)<\/em><\/p>\n<h2>8.21.1<\/span>The Regularisation Caution \u2014 and the I-Card Rule<\/span><\/h2>\n<aside class=\"note\">\" Hiring of manpower through contracts should be avoided \u2014 to ensure no future legal problems, as these employees May demand regularisation afterwards.<\/strong><\/p>\n Even if employed, there should be no direct correspondence with such people.<\/strong><\/p>\n Even i-cards should be issued indicating the person to be representative of the contractor (name of the contractor to be mentioned)<\/strong>.\"<\/p><\/aside>\n<h2>8.21.2<\/span>LCS for High-Value Cases<\/span><\/h2>\n\" Least cost system (LCS) should be considered for procurement of manpower outsourcing service, wherever appropriate \u2014 especially in high-value cases<\/strong>.\"<\/p>\n<h2>8.21.3<\/span>the Minimum and Maximum Service Charges \u2014 3.85% to 7%<\/span><\/h2>\n<aside class=\"note\">\"IN the Procurement of Manpower Outsourcing Service, the Minimum Service Charges (Minimum Floor Price, Inclusive of Transaction Charges) May Be Fixed as 3.85% (Inclusive of GST).<\/em><\/p>\nThe procuring entities can also fix the service charge above 3.85% with proper justification on file, wherever required.<\/strong><\/p>\n However, such charges should not exceed 7% (inclusive of GST) in any case<\/strong>.\" (DoE OM No. 6\/1\/2023-PPD dated 06.01.2023)<\/em><\/p><\/aside>\n<h2>8.21.4<\/span>The Two Clarifications<\/span><\/h2>\n4. No bar on awarding above the minimum:<\/strong>\"there is no bar on award of tenders to the lowest bidder, if he has quoted service charges more than the minimum prescribed service charges in the tender document (i.e., 3.85% to 7%)<\/strong>.\"<\/strong>(DoE OM No. 6\/1\/2023-PPD dated 17.01.2024)<\/em><\/p>\n5. When the floor price applies \u2014 the two limits:<\/p>\n<aside class=\"note\">\"this stipulation of minimum floor price is applicable only:<\/strong><\/p>\n\u2022 if standalone manpower is procured \u2014 not for manpower plus materials contracts; And<\/strong><\/p>\n\u2022 that too on the basis of service charges<\/strong>.\"<\/p><\/aside>\n<h1>8.22 Private Security Manpower Services [NC ONLY]<\/span><\/h1>\n<h2>8.22.1<\/span>What the Service Covers, and the PSARA Licence<\/span><\/h2>\n\"security services offer:<\/strong><\/p>\n<aside class=\"note\">Protection for life and property against theft, pilferage, fire, etc. \u00b7 safety to manpower \u00b7 guiding visitors to the premises \u00b7 regulating entry of unwanted visitors, salesmen \u00b7 and maintenance of visitors register<\/strong>.<\/p><\/aside>\n\" This is one of the most frequently outsourced non-consultancy services.<\/strong><\/p>\n The Private Security Agencies (regulation) Act, 2005 (PSARA) regulates the functioning of Private Security Agencies in India.<\/strong><\/p>\n A PSARA licence and labour licence are required for any person or entity that wants to operate a private security agency in India. The State Government (in which the agency will be operating) issues these licences<\/strong>.\"<\/p>\n<h2>8.22.2<\/span>The Ex-Servicemen (ESM) Resettlement Framework<\/span><\/h2>\n<aside class=\"note\">\"due to operational and administrative reasons, around 60,000 skilled armed forces personnel (skilled to undertake security guard-related duties) are retired (Ex-servicemen \u2014 ESM) every year \u2014 to maintain a youthful profile of the armed forces.<\/strong><\/p>\n Security agencies \u2014 with an ESM officer as proprietor and other ESM as security supervisors\/ guards \u2014 are empanelled for \"provision of security services\" by the directorate general resettlement (DGR), Department of Ex-servicemen welfare (desmw) \u2014 to facilitate resettlement of ESM.<\/strong><\/p>\n These agencies have to employ esms as security guards\/ supervisors in at least 90% of the deployed workforce. DGR monitors these agencies through reports\/ returns<\/strong>.\"<\/p><\/aside>\n<h2>8.22.3<\/span>The DGR Empanelment Certificate \u2014 Five Years or Age Sixty<\/span><\/h2>\n<aside class=\"note\">\"the 'empanelment certificate' by DGR is issued \u2014 only to eligible esms having labour licence and PSARA certification in the relevant State \u2014 for a duration of:<\/strong><\/p>\n Five years (05), *or* up to the date when the ESM proprietor turns sixty (60) years \u2014 whichever is earlier<\/strong>.\"<\/p><\/aside>\n<h2>8.22.4<\/span>The Sponsorship Requirement \u2014 and the Qualification Waiver<\/span><\/h2>\n<aside class=\"note\">\" Dgr-empanelled agencies\/ companies are only eligible through DGR sponsorship.<\/strong><\/p>\n Dgr-empanelled agencies\/ companies are not eligible for participating in the tender enquiry directly \u2014 i.e., without DGR sponsorship.<\/strong><\/p>\n Dgr-sponsored security agencies do not need to fulfil minimum experience, minimum turnover qualifications<\/strong>.\"<\/p><\/aside>\n<h2>8.22.5<\/span>The CPSE Mandate<\/span><\/h2>\n\"security manpower service for CPSEs is governed by orders from the Ministry of defence and the Department of public enterprises (DPE).<\/strong><\/p>\n<aside class=\"note\"> As per these instructions, CPSEs must avail security services only from dgr-empanelled Ex-servicemen (ESM) security service providers<\/strong>.\"<\/p>\n(MoD OM No. 28(3)\/2012-D(Res-1) dated 09.07.2012 and No. 28(75)\/2020-D(Res-1) dated 13 May 2021; DPE OM no. DPE-GM-12\/0001\/2016-GM-FTS-5410 dated 13.09.2018 and 14.02.2019.)<\/em><\/p><\/aside>\n<h2>8.22.6<\/span>The Mandatory GeM Route and the Three-Agency Sponsorship<\/span><\/h2>\n<aside class=\"note\">\" Since these services are available on GeM, procurement of these services through \"security manpower service\" (under the manpower resource outsourcing service) functionality on the GeM portal becomes mandatory.<\/strong><\/p>\nOn this functionality, the Procuring Entity can upload their requirements in the web-based format.<\/strong><\/p>\n DGR issues a sponsorship letter to at least three ESM service agencies, based on their criteria, to participate in such requirements on GeM<\/strong>.\"<\/p><\/aside>\n<h2>8.22.7<\/span>Selection \u2014 the 10% Negotiation Floor and the Seniority Tie-Breaker<\/span><\/h2>\n<aside class=\"note\">\" Selection of a service provider is based on the service charges quoted over the minimum wages.<\/strong><\/p>\n In no case May service charges be negotiated by CPSEs below the rate prescribed by DGR in its guidelines for empanelment of ESM security service agencies from time to time \u2014 which is up to 10% at present.<\/strong><\/p>\n The tie-breaker: In the eventuality of all the dgr-sponsored agencies quoting the same rates \u2014 the Procuring Entity shall award the contract to the senior-most sponsored agency.<\/strong><\/p>\n The order of seniority of sponsored agencies\/ private limited companies\/ corporations has been indicated in the sponsorship letter<\/strong>.\"<\/p><\/aside>\n<h1>8.23 Vehicle Hiring for Office Use [NC ONLY]<\/span><\/h1>\n<h2>8.23.1<\/span>Mode of Procurement and Type of Contract<\/span><\/h2>\n<aside class=\"note\">\" One of the most common outsourcings is hiring of staff cars for use of the executives.<\/strong><\/p>\n The procurement of vehicles for office use on a monthly basis shall be carried out as a Rate Contract through an Open Tender Enquiry (OTE).<\/strong><\/p>\nThis type of contract allows the Procuring Entity to hire vehicles at predetermined rates for a specified period \u2014 ensuring flexibility and cost-effectiveness<\/strong>.\"<\/p><\/aside>\n<h2>8.23.2<\/span>Contract Period<\/span><\/h2>\n<aside class=\"note\">\"the contract will initially be valid for one year \u2014 with the possibility of extension up to two times, contingent on performance and mutual agreement.<\/strong><\/p>\n Include provisions for early termination, due to unsatisfactory performance<\/strong>.\"<\/p><\/aside>\n<h2>8.23.3<\/span>Price Variation Clause (PVC)<\/span><\/h2>\n<aside class=\"note\">\"to account for fluctuations in operational costs \u2014 such as fuel prices and wages \u2014 the contract will include a Price Variation Clause (PVC) based on acceptable indices.<\/strong><\/p>\n This ensures fair compensation for the service provider and continuity of service in case of significant changes<\/strong>.\"<\/p><\/aside>\n<h2>8.23.4<\/span>Bid Design<\/span><\/h2>\n\"appropriate eligibility, qualification, and selection criteria will be defined. Requirements for vehicle quality, technical specifications, and driver standards will also be specified. Different car specifications May be outlined for varying purposes.<\/strong><\/p>\nA Service Level Agreement (SLA) will be included \u2014 which May cover:<\/strong><\/p>\n<aside class=\"note\">Uptime requirements \u00b7 monitoring and reporting \u00b7 complaint response, resolution and escalation \u00b7 penalties for non-compliance \u00b7 and KPIs<\/strong>.\"<\/p><\/aside>\n<h2>8.23.5<\/span>Basis of Payment \u2014 the Daily-Rate Formula<\/span><\/h2>\n<aside class=\"note\">\"payment for hired vehicles will be based on daily rates, which include:<\/strong><\/p>\n\u2022 specified working hours per day (e.g., 10 hours); And<\/strong><\/p>\n\u2022 a set distance (e.g., 100 kilometres per day);<\/strong><\/p>\n\u2022 within an overall monthly limit of 3,000 kilometres.<\/strong><\/p>\nRates for additional overtime hours or kilometres will also be specified. Additional charges \u2014 such as night service fees for specified hours (e.g., 11 pm to 6 am) \u2014 May also be included.<\/strong>\"<\/p><\/aside>\nthe payment periodicity and the quarterly kilometre adjustment:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Item<\/th><th>When paid<\/th><\/tr><\/thead><tbody><tr><td>Basic monthly charges; Overtime\/ night charges<\/td><td>PAID monthly<\/strong><\/td><\/tr><tr><td>payments for extra kilometres<\/td><td>processed on a quarterly basis<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">the carry-forward Rule: \"any net extra kms (after adjusting any shortfall kms) would be paid off at the end of the quarter \u2014 and any net shortfall in kms, if any, during the quarter shall be carried forward to the next quarter<\/strong>.\"<\/p><\/aside>\n<h1>8.24 Procurement of IT Hardware as a Service (HaaS) [NC ONLY]<\/span><\/h1>\n<h2>8.24.1<\/span>The Distinction from an Integrated IT Project<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>Characterisation<\/th><th>Selection method<\/th><\/tr><\/thead><tbody><tr><td>integrated IT project<\/td><td>involves considerable intellectual inputs<\/strong>, hence handled as procurement of consultancy services<\/strong><\/td><td>QCBS with 80%: 20% weightages for quality: Price<\/strong><\/td><\/tr><tr><td>hardware as a service (HaaS)<\/td><td>A non-consultancy service<\/strong> \u2014 hardware on a subscription or lease basis, with slas and maintenance<\/strong><\/td><td>LCS (L1), OR<\/strong> QCBS with e.g. 30% technical and 70% financial<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">\"when procuring IT hardware as a service (HaaS), the salient non-consultancy service tender and evaluation conditions must be clearly defined \u2014 to ensure compliance, competitiveness, and Value for Money.<\/strong><\/p>\n Given that HaaS involves the procurement of hardware on a subscription or lease basis, with service-level agreements (slas) and maintenance \u2014 the tender conditions must address both the hardware and the associated services<\/strong>.\"<\/p><\/aside>\n<h2>8.24.2<\/span>Scope of Services \u2014 the Thirteen Elements<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Element<\/th><th>Content<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>detailed specifications<\/td><td>clearly outline the specific IT hardware (desktops, laptops, servers, networking cabling\/ equipment, ups<\/strong>, etc.) with configurations and performance standards. Specify what software packages (including anti-virus and firewall software) would be included \u2014 and that licence shall be kept valid during the contract period<\/strong><\/td><\/tr><tr><td>b<\/td><td>service components<\/td><td>installation \u00b7 configuration \u00b7 maintenance \u00b7 repair\/ replacement\/ upgradation \u00b7 and dismantling\/ removal at the end of contract period<\/strong><\/td><\/tr><tr><td>c<\/td><td>delivery and deployment<\/td><td>specify timelines FOR delivery, installation, and commissioning of hardware at specified locations<\/strong><\/td><\/tr><tr><td>d<\/td><td>end-to-end support<\/td><td>help desk \u00b7 remote support \u00b7 on-site support \u00b7 and any additional managed services<\/strong><\/td><\/tr><tr><td>e<\/td><td>training and knowledge transfer<\/td><td>train the Procuring Entity's staff on using the hardware, managing configurations, basic troubleshooting and accessing support services<\/strong><\/td><\/tr><tr><td>g<\/td><td>data protection<\/td><td>\"if any data is handled by the hardware or service provider, stringent data protection clauses must be included \u2014 ensuring compliance with relevant Indian regulations such as the information technology Act, 2000 and its associated Rules<\/strong>.\"<\/td><\/tr><tr><td>h<\/td><td>cybersecurity standards<\/td><td>specify the required cybersecurity measures and standards (e.g., iso\/iec 27001 certification)<\/strong><\/td><\/tr><tr><td>i<\/td><td>audit rights<\/td><td>\"include clauses allowing the procuring authority to audit the service provider's performance, data security, and compliance with the contract at regular intervals<\/strong>.\"<\/td><\/tr><tr><td>j<\/td><td>risk management plan<\/td><td>require the bidder to submit a plan to mitigate risks related to hardware failure, service disruptions, or cybersecurity threats<\/strong><\/td><\/tr><tr><td>k<\/td><td>ownership model<\/td><td>\"clarify that the hardware is provided on a service model (HaaS) \u2014 and the ownership and risks remain with the service provider throughout the contract period<\/strong>.\"<\/td><\/tr><tr><td>l<\/td><td>insurance<\/td><td>\"service provider would keep the hardware insured at his cost<\/strong>.\"<\/td><\/tr><tr><td>m<\/td><td>asset tracking<\/td><td>requirements for tracking and monitoring hardware assets \u2014 including provisions for upgrading hardware during the contract period<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>8.24.3<\/span>Contract Period \u2014 and the Ten-Year QCBS Option<\/span><\/h2>\na) tenure: Specify the duration of the contract (e.g., 3 years, 5 years)<\/strong>, indicating whether the contract is renewable and under what conditions<\/strong>.<\/p>\n<aside class=\"note\">\"in case the contract is decided on QCBS basis \u2014 a longer contract period May be considered (say up to 10 years)<\/strong>.\"<\/p><\/aside>\nb) exit clauses: Include provisions for early termination or contract extensions, based on performance<\/strong>.<\/p>\n<h2>8.24.4<\/span>Service Level Agreement (SLA)<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Element<\/th><th>Requirement<\/th><\/tr><\/thead><tbody><tr><td>Uptime requirements<\/td><td>define minimum uptime guarantees (e.g., 99.9% availability) and penalties for breaches<\/strong><\/td><\/tr><tr><td>response and resolution times<\/td><td>set clear expectations (e.g., 4-HOUR response time for critical failures)<\/strong><\/td><\/tr><tr><td>maintenance & support<\/td><td>conditions for periodic preventive maintenance and replacement of faulty hardware at no additional cost<\/strong><\/td><\/tr><tr><td>monitoring and reporting<\/td><td>regular performance reports regarding hardware functionality, uptime, and SLA adherence<\/strong><\/td><\/tr><tr><td>penalties for non-compliance<\/td><td>\"define penalties for failure to meet SLA requirements, delayed delivery, or non-compliance. Penalties could include financial deductions, contract termination, or blacklisting from future tenders<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>8.24.5<\/span>Payment Terms<\/span><\/h2>\na) subscription model: Outline the payment model \u2014 typically on a monthly or quarterly subscription basis<\/strong>, with provisions for penalties in case of non-compliance with slas.<\/p>\nB) cost inclusions: Define the total cost \u2014 including hardware, software, service charges, taxes, transportation, and any other related costs<\/strong>.<\/p>\nC) milestone-based payments: Payment May be linked to delivery \u00b7 installation \u00b7 successful commissioning \u00b7 periodic payment \u00b7 and dismantling\/ removal at end of contract<\/strong>.<\/p>\n<h2>8.24.6<\/span>Qualification and Evaluation Criteria<\/span><\/h2>\nA) technical qualification:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Requirement<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>experience and expertise: Bidders must have prior experience in providing HaaS to Government departments or large enterprises<\/strong>. Minimum of 3 to 5 years' experience in managing similar contracts<\/strong><\/td><\/tr><tr><td>ii<\/td><td>certifications: Relevant certifications such as ISO 9001 (quality management) and ISO 20000 (IT service management)<\/strong> May be required<\/td><\/tr><tr><td>iii<\/td><td>OEM authorisation: \"if the bidder is not the OEM \u2014 an authorisation letter from the OEM must be submitted, to ensure genuine hardware, warranty, and after-sales support<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\nb) technical evaluation criteria:<\/p>\ni) compliance with specifications<\/strong> \u2014 hardware configuration requirements, SLAs, and support service expectations;<\/p>\nii) scalability<\/strong> \u2014 the solution must be capable of accommodating future upgrades or expansions;<\/p>\niii) vendor performance<\/strong> \u2014 past performance, compliance with SLAs, and customer satisfaction reports;<\/p>\niv) demonstrations\/ PoC<\/strong> \u2014 \"<\/strong>proof of concept (PoC) or demonstrations May be required to assess functionality and performance of the proposed solution.\"<\/strong><\/p>\nc) financial qualification: The bidder must demonstrate strong financial health \u2014 with required turnover and profitability over the last 3 to 5 years \u2014 to ensure financial stability for the duration of the contract<\/strong>.<\/p>\nd) financial evaluation criteria \u2014 the TCO basis and the two methods:<\/p>\n<aside class=\"note\">\"the evaluation will focus on the Total Cost of Ownership (TCO) over the contract period \u2014 including hardware subscription fees, service charges, penalties, and other associated costs.<\/strong><\/p>\n The Least Cost Selection (L1) method can be employed \u2014 ensuring all technical qualifications are met first.<\/strong><\/p>\n Alternatively, a QCBS method can be used \u2014 where technical parameters and financial bids are weighted (e.g., 30% technical and 70% financial) to select the best value proposal<\/strong>.\"<\/p><\/aside>\n<h1>Appendix to Chapter 8 \u2014 Points of Difference<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>whether the Chapter exists at all<\/td><td>G: Ch. 8 \u00b7 C: Ch. 9 \u00b7 NC: Ch. 8 \u00b7 W: NONE<\/em><\/td><\/tr><tr><td>2<\/td><td>Chapter title<\/td><td>G: Procurements with Unique Features\u2026<\/em> \u00b7 C: Special Types of Engagements\u2026<\/em> \u00b7 NC: *Special Types of Non-Consultancy Procurements\u2026*<\/td><\/tr><tr><td>3<\/td><td>Number of sections<\/td><td>G: 7 \u00b7 C: 10 \u00b7 NC: 12<\/td><\/tr><tr><td>4<\/td><td>Organising principle<\/td><td>G: Transaction structures<\/em> \u00b7 C and NC: Categories of provider<\/em><\/td><\/tr><tr><td>5<\/td><td>Overlap between G and the other two<\/td><td>ZERO<\/td><\/tr><tr><td>6<\/td><td>Overlap between C and NC<\/td><td>Only four topics: SSS \u00b7 Individual providers \u00b7 Specialised Agencies \u00b7 NGOs<\/td><\/tr><tr><td>7<\/td><td>Emergencies and Disaster Management<\/strong>(the 16 dispensations; crisis declaration order; single offer acceptable without re-tender; Rs 50,000 GeM exception; special time-bound audits after the crisis)<\/em><\/td><td>G ONLY<\/td><\/tr><tr><td>8<\/td><td>Buy Back Offer<\/strong>(the two-price with\/without rebate mechanism)<\/em><\/td><td>G ONLY<\/td><\/tr><tr><td>9<\/td><td>Capital Goods<\/strong>(item-specific budget; wet-lease alternative; TCO; the three evaluation remedies)<\/em><\/td><td>G ONLY<\/td><\/tr><tr><td>10<\/td><td>AMC<\/strong>(starts after warranty; NPV discounting of future AMC; the Rs 1 lakh BG for goods taken to the factory; the model termination clause)<\/em><\/td><td>G ONLY<\/td><\/tr><tr><td>11<\/td><td>net Present Value<\/strong>(the formula, the GPF discount rate, the solved example where the HIGHEST-priced offer becomes L1)<\/em><\/td><td>G ONLY<\/td><\/tr><tr><td>12<\/td><td>Turnkey Contract<\/td><td>G ONLY<\/td><\/tr><tr><td>13<\/td><td>Books and Print Media<\/strong>(Net Discount over Published Price; one-year onboarding; Rate Contract)<\/em><\/td><td>G ONLY<\/td><\/tr><tr><td>14<\/td><td>EoI for shortlisting<\/td><td>C: an entire chapter (Ch. 7) \u00b7 NC: compressed into para 8.1 and framed as an EXCEPTION to its normal single-stage two-envelope process<\/td><\/tr><tr><td>15<\/td><td>The seismic-survey\/ airborne-data-acquisition illustration of when NC needs EoI<\/td><td>nc only<\/td><\/tr><tr><td>16<\/td><td>SSS \u2014 the MONTHLY statement of all nomination selections to the Secretary\/ Head<\/td><td>C<\/strong>(distinct from the QUARTERLY nomination report in Ch. 4)<\/em><\/td><\/tr><tr><td>17<\/td><td>SSS \u2014 downstream continuity must be outlined in the INITIAL RfP; competitive process required if the initial award was non-competitive or the downstream assignment is substantially larger<\/td><td>C + NC<\/td><\/tr><tr><td>18<\/td><td>Individual Consultants \u2014 comparison of at least three candidates; CEC may interview and recommend remuneration; three direct-negotiation exceptions; COI extends to the parent firm<\/td><td>C + NC<\/td><\/tr><tr><td>19<\/td><td>Rule 177 GFR bar on retired Government servants; DoE OM F.No. 3-25\/2020-E.IIIA dated 09.12.2020<\/td><td>C<\/td><\/tr><tr><td>20<\/td><td>NGOs \u2014 QCBS mandatory where the shortlist is all-NGO; the five NGO-unique criteria; SSS permitted for a remote-area single-NGO case<\/td><td>C + NC<\/td><\/tr><tr><td>21<\/td><td>Procurement Consultants\/ Agents \u2014 THE 30% QUALITY-WEIGHTAGE TEST distinguishing Consultancy from Non-Consultancy<\/td><td>C + NC<\/strong>(near-identical text)<\/em><\/td><\/tr><tr><td>22<\/td><td>Cost weight less THAN 50% for procurement consultants handling specific items, with the stated reason<\/td><td>C ONLY<\/strong>(NC omits the 50% cap and its reasoning)<\/em><\/td><\/tr><tr><td>23<\/td><td>Financial Advisors \u2014 retainer plus success fee; QCBS mandatory for M&A\/ restructuring; cost may exceed 30% or LCS for large contracts; when success fees are appropriate<\/td><td>C ONLY<\/td><\/tr><tr><td>24<\/td><td>Auditors \u2014 QCBS preferred \"since in recent times the quality of audit has been a matter of concern\"<\/td><td>C ONLY<\/td><\/tr><tr><td>25<\/td><td>Logo\/ Symbol Design Competitions \u2014 Rule 196; Official Languages Act and Emblems and Names Act; the 11-point Competition Notice; IPR rests with the sponsoring agency; public voting for matters of national importance<\/td><td>C ONLY<\/td><\/tr><tr><td>26<\/td><td>Integrated IT Projects \u2014 quality weightage<\/td><td>C: \"even up to 80%\" \u00b7 NC (8.12.1): \"80%: 20% for Quality: Price\"<\/td><\/tr><tr><td>27<\/td><td>The MeitY\/ DPIIT list of restrictive and discriminatory conditions<\/strong>(Gartner Magic Quadrant; Rs 1000 Cr turnover for a Rs 70 Cr procurement; G8 export experience; named foreign brands; the \u221225\u00b0C EPBX-at-a-Central-India-airport example)<\/em><\/td><td>C ONLY<\/td><\/tr><tr><td>28<\/td><td>Digital India\/ NeGD \u2014 empanelment valid three years extendable by two; Categories A, B, C; sub-contracting PROHIBITED; IPR belongs to NeGD or client; penalties up to 10% of project value<\/td><td>C ONLY<\/td><\/tr><tr><td>29<\/td><td>Inspection Agents \u2014 generally NC because \"they only inspect within the established protocols\"; payment as a percentage of value inspected<\/td><td>nc only<\/td><\/tr><tr><td>30<\/td><td>Housekeeping \u2014 GeM offers floor-area-wise vs manpower-wise; \"usually the floor area wise cleaning option is more cost effective\"; reasons to be recorded on file<\/td><td>nc only<\/td><\/tr><tr><td>31<\/td><td>Manpower Outsourcing \u2014 the regularisation caution; I-cards must name the contractor; LCS for high-value; service charges floor 3.85% and ceiling 7% (both inclusive of GST); floor applies only to standalone manpower<\/td><td>nc only<\/td><\/tr><tr><td>32<\/td><td>Private Security \u2014 PSARA 2005; ~60,000 ESM retire annually; at least 90% ESM workforce; DGR certificate for 5 years or age 60 whichever earlier; DGR sponsorship mandatory; sponsored agencies exempt from minimum experience and turnover; mandatory GeM route; DGR sponsors at least three agencies; no negotiation below DGR rate (up to 10%); seniority tie-breaker<\/td><td>nc only<\/td><\/tr><tr><td>33<\/td><td>Vehicle Hiring \u2014 Rate Contract through OTE; one year extendable twice; PVC on fuel and wages; 10 hours\/ 100 km per day within 3,000 km monthly; night charges 11 PM\u20136 AM; extra km paid quarterly with shortfall carried forward<\/td><td>nc only<\/td><\/tr><tr><td>34<\/td><td>HaaS \u2014 ownership and risk remain with the service provider; provider insures at his own cost; up to 10-year contract if QCBS; ISO 9001 and ISO 20000; TCO-based evaluation via L1 or QCBS 30:70<\/td><td>nc only<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 8<\/p>\n<aside class=\"note\">Next:<\/strong>Chapter 9 \u2014 contract management and monitoring<\/strong>(Goods Ch. 9 \u00b7 Works Ch. 7<\/strong> \u2014 <\/em>Execution and Monitoring of Works and Quality Assurance \u00b7 Consultancy Ch. 10<\/strong> \u00b7 Non-Consultancy Ch. 9)<\/em>.<\/p>\nThe Works chapter here is by far the most elaborate in the entire Manual family \u2014 some 50 sub-sections \u2014 carrying <\/strong>ESHS concerns, Extension of Time, Liquidated Damages, the Denial Clause, Time at Large, Compensation Events, e-Bill processing, Closure of Contract with its four reconciliations, Excepted Matters, Adjudication, Mediation, Foreign Arbitration, and the CPSE dispute-resolution mechanism \u2014 most of which have no counterpart in the other three. Conversely, <\/strong>only Goods carries *Logistics: Transportation, Receiving, Storage and Issue of Goods, and only CS and NC carry *Concluding the Assignment and Post-Contract Review<\/strong>.<\/p><\/aside><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch9\">Chapter 9 \u2014 Part a<\/p><h1>Contract Management, Administration, Scope Control and Quality Assurance<\/h1><\/header>Part I<\/span>Administration, Scope Control and Quality Assurance<\/em><\/p>\nMerging: Goods Ch. 9<\/strong> (Contract Management) \u00b7 Works Ch. 7<\/strong> (Execution and Monitoring of Works and Quality Assurance) \u00b7 Consultancy Ch. 10<\/strong> (Monitoring Consultancy Services Contract) \u00b7 Non-Consultancy Ch. 9<\/strong> (Monitoring Non-consultancy Services Contract)<\/em><\/p><h2>Structural Notes<\/span><\/h2>\n1. Four different Chapter numbers and four different titles:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Chapter<\/th><th>Title<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span> Goods<\/td><td>Chapter 9<\/td><td>Contract Management<\/em><\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> Works<\/td><td>Chapter 7<\/td><td>Execution and Monitoring of Works and Quality Assurance<\/strong><\/td><\/tr><tr class=\"srcmark src-C\" data-src=\" C \"><td>C<\/span> Consultancy<\/td><td>Chapter 10<\/td><td>Monitoring<\/strong> Consultancy Services Contract<\/em><\/td><\/tr><tr class=\"srcmark src-NC\" data-src=\" NC \"><td>NC<\/span> Non-Consultancy<\/td><td>Chapter 9<\/td><td>Monitoring<\/strong> Non-consultancy Services Contract<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n2. This is the largest Chapter in the entire Manual family \u2014 640 kb across the four Manuals.<\/strong> The Works<\/strong> chapter alone runs to some 50 sub-sections<\/strong> and is by far the most elaborate treatment of contract management anywhere in the four Manuals.<\/p>\n3. The three bodies of material that exist in one Manual only:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Body of material<\/th><th>Exists only in<\/th><\/tr><\/thead><tbody><tr><td>Logistics: Transportation, Receiving, Storage and Issue of Goods<\/td><td>GOODS<\/td><\/tr><tr><td>Aligning stakeholder interests \u00b7 Monitoring Team and System \u00b7 Prerequisites to Commencement \u00b7 Commencement of Work \u00b7 Mobilisation \u00b7 Monitoring Resources Deployed \u00b7 Enforcing Contractor's Obligations \u00b7 Safeguarding Assets \u00b7 ESHS \u00b7 Monitoring Variations\/ Extra\/ Substituted Items \u00b7 Revised DPR \u00b7 Compensation Events \u00b7 Time at Large \u00b7 e-Bill \u00b7 Closure of Contract with its four reconciliations<\/td><td>WORKS<\/td><\/tr><tr><td>Contract Monitoring Committee (CMC) \u00b7 Review of Inception Phase \u00b7 Incentives for Excellence in Contract Execution \u00b7 Concluding the Assignment and Post-Contract Review<\/td><td>CS + NC<\/td><\/tr><\/tbody><\/table><\/div>\n4. Because of the volume, this chapter is issued in three parts:<\/p>\n<ul class=\"lst\"><li>PART A (this document)<\/strong> \u2014 Purpose of Contract Management \u00b7 CMC \u00b7 Contract Administration \u00b7 Scope and Quantity Control \u00b7 Quality Assurance and Inspections.<\/li><li>PART B<\/strong> \u2014 Time Control (delays, EOT, Force Majeure, Denial Clause, LD, Performance Notice, Compensation Events, Time at Large) \u00b7 Cost Control (prices, taxes, payments) \u00b7 Logistics \u00b7 Closure of Contract \u00b7 Post-Contract Review.<\/li><li>PART C<\/strong> \u2014 Breach of Contract, Remedies and Termination \u00b7 Dispute Resolution (Excepted Matters, Adjudication, Mediation, Arbitration, Foreign Arbitration, Appointment of Arbitrator, Arbitral Procedure, Challenging Awards, the CPSE mechanism).<\/li><\/ul>\n<h2>Concordance for Chapter 9 \u2014 Part A<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>G<\/th><th>W<\/th><th>C<\/th><th>NC<\/th><\/tr><\/thead><tbody><tr><td>9.1<\/td><td>The Purpose of Contract Management<\/td><td>9.1.1<\/td><td>7.1<\/td><td>10.1.1<\/td><td>9.1.1<\/td><\/tr><tr><td>9.2<\/td><td>Contract Monitoring Committee (CMC)<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>10.1.2<\/td><td>9.1.2<\/td><\/tr><tr><td>9.3<\/td><td>Aligning the Interest of the Stakeholders<\/td><td> \u2014 <\/td><td>7.2.1<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.4<\/td><td>Monitoring Team and System<\/td><td> \u2014 <\/td><td>7.2.2<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.5<\/td><td>Notice to Proceed, Kick-off Meeting and Prerequisites<\/td><td> \u2014 <\/td><td>7.2.3<\/td><td>10.2.1<\/td><td>9.2.1<\/td><\/tr><tr><td>9.6<\/td><td>Commencement of Work<\/td><td> \u2014 <\/td><td>7.2.4<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.7<\/td><td>Mobilisation<\/td><td> \u2014 <\/td><td>7.2.5<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.8<\/td><td>Review of Inception Phase<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>10.2.2<\/td><td>9.2.2<\/td><\/tr><tr><td>9.9<\/td><td>Reporting and Monitoring of Progress<\/td><td> \u2014 <\/td><td>7.2.2-4<\/td><td>10.2.3<\/td><td>9.2.3<\/td><\/tr><tr><td>9.10<\/td><td>Issuing Contract Amendments\/ Variations<\/td><td>9.7.2<\/td><td>7.2.8<\/td><td>10.2.4<\/td><td>9.2.4<\/td><\/tr><tr><td>9.11<\/td><td>Obligations Control \u2014 Deployment of Resources<\/td><td>9.7.5<\/td><td>7.2.6, 7.2.7<\/td><td>10.2.5<\/td><td>9.2.5<\/td><\/tr><tr><td>9.12<\/td><td>Incentives for Excellence in Contract Execution<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>10.2.6<\/td><td>9.2.6<\/td><\/tr><tr><td>9.13<\/td><td>Safeguards for Handing Over Materials\/ Equipment<\/td><td>9.7.3<\/td><td>7.2.9<\/td><td>10.2.7<\/td><td>9.2.7<\/td><\/tr><tr><td>9.14<\/td><td>Environmental, Social, Health and Safety (ESHS)<\/td><td> \u2014 <\/td><td>7.2.10<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.15<\/td><td>Scope and Quantity Control<\/td><td>9.2<\/td><td>7.3.1\u20137.3.3<\/td><td>10.3<\/td><td>9.3<\/td><\/tr><tr><td>9.16<\/td><td>Quality Assurance and Inspections<\/td><td>9.4<\/td><td>7.3.4<\/td><td>10.3.2<\/td><td>9.3.2\u20139.3.3<\/td><\/tr><tr><td>9.17<\/td><td>Warranty Clause<\/td><td>9.4.8<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><\/tbody><\/table><\/div>\n<h1>9.1 The Purpose of Contract Management<\/span><\/h1>\n<h2>9.1.1<\/span>The Governing Proposition \u2014 common to all four<\/span><\/h2>\n<aside class=\"note\">\"the purpose of contract management is to ensure that contractors adhere to contract terms and deliver the desired outcomes as per the terms and conditions of the contract \u2014 such as timely deliveries, quality of goods supplied, adherence to the proper procedure for submitting invoices, and so on \u2014 and any problems are identified and resolved in a timely manner.<\/strong><\/p>\nIt also ensures that the payments made to the contractor match the performance.<\/strong><\/p>\nWithout Sound Contract Management, There Can Be No Assurance That \"WE Get What We Pay and Contract for \u2014 and Pay for Only What We GET.\"<\/em><\/p><\/aside>\nW<\/span>, C<\/span> and NC<\/span> add: \"implementation of the contract should be strictly monitored \u2014 and notices issued promptly whenever a breach of provisions occurs<\/strong>.\"<\/p>\n<h2>9.1.2<\/span>What Is Handled During This Phase \u2014 the four lists compared<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr class=\"srcmark src-multi\" data-src=\" G W C NC \"><th>G<\/span> GOODS (8 heads)<\/th><th>W<\/span> WORKS (7 heads)<\/th><th>C<\/span> CONSULTANCY \/ NC<\/span> NON-CONSULTANCY (5 heads)<\/th><\/tr><\/thead><tbody><tr><td>a) Scope of Supply and Quantity Control<\/td><td>a) Contract Administration<\/td><td>a) Contract Administration<\/td><\/tr><tr><td>b) Time Control \u2013 Monitoring Delays<\/td><td>b) Monitoring Scope of Work and Quality Assurance<\/td><td>b) Scope Control and Quality Assurance<\/td><\/tr><tr><td>c) Quality Assurance and Inspections<\/td><td>c) Time Monitoring<\/td><td>c) Time Control<\/td><\/tr><tr><td>d) Cost Control \u2013 Prices, Taxes and Payments<\/td><td>d) Financial Monitoring<\/td><td>d) Cost Control<\/td><\/tr><tr><td>e) Logistics: Transportation, Receiving, Storage and Issue of Goods<\/td><td>e) Closure of Contract<\/td><td>e) Post-contract evaluation<\/td><\/tr><tr><td>f) Contract Administration<\/strong> \u2014 Performance Security \u00b7 Amendments \u00b7 Safeguards for handing over materials \u00b7 Monitoring Supplier Performance \u00b7 Monitoring Supplier Obligations \u00b7 Contract closure<\/em><\/td><td>f) Resolving Disputes and Conflicts<\/td><td><\/td><\/tr><tr><td>g) Breach of Contract, Remedies and Termination<\/td><td>g) Breach and Termination of Contract<\/td><td><\/td><\/tr><tr><td>h) Dispute resolution<\/td><td><\/td><td><\/td><\/tr><\/tbody><\/table><\/div>\nTHE C<\/span> AND NC<\/span> Sub-heads of contract administration (nine items): I) issuing the notice to proceed<\/strong>; ii) meetings and reviews<\/strong>; iii) amendments\/ variations to the contract<\/strong>; iv) obligations control: Monitoring that key experts and contracted resources are actually employed<\/strong>; v) safeguards for handing over materials\/ equipment<\/strong>; vi) resolving problems faced by consultants<\/strong>; vii) dispute resolution and arbitration<\/strong>; viii) breach of contract, remedies, and termination of services prior to the end of the contract<\/strong>; ix) contract closure upon completion<\/strong>.<\/p>\nTHE C<\/span> AND NC<\/span> Sub-heads of scope control and quality assurance: I) deciding on possible modifications to scope of work and issuing contract variations<\/strong>; ii) monitor that all deliverables are delivered as per contract \u2014 reports including draft final report and the final report<\/strong>; iii) quality assurance: Review quality of outcomes at inception phase, mid-term, and final phase<\/strong>.<\/p>\n<h2 class=\"src-multi srchead\" data-src=\" C NC \">9.1.3<\/span>Why Services Contracts Need MORE Intense Monitoring<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\">\n<aside class=\"note\">\" Due to lack of physically\/ tangibly measurable outcomes in services contracts \u2014 intense and continuous monitoring of the contract by the Procuring Entity is essential for the success of the assignment.<\/strong><\/p>\n Suitable provision for this should be made in the contracts \u2014 which should also take care of the need to terminate\/ penalise the consultant, or to suspend payments till satisfactory progress has been achieved.<\/strong><\/p>\nThe Procuring Entity shall form a Contract Monitoring Committee (CMC) to monitor the contract.<\/strong><\/p>\n The Procuring Entity should also designate a counterpart Project Manager \u2014 with adequate technical qualification, managerial experience, and power and authority \u2014 as the nodal person to interact with the consultant's team.<\/strong><\/p>\n A system of reporting May be developed, so that a statement covering all ongoing consultancy contracts May be submitted within the Department in detail \u2014 so as to enable management by exception, based on various risk and mitigation strategies pointed out at relevant process milestones in this Manual<\/strong>.\" (Rule 195 of GFR 2017)<\/em><\/p><\/aside>\n<\/div><h2>9.1.4<\/span>Why Poor Contract Management Costs the Nation [W ONLY]<\/span><\/h2>\n<aside class=\"note\">\"poor management of public-funded projects costs the nation in terms of the following \u2014 be it in the owner organisation or in construction firms contracted to build a project<\/strong>:\"<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>The cost<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>additional expenditure burden due to increased costs \u2014 crowding out more deserving schemes and projects<\/strong><\/td><\/tr><tr><td>b<\/td><td>affects viability of projects due to increase in construction [cost] \u2014 causing losses to the CPSE or agency concerned<\/strong><\/td><\/tr><tr><td>c<\/td><td>economic burden, due to delayed return on investments<\/strong><\/td><\/tr><tr><td>d<\/td><td>imposes unnecessary economic burden on affected stakeholders<\/strong><\/td><\/tr><tr><td>e<\/td><td>\"creates a culture of acceptance of delay and avoidable costs \u2014 breeding more cases<\/strong>.\"<\/td><\/tr><tr><td>f<\/td><td>\"increased costs of procurement due to monetisation of higher risks, perceived by contractors, of delays and scope creep associated with public-funded projects<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>9.2 Contract Monitoring Committee (CMC) [C + NC ONLY]<\/span><\/h1>\n(Rule 205 of GFR 2017)<\/em><\/p>\n<h2>9.2.1<\/span>Constitution<\/span><\/h2>\n<aside class=\"note\">\" Rule 205 of GFR 2017 enjoins that the Ministry or Department be involved throughout the conduct of the contract, and continuously monitor the performance of the contractor.<\/strong><\/p>\nThe Procuring Entity shall constitute a CMC comprising at least three members at the appropriate level, including the user's representative \u2014 after the selection procedure is over \u2014 for monitoring the progress of the contract.<\/strong><\/p>\n If considered appropriate, the Procuring Entity May select all or any of the members of CEC as members of CMC.<\/strong><\/p>\n The Procuring Entity May also include individual experts from the Government\/ private sector\/ educational\/ research institute, or an individual consultant, in the CMC. The cost of such members, if any, shall be borne by the Procuring Entity<\/strong>.\"<\/p><\/aside>\n<h2>9.2.2<\/span>The Six Responsibilities of the CMC<\/span><\/h2>\n\"the CMC shall be responsible for<\/strong>:\"<\/p>\n<ol class=\"lst\"><li>monitoring the progress of the assignment<\/strong>;<\/li><li>To oversee that the assignment is carried out as per the contract<\/strong>;<\/li><li>To assess the quality of the deliverables<\/strong>;<\/li><li>To accept\/ reject any part of the assignment<\/strong>;<\/li><li>To levy appropriate Liquidated Damages or penalty \u2014 if the assignment is not carried out as per the contract, and if the quality of services is found inferior<\/strong>;<\/li><li>And for any such deficiency related to the completion of the assignment<\/strong>.<\/li><\/ol>\n<h2>9.2.3<\/span>The Expert-Assistance Provision<\/span><\/h2>\n<aside class=\"note\">\"for the assignments which are overly complex and\/ or are of a highly technical nature \u2014 the Procuring Entity May decide to appoint another qualified consultant to assist the CMC in carrying out its functions<\/strong>.\"<\/p><\/aside>\n<h1>9.3 Aligning the Interest of the Stakeholders [W ONLY]<\/span><\/h1>\n<h2>9.3.1<\/span>The Incentive-Structure Principle<\/span><\/h2>\n<aside class=\"note\">\"the incentive structure for all the key stakeholders of Public Procurement ought to be such that the system itself will ensure timely delivery of the projects\/ works in a qualitative manner within approved cost.<\/strong><\/p>\n A balanced framework and work culture \u2014 where risk and rewards are properly shared amongst stakeholders, and timely completion of quality projects is the common goal \u2014 can be the bedrock of efficient project management.<\/strong><\/p>\n An incentive structure \u2014 which May include pecuniary as well as non-pecuniary aspects (including public recognition) \u2014 linked with measurable parameters of outcome\/ output, can help align the interests of stakeholders.<\/strong><\/p>\n An ethics-based regime, where integrity of all the stakeholders is nurtured, can help increase efficiency in all aspects of project management<\/strong>.\"<\/p><\/aside>\n<h2>9.3.2<\/span>The Recognition Devices \u2014 including naming at work sites<\/span><\/h2>\n<aside class=\"note\">\"public authorities May devise strategies to provide incentives to contractors\/ concessionaires\/ consultants\/ architects\/ other stakeholders by various means \u2014 including bonus, better rating and recognition for early\/ timely\/ quality completion of the projects.<\/strong><\/p>\n Similar strategies May be devised for recognition of engineers\/ officers\/ other team members for early\/ timely and quality completion of the projects.<\/strong><\/p>\n The practice of mentioning the names of the contractor and the project-in-charge publicly at work sites May be implemented.<\/strong><\/p>\n Such recognition May be in a form which has a long shelf life \u2014 so as to associate the contractor and project in-charge with the life of the project<\/strong>.\"<\/p><\/aside>\n<h2>9.3.3<\/span>The Closing Aphorism<\/span><\/h2>\n<aside class=\"note\">\"COMING Together is a Beginning; Keeping Together is Progress; Working Together is SUCCESS.<\/em>\"<\/p>\n\"it is an accepted fact that the success of any project is dependent on a well-coordinated team working towards a common goal. For successful execution of any project within specified time, cost and quality \u2014 the interest of all the stakeholders needs to be aligned.<\/strong><\/p>\n Coordinated efforts of all stakeholders \u2014 such as contractors, consultants, public authority and project executing authority and public representatives \u2014 will bring about the best possible outcome<\/strong>.\"<\/p><\/aside>\n<h1>9.4 Monitoring Team and System [W ONLY]<\/span><\/h1>\n<h2>9.4.1<\/span>The Principle of Proportionality for Contract Management<\/span><\/h2>\n<aside class=\"note\">\"the time and resources applied to manage a contract should be proportional to its size, scope, complexity, duration, risk, and strategic importance. One size does not fit all.<\/strong><\/p>\n for example, [in] low-value [contracts], too many checks and balances can delay decision-making, impede the contractor's payments, and stifle innovation.<\/strong><\/p>\n Too little control can result in an undisciplined crisis management culture.<\/strong><\/p>\n Getting the balance exactly right ensures 'fit-for-purpose' contract management<\/strong>.\"<\/p><\/aside>\n<h2>9.4.2<\/span>Role of Apex and Management Levels<\/span><\/h2>\n\"procurement and contract management require various levels of authorisation or approvals for technical, administrative, and financial decisions. Many of these approvals are at apex\/ managerial levels \u2014 which are responsible for macro management of the contract, but May not be involved in day-to-day contract management. However, their roles are important for efficiency of the contract management process<\/strong>.\"<\/p>\n<h2>9.4.3<\/span>The Contract Manager<\/span><\/h2>\n<aside class=\"note\">\"best practice requires that a nodal person be appointed for management of each specific contract.<\/strong><\/p>\n Such a nodal person May be called differently \u2014 engineer \u00b7 Project Manager \u00b7 Contract Manager \u00b7 supply manager \u00b7 service manager \u00b7 employer's representative \u2014 in different organisations and in different categories of contract. This Manual generically refers to him as 'Contract Manager'.<\/strong><\/p><\/aside>\nThe scale Rule:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Contract type<\/th><th>Who the Contract Manager is<\/th><\/tr><\/thead><tbody><tr><td>Small, routine contracts<\/td><td>A single person, who has a portfolio of contracts to manage<\/strong><\/td><\/tr><tr><td>large, complex, high-value contracts<\/td><td>normally a team or entity<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nthe five attendant requirements:<\/p>\n<ol class=\"lst\"><li>\"a competent project management team should be set up \u2014 including training on project management to the team, if required<\/strong>.\";<\/li><li>\"a system of project monitoring for each work shall be prepared before start of the work \u2014 and the same shall be available at site of work<\/strong>.\";<\/li><li>\"'Deadlines' or 'contractual milestones' should be set up and tabulated to facilitate monitoring of the progress of work<\/strong>.\";<\/li><li>\"the work shall be monitored on a quarterly\/ monthly basis by the Works Committee \u2014 and a status report should be submitted to the Secretary in charge of the concerned Ministry\/ Department<\/strong>.\";<\/li><li>\"execution of the work shall primarily be the responsibility of the nominated Contract Manager. However, for large contracts, senior officers shall also review the progress and quality of the work at various stages of construction<\/strong>.\"<\/li><\/ol>\n<aside class=\"note\">the certification suggestion: \"it May also be useful to stipulate organisational standards and\/ or certifications for project managers\/ staff, in complex projects, as tender conditions \u2014 to minimise risk of cost and time overruns<\/strong>.\"<\/p><\/aside>\n<h2 class=\"src-W srchead\" data-src=\" W \">9.4.4<\/span>Progress Reporting and Review \u2014 the Fourteen-Point MIS Report<\/span>W<\/span><\/h2><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n\"there should be a stipulation in the contract for large-value works (magnitude to be specified) \u2014 for the contractor to submit a project-specific monthly progress report of the work in a computerised form (management information system reports \u2014 MIS reports)<\/strong>.\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Content of the Monthly MIS Progress Report<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>project information \u2014 giving the broad features of the contract<\/strong><\/td><\/tr><tr><td>ii<\/td><td>introduction \u2014 giving a brief scope of the work and the broad structural or other details<\/strong><\/td><\/tr><tr><td>iii<\/td><td>construction Schedule of the various components \u2014 through a bar chart for the next three quarters (or as specified) \u2014 showing the milestones, targeted tasks and up-to-date progress<\/strong><\/td><\/tr><tr><td>iv<\/td><td>progress chart of the various components planned and achieved \u2014 for the month as well as cumulative \u2014 with reasons for deviations, if any, in a tabular format<\/strong><\/td><\/tr><tr><td>v<\/td><td>plant and machinery statement \u2014 indicating those deployed in the work, and their working status<\/strong><\/td><\/tr><tr><td>vi<\/td><td>man-power statement \u2014 indicating individually the names of all the staff deployed in the work, along with their designations<\/strong><\/td><\/tr><tr><td>vii<\/td><td>financial statement \u2014 gross value of work done \u00b7 advances taken \u00b7 recoveries effected \u00b7 amounts withheld \u00b7 net payments \u00b7 details of cheque payments received<\/strong><\/td><\/tr><tr><td>viii<\/td><td>a statement showing the extra and substituted items submitted by the contractor and payments received against them \u00b7 broad details of the bank guarantees, indicating clearly their validity periods \u00b7 broad details of the insurance policies \u00b7 advances received and adjusted<\/strong><\/td><\/tr><tr><td>ix<\/td><td>progress photographs, in colour, of the various items\/ components of the work done up to date \u2014 to indicate visually the actual progress<\/strong><\/td><\/tr><tr><td>x<\/td><td>quality assurance and quality control tests conducted during the month, with the results thereof<\/strong><\/td><\/tr><tr><td>xi<\/td><td>any hold-up shall be specified<\/strong><\/td><\/tr><tr><td>xii<\/td><td>dispute, if any, shall also be highlighted<\/strong><\/td><\/tr><tr><td>xiii<\/td><td>monthly or fortnightly progress review by Contract Manager and Procuring Entity with contractor May be necessary \u2014 to ensure that the contractor deploys sufficient resources to meet the deadlines<\/strong><\/td><\/tr><tr><td>xiv<\/td><td>the photograph-and-video system \u2014 see below<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">The photograph and video provision \u2014 worth noting in full:<\/p>\n\"project executing authorities should put in place a system for capturing the photographs and videos of important and critical activities of construction. This May be implemented in projects above a threshold value \u2014 or, if possible, in all projects.<\/strong><\/p>\nSuch photos\/ videos May be uploaded in the it-based project monitoring system \u2014 to facilitate monitoring the progress and quality of work, as well as assessment of delay in execution of work by stakeholders and senior management.<\/strong><\/p>\n Apart from this, photographs and videos May serve as a permanent record of the project for posterity \u2014 in case needed for any eventuality, including litigation or enquiry\/ investigation<\/strong>.\"<\/p><\/aside>\n<\/div><h2 class=\"src-W srchead\" data-src=\" W \">9.4.5<\/span>Project Management Software<\/span>W<\/span><\/h2><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n<aside class=\"note\">\"all complex assignments require the use of proper project management tools \u2014 that enable the contract management team (Procuring Entity, Contract Manager, Project Manager, etc.) to collaboratively monitor the actual physical and financial progress of the contract against the planned physical and financial Schedule.<\/strong><\/p>\n The contract May also specify that the contractor engage certified project management professionals to train and monitor project progress (e.g., pmi-certified contract managers).<\/strong><\/p>\nSome of the common software programmes are \u2014 (no endorsements are intended; There are many more such software available):<\/strong><\/p>\n\u2022 microsoft project and portfolio management (ms ppm); And<\/strong><\/p>\n\u2022 oracle primavera P6 professional project management (P6 ppm).<\/strong><\/p>\n Information technology (IT) enabled project management systems can help in improving efficiency, transparency and aid faster decision-making in execution of projects<\/strong>.\"<\/p><\/aside>\n<h1>9.5 Notice to Proceed, Kick-off Meeting, and Ensuring Prerequisites to Commencement<\/span><\/h1>\n<\/div><h2 class=\"src-W srchead\" data-src=\" W \">9.5.1<\/span>Ensuring Prerequisites to Commencement of Work W<\/span> \u2014 the Six Prerequisites<\/span><\/h2><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n1. Land acquisition: \"the process of land acquisition shall be started by the Procuring Entity well ahead, and completed entirely \u2014 or at least substantially \u2014 by the time the contract is awarded<\/strong>.\"<\/p>\n2. PERMITS\/ APPROVALS \u2014 and the delay-claim warning:<\/p>\nThe Procuring Entity shall seek requisite statutory approvals\/ permission\/ clearances\/ certificates<\/strong> From concerned local bodies and statutory authorities \u2014 including:<\/p>\n<aside class=\"note\">District authorities \u00b7 municipal corporation \u00b7 panchayati raj institutions \u00b7 town planning board \u00b7 electricity board\/ fire Department \u00b7 State\/ Central pollution control boards \u00b7 State\/ Central environmental authorities \u00b7 forest and wildlife authorities<\/strong><\/p><\/aside>\nthe illustrative list of what such clearances cover:<\/p>\n<aside class=\"note\">Removal of trees \u00b7 re-locating utilities \u00b7 conversion of railway level crossings \u00b7 laying of railway sidings needed by the project \u00b7 rehabilitation and resettlement of persons affected by the project \u00b7 traffic control \u00b7 mining of earth and stone \u00b7 interfering [with] protected monuments \u00b7 blasting permission \u00b7 environmental\/ forest\/ wildlife clearances \u00b7 and shifting of religious shrines<\/strong><\/p>\nthe warning: \"the Procuring Entity has to be aware that any delay in fulfilling the pre-requisites stipulated in the contract will attract delay claims from the contractor \u2014 besides causing time and cost overruns.<\/strong><\/p>\n Hence, all or most pre-requisites shall be fulfilled before award of the LoA<\/strong>.\"<\/p><\/aside>\nthe contractor's side: \"the contractor shall give all notices and obtain all other necessary permits and approvals as May be required for the construction \u2014 and shall pay for all such permits and approvals<\/strong>.\"<\/p>\n3. Approval of quarries, borrow areas and materials:<\/p>\n<aside class=\"note\">\"the contractor will obtain approval of the Contract Manager for each quarry and borrow area to be used in the project \u2014 prior to commencement of quarrying and\/ or borrow area excavation activities.<\/strong><\/p>\n All materials (whether natural, processed, manufactured, or designed) proposed by the contractor to be used on the works shall be first approved by the Contract Manager, to comply with the requirements of specifications.<\/strong><\/p>\n Contractor May seek Procuring Entity's permission for equivalent brands \u2014 if some brands are mentioned for certain materials in the contract documents<\/strong>.\"<\/p><\/aside>\n4. Safety at work site \u2014 the hazardous substances and the public-protection list:<\/p>\n<aside class=\"note\">\"the contractor must ensure safety of workmen as well as safety for the general public during construction in and around the work-site. He must follow the laws, codes and standards laid down in this regard.<\/strong><\/p>\n The workmen must be trained and provided protective gear, life-saving equipment and appropriate tools for their jobs.<\/strong><\/p>\n Special precautions must be used if hazardous chemicals are used or stored at workplace \u2014 lead, silica, asbestos, and wood\/ stone that will be cut and generate dust; Construction materials containing zinc, cadmium, beryllium and mercury.<\/strong><\/p>\n Besides protection from noise and environmental pollution \u2014 the public must also be safeguarded from:<\/strong><\/p>\nFalling through dug-up area \u00b7 electrocution \u00b7 flooding \u00b7 falling objects \u00b7 bridge-span dropping\/ failures \u00b7 crane falling\/ overturning \u00b7 and damage to building from vibrations\/ cave-ins from construction activities.<\/strong><\/p>\nCONTRACT Manager Must Ensure That Contractor Does not Adopt Any SHORT-CUT in this REGARD.<\/em><\/p><\/aside>\nThe SHE\/ ESHS apparatus: \"most large contracts have a well-defined safety, health & environment (SHE) \u2014 also called environmental, social, health and safety (ESHS, with addition of the social factor) \u2014 guideline embedded in the agreement.<\/strong><\/p>\n<aside class=\"note\"> Appointment of a site safety engineer by the contractor is a mandatory requirement in such cases.<\/strong><\/p>\n The Contract Manager shall engage safety experts to carry out frequent SHE audits and mandate correct measures<\/strong>.\"<\/p><\/aside>\n5. Advance payments: \"to enable mobilisation, advance payment(s) are to be given after the signing of the contract \u2014 if provided in the contract \u2014 on the contractor's submission of an unconditional BG in an acceptable form<\/strong>.\"<\/p>\n6. INSURANCES \u2014 the four checks:<\/p>\n\"insurance provisions are valuable risk management tools. The contracting entity must ensure the following<\/strong>:\"<\/p>\na) the insurance policies are in place in accordance with the contract<\/strong>;<\/p>\nb) the coverages are adequate and within the thresholds specified in the contract<\/strong>;<\/p>\nc) the insurance policies contain the essential information \u2014 such as coverage, duration, applicability<\/strong>;<\/p>\nd) due diligence is applied to checking the authenticity of the insurance document and payment of insurance premiums<\/strong>.<\/p>\n<\/div><h2 class=\"src-multi srchead\" data-src=\" C NC \">9.5.2<\/span>Issuing the Notice to Proceed and the Kick-off Meeting<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\">\nThe Consultancy and Non-Consultancy Manuals frame the same stage as \"Issuing Notice to Proceed, Kick-off Meeting and Pre-requisites\"<\/em> \u2014 the service analogue of the Works \"Work Order\" at para 9.6 below.<\/p>\n<h1>9.6 Commencement of Work [W ONLY]<\/span><\/h1>\n<aside class=\"note\">\"after the contract has been signed between the parties and Performance Security is deposited by the contractor \u2014 he should visit the site along with the Contract Manager, to identify any potential problem in relation to site.<\/strong><\/p>\nAfter reviewing the status of prerequisites, the Contract Manager issues a 'work order' to the contractor to 'commence the works'.<\/strong><\/p>\nWORK Order Should Be Issued Within a Reasonable Period \u2014 Say 2 Weeks, but not Later Than 6 Weeks from the Date of the Loa.<\/em><\/p><\/aside>\nThe contractor's three submissions: \"within the stipulated time, the contractor should submit to the Contract Manager for his consent:<\/strong><\/p>\na) THE work program \u2014 including the measures proposed by him for work zone safety and mitigation of environmental impact<\/strong>;<\/p>\nb) THE methods statement which the contractor proposes to adopt for execution of the works<\/strong>; and<\/p>\nc) THE quality assurance plan<\/strong>.\"<\/p>\n<aside class=\"note\">\"the Contract Manager should, on being satisfied with the contractor's submission, provide to the contractor total or partial possession of the site.<\/strong><\/p>\n The contractor will update the work program at intervals stipulated (usually every month) and submit it to the Contract Manager for approval. The updated program should include all variations ordered by the Contract Manager and their effect, if any, on the program.<\/strong><\/p>\nNO Work Shall Be Commenced Unless the Conditions Precedent as Laid Down in Para 1.17-13 [Of this Unified Manual] Have Been FULFILLED.<\/em><\/p><\/aside>\n<h1>9.7 Mobilisation [W ONLY]<\/span><\/h1>\n<aside class=\"note\">\"the commencement of works normally begins with a mobilisation or pre-construction phase \u2014 during which the site is prepared for construction.<\/strong><\/p>\n The mobilisation period should be carefully managed by the contracting parties, given its significance to the successful execution of a contract.<\/strong><\/p>\nThe mobilisation or pre-construction phase can include major activities such as:<\/strong><\/p>\nLand clearance \u00b7 excavation \u00b7 building of access roads to the site \u00b7 work site establishment \u00b7 and construction of accommodation for the contractor's personnel<\/strong>.\"<\/p><\/aside>\n Mobilisation of key resources:<\/strong>\"the Contract Manager must ensure that the technical [and other key resources are mobilised]<\/strong>\u2026\"<\/strong>(and see para 9.11 below on Monitoring Resources Deployed).<\/em><\/p>\n<h1>9.8 Review of Inception Phase [C + NC ONLY]<\/span><\/h1>\nThe Consultancy and Non-Consultancy Manuals provide for a distinct Review of Inception Phase<\/em> \u2014 the point at which the Procuring Entity satisfies itself, on the strength of the Inception Report (due about six weeks after the commencement date \u2014 see Chapter 2, para 2.6.3(c)), that the assignment can be carried out as planned, and that any major inconsistency in the ToR, staffing problems, or deficiency in the Procuring Entity's assistance has been surfaced early.<\/p>\n<aside class=\"note\">This has no counterpart in the Goods or Works Manuals, where the analogous checkpoint is the Work Order<\/strong> and the approval of the Work Program, Method Statement and Quality Assurance Plan<\/strong> (para 9.6 above).<\/em><\/p><\/aside>\n<h1>9.9 Reporting and Monitoring of Progress [C + NC; and W at para 9.4.4]<\/span><\/h1>\nCommon to all four is the requirement of periodic progress reporting, but the instruments differ:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>The reporting instrument<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> WORKS<\/td><td>The fourteen-point monthly MIS progress report<\/strong> \u2014 see para 9.4.4 above<\/td><\/tr><tr class=\"srcmark src-C\" data-src=\" C \"><td>C<\/span> Consultancy<\/td><td>The inception \u00b7 progress \u00b7 interim \u00b7 and final reports<\/strong> \u2014 see Chapter 2, para 2.6.3(c)<\/td><\/tr><tr class=\"srcmark src-NC\" data-src=\" NC \"><td>NC<\/span> Non-consultancy<\/td><td>Reporting against the service Level Agreement (SLA) and key performance indicators<\/strong> \u2014 see para 9.15.4 below<\/td><\/tr><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span> GOODS<\/td><td>Monitoring of supplier performance and obligations<\/strong> \u2014 see para 9.11 below<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>9.10 Issuing Contract Amendments \/ Variations<\/span><\/h1>\nAll four Manuals provide for amendment of the contract during execution. The Works treatment is the most detailed, and is set out at Chapter 6, para 6.10.3-1 of this Unified Manual (Variations in Works Contracts, the Variations Register, and the requirement of the Engineer's prior approval from the Procuring Entity).<\/p>\n<aside class=\"note\">The common principle:<\/strong>amendments must be issued <\/strong>in writing, through a formal procedure specified in the contract, and \u2014 in Works \u2014 <\/strong>tracked in a Variations Register updated monthly and summarised to keep all involved agencies informed.<\/strong><\/p><\/aside>\n<h1>9.11 Obligations Control \u2014 Monitoring Resources Deployed and Enforcing Obligations<\/span><\/h1>\n<\/div><h2>9.11.1<\/span>The Common Object<\/span><\/h2>\n\" Monitoring that key experts and contracted resources are actually employed<\/strong>\"<\/strong>(the C<\/span> and NC<\/span> formulation)<\/em> \u2014 corresponding to W<\/span> paras 7.2.6 (Monitoring Resources Deployed by Contractor) and 7.2.7 (Enforcing Contractor's Obligations), and G<\/span> paras 9.7.4 and 9.7.5 (Monitoring Supplier Performance and Obligations)<\/strong>.<\/p>\n<aside class=\"note\">This is the single most important control in a <\/strong>services contract, because \u2014 as the CS and NC Manuals put it at para 9.1.3 above \u2014 there are <\/strong>no physically\/ tangibly measurable outcomes, and the deployment of the promised key personnel is the principal proxy for quality.<\/p><\/aside>\n<h2>9.11.2<\/span>The Works Apparatus<\/span><\/h2>\nThe Works Manual treats this in two distinct sections:<\/p>\n<ul class=\"lst\"><li>7.2.6 \u2014 monitoring resources deployed by contractor<\/strong>(plant, machinery, and manpower \u2014 cross-referenced to the Plant and Machinery Statement<\/strong> and Man-power Statement<\/strong> in the monthly MIS report at para 9.4.4 items (v) and (vi) above)<\/em>;<\/li><li>7.2.7 \u2014 enforcing contractor's obligations.<\/li><\/ul>\n<h1>9.12 Incentives for Excellence in Contract Execution [C + NC ONLY]<\/span><\/h1>\nThe Consultancy and Non-Consultancy Manuals carry a short section providing for incentives for excellence in contract execution \u2014 the services counterpart of the Works provisions on aligning stakeholder interests at para 9.3 above (bonus, better rating, public recognition, and naming at work sites).<\/p>\n<h1>9.13 Safeguards for Handing Over Procuring Entity Materials\/ Equipment to Contractors<\/span><\/h1>\n<aside class=\"note\">This section appears in all four Manuals. The Works text is reproduced below as the fullest version.<\/p><\/aside>\n<h2>9.13.1<\/span>What May Be Handed Over<\/span><\/h2>\n<aside class=\"note\">\"for performance of certain contracts, the Procuring Entity May have to loan stores, drawings, documents, equipment, and assets (such as accommodation, identity cards and gate passes, and so on) to the contractor.<\/strong><\/p>\n In certain situations, the contractor May also be supplied electricity, water, cranes, and weighing facilities on payment\/ hire basis<\/strong>.\"<\/p><\/aside>\n<h2>9.13.2<\/span>The Bank Guarantee Requirement \u2014 and the Rs 1 lakh waiver<\/span><\/h2>\n<aside class=\"note\">\"whenever stores or prototypes or sub-assemblies are required to be issued to the firm\/ contractor for guidance in fabrication \u2014 these should be issued against an appropriate Bank Guarantee.<\/strong><\/p>\n In addition to the Bank Guarantee, appropriate insurance May be asked for if it is considered necessary.<\/strong><\/p>\nFor low-value items of Less Than Rs. 1,00,000 (Rupees One Lakh) \u2014 or for Sending Spares for Repairs to the Oems \u2014 this Stipulation of the Bank Guarantee May Be Waived; and, if Feasible, an Indemnity Bond May Be TAKEN.<\/em><\/p><\/aside>\n<h2>9.13.3<\/span>The Contractor's Obligations in Respect of Loaned Assets<\/span><\/h2>\n<aside class=\"note\">\"the contractor shall use such property for the execution of the contract and no other purpose whatsoever.<\/strong><\/p>\n These assets shall remain the property of the Procuring Entity \u2014 and the contractor shall take all reasonable care of all such assets.<\/strong><\/p>\n The contractor shall be responsible for all damage or loss from whatever cause caused, while such assets are possessed or controlled by the contractor, staff, workers, or agents<\/strong>.\"<\/p><\/aside>\n<h2>9.13.4<\/span>The Transparency Requirement and the Closing Certificate<\/span><\/h2>\n<aside class=\"note\">pre-declaration: \"as a measure of transparency \u2014 the possibility of provision of such resources by the Procuring Entity should have been announced in the tender document, or at least requested by the contractor in the tender, and written in the contract<\/strong>.\"<\/p>\nthe certificate before final payment:<\/p>\n\"before the final payment or release of PBG\/ SD \u2014 a certificate May be taken from the concerned Department that the contractor has returned all:<\/strong><\/p>\nDocuments \u00b7 drawings \u00b7 protective gear \u00b7 material \u00b7 equipment \u00b7 facilities \u00b7 and assets loaned \u2014 including all id cards and gate passes \u2014 in good condition.<\/strong><\/p>\n Further, it should be certified that payment from the contractor has been received for usage of electricity, water, crane, accommodation, weighing facility, and so on<\/strong>.\"<\/p><\/aside>\n<h1>9.14 Environmental, Social, Health, and Safety (ESHS) Concerns [W ONLY]<\/span><\/h1>\n<h2>9.14.1<\/span>The ESHS Obligation and Its Staffing Consequence<\/span><\/h2>\n<aside class=\"note\">\"in works contracts, attention must be paid to environmental, social, health, and safety (ESHS) considerations \u2014 also termed safety, health, and environmental (SHE) in certain contracts.<\/strong><\/p>\n Such considerations must be indicated from the beginning as mandatory skills or experience in the bid documents.<\/strong><\/p>\n The contractor must ensure that he and his sub-contractors comply with legal and regulatory obligations relating to ESHS.<\/strong><\/p>\n it requires professionals with appropriate skills to be part of the contract's team. Such professionals May be required on a part-time or full-time basis \u2014 depending on the nature of the ESHS risks and impacts, and the role they are performing.<\/strong><\/p><\/aside>\n<h2>9.14.2<\/span>What ESHS Monitoring Involves During Implementation<\/span><\/h2>\n<aside class=\"note\">\"during contract implementation, the primary focus is to ensure that the contractual ESHS provisions are continuously adhered to. This will involve:<\/strong><\/p>\n\u2022 the timely preparation and\/ or review of documentation \u2014 such as the contractor's plans and procedures;<\/strong><\/p>\n\u2022 undertaking of inspection, supervision, and\/ or audit;<\/strong><\/p>\n\u2022 attending of progress meetings;<\/strong><\/p>\n\u2022 reporting; And<\/strong><\/p>\n\u2022 resolving issues that May occur<\/strong>.\"<\/p><\/aside>\n<h2>9.14.3<\/span>Safety of the Public and Labour<\/span><\/h2>\n\"the safety of all activities (including traffic safety) in and around the site, and safety of the public and labour, should be ensured by the contractor \u2014 as per prevalent labour laws\/ regulations and the conditions of contract.<\/strong><\/p>\n<aside class=\"note\"> The workmen must be trained and provided protective gear, life-saving equipment, and appropriate tools for their jobs<\/strong>.\"<\/p><\/aside>\nthe hazardous substances: \"special precautions must be used if hazardous chemicals are used or stored at the workplace \u2014 lead, silica, asbestos, and wood\/ stone that will be cut and generate dust; And construction materials containing zinc, cadmium, beryllium, and mercury<\/strong>.\"<\/p>\nthe public-protection list: \"besides protecting the public from noise and environmental pollution \u2014 they must be safeguarded from:<\/strong><\/p>\n<aside class=\"note\">Falls in dug-up areas \u00b7 electrocution \u00b7 flooding \u00b7 falling objects \u00b7 bridge-span dropping\/ failures \u00b7 crane falling\/ overturning \u00b7 and damage to building from vibrations\/ cave-ins from construction activities.<\/strong><\/p>\nTHE Contract Manager Must Ensure That the Contractor Does not Adopt Any Shortcut in this REGARD.<\/em><\/p><\/aside>\n<h1>9.15 Scope and Quantity Control<\/span><\/h1>\n<h2>9.15.1<\/span>Quantity Tolerance \u2014 Minor Short\/ Excess Deliveries [G ONLY]<\/span><\/h2>\n<aside class=\"note\">\"minor shortfall\/ excess deliveries in the last\/ final consignment are unavoidable due to the manufacturing and supply chain vagaries.<\/strong><\/p>\nAlthough to close the contract an amendment May require to be issued \u2014 yet, to simplify the process, the consignee receiving the material can be authorised to treat the contract as completed, provided the deliveries are:<\/strong><\/p>\nSHORT\/ Excess Up to 5 per Cent of the Total Value of the Contract, or Rs. 5 Lakhs \u2014 Whichever is less.<\/em><\/p>\n Payment will be made without the issue of a formal contract amendment, and without reference to the ultimate user\/ indentor. Only the supplied quantity shall be paid for, as per the terms of the contract.<\/strong><\/p>\nThis Shall not Be Applicable to Indivisible Items or Machinery and PLANT.<\/em><\/p><\/aside>\n<h2>9.15.2<\/span>The Option Clause at the Contract Management Stage [G ONLY]<\/span><\/h2>\n1. The right: \"under this clause, the purchaser retains the right to place orders for an additional quantity up to a specified percentage of the originally contracted quantity \u2014 at the same rate and terms of the contract \u2014 during the currency of the contract.<\/strong><\/p>\n<aside class=\"note\"> This clause and percentage should be part of the tender document and the contract, and ideally should not exceed 25\u201330%.<\/strong><\/p>\n Approval should be obtained from the ca (who originally approved the tender decision) to exercise the option clause, based on the value of the contract and the increased quantity.<\/strong><\/p>\n In case the recalculated value of the contract goes beyond the delegation of powers of the original ca \u2014 approval of the ca for the enhanced value May be taken<\/strong>.\"<\/p><\/aside>\n2. The eight conditions governing operation of the option clause:<\/p>\n<aside class=\"note\">\"additional demands should be available for coverage, and over-provisioning May be avoided by keeping informed the officers concerned with provisioning\/ tender evaluation for the next cycle of procurement.<\/strong>\"<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Condition<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>\"if the quantity has been increased under the option clause \u2014 the negative option clause should not be invoked thereafter, or vice versa<\/strong>.\"<\/td><\/tr><tr><td>b<\/td><td>\"in case of a decrease in the ordered quantity \u2014 it would be fair to allow the firm to supply work-in-progress or goods already put up for inspection<\/strong>.\"<\/td><\/tr><tr><td>c<\/td><td>\"there should be no declining trend in the price of the stores \u2014 as evidenced by the fact that no order has since been placed at lower rates, and no tender has been opened since the time offers have been received at lower rates \u2014 even if not finalised<\/strong>.\"<\/td><\/tr><tr><td>d<\/td><td>\"if the option clause exists during the provisioning of the next cycle, and tender evaluation in the next cycle shows an increasing price trend \u2014 the application of the option clause must be positively considered. The contract management authority must also keep an eye on delivery against the contract. If other conditions are satisfied, the option clause must be exercised<\/strong>.\"<\/td><\/tr><tr><td>e<\/td><td>\"the option clause is normally exercised after receipt of 50 (fifty) per cent quantity. If the delivery period is going to expire and other conditions are fulfilled \u2014 it can be exercised even earlier<\/strong>.\"<\/td><\/tr><tr><td>f<\/td><td>\"the option clause shall be exercised during the currency of the contract \u2014 so that the contractor has reasonable time\/ notice for executing such an increase. It can be exercised even if the quantity of the original order is completed before the original last date of delivery. If not already agreed upon, the delivery period shall be fixed for the additional quantity on the lines of the delivery period in the original order \u2014 this will satisfy the requirement of giving reasonable notice to the supplier<\/strong>.\"<\/td><\/tr><tr><td>g<\/td><td>\"this provision can also be exercised in case of PAC\/ single supplier OEM cases<\/strong>.\"<\/td><\/tr><tr><td>h<\/td><td>\"however, where parallel contracts on multiple suppliers are available \u2014 care should be taken in exercising the option clause, so that the original tender decision of splitting quantities and differential pricing is not upset or vitiated. Other things being equal, the supplier with the lower rate should first be considered for the option quantity<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h2 class=\"src-multi srchead\" data-src=\" C NC \">9.15.3<\/span>Scope of Services<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\">\n1. The performance obligation:<\/p>\n<aside class=\"note\">\"the contractor must perform\/ deliver services of the description, scope\/ quantum, performance standards and quality outlined in the contract \u2014 during the contract period specified therein.<\/strong><\/p>\n The services shall conform to performance and quality standards as stipulated in the contract \u2014 or as per the best standards in the market, where not so specified.<\/strong><\/p>\n The services shall include all incidental works\/ goods, and such other work-elements not mentioned explicitly in this contract \u2014 but that can be reasonably inferred from the contract as being required for attaining completion of the services<\/strong>.\"<\/p><\/aside>\n2. The standard of performance:<\/p>\n<aside class=\"note\">\"the contractor shall perform the services and its obligations with all due diligence, efficiency, and economy \u2014 observing sound management practices, and employ appropriate advanced technology and safe methods as per the performance standards and quality control parameters stipulated in the contract.<\/strong><\/p>\n for matters where the contract does not specify any standard \u2014 the services delivered shall conform to national\/ international standards, or generally accepted professional techniques and practices<\/strong>.\"<\/p><\/aside>\n<\/div><h2 class=\"src-multi srchead\" data-src=\" C NC \">9.15.4<\/span>Performance Standards and Quality Control C<\/span>NC<\/span> \u2014 and the 0.5% damages<\/span><\/h2><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\">\n1. The notification of defects:<\/p>\n<aside class=\"note\">\"the Procuring Entity shall check the quality of the services and shall inspect the contractor's performance according to the contract.<\/strong><\/p>\n The Procuring Entity shall promptly notify the contractor of any identified defects \u2014 requesting the correction of the notified defect within a reasonable time<\/strong>.\"<\/p><\/aside>\n2. The cost-of-correction deduction:<\/p>\n<aside class=\"note\">\"if the contractor has not corrected the notified defect within the time stipulated in the Procuring Entity's notice \u2014 the Procuring Entity shall assess the cost of having the defect corrected.<\/strong><\/p>\n Without prejudice to any of its other remedies under this contract or applicable law \u2014 the Procuring Entity shall be legally entitled to deduct such cost from the contract's payments \u2014 together with the damages for the shortfall in performance, a sum equivalent to the percentage stipulated in the contract<\/strong>.\"<\/p><\/aside>\n3. Damages for shortfall in performance \u2014 the 0.5% Rule:<\/p>\n<aside class=\"note\">\"THE Procuring Entity Shall \u2014 Without Prejudice to Other Rights and Remedies under the Contract \u2014 Recover as Damages for the Shortfall in Performance, but not as a PENALTY:<\/em><\/p>\n0.5 (Half) per Cent (or Any Other Percentage Prescribed) of the Delivered Price (Including Elements of GST & Freight) of the Defective Services \u2014 Without Having to Prove Actual Loss INCURRED.<\/em><\/p>\nNote the phrase \"but not as a penalty\"<\/em> \u2014 this is the standard formulation for liquidated damages under Indian contract law, distinguishing a genuine pre-estimate of loss from an unenforceable penalty.<\/p><\/aside>\n<\/div><h2>9.15.5<\/span>Service Level Agreement (SLA) [NC ONLY]<\/span><\/h2>\nThe Non-Consultancy Manual carries a distinct section on the Service Level Agreement (para 9.3.3), which has no counterpart in the Consultancy Manual's scope-control section \u2014 consistent with the NC emphasis on measurable performance standards and KPIs (see Chapter 2, para 2.7.2(d)).<\/p>\n<h1 data-src=\"G\">9.16 Quality Assurance and Inspections<\/span>G<\/span>fullest text<\/span><\/h1>\n<h2>9.16.1<\/span>The Three Components of Quality Assurance<\/span><\/h2>\n<aside class=\"note\">\"in the context of procurement of goods, the quality assurance (QA) process is needed to provide adequate confidence that a procured product will satisfy the standards of quality and serve the purpose for which it is being procured.<\/strong><\/p>\nQA consists of three components:<\/strong><\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Component<\/th><th>How it is done<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>defining quality standards<\/td><td>\"the description and TS define the quality standards expected from the product<\/strong>.\"<\/td><\/tr><tr><td>b<\/td><td>planning assurance of quality<\/td><td>\"by specifying the qualification criteria for the suppliers \u2014 to ensure that they have the technical, infrastructure and financial capabilities to meet the required quality standards. Specifications also lay down quality control requirements \u2014 to indicate parameters, target values, tolerances, and methods of measurement. This also involves laying down the type of inspection agency for inspection<\/strong>.\"<\/td><\/tr><tr><td>c<\/td><td>measurement of quality<\/td><td>\"done through a scheme of inspections at the contract management stage \u2014 which lays down the actual process of inspection<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>9.16.2<\/span>Inspections \u2014 Measuring Quality Standards<\/span><\/h2>\n\"the stages and modes of inspection May vary depending on:<\/strong><\/p>\n<aside class=\"note\">The nature of the goods \u00b7 the total value of the contract \u00b7 the location of the supplier \u00b7 the location of the user<\/strong>, and so on.\"<\/p><\/aside>\n<h2>9.16.3<\/span>Types of Inspection<\/span><\/h2><h3>A. Pre-dispatch Inspection<\/span><\/h3>\na) stage inspection and its purpose:<\/p>\n<aside class=\"note\">\"a pre-dispatch inspection May be conducted either during various stages of the production process (which is known as stage inspection) \u2014 or on the production of the finished products, but before the dispatch of the goods from the supplier's premises.<\/strong><\/p>\n Stage inspection May be used for highly technical goods \u2014 whose quality of the manufacturing process is likely to have a considerable effect on the final quality and durability of the goods.<\/strong><\/p>\nEven After PRE-DISPATCH Inspections, These Materials Should Be Inspected Again upon Receipt as a Matter of Abundant PRECAUTION.<\/em><\/p><\/aside>\nB) who inspects: \"inspection of the materials before dispatch shall be carried out by the inspection agency nominated in the contract, or by its representative, at the premises of the supplier \u2014 in accordance with the inspection procedure laid down and incorporated in the purchase order<\/strong>.\"<\/p>\nc) who pays for testing: \"the supplier should bear the testing charges for samples \u2014 and this should be made clear at the enquiry stage itself, to avoid claims later or affect his position in the comparative statement of offers. Any special testing involving significant financial implications shall be settled prior to placement of the order \u2014 and such costs should form part of the evaluation<\/strong>.\"<\/p>\nd)\u2013g) offshore supplies and the waiver route:<\/p>\n<ul class=\"lst\"><li>\"the Procuring Entity May depute its representative or a third-party inspection agency to the supplier's manufacturing premises to carry out\/ witness inspection and testing, performance testing \u2014 at its discretion<\/strong>\";<\/li><li>\"alternatively, the Procuring Entity shall retain an option to waive the above and accept the material based on the supplier's internal test report, guarantee and fitment certificate. In this regard, the written approval of the hod of the indenting Department should be obtained, and the reasons for it should be recorded<\/strong>\";<\/li><li>\"whenever the inspection is carried out at the supplier's manufacturing premises \u2014 an inspection on receipt of goods at the Procuring Entity shall also be carried out by an officer of the indenting Department or a third-party inspection agency<\/strong>.\"<\/li><\/ul>\nh) the inspector-hospitality prohibition \u2014 a direct instruction from DoE:<\/p>\n<aside class=\"note\">\"it has been brought to the notice of the Department of Expenditure that the contracts signed with suppliers by some of the ministries\/ departments have clauses of pre-inspection at the firm's premises \u2014 where there is a provision that the suppliers or the vendors will pay for the travel, stay, hospitality and other expenses of the inspecting officials.<\/strong><\/p>\nThis is not in Keeping with the Need to Safeguard the Independence of the Inspecting Teams. Such Provisions in Contracts Need to Be Discouraged, So That Inspections are not COMPROMISED.<\/em><\/p>\n Necessary steps May be taken to avoid such provisions in the contracts with suppliers\/ vendors strictly<\/strong>.\" (See also Chapter 3, para 3.8 \u2014 Conduct of Public Servants, Risk 1 on Hospitality.)<\/em><\/p><\/aside>\n<h3>B. Inspection of Goods on Receipt at Consignee\/ User's Site<\/span><\/h3>\n<aside class=\"note\">\"post-delivery inspection is carried out upon receipt of goods before acceptance.<\/strong><\/p>\n This should be typically done for goods that are available off-the-shelf and are bis-marked \u2014 all final goods that May be directly consumed or utilised on delivery (excluding machinery installations and so on), and for which detailed inspection [is not otherwise warranted]<\/strong>.\"<\/p><\/aside>\n<h2>9.16.4<\/span>Types of Inspection Agencies<\/span><\/h2>\n<aside class=\"note\">the governing Rule on changing the agency:<\/p>\n\"normally, inspection modalities or agencies for inspections specified in the contract should not be changed.<\/strong><\/p>\n In rare cases, when this becomes inescapable \u2014 it should be done with the approval of the ca, justifying the rare circumstances, and ensuring that no undue benefit accrues to the contractor<\/strong>.\"<\/p><\/aside>\n<h3>1.<\/span>Internal Inspection Authorities<\/span><\/h3>\n<aside class=\"note\">\"wherever technical expertise is available in-house \u2014 an internal officer of the indenting Department is nominated for inspection.<\/strong><\/p>\nTHE Consignee Should Be the Final Authority for the Acceptance of GOODS.<\/em><\/p><\/aside>\n<h3>2.<\/span>External Inspecting Authorities<\/span><\/h3>\nA) third-party inspection and the reserved right:<\/p>\n<aside class=\"note\">\"in case the Procuring Entity does not have the technical expertise \u2014 or for other relevant reasons \u2014 the inspection May also be entrusted to a third-party inspection authority.<\/strong><\/p>\nTHE Procuring Entity, However, Retains the Right to Reject the Consignment \u2014 Even if third-PARTY Inspection Authorities Have Cleared IT.<\/em><\/p><\/aside>\nb) external laboratory testing \u2014 the approved list and the five guidelines:<\/p>\n<aside class=\"note\">\"sometimes, it becomes necessary to conduct a type test, acceptance test, or special test at external laboratories \u2014 when facilities for these tests are not available in-house with the supplier, or if carrying out confirmatory tests is considered desirable before accepting the goods.<\/strong><\/p>\n The Procuring Entity should draw up a list of approved laboratories for this purpose \u2014 to which the samples drawn from the lots offered by the supplier can be sent for tests.<\/strong><\/p>\n The list should also contain approved laboratories which can be used as referral\/ appellate laboratories for retesting \u2014 when samples tested at one laboratory are decided to be re-tested<\/strong>.\"<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Guideline<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>\"external testing May invariably be done by nationally accredited or reliable laboratories \u2014 preference being given to the National Test House (NTH). For testing the samples drawn from the lots offered by the supplier \u2014 an inspection agent qualified to conduct random sampling in accordance with quality assurance requirements should make the selection of samples<\/strong>.\"<\/td><\/tr><tr><td>ii<\/td><td>\"test reports must contain the values obtained in the tests \u2014 besides fail\/ pass results. The laboratory must preserve the sample and test records for a period of three years<\/strong>.\"<\/td><\/tr><tr><td>iii<\/td><td>\"the Department should lay down a liability statement for costs expended on tests, dispatch of samples, transportation costs, test charges, and so on<\/strong>.\"<\/td><\/tr><tr><td>iv<\/td><td>\"in cases where the samples are to be tested at the supplier's cost because of the non-availability of his own testing arrangements \u2014 the responsibility of depositing the testing fees would rest with the supplier<\/strong>.\"<\/td><\/tr><tr><td>v<\/td><td>the default cost-allocation Rule and its exception \u2014 see below<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">The Default COST-ALLOCATION Rule:<\/p>\n\"normally, unless otherwise intended in the contract:<\/strong><\/p>\n\u2022 charges of routine testing prior to dispatch of materials are to be borne by the supplier; And<\/strong><\/p>\n\u2022 charges of testing of materials after receipt by the consignee are to be borne by the procuring agency.<\/strong><\/p>\n The contract should clearly State the responsibility for the cost of materials expended in tests, and charges for special tests \u2014 e.g., type tests or tests at external labs.<\/strong><\/p>\nEven Where the Procuring Entity is Responsible for Testing Charges \u2014 if the Material Fails in the Test, the Charges Shall Become the Responsibility of the SELLER.<\/em><\/p><\/aside>\n<h3>3.<\/span>Joint Inspection on Complaint<\/span><\/h3>\n<aside class=\"note\">\"in case a written complaint is received from the supplier disputing the rejection of goods by the Procuring Entity \u2014 it should be jointly investigated by a team consisting of:<\/strong><\/p>\n1. An authorised representative of the Procuring Entity;<\/strong><\/p>\n2. A senior representative of the inspecting agency who is conversant with the goods; And<\/strong><\/p>\n3. An authorised representative of the supplier.<\/strong><\/p>\nIN Case the Firm Fails to Associate with a Joint Inspection \u2014 IT Should Be Held with the PRE-INSPECTING AGENCY.<\/em><\/p><\/aside>\n<h2>9.16.5<\/span>Issue of Inspection Report<\/span><\/h2>\n\"after satisfactory inspection and tests \u2014 the acceptable goods shall be stamped, labelled<\/strong>\u2026\"<\/strong>(and the Inspection Report issued accordingly; see also the Goods Receipt and Inspection Report<\/strong> at Annexure 25 of the Goods Manual.)<\/em><\/p>\n<h2>9.16.6<\/span>Material Put Up for Inspection Towards the End of Delivery<\/span><\/h2>\nA distinct sub-section of the Goods Manual (9.4.6) governs the treatment of material offered for inspection at or near the expiry of the delivery period \u2014 read with para 9.3.11 (Handling Deliveries at the Last Moment or after Expiry of the Delivery Period), covered in Part B of this chapter.<\/p>\n<h2>9.16.7<\/span>Approval of Acceptable Deviations<\/span><\/h2>\nGoods para 9.4.7 provides for the formal approval of acceptable deviations discovered at inspection \u2014 the contract-management counterpart of the minor vs substantive deviation<\/em> test at the evaluation stage (Chapter 7 Part A, para 7.15.4).<\/p>\n<h1>9.17 Warranty Clause [G ONLY]<\/span><\/h1>\n<h2>9.17.1<\/span>The Warranty and Its Survival<\/span><\/h2>\n<aside class=\"note\">\"if included, in the case of works and capital equipment \u2014 the warranty clause in the contract warrants that goods supplied by the contractor would continue to conform to the description and quality during the specified warranty period:<\/strong><\/p>\nUSUALLY, 24 Months After Delivery, or 18 Months from the Date of Placement in Service \u2014 Whichever is SOONER.<\/em><\/p>\n Obligations of the contractor under the warranty clause shall survive \u2014 even though the goods May have been inspected, accepted, installed\/ commissioned, and paid for by the Procuring Entity, or the contract is terminated for any reason whatsoever.<\/strong><\/p>\nWhen no warranty clause is called for: \"in the procurement of goods other than capital equipment \u2014 and in the case of low-value capital goods, say up to rupees one lakh \u2014 a warranty clause is not called for<\/strong>.\"<\/p><\/aside>\n<h2>9.17.2<\/span>Notification of Defect<\/span><\/h2>\n<aside class=\"note\">\"the Procuring Entity shall promptly notify in writing to the contractor, during the period above \u2014 if the said goods\/ stores\/ articles are discovered not to conform to the description and quality, or have deteriorated, otherwise than by fair wear and tear.<\/strong><\/p>\n (The decision of the Procuring Entity in that behalf being final and conclusive.)<\/strong>\"<\/p><\/aside>\n<h2>9.17.3<\/span>The 14-Day Rectification Obligation<\/span><\/h2>\n<aside class=\"note\">\"upon receipt of such notice, the contractor shall \u2014 within 14 days (or within any other period, if stipulated in the contract) \u2014 expeditiously repair or replace the defective goods or parts thereof, free of cost, at the ultimate destination.<\/strong><\/p>\n The contractor shall take over the replaced parts\/ goods after providing their replacements \u2014 and no claim shall lie on the Procuring Entity for such replaced parts\/ goods thereafter<\/strong>.\"<\/p><\/aside>\n<h2>9.17.4<\/span>THE WARRANTY PENALTY REGIME \u2014 0.5% per week, capped at 5%<\/span><\/h2>\n<aside class=\"note\">\"A Penalty of 0.5% (Half per Cent, or as Specified in the Contract) of the Contract Value for Every Week of Delay in Response Time Beyond the Specified Time \u2014 Shall Be Recoverable from the Performance\/ Warranty GUARANTEE.<\/em><\/p>\nTHE Maximum Penalty for Warranty Failure Will Be 5% (Five per Cent) of the Contract Value During the Whole Warranty PERIOD.<\/em><\/p>\n If there is further such delay after reaching this limit \u2014 the Procuring Entity shall be entitled to encashment of the whole of performance\/ warranty guarantee bonds \u2014 besides recording the adverse performance of the contractor for future tenders<\/strong>.\"<\/p><\/aside>\n<h2>9.17.5<\/span>Warranty on Rectified\/ Replaced Goods \u2014 the no-extension rule<\/span><\/h2>\n<aside class=\"note\">\"IN Case of Any Rectification of a Defect or Replacement of Any Defective Goods During the Warranty Period \u2014 the Warranty for the Rectified\/ Replaced Goods Shall Remain Till the Original Warranty PERIOD.<\/em><\/p>\nThat is, replacement does not<\/strong> restart or extend the warranty clock.<\/em><\/p><\/aside>\n<h2>9.17.6<\/span>The 21-Day Breach Trigger<\/span><\/h2>\n<aside class=\"note\">\"IF the Contractor \u2014 Having Been Notified \u2014 Fails to Rectify\/ Replace the DEFECT(S) Within 21 Days (or Within Any Other Period, if Stipulated in the CONTRACT):<\/em><\/p>\nIT Shall Amount to a Breach of Contract for Default \u2014 and the Procuring Entity Shall Avail Any or All Remedial ACTION(S) Thereunder, Including Forfeiture of Warranty\/ Performance Bank GUARANTEE.<\/em><\/p><\/aside>\n<h1>Appendix to Chapter 9 \u2014 Part a: Points of Difference<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Chapter number and title<\/td><td>G: Ch. 9 Contract Management \u00b7 W: Ch. 7 *Execution and Monitoring of Works and Quality Assurance<\/strong> \u00b7 C: Ch. 10 <\/em>Monitoring\u2026 \u00b7 NC: Ch. 9 *Monitoring\u2026<\/strong><\/td><\/tr><tr><td>2<\/td><td>Number of heads under contract management<\/td><td>G: 8 \u00b7 W: 7 \u00b7 C and NC: 5 (with nine sub-heads under Contract Administration)<\/em><\/td><\/tr><tr><td>3<\/td><td>\"Post-contract evaluation\" as a distinct head<\/td><td>c + nc only<\/td><\/tr><tr><td>4<\/td><td>The six ways poor project management \"costs the nation\"<\/strong>(incl. \"creates a culture of acceptance of delay\" and \"monetisation of higher risks perceived by contractors\")<\/em><\/td><td>W ONLY<\/td><\/tr><tr><td>5<\/td><td>Why services contracts need more intense monitoring \u2014 \"lack of physically\/ tangibly measurable outcomes\"; Management by Exception; counterpart Project Manager<\/td><td>c + nc only<\/td><\/tr><tr><td>6<\/td><td>contract Monitoring Committee (CMC)<\/strong> \u2014 Rule 205; at least three members; CEC members may be reused; outside experts at Procuring Entity's cost; six responsibilities incl. power to levy LD<\/strong> and accept\/ reject any part<\/strong><\/td><td>c + nc only<\/td><\/tr><tr><td>7<\/td><td>Appointing another qualified consultant to assist the CMC in complex assignments<\/td><td>c + nc only<\/td><\/tr><tr><td>8<\/td><td>Aligning the interest of the stakeholders<\/strong> \u2014 incentive structure; pecuniary and non-pecuniary; naming the contractor and project-in-charge publicly at work sites<\/strong>; recognition with \"long shelf life\"<\/td><td>W ONLY<\/td><\/tr><tr><td>9<\/td><td>Principle of Proportionality<\/strong> \u2014 \"one size does not fit all\"; too many checks stifle innovation, too little control produces \"an undisciplined crisis management culture\"<\/td><td>W ONLY<\/td><\/tr><tr><td>10<\/td><td>The Contract Manager \u2014 the six alternative titles; single person for small contracts, team for large; quarterly\/ monthly monitoring by the Works Committee with status report to the Secretary<\/td><td>W ONLY<\/td><\/tr><tr><td>11<\/td><td>The fourteen-point monthly MIS Progress Report<\/strong> \u2014 incl. named manpower statement<\/strong>, colour progress photographs, hold-ups and disputes to be highlighted<\/td><td>W ONLY<\/td><\/tr><tr><td>12<\/td><td>The photograph\/ video system as \"a permanent record of the project for posterity\u2026 in case needed for litigation or enquiry\/ investigation\"<\/td><td>W ONLY<\/td><\/tr><tr><td>13<\/td><td>Project management software named \u2014 MS PPM and Oracle Primavera P6; PMI-certified contract managers<\/td><td>W ONLY<\/td><\/tr><tr><td>14<\/td><td>The six prerequisites to commencement<\/strong> \u2014 land acquisition, permits (with the delay-claim warning), quarries and borrow areas, safety at work site, advance payments, insurances<\/td><td>W ONLY<\/td><\/tr><tr><td>15<\/td><td>\"All or most pre-requisites shall be fulfilled before award of the LoA\"<\/td><td>W ONLY<\/td><\/tr><tr><td>16<\/td><td>Commencement of Work<\/strong> \u2014 Work Order within 2 weeks but not later than 6 weeks from LoA<\/strong>; the three contractor submissions (Work Program, Method Statement, QA Plan); possession of site<\/td><td>W ONLY<\/td><\/tr><tr><td>17<\/td><td>Mobilisation as a distinct pre-construction phase<\/td><td>W ONLY<\/td><\/tr><tr><td>18<\/td><td>Review of Inception Phase<\/td><td>c + nc only<\/td><\/tr><tr><td>19<\/td><td>Incentives for Excellence in Contract Execution<\/td><td>c + nc only<\/td><\/tr><tr><td>20<\/td><td>Safeguards for handing over materials \u2014 the Rs 1 lakh BG waiver and indemnity bond alternative; certificate on return of ID cards and gate passes; payment for electricity\/ water\/ crane<\/td><td>Common \u2014 W text fullest<\/td><\/tr><tr><td>21<\/td><td>ESHS\/ SHE<\/strong> \u2014 mandatory skills in Bid Documents; site safety engineer mandatory; frequent SHE audits; the hazardous-substances list; the public-protection list<\/td><td>W ONLY<\/td><\/tr><tr><td>22<\/td><td>Quantity tolerance \u2014 5% of contract value or Rs 5 lakh whichever is less; not applicable to indivisible items or machinery and plant<\/td><td>G ONLY<\/td><\/tr><tr><td>23<\/td><td>The eight conditions governing the Option Clause<\/strong> \u2014 no reverse invocation; exercise normally after 50% receipt; no declining price trend; must be exercised during currency; care with parallel contracts<\/td><td>G ONLY<\/td><\/tr><tr><td>24<\/td><td>Scope of Services \u2014 \"such other work-elements not mentioned explicitly but that can be reasonably inferred\"<\/td><td>c + nc only<\/td><\/tr><tr><td>25<\/td><td>Damages for shortfall in performance \u2014 0.5% of delivered price \"but not as a penalty\", without having to prove actual loss<\/td><td>c + nc only<\/td><\/tr><tr><td>26<\/td><td>Service Level Agreement as a distinct section<\/td><td>nc only<\/td><\/tr><tr><td>27<\/td><td>The three components of Quality Assurance (defining, planning, measuring)<\/td><td>G ONLY<\/td><\/tr><tr><td>28<\/td><td>Stage inspection; \"even after pre-dispatch inspections, materials should be inspected again upon receipt as a matter of abundant precaution\"<\/td><td>G ONLY<\/td><\/tr><tr><td>29<\/td><td>The prohibition on suppliers paying for inspectors' travel, stay and hospitality<\/td><td>G ONLY<\/td><\/tr><tr><td>30<\/td><td>\"The consignee should be the final authority for the acceptance of goods\"<\/td><td>G ONLY<\/td><\/tr><tr><td>31<\/td><td>\"The Procuring Entity retains the right to reject the consignment even if third-party inspection authorities have cleared it\"<\/td><td>G ONLY<\/td><\/tr><tr><td>32<\/td><td>External testing \u2014 preference to the National Test House; test reports must contain values not just fail\/pass; laboratory must preserve sample and records for three YEARS; referral\/ appellate laboratories<\/td><td>G ONLY<\/td><\/tr><tr><td>33<\/td><td>The default testing-cost rule (supplier pre-dispatch, procuring agency post-receipt) \u2014 and the exception that if the material FAILS, the charges become the seller's<\/td><td>G ONLY<\/td><\/tr><tr><td>34<\/td><td>Joint Inspection on Complaint \u2014 the three-member team; if the firm fails to associate, it is held with the pre-inspecting agency<\/td><td>G ONLY<\/td><\/tr><tr><td>35<\/td><td>Warranty Clause \u2014 24 months after delivery or 18 months from placement in service whichever sooner; obligations survive acceptance and even termination; 14-day rectification; 0.5% per week capped at 5%; replacement warranty runs only to the ORIGINAL warranty period; 21-day failure = breach<\/td><td>G ONLY<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 9 \u2014 part a<\/p>\n<aside class=\"note\">Next:<\/strong>Chapter 9 \u2014 part b: Time control, cost control, logistics and closure<\/strong> \u2014 Delivery Period \u00b7 Delays in Delivery\/ Execution \u00b7 Extension of Delivery and Extension of Time (EOT)<\/strong> \u00b7 Performance Notice \u00b7 Force Majeure<\/strong> \u00b7 Denial Clause<\/strong> \u00b7 Liquidated Damages, quantum and waiver<\/strong> \u00b7 Handling deliveries after expiry of the delivery period \u00b7 Compensation Events<\/strong> \u00b7 Time at Large<\/strong> \u00b7 Prices, Taxes and Statutory Variation \u00b7 Passing of bills and Payments \u00b7 Logistics: Transportation, Transfer of Title, Insurance, Receipt of Consignment, Storage and Issue [G only]<\/strong> \u00b7 Closure of Contract and its four reconciliations W<\/span> \u00b7 <\/strong>Concluding the Assignment and Post-Contract Review C<\/span>NC<\/span>.<\/p><\/aside>Part II<\/span>Time Control, Cost Control, Logistics and Closure<\/em><\/p>\nMerging: Goods Ch. 9<\/strong> (paras 9.3, 9.5, 9.6, 9.7.6) \u00b7 Works Ch. 7<\/strong> (paras 7.4, 7.5, 7.6) \u00b7 Consultancy Ch. 10<\/strong> (paras 10.4, 10.5, 10.6) \u00b7 Non-Consultancy Ch. 9<\/strong> (paras 9.4, 9.5, 9.6)<\/em><\/p><h2>Concordance for Chapter 9 \u2014 Part B<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>G<\/th><th>W<\/th><th>C<\/th><th>NC<\/th><\/tr><\/thead><tbody><tr><td>9.18<\/td><td>Delivery Period; Terms of Delivery<\/td><td>9.3.1, 9.3.2<\/td><td>7.4.1, 7.4.2<\/td><td> \u2014 <\/td><td>9.4.1<\/td><\/tr><tr><td>9.19<\/td><td>Delays in Delivery\/ Execution<\/td><td>9.3.3<\/td><td>7.4.5<\/td><td>10.4.1<\/td><td>9.4.2<\/td><\/tr><tr><td>9.20<\/td><td>Extension of Delivery \/ Extension of Time (EOT)<\/td><td>9.3.4<\/td><td>7.4.6<\/td><td>10.4.2<\/td><td>9.4.3<\/td><\/tr><tr><td>9.21<\/td><td>Performance Notice<\/td><td>9.3.5<\/td><td>7.4.9<\/td><td>10.4.3<\/td><td>9.4.4<\/td><\/tr><tr><td>9.22<\/td><td>Force Majeure (FM)<\/td><td>9.3.6<\/td><td>7.4.4<\/td><td>10.4.9<\/td><td>9.4.10<\/td><\/tr><tr><td>9.23<\/td><td>Denial Clause (DC)<\/td><td>9.3.7<\/td><td>7.4.8<\/td><td>10.4.4<\/td><td>9.4.5<\/td><\/tr><tr><td>9.24<\/td><td>Liquidated Damages, Quantum and Waiver<\/td><td>9.3.8\u20139.3.10<\/td><td>7.4.7<\/td><td>10.4.5\u201310.4.8<\/td><td>9.4.6\u20139.4.9<\/td><\/tr><tr><td>9.25<\/td><td>Handling Deliveries at the Last Moment\/ After Expiry<\/td><td>9.3.11<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.26<\/td><td>Compensation Events<\/td><td> \u2014 <\/td><td>7.4.10<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.27<\/td><td>Time At Large<\/td><td> \u2014 <\/td><td>7.4.11<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.28<\/td><td>Cost Control \u2014 Prices, Taxes and Payments<\/td><td>9.5<\/td><td>7.5<\/td><td>10.5<\/td><td>9.5<\/td><\/tr><tr><td>9.29<\/td><td>Electronic Bill (e-Bill) Processing System<\/td><td> \u2014 <\/td><td>7.5.8<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.30<\/td><td>Logistics: Transportation, Receiving, Storage and Issue<\/td><td>9.6<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.31<\/td><td>Closure of Contract<\/td><td>9.7.6<\/td><td>7.6<\/td><td>10.6<\/td><td>9.6<\/td><\/tr><tr><td>9.32<\/td><td>Concluding the Assignment and Post-Contract Review<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>10.6<\/td><td>9.6<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>9.18 Delivery Period and Terms of Delivery<\/span><\/h1>\n<h2 class=\"src-G srchead\" data-src=\" G \">9.18.1<\/span>The Delivery Period Must Be Specific<\/span>G<\/span><\/h2><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\n<aside class=\"note\">\"the period FOR delivery of the ordered goods, and completion of any allied service(s) thereof \u2014 such as installation and commissioning of the equipment, operators' training, and so on \u2014 are to be properly specified in the contract with definite dates.<\/strong><\/p>\nAND These Shall Be Deemed to Be the Essence of the CONTRACT.<\/em><\/p>\n The delivery period stipulated in contracts should be specific and practical. Vague and ambiguous terms should be avoided<\/strong>.\"<\/p><\/aside>\n<\/div><h2 class=\"src-G srchead\" data-src=\" G \">9.18.2<\/span>Terms of Delivery Determine When Title Passes<\/span>G<\/span><\/h2><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\n<aside class=\"note\">\"terms of delivery (for, FOB, CIF, CFR, and so on), inter alia, determine the delivery point of the ordered goods \u2014 from where the purchaser is to receive\/ collect the goods.<\/strong><\/p>\nIT Also Decides the Legally Critical Issue of When the 'Titles of the Goods' Have Passed to the PURCHASER.<\/em><\/p>\n The delivery period is to be read in conjunction with the terms of delivery. Therefore, the delivery is taken to have been made at the time when goods reach the delivery point as per the delivery terms<\/strong>.\"<\/p>\n(See Chapter 6, para 6.17 \u2014 Incoterms 2020<\/strong> \u2014 for the eleven delivery terms and the title-of-goods principle.)<\/em><\/p><\/aside>\n<\/div><h2 class=\"src-W srchead\" data-src=\" W \">9.18.3<\/span>Contract Effective Date and Work Program<\/span>W<\/span><\/h2><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\nThe Works Manual replaces \"delivery period\" with Contract Effective Date (7.4.1) and the Work Program (7.4.2) \u2014 the latter being the contractor's submission approved by the Contract Manager at the commencement stage (see Part A, para 9.6).<\/p>\n<\/div><h2 class=\"src-NC srchead\" data-src=\" NC \">9.18.4<\/span>Contract Period and Options<\/span>NC<\/span><\/h2><div class=\"srcblock src-NC\" data-src=\" NC \" data-label=\"Non-Consultancy Manual only\">\nThe Non-Consultancy Manual carries a distinct opening section on Contract Period and Options (9.4.1) \u2014 governing the initial contract term and the exercise of extension options in service contracts.<\/p>\n<h1>9.19 Delays in Delivery \/ Execution<\/span><\/h1>\n<\/div><h2>9.19.1<\/span>The Governing Principle \u2014 Time is the Essence<\/span><\/h2>\n<aside class=\"note\">\"suppliers shall be required to adhere to the delivery Schedule \u2014 including any instalment thereof, or incidental work\/ services (e.g., installation, commissioning, operator training) \u2014 specified in the purchase order (or as extended).<\/strong><\/p>\nAND, if There is a Delay in Supplies, IT Amounts to Breach of Contract \u2014 Since 'Time is the Essence of the CONTRACT'.<\/em><\/p><\/aside>\nThe two remedies: The Procuring Entity May, without prejudice to his other rights<\/strong>:<\/p>\na) recover from the contractor Liquidated Damages<\/strong>; or<\/p>\nb) treat the delay as a breach of contract and avail all the remedies therein<\/strong>.<\/p>\n<aside class=\"note\">The caution on using (b): \"although it is in the purchaser's interest to resort to this provision only as a last resort \u2014 in case of inordinate delays<\/strong>.\"<\/p><\/aside>\nC<\/span> adds the notification duty: \"the consultant should notify the Procuring Entity and explain the causes of such delays<\/strong>.\"<\/p>\n<h2>9.19.2<\/span>INORDINATE DELAYS \u2014 the 25% test and its consequence<\/span><\/h2>\n<aside class=\"note\">\" Inexcusable Delays of More Than one-FOURTH (25%) of the Total Completion Period Shall Be Treated as Inordinate DELAYS.<\/em><\/p>\n Such inordinate delays May be treated as a breach of contract \u2014 and shall be noted as deficient performance and held against the contractor in future tenders.<\/strong><\/p>\n A show-cause notice shall be issued to the contractor before declaring it a deficient performance.<\/strong><\/p>\nIN Case the Procuring Entity Decides to Allow Performance of Contract After Inordinate Delays \u2014 the Maximum Limit on LD Shall Be 10% (Instead of 5%) of the Total Contract VALUE.<\/em><\/p><\/aside>\n<h2>9.19.3<\/span>Delay for Which the Supplier is NOT Responsible \u2014 the four cases<\/span><\/h2>\n\"in cases where there is a delay for which the supplier is not responsible \u2014 the delivery period needs to be re-fixed without imposing any penalty on the supplier \u2014 i.e., without LD and without a Denial Clause.<\/strong><\/p>\nNormally, in the following circumstances, the supplier May not be considered responsible for the delay<\/strong>:\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Case<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>cases where the supplier is dependent on the approval of the pre-production sample \u2014 and the delay occurs in approving the sample, though submitted by the supplier in time<\/strong><\/td><\/tr><tr><td>ii<\/td><td>where extension is granted on account of some omission on the part of the purchaser, which affects the due performance of the contract by the supplier<\/strong><\/td><\/tr><tr><td>iii<\/td><td>cases where the purchaser controls the entire production Schedule of the supplier<\/strong><\/td><\/tr><tr><td>iv<\/td><td>cases where production and\/ or delivery has been affected by force Majeure, or statutory change, or specific executive instructions issued by govt.<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">The shared-fault Rule: \"there May be delays for which both buyer and supplier May be responsible to a different extent. In such cases, the levy of LD and Denial Clause May be decided on merits<\/strong>.\"<\/p>\nW<\/span> variant: *\"\u2026<\/strong>the procuring entity, with the approval of CA and concurrence of finance, may decide a lower quantum of LD, and consider waiver of Denial Clause on the merit of the case.\"*<\/p><\/aside>\n<h1>9.20 Extension of Delivery \/ Extension of Time (EOT)<\/span><\/h1>\n<h2 class=\"src-W srchead\" data-src=\" W \">9.20.1<\/span>THE TWO DISTINCT CONCEPTS \u2014 Re-fixation vs Extension<\/span>W<\/span>the clearest statement<\/span><\/h2><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n<aside class=\"note\">This Distinction is the Single Most Important Point in this Section<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>RE-FIXATION OF DELIVERY<\/th><th>EXTENSION OF TIME (EOT)<\/th><\/tr><\/thead><tbody><tr><td>When<\/td><td>the delay is not attributable to the contractor<\/strong> (or in case of Force Majeure)<\/td><td>the delay is attributable (fully or partly) to the contractor<\/strong><\/td><\/tr><tr><td>What it is<\/td><td>\"a fresh completion period, treated like the original completion period \u2014 which is arrived at by recasting the original contractual completion period, after taking care of the lost period for which the contractor was not responsible<\/strong>\"<\/td><td>the completion Schedule is extended<\/strong><\/td><\/tr><tr><td>LD<\/td><td>without LD<\/strong><\/td><td>with LD<\/strong><\/td><\/tr><tr><td>Denial Clause<\/td><td>Without the denial clause<\/strong><\/td><td>With the denial clause<\/strong><\/td><\/tr><tr><td>Approval<\/td><td>with the approval of Competent Authority<\/strong><\/td><td>(as above)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h2>9.20.2<\/span>The Contractor's Duty to Give Notice<\/span><\/h2>\n<aside class=\"note\">\"if at any time during the currency of the contract, the contractor encounters conditions hindering the timely delivery\/ completion \u2014 he shall promptly inform the concerned officer in writing.<\/strong><\/p>\n He should mention its likely duration, and request an extension of the Schedule accordingly<\/strong>.\"<\/p>\nW<\/span> \u2014 the \"do not leave it to the end\" Rule:<\/p>\n\" Extension of time (EOT) must not be left to the end; It should be dealt with promptly during the progress of the contract \u2014 and for ongoing critical delay, interim EOT May be awarded.<\/strong><\/p>\n After the final stage of completion is reached (final taking-over certificate issued) \u2014 EOT and LD May be reviewed, if required<\/strong>.\"<\/p><\/aside>\n<h2 class=\"src-G srchead\" data-src=\" G \">9.20.3<\/span>The Two Pre-conditions for Granting Extension<\/span>G<\/span><\/h2><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\non approval from the ca, the Procuring Entity May agree to extend the delivery Schedule \u2014 with or without LD, and with or without the Denial Clause<\/strong> \u2014 provided:<\/p>\nA) the earlier-delivery test: \"that a higher rate in the original tender was not accepted against other lower quotations in consideration of the earlier delivery<\/strong>.\"<\/p>\nb) the falling-price test: \"in the case of fixed price contracts \u2014 there is no falling trend in prices for this item, as evidenced by the fact that, in the intervening period, neither orders have been placed at rates lower than this contract, nor any tender has been opened where such rates have been received \u2014 even though the tender is not yet decided.<\/strong><\/p>\n<aside class=\"note\"> In cases of certain raw material supplies where prices are linked to the PVC \u2014 extension May be granted even in case of a falling trend in price indices, since the price variation mechanism protects the purchaser's interests. However, in such cases it should be ensured that extensions are done with the Denial Clause<\/strong>.\"<\/p><\/aside>\n<\/div><h2>9.20.4<\/span>Extension Amounts to an Amendment \u2014 and Requires Consent<\/span><\/h2>\n<aside class=\"note\">\"EXTENSION of the Delivery Date Amounts to an Amendment of the Contract. Such an Extension Can Only Be Done with the Consent of Both PARTIES.<\/em><\/p>\nNO Extension of the Delivery Date is to Be Granted Suo Motu \u2014 Unless the Supplier Specifically Asks for IT.<\/em><\/p>\n However, in a few cases it May be necessary to grant an extension suo motu in the interest of the administration. In such cases, it is legally necessary to obtain clear acceptance of the extension letter from the supplier<\/strong>.\"<\/p><\/aside>\n<h2>9.20.5<\/span>EXTENSION AFTER EXPIRY \u2014 Section 63 of the Indian Contract Act [W ONLY]<\/span><\/h2>\n<aside class=\"note\">\" The power to extend the time for performance under section 63 of the Indian Contract Act is not inherently limited to extensions granted before the original deadline. It can be exercised even after the stipulated time has passed \u2014 provided there is consent from both parties.<\/strong><\/p>\n The contract does not automatically terminate upon the expiry of the initial delivery date \u2014 if there is a shared intention to continue the contractual relationship and fulfil the obligations, albeit under a revised timeline.<\/strong><\/p>\nTherefore, such extension\/ re-fixation of time can be done even after expiry of the original period \u2014 provided consent of the contractor is obtained.<\/strong><\/p>\nHOWEVER, IT is Prudent to Formalise the Extension Before the Original Delivery Period Expires \u2014 to Avoid Any Arguments About the CONTRACT'S Validity, or of Extension of Time After the Initial DEADLINE.<\/em><\/p><\/aside>\n<h2>9.20.6<\/span>THE CORRESPONDENCE TRAP \u2014 and the mandatory closing sentence<\/span><\/h2>\n<aside class=\"note\">\" No Correspondence Should Be Entered into with the Supplier After the Expiry of the Contract Delivery Period, or Towards the End of IT \u2014 Which Has the Legal Effect of Condoning the Delay\/ Breach of CONTRACT.<\/em><\/p>\nWhen it is necessary to obtain certain information regarding past supplies \u2014 it should be made clear that calling for such information:<\/strong><\/p>\n\u2022 is not intended to keep the contract alive;<\/strong><\/p>\n\u2022 that it does not waive the breach; And<\/strong><\/p>\n\u2022 that it is without prejudice to the rights and remedies available to the purchaser under the terms of the contract.<\/strong><\/p>\nThe Mandatory Last Line of Such a Communication:<\/p>\n\"This letter is issued without any prejudice to Procuring Entity's rights and remedies under the terms and conditions of the subject contract, and without any commitment or obligation.\"<\/strong><\/p><\/aside>\n<h2>9.20.7<\/span>THE LD WARNING TRAP \u2014 why \"without prejudice\" is NOT enough<\/span><\/h2>\n<aside class=\"note\">\"when it is decided to extend the delivery period subject to recovery of LD for delay in supplies \u2014 contractors must be given a warning to this effect in writing at the time of granting extensions.<\/strong><\/p>\n it is not correct to grant extensions without any mention of the LD \u2014 if it is proposed to recover such charges eventually.<\/strong><\/p>\nIT is Also not Correct to Grant an Extension of the Delivery Period by Merely Stating That the Extension is Granted \"without Prejudice to the Rights of the Purchaser under the Terms and Conditions of the CONTRACT\" \u2014 <\/em><\/p>\n Because this would mean that all the options given in the conditions of the contract would be available to the purchaser on expiry of the extended delivery period \u2014 and would not amount to exercise of the option to recover LD.<\/strong><\/p>\n To take care of the complex legalities brought out above \u2014 an extension of the delivery period, when granted, should only be done in writing in the prescribed [legally vetted] format<\/strong>.\"<\/p>\nW<\/span> adds: *\"<\/strong>Organisations may put in place a graded authority structure, whereby extension of time for [different durations is approved at different levels].\"*<\/p><\/aside>\n<h1>9.21 Performance Notice (Notice-cum-Extension Letter)<\/span><\/h1>\n<aside class=\"note\">The Situation IT Addresses:<\/p>\n\"a situation May arise where:<\/strong><\/p>\n\u2022 the supply\/ services\/ work have not been completed within the stipulated period, due to negligence\/ fault of the supplier;<\/strong><\/p>\n\u2022 however, the supplier has not made any request for an extension of the delivery period;<\/strong><\/p>\n\u2022 but the purchaser still requires the contracted goods\/ services; And<\/strong><\/p>\n\u2022 the purchaser does not want to terminate the contract at that stage.<\/strong><\/p>\nIN Such a Case, a Performance Notice \u2014 Also Known as a NOTICE-CUM-EXTENSION Letter \u2014 May Be Issued to the Supplier: by Suitably Extending the Delivery Date, and by Imposing LD with Denial CLAUSES.<\/em><\/p>\n The supplier's acceptance of the performance notice, and further action thereof, should also be processed in the same manner as an ordinary extension<\/strong>.\"<\/p><\/aside>\n<h1>9.22 Force Majeure Clause (FM)<\/span><\/h1>\n<h2>9.22.1<\/span>The Definition and Its Exclusions<\/span><\/h2>\n<aside class=\"note\">\"a Force Majeure (FM) means extraordinary events or circumstances beyond human control \u2014 such as:<\/strong><\/p>\nAn event described as an Act of god (like a natural calamity) \u00b7 or events such as a war, strike, riots, crimes.<\/strong><\/p>\nBut not including:<\/em><\/p>\n\u2022 negligence or wrong-doing;<\/strong><\/p>\n\u2022 predictable\/ seasonal rain; And<\/strong><\/p>\n\u2022 any other events specifically excluded in the clause.<\/strong><\/p><\/aside>\n<h2>9.22.2<\/span>What the FM Clause Does \u2014 suspension, NOT excuse<\/span><\/h2>\n<aside class=\"note\">\"AN FM Clause in the Contract Frees Both Parties from Contractual Liability and Obligation \u2014 When Prevented by Such Events from Fulfilling Their Obligations under the CONTRACT.<\/em><\/p>\nAN FM Clause Does not Entirely Excuse a PARTY'S NON-PERFORMANCE \u2014 but Only Suspends IT for the Duration of the FM.<\/em><\/p><\/aside>\n<h2>9.22.3<\/span>The Notice Requirement \u2014 14 days, and no ex post facto claim<\/span><\/h2>\n<aside class=\"note\">\"THE Firm Must Give Notice of FM Within a Reasonable Time as the Conditions Permit \u2014 Say, not Later Than 14 Days After its OCCURRENCE.<\/em><\/p>\nAnd it cannot Be Claimed Ex Post FACTO.<\/em><\/p><\/aside>\nFM affecting the purchaser: \"there May be an FM situation affecting the purchase organisation only. In such a situation, the purchase organisation is to communicate with the supplier along similar lines as above for further necessary action<\/strong>.\"<\/p>\n<h2>9.22.4<\/span>the 90-DAY Termination Option<\/span><\/h2>\n<aside class=\"note\">\"IF the Performance \u2014 in Whole or in Part, or Any Obligation under this Contract \u2014 is Prevented or Delayed by Any Reason of FM for a Period Exceeding 90 (Ninety) DAYS:<\/em><\/p>\nEITHER Party May, at its Option, Seek to Terminate the Contract Without Any Financial Repercussion on Either SIDE.<\/em><\/p><\/aside>\n<h2>9.22.5<\/span>The Immunity from Punitive Provisions<\/span><\/h2>\n<aside class=\"note\">\"notwithstanding the punitive provisions contained in the contract for delay or breach of contract \u2014 the supplier would not be liable for imposition of any such sanction, so long as the delay and\/ or failure of the supplier in fulfilling its obligations under the contract is the result of an event covered in the FM clause<\/strong>.\"<\/p><\/aside>\n<h1>9.23 Denial Clause (DC)<\/span><\/h1>\n<h2>9.23.1<\/span>What It Is and Why It Exists<\/span><\/h2>\n<aside class=\"note\">\"the buyer should protect himself against extra expenditure during the extended period \u2014 by stipulating a Denial Clause (over and above the levy of LD) in the letter informing the supplier of the extension of the delivery period.<\/strong><\/p><\/aside>\n<h2>9.23.2<\/span>the Asymmetric Operation of the Denial Clause<\/span><\/h2>\n<aside class=\"note\">\"IN the Denial Clause \u2014 Wherever Delay in Delivery is Due to a Default by the SELLER:<\/em><\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Direction<\/th><th>Who bears\/ benefits<\/th><\/tr><\/thead><tbody><tr><td>ANY increase<\/em> In statutory duties, and\/ or upward rise<\/em> In prices due to the PVC clause, and\/ or any adverse<\/em> Fluctuation in foreign exchange<\/td><td>are to be borne by the seller<\/strong> During the extended delivery period<\/td><\/tr><\/tbody><\/table><\/div><\/aside>\n| ANY downward<\/em> Revision in statutory duties, PVC, and foreign exchange rate | the purchaser reserves his right to get the benefit<\/strong> During such period |<\/p>\n<aside class=\"note\">The Consequence, Stated in One Sentence:<\/p>\n\"Thus, PVC, other variations, and foreign exchange clauses \u2014 in such cases \u2014 operate only during the original delivery period.\"<\/strong><\/p>\n(Compare Chapter 6, para 6.14.3-4-vi and para 6.15-3, where the same asymmetric rule is stated for the PVC and for ERV.)<\/em><\/p><\/aside>\n<h1>9.24 Liquidated Damages (LD) \u2014 Concept, Quantum and Waiver<\/span><\/h1>\n<h2>9.24.1<\/span>The Legal Concept<\/span><\/h2>\n<aside class=\"note\">\"COMPENSATION of Loss on Account of Late Delivery \u2014 Actually Incurred as Well as Notional \u2014 Where Loss is PRE-ESTIMATED and Mutually Agreed to \u2014 is Termed as Liquidated Damages (LD).<\/em><\/p>\nTHE Law Allows Recovery of PRE-ESTIMATED Loss \u2014 Provided Such a Term is Included in the Contract \u2014 and There is No Need to Establish Actual Loss Due to Late SUPPLY.<\/em><\/p>\n However, it would strengthen the Procuring Entity's rights if it were established and kept on record that inconvenience and loss have been caused due to the delay in supplies \u2014 though the loss cannot be exactly quantified \u2014 and hence Liquidated Damages are applicable as a genuine pre-estimate of the loss<\/strong>.\"<\/p><\/aside>\n<h2>9.24.2<\/span>Quantum of LD \u2014 the Rates Compared<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Rate per week of delay<\/th><th>Maximum<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span> GOODS<\/td><td>0.5 (half) per cent of the delivered price (including elements of GST, freight and variations)<\/em> of the delayed Goods and\/ or incidental Works\/ Services \u2014 for each week of delay or part thereof, until actual delivery or performance<\/td><td>5% of the total contract value<\/strong>(or any other percentage if prescribed)<\/em> 10% in case of INORDINATE DELAY<\/strong><\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> WORKS \u2014 repair works costing UP TO Rs. 20 LAKH<\/td><td>1 PER CENT (1%) of the contract value<\/strong>(that includes variations, taxes and duties)<\/em>per week<\/strong><\/td><td>5% of contract value 10% in case of inordinate delays<\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> Works \u2014 all other works<\/td><td>0.5 PER CENT (0.5%) of the contract value per week of delay<\/td><td>5% of contract value 10% in case of inordinate delays<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Note the works split: repair works up to Rs 20 lakh attract DOUBLE the weekly rate (1% instead of 0.5%).<\/p><\/aside>\n<h2>9.24.3<\/span>LD on the VARIED Price \u2014 and the no-supply rule<\/span><\/h2>\n<aside class=\"note\">\"in contracts governed by any variation (PVC, ERV or statutory variations) \u2014 lds (if a percentage of the price) will be applicable on the price as varied by the operation of the PVC.<\/strong><\/p>\nLds Accrue Only in Case of Delayed SUPPLIES.<\/em><\/p>\n Where \u2014 or as far as \u2014 no supplies have been made under a contract, upon cancellation, recovery of only the loss occasioned thereby can be made \u2014 notwithstanding the fact that, prior to the cancellation, one or more extensions of the delivery period with reservation of the right to LD are granted.<\/strong><\/p><\/aside>\n<h2>9.24.4<\/span>the GST Treatment of LD<\/span><\/h2>\n<aside class=\"note\">\"FOR Purpose of GST, Liquidated Damages Should Be Shown as Deductions on the Invoice Value by the CONTRACTOR.<\/em><\/p><\/aside>\n<h2 class=\"src-W srchead\" data-src=\" W \">9.24.5<\/span>Incentives \/ Bonus for Early Completion<\/span>W<\/span><\/h2><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n<aside class=\"note\">\"procuring entities are encouraged to explore strategies (such as offering bonuses, improved ratings, or recognition) that May incentivise contractors, service providers and consultants for early, timely, and quality completion of projects.<\/strong><\/p>\n Provision of incentives for completion of work before Schedule should be after careful assessment of tangible benefits therefrom \u2014 and disclosed in the tender documents in clear monetary terms.<\/strong><\/p>\nThe Illustrative Bonus:<\/p>\n\"Incentives\/ bonus \u2014 e.g., one per cent of the contract value per month, subject to a maximum of five per cent of contract value \u2014 for early completion, and penalties for delay, should be built into the contract very judiciously.\"<\/strong><\/p><\/aside>\nthe seven-day reporting condition: \"to avail of the incentive clause, it shall be mandatory on the part of the contractor to report the actual date of completion to the concerned Contract Manager.<\/strong><\/p>\n<aside class=\"note\"> The Contract Manager shall report the actual date of completion of the works as soon as possible, through fax or email \u2014 so that the report is received within seven days of such completion by the concerned ca<\/strong>.\"<\/p><\/aside>\n<\/div><h2>9.24.6<\/span>WAIVER OF LD \u2014 the three rules<\/span><\/h2>\n1. The general Rule:<\/p>\n<aside class=\"note\">\"THERE Should Normally Be No System of Waiver of Lds for Delayed Supplies in Supply Contracts \u2014 and IT May Strictly Be an Exception Rather Than a RULE.<\/em><\/p>\n for an extension of the delivery date with waiver of LD \u2014 approval of the ca with consultation of associated finance May be taken, and justifications recorded<\/strong>.\"<\/p><\/aside>\n2. GOVERNMENT ESTABLISHMENTS \u2014 the special dispensation:<\/p>\n<aside class=\"note\">\"GOVERNMENT Establishments\/ Departments \u2014 as Distinct from Psus \u2014 Which Execute Contract WORK:<\/em><\/p>\n\u2022 should not be dealt with as ordinary contractors;<\/strong><\/p>\n\u2022 should not generally be penalised for late delivery; And<\/strong><\/p>\n\u2022 claims for loss on risk-purchase should not be enforced against them.<\/strong><\/p>\n Serious cases of defaults should, however, be brought to the notice of the Head of Department or the Government Department concerned<\/strong>.\"<\/p><\/aside>\n3. Development\/ indigenisation contracts:<\/p>\n<aside class=\"note\">\"IN the Case of Development\/ Indigenisation Contracts \u2014 Lds are not LEVIED.<\/em><\/p><\/aside>\n<h1>9.25 Handling Deliveries at the Last Moment or After the Expiry of the Delivery Period [G ONLY]<\/span><\/h1>\n<h2>9.25.1<\/span>the VOLUNTARY-ABROGATION Trap<\/span><\/h2>\n<aside class=\"note\">\"AS per Law \u2014 if Stores are Accepted After the Expiry of the Delivery Date of a Particular Instalment, Without an Extension in the Delivery Period Having Been Given \u2014 Even Duly Reserving Our Rights to Levy LD:<\/em><\/p>\nIT Amounts to Voluntary Abrogation of Our Legal Rights under the Contract to Claim Lds or Other REMEDIES.<\/em><\/p><\/aside>\n<h2>9.25.2<\/span>LOCAL SUPPLIES \u2014 the Franking Clause<\/span><\/h2>\n\"if the contractor makes supplies locally after the expiry of the delivery period \u2014 the supplies May be provisionally retained under a franking clause reserving right \u2014 and the contractor May be asked to obtain an extension of the delivery period from an authorised officer, with or without any LD\/ Denial Clause<\/strong>.\"<\/p>\n<aside class=\"note\">The franking clause \u2014 reproduced in full:<\/p>\n\"Please note that materials have been supplied after the expiry of the contracted delivery date, and its provisional retention does not acquiesce or condone the late delivery. It does not intend or amount to an extension of the delivery period or keeping the contract alive. You May apply for an extension of delivery date from the Procuring Entity. The goods are being retained without prejudice to the rights of the Government of India under the terms and conditions of the contract.\"<\/strong><\/p><\/aside>\n<h2>9.25.3<\/span>Supplies from Outside Contractors \u2014 the consignee's intimation<\/span><\/h2>\n<aside class=\"note\">\"as regards supplies coming from outside contractors \u2014 if the contractor dispatches the stores after the expiry of the delivery period \u2014 the consignee should, after the receipt of the railway receipt, lorry receipt, goods consignment note or airway bill, send an intimation to the contractor stating:<\/strong><\/p>\n\u2022 that the action taken by him in dispatching the goods after expiry of the delivery date is at his own risk and responsibility;<\/strong><\/p>\n\u2022 that the consignee is not liable for any demurrage, wharfage and deterioration of goods at the destination station; And<\/strong><\/p>\n\u2022 that, in his interest, the contractor should get an extension of the delivery period from the purchasers.<\/strong><\/p>\n A copy of the communication sent to the contractor should also be sent to the purchaser<\/strong>.\"<\/p><\/aside>\n<h2>9.25.4<\/span>IMPORTS \u2014 and the Letter of Credit safeguard<\/span><\/h2>\n<aside class=\"note\">\"IN the Case of Imports, the Contractor Must not Dispatch the Consignment After the Expiry of the Delivery Period, Without Taking a Prior Extension of the Delivery PERIOD.<\/em><\/p>\nIN Any Case, the Terms of LC Should Be Such That \u2014 if There are Dispatches Beyond the Delivery Period \u2014 Payment Should Be Denied Without a Levy of Full LD, and Without a Formal Extension of the Delivery Period by the PURCHASER.<\/em><\/p><\/aside>\n<h1>9.26 Compensation Events [W ONLY]<\/span><\/h1>\n<h2>9.26.1<\/span>The Definition and the Four Categories<\/span><\/h2>\n<aside class=\"note\">\"compensation events are those which cause delays in completion of work (beyond a threshold specified in contract) \u2014 and hence financial loss to the contractor \u2014 due to defaults of the contracting entity.<\/strong><\/p><\/aside>\nThese can be due to delays or default by the contracting entity in:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Category<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>providing of encumbrance-free possession or access to site<\/strong><\/td><\/tr><tr><td>b<\/td><td>discharging of obligations by the contracting entity \u2014 drawings \u00b7 specifications \u00b7 instruction \u00b7 encumbrance-free site \u00b7 approving of sub-contractor \u00b7 payment \u00b7 and completion certificates<\/strong><\/td><\/tr><tr><td>c<\/td><td>infructuous additional or tests, works \u00b7 delays due to the contracting entity's orders, default, or risks<\/strong><\/td><\/tr><tr><td>d<\/td><td>unforeseen adverse conditions \u2014 than could reasonably have been assumed after due diligence<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>9.26.2<\/span>THE 'EARLY WARNING' REQUIREMENT \u2014 and the consequence of failure<\/span><\/h2>\n<aside class=\"note\">\"IF a Compensation Event Occurs During the Execution of the Contract \u2014 the Contractor Must Give an 'Early Warning' to the Contracting ENTITY.<\/em><\/p>\nFAILING Which, No Compensation Would Be GRANTED.<\/em><\/p>\n If the contractor proves that a compensation event would delay the completion of work \u2014 the Contract Manager will assess whether, and by how much, the intended completion date should be extended without LD.<\/strong><\/p>\n Proposals for grant of EOT should be considered and approved by the Competent Authority. The contracting entity May finalise the grant of EOT within a maximum period of two months on receipt of such a proposal from the Contract Manager<\/strong>.\"<\/p><\/aside>\n<h2>9.26.3<\/span>Payment May Continue While the EOT Proposal is Pending<\/span><\/h2>\n<aside class=\"note\">\"THE Payment Against Actual Work Done and Claimed in the Monthly Bills by the Contractor, and Recommended for Payment by the Contract Manager \u2014 May Continue to Be Made to the Contractor, Without Recovery of LD \u2014 Where a Proposal Has Been Received from the Contract Manager for Grant of EOT.<\/em><\/p>\nIF the EOT Proposal is Finally Rejected \u2014 LD Must Be RECOVERED.<\/em><\/p>\n Besides EOT, the contractor is entitled to claim compensation for any financial loss due to such events. In each contract, there are specific provisions defining compensation events, how to determine the EOT, and\/ or compensation<\/strong>.\"<\/p><\/aside>\n<h1>9.27 Time at Large [W ONLY]<\/span><\/h1>\n<aside class=\"note\">This is One of the Most Important Legal Concepts in the Entire Works Manual \u2014 and IT Has No Counterpart in the Other Three.<\/p>\n\"When the Procuring Entity Does not Explicitly Express and Reserve its Rights and Remedies under the Contract for Delays in Execution \u2014 IT Legally Forfeits His Right to Such REMEDIES.<\/em><\/p>\nUnder Such Circumstances, Time is Said to Become \"AT LARGE\" \u2014 and the Contractor Gets Freed from His Obligation to Complete Within the Specified TIME.<\/em><\/p><\/aside>\nHow to avoid it \u2014 the four-step prescription:<\/p>\n<aside class=\"note\">\"to avoid such a situation \u2014 before the expiry of the originally stipulated date of completion, the Procuring Entity should:<\/strong><\/p>\n1. Extend the currency of the agreement;<\/strong><\/p>\n2. Set a new time limit for completion;<\/strong><\/p>\n3. Make the extended time the essence of the contract; And<\/strong><\/p>\n4. Stipulate that this is being done without prejudice to his right to recover damages and other remedies as per the contract.<\/strong><\/p>\nRead this together with para 9.20.6 (the correspondence trap) and para 9.20.7 (why \"without prejudice\" alone is insufficient to preserve the LD right) \u2014 the three provisions together form the Manual's treatment of how a Procuring Entity can inadvertently lose its remedies for delay<\/strong>.<\/em><\/p><\/aside>\n<h1>9.28 Cost Control \u2014 Prices, Taxes and Payments<\/span><\/h1>\n<h2 class=\"src-G srchead\" data-src=\" G \">9.28.1<\/span>Prices Must Be Firm and As Quoted<\/span>G<\/span><\/h2><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\n<aside class=\"note\">\"prices to be charged by the contractor for the supply of goods and provision of incidental works\/ services shall be fixed and firm, and the same as the corresponding prices quoted by the contractor in its bid \u2014 or during negotiations, if any \u2014 and incorporated in the contract.<\/strong><\/p>\n Except for any price adjustment authorised in the contract.<\/strong><\/p><\/aside>\n The controlled-price recovery right:<\/strong>\"if the prices charged are discovered to be higher than any controlled or regulated price \u2014 the Procuring Entity shall have the right to either recover [the excess]<\/strong>\u2026\"<\/strong>(see Chapter 6, para 6.14.1-2 on undue profiteering and the MRP ceiling).<\/em><\/p>\n<\/div><h2>9.28.2<\/span>Payment of Taxes and Duties; Statutory Variation Clause<\/span><\/h2>\nCovered in full at Chapter 6, paras 6.16.1 to 6.16.4 of this Unified Manual \u2014 GST registration and HSN rules, the three bidder-borne taxes, customs duty, and the Statutory Variation Clause with its asymmetric operation (increases borne by the Procuring Entity only during the original\/ re-fixed period; reductions passed on during the original and extended<\/em> period).<\/p>\n<h2 class=\"src-W srchead\" data-src=\" W \">9.28.3<\/span>Financial Monitoring<\/span>W<\/span><\/h2><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n<aside class=\"note\">\"besides administering the contract with regard to its quality and completion \u2014 the Contract Manager will regularly assess the financial position and exercise financial control.<\/strong><\/p>\nHE Will Update, on a Quarterly Basis: Cash Flow Projections \u00b7 Cost Estimates \u00b7 and Yearly\/ Quarterly Milestones \u2014 and Submit Them to the Procuring ENTITY.<\/em><\/p><\/aside>\n<\/div><h2>9.28.4<\/span>Payments to Contractors and Handling of Securities<\/span><\/h2>\nThe payment machinery \u2014 <\/strong>Interim Payment Certificates, the Measurement Book regime, the 75%-within-10-working-days rule, and final bills within three months \u2014 is set out at <\/strong>Chapter 6, para 6.10.3 of this Unified Manual.<\/strong><\/p>\n<h1>9.29 Electronic Bill (e-Bill) Processing System [W ONLY]<\/span><\/h1>\nThe Works Manual carries a distinct section (7.5.8) on the e-Bill Processing System \u2014 the electronic submission and processing of contractors' running account bills, integrated with the Public Financial Management System. It has no counterpart in the other three Manuals.<\/p>\n<h1>9.30 Logistics: Transportation, Receiving, Storage and Issue of Goods [G ONLY]<\/span><\/h1>\n<aside class=\"note\">This entire section exists only in the goods Manual \u2014 because only goods procurement involves the physical movement, receipt, custody and issue of stores.<\/p><\/aside>\n<h2>9.30.1<\/span>Special Instructions for Transportation, Packaging and Storage<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Instruction<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>WHERE critical equipment of high value is involved \u2014 suitable special instructions shall be conveyed to the supplier about the mode of transport, loading, avoidance of transhipment \u2014 and, if necessary, provision of escorts<\/strong><\/td><\/tr><tr><td>b<\/td><td>in the case of chemicals, powdery materials, liquid materials<\/strong> \u2014 parties May be advised on proper packaging to avoid spillage en route, pollution problems \u2014 and conforming to the ISO 14001 standard<\/strong><\/td><\/tr><tr><td>c<\/td><td>special attention should be paid to perishable goods, considering their time-sensitive nature<\/strong> \u2014 regarding packaging \u00b7 transportation \u00b7 handling \u00b7 storage (cold storage\/ cold chain) \u00b7 and fifo (first in first out) system of delivery<\/strong><\/td><\/tr><tr><td>d<\/td><td>in case the Procuring Entity arranges transport \u2014 suitable instructions May be incorporated in the transportation contract<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>9.30.2<\/span>Full Truck Loads and the \"Not to Self\" Rule<\/span><\/h2>\n<aside class=\"note\">\"wherever the items make a full truckload \u2014 the suppliers should be advised to dispatch such items in a full truck direct to the designated consignee on a door delivery basis to the site.<\/strong><\/p>\nIn such cases, the Procuring Entity shall advise the supplier to send a consignee copy of the lorry receipt to the consignee along with the consignment.<\/strong><\/p>\nAND the Consignment Shall Be Booked to the Procuring Entity \u2014 and not \"SELF.\"<\/em><\/p>\n All dispatch documents \u2014 railway\/ lorry receipts, goods consignment notes, airway bills, invoices, packing lists, freight memos, test certificates \u2014 shall be sent to the associated\/ integrated finance, which will arrange to make the payment. If the payment is to be made through the bank \u2014 all original documents are to be sent through the designated bank<\/strong>.\"<\/p><\/aside>\n<h2>9.30.3<\/span>Shipping Arrangements \u2014 the six-week notice<\/span><\/h2>\n<aside class=\"note\">\"in the case of FOB\/ FAS contracts \u2014 the Procuring Entity shall make shipping arrangements.<\/strong><\/p>\nTHE Contractor Shall Give Adequate Notice to the Procuring Entity and its Forwarding Agents\/ Nominees About the Readiness of the Cargo \u2014 and at Least Six Weeks' Notice in Advance of the Required Date of Dispatch \u2014 for Finalising the Shipping ARRANGEMENTS.<\/em><\/p>\n In the case of CFR contracts \u2014 the contractor shall arrange the shipment as per the instructions from the Procuring Entity.<\/strong><\/p>\n Should the Procuring Entity intend to airlift all or some of the goods \u2014 the contractor shall pack the goods accordingly upon receiving intimation to that effect. Such deliveries shall be agreed upon well in advance and paid for as May be mutually agreed<\/strong>.\"<\/p><\/aside>\n<h2>9.30.4<\/span>Transfer of Title of Goods<\/span><\/h2>\n1. The intention Rule: \"the title of goods, and resultant rights and liabilities, is transferred to the buyer at such time as the parties to the contract intend this to happen \u2014 as recorded in the terms of the contract<\/strong>.\"<\/p>\n2. The risk Rule \u2014 and the \"notwithstanding\" chain:<\/p>\n<aside class=\"note\">\"Unless Otherwise Stated in the Contract \u2014 notwithstanding:<\/em><\/p>\n\u2022 any inspection and approval by the inspecting officer on the contractor's premises;<\/strong><\/p>\n\u2022 dispatch\/ delivery\/ in-transit; Or<\/strong><\/p>\n\u2022 any payments made to the contractor \u2014 <\/strong><\/p>\nTITLE of Goods Shall Pass on to the Procuring Entity as Specified by the Terms of Delivery and Other Conditions of the CONTRACT.<\/em><\/p>\nTILL Such Time \u2014 the Goods, and Every Constituent Part Thereof (Whether in the Possession or Control of the Contractor, His Agents or Servants or a Carrier, or the Joint Possession of the Contractor and the Procuring Entity) \u2014 Shall Remain in Every Respect at the Risk of the CONTRACTOR.<\/em><\/p>\n And the contractor shall be responsible for all loss, destruction, damage, or deterioration of or to the goods from any cause whatsoever.<\/strong><\/p><\/aside>\n3. Claims against the carrier: \"the contractor shall alone be entitled and responsible for making claims against any carrier \u2014 in respect of non-delivery, short delivery, mis-delivery, loss, destruction, damage, or deterioration of the goods entrusted to such carrier by the contractor for transmission to the ultimate consignee or the interim consignee<\/strong>.\"<\/p>\n<h2>9.30.5<\/span>Insurance in Transit<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Basis<\/th><th>Who insures<\/th><\/tr><\/thead><tbody><tr><td>DOMESTIC GOODS supplied on a CIF\/ FOR destination<\/em> basis<\/td><td>the contractor is responsible until all the goods contracted arrive in good condition at the destination<\/strong>. <\/strong>The contractor May, at its option, cover the transit risk by getting the goods duly insured in his own name at his own cost<\/strong><\/td><\/tr><tr><td>IMPORT of goods on FOB and CFR<\/em> offers<\/td><td>THE procuring Entity shall arrange the insurance<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">The Coordination Duty:<\/p>\n\"however, the contractor must give sufficient notice to the Procuring Entity before the date of shipment \u2014 so that the insurance cover for the shipment can be activated.<\/strong><\/p>\n The contractor must coordinate to ensure that the shipment sails only with insurance cover in place.<\/strong><\/p>\n In the case of the import of goods, the purchaser should proactively take timely and complete action as per the terms of the insurance contract \u2014 to protect the interest of the organisation after the title of the goods has passed to him<\/strong>.\"<\/p><\/aside>\n<h2>9.30.6<\/span>Distribution of Dispatch Documents \u2014 the 24-hour rule<\/span><\/h2>\n<aside class=\"note\">\"the supplier shall send all the relevant dispatch documents to the purchaser in time \u2014 to enable the purchaser to clear or receive (as the case May be) the goods in terms of the contract.<\/strong><\/p>\nWithin 24 (TWENTY-four) Hours of Dispatch \u2014 the Supplier Shall Notify the Purchaser or Consignee (and Others Concerned) of the Complete Details of DISPATCH.<\/em><\/p><\/aside>\n<h2>9.30.7<\/span>Receipt of Consignment<\/span><\/h2><h3>A. Preliminary Inspection and Receipt<\/span><\/h3>\n<aside class=\"note\">\"at the time of the delivery at the stores \u2014 the storekeeper should receive the goods on a \"subject to inspection\" basis, and should issue the preliminary receipt after a preliminary inspection.<\/strong><\/p>\nAS an Acknowledgement of Having Received the Claimed Quantity (not the Quality) of CONSIGNMENT.<\/em><\/p><\/aside>\nWhat the preliminary inspection covers:<\/p>\n<aside class=\"note\">\"when opening the packages, the storekeeper should initiate a preliminary inspection of the goods received. This should include:<\/strong><\/p>\n\u2022 checks for any obvious damage in transit;<\/strong><\/p>\n\u2022 other physical or visual checks specific to the functional characteristics of the product; And<\/strong><\/p>\n\u2022 verification of the quantity against the purchase order and the supplier's invoice.<\/strong><\/p>\nThe package-sampling Rule: \"when goods are supplied in boxes, bundles, or coils \u2014 as in the case of tools, rope, canvas, cables \u2014 each of which is required to contain a specified quantity: A reasonable number of such packages should be opened and checked for quantity per package.<\/strong><\/p>\n The quantity received should also be mentioned in the preliminary receipt to be given to the supplier. Any discrepancies in packages or quantity should be mentioned therein<\/strong>.\"<\/p><\/aside>\n<h3>B. the SHELF-LIFE Rule \u2014 75%<\/span><\/h3>\n<aside class=\"note\">\"FOR Goods with a Limited Shelf Life \u2014 the Contractor Shall Ensure That at Least 75% (or Any Other Percentage Stipulated in the Contract) of Shelf Life Remains as Balance on the Delivery DATE.<\/em><\/p>\nTHE Procuring Entity Reserves its Rights to Reject Expired Products with Less Than Such Specified Shelf LIFE.<\/em><\/p><\/aside>\n<h3>C. Detailed Inspection on Receipt<\/span><\/h3>\n<aside class=\"note\">\"before accepting the ordered goods, the storekeeper must ensure that the goods have been manufactured as per the required specifications, and can perform the functions specified in the contract.<\/strong><\/p>\n The required inspections and tests should be carried out by technically qualified and competent personnel. If the procurement agency does not have such qualified personnel \u2014 it May engage competent professionals from other departments, or even outside agencies<\/strong>.\"<\/p><\/aside>\n<h3>D. CONSIGNEE'S Right of Rejection of PRE-INSPECTED Goods \u2014 the 90-Day Rule<\/span><\/h3>\n<aside class=\"note\">\" Notwithstanding Any Approval Which the Inspecting Officer May Have Given in Respect of the Goods, Materials, Particulars, Work or Workmanship (Whether with or Without Any Test) \u2014 and Notwithstanding Delivery of the Goods, Where So Provided, to the Interim CONSIGNEE:<\/em><\/p>\nIT Shall Be Lawful for the Consignee, on Behalf of the Procuring Entity, to Inspect, Test and \u2014 if Necessary \u2014 Reject the Goods or Any Part, Portion or Consignment Thereof, After the Goods' Arrival at the Final DESTINATION.<\/em><\/p>\nWithin a Reasonable Time \u2014 Usually Within 90 Days of the Original Inspection Report \u2014 After Actual Delivery Thereof to Him at the Place of Destination Stipulated in the CONTRACT.<\/em><\/p>\n If such goods are not in all respects in conformity with the terms and conditions of the contract \u2014 whether on account of any loss, deterioration or damage before despatch or delivery, or during transit, or otherwise howsoever<\/strong>.\"<\/p><\/aside>\n<h2>9.30.8<\/span>Goods Receipt and Inspection Report (GRIR)<\/span><\/h2><h3>A. What a GRIR Is \u2014 and how it differs from a preliminary receipt<\/span><\/h3>\n<aside class=\"note\">\"While a Preliminary Receipt is Only an Acknowledgement of the Quantity Received \u2014 <\/em><\/p>\nGRIR is an Acknowledgement of Receipt of the Correct Quantity <\/em>AS Well as QUALITY of GOODS.<\/em><\/p><\/aside>\nThe two functions of the GRIR:<\/p>\n<aside class=\"note\">\"GRIR is:<\/strong><\/p>\n\u2022 a voucher that forms the basis for the supplier to claim payment as per the contract; And<\/strong><\/p>\n\u2022 a voucher for the amount of material received in the inventory accounts.<\/strong><\/p>\n Along with the GRIR, material is handed over to the warehouse where it is to be stored<\/strong>.\"<\/p><\/aside>\nwhen a GRIR is prepared: \"accounting of the material received shall be based on the GRIR prepared after inspection and acceptance of the material, which the concerned officers will sign.<\/strong><\/p>\n<aside class=\"note\"> This includes cases where payment is made to the supplier on proof of dispatch \u2014 for which inspection at the suppliers' premises is conducted prior to dispatch.<\/strong><\/p>\n This excludes cases of imported materials \u2014 where accounting will be done on completion of certain further formalities as per regulations and practices<\/strong>.\"<\/p><\/aside>\n<h3>B. THE REJECTION GRIR \u2014 and the yellow paint mark<\/span><\/h3>\n<aside class=\"note\">\"in case the received material fails to pass quantity and quality checks \u2014 a rejection GRIR is issued, noting the reasons for rejection.<\/strong><\/p>\nIF Feasible, a Yellow Paint (or Chisel) Mark Should Be Put on the Rejected Material \u2014 to Prevent its Resubmission by the SUPPLIER.<\/em><\/p>\n The associated finance\/ fa should be asked to recover any advance payment or freight charges paid for the rejected quantity.<\/strong><\/p><\/aside>\nThe 21-DAY removal Rule and the risk-and-cost position:<\/p>\n<aside class=\"note\">\"THE Rejection GRIR Contains Instructions for the Supplier to Take Back the Rejected Goods Within a Stipulated Number of Days \u2014 Usually 21.<\/em><\/p>\nDURING Such Time, the Material Lies with the Consignee at the SUPPLIER'S Risk and COST.<\/em><\/p>\nSuch Removal Should Be Permitted Only After the Advance Payment\/ Freight Paid is RECOVERED.<\/em><\/p>\n Lots that are under inspection, accepted, or rejected should be properly tagged, segregated, and identified<\/strong>.\"<\/p><\/aside>\n<h3>C. Ground Rent on Unlifted Rejected Goods<\/span><\/h3>\n<aside class=\"note\">\"IN Case the Supplier Does not Lift the Rejected Goods Within the Stipulated Time \u2014 a Ground Rent [may Be CHARGED], Say at 0.2% to 0.5% per Day of the Value of Goods as per CONTRACT.<\/em><\/p>\n If the supplier does not respond within a reasonable time \u2014 the Procuring Entity May treat the material as [abandoned and dispose of it accordingly]<\/strong>.\"<\/p><\/aside>\n<h2>9.30.9<\/span>Storage and Issue of Inspected Goods<\/span><\/h2>\nGoods para 9.6.7 governs the storage and issue of inspected goods \u2014 the handover to the warehouse against the GRIR, and the subsequent issue of stores to indenting sections.<\/p>\n<h1>9.31 Closure of Contract<\/span><\/h1>\n<h2 class=\"src-W srchead\" data-src=\" W \">9.31.1<\/span>Completion of Construction W<\/span> \u2014 the seven closing steps<\/span><\/h2><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n1. The completion certificate and its two accompanying documents:<\/p>\n<aside class=\"note\">\"when the work has been executed and the assets created commissioned \u2014 the contractor should request the Contract Manager to issue a 'completion certificate'.<\/strong><\/p>\nThe contractor May, if so specified, submit the following along with his request:<\/strong><\/p>\nA) completion drawings of the entire project; And<\/strong><\/p>\nb) videography\/ photographs of the works covering various phases of the project.<\/strong><\/p>\n Reasonable advance information of completion of work should be given to the concerned Ministry\/ Department \u2014 to enable them to plan for taking over<\/strong>.\"<\/p><\/aside>\n2. The joint inspection and \"as built\" drawings:<\/p>\n<aside class=\"note\">\"the Ministry\/ Department May carry out a detailed joint inspection of the commissioned project with the contractor \u2014 to ensure that no deficiencies are there before taking over.<\/strong><\/p>\n \"As built\" drawings of the work shall be got prepared through the contractor or otherwise \u2014 to facilitate proper maintenance of the assets, additions to the assets at subsequent dates, etc. \u2014 and to form part of the records of the Ministry\/ Department<\/strong>.\"<\/p><\/aside>\n3. Occupancy certificates and nocs: \"the contractor\/ PWO\/ PSU would be responsible for obtaining completion\/ occupancy certificates\/ clearances and no-objection-certificates (nocs), if applicable, from the local civic authorities \u2014 for completed work and facilities, before handing over the same to the 'Procuring Entity' for putting them to functional use<\/strong>.\"<\/p>\n4. Restoration of auxiliary services:<\/p>\n<aside class=\"note\">\"Before the Completed Work is Taken over by the Ministry\/ Department \u2014 IT Must Ensure That the Contractor Restores to Original Status the Auxiliary Services\/ FACILITIES:<\/em><\/p>\nRoads \u00b7 sewerage \u00b7 utilities \u2014 including removal of garbage and debris \u2014 affected during the construction process.<\/strong><\/p><\/aside>\n5. What must be handed over: The contractor\/ PWO\/ PSU shall hand over the completed work \u2014 including all services and facilities constructed in accordance with the approved plans and specifications, fulfilling all agreed techno-functional requirements \u2014 along with:<\/p>\n<aside class=\"note\">Inventory \u00b7 as-built drawings \u00b7 maintenance Manual\/ standard operating procedure (sop) for equipments and plants \u00b7 all clearances\/ certificates from statutory authorities, local bodies<\/strong><\/p><\/aside>\n6. The Project Completion Report (PCR) \u2014 and the one-month deadline:<\/p>\n<aside class=\"note\">\"ON Completion of the Work, a Project Completion Report (PCR) Shall Be Submitted by the Contractor\/ PWO\/ PSU \u2014 Duly Bringing OUT:<\/em><\/p>\n\u2022 the final project completion cost;<\/strong><\/p>\n\u2022 the total time period taken to complete the work; And<\/strong><\/p>\n\u2022 the completed project components \u2014 <\/strong><\/p>\n As against the approved cost, time and project components.<\/strong><\/p>\nThe PCR shall Be Submitted Along with Final Project Accounts \u2014 Including Return of Unspent Balance Amount \u2014 to the Ministry\/ Department Within One Month of Settlement of Final BILLS.<\/em><\/p><\/aside>\n7. Record keeping: \"record keeping should be created at every work centre, to facilitate proper stacking of records pertaining to the completed works. The records should be preserved in such a manner that the same can be retrieved whenever required<\/strong>.\"<\/p>\n<\/div><h2>9.31.2<\/span>Completion of CONTRACT \u2014 and the single Defects Liability Certificate<\/span><\/h2>\n<aside class=\"note\">\"THE Contract is not to Be Treated as Completed Until a Defects Liability Certificate (DLC) Has Been ISSUED.<\/em><\/p>\nTHERE Will Be Only One DLC. It will Be Issued When the Contractor Has Completed All His Obligations under the CONTRACT.<\/em><\/p>\n While making the final payment to the contractor and before releasing the PBG \u2014 it should be ensured that there is nothing outstanding from the contractor.<\/strong><\/p>\nBecause it would Be Difficult to Retrieve Such Amounts After Releasing the Bank Guarantee\/ Final PAYMENT.<\/em><\/p>\n Before the Bank Guarantee is released, a \"no claim certificate\" May be taken from the contractor<\/strong>.\"<\/p>\nThe Rs 25 Lakh Threshold for the Three Reconciliations:<\/p>\n\"at least in large contracts (above Rs. 25 (twenty-five) lakh) \u2014 it should be ensured that, before the release of the Bank Guarantee (or final payment, if there is no Bank Guarantee) \u2014 the following reconciliations should be done across departments involved in the execution of the contract<\/strong>.\"<\/p><\/aside>\n<h2 class=\"src-W srchead\" data-src=\" W \">9.31.3<\/span>RECONCILIATION 1 \u2014 Material and Works Reconciliation<\/span>W<\/span><\/h2><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n<aside class=\"note\">\"the Ministry\/ Department should confirm that all works ordered in the contract and paid for have been taken over in good condition, and there is no shortcoming.<\/strong><\/p>\nFull Reconciliation of All Materials, Machinery and Assets Provided to the Contractor Should Be Done \u2014 Including Wastages and Return of Scrap\/ OFF-CUTS.<\/em><\/p><\/aside>\n<\/div><h2 class=\"src-W srchead\" data-src=\" W \">9.31.4<\/span>RECONCILIATION 2 \u2014 Reconciliation with the User Department<\/span>W<\/span><\/h2><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n\"besides works reconciliation \u2014 the user Department should certify in writing that the following activities (wherever applicable) have been completed by the contractor, to the department's satisfaction, as per the contract<\/strong>:\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Item to be certified<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>achievement of performance standards of work<\/strong><\/td><\/tr><tr><td>b<\/td><td>installation and commissioning, if any<\/strong><\/td><\/tr><tr><td>c<\/td><td>support service during the defect liability period \u2014 which has ended on ______<\/strong><\/td><\/tr><tr><td>d<\/td><td>as made drawings<\/strong><\/td><\/tr><tr><td>e<\/td><td>return of all id cards, gate passes, documents, drawings, protective gear, material, equipment, facilities and assets loaned to contractor<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h2 class=\"src-W srchead\" data-src=\" W \">9.31.5<\/span>RECONCILIATION 3 \u2014 Payment Reconciliation<\/span>W<\/span><\/h2><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n<aside class=\"note\">\"the ministries\/ departments May reconcile payments made to the contractor \u2014 to ensure that there is no liability outstanding against the contractor on account of:<\/strong><\/p>\n\u2022 LD;<\/strong><\/p>\n\u2022 [and the other recoverable heads \u2014 advances, statutory deductions, ground rent, recoveries for materials, and so on].<\/strong><\/p><\/aside>\n<h1>9.32 Concluding the Assignment and Post-Contract Review [C + NC ONLY]<\/span><\/h1>\n<aside class=\"note\">This Section Has No Counterpart in the Goods or Works Manuals.<\/p><\/aside>\nThe Consultancy Manual (para 10.6) and the Non-Consultancy Manual (para 9.6) both carry a section titled \"Concluding the Assignment and Post Contract review\"<\/strong> \u2014 giving effect to the fifth head of contract management in those Manuals, \"Post contract evaluation\"<\/strong> (see Part A, para 9.1.2).<\/p>\nIt governs:<\/p>\n<ul class=\"lst\"><li>THE acceptance of the final deliverables<\/strong> \u2014 including the <\/strong>Final Report, in respect of which (see Chapter 2, para 2.6.3(c)) \"<\/strong>the consultants alone are responsible for their findings; although changes may be suggested in the course of the discussions, consultants should not be forced to make such changes\"<\/em>;<\/strong><\/li><li>THE release of final payment and guarantees (if any), and closing the contract<\/strong>; and<\/li><li>THE post-contract review<\/strong> \u2014 the retrospective evaluation of how the assignment performed, feeding back into future need assessment, ToR drafting and shortlisting criteria.<\/li><\/ul>\n<h1>Appendix to Chapter 9 \u2014 Part B: Points of Difference<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Delivery Period \"deemed to be the essence of the contract\"; terms of delivery determine when TITLE passes<\/td><td>G ONLY<\/td><\/tr><tr><td>2<\/td><td>Contract Effective Date and Work Program as the opening time-control provisions<\/td><td>W ONLY<\/td><\/tr><tr><td>3<\/td><td>Contract Period and Options as the opening time-control provision<\/td><td>nc only<\/td><\/tr><tr><td>4<\/td><td>INORDINATE DELAY \u2014 the 25% test; show-cause notice; deficient performance recorded for future tenders; LD cap rises from 5% to 10%<\/td><td>G + W<\/td><\/tr><tr><td>5<\/td><td>The four cases where the supplier is not responsible for delay<\/strong>(pre-production sample approval; purchaser's omission; purchaser controls the production schedule; FM\/ statutory change\/ executive instructions)<\/em><\/td><td>G ONLY<\/td><\/tr><tr><td>6<\/td><td>RE-FIXATION (no LD, no denial clause) vs extension of time (with LD, with denial clause)<\/td><td>W states the distinction most clearly; G and C\/NC apply the same substance<\/td><\/tr><tr><td>7<\/td><td>\"EOT must not be left to the end\u2026 interim EOT may be awarded\"; EOT and LD reviewed after the Final Taking-Over Certificate<\/td><td>W ONLY<\/td><\/tr><tr><td>8<\/td><td>The two pre-conditions for extension \u2014 the earlier-delivery test and the falling-price test; PVC-linked raw materials may be extended even on a falling trend but with the denial clause<\/td><td>G ONLY<\/td><\/tr><tr><td>9<\/td><td>Extension after expiry permissible under SECTION 63 of the Indian Contract Act with mutual consent \u2014 \"the contract does not automatically terminate upon expiry\"<\/td><td>W ONLY<\/td><\/tr><tr><td>10<\/td><td>The correspondence trap and the mandatory closing sentence<\/td><td>G + W<\/td><\/tr><tr><td>11<\/td><td>Why \"without prejudice\" alone does not preserve the right to LD<\/td><td>G + W<\/td><\/tr><tr><td>12<\/td><td>Graded authority structure for granting extensions<\/td><td>W ONLY<\/td><\/tr><tr><td>13<\/td><td>Performance Notice (notice-cum-extension letter)<\/td><td>All four<\/td><\/tr><tr><td>14<\/td><td>Force Majeure \u2014 expressly EXCLUDES \"predictable\/ seasonal rain\"; notice within 14 days; cannot be claimed ex post facto; 90-day termination option without financial repercussion<\/td><td>G ONLY<\/strong>(fullest); W, C, NC carry shorter versions<\/em><\/td><\/tr><tr><td>15<\/td><td>The Denial Clause and its asymmetric operation \u2014 \"PVC, other variations and foreign exchange clauses operate only during the ORIGINAL delivery period\"<\/td><td>G + W<\/td><\/tr><tr><td>16<\/td><td>LD quantum<\/td><td>G: 0.5% per week, max 5% (10% if inordinate) \u00b7 W: 1% per week for repair works up to Rs 20 lakh; 0.5% for all other works; max 5% (10% if inordinate)<\/td><\/tr><tr><td>17<\/td><td>LD applies on the price AS VARIED by PVC; LDs accrue only on delayed supplies; on cancellation only the loss occasioned can be recovered<\/td><td>G + W<\/td><\/tr><tr><td>18<\/td><td>For GST, LD to be shown as a DEDUCTION on the invoice value by the contractor<\/td><td>G + W<\/td><\/tr><tr><td>19<\/td><td>Incentive\/ bonus for early completion \u2014 1% of contract value per month, max 5%; actual completion date to reach the CA within seven days<\/td><td>W ONLY<\/td><\/tr><tr><td>20<\/td><td>Waiver of LD \u2014 \"strictly an exception rather than a rule\"; Government establishments as distinct from PSUs not to be penalised and risk-purchase claims not enforced; NO LD in development\/ indigenisation contracts<\/td><td>G ONLY<\/td><\/tr><tr><td>21<\/td><td>Handling deliveries after expiry \u2014 the voluntary-abrogation trap; the FRANKING CLAUSE text; the consignee's intimation on demurrage and wharfage; the LC safeguard for imports<\/td><td>G ONLY<\/td><\/tr><tr><td>22<\/td><td>COMPENSATION EVENTS \u2014 four categories; the 'EARLY WARNING' requirement failing which no compensation; EOT to be finalised within two months; payment continues without LD recovery while the EOT proposal is pending<\/td><td>W ONLY<\/td><\/tr><tr><td>23<\/td><td>Time At Large \u2014 the contractor is freed from his obligation to complete within the specified time; the four-step prescription to avoid it<\/td><td>W ONLY<\/td><\/tr><tr><td>24<\/td><td>Quarterly update of cash flow projections, cost estimates and milestones by the Contract Manager<\/td><td>W ONLY<\/td><\/tr><tr><td>25<\/td><td>Electronic Bill (e-Bill) Processing System<\/td><td>W ONLY<\/td><\/tr><tr><td>26<\/td><td>LOGISTICS \u2014 ISO 14001 packaging for chemicals; FIFO and cold chain for perishables; \"booked to the Procuring Entity and not 'self'\"; six weeks' notice for shipping; 24-hour dispatch notification<\/td><td>G ONLY<\/td><\/tr><tr><td>27<\/td><td>Transfer of title \u2014 risk remains with the contractor notwithstanding inspection, dispatch or payment; contractor alone entitled to claim against the carrier<\/td><td>G ONLY<\/td><\/tr><tr><td>28<\/td><td>The 75% shelf-life rule and the right to reject<\/td><td>G ONLY<\/td><\/tr><tr><td>29<\/td><td>Consignee's right to reject pre-inspected goods within 90 days of the original Inspection Report<\/td><td>G ONLY<\/td><\/tr><tr><td>30<\/td><td>GRIR vs preliminary receipt (quality AND quantity vs quantity only); the yellow paint\/ chisel mark on rejected material; 21 days to lift at supplier's risk and cost; removal only after recovery of advance\/ freight; ground rent 0.2%\u20130.5% per day<\/td><td>G ONLY<\/td><\/tr><tr><td>31<\/td><td>Closure of contract \u2014 completion certificate with completion drawings and videography; restoration of auxiliary services including removal of garbage and debris; Maintenance Manual\/ sop; Project Completion Report within one MONTH of settlement of final bills<\/td><td>W ONLY<\/td><\/tr><tr><td>32<\/td><td>\"There will be only one DLC\"; no-claim certificate before releasing the BG; the Rs 25 lakh threshold for the three reconciliations<\/td><td>W ONLY<\/td><\/tr><tr><td>33<\/td><td>The three reconciliations \u2014 Material and Works \u00b7 User Department \u00b7 Payment<\/td><td>W ONLY<\/td><\/tr><tr><td>34<\/td><td>Concluding the Assignment and POST-CONTRACT REVIEW<\/td><td>c + nc only<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 9 \u2014 part b<\/p>\n<aside class=\"note\">Next: CHAPTER 9 \u2014 part c: Breach, termination and dispute resolution \u2014 Breach of Contract \u00b7 Termination for Default \u00b7 Determination for Convenience \u00b7 Frustration of Contract \u00b7 Limitation of Liabilities \u00b7 Disputes \u00b7 Excepted Matters \u00b7 Adjudication \u00b7 Mediation \u00b7 Arbitration \u00b7 Foreign Arbitration \u00b7 Notice for and Reference to Arbitration \u00b7 Appointment of Arbitrator \u00b7 The Arbitral Procedure \u00b7 Challenging Arbitration\/ Judicial Awards \u00b7 The Mechanism for Resolution of Commercial Disputes between CPSEs (AMRCD).<\/p>\nNote: the dispute-resolution apparatus is one of the very few blocks that is substantially COMMON to all four Manuals \u2014 running to roughly 800 lines in each \u2014 which makes Part C the most nearly-uniform part of the entire Unified Manual.<\/p><\/aside><\/div>Part III<\/span>Breach, Termination and Dispute Resolution<\/em><\/p>\nMerging: Goods Ch. 9<\/strong> (paras 9.8\u20139.10) \u00b7 Works Ch. 7<\/strong> (paras 7.7\u20137.9) \u00b7 Consultancy Ch. 10<\/strong> (paras 10.7\u201310.9) \u00b7 Non-Consultancy Ch. 9<\/strong> (paras 9.7\u20139.9)<\/em><\/p><h2>A Note on this Part \u2014 the Most NEARLY-UNIFORM Block in the Entire Manual Family<\/span><\/h2>\nUnlike every other chapter, the dispute-resolution apparatus is substantially COMMON to all four Manuals<\/strong>, running to roughly the same 800 lines in each.<\/p>\nThe reason is that it does not derive from the character of the procurement at all. It derives from a single set of statutes and a single set of DoE instructions applying uniformly:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Source<\/th><th>Instrument<\/th><\/tr><\/thead><tbody><tr><td>Statute<\/td><td>Indian Contract Act, 1872 \u00b7 Arbitration and Conciliation Act, 1996 (amended 2015 and 2021)<\/em> \u00b7 Mediation Act, 2023 \u00b7 msmed Act, 2006 \u00b7 Indian evidence Act (replaced by Bhartiya Sakshya Adhiniyam 2023 from 1 July 2024)<\/em><\/td><\/tr><tr><td>DoE instructions<\/td><td>OM No. F.11\/21\/2024-PPD dated 03.06.2024 (the governing instruction on arbitration, mediation and challenging awards)<\/em> \u00b7 OM No. F.1\/1\/2021-PPD dated 29.10.2021 (General Instructions on Procurement and Project Management, incl. Rule 227A of GFR)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nThe only substantial divergences are noted in the Appendix at the end.<\/p>\n<h2>Concordance for Chapter 9 \u2014 Part C<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>G<\/th><th>W<\/th><th>C<\/th><th>NC<\/th><\/tr><\/thead><tbody><tr><td>9.33<\/td><td>Breach of Contract<\/td><td>9.8.1<\/td><td>7.8.1<\/td><td>10.8.1<\/td><td>9.8.1<\/td><\/tr><tr><td>9.34<\/td><td>Termination of Contract for Default<\/td><td>9.8.2<\/td><td>7.8.2<\/td><td>10.8.2<\/td><td>9.8.2<\/td><\/tr><tr><td>9.35<\/td><td>Determination for Convenience \/ Frustration<\/td><td>9.8.3, 9.8.4<\/td><td>7.8.3<\/td><td>10.8.3<\/td><td>9.8.3<\/td><\/tr><tr><td>9.36<\/td><td>Limitation of Liabilities<\/td><td>9.8.5<\/td><td>7.8.4<\/td><td>10.8.4<\/td><td>9.8.4<\/td><\/tr><tr><td>9.37<\/td><td>Disputes<\/td><td>9.9.1<\/td><td>7.7.1<\/td><td>10.7.1<\/td><td>9.7.1<\/td><\/tr><tr><td>9.38<\/td><td>Excepted Matters<\/td><td>9.9.2<\/td><td>7.7.2<\/td><td>10.7.2<\/td><td>9.7.2<\/td><\/tr><tr><td>9.39<\/td><td>Adjudication<\/td><td>9.9.3<\/td><td>7.7.3<\/td><td>10.7.3<\/td><td>9.7.3<\/td><\/tr><tr><td>9.40<\/td><td>Mediation<\/td><td>9.9.4<\/td><td>7.7.4<\/td><td>10.7.4<\/td><td>9.7.4<\/td><\/tr><tr><td>9.41<\/td><td>Arbitration<\/td><td>9.9.5<\/td><td>7.7.5<\/td><td>10.7.5<\/td><td>9.7.5<\/td><\/tr><tr><td>9.42<\/td><td>Foreign Arbitration<\/td><td>9.9.6<\/td><td>7.7.6<\/td><td>10.7.6<\/td><td>9.7.6<\/td><\/tr><tr><td>9.43<\/td><td>Notice for and Reference to Arbitration<\/td><td>9.9.7, 9.9.8<\/td><td>7.7.7, 7.7.8<\/td><td>10.7.7\u20138<\/td><td>9.7.7\u20138<\/td><\/tr><tr><td>9.44<\/td><td>Appointment of Arbitrator<\/td><td>9.9.9<\/td><td>7.7.9<\/td><td>10.7.9<\/td><td>9.7.9<\/td><\/tr><tr><td>9.45<\/td><td>The Arbitral Procedure<\/td><td>9.9.10<\/td><td>7.7.10<\/td><td>10.7.10<\/td><td>9.7.10<\/td><\/tr><tr><td>9.46<\/td><td>Challenging Arbitration\/ Judicial Awards<\/td><td>9.9.11<\/td><td>7.7.11<\/td><td>10.7.11<\/td><td>9.7.11<\/td><\/tr><tr><td>9.47<\/td><td>AMRCD \u2014 CPSE Disputes Mechanism<\/td><td> \u2014 <\/td><td>7.7.12<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.48<\/td><td>Contract Management \u2014 Risks and Mitigations<\/td><td>9.10<\/td><td>7.9<\/td><td>10.9<\/td><td>9.9<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>9.33 Breach of Contract<\/span><\/h1>\n<h2>9.33.1<\/span>What Constitutes a Breach<\/span><\/h2>\n<aside class=\"note\">\"in case the contractor undergoes insolvency or receivership \u00b7 neglects \u00b7 or defaults \u00b7 or expresses inability or disinclination to honour his obligations relating to:<\/strong><\/p>\n\u2022 the performance of the contract; Or<\/strong><\/p>\n\u2022 ethical standards; Or<\/strong><\/p>\n\u2022 any other obligation that substantively affects the Procuring Entity's rights and benefits under the contract \u2014 <\/strong><\/p>\n[these] Amount to a Breach of CONTRACT.<\/em><\/p><\/aside>\nThe three named categories of default:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Category<\/th><th>Content<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>default in performance and obligations<\/td><td>\"if the contractor fails to deliver any or all the goods, or fails to perform any other contractual obligations \u2014 including Code of Integrity, or the obligation to maintain production capability (equipment & manufacturing facilities) based on which the contract was awarded \u2014 within the period stipulated in the contract, or within any extension thereof granted by the Procuring Entity \u2014 it shall be treated as a breach of contract<\/strong>.\"<\/td><\/tr><tr><td>b<\/td><td>insolvency<\/td><td>if the contractor or any partner shall at any time be adjudged insolvent \u00b7 or shall have a receiving order or order for the administration of his estate made against him \u00b7 or shall take any proceeding for composition under any insolvency Act \u00b7 or make any conveyance or assignment of his effects \u00b7 or enter into any assignment or composition with his creditors \u00b7 or suspend payment \u00b7 or if the firm be dissolved under the partnership Act<\/strong> \u2014 the Procuring Entity May consider it as a breach of contract<\/td><\/tr><tr><td>c<\/td><td>liquidation<\/td><td>if the contractor is a company being wound up voluntarily or by order of a court \u00b7 or a receiver, liquidator or manager on behalf of the debenture-holders is appointed \u00b7 or circumstances shall have arisen which entitle the court or debenture-holders to appoint a receiver, liquidator or manager<\/strong> \u2014 the Procuring Entity May consider it as a breach of contract<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">W<\/span> variant of the opening: *\"<\/strong>In case the contractor is unable to honour important stipulations of the contract, or gives notice of his intention of not honouring \u2014 or his inability to honour \u2014 such a stipulation, a breach of contract is said to have occurred. Mostly, such breaches occur in relation to the performance of the contract, in terms of inability to complete the Work within stipulated time.\"*<\/p><\/aside>\n<h2>9.33.2<\/span>THE 'NOTICE OF DEFAULT' \u2014 two weeks, and the withholding of payments<\/span><\/h2>\n<aside class=\"note\">\"AS Soon as a Breach of Contract is Noticed \u2014 a SHOW-CAUSE 'Notice of Default' Shall Be Issued to the Contractor, Giving Two Weeks' Notice, Reserving the Right to Invoke Contractual REMEDIES.<\/em><\/p>\nAfter Such a SHOW-CAUSE Notice \u2014 All Payments to the Contractor Would Be Temporarily Withheld, to Safeguard Needed Recoveries That May Become Due on Invoking Contractual REMEDIES.<\/em><\/p>\n If there is an unsatisfactory resolution \u2014 remedial action May be taken immediately<\/strong>.\"<\/p><\/aside>\n<h1>9.34 Termination of Contract for Default<\/span><\/h1>\n<h2>9.34.1<\/span>The Notice of Termination and the Three Savings<\/span><\/h2>\n<aside class=\"note\">\"in the event of an unsatisfactory resolution of 'notice of default' within two weeks of its issue \u2014 the Procuring Entity, if so decided, shall by written 'notice of termination for default' sent to the contractor \u2014 terminate the contract in whole or in part, without compensation to the contractor.<\/strong><\/p>\nBefore Cancelling the Contract and Taking Further Action \u2014 IT May Be Desirable to Obtain Legal ADVICE.<\/em><\/p><\/aside>\nSuch termination shall not:<\/p>\na) prejudice or affect the rights and remedies which have accrued and\/ or shall accrue to the Procuring Entity after that<\/strong>;<\/p>\nb) affect the performance of the contract to the extent not terminated<\/strong> \u2014 unless otherwise instructed by the Procuring Entity;<\/p>\nc) extinguish warranty obligations of the contractor for the goods already supplied, if any<\/strong>.<\/p>\n<h2>9.34.2<\/span>the Seven Additional Recourses on Termination<\/span><\/h2>\n\"if the contract is terminated in whole or in part \u2014 additionally, recourse May be taken to any one or more of the following actions<\/strong>:\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Recourse<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>temporarily withhold payments due to the contractor \u2014 till recoveries due to invocation of other contractual remedies are complete<\/strong><\/td><\/tr><tr><td>b<\/td><td>call back any loaned property or advances of payment, if any \u2014 with the levy of interest rate (e.g., the interest rate of the general provident fund \u2014 GPF) prevailing on the date of release of advance payment, plus 2%, to be compounded quarterly<\/strong><\/td><\/tr><tr><td>c<\/td><td>recover Liquidated Damages and invoke the Denial Clause for delays<\/strong><\/td><\/tr><tr><td>d<\/td><td>prefer claims against insurance, if any<\/strong><\/td><\/tr><tr><td>e<\/td><td>encash and\/ or forfeit Performance Security<\/strong><\/td><\/tr><tr><td>f<\/td><td>invoke any other contractual securities<\/strong><\/td><\/tr><tr><td>g<\/td><td>initiate proceedings in a court of law \u2014 for the transgression of the law, tort, and loss, which are not addressable by the above means<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Note the identity between recourse (b) and the interest formula applied to interest-free advances on default \u2014 see Chapter 6, para 6.13.1-3.<\/em><\/p><\/aside>\n<h1>9.35 Determination of Contract for Convenience of the Procuring Entity, or Frustration of Contract<\/span><\/h1>\n<h2>9.35.1<\/span>The 'Notice for Determination of Contract'<\/span><\/h2>\n<aside class=\"note\">\"after placement of the contract, there May be an unforeseen situation compelling the Procuring Entity to terminate the contract, in whole or in part, for its own convenience \u2014 by serving a written 'notice for determination of contract' on the contractor at any time during the currency of the contract.<\/strong><\/p>\nThe notice shall indicate, inter alia:<\/strong><\/p>\n\u2022 that the termination is for the convenience of the Procuring Entity, or the frustration of the contract;<\/strong><\/p>\n\u2022 the extent to which the contractor's performance under the contract is terminated; And<\/strong><\/p>\n\u2022 the date with effect from which such termination shall become effective.<\/strong><\/p><\/aside>\nThe three savings:<\/p>\n<ul class=\"lst\"><li>\"such termination shall not prejudice or affect the rights and remedies accrued, and\/ or that shall accrue after that, to the parties<\/strong>\";<\/li><li>\"unless otherwise instructed, the contractor shall continue to perform the contract to the extent not terminated<\/strong>\";<\/li><li>\"all warranty obligations, if any, shall continue to survive despite the termination<\/strong>.\"<\/li><\/ul>\n<h2>9.35.2<\/span>THE CRITICAL LEGAL POINT \u2014 determination for convenience is NOT a legal right<\/span><\/h2>\n<aside class=\"note\">\" Determining the Contract by the Procuring Entity for its Convenience is not its Legal Right \u2014 and the Contractor Must Be Persuaded to ACQUIESCE.<\/em><\/p>\nDEPENDING on the Merits of the Case \u2014 the Supplier May Have to Be Suitably Compensated on Mutually Agreed Terms for Terminating the CONTRACT.<\/em><\/p>\n Suitable provisions to this effect should be incorporated in the tender document as well as in the resultant contract<\/strong>.\"<\/p><\/aside>\n<h2>9.35.3<\/span>The Thirty-Day Rule on Completed Goods<\/span><\/h2>\n<aside class=\"note\">\"the goods and incidental works\/ services that are complete and ready in terms of the contract FOR delivery and performance within thirty days after the contractor's receipt of the [notice] \u2026<\/strong>\"<\/strong>(shall be accepted and paid for at the contract terms and prices).<\/em><\/p><\/aside>\n<h2>9.35.4<\/span>FRUSTRATION OF CONTRACT \u2014 the 60-day mutual-agreement window<\/span><\/h2>\n<aside class=\"note\">\"[On the occurrence of a frustration event, a party shall give a] 'notice of frustration event' to the other party, giving justification.<\/strong><\/p>\nThe parties shall use reasonable efforts to agree to amend the contract as May be necessary to complete its performance.<\/strong><\/p>\nHOWEVER, if the Parties Cannot Reach a Mutual Agreement Within 60 Days of the Initial Notice \u2014 the Procuring Entity Shall Issue a 'Notice for Determining the Contract' and Terminate the Contract Due to its Frustration \u2014 Without Repercussions on Either SIDE.<\/em><\/p><\/aside>\n<h1>9.36 Limitation of Liabilities<\/span><\/h1>\n<h2>9.36.1<\/span>The Aggregate Cap \u2014 and its three exclusions<\/span><\/h2>\n<aside class=\"note\">\"Except in Cases of Criminal Negligence or Wilful Misconduct \u2014 the Aggregate Liability of the Parties, Whether under the Contract, in Tort or Otherwise, Shall not Exceed the Total Contract Price (Less Payments Already Made, in Case of the Procuring ENTITY).<\/em><\/p>\nProvided That this Limitation Shall not Apply TO:<\/em><\/p>\n\u2022 the cost of repairing or replacing defective equipment\/ work under the warranty clause, defect liability clause or otherwise; Or<\/strong><\/p>\n\u2022 any obligation of the contractor to indemnify the Procuring Entity concerning IPR infringement.<\/strong><\/p><\/aside>\n<h2>9.36.2<\/span>The Consequential-Loss Exclusion \u2014 and the LD carve-out<\/span><\/h2>\n<aside class=\"note\">\"NEITHER Party Shall Be Liable to the Other Party \u2014 Whether in Contract, Tort, or Otherwise \u2014 for any:<\/em><\/p>\n\u2022 indirect or consequential loss or damage;<\/strong><\/p>\n\u2022 loss of use;<\/strong><\/p>\n\u2022 loss of production; Or<\/strong><\/p>\n\u2022 loss of profits or interest costs \u2014 <\/strong><\/p>\nwhich the other party May suffer in connection with the contract.<\/strong><\/p>\nProvided That this Exclusion Shall not Apply to Any Obligation of the Contractor to Pay Liquidated Damages to the EMPLOYER.<\/em><\/p><\/aside>\n<h1>9.37 Disputes<\/span><\/h1>\n<h2>9.37.1<\/span>The Definition of a \"Dispute\"<\/span><\/h2>\n<aside class=\"note\">\"normally, there should not be any scope for dispute between the purchaser and supplier after entering a mutually agreed valid contract. However, due to various unforeseen reasons, problems May arise during the contract.<\/strong><\/p>\nTherefore, the conditions governing the contract should contain suitable provisions for the settlement of such disputes or differences, binding on both parties<\/strong>.\"<\/p><\/aside>\nThe formal definition \u2014 note the four elements:<\/p>\n<aside class=\"note\">\"all disputes and differences between the parties:<\/strong><\/p>\n\u2022 as to the construction or operation of the contract, or the respective rights and liabilities of the parties on any matter in question or any other account whatsoever;<\/strong><\/p>\n\u2022 but excluding the Excepted Matters;<\/strong><\/p>\n\u2022 arising out of or in connection with the contract, within thirty (30) days from the aggrieved party notifying the other party of such matters;<\/strong><\/p>\n\u2022 whether before or after the completion\/ termination of the contract;<\/strong><\/p>\n\u2022 that cannot be resolved amicably between the procurement officer and the contractor within thirty (30) days of one party notifying the other \u2014 <\/strong><\/p>\nShall Be Referred to as a \"DISPUTE\".<\/em><\/p><\/aside>\n<h2>9.37.2<\/span>THE DoE DIRECTIVE ON CONTRACTUAL DISPUTES \u2014 a passage worth memorising<\/span><\/h2>\n<aside class=\"note\">\"GOVERNMENT Departments\/ Entities\/ Agencies Should Avoid and\/ or Amicably Settle as Many Disputes as Possible \u2014 Using Mechanisms Available in the CONTRACT.<\/em><\/p>\nDECISIONS Should Be Taken in a Pragmatic Manner, in Overall LONG-TERM Public Interest, Keeping Legal and Practical Realities in View \u2014 Without Shirking or Avoiding Responsibility, or Denying Genuine Claims of the Other PARTY.<\/em><\/p>\n \u2014 OM No. F.11\/21\/2024-PPD dated 03.06.2024, PPD, DoE, MoF<\/em><\/p><\/aside>\n<h2>9.37.3<\/span>THE SEQUENTIAL RULE \u2014 and the three mechanisms<\/span><\/h2>\n<aside class=\"note\">\"the aggrieved party shall give a 'notice of dispute' \u2014 indicating the dispute and claims, citing relevant contractual clauses \u2014 to the designated authority, and requesting to invoke the following dispute resolution mechanisms.<\/strong><\/p>\nThe dispute shall be attempted to be resolved \u2014 as far as feasible, before recourse to courts \u2014 through dispute resolution mechanisms available in the contract, in the sequence as mentioned below.<\/strong><\/p>\nAND the Next Mechanism Shall not Be Invoked Unless the Earlier Mechanism Has Been Invoked, or Has Failed to Resolve IT Within the Deadline Mentioned THEREIN.<\/em><\/p><\/aside>\n<h2>The THREE-STEP Ladder:<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>Mechanism<\/th><th>Governing instrument<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>adjudication<\/td><td>(contractual)<\/em><\/td><\/tr><tr><td>2<\/td><td>mediation<\/td><td>the Mediation Act, 2023<\/td><\/tr><tr><td>3<\/td><td>arbitration<\/td><td>the Arbitration and Conciliation Act, 1996<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">A Critical Footnote Appearing in All Four Manuals:<\/p>\n\"The conciliation part of the Arbitration and Conciliation Act, 1996 has been replaced by mediation by the recent Mediation Act, 2023.\"<\/strong><\/p><\/aside>\nthe legal-advice duty: \"while processing a case for dispute resolution\/ litigation\/ arbitration \u2014 the Procuring Entity is to take legal advice at appropriate stages<\/strong>.\"<\/p>\n<h1>9.38 Excepted Matters<\/span><\/h1>\n<h2>9.38.1<\/span>The Definition and the Reciprocity Exception<\/span><\/h2>\n<aside class=\"note\">\"MATTERS for Which Provision Has Been Made in Any Clause of the Contract Shall Be Deemed as 'Excepted Matters' (Matters not Disputable\/ Arbitrable) \u2014 and Decisions of the Procuring Entity Thereon Shall Be Final and Binding on the CONTRACTOR.<\/em><\/p>\nTHE 'Excepted Matters' Shall Stand Expressly Excluded from the Purview of the Dispute Resolution Mechanism \u2014 Including ARBITRATION.<\/em><\/p>\nHOWEVER \u2014 Where the Procuring Entity Has Raised the Dispute, this SUB-CLAUSE Shall not APPLY.<\/em><\/p>\nThat is, the exclusion operates only against the contractor<\/strong> \u2014 it does not bar the Procuring Entity from raising a dispute on an excepted matter.<\/em><\/p><\/aside>\n<h2>9.38.2<\/span>What Excepted Matters Include<\/span><\/h2>\n\"unless otherwise stipulated in the contract \u2014 Excepted Matters shall include, but not be limited to<\/strong>:\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Excepted matter<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>ANY controversies or claims brought by a third party for bodily injury, death, [or] property [damage]<\/strong><\/td><\/tr><tr><td>\u2026<\/td><td>(and the further heads specified in the contract)<\/em><\/td><\/tr><tr><td>6<\/td><td>provisions incorporated in the contract which are beyond the purview of the Procuring Entity, or are in pursuance of policies of Government<\/strong> \u2014 including but not limited to:<\/td><\/tr><tr><td>6(a)<\/td><td>provisions of restrictions regarding local content and purchase preference to local suppliers<\/strong> In terms of the Make in India policy<\/td><\/tr><tr><td>6(b)<\/td><td>provisions regarding restrictions on entities from countries having land-borders with India<\/strong><\/td><\/tr><tr><td>6(c)<\/td><td>purchase preference policies regarding MSEs and start-ups<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Why this Matters:<\/p>\nThe effect of head 6 is that a contractor <\/strong>cannot arbitrate against the operation of the Make in India Order, the land-border restrictions, or the MSE\/ Start-up preferences \u2014 because these are Government policy, not matters within the Procuring Entity's discretion.<\/strong><\/p><\/aside>\n<h1>9.39 Adjudication \u2014 Step 1<\/span><\/h1>\n<h2>9.39.1<\/span>The Notice of Adjudication<\/span><\/h2>\n<aside class=\"note\">\"after exhausting efforts to resolve the dispute with the purchasing officer executing the contract on behalf of the Procuring Entity \u2014 the contractor shall give a 'notice of adjudication' specifying:<\/strong><\/p>\n\u2022 the matters which are in question, or subject of the dispute or difference;<\/strong><\/p>\n\u2022 indicating the relevant contractual clause; And<\/strong><\/p>\n\u2022 the amount of claim item-wise \u2014 <\/strong><\/p>\nto the head of procurement, or any other authority mentioned in the contract (hereinafter called the \"adjudicator\")<\/strong>.\"<\/p><\/aside>\n High-value matters:<\/strong>\"where necessary \u2014 e.g., matters of high value \u2014 the Procuring Entity May proceed with adjudication by a high-level committee<\/strong>\"<\/strong>(constituted on the lines of the HLC described at para 9.40.3 below).<\/em><\/p>\n<h2>9.39.2<\/span>The 60-Day Decision and the Stay on Other Proceedings<\/span><\/h2>\n<aside class=\"note\">\"DURING His Adjudication \u2014 the Adjudicator Shall Give the Contractor an Adequate Opportunity to Present His CASE.<\/em><\/p>\nWithin 60 Days After Receiving the Representation \u2014 the Adjudicator Shall Make and Notify Decisions in Writing on All Matters Referred to HIM.<\/em><\/p>\nTHE Parties Shall not Initiate, During the Adjudication Proceedings, Any Conciliation, Arbitral or Judicial Proceedings in Respect of a Dispute That is the Subject Matter of the Adjudication PROCEEDINGS.<\/em><\/p><\/aside>\n<h2>9.39.3<\/span>Escalation to Mediation<\/span><\/h2>\n<aside class=\"note\">\"if not satisfied by the decision in adjudication \u2014 or if the adjudicator fails to notify his decision within the abovementioned time-frame \u2014 the contractor May proceed to invoke the process of mediation<\/strong>.\"<\/p><\/aside>\n<h1>9.40 Mediation \u2014 Step 2<\/span><\/h1>\n(The Mediation Act, 2023)<\/em><\/p>\n<h2>9.40.1<\/span>Invoking Mediation<\/span><\/h2>\n<aside class=\"note\">\"any party May invoke mediation by submitting a \"notice of mediation\" to the head of the procuring organisation. A neutral third party, known as the mediator, facilitates the mediation process.<\/strong><\/p>\nIF the Other Party is not Agreeable to Mediation \u2014 the Aggrieved Party May Invoke Arbitration, if Available in the CONTRACT.<\/em><\/p>\nFootnote in all four Manuals: \"The [Mediation] Act would be fully notified at a later date. Hence some of the provisions \u2014 like registration of mediators, and MSPs\/ MCI \u2014 may get activated later.\"<\/em><\/p><\/aside>\n<h2>9.40.2<\/span>THE DoE GUIDELINES ON MEDIATION \u2014 the High-Level Committee (HLC)<\/span><\/h2>\n\"Government departments\/ entities\/ agencies are encouraged to adopt mediation under the Mediation Act 2023, and\/ or negotiate amicable settlements to resolve disputes.<\/strong>\"<\/p>\na) the HLC and its composition:<\/p>\n<aside class=\"note\">\"Government departments\/ undertakings May \u2014 where they consider appropriate, e.g., in high-value matters \u2014 constitute a high-level committee (HLC) for dispute resolution, which May include the following (this composition is purely indicative and not prescriptive):<\/strong><\/p>\nI) a retired judge;<\/strong><\/p>\nii) a retired high-ranking officer and\/ or technical expert.<\/strong><\/p><\/aside>\nB) the three ways an HLC May be used:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Mode<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>negotiate directly with the other party, and place a tentative proposed solution before the HLC<\/strong><\/td><\/tr><tr><td>ii<\/td><td>conduct mediation through a mediator, and then place the tentative mediated agreement before the HLC<\/strong><\/td><\/tr><tr><td>iii<\/td><td>use the HLC itself as the mediator<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nc) THE RATIONALE \u2014 arm's length scrutiny:<\/p>\n<aside class=\"note\">\"This Will Enable Decisions Taken for Resolving Disputes in Appropriate Matters to Be Scrutinised by a HIGH-RANKING Body at ARM'S Length from the Regular DECISION-MAKING Structure \u2014 Thereby Promoting Fair and Sound Decisions in the Public Interest, with PROBITY.<\/em><\/p><\/aside>\nD) renegotiation in long-duration works contracts:<\/p>\n<aside class=\"note\">\"there May be rare situations in long-duration works contracts where a renegotiation of the terms May best serve public interest, due to unforeseen major events.<\/strong><\/p>\n In such circumstances \u2014 the terms of the tentative re-negotiated contract May be placed before a suitably constituted high-level committee before approval by the Competent Authority<\/strong>.\"<\/p><\/aside>\ne) APPROVAL: \"approval of the appropriate authority will need to be obtained for the final accepted solution. Section 49 of the Mediation Act 2023 is also relevant in this regard<\/strong>.\"<\/p>\nf) the non-routine Rule:<\/p>\n<aside class=\"note\">\"MEDIATION Agreements Need not Be Routinely or Automatically Included in Procurement Contracts\/ TENDERS.<\/em><\/p>\nTHE Absence of a Mediation Agreement in the Contract Does not Preclude PRE-LITIGATION Mediation. Such a Clause May Be Incorporated Where IT is Consciously Decided to Do SO.<\/em><\/p><\/aside>\ng) \"disputes not covered in an arbitration clause \u2014 and where the methods outlined above are unsuccessful \u2014 should be adjudicated by the courts<\/strong>.\"<\/p>\nh) the modification authority: \"general or case-specific modification in the application of the above guidelines May be authorised by:<\/strong><\/p>\n<aside class=\"note\">\u2022 the Secretary concerned (or an officer not below the level of Joint Secretary to whom the authority is delegated by him) \u2014 in respect of Government Ministries\/ Departments, attached\/ subordinate offices and autonomous bodies; or<\/strong><\/p>\n\u2022 the managing director \u2014 in respect of Central Public Sector Enterprises, including Banks and Financial Institutions<\/strong>.\"<\/p><\/aside>\n<h2>9.40.3<\/span>Appointment of Mediator(s)<\/span><\/h2>\n<aside class=\"note\">\"mediators can be of any nationality, and must be:<\/strong><\/p>\n\u2022 registered with the mediation council of India (MCI); Or<\/strong><\/p>\n\u2022 empanelled by a court-annexed mediation centre; Or<\/strong><\/p>\n\u2022 empanelled by an authority constituted under the legal services authorities Act, 1987; Or<\/strong><\/p>\n\u2022 empanelled [by a recognised mediation service provider].<\/strong><\/p><\/aside>\n<h2>9.40.4<\/span>Confidentiality \u2014 and the recording prohibition<\/span><\/h2>\n<aside class=\"note\">\"[MEDIATION Communications Shall not BE] Admissible as Evidence in Any Subsequent Court Proceedings \u2014 Nor Be Asked to Be Disclosed by Any Court\/ TRIBUNAL.<\/em><\/p>\nNO Audio or Video Recording of the Mediation Proceedings Shall Be Made or Maintained by the Parties or the Participants \u2014 Including the Mediator and Mediation Service Provider \u2014 Whether Conducted in Person or ONLINE.<\/em><\/p><\/aside>\nOnline mediation: \"the Act allows parties to opt for online\/ virtual mediation \u2014 which shall be deemed to occur within the jurisdiction of a competent court. The Act also requires online mediation communication mechanisms to ensure confidentiality<\/strong>.\"<\/p>\n<h2>9.40.5<\/span>How the Mediator Works<\/span><\/h2>\n<aside class=\"note\">\"the mediator initially meets the parties separately, and communicates the view of each party to the other \u2014 to the extent agreed upon by them.<\/strong><\/p>\nHe assists them in:<\/strong><\/p>\nIdentifying issues \u00b7 advancing better understanding \u00b7 clarifying priorities \u00b7 exploring areas of the parties' responsibility \u00b7 identifying common interests \u00b7 and encouraging compromise.<\/strong><\/p>\nHe then meets them jointly to encourage a mutually acceptable resolution.<\/strong><\/p>\n At any stage of the mediation proceedings \u2014 at the parties' request, the mediator May suggest a dispute settlement in writing<\/strong>.\"<\/p><\/aside>\n<h2>9.40.6<\/span>Termination of Mediation \u2014 120 Days Plus 60<\/span><\/h2>\n<aside class=\"note\">\"THE Process Must Be Completed Within 120 Days \u2014 Though Parties Can Extend IT by Another 60 Days Through Mutual CONSENT.<\/em><\/p>\nIF Mediation is not Completed Within this Timeline \u2014 the Mediator Shall Prepare a NON-SETTLEMENT Report \u2014 Without Disclosing the Cause of NON-SETTLEMENT, or Any Other Matter or Thing Referring to Their Conduct During MEDIATION.<\/em><\/p>\n Mediation shall also stand terminated:<\/strong><\/p>\n\u2022 on a declaration of the mediator \u2014 after consultation with the parties or otherwise \u2014 that further efforts at mediation are no longer justified; Or<\/strong><\/p>\n\u2022 on communication by a party in writing, addressed to the mediator and the other parties, that they wish to opt out of mediation.<\/strong><\/p>\nOn termination of mediation \u2014 if the dispute is still alive, the aggrieved party shall be free to invoke arbitration<\/strong>.\"<\/p><\/aside>\n<h2>9.40.7<\/span>Mediated Settlement Agreement (MSA)<\/span><\/h2>\na) what it is: \"if the parties resolve the dispute and execute a mediated settlement agreement (\"MSA\") \u2014 then the mediation is successful.<\/strong><\/p>\n<aside class=\"note\">An MSA is a written agreement settling some or all disputes \u2014 and May extend beyond the disputes referred to mediation.<\/strong><\/p>\n it must be valid under the Indian Contract Act, signed by both parties, and duly authenticated by the mediator for the parties or the MSP. The Act provides options for MSA registration<\/strong>.\"<\/p><\/aside>\nb) challenge to MSA \u2014 90 days, four grounds only:<\/p>\n<aside class=\"note\">\"MSA Can Be Challenged Within 90 Days on Limited Grounds OF:<\/em><\/p>\n(a) fraud; (b) corruption; (c) impersonation; And (d) subject matter being unfit for mediation.<\/strong><\/p><\/aside>\nc) EXECUTION \u2014 enforceable as a decree:<\/p>\n<aside class=\"note\">\"IF There is No Challenge \u2014 or a Challenge is Unsuccessful \u2014 the Act Ensures That the MSA is Binding and Enforceable, Akin to a Judgment or DECREE.<\/em><\/p>\nThis means that if one party fails to comply with the MSA \u2014 the non-defaulting party has a right to enforce it through the court<\/strong>.\"<\/p><\/aside>\n<h2>9.40.8<\/span>Costs and the Interest Moratorium<\/span><\/h2>\na) COSTS: \"the parties shall equally bear all costs of mediation \u2014 including the fees of the mediator and the charges of the mediation service provider<\/strong>.\"<\/p>\nb) no claim of interest during mediation:<\/p>\n<aside class=\"note\">\"PARTIES Shall not Claim Any Interest on Claims\/ COUNTER-CLAIMS from the Date of Notice Invoking Mediation Till the Execution of the Settlement Agreement, if So ARRIVED.<\/em><\/p>\nIF Parties Cannot Resolve the Dispute \u2014 Either Party Shall Claim No Interest from the Date of Notice Invoking Mediation Until the Date of Termination of Mediation PROCEEDINGS.<\/em><\/p><\/aside>\nC) the stay on other proceedings: \"the parties shall not initiate, during the mediation proceedings, any arbitral or judicial proceedings in respect of a dispute that is the subject matter of the mediation proceedings<\/strong>.\"<\/p>\n<h1>9.41 Arbitration \u2014 Step 3<\/span><\/h1>\n(The Arbitration and Conciliation Act, 1996 \u2014 amended 2015 and 2021)<\/em><\/p>\n<h2>9.41.1<\/span>The Arbitration Agreement and Its Survival<\/span><\/h2>\n<aside class=\"note\">\"if an amicable settlement is not forthcoming \u2014 recourse May be taken to the settlement of disputes through arbitration as per the Indian Arbitration and Conciliation Act, 1996.<\/strong><\/p>\nFor this purpose, when the contract is with a domestic supplier \u2014 a standard arbitration clause May be included in the tender document, indicating the arbitration procedure to be followed \u2014 based on which the arbitration Act shall become applicable.<\/strong><\/p>\nThis Agreement Shall Continue to Survive Termination, Completion, or Closure of the Contract for 120 Days After that.<\/em><\/p>\nTHE Venue of Arbitration Should Be the Place from Where the Contract Has Been ISSUED.<\/em><\/p><\/aside>\n<h2>9.41.2<\/span>the Msmed Override<\/span><\/h2>\n<aside class=\"note\">\"THE Micro, Small and Medium Enterprises Development (Msmed) Act, 2006 Provides [FOR] Parties to a Dispute \u2014 Where One of the Parties is a Micro or Small Enterprise \u2014 to Be Referred to the Micro and Small Enterprises Facilitation Council, if the Dispute is Regarding Any Amount Due under Section 17 of the Msmed Act, 2006.<\/em><\/p>\nIF a Micro or Small Enterprise, Being a Party to Dispute, Refers to the Provisions in the Msmed Act 2006 \u2014 These Provisions Shall Prevail over this [ARBITRATION] AGREEMENT.<\/em><\/p><\/aside>\n<h2>9.41.3<\/span>the Government Guidelines on Arbitration \u2014 the Rs 10 Crore Rule<\/span><\/h2>\n(OM No. F.11\/21\/2024-PPD dated 03.06.2024)<\/em><\/p>\n\"DoE has issued the following guidelines for arbitration in contracts of domestic procurement by the Government and by its entities and agencies \u2014 including CPSEs, public sector banks (PSBs), and Government companies<\/strong>:\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Guideline<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>## \"arbitration as a method of dispute resolution should not be routinely or automatically included in procurement contracts\/ tenders \u2014 especially in large contracts<\/strong>.\"<\/td><\/tr><tr><td>b<\/td><td>## \"as a norm \u2014 arbitration (if included in contracts) May be restricted to disputes with a value less than Rs. 10 crores.<\/strong> This figure is regarding the value of the dispute \u2014 not the [value of the contract]<\/strong>.\"<\/td><\/tr><tr><td>d<\/td><td>\"*In matters where arbitration is to be resorted to \u2014 institutional arbitration May be given preference (where appropriate, after considering the reasonableness of the cost of arbitration relative to the value involved).\"<\/td><\/tr><tr><td>e<\/td><td>general or case-specific modification May be authorised by the Secretary concerned<\/strong> (or an officer not below Joint Secretary to whom delegated) for Ministries\/ Departments\/ attached and subordinate offices\/ autonomous bodies \u2014 or by the managing director<\/strong> for CPSEs, Banks and Financial Institutions<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>9.42 Foreign Arbitration<\/span><\/h1>\n<aside class=\"note\">\"the Arbitration and Conciliation Act 1996 has provisions for international commercial arbitration \u2014 which shall be applicable if one of the parties has its Central management and control in any foreign country.<\/strong><\/p>\nWhen the Contract is with a Foreign Supplier \u2014 the Supplier Has the Option to Choose EITHER:<\/em><\/p>\n\u2022 the Indian Arbitration and Conciliation Act, 1996; Or<\/strong><\/p>\n\u2022 arbitration in accordance with the provisions of the united nations commission on international trade law (UNCITRAL) arbitration Rules.<\/strong><\/p>\n The arbitration clause with foreign firms should be in the form of self-contained agreements \u2014 especially for large-value contracts, or those for costly plant and machinery.<\/strong><\/p>\nTHE Venue of Arbitration Should Be in Accordance with UNCITRAL or INDIA'S Arbitration Rules \u2014 Whereby IT May Be in India or Any Neutral COUNTRY.<\/em><\/p><\/aside>\n<h1>9.43 Notice for Arbitration and Reference to Arbitration<\/span><\/h1>\n<h2>9.43.1<\/span>The Appointing Authority<\/span><\/h2>\n<aside class=\"note\">\"'The appointing authority' to appoint the arbitrator shall be the head of the procuring organisation named in the contract \u2014 and includes, if there be no such authority, the officer who is for the time being discharging the functions of that authority, whether in addition to other functions or otherwise<\/strong>.\"<\/p><\/aside>\n<h2>9.43.2<\/span>the 60\u2013120 Day Window for the Notice for Arbitration<\/span><\/h2>\n<aside class=\"note\">\"IN the Event of Any Dispute \u2014 if the Adjudicator Fails to Decide Within 60 Days, or the Mediation is Terminated \u2014 Then the Parties to the CONTRACT:<\/em><\/p>\nAfter 60 Days but Within 120 Days of the 'Notice of Dispute' \u2014 Shall Request the Appointing Authority Through a \"NOTICE for ARBITRATION\" in Writing, Requesting That the Dispute or Difference Be Referred to ARBITRATION.<\/em><\/p>\nThe \"notice for arbitration\" shall specify:<\/strong><\/p>\n\u2022 the matters in question, or the subject of the dispute or difference;<\/strong><\/p>\n\u2022 the relevant contractual clause; And<\/strong><\/p>\n\u2022 the amount of claim item-wise.<\/strong><\/p><\/aside>\n<h2>9.43.3<\/span>Reference to Arbitration \u2014 the jurisdictional limit<\/span><\/h2>\n<aside class=\"note\">\"After Appointing ARBITRATOR(S) \u2014 the Appointing Authority Shall Refer the Dispute to THEM.<\/em><\/p>\nOnly Such Dispute or Difference Shall Be Referred to Arbitration Regarding Which the Demand Has Been Made \u2014 Together with COUNTER-CLAIMS or Set OFF.<\/em><\/p>\nOTHER Matters Shall Be Beyond the Jurisdiction of the ARBITRATOR(S).<\/em><\/p><\/aside>\n<h1>9.44 Appointment of Arbitrator<\/span><\/h1>\n<h2>9.44.1<\/span>Qualification of Arbitrators \u2014 the five rules<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Rule<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>RETIRED OFFICERS of the Procuring Organisation: Must HAVE retired in the rank of Senior Administrative Grade (or equivalent)<\/strong> \u00b7 must have retired at least 1 year prior<\/strong> \u00b7 AND must not be over 70 years of age on the date of notice for arbitration<\/strong><\/td><\/tr><tr><td>b<\/td><td>serving officers: Shall not be below ja grade level<\/strong><\/td><\/tr><tr><td>c<\/td><td>## the no-prior-involvement Rule: \"he\/ they shall not have had an opportunity to deal with the matters to which the contract relates \u2014 or who, in the course of his\/ their duties as an officer of the procuring organisation, expressed views on any or all the matters under dispute or differences.<\/strong> *A declaration to this effect shall be taken from the arbitrators.\"<\/td><\/tr><tr><td>d<\/td><td>\"an arbitrator May be appointed notwithstanding the total number of arbitration cases in which he has been appointed in the past<\/strong>.\"<\/td><\/tr><tr><td>e<\/td><td>## \"not be other than the person appointed by the appointing authority \u2014 and if for any reason that is not possible, the matter shall not be referred to arbitration at all<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>9.44.2<\/span>Panel of Arbitrators \u2014 and the two caps<\/span><\/h2>\n<aside class=\"note\">\"the procuring organisation May prepare \u2014 with the approval of the head of the procuring organisation \u2014 a panel of serving and retired officers who are willing and qualified to be empanelled as arbitrators, based on:<\/strong><\/p>\nIntegrity \u00b7 ethics \u00b7 the experience of dealing in contracts\/ tenders \u00b7 temperament of taking fair decisions \u00b7 feedback \u00b7 general image \u00b7 career profile.<\/strong><\/p>\nSuch Persons Should Have Vigilance Clearance \u2014 and Should not Be Working in the Vigilance WING.<\/em><\/p>\n The performance of empanelled arbitrators should be reviewed annually.<\/strong><\/p>\nThe Two Caps:<\/p>\n\u2022 \"the empanelment of a retired officer as arbitrator shall be limited to three procuring entities only.\"<\/strong><\/p>\n\u2022 \"at any given time, a maximum of two arbitration cases shall be assigned to any arbitrator in a Procuring Entity.\"<\/strong><\/p><\/aside>\n<h2>9.44.3<\/span>Replacement of Arbitrators<\/span><\/h2>\n<aside class=\"note\">\"if one or more of the arbitrators: Refuses to Act \u00b7 withdraws from his office \u00b7 dies \u00b7 neglects\/ is unable or unwilling or refuses to Act for any reason \u00b7 his award being set aside by the court for any reason \u00b7 or in the opinion of the appointing authority fails to Act without undue delay \u2014 <\/strong><\/p>\nthe appointing authority shall appoint new arbitrator(s) to Act in his\/ their place in the same manner in which the earlier arbitrator(s) had been appointed.<\/strong><\/p>\nSuch a RE-CONSTITUTED Tribunal May, at its Discretion, Proceed with the Reference from the Stage at Which the Previous ARBITRATOR(S) Left IT.<\/em><\/p><\/aside>\n<h2>9.44.4<\/span>THE FOUR APPOINTMENT REGIMES \u2014 turning on Section 12(5) waiver and value<\/span><\/h2>\n<aside class=\"note\">This is the Most Intricate Table in the Chapter. Note That the Thresholds Differ Depending on Whether Section 12(5) of the Arbitration Act Has Been Waived.<\/p><\/aside>\n<h3>A. Where Section 12(5) Has Been Waived<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>Value of all claims added together<\/th><th>Composition of the Arbitral Tribunal<\/th><\/tr><\/thead><tbody><tr><td>Does not exceed \u20b9 1,00,00,000 (one crore)<\/td><td>A sole arbitrator<\/strong> \u2014 who shall be a serving officer of the procuring organisation, not below Junior Administrative Grade<\/strong>, nominated by the appointing authority. <\/strong>Appointed within 60 days<\/strong> From the day when a written and valid demand for arbitration is received<\/td><\/tr><tr><td>all other cases<\/td><td>a panel of three serving officers not below Junior Administrative Grade<\/strong> \u2014 OR two serving officers not below jag and one retired officer<\/strong> (retired not below the rank of Senior Administrative Grade)<\/td><\/tr><\/tbody><\/table><\/div>\nThe four-name panel procedure (for the three-member tribunal):<\/p>\n<aside class=\"note\">1. The appointing authority shall send a panel of at least four (4) names of officers \u2014 which May also include retired officers empanelled to work as arbitrator \u2014 to the contractor within 60 days of the demand.<\/strong><\/p>\n2. The contractor will be asked to suggest at least 2 names out of the panel for appointment as the contractor's nominee \u2014 within 30 days from the date of dispatch of the request.<\/strong><\/p>\n3. The appointing authority shall appoint at least one out of them as the contractor's nominee \u2014 and shall also simultaneously appoint the balance number of arbitrators, either from the panel or from outside the panel \u2014 duly indicating the 'presiding arbitrator' from amongst the 3 arbitrators so appointed.<\/strong><\/p>\n4. The appointing authority shall complete this exercise within 30 days from the receipt of the names of the contractor's nominees.<\/strong><\/p>\nThe Finance\/ Accounts Requirement:<\/p>\n\"While nominating the arbitrators \u2014 it shall be necessary to ensure that one of them is from the finance\/ accounts Department.<\/strong><\/p>\n (An officer of selection grade of the finance\/ accounts Department shall be considered as of equal status to the officers in Senior Administrative Grade of other departments for appointment of an arbitrator.)\"<\/strong><\/p>\nthe post-retirement continuation Rule: \"the serving officer working in an arbitral tribunal in ongoing arbitration cases can continue as arbitrator in the tribunal even after his retirement<\/strong>.\"<\/p><\/aside>\n<h3>B. Where Section 12(5) Has not Been Waived<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>Value of all claims added together<\/th><th>Composition<\/th><\/tr><\/thead><tbody><tr><td>does not exceed \u20b9 50,00,000 (fifty lakh)<\/td><td>A retired officer<\/strong> \u2014 retired not below the rank of Senior Administrative Grade officer<\/strong> \u2014 as the sole arbitrator<\/strong><\/td><\/tr><tr><td>exceeds \u20b9 50,00,000 (fifty lakh)<\/td><td>a panel of three (3) retired officers<\/strong> \u2014 retired not below the rank of Senior Administrative Grade officer<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nThe same four-name panel \/ 60-day \/ 30-day \/ 30-day procedure applies, but drawn entirely from RETIRED officers<\/strong>, with their retirement dates duly indicated.<\/p>\n<h2>9.44.5<\/span>FAILURE TO APPOINT \u2014 who designates the institution<\/span><\/h2>\n<aside class=\"note\">\"IF the Appointing Authority Fails to Appoint an Arbitrator \u2014 or Two Appointed Arbitrators Fail to Agree on the Third Arbitrator \u2014 Within 60 (Sixty) Days, Then, Subject to the Survival of this Arbitration AGREEMENT:<\/em><\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Type of arbitration<\/th><th>Who designates the arbitral institution<\/th><\/tr><\/thead><tbody><tr><td>International commercial arbitration<\/td><td>THE supreme court of India<\/strong> Shall designate the arbitral institution<\/td><\/tr><tr><td>national arbitrations<\/td><td>THE high court<\/strong> Shall designate arbitral institutions<\/td><\/tr><\/tbody><\/table><\/div>\nTHE Arbitration Council of India Must Have Graded These Arbitration INSTITUTIONS.<\/em><\/p>\nThese Arbitral Institutions Must Complete the Selection Process Within Thirty Days of Accepting the Request for the ARBITRATOR'S APPOINTMENT.<\/em><\/p><\/aside>\n<h1>9.45 the Arbitral Procedure<\/span><\/h1>\n<h2>9.45.1<\/span>Effective Date of Entering Reference<\/span><\/h2>\n<aside class=\"note\">\"THE Arbitral Tribunal Shall Be Deemed to Have Entered the Reference on the Date on Which the ARBITRATOR(S) Have Received Notice of Their APPOINTMENT.<\/em><\/p>\nAll Subsequent Time Limits Shall Be Counted from Such DATE.<\/em><\/p><\/aside>\n<h2>9.45.2<\/span>SEAT vs VENUE of Arbitration \u2014 the critical distinction<\/span><\/h2>\n<aside class=\"note\">\"THE Seat of Arbitration Shall Be the Place from Which the Letter of Award or the Contract is ISSUED.<\/em><\/p>\nThe venue of arbitration shall be the same as the seat of arbitration.<\/strong><\/p>\nHOWEVER, in Terms of Section 20 of the Arbitration Act \u2014 the Arbitrator, at His Discretion, May Determine a Venue Other Than the Seat of the Arbitration \u2014 Without in Any Way Affecting the Legal Jurisdictional Issues Linked to the Seat of the ARBITRATION.<\/em><\/p><\/aside>\n<h2>9.45.3<\/span>The Duty to Send Parties Back if Earlier Steps Were Skipped<\/span><\/h2>\n<aside class=\"note\">\"IF the Adjudication and\/ or Mediation Mechanisms Had not Been Exhausted Before Such Reference to Arbitration \u2014 the Arbitrator Should Ask the Aggrieved Party to Approach the Designated Authority for Such Mechanisms Before the Arbitration Proceedings are STARTED.<\/em><\/p><\/aside>\n<h2>9.45.4<\/span>Pleadings \u2014 the 30 \/ 60 \/ six-month timetable<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>Time limit<\/th><\/tr><\/thead><tbody><tr><td>CLAIMANT to submit claims<\/strong>(stating the facts supporting the claims, with all relevant documents, and the relief or remedy sought against each claim)<\/em><\/td><td>within 30 DAYS<\/strong> From the date of appointment of the arbitral tribunal \u2014 unless it has granted an extension<\/td><\/tr><tr><td>RESPONDENT to submit defence statement and counter-claim(s), if any<\/td><td>within 60 DAYS<\/strong> Of receipt of the copy of claims \u2014 unless the Tribunal has granted an extension<\/td><\/tr><tr><td>COMPLETION of statements of claims, counter-claims and defence<\/td><td>## within six months<\/strong> From the effective reference date<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">The NO-NEW-CLAIM Rule:<\/p>\n\"no new claim shall be added during proceedings by either party.<\/strong><\/p>\n However, a party May amend or supplement the original claim or defence thereof during arbitration proceedings \u2014 subject to acceptance by the tribunal, having due regard to the delay in making it.\"<\/strong><\/p><\/aside>\n<h2>9.45.5<\/span>Oral Arguments on a Day-to-Day Basis \u2014 and exemplary costs<\/span><\/h2>\n<aside class=\"note\">\"ORAL Arguments \u2014 as Far as Possible \u2014 Shall Be Heard by the Arbitral Tribunal on a DAY-TO-DAY Basis, and No Adjournments Shall Be Granted Without Sufficient CAUSE.<\/em><\/p>\nThe arbitrator(s) may Impose an Exemplary Cost on the Party Seeking Adjournment Without Sufficient CAUSE.<\/em><\/p><\/aside>\n<h2>9.45.6<\/span>AWARD WITHIN 12 MONTHS \u2014 and the extension ladder<\/span><\/h2>\n<aside class=\"note\">\"THE Arbitral Tribunal is Statutorily Bound to Deliver an Award Within 12 (Twelve) Months from the Date When the Arbitral Tribunal Enters REFERENCE.<\/em><\/p>\nTHE Award Can Be Delayed by a Maximum of Six Months Only under Exceptional Circumstances \u2014 Where All Parties Consent to Such Extension of TIME.<\/em><\/p>\nThe court's approval Shall Be Required for Further Extension, if the Award is not Made Out Within Such an Extended PERIOD.<\/em><\/p>\n During the period of an application for an extension of time awaiting before the court \u2014 the arbitrator's proceedings shall continue until the disposal of the application<\/strong>.\"<\/p><\/aside>\n<h2>9.45.7<\/span>Cost of Arbitration and Fees of the Arbitrators<\/span><\/h2>\n<aside class=\"note\">\"the concerned parties shall bear the cost of arbitration in terms of section 31(A) of the arbitration Act. The cost shall inter alia include fees of the arbitrator.<\/strong><\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Fee entitlement<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>A sole arbitrator shall be entitled to a 25% extra fee<\/strong> Over the prescribed fee<\/td><\/tr><tr><td>2<\/td><td>the arbitrator shall be entitled to a 50 per cent extra fee if the award is made within 6 months<\/strong> \u2014 in terms of section 29(A)(2) of the Arbitration Act<\/td><\/tr><tr><td>3<\/td><td>the arbitrator shall also be entitled to this extra fee where the fast track procedure<\/strong> in terms of section 29(B) is followed<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>9.45.8<\/span>FAST TRACK PROCEDURE \u2014 four salient features<\/span><\/h2>\n<aside class=\"note\">\"the parties to arbitration May choose to opt for a fast-track procedure \u2014 either before or after the commencement of the arbitration.<\/strong><\/p>\nTHE Award in FAST-TRACK Arbitration is to Be Made Out Within Six Months \u2014 and the Arbitral Tribunal Shall Be Entitled to Additional FEES.<\/em><\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Feature<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>## \"the dispute is to be decided based on written pleadings only. Procuring entities May encourage fast track procedure based on written pleadings only<\/strong>.\"<\/td><\/tr><tr><td>b<\/td><td>\"the arbitral tribunal shall have the power to call for clarifications in addition to the written pleadings where it deems necessary<\/strong>.\"<\/td><\/tr><tr><td>c<\/td><td>\"an oral hearing May be held only if all the parties request, or the arbitral tribunal considers it necessary<\/strong>.\"<\/td><\/tr><tr><td>d<\/td><td>\"the parties are free to decide the fees of the arbitrator(s) for a fast-track procedure<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>9.45.9<\/span>Powers of the Arbitral Tribunal to Grant Interim Relief<\/span><\/h2>\n<aside class=\"note\">\"the parties to arbitration May approach the arbitral tribunal to seek interim relief on the grounds available under section 9 of the Act.<\/strong><\/p>\n The tribunal has the powers of a court to make interim awards<\/strong>.\"<\/p><\/aside>\n<h2>9.45.10<\/span>THE AWARD \u2014 reasons, no pre-award interest, and corrections<\/span><\/h2>\n<aside class=\"note\">\"[The award shall State] item-wise the sum and reasons upon which it is based.<\/strong><\/p>\nTHE Analysis and Reasons Shall Be Detailed Enough So That the Award Can Be Inferred from IT.<\/em><\/p>\nThe no-pre-award-interest term:<\/p>\n\"it shall be further a term of this arbitration agreement that \u2014 where the arbitral award is for the payment of money \u2014 no interest shall be payable on the whole or any part of the money for any period till the date on which the award is made \u2014 in terms of section 31(7)(a) of the arbitration Act.\"<\/strong><\/p><\/aside>\nfinality and corrections:<\/p>\n<ul class=\"lst\"><li>\"the award of the arbitrator shall be final and binding on the parties to this contract<\/strong>\";<\/li><li>\"a party May apply for corrections of any computational errors, typographical or clerical errors, or any other error of a similar nature occurring in the award \u2014 or interpretation of a specific point of the award \u2014 to the tribunal within 60 days of receipt of the award<\/strong>\";<\/li><li>\"a party May apply to the tribunal within 60 days of receiving the award to make an additional award \u2014 as to claims presented in the arbitral proceedings but omitted from the arbitral award<\/strong>.\"<\/li><\/ul>\n<h1>9.46 Challenging Arbitration \/ Judicial Awards<\/span><\/h1>\n<aside class=\"note\">This is One of the Most Candid Passages in the Entire Manual Family, and is Reproduced at Length.<\/p><\/aside>\n<h2>9.46.1<\/span>The Non-Routine Rule<\/span><\/h2>\n<aside class=\"note\">\"IN Cases Where There is a Decision Against the Government\/ Public Sector Enterprise \u2014 the Decision to Challenge\/ Appeal Should not Be Taken ROUTINELY.<\/em><\/p>\nBUT Only When the Case Genuinely Merits Going for Challenge\/ Appeal, and There are High Chances of Winning in the Court\/ Higher COURT.<\/em><\/p><\/aside>\n<h2>9.46.2<\/span>the 75% Payment Rule \u2014 Rule 227A of GFR, 2017<\/span><\/h2>\n<aside class=\"note\">\"IN Cases Where the Ministry\/ Department Has Challenged an Arbitral Award \u2014 and, as a Result, the Amount of the Arbitral Award Has not Been PAID:<\/em><\/p>\n75% of the Arbitral Award (Which May Include Interest Up to Date of the Award) Shall Be Paid by the Ministry\/ Department to the Contractor\/ Concessionaire Against a Bank Guarantee (BG).<\/em><\/p>\nThe BG shall Only Be for the Said 75% of the Arbitral Award \u2014 and not for the Interest, Which May Become Payable to the Ministry\/ Department Should the Subsequent Court Order Require a Refund of the Said AMOUNT.<\/em><\/p><\/aside>\n<h2>9.46.3<\/span>the Escrow Account and the Waterfall<\/span><\/h2>\n<aside class=\"note\">\"the payment May be made into a designated escrow account, with the stipulation that the proceeds will be used:<\/strong><\/p>\n1. First \u2014 for payment of lenders' dues;<\/strong><\/p>\n2. Second \u2014 for completion of the project; And<\/strong><\/p>\n3. Then \u2014 for completion of other projects of the same Ministry\/ Department, as mutually agreed\/ decided.<\/strong><\/p>\n Any balance remaining in the escrow account \u2014 after settlement of lenders' dues and completion of projects of the Ministry\/ Department \u2014 May be allowed to be used by the contractor\/ concessionaire, with the prior approval of the lead banker and the Ministry\/ Department.<\/strong><\/p>\n If otherwise eligible, and subject to contractual provisions \u2014 other amounts withheld May also be released against BG<\/strong>.\"<\/p><\/aside>\n<h2>9.46.4<\/span>the Candid Passage on Casual Appeals<\/span><\/h2>\n<aside class=\"note\">\"ARBITRATION\/ Court Awards Should Be Critically Reviewed. in Cases Where There is a Decision Against Government\/ Pse \u2014 the Decision to Appeal Should not Be Taken ROUTINELY.<\/em><\/p>\nTHERE is a Perception That Such Appeals are Sometimes Resorted to in Order to Postpone the Problem and Defer Personal ACCOUNTABILITY.<\/em><\/p>\nCASUAL Appeals in Arbitration\/ Court Cases Have Resulted in the Payment of Heavy Damages\/ Compensation\/ Additional Interest Cost \u2014 Thereby Causing More Harm to the Exchequer, in Addition to Tarnishing the Image of the GOVERNMENT.<\/em><\/p><\/aside>\n<h2>9.46.5<\/span>The Monitoring, Delegation and Board\/ Committee Requirements<\/span><\/h2>\n<aside class=\"note\">\"the organisation should monitor the success rate of appealing against arbitration awards.<\/strong><\/p>\n There should be a clear delegation to empower officials to accept arbitration\/ court orders.<\/strong><\/p>\nA Special Board\/ Committee May Be Set Up to Review the Case Before an Appeal is Filed Against an ORDER.<\/em><\/p>\nArbitration\/ court awards should not be routinely appealed, without due application of mind to all facts and circumstances \u2014 including realistic probability of success.<\/strong><\/p>\nThe Certification the Board\/ Committee Must Make:<\/p>\n\"The board\/ committee or other authority deciding on the matter shall clarify that it has considered both legal merits and the practical chances of success \u2014 and, after considering the cost of (and rising through) litigation\/ appeal\/ further litigation, as the case May be:<\/strong><\/p>\n it is satisfied that such litigation\/ appeal\/ further litigation cost is likely to be financially beneficial compared to accepting the arbitration\/ court award.\"<\/strong><\/p><\/aside>\n<h2>9.46.6<\/span>THE STATISTICAL JUSTIFICATION \u2014 why the 75% risk is worth taking<\/span><\/h2>\n<aside class=\"note\">\"STATISTICS Have Shown That \u2014 in Cases Where the Arbitration Award is Challenged, a Large Majority of Cases are Decided in Favour of the CONTRACTOR.<\/em><\/p>\nIN Such Cases, the Amount Becomes Payable with Interest at a Rate That is Often Far Higher Than the GOVERNMENT'S Cost of Funds. this Results in Huge Financial Losses to the GOVERNMENT.<\/em><\/p>\nHENCE, in the Aggregate \u2014 IT is in the Public Interest to Take the Risk of Paying a Substantial Part of the Award Amount, Subject to the Result of the Litigation \u2014 Even if, in Some Rare Cases of Insolvency Etc., Recovery of the Amount in Case of Success May Become DIFFICULT.<\/em><\/p><\/aside>\n<h2>9.46.7<\/span>the Personal Accountability Provision<\/span><\/h2>\n<aside class=\"note\">\"THE Only Circumstances in Which Such Payment Need not Be Made are When the CONTRACTOR:<\/em><\/p>\n\u2022 declines or is unable to provide the requisite Bank Guarantee; And\/ or<\/strong><\/p>\n\u2022 fails to open an escrow account as required.<\/strong><\/p>\nPERSONS Responsible for not Adhering to this are Liable to Be Held Personally Accountable for the Additional Interest Arising in the Event of the Final Court Order Going Against the Procuring ENTITY.<\/em><\/p>\n \u2014 Rule 227A of GFR, 2017, as notified under paras 16.1 to 16.5 of OM No. F.1\/9\/2021-PPD dated 29.10.2021<\/em><\/p><\/aside>\n<h1>9.47 Mechanism for Resolution of Commercial Disputes Between Cpses and Government Agencies (AMRCD) [W ONLY]<\/span><\/h1>\n<h2>9.47.1<\/span>Introduction \u2014 and what AMRCD superseded<\/span><\/h2>\n<aside class=\"note\">\"to streamline and ensure the effective resolution of commercial disputes between Central public sector enterprises (CPSEs) and Government departments\/ organizations \u2014 the Government of India has established the:<\/strong><\/p>\nADMINISTRATIVE Mechanism for Resolution of Cpses Disputes (AMRCD)<\/em><\/p>\nThis Mechanism \u2014 Effective from May 22, 2018 \u2014 Supersedes the Earlier Permanent Machinery of Arbitration (PMA).<\/em><\/p><\/aside>\nSCOPE \u2014 it applies to all commercial disputes concerning the interpretation and application of provisions in contracts between:<\/p>\na) CPSEs inter se<\/strong>; and<\/p>\nb) CPSEs and Government departments\/ organizations<\/strong> \u2014 <\/p>\n<aside class=\"note\">EXCLUDING Disputes Related to: Railways \u00b7 Income Tax \u00b7 Customs \u00b7 and Excise DEPARTMENTS.<\/em><\/p><\/aside>\n<h2>9.47.2<\/span>the TWO-TIER Structure<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Tier<\/th><th>Composition \/ Authority<\/th><\/tr><\/thead><tbody><tr><td>First level (tier 1)<\/td><td>disputes are initially referred to a committee comprising<\/strong>: \u2022 THE secretaries of the respective administrative ministries\/ departments involved<\/strong>; AND \u2022 THE Secretary of the Department of legal affairs<\/strong>. THE financial advisors (fas) of the concerned ministries\/ departments represent the issues before this committee<\/strong><\/td><\/tr><tr><td>second level (tier 2)<\/td><td>if the dispute remains unresolved at the first level \u2014 it is escalated to the Cabinet Secretary<\/strong>. ## WHOSE decision is final and binding<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>9.47.3<\/span>Procedure \u2014 the three-month and 15-day rules<\/span><\/h2>\n<aside class=\"note\">\"the claiming party must approach the financial advisor of its administrative Ministry\/ Department to initiate the dispute resolution process.<\/strong><\/p>\nMeetings are held to examine and resolve the dispute on its merits.<\/strong><\/p>\nTHE Committee is Expected to Finalize its Decision Within Three Months of Receiving the Dispute NOTICE.<\/em><\/p>\nAN Aggrieved Party Can Appeal the first-LEVEL Decision to the Cabinet Secretary Within 15 DAYS.<\/em><\/p><\/aside>\n<h2>9.47.4<\/span>Inclusion in Contracts \u2014 mandatory, including retrospectively<\/span><\/h2>\n<aside class=\"note\">\"All Cpses Must Include a Specific Clause in Relevant Contracts \u2014 to Ensure That Disputes are Resolved Through the AMRCD as Stipulated in the Dpe O.M..<\/em><\/p>\nONGOING Contracts Should Also Be Amended to Incorporate this CLAUSE.<\/em><\/p><\/aside>\n<h1>9.48 Contract Management \u2014 Risks and Mitigations<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>advance payments: \"this is an area of risk in Public Procurement with undue and unintended benefits to the contractor \u2014 which vitiates the original selection criteria<\/strong>.\"<\/td><td>any mobilisation or other advance payments should be as per the tender document\/ contract, and only for justifiable cases<\/strong>. Terms of such advances should be expressly stated in the NIT\/ tender documents<\/strong>. The advance payment May be released in not less than two stages<\/strong>, depending upon the progress of the contract. The advance should be progressively adjusted against bills cleared for payment<\/strong>. ## \"interest should be charged on delayed recoveries irrespective of the reason stated<\/strong>.\"<\/td><\/tr><tr><td>2<\/td><td>contract changes and renegotiations: \"this is also a risk area where the Procuring Entity May not get what it contracted and paid for, or May pay for what it has not received. On the other hand, the contractor May not get timely or proper amendments due to changes asked by the procuring entities<\/strong>.\"<\/td><td>## \"contract modifications and renegotiations should not substantially alter the nature of the contract. It should not vitiate the basis of the selection of the contractor. It should not give undue or unintended benefits to the contractor.<\/strong> *However, for any changes caused by the Procuring Entity \u2014 the contractor should be adequately and timely compensated within the contractual terms.\"<\/td><\/tr><tr><td>3<\/td><td>\"supervising agencies\/ individuals are unduly influenced to alter the contents of their reports \u2014 so changes in quality, performance, equipment, and characteristics go unnoticed<\/strong>.\"<\/td><td>A contract management Manual or operating procedure should be prepared for large-value contracts<\/strong>. <\/strong>There should be built-in systems for checks and balances<\/strong><\/td><\/tr><tr><td>4<\/td><td>\"the contractor's claims are false or inaccurate \u2014 and are protected by the person in charge of revising them<\/strong>.\"<\/td><td>## \"all large contracts should be formally reconciled for closure \u2014 to ensure that the scope of the work and warranty\/ defect liability period is completed.<\/strong> *This should include the dispute resolution forum for resolving disputes in a fixed timeframe, with the provision of escalation level.\"<\/td><\/tr><tr><td>5<\/td><td>\"payment to the contractor is delayed intentionally or otherwise<\/strong>.\"<\/td><td>\"all payments\/ recoveries should also be reconciled<\/strong>.\"<\/td><\/tr><tr><td>6<\/td><td>\"the contractor gets the final payment \u2014 but contract closure has not been formally done. As a result, material\/ assets loaned to him are not accounted for<\/strong>.\"<\/td><td>## \"*it should also be ensured that material\/ assets loaned to him \u2014 including security passes \u2014 are accounted for.\"<\/td><\/tr><tr><td>7<\/td><td>## \"every dispute lands up in arbitration or court cases \u2014 since the Procuring Entity is reluctant to grant compensation for its lapses to the contractor<\/strong>.\"<\/td><td>(addressed by the dispute-resolution ladder at paras 9.37\u20139.46, and by the DoE directive at para 9.37.2)<\/em><\/td><\/tr><tr><td>8<\/td><td>\"agents\/ sub-contractors and partners \u2014 chosen in a non-transparent way \u2014 are unaccountable, or are used to channel bribes<\/strong>.\"<\/td><td>\"agents should only be as per the terms of the contract.<\/strong> ## *sub-contracting of the contract should normally not be allowed in the procurement of goods.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>Appendix to Chapter 9 \u2014 Part C: Points of Difference<\/span><\/h1>\n<aside class=\"note\">As noted at the head of this Part, the dispute-resolution block is substantially COMMON to all four Manuals. The divergences below are therefore few \u2014 but correspondingly significant.<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>AMRCD \u2014 the Administrative Mechanism for Resolution of CPSEs Disputes<\/strong>(effective 22 May 2018, superseding the Permanent Machinery of Arbitration; two-tier structure ending with the Cabinet Secretary; three-month decision; 15-day appeal; excludes Railways, Income Tax, Customs and Excise)<\/em><\/td><td>W ONLY<\/td><\/tr><tr><td>2<\/td><td>Definition of breach<\/td><td>G\/C\/NC: framed around insolvency, receivership, neglect, default, or disinclination to honour obligations<\/em> \u2014 expressly including ETHICAL STANDARDS and the obligation to maintain production capability \u00b7 W: framed around *inability to honour important stipulations*, noting that breaches mostly relate to inability to complete the Work within stipulated time<\/strong><\/td><\/tr><tr><td>3<\/td><td>\"Obligation to maintain production capability (equipment & manufacturing facilities) based on which contract was awarded\"<\/td><td>G<\/strong>(a goods-specific default)<\/em><\/td><\/tr><tr><td>4<\/td><td>Warranty obligations survive termination<\/td><td>G<\/strong>(consistent with the Goods-only Warranty Clause at Part A, para 9.17)<\/em><\/td><\/tr><tr><td>5<\/td><td>Sub-contracting \"should normally not be allowed in the procurement of GOODS\"<\/td><td>G<\/strong>(contrast the Works and NC positions permitting sub-contracting subject to limits \u2014 Chapter 3, para 3.3.3 and Chapter 4 Part A, para 4.3.3-E)<\/em><\/td><\/tr><tr><td>6<\/td><td>Excepted matters head 6 \u2014 Make in India, land-border restrictions, MSE and Start-up preferences excluded from arbitration<\/td><td>Common to all four<\/td><\/tr><tr><td>7<\/td><td>The three-step ladder \u2014 Adjudication \u2192 Mediation \u2192 Arbitration, with the sequential rule<\/td><td>Common to all four<\/td><\/tr><tr><td>8<\/td><td>The Mediation Act 2023 replacing the conciliation part of the Arbitration and Conciliation Act 1996<\/td><td>Common footnote in all four<\/td><\/tr><tr><td>9<\/td><td>Rs 10 crore norm restricting arbitration; institutional arbitration preferred; arbitration not to be routinely included<\/td><td>Common to all four<\/strong>(OM dated 03.06.2024)<\/em><\/td><\/tr><tr><td>10<\/td><td>The four appointment regimes turning on Section 12(5) waiver \u2014 Rs 1 crore \/ Rs 50 lakh thresholds; the four-name panel; the Finance\/ Accounts member requirement<\/td><td>Common to all four<\/td><\/tr><tr><td>11<\/td><td>75% payment against BG on challenging an award; the escrow waterfall; personal accountability for non-adherence<\/td><td>Common to all four<\/strong>(Rule 227A of GFR 2017)<\/em><\/td><\/tr><tr><td>12<\/td><td>Risk row 8 mitigation \u2014 \"sub-contracting should normally not be allowed\"<\/td><td>G<\/strong>(the other Manuals' risk tables address agents differently)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 9 (parts a, b and c)<\/p>\n<aside class=\"note\">The Unified Manual is Now Complete for Chapters 1 to 9.<\/p>\nWhat remains in the source Manuals beyond this point are the <\/strong>ANNEXURES and APPENDICES \u2014 which differ substantially in numbering between the four Manuals, and which have been cross-referenced throughout this Unified Manual at the point where each is invoked (for example: Integrity Pact \u2014 G Annexure 30 \u00b7 W Annexure 14 \u00b7 C Annexure 18 \u00b7 NC Annexure 12)<\/em>.<\/p>\nA consolidated ANNEXURE CONCORDANCE \u2014 mapping every annexure of all four Manuals to its counterparts \u2014 would be the natural next deliverable.<\/p><\/aside><\/section>\n<\/div><\/main>\n<\/div>\n<button class=\"upm-navbtn\" type=\"button\">Chapters<\/button>\n<button class=\"upm-top\" type=\"button\">Top<\/button>\n<script>\n\/* ===================================================================\n SET YOUR PDF URL HERE \u2014 paste the File URL from Media Library.\n Leave it empty to use the PDF sitting beside this page.\n =================================================================== *\/\nvar UPM_PDF_URL = \"\";\n\/* =================================================================== *\/\n\n(function(){\n var root=document.querySelector('.upm'); 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padding-left:.85rem; margin:.35rem 0 .9rem}\n.upm .srcblock > *:last-child{margin-bottom:0}\n.upm .srcblock table{color:inherit}\n.upm .srcblock thead th{background:currentColor; color:#fff}\n.upm .note .srcblock{border-left-width:2px}\n\n\/* keep emphasis legible inside coloured passages *\/\n.upm .src-G strong,.upm .src-W strong,.upm .src-C strong,\n.upm .src-NC strong,.upm .src-multi strong{color:inherit; font-weight:700}\n\n\/* colour key *\/\n.upm-key{display:flex; flex-wrap:wrap; gap:.5rem; margin:.9rem 0 1.6rem;\n padding:.75rem .85rem; background:#FBFAF8; border:1px solid var(--rule); border-radius:3px}\n.upm-key b{font-family:'IBM Plex Sans Condensed',system-ui,sans-serif; font-size:.7rem;\n letter-spacing:.14em; text-transform:uppercase; color:var(--ink-soft);\n width:100%; margin-bottom:.15rem; font-weight:600}\n.upm-key span{font-family:'IBM Plex Sans Condensed',system-ui,sans-serif; font-size:.78rem;\n display:inline-flex; align-items:center; gap:.4rem}\n.upm-key i{width:.85rem; height:.85rem; border-radius:2px; display:inline-block; font-style:normal}\n\n\/* part dividers inside a merged chapter *\/\n.upm .partrule{\n margin:2.8rem 0 1.6rem; padding:.6rem 0 .55rem; border-top:2px solid var(--blue-700);\n border-bottom:1px solid var(--rule);\n font-family:'IBM Plex Sans Condensed',system-ui,sans-serif; font-weight:600;\n letter-spacing:.14em; text-transform:uppercase; font-size:.78rem; color:var(--blue-700);\n display:flex; align-items:baseline; gap:.7rem;\n}\n.upm .partrule em{font-style:normal; font-family:'Spectral',Georgia,serif; font-size:1.02rem;\n font-weight:600; letter-spacing:0; text-transform:none; color:var(--ink)}\n\n\/* ---------------- print ---------------- *\/\n@media print{\n .upm-hero,.upm-nav,.upm-navbtn,.upm-top{display:none !important}\n .upm-shell{display:block; max-width:none}\n .upm-body{padding:0}\n .upm-body-in{max-width:none}\n .upm{font-size:10pt}\n .upm .chapter{break-before:page; page-break-before:always}\n .upm .chapter:first-child{break-before:auto; page-break-before:auto}\n .upm .chapter + .chapter{margin-top:0; padding-top:0; border-top:0}\n .upm .note,.upm .tblwrap,.upm table{break-inside:avoid; page-break-inside:avoid}\n .upm thead{display:table-header-group}\n @page{size:A4; margin:18mm 15mm}\n}\n<\/style>\n\n<section class=\"upm-hero\">\n <div class=\"upm-hero-in\">\n Government of India · Ministry of Finance · Department of Expenditure<\/p>\n <h1>The Unified Manual for Public Procurement<\/em><\/h1>\n Four procurement Manuals merged into one continuous text. Where they agree,\n the provision is stated once. Where they differ, the divergence is set out openly, with the\n position of each Manual identified. Nothing has been dropped in the merging.<\/p>\n <div class=\"upm-src\">\n G<\/b> Goods, 2024<\/span>\n W<\/b> Works, 2025<\/span>\n C<\/b> Consultancy Services, 2025<\/span>\n NC<\/b> Non-Consultancy Services, 2025<\/span>\n <\/div>\n <div class=\"upm-stats\">\n <div>9<\/b>Chapters<\/i><\/div>\n <div>391<\/b>Sections<\/i><\/div>\n <div>4<\/b>Manuals merged<\/i><\/div>\n <div>400+<\/b>Points of difference<\/i><\/div>\n <\/div>\n <div class=\"upm-cta\">\n <a class=\"upm-btn upm-btn-a\" href=\"Unified-Manual-for-Public-Procurement.pdf\" data-pdf=\"Unified-Manual-for-Public-Procurement.pdf\" download rel=\"noopener\"><svg viewBox=\"0 0 24 24\" fill=\"none\" stroke=\"currentColor\" stroke-width=\"2.2\" stroke-linecap=\"round\" stroke-linejoin=\"round\" aria-hidden=\"true\"><path d=\"M12 3v12m0 0l-4-4m4 4l4-4M4 19h16\"\/><\/svg>Download PDF 360 pp · 2.8 MB<\/span><\/a>\n <a class=\"upm-btn upm-btn-b\" href=\"#upm-ch00\">Start reading<\/a>\n <a class=\"upm-btn upm-btn-b\" href=\"#\" data-print>Print this page<\/a>\n <\/div>\n <\/div>\n<\/section>\n<div class=\"upm-shell\">\n<nav class=\"upm-nav\" aria-label=\"Chapters\"><h2>Chapters<\/h2><ol><li><a href=\"#upm-ch00\">00<\/span>How to Use this ManualTags, colour key, contents and the three master concordance tables<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch1\">1<\/span>Principles and PoliciesApplicability, the Five R's, Value for Money, MSE, Make in India, land border restrictions<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch2\">2<\/span>Need Assessment and PlanningIndent, Perspective Plan, Procurement Proposal, cost estimation, TS \/ DPR \/ ToR \/ Activities Schedule<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch3\">3<\/span>Bidders and GovernanceEligibility, Code of Integrity, Integrity Pact, grievances, registration, debarment<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch4\">4<\/span>Bidding Design and Modes of ProcurementTypes of contract, QCBS, tendering systems, channels; OTE, GTE, Rate Contract, LTE, SLTE, PAC, STE<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch5\">5<\/span>Bid Invitation ProcessModel Tender Documents, NIT, ITB, GCC, REoI and RfP, e-publishing, pre-bid, bid opening<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch6\">6<\/span>Securities, Prices, PaymentsBid and performance security, retention money, advances, price variation, ERV, taxes, Incoterms<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch7\">7<\/span>Bid Evaluation and Award of ContractShortlisting, Tender Committee and CEC, LCS, QCBS, SSS, FBS, abnormally low bids, cartels, award<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch8\">8<\/span>Special Types of ProcurementEmergencies, buy back, AMC, NPV, turnkey, consultants, NGOs, security, manpower, HaaS<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch9\">9<\/span>Contract ManagementAdministration, quality assurance, time and cost control, logistics, closure, breach, disputes<\/span><\/span><\/a><\/li><\/ol>Merging the Goods (2024), Works (2025), Consultancy Services (2025) and Non-Consultancy Services (2025) Manuals of the Department of Expenditure.<\/p><\/nav>\n<main class=\"upm-body\"><div class=\"upm-body-in\">\n<section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch00\">Front Matter<\/p><h1>How to Use this Manual<\/h1><\/header><div class=\"upm-key\">\nColour key \u2014 which Manual a passage comes from<\/b>\n<\/i>Common to all four<\/span>\n<\/i>Goods only<\/span>\n<\/i>Works only<\/span>\n<\/i>Consultancy only<\/span>\n<\/i>Non-Consultancy only<\/span>\n<\/i>Two or three Manuals<\/span>\n<\/div><h2>0.1<\/span>Purpose and Scope of this Manual<\/span><\/h2>\nThis Manual consolidates, into a single continuous text, the four procurement Manuals issued by the Department of Expenditure, Ministry of Finance, Government of India. It is written for officers preparing for departmental promotion and competitive examinations, and for practitioners who must work across more than one category of procurement.<\/p>\nEach of the four source Manuals is complete in itself, and each is written as though the other three did not exist. In practice they overlap heavily, diverge sharply at particular points, and use different chapter numbers for the same subject matter. A candidate who studies them separately must hold four parallel structures in mind and reconcile them under examination conditions.<\/p>\nThis Manual removes that burden. Where the four Manuals agree, the provision is stated once. Where they differ, the divergence is stated openly, with the position of each Manual identified. Nothing has been dropped in the process of merging: every provision of every source Manual appears somewhere in this text.<\/p>\n<h2>0.2<\/span>The Four Source Manuals<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Tag<\/th><th>Manual<\/th><th>Edition<\/th><\/tr><\/thead><tbody><tr><td>G<\/td><td>Manual for Procurement of Goods<\/td><td>Second Edition, 2024<\/td><\/tr><tr><td>W<\/td><td>Manual for Procurement of Works<\/td><td>Second Edition, 2025<\/td><\/tr><tr><td>C<\/td><td>Manual for Procurement of Consultancy Services<\/td><td>Second Edition, 2025<\/td><\/tr><tr><td>NC<\/td><td>Manual for Procurement of Non-Consultancy Services<\/td><td>2025<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>0.3<\/span>How to Read this Manual<\/span><\/h2>\nUntagged text applies to all four categories.<\/strong> Where a provision is confined to one or more categories, the relevant tag appears against the heading or in the body of the text:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Tag<\/th><th>Category<\/th><th>Meaning of the tag<\/th><\/tr><\/thead><tbody><tr><td>G<\/td><td>Goods<\/td><td>The provision appears only in the Goods Manual<\/td><\/tr><tr><td>W<\/td><td>Works<\/td><td>The provision appears only in the Works Manual<\/td><\/tr><tr><td>C<\/td><td>Consultancy Services<\/td><td>The provision appears only in the Consultancy Manual<\/td><\/tr><tr><td>NC<\/td><td>Non-Consultancy Services<\/td><td>The provision appears only in the Non-Consultancy Manual<\/td><\/tr><\/tbody><\/table><\/div>\nTags may be combined. A heading marked G + W<\/em> is common to Goods and Works but absent from the two services Manuals.<\/p>\nShaded panels<\/strong> carry three kinds of material: a divergence between the Manuals that a reader must not merge in the mind; a passage from a source Manual reproduced because its exact wording matters; or a caution that the source Manual itself states in emphatic terms.<\/p>\nBold within the running text<\/strong> marks the operative words of a provision \u2014 the words on which its legal effect turns. It is used sparingly and deliberately.<\/p>\nEvery chapter closes with a table of points of difference<\/strong> between the four Manuals. That table is the single most useful revision aid in this Manual, and should be read before and after the chapter body.<\/p>\n<h2>0.4<\/span>Contents<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Chapter<\/th><th>Title<\/th><th>What it covers<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Introduction \u2014 Principles and Policies<\/td><td>Applicability, categorisation, the Five R's, Value for Money, the five Fundamental Principles, Canons of Financial Propriety, procurement infrastructure, and the whole body of preferential and restricted purchase policy \u2014 MSE, Make in India, land border restrictions, Start-ups and DMI&SP<\/td><\/tr><tr><td>2<\/td><td>Need Assessment, Formulation of the Requirement, and Procurement Planning<\/td><td>The indent, the Perspective Plan and the Procurement Proposal; cost estimation; and the four different instruments by which a requirement is described \u2014 Technical Specifications, the DPR sequence, the Terms of Reference, and the Services and Activities Schedule<\/td><\/tr><tr><td>3<\/td><td>Participation of Bidders, Vendor Relationship Management and Governance<\/td><td>Eligibility and legal status of bidders, the Code of Integrity, the Integrity Pact, grievance redressal, conduct of public servants, registration and enlistment, debarment, and Indian agents<\/td><\/tr><tr><td>4<\/td><td>Bidding Design (Parts A and B)<\/em><\/td><td>Agency for procurement, admeasurement, types of contract, systems of selection including QCBS, tendering systems, channels of procurement; and the full range of modes of procurement from Open Tender to Direct Procurement<\/td><\/tr><tr><td>5<\/td><td>Bid Invitation Process<\/td><td>Model Tender Documents, the contents and sections of the tender document, the REoI and RfP, e-publishing, amendment and extension, pre-bid conferences, bid submission, and bid opening<\/td><\/tr><tr><td>6<\/td><td>Forms of Securities, Prices, Payment Terms and Price Variations<\/td><td>Bid security and performance security, Security Deposit, Insurance Surety Bond and e-BG, payment terms, advance payments, price variation, Exchange Rate Variation, taxes, and Incoterms<\/td><\/tr><tr><td>7<\/td><td>Bid Evaluation and Award of Contract (Parts A and B)<\/em><\/td><td>Shortlisting and EoI, the Tender Committee and the CEC, preliminary examination, techno-commercial and financial evaluation, LCS, QCBS, SSS and FBS, abnormally low bids, cartels, negotiations, and award<\/td><\/tr><tr><td>8<\/td><td>Special and Unique Types of Procurement<\/td><td>Emergencies and disaster management, buy back, capital goods, AMC, Net Present Value, turnkey; and the special engagements \u2014 individual consultants, NGOs, procurement agents, auditors, IT projects, security and manpower services<\/td><\/tr><tr><td>9<\/td><td>Contract Management (Parts A, B and C)<\/em><\/td><td>Contract administration and quality assurance; time control, cost control, logistics and closure; and breach, termination and the whole dispute resolution apparatus<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>0.5<\/span>Master Concordance \u2014 Chapter Numbering across the Four Manuals<\/span><\/h2>\nThe single most frequent source of error in examination is that the same subject carries a different chapter number in each Manual. This table should be memorised before anything else in this book.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Subject<\/th><th>This Manual<\/th><th>G<\/th><th>W<\/th><th>C<\/th><th>NC<\/th><\/tr><\/thead><tbody><tr><td>Introduction, principles and policies<\/td><td>1<\/td><td>1<\/td><td>1<\/td><td>1<\/td><td>1<\/td><\/tr><tr><td>Need assessment and procurement planning<\/td><td>2<\/td><td>2<\/td><td>2<\/td><td>2<\/td><td>2<\/td><\/tr><tr><td>Bidders, governance and debarment<\/td><td>3<\/td><td>3<\/td><td>8<\/td><td>3<\/td><td>3<\/td><\/tr><tr><td>Bidding design and modes of procurement<\/td><td>4<\/td><td>4<\/td><td>3<\/td><td>4<\/td><td>4<\/td><\/tr><tr><td>Bid invitation process<\/td><td>5<\/td><td>5<\/td><td>4<\/td><td>5<\/td><td>5<\/td><\/tr><tr><td>Securities, prices and payment terms<\/td><td>6<\/td><td>6<\/td><td>5<\/td><td>6<\/td><td>6<\/td><\/tr><tr><td>Shortlisting of consultants (EoI)<\/td><td>7A<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>7<\/td><td> \u2014 <\/td><\/tr><tr><td>Bid evaluation and award of contract<\/td><td>7<\/td><td>7<\/td><td>6<\/td><td>8<\/td><td>7<\/td><\/tr><tr><td>Special and unique types of procurement<\/td><td>8<\/td><td>8<\/td><td>none<\/td><td>9<\/td><td>8<\/td><\/tr><tr><td>Contract management and monitoring<\/td><td>9<\/td><td>9<\/td><td>7<\/td><td>10<\/td><td>9<\/td><\/tr><\/tbody><\/table><\/div>\nThree consequences follow, and each has been the subject of examination questions:<\/p>\n<ol class=\"lst\"><li>The Works Manual runs one chapter behind<\/strong> the others from Bidding Design onwards, because it places governance and debarment at the end, as Chapter 8, rather than early, as Chapter 3.<\/li><li>The Consultancy Manual runs one chapter ahead<\/strong> from Bid Evaluation onwards, because it inserts an entire chapter on Shortlisting of Consultants, which has no counterpart anywhere.<\/li><li>The Works Manual has no chapter on special types of procurement at all.<\/strong> Its variants \u2014 EPC, PPP, piece Work and stalled contracts \u2014 are dealt with inside its Bidding Design chapter.<\/li><\/ol>\n<h2>0.6<\/span>Master Concordance \u2014 Where the Four Manuals Stand Alone<\/span><\/h2>\nA provision found in only one Manual cannot be inferred from the others. The following are the principal bodies of material that exist in a single Manual, and they account for most of the difference in length between the four.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Body of material<\/th><th>Only in<\/th><th>Where in this Manual<\/th><\/tr><\/thead><tbody><tr><td>Reservation of Khadi, pharmaceuticals and 358 MSE-reserved items<\/td><td>G<\/td><td>1.11.1<\/td><\/tr><tr><td>Right to Information and proactive disclosures<\/td><td>G<\/td><td>1.16<\/td><\/tr><tr><td>Basic principles of undertaking works; administrative control<\/td><td>W<\/td><td>1.17, 1.18<\/td><\/tr><tr><td>Law of Agency<\/td><td>W + C + NC<\/td><td>1.15<\/td><\/tr><tr><td>Technical Specifications, Ecomark, BEE star ratings<\/td><td>G<\/td><td>2.4<\/td><\/tr><tr><td>The PPR, DPR, technical Sanction and Reference Documents sequence<\/td><td>W<\/td><td>2.5<\/td><\/tr><tr><td>Terms of Reference, activity-based and position-based<\/td><td>C<\/td><td>2.6<\/td><\/tr><tr><td>Services and Activities Schedule, Method Statement, KPIs<\/td><td>NC<\/td><td>2.7<\/td><\/tr><tr><td>Agency for Procurement \u2014 PWO, PSU, works Committee<\/td><td>W<\/td><td>4.1<\/td><\/tr><tr><td>Admeasurement of services, input and output<\/td><td>NC<\/td><td>4.2<\/td><\/tr><tr><td>Types of contract \u2014 Item Rate, Percentage Rate, Piece Work, EPC, PPP<\/td><td>W<\/td><td>4.3.3<\/td><\/tr><tr><td>Fixed Budget based Selection<\/td><td>C<\/td><td>4.4.5, 7.22<\/td><\/tr><tr><td>Quality Oriented Procurement and the Special Technical Committee<\/td><td>W + NC<\/td><td>4.4.4<\/td><\/tr><tr><td>Rate Contract, Approved Vendor List, Proprietary Article Certificate<\/td><td>G<\/td><td>4.10, 4.13, 4.16<\/td><\/tr><tr><td>Award of work through quotations; stalled contracts<\/td><td>W<\/td><td>4.20, 4.21<\/td><\/tr><tr><td>Accessibility standards under the RPwD Act<\/td><td>W<\/td><td>5.3.5<\/td><\/tr><tr><td>Fixed days for issue of NIT and tender opening<\/td><td>W<\/td><td>5.6<\/td><\/tr><tr><td>Incoterms, Exchange Rate Variation, Letter of Credit, customs<\/td><td>G<\/td><td>6.12, 6.15, 6.17<\/td><\/tr><tr><td>Mobilisation, plant and secured advances<\/td><td>W<\/td><td>6.13.2<\/td><\/tr><tr><td>Evaluation of the quality of technical proposals; the A\u2013E rating scale<\/td><td>C<\/td><td>7.17<\/td><\/tr><tr><td>Splitting of contracts; the option clause; variation of quantities<\/td><td>G<\/td><td>7.26 \u2013 7.28<\/td><\/tr><tr><td>Emergencies, buy back, capital goods, AMC, Net Present Value<\/td><td>G<\/td><td>8.1 \u2013 8.6<\/td><\/tr><tr><td>Logo design competitions; Digital India; financial advisors; auditors<\/td><td>C<\/td><td>8.14 \u2013 8.18<\/td><\/tr><tr><td>Housekeeping, manpower, private security, vehicle hiring, HaaS<\/td><td>NC<\/td><td>8.20 \u2013 8.24<\/td><\/tr><tr><td>Logistics \u2014 transport, title, receipt, storage, GRIR<\/td><td>G<\/td><td>9.30<\/td><\/tr><tr><td>Compensation Events; Time at Large; the three closure reconciliations<\/td><td>W<\/td><td>9.26, 9.27, 9.31<\/td><\/tr><tr><td>Contract Monitoring Committee; post-contract review<\/td><td>C + NC<\/td><td>9.2, 9.32<\/td><\/tr><tr><td>The AMRCD mechanism for CPSE disputes<\/td><td>W<\/td><td>9.47<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>0.7<\/span>Master Concordance \u2014 The Principal Numerical Divergences<\/span><\/h2>\nWhere the four Manuals prescribe different figures for the same thing, the difference is almost always examinable. These are collected here for revision; each is dealt with in its place in the text.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Provision<\/th><th>G<\/th><th>W<\/th><th>C<\/th><th>NC<\/th><th>See<\/th><\/tr><\/thead><tbody><tr><td>Open Tender Enquiry applies above<\/td><td>Rs 50 lakh<\/td><td>Rs 10 lakh<\/td><td>Rs 50 lakh<\/td><td>Rs 50 lakh<\/td><td>4.8<\/td><\/tr><tr><td>Special Limited Tender Enquiry above<\/td><td>Rs 50 lakh<\/td><td>Rs 10 lakh<\/td><td>Rs 50 lakh<\/td><td>Rs 50 lakh<\/td><td>4.15<\/td><\/tr><tr><td>QCBS \u2014 weight of quality<\/td><td>not used<\/em><\/td><td>not above 30%<\/td><td>70%<\/td><td>not above 30%<\/td><td>4.4.3, 7.20<\/td><\/tr><tr><td>Performance security<\/td><td>3 \u2013 5%<\/td><td>3 \u2013 10%<\/td><td> \u2014 <\/td><td>3 \u2013 5%<\/td><td>6.2<\/td><\/tr><tr><td>Firm price contracts up to<\/td><td>12 months<\/td><td>18 months<\/td><td>12 months<\/td><td>12 months<\/td><td>6.14.2<\/td><\/tr><tr><td>Consequence under a Bid Securing Declaration<\/td><td>suspended<\/td><td>debarred<\/td><td>suspended<\/td><td>suspended<\/td><td>6.1<\/td><\/tr><tr><td>Exemption from bid security<\/td><td>MSEs and Start-ups<\/td><td>Start-ups only<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>6.1<\/td><\/tr><tr><td>Liquidated damages per week<\/td><td>0.5%<\/td><td>1% for repair works up to Rs 20 lakh, otherwise 0.5%<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>9.24.2<\/td><\/tr><tr><td>Debarment for breach of the Code of Integrity<\/td><td>not less than 6 months<\/td><td>not less than 6 months<\/td><td>not exceeding 2 years<\/td><td>not less than 6 months<\/td><td>3.5.5<\/td><\/tr><tr><td>Reference to the Competition Commission signed by<\/td><td>Joint Secretary<\/td><td>Joint Secretary<\/td><td>Competent Authority<\/td><td>Joint Secretary<\/td><td>3.5.5<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>0.8<\/span>A Note on the Source Texts<\/span><\/h2>\nTwo errors in the source Manuals have been retained and flagged rather than silently corrected, because a candidate may be examined on the text as printed:<\/p>\n<ol class=\"lst\"><li>The Goods Manual states the threshold below which performance security is not necessary as \"Rupees 50 (twenty-five) lakh\"<\/em> \u2014 the figure and the word do not agree.<\/li><li>The Goods and Consultancy Manuals cite the rule on enlistment of Indian agents as \"Rule 52\"<\/em>; the Works and Non-Consultancy Manuals correctly cite Rule 152<\/strong> of the General Financial Rules, 2017.<\/li><\/ol>\nA third point of substance should also be noted. The Consultancy Manual assigns 70% weight to the technical score and 30% to cost, and then states two paragraphs later that \"the weightage of the cost element adopted in Consultancy services is as high as 70 per cent.\"<\/em> That sentence is correct in the Non-Consultancy Manual, where cost does carry 70%, but is internally inconsistent in the Consultancy Manual. Both sentences are reproduced in this Manual at paragraph 7.20.<\/p><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch1\">Chapter 1<\/p><h1>Introduction \u2014 Principles and Policies<\/h1><\/header><div class=\"upm-key\">\nColour key \u2014 which Manual a passage comes from<\/b>\n<\/i>Common to all four<\/span>\n<\/i>Goods only<\/span>\n<\/i>Works only<\/span>\n<\/i>Consultancy only<\/span>\n<\/i>Non-Consultancy only<\/span>\n<\/i>Two or three Manuals<\/span>\n<\/div>\n<h2>1.1<\/span>Procurement Rules and Regulations; and this Manual<\/span><\/h2>\n<ol class=\"lst\"><li>Various Ministries, Departments, attached and subordinate offices, local urban bodies, public sector enterprises, and other Government (including autonomous) bodies (hereinafter referred to as 'Procuring Entities<\/strong>') spend a sizeable amount of their budget on the Procurement of goods, works and services to fulfil their stated objectives, assigned duties\/ obligations\/ responsibilities\/ functions, and activities in alignment with desired policy outcomes.<\/li><li>G<\/span>C<\/span>NC<\/span> The Ministries\/ Departments have been delegated full powers<\/strong> to make their own arrangements for the procurement of goods and services that are not<\/strong> available on the Government e-Marketplace (GeM). These powers must be exercised as per the Delegation of Financial Power Rules and in conformity with the 'Procurement Guidelines' described below. Common use Goods and Services available on GeM are required to be procured mandatorily<\/strong> through GeM as per Rule 149 of GFR, 2017<\/strong>.<\/li><\/ol>\nW<\/span> The Ministries\/ Departments have been delegated powers to make their own arrangements for procurement of works under the Delegation of Financial Power Rules, which have to be exercised in conformity with the 'Procurement Guidelines' described below.<\/p>\n<ol class=\"lst\"><li>To ensure that these procurements are made by following a uniform, systematic, efficient and cost-effective procedure, and also to ensure fair and equitable treatment of suppliers\/ bidders\/ contractors\/ consultants\/ service providers<\/strong>, there are guidelines comprising a hierarchy of Statutory framework, Rules and Regulations, Manuals of Procurement and Procurement Documents as detailed in Annexure 1 of the Manual for Procurement of Goods, Second Edition, 2024<\/strong> (hereinafter referred to as 'Procurement Guidelines<\/strong>').<\/li><\/ol>\n<aside class=\"note\">C<\/span> adds: there is a hierarchy of statutory provisions, rules, financial, vigilance, security, safety, counter-trade and other regulations; orders and guidelines of the Government about public procurement.<\/p><\/aside>\n<ol class=\"lst\"><li>At the apex of the Statutory framework governing public Procurement is Article 299 of the Constitution of India<\/strong>, which stipulates that contracts legally binding on the Government must be executed in writing by officers specifically authorised to do so. The Constitution also enshrines Fundamental Rights \u2014 in particular Article 14<\/strong> (Right to Equality before Law) and Article 19(1)(g)<\/strong> (Right to practise any profession, or to carry on any occupation, trade, or business) \u2014 which have implications for Public Procurement.<\/li><\/ol>\nFurther:<\/p>\n<ul class=\"lst\"><li>G<\/span>C<\/span>NC<\/span> The Indian Contract Act, 1872<\/strong> and the Sale of Goods Act, 1930<\/strong> are significant legislations governing contracts of sale\/ purchase of goods in general.<\/li><li>W<\/span> The Indian Contract Act, 1872<\/strong> is a significant legislation governing contracts in general.<\/li><\/ul>\nThere are other mercantile laws that may be attracted in Public Procurement transactions:<\/p>\n<ul class=\"lst\"><li>Arbitration and Conciliation Act, 1996<\/li><li>Mediation Act, 2023<\/strong>(in G, W, NC)<\/em><\/li><li>Competition Act, 2002<\/li><li>Information Technology Act, 2000<\/li><li>Indian Stamp Act, 1899 (in W, C, NC)<\/em><\/li><\/ul>\n \u2014 all as amended from time to time.<\/p>\n<ol class=\"lst\"><li>In the Central Government, there is no law exclusively governing public procurement<\/strong>. However, comprehensive Rules and Regulations in this regard are available in:<\/li><li>General Financial Rules (GFR), 2017<\/strong> \u2014 especially [G, C, NC]<\/strong> Chapters 6 to 9; W<\/span> Chapters 5 to 9;<\/li><li>Delegation of Financial Powers Rules (DFPR) \u2014 [W, C, NC] cite DFPR, 2024;<\/li><li>Government orders regarding purchase preference\/ restrictions, such as the Public Procurement (Preference to Make in India) Order, 2017<\/strong>; facilities to Micro and Small Enterprises<\/strong> and Start-ups<\/strong>; Restrictions on Entities from a Class of Countries (Rule 144(xi), GFR 2017)<\/strong>; and W<\/span> relaxation of the conditions of prior turnover and prior experience for start-up enterprises.<\/li><li>Without purporting to be a comprehensive compendium of all such 'Procurement Guidelines', this Manual is intended to serve as a portal to enter this vast area<\/strong> and draw attention to basic norms and practices governing public procurement.<\/li><\/ol>\n<h2>1.2<\/span>Clarification, Amendments and Revision of this Manual<\/span><\/h2>\nThe Procurement Policy Division, Department of Expenditure, Ministry of Finance<\/strong> would be the nodal authority<\/strong> for this Manual's revision, interpretation, and clarification.<\/p>\n<h2>1.3<\/span>Applicability of this Manual<\/span><\/h2><h3>1.3.1<\/span>Category of Procurements<\/span><\/h3>\nG<\/span> The Goods Manual applies to the Procurement of all \"Goods<\/strong>\" as defined in the 'Procurement Glossary' section. What is unique about the Procurement of goods (as compared to services and works) is the ability to precisely describe the technical specification and scope of the requirement<\/strong>. The other Manuals (Consultancy Services, Non-consultancy Services and Works) are generically based on the Goods Manual<\/strong>. Hence, for any topic for which guidance cannot be found in those Manuals, the Manual for Procurement of Goods shall apply mutatis mutandis<\/strong><\/em>. For the sake of brevity, those Manuals refer to some of the sections of the Goods Manual without reproducing them.<\/p>\nW<\/span> The Works Manual applies to procurement of all \"Works<\/strong>\" as defined in the 'Procurement Glossary' section.<\/p>\nC<\/span> The Consultancy Manual applies to procurement of \"Consultancy Services<\/strong>\" as defined in the 'Procurement Glossary' section. For any circumstances not covered, the Procuring Entity may refer to the Manual for Procurement of Goods, 2024.<\/p>\nNC<\/span> The Non-Consultancy Manual applies to procurement of \"Non-consultancy Services<\/strong>\" (including \"Outsourcing of Services\"<\/strong>) as defined in the 'Procurement Glossary' section. For any circumstances not covered, the Procuring Entity may refer to the Manual for Procurement of Goods, 2024 (Rule 206 of GFR, 2017<\/strong>).<\/p>\n<h3 class=\"src-W\">1.3.2<\/span>Classification of Works<\/span>W<\/span><\/h3><div class=\"srcblock src-W\">\nThe civil works are classified in GFR 2017 (Rule 130)<\/strong> into three categories:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Meaning<\/th><\/tr><\/thead><tbody><tr><td>(a) Original Works<\/td><td>All new constructions, site preparation, additions and alterations to existing works. Also includes special repairs to newly purchased or previously abandoned buildings or structures, including remodelling or replacement.<\/td><\/tr><tr><td>(b) Minor Works<\/td><td>Works which add capital value to existing assets but do not create new assets.<\/td><\/tr><tr><td>(c) Repair Works<\/td><td>Works undertaken to maintain building and fixtures. Expenditure on Repair Work does not add to the value of the asset and only restores the functionality of the asset.<\/td><\/tr><\/tbody><\/table><\/div>\nRepair Work can be further categorised as:<\/p>\n<ol class=\"lst\"><li>Annual repairs<\/strong> \u2014 covering routine and yearly operation and maintenance work on buildings and fixtures;<\/li><li>Special repairs<\/strong> \u2014 undertaken as and when required, covering major repairs to existing buildings or structures. Some types of Special repairs may qualify to be categorised as 'Original Work' as mentioned above.<\/em><\/li><\/ol>\n<\/div><h3>1.3.3<\/span>Procuring Entities<\/span><\/h3>\n<ol class=\"lst\"><li>This Manual shall apply to all Procuring Entities covered by Rule 1 of GFR<\/strong>, i.e., all Central Government Ministries\/ Departments, attached and subordinate bodies. These provisions shall also apply, as per the same rule, to autonomous bodies<\/strong> except to the extent that the bye-laws of an autonomous body provide separate procurement guidelines* that the Government has approved.<\/li><\/ol>\n<aside class=\"note\">\\* Such approved guidelines must retain fundamental provisions relating to the Constitution and Government instructions relating to Preferential Procurement Policies, GTE and Land Border restriction, General Instructions on Procurement and Project Management (No. F.1\/1\/2021-PPD dated 20.10.2021).<\/p><\/aside>\n<ol class=\"lst\"><li>W<\/span> \u2014 additional provisions on addressees:<\/li><li>This Manual inter alia<\/em> covers fundamental provisions relating to the Constitution; Government instructions relating to Preferential Procurement Policies; GTE; Land Border restriction; and General Instructions on Procurement and Project Management (No. F.1\/1\/2021-PPD dated 20.10.2021), which are mandatory for all entities of Central Government<\/strong>.<\/li><li>This Manual is addressed to Ministries\/ Departments, their attached and subordinate offices, and autonomous bodies whose in-house capabilities are limited to repair works of up to Rs 60 lakh<\/strong> and who assign larger repair works (and original works) to third parties (Public Works Organisations or CPSEs) \u2014 Rule 133 of GFR, 2017 (as amended)<\/em>. Refer para 3.1 of the Works Manual for further details.<\/li><li>This Manual may also be useful for Ministries\/ Departments, their attached and subordinate offices, and autonomous bodies who have in-house capabilities for direct execution of larger works<\/strong> but may not have their own detailed procurement guidelines.<\/li><li>The Manual does not purport to address<\/strong> procurement of larger works for which major works procuring Ministries\/ Departments \u2014 like the Central Public Works Department (CPWD); Military Engineering Service (MES); Border Roads Organisation (BRO); Ministries of Railways; Information & Broadcasting; and Departments of Posts and Space<\/strong>, etc. \u2014 already have their own detailed guidelines tailored to unique individual requirements. They may, however, ensure that their procurement guidelines comply with the mandatory provisions mentioned in sub-para (a) above.<\/li><\/ol>\n<h3>1.3.4<\/span>Statutory Bodies and CPSEs<\/span><\/h3>\nThese guidelines shall also be applicable to bodies substantially owned or controlled by, or receiving substantial financial assistance from<\/strong>, the Central Government \u2014 inter alia<\/em>:<\/p>\n<ul class=\"lst\"><li>Central Public Sector Enterprises (CPSEs or undertakings, including their subsidiary companies\/ Ventures);<\/li><li>Public Sector Banks (PSBs);<\/li><li>Public Sector Insurance Companies (PSICs);<\/li><li>Public Sector Financial Institutions (FIs);<\/li><li>Constitutional or Statutory Bodies;<\/li><li>Public Academic Institutions (National\/ Central institutes); and<\/li><li>Commissions created under the Constitution of India or specific legislations<\/li><\/ul>\n \u2014 except to the extent of deviations that have been approved by their competent authority (e.g., Board of Directors<\/strong> in CPSEs).<\/p>\n<h3>1.3.5<\/span>Indian Missions and CPSE Units Abroad<\/span><\/h3>\nWhile the applicability of the Manual in the case of Indian Missions abroad and CPSE Units abroad shall be as per paras 1.3.3 and 1.3.4 above respectively, the following is clarified:<\/p>\na) Adopting Financial Limits\/ Thresholds in Local Currency:<\/strong> For procurements done and for use outside India, in the host country's local currency, Indian Missions and CPSE units abroad may adopt General Financial Rules (GFR) financial limits\/ thresholds of procurements (as mentioned in this Manual at various instances, e.g., selection of mode of Procurement etc.) by using the latest INR-PPP conversion rates<\/strong> for the local currency as published by the IMF<\/strong> (International Monetary Fund). For convenience, such converted limits\/ thresholds may be reviewed annually<\/strong>. Even if the Procurement is to be done in a currency other than the local currency, the applicable financial limits\/ thresholds of procurements shall be in terms of the INR-PPP conversion rate for the local currency only<\/strong>. If the IMF does not publish the PPP conversion rate for local currency, then the conversion may be done to the currency most relevant to that mission\/ unit in consultation with the Financial Adviser<\/strong>.<\/p>\n<aside class=\"note\">Illustration (as given in all four Manuals):<\/strong> Financial limits in GFR are to be calculated for the Indian Mission in Bangladesh, where the relevant local currency is Bangladesh Taka (BT). Let the PPP conversion rate (as per international dollar) published by the IMF for INR and BT in a particular year be as follows:<\/p>\nRs. 22.947 = 1 USD = 31.98 BT<\/strong> The PPP-based conversion rate for BT\/INR may be calculated as 31.98 \u00f7 22.947 = 1.394<\/strong>. Thus, a threshold of INR 25,00,000<\/strong> (say the threshold for OTE) would then be 34,85,000 BT<\/strong>.<\/p><\/aside>\nb) Exemptions:<\/strong> For exemptions from restrictions relating to Global Tenders<\/strong>, bidders from Land-border countries<\/strong>, and eProcurement<\/strong> for bona fide procurements and use outside India by Indian Missions and CPSE Units abroad, please refer to paragraphs 4.3.2-4-g)<\/strong>(W cites 4.3.2-4-h)<\/em>, 1.11.4-3-f)ii)<\/strong>, and 4.17.1-4<\/strong>(W cites 4.17.1-5)<\/em> respectively, in the Manual for Procurement of Goods, 2024<\/strong>.<\/p>\n<h3>1.3.6<\/span>Portals<\/span><\/h3>\n<ul class=\"lst\"><li>G<\/span> GeM portal, GePNIC portal (Government e-Procurement of NIC, eproc.gov.in), and various such platforms of different Organisations carry out a substantial proportion of Public Procurement. Hence, the procedures for such platforms should conform to these 'Procurement Guidelines'.<\/li><li>W<\/span> Central Public Procurement Portal (CPPP of NIC, eproc.gov.in), and various such platforms.<\/li><li>C<\/span>NC<\/span> GeM portal, CPPP (Central Public Procurement Portal), and various such platforms \u2014 the procedures for such platforms should generally<\/strong> conform to these 'Procurement Guidelines'.<\/li><\/ul>\n<h3>1.3.7<\/span>Outsourced Procurement<\/span><\/h3>\nThese procurement guidelines would continue to apply<\/strong> if these procuring entities:<\/p>\n<ul class=\"lst\"><li>outsource the procurement process, or<\/li><li>bundle the procurement process with other contractual arrangements, or<\/li><li>utilise the services of a procurement support agency<\/strong> or procurement agents<\/strong> to carry out the Procurement on their behalf.<\/li><\/ul>\n<h3>1.3.8<\/span>Customisation<\/span><\/h3>\nThis Manual is to be taken as generic guidelines<\/strong>, which are necessarily broad in nature. (C<\/span>NC<\/span> add: Subject to the observance of these generic guidelines,)<\/em> Procuring Entities are advised to customise these Manuals, with the approval of competent authority and financial concurrence<\/strong>, to suit their local\/ specialised needs by issuing their own detailed Manuals (including customised formats); Model Tender Documents; Schedule of Procurement Powers; and Checklists \u2014 to serve as practical instructions for their officers and to ensure completeness of examination of cases.<\/p>\nFor procuring organisations that have their own detailed manuals or procedure orders, the initiation, authorisation, Procurement, and execution of contracts<\/strong> undertaken by them shall be regulated by detailed rules and orders contained in their respective regulations and by other special orders applicable to them.<\/p>\n<h3>1.3.9<\/span>Exemptions<\/span><\/h3>\nThese procurement guidelines would not apply to procurements by procuring entities mentioned above for their own use from their subsidiary companies, including Joint Ventures, where they have a controlling share.<\/p>\nMoreover, by a general or special notification, the Government may permit certain 'Procuring Entities' mentioned above, considering unique conditions under which they operate, for all or certain categories of procurement, to adopt detailed approved guidelines for procurement which may deviate in some respects but conform with all other essential aspects<\/strong> of these 'Procurement Guidelines'.<\/p>\n<h3>1.3.10<\/span>Procurements financed by Loans\/ Grants extended by International Funding Agencies<\/span><\/h3>\n<ol class=\"lst\"><li>For projects funded by the World Bank<\/strong>, Asian Development Bank<\/strong>, and other International Funding Agencies (IFA)<\/strong>, the Articles of Agreement, with the approval of the Ministry of Finance, stipulate either the Indian (or State) Government's own procurement procedures or<\/strong> the IFA's specific procurement procedures to be followed by the borrowers.<\/li><li>These guidelines would not<\/strong> be applicable to projects funded by the World Bank using the Investment Project Financing (IPF)<\/strong> instrument and similar instruments of other IFAs, as stipulated under Articles of Agreement as mentioned under sub-para (a) above. IFA's specific procurement procedures shall be applicable as permitted under Rule 264 of GFR, 2017<\/strong>.<\/li><li>However, for projects financed using instruments such as Program-for-Results (PforR)<\/strong> of the World Bank, and Results-based Lending (RBL)<\/strong> of the Asian Development Bank, and similar instruments of other IFAs, the application of these guidelines as expressly agreed in the legal agreements<\/strong> shall be followed.<\/li><\/ol>\n<h2>1.4<\/span>Categorisation of Procurements<\/span><\/h2><h3>1.4.1<\/span>Categories<\/span><\/h3>\nCategorisation of Procurements helps prepare guidelines for Procurements and Model Tender Documents, which cater to peculiar contractual conditions of the categories of procurements. G<\/span> These categories may be further sub-categorised, e.g., Capital Equipment procurement in Goods.<\/p>\nFollowing are the categories of procurements (please refer to their definitions in the 'Procurement Glossary' section):<\/p>\n<ul class=\"lst\"><li>a) Goods<\/li><li>b) Services<\/li><li>i) Consultancy Services, and<\/li><li>ii) Non-consultancy services (NC services)<\/li><li>c) Works<\/li><\/ul>\n<h3>1.4.2<\/span>Distinctive Features<\/span><\/h3>\nNormally, such categorisation is evident from their definition, and Procurement should be done accordingly, following the relevant guidelines and Model Tender Documents. The boundaries between such categorisation may not be clear-cut and may overlap<\/strong>. It may neither be possible nor necessary to distinguish precisely between the categories in overlapping areas. Though simplistic, the main distinguishing factors between these are:<\/p>\n<ol class=\"lst\"><li>While both Goods<\/strong> and Works<\/strong> lead to tangible outputs<\/strong> (with some exceptions like IPR materials), the main difference between goods and works is that the manufacture of goods is done on the supplier's own premises<\/strong> (other than installation\/ commissioning), whereas 'Works<\/strong>' is executed on the premises of the procuring entity<\/strong> (other than pre-fabricated components). Works may include incidental 'Goods' and vice versa.<\/li><li>The main difference between 'Goods<\/strong>' or 'Works<\/strong>' on the one hand and 'Services<\/strong>' on the other is the intangibility of the outputs of Services<\/strong>.<\/li><li>The main difference between Consultancy and Non-consultancy services is the level of intellectual input, which is predominant in Consultancy and not central to Non-consultancy. Another difference is that non-consultancy services are repetitive routines with measurable and standardised outputs, while consultancy services are one-off and non-routine, with outputs that are neither precisely measurable nor standardised.<\/li><\/ol>\n<h3>1.4.3<\/span>In Case of Doubt<\/span><\/h3>\nProcurement in cases of doubts about categorisation may be handled as follows:<\/p>\na) Simpler procedure rule:<\/strong> In the case of blurred border lines and grey areas, a simpler procurement procedure<\/strong> should be followed. In case of doubt between:<\/p>\n<ul class=\"lst\"><li>i) Goods<\/strong> and works\/ NC services\/ consultancy \u2192 process as Procurement of Goods<\/strong>;<\/li><li>ii) Works<\/strong> and NC service\/ consultancy \u2192 process as Procurement of Works<\/strong>;<\/li><li>iii) Non-consultancy and Consultancy services \u2192 process as Procurement of Non-consultancy services.<\/li><\/ul>\nb) IT Projects:<\/strong> The Procurement of IT projects should usually be carried out as a procurement of Consultancy services<\/strong>, as the outcomes\/ deliverables vary from one service provider to another. The IT Projects may include:<\/p>\n<ul class=\"lst\"><li>i) tailor-made\/ bespoke software development<\/strong>;<\/li><li>ii) cloud-based services;<\/li><li>iii) composite IT system integration services<\/strong> involving the design, development, deployment and commissioning of IT systems, including hardware supply, software development, bandwidth, and operation\/ maintenance of the system for a defined period after going live, etc.<\/li><\/ul>\nc) Composite Contracts<\/strong>(PPD's OM No. F6\/2\/2023-PPD dated 13.01.2023)<\/em>: Composite contracts may involve mixed elements of Goods, Works, and Services. For example, in the Procurement of large machinery, some works and services like Installation, Commissioning, Training, Annual Maintenance Contract (AMC) or a Comprehensive Maintenance Contract (CMC), and so on, may be incidental to the supply of goods. The relationship of primacy between the goods element and the works\/ services element may be examined, irrespective of the relative values.<\/strong><\/p>\n<ul class=\"lst\"><li>If the primary intention\/ objective is the Procurement of goods<\/strong> with services\/ works being incidental to it, it may be processed as Procurement of Goods<\/strong>.<\/li><li>However, if the primary intention\/ objective is Procurement of Works\/ Services<\/strong> with Procurement of goods being incidental, then it should generally be processed as Procurement of Works\/ Services<\/strong> (as the case may be), irrespective of the relative values<\/strong>.<\/li><li>A possible alternative approach could be to have separate but linked contracts<\/strong> for such elements of Goods, Works, and Services, but implementation may become challenging.<\/li><\/ul>\nW<\/span>C<\/span>NC<\/span> \u2014 further refinements:<\/p>\n<ul class=\"lst\"><li>i) Procurement of \"new product<\/strong>\" viz. Mechanical, Electrical or ICT assets etc. of the nature of Machinery and Plant<\/strong>, with incidental works\/ services like fabrication, installation, erection, commissioning, AMC\/CMC, should be handled as procurement of Goods<\/strong> \u2014 except for procurement of IT Projects as specified above.<\/li><li>ii) AMC\/ CMC of existing<\/strong> Mechanical, Electrical or ICT assets of the nature of Machinery and Plant should be treated as procurement of Non-Consultancy Services<\/strong>.<\/li><\/ul>\n<aside class=\"note\">Notes:<\/p>\n<ol class=\"lst\"><li>If the NC services primarily involve construction, fabrication, repair, maintenance, overhaul, renovation, decoration, installation, erection, excavation, dredging and so on of Civil assets, then it should be handled as procurement of Works.<\/li><li>G<\/span> variant: *In case of fabrication, repair, maintenance, overhaul, renovation, decoration, installation, erection and so on, of mechanical, electrical or ICT assets \u2014 e.g. Annual Maintenance Contracts or installation\/ commissioning of Machinery and Plant \u2014 it may be handled as Procurement of Goods rather than Procurement of Services.*<\/li><li>W<\/span>C<\/span>NC<\/span> Procurement of new mechanical and electrical works<\/strong> (not<\/strong> in the nature of Machinery and Plant) involving fabrication, installation, or erection of a mechanical or electrical nature should be treated as procurement of Works<\/strong>, if elements of procurement of Goods are incidental.<\/li><li>W<\/span>C<\/span>NC<\/span> Repair, renovation, maintenance, overhauling, decoration, AMC\/ CMC or similar work for existing<\/strong> Mechanical, Electrical or ICT assets NOT<\/strong> of the nature of Machinery and Plant etc. should normally be handled as procurement of Services<\/strong>.<\/li><\/ol><\/aside>\nd) Consultancy vs Non-Consultancy \u2014 the \"primary objective\" test W<\/span>C<\/span>NC<\/span>:<\/strong> It is possible that, depending on the nature and complexity of the assignment, a task could be dealt with either<\/strong> as a consultancy or<\/strong> a non-consultancy service. In essence, if the intellectual and advisory part<\/strong> of services is the primary objective<\/strong> (irrespective of the relative value of this component), the selection needs to be dealt with in Consultancy mode<\/strong>.<\/p>\n<aside class=\"note\">Example given in the Manuals:<\/strong> If the task is looking at the condition of a dam (for dam safety) by physically inspecting the dam through underwater observation, this task is a collection of data using technologies and photography \u2014 but the actual analysis is an intellectual and advisory task<\/strong> and is the primary objective<\/strong> of the assignment. Therefore, the entire task<\/strong> needs to be dealt with as the selection of a consultant<\/strong>.<\/p><\/aside>\n<h2>1.5<\/span>Authorities Competent to Incur Expenditure on Procurements and Consultation with Financial Advisers<\/span><\/h2>\n<ol class=\"lst\"><li>The first step in procurement<\/strong> is the decision to procure<\/strong> something \u2014 goods, services, works, etc. \u2014 involving a formal decision to procure along with the exact or approximate expenditure<\/strong> to be incurred. A Competent Authority that is competent to incur expenditure may accord administrative sanction\/ approval<\/strong> to incur expenditure on a specific procurement in accordance with the Delegation of Financial Powers Rules (DFPR)<\/strong> by following the 'Procurement Guidelines' (Rule 145 of GFR 2017<\/strong>).<\/li><\/ol>\nEach 'Procuring Entity' may issue a Schedule of Procurement Powers (SoPP)<\/strong>, adding further details to the broad delegations in the DFPR based on assessing risks<\/strong> involved in different decisions\/ approvals at various stages of the Procurement Cycle.<\/p>\n<aside class=\"note\">Annexure references:<\/strong> DFPR extract \u2014 G<\/span> Annexures 2 and 3; [W, C, NC]<\/strong> Annexure 1. Suggested structure of SoPP \u2014 G<\/span> Annexure 4; [W, C, NC]<\/strong> Annexure 2.<\/p><\/aside>\n<ol class=\"lst\"><li>Being a decision with a financial bearing, it invariably requires consultation of the Financial Adviser<\/strong> (unless validly re-delegated within permissible limits or otherwise permitted by DoE through specific orders). The extent of involvement of the Financial Adviser and the Integrated Finance Division (IFD) in subsequent stages of procurement matters may be based on one of the following procedures<\/strong> (Para 19, Charter for Financial Advisers, 2023<\/strong>):<\/li><\/ol>\na) Normal Procedure: Under this procedure, the concurrence of the Financial Adviser\/ IFD shall be required on all procurement matters, except for matters where re-delegation has been done within the permissible limits under the rules\/ general orders\/ general instructions of DoE. Unless the Secretary of the Department approves a special procedure with the concurrence of DoE, this procedure shall be followed.<\/p>\nb) Special Procedure:<\/strong> With the prior concurrence of Secretary (Expenditure)<\/strong>, the Secretary of the Department may decide on a different level of involvement<\/strong> of the Financial Adviser\/ IFD specific to the Department. The procedure shall lay out the types\/ classes of cases where the Financial Adviser\/ IFD consultation would be required, which may be in terms of:<\/p>\n<ul class=\"lst\"><li>threshold financial limits,<\/li><li>stages in Procurement, or<\/li><li>types of Procurement and contracts, viz. consultancy (NC<\/span> adds: \/ non-consultancy)<\/em>, goods and works contracts, etc.,<\/li><li>or any permutation thereof.<\/li><\/ul>\nG<\/span> clarification: It is further clarified that <\/strong>this system will be applicable only to Ministries\/ Departments etc. covered under the FA Charter. All other organisations, including CPSEs, are free to devise their own system.<\/p>\n<ol class=\"lst\"><li>In all procedures, payments under approved contracts shall not require IFD consultation, except in cases where the payments are in relaxation\/ variation to approved contract conditions.<\/li><\/ol>\n<h2>1.6<\/span>Basic Aims of Procurement \u2014 the Five R's of Procurement<\/span><\/h2>\nIn every Procurement, public or private, the basic aim is to achieve just the right balance between costs and requirements<\/strong> with respect to five parameters called the Five 'R's of Procurement<\/strong>. The entire process of Procurement \u2014 from the time the need for an item, facility or service is identified till the need is satisfied \u2014 is designed to achieve such a right balance. The word 'Right<\/strong>' is used in the sense of 'optimal balance<\/strong>'.<\/p>\n<aside class=\"note\">[W, C, NC] note:<\/strong> Although couched in the jargon of procurement of Goods, the Five R's are equally applicable<\/strong> to procurement of Works, Consultancy Services and Non-consultancy Services.<\/p><\/aside>\nThe Five R's are: 1. Right Quality; 2. Right Quantity; 3. Right Price; 4. Right Time and Place; and 5. Right Source.<\/p>\n<h3>1.6.1<\/span>Right Quality<\/span><\/h3>\nProcurement aims to buy just the right quality that will suit the needs \u2014 no more and no less<\/strong> \u2014 with precise specifications of the procuring entity's requirements, a proper understanding of the functional value and cost, and an understanding of the bidder's quality system and quality awareness. The concept of the right balance of quality can be further refined to the concept of utility\/ value<\/strong> (refer para 1.7 below). Technical specifications and quality assurance plans are the most vital ingredients for the right quality.<\/strong> In public procurement, it is essential to give due consideration to value for money<\/strong> while preparing the specifications.<\/p>\n<h3>1.6.2<\/span>Right Quantity<\/span><\/h3>\nThere are extra costs and systemic overheads<\/strong> involved with both<\/strong> procuring a requirement too frequently in small quantities and<\/strong> buying significant quantities for prolonged use. Hence, the right quantity should be procured (in the appropriate size of the contract), which balances extra costs associated with larger and smaller quantities<\/strong>.<\/p>\n<h3>1.6.3<\/span>Right Price<\/span><\/h3>\nIt is not correct to aim at the cheapest<\/strong> materials\/ facilities\/ services available. The price should be just right for the quality, quantity, and other factors involved<\/strong> \u2014 or should not be abnormally low<\/strong> for facilities, works, or services, which could lead to a situation of non-performance or failure of contract. The concept of price can be refined further to consider not only the initial price paid for the requirement but also other costs such as maintenance costs, operational costs, and disposal costs<\/strong> (also termed life cycle costing<\/strong> \u2014 refer para 1.7 below).<\/p>\n<h3>1.6.4<\/span>Right Time and Place<\/span><\/h3>\nIf an organisation needs the material (or facility or services) in three months, it will be costly to procure it too late or too early<\/strong>. Similarly, if the vendor delivers the materials\/ facilities\/ services in another city, extra time and money would be involved in logistics<\/strong>. An unrealistic time schedule<\/strong> for completion of a facility may lead to delays, claims, and disputes<\/strong>.<\/p>\n<h3>1.6.5<\/span>Right Source<\/span><\/h3>\nThe source of delivery of Goods, Works and Services must have just the right financial capacity and technical capability<\/strong> for our needs \u2014 demonstrated through satisfactory past performance of contracts of the same or similar nature<\/strong>. Buying a few packets of printer paper directly from a large manufacturer may not be the right strategy. On the other hand, if our requirements are large, buying such requirements through dealers or intermediaries<\/strong> may also not be right.<\/p>\n<aside class=\"note\">These advanced concepts are further explained in Appendix 1: Advanced Concepts of Value for Money<\/strong> of the Manual for Procurement of Goods, 2024.<\/em><\/p><\/aside>\n<h2>1.7<\/span>Refined Concepts of Cost and Value \u2014 Value for Money<\/span><\/h2>\nThe concept of price or cost has been further refined into:<\/p>\n<ul class=\"lst\"><li>Total Cost of Ownership (TCO),<\/li><li>Life Cycle Cost (LCC), or<\/li><li>Whole-of-Life (WOL) cost<\/li><\/ul>\n \u2014 to consider not only the initial acquisition cost<\/strong> but also the cost of operation, maintenance, and disposal<\/strong> during the lifetime of the external resource procured.<\/p>\nSimilarly, the concept of quality<\/strong> is linked to the need and is refined into the concept of utility\/ value<\/strong>.<\/p>\nThese two, taken together, are used to develop the concept of Value for Money (VfM)<\/strong> \u2014 also called Best Value for Money<\/strong> in certain contexts.<\/p>\nVfM means the effective, efficient, and economical use of resources, which may involve the evaluation of:<\/p>\n<ul class=\"lst\"><li>relevant costs and benefits<\/strong>, along with<\/li><li>an assessment of risks<\/strong>,<\/li><li>non-price attributes<\/strong> \u2014 e.g., goods and\/or services that contain recyclable content, are recyclable, minimise waste and greenhouse gas emissions, conserve energy and water, minimise habitat destruction and environmental degradation, are non-toxic, etc., and\/or<\/li><li>life cycle costs<\/strong>, as appropriate.<\/li><\/ul>\nPrice alone may not necessarily represent VfM.<\/p>\nIn public Procurement, VfM is achieved by attracting the widest competition by way of:<\/p>\n<ul class=\"lst\"><li>optimal description of need;<\/li><li>development of value-engineered specifications\/ Terms of Reference (ToR);<\/li><li>appropriate packaging\/ slicing<\/strong> of requirement;<\/li><li>selection of an appropriate mode of Procurement<\/strong> and tendering system<\/strong>.<\/li><\/ul>\n<aside class=\"note\">These advanced concepts are explained in Appendix 1: Advanced Concepts of Value for Money<\/strong> of the Manual for Procurement of Goods, 2024.<\/em><\/p><\/aside>\n<h2>1.8<\/span>Fundamental Principles of Public Procurement<\/span><\/h2>\nGeneral Financial Rules, 2017 (Rule 144)<\/strong> lay down the Fundamental Principles of Public Procurement. These principles and other additional obligations of procuring authorities in public Procurement can be organised into five fundamental principles of public Procurement<\/strong>, which all procuring authorities must abide by and be accountable for<\/strong>:<\/p>\n<ol class=\"lst\"><li>Transparency Principle<\/li><li>Professionalism Principle<\/li><li>Broader Obligations Principle<\/li><li>Extended Legal Responsibilities Principle<\/strong>(C<\/span> terms it \"Extrinsic legal principle\"; W<\/span> terms it \"Extended legal principle\")<\/em><\/li><li>Public Accountability Principle<\/li><\/ol>\n<h3>1.8.1<\/span>Transparency Principle<\/span><\/h3>\nAll procuring authorities are responsible and accountable<\/strong> for ensuring transparency, fairness, equality, competition, and appeal rights<\/strong>. This involves simultaneous, symmetric, and unrestricted dissemination of information<\/strong> to all likely bidders, sufficient for them to know and understand the availability of bidding opportunities and the actual means, processes and time-limits prescribed for completion of registration of bidders, bidding, evaluation, grievance redressal, award, and management of contracts.<\/p>\nIt implies that such officers must ensure:<\/p>\n<ul class=\"lst\"><li>consistency<\/strong> (absence of subjectivity),<\/li><li>predictability<\/strong> (absence of arbitrariness),<\/li><li>clarity,<\/li><li>openness<\/strong> (absence of secretiveness), and<\/li><li>equal opportunities<\/strong> (absence of discrimination) in processes.<\/li><\/ul>\nIn essence, the Transparency Principle also enjoins upon the Procuring Authorities to do only that which they professed to do as pre-declared in the relevant published documents, and not to do anything that had not been so declared.<\/p>\nAs part of this principle, all procuring entities should ensure that offers are invited following a fair and transparent procedure and ensure publication of all relevant information on the Government e-Marketplace (GeM) and GeM-Central Public Procurement Portal (CPPP).<\/p>\n<h3>1.8.2<\/span>Professionalism Principle<\/span><\/h3>\n<ol class=\"lst\"><li>As per these synergic attributes, the procuring authorities have a responsibility and accountability to ensure professionalism, economy, efficiency, effectiveness, and integrity<\/strong> in the procurement process. They must avoid wasteful, dilatory, and improper practices<\/strong> violating the Code of Integrity for Public Procurement (CIPP)<\/strong>. They should, at the same time, ensure that the methodology adopted for Procurement is reasonable and appropriate for the cost and complexity<\/strong> and that it effectively achieves the planned objective of the Procurement. As part of this principle, the Government may prescribe professional standards and specify suitable training and certification requirements<\/strong> for officials dealing with procurement matters.<\/li><li>In reference to the above two principles \u2014 Transparency and Professionalism \u2014 it may be useful to refer to the following provision in the General Financial Rules, 2017:<\/li><\/ol>\n<aside class=\"note\">GFR, 2017, Rule 144 \u2014 Fundamental principles of public buying<\/strong>(for all procurements, including Procurement of works)<\/em>: Every authority delegated with the financial powers of procuring goods in the public interest shall have the responsibility and accountability to bring efficiency, economy, and transparency<\/strong> in matters relating to public procurement and for fair and equitable treatment of suppliers<\/strong> and promotion of competition<\/strong> in public procurement.<\/p><\/aside>\n<ol class=\"lst\"><li>The procedure to be followed in making public Procurement must conform to the following yardsticks<\/strong> (Rule 144, GFR 2017):<\/li><li>offers should be invited following a fair, transparent, and reasonable procedure<\/strong>;<\/li><li>the procuring authority should be satisfied that the selected offer adequately meets the requirement in all respects;<\/li><li>the procuring authority should satisfy itself that the price of the selected offer is reasonable and consistent with the quality required.<\/li><\/ol>\n<h3>1.8.3<\/span>Broader Obligations Principle<\/span><\/h3>\n<ol class=\"lst\"><li>Over and above transparency and professionalism, the procuring authorities also have the responsibility and accountability to conduct public Procurement in a manner that facilitates the achievement of the broader objectives, social policies and programme objectives<\/strong> of the Government \u2014 for example, economic growth, strengthening of local industry (Make in India), Ease of Doing Business, job and employment creation, and so on \u2014 to the extent these are specifically included in the 'Procurement Guidelines'. These policies are detailed in para 1.11<\/strong> below.<\/li><li>To support social policies<\/strong> \u2014 reservation of Procurement of specified goods from MSEs, weaker sections, backward regions<\/strong>, and reservation of Procurement of certain goods from MSEs.<\/li><li>To strengthen local industry and job\/ employment creation \u2014 preferential Procurement of locally manufactured goods or services (Rule 153(iii) of GFR, 2017) and support to Start-up enterprises (Rule 170(i), 173(i) of GFR, 2017).<\/li><li>To achieve programme objectives<\/strong> \u2014 reservation of Procurement of a specified class of goods from or through certain nominated CPSEs or Government Organisations<\/strong>.<\/li><li>On grounds of defence of India<\/strong> or matters directly or indirectly related thereto, including national security<\/strong> \u2014 impose restrictions, including prior registration and\/or screening<\/strong>, on Procurement from bidders from, or bidders having commercial arrangements with an entity from, a certain country or countries, or a class of countries \u2014 Rule 144(xi) of GFR, 2017<\/strong>.<\/li><li>Facilitating broader objectives of other Departments<\/strong> of Government \u2014 for example, ensuring tax or environmental compliance<\/strong> by participants, Energy Conservation<\/strong>, accessibility for People with Disabilities<\/strong>, etc. Procurement policies and procedures must comply with accessibility criteria<\/strong> that the Government may mandate from time to time.<\/li><\/ol>\n<aside class=\"note\">Footnote on accessibility criteria G<\/span>:<\/strong> Accessibility criteria for buildings and facilities are requirements that ensure that people with disabilities can access and use the buildings and facilities without barriers. These are contained in the National Building Code (NBC)<\/strong> and ISO 21542:2011<\/strong>. The \"Accessible India Campaign (Sugamya Bharat Abhiyan)<\/strong>\" is a nationwide campaign launched by the Department of Empowerment of Persons with Disabilities (DEPwD), Ministry of Social Justice & Empowerment, to provide universal accessibility to persons with disabilities.<\/p><\/aside>\n<h3>1.8.4<\/span>Extended Legal Responsibilities Principle<\/span><\/h3>\nProcuring authorities must fulfil additional legal obligations<\/strong> in public Procurement, over and above mere conformity to the mercantile laws (which even private sector procurements must comply with).<\/p>\nThe Constitution of India<\/strong> has certain provisions regarding fundamental rights and public Procurement. Courts have, over time, taken a broader view of public Procurement as a function of the 'State'<\/strong>, interpreting these to extend the responsibility and accountability of public procurement authorities. Courts in India thus exercise additional judicial review<\/strong> (beyond contractual issues) over public Procurement in relation to the manner of decision-making<\/strong> with respect to fundamental rights, fair play, and legality<\/strong>.<\/p>\nSimilarly, procuring authorities also have the responsibility and accountability to comply with the laws relating to Governance Issues<\/strong> like the Right to Information (RTI) Act<\/strong> and the Prevention of Corruption Act<\/strong>, and so on.<\/p>\n<aside class=\"note\">Details of such extended legal obligations are given in Appendix 2: Legal Aspects of Public Procurement<\/strong> of the Manual for Procurement of Goods, 2024. See also para 1.14 of this Unified Manual.<\/em><\/p><\/aside>\n<h3>1.8.5<\/span>Public Accountability Principle<\/span><\/h3>\n<ol class=\"lst\"><li>Procuring authorities are accountable for all the above principles to several statutory and official bodies in the Country \u2014 the Legislature and its Committees, Central Vigilance Commission, Comptroller and Auditor General of India, Central Bureau of Investigation and so on \u2014 in addition to administrative accountability. As a result, each individual public procurement transaction is liable to be scrutinised independently and in isolation, besides judging the overall outcomes of the procurement process over a period. Procuring authorities thus have responsibility and accountability for compliance with rules and procedures in each individual procurement transaction, as well as the achievement of overall procurement outcomes.<\/li><li>The procuring authority, at each stage of Procurement<\/strong>, must therefore place on record, in precise terms, the considerations that weighed with it<\/strong> while making the procurement decision \u2014 from need assessment to fulfilment of need (Rule 144(viii), GFR 2017<\/strong>).<\/li><li>Such records must be preserved, retained in easily retrievable form, and made available to such oversight agencies on demand. The procuring entity shall therefore maintain and retain audit trails, records and documents generated or received during its procurement proceedings in chronological order. The files shall be stored in an identified place and retrievable for scrutiny whenever needed without wasting time.<\/li><\/ol>\n<h2 class=\"src-multi\">1.9<\/span>Standards (Canons) of Financial Propriety<\/span>G<\/span>W<\/span><\/h2><div class=\"srcblock src-multi\">\nPublic Procurement, like any other expenditure in Government, must conform to the Standards (also called Canons) of Financial Propriety<\/strong>. It may be useful to refer to the relevant provisions in the General Financial Rules, 2017:<\/p>\n<aside class=\"note\">Rule 21 \u2014 Standards of Financial Propriety:<\/strong> Every officer incurring or authorising expenditure from public moneys should be guided by high standards of financial propriety<\/strong>. Every officer should also enforce financial order and strict economy<\/strong> and see that all relevant financial rules and regulations are observed, by his own office and by subordinate disbursing officers. Among the principles on which emphasis is generally laid are the following:<\/p>\ni) Every officer is expected to exercise the same vigilance in respect of expenditure incurred from public moneys as a person of ordinary prudence would exercise in respect of expenditure of his own money.<\/p>\nii) The expenditure should not be prima facie more than the occasion demands.<\/p>\niii) No authority should exercise its powers of sanctioning expenditure to pass an order which will be directly or indirectly to its own advantage.<\/p>\niv) Expenditure from public moneys should not be incurred for the benefit of a particular person or a section of the people, unless \u2014 a) a claim for the amount could be enforced in a Court of Law, or b) the expenditure is in pursuance of a recognised policy or custom.<\/p>\nv) (reproduced in W<\/span> only)<\/em> The amount of allowances granted to meet expenditure of a particular type should be so regulated that the allowances are not, on the whole, a source of profit to the recipients.<\/p>\nNote for students:<\/strong> Sub-clause (v)<\/strong> is reproduced only in the Works Manual; the Goods Manual stops at (iv). Both are extracts of the same Rule 21 of GFR 2017. This section does not<\/strong> appear at all in the Consultancy and Non-Consultancy Manuals.<\/p><\/aside>\n<\/div><h2>1.10<\/span>Public Procurement Infrastructure at the Centre<\/span><\/h2>\nPublic Procurement is a complex function<\/strong>, and the infrastructure needed to execute it is equally complex. In India, the following administrative, oversight, and digital infrastructure<\/strong> exists for Public Procurement:<\/p>\n<ol class=\"lst\"><li>Procurement Policy Division (PPD)<\/li><li>Central Public Procurement Portal (CPPP)<\/li><li>Government e-Marketplace (GeM)<\/li><li>Comptroller and Auditor General (CAG) of India<\/li><li>Lokpal\/ Lokayukta \u2014 Anti-corruption Ombudsman<\/li><li>Central Vigilance Commission (CVC)<\/li><li>Central Bureau of Investigation (CBI)<\/li><\/ol>\n<aside class=\"note\">The Works, Consultancy and Non-Consultancy Manuals list these seven institutions and cross-refer to the Goods Manual for details. The details below are from the Goods Manual.<\/em><\/p><\/aside>\n<h3>1.10.1<\/span>Procurement Policy Division (PPD)<\/span><\/h3>\nThe Procurement Policy Division (PPD) in the Department of Expenditure, Ministry of Finance has been created to encourage uniformity and harmonisation in public procurement processes by:<\/p>\n<ul class=\"lst\"><li>disseminating best practices<\/strong>,<\/li><li>providing guidance, oversight and capacity building,<\/li><li>issuing procurement manuals and Model Tender Documents.<\/li><\/ul>\nHowever, centralisation of Procurement or involvement in procurement processes is not the intended purpose of the creation of PPD.<\/p>\n<h3>1.10.2<\/span>Central Public Procurement Portal (CPPP)<\/span><\/h3>\nThe Central Public Procurement Portal (CPPP)<\/strong> has been designed, developed and hosted by the National Informatics Centre (NIC, Ministry of Electronics & Information Technology)<\/strong> in association with the Department of Expenditure to ensure transparency in the public procurement process.<\/p>\n<ul class=\"lst\"><li>Primary objective:<\/strong> to provide single-point access<\/strong> to the information on procurements made across various Ministries and Departments.<\/li><li>The CPPP has e-publishing<\/strong> and e-procurement<\/strong> modules.<\/li><li>It is mandatory<\/strong> for all Ministries\/ Departments of the Central Government, CPSEs<\/strong>, and Autonomous and Statutory Bodies<\/strong> to publish on the CPPP all their tender enquiries and information about the resulting contracts<\/strong>.<\/li><li>CPPP provides access to information on documents relating to pre-qualification, bidders' registration, Tender Documents, details of bidders, their pre-qualification, registration, exclusions\/ debarments, decisions taken regarding pre-qualification and selection of successful bids.<\/li><li>Implementing end-to-end e-procurement<\/strong> for all procurements is now mandatory<\/strong> \u2014 either through the CPPP portal or any other suitable GCQE-compliant<\/strong> portal.<\/li><\/ul>\n<aside class=\"note\">GCQE<\/strong> = Guidelines for Compliance to Quality Requirements of eProcurement, July 2021, issued by the Standardisation Testing and Quality Certification (STQC) Directorate<\/strong>, an attached office of MeitY.<\/p><\/aside>\n<h3>1.10.3<\/span>Government e-Marketplace (GeM)<\/span><\/h3>\nGeM is the 'National Public Procurement Portal', serving as an end-to-end online marketplace for various entities.<\/p>\n<ul class=\"lst\"><li>The Procurement of Goods and Services available on GeM (as per Rule 149 of GFR, 2017<\/strong>) is mandatory<\/strong> for Ministries\/ Departments (including attached\/ subordinate offices), CPSEs, autonomous bodies and local bodies<\/strong>.<\/li><li>GeM facilitates the Procurement of common-use goods and services<\/strong> by such entities.<\/li><li>The portal aims to enhance efficiency, transparency, and speed<\/strong> in public Procurement.<\/li><li>Through this paperless, contactless, and cashless<\/strong> platform, registered government buyers<\/strong> can seamlessly procure goods and services from registered sellers<\/strong>.<\/li><\/ul>\n<h3>1.10.4<\/span>Comptroller and Auditor General (CAG) of India<\/span><\/h3>\n<ol class=\"lst\"><li>The CAG of India<\/strong>, established under Articles 149\u2013151 of the Constitution of India<\/strong>, holds a pivotal role as the Supreme Audit Institution of India (SAII)<\/strong>. CAG plays a crucial role in promoting accountability, transparency, and good governance<\/strong> through high-quality auditing and accounting. It provides independent and timely assurance<\/strong> to the legislature, the public, and the executive that public funds are being collected and utilised effectively and efficiently.<\/li><li>The CAG's mandate encompasses a wide spectrum of audit and reporting responsibilities:<\/li><li>Government Departments and Entities;<\/li><li>Government Companies and Corporations;<\/li><li>Autonomous Bodies and Authorities<\/strong> that receive government funding (e.g., municipal bodies, IIMs, IITs, state health societies);<\/li><li>Special Requests and Initiatives<\/strong> \u2014 the CAG can audit the accounts of any other body or authority upon request of the President\/ Governor<\/strong>, or on its own initiative.<\/li><li>CAG conducts multiple types of audits, namely:<\/li><li>Compliance Audits<\/li><li>Financial Audits<\/li><li>Performance Audits<\/li><li>Thematic Audits<\/li><li>IT Audits<\/li><\/ol>\nThese audits, especially the performance audits, are noted to cover Procurement, but only with the perspective of identifying if any wastage, malpractice, and fraud have occurred.<\/p>\n<ol class=\"lst\"><li>To carry out its extensive audit mandate effectively, the CAG is endowed with significant powers:<\/li><li>Inspection Authority<\/strong> \u2014 power to inspect any office or organisation subject to its audit.<\/li><li>Transaction Examination<\/strong> \u2014 can examine all transactions and question the executive regarding financial matters.<\/li><li>Record Access<\/strong> \u2014 can call for records, papers, and documents from any audited entity.<\/li><li>Audit Extent and Manner<\/strong> \u2014 authority to decide the extent and manner of audit to ensure thorough scrutiny.<\/li><\/ol>\n<h3>1.10.5<\/span>Lokpal\/ Lokayukta \u2014 Anti-corruption Ombudsman<\/span><\/h3>\n<ol class=\"lst\"><li>The Lokpal and Lokayukta Act, 2013<\/strong> and its amendment in 2016<\/strong> (the Act) provides for a Lokpal in the Central (Union) Government<\/strong> and Lokayukta in the State Governments<\/strong> as the statutory anti-corruption Ombudsman<\/strong> to inquire into allegations of corruption against public servants and for related matters. Once appointed \u2014 by the President<\/strong> in the case of Lokpal, or the Governor<\/strong> in the case of Lokayukta \u2014 they cannot be transferred or removed except by impeachment proceedings<\/strong> undertaken by Parliament or the State legislatures respectively.<\/li><li>The Act outlines the Lokpal's and Lokayuktas' roles, powers, and responsibilities<\/strong>. It has a broad scope<\/strong> regarding the individuals it covers \u2014 extending to:<\/li><li>Union Ministers<\/strong> (including the serving and former Prime Ministers),<\/li><li>Members of Parliament, and<\/li><li>various categories of public servants<\/strong>, including those in Group 'A', 'B', 'C', or 'D'<\/strong> positions as defined in the Prevention of Corruption Act, 1988<\/strong>.<\/li><li>All entities (NGOs<\/strong>) receiving donations from foreign sources under the Foreign Contribution Regulation Act (FCRA)<\/strong>above Rs 10 lakh per year<\/strong> are also under the jurisdiction of Lokpal.<\/li><\/ol>\nThe Act grants Lokpal powers to sanction prosecution<\/strong> against public servants.<\/p>\n<ol class=\"lst\"><li>There are exceptions<\/strong> in matters related to international relations, external and internal security, public order, atomic energy, and space<\/strong>. To initiate an inquiry into such cases, at least two-thirds of Lokpal members must approve<\/strong>. The Act emphasises confidentiality<\/strong> \u2014 if Lokpal concludes a complaint is baseless, the inquiry records remain undisclosed<\/strong> to the public or any party involved.<\/li><li>One significant aspect of the Act is the requirement for public servants to declare their assets<\/strong> in a specified manner. This transparency measure aims to deter corruption and promote accountability<\/strong>.<\/li><li>Composition: One Chairperson and a maximum of eight other members.<\/li><li>The age<\/strong> of Lokpal (Chairperson or member) on the date of assuming office should not be under 45 years<\/strong>.<\/li><li>Of the eight members, four are judicial members who are or have been judges of the Supreme Court or a Chief Justice of a High Court.<\/li><li>The remaining four are non-judicial members \u2014 people of impeccable integrity and outstanding ability, having special knowledge and expertise of not less than twenty-five years in matters relating to anti-corruption policy, public administration, vigilance, finance including insurance and banking, law, and management.<\/li><li>Fifty per cent of the Members shall be from Scheduled Castes\/ Scheduled Tribes\/ Other Backward Classes\/ Minorities and women.<\/li><li>Selection Committee:<\/strong> The Chairperson and Lokpal members are selected through a selection committee consisting of:<\/li><li>the Prime Minister,<\/li><li>the Speaker of Lok Sabha,<\/li><li>the Leader of Opposition in Lok Sabha,<\/li><li>the Chief Justice of India (CJI)<\/strong> or a sitting Supreme Court judge nominated by CJI, and<\/li><li>another eminent jurist<\/strong> nominated by the President of India<\/strong> based on the recommendations of the first four members of the selection committee \"through consensus<\/strong>\".<\/li><li>Lokpal may refer complaints for investigation to the CBI. For such cases, CBI would work under Lokpal's supervision. It envisages a 'Directorate of Prosecution' under the overall control of the Director, CBI, with a fixed tenure of two years. The appointment of the Director of Prosecution is to be based on the recommendation of the Central Vigilance Commission. Transfer of CBI officers investigating cases referred by Lokpal shall be with the CVC's approval.<\/li><li>The Act lays down clear timelines for preliminary enquiry, investigation and trial and has provisions for attachment and confiscation of property acquired by corrupt means, even while prosecution is pending.<\/li><\/ol>\n<h3>1.10.6<\/span>Central Vigilance Commission (CVC)<\/span><\/h3>\n<ol class=\"lst\"><li>Under the Central Vigilance Commission Act, 2003, the CVC is a statutory body headed by the Central Vigilance Commissioner and comprising not more than two Commissioners. It is conceived to be the apex oversight institution, independent from any executive authority. There are two Chief Technical Examiners (CTE) who oversee public procurement.<\/li><li>All Central (Union) Government entities appoint a Chief Vigilance Officer (CVO)<\/strong> in consultation with the CVC. CVOs undertake system audits and preventive\/ forensic investigations<\/strong> in the Entity and report them to the CVC.<\/li><li>CVC only investigates and recommends<\/strong> punitive and follow-up actions to the concerned entity but has no punitive powers by itself<\/strong>. The recommendations are not binding<\/strong> on the entities, but CVC may report any deviations from recommendations to Parliament<\/strong>. It has an advisory role in Discipline and Appeal cases<\/strong> arising from its investigations. It plays a role in sanctioning prosecutions<\/strong> related to corruption and consultations in key appointments<\/strong>. CVC also has a role in the appointment of Independent External Monitors (IEM)<\/strong> under the Integrity Pact<\/strong> (wherever applicable) for Central (Union) Government Entities. CVC submits an annual report to Parliament<\/strong> regarding its investigations.<\/li><li>CVC has superintendence over the functioning of the CBI<\/strong> regarding the investigation of offences related to corruption in Central (Union) Government Agencies. CVC has jurisdiction over cases under the Lokpal and Lokayukta Act<\/strong>, Whistle Blowers Act<\/strong>, and Money Laundering Act<\/strong>.<\/li><li>It has the powers of a civil court<\/strong> when conducting any inquiry. CVC and CVOs do not have the powers of Police<\/strong> to arrest, seize properties, and enforce compliance from non-government agencies. Therefore, cases requiring such action are entrusted to the CBI<\/strong>.<\/li><li>To avoid conflict of interest, CVO and vigilance officers shall not associate with decision-making that may have vigilance sensitivities. Some organisations have a system wherein executive work \u2014 like the shortlisting of arbitrators or the debarment of firms \u2014 is entrusted fully\/ partially to vigilance. The same is not appropriate and is also against the CVC Vigilance Manual.<\/li><li>The following levels\/ categories of officials are covered under the jurisdiction of the CVC<\/strong>:<\/li><\/ol>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Coverage<\/th><\/tr><\/thead><tbody><tr><td>a) All India Services & Central Government<\/td><td>Members of All India Services serving in connection with the affairs of the Union, and Group 'A' officers<\/strong> of the Central Government. Officers of central services, even those working in state governments<\/strong>, are also under its jurisdiction.<\/td><\/tr><tr><td>b) Schedule 'A' and 'B' PSUs of the Central Government<\/td><td>Chief Executives and Executives on the Board and other officers of level E-8 and above<\/strong><\/td><\/tr><tr><td>c) Schedule 'C' and 'D' PSUs of the Central Government<\/td><td>Chief Executives and Executives on the Board and other officers of level E-7 and above<\/strong><\/td><\/tr><tr><td>d) Public Sector Banks<\/td><td>Officers of the rank of Scale V and above<\/strong><\/td><\/tr><tr><td>e) Reserve Bank of India, NABARD and SIDBI<\/td><td>Officers in Grade 'D' and above<\/td><\/tr><tr><td>f) General Insurance Companies<\/td><td>Managers and above<\/td><\/tr><tr><td>g) Life Insurance Corporation of India<\/td><td>Senior Divisional Managers and above<\/td><\/tr><tr><td>h) Societies and local authorities owned or controlled by the Central Government<\/td><td>Officers drawing a salary of Rs 8,700\/- per month and above<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h3>1.10.7<\/span>Central Bureau of Investigation (CBI)<\/span><\/h3>\n<ol class=\"lst\"><li>Under the Delhi Special Police Establishment Act, 1946<\/strong>, the CBI<\/strong> \u2014 a police organisation under the Department of Personnel, Ministry of Personnel, Pension & Public Grievances<\/strong> \u2014 is the only oversight agency with police powers<\/strong>. It investigates and prosecutes corruption cases<\/strong> (including those related to public procurement) requiring arrest, seizure of properties and enforcement of compliance from non-government agencies<\/strong>. The prosecutions are carried out under, inter alia<\/em>, the Prevention of Corruption Act, 1988<\/strong>. It takes up cases based on complaints received from stakeholders or the general public.<\/li><\/ol>\nJurisdiction: Though its jurisdiction is restricted to Delhi and UTs, under sections 5 & 6 of the Act, the Central Government can extend its powers and jurisdiction to a State with the consent of the government of that State for investigation of specified offences (generally related to All India Services or Members of Parliament). High Courts and the Supreme Court can also order the CBI to investigate cases outside its normal jurisdiction, for which no consent is required from the State.<\/p>\n<ol class=\"lst\"><li>The Delhi Special Police Establishment (DSPE), which forms a part of the CBI, has two Divisions:<\/li><\/ol>\n<div class=\"tblwrap\"><table><thead><tr><th>Division<\/th><th>Investigates<\/th><\/tr><\/thead><tbody><tr><td>(i) Anti-Corruption Division (ACD)<\/td><td>All cases registered under the Prevention of Corruption Act, 1988<\/strong>. If an offence under any section of the Indian Penal Code, 1860 (replaced by the Bharatiya Nyaya Sanhita (BNS), 2023<\/strong> from 1st July 2024<\/em>) or any other law is committed along with<\/strong> the offence of bribery and corruption, it shall also be investigated by the ACD. The ACD also investigates cases of serious irregularities allegedly committed by public servants<\/strong>.<\/td><\/tr><tr><td>(ii) Special Crimes Division (SCD)<\/td><td>All cases of Economic offences<\/strong> and all cases of conventional crime<\/strong>, such as offences relating to internal security, espionage, sabotage, narcotics and psychotropic substances, antiquities, murders and dacoities\/ robberies, cheating, criminal breach of trust, forgery, dowry deaths, suspicious deaths, etc.<\/td><\/tr><\/tbody><\/table><\/div>\n<ol class=\"lst\"><li>While the superintendence of DSPE<\/strong>, as far as it relates to investigation of offences under the Prevention of Corruption Act, 1988, vests in the CVC<\/strong>; for all other matters<\/strong>, the superintendence of DSPE vests in the Central Government<\/strong>.<\/li><li>The administration of DSPE vests in the Director of the CBI<\/strong>, who is appointed on the recommendations of a committee headed by the Central Vigilance Commissioner<\/strong>. He holds office for a period of not less than two years<\/strong>. The Director of CBI exercises, in respect of DSPE, powers exercisable by an Inspector General of Police<\/strong> regarding the police force in a State.<\/li><li>DSPE cannot conduct any inquiry or investigation<\/strong> into any offence alleged to have been committed under the Prevention of Corruption Act, 1988, except with the prior approval of the Central Government<\/strong>, where such allegation relates to employees at the level of Joint Secretary and above<\/strong> in the Central Government, or corporations established by or under any Central Act, Government companies, societies, and local authorities owned or controlled by it.<\/li><li>No such approval, however, is necessary for cases involving the arrest of a person on the spot on the charge of accepting or attempting to accept any gratification other than legal remuneration.<\/li><\/ol>\n<h2>1.11<\/span>Preferential \/ Mandatory \/ Restricted Purchase from Certain Sources<\/span><\/h2>\n<aside class=\"note\">Section titles in the four Manuals:<\/p>\nG<\/span>Reserved Items and Other Purchase\/ Price Preference Policies<\/em> \u00b7 W<\/span>Preferential\/ Restriction on Purchase from certain sources<\/em> \u00b7 C<\/span>Preferential Purchase from certain sources<\/em> \u00b7 NC<\/span>Preferential\/ Mandatory Purchase from certain sources<\/em><\/p><\/aside>\nThe Central Government may, by notification, provide for mandatory procurement of any goods or services from any category of bidders, or provide for preference to bidders on the grounds of promotion of locally manufactured goods or locally provided services (General Financial Rules, 2017, Rule 153).<\/p>\n<aside class=\"note\">Note: Before considering any Purchase Preference\/ Product Reservation mentioned below, the Procuring Entity should check the latest directives in this regard for necessary action. Product Reservation\/ Purchase Preference provision shall invariably be part of the Notice Inviting Tender (NIT) and Instructions to Bidders\/ Consultants (ITB\/ ITC).<\/p><\/aside>\nW<\/span>Presently the following policies are in vogue.<\/em><\/p>\n<h3 class=\"src-G\">1.11.1<\/span>Reservation of Procurement of Certain Class of Products from Certain Agencies<\/span>G<\/span><\/h3><div class=\"srcblock src-G\"><h4>1.<\/span>Khadi Goods \/ Handloom Textiles<\/span><\/h4>\nOut of the total procurement of handloom origin textiles<\/strong> required by Central Government departments throughout the year, it shall be mandatory to make procurement of at least 20%<\/strong> from:<\/p>\n<ul class=\"lst\"><li>the Khadi & Village Industries Commission (KVIC), and\/or<\/li><li>Handloom Clusters<\/strong> such as Co-operative Societies, Self Help Group (SHG) Federations, Joint Liability Groups (JLG), Producer Companies (PC), Corporations etc., including Weavers having Pehchan Card<\/strong>.<\/li><\/ul>\n(Notified vide OM No. F.10\/2\/2019-PPD(Pt.) issued by Department of Expenditure dated 17.02.2020.)<\/em><\/p>\nKhadi and Handloom goods are also available on GeM. (GFR Rule 153(i)<\/strong>.)<\/p>\n<h4>2.<\/span>Pharmaceuticals from Pharmaceutical CPSEs<\/span><\/h4>\na) The Pharmaceuticals Purchase Policy, 2013<\/strong>(Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers, OM 50(9)\/2010-PI-IV dated 10.12.2013)<\/em> is intended to ensure:<\/p>\n<ul class=\"lst\"><li>i) Optimum utilisation of the installed capacity<\/strong> and the provision of a necessary fillip in reviving these ailing pharmaceutical CPSEs;<\/li><li>ii) Availability of quality medicines at low prices to the masses;<\/li><li>iii) Drug security of the nation.<\/li><\/ul>\nb) Salient features of this policy:<\/p>\n<ul class=\"lst\"><li>i) The Policy in respect of 103 medicines<\/strong>, originally valid for a period of five years<\/strong>, has now been renewed and extended<\/strong>(as approved by the Union Cabinet in its meeting held on 20.11.2019)<\/em>till the final closure\/ strategic disinvestment<\/strong> of the Pharma PSEs mentioned below.<\/li><li>ii) The Policy extends only to CPSEs under the administrative control of the Department of Pharmaceuticals, such as:<\/li><li>Indian Drugs and Pharmaceuticals Limited (IDPL)<\/li><li>Hindustan Antibiotics Limited (HAL)<\/li><li>Bengal Chemicals and Pharmaceuticals Limited (BCPL)<\/li><li>Karnataka Antibiotics and Pharmaceuticals Limited (KAPL)<\/li><li>Rajasthan Drugs and Pharmaceuticals Limited (RDPL)<\/li><\/ul>\nand their subsidiaries where the Government of India owns 51% or above shares.<\/p>\n<ul class=\"lst\"><li>iii) Applicable to purchases by Central Government Departments, their PSUs, Autonomous Bodies, etc. Also applicable to the purchase of medicines by State Governments under health programmes funded by the Government of India, such as the National Rural Health Mission.<\/li><li>iv) Pricing of the products would be done by the National Pharmaceutical Pricing Authority (NPPA) using the cost-based formula, as mentioned in the Drugs Price Control Order, 1995. A uniform discount of 16% would be extended to all products. All taxes, whatsoever, would have to be passed on to buyers.<\/li><li>v) Annual revision of prices<\/strong> would be linked to the Wholesale Price Index<\/strong>, as per provisions contained in the Drugs Prices Control Order, 2013<\/strong>.<\/li><li>vi) The procuring entity would purchase from pharma CPSEs and their subsidiaries subject to their meeting Good Manufacturing Practices (GMP) norms<\/strong> as per Schedule 'M' of the Drugs & Cosmetics Rules<\/strong>.<\/li><li>vii) In case pharma CPSEs and their subsidiaries fail to supply<\/strong> the medicines, the procuring entity would be at liberty to make purchases from other manufacturers<\/strong>. If the pharma CPSEs or their subsidiaries fail to perform<\/strong> as per the purchase order, they would also be subject to payment of liquidated damages or any other penalty<\/strong> as per the terms of the contract.<\/li><li>viii) The list of medicines<\/strong> (Annexure 29 of the Goods Manual) may be reviewed and revised by the Department of Pharmaceuticals<\/strong> as per requirement.<\/li><\/ul>\n<h4>3.<\/span>Reservation of specific items for procurement from Micro and Small Enterprises (MSE)<\/span><\/h4>\nTo enable wider dispersal of enterprises in the country, particularly in rural areas, the Central Government Ministries\/ Departments\/ Public Sector Undertakings shall continue to procure items reserved for procurement exclusively from MSE \u2014 presently 358 items (including eight items of Handicrafts), which have been reserved for exclusive purchase from them. The latest list can be found on the MSME Ministry's website.<\/p>\nThe Ministry of MSME has clarified that laminated paper Gr. I, II and III are not covered<\/strong> under the paper conversion product (Sl. No. 202) of the Public Procurement Policy (Policy Circular No. 21(6)\/2016-MA dated 26.05.2016)<\/em>.<\/p>\nNSIC may be contacted to locate the sources of such reserved items.<\/p>\n<\/div><h3>1.11.2<\/span>Public Procurement Policy for Micro and Small Enterprises (MSEs)<\/span><\/h3>\n(Rule 153(ii) of GFR 2017)<\/em><\/p>\n<h4>1.<\/span>The Policy<\/span><\/h4>\nFrom time to time, the Government of India lays down procurement policies to help inclusive national economic growth<\/strong> by providing long-term support to micro, small and medium enterprises<\/strong>, and to disadvantaged sections of society<\/strong>(C<\/span> adds: \"and to address environmental concerns\")<\/em>.<\/p>\nThe Procurement Policy for Micro and Small Enterprises, 2012 [amended 2018 and 2021]<\/strong> has been notified by the Government in exercise of the powers conferred in Section 11 of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006<\/strong>, which is mandatory to be followed<\/strong> by Central Government Ministries\/ Departments\/ Public Sector Undertakings. Details of the policy, along with the amendments issued in 2018<\/strong> and 2021<\/strong>, are available on the MSME website<\/strong>.<\/p>\n<h4>2.<\/span>Eligibility<\/span><\/h4>\n<ol class=\"lst\"><li>Micro and Small Enterprises (MSEs) registered under Udyam Registration are eligible to avail the benefits under the policy.<\/li><li>This Policy provides preferential procurement of goods produced and services rendered by MSEs. Traders\/ distributors\/ sole agents\/ Works Contracts are EXCLUDED from the purview of the policy.<\/li><li>i) (Notified by MSME Ministry vide S.O. 4926(E) dated 18.10.2022)<\/em> In case of an upward change in terms of investment in plant and machinery or equipment or turnover or both, and consequent re-classification, an enterprise shall continue to avail of all non-tax benefits of the category (micro, small, or medium) it was in before the re-classification, for a period of three years from the date of such upward change.<\/li><\/ol>\n<aside class=\"note\">C<\/span> adds: Non-tax benefits include benefits of various schemes of the Government, including <\/strong>Public Procurement Policy, Delayed Payments, etc.<\/p><\/aside>\n<ul class=\"lst\"><li>ii) MSEs would be treated as owned by SC\/ST or Women entrepreneurs where:<\/li><li>In the case of a proprietary MSE<\/strong> \u2014 the proprietor(s) are SC\/ST or Woman;<\/li><li>In the case of a partnership MSE<\/strong> \u2014 the SC\/ST or Women partners hold at least 51%<\/strong> shares in the unit;<\/li><li>In the case of Private Limited Companies<\/strong> \u2014 SC\/ST or Women promoters hold at least 51%<\/strong> share.<\/li><\/ul>\n<h4>3.<\/span>Applicability and Exemptions<\/span><\/h4>\n<ol class=\"lst\"><li>The policy is applicable to Central Government Ministries\/ Departments\/ Public Sector Undertakings.<\/li><li>The policy is not applicable to State Government Ministries\/ Departments\/ State PSEs<\/strong>, but they have similar policies applicable in their state.<\/li><li>Exemptions:<\/strong> Given their unique nature, defence armament imports shall not be included in computing the 25% goal for the Ministry of Defence<\/strong>. In addition, defence equipment like weapon systems, missiles, etc., shall remain out of the purview<\/strong> of such a reservation policy. Monitoring of goals<\/strong> set under the policy will be done, as far as they relate to the Defence sector, by the Ministry of Defence itself<\/strong>, in accordance with suitable procedures to be established by them.<\/li><\/ol>\n<h4>4.<\/span>Facilities for MSE<\/span><\/h4>\na) Reduced Transaction Costs:<\/strong> To reduce the transaction cost of doing business, MSEs will be facilitated by:<\/p>\n<ul class=\"lst\"><li>providing them tender documents free of cost,<\/li><li>exempting MSEs from payment of Earnest Money Deposits, and<\/li><li>adopting e-procurement<\/strong> to bring transparency in the tender process.<\/li><\/ul>\nHowever, exemption from paying Performance Bank Guarantee\/ Security Deposit is not covered under the policy.<\/p>\nb) Relaxation in Prior Turnover and Experience: The Procuring Entity may relax the condition of prior turnover and prior experience for start-up enterprises recognised by DPIIT, subject to meeting quality & technical specifications. Start-ups may be MSMEs\/ MSEs or otherwise. Such relaxation can be provided in the case of procurement of works as well.<\/p>\nIt is further clarified that such relaxation is not optional but normally has to be ensured<\/strong>, except in the case of procurement of items related to public safety, health, critical security operations and equipment<\/strong>, etc., where adequate justification exists<\/strong> for the Procuring Entity not to relax such criteria (Notified vide OM No. F.20\/2\/2014-PPD(Pt.) issued by Department of Expenditure dated 29.09.2016)<\/em>. The decision of the Procuring Entity in this regard shall be final.<\/strong> (Rule 173(i) of GFR 2017<\/strong>.)<\/p>\n<aside class=\"note\">Footnote [C, W, NC]:<\/strong> Such relaxation can be partial<\/strong> \u2014 e.g., 25% relaxation<\/strong> over specified turnover and experience.<\/p><\/aside>\nc) Timely Payments:<\/strong>Chapter V of the MSMED Act, 2006<\/strong> has provisions for ensuring timely payments to MSE suppliers:<\/p>\n<ul class=\"lst\"><li>The period agreed upon for payment must not exceed forty-five (45) days<\/strong> from the deemed acceptance<\/strong> of the materials supplied by the MSEs.<\/li><li>In case of any discrepancies in the supplies, the Procuring Entity shall raise an objection to the MSE supplier within 15 days from the date of receipt of materials. If such objection is not raised, then it will be taken as deemed acceptance.<\/li><li>For delays in payment<\/strong>, the buyer shall be liable to pay compound interest<\/strong> to the supplier on the delayed amount at three times the bank rate notified by the Reserve Bank<\/strong>.<\/li><li>For arbitration and conciliation<\/strong> regarding the recovery of such payments and interest, the Micro and Small Enterprises Facilitation Council<\/strong> has been set up in various states.<\/li><\/ul>\n<h4>5.<\/span>Purchase Preference<\/span><\/h4>\na) The 25% annual target:<\/strong> Under the amended Public Procurement Policy for MSEs, Order 2012, the Central Government Ministries\/ Departments\/ PSUs shall procure a minimum of 25 per cent of their annual value of goods or services from MSEs<\/strong> (in accordance with GFR 2017, Rule 153(ii)<\/strong>).<\/p>\n<ul class=\"lst\"><li>i) The annual goal of procurement from MSEs also includes sub-contracts to MSEs by large enterprises and consortia of MSEs formed by the National Small Industries Corporation. If a sub-contract is given to MSEs, it will be considered as procurement from MSEs.<\/li><li>ii) C<\/span>NC<\/span> \u2014 important clarification: The <\/strong>annual target of 25% procurement from MSEs is only a MINIMUM. The <\/strong>MSE purchase preference is mandatory for all procurements (except for exemptions as per sub-para 3-c above), <\/strong>even after this target is achieved. For example, <\/strong>it is not permissible for organisations to earmark only some goods\/ services to be procured exclusively from MSEs to achieve the annual target and not apply MSE procurement preferences to the rest of the goods\/ services.<\/li><\/ul>\nb) The L1+15% price band: In a tender, if the L1 price is from someone other than an MSE, participating MSEs quoting prices within a price band of L1 + 15% shall be allowed to supply up to 25% of the total tendered value by bringing down their price to the L1 price. If there is more than one eligible MSE within such price band who agrees to match the L1 price, the 25% quantity is to be distributed proportionately to them.<\/p>\n<aside class=\"note\">Note:<\/strong> If the procuring entity negotiates<\/strong> with the non-MSE L1 bidder, the price band (L1+15%<\/strong>) should be calculated based on the ORIGINAL L1 price, not the lower negotiated price<\/strong>, and such eligible MSE bidders shall be called to match the new negotiated L1 price<\/strong> as per the procedure mentioned above for placement of the 25% quantity.<\/p><\/aside>\n<ul class=\"lst\"><li>i) Non-divisible items:<\/strong> In case the tender item cannot be split or divided<\/strong>, etc., the MSE quoting a price within the band L1+15% may be awarded for full\/ complete supply of the total tendered value<\/strong>, considering the spirit of the Policy for enhancing Government procurement from MSEs.<\/li><li>ii) Sub-targets: Out of the target of 25% of annual procurement from MSEs (not in the specific tender):<\/li><li>a sub-target of 4% of annual procurement<\/strong> is earmarked for procurement from MSEs owned by SC\/ST entrepreneurs<\/strong>, and<\/li><li>3% of annual procurement is earmarked for procurement from MSEs owned by women entrepreneurs.<\/li><\/ul>\nHowever, in the event of failure of such MSEs to participate<\/strong> in the tender process or to meet tender requirements and L1 price, the 4% sub-target (SC\/ST) and 3% (women) will also be met from other MSEs<\/strong>.<\/p>\n<h4>6.<\/span>Developing MSE Vendors<\/span><\/h4>\nThe Central Ministries\/ Departments\/ PSUs shall take necessary steps to develop appropriate vendors<\/strong> by organising:<\/p>\n<ul class=\"lst\"><li>Vendor Development Programmes (VDP), or<\/li><li>Buyer-Seller Meets<\/li><\/ul>\nfocused on developing MSEs for procurement through the GeM Portal<\/strong>.<\/p>\nTo enhance the participation of MSEs owned by SCs\/ STs\/ Women<\/strong> in Government procurement, Central Government Ministries\/ Departments\/ CPSEs should conduct Special Vendor Development Programmes\/ Buyer-Seller Meets for SC\/ST and Women MSEs<\/strong>.<\/p>\n<h4>7.<\/span>Policy Implementation<\/span><\/h4>\n<ol class=\"lst\"><li>A Review Committee<\/strong> has been constituted under the Chairmanship of the Secretary, Ministry of MSME<\/strong>, to monitor and review the Public Procurement Policy for MSEs. M\/o MSME will review and\/or modify the composition of the Committee as and when required. This Committee will, inter alia<\/em>:<\/li><li>review the list of 358 items<\/strong> reserved for exclusive purchase from MSEs on a continuous basis,<\/li><li>consider requests from Central Government Departments\/ CPSEs for exemption from the 25% target on a case-to-case basis, and<\/li><li>monitor achievements<\/strong> under the Policy.<\/li><li>To monitor the progress of procurement by Central Government Ministries\/ Departments and CPSEs from MSEs, the Ministry of MSME launched the MSME 'Sambandh' Portal on 8th December 2017<\/strong> for uploading procurement details by all CPSEs on a monthly and annual basis<\/strong>, which the Ministry regularly monitors.<\/li><\/ol>\n<aside class=\"note\">Any payment grievances filed by the MSMEs against a Procuring Entity may be monitored and progress updated therein. Total value of month-end payments due to the MSMEs may be updated.<\/em><\/p><\/aside>\n<ol class=\"lst\"><li>To redress the grievances of MSEs related to non-compliance with the policy, a Grievance cell named \"CHAMPION Portal\"<\/strong> has been set up in the Ministry of MSME.<\/li><li>G<\/span> A National SC\/ST Hub (NSSH)<\/strong> scheme was launched in October 2016<\/strong> to provide handholding support to SC\/ST entrepreneurs<\/strong>, and it is being coordinated\/ implemented by the NSIC<\/strong> under this Ministry.<\/li><li>Clarifications:<\/strong> The Office of the Development Commissioner (Micro, Small & Medium Enterprises) issued an FAQ on the Public Procurement Policy for MSE Order, 2012<\/strong>.<\/li><\/ol>\n<aside class=\"note\">Annexure references:<\/strong>G<\/span> Annexure 32 \u00b7 C<\/span> Annexure 19 \u00b7 NC<\/span> Annexure 13.<\/p><\/aside>\n<h3>1.11.3<\/span>Procurement Preference to Make in India (MII Policy)<\/span><\/h3>\n(Rule 153(iii) of GFR, 2017)<\/em><\/p>\n<h4>1.<\/span>Purpose<\/span><\/h4>\nTo encourage 'Make in India' and promote manufacturing and production of goods and services in India with a view to enhancing income and employment, the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, Government of India, issued the Public Procurement (Preference to Make in India) Order, 2017.<\/p>\n<aside class=\"note\">Latest revision to the Order notified vide OM No. P-45021\/2\/2017-PP (BE-II)-Part(4)Vol.II issued by DPIIT, dated 19.07.2024<\/strong>.<\/em><\/p>\nG<\/span> footnote: The earlier '<\/strong>Domestically Manufactured Electronic Products (DMEP)', also called <\/strong>Preference for Domestically Manufactured Electronic Goods (PMA), <\/strong>stands subsumed in the MII policy.<\/p><\/aside>\nThe Order is issued pursuant to Rule 153(iii) of GFR, 2017<\/strong> and is applicable to the procurement of Goods, Works, and Services<\/strong>.<\/p>\n<h4>2.<\/span>Definitions<\/span><\/h4>\nFor the purpose of this Order:<\/p>\n<ol class=\"lst\"><li>'L1<\/strong>' means the lowest tender or lowest bid, or the lowest quotation<\/strong> received in a tender, tender\/ bidding process or other procurement solicitation, as adjudged in the evaluation process<\/strong> as per the tender or other procurement solicitation.<\/li><li>'Local Content<\/strong>' means the amount of value added in India<\/strong>, which shall \u2014 unless otherwise prescribed by the Nodal Ministry \u2014 be:<\/li><\/ol>\n<aside class=\"note\">the total value of the item procured (excluding net domestic indirect taxes) MINUS the value of imported content in the item (including all customs duties), as a proportion of the total value, in percent.<\/p><\/aside>\nExplanatory notes for calculation of local content:<\/p>\n<ul class=\"lst\"><li>i) Imported items sourced locally from resellers\/ distributors shall be EXCLUDED from calculation of local content.<\/li><li>ii) The license fees\/ royalties paid\/ technical charges paid out of India shall be EXCLUDED from local content calculation.<\/li><li>iii) Procurement\/ supply of repackaged\/ refurbished\/ rebranded<\/strong> imported products, as commonly understood, shall be treated as reselling of imported products<\/strong> and shall be excluded<\/strong> from calculation of local content. Definitions:<\/li><li>'Refurbishing' means repair or reconditioning of an imported product \u2014 this does not amount to manufacture because no new goods come into existence.<\/li><li>'Repackaging' means repacking of imported goods from bulk pack to smaller packs \u2014 this would not ordinarily amount to manufacture of a new item.<\/li><li>'Rebranding' means relabelling or renaming or change in symbol or logo\/ makes or corporate image of a company\/ organisation\/ firm for an imported product \u2014 this would amount to rebranding.<\/li><li>iv) To ensure that imported items sourced locally from resellers\/ distributors are excluded from calculation of local content, procuring entities are to obtain from bidders the cost of such locally-sourced imported items (inclusive of taxes)<\/strong> along with a break-up on license\/ royalties paid\/ technical expertise cost etc. sourced from outside India<\/strong>. For items sold by a bidder as reseller<\/strong>, an OEM certificate for country of origin<\/strong> is to be submitted.<\/li><li>v) For contracts involving supply of multiple items<\/strong>, a weighted average of all items<\/strong> is to be taken while calculating the local content.<\/li><li>W<\/span>C<\/span>NC<\/span> \u2014 Class definitions (these definitions appear in the Chapter 1 text of the Works, Consultancy and Non-Consultancy Manuals; in the Goods Manual they are in the Procurement Glossary):<\/em><\/li><\/ul>\n<div class=\"tblwrap\"><table><thead><tr><th>Term<\/th><th>Definition<\/th><\/tr><\/thead><tbody><tr><td>'Class-I local supplier'<\/td><td>A supplier or service provider whose goods, services or works offered for procurement meets the minimum local content as prescribed for 'Class-I local supplier' under this Order.<\/td><\/tr><tr><td>'Class-II local supplier'<\/td><td>A supplier or service provider whose goods, services or works offered for procurement meets the minimum local content as prescribed for 'Class-II local supplier' but less than that prescribed for 'Class-I local supplier' under this Order.<\/td><\/tr><tr><td>'Non-Local supplier'<\/td><td>A supplier or service provider whose goods, services or works offered for procurement has local content less than that prescribed for 'Class-II local supplier' under this Order.<\/td><\/tr><\/tbody><\/table><\/div>\n<ol class=\"lst\"><li>'Margin of purchase preference' means the maximum extent to which the price quoted by a \"Class-I local supplier\" may be above the L1 for the purpose of purchase preference. It has been fixed as 20 per cent.<\/li><li>'Nodal Ministry<\/strong>' means the Ministry or Department identified pursuant to this Order with respect to a particular item of goods or services or works.<\/li><li>'Procuring entity' means a Ministry or Department or attached or subordinate office of, or autonomous body controlled by, the Government of India, and includes Government companies as defined in the Companies Act.<\/li><li>'Works' means all works as per Rule 130 of GFR 2017 and will also include 'turnkey works'.<\/li><\/ol>\n<h4>2A. Special Treatment for Items Covered under the PLI Scheme<\/span><\/h4>\nThe manufacturers manufacturing an item under the Production Linked Incentive (PLI) scheme<\/strong> shall be treated as deemed Class-II local supplier<\/strong> for that item, unless<\/strong> they have minimum local content equal to or higher than<\/strong> that notified for Class-I local supplier for that item, provided<\/strong> the manufacturer has received incentive from the concerned PLI Ministry<\/strong> for the item. The above shall be applicable for the specific time period only<\/strong>, as notified by the concerned PLI Ministry.<\/p>\n<h4>3.<\/span>Eligibility of 'Class-I local supplier' \/ 'Class-II local supplier' \/ 'Non-local suppliers' for Different Types of Procurement<\/span><\/h4>\n<ol class=\"lst\"><li>In the procurement of all goods, services or works in respect of which the Nodal Ministry\/ Department has communicated that there is sufficient local capacity and local competition, only a 'Class-I local supplier' shall be eligible to bid, irrespective of purchase value.<\/li><li>Only 'Class-I local supplier' and 'Class-II local supplier' shall be eligible to bid in procurements undertaken by procuring entities, except when a Global Tender Enquiry has been issued. In global tender enquiries, 'Non-local suppliers' shall also be eligible to bid along with Class-I and Class-II local suppliers.<\/li><\/ol>\nIn procurement of all goods, services or works not covered by sub-para (a) above, and with estimated value of purchases less than Rs. 200 Crore, in accordance with Rule 161(iv) of GFR, 2017 (W<\/span> cites Rule 161(iv)(b))<\/em>, a Global Tender Enquiry shall not be issued except with the approval of the competent authority as designated by the Department of Expenditure.<\/p>\n<ol class=\"lst\"><li>For the purpose of this Order, works include Engineering, Procurement and Construction (EPC) contracts, and services include System Integrator (SI) contracts.<\/li><\/ol>\n<h4>3A. Mandatory Sourcing of Items with Sufficient Local Capacity and Competition, from Class-I Local Suppliers in SI\/ EPC\/ Turnkey Contracts\/ Service Tenders<\/span><\/h4>\n<ol class=\"lst\"><li>The items notified as having sufficient local capacity and competition shall mandatorily be sourced from Class-I local suppliers in si\/ EPC\/ turnkey Contracts\/ Services tenders. This provision will be applicable only for those items which have been notified by the Nodal Ministry as Class-I \u2014 i.e., having sufficient local capacity and competition, with specific HSN codes.<\/li><li>Notwithstanding the above, if in any project it is considered that it is not practically feasible<\/strong> to source such items from Class-I local suppliers, it may take relaxation from such stipulation with the approval of the Secretary of the administrative Ministry\/ Department concerned<\/strong>, or with the approval of the Competent Authority specified by the Administrative Ministry\/ Department, on a case-specific basis<\/strong>.<\/li><\/ol>\n<h4>4.<\/span>Purchase Preference<\/span><\/h4>\n<ol class=\"lst\"><li>Subject to the provisions of the Order and to any specific instructions issued by the Nodal Ministry, purchase preference shall be given to 'Class-I local supplier'<\/strong> in procurements undertaken by procuring entities in the manner specified hereunder.<\/li><li>Divisible procurements:<\/strong> In the procurements of goods or works covered by para 3(b) above which are DIVISIBLE in nature<\/strong>, the 'Class-I local supplier' shall get purchase preference over 'Class-II local supplier' as well as 'Non-local supplier', as per the following procedure:<\/li><\/ol>\n<aside class=\"note\">Notes:<\/p>\n1.<\/strong> If the procuring entity negotiates with the L1 bidder who is not a Class-I Local Supplier<\/strong>, the margin of purchase preference (L1+20%<\/strong>) should be calculated based on the ORIGINAL L1 price, not the lower negotiated price<\/strong>, and such eligible Class-I Local Suppliers shall be called to match the new negotiated L1 price<\/strong> as per the procedure mentioned above for placement of the 50% quantity.<\/p>\n2. Since, as per sub-para (c) below, the MII order is applicable 'where the bid is evaluated on price alone' \u2014 MII purchase preference would not be applicable where evaluation is based inter alia<\/em> on non-price criteria, e.g., QCBS or FBS in Services and Works.<\/p><\/aside>\n<ul class=\"lst\"><li>i) Among all qualified bids, the lowest bid will be termed L1. If L1 is a 'Class-I local supplier', the contract for the full quantity will be awarded to L1.<\/li><li>ii) If the L1 bid is not a 'Class-I local supplier':<\/li><li>50% of the order quantity shall be awarded to L1.<\/li><li>Thereafter, the lowest bidder among the 'Class-I local suppliers' will be invited to match the L1 price for the remaining 50% quantity<\/strong>, subject to the Class-I local supplier's quoted price falling within the margin of purchase preference (L1+20%)<\/strong>, and the contract for that quantity shall be awarded to such Class-I local supplier subject to matching the L1 price.<\/li><li>In case the lowest eligible Class-I local supplier fails to match the L1 price or accepts less than the offered quantity<\/strong>, the next higher Class-I local supplier within L1+20% shall be invited<\/strong> to match the L1 price for the remaining quantity, and so on, and the contract shall be awarded accordingly.<\/li><li>In case some quantity out of the 50% (for the eligible Class-I Local Suppliers) is still left uncovered, then such balance quantity may also be ordered on the L1 bidder.<\/li><li>Non-divisible procurements and services evaluated on price alone:<\/strong> In the procurements of goods or works covered by para 3(b) above which are not divisible in nature<\/strong>, and in the procurement of services where the bid is evaluated on price alone<\/strong>, the 'Class-I local supplier' shall get purchase preference over 'Class-II local supplier' as well as 'Non-local supplier', as per the following procedure:<\/li><li>Among all qualified bids, the lowest bid will be termed L1. If L1 is a 'Class-I local supplier', the contract will be awarded to L1.<\/strong><\/li><li>If L1 is not a 'Class-I local supplier'<\/strong>, the lowest bidder among the 'Class-I local suppliers' will be invited to match the L1 price<\/strong>, subject to the Class-I local supplier's quoted price falling within the margin of purchase preference (L1+20%<\/strong>), and the contract shall be awarded to such Class-I local supplier subject to matching the L1 price.<\/li><li>In case the lowest eligible Class-I local supplier fails to match<\/strong> the L1 price, the Class-I local supplier with the next higher bid within L1+20% shall be invited<\/strong> to match the L1 price, and so on, and the contract shall be awarded accordingly. In case none of the Class-I local suppliers within the margin of purchase preference matches the L1 price, the contract may be awarded to the L1 bidder.<\/strong><\/li><li>\"Class-II local supplier<\/strong>\" will not get a preference<\/strong> for any procurement undertaken by procuring entities.<\/li><\/ul>\n<h4>4A. Applicability in Tenders where the Contract is to be Awarded to Multiple Bidders<\/span><\/h4>\nIn tenders where the contract is awarded to multiple bidders<\/strong>, subject to matching of L1 rates or otherwise, the 'Class-I local supplier' shall get purchase preference over 'Class-II local supplier' as well as 'Non-local supplier', as per the following procedure:<\/p>\n<ul class=\"lst\"><li>i) In case there is sufficient local capacity and competition<\/strong> for the item to be procured, as notified by the Nodal Ministry, only Class-I local suppliers shall be eligible to bid<\/strong>. As such, the multiple suppliers who would be awarded the contract should be all and only 'Class-I Local suppliers'<\/strong>.<\/li><li>ii) In other cases<\/strong>, 'Class-II local suppliers' and 'Non-local suppliers' may also participate in the tender process along with 'Class-I local suppliers' as per provisions of the Order.<\/li><li>iii) If 'Class-I Local suppliers' qualify for the award of contract for at least 50% of the tendered quantity in any tender, the contract may be awarded to all the qualified bidders as per the award criteria stipulated in the tender documents.<\/li><li>iv) However, in case 'Class-I Local suppliers' do not qualify for the award of contract for at least 50% of the tendered quantity, purchase preference should be given to the 'Class-I local supplier' over Class-II local suppliers\/ Non-local suppliers, provided their quoted rate falls within the 20% margin of purchase preference of the HIGHEST quoted bidder considered for award of contract \u2014 so as to ensure that the Class-I Local suppliers, taken in totality, are considered for award of contract for at least 50% of the tendered quantity.<\/li><li>v) Only those 'Class-I local suppliers' whose quoted rates fall within the 20% margin of purchase preference would be eligible for purchase preference, subject to meeting the prescribed criteria for award of contract as also the constraint of maximum quantity that can be sourced from any single supplier.<\/li><li>First, purchase preference must be given to the lowest quoting eligible 'Class-I local supplier'.<\/li><li>If the lowest quoting Class-I local supplier does not qualify<\/strong> for purchase preference because of the aforesaid constraints, or does not accept the offered quantity<\/strong>, an opportunity may be given to the next higher eligible Class-I local supplier<\/strong>, and so on.<\/li><li>In case the quantity thus allocated to eligible Class-I local suppliers is short of 50%<\/strong> of the tendered quantity, then this shortfall quantity may be distributed among all other qualified bidders<\/strong> as per the award criteria stipulated in the tender documents.<\/li><li>vi) To avoid any ambiguity during the bid evaluation process, the procuring entities may stipulate their own tender-specific criteria<\/strong> for the award of contracts amongst different bidders, including the procedure for purchase preference to 'Class-I local supplier', within the broad policy guidelines stipulated in the sub-paras above.<\/li><\/ul>\n<h4>5.<\/span>Exemption of Small Purchases<\/span><\/h4>\nNotwithstanding anything contained above, procurements where the estimated value to be procured is less than Rs. 5 lakh shall be EXEMPT from the Order. However, it shall be ensured by procuring entities that procurement is not split for the purpose of avoiding the provisions of this Order.<\/p>\n<h4>5A. Exemption in Sourcing of Spares and Consumables of Closed Systems<\/span><\/h4>\nProcurement of spare parts, consumables for closed systems, and Maintenance\/ Service contracts with the Original Equipment Manufacturer\/ Original Equipment Supplier\/ Original Part Manufacturer shall be exempted from this Order.<\/p>\n<h4>6.<\/span>Minimum Local Content<\/span><\/h4>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Minimum Local Content<\/th><\/tr><\/thead><tbody><tr><td>Class-I local supplier<\/td><td>50%<\/td><\/tr><tr><td>Class-II local supplier<\/td><td>20%<\/td><\/tr><\/tbody><\/table><\/div>\nThe Nodal Ministry\/ Department may prescribe only a higher percentage<\/strong> of the minimum local content requirement to categorise a supplier as Class-I\/ Class-II local supplier. For items for which the Nodal Ministry\/ Department has not prescribed a higher minimum local content<\/strong> notification under the Order, it shall be 50% and 20%<\/strong> for Class-I and Class-II local supplier respectively.<\/p>\n<aside class=\"note\">Important: Local content is not related to the nationality of the firm \u2014 a foreign-owned firm may also become a Class-I or Class-II local supplier by adding local value addition.<\/p><\/aside>\n<h4>7.<\/span>Requirement for Declaration\/ Specification in Advance<\/span><\/h4>\nThe minimum local content, the margin of purchase preference, and the procedure for preference to Make in India shall be declared in the Notice Inviting Tenders or other forms of procurement solicitation, and shall not be varied during a particular procurement transaction.<\/p>\n<h4>8.<\/span>Government e-Marketplace<\/span><\/h4>\nIn respect of procurement through GeM, GeM shall, as far as possible, specifically mark the items that meet the minimum local content while registering the item for display, and shall, wherever feasible, make provision for automated comparison with purchase preference and without purchase preference, and for obtaining consent of the local supplier in those cases where purchase preference is to be exercised.<\/p>\n<h4>9.<\/span>Verification of Local Content<\/span><\/h4>\n<ol class=\"lst\"><li>The Class-I\/ Class-II local supplier shall, at the time of tender, bidding or solicitation<\/strong>, be required to indicate the percentage of local content<\/strong> and provide self-certification<\/strong> that the item offered meets the local content requirement for Class-I\/ Class-II local supplier, as the case may be. They shall also give details of the location(s) at which the local value addition is made<\/strong>.<\/li><li>In cases of procurement for a value more than Rs. 10 crore<\/strong>, the Class-I\/ Class-II local supplier shall be required to provide a certificate from the statutory auditor or cost auditor of the company<\/strong> (in the case of companies), or from a practising cost accountant or practising chartered accountant<\/strong> (in respect of suppliers other than companies), giving the percentage of local content<\/strong>.<\/li><li>The bidder shall give self-certification for local content in the quoted item (goods\/ works\/ services) at the time of tendering. However, at the time of execution of the project, for all contracts above INR 10 Crore, the contractor\/ supplier shall be required to give local content certification duly certified by a cost\/ chartered accountant in practice.<\/li><\/ol>\nFor cases where it is not possible<\/strong> to provide certification by Cost\/ Chartered Accountant at the time of execution of the project, the supplier shall be permitted to provide the certificate after completion of the contract<\/strong>, within the limit acceptable to the procuring entity.<\/p>\nIn case the contractor\/ supplier does not meet the stipulated local content requirement and the category of the supplier changes from Class-I to Class-II\/ Non-local, or from Class-II to Non-local \u2014 a penalty up to 10% of the contract value may be imposed. However, the contract once awarded shall not be terminated on this account.<\/p>\n<ol class=\"lst\"><li>Decisions on complaints<\/strong> relating to the implementation of this Order shall be made by the competent authority empowered to investigate procurement-related complaints<\/strong> relating to the procuring entity.<\/li><li>Nodal Ministries may constitute committees with internal and external experts for independent verification of self-declarations and auditor's\/ accountant's certificates \u2014 on a random basis and in the case of complaints.<\/li><li>Nodal Ministries and procuring entities may prescribe fees for such complaints.<\/li><li>False declarations will be in breach of the Code of Integrity under Rule 175(1)(i)(h) of the GFR<\/strong>, for which a bidder or its successors can be DEBARRED for up to two years<\/strong> as per Rule 151(iii) of the GFR<\/strong>, along with such other actions as may be permissible under law. The Department of Expenditure shall issue suitable instructions for the effective and smooth operation of this process, so that:<\/li><li>i) The fact and duration of debarment<\/strong> for violation of the Order by any procuring entity are promptly brought to the notice of the Member-Convenor of the Standing Committee and the Department of Expenditure<\/strong> through the concerned Ministry\/ Department or in some other manner;<\/li><li>ii) On a periodical basis, such cases are consolidated, and a centralised or decentralised list of such suppliers with the period of debarment is maintained and displayed on the website(s);<\/li><li>iii) With respect to procuring entities other than the one that has carried out the debarment, the debarment takes effect PROSPECTIVELY from the date of uploading on the website(s), in such a manner that ongoing procurements are not disrupted;<\/li><li>iv) A supplier who has been debarred by any procuring entity for violation of the Order shall not be eligible for preference under the Order for procurement by any other procuring entity for the duration of the debarment<\/strong>. The debarment for such other procuring entities shall take effect prospectively from the date on which it comes to the notice of other procuring entities<\/strong> in the manner prescribed above.<\/li><\/ol>\n<h4>10.<\/span>Specifications in Tenders and Other Procurement Solicitations<\/span><\/h4>\n<ol class=\"lst\"><li>Every procuring entity shall ensure that the eligibility\/ qualification conditions with respect to previous experience fixed in any tender or solicitation do not require proof of supply in other countries or proof of exports.<\/li><li>Procuring entities shall endeavour to see that eligibility\/ qualification conditions \u2014 including on matters like turnover, production capability, and financial strength<\/strong> \u2014 do not result in unreasonable exclusion of Class-I\/ Class-II local suppliers<\/strong> who would otherwise be eligible, beyond what is essential for ensuring quality or creditworthiness<\/strong> of the supplier.<\/li><li>Procuring entities shall review all existing eligibility norms and conditions<\/strong> with reference to sub-paragraphs (a) and (b) above.<\/li><li>Specifying foreign certifications\/ unreasonable technical specifications\/ brands\/ models in the tender document is a restrictive and discriminatory practice against local suppliers. If foreign certification is required to be stipulated because of the non-availability of Indian Standards and\/or for any other reason, the same shall be done only after written approval of the Secretary of the Department concerned, or any other Authority designated such power by the Secretary of the Department concerned.<\/li><li>G<\/span>C<\/span> \"All administrative Ministries\/ Departments whose procurement exceeds Rs. 1000 Crore per annum<\/strong> shall notify\/ update their procurement projections every year<\/strong>, including those of the PSEs\/ PSUs, for the next five years on their respective website<\/strong>.\"<\/li><\/ol>\n<h4>11.<\/span>Reciprocity Clause<\/span><\/h4>\n<ol class=\"lst\"><li>When a Nodal Ministry\/ Department identifies that Indian suppliers of an item are not allowed to participate and\/or compete in procurement by any foreign government due to restrictive tender conditions which have the direct or indirect effect of barring Indian companies \u2014 such as registration in the procuring country, execution of projects of specific value in the procuring country, etc. \u2014 it shall provide such details to all its procuring entities, including CMDs\/ CEOs of PSEs\/ PSUs, State Governments and other procurement agencies under their administrative control, and GeM, for appropriate reciprocal action.<\/li><li>Entities of countries identified by the Nodal Ministry\/ Department as not allowing Indian companies to participate in their Government procurement for any item related to that Nodal Ministry shall not be allowed to participate in Government procurement in India for all items related to that Nodal Ministry\/ Department, except for the list of items published by the Ministry\/ Department permitting their participation.<\/li><li>The stipulation in (b) above shall be part of all tenders invited by the Central Government procuring entities<\/strong> stated in (a) above. All purchases on GeM shall also necessarily have the above provisions<\/strong> for items identified by the Nodal Ministry\/ Department.<\/li><li>State Governments should be encouraged to incorporate similar provisions in their respective tenders.<\/li><li>The term 'entity<\/strong>' of a country shall have the same meaning as under the FDI (Foreign Direct Investment) Policy of DPIIT<\/strong>, as amended from time to time.<\/li><\/ol>\n<h4>12.<\/span>Action for Non-Compliance with the Provisions of the Order<\/span><\/h4>\nIn case restrictive or discriminatory conditions against domestic suppliers are included in tender documents, an inquiry shall be conducted by the Administrative Department undertaking the procurement (including procurement by any entity under its administrative control) to fix responsibility for the same. Thereafter, appropriate action \u2014 administrative or otherwise \u2014 shall be taken against erring officials of procuring entities under relevant provisions. Intimation on all such actions shall be sent to the Standing Committee.<\/p>\n<h4>13.<\/span>Assessment of Supply Base by Nodal Ministries<\/span><\/h4>\nThe Nodal Ministry shall keep in view the domestic manufacturing\/ supply base and assess the available capacity and the extent of local competition while identifying items and prescribing the higher minimum local content or the manner of its calculation \u2014 with a view to avoiding cost increase from the operation of this Order.<\/p>\n<h4>14.<\/span>Increase in Minimum Local Content<\/span><\/h4>\nThe Nodal Ministry may annually review the local content requirements with a view to INCREASING them, subject to the availability of sufficient local competition with adequate quality.<\/p>\n<h4>15.<\/span>Manufacture under Licence\/ Technology Collaboration Agreements with Phased Indigenisation<\/span><\/h4>\n<ol class=\"lst\"><li>While notifying the minimum local content, Nodal Ministries may make special provisions for exempting suppliers from meeting the stipulated local content if the product is being manufactured in India under a licence from a foreign manufacturer who holds intellectual property rights, and where there is a technology collaboration agreement\/ transfer of technology agreement for indigenous manufacture of a product developed abroad with clear phasing of increase in local content.<\/li><li>In the procurement of all goods, services or works in respect of which there is a substantial quantity of public procurement, and for which the Nodal Ministry has not notified that there is sufficient local capacity and local competition, the concerned Nodal Ministry shall notify an upper threshold value of procurement beyond which foreign companies shall enter into a JOINT VENTURE with an Indian company to participate in the tender. Procuring entities, while procuring such items beyond the notified threshold value, shall prescribe in their respective tenders that foreign companies may enter into a joint venture with an Indian company to participate in the tender. The procuring Ministries\/ Departments shall also make special provisions to exempt such joint ventures from meeting the stipulated minimum local content requirement, which shall be increased in a phased manner.<\/li><\/ol>\n<h4>16.<\/span>Powers to Grant Exemption and to Reduce Minimum Local Content<\/span><\/h4>\n<ol class=\"lst\"><li>The Administrative Department undertaking the procurement (including procurement by any entity under its administrative control), with the approval of their Minister-in-charge, may \u2014 by written order, for reasons to be recorded in writing:<\/li><li>i) reduce the minimum local content below the prescribed level; or<\/li><li>ii) reduce the margin of purchase preference below 20 per cent; or<\/li><li>iii) exempt any item or supplying entities from the operation of this Order or any part of the Order.<\/li><li>The Administrative Department, while seeking exemption under this para, shall certify that such item(s) has not been notified by the Nodal Ministry\/ Department concerned.<\/li><li>A copy of every such order shall be provided to the Standing Committee and the concerned Nodal Ministry\/ Department. The Nodal Ministry\/ Department will continue to have the power to vary its notification on Minimum Local Content.<\/li><\/ol>\n<h4>17.<\/span>Directions to Government Companies<\/span><\/h4>\nWith respect to Government companies and other procuring entities not governed by the General Financial Rules, the administrative Ministry or Department shall issue policy directions requiring compliance with this Order.<\/p>\n<h4>18.<\/span>Standing Committee<\/span><\/h4>\n<ol class=\"lst\"><li>A Standing Committee<\/strong> is constituted with the following membership:<\/li><\/ol>\n<div class=\"tblwrap\"><table><thead><tr><th>Position<\/th><th>Member<\/th><\/tr><\/thead><tbody><tr><td>Chairman<\/td><td>Secretary, Department for Promotion of Industry and Internal Trade (DPIIT)<\/td><\/tr><tr><td>Member<\/td><td>Secretary, Commerce<\/td><\/tr><tr><td>Member<\/td><td>Secretary, Ministry of Electronics and Information Technology<\/td><\/tr><tr><td>Member<\/td><td>Joint Secretary (Public Procurement), Department of Expenditure<\/td><\/tr><tr><td>Member-Convenor<\/td><td>Joint Secretary (DPIIT)<\/td><\/tr><\/tbody><\/table><\/div>\n<ol class=\"lst\"><li>The Secretary of the Department concerned with a particular item shall be a member<\/strong> in respect of issues relating to such item. The Chairman of the Committee may co-opt technical experts<\/strong> as relevant to any issue or class of issues under its consideration.<\/li><\/ol>\n<h4>19.<\/span>Functions of the Standing Committee<\/span><\/h4>\nThe Standing Committee shall meet as often as necessary, but not less than once every six months. The Committee:<\/p>\n<ol class=\"lst\"><li>shall oversee the implementation<\/strong> of this Order and the issues arising from it, and make recommendations<\/strong> to Nodal Ministries and procuring entities;<\/li><li>shall annually assess and periodically monitor compliance with this Order;<\/li><li>shall identify Nodal Ministries and the allocation of items among them for the issue of notifications on minimum local content;<\/li><li>may require the furnishing of details or returns<\/strong> regarding compliance with this Order and related matters;<\/li><li>may, during the annual review or otherwise, assess issues where the manner of implementation of the Order results in any restrictive practices, cartelisation, or increase in public expenditure, and suggest remedial measures;<\/li><li>may examine cases covered by para 15 above relating to manufacture under licence\/ technology transfer agreements, with a view to satisfying itself that adequate mechanisms exist for enforcement of such agreements and for attaining the underlying objective of progressive indigenisation;<\/li><li>may consider any other issue<\/strong> relating to this Order that may arise.<\/li><\/ol>\n<h4>20.<\/span>Removal of Difficulties<\/span><\/h4>\nMinistries\/ Departments and the Boards of Directors of Government companies<\/strong> may issue such clarifications and instructions<\/strong> as may be necessary for the removal of any difficulties<\/strong> arising in the implementation of the Order.<\/p>\n<h4>21.<\/span>Ministries Having Existing Policies<\/span><\/h4>\nWhere any Ministry or Department has its own policy for preference to local content approved by the Cabinet after 1st January 2015<\/strong>, such policies will PREVAIL over the provisions of the Order<\/strong>. All other existing orders on preference to local content shall be reviewed by the Nodal Ministries and revised as needed<\/strong>(W<\/span> adds: \"to conform to this Order, within two months of the issue of this Order\")<\/em>.<\/p>\n<h4>22.<\/span>Faqs<\/span><\/h4>\nPlease refer to the FAQs related to the PPP-MII Order issued by DPIIT.<\/p>\n<aside class=\"note\">Annexure references:<\/strong>G<\/span> Annexure 28 \u00b7 W<\/span> Annexure 18 \u00b7 C<\/span> Annexure 26 \u00b7 NC<\/span> Annexure 22.<\/p><\/aside>\n<h3>1.11.4<\/span>Restrictions\/ Prior Registration on Entities from a Class of Countries<\/span><\/h3>\n(Rule 144(xi), GFR 2017 \u2014 the \"Land Border\" Order)<\/em><\/p>\n<h4>1.<\/span>Requirement of Registration<\/span><\/h4>\nRule 144 of GFR, 2017 has been amended to include a new sub-para (xi)<\/strong> as follows:<\/p>\n<aside class=\"note\">\"Notwithstanding anything contained in these Rules, the Department of Expenditure may, by order in writing, impose restrictions, including prior registration and\/or screening, on procurement from bidders from, or bidders having commercial arrangements with an entity from, a country or countries, or a class of countries, on grounds of defence of India, or matters directly or indirectly related thereto including national security; No procurement shall be made in violation of such restrictions.\"<\/p><\/aside>\n<h4>2.<\/span>Detailed Provisions<\/span><\/h4>\n(Notified by the Department of Expenditure's OM No. F.7\/10\/2021-PPD(1) dated 23.02.2023)<\/em><\/p>\n<ol class=\"lst\"><li>Any bidder from a country that shares a land border with India will be eligible to bid in any procurement \u2014 whether of goods, services (including consultancy services and non-consultancy services) or works (including turnkey projects) \u2014 only IF the bidder is REGISTERED with the Competent Authority (see sub-para 10 below).<\/li><li>Any bidder (including an Indian bidder) who has a Specified Transfer of Technology (ToT) arrangement with an entity from a country that shares a land border with India<\/strong> will be eligible to bid in any procurement \u2014 whether of goods, services (including consultancy and non-consultancy services) or works (including turnkey projects) \u2014 only if the bidder is registered with the Competent Authority<\/strong>. (See also sub-para 5 below.)<\/li><li>Effective dates:<\/li><\/ol>\n<div class=\"tblwrap\"><table><thead><tr><th>Provision<\/th><th>Applicable from<\/th><\/tr><\/thead><tbody><tr><td>Registration for bidders under para (a)<\/td><td>23.07.2020<\/td><\/tr><tr><td>Registration for bidders under para (b) \u2014 ToT arrangements<\/td><td>All procurements where tenders are issued\/ published after 01.04.2023<\/td><\/tr><\/tbody><\/table><\/div>\n<ol class=\"lst\"><li>In tenders issued after 23.07.2020 or 01.04.2023, as the case may be, the requirements for registration of bidders and other relevant provisions of this Order shall be incorporated in the tender conditions.<\/li><\/ol>\n<h4>3.<\/span>Applicability<\/span><\/h4>\nApart from Ministries\/ Departments, attached and subordinate bodies, notwithstanding anything contained in Rule 1 of the GFRs 2017<\/strong>, the Order shall also<\/strong> be applicable:<\/p>\n<ol class=\"lst\"><li>to all Autonomous Bodies;<\/li><li>to public sector banks and public sector financial institutions;<\/li><li>to all Central Public Sector Enterprises;<\/li><li>to all procurement in Public Private Partnership projects receiving financial support from the Government or public sector enterprises\/ undertakings;<\/li><li>to Union Territories, the National Capital Territory of Delhi, and all agencies\/ undertakings thereof.<\/li><\/ol>\nf) The Order is not applicable:<\/p>\n<ul class=\"lst\"><li>i) In projects that receive international funding with the approval of the Department of Economic Affairs (DEA)<\/strong>, Ministry of Finance \u2014 the procurement guidelines applicable to the project shall normally be followed, notwithstanding anything contained in this Order and without reference to the Competent Authority<\/strong>. Exceptions to this shall be decided in consultation with DEA.<\/strong><\/li><li>ii) On procurements made by Indian missions and by offices of government agencies\/ undertakings located outside India.<\/li><li>iii) On bidders (or entities) from those countries \u2014 even if sharing a land border with India \u2014 to which the Government of India has extended lines of credit, or in which the Government of India is engaged in development projects. Updated lists are given on the Ministry of External Affairs' website.<\/li><li>iv) On procurement of spare parts and other essential service support like AMC\/ CMC, including consumables for closed systems, from Original Equipment Manufacturers (OEMs) or their authorised agents<\/strong> \u2014 exempted from the requirement of registration as mandated under Rule 144(xi) of GFR, 2017 (Notified vide OM No. F.12\/1\/2021-PPD(Pt.) dated 02.03.2021)<\/em>.<\/li><li>v) A bidder is permitted to procure raw materials, components, sub-assemblies, etc. from vendors from countries that share a land border with India. Such vendors will not be required to be registered with the Competent Authority, as it is not regarded as \"sub-contracting\". However, if a bidder proposes to supply FINISHED GOODS procured directly\/ indirectly from vendors from countries sharing a land border with India, such vendors WILL be required to be registered with the Competent Authority (Notified vide OM No. F.18\/37\/2020-PPD dated 08.02.2021)<\/em>.<\/li><\/ul>\n<h4>4.<\/span>Definitions<\/span><\/h4>\na) \"Bidder\"<\/strong> \u2014 for the purpose of the Order (including the terms 'bidder<\/strong>', 'consultant<\/strong>', 'vendor<\/strong>' or 'service provider<\/strong>' in certain contexts) means any person, firm or company, including any member of a consortium or joint venture<\/strong> (that is, an association of several persons, or firms or companies), every artificial juridical person<\/strong> not falling in any of the descriptions of bidders stated hereinbefore, including any agency, branch or office controlled by such person<\/strong>, participating in a procurement process.<\/p>\nb) \"Tender\"<\/strong> \u2014 for the purpose of the Order will include other forms of procurement<\/strong>, except where the context requires otherwise.<\/p>\nc) \"Transfer of Technology\" \u2014 means dissemination and transfer of all forms of commercially usable knowledge, such as transfer of know-how, skills, technical expertise, designs, processes and procedures, and trade secrets, which enables the acquirer of such technology to perform activities using the transferred technology independently.<\/p>\n<aside class=\"note\">Matters of interpretation of this term shall be referred to the Registration Committee constituted by DPIIT<\/strong>, and the interpretation of the Committee shall be final<\/strong>.<\/em><\/p><\/aside>\nd) \"Specified Transfer of Technology\" \u2014 means a transfer of technology in the sectors and\/or technologies specified in sub-para 5 below, occurring on or after 23.07.2020.<\/p>\ne) \"Bidder (or entity) from a country which shares a land border with India\" \u2014 means:<\/p>\n<ul class=\"lst\"><li>i) An entity incorporated, established, or registered in such a country; or<\/li><li>ii) A subsidiary<\/strong> of an entity incorporated, established, or registered in such a country; or<\/strong><\/li><li>iii) An entity substantially controlled through entities<\/strong> incorporated, established, or registered in such a country; or<\/strong><\/li><li>iv) An entity whose beneficial owner is situated in such a country; or<\/li><li>v) An Indian (or other) AGENT of such an entity; or<\/li><li>vi) A natural person who is a citizen of such a country; or<\/li><li>vii) A consortium or joint venture where any member<\/strong> of the consortium or joint venture falls under any of the above.<\/li><\/ul>\nf) \"Agent\" \u2014 for the purpose of the Order, is a person employed to do any act for another, or to represent another in dealings with third persons.<\/p>\n<aside class=\"note\">Notes:<\/p>\n1. A person who procures and supplies FINISHED GOODS from an entity from a country that shares a land border with India will \u2014 regardless of the nature of his legal or commercial relationship with the producer of the goods \u2014 be deemed to be an AGENT for the purpose of this Order.<\/p>\n2. However, a bidder who only procures raw material, components, etc. from an entity from a country that shares a land border with India and then manufactures or converts them into other goods will not be treated as an Agent.<\/p><\/aside>\ng) \"Beneficial owner\"<\/strong> \u2014 for the purposes of point (e)(iv) will be as follows:<\/p>\n<ul class=\"lst\"><li>i) In the case of a company or Limited Liability Partnership, the beneficial owner is the natural person(s) who, whether acting alone or together, or through one or more juridical person(s), has a controlling ownership interest, or who exercises CONTROL through other means.<\/li><\/ul>\n<aside class=\"note\">Explanation:<\/p>\n<ol class=\"lst\"><li>\"Controlling ownership interest<\/strong>\" means ownership of, or entitlement to, more than twenty-five per cent (25%)<\/strong> of shares or capital or profits of the company;<\/li><li>\"Control\" shall include the right to appoint the majority of the directors, or to control the management or policy decisions \u2014 including by virtue of their shareholding or management rights or shareholders' agreements or voting agreements.<\/li><\/ol><\/aside>\n<ul class=\"lst\"><li>ii) In the case of a partnership firm<\/strong>, the beneficial owner is the natural person(s) who, whether acting alone or together, or through one or more juridical persons, has ownership of\/ entitlement to more than fifteen per cent (15%) of capital or profits<\/strong> of the partnership.<\/li><li>iii) In the case of an unincorporated association or body of individuals<\/strong>, the beneficial owner is the natural person(s) who, whether acting alone or together, or through one or more juridical persons, has ownership of or entitlement to more than fifteen per cent (15%) of the property or capital or profits<\/strong> of such association or body of individuals.<\/li><li>iv) Where NO natural person is identified under (i), (ii) or (iii) above, the beneficial owner is the relevant natural person who holds the position of senior managing official.<\/li><li>v) In the case of a TRUST<\/strong>, the identification of beneficial owner(s) shall include identification of:<\/li><li>the author of the trust,<\/li><li>the trustee,<\/li><li>the beneficiaries with fifteen per cent (15%) or more interest in the trust, and<\/li><li>any other natural person exercising ultimate effective control over the trust through a chain of control or ownership.<\/li><li>vi) To determine nationality<\/strong> while assessing the beneficial ownership of the bidder, the nationality mentioned in the beneficial owner's PASSPORT<\/strong> should be considered. In case of the possibility of dual citizenship<\/strong>, nationality on all the passports should be considered through a suitable declaration<\/strong>. If nationality in any of the passports<\/strong> of the person whose beneficial ownership is being assessed is recorded to be from a country sharing a land border with India, the provisions contained under this Order shall apply<\/strong>.<\/li><\/ul>\n<aside class=\"note\">Hong Kong and Macau are to be considered as part of China for the purpose of this Order.<\/p><\/aside>\n<h4>5.<\/span>Sensitive Sectors\/ Technologies<\/span><\/h4>\n(Relevant only for the provisions on ToT arrangements \u2014 refer sub-para 2(b) above)<\/em><\/p>\n<ol class=\"lst\"><li>Certain sectors and technologies have been identified as sensitive from the national security point of view:<\/li><li>Sectors listed in Schedule I \u2192 Category-I sensitive sectors<\/li><li>Sectors listed in Schedule II \u2192 Category-II sensitive sectors<\/li><li>Technologies listed in Schedule III \u2192 sensitive technologies<\/li><\/ol>\nList of Category-I Sensitive Sectors (Schedule-I)<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>S. No.<\/th><th>Sector<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Atomic Energy<\/td><\/tr><tr><td>2<\/td><td>Broadcasting\/ Print and Digital Media<\/td><\/tr><tr><td>3<\/td><td>Defence<\/td><\/tr><tr><td>4<\/td><td>Space<\/td><\/tr><tr><td>5<\/td><td>Telecommunications<\/td><\/tr><\/tbody><\/table><\/div>\nList of Category-II Sensitive Sectors (Schedule-II)<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>S. No.<\/th><th>Sector<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Power and Energy (including exploration\/ generation\/ transmission\/ distribution\/ pipeline)<\/td><\/tr><tr><td>2<\/td><td>Banking and Finance, including Insurance<\/td><\/tr><tr><td>3<\/td><td>Civil Aviation<\/td><\/tr><tr><td>4<\/td><td>Construction of ports and dams & river valley projects<\/td><\/tr><tr><td>5<\/td><td>Electronics and Microelectronics<\/td><\/tr><tr><td>6<\/td><td>Meteorology and Ocean Observation<\/td><\/tr><tr><td>7<\/td><td>Mining and extraction (including deep sea projects)<\/td><\/tr><tr><td>8<\/td><td>Railways<\/td><\/tr><tr><td>9<\/td><td>Pharmaceuticals & Medical Devices<\/td><\/tr><tr><td>10<\/td><td>Agriculture<\/td><\/tr><tr><td>11<\/td><td>Health<\/td><\/tr><tr><td>12<\/td><td>Urban Transportation<\/td><\/tr><\/tbody><\/table><\/div>\nList of Sensitive Technologies (Schedule-III)<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>S. No.<\/th><th>Technology<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Additive Manufacturing (e.g., 3D Printing)<\/td><\/tr><tr><td>2<\/td><td>Any equipment having electronic programmable components or autonomous systems (e.g., SCADA systems)<\/td><\/tr><tr><td>3<\/td><td>Any technology used for uploading and streaming data, including broadcasting, satellite communication, etc.<\/td><\/tr><tr><td>4<\/td><td>Chemical Technologies<\/td><\/tr><tr><td>5<\/td><td>Biotechnologies, including Genetic Engineering and Biological Technologies<\/td><\/tr><tr><td>6<\/td><td>Information and Communication Technologies<\/td><\/tr><tr><td>7<\/td><td>Software<\/td><\/tr><\/tbody><\/table><\/div>\n<ol class=\"lst\"><li>For Category-I sensitive sectors<\/strong>, bidders with a ToT arrangement in any technology<\/strong> with an entity from a country that shares a land border with India shall require registration<\/strong>.<\/li><li>For Category-II sensitive sectors<\/strong>, bidders with a ToT arrangement in the sensitive technologies listed in Schedule III<\/strong> with an entity from a country that shares a land border with India shall require registration<\/strong>.<\/li><li>In Category-II sensitive sectors, the Secretary (or an officer not below the rank of Joint Secretary to the Government of India, so authorised by the Secretary) of the Ministry\/ Department of the Government of India is empowered, after due consideration, to WAIVE the requirement of registration for a particular item\/ application or a class of items\/ applications, even if included in Schedule III. The Ministry\/ Department concerned shall INFORM DPIIT and the National Security Council Secretariat (NSCS) of their decision to waive the requirement of registration. Ministries\/ Departments are not required to consult DPIIT\/ nscs before deciding, and are only required to inform DPIIT\/ nscs of the decision. If DPIIT\/ NSCS raises any point, it should be considered in future procurements, and the ongoing procurement for which the waiver was granted need not be interrupted or altered.<\/li><li>Based on security considerations<\/strong>, a Ministry\/ Department in a Category-II sensitive sector, or other Ministries\/ Departments, may recommend to DPIIT the inclusion of any other technology in the list of sensitive technologies<\/strong> \u2014 either generally or for their Ministry\/ Department.<\/li><\/ol>\n<h4>6.<\/span>Sub-contracting in Works Contracts<\/span><\/h4>\nIn works contracts, including turnkey contracts, contractors shall not be allowed to sub-contract works to any contractor from a country that shares a land border with India unless such contractor is REGISTERED with the Competent Authority. The definition of \"contractor from a country which shares a land border with India\" shall be as in sub-para 4(e) above. This shall not apply to sub-contracts already awarded on or before the date of the Order (i.e., 23rd July 2020).<\/p>\n<aside class=\"note\">[Note: Procurement of raw material, components, etc. does not constitute sub-contracting.]<\/p><\/aside>\n<h4>7.<\/span>Model Clauses\/ Certificate Regarding Compliance<\/span><\/h4>\nAn undertaking\/ certificate shall be taken from bidders in the tender documents that the extant guidelines for participation in the tenders (which should include conditions for implementation of this Order) have been complied with. If such a certificate is given by a bidder whose bid is accepted and is found to be FALSE, this would be grounds for DEBARMENT and further legal action in accordance with law.<\/p>\nModel Clauses and Model Certificates<\/strong>, which may be inserted in tenders\/ obtained from Bidders, are given in the Annexures. While adhering to the substance<\/strong> of the Order, procuring entities are free to appropriately modify the wording of these clauses<\/strong> based on their past experience, local needs, etc.<\/p>\n<aside class=\"note\">Annexure references:<\/strong>G<\/span> Annexure 33 \u00b7 W<\/span> Annexure 19 \u00b7 C<\/span> Annexure 17 \u00b7 NC<\/span> Annexure 11.<\/p><\/aside>\n<h4>8.<\/span>Validity of Registration<\/span><\/h4>\n<ul class=\"lst\"><li>With respect to tenders, registration should be valid at the time of SUBMISSION of bids AND at the time of ACCEPTANCE of bids.<\/li><li>With respect to supplies other than by tender, registration should be valid at the time of placement of the order.<\/li><li>If the bidder was validly registered at the time of acceptance\/ placement of the order, registration shall not be a relevant consideration during contract execution.<\/li><\/ul>\n<h4>9.<\/span>Government e-Marketplace<\/span><\/h4>\nGeM shall REMOVE non-compliant entities from GeM unless\/ until they are registered in accordance with this Order.<\/p>\n<h4>10.<\/span>Competent Authority and Procedure for Registration<\/span><\/h4>\n<ol class=\"lst\"><li>The Competent Authority<\/strong> for the purpose of registration under this Order shall be the Registration Committee constituted by DPIIT<\/strong>(Notified vide OM No. F.6\/18\/2019-PPD issued by Department of Expenditure dated 23.07.2020)<\/em>.<\/li><\/ol>\n<aside class=\"note\">Footnote on States: (i) In respect of application of the Order to procurement by\/ under State Governments, all functions assigned to DPIIT shall be carried out by the State Government concerned through a specific department or authority designated by it. The composition of the Registration Committee shall be as decided by the State Government. However, the requirement of political and security clearance as per para 10(d) shall remain, and no registration shall be granted without such clearance. (ii) Registration granted by State Governments shall be valid only for procurement by that State Government and its agencies\/ public enterprises etc., and shall not be valid for procurement in other states or by the Government of India and their agencies\/ public enterprises etc.<\/p><\/aside>\n<ol class=\"lst\"><li>The Registration Committee<\/strong> shall have the following members:<\/li><li>i) An officer not below the rank of Joint Secretary, designated for this purpose by DPIIT, who shall be the Chairperson;<\/li><li>ii) Officers (ordinarily not below the rank of Joint Secretary) representing the Ministry of Home Affairs, Ministry of External Affairs, and those Departments whose sectors are covered by applications under consideration;<\/li><li>iii) Any other officer whose presence is deemed necessary by the Chairperson of the Committee.<\/li><li>DPIIT has laid down the method of application, format, etc. for such bidders as covered by the Order.<\/li><li>On receipt of an application seeking registration from a bidder covered by sub-para 2(a) and 2(b) above, the Competent Authority shall first seek POLITICAL and SECURITY CLEARANCES from the Ministry of External Affairs and Ministry of Home Affairs<\/strong>, as per guidelines issued from time to time. Registration shall not be given unless political and security clearance have both been received.<\/strong><\/li><li>The Ministry of External Affairs and Ministry of Home Affairs may issue guidelines for internal use regarding the procedure for scrutiny of such applications.<\/li><li>The decision of the Competent Authority to register such bidder may be for all kinds of tenders or for a specified type(s) of goods or services, and may be for a specified or unspecified duration of time, as deemed fit. The decision of the Competent Authority shall be final.<\/li><li>Registration granted by the Competent Authority of the Government of India shall be valid not only for procurement by the Central Government and its bodies specified in sub-para 3 above, BUT also for procurement by State Governments and their agencies\/ public enterprises, etc. No fresh registration at the State level shall be required.<\/li><li>The Competent Authority is empowered to CANCEL the registration already granted if it determines that there is sufficient cause. Such cancellation by itself, however, will not affect the execution of contracts already awarded. Pending cancellation, it may also SUSPEND the registration of a bidder, and the bidder shall not be eligible to bid in any further tenders during the period of suspension.<\/li><li>For national security reasons, the Competent Authority shall not be required to give reasons for rejection\/ cancellation of registration of a bidder.<\/li><\/ol>\n<h4>11.<\/span>Clarifications Regarding Applicability of the Restrictions under Rule 144(xi)<\/span><\/h4>\n<ol class=\"lst\"><li>Proprietary purchases are not excluded<\/strong> from the provisions of Rule 144(xi) of GFR, 2017.<\/li><li>The rule is applicable to all purchases irrespective of the order value.<\/li><li>Sub-contracting is not permitted<\/strong> by any contractor to a contractor from a country sharing a land border with India unless registered with the competent authority<\/strong>. However, it is to be noted that procurement of raw materials, components, sub-assemblies, etc. does not constitute sub-contracting<\/strong>. In case a bidder has proposed to supply finished goods<\/strong> procured directly\/ indirectly from vendors from countries that share a land border with India, such vendor will be required to be registered<\/strong> with the Competent Authority.<\/li><li>There is NO bar on the contractor from procuring raw material from a firm that has been ACQUIRED by another firm belonging to a country that shares a land border with India.<\/li><li>Contract Manufacturing outside India: If the bidder is getting the subject product manufactured outside India, this is treated as contract manufacturing, and the beneficial ownership of the actual manufacturing entity must be verified. If the actual manufacturer does not meet the beneficial ownership criteria \u2014 then the bidder must submit DPIIT registration of such manufacturer to participate in the procurement.<\/li><li>The Hiring of Services:<\/strong> Suppose a Bidder (Indian\/ Foreign) who is not<\/strong> from a country sharing a land border with India offers services to a procuring entity by arranging equipment from another company<\/strong>. Then the following scenarios may appear:<\/li><\/ol>\n<div class=\"tblwrap\"><table><thead><tr><th>S. No.<\/th><th>Scenario<\/th><th>Applicability of Rule 144(xi)<\/th><\/tr><\/thead><tbody><tr><td>a)<\/td><td>The equipment\/ goods have been purchased or will be purchased from a company (manufacturer) from a country that shares a land border with India.<\/td><td>The bidder has procured certain goods<\/strong> to offer the requisite services to a procuring entity. In such case, the bidder does not fall within the definition of the term \"bidder\"<\/strong> as defined under para 4(e) above. Hence, the provisions of Rule 144(xi) of GFR, 2017 do not apply<\/strong> to this case.<\/td><\/tr><tr><td>b)<\/td><td>By entering into an MOU\/ lease agreement with the company (who OWNS the equipment\/ goods) from a country that shares a land border with India.<\/td><td>Here, the bidding vendor proposes to hire services from a company that belongs to a country that shares a land border with India<\/strong>. This prima facie<\/em> becomes a case of INDIRECT SUPPLY of services<\/strong> by a company that owns the equipment\/ goods by introducing an intermediary<\/strong>. The intermediary merely acts as an AGENT<\/strong> to the company providing services of the equipment. In such a case, the company owning the equipment and indirectly supplying the services shall be required to be registered<\/strong> with the competent authority \u2014 thereby requiring the fulfilment of the provisions of Rule 144(xi).<\/td><\/tr><tr><td>c)<\/td><td>By entering into an MOU\/ lease agreement with company 'X' (the present owner of the equipment) from a country that does not share a land border with India. The equipment has been purchased from the manufacturer company 'Y', which is from a country that SHARES a land border with India.<\/td><td>In this case, the actual supplier of services, prima facie<\/em>, shall be 'X'. The status of 'X' in this case does not attract the provisions of Rule 144(xi).<\/td><\/tr><\/tbody><\/table><\/div>\n<h4>12.<\/span>Illustrative Examples of the Applicability of Restrictions under Rule 144(xi)<\/span><\/h4>\na) The \"sister company \/ offshore production unit\" example:<\/p>\nA vendor, say 'Party A' from India, is procuring an item from their sister company 'Party B', which is registered in a country that does not share a land border with India. Both Party A and Party B are owned by an entity, say 'Party C'. Party C does not belong to a country sharing a land border with India. However, Party B has its production facility in a country sharing a land border with India, and the manufactured item will be procured by Party A from Party B from that production facility. The production unit is wholly owned by Party B.<\/p>\nParty A claims that Rule 144(xi) does not apply to it because neither Party A nor Party B is:<\/p>\n<ul class=\"lst\"><li>i) An entity incorporated, established or registered in such a country \u2014 as Party A is registered in India and Party B is registered in a country not sharing a land border with India;<\/li><li>ii) A subsidiary of an entity incorporated, established or registered in such a country \u2014 as they are 100% owned subsidiaries of Party C, which is incorporated, registered and established in a country not sharing a land border with India;<\/li><li>iii) An entity controlled through entities incorporated, established or registered in such a country \u2014 as they are 100% owned by Party C;<\/li><li>iv) An entity whose beneficial owner is situated in such a country \u2014 as their beneficial owner is Party C;<\/li><li>v) An Indian (or other) agent of such an entity;<\/li><li>vi) A natural person who is a citizen of such a country;<\/li><li>vii) A consortium or joint venture where any member falls under any of the above \u2014 though it has a wholly owned subsidiary<\/strong> in a country that shares a land border with India, it is not a JV or consortium<\/strong> (a subsidiary does not qualify as a JV or consortium<\/strong>);<\/li><li>viii) In addition, Party A claims that they are not procuring finished goods directly\/ indirectly from vendors from countries sharing land borders with India, as the item is being manufactured in their own production units.<\/li><\/ul>\n<aside class=\"note\">ix) clarification:<\/strong> In light of the above facts and claims, it is important to clarify to procurers that Party A acts as an AGENT for Party B<\/strong>, which manufactures goods in a country sharing a land border with India. Party B supplies goods manufactured at premises established in a country that shares a land border with India.<\/strong> In such a case, registration is required for party b<\/strong> (and not necessarily for Party A<\/strong>, who is only an agent and not from a country sharing a land border with India).<\/p><\/aside>\nb) IT goods and services examples:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Scenario<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>i) The contractor is only supplying the servers as-is from an OEM that belongs to a country sharing a land border with India, and there is NO value addition done by the contractor<\/td><td>The contractor acts as an AGENT for the OEM, and registration of both the OEM and the agent (contractor) is required as per Rule 144(xi) of GFR 2017.<\/td><\/tr><tr><td>ii) The contractor supplies value-added services on hardware and the contractor outsources the procurement of hardware<\/td><td>OEM registration is not required.<\/td><\/tr><tr><td>iii) There is deployment of IT services that includes both hardware and software customisation, and the contractor has sourced hardware which is made in the country sharing a land border with India<\/td><td>The requirement of registration as per Rule 144(xi) is not applicable.<\/td><\/tr><\/tbody><\/table><\/div>\n<h3>1.11.5<\/span>Support to Start-up Enterprises<\/span><\/h3><h4>1.<\/span>Definition of Start-up Enterprises<\/span><\/h4>\n<ol class=\"lst\"><li>As defined by DPIIT<\/strong>, an entity shall be considered a 'Start-up<\/strong>':<\/li><li>i) Up to a period of ten YEARS from the date of incorporation\/ registration<\/strong>, if it is incorporated as a private limited company<\/strong> (as defined in the Companies Act, 2013) or<\/strong> registered as a partnership firm<\/strong> (registered under section 59 of the Partnership Act, 1932) or<\/strong> a limited liability partnership<\/strong> (under the Limited Liability Partnership Act, 2008) in India<\/strong>; and<\/strong><\/li><li>ii) Turnover of the entity for any of the financial years since incorporation\/ registration has not exceeded one hundred crore rupees; and<\/li><li>iii) The entity works towards INNOVATION, DEVELOPMENT, or IMPROVEMENT of products, processes, or services, or a scalable business model with a high potential for EMPLOYMENT GENERATION or WEALTH CREATION.<\/li><li>Provided that an entity formed by SPLITTING UP or RECONSTRUCTING an existing business shall not be considered a 'Start-up'.<\/li><li>Provided further that<\/strong>, in order to obtain benefits, a Start-up so identified under the above definition shall be required to be RECOGNISED as a Start-up by DPIIT<\/strong>.<\/li><\/ol>\n<h4>2.<\/span>Support to Start-ups<\/span><\/h4>\nThe Government of India has ordered the following support to Start-ups (as defined by DPIIT):<\/p>\na) Exemption from submission of Bid Security: Such Start-ups shall be EXEMPTED from payment\/ submission of Earnest Money Deposit\/ Bid Security.<\/p>\nb) Relaxation in Prior Turnover and Experience: The Procuring Entity reserves its right to relax the condition of prior turnover and prior experience for start-up enterprises recognised by DPIIT, subject to meeting quality & technical specifications. Start-ups may be MSMEs\/ MSEs or otherwise. Such relaxation can be provided in the case of procurement of works as well.<\/p>\nIt is further clarified that such relaxation is not optional but normally has to be ensured, except in the case of procurement of items related to public safety, health, critical security operations and equipment, etc., where adequate justification exists for the Procuring Entity not to relax such criteria. The decision of the Procuring Entity in this regard shall be final. (Rule 173(i) of GFR 2017.)<\/p>\n<aside class=\"note\">Footnote:<\/strong> Such relaxation can be PARTIAL<\/strong> \u2014 e.g., 25% relaxation<\/strong> over specified turnover and experience.<\/p>\nW<\/span>C<\/span> additional clarification: The <\/strong>benefits under Start-up policy will be applicable only for the particular industry\/ sector for which they are registered with DPIIT (<\/strong>necessary certificate to be obtained from the bidder in this regard).<\/p><\/aside>\n<h3 class=\"src-multi\">1.11.6<\/span>Domestically Manufactured Iron & Steel Products (DMI&SP) Policy<\/span>G<\/span>W<\/span><\/h3><div class=\"srcblock src-multi\">\n<aside class=\"note\">Critical note for students:<\/strong> The two Manuals reproduce two different versions<\/strong> of this Policy.<\/p>\n<ul class=\"lst\"><li>The Goods Manual, 2024<\/strong> reproduces the DMI&SP Policy, 2019<\/strong> (first notified May 2017, revised May 2019, amended December 2020, extended by Ministry of Steel notification dated 8 March 2024 till November 2024).<\/li><li>The Works Manual, 2025 reproduces the DMI&SP Policy \u2014 REVISED, 2025, notified by the Ministry of Steel vide notification no. G.S.R. 341(E) dated 26th May 2025, and presents it as applicable to EPC tenders.<\/li><\/ul>\nThe 2025 version is the later instrument<\/strong>. Both are set out below in full, because the Goods Manual has not yet been updated to the 2025 version and each is examinable in its own right.<\/p>\nThis Policy does not appear in the Consultancy Services or Non-Consultancy Services Manuals.<\/p><\/aside>\n<h4 class=\"src-G\">PART A \u2014 DMI&SP POLICY, 2019 (as reproduced in the Goods Manual, 2024)<\/span>G<\/span><\/h4><div class=\"srcblock src-G\">\n1. Background: The DMI&SP policy provides a preference for Domestically Manufactured Iron and Steel Products in Government procurement. By promoting domestically manufactured iron and steel products as well as capital goods used for manufacturing iron and steel products, the Policy contributes to the growth of the Indian iron and steel industry. It was first notified in May 2017, revised in May 2019, and further amended in December 2020. The Ministry of Steel notified on March 8, 2024 the extension of this Policy till November 2024.<\/p>\n2. Applicability:<\/p>\na) Iron & Steel Products:<\/p>\n<ul class=\"lst\"><li>i) The Policy applies to the government procurement of iron & steel products (listed in Appendix A of the Policy, produced in compliance with prescribed quality standards) by every Ministry or Department of Government and all agencies\/ entities under their administrative control, and to projects funded by these agencies. All Central Sector Schemes (CS)\/ Centrally Sponsored Schemes (CSS) for which States and Local Bodies make procurement would come within the purview of this Policy if the Government of India fully\/ partly funds that project\/ scheme.<\/li><li>However, this Policy shall not apply to purchasing iron & steel products with a view to COMMERCIAL RESALE or to use in producing goods for COMMERCIAL SALE.<\/li><li>The Policy also applies to private agencies' purchase of iron & steel products to fulfil an EPC contract and\/or any other requirement of the Ministry or Department of Government or their PSEs.<\/li><li>ii) The Policy shall apply to projects where the procurement value of iron and steel products exceeds Rs. 5 lakh. The Policy shall also be applicable for other procurements (non-project) where the ANNUAL procurement value of iron and steel products for that Government organisation is more than Rs. 5 lakh. However, it shall be ensured by procuring entities that procurement is not SPLIT to avoid the provisions of this Policy.<\/li><\/ul>\nb) Capital Goods for Manufacturing Iron & Steel Products:<\/p>\n<ul class=\"lst\"><li>i) For government procurement of capital goods for manufacturing iron & steel products listed in Appendix B of the Policy (produced in compliance with prescribed quality standards, as applicable), the policy is applicable \u2014 irrespective of the project size \u2014 to all public sector steel manufacturers and all agencies\/ entities under their administrative control, but not for commercial resale. The Policy also applies to the purchase of capital goods for manufacturing iron & steel products by private agencies for fulfilling an EPC contract and\/or any other requirement of public sector steel manufacturers and all agencies\/ entities under their administrative control.<\/li><li>ii) NO Global Tender Enquiry (GTE) shall be invited for tenders related to the procurement of Capital Goods for manufacturing iron & steel products (Appendix-B) having estimated value UP TO Rs. 200 Crore, except with the approval of the competent authority as designated by the Department of Expenditure.<\/li><\/ul>\n3. Waivers: Waivers shall be granted by the Ministry of Steel, subject to the conditions below. The exclusion requests shall be submitted to the Standing Committee along with sufficient proof of unavailability of domestically manufactured iron & steel products: a) Where specific grades of steel are not manufactured in the country; or b) Where the quantities as per the demand of the project cannot be met through domestic sources.<\/p>\n4. Purchase Preferences: a) NO Global Tender Enquiry (GTE) shall be invited for tenders related to the procurement of iron and steel products (Appendix-A). The procurement process shall be open only to the manufacturers\/ suppliers capable of meeting\/ exceeding the domestic value-addition targets. Manufacturers\/ suppliers not meeting the domestic value addition targets shall not be eligible to participate in the bidding. b) Purchase preference shall be provided to domestically manufactured capital goods listed in Appendix B if their quoted price falls within 20% of the price quoted for corresponding imported capital goods. If the procuring company considers that the procured quantity cannot be divided in the prescribed ratio of 50:50, they shall have the right to award the contract to the eligible domestic manufacturer for a quantity not less than 50%, as may be divisible. The contract can be awarded to the eligible domestic manufacturer for the entire quantity if the tendered capital goods are NON-DIVISIBLE. If none of the eligible manufacturers meets domestic value addition requirements and matches the L1 bid, the original bidder holding the L1 bid shall secure the order for the entire procurement value.<\/p>\n5. Clause in Tender Document:<\/strong> The tender document for procurement of both Goods as well as for EPC contracts<\/strong> should explicitly outline the eligibility\/ qualification criteria for adherence to minimum prescribed domestic value addition<\/strong> by the bidder for iron and steel products and capital goods (as indicated in Appendix A and Appendix B).<\/p>\n6. Standing Committee: A Standing Committee under the Ministry of Steel (MoS), chaired by the Secretary (Steel), shall be constituted to oversee implementation. The Committee shall comprise experts from Industry\/ Industry Association\/ Government Institution or Body\/ Ministry of Steel. Its mandate: a) Monitoring the implementation of the Policy; b) Review and notify the Iron & Steel products list and the domestic value addition requirement criteria mentioned in Appendix A and Appendix B; c) Issue necessary clarifications for implementation of the Policy, including grant of exclusions to procuring agencies as per section 3; d) Constitute a separate committee to carry out grievance redressal; e) The Standing Committee shall submit its recommendations for approval to the Ministry of Steel.<\/p>\n7. Certification of Local Content:<\/strong> a) To qualify as domestically manufactured iron and steel products\/ capital goods for purchase preference under this Policy, a minimum domestic value addition of 20% to 50% is specified in Appendix A<\/strong> (domestically manufactured iron and steel products) and 50% for Appendix B<\/strong> (capital goods for manufacturing iron & steel products). The domestic value-addition is based on SELF-CERTIFICATION.<\/strong> b) For products in Appendix A<\/strong>, each domestic manufacturer shall furnish the Affidavit of self-certification in the prescribed format<\/strong> to the procuring agency declaring that the iron & steel products are domestically manufactured in terms of the domestic value addition prescribed. It shall be the responsibility of the domestic manufacturer to ensure that the products supplied are indeed domestically manufactured<\/strong> in terms of the domestic value addition prescribed for the product. c) For capital goods in Appendix B<\/strong>, the bidder shall furnish the certification issued by the STATUTORY AUDITOR of the domestic manufacturer<\/strong> declaring that the capital goods are domestically manufactured in terms of the domestic value addition prescribed. The bidder shall also be required to provide a domestic value addition certificate on a HALF-YEARLY basis (September 30 and March 31), within 60 days of commencement of each half-year<\/strong>, duly certified by the Statutory Auditors of the domestic manufacturer, to the concerned procuring agencies till the completion of the supply<\/strong> \u2014 that the claims of domestic value addition made for the product during the preceding 6 months are in accordance with the Policy. d) Bidders who are selling agents\/ authorised distributors\/ authorised dealers\/ authorised supply houses<\/strong> of the domestic manufacturers of iron & steel products are ELIGIBLE to bid on behalf of the domestic manufacturers<\/strong> under the Policy. However, this shall be subject to the following conditions:<\/p>\n<ul class=\"lst\"><li>i) The bidder shall furnish the authorisation certificate issued by the domestic manufacturer<\/strong> for selling domestically manufactured iron & steel products;<\/li><li>ii) In case the procurement is covered under Appendix A<\/strong>, the bidder shall furnish the Affidavit of self-certification issued by the domestic manufacturer<\/strong> to the procuring agency;<\/li><li>iii) In case the procurement is covered under Appendix B<\/strong>, the bidder shall furnish the certification issued by the statutory auditor to the domestic manufacturer<\/strong>;<\/li><li>iv) The bidder shall be responsible for furnishing other documents required to be issued by the domestic manufacturer to the procuring agency as per the Policy.<\/li><\/ul>\n8. Complaints and Penalties: a) Complaints relating to mis-declaration made to the procuring agency or Ministry of Steel shall be dealt with in the prescribed time frame by examining the documents at the bidder's cost. A refundable cautionary deposit is required for complaints to the Ministry of Steel. b) Each procuring agency shall define the penalties in the tender document in case of wrong declaration by the bidder of the prescribed domestic value addition. The penalties may include forfeiting the EMD, other financial penalties, and debarment of the manufacturer\/ service provider.<\/p>\n9. Specifications in Tenders and Other Procurement Solicitations:<\/strong> a) Every procuring entity shall ensure that the eligibility conditions with respect to previous experience do not require proof of supply in other countries or proof of exports<\/strong>. b) Procuring entities shall endeavour to see that eligibility conditions \u2014 including on turnover, production capability and financial strength<\/strong> \u2014 do not result in unreasonable exclusion of local suppliers<\/strong> who would otherwise be eligible, beyond what is essential for ensuring quality or creditworthiness. c) Procuring entities shall review all existing eligibility norms and conditions<\/strong> with reference to (a) and (b) above. d) Reciprocity:<\/strong> If the Ministry of Steel<\/strong> is satisfied that Indian suppliers of iron and steel products are not allowed to participate and\/or compete in procurement by any foreign government<\/strong> due to restrictive tender conditions which have the direct or indirect effect of barring Indian companies \u2014 such as registration in the procuring country, execution of a project of specific value in the procuring country, etc. \u2014 it may, if deemed appropriate, RESTRICT or EXCLUDE bidders from that country<\/strong> from eligibility for procurement of that item and\/or other items relating to the Ministry of Steel. e) For the purpose of (d) above, a supplier or bidder shall be considered to be from a country<\/strong> if:<\/p>\n<ul class=\"lst\"><li>(i) the entity is incorporated in that country, or<\/li><li>(ii) a majority of its shareholding or effective control of the entity is exercised from that country, or<\/li><li>(iii) more than 50% of the value of the item being supplied has been added in that country.<\/li><\/ul>\nIndian suppliers shall mean those entities that meet any of these tests with respect to India. The term 'entity' of a country shall have the same meaning as under the FDI Policy of DPIIT, as amended from time to time. f) In case restrictive or discriminatory conditions against domestic suppliers are included in tender documents, an inquiry shall be conducted by the Administrative Department undertaking the procurement to fix responsibility. Thereafter, appropriate action \u2014 administrative or otherwise \u2014 shall be taken against erring officials. Intimation on all such action shall be sent to the Standing Committee under the DMI&SP Policy.<\/p>\n<\/div><h4 class=\"src-W\">PART B \u2014 DMI&SP POLICY (REVISED), 2025 \u2014 as applicable to EPC tenders<\/span>W<\/span><\/h4><div class=\"srcblock src-W\">\n1. Background: a) This policy, issued by the Ministry of Steel vide notification no. G.S.R. 341(E) dated 26th May 2025, provides preference for Domestically Manufactured Iron and Steel Products (DMI&SP) in Government procurement. b) The policy applies to procurement of iron & steel products notified in Appendix A. In Appendix B, the minimum domestic content and an exempted list of capital goods for manufacturing iron & steel products which can be imported have been listed. Appendix C contains the policy for promoting the procurement of technology from indigenous technology suppliers.<\/p>\n2. Definitions:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Term<\/th><th>Definition<\/th><\/tr><\/thead><tbody><tr><td>Bidder<\/td><td>May be a domestic\/ foreign manufacturer of iron & steel, or their selling agents\/ authorised distributors\/ authorised dealers\/ authorised supply houses, or any other company engaged in the bidding of projects funded by Government agencies.<\/td><\/tr><tr><td>Domestically Manufactured Iron & Steel Products<\/td><td>Those iron and steel products that are manufactured by entities that are registered and established in India, INCLUDING in Special Economic Zones (SEZs).<\/td><\/tr><tr><td>Domestic Manufacturer<\/td><td>A manufacturer of iron & steel products conforming to guidelines in section 7 and the definition of 'manufacturer<\/strong>' as per the Central Excise Act<\/strong>.<\/td><\/tr><tr><td>Domestic value addition<\/td><td>The amount of value added in India = total value of the item to be procured (excluding net domestic indirect taxes) MINUS the value of imported content in the item (including all customs duties), as a proportion of the total value of the item to be procured, in percent. The definition shall be in line with DPIIT guidelines and shall be suitably amended in case of any future changes by DPIIT. For the purpose of this policy document, \"domestic value addition\" and \"local content\" have been used INTERCHANGEABLY. % Domestic value addition = {Total value of the item to be procured (excluding net domestic indirect taxes) \u2212 Value of imported content in the item (including all customs duties)} \u00d7 100 \u00f7 {Total value of the item to be procured}<\/td><\/tr><tr><td>Finished Steel<\/td><td>Flat and long products<\/strong>, which can be subsequently processed into manufactured items.<\/td><\/tr><tr><td>Government<\/td><td>For the purpose of the Policy, means Government of India<\/strong>.<\/td><\/tr><tr><td>Government agencies<\/td><td>Include Government PSUs, Societies, Trusts, and Statutory bodies set up by the Government of India.<\/td><\/tr><tr><td>Indigenous Technology<\/td><td>A technology shall be deemed to be Indigenous technology if at least 51% of the entity's equity is held by Indian residents, AND the IPR is owned or co-owned by an Indian entity or licensed exclusively to them, AND the core engineering R&D and project execution capabilities reside in India.<\/td><\/tr><tr><td>L1<\/td><td>The lowest tender or the lowest bid, or the lowest quotation<\/strong> received in a tender, bidding process, or other procurement solicitation, as adjudged in the evaluation process.<\/td><\/tr><tr><td>MoS<\/td><td>Ministry of Steel, Government of India.<\/td><\/tr><tr><td>Margin of purchase preference<\/td><td>The maximum extent to which the price quoted by a domestic supplier may be above L1<\/strong> for the purpose of purchase preference. In the case of DMI&SP policy, the margin of purchase preference shall be 20% for items in Appendix B<\/strong>.<\/td><\/tr><tr><td>Melt & Pour<\/td><td>The steel that has been produced in a steel-making furnace and poured into its first solid shape. The location where this process takes place is called the country of melt and pour (COM). The COM is the original location where crude steel is first produced in a liquid state and poured into its first solid shape. The first solid shape can be a semi-finished product \u2014 like a slab, billet, ingot \u2014 or a finished steel mill product.<\/td><\/tr><tr><td>Net Selling Price<\/td><td>The invoiced price excluding net domestic taxes and duties.<\/td><\/tr><tr><td>Semi-Finished Steel<\/td><td>Ingots, billets, blooms, and slabs<\/strong>, which can be subsequently processed into finished steel.<\/td><\/tr><\/tbody><\/table><\/div>\n3. Exclusions: a) Waivers may be granted by the Ministry of Steel to all such Government procurements subject to the below conditions: b) Where specific grades of steel are not manufactured in the country, or c) Where the quantities as per the demand of the project cannot be met through domestic sources. d) Exemption requests shall be submitted to the Standing Committee along with sufficient proof of unavailability of iron & steel products domestically.<\/p>\n4. Standing Committee: a) A Standing Committee chaired by the Secretary (Steel) shall oversee the implementation of the policy. b) The Committee shall comprise experts drawn from Industry\/ Industry Association\/ Government Institution or Body\/ Ministry of Steel. Mandate:<\/p>\n<ul class=\"lst\"><li>i) Monitor the implementation of the policy;<\/li><li>ii) Review and notify the list of Iron & Steel products, the domestic content requirement criteria and policy directives as mentioned in Appendix A, Appendix B and Appendix C;<\/li><li>iii) Issue necessary clarifications<\/strong> for implementation of the policy, including grant of exclusions<\/strong> to procuring agencies as per Para 3;<\/li><li>iv) Constitute a grievance redressal committee<\/strong> for preliminary examination of complaints related to implementation of this policy;<\/li><li>v) Issue directions for suitable action to Ministries\/ Departments concerned in case of non-compliance with this policy by the procuring agency, and advise.<\/li><li>Wherever a procuring entity concludes that an unreasonably high price has been quoted by the SOLE bidder\/ manufacturer, the matter may be referred to the committee. In such cases, the procuring entity would be required to substantiate its case with complete and thorough documentation.<\/li><li>Specifying foreign certifications\/ unreasonable technical specifications in the bid document is a restrictive and discriminatory practice against local suppliers. If foreign certification is required to be stipulated because of non-availability of Indian Standards and\/or for any other reason, the same shall be done only after written approval of the Committee.<\/li><\/ul>\n5. Applicability: a) The policy applies to every Ministry or Department of Government and all agencies\/ entities under their administrative control, and to projects funded by these agencies, for the purchase of iron & steel products for government projects. All Central Sector Schemes (CS)\/ Centrally Sponsored Schemes (CSS) for which procurement is made by States and Local Bodies come within the purview of this Policy if that project\/ scheme is fully\/ partly funded by the Government of India. b) The policy applies to public sector steel manufacturers and agencies\/ entities under their administrative control for purchase of capital goods (Appendix-B) for manufacturing iron & steel products. c) Appendix-B contains the exemption list of capital goods used in manufacturing iron & steel products which can be imported, and the minimum domestic content requirement for respective packages. The domestic value addition for Capital Goods, as indicated, is subject to change; for example, if some capital goods components can be manufactured in the country, the domestic value addition percentage may go up. d) A purchase preference of 20% is applicable for capital goods used in steel manufacturing.<\/p>\n<aside class=\"note\">Example given in the Manual: If the lowest bidder (L1) for an importable capital good is a foreign company with a quoted price of INR 100 crores for the product package, under the policy a procurement preference of 20% will be applicable to a domestic supplier of the same capital good.<\/p><\/aside>\n<ol class=\"lst\"><li>Appendix-C contains directives and methodology for steelmaking CPSEs to procure from indigenous technology suppliers.<\/li><li>The policy shall apply to projects AND non-projects where the total procurement value of iron and steel products (Appendix-A) in a contract is greater than rs. 5 lakh, on an ITEMISED BASIS.<\/li><li>NO Global Tender Enquiry (GTE) shall be invited<\/strong> for tenders related to the procurement of iron and steel products (Appendix-A)<\/strong>. NO GTE shall be invited<\/strong> for tenders related to the procurement of Capital Goods for manufacturing iron & steel products (Appendix-B) having estimated value UP TO Rs. 200 Crore<\/strong>, except with the approval of the competent authority as designated by the Department of Expenditure.<\/li><li>The policy applies to the purchase of iron & steel products by PRIVATE agencies for fulfilling an EPC contract and\/or any other requirement of a Ministry or Department of Government or their PSUs.<\/li><\/ol>\n6. Tender Procedure for Procurement: a) Procuring agencies shall follow standard procurement procedures, in accordance with instructions of the Ministry of Finance and CVC, while adhering to DMI&SP policy. b) The tender document, for procurement of both Goods as well as for EPC contracts, should explicitly outline the qualification criteria for adherence to the requirement as mentioned in Appendix A and Appendix B. c) Domestic manufacturers of products under Appendix-A and Appendix-B shall SELF-CERTIFY the local content as per Form-1 placed in the policy, at the time of bidding. d) Bidders who are selling agents\/ authorised distributors\/ authorised dealers\/ authorised supply houses of the domestic manufacturers of iron & steel products covered by Appendix-A are eligible to bid with self-certification on behalf of the domestic manufacturers under the policy, subject to the bidder furnishing an authorisation certificate issued by the domestic manufacturer at the time of delivery. e) For products covered under Appendix B, the bidder shall furnish certification issued by the statutory auditor or cost auditor of the company (in the case of companies), or from a practising cost accountant or practising chartered accountant (in respect of suppliers other than companies), declaring that the capital goods to be used in the iron & steel industry are domestically manufactured in terms of the domestic value addition prescribed. f) If Indian suppliers of an item are not allowed to participate and\/or compete in procurement by any foreign government, due to restrictive tender conditions which have the direct or indirect effect of barring Indian companies \u2014 such as registration in the procuring country, execution of projects of specific value in the procuring country, etc. \u2014 it shall provide such details to the procuring entities for appropriate RECIPROCAL action. g) Entities of countries identified by the Ministry of Steel as not allowing Indian companies to participate in their Government procurement for any item related to the Ministry of Steel shall not be allowed to participate in Government procurement in India for all items related to the Ministry of Steel, except for the list of items published by the Ministry of Steel permitting their participation. h) The stipulation above shall be part of all tenders, including those on the GeM portal, invited by the Central Government procuring entities. i) In case restrictive or discriminatory conditions against domestic suppliers are included in bid documents, an inquiry shall be conducted by the Administrative Department undertaking the procurement to fix responsibility. Thereafter, appropriate action \u2014 administrative or otherwise \u2014 shall be taken against erring officials. Intimation on all such action shall be sent to the Standing Committee under the DMI&SP policy. j) A supplier DEBARRED by any procuring entity for violation of this Order shall not be eligible for preference under this Order for procurement by any OTHER procuring entity for the duration of the debarment. The debarment for such other procuring entities shall take effect prospectively from the date on which it comes to the notice of other procurement entities. k) Grievance redressal timelines: In case the matter is referred to the Ministry of Steel, the grievance redressal committee set up under the MoS shall dispose of the complaint within 4 WEEKS of its reference and receipt of all documents from the bidder, after taking into consideration the view of the Government Agency. The bidder shall be required to furnish the necessary documentation in support of domestic value addition claimed in iron & steel products to the grievance redressal committee under MoS within 2 WEEKS of the reference of the matter. l) The procuring agency shall define the penalties in the tender document in case of a wrong declaration by the bidder of the prescribed domestic value addition. The penalties may include forfeiting of the EMD, other financial penalties, and BLACKLISTING of such manufacturer\/ service provider, etc., in terms of extant rules.<\/p>\n7. Implementation Monitoring by the Ministry of Steel: a) The policy provisions shall be applicable for 5 YEARS from the date of publication and may further be extended at the discretion of the Ministry of Steel. b) MoS shall be the NODAL MINISTRY to monitor the implementation of the policy. c) Agencies covered under the DMI&SP policy shall send a declaration on a QUARTERLY basis indicating the extent of compliance to the policy and reasons for non-compliance thereof, during the preceding financial year.<\/p>\n8. Conclusion \u2014 Applicability to EPC Tenders W<\/span>:<\/p>\nPara 6(b) of the policy above makes it explicitly applicable to both Goods and EPC tenders. Except for the rare cases of EPC tenders for setting up of Steel Manufacturing facilities (where Appendix B and C shall also be applicable), normally only Appendix A shall be applicable in EPC tenders, and these products can only be procured from domestic sources. Purchase preference of 20% is applicable only to capital goods as per Appendix B and not to Appendix A.<\/p>\n<aside class=\"note\">Appendix A, B & C and Form 1 of this policy are given in Annexures 20 and 21<\/strong> of the Works Manual.<\/p><\/aside>\n<\/div><\/div><h2 class=\"src-multi\">1.12<\/span>When is Procurement of Services Justified<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\"><h3 class=\"src-C\">1.12.1<\/span>Consultancy Services<\/span>C<\/span><\/h3><div class=\"srcblock src-C\">\nRules 178 & 180 of GFR 2017 permit Ministries\/ Departments to hire external professionals, consultancy firms or consultants (referred to as 'consultant' hereinafter) for a specific job, which is well defined in terms of content and time frame for its completion.<\/p>\nEngagement of consultants may be resorted to in situations requiring high quality services for which the Procuring Entity does not have the requisite expertise. Approval of the competent authority should be obtained before engaging consultant(s).<\/p>\nThe need for Procurement of Consultancy Services may be justified on consideration of:<\/p>\n<ol class=\"lst\"><li>The assignment should be well defined in terms of content and time frame for its completion;<\/li><li>The inadequacy of Capability or Capacity of required expertise IN-HOUSE;<\/li><li>The need to have qualified consultants for providing a specialised high-quality service;<\/li><li>Need for impartial advice<\/strong> from a consultant (acting independently from any affiliation) to avoid conflicts of interest<\/strong>;<\/li><li>The need, in some cases, for Transfer of Knowledge\/ Training\/ Capacity and capability building as a by-product of such engagement;<\/li><li>Need to acquire information about\/ identifying and implementing new methods and systems;<\/li><li>Need for planning and implementing ORGANISATIONAL CHANGE;<\/li><li>There may be internal capacity\/ capability to do the job, BUT there are considerations of ECONOMY, SPEED, and EFFICIENCY in relation to additional requirement\/ commitment\/ usage of:<\/li><li>i) Staff\/ Management\/ Organisation;<\/li><li>ii) Technological and Material Resources;<\/li><li>iii) Money<\/strong>; and<\/li><li>iv) Time\/ Speed of execution.<\/li><\/ol>\n<\/div><h3 class=\"src-NC\">1.12.2<\/span>Non-Consultancy Services<\/span>NC<\/span><\/h3><div class=\"srcblock src-NC\">\nIn the interest of economy, efficiency and to provide more effective delivery of public services, Rule 198 of GFR, 2017 permits Ministries\/ Departments to procure\/ outsource NC services (e.g. non-core, auxiliary and support services). Approval of the competent authority should be obtained before engaging service providers.<\/p>\nThe need for Procurement of NC services may be justified on consideration of:<\/p>\n<ol class=\"lst\"><li>Economy, speed and efficiency and more effective delivery of public services relating to additional requirement\/ commitment\/ usage of:<\/li><li>Staff\/ Management\/ Organisation;<\/li><li>Technological and Material Resources;<\/li><li>Money<\/strong>; and<\/li><li>Time\/ Speed of execution.<\/li><li>An administrative policy decided by the Ministry\/ Department to outsource specific (or a class of) services.<\/li><\/ol>\n<\/div><\/div><h2 class=\"src-multi\">1.13<\/span>Principles for Public Procurement of Services<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\">\nOther principles of Public Procurement as mentioned in para 1.8 above are also equally applicable to Procurement of Consultancy and Non-consultancy services. To ensure value for money during procurement of services, the following additional principles shall be considered:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Consultancy Services C<\/span><\/th><th>Non-Consultancy Services NC<\/span><\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>Services to be procured should be justifiable<\/strong> in accordance with para 1.12 above<\/td><td>Services to be procured should be justifiable<\/strong> in accordance with para 1.12 above<\/td><\/tr><tr><td>b<\/td><td>Terms of Reference \u2014 a document covering well-defined scope of work\/ description of services and the time frame for which services are to be availed \u2014 should be consistent with the overall objectives of the Procuring Entity<\/td><td>In Non-consultancy Services, the Activities Schedule \u2014 a document covering well-defined scope of work\/ description of services and the time frame for which services are to be availed \u2014 should be consistent with the overall objectives of the Procuring Entity<\/td><\/tr><tr><td>c<\/td><td>Equal opportunity to all qualified Consultants to compete should be ensured<\/td><td>Equal opportunity to all qualified service providers to compete should be ensured<\/td><\/tr><tr><td>d<\/td><td>Engagements should be economical and efficient<\/strong><\/td><td>Engagements should be economical and efficient<\/strong><\/td><\/tr><tr><td>e<\/td><td>Transparency and integrity in the Consultancy process \u2014 that is, proposed, awarded, administered, and executed according to the highest ethical standards<\/td><td>Transparency and integrity in the selection process \u2014 that is, proposed, awarded, administered, and executed according to the highest ethical standards<\/td><\/tr><tr><td>f<\/td><td>Additionally, in procurement of consultancy services, consultants should be of HIGH QUALITY<\/strong>, in line with the justification as per para 1.12 above (Rule 180 of GFR 2017)<\/em><\/td><td> \u2014 <\/td><\/tr><\/tbody><\/table><\/div>\nC<\/span> \u2014 the two-stage requirement: In Procurement of Consultancy, these considerations can be <\/strong>best addressed through unrestricted competition among qualified shortlisted firms or individuals, in which <\/strong>selection is based on the QUALITY of the proposal and, where appropriate, on the COST of services to be provided. <\/strong>Hence Procurement of Consultancy needs to be done in a two-STAGE PROCESS.<\/p>\n<\/div><h2>1.14<\/span>Legal Aspects Governing Public Procurement<\/span><\/h2>\nA public procurement contract, besides being a commercial transaction, is also a legal transaction. There are several laws that may affect various commercial aspects of public procurement contracts. A public procurement professional is expected to be generally aware of the implications of the following basic laws affecting procurement; however, he or she is not expected to be a legal expert. In different contexts of the scope of work, an additional set of laws may be relevant.<\/p>\n<aside class=\"note\">G<\/span> The Goods Manual places this material in Appendix 2: Legal Aspects of Public Procurement<\/strong>, covering: (1) Relevant Provisions of the Constitution of India; (2) Salient Features of the Indian Contract Act; (3) Salient Features of the Sale of Goods Act, 1930; (4) Salient Features of the Indian Arbitration & Conciliation Act, 1996; (5) The Mediation Act, 2023; (6) Salient Features of the Competition Act, 2002 relating to Anti-competitive Practices; (7) Salient Features of the Whistle Blowers Protection Act, 2011 and the Whistle Blowers Protection (Amendment) Act, 2015.<\/p>\nC<\/span>NC<\/span> cross-refer to Appendix 2 of the Goods Manual<\/strong> without listing the statutes.<\/p><\/aside>\nW<\/span> \u2014 the list of applicable laws, as enumerated in the Works Manual:<\/p>\n<ol class=\"lst\"><li>The Constitution of India<\/li><li>Indian Contract Act, 1872<\/li><li>Arbitration and Conciliation Act, 1996<\/strong>, as amended by the Arbitration and Conciliation (Amendment) Acts, 2015, 2019 and 2021<\/strong><\/li><li>Competition Act, 2002<\/strong>, as amended by the Competition (Amendment) Acts, 2007 and 2023<\/strong><\/li><li>The Information Technology Act, 2000<\/strong> (IT Act \u2014 regarding e-procurement and e-auction<\/strong>, popularly called the Cyber Law<\/strong>), as amended by the Information Technology (Amendment) Acts 2008 and 2015<\/strong>, and as modified by the Jan Vishwas (Amendment of Provisions) Act, 2023<\/strong><\/li><li>Right to Information (RTI) Act, 2005<\/li><li>Central Vigilance Commission Act, 2003<\/li><li>Delhi Special Police Establishment Act, 1946<\/strong> (DSPE \u2014 basis of the Central Bureau of Investigation)<\/li><li>Prevention of Corruption Act, 1988<\/strong>, as amended by the Prevention of Corruption (Amendment) Act, 2018<\/strong><\/li><li>Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) \u2014 replaces the Code of Criminal Procedure, 1973; Section dealing with sanction for prosecution \u2014 \u00a7218<\/li><li>Insolvency and Bankruptcy Code, 2016<\/strong>, as amended by the Insolvency and Bankruptcy Code (Amendment) Acts 2018, 2019, 2020 and 2021<\/strong> \u2014 governs insolvency and liquidation of business enterprises<\/strong> \u2014 and other allied laws applicable to business entities participating in works contracts<\/li><li>Various labour laws<\/strong> applicable at the works' site<\/li><li>Various building and safety acts, codes, standards<\/strong> applicable in the context of the scope of work; and<\/li><li>Various environmental and mining laws, codes, standards<\/strong> applicable in the context of the scope of work.<\/li><\/ol>\n<h2 class=\"src-multi\">1.15<\/span>The Law of Agency<\/span>W<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\">\nIn addition to the laws applicable to Public Procurement referred to above, the Law of Agency (Sections 182 to 238 of the Indian Contract Act, 1872)<\/strong> implies that the contractor\/ consultant\/ service provider would be an AGENT of the Procuring Entity<\/strong>, acting as a 'Principal<\/strong>', to execute the works\/ carry out the service on its behalf<\/strong>.<\/p>\nHence, there exists a PRINCIPAL\/ EMPLOYER and AGENT relationship<\/strong> between the Procuring Entity and such contractor\/ consultant\/ service provider.<\/p>\nAs per this law, the principal\/ employer (i.e., the Procuring Entity) is vicariously, legally and financially liable for the actions of its Agents.<\/p>\n<aside class=\"note\">Example given in the Manuals:<\/strong> A violation of certain labour laws<\/strong> in deputing staff for the Procuring Entity's contract by the agent (contractor\/ consultant\/ service provider) may render the Procuring Entity legally and financially liable\/ answerable for such violations<\/strong>, under certain circumstances.<\/p><\/aside>\nThe Procuring Entities need to be AWARE of such eventualities. Standard\/ Model Bidding\/ Tender Documents should take care of this aspect.<\/p>\n<aside class=\"note\">Note:<\/strong> This section does not<\/strong> appear in the Goods Manual.<\/p><\/aside>\n<\/div><h2 class=\"src-G\">1.16<\/span>Right to Information and Proactive Information Disclosures<\/span>G<\/span><\/h2><div class=\"srcblock src-G\">\nSection 4(1)(b) of the RTI Act lays down the information to be disclosed by public authorities on a SUO-MOTU or PROACTIVE basis, and Section 4(2) and Section 4(3) prescribe the method of its dissemination \u2014 to enhance transparency and also to reduce the need for filing individual RTI applications.<\/p>\nThe Department of Personnel & Training, Ministry of Personnel, Public Grievances & Pensions<\/strong>, Government of India, has issued \"Guidelines on suo motu disclosure under Section 4 of the RTI Act<\/strong>\" vide their OM No. 1\/6\/2011-IR dated April 15, 2013<\/strong>. The relevant guidelines relating to information disclosure relating to procurement are reproduced below:<\/p>\n<aside class=\"note\">\"Information relating to procurement made by public authorities \u2014 including publication of notice\/ tender enquiries, corrigenda thereon, and details of bid awards detailing the name of the Vendor\/ Contractor of goods\/ services being procured or the works contracts entered, or any such combination of these, and the rate and total amount at which such procurement or works contract is to be done \u2014 should be disclosed.<\/p>\nAll information disclosable as per Ministry of Finance, Department of Expenditure's O.M. No. 10\/1\/2011-PPC dated 30th November 2011 (and 05th March 2012) on Mandatory Publication of Tender Enquiries on the Central Public Procurement Portal, and O.M. No. 10\/3\/2012-PPC dated 09th January 2014 on implementation of comprehensive end-to-end e-procurement, should be disclosed under Section 4 of the Right to Information Act.\"<\/p><\/aside>\n<\/div><h2 class=\"src-W\">1.17<\/span>The Basic Principles of Undertaking Works<\/span>W<\/span><\/h2><div class=\"srcblock src-W\">\n<ol class=\"lst\"><li>No new works should be sanctioned without:<\/li><li>Careful assessment of the assets or facilities already available, and the time and cost required to complete the new works;<\/li><li>A concept plan\/ preliminary drawing having been approved by the Authority competent to accord sanction. While designing projects, to the extent possible, principles of life cycle costing may also be considered.<\/li><li>As budgetary resources are limited and granted on an annual basis, adequate provisions should be ensured for works and services already in progress before new works are undertaken.<\/li><li>NO project or work will be SPLIT UP to bring it within the sanctioning powers of a lower authority.<\/li><li>(Rule 137, GFR 2017)<\/em> For the purpose of approval and sanctions, a group of works which forms one PROJECT shall be considered as one WORK<\/strong>. The approval or sanction of the higher authority for such a project consisting of a group of works should not be circumvented by resorting to approval of individual works using the powers of approval or sanction of a lower authority<\/strong>.<\/li><li>(MoF OM No. F.1(26)-E-II(A)\/66 dated 04.01.1967 & 27.10.1967)<\/em>If the component parts of a project are MUTUALLY INDEPENDENT of each other<\/strong> and are not dependent on the execution of one or more such component parts, each such part should be treated as a SEPARATE PROJECT<\/strong>.<\/li><li>In case the functioning of a project is DEPENDENT on the execution of one or more other projects, the entire group of such projects should be taken as a SINGLE scheme\/ project and provision made accordingly.<\/li><\/ol>\nIf, however, a scheme consists of revenue component, capital expenditure and loan content, etc., the provision for which is required to be exhibited separately under respective Heads of Account, there is no objection to the provision being made in the relevant Heads of Account; but the authorities concerned should ensure that the sanction of the Competent Authority is obtained for the integrated scheme as a whole, depending on the total COST of the scheme. It will not be permissible in such cases to split up a scheme, treating each part as a scheme, in order to avoid the sanction of a higher authority.<\/p>\n<ol class=\"lst\"><li>(Rule 138, GFR 2017)<\/em> Any anticipated or actual SAVINGS from a sanctioned estimate for a definite project shall not, without special authorisation, be applied to carry out ADDITIONAL WORK not contemplated in the original project.<\/li><li>(Rule 136(3), GFR 2017)<\/em> Any development of a project considered necessary while a work is in progress, which is not contingent on the execution of the work first sanctioned, shall have to be covered by a SUPPLEMENTARY ESTIMATE.<\/li><li>The construction period and sanctioned cost stipulated in the sanction of the Project will not be exceeded as far as possible.<\/li><li>(Rule 135(2), GFR 2017)<\/em> Ministry or Department shall put in place, as far as possible, empowered project teams for all large value projects, and these teams should be tasked only with project execution and not given other operational duties.<\/li><li>The competent financial authority according the administrative approval should be KEPT INFORMED of the physical and financial progress of the work till their completion, through regular periodical reports.<\/li><li>(Rule 135(1) and 139(i), GFR 2017)<\/em> Subject to the observance of general rules (Rules 130\u2013141, Rule 144 of GFR, 2017), the initiation, authorisation, procurement and execution of works allotted to a particular Ministry or Department shall be regulated by detailed rules and orders contained in the respective departmental regulations and by other special orders applicable to them. The detailed procedure relating to expenditure on such works shall be prescribed by departmental regulations framed in consultation with the accounts officer, generally based on the procedures and the principles underlying the financial and accounting rules prescribed for similar works carried out by the Central Public Works Department (CPWD).<\/li><li>(Rule 136(1) and 139(vi), GFR 2017)<\/em> NO works shall be commenced or liability incurred in connection with it until:<\/li><li>Feasibility Study Report\/ Preliminary Project Report (PPR) has been prepared in case of works of substantial value;<\/li><li>A proper Detailed Project Report (DPR) has been prepared by a competent agency;<\/li><li>Administrative Approval (A\/A)<\/strong> has been obtained from the appropriate authority, in each case;<\/li><li>Expenditure Sanction (E\/S)<\/strong> to incur expenditure has been obtained from the competent authority;<\/li><li>Technical approval has been obtained of the detailed and coordinated design of all the Architectural, Civil, Electrical, Mechanical, Horticulture and any other services included in the scope of the sanction, and of the Detailed Cost Estimates containing the detailed specifications and quantities of various items prepared on the basis of the schedule of rates maintained by CPWD or other Public Works Organisations;<\/li><li>Funds to cover the work, which will be executed at least during the current year, have been provided by competent authority;<\/li><li>Tenders have been invited and processed in accordance with rules;<\/li><li>Award of work and execution of Contract Agreement;<\/li><li>A work order has been issued;<\/li><li>Statutory and other clearances: Time taken in the grant of statutory and other clearances also contributes to the time and cost overrun in public projects. These clearances are required to achieve specific objectives like concern for the environment, aviation safety, preservation of national heritage, conservation of forest and wildlife, etc. Public Authorities\/ Project Executing Authorities should plan for obtaining all necessary clearances quickly and proper efforts be made for the same, which also should be duly recorded. The progress regarding follow-up of obtaining the statutory clearances should be closely monitored.<\/li><li>Land acquisition: The process of land acquisition shall be started by the Procuring Entity well ahead and completed entirely, or at least substantially, before the work is started. Availability of auxiliary services has been ensured \u2014 like roads\/ access, power, water, solid & liquid waste disposal system, street lighting and other civic services.<\/li><li>It is desirable to have 100% of the required land in possession before award of contract; however, it may not always be possible to have the entire land due to prevailing circumstances.<\/li><li>Also, it may not be prudent to put the entire process of award of contract on hold for want of the remaining portion of land, which \u2014 in the assessment of the public authority or project executing authority \u2014 could possibly be acquired in a targeted manner after award of the contract, without affecting progress.<\/li><li>Minimum necessary encumbrance-free land should be available before award of contract. The minimum may be determined based on the circumstances of each case or general guidelines issued by the concerned authorities. Such land, non-availability of which will prevent essential components of work from execution, should be insisted upon.<\/li><li>Public Authorities\/ Project Executing Authorities should plan for acquiring balance land quickly and proper efforts be made for the same, which also should be duly recorded. The progress regarding land acquisition should be closely monitored.<\/li><\/ol>\n<\/div><h2 class=\"src-W\">1.18<\/span>Administrative Control and Powers to Sanction<\/span>W<\/span><\/h2><div class=\"srcblock src-W\">\n1. Administrative control of works includes (Rule 131, GFR 2017)<\/em>: a) Assumption of full responsibility for construction, maintenance and upkeep; b) Proper utilisation of buildings and allied works; c) Provision of funds for execution of these functions.<\/p>\n2. Powers to Sanction Works (Rule 132, GFR 2017)<\/em>: The powers delegated to various subordinate authorities to accord administrative approval, sanction expenditure and re-appropriate funds for works are regulated by the Delegation of Financial Powers Rules (DFPR) and other orders contained in the respective departmental regulations. The powers of the Department relating to works are detailed in Rule 133(1) and 133(2) of GFR, 2017.<\/p>\n3. Work under the administrative control of the Public Works Departments (Rule 134, GFR 2017)<\/em>: Works not specifically allotted to any Ministry or Department shall be included in the Grants for Civil Works to be administered by the Central Public Works Department. NO such work may be financed partly from funds provided in the departmental budget and partly from the budget for civil works.<\/p>\n<\/div><h2>1.19<\/span>Public Procurement Cycle<\/span><\/h2>\nThe procurement process for goods, works and\/or services typically involves the following cycle of activities, undertaken in the order stated below<\/strong>. Details and procedures of the various stages of the procurement cycle are described in the subsequent Chapters.<\/p>\nCommon four-stage spine (all four Manuals):<\/p>\nNeed Assessment \u2192 Bid Invitation Process \u2192 Bid Evaluation and Award of Contract \u2192 Contract Management<\/p>\n<h3 class=\"src-G\">1.19.1<\/span>Goods<\/span>G<\/span><\/h3><div class=\"srcblock src-G\">\n<div class=\"tblwrap\"><table><thead><tr><th>Stage<\/th><th>Content<\/th><\/tr><\/thead><tbody><tr><td>a) Need Assessment<\/td><td>Need assessment, formulation of Specifications and Procurement Planning (including market consultation, if required)<\/td><\/tr><tr><td>b) Bid Invitation Process<\/td><td>Preparing tender documents, publication, receipt and opening of bids<\/td><\/tr><tr><td>c) Bid Evaluation and Award of Contract<\/td><td>Evaluation of bids and award of contract<\/td><\/tr><tr><td>d) Contract Management<\/td><td>Contract management and closure<\/strong><\/td><\/tr><tr><td>e) Disposal of Scrap<\/td><td>Disposal of Scrap through various modes of disposal<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h3 class=\"src-W\">1.19.2<\/span>Works<\/span>W<\/span><\/h3><div class=\"srcblock src-W\">\nFollowing are the stages in planning, sanctioning and execution of work:<\/p>\n1. Need Assessment: a) Perspective Planning for works; b) Preparation of Preliminary Project Report (PPR) or Rough Cost Estimate; c) Acceptance of necessity and issue of in-Principle Approval; d) Preparation of Detailed Project Report (DPR) or Preliminary Estimate (PE); e) Administrative Approval and Expenditure Sanction (A\/A & E\/S) or 'Go ahead' Approval; f) Detailed Design, Estimate and Technical Sanction; g) Appropriation\/ re-appropriation of funds.<\/p>\n2. Bid Invitation Process:<\/strong> Preparation of Bid documents, Publication, Receipt and Opening of Bids.<\/p>\n3. Bid Evaluation and Award of Contract: a) Preliminary Examination and Evaluation of technical proposals \u2014 consideration of quality; b) Evaluation of financial proposals; c) Selection of winning proposal and award of the contract to the selected firm.<\/p>\n4. Contract Management: Execution and Monitoring of works and Quality Assurance.<\/p>\n<aside class=\"note\">Note W<\/span>: For repair works up to Rs. 60 (Sixty) lakh, expenditure sanction may be given on the basis of the Preliminary Project Report itself. Annexure 11 of the Works Manual shows the above-mentioned process of procurement of Public Works as a flow-chart.<\/p><\/aside>\n<\/div><h3 class=\"src-C\">1.19.3<\/span>Consultancy Services<\/span>C<\/span><\/h3><div class=\"srcblock src-C\">\nThe entire process of procurement and implementation of Consultancy services shall include the following steps:<\/p>\n1. Need Assessment: a) Preparation of Procurement Proposal (Concept Paper) and obtaining in-principle approvals; b) Preparation of the Terms of Reference (ToR), cost estimate and seeking administrative and budgetary approval; c) Developing a Procurement Plan.<\/p>\n2. Shortlisting of Qualified Consultants \u2014 EOI process.<\/p>\n3. RfP Invitation Process:<\/strong> Preparing 'Request for Proposal (RfP) Document<\/strong>', publication, receipt and opening of bids.<\/p>\n4. Bid Evaluation and Award of Contract: a) Preliminary Examination and Evaluation of technical proposals \u2014 consideration of quality; b) Evaluation of financial proposals; c) Selection of winning proposal; NEGOTIATIONS and award of the contract to the selected firm.<\/p>\n5. Contract Management: Execution and Monitoring of Consultancy Assignments.<\/p>\n<\/div><h3 class=\"src-NC\">1.19.4<\/span>Non-Consultancy Services<\/span>NC<\/span><\/h3><div class=\"srcblock src-NC\">\nThe entire process of procurement and implementation of Non-consultancy services shall include the following steps:<\/p>\n1. Need Assessment:<\/strong> a) Preparation of Procurement Proposal (Concept Paper)<\/strong> and obtaining in-principle approvals; b) Preparation of the Services and Activities Schedule, cost estimate<\/strong> and seeking administrative and budgetary approval; c) Developing a Procurement Plan<\/strong>.<\/p>\n2. Bid Invitation Process:<\/strong> Preparing tender documents, publication, receipt and opening of bids.<\/p>\n3. Bid Evaluation and Award of Contract:<\/strong> a) Preliminary Examination and Evaluation of technical proposals \u2014 consideration of quality; b) Evaluation of financial proposals; c) Selection of winning proposal and award of the contract to the selected firm.<\/p>\n4. Contract Management: Execution and Monitoring of Service Contract.<\/p>\n<aside class=\"note\">Comparison at a glance \u2014 what differs between the four cycles:<\/p>\n<ul class=\"lst\"><li>Only Goods has a fifth stage: Disposal of Scrap.<\/li><li>Only Works<\/strong> breaks Need Assessment into seven sanctioning steps<\/strong> (PPR \u2192 in-principle approval \u2192 DPR\/PE \u2192 A\/A & E\/S \u2192 Technical Sanction \u2192 appropriation of funds).<\/li><li>Only Consultancy<\/strong> has a separate stage for Shortlisting\/ EoI<\/strong>, and an RfP Invitation Process<\/strong> in place of the ordinary Bid Invitation Process, and expressly includes Negotiations<\/strong> before award.<\/li><li>CS and NC both begin with a Procurement Proposal (Concept Paper).<\/li><\/ul><\/aside>\n<\/div><h2>1.20<\/span>Nomenclature Conundrum<\/span><\/h2>\n<ol class=\"lst\"><li>There is NO standardised nomenclature in Public Procurement in India, and a mix of American, European, and British\/ Indian nomenclature has become common.<\/li><\/ol>\n'Tender<\/strong>' is taken to mean:<\/p>\n<ul class=\"lst\"><li>(i) the 'Tender Document' or 'Tender Process', as well as<\/li><li>(ii) the 'Bid<\/strong>' submitted by the 'bidders<\/strong>'.<\/li><\/ul>\nThe Tender Document floated by the Procuring Entity is also called a Bid (or Bidding) Document. Similarly, participants in a 'tender' are alternatively called BIDDERS and TENDERERS. This duality is reflected in \"Notice Inviting Tenders\" and \"Instructions to Bidders\", etc.<\/p>\n<ol class=\"lst\"><li>An attempt is made in these Manuals to standardise:<\/li><li>the term 'Tender<\/strong>' for the 'Tender Document<\/strong>' (document prepared and published by the Procuring Entity \u2014 instead of bid\/ bidding document) or the 'Tender Process<\/strong>'; and<\/li><li>'Bid<\/strong>' for the bid submitted by the bidders \u2014 and hence 'bidder<\/strong>' is used instead of 'tenderer<\/strong>'.<\/li><\/ol>\nSimilar attempts are made to standardise other nomenclature in these documents without DISTURBING the nomenclature (e.g., 'Pre-qualification Bidding') already embedded in the CPPP or GeM portals.<\/p>\n<h1>Appendix to Chapter 1 \u2014 Points of Difference Between the Four Manuals<\/span><\/h1>\nA ready-reckoner of every place in Chapter 1 where the four Manuals genuinely differ, rather than merely rename.<\/em><\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Delegation of powers for procurement<\/td><td>G\/C\/NC:<\/strong> \"full powers<\/strong>\" for goods and services not on GeM; GeM mandatory under Rule 149. W:<\/strong> \"powers\" under DFPR only \u2014 no GeM mandate stated<\/strong><\/td><\/tr><tr><td>2<\/td><td>Relevant GFR chapters<\/td><td>G, C, NC:<\/strong> Chapters 6 to 9<\/strong>. W:<\/strong> Chapters 5 to 9<\/strong><\/td><\/tr><tr><td>3<\/td><td>Sale of Goods Act, 1930<\/td><td>Cited in G, C, NC<\/strong>; NOT<\/strong> in W<\/strong><\/td><\/tr><tr><td>4<\/td><td>Mediation Act, 2023<\/td><td>Cited in G, W, NC<\/strong>; NOT<\/strong> in C<\/strong>'s para 1.1 list<\/td><\/tr><tr><td>5<\/td><td>Indian Stamp Act, 1899<\/td><td>Cited in W, C, NC<\/strong>; NOT<\/strong> in G<\/strong><\/td><\/tr><tr><td>6<\/td><td>Classification of Works<\/strong> (Original\/ Minor\/ Repair \u2014 Rule 130)<\/td><td>W only<\/td><\/tr><tr><td>7<\/td><td>Rs 60 lakh in-house repair-work threshold<\/td><td>W only<\/td><\/tr><tr><td>8<\/td><td>Portals named<\/td><td>G:<\/strong> GeM + GePNIC<\/strong>. W:<\/strong>CPPP only<\/strong>. C\/NC:<\/strong> GeM + CPPP (\"generally<\/strong> conform\")<\/td><\/tr><tr><td>9<\/td><td>Composite contract refinements<\/strong> (new product vs AMC\/CMC; Notes 1\u20133)<\/td><td>W, C, NC<\/strong>; G<\/strong> has only the shorter version<\/td><\/tr><tr><td>10<\/td><td>Consultancy-vs-NC \"primary objective\" test (dam safety example)<\/td><td>W, c, nc; Not in G<\/td><\/tr><tr><td>11<\/td><td>FA Charter applies only to Ministries\/ Departments; CPSEs free to devise own system<\/td><td>G only<\/td><\/tr><tr><td>12<\/td><td>Standards (Canons) of Financial Propriety<\/td><td>G, W only<\/strong> \u2014 absent from C<\/strong> and NC<\/strong><\/td><\/tr><tr><td>13<\/td><td>Rule 21 clause (v)<\/strong> \u2014 allowances not a source of profit<\/td><td>W only<\/td><\/tr><tr><td>14<\/td><td>National SC\/ST Hub (NSSH)<\/td><td>G only<\/td><\/tr><tr><td>15<\/td><td>\"25% is only a minimum; MSE preference mandatory for all procurements\"<\/td><td>C, NC only<\/td><\/tr><tr><td>16<\/td><td>Non-tax benefits explained (schemes, delayed payments)<\/td><td>C only<\/td><\/tr><tr><td>17<\/td><td>Definitions of Class-I \/ Class-II \/ Non-local supplier in Chapter 1<\/td><td>W, C, NC<\/strong>; in G<\/strong> these are in the Glossary<\/strong><\/td><\/tr><tr><td>18<\/td><td>\"Rs 1000 Crore per annum \u2192 five-year procurement projections on website\"<\/td><td>G, C<\/td><\/tr><tr><td>19<\/td><td>Start-up benefits limited to the DPIIT-registered industry\/ sector<\/td><td>W, C<\/td><\/tr><tr><td>20<\/td><td>\"Relaxation can be partial \u2014 e.g. 25%\" footnote<\/td><td>W, C, NC<\/td><\/tr><tr><td>21<\/td><td>DMI&SP Policy<\/td><td>G:<\/strong> 2019 version. W:<\/strong>Revised 2025<\/strong> version (G.S.R. 341(E) dated 26.05.2025), framed for EPC tenders. Absent from C and NC<\/strong><\/td><\/tr><tr><td>22<\/td><td>\"When is procurement justified\"<\/td><td>C, NC only<\/td><\/tr><tr><td>23<\/td><td>\"Principles for Public Procurement of Services\"<\/td><td>C, NC only<\/td><\/tr><tr><td>24<\/td><td>Two-stage process mandated for Consultancy<\/td><td>C only<\/td><\/tr><tr><td>25<\/td><td>Enumerated list of 14 applicable laws<\/td><td>W only<\/strong> (G places them in Appendix 2; C\/NC cross-refer)<\/td><\/tr><tr><td>26<\/td><td>Law of Agency<\/td><td>W, c, nc; Not in G<\/td><\/tr><tr><td>27<\/td><td>RTI and Proactive Disclosures<\/td><td>G only<\/td><\/tr><tr><td>28<\/td><td>Basic Principles of Undertaking Works (13 principles)<\/td><td>W only<\/td><\/tr><tr><td>29<\/td><td>Administrative Control and Powers to Sanction<\/td><td>W only<\/td><\/tr><tr><td>30<\/td><td>Procurement Cycle \u2014 fifth stage \"Disposal of Scrap\"<\/td><td>G only<\/td><\/tr><tr><td>31<\/td><td>Procurement Cycle \u2014 Shortlisting\/ EoI as a separate stage; RfP in place of Bid Invitation; Negotiations named<\/td><td>C only<\/td><\/tr><tr><td>32<\/td><td>Procurement Cycle \u2014 Procurement Proposal (Concept Paper) as first step<\/td><td>C, NC<\/td><\/tr><tr><td>33<\/td><td>Repair works up to Rs 60 lakh \u2014 expenditure sanction on PPR alone<\/td><td>W only<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 1<\/p>\n<aside class=\"note\">Next:<\/strong> Chapter 2 \u2014 Need Assessment, Formulation of Specifications\/ Estimates\/ ToR\/ Activities Schedule, and Procurement Planning<\/em> (merging Goods Ch. 2, Works Ch. 2, Consultancy Ch. 2 and Non-Consultancy Ch. 2).<\/p><\/aside><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch2\">Chapter 2<\/p><h1>Need Assessment, Formulation of the Requirement, and Procurement Planning<\/h1><\/header>\nMerging: Goods Ch. 2 (Need Assessment, Formulation of Specifications and Procurement Planning) \u00b7 Works Ch. 2 (Need Assessment and Procurement Planning) \u00b7 Consultancy Ch. 2 \u00b7 Non-Consultancy Ch. 2<\/em><\/p><h2>The Central Idea of this Chapter<\/span><\/h2>\nThis is the chapter where the four Manuals genuinely diverge the most.<\/strong> Chapter 1 was largely common text; Chapter 2 is not. The reason is simple:<\/p>\n<aside class=\"note\">Every procurement must be described before it can be tendered \u2014 but the INSTRUMENT of description is different in each of the four categories.<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Initiating document<\/th><th>Description-of-requirement instrument<\/th><th>Approval architecture<\/th><\/tr><\/thead><tbody><tr><td>Goods<\/td><td>Indent \/ Purchase Requisition (Annexure 5)<\/td><td>Technical Specifications (TS)<\/td><td>Technical + Administrative + Budgetary sanction; signing of Indent<\/td><\/tr><tr><td>Works<\/td><td>Requisition \u2192 Perspective Plan<\/td><td>PPR\/ Rough Cost Estimate \u2192 DPR\/ Preliminary Estimate \u2192 Detailed Designs & Detailed Estimates<\/td><td>In-Principle Approval \u2192 A\/A and E\/S \u2192 Technical Sanction \u2192 Appropriation of funds<\/td><\/tr><tr><td>Consultancy<\/td><td>Procurement Proposal (Concept Paper) (Annexure 3)<\/td><td>Terms of Reference (ToR) (Annexure 4)<\/td><td>In-principle approval \u2192 Final Administrative and Budgetary Approval<\/td><\/tr><tr><td>Non-Consultancy<\/td><td>Procurement Proposal (Concept Paper) (Annexure 3)<\/td><td>Services and Activities Schedule (Annexure 4)<\/td><td>In-principle approval \u2192 Final Administrative and Budgetary Approval<\/td><\/tr><\/tbody><\/table><\/div>\nEverything else in this chapter \u2014 cost estimation principles, procurement planning, packaging\/slicing, cartel mitigation, annual procurement plans, risks and mitigations \u2014 is largely common and is stated once below.<\/p>\n<h2>Concordance for Chapter 2<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>Goods<\/th><th>Works<\/th><th>CS<\/th><th>NCS<\/th><\/tr><\/thead><tbody><tr><td>2.1<\/td><td>Need Assessment and the Initiating Document<\/td><td>2.1<\/td><td>2.1<\/td><td>2.1, 2.2<\/td><td>2.1, 2.2<\/td><\/tr><tr><td>2.2<\/td><td>Matters decided during Need Assessment<\/td><td>2.1-2<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>2.3<\/td><td>Estimation of Cost<\/td><td>2.1-2-f)<\/td><td>2.2, 2.4<\/td><td>2.4<\/td><td>2.3.2<\/td><\/tr><tr><td>2.4<\/td><td>Formulation of the Requirement \u2014 Goods: Technical Specifications<\/strong><\/td><td>2.2<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>2.5<\/td><td>Formulation of the Requirement \u2014 Works: PPR, DPR, designs, Estimates, Sanctions<\/td><td> \u2014 <\/td><td>2.2\u20132.8<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>2.6<\/td><td>Formulation of the Requirement \u2014 Consultancy: Terms of Reference<\/strong><\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>2.3<\/td><td> \u2014 <\/td><\/tr><tr><td>2.7<\/td><td>Formulation of the Requirement \u2014 NC: Services and Activities Schedule<\/strong><\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>2.3.1<\/td><\/tr><tr><td>2.8<\/td><td>Obtaining Sanctions\/ Approvals<\/td><td>2.3<\/td><td>2.3, 2.5, 2.7<\/td><td>2.5<\/td><td>2.3.3<\/td><\/tr><tr><td>2.9<\/td><td>Need Assessment & Formulation \u2014 Risks and Mitigations<\/td><td>2.4<\/td><td> \u2014 <\/td><td>2.6<\/td><td>2.3.4<\/td><\/tr><tr><td>2.10<\/td><td>Procurement Planning<\/td><td>2.5.1<\/td><td>2.9<\/td><td>2.7.1<\/td><td>2.4.1<\/td><\/tr><tr><td>2.11<\/td><td>Procurement Planning \u2014 Risks and Mitigations<\/td><td>2.5.2<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>2.4.2<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>2.1<\/span>Need Assessment and the Initiating Document<\/span><\/h2><h3 class=\"src-G\">2.1.1<\/span>Goods \u2014 the Indent<\/span>G<\/span><\/h3><div class=\"srcblock src-G\">\n<ol class=\"lst\"><li>Procurements should be initiated only on the basis of an INDENT (please refer to Annexure 5 \u2014 Purchase Requisition (Indent) for Goods (Non-stock)) from the user Department.<\/li><li>The authority in the user Department initiating the indent for procurement shall first determine the need (including anticipated quantum) for the subject matter of the procurement.<\/li><li>Description and Specification of Need assessment is of FUNDAMENTAL IMPORTANCE in ensuring value for money, transparency, competition, and a level playing field in procurement.<\/li><li>The user department shall maintain all documents relating to the determination and technical\/ financial\/ budgetary approvals needed for procurement.<\/li><\/ol>\n<\/div><h3 class=\"src-W\">2.1.2<\/span>Works \u2014 Perspective Planning for Works<\/span>W<\/span><\/h3><div class=\"srcblock src-W\">\n<ol class=\"lst\"><li>Each Ministry\/ Department shall prepare a perspective plan for undertaking different types of works. There shall also be a provision for ANNUAL REVIEW of the plan for making modifications, if any.<\/li><li>During procurements, in place of considering only the initial acquisition cost<\/strong>, other costs like cost of operation, maintenance, and disposal during the lifetime<\/strong> of the external resource procured should also be considered. This practice refers to the concept of Total Cost of Ownership (TCO) or Life Cycle Cost (LCC) or Whole-of-Life (WOL)<\/strong>, as mentioned under para 1.7<\/strong> above.<\/li><\/ol>\n<\/div><h3 class=\"src-multi\">2.1.3<\/span>Consultancy and Non-Consultancy Services \u2014 the Procurement Proposal<\/span>C<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\">\n<ol class=\"lst\"><li>Procurement Proposal:<\/strong> A critical part of the procurement of Services process is preparing an appropriately staffed and budgeted Procurement Proposal\/ Concept Paper<\/strong> \u2014 which serves the function that an INDENT serves in procurement of Goods<\/strong>. The authority in the user Department initiating the procurement proposal shall first determine the need (including anticipated quantum)<\/strong> for the subject matter of the procurement.<\/li><\/ol>\nPurpose\/ Objective Statement of Services, Service Outcome Statement, and justification for the procurement of Services are important parts of the procurement proposal.<\/p>\n<ol class=\"lst\"><li>The description instrument:<\/li><li>C<\/span>Terms of Reference<\/strong> containing Scope of Work, Time-frame, Key Staff, Deliverables\/ Milestones<\/strong> is of fundamental importance in ensuring value for money, transparency, competition, and a level playing field in procurement of Consultancy Services.<\/li><li>NC<\/span>Services and Activity Schedule<\/strong> containing Service Outcomes, Description\/ Scope of Services, Quantum and Length (Duration\/ Frequency\/ Shifts) of activities<\/strong> is of fundamental importance in ensuring value for money, transparency, competition, and a level playing field in procurement of NC Services.<\/li><\/ol>\nThe user Department shall maintain all documents relating to the determination and technical\/ financial\/ budgetary approvals of the need for procurement.<\/p>\n<h4 class=\"src-multi\">2.1.3.1<\/span>Preparing the Procurement Proposal\/ Concept Paper<\/span>C<\/span>NC<\/span><\/h4><div class=\"srcblock src-multi\">\nAs a first step towards procurement of services, a formal written brief Proposal and Justification for the Services should be prepared (suggested format at Annexure 3: Format of Procurement Proposal). It is akin to the Indent for Materials\/ Material Requisition in the case of Procurement of Goods.<\/p>\nThe User should prepare, in simple and concise language, the requirement, purpose\/ objectives and the scope\/ outcomes of the assignment\/ Services, and justify the procurement based on analysis of in-house available capacity\/ capability.<\/p>\n<ul class=\"lst\"><li>C<\/span>The eligibility and PRE-QUALIFICATION criteria to be met by the consultants<\/strong> should also be clearly identified at this stage.<\/li><li>NC<\/span>The eligibility and QUALIFICATION criteria to be met by the service providers<\/strong> should also be clearly identified at this stage.<\/li><\/ul>\nJustifications for procurement of Services as given in para 1.12 may be kept in view. It is the basic document for initiating procurement of services. It is also the document from which the subsequent detailing of the ToR C<\/span> \/ Services and Activities Schedule NC<\/span> is drawn up.<\/p>\nA procurement proposal should contain:<\/p>\n1. Purpose\/ Objective Statement of Services: The user should prepare a \"Purpose\/ Objective Statement of Services\". One of the important contents of this statement is the description of service to describe the subject matter of procurement, which would be used in all subsequent documents. Bringing out the background and context, this should justify how the proposed procurement of services would fit in with the short-term and strategic goals of the Procuring Entity. Making such a statement is important to put the need for services in clear perspective. It may seem elementary or academic, but is a necessary and critical first step in properly designing a procurement proposal.<\/p>\n2. Service Outcome Statement:<\/strong> Once the \"Purpose\/ Objective of Services\" has been clearly defined, the next step is to formulate a 'Service Outcome Statement<\/strong>'. This should list out QUALITATIVELY and QUANTITATIVELY the outcomes expected<\/strong> from the Procurement of Services, as well as the expected Time-frame<\/strong> and a rough estimate of cost<\/strong> of Procurement of services (including related costs to be incurred by the organisation<\/strong>).<\/p>\nAt this stage, it is not necessary to go into details of all the activities<\/strong> required to achieve the service outcomes, but it should list at least the BROAD activities<\/strong>, which would help in putting a rough estimate to the cost of the assignment.<\/p>\nA 'Service Outcome Statement' should provide a concrete basis for subsequently defining the type and amount of work that needs to be done by the Consultant\/ service provider, and the time-frame within which the output needs to be received by the user. The estimated cost is needed to ascertain the level of administrative\/ financial approvals necessary as per the SoPP.<\/p>\n3. Justification for the Procurement of Services: The Concept Paper\/ Procurement Proposal should analyse the capabilities\/ capacities REQUIRED to carry out the assignment. It should also analyse the AVAILABLE IN-HOUSE capabilities\/ capacities and COMPARE these with the ones required for the assignment. Based on this assessment, the Procurement should be justified in the light of para 1.12.<\/p>\n<\/div><h4 class=\"src-multi\">2.1.3.2<\/span>In-principle Approval for initiating procurement of Services<\/span>C<\/span>NC<\/span><\/h4><div class=\"srcblock src-multi\">\nBased on the justification contained in the Procurement Proposal, in-principle administrative approval and BUDGETARY SANCTION for initiating procurement of such services should be accorded by the Competent Authority (CA) as laid down in the SoPP.<\/p>\nFurther stages May be proceeded with only after such approvals. (C<\/span> cites Rule 180 of GFR 2017.)<\/em><\/p>\n<\/div><\/div><h2 class=\"src-G\">2.2<\/span>Matters Decided During Need Assessment<\/span>G<\/span>of general application<\/span><\/h2><div class=\"srcblock src-G\">\nDuring need assessments, the following matters are decided to comply with the 'Procurement Guidelines':<\/p>\n<h3>a) Expression\/ Description of the Need<\/span><\/h3>\nThe expression\/ description of the need is an important determinant of Value for Money (VfM) and wide competition<\/strong>. Therefore, to the extent practicable, it should be:<\/p>\n<ul class=\"lst\"><li>i) Unambiguous, complete, using common terminology prevalent in the relevant trade;<\/li><li>ii) In accordance with the guidelines prescribed, if any, in this regard;<\/li><li>iii) Except in the case of proprietary purchase from a selected single source, reference to trademark, brand\/ trade names, catalogue numbers, or other details that limit any materials or items to specific manufacturer(s) should be AVOIDED as far as possible. Where unavoidable, such item descriptions should always be followed by the words \"or substantially equivalent.\"<\/li><\/ul>\n<h3>b) Method of Satisfying the Need<\/span><\/h3>\nThe method of satisfying the need \u2014 owning\/ leasing\/ hiring\/ outsourcing or through Public Private Partnership (PPP)<\/strong>, and so on \u2014 may be determined:<\/p>\n<ul class=\"lst\"><li>as per policies declared in this regard, or<\/li><li>based on a techno-economic evaluation (using life cycle cost if feasible) of various alternative methods of satisfaction of the need, and compatibility and inter-operability with existing infrastructure or systems.<\/li><\/ul>\nThere are now new procurement approaches like:<\/p>\n<ul class=\"lst\"><li>Hardware as a Service (HaaS)<\/strong>, also known as Infrastructure as a Service (IaaS)<\/strong> \u2014 it allows customers to outsource their IT infrastructures, such as servers, networking, processing, storage, virtual machines, and other resources. Customers access these resources on the Internet using a pay-as-per-use model.<\/em><\/li><li>Software as a Service (SaaS)<\/strong> \u2014 the SaaS provider is responsible for operating, managing, and maintaining the application software hosted on the cloud and the infrastructure on which it runs. The customer simply creates an account, pays a fee and uses the software over an internet connection by way of a web browser, mobile app or thin client.<\/em><\/li><\/ul>\n<h3>c) Quantity of the Subject Matter of Procurement, Commensurate with Economy<\/span><\/h3>\n<ul class=\"lst\"><li>i) Care should be taken to avoid purchasing quantities in excess of the requirement to avoid inventory carrying costs. Where scales of consumption or usage limits of requirements have been laid down by the Competent Authority, the officer signing the indent should also CERTIFY that the prescribed scales or limits are not exceeded. It is also necessary to round off the calculated quantity to the nearest wagon load\/ truckload\/ package to economise on transportation.<\/li><li>ii) An appropriate size of the tender has a great impact on value for money and the level of competition. A balance is achieved by judicious packaging requirements of different users or slicing requirements into smaller tenders (see para 2.10 below on the merits and demerits of packaging and slicing).<\/li><li>iii) units of quantity are an important parameter. Some items may be manufactured in metric tons but used in units of numbers or units of length (for example, steel sheets\/ structurals). For the sake of transparency, it is important to buy an item in units of manufacture. For example, it is better to buy steel\/ structurals in units of WEIGHT, since it has a tolerance in weight per unit of length; this usually works to the disadvantage of the buyer if it is bought in units of length. The buying and issuing units of an item may be different \u2014 but should be standardised.<\/li><\/ul>\n<h3>d) Time-schedule and Place of Product\/ Work\/ Service Delivery<\/span><\/h3>\nNeed assessment and generation of indent for procurement should be done sufficiently in advance of the time when goods are required. Delays in need assessment have an ADVERSE IMPACT on value for money and transparency.<\/p>\nGreat care is required to be exercised in filling up REALISTIC DATES for the requirement of material. The procuring entity should be allowed time in accordance with the established lead times.<\/p>\nIn urgent cases, the procuring entity may entertain indents providing shorter periods, but such urgencies must be approved by the authority empowered to grant administrative approval for the indent, and must be accompanied by PROPER JUSTIFICATION.<\/p>\n<h3>e) Formulation of Specifications<\/span><\/h3>\nFormulation of Specifications ensures value for money, transparency, a level playing field, and the widest competition. (Detailed at paras 2.4 to 2.7 below, category-wise.)<\/em><\/p>\n<h3>f) Estimation of Cost<\/span><\/h3>\n(Detailed at para 2.3 below.)<\/em><\/p>\n<\/div><h2>2.3<\/span>Estimation of Cost<\/span><\/h2><h3 class=\"src-G\">2.3.1<\/span>Why the Estimate Matters<\/span>G<\/span>of general application<\/span><\/h3><div class=\"srcblock src-G\">\nThe estimated cost in the indent is a VITAL ELEMENT in:<\/p>\n<ul class=\"lst\"><li>various procurement processes,<\/li><li>approvals, and<\/li><li>the establishment of reasonable prices at the time of evaluation of the bids.<\/li><\/ul>\nTherefore, it should be worked out REALISTICALLY and OBJECTIVELY.<\/p>\nFollowing are some suggested methods of cost estimates. These are neither mandatory nor comprehensive nor in any order of preference. These methods are not mutually exclusive, and TRIANGULATION from different methods would give a more accurate estimate of cost.<\/p>\n<h4>A. Where historical cost data IS available<\/span><\/h4>\nLast purchase price<\/strong> (or estimated rate in past indents) of this or similar or nearly equivalent requirements \u2014 after due updation<\/strong> as per D below.<\/p>\n<h4>B. Where NO historical cost data is available \u2014 Costing Analysis<\/span><\/h4>\nCosting analysis through internal or external expert costing agencies provides a reliable estimate of cost.<\/p>\n<h4>C. Where NO historical cost data is available AND Costing Analysis is NOT feasible<\/span><\/h4>\nIn such situations, a rough assessment of cost can be arrived at \u2014 but should be used with CAUTION for evaluation of the reasonableness of bids:<\/p>\n<ol class=\"lst\"><li>Rough assessment from the price of the assembly\/ machine of which the item is a part, or vice versa;<\/li><li>Published catalogues\/ Maximum Retail Price (MRP) printed on the item is the main source for establishing the estimated cost of items. It may be noted that MRPs usually include SIGNIFICANT MARGINS for distributors, wholesalers, and retailers;<\/li><li>As a LAST RESORT, a rough assessment of the opportunity cost of not using this item at all;<\/li><li>Market Survey: For commercially available goods, a formal market survey online (GeM portal or other commercial market apps) or a physical survey of the market can provide a reasonable estimate of cost;<\/li><li>Budgetary Quotes: For equipment\/ craft that are custom-built to the buyer's specifications, the best way to get a rough assessment of costs is by obtaining budgetary quotes from potential parties.<\/li><li>Ideally, there should be three quotes.<\/li><li>However, there is a need to have a time schedule for receipt of quotes<\/strong> to ensure some timeframe for this activity.<\/li><li>An attempt should be made to obtain as many budgetary quotes as possible from reputed\/ potential firms, and a time (if feasible, ten to twenty-one days) should be indicated.<\/li><li>In the event of receipt of less than three budgetary quotes, two EXTENSIONS (if feasible, of five days each) may be considered.<\/li><li>In the event of the non-availability of three quotes within the above extended period, the estimates should be prepared based on the number of budgetary quote(s) received \u2014 which May even be one.<\/li><li>Where more than one budgetary quote is received, the estimate should be framed on an AVERAGE of the quotes, which will reduce variations and fluctuations.<\/li><li>CAUTION: Budgetary quotes are not exact estimates \u2014 the bidder who EXPECTS to be short-listed may quote HIGH rates, and the bidder who does not expect to be shortlisted may quote ABNORMALLY LOW prices to queer the pitch for others.<\/li><\/ol>\n<h4>D. Updation of Historical Data<\/span><\/h4>\nHistorical cost data can be supplemented with escalations to cater for inflation, price increases of raw materials, labour, energy, statutory changes, price indices, and so on, to make them usable in conditions prevailing currently. In the case of foreign currencies, the rate should be reduced to a common denomination of Indian Rupees.<\/p>\nPrice indices can be obtained from the following websites<\/strong>(some may require prior free registration, and some have paid subscriptions)<\/em>:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Purpose<\/th><th>Source<\/th><\/tr><\/thead><tbody><tr><td>Price indices of indigenous items<\/strong><\/td><td>http:\/\/www.eaindustry.nic.in\/home.asp.in \u2014 Ministry of Industry<\/td><\/tr><tr><td>Metals and other minerals<\/td><td>http:\/\/www.mmronline.com\/ \u00b7 http:\/\/www.metalprices.com\/index.asp \u00b7 http:\/\/www.asianmetal.com\/<\/td><\/tr><tr><td>Price trends of non-ferrous metals<\/td><td>London Metal Exchange<\/strong> \u2014 https:\/\/www.lme.com\/ (often show volatile trends<\/em>)<\/td><\/tr><tr><td>General economic\/ trade intelligence<\/td><td>http:\/\/www.tradeintelligence.com\/ \u00b7 http:\/\/www.cmie.com\/ (Centre for Monitoring Indian Economy<\/strong>)<\/td><\/tr><tr><td>Price trends of different countries<\/td><td>http:\/\/www.imf.org\/external\/pubs\/ft\/weo\/2015\/01\/ \u2014 International Monetary Fund<\/strong><\/td><\/tr><tr><td>Industry chambers<\/td><td>www.ieema.org \u2014 Indian Electrical and Electronics Manufacturers' Association<\/td><\/tr><tr><td>Commodity Prices<\/td><td>Multi Commodity Exchange of India Limited (MCX) \u2014 https:\/\/www.mcxindia.com\/home<\/td><\/tr><tr><td>Cross-commodity price reporting agency (PRA)<\/td><td>Fastmarkets<\/strong> \u2014 https:\/\/www.fastmarkets.com\/<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h3 class=\"src-C\">2.3.2<\/span>Cost Estimation for Consultancy Services<\/span>C<\/span><\/h3><div class=\"srcblock src-C\">\nPreparation of a well-thought-through cost estimate is ESSENTIAL if realistic budgetary resources are to be earmarked.<\/p>\na) Categories:<\/strong> Costs shall be divided into Two broad categories<\/strong>:<\/p>\n<ul class=\"lst\"><li>(a) fee or remuneration<\/strong> (according to the type of contract used); and<\/li><li>(b) reimbursable costs.<\/li><\/ul>\nDepending on the nature of the assignment, cost estimates may be prepared either in local currency or with a combination of local plus foreign currencies. Cost estimate should provide for forecast of inflation during the period of assignment.<\/p>\nb) Estimated Resources:<\/strong> The cost estimate shall be based on the Procuring Entity's assessment of the resources needed<\/strong> to carry out the assignment:<\/p>\n<ul class=\"lst\"><li>i) Staff time;<\/li><li>ii) Logistical support<\/strong> (City, National and International Travels\/ Trips and durations); and<\/li><li>iii) Physical inputs<\/strong> (for example, vehicles, laboratory equipment);<\/li><li>iv) Miscellaneous<\/strong> (Support services, contingencies, and Profit element, taxes, and duties).<\/li><\/ul>\nc) Rates:<\/strong> Costs are normally estimated using UNIT RATES<\/strong> (staff remuneration rates, reimbursable expenses) and quantities<\/strong> (exceptionally, some items may be estimated on a lump-sum basis or percentage basis<\/strong> \u2014 Contingencies and support services). Rates of payment should be identified (including applicable taxes, if any) in LOCAL and FOREIGN currency<\/strong> for Staff Time, Logistics Costs and Costs of various physical inputs\/ support services.<\/p>\nd) Staff Costs: The estimate of staff cost is based on an estimate of the personnel time (staff-months or staff-hours) required for carrying out the assignment, taking into account the time required by each expert, his or her BILLING RATE, and the related DIRECT COST component.<\/p>\nIn general, staff remuneration rates include: Basic salary, social charges, overheads, fees or profit, and ALLOWANCES.<\/p>\nIt is useful to prepare a bar chart<\/strong> indicating:<\/p>\n<ul class=\"lst\"><li>the duration of each main activity (WORK SCHEDULE), and<\/li><li>time to be spent by different members of the consultancy team (STAFFING SCHEDULE),<\/li><\/ul>\ndistinguishing tasks to be carried out by FOREIGN and LOCAL consultants. Due consideration should be given to the expected breakdown of a consultant's time in the home office and client's countries, and away-from-home-office allowance.<\/p>\ne) Logistic Costs: The number of trips required should be estimated as required to carry out various activities. Travel costs may be included for city travel, National and International travel and stay.<\/p>\nf) Physical Inputs Costs: Assessment of such costs would depend on the technical requirements of equipment.<\/p>\ng) Miscellaneous costs: Support services may be taken as a percentage of staff costs. Contingencies and Profit elements are usually taken as a percentage of the total cost of the Consultancy. To this would be added the taxes and duties likely to be incurred by the consultants.<\/p>\nCost categories for breaking down an assignment C<\/span>: Although assignments vary in size, length, and nature, it is possible to make a cost estimate by breaking down the assignment's activities into the following cost categories: a) Professional and support staff; b) Travel, Hotel, and transport; c) Mobilisation and demobilisation; d) Office rent, Furniture\/ Equipment, supplies, Utilities, IT equipment and communication; e) Assignment-related surveys, training programmes; f) Translation, report printing; g) Contingencies: miscellaneous, insurance, shipping; and h) Indirect local taxes and duties in connection with carrying out the services.<\/p>\n<aside class=\"note\">A MISMATCH between the cost estimate and the ToR is likely to MISLEAD CONSULTANTS on the desired scope, depth, and details of service required, and this could lead to SERIOUS PROBLEMS during contract negotiations or during implementation of the assignment.<\/p><\/aside>\n<\/div><h3 class=\"src-NC\">2.3.3<\/span>Cost Estimation for Non-Consultancy Services<\/span>NC<\/span><\/h3><div class=\"srcblock src-NC\">\nPreparation of a well-thought-through cost estimate is essential if realistic budgetary resources are to be earmarked. The cost estimate shall be based on the Procuring Entity's assessment of the resources needed to carry out the services: managerial and staff time and physical inputs (for example, materials, consumables, tools and machines).<\/p>\nCosts shall be divided into three broad categories.<\/strong>Profit element, Taxes and duties should be ADDED to the estimated costs:<\/strong> a) Remunerations for Personnel deployed<\/strong>; b) Reimbursable:<\/strong> Travel, logistics, Consumables, Materials, Tools, Hiring of third-party services, etc.; c) Administrative and Miscellaneous:<\/strong> Mobilisation, demobilisation, Temporary Structures, Administrative expenses, office and IT equipment, contingencies, financing costs, Costs for hiring\/ depreciation\/ financing of machinery and equipment, etc.<\/p>\nRates:<\/strong> Costs are normally estimated using unit rates<\/strong> (staff remuneration rates, reimbursable expenses) and quantities<\/strong> (exceptionally some items may be estimated on a lump-sum basis or percentage basis<\/strong> \u2014 Contingencies and support services).<\/p>\nStaff Costs: The estimate of staff cost is based on an estimate of the personnel time (staff-months\/ weeks\/ days) required for delivering the services, considering the time required by each staff, his remuneration rate (or the minimum wage rate, if applicable), and the related direct cost component. In general, staff remuneration rates include basic salary, social charges, overheads, fees or profit and allowances.<\/p>\n<aside class=\"note\">A MISMATCH between the cost estimate and the Services and Activities Schedule is likely to mislead service providers on the desired scope, quantum, and frequency of service required, and this could lead to SERIOUS PROBLEMS during contract implementation.<\/p>\nNote the difference:<\/strong>C<\/span> uses TWO<\/strong> cost categories (fee\/ remuneration + reimbursable), with profit\/ taxes folded into \"Miscellaneous\". NC<\/span> uses THREE<\/strong> categories (Remuneration + Reimbursable + Administrative & Miscellaneous), with profit, taxes and duties added on top<\/strong>. NC<\/span> alone refers to the minimum wage rate<\/strong>.<\/p><\/aside>\n<\/div><h3 class=\"src-W\">2.3.4<\/span>Cost Estimation for Works<\/span>W<\/span><\/h3><div class=\"srcblock src-W\">\n(Works cost estimation is embedded in the PPR \u2192 DPR \u2192 Detailed Estimates sequence \u2014 see para 2.5 below, and the reference documents at para 2.5.7.)<\/em><\/p>\n<\/div><h2 class=\"src-G\">2.4<\/span>Formulation of the Requirement \u2014 GOODS: Technical Specifications (TS)<\/span>G<\/span><\/h2><div class=\"srcblock src-G\"><h3>2.4.1<\/span>Value for Money and Technical Specifications<\/span><\/h3>\nThe procuring authority should ensure that specifications are developed to ensure VfM, a level playing field and wide competition in procurement [Rule 173(ix) of GFR 2017].<\/p>\nThe TS constitute the BENCHMARKS against which the procuring entity will verify the technical responsiveness of bids and, subsequently, evaluate the bids. Therefore, well-defined TS will facilitate:<\/p>\n<ul class=\"lst\"><li>the preparation of responsive bids by bidders, as well as<\/li><li>the examination, evaluation, and comparison of the bids by the procuring entity.<\/li><\/ul>\nIt would also help in ensuring the QUALITY of the supplied goods.<\/p>\nThe procuring authority should ensure that the specification should:<\/p>\n1. Ensure a level playing field and the widest competition;<\/p>\n2. Be unambiguous, precise, objective, functional, broad-based\/ generic, standardised (for items procured repeatedly) and measurable. TS should be broad enough to avoid restrictions on workmanship, materials and equipment commonly used in manufacturing similar kinds of goods;<\/p>\n3. Set out the required technical, qualitative and performance characteristics to meet just the bare essential specific needs of the procuring entity, without including SUPERFLUOUS and NON-ESSENTIAL features, which may result in unwarranted expenditure;<\/p>\n4. Standards:<\/p>\n<ul class=\"lst\"><li>Normally, these standards should be based on national technical regulations or recognised national standards (Bureau of Indian Standards \u2014 BIS) or building codes, wherever such standards exist. Preference should be given to procure the goods which carry the BIS mark.<\/li><li>In the absence of national standards, TS may be based on the relevant INTERNATIONAL standards.<\/li><li>Provided that an indenting authority may, for reasons to be recorded in writing, base the TS on equivalent international standards even in cases where BIS standards exist.<\/li><li>For any deviations from Indian standards or for any additional parameters for better performance, specific reasons for deviations\/ modifications should be duly recorded with the approval of the Competent Authority.<\/li><li>Where the technical parameters are only MARGINALLY different, Indian standards may be specified, and the Departmental specifications could cover only such additional details as packing, marking, inspection, and so on, as are specially required for a particular end use.<\/li><\/ul>\n<aside class=\"note\">Footnote: It has been reiterated by the Department of Expenditure vide OM F.No. 12\/17\/2019-PPD dated 12.05.2020 that wherever Indian Technical specifications and Quality Certifications exist, the procuring entity should prescribe them. In those rare or exceptional cases where, despite the existence of Indian technical specifications, the procuring entity intends to specify foreign Technical Certifications and Accreditations, it must record its reasons in writing for adoption of such other technical specifications. This may also be subject to matter of audit.<\/p><\/aside>\n5. Units: All dimensions incorporated in the specifications shall be indicated in metric units. If, for some unavoidable reason, dimensions in FPS units are to be mentioned, the corresponding equivalents in the metric system must also be indicated. In the case of Government of India funded projects ABROAD, the technical specifications may be framed based on the requirements and standards of the host beneficiary Government, where such standards exist \u2014 provided that a procuring entity may, for reasons to be recorded in writing, adopt any other technical specification;<\/p>\n6. Make use of best practices: Examples of specifications from successful similar procurements in other organisations or sectors may provide a sound basis for drafting the TS;<\/p>\n7. Avoid obsolescence: Commensurate with VfM, avoid procurement of obsolete goods, and require that all goods and materials be NEW, UNUSED and of the most recent or current models, and that they incorporate all recent improvements in design and materials, unless provided for otherwise in the tender documents;<\/p>\n<h3 class=\"src-G\">2.4.2<\/span>Environmental Issues, Green Procurement, Sustainable Development Goals<\/span>G<\/span><\/h3><div class=\"srcblock src-G\">\na) Comply with sustainability criteria and legal requirements of environment or pollution control and other mandatory and statutory regulations or internal guidelines, if any, applicable to the goods to be purchased.<\/p>\nb) While specifying packaging requirements in the supply of Goods\/ Works\/ Services, the procuring entity may emphasise packaging that has minimal impact on the environment without compromising on safety and security.<\/p>\nc) Ecomark:<\/strong> The procuring Entity may include a requirement for the Ecomark Label<\/strong>, to the extent feasible, in their Description\/ Specification of the goods being procured.<\/p>\nThe Government of India has promulgated the Ecomark Certification Rules, 2023<\/strong> for:<\/p>\n<ul class=\"lst\"><li>labelling environmentally friendly products<\/strong> that meet the approved environment criteria, and<\/li><li>ensuring environmental performance of such products with respect to resource efficiency, circular economy and environmental impacts \u2014 in particular the impact on climate change, the impact on nature and biodiversity, generation of waste, emissions to all environmental media, pollution through physical effects, and use and release of hazardous substances<\/li><\/ul>\n \u2014 thereby supporting the principles of 'LiFE (Lifestyle for Environment)'.<\/p>\nObjective: to encourage consumers to adopt such products and the manufacturers to transition to the production of Ecomark-certified products to promote sustainability. It shall be applicable to any product that is produced or supplied for distribution or use in the market, unless otherwise excluded under the Ecomark Certification Rules. It would also prevent misleading information on the environmental aspects of products.<\/p>\nd) Efficiency factors: Specifications should emphasise factors such as efficiency, optimum fuel\/ power consumption, use of environmentally friendly materials, reduced noise and emission levels, low maintenance cost, and so on.<\/p>\ni) Bureau of Energy Efficiency (BEE): The Government of India set up the BEE (https:\/\/beeindia.gov.in\/en) on 1 March 2002, under the provisions of the Energy Conservation Act, 2001, with the primary objective of reducing the energy intensity of the Indian economy. The Bureau initiated the Standards & Labelling Programme for equipment and appliances in 2006 to provide the consumer with an informed choice about energy saving and, thereby, the cost-saving potential of the relevant marketed product.<\/p>\nii) Coverage: The scheme is invoked for 34 equipment\/ appliances, out of which labelling is mandatory for 11 equipment\/ appliances, i.e.:<\/p>\n<aside class=\"note\">Frost-Free Refrigerator \u00b7 Stationary Storage Type Electric Water Heater \u00b7 Colour Television \u00b7 Room Air Conditioner (RAC \u2014 Variable Speed; Fixed Speed; Cassette; Floor Standing Tower; Ceiling; Corner) \u00b7 TFL \u00b7 LED Lamps \u00b7 Distribution Transformer \u00b7 Direct Cool Refrigerator \u00b7 Ceiling Fan<\/p><\/aside>\nThe other appliances are presently under the VOLUNTARY labelling phase.<\/p>\niii) Star ratings: The energy efficiency labelling programmes under BEE are intended to reduce the energy consumption of appliances without DIMINISHING the services they provide to consumers. The higher the stars, the more EFFICIENT the appliance. The threshold ratings prescribed by the Ministry of Finance are:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Appliance<\/th><th>Threshold Star Rating<\/th><\/tr><\/thead><tbody><tr><td>Split Air Conditioners<\/td><td>5 Star<\/strong> (under normal conditions where annual usage is expected to be more than 1000 Hrs<\/strong>) 3 Star<\/strong> (where usage of AC is limited<\/strong>, e.g., in conference rooms)<\/td><\/tr><tr><td>Frost Free Refrigerators<\/td><td>4 Star<\/td><\/tr><tr><td>Ceiling Fans<\/td><td>5 Star<\/td><\/tr><tr><td>Water Heaters<\/td><td>5 Star<\/td><\/tr><\/tbody><\/table><\/div>\niv) Building it into the TS:<\/strong> The procuring Entity should try to build either the BEE Star rating<\/strong>, where applicable, and minimum energy efficiency<\/strong>, where such star ratings are not yet available, into the TS<\/strong> (in accordance with Rule 173(xvii) of GFR 2017<\/strong>). Such benchmarking illustrates the use of neutral and dependable benchmarking<\/strong> in the procurement of sustainable, environmentally favourable goods by way of appropriately formulated Technical Specifications.<\/p>\nIn a similar fashion, to implement sustainability goals, TS may include an Environmental Product Declaration (EPD) as defined by ISO 14025 as a Type III declaration that \"quantifies environmental information on the life cycle of a product to enable comparisons between products fulfilling the same function\". Voluntary environmental standards can also be used to specify environmental sustainability criteria.<\/p>\n<\/div><h3 class=\"src-G\">2.4.3<\/span>Discourage Procurement Involving Evaluation of Samples\/ Demonstration of Equipment<\/span>G<\/span><\/h3><div class=\"srcblock src-G\">\nAccording to the existing guidelines on public procurement of goods, purchase in accordance with a sample, or requiring demonstration of equipment, should not be usually undertaken.<\/p>\na) Calling for a sample along with the tender, or requiring a demonstration of equipment after bid opening, and deciding based on evaluation of the sample\/ demonstration of equipment should not be done.<\/p>\nb) Built-in sample clauses: In certain specifications, there may be a built-in sample clause. Usually, such clauses are stipulated to illustrate INDETERMINABLE CHARACTERISTICS such as shade\/ tone, make-up, feel, finish, workmanship, and so on. In some specifications there may not be a sample clause, but such indeterminable characteristics are left to be agreed between the seller and buyer. One way to procure\/ indigenise certain spares whose drawings\/ specifications are not available is to procure in accordance with an available sample of the part. In such cases, the supply must conform to an agreed reference sample only, whereas the remaining characteristics must conform to the drawings\/ specifications.<\/p>\nc) The reference-sample procedure: However, NO sample should be called for or evaluated along with the bids. If desired:<\/p>\n<ul class=\"lst\"><li>Three COPIES of the purchaser's REFERENCE SAMPLE with seal\/ label may be DISPLAYED<\/strong> for prospective bidders to illustrate the desired indeterminable characteristics, which final supplies from successful bidder(s) will have to meet in addition to the specifications\/ drawings<\/strong>.<\/li><li>If required, in addition to the purchaser's reference sample, the provision for the submission of a PRE-PRODUCTION SAMPLE matching the purchaser's sample by the successful bidder(s) may be stipulated for indeterminable characteristics before giving clearance for bulk production of the supply.<\/li><li>On placement of the contract, the three copies of the purchaser's reference sample are distributed as follows:<\/li><li>One copy \u2192 to the CONTRACTOR<\/strong> for preparing pre-production sample\/ supplies;<\/li><li>One copy \u2192 to the CONSIGNEE<\/strong> for matching with the pre-production sample\/ supplies;<\/li><li>One copy \u2192 kept secure under lock and key in the SAMPLE ROOM of the procuring entity.<\/li><li>The Indent for items that are to be procured in accordance with a sample must be accompanied by three sealed reference samples, as far as possible.<\/li><\/ul>\nd) Demonstration: If a demonstration of equipment (say, entirely newly developed equipment) is considered necessary, it may be planned only during the PRE-BID stage \u2014 but the evaluation of tenders should not be based on this.<\/p>\n<\/div><h3 class=\"src-G\">2.4.4<\/span>Essential Technical Particulars<\/span>G<\/span><\/h3><div class=\"srcblock src-G\">\nThe essential Technical particulars to be specified in the tender document<\/strong> shall include the following, to the extent applicable for a particular purchase<\/strong>:<\/p>\n<ol class=\"lst\"><li>Scope of supply and END USE<\/strong> of the required goods;<\/li><li>All essential technical, qualitative, functional, environmental and performance characteristics and requirements \u2014 such as material composition, physical dimensions and tolerances, workmanship, and manufacturing process wherever applicable; test schedule, if any \u2014 including guaranteed or acceptable MAXIMUM or MINIMUM values, as appropriate.<\/li><\/ol>\n<aside class=\"note\">Whenever necessary, the user may include an additional format for guaranteed technical parameters (as an attachment to the bid submission sheet), where the bidder shall provide detailed information on such technical performance characteristics in reference to the corresponding acceptable or guaranteed values.<\/p><\/aside>\n<ol class=\"lst\"><li>Drawings;<\/li><li>Requirement of the BIS mark, where applicable \u2014 mentioning all parameters where such a specification provides options;<\/li><li>Requirement of a PRE-PRODUCTION SAMPLE, if any, at the post-contract stage before bulk production;<\/li><li>Specific requirements of PRESERVATION, PACKING and MARKING, if any;<\/li><li>INSPECTION PROCEDURE for goods ordered and criteria of conformity;<\/li><li>Requirements of SPECIAL TESTS or type test certificate or TYPE APPROVAL for compliance of statutory requirements with reference to pollution, emission, noise, if any;<\/li><li>Other additional work and\/or related services required to achieve full delivery\/ completion, installation, commissioning, training, technical support, after-sales service, and Annual Maintenance Contract (AMC) requirements, if any;<\/li><li>WARRANTY requirements;<\/li><li>QUALIFICATION CRITERIA of the bidders, if any;<\/li><li>Any other aspects PECULIAR to the goods in question \u2014 such as the shelf life of the equipment, and so on.<\/li><\/ol>\n<\/div><\/div><h2 class=\"src-W\">2.5<\/span>Formulation of the Requirement \u2014 WORKS: PPR, DPR, Designs, Estimates and Sanctions<\/span>W<\/span><\/h2><div class=\"srcblock src-W\">\n<aside class=\"note\">This is the longest and most legally-loaded part of any of the four Chapter 2s. It runs through a seven-step sanctioning sequence: PPR \u2192 In-Principle Approval \u2192 DPR\/PE \u2192 A\/A and E\/S \u2192 Detailed Designs & Technical Sanction \u2192 Appropriation of funds \u2192 Tendering.<\/p><\/aside>\n<h3>2.5.1<\/span>Preparation of Preliminary Project Report (PPR) or Rough Cost Estimate<\/span><\/h3>\nWHO prepares it:<\/p>\n<ul class=\"lst\"><li>If the work is to be executed under its OWN arrangement by the Ministry\/ Department \u2014 a PPR or Rough Cost Estimate shall be prepared by the WORKS COMMITTEE, based on Land, Site Details, functional and space requirements (or Various Facilities, Special Requirements\/ Features and Broad Specifications for specialised Equipment and Plants), Layout Plans etc. \u2014 with the technical details\/ documents mentioned below being prepared by (or under the guidance of) the TECHNICAL MEMBER(S) of the Works Committee.<\/li><li>If the Work is executed through a Public Works Organisation (PWO) or a Public Sector Undertaking (PSU) \u2014 on requisition from the Ministry\/ Department for procurement of works, the PWO or PSU to whom the work is entrusted for execution shall prepare such PPR or Rough Cost Estimate and submit it to the requiring Department\/ Ministry.<\/li><\/ul>\nWHAT it triggers: Based on the PPR and Rough Cost Estimate, the competent authority in the Administrative Ministry\/ Department grants IN-PRINCIPLE APPROVAL, indicating approval of the CONCEPT and SCOPE of the project at the ROUGH COST assessed.<\/p>\n<aside class=\"note\">Ministry of Finance (DoE) has issued detailed instructions regarding appraisal and approval of Public Funded projects\/ schemes<\/strong> \u2014 OM No. 24(35)\/PF-II\/2012 dated 05.08.2016<\/strong> (where \"Schemes\"<\/strong> refers to a collection of Projects\/Works of either Central Sector Schemes or Centrally Sponsored Schemes, and \"Project\"<\/strong> refers to work which can be standalone or part of a scheme). It is suggested that the website of the Department of Expenditure be checked for the latest instructions (https:\/\/doe.gov.in\/appraisal-and-approval).<\/em><\/p><\/aside>\nThe Preliminary Project Report shall provide the following details:<\/p>\n<ol class=\"lst\"><li>Background of the work\/ project justifying the NEED for the work;<\/li><li>Details of SCOPE of the project;<\/li><li>EXCLUSIONS (if any)<\/strong> \u2014 this will cover part of the work which is not included<\/strong> in this particular project estimate;<\/li><li>Availability of LAND \u2014 there should be a clear indication about the availability of land required for completion of the whole project. The land shall be made available free of all encumbrances;<\/li><li>Availability of AUXILIARY SERVICES \u2014 like roads, power, water, solid & liquid waste disposal system, street lighting and other civic services shall be ensured;<\/li><li>Reference to Concept Plans\/ Preliminary Drawings, if any, and their acceptance \u2014 this shall indicate the details of Concept Plans\/ Preliminary Drawings prepared and their approval by the requisitioning authority;<\/li><li>AGENCY of Procurement \u2014 through direct procurement, outsourcing to PWO\/ PSUs or otherwise;<\/li><li>Rough Cost Estimate: Ministries\/ Departments may carefully assess alternative technological options, their area requirements, and obtain Rough Cost on the basis of prevailing plinth area rates (or any other reliable basis) without preparation of drawings, to enable the competent authority to accord in-principle approval;<\/li><li>If relevant, cost benefit analysis of the project, including evaluation of options for cost sharing\/ recovery (user charges) for infrastructure\/ services. Principles of Life Cycle Cost may also be considered, to the extent feasible;<\/li><li>CASH FLOW \u2014 this will show year-wise requirement;<\/li><li>Source & availability of funds \u2014 the manner of transferring the fund to the executing agency to be spelt out;<\/li><li>Appendices:<\/li><li>i) Requisition of the Department\/ Ministry;<\/li><li>ii) Concept Plans\/ Preliminary Drawings;<\/li><li>iii) Reference to approval of Concept Plans\/ Preliminary Drawings;<\/li><li>Any other relevant documents;<\/li><li>PRESENTATION on the findings of the feasibility study\/ PPR: As directed in the Department of Expenditure's General Instructions on Procurement and Project Management (OM No. F.1\/1\/2021-PPD dated 29.10.2021), a presentation may be made by a team (which may include engineers\/ consultants\/ outside experts, finance officers etc.) before the public authority\/ designated competent authority. This is to provide an opportunity to the public authority to have an overall assessment of the situation, appraisal of various options, as well as likely challenges and mitigation measures. In the case of VERY LARGE projects, such presentation may be made to the HEAD of the public authority. The record of discussions during the presentation may become part of the DPR and tender file\/ project record.<\/li><\/ol>\n<h3>2.5.2<\/span>Acceptance of Necessity and Issue of In-Principle Approval<\/span><\/h3>\nApproval of the competent financial authority for accepting the necessity of works and its SCOPE should be sought on the basis of the PPR or Rough Cost Estimate, and In-Principle Approval of the concerned Ministry\/ Department shall be made available for preparation of the Detailed Project Report or Preliminary Estimates.<\/p>\n<h3>2.5.3<\/span>Preparation of Detailed Project Report (DPR)\/ Preliminary Estimates (PE)<\/span><\/h3>\n1. On receipt of In-Principle Approval of the project, the procuring entity shall finalise the Detailed Project Report with due care and accuracy, using the latest technological tools, collecting all relevant ground information, including consultation with the field units wherever applicable, giving reference to the documents mentioned below. The DPR should provide a level playing field to the bidders and should ensure, as far as feasible, the widest possible competition.<\/p>\nThe DPR shall contain:<\/p>\n<ol class=\"lst\"><li>Reference to Concept plan\/ preliminary drawings and their acceptance;<\/li><li>Details of SCOPE of the project, indicating clearly the list of Engineering Services (Mechanical\/ Electrical\/ Plumbing) as well as Operation and Maintenance \u2014 included or not included in the DPR\/PE;<\/li><li>Preliminary estimated cost \u2014 this will also include the expected ESCALATION for the period of completion of the project, and also the departmental or lump sum charges to be paid to the executing agency (PWO or PSUs). Cash flow projection should show year-wise requirement. While designing the projects, if and to the extent possible, principles of Life Cycle Cost may also be considered;<\/li><li>Time of completion \u2014 this will consist of two PARTS: one for PRE-CONSTRUCTION activity till award of the work, and the other for the EXECUTION;<\/li><li>Details of LAND required along with land plan Schedule<\/strong> to implement timely land acquisition procedures;<\/li><li>Environmental Impact Assessment (EIA) of the project and approval thereof, wherever applicable;<\/li><li>Social Impact Assessment and Resettlement and Rehabilitation: Social Impact Assessment needs to be done, based on baseline socio-economic survey and census survey data, to identify the Project Affected People (PAPs). A Resettlement and Rehabilitation Plan should be prepared for the PAPs in accordance with the LARR Act 2013 or the National Policy on Resettlement and Rehabilitation (NPRR), and State Governments' framework of resettlement policies and other social safeguard policies designed to protect the rights of the affected persons and communities as applicable;<\/li><li>List of Approvals of STATUTORY BODIES required;<\/li><li>Annual plan allocation and cash flow;<\/li><li>Systems to be adopted for PROJECT MONITORING;<\/li><li>Works accounting system;<\/li><li>QUALITY ASSURANCE system\/ mechanism;<\/li><li>Bidding systems<\/strong> \u2014 Single, two parts, pre-qualification, Post-qualification;<\/li><li>WHO prepares: In case the work is being executed by the Ministry\/ Department themselves, DPR and PE will be prepared by the Ministry\/ Department itself. In case the Work is assigned to a PWO or PSU, that agency shall prepare the DPR and PE;<\/li><li>EXEMPTION: For repair works costing up to rs. 60 (SIXTY) LAKH, preparation of DPR and pe May be dispensed with, since repair work does not need detailed designing. Sanction may be accorded by the competent authority based on the PPR itself.<\/li><\/ol>\n2. The consultant-quality problem: A major reason for problems in works contracts \u2014 in particular relating to construction of roads, highways, ports, runways, dams etc. on item-rate or percentage rate basis \u2014 is the OUTSOURCING of preparation of Detailed Project Reports to consultants without sufficient relevant experience, or without giving them sufficient TIME to do so.<\/p>\n<ul class=\"lst\"><li>It is therefore essential to STIPULATE & ENSURE successful project design\/ supervision experience while selecting consultants, especially for large works contracts.<\/li><li>DPR in such contracts is required to be based on proper ground investigation at each specified stretch (normally 50 METRES), called a \"REACH\", and the Consultant be directed to exercise such due diligence.<\/li><li>Wherever consultants are appointed for preparation of DPR, field units of the public authorities should also be associated with the process. The inputs from these field units can be useful in proposing best solutions for design and execution of the work, as they are the custodian of legacy data, which may not be available with the consultants, as they may not be operating regularly in that geographical region.<\/li><\/ul>\n3. Involvement of the Ministry\/ Department: The involvement of the Ministry\/ Department in providing proper inputs, including USER REQUIREMENTS, during the preparation of the DPR and before accepting the draft DPR, is PARAMOUNT in ensuring successful implementation.<\/p>\n<ul class=\"lst\"><li>Proper FIELD SURVEYS and INVESTIGATIONS of ground conditions are CRITICAL in preparation of a reliable DPR.<\/li><li>Providing scientifically valid data to bidders will depend on the quality of the investigations done by the DPR consultant.<\/li><li>As a corollary, the Ministry\/ Department must INSIST on a qualified team of engineers with experience for carrying out DPR studies.<\/li><li>It is also essential that the Ministry\/ Department insists that the Consultant offers them TECHNOLOGY OPTIONS at the EARLY stage of preparation of the DPR, so that a cost-efficient choice may be made using principles of life cycle costing.<\/li><\/ul>\n4. Consequences of a defective DPR: In case the deviations between the actual ground situation and the situation recorded in such DPR result in significant COST and TIME OVER-RUNS, the Engineer, while doing valuation of variations, must bring to the Procuring Entity's notice the reach-wise differences, and the Ministry\/ Department May consider stringent action against the consultant who has prepared such DPRs \u2014 including debarment from future consultancy contracts, after following due procedure. Such clauses May be included in the contracts for preparation of DPR.<\/p>\n5. Presentation on the DPR: A presentation may be made about the DPR before the public authority, for projects above a THRESHOLD VALUE as decided by Project Executing Authorities. The presentation may include:<\/p>\n<aside class=\"note\">salient features of the project including general layout, architectural drawings, broad specifications, cash flow (over the life of the project), composition of the project team, quality management plan for the project, important milestones in the project execution, obligations of the authority and the contractor\/ concessionaire, and possible risks and mitigation measures.<\/p><\/aside>\nIn the case of very large projects, such presentation may be made to the HEAD of the public authority. The record of discussions during the presentation shall become part of the tender file\/ project record.<\/p>\n<h3>2.5.4<\/span>Administrative Approval and Expenditure Sanction (A\/A and E\/S)<\/span><\/h3>\n1. A\/A and E\/S will be accorded to the execution of work by the competent financial authority in the Ministry\/ Department after due examination of the Detailed Project Report and Preliminary Estimates.<\/p>\nPOST-SANCTION CHANGES in scope and specification lead to delay, loss of quality and contractual penalties. Therefore, such A\/A and E\/S shall be accorded after carefully assessing their requirements.<\/p>\nThe estimates framed by a PWO or other engineering organisation May be modified for such sanction only with their concurrence.<\/p>\n2. The sanction order should contain:<\/p>\n<ul class=\"lst\"><li>SCOPE of work,<\/li><li>estimated cost, and<\/li><li>TIME SCHEDULE for completion of work, and<\/li><li>funding sources along with the break-up of the share of each funding agency.<\/li><\/ul>\n3. A Department of Government of India may sanction expenditure on any scheme or project as per the powers delegated from time to time by the Finance Ministry (DoE's O.M. No. 24(35)\/PF-II\/2012 dated 05.08.2016)<\/em>, subject TO its outlay having been APPROVED by the Competent Authority in accordance with the appraisal and approval process prescribed by the Finance Ministry from time to time. (Rule 16, DFPR 2024)<\/em><\/p>\n<h3>2.5.5<\/span>Detailed Designs, Detailed Estimates and Technical Sanction<\/span><\/h3>\n1. Except where the work is to be undertaken in the EPC (Turnkey) mode, on receipt of sanction of the project (based on DPR or PE) and assurance of funds, the procuring entity, in consultation with the Works Committee, shall prepare and accord TECHNICAL SANCTION to:<\/p>\n<ul class=\"lst\"><li>the detailed and coordinated DESIGN of all the Architectural, Civil, Electrical, Mechanical, Horticulture and any other services included in the scope of the sanction, and<\/li><li>the detailed cost estimates containing the detailed SPECIFICATIONS and QUANTITIES of various items, prepared on the basis of the Schedule of Rates maintained by CPWD or other Public Works Organisations<\/li><\/ul>\n \u2014 so as to ensure that proposals are STRUCTURALLY SOUND and that the estimates are accurately calculated based on adequate data.<\/p>\nIn case the work is to be executed through a PWO or PSU, preparation of detailed design\/ estimates and technical sanction shall be done\/ accorded by that organisation.<\/p>\n2. Architectural and structural drawings: Architectural and structural drawings (\"fit for construction\") are among the CORE REQUIREMENTS for projects.<\/p>\n<ul class=\"lst\"><li>Finalisation of these drawings at the EARLIEST \u2014 preferably at the time of preparation of the cost estimate itself \u2014 can help to determine quantities of various items of the work.<\/li><li>Adverse consequences of not preparing these drawings before invitation of tenders may manifest in the form of delay in execution of the work and deviations in quantities of the items of work.<\/li><li>Hence, APPROVED architectural and structural drawings should be available before invitation of tenders.<\/li><li>\"Fit for construction\" (sometimes called \"Good for construction\") drawings means the architectural and structural drawings approved by the project executing authority as well as by the authority governing the extant Rules\/ laws, including byelaws, such as local authorities.<\/li><\/ul>\n3. Enlarging the Schedule of Rates: Endeavour may be made to enlarge the base of the 'Schedule of Rates' published by various organisations, to bring a maximum number of items under its ambit. For NON-SCHEDULED ITEMS, rates may be finalised by a COMMITTEE constituted by the organisation concerned\/ consultants, as the case may be.<\/p>\n<h3>2.5.6<\/span>Appropriation of Funds<\/span><\/h3>\nBefore taking up the execution of work, it shall be ensured that proper funds are available to meet the expenditure on the work.<\/p>\nIt should also be emphasised that the DPR CONSULTANT is able to provide realistic year-wise requirement of funds. This information is necessary so that concerned Ministries\/ organisations may be intimated regarding the same, which will enable them to include such funds projection in their BUDGET.<\/p>\n<h3>2.5.7<\/span>Reference Documents Used in Preparation of Estimates<\/span><\/h3>\nFor preparation of estimates and during execution of work<\/strong>, the following reference documents are used by PWOs. These may be SEPARATE for different regions, and for various types of works \u2014 Building, Electrical and Mechanical.<\/strong>(Annexure 12 of the Works Manual lists further resources regarding Procurement of Works.)<\/em><\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Document<\/th><th>Purpose<\/th><th>Example<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Plinth Area Rates<\/td><td>Provide a quick but fairly accurate method of estimation of cost of buildings<\/td><td>CPWD DPAR \u2014 Delhi Plinth Area Rates<\/td><\/tr><tr><td>2<\/td><td>Schedule of Rates<\/td><td>For each kind of work commonly executed, to facilitate the preparation of estimates, and also to serve as a guide in settling rates in connection with contract agreements \u2014 maintained up to date<\/td><td>CPWD DSR \u2014 Delhi Schedule of Rates<\/td><\/tr><tr><td>3<\/td><td>Analysis of Rates<\/td><td>By taking market rates of labour, materials, cartage<\/strong> etc. and their quantities<\/strong> for each kind of work commonly executed<\/td><td>CPWD Analysis of Rates<\/td><\/tr><tr><td>4<\/td><td>Specifications<\/td><td>Describing inputs, processes, tests and mode of measurement<\/strong> for each kind of work commonly executed<\/td><td>CPWD Specifications<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Repeated instruction: Endeavour may be made to enlarge the base of the 'Schedule of Rates' published by various organisations to bring a maximum number of items under its ambit. For non-scheduled items, rates may be finalised by a committee constituted by the organisation concerned\/ consultants, as the case may be.<\/p><\/aside>\n<\/div><h2 class=\"src-C\">2.6<\/span>Formulation of the Requirement \u2014 CONSULTANCY: Terms of Reference (ToR)<\/span>C<\/span><\/h2><div class=\"srcblock src-C\"><h3>2.6.1<\/span>What the ToR Is and Why It Matters<\/span><\/h3>\n1. The ToR is akin to description, Quantity and Technical Specification in Procurement of Goods. This is the first STEP in the selection of the consultants once a need has been identified.<\/p>\nIt explains:<\/p>\n<ul class=\"lst\"><li>the purpose\/ objectives of the assignment,<\/li><li>scope of work,<\/li><li>activities,<\/li><li>tasks to be performed,<\/li><li>respective responsibilities of the Procuring Entity AND consultant,<\/li><li>expected results, and<\/li><li>deliverables of the assignment.<\/li><\/ul>\nIt is important for an understanding of the assignment and its correct execution to ensure that the objectives of the assignment are achieved.<\/p>\n<ul class=\"lst\"><li>It reduces the risk for the PROCURING ENTITY of unnecessary extra work, delays, and additional expenses.<\/li><li>In addition, it helps reduce for the bidders the risk of ambiguities during the preparation of bidders' proposals, contract negotiation, and execution of Consultancy.<\/li><\/ul>\n2. The balance to strike: Hence the ToR should be COMPREHENSIVE and UNAMBIGUOUS. HOWEVER, it should not be too detailed and inflexible, so that competing consultants may be in a position to propose their own methodology and staffing. Bidders shall be encouraged to comment on the ToR in their proposals.<\/p>\n<h3>2.6.2<\/span>Contents of the ToR<\/span><\/h3>\nThe ToR shall include:<\/p>\n<ol class=\"lst\"><li>Procuring Entity's organisation background and Project background;<\/li><li>Purpose and Service Outcomes Statement of the assignment;<\/li><li>Detailed scope of work Statement, including schedule for completing the assignment;<\/li><li>Expected requirement of KEY PROFESSIONALS and kind of EXPERTISE;<\/li><li>Capacity-building programme and transfer of knowledge, if any;<\/li><li>Deliverables<\/strong> \u2014 List of reports<\/strong> (or documents, data, maps, surveys, designs, drawings), schedule of deliveries<\/strong>, and period of performance<\/strong>;<\/li><li>Background material<\/strong> \u2014 Data, reports, records of previous surveys, and so on \u2014 available and to be provided to the consultant<\/strong>;<\/li><li>FACILITIES such as local conveyance, office space, office machines, secretarial assistance, utilities, local services, etc., which would be provided to the consultant by the Procuring Entity;<\/li><li>Institutional and organisational arrangement; and<\/li><li>Procedure for REVIEW of the work of the consultant after award of contract.<\/li><\/ol>\n(A template for developing a ToR is given at Annexure 4<\/strong> of the Consultancy Manual. Rule 185 of GFR 2017<\/strong>.)<\/em><\/p>\n<h3>2.6.3<\/span>Detailed Guidance on Key ToR Elements<\/span><\/h3><h4>a) Detailed Scope of Work<\/span><\/h4>\nAs part of the ToR, at its simplest, the 'Detailed Scope of Work<\/strong>' will contain:<\/p>\n<ul class=\"lst\"><li>the TYPE and VOLUME of activity<\/strong> to be undertaken, and<\/li><li>the TIME-FRAME of activity involved<\/li><\/ul>\nto achieve the Purpose and Service Outcomes<\/strong> as envisaged in the 'Brief Proposal and Justification of the Services'.<\/p>\nMethod: Starting from END-OUTCOMES BACKWARDS, the process to achieve the outcomes is BROKEN DOWN into a discrete number of interrelated tasks, which the consultant will have to undertake.<\/p>\n<aside class=\"note\">Critical Rule: In Consultancy Services, the 'Detailed Scope of Work' should describe only the activities \u2014 not the APPROACH or METHODOLOGY by which the results are to be achieved, since these are the task of the consultants. However, SUGGESTIONS may be provided on the approach or the methodology that the consultants COULD or should use to execute the assignment.<\/p><\/aside>\nAfter the tasks are identified, a LOGICAL SEQUENCING of the tasks must be determined. Usually a simple BAR CHART (or GANTT CHART) is the best way to illustrate required outputs over time and their relationship to each other. The 'Detailed Scope of Work' contains such a sequence of tasks over a timeline, and also tangible outputs and activities such as reports, workshops, or seminars.<\/p>\n<h4>b) Expected Requirement of Key Professionals and Kind of Expertise<\/span><\/h4>\nExcept in very complex consultancies, it is DESIRABLE not to distinguish the tasks of individual experts, but instead to prepare a longer and more detailed description of what the consultancy team, as a whole, will provide \u2014 without splitting up tasks.<\/p>\n<aside class=\"note\">These are generally known as \"activity-based<\/strong>\" ToR, as opposed to \"position-based<\/strong>\" ToR.<\/p><\/aside>\nThe ToR would list a range of tasks without regard to who will have the responsibility to undertake them. In most cases, where the number of experts is small, the work to be done is not clearly defined, and a degree of flexibility is required \u2014 this is ACCEPTABLE.<\/p>\nIn consultancy services, key professionals are usually named, and their credentials carry weightage in technical evaluation.<\/p>\n<h4>c) Deliverables and Reports Requirements<\/span><\/h4>\nThe assignment's deliverables and reporting should be clearly specified. In particular, for inception and progress reports, there should be a BALANCE between keeping the Procuring Entity well informed and not forcing consultants to spend an excessive amount of time preparing minor reports.<\/p>\nThe ToR should indicate: the FORMAT, FREQUENCY, and CONTENT of reports, as well as the number of copies, the LANGUAGE, and the names of the prospective recipients of the reports.<\/p>\n<aside class=\"note\">For all MAJOR reports, an EXECUTIVE SUMMARY is recommended as a SEPARATE SECTION.<\/p><\/aside>\nDepending on the assignment, the following reports are usually required:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Report<\/th><th>Timing<\/th><th>Purpose and Content<\/th><\/tr><\/thead><tbody><tr><td>i) Inception Report<\/td><td>About six WEEKS after the commencement date<\/td><td>Any major inconsistency in the toR, STAFFING PROBLEMS, or deficiency in the Procuring Entity's assistance that have become apparent during this period should be included. The inception report is designed to give the Procuring Entity confidence that the assignment can be carried out as planned and as agreed upon in the contract, and should bring to its attention major problems that might affect the direction and progress of the work.<\/td><\/tr><tr><td>ii) Progress Reports<\/td><td>Monthly or bimonthly, depending on the assignment. \u2022 Feasibility studies and design assignments \u2192 two-month intervals is satisfactory \u2022 Technical assistance and implementation supervision (e.g. construction) \u2192 best submitted MONTHLY<\/td><td>Keep the Procuring Entity regularly informed about the progress of the assignment. They may also provide WARNINGS of anticipated problems or serve as a reminder for payment of invoices due. Progress reports may include a BAR CHART showing details of progress and any changes in the assignment schedule. Photographs with time-stamping are a quick and easy way of conveying the status of a project, and their use in progress reports should be encouraged. For technical assistance services, progress reports also serve as a means of setting out the WORK PROGRAM for the following months. Each team member usually contributes to the preparation of the monthly report.<\/td><\/tr><tr><td>iii) Interim Reports<\/td><td>If the assignment is PHASED<\/td><td>Required to inform the Procuring Entity of preliminary results, alternative solutions, and major decisions that need to be made. Since the recommendations of an interim report may affect later PHASES of the assignment and even influence the results of the project, the Procuring Entity should DISCUSS the draft interim reports with consultants in the field. The Procuring Entity should not take more than 15 (FIFTEEN) DAYS to review and approve draft interim reports.<\/td><\/tr><tr><td>iv) Final Report<\/td><td>Due at the COMPLETION of the assignment<\/td><td>The Procuring Entity and consultants should DISCUSS the report while it is still in draft form. The consultants alone are responsible for their findings; although changes may be SUGGESTED in the course of the discussions, consultants should not be forced to make such changes. If the consultants do not accept comments or recommendations from the Procuring Entity, these should be noted in the report. The consultants should include in the report the reasons for not accepting such changes.<\/td><\/tr><\/tbody><\/table><\/div>\n<h4>d) Background Material and Records of Previous Surveys<\/span><\/h4>\nThis would vary from project to project, but TRANSPARENCY DEMANDS that such information should be transparently and equitably shared with all prospective bidders.<\/p>\n<h4>e) Facilities to be Provided by the Procuring Entity<\/span><\/h4>\nFacilities such as local conveyance, office space, secretarial assistance<\/strong> etc. which can be provided to the consultant.<\/p>\n<aside class=\"note\">This aspect has a great bearing on the cost that will be quoted by the bidders. This can have implications in vitiating the selection process either way \u2014 a facility to be provided may not get declared, or a declared facility may not be provided ultimately. So great care and reality check is necessary while preparing this statement.<\/p><\/aside>\n<h4>f) Procedure for Review of the Consultancy after Award of Contract<\/span><\/h4>\nIn consultancy services, the contract Monitoring Committee (CMC), and the procedure for review and approval of the work of the consultant after the award of contract, should also be declared and adhered to.<\/p>\n<\/div><h2 class=\"src-NC\">2.7<\/span>Formulation of the Requirement \u2014 NON-CONSULTANCY: Services and Activities Schedule<\/span>NC<\/span><\/h2><div class=\"srcblock src-NC\"><h3>2.7.1<\/span>What the Services and Activities Schedule Is<\/span><\/h3>\n1. The Services and Activities Schedule is akin to description, Quantity and Technical Specification in Procurement of Goods. This is the first STEP in the selection of the Service Provider once a need has been identified.<\/p>\nIt explains:<\/p>\n<ul class=\"lst\"><li>the background and context,<\/li><li>purpose\/ objectives of the services,<\/li><li>scope, quantum, duration\/ frequency of activities\/ tasks to be performed,<\/li><li>respective responsibilities of the Procuring Entity and service provider,<\/li><li>expected outcomes, and<\/li><li>deliverables of the Service.<\/li><\/ul>\nIt is important for an understanding of the service requirement and its correct execution to ensure that the outcomes of the service are achieved. It reduces the risk for the Procuring Entity of unnecessary extra work, delays, and additional expenses. In addition, it helps reduce for the bidders the risk of ambiguities during the preparation of bidders' proposals and contract execution. Hence, the Services and Activities Schedule should be COMPREHENSIVE and UNAMBIGUOUS.<\/p>\nThe OBJECTIVES of the Services and Activities Schedule are:<\/p>\n<ul class=\"lst\"><li>a) To provide sufficient information on the quantum, scope, duration\/ frequency and TIMELINES of Services to be performed, to enable bids to be prepared efficiently and accurately; and<\/li><li>b) When a Contract has been entered into, to provide a PRICED Services and Activities Schedule for use in the PERIODIC VALUATION of Services executed.<\/li><\/ul>\n<h3>2.7.2<\/span>Contents of the Services and Activities Schedule<\/span><\/h3>\nBesides detailing the activities, quantum and time frame<\/strong>, the Services and Activities Schedule should contain the following sections also:<\/p>\n<h4>a) Background<\/span><\/h4>\n<ul class=\"lst\"><li>i) Procuring Entity's organisation and Project background;<\/li><li>ii) Purpose and Service Outcomes Statement;<\/li><li>iii) Short Description and Scope of Services<\/strong> (including any incidental works\/ goods<\/strong>) that would help the bidders understand the service requirement;<\/li><li>iv) Contract period (and provision of extension, if any), duration\/ frequency\/ timeline of outcomes\/ deliverables;<\/li><li>v) Type of Contract\/ BOQ \u2014 Time-based, Unit-Rate, Indefinite delivery, Lumpsum or Percentage-Based;<\/li><li>vi) Expected requirement of RESOURCES: Man-power, Materials, Equipment;<\/li><li>vii) FACILITIES such as office space, office machines, utilities, local services, etc., which would be provided to the Service Provider by the Procuring Entity;<\/li><li>viii) INSURANCES required, if any;<\/li><li>ix) Statutory and Contractual OBLIGATIONS to be complied with by the Service Providers;<\/li><li>x) Institutional and organisational arrangement for Services \u2014 Counterpart Contract Management Team, Chain of Command, Interim\/ ultimate beneficiaries\/ stakeholders of Services; and<\/li><li>xi) Procedure for REVIEW of the Service delivery after award of contract, including service Level Agreement, if any.<\/li><\/ul>\n<h4>b) Description of Services<\/span><\/h4>\nA brief description of the service required is important information that would help the bidders understand the service requirement. It should cover background about the Procuring Entity's organisation and about the project\/ service. The Purpose and Service Outcome statement should be INCLUDED in the description of services (as finalised for initiating the procurement) to help the service providers understand the requirement.<\/p>\n<h4>c) Services and Activities Schedule<\/span><\/h4>\nIn order to attain the objectives, Services should be itemised in sufficient detail to DISTINGUISH:<\/p>\n<ul class=\"lst\"><li>between the different CLASSES of Services, or<\/li><li>between Services of the same NATURE carried out in different LOCATIONS or in other circumstances which may give rise to different considerations of cost.<\/li><\/ul>\nThere may be more than one schedule of Services, based on grouping similar services in one Schedule. Each Service should be described and broken down into DISCRETE ACTIVITIES required to deliver the service.<\/p>\nThe description\/ Scope of Service and Activities should indicate WHAT IS \u2014 and, more important, what is not \u2014 included in the scope, and the conditions under which services are to be performed.<\/p>\nConsistent with these requirements, the layout and content of the Services and Activities Schedule should be as simple and brief as possible. All information relevant for the bidder to quote a price may be included \u2014 e.g., the location, frequency\/ shifts\/ length and quantum, and time-frame\/ duration of completion of activities to be performed.<\/p>\n<aside class=\"note\">Simplification technique: In a Services and Activities Schedule containing scores of items, evaluation can be SIMPLIFIED if the system used in WORKS CONTRACTS is borrowed, if feasible \u2014 where the Schedule of Rates (SoR) for each activity is specified in the bid documents by the Procuring Entity, and only a percentage +\/- above the soR (separately for different Schedules or combined) is asked to be quoted by the bidders.<\/p><\/aside>\n<h4>d) Performance Standards and Quality Assurance<\/span><\/h4>\nPerformance standards\/ Service Levels; functional\/ materials\/ technical specifications (indicating QUANTITATIVE and QUALITATIVE parameters\/ limits\/ thresholds for performance) should be specified OVERALL for the Service AND for each activity, materials, tools and machines to be used in the activity.<\/p>\nIt should also include:<\/p>\n<ul class=\"lst\"><li>i) Any reporting requirement, periodic meetings or other submissions;<\/li><li>ii) Any service Level Agreement, if required<\/strong> \u2014 say, for the outsourcing of services;<\/li><li>iii) key performance indicators indicating how MEASUREMENT, REPORTING, and TRACKING of performance parameters would be done for Quality Assurance and Monitoring of Service (indicate procedure for quality assurance and monitoring of services, including institutional or third-PARTY arrangements for this purpose);<\/li><li>iv) Procedure for RESOLUTION and ESCALATION procedures in case of DEFICIENCY in performance\/ quality\/ service levels;<\/li><li>v) METHOD STATEMENT (Sequencing and inter-dependencies of activities), methodology, Service Level Agreement, arrangements to ensure environmental, social, gender, health, and SAFETY requirements if relevant. The Method Statement must be supplemented by information in sub-schedules for work plan; and<\/li><li>vi) Schedule for Forms of BOQ\/ Contract based on INPUT-ADMEASUREMENT \u2014 Key Inputs deployments (Personnel Deployment, Critical Equipment Deployment and Critical Materials Deployment) May not be essential \u2014 but list these if required to achieve the performance standards and quality. If the service is not dependent on any of the key inputs, that May be omitted.<\/li><\/ul>\n<h4>e) Labour\/ Personnel Schedule<\/span><\/h4>\nIf labour\/ personnel are used in the activity, these may be QUANTIFIED, specifying PLACE, SHIFTS and frequency of utilisation in the Services and Activities Schedule.<\/p>\nIn case any KEY PROFESSIONALS or PROJECT MANAGER is required, their qualification and experience required may also be mentioned.<\/p>\n<aside class=\"note\">Any RELIEVERS and LEAVE RESERVE for deploying the personnel should be included in the rate for such personnel and would not be separately payable.<\/p><\/aside>\n<h4>f) Critical Material Schedule<\/span><\/h4>\nIn case any Materials\/ Consumables\/ tools of trade are to be consumed\/ deployed, a SEPARATE Materials Schedule should be included, indicating the specification and quantity of such materials\/ consumables\/ tools to be consumed\/ deployed per unit activity\/ day\/ location\/ per manpower deployed.<\/p>\nThe price of all these materials\/ tools etc. is to be shown as a separate lump-sum cost in the financial bid by the bidder.<\/p>\n<h4>g) Critical Equipment Schedule<\/span><\/h4>\nAny ESSENTIAL equipment or machinery \u2014 Trucks, Cranes, Washing Machines, Vessels\/ crafts, plant and machinery, etc. \u2014 that the service provider must HAVE and should DEPLOY as a QUALIFYING REQUIREMENT must be mentioned, along with specifications, capacity, age of equipment etc.<\/p>\nIt should be ensured that OPERATORS for such equipment must be mentioned in the Labour\/ Personnel Schedule.<\/p>\nIn case of INPUT ADMEASUREMENT, indicate only Critical Equipment (not others) required to carry out the Services to required standards and quality. CATEGORISE the equipment \u2014 IT Equipment\/ Motor Vehicles, Cranes, Washing Machines, vessels\/ crafts, plant & machinery etc. Give estimated number LOCATION-WISE, CATEGORY-WISE.<\/p>\n<aside class=\"note\">This schedule May not be essential for output-admeasurement BOQ\/ contracts, but list these if required. If the service is not dependent on Critical Equipment, this may be OMITTED.<\/p><\/aside>\n<h4>h) Statutory and Contractual Obligations to be Complied with by the Contractor<\/span><\/h4>\nThe service provider mostly works within the premises of the Procuring Entity, along with the staff of the Procuring Entity.<\/p>\nMany services are subject to various STATUTORY PROVISIONS relating to:<\/p>\n<aside class=\"note\">labour, taxation, Workmen's Safety, Child and Women Labour, Private Security Agencies, Environmental Protection, Mining, Forest clearance, Employment reservations, etc.<\/p><\/aside>\nThe bidder must have:<\/p>\n<ul class=\"lst\"><li>a Service Tax Number,<\/li><li>ESI<\/strong> registration,<\/li><li>EPF Registration Certificate,<\/li><li>Registration Declaration of ownership under the Indian Registration Act, 1908,<\/li><li>a Labour Licence, and<\/li><li>PAN (Income Tax).<\/li><\/ul>\nMoreover, the Procuring Entity itself may have its OWN regulations about safety, security, confidentiality, etc. All such statutory and contractual obligations must be listed, so that price implications and compliance are taken care of by the bidder.<\/p>\n<aside class=\"note\">In the case of SECURITY SERVICES contracts, the bidder must have a valid LICENCE to run the business of a private security agency in the state, issued by the appropriate authority for operating Security Services.<\/p><\/aside>\n<h4>i) Facilities and Utilities to be Provided by the Procuring Entity at the Site<\/span><\/h4>\nIt should be mentioned if any facility\/ utility \u2014 IT\/ Communication Services, Emergency Medical, Room, Furniture, Electricity connection, Water connection, etc. \u2014 would be made available to the successful bidder to carry out the service.<\/p>\nIn case it is proposed to CHARGE for the Electricity\/ Water supplied to the service provider, the same may be mentioned, including the rate of charges.<\/p>\n<aside class=\"note\">This aspect has a great bearing on the cost that will be quoted by the bidders. This can have implications in vitiating the selection process either way \u2014 a facility to be provided may not get declared, or a declared facility may not be provided ultimately. So great care and reality check is necessary while preparing this Statement.<\/p><\/aside>\nSPECIALLY MENTION facilities and utilities which WILL not be provided, or the facilities which would be provided on a CHARGEABLE basis.<\/p>\nIt should be clearly MENTIONED that the service provider will not be allowed to use any of the Procuring Entity's facility\/ area which are not LISTED in this section.<\/p>\n<h4>j) Institutional Arrangements and Procedure for Review of Work of Service Provider after the Award of Contract<\/span><\/h4>\nInstitutional arrangements like the placement in a Department, name of Project Manager, and chain of command for reporting may be specified. The process of Review of Service Outcomes and deployment of personnel and resources should be clearly brought out.<\/p>\n(A template for the Services and Activities Schedule is given in Annexure 4<\/strong> of the Non-Consultancy Manual.)<\/em><\/p>\n<\/div><h2>2.8<\/span>Obtaining Technical, Administrative and Budgetary Sanctions\/ Approvals<\/span><\/h2><h3 class=\"src-G\">2.8.1<\/span>Goods \u2014 Sanctions and Signing of Indents<\/span>G<\/span><\/h3><div class=\"srcblock src-G\">\nProcuring Entities may lay down a Schedule of powers for administrative and budgetary approval of indents generated for the procurement of goods (please refer to Annexure 4 for the suggested Structure of SoPP).<\/p>\nBefore granting such approvals, it should be CERTIFIED that:<\/p>\n<ul class=\"lst\"><li>Funds in the budget are available, and<\/li><li>liability for this indent is noted against the total available budget.<\/li><\/ul>\nIn case the delivery schedule is URGENT (or shorter than the usual lead time), an URGENCY CERTIFICATE should be recorded to JUSTIFY the urgency.<\/p>\nThe indenting authority may submit an indent in the form of a PURCHASE REQUISITION (Annexure 5) to the procuring entity, giving it ADEQUATE TIME for procurement.<\/p>\nMonitoring registers:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Register<\/th><th>Maintained by<\/th><th>Format<\/th><\/tr><\/thead><tbody><tr><td>Progress of Indents submitted<\/strong><\/td><td>Indentors<\/strong> \u2014 Indentors should monitor the progress of the Indents they submit<\/em><\/td><td>Annexure 6<\/strong> \u2014 Purchase Requisition Register for Indentors<\/td><\/tr><tr><td>Progress of Indents received<\/strong><\/td><td>Procuring authority<\/strong> \u2014 on receipt from the indenting authority, the progress of such Indents should be monitored<\/em><\/td><td>Annexure 7<\/strong> \u2014 Purchase Requisition Register for Procuring Entity<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h3 class=\"src-W\">2.8.2<\/span>Works \u2014 the Sanctioning Sequence<\/span>W<\/span><\/h3><div class=\"srcblock src-W\">\n(See paras 2.5.2, 2.5.4, 2.5.5 and 2.5.6 above \u2014 In-Principle Approval \u2192 A\/A and E\/S \u2192 Technical Sanction \u2192 Appropriation of Funds.)<\/em><\/p>\n<\/div><h3 class=\"src-multi\">2.8.3<\/span>Consultancy and Non-Consultancy \u2014 Final Administrative and Budgetary Approvals<\/span>C<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\">\n1. Compatibility with budget and iteration:<\/p>\n<ul class=\"lst\"><li>C<\/span> The scope of the work described in the ToR shall be compatible with the available budget.<\/li><li>NC<\/span> The Services and Activities Schedule shall be compatible with the available budget.<\/li><\/ul>\nThe most important step is to determine whether all TASKS required to achieve the desired output have been INCLUDED.<\/p>\nThe NEXT STEP is to determine whether an ADEQUATE BUDGET has been ALLOCATED to implement the ToR\/ services as designed\/ proposed.<\/p>\n<aside class=\"note\">Since the budget may be fixed or limited, a series of iterations may be required before a final, acceptable toR\/ Services and Activities Schedule is formulated.<\/p><\/aside>\nThe Competent Authority's approval may be taken for the ToR\/ the Procurement before proceeding ahead.<\/p>\nAfter administrative approval, provision May be made in the budget; or, if that is not feasible, additional confirmation at the time of seeking Administrative approval may be taken from the CA for inclusion in the revised estimate stage of budget.<\/p>\nProcurement May be initiated only after such budgetary provisions\/ confirmations.<\/p>\n2. Schedule of powers: Procuring Entities may lay down a Schedule of powers for administrative and budgetary approval of procurement proposals for services. Before granting such approvals, it should be CERTIFIED that funds in the budget are available and liability for this procurement proposal is noted against the total available budget.<\/p>\n<\/div><h2>2.9<\/span>Need Assessment and Formulation of the Requirement \u2014 Risks and Mitigations<\/span><\/h2>\n<aside class=\"note\">Section titles:<\/strong>G<\/span>Need Assessment and Technical Specification \u2013 Risks and Mitigations<\/em> \u00b7 C<\/span> and NC<\/span>Need assessment, Formulation of Terms of Reference, and Procurement Planning \u2013 Risks and Mitigations<\/em> \u00b7 W<\/span> \u2014 no corresponding risk table in Chapter 2.<\/em><\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>The need is either ARTIFICIALLY CREATED or EXAGGERATED<\/strong>, with the intention to channel benefits to an individual or an organisation<\/strong>. For example, demand is created for a good that is not needed<\/strong>, simply to benefit the company's owner.<\/td><td>Keep records and involve stakeholders: Records of decision-making and data used should be kept. Involve PROCUREMENT and FINANCE functions at this stage also. END-USER and STAKEHOLDER CONSULTATIONS should be part of the process.<\/td><\/tr><tr><td>2<\/td><td>DELAYS in the Assessment of Need and generation of the Indent\/ Purchase Proposal for Procurement may lead to SHORTCUT procurement procedures that DILUTE TRANSPARENCY and PREVENT the achievement of value for money. It may also lead to delays in the delivery of goods\/ services.<\/td><td>Need assessment should be done sufficiently in advance of the time when goods\/ services are required. In the case of URGENT requirements, the URGENCY CERTIFICATE should be approved by an authority empowered to grant administrative approval for the indent, RECORDING JUSTIFICATION \u2014 why the need could not be formulated earlier.<\/td><\/tr><tr><td>3<\/td><td>The estimate of the costs may be INADEQUATE. This may lead to an inadequate response from the bidders and may delay the finalisation of procurement. It may also adversely affect the QUALITY of supplies.<\/td><td>Estimates of procurement should be prepared with DUE DILIGENCE, keeping inflation, technology changes, profit margins, etc., in view.<\/td><\/tr><tr><td>4<\/strong>G<\/span><\/td><td>Need Description\/ Specifications involving SUBJECTIVITY: Procurements where samples are asked to be submitted along with the offer, and the evaluation is based on the SUBJECTIVE EVALUATION of samples \u2014 which may lead to allegations of corruption.<\/td><td>If required, a STOCK SAMPLE for INDETERMINABLE PARAMETERS \u2014 such as shade\/ tone, size, make-up, feel, finish, and workmanship \u2014 may be DISPLAYED during procurement, to which the offers must conform. If necessary, provide for submission of a PRE-PRODUCTION SAMPLE by the successful bidder(s) before giving clearance for bulk production of the supply. (See para 2.4.3.)<\/em><\/td><\/tr><tr><td>5<\/td><td>Need Description\/ Specifications\/ Terms of Reference\/ Activity Schedule are DISPROPORTIONATE to the need identified, or made to tilt in favour of one or a group of vendor(s) or contractor(s) to artificially restrict competition.<\/td><td>Use a formal market discovery tool: A pre-bid conference and\/or well-publicised EoI may be used to discover the market. Otherwise, encourage and invite comments on the technical and commercial conditions in the tender document, or hold a pre-bid conference.<\/td><\/tr><tr><td>6<\/td><td>ASYMMETRIC DISSEMINATION of vital need information: Dialogue for determining solutions available in the market is held only with SELECTED prospective bidders, giving them an UNDUE ADVANTAGE in preparing for the bidding. Selected prospective bidders get access to INSIDE INFORMATION that has not been disclosed, or DISCLOSED LATE, to others.<\/td><td>(Same mitigation as Risk 5 above \u2014 formal market discovery tool.)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>2.10<\/span>Procurement Planning<\/span><\/h2><h3 class=\"src-multi\">2.10.1<\/span>The Requirement is Usually Part of a Larger Project<\/span>W<\/span>C<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\">\nThe Works\/ Consultancy Services\/ NC Services may be part of a LARGER PROJECT in which there may be other components of Work, Goods, or Consultancy\/ NC services.<\/p>\nOnce a project or a programme is identified, the Procuring Entity needs to develop a synchronised procurement plan for all the various components of the project\/ programme. This will also require:<\/p>\n<ul class=\"lst\"><li>planning of the SEQUENCE and CONTENTS of the different components,<\/li><li>adoption of the most appropriate method of selection and type of contract, and<\/li><li>ensuring that selection of the contractor\/ consultant\/ service provider is initiated and completed in a timely manner to meet the overall requirements of project implementation.<\/li><\/ul>\n<aside class=\"note\">Example C<\/span>: If a consultant is required for a large road project construction supervision, the entire sequence of preparation of the feasibility report, detailed design and bidding document, time required for inviting bids for construction work, and award of contract has to be considered \u2014 so that the construction supervision consultant is mobilised before the award of the construction contract.<\/p>\nExample W<\/span>NC<\/span>: If a contractor\/ service provider is required for HOUSEKEEPING SERVICES for a hostel still under construction, the entire sequence of preparation of feasibility report, detailed design and bidding document, the time required for inviting bids for construction work, and award of contract has to be considered \u2014 so that the housekeeping contractor is mobilised at the right time when the hostel is ready for occupation.<\/p><\/aside>\nProcurement planning is a crucial stage of decision-making for a better outcome and for VfM considerations.<\/p>\n<\/div><h3 class=\"src-G\">2.10.2<\/span>Critical Review of the Indent<\/span>G<\/span><\/h3><div class=\"srcblock src-G\">\nWithin 10 (ten) working days of receipt of the indent from the user Department, the procuring authorities should CRITICALLY REVIEW the description and TS enclosed with the indent for:<\/p>\n<ul class=\"lst\"><li>completeness\/ approvals\/ funding,<\/li><li>VfM<\/strong>, and<\/li><li>possibility of the widest competition<\/li><\/ul>\n \u2014 and seek clarifications from the indenting officer, if needed, before initiating such procurement.<\/p>\n<\/div><h3>2.10.3<\/span>Reassessment of Quantity and Packaging\/ Bundling\/ Slicing of Requirement<\/span><\/h3>\ni) The general rule (Rule 157 of GFR 2017)<\/em>: The procuring authority shall normally neither package nor divide its procurement, or take any other action to LIMIT COMPETITION among bidders, or to avoid the necessity of obtaining the sanction of a higher authority required with reference to the estimated value of the total demand.<\/p>\nii) the exception: Provided that \u2014 in the interest of efficiency, economy, timely completion or supply, wider competition, or access to MSEs (W<\/span> says: access to SMALLER CONTRACTORS)<\/em> \u2014 a procuring authority May, for reasons to be recorded in writing, divide its procurement into APPROPRIATE PACKAGES, or club requirements of other users for procurement.<\/p>\niii) Market-facing considerations: Packaging of the contract and procurement planning should be done while keeping in view:<\/p>\n<ul class=\"lst\"><li>Market conditions and availability,<\/li><li>the possibility of eliciting the interest of the qualified firms,<\/li><li>EFFECTIVE COMPETITION for the type and size of the contract, and<\/li><li>access to MSEs<\/strong>(W<\/span>: smaller contractors)<\/em>.<\/li><\/ul>\n<aside class=\"note\">An exceptionally large value package contract May restrict competition to big firms.<\/p><\/aside>\niv) Mixed-category requirements:<\/p>\n<ul class=\"lst\"><li>G<\/span> Some requirements, e.g., IT Systems, may have elements of Goods, Works, and Services. It could be either SLICED into separate Goods, Works and Services elements, or COMBINED into a single package.<\/li><li>W<\/span>C<\/span>NC<\/span> For example, for a particular contract, material to be procured may constitute more THAN 50 (fifty) per cent of the total cost of works, or there are services which are a mix of consultancy services with a substantial element of goods, such as procurement of an IT system. Such procurement could be done as a single composite contract comprising all components, or divided into separate procurements\/ contracts for each category of procurement.<\/li><\/ul>\nv) The test to apply: In all such situations, the DOMINANT ASPECT of the requirement, and the value for Money aspects of a composite all-inclusive contract versus dividing the contract into respective categories, should be carefully examined at the time of need assessment\/ procurement planning. This is a crucial stage of decision-making in procurement planning for a better outcome and for VfM considerations.<\/p>\n<h3>2.10.4<\/span>Eligibility for Participation in Tender<\/span><\/h3>\nDetermine and declare in documents any limitation on the participation of bidders as per the Government's procurement policy regarding preference for certain sections of industry, if any.<\/p>\nThe procuring entity shall not establish any requirement aimed at LIMITING the participation of bidders in the procurement process that discriminates against or amongst bidders, or against any category thereof \u2014 except to lay down a reasonable and justifiable eligibility or pre-qualification criteria for the bidders.<\/p>\n<h3>2.10.5<\/span>Type of Contract, System of Tendering and Mode of Procurement<\/span><\/h3>\na) Type of Contract [W only]: Decide upon the type of contract suitable to the procurement requirement \u2014 Lump sum; Item Rate; Percentage Rate; Piece Work; EPC or PPP.<\/p>\nb) Selection of a system of tendering: single\/ two stage; single\/ two bids; suitability for e-procurement or reverse auction.<\/p>\nc) Select the mode of procurement: open tenders, limited tenders, single tenders, and so on.<\/p>\n<h3>2.10.6<\/span>Time Frame<\/span><\/h3>\nDecisions on the TIMEFRAME for completing various stages of procurement \u2014 from the date of issuing the tender to the date of issuing the contract \u2014 which should be DECLARED in the pre-qualification\/ bidder registration or tender documents. (Rule 144(ix), GFR 2017)<\/em><\/p>\nThe procuring entity should endeavour to adhere to the time limit so decided, and RECORD REASONS for any modification of such limits.<\/p>\n<h3 class=\"src-W\">2.10.7<\/span>Availability of Land and Statutory Clearances<\/span>W<\/span><\/h3><div class=\"srcblock src-W\">\n<ol class=\"lst\"><li>It is DESIRABLE to have 100% of the required land in possession before award of contract; however, it may not always be possible to have the entire land due to prevailing circumstances. Also, it may not be prudent to put the entire process of award of contract ON HOLD for want of the remaining portion of land, which in the assessment of the public authority or the project executing authority could possibly be acquired in a targeted manner after award of the contract, without affecting progress.<\/li><li>Minimum necessary encumbrance-free land should be available before award of contract. The minimum may be determined based on the circumstances of each case, or general guidelines issued by the concerned authorities. Only such land, non-availability of which will prevent essential components of work from execution, should be INSISTED UPON.<\/li><li>Time taken in the grant of statutory and other clearances also contributes to the time and cost of public projects. These clearances are required to achieve specific objectives like concern for the environment, aviation safety, preservation of national heritage, conservation of forest and wildlife, etc. Public Authorities\/ Project Executing Authorities should PLAN for obtaining all necessary clearances QUICKLY and CLOSELY MONITOR the progress.<\/li><\/ol>\n<\/div><h3 class=\"src-W\">2.10.8<\/span>Architectural and Structural Drawings<\/span>W<\/span><\/h3><div class=\"srcblock src-W\">\nArchitectural and structural drawings (\"fit for construction\") are among the CORE REQUIREMENTS for projects. Finalisation of these drawings at the EARLIEST \u2014 preferably at the time of preparation of the cost estimate itself \u2014 can help to determine QUANTITIES of various items of the work.<\/p>\nADVERSE CONSEQUENCES of not preparing these drawings before invitation of tenders may manifest in the form of delay in execution of the work and deviations in quantities of the items of work.<\/p>\nHence, APPROVED architectural and structural drawings should be available before invitation of tenders.<\/strong>(\"Fit for construction\", sometimes called \"Good for construction\", drawings means the architectural and structural drawings approved by the project executing authority as well as by the authority governing the extant rules\/ laws, including byelaws, such as local authorities.)<\/em><\/p>\n<\/div><h3>2.10.9<\/span>Annual Procurement Plans<\/span><\/h3>\nW<\/span>C<\/span>NC<\/span> \u2014 the mandatory 30-day rule:<\/strong>GFR 2017 [Rule 144(x)] mandates that all ministries\/ departments shall prepare an annual procurement plan within 30 (thirty) days of budget approval, before the commencement of the year, and the same should also be placed on their website.<\/p>\n[All four] \u2014 publication: The procuring entity shall\/ may publish information regarding the planned procurement activities for the forthcoming year or years on:<\/p>\n<ul class=\"lst\"><li>G<\/span> the Government e-Marketplace (GeM), GeM-Central Public Procurement portal, and the website\/ e-procurement portal used by the procuring entity;<\/li><li>W<\/span>NC<\/span>CPPP and website\/ e-procurement portal used by the procuring entity<\/strong>;<\/li><li>C<\/span> the central public procurement portal and website\/ e-Procurement portal used by the procuring entity<\/li><\/ul>\n \u2014 with a caveat that such publication shall not be construed as an initiation of a procurement process, and shall not cast any obligation on the Procuring Entity to issue the tender document or confer any right on prospective bidders. (Rule 144(x), GFR 2017)<\/em><\/p>\n[All four] \u2014 the integrated plan: An integrated annual procurement plan should be prepared for goods, works and services for the ensuing financial year, based on:<\/p>\n<ul class=\"lst\"><li>The latest cost estimates, and<\/li><li>a realistic time Schedule for procurement activities and contract implementation<\/li><\/ul>\n \u2014 and thus Schedule and stagger the procurements over the year, with a view to:<\/p>\n<ul class=\"lst\"><li>Ensure an even load on the Procuring Entity and the market, and<\/li><li>Co-ordinate matching procurements of Goods, Works, and Services for a project.<\/li><\/ul>\n<h3>2.10.10<\/span>Mitigating Cartel Formation<\/span><\/h3>\n<aside class=\"note\">Need assessment and procurement planning is the main stage where this menace can be addressed effectively.<\/p><\/aside>\na) Inadequate competition due to an inadequate number of suppliers\/ contractors\/ consultants\/ service providers in the list\/ panel of registered vendors \u2014 may empower bidders to conspire against the Procuring Entity:<\/p>\n<ul class=\"lst\"><li>i) new firms May be encouraged to register themselves<\/strong> for the subject goods\/ category\/ services.<\/li><li>ii) Review the description of requirement:<\/li><li>G<\/span> A review of TECHNICAL SPECIFICATIONS (especially TAILOR-MADE specifications) may be done to examine why a commercially available alternative cannot be used instead, or at least review its features so that more suppliers become eligible. Consider using SUBSTITUTE ITEMS or new developments in the market.<\/li><li>W<\/span> Various items in the BOQ May be reviewed (using packaging\/ slicing) so that more contractors become eligible. Insisting on costly machinery to be used May reduce competition and encourage cartel formation.<\/li><li>C<\/span>NC<\/span> Various services and activities in the Services and Activities Schedule may be reviewed so that more consultants\/ service providers become eligible. Insisting on costly machinery to be used may reduce competition and encourage cartel formation.<\/li><\/ul>\nb) Pre-bid conferences: Processes \u2014 e.g., PRE-BID CONFERENCES, where a considerable number of competing bidders come together on a platform \u2014 May facilitate such cartel formation. This may be AVOIDED as far as feasible, or be held only VIRTUALLY.<\/p>\nHOWEVER, a pre-bid conference May be advantageous in the case of:<\/p>\n<aside class=\"note\">Turnkey contract(s), sophisticated and costly equipment, large works, and complex consultancy\/ service assignments.<\/p><\/aside>\nG<\/span> adds:<\/strong>Pre-bid conferences must be done wherever necessary.<\/p>\nc) Varying quantity and conditions: Tendering similar quantities\/ works\/ services with similar conditions, year on year, provides a stable conspiring environment for the bidders to come to an agreement for quoting prices and quantities. Therefore, the following action can be considered to vary quantity and conditions to make it difficult for cartels:<\/p>\n<ul class=\"lst\"><li>i) change the mode of procurement \u2014 OTE instead of LTE, or GTE instead of OTE; or bypass the pre-qualification stage and vice versa.<\/li><li>ii) change the quantity\/ packaging:<\/li><li>G<\/span> Change the quantity to be procured by PACKAGING\/ SLICING the tendered quantity, or by clubbing more than one similar item in a tender (or vice versa).<\/li><li>W<\/span> Change the packaging\/ slicing by clubbing\/ slicing WORKS in a tender.<\/li><li>C<\/span>NC<\/span> Change the packaging\/ slicing by clubbing\/ slicing SERVICES\/ ACTIVITIES in a tender.<\/li><li>iii) change the pre-qualification criteria, especially in the case of slicing\/ packaging, to broaden the target bidders.<\/li><\/ul>\n<h3 class=\"src-multi\">2.10.11<\/span>Strategising Large Procurement<\/span>G<\/span>W<\/span><\/h3><div class=\"srcblock src-multi\">\nLarge procurements warrant strategies to achieve competition and VfM. Large procurements require the application of mind during need assessment, cost estimation and procurement planning \u2014 where the blind application of Rules May not bring VfM.<\/p>\nFormal market research can reveal important parameters of the market<\/strong> that can be used for designing optimal procurement strategies<\/strong> \u2014 alternative methods of procurement, slicing\/ packaging, mitigating cartels, optimising various features\/ specifications of the item\/ work \u2014 to maximise VfM and competition.<\/strong><\/p>\nSome of the market parameters to look for are:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Parameter<\/th><th>G<\/span> \u2014 Goods<\/th><th>W<\/span> \u2014 Works<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>Capacity vs demand<\/td><td>Total Production Capacities and total demand for the ITEM in the country and abroad. Is there an unbalanced demand\/ supply?<\/td><td>Total Production Capacities and total demand for similar works in the region or the State. Is there an unbalanced demand\/ supply?<\/td><\/tr><tr><td>b<\/td><td>Volumes of procurement<\/td><td>How SIGNIFICANT is our requirement vis-\u00e0-vis the market? Would CLUBBING DEMANDS increase BARGAINING POWER? Can we COLLABORATE with another large public-sector buyer? Has there been a recent major procurement that may CONSTRICT available capacity?<\/td><td>(same)<\/em><\/td><\/tr><tr><td>c<\/td><td>Level of competition<\/td><td>Location-wise number of SUPPLIERS, co-ordination\/ cartelisation among them, major suppliers\/ buyers CONTROLLING the market<\/td><td>Location-wise number of CONTRACTORS, co-ordination\/ cartelisation among them, major contractors\/ buyers controlling the market<\/td><\/tr><tr><td>d<\/td><td>Bottlenecks<\/td><td>SUPPLY CHAIN constraints, RAW MATERIALS bottlenecks, LOGISTICS, GEOPOLITICAL issues<\/td><td>MANPOWER constraints, SKILLS\/ MANPOWER bottlenecks, LOGISTICS, GEOPOLITICAL issues<\/td><\/tr><tr><td>e<\/td><td>Specifications\/ statutory constraints<\/td><td>Specifications and variations: Patents, manufacturing processes, pollution, and other LEGAL RESTRICTIONS, etc. Should we tinker with specifications to get VfM?<\/td><td>Statutory Constraints: Patents, construction processes, pollution, and other legal restrictions, etc. Should we tinker with specifications to get VfM?<\/td><\/tr><tr><td>f<\/td><td>Pricing Trends [G only]<\/td><td>seasonality of prices \u2014 is it the appropriate time to enter the market?<\/td><td> \u2014 <\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h2 class=\"src-multi\">2.11<\/span>Procurement Planning \u2014 Risks and Mitigations<\/span>G<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\">\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>Packaging, bundling, and slicing of requirements are done to avoid open competition or reduce competition. Or it is TOO LARGE to make it difficult for MSEs to participate. Possible CLUBBING\/ COLLABORATION among different units having the same NEEDS has not been explored.<\/td><td>Lay down a clear policy for packaging and bundling of requirements. In LARGE PACKAGES, the affordability of EMD and the resultant restriction on competition may be kept in view, and bidders May be allowed to bid for slices of the package by depositing proportional EMD.<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>Appendix to Chapter 2 \u2014 Points of Difference Between the Four Manuals<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Chapter title<\/td><td>G:<\/strong>Need Assessment, Formulation of Specifications and Procurement Planning<\/em> \u00b7 W:<\/strong>Need Assessment and Procurement Planning<\/em> \u00b7 C\/NC:<\/strong>Need assessment and Procurement Planning<\/em><\/td><\/tr><tr><td>2<\/td><td>Number of sections<\/td><td>G: 5 \u00b7 W: 9 (the most) \u00b7 C: 7 \u00b7 NC: 4 (the fewest)<\/td><\/tr><tr><td>3<\/td><td>Initiating document<\/td><td>G: Indent\/ purchase Requisition (Annexure 5) \u00b7 W: Requisition + Perspective Plan \u00b7 C\/NC: Procurement Proposal (Concept Paper) (Annexure 3)<\/td><\/tr><tr><td>4<\/td><td>Description-of-requirement instrument<\/td><td>G: Technical Specifications (TS) \u00b7 W: PPR \u2192 DPR\/PE \u2192 Detailed Designs & Detailed Estimates \u00b7 C: Terms of Reference (ToR) \u00b7 NC: Services and Activities Schedule<\/td><\/tr><tr><td>5<\/td><td>Perspective Plan with annual review<\/td><td>W only<\/td><\/tr><tr><td>6<\/td><td>\"Matters decided during need assessment\"<\/strong> (method of satisfying need, HaaS\/ SaaS, units of quantity, wagon-load rounding)<\/td><td>G only<\/td><\/tr><tr><td>7<\/td><td>Detailed cost-estimation methods<\/strong> (last purchase price, costing analysis, MRP, market survey, budgetary quotes with 3-quote\/ 10\u201321 day\/ two 5-day extension rule, price-index websites)<\/td><td>G only<\/td><\/tr><tr><td>8<\/td><td>Cost categories<\/td><td>C:<\/strong>TWO<\/strong> (fee\/ remuneration + reimbursable) \u00b7 NC:<\/strong>THREE<\/strong> (Remuneration + Reimbursable + Administrative & Miscellaneous), with profit, taxes and duties added on top<\/strong><\/td><\/tr><tr><td>9<\/td><td>Minimum wage rate referenced in staff costing<\/td><td>NC only<\/td><\/tr><tr><td>10<\/td><td>Green procurement \u2014 Ecomark Rules 2023, BEE star ratings table, EPD\/ISO 14025<\/td><td>G only<\/td><\/tr><tr><td>11<\/td><td>Samples and demonstration of equipment \u2014 three-copy reference-sample procedure<\/td><td>G only<\/td><\/tr><tr><td>12<\/td><td>Essential Technical Particulars (12-item list)<\/td><td>G only<\/td><\/tr><tr><td>13<\/td><td>PPR \/ Rough Cost Estimate with 14-item content list<\/td><td>W only<\/td><\/tr><tr><td>14<\/td><td>In-Principle Approval as a distinct sanction step<\/td><td>W only<\/strong> (C\/NC have an in-principle approval<\/em> on the Concept Paper, but not the works sequence)<\/td><\/tr><tr><td>15<\/td><td>DPR\/PE with 15-item content list; EIA; Social Impact Assessment & LARR Act 2013<\/td><td>W only<\/td><\/tr><tr><td>16<\/td><td>50-metre \"reach\" ground investigation rule; debarment of DPR consultants<\/td><td>W only<\/td><\/tr><tr><td>17<\/td><td>A\/A and E\/S; sanction order contents; Rule 16 DFPR 2024<\/td><td>W only<\/td><\/tr><tr><td>18<\/td><td>Technical Sanction; \"fit for construction\" drawings; Schedule of Rates enlargement<\/td><td>W only<\/td><\/tr><tr><td>19<\/td><td>Appropriation of funds as a distinct step<\/td><td>W only<\/td><\/tr><tr><td>20<\/td><td>Reference documents (Plinth Area Rates, Schedule of Rates, Analysis of Rates, Specifications)<\/td><td>W only<\/td><\/tr><tr><td>21<\/td><td>Rs 60 lakh repair-works exemption from DPR\/PE<\/td><td>W only<\/td><\/tr><tr><td>22<\/td><td>Activity-based vs position-based ToR; four report types (Inception\/ Progress\/ Interim\/ Final); 6-week inception; 15-day interim review; \"consultants alone are responsible for their findings\"<\/td><td>C only<\/td><\/tr><tr><td>23<\/td><td>Contract Monitoring Committee (CMC)<\/td><td>C only<\/td><\/tr><tr><td>24<\/td><td>Performance Standards & QA, KPIs, SLA, Method Statement<\/td><td>NC only<\/td><\/tr><tr><td>25<\/td><td>Labour\/ Personnel Schedule; relievers and leave reserve not separately payable<\/td><td>NC only<\/td><\/tr><tr><td>26<\/td><td>Critical Material Schedule; Critical Equipment Schedule; input- vs output-admeasurement<\/td><td>NC only<\/td><\/tr><tr><td>27<\/td><td>Statutory obligations list (ESI, EPF, labour Licence, PAN, Private Security Agency licence)<\/td><td>NC only<\/td><\/tr><tr><td>28<\/td><td>\"Borrow the Works SoR + percentage above\/below\" simplification for large activity schedules<\/td><td>NC only<\/td><\/tr><tr><td>29<\/td><td>10 working days for critical review of indent<\/td><td>G only<\/td><\/tr><tr><td>30<\/td><td>Access to MSEs vs access to smaller contractors (packaging exception)<\/td><td>G\/C\/NC: MSEs \u00b7 W: smaller contractors<\/td><\/tr><tr><td>31<\/td><td>Type of contract decision in planning (Lump sum\/ Item Rate\/ Percentage Rate\/ Piece Work\/ EPC\/ PPP)<\/td><td>W only<\/td><\/tr><tr><td>32<\/td><td>Land availability & statutory clearances in procurement planning<\/td><td>W only<\/td><\/tr><tr><td>33<\/td><td>Annual Procurement Plan \u2014 express 30-day-from-budget-approval mandate<\/td><td>W, C, NC<\/strong> (G<\/strong> states the publication obligation under Rule 144(x) but not the 30-day deadline)<\/td><\/tr><tr><td>34<\/td><td>Strategising Large Procurement (market research parameters)<\/td><td>G + W only<\/td><\/tr><tr><td>35<\/td><td>\"Pricing Trends \/ seasonality\" as a market parameter<\/td><td>G only<\/td><\/tr><tr><td>36<\/td><td>Procurement Planning \u2014 Risks and Mitigations table<\/td><td>G + NC only<\/td><\/tr><tr><td>37<\/td><td>Need Assessment \u2014 Risks and Mitigations table<\/td><td>G, C, NC \u2014 absent from W<\/td><\/tr><tr><td>38<\/td><td>Subjectivity-of-samples risk row in the risk table<\/td><td>G only<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 2<\/p>\n<aside class=\"note\">Next:<\/strong> Chapter 3 \u2014 Vendor Governance: Supplier\/ Contractor Relationship Management, Participation of Bidders, Code of Integrity, Integrity Pact, Grievance Redressal, Registration\/ Enlistment, Debarment and Indian Agents<\/em> (merging Goods Ch. 3, Works Ch. 8<\/strong>, Consultancy Ch. 3 and Non-Consultancy Ch. 3).<\/p><\/aside><\/div><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch3\">Chapter 3<\/p><h1>Participation of Bidders, Vendor Relationship Management and Governance Issues<\/h1><\/header>\nMerging: Goods Ch. 3 (Supplier Relationship Management) \u00b7 Works Ch. 8<\/strong> (Registration\/ Enlistment of Contractors and Governance Issues) \u00b7 Consultancy Ch. 3 (Participation of Bidders and Governance Issues) \u00b7 Non-Consultancy Ch. 3 (Participation of Bidders and Governance Issues)<\/em><\/p><h2>Structural Warning for Students<\/span><\/h2>\nThis block of subject matter is CHAPTER 3 in the Goods, Consultancy and Non-Consultancy Manuals \u2014 but CHAPTER 8 in the Works Manual.<\/p>\nThe Works Manual moves the entire vendor-governance block to the END<\/strong> of the Manual (after Contract Execution), whereas the other three place it before Bidding Design<\/strong>. The content<\/em> is substantially the same; only the location<\/em> differs. Any exam question citing \"para 8.2\" of Works corresponds to \"para 3.2\" of Goods.<\/p>\n<h2>Concordance for Chapter 3<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>Goods<\/th><th>Works<\/th><th>CS<\/th><th>NCS<\/th><\/tr><\/thead><tbody><tr><td>3.1<\/td><td>Supplier\/ Contractor Relationship Management<\/td><td>3.1<\/td><td>8.1<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>3.2<\/td><td>Eligibility Criteria for Participation in Tender Process<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>3.1<\/td><td>3.1<\/td><\/tr><tr><td>3.3<\/td><td>Legal Status of Bidders<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>3.2<\/td><td>3.2<\/td><\/tr><tr><td>3.4<\/td><td>Governance Issues \u2014 Canons of Financial Propriety; RTI<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>3.3.1, 3.3.2<\/td><td>3.3.1, 3.3.2<\/td><\/tr><tr><td>3.5<\/td><td>Code of Integrity for Public Procurement (CIPP)<\/td><td>3.2<\/td><td>8.2<\/td><td>3.3.3<\/td><td>3.3.3<\/td><\/tr><tr><td>3.6<\/td><td>Integrity Pact (IP)<\/td><td>3.3<\/td><td>8.3<\/td><td>3.4<\/td><td>3.4<\/td><\/tr><tr><td>3.7<\/td><td>Grievances and its Redressal<\/td><td>3.4<\/td><td>8.4<\/td><td>3.5<\/td><td>3.5<\/td><\/tr><tr><td>3.8<\/td><td>Conduct of Public Servants \u2014 Risks and Mitigations<\/td><td>3.5<\/td><td>8.5<\/td><td>3.6<\/td><td>3.6<\/td><\/tr><tr><td>3.9<\/td><td>Development of New Sources and Registration\/ Empanelment\/ Enlistment\/ Pre-qualification<\/td><td>3.6<\/td><td>8.6<\/td><td>3.7<\/td><td>3.7<\/td><\/tr><tr><td>3.10<\/td><td>Debarment<\/td><td>3.7<\/td><td>8.7<\/td><td>3.8<\/td><td>3.8<\/td><\/tr><tr><td>3.11<\/td><td>Enlistment of Indian Agents<\/td><td>3.8<\/td><td>8.8<\/td><td>3.9<\/td><td>3.9<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Note on the order of the last four topics: In all four Manuals, the sequence Development of New Sources\/ Registration \u2192 Debarment \u2192 Enlistment of Indian Agents appears in the same relative order as the closing sections of the chapter. This is a reliable memory anchor.<\/p><\/aside>\n<h2 class=\"src-multi\">3.1<\/span>Supplier\/ Contractor Relationship Management<\/span>G<\/span>W<\/span><\/h2><div class=\"srcblock src-multi\">\nSupplier Relationship Management G<\/span> \/ Contractor Relationship Management W<\/span> comprises the following three functions:<\/p>\n<ol class=\"lst\"><li>Ensuring COMPLIANCE of suppliers\/ contractors to the Code of Integrity for Public Procurement and Integrity Pact (CIPP), if stipulated in Tender\/ Bid Documents;<\/li><li>REMOVAL from the list of registered\/ enlisted suppliers\/ contractors, and DEBARMENT of firms;<\/li><li>Development of new sources and registration\/ enlistment of suppliers\/ contractors.<\/li><\/ol>\n<aside class=\"note\">C<\/span>NC<\/span> do not<\/strong> carry a corresponding \"Relationship Management\" heading. They instead open the chapter with Eligibility Criteria<\/strong> and Legal Status of Bidders<\/strong> (paras 3.2 and 3.3 below), which have no counterpart in the Goods or Works Manuals in this chapter<\/strong>.<\/p><\/aside>\n<\/div><h2 class=\"src-multi\">3.2<\/span>Eligibility Criteria for Participation in Tender Process<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\">\n1.<\/strong>Normally, participation in the Tender Process should be open to all bidders.<\/strong> However, the procuring entity should lay down 'Eligibility<\/strong>' criteria, based on the requirement of the procurement and Government Policies.<\/p>\n<aside class=\"note\">The critical distinction:<\/p>\n'ELIGIBILITY' and 'QUALIFICATION' criteria (Experience; Performance and Financial Capabilities) are entirely different criteria and should not be mixed up.<\/p>\n<ul class=\"lst\"><li>'ELIGIBILITY' criteria regulate the participation of bidders in the Tender process.<\/li><li>'QUALIFICATION' criteria are for EVALUATION of bidders for award of the contract.<\/li><\/ul><\/aside>\nTiming rule: The bidder should meet the eligibility criteria as of the date of his bid submission \u2014 AND should continue to meet these till the award of the contract. Otherwise, his bid would be rejected as non-responsive and would not be evaluated for award of contract.<\/p>\nThe bidder shall be required to DECLARE FULFILMENT of Eligibility Criteria in his bid document.<\/p>\nSome of the eligibility criteria relate to the following issues (for details refer to the relevant Model Tender Documents)<\/em>:<\/p>\na) Legal status of the bidder:<\/strong> a natural person<\/strong>, or a private entity<\/strong>, or a public entity<\/strong> (State-owned enterprise or institution), or a Joint Venture\/ Consortium<\/strong> (an association of several persons, firms, or companies \u2014 hereinafter JV\/C<\/strong>).<\/p>\n<aside class=\"note\">NC<\/span> adds a restriction:<\/strong>JV\/C may be permitted to participate in the procurement of Non-consultancy services only in specific situations where the credentials required are not likely to be available with an individual bidder.<\/strong>Participation of JV\/C is SPECIFICALLY DISCOURAGED in the case of quality Oriented Procurement (QOP) with QCBS evaluation.<\/p><\/aside>\nb) Participation of demerged entities [NC only]: (by virtue of a corporate restructuring exercise etc.) Tender documents must clearly mention if \u2014 and under what conditions \u2014 the demerged entity will be permitted to use the credentials of the original\/ parent entity (for the initial five years from the incorporation of the demerged entities) to satisfy the eligibility criteria, or not, in the specific tender.<\/p>\n<aside class=\"note\">Footnote NC<\/span>:<\/em> As per DoE's OM No. F.8\/78\/2023-PPD dated 12.10.2023, in suitable cases the procuring entity may consider the credentials based on the merit and circumstances of the case \u2014 like type of procurement, nature of demerger, number of eligible bidders available, etc.<\/p><\/aside>\nc) Requirement of various REGISTRATIONS\/ LICENCES from various statutory authorities required for the subject matter of procurement: GSTIN, PAN, EPF, ESI, labour, Private Security Agencies (PASARA), etc.<\/p>\nd) Submission of requisite BID SECURITY (or Bid Security Declaration, if allowed) or proof of exemption therefrom.<\/p>\nE) free from financial insolvency, debarment or convictions.<\/p>\nF) a consistent history of litigation or arbitration by the bidder May result in disqualification.<\/p>\ng) Free from 'conflict of interest' with other bidders, which may affect fair competition.<\/p>\nh) Restriction on participation as per Government Policies:<\/p>\n<ul class=\"lst\"><li>i) For Class-II Local Suppliers and Non-Local bidders as per the Make-in-India policy;<\/li><li>ii) Any bidder from a country sharing a land border with India (but not in development partnership with India), or any bidder (INCLUDING INDIAN) with a Specified Transfer of Technology (ToT) arrangement with such a country, shall be eligible subject to certain conditions.<\/li><\/ul>\n<\/div><h2 class=\"src-multi\">3.3<\/span>Legal Status of Bidders<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\"><h3>3.3.1<\/span>Individual Persons<\/span><\/h3>\n1. Individual consultants C<\/span> \/ Individual service providers NC<\/span>:<\/p>\nIndividual consultants\/ service providers are recruited for similar activities as Consultancy firms\/ Service providing firms when a full team is not considered necessary.<\/p>\nThey may be:<\/p>\n<ul class=\"lst\"><li>independent experts not permanently associated with any particular firm, or<\/li><li>employees of a firm recruited on an INDIVIDUAL basis, or<\/li><li>employees of an agency, institution, or university.<\/li><\/ul>\nThey are normally recruited for:<\/p>\n<aside class=\"note\">project implementation supervision \u00b7 training \u00b7 provision of specific expert advice on a highly technical subject \u00b7 policy guidance \u00b7 special studies \u00b7 compliance supervision \u00b7 implementation monitoring<\/p><\/aside>\nThey are not normally recruited for PROJECT PREPARATION, unless the proposed project is simple and, generally, a repeat of an already established and successful project.<\/p>\n<aside class=\"note\">If more than three experts are required, then the assignment should normally be undertaken by a team from a firm.<\/p><\/aside>\nAs with firms, individual consultants\/ service providers are classed as either INTERNATIONAL or NATIONAL, depending on their level of EXPERTISE and their international experience and exposure.<\/p>\n2. Retired Government Servants:<\/p>\nC<\/span> \u2014 the GFR bar:<\/strong>Rule 177 of GFR, 2017 says that <\/strong>consulting services do not include direct engagement of retired Government servants.<\/strong>They should not be engaged as consultants against regular vacant posts under this rule. Such engagements should be handled as a PERSONNEL MATTER.<\/p>\nC<\/span>NC<\/span> \u2014 the permitted mode: As Consultants\/ Service Providers, <\/strong>retired Government servants CAN be hired\/ engaged only:<\/p>\n<ul class=\"lst\"><li>for a SPECIFIC TASK, and<\/li><li>for a specific duration.<\/li><\/ul>\nThey should be assigned clear output-related goals.<\/p>\nRemuneration:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Type of engagement<\/th><th>Remuneration<\/th><\/tr><\/thead><tbody><tr><td>Full-TIME basis (when they are not allowed to concurrently do any other assignment), on a monthly basis<\/td><td>Last pay drawn minus pension, as per extant DOPT guidelines<\/td><\/tr><tr><td>PART-TIME, NON-EXCLUSIVE engagements<\/td><td>The Procuring Ministry\/ Department may fix remuneration on a per day\/ month or lump-sum basis<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h3>3.3.2<\/span>Private and Public Entities<\/span><\/h3>\n1. Consultancy Firms C<\/span> \/ Service Providing Firms NC<\/span>: The MAIN SOURCE of consultants\/ service providers is firms of diverse specialisations that provide consultancy\/ non-consultancy services. Such firms are normally classified as either:<\/p>\n<ul class=\"lst\"><li>INTERNATIONAL \u2014 firms that have international experience and are capable of undertaking work at international level at international rates; or<\/li><li>NATIONAL \u2014 firms that may not have international exposure and normally undertake assignments only within that country, usually at significantly lower rates.<\/li><\/ul>\n2. Non-Governmental Organisations (NGO): There may be a DISTINCT ADVANTAGE in the use of NGOs in Projects which emphasise experience in community participation and in-depth local knowledge \u2014 for example, Projects related to Corporate Social Responsibility (CSR) or Government Social Initiatives like 'Swachh Bharat Abhiyan', etc.<\/p>\n3. Specialised Agencies and Institutions:<\/strong> Specialised agencies or institutions \u2014 including Government\/ Semi-Government agencies, universities, research and professional institutions<\/strong> \u2014 may also from time to time be recruited to provide Consultancy\/ Non-consultancy services.<\/p>\nThese services may be provided by INDIVIDUALS (as discussed above) or by TEAMS. Nonetheless, there are at times DISTINCT ADVANTAGES to using such agencies. Experts and teams from such agencies and institutions may undertake a variety of roles across the whole field of possible services \u2014 these may range from PROJECT PREPARATION through PROJECT SUPERVISION and POLICY ADVICE to project benefit monitoring and evaluation.<\/p>\n<h3>3.3.3<\/span>Association of Several Bidders<\/span><\/h3><h4>1.<\/span>Sub-contracting<\/span><\/h4>\nA bidder who is capable of being selected for award of contract on his own credentials may propose to sub-contract a PART of the contract for SPECIALISED ITEMS of services, as a financial or technical strategy.<\/p>\n<ul class=\"lst\"><li>The names and details of the sub-contracts are to be clearly stated in the bid submitted by the Bidder.<\/li><li>Provided further that such sub-contractor should not circumvent the eligibility criteria.<\/li><li>Qualifications of these sub-contractors shall not be considered in evaluation of qualification criteria for the bid.<\/li><li>DESPITE any approval granted by the Procuring Entity for such arrangements, the bidder\/ contractor shall be solely and directly responsible for executing sub-contracted portions of the contract.<\/li><li>The total VALUE of the sub-contracting portion of services must not exceed the per cent of the contract price as specified in the Tender Document\/ Contract \u2014 if not so specified, 25 (twenty-five) per cent.<\/li><li>Sub-contracting by the contractor without the approval of the Procuring Entity shall be a breach of contract.<\/li><\/ul>\n<h4 class=\"src-NC\">2.<\/span>Consortium of Consultants C<\/span> \/ Consortium of Service Providers<\/span>NC<\/span><\/h4><div class=\"srcblock src-NC\">\na) Why consortia form: In large and complex assignments, consultants\/ service providers may associate with each other to form a consortium:<\/p>\n<ul class=\"lst\"><li>to COMPLEMENT their respective areas of expertise,<\/li><li>to INCREASE the technical responsiveness of their proposal, and<\/li><li>to make larger pools of experts available, or for other reasons.<\/li><\/ul>\nSuch an association may be for the LONG TERM (independent of any particular assignment) or for a SPECIFIC assignment.<\/p>\nb) Legal character:<\/strong> Such associations are called Consortium or Joint Ventures (JVs)<\/strong> for the purpose of this Manual.<\/p>\n<ul class=\"lst\"><li>In case of consortium or JVs, all members shall sign the contract and shall be jointly and severally liable for the entire assignment.<\/li><\/ul>\n<aside class=\"note\">(NC<\/span> phrasing: \"The consortium may take the form of a Joint Venture (JV) \u2014 in which case, all members of the JV shall sign the contract and shall be jointly and severally liable for the entire assignment.\")<\/em><\/p><\/aside>\n<ul class=\"lst\"><li>HOWEVER, the Procuring Entity only deals with the lead member of consortiums\/ JVs for all purposes.<\/li><li>After the short list is finalised and the Request for Proposal (RfP) is issued, any association in the form of a consortium\/ JV or sub-consultancy among the short-listed firms shall be PERMISSIBLE in accordance with provisions stated in the RfP. Under such circumstance, one of the shortlisted consultants must become the lead member of the consortium\/ JV.<\/li><\/ul>\nc) What the bid document must specify: Bid documents should clearly specify whether consortiums\/ JVs are ALLOWED to bid \u2014 in the case of complex and large assignments, say above certain values (say Rs. 5 crore).<\/p>\n<ul class=\"lst\"><li>Maximum number of partners in a consortium\/ JV shall be LIMITED (say \u2014 three).<\/li><li>In case consortiums\/ JVs are permitted to bid, it should be clarified:<\/li><li>WHAT qualifications are to be met COLLECTIVELY (clubbed together)<\/strong> by the consortium\/ JV partners \u2014 say, experience of similar consultancy\/ non-consultancy service<\/em>; and<\/li><li>WHAT each partner has to meet individually and separately \u2014 say, financial capacity<\/em>.<\/li><li>In the case of each member meeting credentials individually, it should also be specified that:<\/li><\/ul>\n<aside class=\"note\">Each PARTNER should meet AT least 25%, and the lead partner at least 50%, out of the qualifying limit (say financial capacity\/ turnover).<\/p><\/aside>\nd) Ensuring the consortium actually performs: If consortiums\/ JVs are allowed, measures should be taken to ensure that all the consortium\/ JV partners are present and deliver services all through the contract period.<\/p>\n<ul class=\"lst\"><li>An IMPLEMENTATION BOARD with participation of all consortium\/ JV partners may be provided for, wherein the project Manager from the Procuring Entity shall also be ALLOWED AUDIENCE when required.<\/li><li>MEETING of consortium\/ JV partners with the project executing authority for quarterly progress review may be made a criterion linked to achievement of key dates or even payment.<\/li><\/ul>\n<\/div><\/div><h2 class=\"src-multi\">3.4<\/span>Governance Issues in Procurement \u2014 Financial Propriety and RTI<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\">\n<aside class=\"note\">C<\/span>NC<\/span> open their governance section by re-stating two topics that the Goods and Works Manuals place in CHAPTER 1<\/strong> \u2014 see paras 1.9<\/strong> and 1.16<\/strong> of this Unified Manual.<\/p><\/aside>\n<h3>3.4.1<\/span>Standards (Canons) of Financial Propriety<\/span><\/h3>\nPublic Procurement, like any other expenditure in Government, must conform to the Standards (also called Canons) of Financial Propriety \u2014 Rule 21 of GFR, 2017.<\/p>\n<aside class=\"note\">The four principles reproduced in the CS and NC Manuals are (i) to (iv):<\/p>\ni) Every officer is expected to exercise the same vigilance in respect of expenditure incurred from public moneys as a person of ordinary prudence would exercise in respect of expenditure of his own money.<\/p>\nii) The expenditure should not be prima facie more than the occasion demands.<\/p>\niii) No authority should exercise its powers of sanctioning expenditure to pass an order which will be directly or indirectly to its own advantage.<\/p>\niv) Expenditure from public moneys should not be incurred for the benefit of a particular person or a section of the people, unless \u2014 (a) a claim for the amount could be enforced in a Court of Law, or (b) the expenditure is in pursuance of a recognised policy or custom.<\/p>\nCross-reference:<\/strong> The Works Manual (para 1.9) additionally reproduces clause (v)<\/strong> \u2014 the amount of allowances granted to meet expenditure of a particular type should be so regulated that the allowances are not, on the whole, a source of profit to the recipients<\/em>. Neither the Goods Manual (para 1.9) nor the CS\/NC Manuals (para 3.3.1) reproduce clause (v).<\/strong><\/p><\/aside>\n<h3>3.4.2<\/span>Right to Information and Proactive Information Disclosures<\/span><\/h3>\nSection 4(1)(b) of the RTI Act lays down the information to be disclosed by public authorities on a suo-motu or proactive basis, and Section 4(2) and Section 4(3) prescribe the method of its dissemination \u2014 to enhance transparency and to reduce the need for filing individual RTI applications.<\/p>\nThe DoPT has issued \"Guidelines on suo motu disclosure under Section 4 of the RTI Act\" vide OM No. 1\/6\/2011-IR dated April 15, 2013. The relevant guideline relating to procurement:<\/p>\n<aside class=\"note\">\"Information relating to procurement made by public authorities \u2014 including publication of notice\/ tender enquiries, corrigenda thereon, and details of bid awards detailing the name of the Vendor\/ Contractor of goods\/ services being procured or the works contracts entered, or any such combination of these, and the rate and total amount at which such procurement or works contract is to be done \u2014 should be disclosed. All information disclosable as per Ministry of Finance, Department of Expenditure's O.M. No. 10\/1\/2011-PPC dated 30th November 2011 (and 05th March 2012) on Mandatory Publication of Tender Enquiries on the Central Public Procurement Portal, and O.M. No. 10\/3\/2012-PPC dated 09th January 2014 on implementation of comprehensive end-to-end e-procurement, should be disclosed under Section 4 of the Right to Information Act.\"<\/p>\nPlacement note: This appears at para 1.12 in the Goods Manual and at para 3.3.2 in the CS and NC Manuals. It does not appear in the Works Manual at all.<\/p><\/aside>\n<\/div><h2>3.5<\/span>Code of Integrity for Public Procurement (CIPP)<\/span><\/h2>\n(Rule 175 of GFR 2017)<\/em><\/p>\n<h3>3.5.1<\/span>Introduction<\/span><\/h3>\nPublic Procurement is perceived to be prone to corruption and ethical risks. To mitigate this, the officials of Procuring Entities involved in procurement AND the bidders\/ suppliers\/ contractors\/ consultants\/ service providers must abide by the following Code of Integrity for Public Procurement (CIPP).<\/p>\nDeclarations by officials: All Procuring officials May be asked to sign declarations to this effect PERIODICALLY and in various procurement decisions.<\/p>\n<ul class=\"lst\"><li>[G, C, NC] \u2014 including Need Assessment<\/em><\/li><li>W<\/span> \u2014 including Preparation of Estimates<\/strong><\/em><\/li><\/ul>\nDeclarations by bidders:<\/strong> The bidders\/ suppliers\/ contractors\/ consultants\/ service providers should be asked to sign a declaration about abiding by the CIPP<\/strong> \u2014 W<\/span> adds: including sub-contractors engaged by them<\/em> \u2014 <\/strong>in registration\/ enlistment applications AND in tender\/ bid documents, with a <\/strong>WARNING that, in case of any transgression of this code:<\/p>\n<ul class=\"lst\"><li>G<\/span> \u2014 it would be liable for punitive actions as detailed below<\/em>;<\/li><li>W<\/span> \u2014 its name is not only liable to be removed from the list of enlisted contractors, but it would be liable for other punitive actions such as cancellation of contracts, debarment or action in Competition Commission of India<\/strong>, and so on<\/em>;<\/li><li>C<\/span>NC<\/span> \u2014 its name is not only liable to be removed from the list of registered suppliers\/ contractors\/ service providers, but it would be liable for other punitive actions as detailed below<\/em>.<\/li><\/ul>\n<h3>3.5.2<\/span>The Code \u2014 Seven Prohibited Practices<\/span><\/h3>\nProcuring authorities, as well as bidders, suppliers, contractors, consultants and service providers, should observe the highest standard of ethics and should not INDULGE in the following PROHIBITED PRACTICES \u2014 either directly or indirectly \u2014 at any stage during the procurement process or the execution of resultant contracts:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Practice<\/th><th>Definition<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>\"CORRUPT practice\"<\/td><td>making offers, solicitation or acceptance of a BRIBE, REWARDS or GIFTS or any material benefit, either directly or indirectly, in exchange for an unfair advantage in the procurement process, or to otherwise INFLUENCE the procurement process or contract execution<\/td><\/tr><tr><td>ii<\/td><td>\"FRAUDULENT practice\"<\/td><td>any OMISSION or MISREPRESENTATION that may mislead or attempt to mislead so that financial or other benefits may be obtained, or an obligation avoided. This includes making FALSE DECLARATIONS or providing FALSE INFORMATION for participation in a procurement process, or to secure a contract, or in the execution of the contract<\/td><\/tr><tr><td>iii<\/td><td>\"ANTI-COMPETITIVE practice\"<\/td><td>any collusion, bid rigging or anti-competitive arrangement, or any other practice coming under the purview of the Competition Act, 2002, between two or more bidders \u2014 with or without the knowledge of the procuring entity \u2014 that may IMPAIR the transparency, fairness and progress of the procurement process, or to establish bid prices at artificial, non-competitive levels<\/td><\/tr><tr><td>iv<\/td><td>\"COERCIVE practice\"<\/td><td>any COERCION or any threat to impair or harm, directly or indirectly, any party or its property, to influence the procurement process or affect the execution of a contract<\/td><\/tr><tr><td>v<\/td><td>\"Conflict of interest\" (coi)<\/td><td>any PERSONAL, FINANCIAL, or BUSINESS RELATIONSHIP between the BIDDER and any personnel of the Procuring Entity who are directly or indirectly related to the procurement or execution process of the contract, which can affect the decision of the procuring entity directly or indirectly<\/td><\/tr><tr><td>vi<\/td><td>\"Undue advantage\"<\/td><td>Improper use of information obtained by the bidder from the procuring entity with an intent to gain an unfair advantage in the procurement process or for personal gain. This also includes if the bidder (or his allied firm) provided services for the need assessment\/ procurement planning of the tender process in which he is participating<\/td><\/tr><tr><td>vii<\/td><td>\"OBSTRUCTIVE practice\"<\/td><td>MATERIALLY IMPEDE the procuring entity's INVESTIGATION of a procurement process \u2014 either by deliberately destroying, falsifying, altering; or by concealing evidence material to the investigation; or by making false statements; or by THREATENING, HARASSING or intimidating any party to prevent it from disclosing its knowledge of matters relevant to such investigation or from pursuing the investigation; or by impeding the Procuring Entity's rights of audit or access to information<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Footnote on \"Undue Advantage\": \"Need assessment\/ procurement planning\" here means, inter alia<\/em>, need assessment, preparation of feasibility\/ cost estimates\/ Detailed Project Report (DPR), design\/ technical specifications, terms of reference (ToR)\/ Activity Schedule\/ schedule of requirements, or the Tender Document, etc. For \"allied firm\", see the Procurement Glossary.<\/p><\/aside>\n<h3>3.5.3<\/span>Obligations for Proactive Disclosures<\/span><\/h3>\nWhether asked or not, in a tender document:<\/p>\na) Declaration of Conflict of Interest: Procuring authorities, as well as bidders, suppliers, contractors, consultants and service providers, should suo-moto proactively declare any conflict of interest as per item (v) above \u2014 PRE-EXISTING or as soon as these arise at any STAGE in any procurement process or execution of a contract.<\/p>\nb) Declaration of previous transgressions: Bidders must DECLARE any PREVIOUS TRANSGRESSIONS with respect to the prohibited practices above with any entity in any country during the last three years, or of being debarred by any other Procuring Entity.<\/p>\nc) Declaration of commissions\/ fees to agents: The bidder\/ contractor must disclose any commissions or fees that may have been paid or are to be paid to AGENTS, REPRESENTATIVES, or COMMISSION AGENTS concerning the selection process or execution of the Contract. The information disclosed must INCLUDE:<\/p>\n<ul class=\"lst\"><li>the name and address<\/strong> of the agent, representative or commission agent,<\/li><li>the AMOUNT and CURRENCY, and<\/li><li>the purpose<\/strong> of the commission or fee<\/li><\/ul>\n \u2014 in a format given in the tender document.<\/p>\n<aside class=\"note\">IMPORTANT FOOTNOTE (in all four Manuals): To encourage voluntary disclosures, such declarations would not mean automatic disqualification for the bidder making such declarations. The declared conflict of interest May be evaluated, and MITIGATION STEPS, if possible, may be taken by the procuring entity. Similarly, voluntary reporting of previous transgressions of the Code of Integrity elsewhere may be evaluated, and \u2014 barring cases of debarment \u2014 an alert watch May be kept on the bidder's actions in the tender and subsequent contract.<\/p><\/aside>\n<h3>3.5.4<\/span>Professionalism and Unfair Competitive Advantage [C ONLY]<\/span><\/h3>\n<aside class=\"note\">This sub-section appears only in the Consultancy Services Manual. It has no counterpart in the Goods, Works or Non-Consultancy Manuals.<\/p><\/aside>\nA) professionalism: The consultant is required to provide professional, objective, and impartial advice \u2014 at all times holding the Procuring Entity's interest paramount above his\/ its own corporate interests and above any consideration for future work \u2014 strictly avoiding any conflicts of interest.<\/p>\nb) Unfair Competitive Advantage: Fairness and transparency in the selection process require that the consultants or their affiliates competing for a specific assignment do not derive an unfair competitive advantage from having provided consultancy services related to the assignment in question.<\/p>\nSuch unfair competitive advantage is BEST AVOIDED by full TRANSPARENCY and by providing equal opportunity, so that all firms or individuals interested or involved have full INFORMATION about a service assignment and its NATURE, SCOPE, and background information. To that end, the request for proposals and all information should be made available to all short-listed consultants simultaneously.<\/p>\nc) The three disqualification rules: Therefore, without limitation on the generality of the foregoing, and unless stated otherwise in the RfP document, Consultants (including their experts and sub-consultants) or their allied firm shall not be eligible for any assignment that:<\/p>\n<ul class=\"lst\"><li>i) by its NATURE, may be in conflict with another assignment of the consultant or its allied firm \u2014 for the same or for another procuring Entity;<\/li><li>ii) a consultant or any of its affiliates\/ allied firms that has been engaged by the client to provide goods, works, or non-consultancy services for a project, shall be disqualified from providing consultancy service resulting from or directly related to those goods, works, or non-consultancy services;<\/li><li>iii) conversely, a consultant or any of its affiliates\/ allied firms hired to provide consultancy services for the preparation or implementation of a project shall be disqualified from subsequently providing goods or works or non-consultancy services resulting from or directly related to the consultancy services for such preparation or implementation.<\/li><\/ul>\n<h3>3.5.5<\/span>Punitive Provisions<\/span><\/h3>\n(Rule 175(2) of GFR, 2017)<\/em><\/p>\nWithout prejudice to \u2014 and in addition to \u2014 the rights of the procuring entity to other penal provisions as per the tender\/ bid documents or contract, IF the procuring entity CONCLUDES that a (prospective) bidder\/ supplier\/ contractor\/ consultant\/ service provider, directly or through an agent, has violated this code of integrity in COMPETING FOR the contract or in EXECUTING a contract, the procuring entity May take appropriate measures including one or more of the following:<\/p>\n<h4>1.<\/span>If his bids are UNDER CONSIDERATION in any procurement<\/span><\/h4>\n<ol class=\"lst\"><li>Forfeiture and\/ or encashment of Bid Security;<\/li><li>Calling off of any pre-contract negotiations; And<\/li><li>REJECTION and EXCLUSION of the bidder from the procurement process.<\/li><\/ol>\n<h4>2.<\/span>If a contract has ALREADY BEEN AWARDED<\/span><\/h4>\n<ol class=\"lst\"><li>CANCELLATION of the relevant contract and recovery of compensation for loss incurred by the procuring entity;<\/li><li>FORFEITURE and\/ or ENCASHMENT of any other security or bond relating to the procurement;<\/li><li>Recovery of payments \u2014 including advance payments, if any \u2014 made by the procuring entity, along with interest thereon at the prevailing rate.<\/li><\/ol>\n<aside class=\"note\">(C<\/span> omits the words \"including advance payments\" in this clause.)<\/em><\/p><\/aside>\n<h4>3.<\/span>Provisions IN ADDITION to the above<\/span><\/h4>\n<ol class=\"lst\"><li>REMOVAL from the list of registered suppliers\/ enlisted contractors and\/ or DEBARMENT of the bidder from participation in FUTURE PROCUREMENTS of the procuring entity:<\/li><li>[G, W, NC] \u2014 for a period not less than six months;<\/li><li>C<\/span> \u2014 for a period not exceeding two years.<\/strong><\/li><\/ol>\n<aside class=\"note\">Note the divergence:<\/strong> the Consultancy Manual states a ceiling<\/strong> (not exceeding two years), whereas the other three state a FLOOR<\/strong> (not less than six months).<\/p><\/aside>\n<ol class=\"lst\"><li>In case of ANTI-COMPETITIVE PRACTICES, information for further processing May be filed with the Competition Commission of India:<\/li><li>[G, W, NC] \u2014 under the signature of a joint Secretary level officer;<\/li><li>C<\/span> \u2014 by the Competent Authority.<\/strong><\/li><li>Initiation of suitable disciplinary or criminal proceedings against any individual or staff found responsible.<\/li><\/ol>\n<h2>3.6<\/span>Integrity Pact (IP)<\/span><\/h2>\n1. What it is: The pre-bid Integrity Pact is a tool to help governments, businesses, and civil society fight corruption in public contracting.<\/p>\nIt binds both buyers and sellers to ethical conduct and transparency in all activities \u2014 from:<\/p>\n<aside class=\"note\">pre-selection of bidders \u2192 bidding \u2192 contracting \u2192 implementation \u2192 completion \u2192 operation related to the contract.<\/p><\/aside>\nThis removes the insecurity of bidders that, while they themselves May abjure bribery, their competitors May resort to it and win contracts by unfair means.<\/p>\n2. Who must incorporate it, and at what threshold: Ministries\/ Departments and their attached\/ subordinate offices (including autonomous bodies) should incorporate the Integrity Pact (OM No. 14(12)\/2008-E-II(A) dated 19th July 2011)<\/em> in the procurements\/ contracts:<\/p>\n<ul class=\"lst\"><li>of the NATURE and of a THRESHOLD VALUE,<\/li><li>decided by the ministries\/ departments,<\/li><li>with the approval of the minister in charge.<\/li><\/ul>\n<aside class=\"note\">As guidance, the threshold should cover the bulk \u2014 80\u201390% (eighty to ninety per cent) by value \u2014 of its annual procurement expenditure.<\/p><\/aside>\nFormat and customisation:<\/p>\n<ul class=\"lst\"><li>[G, W] \u2014 The procuring entities May make suitable changes in the format, wherever required, based on the specific situation in which the pact is to be used. The pact May also be updated, wherever necessary, to incorporate latest procurement instructions.<\/li><li>[C, NC] \u2014 Ministries\/ Departments including their attached\/ subordinate offices AND CPSEs may use this format of Integrity Pact, with the suitable changes specific to the situations in which the pact is to be used.<\/li><\/ul>\n<aside class=\"note\">Annexure references for the IP Format:<\/strong>G<\/span> Annexure 30 \u00b7 W<\/span> Annexure 14 \u00b7 C<\/span> Annexure 18 \u00b7 NC<\/span> Annexure 12.<\/p><\/aside>\n3. Extension to PSBs, PSICs and FIs: CVC issued a revised standard operating procedure (CVC Circular No. 04\/06\/23 \u2014 015\/VGL\/091 dated 14.06.2023)<\/em> and has further stated (CVC Circular No. 06\/05\/21 \u2014 015\/VGL\/091 dated 03.06.2021)<\/em> That, in view of the increasing procurement activities of public sector banks (PSBs), public sector insurance companies (PSICs) and public sector financial institutions (FIs), they shall also adopt and implement the suggested format of Integrity Pact.<\/p>\n<aside class=\"note\">C<\/span> \u2014 additional provision found only in the consultancy Manual:<\/p>\nIn the case of sub-contractors, the Integrity Pact shall be a tri-partite arrangement, to be signed by (1) the organisation, (2) the contractor, and (3) the sub-contractor.<\/p>\nSee Annex-2 to the Integrity Pact Annexure for details.<\/strong>(Note: G<\/span> titles Annex-2 as \"Extract of Standard Operating Procedure\"; W<\/span>, C<\/span>, NC<\/span> title it \"Appointment and Role of IEMs\".)<\/em><\/p><\/aside>\n<h2>3.7<\/span>Grievances and its Redressal<\/span><\/h2>\n1. Procuring Entities shall provide a suitable clause in their tender documents for the redressal of grievances of bidders. The following is a suggested mechanism of redressal.<\/p>\n2. Who may apply, and within what time:<\/p>\nAny supplier, contractor, or consultant that claims to have suffered or is likely to suffer loss or injury as a result of a decision\/ action\/ omission of the Procurement Entity May make an application for its review:<\/p>\n<ul class=\"lst\"><li>Within a period of five (5) days from its date,<\/li><li>to the DESIGNATED OFFICER named in the tender documents in this regard (or the head of the Procuring Entity, if not so specified),<\/li><li>specifying the ground(s) and the relevant clauses of the tender documents.<\/li><\/ul>\nDe-briefing: Unsuccessful bidders May seek de-briefing regarding the rejection of their bid \u2014 in writing or electronically \u2014 within five (5) days of the declaration of techno-commercial or financial evaluation results.<\/p>\n3. Only a directly affected bidder can represent:<\/p>\n<ol class=\"lst\"><li>Only a bidder who has participated in the concerned procurement process \u2014 i.e., pre-qualification, bidder registration or bidding, as the case may be \u2014 can make such representation.<\/li><li>In case the PRE-QUALIFICATION bid has been evaluated before the bidding of Technical\/ financial bids, an application for review in relation to the technical\/ financial bid may be filed only by a bidder who has qualified in the pre-qualification bid.<\/li><li>In case the TECHNICAL bid has been evaluated before the opening of the FINANCIAL bid, an application for review in relation to the financial bid may be filed only by a bidder whose technical bid is found to be acceptable.<\/li><\/ol>\nD) decisions not subject to review:<\/strong> The following decisions of the procuring entity, in accordance with the provisions of internal guidelines, shall not be subject to review:<\/strong><\/p>\n<ul class=\"lst\"><li>i) determination of the need for procurement;<\/li><li>ii) selection of the mode of procurement or tendering system;<\/li><li>iii) choice of selection procedure;<\/li><li>iv) complaints against specifications \u2014 except under the premise that they are either VAGUE or too specific to limit competition, which may be permissible;<\/li><li>v) provisions limiting the participation of bidders in the procurement process in terms of government policies;<\/li><li>vi) provisions regarding purchase preferences to specific categories of bidders in terms of policies of the Government;<\/li><li>vii) the decision to enter into negotiations with the L1 bidder;<\/li><li>viii) cancellation of the procurement process \u2014 except where it is intended to SUBSEQUENTLY RE-TENDER the same requirements;<\/li><li>ix) issues related to ambiguity in contract terms shall not be taken up after a contract has been signed; all such issues should be HIGHLIGHTED before the vendor\/ contractor consummates the contract.<\/li><\/ul>\n<aside class=\"note\">(In the Works Manual this is numbered as a separate para 4, not as a sub-item of the \"not subject to review\" list.)<\/em><\/p><\/aside>\n4. This grievance redressal is BESIDE the avenue of complaints to the vigilance Department of the procuring organisation.<\/p>\n5. If received DURING the processing of the tender: The designated officer shall FORWARD the application to the tC\/ convener of TC for its examination on merits and action as considered necessary.<\/p>\n<ul class=\"lst\"><li>An interim reply May be sent that the application will be kept in view in the tender evaluation, and a final response shall be given only after the declaration of the award of the contract.<\/li><li>The Tender Committee shall place the application on record \u2014 including its analysis and action taken thereon \u2014 in the TC minutes\/ report to the Competent Authority.<\/li><li>After the award, the TC convener shall respond to the aggrieved party.<\/li><\/ul>\n6. If received after the declaration of the award of the contract: The designated officer shall FORWARD the application to the COMPETENT AUTHORITY of the tender for his examination on merits and action as considered necessary.<\/p>\n<aside class=\"note\">Such post-award grievance must be redressed and closed within 30 days of receipt of the grievance.<\/p><\/aside>\nIf the Competent Authority finds the complaint to have substance, appropriate and feasible remedial measures should be initiated.<\/p>\n7. If the grievance is resolved, or if the grievance is found to be unwarranted, the aggrieved party shall be informed by the TC convener of the final decision \u2014 without disclosing confidential details.<\/p>\n8. Remedial actions available: Based on such representation, if the Competent Authority is satisfied that there has been a contravention of procurement guidelines in the case, he May initiate such action as, in his opinion, is necessary to rectify the contravention \u2014 INCLUDING:<\/p>\n<ol class=\"lst\"><li>If the grievance is due to inadequacy of procurement guidelines or a lack of understanding of the staff \u2014 remedial action to address such lacunae May be initiated without repercussions to the concerned staff;<\/li><li>Annulment or reconsideration of the procurement proceedings;<\/li><li>Cancellation of the resultant procurement contract, if legally feasible;<\/li><li>In case any individual staff is found responsible \u2014 suitable disciplinary proceedings should be initiated against such staff under the conduct Rules;<\/li><li>In case the complicity of any bidder is proved:<\/li><li>i) REMOVAL of the concerned firm from the list of registered firms;<\/li><li>ii) DEBARMENT of the bidders, if warranted;<\/li><li>iii) reporting the matter to the Competition Commission of India (CCI) in case of anti-competitive actions by the bidder;<\/li><li>Handing over the case to the CVO if there are aspects that require INVESTIGATIONS.<\/li><\/ol>\n<h2>3.8<\/span>Conduct of Public Servants in Public Procurement \u2014 Risks and Mitigations<\/span><\/h2>\n<aside class=\"note\">(Notified vide OM No. F.11\/13\/2017-PPD<\/strong> issued by Department of Expenditure dated 24.10.2017<\/strong>.)<\/em><\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>HOSPITALITY: Hospitality \u2014 including facilitation of travel, lodging, boarding and ENTERTAINMENT during official or unofficial programs \u2014 from suppliers\/ contractors may tend to cross the limits of ethical\/ occasional\/ routine\/ modest\/ normal business practice. Officials sent to the firm's premises for INSPECTIONS\/ MEETINGS may mistakenly presume entitlement to hospitality from the firm, even if other arrangements are available at the location.<\/td><td>Hospitality must never be solicited, directly or indirectly. The frequency, scale and number of officials availing hospitality should not be allowed to identify the recipient in a public way with any particular contractor, supplier or service provider, or raise doubts about its neutrality. It should not involve significant travel, overnight accommodation, or trips abroad. Particular care should be taken in relation to offers of hospitality from firms (say, participating in current or imminent tenders or their execution) who stand to derive a personal or commercial benefit from their relationship with the recipient.<\/td><\/tr><tr><td>2<\/td><td>GIFTS: Gifts from suppliers\/ contractors may tend to cross the limits of ethical\/ occasional\/ routine\/ modest\/ normal business practice \u2014 especially during the festive season. Since the VALUE of the gift May not be known to the recipient, it may cause an inadvertent violation of conduct Rules.<\/td><td>Gifts must never be solicited, directly or indirectly. An official should not accept and retain gifts that are more valuable than the limit as laid down in the conduct Rules. Cash, gift cheques or any vouchers that May be exchanged for cash May not be accepted, regardless of the amount. Particular care should be taken in relation to gifts from firms (say, participating in current or imminent tenders or their execution) who stand to derive a personal or commercial benefit from their relationship with the recipient. Any gift received inadvertently in violation of the above must immediately either be returned, or else reported and deposited in toshakhana\/ treasury.<\/td><\/tr><tr><td>3<\/td><td>Private purchases from official suppliers: Procuring Officials may mistakenly consider it innocuous to seek discounts in private procurements from suppliers\/ contractors having OFFICIAL DEALINGS or its ALLIED FIRMS \u2014 G<\/span> adds: especially from rate Contract holders.<\/td><td>Officials involved in Public Procurement must never indulge in any non-official pecuniary transaction with the contractors, suppliers, or service providers with whom they have official dealings \u2014 including seeking or accepting special facilities or discounts on private purchases (G<\/span> adds: particularly the same items that are being ordered officially on rate contracts)<\/em>.<\/td><\/tr><tr><td>4<\/td><td>sponsorship of events: Procuring officials May mistakenly consider it innocuous to seek financial favours \u2014 donations, advertisements for souvenirs, and contributions in cash or kind \u2014 in relation to sponsoring cultural, social, charitable, religious, or sporting events, in the false belief that, since they are personally not benefitted, it would not be a violation of CIPP.<\/td><td>Officials involved in Public Procurement must never indulge in any non-official pecuniary transaction with the contractors, suppliers, or service providers with whom they have official dealings \u2014 including soliciting of sponsorship for unofficial and private cultural, social, sporting, religious, charitable, or similar organisations or events.<\/td><\/tr><tr><td>5<\/td><td>conflict of interest (coi):<\/strong> The CIPP defines COI as \"\u2026any personal, financial, or business relationship between the bidder and any personnel of the procuring entity who are directly or indirectly related to procurement or execution process of the contract, which can affect the decision of the procuring entity directly or indirectly\u2026\u2026\"<\/em>There may be DILEMMAS regarding which officers are 'RELATED' to the tender or execution process, and even in respect of minor, routine transactions.<\/strong><\/td><td>(See detailed mitigation below the table.)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<h3>3.8.1<\/span>Detailed Mitigation for Conflict of Interest<\/span><\/h3>\n<aside class=\"note\">interpretation of conflict of interest would depend on the organisational structure and its unique circumstances and cannot be laid down universally. However, some illustrative examples are given below to provide context.<\/p><\/aside>\na) which OFFICERS are 'related' to the tender or execution process: This would depend on the ORGANISATIONAL STRUCTURE and the sensitivity of their role in procurement. It may cover KEY OFFICIALS (and any external consultants\/ advisors) involved in:<\/p>\n<ul class=\"lst\"><li>making a RECOMMENDATION,<\/li><li>various APPROVALS, or<\/li><li>making a MAJOR DECISION<\/li><\/ul>\nat any STAGE in procurement \u2014 i.e., during:<\/p>\n<aside class=\"note\">need determination\/ indenting \u2192 Tender Document preparation\/ preparation of comparative tabulation \u2192 Technical and Financial evaluation of Bids \u2192 negotiation\/ signing of Contract \u2192 execution of the contract \u2192 payments to the contractor.<\/p><\/aside>\nB) illustration \u2014 coi (actual, potential, or perceived) can arise if such officers (or his close family) have:<\/p>\n<ul class=\"lst\"><li>i) substantial business interests in the firm \u2014 e.g., shares more than 0.1% of market cap \u2014 or have taken a loan or other FINANCIAL OBLIGATION (say DISCOUNTS) from the firm or its personnel, etc.;<\/li><li>ii) business relationships with the firm \u2014 say, previously worked for the firm, or availed hospitality\/ gifts beyond the limits laid down in the Code of Conduct of the organisation, etc.;<\/li><li>iii) FAMILIAL RELATIONSHIP with the personnel of the firm;<\/li><li>iv) close personal friendships or REGULAR (say, more than once in a quarter) social interactions \u2014 e.g., clubs, games, social associations \u2014 with the Firm's personnel, etc.<\/li><\/ul>\n<aside class=\"note\">DEFINITIONAL FOOTNOTE (in all four Manuals): For the purpose of COI \u2014 <\/p>\n<ul class=\"lst\"><li>\"Firm\" includes its allied firms also.<\/li><li>\"FIRM'S PERSONNEL\" for this purpose shall mean SENIOR EXECUTIVES (or the team handling the bidding) at the bidding firm.<\/li><li>\"CLOSE FAMILY\" for this purpose shall be the officer's spouse, parents, children, and their families.<\/li><li>As far as extended family \u2014 siblings\/ uncles\/ aunts\/ cousins and their families \u2014 is concerned, the situation would depend on the closeness of relationships and whether the officer would in normal course be aware of their activities.<\/li><\/ul><\/aside>\nC) resolution of coi:<\/p>\nIt shall be the responsibility of such officials to declare coi \u2014 to the extent he is aware of it in normal course \u2014 with reference to a procurement process, to the Competent Authority\/ next higher officer.<\/p>\nThe competent officer may EVALUATE:<\/p>\n<ul class=\"lst\"><li>the level of coi, and<\/li><li>the sensitivity of the function assigned to the official.<\/li><\/ul>\nHe may then EITHER DETERMINE:<\/p>\n<ul class=\"lst\"><li>I) that the coi is insignificant enough to influence the type of function performed by the official \u2014 and ask the officer to continue his function; Or<\/li><li>ii) that if the coi or the type of function is significant \u2014 nominate any alternative officer to perform the function (partly or fully) of this official in that procurement process.<\/li><\/ul>\n<h2>3.9<\/span>Development of New Sources and Registration\/ Empanelment\/ Enlistment\/ Pre-qualification<\/span><\/h2>\n(Rule 150 of GFR 2017)<\/em><\/p>\n<aside class=\"note\">Section titles: G<\/span>Development of New Sources and Registration\/ Empanelment\/ Pre-qualification of Suppliers \u00b7 W<\/span> *Development of New Sources and Registration\/ Enlistment of Contractors<\/strong> \u00b7 C<\/span>NC<\/span><\/em>Development of New Sources and Registration\/ Empanelment\/ Pre-qualification of Firms*<\/p><\/aside>\n<h3>3.9.1<\/span>The Three (or Two) Concepts Distinguished<\/span><\/h3><h4 class=\"src-multi\">A. The Goods\/ CS\/ NC formulation \u2014 THREE concepts<\/span>G<\/span>C<\/span>NC<\/span><\/h4><div class=\"srcblock src-multi\">\nNormally, in open tendering, there should be no restriction of prior registration. Entities may provide for registration after selection in unrestricted open tendering.<\/p>\nDifferences may be noted between REGISTRATION, EMPANELMENT and PRE-QUALIFICATION:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Concept<\/th><th>Purpose<\/th><\/tr><\/thead><tbody><tr><td>A) registration<\/td><td>To establish GENUINE IDENTIFICATION of the firm \u2014 e.g., for e-procurement portals, preferential procurement, and so on<\/td><\/tr><tr><td>b) empanelment<\/td><td>To establish PRIMA-FACIE CAPABILITY for RESTRICTED TENDERING (not open tendering) \u2014 e.g., limited tendering panels (C<\/span>NC<\/span> add: also useful in special limited tenders)<\/em>. (It means maintaining a CLASSIFIED LIST of firms based on their EXPERIENCE, usually required in case of limited tenders.)<\/em><\/td><\/tr><tr><td>c) pre-qualification<\/td><td>wherever the nature of the requirement dictates competition only among prequalified bidders (without vitiation of prices offered by unqualified bidders), prequalification May be done with open tendering in the prequalification bidding stage<\/td><\/tr><tr><td>d) approved list\/ multi-use list<\/td><td>If there are FREQUENT REQUIREMENTS of such nature, prequalification may be done through an OPEN PROCESS with an EXTENDED VALIDITY of the Shortlist of Qualified Bidders \u2014 called the List of Approved Sources in some organisations (e.g., Ministry of Railways) \u2014 for example, one year or longer. The use of a List of Qualified Bidders is also known as a MULTI-USE LIST in many countries \u2014 as distinct from empanelment (e.g., Limited Tender Panel, which does not undergo a formal open tender pre-qualification\/ EoI process). In such long-term multi-use lists or approved lists, if any competent bidder applies for inclusion at any time, it should be examined as per the criteria of the original multi-use list.<\/td><\/tr><\/tbody><\/table><\/div>\nHowever, since in common parlance \"registration\" is a word used interchangeably by most departments for all the above three concepts, this usage is being retained \u2014 though the distinction would be clear from the context of usage.<\/p>\n<\/div><h4 class=\"src-W\">B. The Works formulation \u2014 TWO concepts<\/span>W<\/span><\/h4><div class=\"srcblock src-W\">\nThe terms 'ENLISTMENT' and 'REGISTRATION' may be differentiated as follows:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Term<\/th><th>Meaning<\/th><\/tr><\/thead><tbody><tr><td>A) registration<\/td><td>simply registering the contractor, without any verification<\/td><\/tr><tr><td>b) enlistment<\/td><td>including the name of the contractor in the list after verification of credentials<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h3>3.9.2<\/span>Registration \u2014 General Provisions<\/span><\/h3>\na) Who may register, and why G<\/span>C<\/span>NC<\/span>: For goods and services not available on GeM, and for Works, the head of Ministry\/ Department May periodically register suppliers of goods and services that the Department or Office SPECIFICALLY REQUIRES.<\/p>\nEnsuring an up-to-date and current list of registered, capable and competent suppliers\/ consultants\/ service providers facilitates efficiency, economy, and promotion of competition in public procurement \u2014 especially while floating a limited tender\/ local purchase\/ direct contracting.<\/p>\nFor such tenders, it May be possible to skip bidder qualification, to avoid unnecessary repetition\/ duplication of efforts \u2014 thereby saving time, especially in the case of emergency procurement.<\/p>\nRegistration of the supplier\/ consultant\/ service provider should be done following a fair, transparent, and reasonable procedure and after giving due publicity.<\/p>\nSuch registered suppliers should be on-boarded on GeM as and when the item or service gets listed on GeM (Amended vide DoE OM No. F.1\/26\/2018-PPD dated 02.04.2019)<\/em>.<\/p>\nThe list of registered firms for the subject matter of procurement should be exhibited on the websites of the Procuring Entity\/ their e-procurement portals.<\/p>\nb) Registration on e-procurement portals W<\/span>: All the Ministries\/ Departments shall register the prospective contractors on their e-procurement portal or in the CPPP (in case they do not have their own e-procurement portal) before submitting their bids.<\/p>\nThe contractor May be an individual, sole proprietorship firm, partnership firm, limited liability partnership, private or public limited company.<\/p>\nFor registration, the Ministries\/ Departments\/ CPSUs shall capture at least: a) Name of contractor; b) Address and Contact details; c) Permanent Account Number (PAN); d) Details of Digital Signature Certificate (DSC); and e) GSTIN.<\/p>\nDepending on the requirement of the respective procurement portal, the Ministries\/ Departments can capture any other information as may be considered necessary.<\/p>\nc) Enlistment practice in works departments W<\/span>: Some departments \u2014 such as the Central Public Works Department (CPWD) and Military Engineering Services (MES) \u2014 are enlisting the contractors after verification of their credentials.<\/p>\n<ul class=\"lst\"><li>Public authorities May empanel\/ register contractors of those specific types of work which are required by them regularly.<\/li><li>PERFORMANCE of such empanelled contractors should be reviewed periodically.<\/li><li>The list of empanelled\/ registered contractors shall be updated on a regular basis.<\/li><li>The category\/ Class of contractors May be upgraded\/ downgraded, or contractors May be de-listed, based on their performance.<\/li><li>Empanelment of contractors shall be done in a fair and equitable manner, preferably online, after giving due publicity.<\/li><li>The practice of inviting bids for works tenders only from empanelled contractors May be confined to tenders up to a certain threshold value (say Rs 20 crore), as decided by the project executing authorities.<\/li><li>It is expected that ministries\/ departments will also develop their own enlistment process \u2014 as has been done by CPWD, Ministry of railways (MoR) and Ministry of road transport & highways (MoRTH) \u2014 to reduce the time required for verification of credentials of the contractors after opening of the bids.<\/li><li>The lists of such enlisted contractors can be used by any Ministry\/ Department\/ cpsu.<\/li><\/ul>\nd) Sharing of information through CPPP W<\/span>: The ministries\/ departments will also share the information of registered and enlisted contractors with each other through the Central Public Procurement Portal (CPPP).<\/p>\n<ul class=\"lst\"><li>They will also ensure that whenever a contractor is debarred, the information regarding the same is made available immediately to all the ministries\/ departments through the CPPP.<\/li><li>The reasons for the debarment and the order of such debarment May also be displayed on the CPPP.<\/li><li>NIC\/ MeitY shall make appropriate changes in the CPPP so that each contractor can be uniquely identified by PAN.<\/li><li>All the Ministries\/ Departments May take cognizance of the information regarding debarment of contractors and use it as an input for the decision-making process as per their own procurement policies.<\/li><\/ul>\ne) Entities with their own policies: Ministries\/ Departments with a significant volume of procurements May follow their own policies and procedures for registration\/ enlistment of vendors\/ contractors, if they already exist. The policies and procedures described below are for the non-mandatory generic guidance of Ministries\/ Departments that DO not have their own policies\/ procedures.<\/p>\nThe Ministry\/ Department shall notify the authorities competent to deal with the applications and grant registrations\/ enlistments, along with their jurisdictions.<\/p>\nThe appellate authority shall be at least one level above the registering authority, or as designated by the Ministry\/ Department.<\/p>\nf) Cross-use of lists and EMD exemption: All Ministries\/ Departments May use such lists prepared by other ministries\/ departments as and when necessary.<\/p>\nRegistered suppliers\/ firms are ordinarily exempted from furnishing earnest money deposit\/ Bid Security with their tenders for items and monetary limits for which they are registered.<\/p>\n<aside class=\"note\">(NC<\/span> phrases this as: \"empanelled<\/strong> Firms are ordinarily exempted \u2026 for items and Monetary Limits for which they are empanelled<\/strong>.\")<\/em><\/p><\/aside>\n<h3>3.9.3<\/span>Categories for Registration\/ Enlistment<\/span><\/h3><h4>G<\/span> \u2014 Categories for Registration of Suppliers of Goods<\/span><\/h4>\nIn case of procurement of goods, the Administrative Department shall register firms as suppliers of goods in different trade groups of goods in the following BROAD CATEGORIES: a) MANUFACTURERS who supply INDIGENOUS items; b) AGENTS\/ DISTRIBUTORS of such manufacturers who desire to market their production only through their agents; c) FOREIGN MANUFACTURERS with\/ without their accredited agent in India; d) stockists of imported spares or other specified items; e) suppliers of imported goods having REGULAR ARRANGEMENTS with foreign manufacturers.<\/p>\n<h4>W<\/span> \u2014 Categories for Enlistment of Contractors<\/span><\/h4>\nIn case of procurement of works, the Administrative Department shall enlist firms as contractors in different types\/ categories of works \u2014 civil, electrical, horticulture, nursery, etc.<\/p>\nThe contractor may be a private, partnership, pvt ltd, corporate, PSU or a JOINT VENTURE company.<\/p>\n<h3 class=\"src-G\">3.9.4<\/span>Registration of Manufacturers<\/span>G<\/span><\/h3><div class=\"srcblock src-G\">\nOne of the main prerequisites for registration as a manufacturer is that the firm should possess its own in-house testing facilities.<\/p>\n<aside class=\"note\">MSE relaxation: In the case of MSE units, the firm does not need its own testing facilities, but regular arrangements with other reputed Government or government-approved or private agencies in its area for product testing.<\/p><\/aside>\nBefore the manufacturer is included in the list of registered suppliers, the Procuring Entity shall verify the bona fides and standing of the firm. The procuring Entity May also seek assistance from the inspection wing of other inspecting agencies.<\/p>\nIso-certified firms: In the case of firms that have an established quality maintenance system with ISO 9001-2000 certification (latest version) from authorised agencies, the Procuring Entity May consider the registration of such firms without carrying out a capacity assessment.<\/p>\n<aside class=\"note\">Even in the case of firms that have an established quality maintenance system with ISO 9001-2000 certification from authorised agencies, it is necessary for the Procuring Entity to verify the quality processes put in place.<\/p><\/aside>\n<\/div><h3>3.9.5<\/span>Grades\/ Classes (Monetary\/ Tendering Limits)<\/span><\/h3>\nRegistration\/ enlistment should be done by grading the firms (grade a, b, and so on) based on their capability to execute contracts\/ orders of different monetary limits in the relevant category of requirements.<\/p>\nThe monetary limits should be carefully fixed while keeping in view:<\/p>\n<ul class=\"lst\"><li>The banker's reports,<\/li><li>the capacity and capability of the firm, and<\/li><li>other FINANCIAL INFORMATION indicated in the BALANCE SHEETS, such as profit and loss statements.<\/li><\/ul>\n<h4>G<\/span> \u2014 Example of gradation for Goods (NOT mandatory)<\/span><\/h4>\n<div class=\"tblwrap\"><table><thead><tr><th>Grade<\/th><th>Monetary Limit<\/th><\/tr><\/thead><tbody><tr><td>Grade A<\/td><td>Rs. 25 (Rupees twenty-five) lakh AND above<\/td><\/tr><tr><td>Grade B<\/td><td>Rupees five lakh to Rs. 25 (Rupees twenty-five) lakh<\/td><\/tr><tr><td>Grade C<\/td><td>Rupees one lakh and up to Rupees five lakh<\/td><\/tr><\/tbody><\/table><\/div>\nAdditional rule G<\/span>: The firms that are registered for the supply of orders valued above rupees five lakh should invariably be manufacturers or their authorised agents.<\/p>\nWherever practical, the Procuring Entity shall register the manufacturers and not agents or intermediaries.<\/p>\nA sole selling agent\/ authorised agent could be considered for registration, subject to the conditions that:<\/p>\n<ul class=\"lst\"><li>The Procuring Entity is satisfied that he is the sole selling agent of the manufacturers;<\/li><li>The Procuring Entity ascertains the financial and technical capabilities of the manufacturers;<\/li><li>The availability of a suitable arrangement with the sole selling agent for after-sales service shall also be ensured; And<\/li><li>the Procuring Entity shall also satisfy itself that a valid legal agreement exists between the applicant unit and its sole selling agent during the period for which he is registered.<\/li><\/ul>\n<h4>W<\/span> \u2014 Class of Enlistment (Tendering Limits) for Works<\/span><\/h4>\n(A sample classification \u2014 Source: Rules for Enlistment of Contractors in CPWD, 2024)<\/em><\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Class<\/th><th>Tendering Limit<\/th><th>Class<\/th><th>Tendering Limit<\/th><\/tr><\/thead><tbody><tr><td>Class-I (Super)<\/td><td>Rs 650 crore<\/td><td>Class-II<\/td><td>Rs 15 crore<\/td><\/tr><tr><td>Class-I (AAA)<\/td><td>Rs 260 crore<\/td><td>Class-III<\/td><td>Rs 4 crore<\/td><\/tr><tr><td>Class-I (AA)<\/td><td>Rs 130 crore<\/td><td>Class-IV<\/td><td>Rs 1.30 crore<\/td><\/tr><tr><td>Class-I (A)<\/td><td>Rs 75 crore<\/td><td>Class-V<\/td><td>Rs 40 lakh<\/td><\/tr><tr><td>Class-I<\/td><td>Rs 50 crore<\/td><td><\/td><td><\/td><\/tr><\/tbody><\/table><\/div>\n<h3>3.9.6<\/span>Procedure for Registration\/ Enlistment<\/span><\/h3>\na) Fair procedure and publicity: Registration\/ enlistment of the suppliers\/ contractors should be done following a fair, transparent, and reasonable procedure and after giving due publicity.<\/p>\n<aside class=\"note\">W<\/span> adds: Enlistment should be done by any Ministry\/ Department in case it desires to enlist contractors for works <\/strong>which are exclusively needed by it, by keeping <\/strong>Fundamental principles of Public Procurement in view \u2014 especially the transparency principle (transparency, fairness, equality, competition and appeal rights) \u2014 <\/strong>with the approval of the CA, after carefully assessing and verifying credentials, capability, quality control systems, past performance, after-sales service facilities, financial background, and so on.<\/p><\/aside>\nDetails of the procedure for registration\/ enlistment of new firms May be uploaded on the website and published in the form of a booklet for information of the suppliers\/ contractors. Timeframes and criteria for registration\/ enlistment of new suppliers\/ contractors May be clearly indicated.<\/p>\nb) Identifying possible sources:<\/strong> Possible sources for any category\/ group of requirements can be identified based on internal and external references.<\/strong> Data on new suppliers\/ contractors can be obtained from:<\/p>\n<aside class=\"note\">the response received from suppliers\/ contractors \u00b7 open tender advertisements \u00b7 pre-qualification bids \u00b7 Expression of Interest (EoI) \u00b7 various enquiries on the website \u00b7 dedicated websites \u00b7 exhibitions \u00b7 buyer-seller meets \u00b7 various publications of NSIC G<\/span>, the Development Commissioner of the Small Industries Service Institute G<\/span>, BIS \u00b7 trade journals, and so on.<\/p><\/aside>\nThe e-procurement and GeM portals pre-register suppliers online. Such data can be a source of information on prospective suppliers\/ contractors.<\/p>\nc) Updating the list and inviting EoI: The list of registered\/ enlisted contractors shall be updated on a regular basis (ANNUALLY) G<\/span>. New supplier(s)\/ contractor(s) May be considered for registration\/ enlistment at any time, provided they fulfil all the required conditions.<\/p>\nFor any larger-scale or critical registration or development of new suppliers\/ contractors, the Procuring Entity should call for eoI by publicising its need for the development of sources.<\/p>\nD) CIPP undertaking: While registering the firms, an undertaking May be obtained from them that they will abide by the CIPP enclosed with the application, with a clear warning that, in case of transgression of the Code of Integrity, their names are likely to be deleted from the list of registered suppliers\/ enlisted contractors \u2014 besides any other penalty or more severe action as deemed fit.<\/p>\nE) GCC undertaking: Along with the new\/ renewal application for registration\/ enlistment, the suppliers\/ contractors should also be asked to declare that, if awarded a contract in any LTE in which they participate, they bind themselves to abide by the Procuring Entity's general conditions of contract (GCC). Such GCC should be part of the application.<\/p>\nF) the participation Rule: Registered vendors\/ enlisted contractors must participate in relevant limited tenders. In case they do not respond to at least three (3) tenders in a year on being invited to do so \u2014 if there were at least 6 invitations to them \u2014 they May be removed from the list of registered vendors\/ enlisted contractors.<\/p>\ng) Eligibility for registration\/ enlistment:<\/p>\n<ul class=\"lst\"><li>i) any firm situated in India or abroad that is in the business of providing goods\/ works\/ services of specified categories of interest shall be eligible for registration\/ enlistment;<\/li><li>ii) G<\/span><\/strong>where registration is granted based on partly outsourced arrangements\/ agreements, it shall always be the responsibility of the registered unit to keep such arrangements\/ agreements renewed\/ alive, and to keep their registration valid for the period for which it has been granted.<\/strong>Any failure in this regard May make the registration null and void\/ ineffective retrospectively from any such dates which the registering authority considers appropriate;<\/li><li>iii) Suppliers\/ contractors should possess a valid digital signature certificate (DSC) Class III with the company name at the time of registration\/ enlistment\/ renewal, to enable them to participate in e-PROCUREMENTS;<\/li><li>iv) the firm should also have good internal governance \u2014 such as a whistleblower policy, commitment to esg (environmental, social, and governance) code of conduct, code of business ethics, etc.;<\/li><li>V) the firm against whom punitive action has been taken shall not be eligible for re-registration\/ re-enlistment during the currency of the punitive action. Registration\/ enlistment requests May not be entertained from firms (or their allied firms) who are de-registered\/ banned (W<\/span> Phrasing: \"From such firms, stakeholders of whom have any interest in de-enlisted\/ banned firms\")<\/em>.<\/li><\/ul>\nH) assessment of capacity and capability: The application form, complete in all respects and accompanied by the requisite processing fee and prescribed documents, shall be submitted by the firms to the registering\/ enlisting authority.<\/p>\nThe application form, duly filled in, when received from the firms, shall be scrutinised carefully to assess the capacity and capability of the firms \u2014 INCLUDING:<\/p>\n<aside class=\"note\">credentials \u00b7 manufacturing capability G<\/span>\/ capability W<\/span> \u00b7 quality control system \u00b7 past performance \u00b7 after-sales service facilities G<\/span> \u00b7 financial background, and so on, of the applicant.<\/p><\/aside>\n<ul class=\"lst\"><li>References shall be made to other firms of the standing of whom the applicant firm claims to be a supplier\/ contractor.<\/li><li>Likewise, the applicant firm's bankers May also be requested to advise about the firm's financial standing.<\/li><\/ul>\ni) If registration cannot be granted: In cases where the firm is not considered capable and registration\/ enlistment cannot be granted, the concerned authority shall communicate the deficiencies and shortcomings directly to the firms, under intimation to the appellate authority.<\/p>\nWhere a request for re-verification and review is made by the firm \u2014 along with any fee as prescribed and within the period prescribed by the Department \u2014 a review shall be undertaken.<\/p>\n<aside class=\"note\">Timing variant:<\/strong>C<\/span>NC<\/span> expressly add that such a request can be made only after six months<\/strong>. W<\/span> says the period is \"say, within six months<\/strong>\". G<\/span> does not specify the period.<\/p><\/aside>\nRequests for re-verification after the expiry of the said period would be treated as a fresh application, and a processing fee, if any is prescribed, charged accordingly.<\/p>\nj) Grant of registration\/ enlistment: If considered to be CAPABLE after carefully assessing and verifying credentials, the firm May be granted registration\/ enlistment with the approval of the ca.<\/p>\nk) Scope of registration:<\/p>\n<ul class=\"lst\"><li>G<\/span> Registration should be for specific trade groups of goods\/ works\/ services. For this purpose, all goods\/ works\/ services should be divided into trade groups, and the information published on the relevant portals\/ websites.<\/li><li>W<\/span> Enlistment should be for a specific category of works.<\/li><\/ul>\nl) Validity period and provisional status:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>G<\/span> \u2014 Goods<\/th><th>W<\/span> \u2014 Works<\/th><\/tr><\/thead><tbody><tr><td>Validity<\/td><td>a specified period (one to three years)<\/td><td>A specified period (say three years), and would be considered for EXTENSION (on application by the contractor\/ service provider) based on satisfactory performance of the firm<\/td><\/tr><tr><td>Renewal<\/td><td>At the end of this period, the registered supplier(s) willing to continue with registration is to apply afresh for renewal of registration<\/td><td> \u2014 <\/td><\/tr><tr><td>Provisional status<\/td><td>the registration would be initially treated as provisional, and it would be treated as confirmed only after the firm has satisfactorily executed one order of the relevant category and value from the Procuring Entity<\/td><td>Same rule, but \"one CONTRACT of the relevant category and value\"<\/td><\/tr><tr><td>Extension not a right<\/td><td>the extension of validity of registration is not a matter of right, and the Procuring Entity reserves the right not to extend such registration without assigning any reason<\/td><td>(same)<\/em><\/td><\/tr><tr><td>New entrants<\/td><td>New supplier(s) May also be considered for registration at any time, provided they fulfil all the required conditions<\/td><td> \u2014 <\/td><\/tr><\/tbody><\/table><\/div>\nm) Unique number and website display: All registered suppliers\/ enlisted contractors should be allocated a unique registration\/ enlistment number.<\/p>\nThe list of registered suppliers\/ enlisted contractors \u2014 indicating the names and addresses with details of the requirements and monetary value they will supply\/ execute, as well as the VALIDITY PERIOD, and so on, for which they are registered\/ enlisted \u2014 shall be exhibited on the websites of the Procuring Entity.<\/p>\nn) EMD exemption and its limits G<\/span>: Within the monetary limits so prescribed, and also for the category of registration, the registered firm May be exempted from depositing the earnest money deposit (EMD).<\/p>\nIn other categories and higher monetary limits, the supplier would be treated as any unregistered supplier and not be entitled to the privileges of a registered supplier.<\/p>\n<aside class=\"note\">However: The monetary limit or category so laid down does not debar a firm from getting orders more than the monetary limit or for other categories \u2014 provided the Procuring Entity is satisfied with the capacity and capability of the firm \u2014 but a requisite Security Deposit should be obtained, as is being done in the case of unregistered firms.<\/p><\/aside>\nO) monitoring performance and removal: The performance and conduct of every registered supplier\/ enlisted contractor are to be monitored\/ watched by the relevant Department.<\/p>\nThe Procuring Entity should also reserve the right to remove firms who do not perform satisfactorily \u2014 even during the validity of registration\/ enlistment (after giving due opportunity to the supplier\/ contractor to make a representation) \u2014 if they:<\/p>\n<ul class=\"lst\"><li>Fail to abide by the terms and conditions of the registration\/ enlistment, or<\/li><li>fail to execute contracts on time, or<\/li><li>supply substandard goods G<\/span> \/ do substandard work W<\/span>, or<\/li><li>make any false declaration to any Government agency, or<\/li><li>G<\/span> For on public interest considerations \/ W<\/span> For any ground which, in the opinion of the Government, is not in public interest.<\/li><\/ul>\nP) right of reassessment: The Procuring Entity shall retain its option to reassess firms already registered\/ enlisted at any later date, to satisfy itself with:<\/p>\n<ul class=\"lst\"><li>The current financial soundness\/ creditworthiness,<\/li><li>facilities available, and so on.<\/li><\/ul>\nThereafter, the Procuring Entity May decide to retain them as registered suppliers for the requirements and monetary limit that were earlier considered, or with necessary changes as deemed fit.<\/p>\nIn case of adverse reports from the team of Procuring Entity officers who reassess the firm, the Procuring Entity shall:<\/p>\n<ul class=\"lst\"><li>G<\/span>W<\/span> \u2014 DELETE such firm from the registered suppliers'\/ enlisted contractors' list<\/strong>;<\/li><li>C<\/span>NC<\/span> \u2014 delete or downgrade such firm from the registered suppliers'\/ service providers' list.<\/li><\/ul>\n<aside class=\"note\">Cross-reference note C<\/span>NC<\/span>:<\/strong>\"Further details about the procedure for registration are given in para 3.6 of the Manual for Procurement of Goods, 2024<\/strong>.\"<\/em> \u2014 i.e., the Consultancy and Non-Consultancy Manuals reproduce only paras (a), (f) and (i)\u2013(p) above, and cross-refer to the Goods Manual for the full procedure<\/strong>.<\/p><\/aside>\n<h2>3.10<\/span>Debarment<\/span><\/h2>\n(Rule 151 of GFR 2017)<\/em><\/p>\n<aside class=\"note\">Section titles: G<\/span>Debarment of Suppliers \u00b7 W<\/span> *Debarment of Contractors<\/strong> \u00b7 C<\/span><\/em>Debarment of Suppliers *(an apparent carry-over from the Goods Manual \u2014 the CS Manual's subject is consultants)* \u00b7 NC<\/span> *Debarment of Service Providers<\/strong><\/p><\/aside>\n<h3>3.10.1<\/span>GFR Provisions<\/span><\/h3>\nRegistration of suppliers\/ contractors\/ consultants\/ service providers AND their eligibility to participate in a Procuring Entity's procurements is subject to:<\/p>\n<ul class=\"lst\"><li>Compliance with the Code of Integrity for Public Procurement, and<\/li><li>satisfactory performance in contracts.<\/li><\/ul>\nRule 151 of GFR, 2017 states the following regarding 'debarment from bidding':<\/p>\n<aside class=\"note\">A) a bidder shall be debarred if he has been convicted of an offence:<\/p>\n<ul class=\"lst\"><li>i) under the prevention of Corruption Act, 1988; or<\/li><li>ii) the Indian Penal Code (IPC), 1860 \u2014 (G<\/span> footnote: this law has been replaced by the bharatiya Nyaya Sanhita (BNS), 2023 from 1st July 2024; W<\/span>, C<\/span>, NC<\/span> cite the BNS directly)<\/em> \u2014 or any other law for the time being in force, for causing any loss of life or property, or causing a threat to public health, as part of the execution of a Public Procurement contract.<\/li><\/ul>\nB) a bidder debarred under sub-section (a), or any successor of the bidder, shall not be eligible to participate in a procurement process of ANY<\/em> Procuring Entity for a period not exceeding three years, commencing from the date of debarment.<\/p>\n<aside class=\"note\">W<\/span> footnote: *\"<\/strong>Now two years is applicable as mentioned below in para 8.7.2-3-a).\"*<\/p><\/aside>\nc) a Procuring Entity May debar a bidder or any of its successors from participating in any procurement process undertaken by it for a period not exceeding two years, if it determines that the bidder has breached the Code of Integrity.<\/p>\n<aside class=\"note\">W<\/span>NC<\/span> add: *\"<\/strong>The Ministry\/ Department will maintain such list, which will also be displayed on their website.\"*<\/p><\/aside>\nd) the bidder shall not be debarred unless such bidder has been given a reasonable opportunity to represent against such debarment.<\/p><\/aside>\n<h3>3.10.2<\/span>Current Guidelines on Debarment<\/span><\/h3>\n1. Origin: PPD, DoE did consultations on the issue of Debarment with major procuring Ministries\/ Departments and issued the following 'debarment guidelines' in supersession of all earlier instructions on this subject (Notified vide OM No. F.1\/20\/2018-PPD issued by Department of Expenditure dated 02.11.2021)<\/em>.<\/p>\nPublic Procurement organisations who have existing guidelines for debarment (by any name) should revise their guideline in conformity with these guidelines issued by PPD, DoE.<\/p>\n2. Two types of debarment:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Type<\/th><th>Who issues the order<\/th><\/tr><\/thead><tbody><tr><td>I) debarment limited to a single Ministry<\/td><td>The Ministry itself can issue the appropriate Orders, thereby banning all its business dealing with the debarred firm<\/td><\/tr><tr><td>ii) Debarment EXTENDING beyond the jurisdiction of the Ministry \u2014 i.e., covering all Central ministries\/ departments<\/td><td>the requisite orders shall be issued by the Department of Expenditure (DoE), Ministry of Finance (MoF)<\/td><\/tr><\/tbody><\/table><\/div>\n3. Definitions:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Term<\/th><th>Definition<\/th><\/tr><\/thead><tbody><tr><td>\"Firm\" \/ \"bidder\"<\/td><td>have the same meaning for the purpose of these guidelines, which includes an individual or person, a company, a cooperative society, a hindu undivided family, and an association or body of persons \u2014 whether incorporated or not \u2014 engaged in trade or business<\/td><\/tr><tr><td>\"Allied firm\"<\/td><td>All concerns which come within the sphere of effective influence of the debarred firms shall be treated as allied firms. In determining this, the factors listed in its definition in the 'Procurement Glossary' section may be kept in view<\/td><\/tr><tr><td>\"Banning of a firm\", \"suspension\", \"black-listing\"<\/td><td>convey the same meaning as \"debarment\"<\/td><\/tr><\/tbody><\/table><\/div>\n4. Alignment obligation: All ministries\/ departments must align their existing debarment guidelines with these guidelines. Further, tender\/ bidding documents must also be suitably amended, if required.<\/p>\n<h3>3.10.3<\/span>Debarment by a SINGLE Ministry\/ Department<\/span><\/h3>\nOrders for Debarment of a firm(s) shall be passed by a Ministry\/ Department, keeping in view the following:<\/p>\na) Grounds and duration: A bidder (including its successors\/ allied firms) May be debarred from participating in any procurement process for a period not exceeding two years (along with such other actions as may be permissible under law) for the following reasons:<\/p>\n<ul class=\"lst\"><li>i) If it is determined that the bidder has breached the Code of Integrity as per Rule 175 of GFRs 2017.<\/li><li>ii) false declaration of local content by Class-I\/ Class-II local suppliers under the Public Procurement (Preference to Make in India) Order 2017, dated 16\/09\/2020 or later \u2014 shall also be treated as a breach of the Code of Integrity. A supplier who has been debarred by any procuring entity as per this sub-para:<\/li><li>The fact and duration of debarment for this reason by any procuring entity must be promptly brought to the notice of the member-convenor of the standing committee (joint Secretary, DPIIT, under the Make in India order) and the Department of Expenditure, through the concerned Ministry\/ Department or in some other manner;<\/li><li>The standing committee shall consolidate such cases, and a centralised list or decentralised list of such suppliers with the period of debarment must be maintained on a periodical basis and displayed on the website(s);<\/li><li>Such suppliers \u2014 though debarred by a single Ministry\/ Department \u2014 shall not be eligible for preference under the Make in India order for procurement by any other<\/em> Procuring Entity for the duration of the debarment. This shall be effective from the date of uploading such debarment to the website(s).<\/li><li>iii) for any other actions or omissions by the firm that, in the opinion of the Ministry\/ Department, warrants debarment.<\/li><\/ul>\n<aside class=\"note\">Footnote \u2014 the illustrative list of \"other actions or omissions\" (given in all four Manuals):<\/p>\n<ul class=\"lst\"><li>Supply of substandard material;<\/li><li>NON-SUPPLY of material;<\/li><li>Abandonment of works;<\/li><li>Substandard quality of works;<\/li><li>Failure to abide by \"bid securing declaration\";<\/li><li>Conviction under the Prevention of Corruption Act, 1988;<\/li><li>CONVICTION under any law for causing any loss of life or property, or causing a threat to public health, as part of executing a public procurement contract;<\/li><li>Employs a Government servant who has been dismissed or removed on account of corruption;<\/li><li>Employs a non-official convicted for an offence involving corruption or abetment of such an offence, in a position where he could corrupt Government servants; Or<\/li><li>employs a Government officer within one year of his retirement who has had business dealings with him in an official capacity before retirement.<\/li><\/ul><\/aside>\nB) jurisdiction of the order: The debarment order shall not be circulated to other ministries\/ departments. It will only be applicable to all the attached\/ subordinate offices, autonomous bodies, Central public sector undertakings (CPSEs), etc., of the Ministry\/ Department issuing the debarment order.<\/p>\n<aside class=\"note\">(Format of Debarment Order \u2014 G<\/span> Annexure 38 \u00b7 W<\/span> Annexure 16 \u00b7 C<\/span> Annexure 28 \u00b7 NC<\/span> Annexure 24.)<\/em><\/p><\/aside>\nc) Reasonable opportunity: The concerned Ministry\/ Department, before ISSUING the debarment order against a firm, must ensure that reasonable opportunity has been given to the concerned firm to represent against such debarment \u2014 including a personal hearing if requested by the firm.<\/p>\n<aside class=\"note\">(Format of Show-cause Notice for Debarment \u2014 G<\/span> Annexure 37 \u00b7 W<\/span> Annexure 15 \u00b7 C<\/span> Annexure 27 \u00b7 NC<\/span> Annexure 23.)<\/em><\/p><\/aside>\nd) Competent Authority: The Secretary of the Ministry\/ Department May nominate an officer at the rank of Joint Secretary\/ Additional Secretary as Competent Authority (ca) to debar the firms.<\/p>\ne) List maintenance: The Ministry\/ Department will maintain a list of such debarred firms, which will also be displayed on its website. Such a list on the website shall be automatically binding on the departments, subordinate and attached offices, autonomous bodies, and CPSEs under the Ministry \u2014 but in case of doubt, it can be confirmed by the issuing authority.<\/p>\nF) concurrent debarments: More than one Ministry\/ Department May concurrently debar the same firm.<\/p>\nG) not a vigilance function: Debarment is an executive function and should not be allocated to the vigilance Department.<\/p>\nH) timeline for the debarment process: The period of debarment starts from the date of issue of the debarment order; Therefore, the process of debarment should be conducted expeditiously.<\/p>\nConsidering the QUASI-JUDICIAL NATURE of such proceedings and the need to afford a fair hearing to the firm, the following timeline is SUGGESTED \u2014 which May be suitably modified considering the specifics of an organisation:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>Activity<\/th><th>Time<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>Noticing of delinquency of the firm by the Procuring Entity<\/td><td>zero-day<\/td><\/tr><tr><td>ii<\/td><td>Evaluation of evidence and proposal to ca for debarment of the firm<\/td><td>2 WEEKS<\/td><\/tr><tr><td>iii<\/td><td>Issue of show cause notice to the firm, calling for written and oral submission<\/td><td>1 WEEK<\/td><\/tr><tr><td>iv<\/td><td>time for submission, including reminders, etc.<\/td><td>3 WEEKS<\/td><\/tr><tr><td>v<\/td><td>evaluation of firm's submission and giving oral hearing to the firm<\/td><td>3 WEEKS<\/td><\/tr><tr><td>vi<\/td><td>Final ORDER, indicating an opportunity to the firm \u2014 2 weeks \u2014 to appeal to the Secretary of the Ministry\/ Department as APPELLATE AUTHORITY<\/td><td>2 WEEKS<\/td><\/tr><tr><td><\/td><td>total from zero-day, after which the debarment period starts<\/td><td>12 WEEKS<\/td><\/tr><tr><td>vii<\/td><td>receipt of appeal and disposal of the same by the appellate authority<\/td><td>4 WEEKS<\/td><\/tr><\/tbody><\/table><\/div>\n<h3>3.10.4<\/span>Debarment by CPSEs, Attached Offices\/ Autonomous Bodies, and GeM<\/span><\/h3>\nministries\/ departments, at their option, May also delegate powers to debar bidders to their CPSEs, attached offices\/ autonomous bodies, etc.<\/p>\nIn such cases, the broad principles for debarment in para 3.10.3(a) to (h) above are to be kept in mind.<\/p>\nDebarments by such bodies shall be applicable only to the procurements made by such bodies.<\/p>\nSimilarly, the Government E-marketplace (GeM) can also debar bidders for up to two years on its portal.<\/p>\n<h3>3.10.5<\/span>Debarment ACROSS ALL Ministries\/ Departments<\/span><\/h3>\nIn the following situations, the Ministry\/ Department May consider debarring the firm from taking part in any tendering procedure floated by ALL<\/em> The Central Government ministries\/ departments:<\/p>\na) Ground \u2014 conviction (Rule 151(i) of GFRs, 2017), for debarment up to three years:<\/p>\n<ul class=\"lst\"><li>i) under the prevention of Corruption Act, 1988; or<\/li><li>ii) the IPC, 1860\/ Bharatiya Nyaya Sanhita, 2023, or any other law for the time being in force, for causing any loss of life or property, or causing a threat to public health, as part of the execution of a Public Procurement contract.<\/li><\/ul>\nB) the reference to DoE: The Ministry\/ Department concerned should, after obtaining the approval of the Secretary concerned, forward to DoE a self-contained note setting out all the facts of the case and the justification for the proposed debarment, along with all the relevant papers and documents.<\/p>\nC) prior opportunity is mandatory: The Ministry\/ Department, before forwarding the proposal to DoE, must ensure that reasonable opportunity has been given to the concerned firm to represent against such debarment \u2014 including a personal hearing if requested by the firm.<\/p>\n<aside class=\"note\">If DoE realises that sufficient opportunity has not been given to the firm to represent against the debarment, such debarment requests received from ministries\/ departments shall be rejected.<\/p><\/aside>\nD) interim debarment: The firm shall remain debarred during the interim period till the final decision is taken by DoE \u2014 only in the Ministry\/ Department forwarding such proposal<\/em>.<\/p>\nFor this purpose, the proposing Ministry shall issue an interim order debarring the firm from taking part in tendering procedures floated by their Ministry\/ Department, following the procedure laid down in para 3.10.3 above.<\/p>\nSuch order inter alia must mention that the Government reserves its right to further debar the firm from taking part in any tendering procedure floated across all the Central Government ministries\/ departments, following due procedure.<\/p>\nE) doe's powers and timeline: DoE can also give additional opportunity, at their option, to the firm to represent against proposed debarment. DoE can also take suo-moto<\/em> Action to debar the firms in certain circumstances.<\/p>\nDoE shall complete the process of debarment within 12 weeks after receiving the proposal from the concerned Ministry\/ Department.<\/p>\nF) doe's order: DoE will issue the necessary orders for debarment for a period not exceeding three years for offences mentioned in Rule 151(i) of gfrs, 2017 \u2014 after satisfying itself that the proposed debarment across all the ministries\/ departments is in accordance with the said Rule. This scrutiny is intended to ensure uniformity of treatment in all cases.<\/p>\nG) the Central list: DoE will maintain a list of such debarred firms, which will be displayed on the gem-Central Public Procurement Portal (CPPP). This list on CPPP shall be applicable to all ministries\/ departments, attached and subordinate offices, CPSEs, and autonomous bodies \u2014 but in case of doubt, they May confirm it from the issuing authority.<\/p>\nH) absolute bar: No contract of any kind whatsoever shall be placed on the firm debarred by DoE \u2014 including its allied firms \u2014 during the period of debarment, by any Ministry\/ Department\/ attached\/ subordinate offices of the Government of India, including autonomous bodies, CPSEs, etc., after the issue of a debarment order.<\/p>\n<h3>3.10.6<\/span>Review and Revocation of Orders<\/span><\/h3>\nA) automatic revocation on expiry: An order for debarment passed shall be deemed to have been automatically revoked on the expiry of the period of debarment specified therein \u2014 and it will not be necessary to issue a specific formal order of revocation.<\/p>\nb) Early review\/ revocation: The AUTHORISED ENTITY (DoE, Ministry\/ Department, or CPSEs, Attached Offices\/ Autonomous Bodies, GeM, etc.) that ISSUED the order of debarment can review or revoke the debarment order before the period of debarment is over:<\/p>\n<ul class=\"lst\"><li>Suo-moto (based on new facts that come to light), or<\/li><li>on an appeal by the debarred bidder.<\/li><\/ul>\nAfter a review, an order for modification of the period of debarment or revocation of debarment \u2014 if there is adequate justification for the same \u2014 can be issued.<\/p>\nApproval levels:<\/p>\n<ul class=\"lst\"><li>Ordinarily, such modification\/ revocation of the Order should be done with the approval of the Secretary concerned of doE or the Ministry\/ Department that issued such orders.<\/li><li>In case of debarments done by CPSEs, attached offices\/ autonomous bodies, GeM, etc., such modification\/ revocation of the debarment orders should be done only with the approval of at least a board-level officer.<\/li><\/ul>\n<h3>3.10.7<\/span>Other Provisions (Common to BOTH Types of Debarment)<\/span><\/h3>\na) Contents of the order: The debarment order shall MENTION:<\/p>\n<ul class=\"lst\"><li>The reason(s) in brief that led to the debarment of the firm,<\/li><li>The jurisdictional extent to which the order shall be applicable, and<\/li><li>The validity period of debarment.<\/li><\/ul>\nB) the bar on contracts, and the two cut-off dates: No contract of any kind whatsoever shall be placed with a debarred firm \u2014 including its allied firms \u2014 after the issue of a debarment order by the entities in the jurisdiction mentioned in the order.<\/p>\nBids from only such firms shall be considered for placement of contract which are:<\/p>\n<ul class=\"lst\"><li>Neither debarred on the date of opening of tender<\/strong> \u2014 opening of the first bid, normally called the technical bid, in case of two-packet\/ two-stage tendering<\/em> \u2014 <\/li><li>nor debarred on the date of contract<\/strong> \u2014 i.e., date of issue of the Letter of Acceptance<\/em>.<\/li><\/ul>\nEven in the cases of risk purchase, no contract should be placed on such debarred firms.<\/p>\nC) treatment of a debarred firm's bid: If any debarred firm submits the bid, it will be ignored. In case such firm is lowest (L-1), the next lowest firm shall be considered as L-1. Bid Security submitted by such debarred firms shall be returned to them.<\/p>\nd) No retrospective effect on existing contracts: Contracts concluded before the issue of the debarment order shall not be affected by the debarment orders.<\/p>\nE) automatic extension to allied firms and JV partners: The debarment shall be automatically extended to all its allied firms. In case a joint venture\/ consortium is debarred, all partners will also stand debarred for the period specified in the debarment order. The names of partners should be clearly specified in the \"debarment order\".<\/p>\nF) no impact on other legal rights: Debarment in any manner does not impact any other contractual or other legal rights of the procuring entities.<\/p>\ng) Commencement \u2014 two different dates:<\/p>\n<ul class=\"lst\"><li>For the issuing entity: The period of debarment shall start from the date of issue of the debarment order.<\/li><li>For other procuring entities: The debarment takes effect prospectively from the date of uploading on the website(s), in such a manner that ongoing procurements are not disrupted.<\/li><\/ul>\nH) minimum period: Ordinarily, the period of debarment should not be less than six months.<\/p>\ni) GeM Suspension under the Incidence Management Policy [W + C + NC \u2014 not in G]:<\/p>\nThe GeM portal also has a provision for suspension<\/em> \u2014 debarring vendors'\/ service providers' participation in procurements of ALL<\/em> The buyers \u2014 under its incidence management policy.<\/p>\n<aside class=\"note\">(Reference: https:\/\/assets-bg.gem.gov.in\/resources\/pdf\/incident_management_policy_v12.1.pdf)<\/em><\/p><\/aside>\nthe reasons and periods for suspension are different than in the provisions mentioned above.<\/p>\nHowever, if a Procuring Entity feels that the period of suspension by GeM is not adequate, it May also debar the firm as per the procedure mentioned in this section for a more appropriate period \u2014 but such debarment shall be applicable ONLY<\/em> To procurements by that Procuring Entity.<\/p>\nj) Undertakings from bidders on debarment status [G \u2014 not in W\/C\/NC]:<\/p>\nIt is noticed that many procuring entities take undertakings from the bidders with respect to their debarment status\/ period. Such undertakings, if taken, must be in conformity with the debarment guidelines, as above, to avoid any possible confusion.<\/p>\nk) Alignment obligation W<\/span>C<\/span>NC<\/span>: All ministries\/ departments must align their existing debarment guidelines in conformity with these guidelines. Further, bidding documents must also be suitably amended, if required.<\/p>\n<h3>3.10.8<\/span>Safeguarding the Procuring Entity's Interests during Debarment<\/span><\/h3>\n<aside class=\"note\">This is the closing caution of the debarment section in all four manuals.<\/p><\/aside>\nSuppliers\/ contractors\/ consultants\/ service providers are important assets for the procuring entities, and punishing delinquent suppliers should be the last resort<\/em>.<\/p>\n<ul class=\"lst\"><li>It takes a lot of time and effort to develop, register and mature a new supplier.<\/li><li>In case of a shortage of suppliers in a particular group of materials\/ equipment\/ services, such punishment May also hurt the interest of the Procuring Entity<\/em>.<\/li><\/ul>\nTherefore:<\/p>\n<ol class=\"lst\"><li>The Procuring Entity May always seek the views of the concerned Department regarding the repercussions of such punitive action on the continuity of procurements.<\/li><li>The Procuring Entity May give due weightage to the past performance of the supplier\/ consultant\/ service provider.<\/li><li>In case of a shortage of suppliers and in cases of less serious misdemeanours, the Procuring Entity May:<\/li><li>Pragmatically analyse the circumstances,<\/li><li>reform the supplier, and<\/li><li>get a written commitment from the supplier that his performance will improve.<\/li><li>If this fails, efforts should be made to see if:<\/li><li>[G, c, nc] \u2014 a shorter period of debarment can serve the purpose;<\/li><li>W<\/span> \u2014 A temporary<\/em> Debarment can serve the purpose.<\/li><\/ol>\n<h2>3.11<\/span>Enlistment of Indian Agents<\/span><\/h2>\n(Rule 152 of GFR 2017)<\/em><\/p>\nministries\/ departments, if they so require, May enlist Indian agents who desire to quote directly on behalf of their foreign principals.<\/p>\n<aside class=\"note\">Footnote in all four Manuals:<\/em> Rule 152 of GFR, 2017 amended vide OM No. F.26\/2\/2016-PPD issued by Department of Expenditure dated 25.07.2017.<\/p>\n(The Goods and Consultancy Manuals print this footnote as \"Rule 52\" \u2014 an evident typographical error for Rule 152<\/strong>, which is correctly printed in the Works and Non-Consultancy Manuals.)<\/em><\/p><\/aside>\nDetailed guidelines on Indian Agents of foreign suppliers are contained in Annex-1 to the Integrity Pact Annexure of each Manual \u2014 \"Guidelines for Indian Agents of Foreign Suppliers\"<\/em>.<\/p>\n<h1>Appendix to Chapter 3 \u2014 Points of Difference Between the Four Manuals<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Chapter number<\/td><td>G\/C\/NC: Chapter 3<\/strong> (before Bidding Design) \u00b7 w: Chapter 8<\/strong> (after Contract Execution)<\/td><\/tr><tr><td>2<\/td><td>Chapter title<\/td><td>G:<\/strong>Supplier Relationship Management<\/em> \u00b7 W:<\/strong>Registration\/ Enlistment of Contractors and Governance Issues<\/em> \u00b7 C\/NC:<\/strong>Participation of Bidders and Governance Issues<\/em><\/td><\/tr><tr><td>3<\/td><td>Relationship Management section<\/td><td>G (3.1) + W (8.1) only \u2014 absent in C\/NC<\/td><\/tr><tr><td>4<\/td><td>Eligibility Criteria for Participation<\/td><td>C (3.1) + NC (3.1) only \u2014 absent in G\/W<\/td><\/tr><tr><td>5<\/td><td>Legal Status of Bidders<\/strong> (individuals, firms, NGOs, specialised agencies, sub-contracting, consortium\/ JV)<\/td><td>C (3.2) + NC (3.2) only<\/td><\/tr><tr><td>6<\/td><td>JV\/C discouraged in QCBS\/ QOP procurement<\/td><td>NC only<\/td><\/tr><tr><td>7<\/td><td>Demerged entities \u2014 five-year use of parent credentials (DoE OM F.8\/78\/2023-PPD dated 12.10.2023)<\/td><td>NC only<\/td><\/tr><tr><td>8<\/td><td>Rule 177 GFR bar on direct engagement of retired Government servants as consultants<\/td><td>C only<\/strong> (NC states the substance without citing Rule 177)<\/td><\/tr><tr><td>9<\/td><td>Canons of Financial Propriety re-stated in this chapter<\/td><td>C (3.3.1) + NC (3.3.1)<\/strong> \u2014 in G\/W<\/strong> it is at para 1.9<\/td><\/tr><tr><td>10<\/td><td>RTI and Proactive Disclosures re-stated in this chapter<\/td><td>C (3.3.2) + NC (3.3.2) \u2014 in G it is at para 1.12; absent from W entirely<\/td><\/tr><tr><td>11<\/td><td>CIPP broken into four numbered sub-sections<\/strong> (Introduction; the Code; Proactive Disclosures; Punitive Provisions)<\/td><td>W only<\/strong> (8.2.1\u20138.2.4)<\/td><\/tr><tr><td>12<\/td><td>CIPP declaration signed at \"Need Assessment\" vs \"Preparation of Estimates\"<\/td><td>G\/C\/NC: Need Assessment \u00b7 W: Preparation of Estimates<\/td><\/tr><tr><td>13<\/td><td>CIPP declaration expressly extended to SUB-CONTRACTORS engaged by the bidder<\/td><td>W only<\/td><\/tr><tr><td>14<\/td><td>Professionalism and Unfair Competitive Advantage; the three consultancy disqualification rules<\/td><td>C only<\/td><\/tr><tr><td>15<\/td><td>Punitive debarment period under CIPP<\/td><td>G\/w\/nc: Not less than six months (a floor) \u00b7 c: Not exceeding two years (a ceiling)<\/td><\/tr><tr><td>16<\/td><td>CCI reference filed by whom<\/td><td>G\/W\/NC: Joint Secretary level officer \u00b7 C: the Competent Authority<\/td><\/tr><tr><td>17<\/td><td>\"Recovery of payments including advance payments\"<\/td><td>G, W, NC \u2014 C omits \"including advance payments\"<\/td><\/tr><tr><td>18<\/td><td>Integrity Pact \u2014 tri-partite arrangement with sub-contractors<\/td><td>C only<\/td><\/tr><tr><td>19<\/td><td>IP format may be updated to incorporate latest procurement instructions<\/td><td>G + W<\/strong> \u00b7 C\/NC<\/strong> instead say Ministries and CPSEs<\/strong> may use the format with suitable changes<\/td><\/tr><tr><td>20<\/td><td>Annex-2 to Integrity Pact<\/td><td>G:<\/strong>Extract of Standard Operating Procedure<\/em> \u00b7 W\/C\/NC:<\/strong>Appointment and Role of IEMs<\/em><\/td><\/tr><tr><td>21<\/td><td>Grievance redressal \u2014 \"ambiguity in contract terms\" placed as a separate paragraph<\/td><td>W<\/strong> (para 4) \u00b7 G\/C\/NC<\/strong> place it as item (ix) within the \"not subject to review\" list<\/td><\/tr><tr><td>22<\/td><td>Rate Contract holders named in the \"private purchases\" risk row<\/td><td>G only<\/td><\/tr><tr><td>23<\/td><td>Registration\/ Empanelment\/ Pre-qualification \u2014 three concepts distinguished<\/td><td>G, C, NC<\/td><\/tr><tr><td>24<\/td><td>Registration vs Enlistment \u2014 two concepts distinguished<\/td><td>W only<\/td><\/tr><tr><td>25<\/td><td>Mandatory pre-bid registration on e-procurement portal\/ CPPP with five data fields (Name, Address, PAN, DSC, GSTIN)<\/td><td>W only<\/td><\/tr><tr><td>26<\/td><td>CPWD\/ MES enlistment practice; MoR and MoRTH cited; Rs 20 crore ceiling on empanelled-only tendering<\/td><td>W only<\/td><\/tr><tr><td>27<\/td><td>Sharing of registered\/ enlisted\/ debarred contractor data through CPPP; unique identification by PAN by NIC\/ MeitY<\/td><td>W only<\/td><\/tr><tr><td>28<\/td><td>Five categories for registration of suppliers of goods (manufacturers, agents, foreign manufacturers, stockists, importers)<\/td><td>G only<\/td><\/tr><tr><td>29<\/td><td>Categories of works for enlistment (Civil, Electrical, Horticulture, Nursery)<\/td><td>W only<\/td><\/tr><tr><td>30<\/td><td>In-house testing facility prerequisite; MSE relaxation; ISO 9001-2000 treatment<\/td><td>G only<\/td><\/tr><tr><td>31<\/td><td>Grade A\/B\/C monetary limits (Rs 25 lakh \/ Rs 5\u201325 lakh \/ Rs 1\u20135 lakh)<\/td><td>G only<\/td><\/tr><tr><td>32<\/td><td>CPWD Class-I(Super) to Class-V tendering limits (Rs 650 crore down to Rs 40 lakh)<\/td><td>W only<\/td><\/tr><tr><td>33<\/td><td>Sole selling agent registration conditions; above-Rs-5-lakh manufacturers-or-authorised-agents rule<\/td><td>G only<\/td><\/tr><tr><td>34<\/td><td>Partly outsourced arrangements \u2014 registration void retrospectively<\/td><td>G only<\/td><\/tr><tr><td>35<\/td><td>Re-verification request permitted only after six MONTHS<\/td><td>C + NC<\/strong> state it expressly \u00b7 W<\/strong> says \"say, within six months\" \u00b7 G<\/strong> silent<\/td><\/tr><tr><td>36<\/td><td>Validity of registration<\/td><td>G: one to three years<\/strong>, apply afresh for renewal \u00b7 W: say three years<\/strong>, extension on application based on satisfactory performance<\/td><\/tr><tr><td>37<\/td><td>EMD exemption within monetary limit; treated as unregistered beyond it; security deposit instead<\/td><td>G only<\/td><\/tr><tr><td>38<\/td><td>Adverse reassessment consequence<\/td><td>G\/W: DELETE from list \u00b7 C\/NC: DELETE or downgrade<\/em><\/td><\/tr><tr><td>39<\/td><td>Full registration procedure reproduced<\/td><td>G (16 sub-paras) + W (17 paras) \u00b7 C\/NC reproduce an abridged version and cross-refer to para 3.6 of the Goods Manual<\/td><\/tr><tr><td>40<\/td><td>Debarment section title<\/td><td>G: Suppliers \u00b7 W: Contractors \u00b7 C: \"Suppliers\" (apparent template carry-over) \u00b7 NC: Service Providers<\/td><\/tr><tr><td>41<\/td><td>Rule 151(a)(ii) statute cited<\/td><td>G: IPC 1860 (with BNS footnote) \u00b7 W\/C\/NC: Bharatiya Nyaya Sanhita directly<\/td><\/tr><tr><td>42<\/td><td>\"Ministry\/ Department will maintain such list \u2026 displayed on their website\" added to Rule 151(c)<\/td><td>W + NC<\/td><\/tr><tr><td>43<\/td><td>Footnote that \"now two years is applicable\" against the three-year period in Rule 151(b)<\/td><td>W only<\/td><\/tr><tr><td>44<\/td><td>GeM Suspension under Incidence Management Policy<\/td><td>W + C + NC \u2014 absent from G<\/td><\/tr><tr><td>45<\/td><td>Undertakings from bidders regarding debarment status must conform to the Guidelines<\/td><td>G only<\/td><\/tr><tr><td>46<\/td><td>Closing safeguard \u2014 remedy if reform fails<\/td><td>G\/C\/NC: a SHORTER PERIOD of debarment \u00b7 W: a TEMPORARY debarment<\/td><\/tr><tr><td>47<\/td><td>Rule number cited for Indian Agents footnote<\/td><td>G + C print \"Rule 52\" (evident typo) \u00b7 W + NC correctly print \"Rule 152\"<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 3<\/p>\n<aside class=\"note\">Next:<\/strong> Chapter 4 \u2014 Bidding Design: Modes of Procurement, Types of Contracts, Systems of Selection, Tendering Systems and Channels of Procurement<\/em> (merging Goods Ch. 4<\/strong>, Works Ch. 3<\/strong>, Consultancy Ch. 4<\/strong> and Non-Consultancy Ch. 4<\/strong>).<\/p>\nAnother numbering trap ahead:<\/strong> this block is Chapter 4<\/strong> in Goods, Consultancy and Non-Consultancy, but Chapter 3<\/strong> in Works.<\/p><\/aside><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch4\">Chapter 4 \u2014 Part a<\/p><h1>Bidding Design<\/h1><\/header>Part I<\/span>Contracts, Selection Systems and Channels<\/em><\/p>\n<h3>Agency for Procurement \u00b7 Admeasurement \u00b7 Types of Contracts \u00b7 Systems of Selection \u00b7 Tendering Systems \u00b7 Channels of Procurement<\/span><\/h3>\nMerging: Goods Ch. 4<\/strong> (Modes of Procurement and Tendering Systems) \u00b7 Works Ch. 3<\/strong> (Bidding Design for Works) \u00b7 Consultancy Ch. 4<\/strong> (Bidding Design for Consultancy Services) \u00b7 Non-Consultancy Ch. 4<\/strong> (Bidding Design for Non-Consultancy Services)<\/em><\/p><h2>Structural Warning for Students<\/span><\/h2>\nThis block is CHAPTER 4 in Goods, Consultancy and Non-Consultancy \u2014 but CHAPTER 3 in Works.<\/p>\n(The reverse of the trap in the previous chapter, where governance was Ch. 3 in three Manuals but Ch. 8 in Works.)<\/em><\/p>\nThis is also the chapter of greatest substantive divergence between the four Manuals. Three whole apparatus exist in only one Manual each:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Apparatus<\/th><th>Exists only in<\/th><\/tr><\/thead><tbody><tr><td>Agency for Procurement (pWO\/ PSU\/ works Committee)<\/td><td>Works<\/td><\/tr><tr><td>Admeasurement of Services (input vs output)<\/td><td>Non-Consultancy<\/td><\/tr><tr><td>Rate Contract \/ Framework Agreement, Approved Vendor List, Proprietary Article Certificate, Direct Procurement<\/td><td>Goods<\/strong>(covered in Part B)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nAnd \"Types of Contracts\" does not exist at all in the Goods Manual<\/strong> \u2014 goods procurement has no contract-type taxonomy, because it uses Rate Contracts and supply orders instead.<\/p>\nBecause of the volume, this chapter is issued in two parts<\/strong>:<\/p>\n<ul class=\"lst\"><li>PART A (this document)<\/strong> \u2014 Agency, Admeasurement, Types of Contracts, Systems of Selection, Tendering Systems, Channels of Procurement.<\/li><li>PART B<\/strong> \u2014 Modes of Procurement (OTE, GTE, rc\/fa, eRA, PQB, AVL, LTE, SLTE, PAC, STE, direct Procurement, Quotations, Stalled Contracts).<\/li><\/ul>\n<h2>Concordance for Chapter 4 \u2014 Part A<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>Goods<\/th><th>Works<\/th><th>CS<\/th><th>NCS<\/th><\/tr><\/thead><tbody><tr><td>4.1<\/td><td>Agency for Procurement<\/td><td> \u2014 <\/td><td>3.1<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>4.2<\/td><td>Admeasurement of Services<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>4.1<\/td><\/tr><tr><td>4.3<\/td><td>Types of Contracts<\/td><td> \u2014 (none)<\/td><td>3.2<\/td><td>4.1<\/td><td>4.2<\/td><\/tr><tr><td>4.4<\/td><td>Systems of Selection<\/td><td> \u2014 (none)<\/td><td>3.3<\/td><td>4.2<\/td><td>4.3<\/td><\/tr><tr><td>4.5<\/td><td>Tendering Systems<\/td><td>4.14\u20134.16<\/td><td>3.4<\/td><td>4.4<\/td><td>4.5<\/td><\/tr><tr><td>4.6<\/td><td>Channels of Procurement<\/td><td>4.17<\/td><td>3.5<\/td><td>4.5<\/td><td>4.6<\/td><\/tr><tr><td>Part B<\/em><\/td><td>Modes of Procurement<\/td><td>4.1\u20134.13<\/td><td>3.6\u20133.14<\/td><td>4.3<\/td><td>4.4<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.1<\/span>Agency for Procurement [W ONLY]<\/span><\/h2>\n1. The three routes (Rule 133 of GFR, 2017)<\/em>: Rule 133 permits Ministries\/ Departments at its discretion to assign execution of their original and repair works as follows: a) directly by the Ministry\/ Department; b) public works organisations (PWO); c) public sector undertaking (PSU)\/ Organisations set up to execute Works.<\/p>\n2. Directly by the Ministry\/ Department: A Ministry or Department at its discretion May directly execute repair works estimated to cost up to rupees sixty (60) LAKH, after following the due procedure 'laid down for Execution of Works' (Rules 139, 159 and 160 of GFR 2017)<\/em>.<\/p>\n<h3>4.1.1<\/span>Public Works Organisations (PWO)<\/span><\/h3>\nA Ministry or Department May, at its discretion, assign:<\/p>\n<ul class=\"lst\"><li>REPAIR WORKS estimated to cost above Rupees SIXTY (60) LAKH, and<\/li><li>original\/ minor works of any value<\/li><\/ul>\nto any public Works Organisation (PWO) such as:<\/p>\n<aside class=\"note\">Central Public Works Department (CPWD) \u00b7 State Public Works Department \u00b7 other Central Government organisations authorised to carry out civil or electrical works such as Military Engineering Service (MES), Border Roads Organisation (BRO), etc. \u00b7 or the Ministry\/ Department's construction wings of the Ministries of Railways, Defence, Environment & Forests, Information & Broadcasting, and the Departments of Posts and Space, etc.<\/p><\/aside>\n<h3>4.1.2<\/span>Public Works PSU\/ Organisations<\/span><\/h3>\nAs an alternative, a Ministry or Department May assign repair works estimated to cost above rupees sixty (60) lakh and original works of any value to: A) any public sector undertaking (PSU) set up by the Central or State Government to carry out civil or electrical works; Or b) to any other Central\/ State Government organisation\/ PSU which May be notified by the Ministry of housing and urban affairs (MoHUA) for such purpose, after evaluating their financial strength and technical competence.<\/p>\n<h3>4.1.3<\/span>Procedure for Assigning Work to PWO or PSU\/ Organisations<\/span><\/h3>\n1. Competition among PSUs \u2014 and the PMC characterisation: For the assignment of work to PSUs, the Ministry\/ Department shall ensure competition among all such eligible PSUs\/ ORGANISATIONS.<\/p>\nThis competition shall be essentially on the lump sum service charges to be claimed for execution of work.<\/p>\nThe award of work to a PSU should be taken as project management consultancy (pmc), and the concerned PSU shall be treated as a consultancy firm. Relevant methods (QCBS, LCS etc.) for procurement of consultancy will be applicable.<\/p>\n<aside class=\"note\">For better understanding of the selection methodology of consultant(s), Rule 192 to Rule 194 of GFR 2017<\/strong> and the Manual for Procurement of Consultancy Services, 2025<\/strong> may be referred.<\/em><\/p><\/aside>\n2. Nomination basis: In exceptional cases, for assignment of work on nomination basis to a PSU, the conditions for nomination basis would apply. The work under these circumstances shall also be assigned only on a lump sum basis.<\/p>\n3. Sanctions and execution<\/strong>(Rule 140, GFR 2017)<\/em>: For original works and repair works entrusted under paras 4.1.1 and 4.1.2 above, the administrative approval and expenditure sanction shall be accorded and funds allotted by the concerned authority<\/strong> in accordance with the sanctioning sequence of Chapter 2.<\/p>\nThe PWO or the PSU or any organisation allotted work shall then execute the work entrusted to it in accordance with the Rules and procedures prescribed in their own organisation.<\/p>\n4. Memorandum of Understanding (MoU): An MoU May be drawn with the PWO or the PSU for proper execution of work.<\/p>\nThe MoU should spell out:<\/p>\n<ul class=\"lst\"><li>the OBLIGATIONS on the part of the PWO or PSU regarding execution of works as per proper specifications, and<\/li><li>for maintaining proper quality and speed of execution of works;<\/li><li>Different stages at which funds shall be released to the PWO should also be clearly spelt out.<\/li><\/ul>\nSuch MoU would normally be for a specific standalone work, but could also be for a project consisting of a collection of related works.<\/p>\n5. Long-term framework MoU: In case of MoU with PWOs, it could also be a long-term framework moU.<\/p>\n<aside class=\"note\">A Sample MoU delineating the complete procedure of assignment of work to PWO\/ PSUs and its monitoring is at Annexure 10 of the Works Manual. The Procuring entity may CHANGE the MoU format to suit their requirement, and if felt necessary May also get the moU document vetted from the Ministry of law or its own legal cell.<\/p><\/aside>\n6. The Works Committee: For execution of any work under Paras 4.1.1 and 4.1.2 above, the Ministry\/ Department shall constitute a \"Works Committee\" \u2014 whether on an ad hoc or standing basis \u2014 comprising:<\/p>\n<ul class=\"lst\"><li>representatives of the ADMINISTRATIVE WING,<\/li><li>representatives of the FINANCE WING, and<\/li><li>an officer possessing technical skills and experience of framing estimates and execution of works.<\/li><\/ul>\nIf need be, members May be co-opted from: the User Department; CPWD\/ PWOs\/ PSUs; or any technically sound Government agency such as a relevant National Institute of Technology (NIT)\/ Indian Institute of Technology (IIT) or a relevant National Research Institute, etc.<\/p>\nThe Works Committee shall:<\/p>\n<ul class=\"lst\"><li>Ensure observance of due process in the planning and execution of works;<\/li><li>Check the reasonability of the estimates and other technical details; And<\/li><li>monitor the execution of the works.<\/li><\/ul>\n<h2>4.2<\/span>Admeasurement of Services [NC ONLY]<\/span><\/h2>\nNon-consultancy services are bid and contracted on the total price (UNIT RATE \u00d7 quantum) of the delivered services (of requisite performance standards) \u2014 much like procurement of goods and works.<\/p>\nThe QUANTUM of services can be ascertained by EITHER:<\/p>\n<ul class=\"lst\"><li>measuring the INPUTS DEPLOYED by the service provider \u2192 INPUT ADMEASUREMENT; or<\/li><li>measuring the output of services delivered \u2192 output admeasurement.<\/li><\/ul>\n<h3>4.2.1<\/span>Input Admeasurement<\/span><\/h3>\n1. The quantum of services can be ascertained by measurement of the inputs \u2014 personnel, equipment, materials, and miscellaneous inputs \u2014 deployed during a period (say per month) by the service provider.<\/p>\n2. What the contract specifies:<\/p>\n<ul class=\"lst\"><li>the UNIT RATE, and<\/li><li>the ESTIMATED QUANTUM (per period \u2014 say per day\/ month) of various inputs<\/strong> required to be deployed to deliver the required quantum of services of requisite performance standards.<\/li><li>The contract would also specify the SERVICE CHARGES (including profits, overheads, etc.) and taxes over and above such input unit rates.<\/li><\/ul>\nFinancial evaluation is based on the total price of the indicated quantum of various inputs at the contracted unit rate, plus service charges and taxes.<\/p>\n3. The monitoring burden: Input admeasurement requires more vigilant and constant monitoring of inputs deployed. The Procuring Entity must also monitor the performance standards, methodology employed and productivity of inputs to ensure Value for Money.<\/p>\n4. Where used: Input admeasurement is frequently used in time-based and indefinite delivery types of contracts for Services like:<\/p>\n<aside class=\"note\">upkeep and maintenance of office\/ buildings\/ estates (other than Civil & Electrical Works, etc.) \u00b7 Security Services \u00b7 Horticultural Services \u00b7 Janitor\/ Cooking\/ Catering\/ Management Services for Hostels and Guest Houses \u00b7 Cleaning\/ Housekeeping Services \u00b7 Errand\/ Messenger Services, etc.<\/p><\/aside>\n5. Input Admeasured Contracts \u2014 Risks and Mitigations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>a) The quality and scope of the Output\/ deliverables is not linked to the payment. There may be a tendency for the service provider to IGNORE the quality and scope of the services. Disputes may arise due to different possible interpretations of quality and scope of contract.<\/td><td>The contract should include provision for evaluation of quality, methodology and scope of deliverables, and a certificate for its acceptability may be recorded. Payments should be released only against such certificates. Therefore, the service Level Agreement (SLA) becomes very important in such contracts.<\/td><\/tr><tr><td>b) productivity of inputs deployed is not linked to the payment. There may be a tendency for the service provider to use paid staff in a dilatory and un-productive manner. This may lead to time and cost over-runs.<\/td><td>Such contracts need to be closely monitored and administered by the Procuring Entity to ensure that the progress of the contract is commensurate with the time spent, and that the resources for which payment is claimed have actually efficiently and productively been deployed on the contract during the period. It may be worthwhile to lay down productivity linkage between the quantum of the output of services and input deployed in a period (say, cleaning of a quantum of area per day per cleaner deployed) as part of Performance Standards. A system of MONTHLY REPORTING of payouts and the quantum of work achieved by the service provider to the CA should be instituted to enable supervision. Such contracts should include an upper limit of total payments to be made to the service providers, to safeguard against excessive prolonging of time and payments. After this limit is reached \u2014 or the period of completion is exceeded \u2014 the ca should review the justification for the extension of the contract.<\/td><\/tr><\/tbody><\/table><\/div>\n<h3>4.2.2<\/span>Output-Admeasurement<\/span><\/h3>\n1. Alternatively, the quantum of services can be ascertained by measurement of the quantum of outputs delivered of the required performance standards \u2014 numbers, length, area, volume, weight, value, etc., or a combination thereof \u2014 say, the area of office cleaned, or tonne-kilometre of transportation, or value of goods inspected.<\/p>\n<aside class=\"note\">Since contracts based on Output admeasurement specify the unit rate of service output, they are also referred to as unit-rate contracts.<\/p><\/aside>\n2. Financial evaluation: The contract specifies a unit rate of the output of services, and the financial evaluation is done based on the total price of the indicated quantum of service at the contracted unit rate plus taxes.<\/p>\n<aside class=\"note\">In actual practice, this could be more complex \u2014 as in taxi hiring for 8 hours with a maximum of 250 km included in the price, but every additional km\/ hour May be charged extra. There May also be additional charges for night duty, etc.<\/p><\/aside>\n3. Why it is preferred: Output admeasurement contracts are simpler to administer, since the Procuring Entity will only ascertain performance standards and the quantum. It need not monitor the inputs deployed and the methodology employed. Therefore, wherever feasible, output admeasurement should be the preferred choice.<\/p>\n4. However, in many services, it May be part of the quality assurance plan and SLA to ensure that a specified quantum of inputs is deployed for the services \u2014 although payments are still based on output admeasurement.<\/p>\n5. Where used: Depending on the situation, output admeasurement may be suitable mainly for lump-sum and percentage-based types of contracts, and in special circumstances for time-based and indefinite delivery types.<\/p>\nSuitable for Services like:<\/p>\n<aside class=\"note\">transport services \u00b7 logistics \u00b7 clearing and forwarding \u00b7 courier services \u00b7 drilling \u00b7 aerial photography \u00b7 satellite imagery \u00b7 mapping, and similar operations.<\/p><\/aside>\n6. Output Admeasurement Contracts \u2014 Risks and Mitigations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>a) insufficient deployment of resources: Service Provider may not deploy sufficient resources, which may lead to POOR QUALITY and TIME OVER-RUN.<\/td><td>Stipulate in the tender document that the quantum of input deployments (personnel, equipment, materials, etc.) shall also be quoted \u2014 but shall be used only to monitor performance standards.<\/td><\/tr><tr><td>b) The QUALITY of the Output\/ deliverables is not linked to the payment.<\/strong> There may be a tendency for the service provider to Cut corners on quality of the output\/ deliverables by saving on resources employed.<\/strong> Disputes may arise due to different possible interpretations of quality and scope of Output\/ deliverables.<\/td><td>Such contracts should be used mainly for contracts in which the quality and scope of the required output are clearly defined and are measurable. The contract should include provision for evaluation of quality and scope of deliverables, and a certificate for its acceptability may be recorded. Payment should be made only against certificate of acceptance of deliverables. It's important to include a service Level Agreement in such contracts.<\/td><\/tr><tr><td>c) time and cost over-run: As time is not linked to the payment, there may be a tendency for the service provider to save on deployment of resources, which may result in time-over-run.<\/td><td>While the payments are not linked to time, the contract should be monitored per month to ensure that the output per month is in line with planned and estimated time-line. This type of contract should include an upper limit of total payments to safeguard against excessive prolonging of time and payments. After this limit is reached, or the period of completion is exceeded, the CA should review the justification for the extension of the contract.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.3<\/span>Types of Contracts<\/span><\/h2>\n<aside class=\"note\">The goods Manual has no \"types of contracts\" SECTION. Goods procurement instead uses Rate Contract\/ Framework Agreement, Approved Vendor List and Proprietary Article Certificate \u2014 treated as modes of procurement<\/em> in Part B.<\/p><\/aside>\n<h3 class=\"src-multi\">4.3.1<\/span>The Common Opening Proposition<\/span>W<\/span>C<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\">\n1. There are various alternative bases for linking payments to the performance of a contract (called types of contracts) \u2014 each having different risks and mitigation measures.<\/p>\n<ul class=\"lst\"><li>Bids are called and evaluated based on the type of contract.<\/li><li>C<\/span>NC<\/span> add:<\/strong>The BOQ of the financial bid is designed specifically for each type of contract.<\/li><li>The choice of the type of contract should be based on value-for-money (VfM), with due regard to the nature of work\/ requirement.<\/li><li>Adoption of an inappropriate type of contract could lead to a situation of lack of competition, contractual disputes and non-performance\/ failure of the contract.<\/li><li>W<\/span> adds:<\/strong>Standard forms for all the types of contracts mentioned below are available with public works organisations like CPWD, and the same May be used for calling the tenders.<\/li><\/ul>\n<\/div><h3>4.3.2<\/span>The Three Taxonomies Compared<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>W<\/span> \u2014 WORKS (7 types)<\/th><th>C<\/span> \u2014 CONSULTANCY (5 types)<\/th><th>NC<\/span> \u2014 NON-CONSULTANCY (4 types)<\/th><\/tr><\/thead><tbody><tr><td>a) Lump sum (Firm Fixed Price) contract<\/td><td>a) Lump sum (Firm Fixed Price) contract<\/td><td>a) Lump sum (Firm Fixed Price) contract<\/td><\/tr><tr><td>b) Item Rate (Unit Rate) contract<\/td><td>b) Time based (Retainer-ship) contract<\/td><td>b) Time based contract<\/td><\/tr><tr><td>c) Percentage Rate contract<\/td><td>c) Percentage (Success Fee) contract<\/td><td>c) Percentage (Success Fee) contract<\/td><\/tr><tr><td>d) Piece Work contract<\/td><td>d) Retainer-ship cum Success fee-based contract<\/td><td>d) Indefinite delivery contract<\/td><\/tr><tr><td>e) Engineering, Procurement and Construction (EPC) contract<\/td><td>e) Indefinite delivery contract<\/td><td><\/td><\/tr><tr><td>f) Public Private Partnership (PPP)<\/td><td><\/td><td><\/td><\/tr><\/tbody><\/table><\/div>\n<h3 class=\"src-W\">4.3.3<\/span>WORKS \u2014 the Seven Types<\/span>W<\/span><\/h3><div class=\"srcblock src-W\"><h4>A. Lump Sum (Fixed Price) Contract<\/span><\/h4>\n1. In this type of contract, bidders are required to quote a lump sum fixed price figure for completing the works in accordance with the given designs, specifications and functional requirements.<\/p>\n<ul class=\"lst\"><li>Bidder's price is deemed to include all elements of cost \u2014 no arithmetical correction or price adjustments are allowed during evaluation and execution.<\/li><li>Lump sum contracts are easy to administer because it is a fixed price for a fixed scope, and payments are linked to clearly specified outputs\/ milestones.<\/li><\/ul>\n2. Quality risk: There may be a tendency for the Contractor to cut corners on quality and scope of work by saving on resources employed. Disputes may arise due to different possible interpretations of quality and scope of work. The contract should include provision for evaluation of quality and scope of work, and a certificate for its acceptability May be recorded.<\/p>\n3. Time risk: As time is not linked to the payment, there may be a tendency for the Contractor to save on deployment of resources, which may result in time over-run. While the payments are not linked to time, the assignment should be monitored per month to ensure that the progress of work per month is in line with the planned and estimated timeline.<\/p>\n4. Where suitable: Lump sum service contracts should be used mainly for assignments in which the quality, scope and timing of the work are clearly defined.<\/p>\nLump sum contracts May be used where the works can be defined in their full physical and qualitative characteristics, and risk for change in quantity or specification, and unforeseen difficulties and site conditions (for example, hidden foundation problems) are minimal.<\/p>\nThus suitable for:<\/p>\n<aside class=\"note\">stereotype\/ repetitive residential buildings or other structures for which STANDARD DRAWINGS are normally available; also for minor bridge works, chimneys, bins\/ silos, overhead tanks, etc. \u2014 whether on the Department's design or that of the contractor.<\/p><\/aside>\nIn the latter case, the Department shall spell out the requirements in detail to enable the contractor to prepare his designs and drawings accordingly and submit them to the Procuring Entity for check and approval before construction.<\/p>\n5. Schedule of Rates still relevant: A Schedule of Rates (sor) May still be specified in order to regulate the amounts to be added to or deducted from the fixed sum on account of additions and alterations to drawings, designs and specifications not covered by the contract.<\/p>\n6. Payment: The contractor shall be paid from time to time as per the Schedule specified in the contract, or the full amount on completion of the work. The billing Schedule shall be commensurate with the actual work done, and the risk of front-loading strictly guarded against.<\/p>\n7. Measurements: Detailed measurements of work done in a lump sum contract are not required to be recorded \u2014 except in respect of additions and omissions. No reference is made in the contract to the departmental estimate of the work, prevailing sor, or the quantities of work to be done. Payment of additions and omissions is regulated by the prevailing sor as agreed upon while approving the tender or the rates.<\/p>\n<h4>B. Item Rate (Unit Rate) Contract<\/span><\/h4>\n1. For item rate tenders, contractors are required to quote a rate for each individual item (detailed sub-activity) comprising a work, on the basis of the Bill of Quantities (BOQ) provided by the Procuring Entity in the bid documents.<\/p>\nThis is the most commonly used contract type for civil works.<\/p>\n2. Payment and variations: The payment is made at the rate set out in the contract for the measured quantity.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Extent of variation in BOQ quantities<\/th><th>Treatment<\/th><\/tr><\/thead><tbody><tr><td>REASONABLE variations \u2014 typically \u00b110% to \u00b115%<\/td><td>Can be allowed during the execution in terms of the contract<\/td><\/tr><tr><td>SLIGHTLY LARGER variation \u2014 typically \u00b125% to \u00b130%<\/td><td>competent Authority's sanction is required<\/td><\/tr><tr><td>Where the variation exceeds the prescribed limit<\/td><td>The contract generally provides that either (a) the Procuring Entity May revise the rate with mutual agreement (often based on analysis of current market rates), or (b) the work beyond the limit May be treated as a new item, requiring approval at appropriate levels<\/td><\/tr><\/tbody><\/table><\/div>\n3. Where suitable: Suitable for all types of major works such as buildings, bridges, culverts, roads, sewer lines, irrigation works \u2014 and carries the least risk of uncertainty for the parties.<\/p>\n4. Prerequisite: Specifications, design, drawings and contract conditions \u2014 including availability of land, forest clearance, social and environmental impact assessment, where applicable \u2014 have to be critically appraised before the initiation of the procurement process, in order to minimise the incidence of internal inconsistencies, variations, and situations of claims\/ disputes or contract failure.<\/p>\n<h4>C. Percentage Rate Contract<\/span><\/h4>\n1. For percentage Rate Contract, the contractors are required to quote a rate as an overall percentage above or below the total estimated cost.<\/p>\n2. Where suitable: This type works best when the work does not involve major design process and directions, and simple drawings are sufficient for execution. It saves on the time and effort of detailed design before the procurement process.<\/p>\nCan be used for:<\/p>\n<aside class=\"note\">Small and routine types of original works for which estimates can be made based on available Schedule of Rates, and all repair works \u2014 e.g. levelling and development works, including storm water drainage, water supply and sewer lines.<\/p><\/aside>\n3. Billing: Bills for percentage rate contracts shall be prepared at the estimated rates for individual items only, and the percentage excess or less shall be added or subtracted from the gross amount of the bill. The payment is made for the measured quantity.<\/p>\nContract provisions are made to determine the price of the items not included in sor. In the absence of a standard Schedule of Rates, a project-specific Schedule of items and their rates is drawn.<\/p>\n<aside class=\"note\">Note: Percentage rate contracts should not be confused with lump-sum contracts, since the pricing structure in both cases is fundamentally different.<\/p><\/aside>\n<h4>D. Piece Work Agreement<\/span><\/h4>\n1. In a piece work agreement, bidders quote and are paid for each piece (or unit) of a work element \u2014 neither the complete work as in lump-sum contract, nor as granular a work element as in item Rate Contract \u2014 without necessarily providing detailed quantities upfront.<\/p>\nThe Procuring Entity has flexibility to put an end to the piece work agreement at his option at any time. It incentivises productivity of the contractor and cost control for the Procuring Entity.<\/p>\n2. Two main uses:<\/p>\nA) anticipatory work commencement: In cases where it is necessary to start the work in anticipation of formal acceptance of a detailed contract, a piece work agreement May be drawn \u2014 and the agreement May be cancelled as soon as the regular contract is signed.<\/p>\nb) for ongoing requirements: For ongoing requirements \u2014 i.e., pipes, laying of sewerage, maintenance of colonies\/ facilities etc. \u2014 quotations are called periodically, and a running piece work agreement is drawn up as a result of those quotations, usually for a period of one year. The agreement provides for payment of stipulated rates only when it refers to such quantity of time, and also stipulates that the Procuring Entity May put an end to the agreement at his option at any time.<\/p>\n3. Important provisions of such contracts:<\/p>\nA) quality assurance: Contractor might prioritise speed over quality to maximise earnings. Therefore, the contract must clearly define the quality standards each unit of work must meet to be acceptable. Implement processes for inspecting and approving completed work before payment. Define the scope of work meticulously to prevent misunderstandings. Maintain open lines of communication with contractors to address issues promptly. Establish KPIs to monitor progress and quality.<\/p>\nB) payment terms: Specify the payment rate per unit of work and any conditions that might affect this rate. Outline when payments will be made (e.g., upon completion of each unit, weekly, monthly).<\/p>\nC) termination clauses: Include a clause that allows the Procuring Entity to terminate the contract at their option at any time. Specify any notice period required and obligations upon termination.<\/p>\nD) labour laws: There's a potential for unfair labour practices if not properly managed. Therefore, the contract must stipulate strict compliance with local labour regulations, including minimum wage requirements and worker protections.<\/p>\nE) documentation: Keep thorough records of work completed and payments made for transparency and legal purposes.<\/p>\n<h4>E. Engineering, Procurement and Construction (EPC) Contracts<\/span><\/h4>\n1. What it is: The EPC approach \u2014 also called 'design & build' contracts \u2014 relies on assigning the responsibility for investigations, design and construction to the contractor for a lump sum price determined through competitive bidding.<\/p>\nThe objective is to ensure implementation of the project to specified standards with a fair degree of certainty relating to costs and time, while transferring the construction risks to the contractor.<\/p>\n2. Policy push: On the recommendations of niti aayog, the cabinet committee on economic affairs (ccea) has recommended that item rate contracts May be substituted by EPC contracts wherever appropriate (NITI Aayog OM No. N-14070\/14\/2016-PPPAU dated September 05, 2016)<\/em>.<\/p>\n3. Output specifications, not construction specifications: Unlike the normal practice of construction specifications, the technical parameters in the EPC agreement are based mainly on output specifications\/ performance standards.<\/p>\nThe Procuring Entity specifies only the core requirements of design and construction that have a bearing on the quality, durability, reliability, maintainability and safety of assets \u2014 and enough room is left for the contractor to add value. The contractor has full freedom to design and plan the construction Schedule using best practices.<\/p>\n4. Risk allocation:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Risk<\/th><th>Borne by<\/th><\/tr><\/thead><tbody><tr><td>Soil conditions and weather; Commercial and technical risks relating to design and construction<\/td><td>the contractor<\/td><\/tr><tr><td>delays in handing over the land \u00b7 approvals from local authorities \u00b7 environment clearances \u00b7 shifting of utilities \u00b7 approvals in respect of engineering plans<\/td><td>the Procuring Entity<\/td><\/tr><\/tbody><\/table><\/div>\n5. Selection, price and the 10% variation ceiling: Selection of the contractor is based on open competitive bidding. All project parameters \u2014 contract period, price adjustments and technical parameters \u2014 are to be clearly stated upfront, and short-listed bidders are required to specify only the lump sum price for the project. The bidder who seeks the lowest payment is awarded the contract.<\/p>\nThe contract price is subject to adjustment on account of price variation during the contract period as per a specified formula.<\/p>\nIt also lays down a ceiling of 10 (ten) per cent of contract price to cater for any changes in the scope of project, the cost of which the Procuring Entity will bear.<\/p>\n<ul class=\"lst\"><li>Once this ceiling is reached, no further variations shall be issued under the existing contract.<\/li><li>Any additional requirement beyond this limit must be procured separately through a competitive bidding process, so as to preserve transparency, fairness, and Value for Money.<\/li><li>In exceptional cases where continuity of work demands that the existing contractor execute such additional scope, this shall be permitted only through a formally approved supplemental agreement, with revised price and timelines duly concurred by the Competent Authority and finance.<\/li><li>The original contractor shall, however, be required to extend reasonable cooperation to ensure coordination with any other agency engaged for excess works.<\/li><\/ul>\nSuggested eligibility criteria for EPC tenders:<\/p>\nA) technical capacity: The bidder has received payments for construction of eligible projects over the past five financial years preceding the bid due date. The payment amounts should be at least:<\/p>\n<ul class=\"lst\"><li>i) 60% of the estimated project cost from one eligible project; or<\/li><li>ii) 40% of the estimated project cost from each of two eligible projects; or<\/li><li>iii) 30% of the estimated project cost from each of three eligible projects.<\/li><\/ul>\nb) financial capacity: The bidder should possess a minimum net worth of at least 15% of the estimated project cost at the close of the preceding financial year. If the bid due date falls within three months of the closing of the latest financial year, that year can be ignored for calculation purposes.<\/p>\nC) eligible works for EPC tenders specifically refer to construction projects directly awarded by either a Government Ministry or Department, or by a public listed company. The latter should be listed on major Indian stock exchanges, such as the nse or the bse.<\/p>\nIn the case of awards from public listed companies, the tender documents need to clearly outline specific financial requirements. This includes detailing the average annual turnover of the company over a defined period \u2014 typically the past three or five years. Additionally, the tender should specify a minimum duration for which the company must have been registered \u2014 for example, a period of five years. This stipulation is aimed at ensuring that the awards considered for eligibility come from established and financially sound entities.<\/p>\n6. Design review process: The selected Contractor carries out survey and investigations and also develops designs and drawings in conformity with the specifications and standards laid down in the Agreement.<\/p>\nThe Procuring Entity's engineer (also called owner's engineer) reviews the design and drawings to ensure that these conform to the scope of the project, design standards and specifications.<\/p>\nAny comments by the Procuring Entity on the design proposals submitted by the contractor are to be communicated in totality once, in a time-bound manner as indicated in the Schedule. The contractor is free to proceed with construction after the expiry of the specified period, in case no remarks\/ clearances are given by the Procuring Entity.<\/p>\n7. Shifting of utilities: The contractor is also responsible for shifting of any utility (electric lines, water pipes, telephone cables etc.) to an appropriate location or alignment \u2014 if the utilities are under the purview of the Procuring Entity and adversely affect or infringe the execution of works.<\/p>\nThis requirement should be part of the tender document, so as to avoid such a requirement at a later stage that May lead to amending the scope of work.<\/p>\nFor utilities not owned by the Procuring Entity, the concerned organisation under whose ambit such utilities fall shall be intimated by the Procuring Entity for shifting, and the price of shifting shall be paid to the organisation by the Procuring Entity. If there is delay in shifting of the utilities for which the contractor is not accountable, reasonable time extension May be given to the contractor.<\/p>\n8. Liquidated Damages and bonus: The contractor is liable to pay Liquidated Damages (LD) for each day of delay beyond the specified date of completion \u2014 subject to the total amount of damages not exceeding 10 (ten) per cent of the contract price.<\/p>\nHowever, the contractor is entitled to time extension arising out of delays on account of change of scope and Force Majeure, or delays caused by or attributable to the Procuring Entity.<\/p>\nIf so provided in the Bid Document, the Procuring Entity is also liable to pay a bonus (normally should not exceed ten per cent) to the Contractor for completion of the project before the scheduled completion date.<\/p>\nIf delays have happened in achieving the individual milestones but the overall project completion is within time, then LD deducted should be refunded (without any interest).<\/p>\n9. Supervision: Monitoring and supervision of construction are undertaken through the Procuring Entity's engineer \u2014 a qualified firm selected through a transparent process \u2014 acting as a single window for coordination with the contractor.<\/p>\n10. Staged payment, defects liability and grace period: Each item of work is further sub-divided into stages, and payment based on output specifications and performance standard is to be made for each completed stage of work.<\/p>\n<ul class=\"lst\"><li>A defects liability period of two years May be specified in the agreement<\/strong> in order to provide additional comfort to the Procuring Entity.<\/li><li>A grace period of say 30 days for achieving the individual project milestones as per payment schedule May be provided in the tender document, so that any unavoidable delay may be covered during the grace period. The applicability of Liquidated Damages would be beyond the grace period.<\/li><\/ul>\n11. Model documents: FIDIC (F\u00e9d\u00e9ration Internationale Des Ing\u00e9nieurs-Conseils \u2014 an International Federation of Consulting Engineers, known by its French acronym) has also published such contractual frameworks.<\/p>\nModel EPC contract documents have been developed for highways and railways and published by the erstwhile planning commission. NHAI has already adopted these documents, and all construction contracts are currently being structured on this model. The Ministry of railways has also started using such documents. Model bidding documents and Model EPC contracts, suitably revisited or modified wherever required to suit the requirements of particular sectors, may be adopted.<\/p>\n12. Capability of the Owner's Engineer: The selected Procuring Entity's Engineer (Consultant) has to have good experience in design, project supervision and works management.<\/p>\nThe Procuring Entity organisation must have an experienced team (Works Committee) to super-check the quality of supervision exercised by the owner's engineer \u2014 including quality of design review, site supervision, quality audits, etc. Periodic audits of the Procuring Entity's engineer's functioning are desirable.<\/p>\n13. Third-party consultant: In complex projects, a third-party consultant be deployed for specific tasks like design audit, quality audits, safety audits, etc., to cross-check the Procuring Entity's engineer's diligence in the process.<\/p>\n14. Change of Scope and the right to match: The tender document should consist of provisions of change of scope in terms of specifications, omission of any work from the Scope of the Project, or any additional work. However, the total value of all change of scope orders should be limited (SAY 10%) of the contract price.<\/p>\nIn the event the parties are unable to agree to the proposed change of scope, the Procuring Entity May award such works or services to any other party \u2014 preferably on the basis of open competitive bidding.<\/p>\nThe contractor should have the option of matching the first-ranked bid in terms of the selection criteria, subject to payment of a certain percentage (say 2%) of the bid amount to the Procuring Entity. Such an option is possible when the contractor also participated in the bidding process and its bid did not exceed the first-ranked bid by more than 10%.<\/p>\n15. Sub-contracting: Sub-contracting by the EPC contractor must be limited and should not exceed 50% of the contract price. Any work to be sub-contracted by the main contractor must be brought to the notice of the Procuring Entity.<\/p>\n16. Qualification of sub-contractor: Preceding 3 years, at least one work of a similar nature with a contract value exceeding 40% of the value of the sub-contract to be awarded, and received payments in respect thereof for an amount equal to at least 80% of such contract.<\/p>\nProvided, however, that in any event the contractor shall communicate the name and particulars to the Procuring Entity for any sub-contract, including the relevant experience, prior to entering into any such sub-contract. Overall responsibility of all works lies on the contractor.<\/p>\n17. General Instructions on Procurement and Project Management on EPC (OM No. F.1\/1\/2021-PPD dated 29.10.2021)<\/em>:<\/p>\n<ol class=\"lst\"><li>In EPC contracts, since primary responsibility to execute the work lies with the EPC contractor, success of the project also depends upon the quality of the tender document \u2014 wherein enough clarity on the broad framework for execution of the work and the obligations of the contractor needs to be built in.<\/li><li>Milestones for payment to the contractor should be fixed in a manner that facilitates smooth cash flow for the contractor as well as for progress of the work. Milestones fixed should avoid excessive front loading or back loading \u2014 i.e., amount of payment should be commensurate with stage-wise quantum of work\/ cost incurred. Milestones for payment should also be linked with the deliverables.<\/li><li>In case of EPC contracts, only general arrangement drawings and architectural control parameters should be part of the EPC tender document. Timelines for submission of drawings by the contractors and approval thereof by the Competent Authority should be clearly prescribed in the tender document, wherein damages for non-adherence of such timelines May also be incorporated.<\/li><li>EPC contracts shall specify broad technical specification and key output parameters. Over-specification of design May lead to increase in cost. Technical specifications shall be framed in such a manner as to allow sufficient freedom to the contractor to optimise design. Provisions on the following should be included in commercial conditions:<\/li><li>i) limitation of liability for procuring entity as well as contractor;<\/li><li>ii) deviation limits and procedure for change of scope;<\/li><li>iii) contract closing timelines and procedure to ensure timely closing of contract;<\/li><li>iv) performance parameters and Liquidated Damages for shortfall in performance;<\/li><li>v) RISK MATRIX and RESPONSIBILITIES of the contractor and the procuring entity.<\/li><li>In addition, a latent defect period beyond the defect liability period May be included to protect the procuring entity and public authority interest in case of any design\/ engineering defect after the defect liability period is over, wherever appropriate.<\/li><li>To mitigate the risk involved in the methodology proposed by the contractor, the project executing authority shall either have an in-house engineering, quality assurance and project management expert, or alternatively hire an experienced engineer to intensively examine the proposal submitted by the contractor. Project executing authorities are to ensure that optimal technological solutions are provided by the contractor.<\/li><li>To ensure quality, regular inspection and quality checks must be carried out. The project executing authority shall carry out stage inspections in manufacturing of critical equipment\/ critical activities of the project.<\/li><\/ol>\n<aside class=\"note\">Note: In this sub-para 17, instructions containing \"shall\" are mandatory; Any deviation from these instructions shall require relaxation from the Ministry of Finance (for ministries\/ departments etc.) or from the board of directors (for CPSEs).<\/p><\/aside>\n<h4>F. Public Private Partnership (PPP)<\/span><\/h4>\nPPP means an arrangement between:<\/p>\n<ul class=\"lst\"><li>A Government\/ statutory entity\/ government-owned entity on one side \u2014 the Sponsoring (PPP) Authority, or simply the Authority<\/em>; and<\/li><li>A private sector entity on the other \u2014 a legal entity in which 51% or more of equity is with the private partner\/s \u2014 the concessionaire<\/em><\/li><\/ul>\n \u2014 for the creation and\/ or management of public assets and\/ or public services, through investments being made and\/ or management being undertaken by the concessionaire, for a specified period of time (concession period) on commercial terms, where:<\/p>\n<ul class=\"lst\"><li>there is a well-defined allocation of risk between the concessionaire and the Authority; and<\/li><li>the concessionaire \u2014 who is chosen on the basis of a transparent and open competitive bidding \u2014 receives performance-linked payments that conform (or are benchmarked) to specified and pre-determined performance standards, measurable by the authority or its representative.<\/li><\/ul>\n<aside class=\"note\">For further information, PPP instructions issued by the Department of economic affairs (DEA), Ministry of Finance, from time to time, may be referred. The provisions contained within this Manual are also applicable to works procurement carried out under PPP mode.<\/p><\/aside>\n<h4 class=\"src-W\">G. Comparison of Types of Contracts<\/span>W<\/span><\/h4><div class=\"srcblock src-W\">\n<div class=\"tblwrap\"><table><thead><tr><th>Contract Type<\/th><th>Payment Structure<\/th><th>Scope Flexibility<\/th><th>Risk to Contractor<\/th><th>Common Use Cases<\/th><\/tr><\/thead><tbody><tr><td>Lump Sum Contract<\/td><td>Fixed price for the entire project<\/td><td>Low<\/td><td>High<\/strong> (if costs are underestimated)<\/td><td>Simple, well-defined projects<\/td><\/tr><tr><td>Item Rate Contract<\/td><td>Payment based on rates for units of work\/ materials<\/td><td>High<\/td><td>Medium<\/td><td>Projects with variable quantities<\/td><\/tr><tr><td>Percentage Rate Contract<\/td><td>Payment based on a percentage of a standard schedule<\/td><td>Medium<\/td><td>Medium<\/td><td>Projects with standardised rates<\/td><\/tr><tr><td>Piece Work Contract<\/td><td>Fixed rate per unit of work completed<\/td><td>Medium<\/td><td>Depends on productivity<\/td><td>Discrete unit work, as in repair works<\/td><\/tr><tr><td>EPC Contract<\/td><td>Payment for design, procurement, and construction<\/td><td>Low<\/strong> (complete facility delivery)<\/td><td>High<\/strong> (responsible for entire project)<\/td><td>Large, complex projects<\/td><\/tr><tr><td>PPP Contract<\/td><td>Payment based on performance and availability of services<\/td><td>Medium<\/td><td>Shared between public and private entities<\/td><td>Infrastructure projects, public services<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><\/div><h3 class=\"src-multi\">4.3.4<\/span>CONSULTANCY and NON-CONSULTANCY \u2014 the Service Contract Types<\/span>C<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\"><h4>A. Lump Sum (Firm Fixed Price) Contract<\/span><\/h4>\n1. The lump sum (firm fixed price) contract is the simplest\/ simpler form of contract, and wherever feasible the Procuring Entity shall use this form of contract.<\/p>\nConsultants\/ service providers are required to quote a lump sum fixed price figure for completing the services in accordance with:<\/p>\n<ul class=\"lst\"><li>C<\/span> the given Terms of Reference<\/strong>;<\/li><li>NC<\/span> the given activity and services Schedule<\/strong>.<\/li><\/ul>\nThe proposal is deemed to include all prices \u2014 no arithmetical correction or price adjustments are allowed during evaluation.<\/p>\n<aside class=\"note\">NC<\/span> adds:<\/strong>This type of contract is based on output admeasurement.<\/p><\/aside>\nThe Terms of Reference\/ Schedule of Requirement shall indicate the scope and quantum of services required.<\/p>\n2. Why easy to administer: Lump sum contracts are easy to administer because there is a fixed price for a fixed scope, and payments are linked to clearly specified outputs\/ milestones\/ deliverables \u2014 C<\/span>such as reports, documents, drawings, bills of quantities, software programs and so on.<\/em><\/p>\nBidders quote a lump sum price for the required quantum of services. They May also be asked to quote a unit rate for the consultancy output\/ service, to be used in case of variation, etc.<\/p>\n3. The Schedule of requirement shall indicate the quantum of the outputs\/ services, its performance standards, and the timeline\/ milestones of its delivery. Contract May specify parts of payments to be released at specified timelines\/ milestones.<\/p>\n4. Where used:<\/p>\n<ul class=\"lst\"><li>C<\/span> Widely used for simple planning and feasibility studies, environmental studies, detailed design of standard or common structures, preparation of data processing systems, and so forth.<\/li><li>NC<\/span> Not many services are amenable to lump-sum type of contracts. Depending on the situation, such contracts may be used for transport services, logistics, clearing and forwarding, courier services, drilling, aerial photography, satellite imagery, mapping, and similar operations.<\/li><\/ul>\n5. Lump Sum Contracts \u2014 Risks and Mitigations C<\/span>(NC<\/span> cross-refers to its Output Admeasurement risk table):<\/em><\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. The quality and scope of the Output\/ deliverables is not linked to the payment.<\/strong> There may be a tendency for the consultant to Cut corners on quality and scope of the output\/ deliverables by saving on resources employed.<\/strong> Disputes may arise due to different possible interpretations of quality and scope of assignment.<\/td><td>Lump sum service contracts should be used mainly for assignments in which the quality, scope, and timing of the required output are clearly defined. The contract should include provision for evaluation of quality and scope of deliverables, and a certificate for its acceptability may be recorded. Payment should be made only against certificate of acceptance of deliverables.<\/td><\/tr><tr><td>2. Time over-run:<\/strong> As time is not linked to the payment, there may be a tendency for the consultant to save on deployment of resources, which may result in time-over-run.<\/strong><\/td><td>While the payments are not linked to time, the assignment should be monitored per month to ensure that the output per month is in line with the planned and estimated timeline.<\/td><\/tr><\/tbody><\/table><\/div>\n<h4 class=\"src-NC\">B. Time-Based Contract \u2014 \"Retainer-ship\" C<\/span> \/ \"Unit-rate\"<\/span>NC<\/span><\/h4><div class=\"srcblock src-NC\">\n1. C<\/span> In <\/strong>Time-based (Retainer-ship) contracts, payments are based on agreed hourly, daily, weekly, or monthly rates for staff (who in consultancy contracts are <\/strong>normally named) <\/strong>and on reimbursable items using actual expenses and\/ or agreed unit prices.<\/p>\n<aside class=\"note\">These are also called RETAINER-SHIP CONTRACTS, since the consultants are retained for a pre-decided contract period.<\/p><\/aside>\nThe rates for staff include: Salary, social costs, overhead, fee (or profit), and \u2014 where appropriate \u2014 special allowances.<\/p>\n1. NC<\/span> In <\/strong>Time-based (unit-rate) contracts, payments are based on agreed unit prices.<\/strong>This type of contract can be based either on input (more often) or output admeasurement.<\/strong>Payments are usually released every month for the quantum of inputs\/ output actually performed.<\/p>\n2. C<\/span> The <\/strong>Schedule of requirement shall indicate the quantum of inputs required \u2014 man-hours of different key and non-key personnel \u2014 qualifications of key personnel, reimbursable items, and the timeline\/ milestones of its deliverables.<\/p>\n3. When to use time-based rather than lump sum \u2014 and the key distinction from Indefinite Delivery C<\/span>:<\/p>\nBoth time-based contracts AND indefinite delivery contracts are used when a lump sum contract is not feasible, due to difficulties in specifying:<\/p>\n<ul class=\"lst\"><li>the SCOPE\/ LENGTH of consultancy services, or<\/li><li>the quantum of individual activities<\/li><\/ul>\n \u2014 either because the inputs required for attaining the objectives of the requirement is difficult to assess, or because the services are tied up to contracts\/ activities by others for which the completion period May vary.<\/p>\n<aside class=\"note\">The distinction:<\/p>\n<ul class=\"lst\"><li>TIME-BASED contracts are suitable for consultancy services that are CONTINUOUSLY NEEDED.<\/li><li>INDEFINITE DELIVERY type of contracts is suitable for services which are infrequently needed, but the consultant needs to be always on beck and call.<\/li><\/ul><\/aside>\n4. Where used C<\/span>: Widely used for complex studies, supervision of construction, advisory services, and most training assignments, etc.<\/p>\n5. Time-Based Contracts \u2014 Risks and Mitigations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. The quality and scope of the Output\/ deliverables \u2014 as in Lump-sum Contracts \u2014 is not linked to the payment. There may be a tendency for the consultant to cut corners on quality, scope, and timing of the output\/ deliverables by saving on resources employed.<\/td><td>The contract should include provision for evaluation of quality and scope of deliverables, and a certificate for its acceptability may be recorded. Payments should be released only against such certificates.<\/td><\/tr><tr><td>2. Performance in each time period is not linked to the payment. There May be a tendency for the consultant to use paid staff in a dilatory and un-productive manner.<\/td><td>Contracts need to be closely monitored and administered by the Procuring Entity to ensure that the progress of assignment is commensurate with the time spent, and that the resources for which payment is claimed have actually efficiently and productively been deployed on the assignment during the period. A system of MONTHLY REPORTING of payouts and quantum of work achieved by the consultant to the CA should be instituted to enable supervision.<\/td><\/tr><tr><td>3. Time and cost over-run is a major risk in Time-based contracts, as the payment is based on time, and delay May result in unanticipated benefit to the consultant and the assignment may get delayed.<\/td><td>This type of contract should include an upper limit of total payments to be made to the consultants for the assignment, to safeguard against excessive prolonging of time and payments. After this limit is reached, or the period of completion is exceeded, the ca should review justification for extension of the contract.<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h4>C. Percentage (Success\/ Contingency Fee) Contract<\/span><\/h4>\n1. Percentage (success\/ contingency fee) contracts directly relate the fees paid to the consultant\/ service provider to the estimated or actual project cost, or actual value of assets\/ transactions to be handled \u2014 e.g., project cost, or the cost of the goods procured or inspected.<\/p>\n<aside class=\"note\">Since the payment is made after the successful realisation of objectives, it is also called a success (or contingency) fee contract.<\/p><\/aside>\nThe payment is made based on the value of assets\/ transactions handled during the period.<\/p>\n2. The Schedule of Requirement shall indicate the estimated value of assets\/ transactions to be handled, as well as the contract period (one year, unless otherwise stipulated) over which such volume shall be availed.<\/p>\nHowever, there shall be no firm commitment to avail the entire value of transactions within the contract period.<\/p>\nThe final selection is made among the technically qualified consultants who have quoted the lowest percentage, while the notional value of assets is fixed.<\/p>\n3. Where used C<\/span>: Commonly used for appropriate architectural services; Procurement and inspection agents.<\/p>\n4. Percentage Contracts \u2014 Risks and Mitigations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>Quality and Scope not linked to payment (as in Lump-sum)<\/em><\/td><td>Contract should include provision for evaluation of quality, scope and the timing of deliverables, and certificate for its acceptability may be recorded. Payment should be made only against certificate of acceptance of deliverables.<\/td><\/tr><tr><td>Time over-run<\/strong> \u2014 time not linked to payment<\/td><td>Assignment should be monitored per month to ensure output per month is in line with planned and estimated timeline.<\/td><\/tr><tr><td>Bias against economic solutions: Since the percentage payment is linked to the total cost of the project, in the case of architectural or engineering services, percentage contracts implicitly lack incentive for economic design and are hence discouraged.<\/td><td>Therefore, the use of such a contract for architectural services is recommended only if it is based on a fixed target cost and covers precisely defined services.<\/td><\/tr><\/tbody><\/table><\/div>\n<h4>D. Retainer and Success (Contingency) Fee Contract [C ONLY]<\/span><\/h4>\n1.<\/strong> In Retainer and Success (Contingency) fee contracts, the remuneration of the consultant includes:<\/strong><\/p>\n<ul class=\"lst\"><li>A retainer (time-based, monthly payment), and<\/li><li>a success fee (percentage-based) \u2014 the latter being normally expressed as a percentage of the estimated or actual project cost.<\/li><\/ul>\n<aside class=\"note\">Thus, this type of contract is a combination of time-based and percentage contracts.<\/p><\/aside>\n2. Where used: Widely used when consultants (banks or financial firms) are preparing companies for sales or mergers of firms \u2014 notably in privatisation operations. It can also be used for assignments related to organisational restructuring\/ change.<\/p>\n3. Risks and Mitigations: All RISKS as applicable to both Percentage Contracts AND Time-Based contracts are encountered in this case. The same mitigation strategies as in both Percentage and Time-Based contracts may be adopted.<\/p>\n<h4>E. Indefinite Delivery Contract (Price Agreement)<\/span><\/h4>\n1. These contracts are used when the Procuring Entity needs to have \"on call\" specialised services, the extent and timing of which cannot be defined in advance.<\/p>\n<aside class=\"note\">This is akin to the system of 'rate contracts' or framework contracts in the procurement of goods.<\/p><\/aside>\nC<\/span> adds:<\/strong>There is no commitment from the Procuring Entity for the quantum of work that May be assigned to the consultant.<\/p>\nThe Procuring Entity and the firm agree on the unit rates to be paid, and payments are made periodically on the basis of the time\/ quantum of service actually used during the period.<\/p>\nNC<\/span> adds:<\/strong>This type of contract can be based either on input (more often) or output admeasurement.<\/p>\n2. Schedule of requirement: Shall indicate only a tentative estimate of the volume of required service\/ outputs\/ inputs, as well as the contract period (one year, unless otherwise stipulated) over which such volume is likely to be availed.<\/p>\nThe services shall be availed on-call, as and when needed by the Procuring Entity, without any commitment regarding the volume of services.<\/p>\nThe consultant\/ service provider shall be selected based on the total price (unit rate multiplied by indicative volume) of such services\/ inputs \u2014 including service charges and taxes \u2014 over the period of contract.<\/p>\n3. NC<\/span> \u2014 the cross-monitoring rule: In case of OUTPUT ADMEASUREMENT contracts, if expressly STIPULATED in the Tender Document, the quantum of input deployments (Personnel, equipment etc.) shall also be called for \u2014 but shall be used only to monitor performance standards.<\/p>\nSimilarly, in case of input admeasurement contracts, the quantum of services to be delivered per quantum of inputs deployed per day\/ month May also be called for, to evaluate the quality and productivity of deployed inputs.<\/p>\n4. Where used: Commonly used to RETAIN \"ADVISERS\" or avail services 'ON-CALL' \u2014 for example:<\/p>\n<aside class=\"note\">expert adjudicators for dispute resolution panels \u00b7 institutional reforms C<\/span> \u00b7 procurement advice \u00b7 technical troubleshooting \u00b7 Document Management \u00b7 Taxi Services C<\/span> \u00b7 Temporary Manpower Deployment C<\/span>, and so forth \u2014 normally over a period of a year or more.<\/p><\/aside>\n5. Indefinite Delivery Contracts \u2014 Risks and Mitigations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. Quality and Scope of the Output\/ deliverables not linked to payment<\/td><td>Contract should include provision for evaluation of quality and scope of deliverables, with certificate for acceptability; Payments released only against such certificates.<\/td><\/tr><tr><td>2. Performance in each time period not linked to payment<\/strong> \u2014 tendency to use resources in a dilatory and un-productive manner<\/td><td>Close monitoring and administration; Monthly reporting of payouts and quantum of work achieved to the CA.<\/td><\/tr><tr><td>3. Time and cost over-run is a major risk<\/strong>, as the output may not be achieved in the estimated time<\/td><td>Upper limit of total payments; after the limit is reached or the period exceeded, CA should review justification for extension.<\/td><\/tr><tr><td>4. Risk of over-utilisation C<\/span>: Indefinite Delivery Contracts are at risk of being over-utilised in excess of actual need, since the scrutiny of service need May not be as intense as in case of other types of contracts.<\/td><td>The need assessment of utilised services should be subject to some scrutiny, to ensure that there is no abnormal unexplainable trend in utilisation. Such contracts need to be closely monitored to ensure that there is no indiscriminate or unwarranted usage, and a maximum contract value May be laid down to keep control over usage, with approval of ca obtained to extend beyond such limit. A system of MONTHLY REPORTING to CA should be instituted. In the report, a monthly payout benchmark May be kept, above which the report May be required to be sent to a level above ca.<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h2>4.4<\/span>Systems of Selection<\/span><\/h2>\n<aside class=\"note\">The goods Manual has no \"systems of selection\" SECTION. Goods procurement is price-based by default (L1 among technically responsive offers), so no lCS\/ QCBS\/ FBS\/ SSS taxonomy is required. The taxonomy exists in Works, Consultancy and Non-Consultancy only.<\/p><\/aside>\n<h3 class=\"src-multi\">4.4.1<\/span>The Common Rationale<\/span>W<\/span>C<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\">\n1. Why different systems exist: The relative importance of quality and price aspects May vary from contractor to contractor\/ assignment to assignment, depending on:<\/p>\n<ul class=\"lst\"><li>The complexities\/ criticality of quality requirements;<\/li><li>The internal capability of the Procuring Entity to engage and supervise the contract; As well as<\/li><li>the value of procurements.<\/li><\/ul>\nHence different systems of selection are designed to achieve appropriate relative importance (weightage) of quality and price aspects.<\/p>\nThe decision on the system of selection is normally preceded by an assessment of the capacity of the user to engage and supervise the implementation of the proposed contract. The selection method chosen depends to some extent on this assessment. Selection of the system of selection should also consider the likely field of bidders.<\/p>\n2. The four systems:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>W<\/span> \u2014 Works<\/th><th>C<\/span> \u2014 Consultancy<\/th><th>NC<\/span> \u2014 Non-Consultancy<\/th><\/tr><\/thead><tbody><tr><td>a)<\/td><td>Price based System \u2014 Least Cost Selection (LCS)<\/td><td>Price based System \u2014 LCS<\/td><td>Price based System \u2014 LCS<\/td><\/tr><tr><td>b)<\/td><td>Quality and Cost Based Selection (QCBS)<\/td><td>QCBS<\/td><td>QCBS<\/td><\/tr><tr><td>c)<\/td><td> \u2014 <\/td><td>Fixed Budget based Selection (FBS) (C only)<\/em><\/td><td> \u2014 <\/td><\/tr><tr><td>d)<\/td><td>Direct Selection: Single Source Selection (SSS)<\/td><td>Direct Selection: SSS<\/td><td>Direct Selection: SSS<\/td><\/tr><\/tbody><\/table><\/div>\n3. The default rule \u2014 and it differs by category:<\/p>\n<ul class=\"lst\"><li>W<\/span> In the procurement of WORKS, the NORMAL system of selection used is PRICE-BASED \u2014 least Cost Selection (L1) \u2014 as in the procurement of Goods, for technically responsive offers. Under VERY SPECIAL circumstances, Single Source Selection may also be used. HOWEVER, the QCBS method has been ALLOWED to be used for procurement of Works for highly technically complex and critical assignments where it is justifiable to pay appropriately higher prices for a higher quality proposal.<\/li><li>C<\/span> \u2014 the two-stage rule:<\/strong>Since the quality and scope of a consultancy assignment are not tangibly identifiable and consistently measurable, the technical and financial capability of consultants becomes an important \u2014 though indirect \u2014 determinant for quality and scope of performance. In such a situation, <\/strong>value for Money is achieved by encouraging wide and open competition among equally competent consultants.<\/li><\/ul>\nThus, selection of consultants is normally done in a two-stage process:<\/p>\n<ul class=\"lst\"><li>First stage: Likely capable sources are shortlisted, on the basis of qualification and experience requirements for the given assignment \u2014 if need be, through an 'Expression of Interest' (EoI) through advertisement.<\/li><\/ul>\n<aside class=\"note\">The shortlist should include a sufficient number \u2014 not fewer than three (3) and not more than eight (8) eligible firms. In rare cases where fewer than three consultants become eligible as per short-listing criteria, and the criteria cannot be relaxed, procurement May be continued with the approval of the Competent Authority.<\/p><\/aside>\n<ul class=\"lst\"><li>Second stage: The shortlisted consultants are invited to submit their technical and financial (RfP) proposals, generally in separate sealed envelopes. Evaluation of the technical proposal is carried out by evaluators without access to the financial part of the proposal. Financial proposals are opened after evaluation of quality.<\/li><\/ul>\n<\/div><h3>4.4.2<\/span>Price Based System \u2014 Least Cost Selection (LCS)<\/span><\/h3>\n(Rule 193 of GFR 2017)<\/em><\/p>\n1. How it works: In this method of selection, bidders submit both a technical proposal and a financial proposal at the same time.<\/p>\n<ul class=\"lst\"><li>Minimum qualifying marks for the quality of the technical proposal are prescribed as a benchmark \u2014 normally 75 (seventy-five) out of a maximum of 100 (hundred) \u2014 and indicated in the tender document\/ RfP, along with a scheme for allotting marks for various technical criteria\/ attributes.<\/li><li>Alternatively \u2014 since in LCS selection, technical offers do not require to be ranked (or to have weighted technical score added to financial score, as in QCBS) \u2014 it would suffice in appropriately simple cases if the evaluation criteria is only a fail\/ pass criteria prescribing only the minimum qualifying benchmark.<\/li><\/ul>\n<aside class=\"note\">Thus, in LCS, simplified evaluation criteria May also be used, where instead of a marking scheme, a minimum fail\/ pass benchmark of technical evaluation may be prescribed \u2014 e.g., must have completed at least two similar assignments; must have a turnover of at least rs 10 (Rupees Ten) CRORE<\/strong>, etc. Any bidder that passes these benchmarks is declared as technically qualified for the opening of their financial bids.<\/p><\/aside>\n<ul class=\"lst\"><li>The technical proposals are opened first and evaluated, and the offers that qualify as per these technical evaluation criteria will only be considered as technically responsive; the rest will be considered technically non-responsive and will be dropped from the list.<\/li><li>Financial proposals are then opened for only eligible and responsive offers (financial bids of other unresponsive bidders remain unopened) and ranked.<\/li><li>The L-1 offer out of the responsive offers is selected on price criteria alone, without giving any additional weightage to marks\/ ranking of the technical proposal.<\/li><\/ul>\nThis system of selection is roughly the same as the price-based selection of an l-1 OFFER (among the technically responsive offers) in the procurement of goods\/ works.<\/p>\n2. Where suitable W<\/span>: LCS is considered suitable for engaging contractors in most works procurement assignments that are of a standard or routine nature \u2014 such as construction works or non-complex engineering projects \u2014 where well-established practices and standards exist.<\/p>\n3. The default Rule: It is the simplest and the quickest system of selection, and under normal circumstances this method of evaluation shall be used as default, since it allows for minimum satisfactory technical efficiency with economy. Justification must be provided if a selection method other than LCS is to be used.<\/p>\n4. LCS \u2014 Risks and Mitigations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>a) technical criteria May not be relevant to the realisation of the quality of the assignment.<\/td><td>Technical criteria selected should be relevant and proportional to the requirement of quality of the assignment, and the selection process should be rigorous enough to ensure that \u2014 on the one hand \u2014 no technically unsatisfactory bids should be able to get past a loose criterion, and \u2014 on the other hand \u2014 no technically satisfactory offer should get ruled out by tight criteria.<\/td><\/tr><tr><td>b) marking subjectivity: The scheme of marking or its application may be subjective.<\/td><td>It is important to lay down as objective a scheme of marking as possible. Cases where subjectivity is unavoidable (as in evaluation of methodology etc.) \u2014 a system of grading responses and their marking May be laid down in the bidding documents. The Procuring Entity should also have a system of conciliation and moderation of widely disparate markings by different members of the evaluation committee. W<\/span> adds: *As mentioned above, in most works procurement a fail\/ pass criteria is sufficient, and it avoids subjectivity.*<\/td><\/tr><\/tbody><\/table><\/div>\n<h3>4.4.3<\/span>Quality and Cost Based Selection (QCBS)<\/span><\/h3>\n(Rule 192 of GFR 2017)<\/em><\/p>\n1. What it is: In the QCBS system of selection, both the quality of the proposal and the cost are considered as deciding factors. This approach is employed when the quality of deliverables is crucial, but the cost of service or work cannot be ignored.<\/p>\n2. The mechanics:<\/p>\n<ul class=\"lst\"><li>Quality\/ technical scores are assigned to proposals based on specified quality criteria.<\/li><li>Minimum qualifying marks \u2014 normally 70\u201380 (seventy to eighty) out of a maximum of 100 (hundred) marks \u2014 as a benchmark for the quality of the technical proposal is prescribed, and proposals below this benchmark are not considered for financial evaluation.<\/li><li>The financial proposals are also given a cost-score based on the relative ranking of prices \u2014 with 100 (hundred) marks for the lowest and pro-rated lower marks for higher-priced offers.<\/li><li>The total score shall be obtained by weighting the quality and cost scores and adding them.<\/li><li>The proposed weightings for quality and cost shall be specified in the RfP\/ tender document.<\/li><li>The firm obtaining the highest total score shall be selected.<\/li><li>It May be noted that, theoretically, a QCBS system with a weight of 100% (hundred percent) for the 'cost' approximates the price-based LCS system.<\/li><li>This method of selection shall be used for highly technically complex and critical assignments where it is justifiable to pay an appropriately higher price for a higher quality of proposal.<\/li><\/ul>\n<aside class=\"note\">The Single Most Important Numerical Divergence in this Chapter<\/p>\nthe weightage ratio is inverted between consultancy on the one hand and works\/ non-consultancy on the other:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>Cost weightage<\/th><th>Technical\/ Quality weightage<\/th><th>Ceiling on non-financial parameters<\/th><\/tr><\/thead><tbody><tr><td>C<\/span> Consultancy<\/td><td>30%<\/strong> (example)<\/td><td>70% \u2014 but should never be more than 80%<\/td><td>(quality-dominant)<\/em><\/td><\/tr><tr><td>W<\/span> WORKS<\/td><td>80%<\/strong> (example)<\/td><td>20% \u2014 but should never be more than 30%<\/td><td>the maximum weight of the non-financial parameters shall in no case exceed 30%<\/td><\/tr><tr><td>NC<\/span> Non-consultancy<\/td><td>80%<\/strong> (example)<\/td><td>20% \u2014 but should never be more than 30%<\/td><td>shall in no case exceed 30%<\/td><\/tr><\/tbody><\/table><\/div>\nC<\/span> further permits: *The ratio of weightages for cost and Technical score <\/strong>Could also be 40:60 (forty: sixty) OR 50:50 (fifty: fifty), etc. <\/strong>However, the weight for the \"COST\" shall be chosen, considering the complexity of the assignment and the relative importance of quality.*<\/p>\nW<\/span> and NC<\/span> state the converse: However, the weight for the \"QUALITY\" shall be chosen, considering the complexity of the assignment and the relative importance of quality.<\/strong><\/p><\/aside>\n3. The suggestive weighting table [C only]:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Description<\/th><th>Remarks<\/th><th>Quality\/ Cost Score Weighting (%)<\/th><\/tr><\/thead><tbody><tr><td>Highly complex\/ downstream consequences\/ specialised assignments<\/td><td>Use QCBS with higher technical weightage<\/td><td>80\/20<\/td><\/tr><tr><td>Moderate complexity<\/td><td>Majority of cases will follow this range<\/td><td>75\u201365 \/ 25\u201335<\/td><\/tr><tr><td>Assignments of a standard or routine nature, such as auditors\/ procurement agents handling the procurement<\/td><td>Use of LCS is appropriate<\/td><td>60\u201350 \/ 40\u201350<\/td><\/tr><\/tbody><\/table><\/div>\n<h3 class=\"src-multi\">4.4.4<\/span>The Quality Oriented Procurement (QOP) Framework<\/span>W<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\">\n<aside class=\"note\">This apparatus \u2014 QOP declaration, Competent Authority, and the Special Technical Committee \u2014 exists in the WORKS and NON-CONSULTANCY Manuals only. It does not exist in the Consultancy Manual (where QCBS is the norm, not the exception) nor in the Goods Manual.<\/p>\nIn this section, instructions containing \"shall\" are mandatory; Any deviation shall require relaxation from the Ministry of Finance (for ministries\/ departments etc.) or from the board of directors (for CPSEs).<\/p>\n(Source: General Instructions on Procurement and Project Management \u2014 DoE's OM No. F.1\/1\/2021-PPD dated 29.10.2021.)<\/em><\/p><\/aside>\n<h4>A. When QCBS may be used<\/span><\/h4>\nProcuring entities are ALLOWED to use QCBS for procurement of works and non-consultancy services in the following cases:<\/p>\nA) where the procurement has been declared to be a Quality Oriented Procurement (QOP) by the Competent Authority; Or<\/p>\nb) [NC only \u2014 the value route]: For procurement of non-consulting services, where the estimated value of procurement (including all taxes and option clause) does not exceed rs 10 CRORE \u2014 this method of selection shall be used for highly technically complex and critical assignments where it is justifiable to pay an appropriately higher price for higher quality of proposal.<\/p>\nC) the prohibitions: QCBS shall not be used in procurements planned to be done:<\/p>\n<ul class=\"lst\"><li>W<\/span>through two-STAGE BIDDING<\/strong>(where the Procuring Entity is unable to define the technical specifications or performance parameters with adequate clarity)<\/em>, or through REVERSE AUCTION, or through LIMITED TENDERS<\/strong>;<\/li><li>NC<\/span> through REVERSE AUCTION or through LIMITED TENDERS.<\/li><\/ul>\n<aside class=\"note\">NC<\/span> \u2014 the CROSSING-Rs-10-CRORE Rule: In cases where the <\/strong>estimated value was less than rs 10 crore, but on tendering \u2014 following the QCBS process \u2014 it is proposed to place a contract for more than rs 10 crore, the following procedure shall be adopted:<\/p>\n<ul class=\"lst\"><li>i) In case the DIFFERENCE between estimated value (including taxes etc.) and value of the proposed contract (including taxes etc.) is less THAN 10% of the estimated value \u2014 there will be no bar on placement of contract.<\/li><li>ii) in all other cases, the procurement process is to be scrapped and restarted \u2014 either as QOP or on a non-qcbs basis.<\/li><\/ul><\/aside>\nThe PRINCIPLES of QCBS shall be as provided in RULE 192(i), (ii), and (iii) of the GFR. (Refer to the Manual for Procurement of Consultancy Services for such principles.)<\/em> However, the maximum weight of the non-financial parameters shall in no case exceed 30%.<\/p>\n<h4>B. The Competent Authority for allowing QCBS<\/span><\/h4>\nA) for declaring a procurement as QOP:<\/p>\ni) Where the procuring entity\/ project executing authority is covered by RULE 1 OF GFR (as amended by OM No. F.1\/1\/2021-PPD dated 08.03.2024)<\/em>:<\/p>\n<ol class=\"lst\"><li>Secretary of the Ministry\/ Department to which the procuring entity belongs; or<\/li><li>Secretary of the public authority, with the concurrence of the Procuring Entity\/ project executing authority;<\/li><\/ol>\n<aside class=\"note\">Note: The Procuring entity\/ project executing authority will themselves decide the level at which such concurrence is to be given. Such concurrence need not be obtained at the level of Secretary in charge of the Procuring entity\/ project executing authority.<\/p><\/aside>\n<ol class=\"lst\"><li>Where the public authority is any Indian Institute of Technology (IIT) or Indian Institute of Science (IISc) \u2014 the director of such IIT\/ IISc. (This provision is applicable for procurement declared as QOP on or before 31.03.2027 and will be reviewed thereafter.)<\/em><\/li><\/ol>\nii) where the Procuring Entity is a CPSE \u2014 the board of directors of the CPSE.<\/p>\niii) in case the authority to approve procurement on a nomination basis is lower than the Secretary of the Ministry\/ Department (or board of directors in case of CPSEs), such authority will also be competent to approve the procurement as QOP.<\/p>\nB) [nc only] for non-consulting services not exceeding Rs. 10 crore in value:<\/strong> where the procuring entity\/ project executing authority is covered by Rule 1 of GFR<\/strong>(i.e., Central Government Ministries\/ Departments, attached\/ subordinate bodies, and Autonomous Bodies \u2014 except those Autonomous Bodies with separate Financial Rules approved by the Government)<\/em> \u2014 by the officer or authority so designated.<\/strong><\/p>\n<aside class=\"note\">DEFINITIONS used in this framework W<\/span>NC<\/span>:<\/p>\n<ul class=\"lst\"><li>\"Public authority\"<\/strong> means the client organisation<\/strong>, which may be asking a \"Procuring Entity\"\/ \"Project Executing Authority\"\/ \"Project Executing Agency\" to execute a project or work on their behalf. For example, if a university executes works through CPWD, then the university is the public authority, and CPWD is the Procuring Entity<\/strong>. (The public authority and the project executing authority may also be the same.)<\/em><\/li><li>\"PROCURING ENTITY\"\/ \"project executing authority\"\/ \"project executing agency\" means Central Government Ministries\/ Departments, Attached\/ Subordinate bodies including Autonomous Bodies, or CPSEs (etc.) executing projects\/ works.<\/li><\/ul><\/aside>\n<h4>C. The Special Technical Committee (STC)<\/span><\/h4>\na) Composition \u2014 in all cases of QOP, an STC shall be constituted with the following composition:<\/p>\n<ul class=\"lst\"><li>I) two or more persons who have expert knowledge and\/ or long experience relevant to the procurement in question;<\/li><li>ii) one or more persons with extensive experience in handling public projects and\/ or public finance in the Government or State\/ Central public sector;<\/li><li>iii) one or more persons with experience in financial management\/ financial administration\/ audit\/ accountancy;<\/li><li>iv) not more than one member representing the Procuring Entity, who May inter alia provide administrative support to the committee;<\/li><li>V) any person who is a member of the STC shall not associate himself in any manner with any bidder for the procurement concerned.<\/li><\/ul>\nB) appointment: The names of members of the STC shall be decided either by the Competent Authority specified above, or by any other authority to whom such power is delegated by the Competent Authority. However, powers shall not be delegated to the officer or authority competent to finalise the particular procurement.<\/p>\nSitting fee May be paid to the members of the STC. Incidental costs, including travel, shall be paid by the Procuring Entity.<\/p>\nC) mandate \u2014 the STC shall make specific recommendations on the following matters:<\/p>\n<ul class=\"lst\"><li>I) the weight to be given to non-financial parameters (not exceeding 30%).<\/strong> However, the weight for the \"technical\" shall be chosen considering the complexity of the assignment and the relative importance of quality. The proposed weightings for quality and cost shall be specified in the Tender Document.<\/strong><\/li><li>ii) the specific quality\/ technical parameters, their weights, their scoring methodology, the minimum qualification score, etc., and other relevant criteria necessary for ensuring fair and transparent quality\/ technical evaluation of the bids.<\/li><\/ul>\nD) binding force: The recommendations of the STC shall be followed, except where there are special grounds in public interest for deviating from them. However, every case of deviation from the recommendations of the STC shall require approval of the Competent Authority who approved the declaration of the procurement as QOP.<\/p>\n<h4>D. Grounds for Declaring a Procurement to be QOP<\/span><\/h4>\nA procurement should be declared as a QOP only if there is enough justification in terms of:<\/p>\n<ul class=\"lst\"><li>Value addition, or<\/li><li>enhancement of delivery, or<\/li><li>paramount importance of quality.<\/li><\/ul>\nReasons for not adopting two-cover\/ pre-qualification-based\/ least-cost system shall be documented.<\/p>\n<h4>E. Tender Documents \u2014 Fixing\/ Selection of the Evaluation\/ Qualification Criteria<\/span><\/h4>\nTo ensure quality, some of the criteria used in marking May be made mandatory \u2014 and if a bidder does not meet those, then bids shall not be evaluated further.<\/p>\nWeightage May also be given for the timely completion of past projects of a similar nature by the bidder.<\/p>\n<h4>F. Pre-bid Meeting<\/span><\/h4>\nIn all cases of QOP, a pre-bid meeting shall be held, in which the technical criteria \u2014 including the marking scheme \u2014 shall be discussed with the potential bidders.<\/p>\nIf any changes in the criteria are necessitated by such consultation, such changes shall require the recommendation of the STC.<\/p>\n<h4>G. Fixing of Scoring\/ Marking Criteria<\/span><\/h4>\nA) objectivity: The scoring should not be a variable that relies on the subjective opinion of the evaluating panel. The marking scheme should enable the achievement of almost similar scores irrespective of the persons\/ experts involved in the evaluation process. When the outcomes are consistent with the available information, the QCBS parameters are more reliable. Unambiguous descriptions and criteria help to avoid grey areas, so as to ensure that there is only one possible score for the item. As far as possible, the criteria should be so specific and clear that bidders can self-mark their own bids.<\/p>\nB) the minimum threshold and why it must be set high: It is better to specify minimum marks for meeting the qualifying criteria specified. In QCBS selection, minimum qualifying marks (normally 70\u201380 out of a maximum of 100 marks) as a qualifying benchmark shall be prescribed and indicated in the tender document, along with a scheme for allotting marks for various technical criteria\/ attributes. Bids scoring less than the minimum threshold shall not be considered for further evaluation.<\/p>\n<aside class=\"note\">Since the weightage of the cost element adopted is as high as 70 (seventy) per cent, financial considerations would dominate the selection \u2014 though to a lower extent as compared to LCS. In such cases, it is essential to ensure that the minimum qualifying benchmark in the technical evaluation is set sufficiently high to weed out low-quality bids with low prices.<\/p><\/aside>\nC) fixed vs relative parameters: Examples of fixed quality parameters that ought not to be considered for relative scoring include organisations' ISO\/ standards' accreditation, etc. These are required to establish the credentials of the contractor but cannot be used for relative comparison between various bidders.<\/p>\nD) past performance: Bidders should be asked to produce certificates for past performance. A format May be given in the tender itself outlining the contract details, completion, sustainability etc., and bidders May be asked to fill it and give evidence to that effect.<\/p>\nE) presentations: Bidders May be asked to submit a detailed presentation on their proposals in the form of a soft copy along with the bid, so as to facilitate better understanding of their proposal and to ensure commitment.<\/p>\nF) KPIs: Besides the BOQ output criteria for payment, key performance indicators (KPIs) May be specified with minimum achievement levels for payment, so as to ensure quality compliance.<\/p>\n<h4 class=\"src-multi\">H. Caution against Joint Ventures\/ Consortium in QCBS Procurements<\/span>W<\/span>C<\/span>NC<\/span><\/h4><div class=\"srcblock src-multi\">\nA) since quality is given weightage in the evaluation itself, in QCBS procurement, therefore, JVs May be avoided as far as possible. JVs could, however, become necessary in high technology or innovative projects where a single entity May not be able to execute the work alone.<\/p>\nB) if JVs are allowed, measures should be taken to ensure that all the JV partners are present and execute work all through the contract period. An implementation board with the participation of all JV partners May be provided for, wherein the Project Manager from the Procuring Entity shall also be allowed an audience when required. Meeting of JV partners with the project executing authority for quarterly progress review May be made a criterion linked to the achievement of key dates or even payment.<\/p>\n<\/div><h4>I. QCBS \u2014 Risks and Mitigations<\/span><\/h4>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>A) inappropriate selection of QCBS:<\/strong> There is a possibility that the QCBS system is selected where LCS or other systems would have been more appropriate<\/strong>, considering the quality requirements or the capability of the Procuring Entity to monitor the assignment.<\/td><td>The selection of QCBS should be justified and applied only under the circumstances mentioned above.<\/td><\/tr><tr><td>b) weightage of technical: Cost may not be proportional to quality requirements.<\/td><td>Weightage different from 70:30 (seventy: Thirty) should be adequately examined and justified.<\/td><\/tr><tr><td>c) technical criteria May not be relevant to the realisation of the quality of the assignment.<\/td><td>Technical criteria selected should be relevant and proportional to the requirement of quality of assignment, and the selection process should be rigorous enough to ensure that no technically unsatisfactory bids get past a loose criterion, and no technically satisfactory offer gets ruled out by tight criteria.<\/td><\/tr><tr><td>D) marking subjectivity:<\/strong> The scheme of marking or its application may be subjective.<\/td><td>Lay down as objective a scheme of marking as possible. Where subjectivity is unavoidable (as in evaluation of methodology etc.), a system of grading responses and their marking may be laid down in the bidding documents. The Procuring Entity should also have a system of conciliation and moderation of widely disparate markings by different members of the evaluation committee.<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h3>4.4.5<\/span>Fixed Budget based Selection (FBS) [C ONLY]<\/span><\/h3>\n1. Its status: GFR 2017 provides three methods for selection\/ evaluation of consultancy proposals \u2014 viz. QCBS, LCS and SSS. The Fixed Budget Based Selection (FBS) method is now also allowed for selection of consultants (General Instructions on Procurement and Project Management \u2014 DoE's OM No. F.1\/1\/2021-PPD dated 29 October 2021)<\/em>.<\/p>\n2. How it works: In FBS, the selection process considers both the quality of proposals and the cost. FBS is a competitive method, encouraging consultants to provide high-quality services within the defined budget constraints:<\/p>\nA) fixed budget: In the Request for Proposal (RfP) document, a specific fixed budget is specified. Consultants must adhere to this budget, and their proposed cost cannot exceed it.<\/p>\nb) quality assessment: Consultants submit their proposals, and the evaluation considers the quality of these proposals. The proposal that scores the highest in quality \u2014 and is within the specified budget \u2014 is selected for award of contract. This assessment ensures that the selected consultant meets the project's requirements effectively, within the stipulated budget.<\/p>\n3. FBS May be used when: A) the type of consulting services required is simple and\/ or repetitive and can be precisely defined; And b) the budget can be reasonably estimated, and set based on credible cost estimates and\/ or previous selections which have been successfully executed; And c) the budget is sufficient for the consultant to perform the assignment.<\/p>\n<h3>4.4.6<\/span>Direct Selection: Single Source Selection (SSS)<\/span><\/h3>\n(Rule 194 of GFR 2017)<\/em><\/p>\n1. When permissible: Under some special circumstances, it May become necessary to select a particular contractor\/ consultant\/ service provider where adequate justification is available for such single-source selection, in the context of the overall interest of the Procuring Entity.<\/p>\n<aside class=\"note\">Direct selection is also called the nomination mode of procurement.<\/p><\/aside>\nThe selection by SSS\/ nomination is permissible under exceptional circumstances such as:<\/p>\n<ol class=\"lst\"><li>Tasks that represent a natural continuation of previous work carried out by the firm;<\/li><li>In case of an emergency situation; Situations arising after natural disasters; Situations where timely completion of the assignment is of utmost importance;<\/li><li>Situations where execution of the assignment May involve the use of proprietary techniques, or only one contractor\/ consultant has the requisite expertise;<\/li><li>At times, other PSUs or Government organisations are used to provide technical expertise. It is possible to use the expertise of such institutions on an SSS basis;<\/li><li>Under some special circumstances, it may become necessary to select a particular contractor\/ consultant where adequate justification is available in the context of the overall interest of the Ministry or Department. Full justification for Single Source Selection should be recorded in the file, and approval of the Competent Authority obtained before resorting to such single-source selection.<\/strong><\/li><\/ol>\n2. Safeguards: The Procuring Entity shall ensure fairness and equity, and shall have a procedure in place to ensure that: A) the prices are reasonable and consistent with market rates for tasks of a similar nature; And b) the required work\/ services are not split into smaller-sized procurement.<\/p>\n3. Mandatory reporting of nomination awards: All works\/ purchase\/ consultancy\/ non-consultancy contracts awarded on a nomination basis should be brought to the notice of the following authorities for information: a) THE SECRETARY, in the case of Ministries\/ Departments; b) the board of directors or equivalent managing body, in case of Public Sector Undertakings, Public Sector Banks, Insurance companies, etc.; c) the chief executive of the organisation where such a managing body is not in existence.<\/p>\n<ul class=\"lst\"><li>I) the report relating to such awards on a nomination basis shall be submitted to the Secretary\/ board\/ chief executive\/ equivalent managing body every quarter.<\/li><li>ii) the audit committee or similar unit in the organisation May be required to check at least 10% of such cases.<\/li><\/ul>\n4. SSS \u2014 Risks and Mitigations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>a) inappropriate selection of SSS: There is a possibility that the SSS system is selected where LCS or other systems would have been more appropriate, considering the quality requirements or the capability of the Procuring Entity to monitor the assignment. The assignment May be split into parcels to avoid competitive selection systems, or to avoid obtaining higher-level approvals for SSS.<\/td><td>Full JUSTIFICATION for single source selection should be recorded in the file, and approval of the Competent Authority obtained \u2014 the Schedule of Procurement Powers (SoPP) should severely restrict powers for SSS selection. In direct selection, the Procuring Entity should ensure fairness and equity, and the required work\/ services are not split into smaller-sized procurement to avoid competitive processes.<\/td><\/tr><tr><td>b) cost May be unreasonably high: The single contractor\/ consultant is likely to charge unreasonably high prices.<\/td><td>The Procuring Entity must have a procedure in place to ensure that the prices are reasonable and consistent with market rates for tasks of a similar nature. If necessary, negotiations May be held with the contractors\/ consultants to examine reasonableness of quoted price.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.5<\/span>Tendering Systems<\/span><\/h2><h3>4.5.1<\/span>The Common Rationale<\/span><\/h3>\nTendering systems are designed to achieve an appropriate balance between the countervailing needs for the 'right quality' and the 'RIGHT PRICE' \u2014 while the mode of procurement addresses the 'RIGHT SOURCE', and the TENDER DOCUMENT addresses the 'RIGHT QUANTITY' and 'right time and place' \u2014 under different complexities\/ criticality of Technical requirements and value of procurements.<\/p>\n<aside class=\"note\">C<\/span> variant of the same proposition: *Tendering systems are designed to achieve an appropriate balance between the countervailing needs for <\/strong>Right Quality, Right Source, AND the Right Price\u2026 <\/strong>In certain critical and complex requirements, the technical and financial capability of the source of supply becomes an important determinant for Value for Money.*<\/p><\/aside>\nplease note that the selection of a tendering system has to be based on the two factors mentioned above; Hence, just a value threshold for their use is discouraged. Selection should be based on professional judgement of the two factors mentioned above. (Stated expressly in G<\/span>, W<\/span> and NC<\/span>.)<\/em><\/p>\n<h3>4.5.2<\/span>The Systems Listed<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>G<\/span> Goods<\/th><th>W<\/span> Works<\/th><th>C<\/span> Consultancy<\/th><th>NC<\/span> Non-Consultancy<\/th><\/tr><\/thead><tbody><tr><td>1. Single-Stage Tendering System<\/td><td><\/td><td><\/td><td><\/td><td><\/td><\/tr><tr><td> \u2014 a) Single Stage Single Envelope System<\/td><td><\/td><td><\/td><td><\/td><td><\/td><\/tr><tr><td> \u2014 b) Single Stage Two Envelopes System (Two Bid System) (Rule 163 of GFR 2017)<\/em><\/td><td><\/td><td><\/td><td><\/td><td><\/td><\/tr><tr><td> \u2014 c) Single Stage Two Envelopes System with PRE-QUALIFICATION<\/td><td><\/td><td><\/td><td>[C ONLY]<\/td><td><\/td><\/tr><tr><td>2. Two Stage Bidding \u2014 Expression of Interest Tenders \u2014 Market Exploration\/ Short-listing (Rule 164 of GFR 2017)<\/em><\/td><td><\/td><td><\/td><td><\/td><td><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Cross-reference note: The WORKS, CONSULTANCY and NON-CONSULTANCY Manuals all state expressly: \"Details of these Bidding Systems are explained in CHAPTER 4 of the Manual for procurement of goods, 2024, which may be referred to. For the sake of brevity, these are not repeated here.\"<\/em><\/p>\nThe full text below is therefore drawn from the GOODS Manual and applies to all four categories.<\/p>\nC<\/span> adds: *For guidance on the preparation of the <\/strong>Request for Expression of Interest (REoI) document for the procurement of consultancy services, please refer to para 5.2 of the Consultancy Manual.*<\/p><\/aside>\n<h3>4.5.3<\/span>Single-Stage Tendering System<\/span><\/h3>\nIn single-stage tendering, bids are invited at a single stage of submission. The bids can be stipulated to be either in a single envelope or in multiple envelopes.<\/p>\n<h4>A. Single Stage Single Envelope System<\/span><\/h4>\n1. In a single-stage single-envelope system, eligibility, technical\/ commercial details, and financial details are submitted together in the same envelope.<\/p>\nEvaluation is in the sequence of evaluated responsive prices (from L1 onwards), and their technical\/ commercial compliance is checked.<\/p>\nThe lowest-priced bid that meets the eligibility\/ qualification criteria, technical and commercial conditions laid down in the tender documents is declared as successful.<\/p>\n2. Where suitable: This tendering system is SUITABLE where:<\/p>\n<ul class=\"lst\"><li>The technical requirement is simple or moderately complex;<\/li><li>The capability of the source of supply is not too crucial; And<\/li><li>the value of procurement is not too high.<\/li><\/ul>\nThis is the simplest and the quickest tendering system and should be the default system of tendering.<\/p>\n<h4>B. Single Stage Two Envelopes System (Two Bid System)<\/span><\/h4>\n(Rule 163 of GFR 2017)<\/em><\/p>\n1. When used: In technically complex requirements \u2014 but where the capability of the source of supply is still not critical, and the value of procurement is not high \u2014 a Single-stage two-envelopes system may be followed.<\/p>\n2. Composition of the two envelopes (off-line tenders): Bidders should be asked to bifurcate their quotations into two separately sealed envelopes:<\/p>\n<ul class=\"lst\"><li>The first envelope \u2014 called the techno-commercial bid \u2014 contains the eligibility, technical quality and performance aspects, commercial terms and conditions and documents sought in the tender, except the price and relevant financial details<\/em>.<\/li><li>The second envelope \u2014 called the financial bid \u2014 contains the price quotation along with other financial details.<\/li><li>Both the envelopes are to be submitted together in a sealed outer envelope.<\/li><li>In e-procurement, the bidder would be asked to upload two files, mutatis mutandis<\/em>.<\/li><\/ul>\n3. First opening: The techno-commercial bids are to be opened in the first instance on the pre-announced bid opening date and time, and scrutinised and evaluated by the TC with reference to parameters prescribed in the tender documents; And responsive, eligible, and technically compliant bidders are decided.<\/p>\n4. Second opening: Thereafter, the financial bids of ONLY<\/em> The techno-commercially compliant offers are to be opened on a pre-announced date and time for further scrutiny, evaluation, ranking and placement of the contract.<\/p>\n<ul class=\"lst\"><li>In e-procurement, financial bids of technically non-compliant offers would remain encrypted and unopened.<\/li><li>In off-line tenders, the financial bids of technically non-compliant bidders should be returned unopened to the respective bidders by registered acknowledgement due\/ reliable courier, or any other mode with proof of delivery.<\/li><\/ul>\n<h3>4.5.4<\/span>Two-Stage Bidding \u2014 Expression of Interest (EoI) Tenders \u2014 Market Exploration<\/span><\/h3>\n(Rule 164 of GFR 2017)<\/em><\/p>\n1. The problem it solves: In the case of green-field\/ blue-sky projects, where the equipment\/ plant to be procured is COMPLEX, the procuring organisation May not possess the full knowledge of either the various technical solutions available or the likely sources for such products in the market.<\/p>\nTo meet the desired objectives of a transparent procurement that ensures value for money and simultaneously ensures the upgradation of technology & CAPACITY BUILDING, it would be prudent to invite an Expression of Interest (EoI) bids as a first stage of the two-stage tendering system \u2014 to explore the market and finalise specifications based on technical discussions\/ presentations with the experienced manufacturers\/ suppliers in a transparent manner.<\/p>\n<aside class=\"note\">In less complex cases, a market consultation through a pre-nit conference May suffice instead of two-stage tendering.<\/p><\/aside>\n2. The four situations in which EoI bids May be invited: A) it is not feasible for the Procuring Entity to formulate detailed specifications or identify specific characteristics for the subject matter of procurement without receiving inputs regarding its technical aspects from bidders; B) the character of the subject matter of procurement is subject to rapid technological advances, market fluctuations, or both; C) the Procuring Entity seeks to enter into a contract for research, experiment, study, or development \u2014 except where the contract includes the production of requirements in quantities sufficient to establish their commercial viability or to recover research and development costs; Or d) the bidder is expected to carry out a detailed survey or investigation and undertake a comprehensive assessment of risks, costs and obligations associated with the particular procurement.<\/p>\n<h4>A. The Procedure of Two-Stage Bidding<\/span><\/h4>\n1. First stage: The Procuring Entity shall invite EoI bids containing the broad objectives, technical and financial qualification criteria, terms and conditions of the proposed procurement, etc. \u2014 without a bid price<\/em>.<\/p>\nOn receipt of the Expressions of Interest, manufacturers\/ suppliers which are prima facie<\/em> Considered technically and financially capable of supplying the material or executing the proposed work shall be shortlisted.<\/p>\n2. Technical discussions: Thereafter, technical discussions\/ presentations May be held with the short-listed manufacturers\/ suppliers \u2014 giving equal opportunity to all such bidders to participate in the discussions.<\/p>\nDuring these technical discussions, the procurement agency May also add other stakeholders who could add value to the decision-making on the various technical aspects and evaluation criteria.<\/p>\nA proper record of discussions\/ presentations and the process of decision-making should be kept.<\/p>\n3. Framing specifications: Based on the discussions\/ presentations so held, one or more acceptable technical solutions could be decided upon \u2014 by laying down detailed technical specifications for each acceptable technical solution, quality benchmarks, warranty requirements, delivery milestones, etc. \u2014 in a manner consistent with the objectives of transparent procurement.<\/p>\nAt the same time, care should be taken to make the specifications generic in nature, to provide equitable opportunities to the prospective bidders.<\/p>\n4. The limit on revision:<\/strong> In revising the relevant terms and conditions of the procurement, if found necessary because of discussions with the shortlisted bidders, the Procuring Entity shall not modify the fundamental nature<\/em> Of the procurement itself.<\/strong><\/p>\n5. Second stage: The Procuring Entity shall invite only those bidders whose bids at the first stage were not rejected, to participate in a two-envelope tendering in response to a revised set of terms and conditions of the procurement.<\/p>\n6. Right of withdrawal without penalty: Any bidder invited to bid but not in a position to supply the subject matter of procurement due to modification in the specifications or terms and conditions May withdraw from the tendering proceedings without forfeiting any Bid Security<\/em> That he May have been required to provide, or being penalised in any way \u2014 by declaring his intention to withdraw from the procurement proceedings with adequate justification.<\/p>\n7. 'Non-committal' EoI: If the Procuring Entity is of the view that after the EoI stage there is a likelihood of further participation by many more bidders \u2014 and to avoid getting trapped into a legacy technology \u2014 the second-stage tendering May not be restricted only to the shortlisted bidders of the EoI stage, and it May be so declared in the EoI document ab initio<\/em>.<\/p>\nThereafter, in the second stage, normal OTE\/ GTE tendering May be performed. Such a variant of EoI is called a 'non-committal' EoI.<\/p>\nInstances of 'non-committal EoI' should be rare, since it May de-incentivise the participants from giving a diligent\/ sincere EoI. There should not be any bid-security requirement in such non-committal EoI.<\/p>\n<h4>B. Invitation of EoI Tenders<\/span><\/h4>\nIn EoI tenders, an advertisement inviting Expression of Interest should be published. The invitation to the EoI document should contain: a) a copy of the advertisement; b) objectives and scope of the requirement \u2014 a brief description of objectives and the broad scope of the requirement; it may also include the validity period of empanelment; c) instructions to the bidders \u2014 including the nature of supply, fees for empanelment (if EoI is for empanelment), last date of submission, place of submission and any other related instructions; d) formats for submission \u2014 the format in which the bidders are expected to submit their EoI; e) QUALIFICATION CRITERIA \u2014 the invitation to EoI should clearly lay down the qualification criteria that should be applied for shortlisting. The required supporting documents need to be clearly mentioned.<\/p>\n<h4>C. Evaluation of EoI<\/span><\/h4>\nThe bidders should be evaluated for shortlisting \u2014 inter alia<\/em> \u2014 based on their past experience of performance in a similar context, financial strength, and technical capabilities, among others.<\/p>\nEach bidder should be assigned scores based on the sum of marks obtained for each parameter multiplied by the weightage assigned to that parameter.<\/p>\nAll bidders who secure the minimum required marks (normally 60 (sixty) per cent) should be shortlisted. The minimum qualifying marks should be specified in the EoI document.<\/p>\nALTERNATIVELY, instead of weighted evaluation, the EoI document May specify a 'FAIL-PASS CRITERIA' with the minimum qualifying requirement for each of the criteria \u2014 such as minimum years of experience, minimum number of assignments executed and minimum turnover. Under such circumstances, all bidders who meet the minimum requirement as specified should be shortlisted.<\/p>\nThe shortlist should normally comprise at least four firms.<\/p>\n<aside class=\"note\">(Contrast C<\/span> at para 4.4.1-3 above, where the consultancy shortlist is not fewer than three and not more than eight<\/strong>.)<\/em><\/p><\/aside>\nAn example of EoI Qualification criteria G<\/span>:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Criteria<\/th><th>Sub-criteria<\/th><th>Weightage*<\/th><th>Break-up of Weightage<\/th><\/tr><\/thead><tbody><tr><td>Past experience of the firm with similar requirements<\/td><td><\/td><td>A\\*<\/td><td><\/td><\/tr><tr><td>Financial strength of the vendor<\/td><td><\/td><td>B\\*<\/td><td><\/td><\/tr><tr><td><\/td><td>Turnover figures for the last three years<\/td><td><\/td><td>B1\\*<\/td><\/tr><tr><td><\/td><td>Net profit figures for the last three years<\/td><td><\/td><td>B2\\*<\/td><\/tr><tr><td>Quality accreditations, licensing requirements<\/td><td><\/td><td>C\\*<\/td><td><\/td><\/tr><tr><td>Manufacturing capabilities\/ tie-ups<\/td><td><\/td><td>D\\*<\/td><td><\/td><\/tr><tr><td>After-sales support infrastructure<\/td><td><\/td><td>E\\*<\/td><td><\/td><\/tr><tr><td>Product support<\/td><td><\/td><td>F\\*<\/td><td><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">\\* weightage (out of 100) should be pre-decided and declared in EoI documents by the ca, based on an assessment of the required profiles of the potential bidders. The marking\/ grading scheme for allotting marks (out of 100) for various parameters should also be laid down.<\/p><\/aside>\n<h2>4.6<\/span>Channels of Procurement<\/span><\/h2>\nPublic Procurement can be performed\/ channelled by way of:<\/p>\n<aside class=\"note\">Manual bids \u00b7 e-procurement platforms \u00b7 GeM portal \u00b7 or through third-party agencies.<\/p>\nPlacement note: Electronic Reverse Auction (eRA) appears under CHANNELS in the Works (3.5.2) and Non-Consultancy (4.6.2) Manuals, but under modes of procurement in the Goods Manual (4.5). It is absent from the Consultancy Manual. eRA is covered in PART B of this chapter with the modes of procurement.<\/p><\/aside>\n<h3>4.6.1<\/span>Electronic Procurement (e-Procurement)<\/span><\/h3>\n(Rule 160 of GFR 2017)<\/em><\/p>\n1. What it is: Electronic procurement (e-procurement) is the use of information and communication technology (especially the internet) by the buyer (through a third-party e-procurement portal) in conducting procurement processes with the vendors\/ contractors for the acquisition of goods (supplies), works and services \u2014 aimed at open, non-discriminatory, and efficient procurement through transparent procedures.<\/p>\n<aside class=\"note\">A generic description of how e-Procurement is conducted is detailed in 'Appendix 3: Electronic Procurement (e-Procurement) and e-Auction' of the Manual for Procurement of Goods, 2024.<\/em><\/p><\/aside>\n2. The mandate \u2014 and its two exceptions: It is mandatory for ministries\/ departments to receive all bids through e-procurement portals that are gcqe compliant<\/em>, for all procurements.<\/p>\nThis condition will NOT<\/em> Be applicable for:<\/p>\n<ul class=\"lst\"><li>the procurement made without QUOTATION (under RULE 154 of GFR, 2017); or<\/li><li>through PURCHASE COMMITTEE (under RULE 155 of GFR, 2017).<\/li><\/ul>\n<aside class=\"note\">GCQE = Guidelines for Compliance to Quality Requirements of eProcurement, JULY 2021, issued by the Standardisation Testing and Quality Certification (STQC) Directorate \u2014 an attached office of MeitY.<\/p><\/aside>\n3. No mixing of Manual and electronic bids: Normally, in e-procurement, no physical\/ off-line tender documents are provided, nor are any Manual bids accepted. It is not a good practice to call both electronic and Manual bids in the same tender.<\/p>\n4. Exemption \u2014 Global Tender Enquiry: In Global Tender Enquiry (by any mode \u2014 open tender, limited tender or single tender), e-procurement May not be mandatorily insisted upon. However, e-publishing would still be mandatory.<\/p>\n5. Exemption \u2014 national security and missions abroad: In individual cases where national security and strategic considerations demand confidentiality, ministries\/ departments May exempt such cases from e-procurement \u2014 after seeking the approval of the concerned Secretary and with the concurrence of financial advisers.<\/p>\nIn case of tenders floated by Indian missions and CPSE units abroad, the Competent Authority for deciding the tender May exempt such cases from e-procurement.<\/p>\n6. The portals: Note the different names used by the four Manuals for the NIC portal:<\/p>\n<ul class=\"lst\"><li>G<\/span>\"The National Informatics Centre (NIC) has an e-Procurement portal called Government e-procurement of NIC (gepnic)<\/strong>.\"<\/em><\/li><li>C<\/span>\"National Informatics Centre (NIC) has an eProcurement portal called the Central Public Procurement Portal (CPPP)<\/strong>.\"<\/em><\/li><\/ul>\nThere are other service providers in the public sector (e.g., MSTC) and private sector that can be utilised for e-PROCUREMENT. Details about the process of e-procurement are available from the service providers.<\/p>\n7. Which portal a Ministry should use: Ministries\/ departments that do not have a large volume of procurement, or carry out procurements required only for the day-to-day running of offices, and have not initiated e-procurement through any other solution so far \u2014 May use the e-procurement solution developed by NIC.<\/p>\nOther ministries\/ departments May either use the e-procurement solution developed by NIC, or engage any other service provider \u2014 G<\/span> adds: (Gcqe compliant)<\/em> \u2014 following due process.<\/p>\n8. These instructions will not apply to procurements made by ministries\/ departments through Government E-marketplace (GeM).<\/p>\n<h3>4.6.2<\/span>Mandatory Procurement of Goods and Services through GeM<\/span><\/h3>\n(Rule 149 of GFR 2017)<\/em><\/p>\n1. What an online marketplace is: An online marketplace (or e-commerce marketplace) is a type of e-commerce site where several sellers offer products or services, and all the buyers can select the product\/ services offered by any one of the sellers based on his own criteria.<\/p>\nIn an online marketplace, the purchaser's transactions are processed by the marketplace operator, and then products\/ services are delivered and fulfilled directly by the participating retailers. Other capabilities might include auctioning (forward or reverse), catalogues, ordering, posting requirements by purchasers, payment gateways, etc.<\/p>\nIn general, because online marketplaces aggregate products from a wide array of providers, selection is usually wider, availability is higher, and prices are more competitive than in vendor-specific online retail stores.<\/p>\n2. The mandate: The Government of India has established the Government E-marketplace (GeM) for common-use goods and services. The procurement process on GeM is end-to-end \u2014 from placement of contract orders to payment to suppliers. This is to ensure better transparency and higher efficiency. All the processes will be electronic and online.<\/p>\nThe procurement of goods and services through the GeM portal by ministries\/ departments (including attached\/ subordinate offices), CPSEs, and autonomous bodies is mandatory<\/em> for goods or services available therein, as per Rule 149 of GFR, 2017.<\/p>\n3. Supplier registration: Products and services are listed on GeM by various suppliers, as on other e-commerce portals. Supplier registration on geM is online and automatic, based on:<\/p>\n<aside class=\"note\">PAN Card \u00b7 Aadhaar Card \u00b7 GST Certification \u00b7 Bank Account and Financial Information \u00b7 Corporate Registration Documents (Udyam registration for MSEs) \u00b7 VAT or TIN Number \u00b7 Proof of Address \u00b7 Contact Details, etc.<\/p><\/aside>\n4. Demand aggregation: The best prices for a user can be available if the same requirements and demands of various organisations are aggregated. This Acts as an incentive for the supplier to quote their best price. For the same products, the demand of various Government departments can be clubbed together, and Reverse Auction can be done based on aggregate demand, which will provide the best prices to the Government.<\/p>\n5. The GeM monetary thresholds \u2014 Rule 149 of GFR, 2017:<\/p>\n<aside class=\"note\">\"Government e-Market Place (GeM): GeM SPV (Special Purpose Vehicle) will ensure adequate publicity, including periodic advertisement of the items to be procured through GeM for the prospective suppliers. Suppliers' credentials on GeM shall be certified by GeM SPV. The GeM portal shall be utilised by the Government buyers for direct online purchases as follows:<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>Value<\/th><th>Procedure<\/th><\/tr><\/thead><tbody><tr><td>a) UP TO Rs. 50,000\/-<\/td><td>through any of the available suppliers on the GeM, meeting the requisite quality, specification, and delivery period. Note 1: In the case of automobiles, direct procurement under this sub-para is permitted without any ceiling limit<\/em>. Note 2: In case the item is available on GeM, it is not permitted<\/em> To purchase the same under Rule 154 of the GFR, 2017.<\/td><\/tr><tr><td>B) above Rs. 50,000\/- and up to Rs. 10,00,000\/-<\/td><td>through the GeM seller having the lowest price amongst the available sellers, of at least three different manufacturers<\/em>, ON GeM \u2014 meeting the requisite quality, specification, and delivery period. The tools for online bidding and online Reverse Auction available on GeM can be used by the buyer even for procurements less than Rs. 10,00,000\/-. Note 1: In case the item is available on GeM, it is not permitted<\/em> To purchase the same under Rule 155 of the GFR, 2017.<\/td><\/tr><tr><td>c) above Rs. 10,00,000\/-<\/td><td>through the supplier having the lowest price meeting the requisite quality, specification, and delivery period \u2014 after mandatorily<\/em> Obtaining bids, using online bidding or Reverse Auction tool provided on GeM.<\/td><\/tr><\/tbody><\/table><\/div>\nD) the invitation for the online e-bidding\/ Reverse Auction will be available to all the existing sellers or other sellers registered on the portal who have offered their goods\/ services under the particular product\/ service category, as per the terms and conditions of GeM.<\/p>\nE) the above-mentioned monetary ceiling is applicable ONLY<\/em> for purchases made through GeM. For purchases, if any, outside GeM, relevant GFR Rules shall apply.<\/p>\nF) the ministries\/ departments shall work out their procurement requirements of goods and services on either \"opex\" model or \"capex\" model as per their requirement\/ suitability at the time of preparation of budget estimates (be), and shall project their annual procurement plan of goods and services on GeM portal within 30 (thirty) days of budget approval.<\/p>\ng) it is the responsibility of the Procuring Entity to do due diligence to ensure the reasonableness of rates. The government buyers may ascertain the reasonableness of prices before placing an order using the BUSINESS ANALYTICS (ba) tools available on geM \u2014 including the last purchase price on geM, the department's own last purchase price, etc.<\/p>\nH) demand for goods shall not be divided into small quantities to make piecemeal purchases, to avoid procurement through L-1 buying\/ bidding\/ Reverse Auction on GeM, or the necessity of obtaining the sanction of higher authorities required with reference to the estimated value of the total demand.\"<\/p>\n6. GeM Portal: https:\/\/gem.gov.in \u2014 Detailed instructions for user organisation registration, supplier registration, listing of products, terms and conditions, online bidding, Reverse Auction, demand aggregation, call centre, etc., are available on this portal.<\/p>\n7. Uploading of non-availability report \u2014 gemar&pts: It is mandatory for a buyer to generate a \"GeM availability report and past transaction summary\" (gemar&pts) with a unique id on the GeM portal using his login credentials, for procurement outside<\/em> GeM (for example, for procurement through the Central Public Procurement Portal)<\/em>(Notified vide OM No. F.6.18.2019-PPD dated 11th June 2021)<\/em>.<\/p>\nThe past transaction summary will be provided, where available.<\/p>\n\"Gemar&pts\" shall be a pre-requisite for arriving at a decision by the Competent Authority for procurement of required goods and services by floating a bid outside GeM, and its unique id would be required to be furnished on the publishing portal along with the tender proposed to be published.<\/p>\n8. Interaction with Rules 154 and 155:<\/p>\n<ul class=\"lst\"><li>Purchase of goods without quotation<\/em> Can be resorted to for value up to Rs. 50,000\/- only on each occasion \u2014 without inviting quotations or bids \u2014 based on a certificate to be recorded by the Competent Authority, only when the required goods are not available on GeM<\/em>.<\/li><li>In case a certain item is not available on the GeM portal, purchase of goods costing above Rs. 50,000\/- and up to Rs. 5,00,000\/- on each occasion May be made on the recommendations of a duly constituted local Purchase Committee<\/em>.<\/li><\/ul>\n9. Buying outside GeM when the item is on GeM: Where an item is available on GeM, and the Ministry\/ Department\/ organisation wants to buy outside the GeM in view of any compelling circumstances, the approval of the standing committee of GeM (SCoGeM)<\/em> And the Secretary concerned<\/em> Shall be required (OM No. F.6\/15\/2018-PPD dated 05.02.2020)<\/em>.<\/p>\n10. Receipt of Materials and Payment Procedures:<\/strong> Further details are given in Annexure 36<\/strong> of the Goods Manual.<\/p>\n11. Push Button Procurement (PBP) on GeM<\/strong>(Notified vide OM No. F.6\/7\/2022-PPD dated 06.09.2022)<\/em>:<\/p>\na) The rationale: As per Rule 144(vii) and Rule 149 of GFR, 2017, the procuring entity should satisfy itself that the price of the selected offer is reasonable. SOMETIMES \u2014 ESPECIALLY INFREQUENTLY \u2014 Government buyers find it difficult to certify the reasonableness of rates. Such users normally do not possess the requisite skills to make procurement decisions. It delays the procurement process.<\/p>\nAt the same time, for typically low-value procurements, efforts expended in assessing the reasonability of rates May be disproportionate. Additionally, with developments in technology and e-procurement becoming the norm, the availability of market activities and the capability to analyse them artificially have provided an opportunity to automate decision-making activities, such as the assessment of the reasonability of rates in such cases.<\/p>\nb) The seven conditions of PBP:<\/p>\n<ul class=\"lst\"><li>I) PBP will be made only on GeM through bidding<\/em> \u2014 PBP through direct purchase, L-1, custom-bid, etc., are not permitted<\/em>.<\/li><li>ii) the total procurement value of the specific case is permitted up to rupees five (5) lakh, inclusive of all taxes.<\/li><li>iii) this will be an additional<\/em> Method of procurement, and procuring entities are free to use or not to use this additional method.<\/li><li>iv) this method can be used only if at least five bids<\/em> Are received. In case fewer than five bids are received, the procurement is to restart using the usual procurement modes. However, buyers will have a choice to extend the PBP date once by three (3) days<\/em> At the time of preparation of the tender document, in case of lesser participation.<\/li><li>V) no splitting of requirements is to be done to bring procurement under this method.<\/li><li>vi) once a bid is invited on GeM, the contract will be placed directly by GeM without any human intervention<\/em> [provided condition (iv) above is complied with].<\/li><li>vii) GeM will permit this method only for such categories where at least ten sources<\/em> Are listed.<\/li><\/ul>\nc) GeM has published a Manual on PBP for buyers on its website.<\/p>\n<h3>4.6.3<\/span>Procurement through Centralised Agencies or other Organisations<\/span><\/h3>\nDepartments\/ Organisations that have not built up their own capability for procurement May engage procurement agents \u2014 for individual procurement or as outsourcing of service \u2014 with the approval of the Competent Authority.<\/p>\nMany canalised agencies authorised by the Government, and some CPSEs, provide end-to-end procurement services \u2014 i.e., framing procurement documents, bidding process, evaluation, and contract management.<\/p>\nPossibilities of other ministries\/ departments or their attached and subsidiary offices undertaking such procurement may also be explored.<\/p>\n<h1>Appendix to Chapter 4 \u2014 Part a: Points of Difference<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Chapter number<\/td><td>G\/C\/NC: Chapter 4 \u00b7 W: CHAPTER 3<\/td><\/tr><tr><td>2<\/td><td>Chapter title<\/td><td>G:<\/strong>Modes of Procurement and Tendering Systems<\/em> \u00b7 W\/C\/NC:<\/strong>Bidding Design for \u2026<\/em><\/td><\/tr><tr><td>3<\/td><td>Agency for Procurement (PWO \/ PSU \/ MoHUA notification \/ Works Committee \/ Sample MoU)<\/td><td>W ONLY<\/td><\/tr><tr><td>4<\/td><td>Rs 60 lakh direct-execution ceiling for repair works<\/td><td>W ONLY<\/td><\/tr><tr><td>5<\/td><td>Award to a PSU treated as project management consultancy; competition on lump sum service charges<\/td><td>W ONLY<\/td><\/tr><tr><td>6<\/td><td>Admeasurement of Services \u2014 input vs output<\/td><td>nc only<\/td><\/tr><tr><td>7<\/td><td>\"Types of Contracts\" section<\/td><td>absent from goods entirely<\/strong>; W has 7, C has 5, NC has 4<\/td><\/tr><tr><td>8<\/td><td>Item Rate, Percentage Rate, Piece Work, EPC, PPP<\/td><td>W ONLY<\/td><\/tr><tr><td>9<\/td><td>BOQ variation bands (\u00b110\u201315% allowed; \u00b125\u201330% needs CA sanction)<\/td><td>W ONLY<\/td><\/tr><tr><td>10<\/td><td>EPC 10% change-of-scope ceiling; LD capped at 10%; bonus \u226410%; 2-year defects liability; 30-day grace period; sub-contracting \u226450%<\/td><td>W ONLY<\/td><\/tr><tr><td>11<\/td><td>EPC technical capacity thresholds (60% one project \/ 40% two \/ 30% three); net worth 15%<\/td><td>W ONLY<\/td><\/tr><tr><td>12<\/td><td>Right of the EPC contractor to MATCH the first-ranked bid on payment of ~2%<\/td><td>W ONLY<\/td><\/tr><tr><td>13<\/td><td>Retainer-ship cum Success (Contingency) Fee Contract<\/td><td>C ONLY<\/td><\/tr><tr><td>14<\/td><td>\"Risk of over-utilisation\" as a fourth risk row in Indefinite Delivery contracts<\/td><td>C ONLY<\/td><\/tr><tr><td>15<\/td><td>Consultancy staff \"normally NAMED\" in Time-Based contracts<\/td><td>C ONLY<\/td><\/tr><tr><td>16<\/td><td>Percentage contract discouraged for architectural services unless on fixed target cost<\/td><td>C<\/strong> (NC carries the type but not this caution in the same terms)<\/td><\/tr><tr><td>17<\/td><td>\"Systems of Selection\" section<\/td><td>absent from goods entirely<\/td><\/tr><tr><td>18<\/td><td>QCBS weightage \u2014 inverted<\/td><td>C: Technical 70% \/ Cost 30%, technical never more than 80% \u00b7 W & NC: Cost 80% \/ Technical 20%, non-financial never EXCEEDING 30%<\/td><\/tr><tr><td>19<\/td><td>QCBS suggestive weighting table (80\/20 \u00b7 75-65\/25-35 \u00b7 60-50\/40-50)<\/td><td>C ONLY<\/td><\/tr><tr><td>20<\/td><td>Fixed Budget based Selection (FBS)<\/td><td>C ONLY<\/td><\/tr><tr><td>21<\/td><td>Quality Oriented Procurement (QOP) declaration framework<\/td><td>w + nc only<\/td><\/tr><tr><td>22<\/td><td>Special Technical Committee (STC) \u2014 composition, appointment, mandate, binding force<\/td><td>w + nc only<\/td><\/tr><tr><td>23<\/td><td>IIT\/ IISc Director as Competent Authority for QOP, valid up to 31.03.2027<\/td><td>w + nc only<\/td><\/tr><tr><td>24<\/td><td>Rs 10 crore value route to QCBS for NC Services, and the \"crossing Rs 10 crore\" 10% rule<\/td><td>nc only<\/td><\/tr><tr><td>25<\/td><td>QCBS prohibited in two-STAGE BIDDING<\/td><td>W ONLY<\/strong> (NC prohibits only Reverse Auction and Limited Tenders)<\/td><\/tr><tr><td>26<\/td><td>Mandatory pre-bid meeting in all QOP cases; changes to criteria need STC recommendation<\/td><td>w + nc only<\/td><\/tr><tr><td>27<\/td><td>Consultancy shortlist: Not fewer than 3, not more than 8<\/td><td>C ONLY<\/td><\/tr><tr><td>28<\/td><td>EoI shortlist should normally comprise at least four firms; minimum 60% marks<\/td><td>G<\/strong> (applied by cross-reference to W\/C\/NC)<\/td><\/tr><tr><td>29<\/td><td>\"Single Stage Two Envelopes System with PRE-QUALIFICATION\" listed as a distinct tendering system<\/td><td>C ONLY<\/td><\/tr><tr><td>30<\/td><td>Full text of the tendering systems<\/td><td>G ONLY<\/strong> \u2014 W, C and NC all expressly cross-refer to Goods Ch. 4 \"for the sake of brevity\"<\/td><\/tr><tr><td>31<\/td><td>NIC portal named<\/td><td>g: Gepnic \u00b7 c: CPPP<\/td><\/tr><tr><td>32<\/td><td>eRA placed under CHANNELS<\/td><td>W (3.5.2) + NC (4.6.2) \u00b7 G places it under MODES (4.5) \u00b7 absent from c<\/td><\/tr><tr><td>33<\/td><td>GeM monetary thresholds, GeMAR&PTS, SCoGeM approval, Push Button Procurement<\/td><td>G ONLY<\/strong> in full (C\/NC reproduce parts; W does not)<\/td><\/tr><tr><td>34<\/td><td>Automobiles exempt from the Rs 50,000 direct-purchase ceiling on GeM<\/td><td>G ONLY<\/td><\/tr><tr><td>35<\/td><td>PBP conditions \u2014 Rs 5 lakh cap, at least 5 bids, one 3-day extension, at least 10 listed sources, no human intervention<\/td><td>G ONLY<\/td><\/tr><tr><td>36<\/td><td>Nomination awards reported QUARTERLY; audit committee to check AT least 10% of such cases<\/td><td>W + C + NC<\/strong> (common)<\/td><\/tr><tr><td>37<\/td><td>\"Justification must be provided if a selection method other than LCS is used\"<\/td><td>W<\/strong> (states it as an express default rule)<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 4 \u2014 part a<\/p>\n<aside class=\"note\">Next:<\/strong>Chapter 4 \u2014 part b: Modes of procurement<\/strong> \u2014 Open Tender Enquiry \u00b7 Global Tender Enquiry and the Rs 200 crore restriction \u00b7 Rate Contract\/ Framework Agreement \u00b7 Electronic Reverse Auction \u00b7 Pre-qualification Bidding \u00b7 Approved Vendor List \u00b7 Limited Tender Enquiry \u00b7 Special Limited Tender Enquiry (Rs 50 lakh in Goods vs Rs 10 lakh in Works)<\/strong> \u00b7 Proprietary Article Certificate \u00b7 Single Tender Enquiry\/ Selection by Nomination \u00b7 Direct Procurement without Quotation \u00b7 Direct Procurement by Purchase Committee \u00b7 Award of Work through Quotations \u00b7 Award of works in stalled contracts.<\/p><\/aside>Part II<\/span>Modes of Procurement<\/em><\/p>\nMerging: Goods Ch. 4<\/strong> paras 4.1\u20134.13 \u00b7 Works Ch. 3<\/strong> paras 3.6\u20133.14 \u00b7 Consultancy Ch. 4<\/strong> para 4.3 \u00b7 Non-Consultancy Ch. 4<\/strong> para 4.4<\/em><\/p><h2>The Most Important Caution in this Chapter<\/span><\/h2>\n<aside class=\"note\">the works, consultancy and non-consultancy Manuals all carry the following sentence, word for word:<\/p>\n\"Applicability, Terms and Conditions, Risks, and mitigations of these modes of procurement (including restrictions regarding GTE mode for procurements below Rs 200 Crore) are detailed in CHAPTER 4 of the Manual for procurement of goods, 2024, which may be referred to. For the sake of brevity, these are not repeated here.\"<\/em><\/p>\nConsequently, the detailed text of every mode of procurement below is drawn from the GOODS Manual and applies mutatis mutandis<\/em> to Works, Consultancy and Non-Consultancy \u2014 except where the Works Manual has chosen to reproduce and vary the text (OTE, GTE, PQB, LTE, SLTE, STE), and except for the two modes that exist only in the Works Manual (Award of Work through Quotations; Award of works in stalled contracts).<\/p>\nA student who reads only the Works\/ CS\/ NC Manuals will not find the text of Rate Contract, AVL, PAC, eRA, Direct Procurement or the GTE exemptions at all. It is reproduced here in full so that this Unified Manual is self-sufficient.<\/p><\/aside>\n<h2>The Threshold Divergence Table \u2014 the Single Most Examinable Page in this Chapter<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Threshold<\/th><th>G<\/span> GOODS<\/th><th>W<\/span> WORKS<\/th><th>C<\/span> CONSULTANCY<\/th><th>NC<\/span> NON-CONSULTANCY<\/th><\/tr><\/thead><tbody><tr><td>OTE (Open Tender Enquiry) applies above<\/td><td>Rs. 50 lakh<\/td><td>Rs. 10 lakh<\/td><td>Rs. 50 lakh<\/td><td>Rs. 50 lakh<\/td><\/tr><tr><td>LTE (Limited Tender Enquiry) is the default up to<\/td><td>Rs. 5 lakh to Rs. 50 lakh<\/td><td>up to Rs. 10 lakh<\/td><td>up to Rs. 50 lakh<\/td><td>up to Rs. 50 lakh<\/td><\/tr><tr><td>SLTE (Special LTE) applies for procurements more THAN<\/td><td>Rs. 50 LAKH<\/td><td>Rs. 10 LAKH<\/td><td>Rs. 50 lakh<\/td><td>Rs. 50 lakh<\/td><\/tr><tr><td>Rule cited for the LTE\/SLTE threshold<\/td><td>Rule 162<\/td><td>Rule 139(v) AND Rule 162<\/td><td>Rule 162<\/td><td>Rule 162<\/td><\/tr><tr><td>GTE restriction<\/td><td>No GTE up to Rs. 200 crore<\/td><td>Same \u2014 Rs. 200 crore<\/td><td>Same<\/td><td>Same<\/td><\/tr><tr><td>Direct Procurement without Quotation<\/td><td>up to Rs. 50,000<\/strong>(Rs. 1,00,000 for Scientific Ministries)<\/em><\/td><td>(subsumed in \"Award of Work through Quotations\")<\/em><\/td><td>up to Rs. 50,000<\/td><td>up to Rs. 50,000<\/td><\/tr><tr><td>Direct Procurement by Purchase Committee<\/td><td>above Rs. 50,000 and up to Rs. 5,00,000<\/strong>(up to Rs. 10 lakh for Scientific Ministries)<\/em><\/td><td>(not carried)<\/em><\/td><td>up to Rs. 5 lakh<\/td><td>up to Rs. 5 lakh<\/td><\/tr><tr><td>Award of Work through Quotations<\/td><td>(not carried)<\/em><\/td><td>up to Rs. 5 lakh \u2014 works only<\/td><td>(not carried)<\/em><\/td><td>(not carried)<\/em><\/td><\/tr><tr><td>Rate Contract viability threshold<\/td><td>aggregate requirement more than Rs. 50 lakh p.a.<\/td><td>(cross-refers)<\/em><\/td><td>(cross-refers)<\/em><\/td><td>(cross-refers)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Footnote common to all four Manuals: \"Various thresholds for these Modes of procurements have been REVISED UPWARDS vide PPD's OM No. F.1\/3\/2014-PPD dated 10.07.2024.\"<\/em><\/p><\/aside>\n<h2>Concordance for Chapter 4 \u2014 Part B<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Mode<\/th><th>Goods<\/th><th>Works<\/th><th>CS<\/th><th>NCS<\/th><\/tr><\/thead><tbody><tr><td>4.7<\/td><td>Modes of Procurement \u2014 the taxonomy<\/td><td>4.1<\/td><td>3.6<\/td><td>4.3<\/td><td>4.4<\/td><\/tr><tr><td>4.8<\/td><td>Open Tender Enquiry (OTE)<\/td><td>4.2<\/td><td>3.7<\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><\/tr><tr><td>4.9<\/td><td>Global Tender Enquiry (GTE) + Rs 200 crore restriction<\/td><td>4.3<\/td><td>3.8<\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><\/tr><tr><td>4.10<\/td><td>Rate Contract (RC)\/ Framework Agreement (FA)<\/td><td>4.4<\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><\/tr><tr><td>4.11<\/td><td>Electronic Reverse Auction (eRA)<\/td><td>4.5<\/td><td>3.5.2 (under Channels)<\/em><\/td><td>absent<\/td><td>4.4-3-a)-iii + 4.6.2<\/td><\/tr><tr><td>4.12<\/td><td>Pre-qualification Modes \u2014 PQB<\/td><td>4.6<\/td><td>3.9<\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><\/tr><tr><td>4.13<\/td><td>Approved Vendor List (AVL)<\/td><td>4.7<\/td><td>(cross-ref only)<\/em><\/td><td>(cross-ref only)<\/em><\/td><td>(cross-ref only)<\/em><\/td><\/tr><tr><td>4.14<\/td><td>Limited Tender Enquiry (LTE)<\/td><td>4.8<\/td><td>3.10<\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><\/tr><tr><td>4.15<\/td><td>Special Limited Tender Enquiry (SLTE)<\/td><td>4.9<\/td><td>3.11<\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><\/tr><tr><td>4.16<\/td><td>Proprietary Article Certificate (PAC)<\/td><td>4.10<\/td><td>absent<\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><\/tr><tr><td>4.17<\/td><td>Single Tender Enquiry (STE)\/ Selection by Nomination<\/td><td>4.11<\/td><td>3.12<\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><\/tr><tr><td>4.18<\/td><td>Direct Procurement without Quotation<\/td><td>4.12<\/td><td><\/td><td>(listed only)<\/em><\/td><td>4.4-7<\/td><\/tr><tr><td>4.19<\/td><td>Direct Procurement by Purchase Committee<\/td><td>4.13<\/td><td><\/td><td>(listed only)<\/em><\/td><td>4.4-7<\/td><\/tr><tr><td>4.20<\/td><td>Award of Work through Quotations<\/td><td><\/td><td>3.13<\/td><td><\/td><td><\/td><\/tr><tr><td>4.21<\/td><td>Award of works in stalled contracts<\/td><td><\/td><td>3.14<\/td><td><\/td><td><\/td><\/tr><tr><td>4.22<\/td><td>Mode selection by value \u2014 Non-Consultancy Services<\/td><td><\/td><td><\/td><td><\/td><td>4.4-5 to 4.4-7<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.7<\/span>Modes of Procurement \u2014 the Taxonomy<\/span><\/h2>\n1. The balance to be struck: Offers from prospective bidders in Public Procurement must be invited according to a procedure that achieves a balance between the need for the widest competition, on the one hand, and the complexity \u2014 G<\/span>NC<\/span> Add: Time, effort, and cost \u2014 of the procedure, on the other hand.<\/p>\nDifferent modes of procurement (W<\/span>, C<\/span>, NC<\/span> add: and tendering systems)<\/em> are used to suit various procurement circumstances to achieve this balance. Various modes of procurement vary the extent of competition (width and specificity of catchment area of bidders) to suit different procurement situations.<\/p>\nMode of procurement addresses the 'right source' of the 5Rs.<\/p>\n2. Delegation:<\/strong>There are laid-down delegations of powers to approve different modes of procurement to various competent authorities as shown in DFPR<\/strong>(G<\/span> Annexures 2 and 3 \u00b7 W<\/span>, C<\/span>, NC<\/span> Annexure 1)<\/em>. Each Procuring Entity May also publish its own Schedule of Procurement Powers (SoPP) delegating such powers within the entity<\/strong>(G<\/span> Annexure 4 \u00b7 W<\/span>, C<\/span>, NC<\/span> Annexure 2)<\/em>.<\/p>\n<h3>4.7.1<\/span>The Five (or Six) Families of Modes \u2014 Compared Across the Four Manuals<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>Family<\/th><th>G<\/span> GOODS<\/th><th>W<\/span> WORKS<\/th><th>C<\/span> CONSULTANCY<\/th><th>NC<\/span> NON-CONSULTANCY<\/th><\/tr><\/thead><tbody><tr><td>A) advertised modes<\/strong>(widest possible competition through wide publicity \u2014 Rule 161)<\/em><\/td><td>OTE \u00b7 GTE \u00b7 Rate Contracts<\/strong> \u00b7 eRA<\/strong><\/td><td>OTE \u00b7 GTE<\/td><td>OTE (above Rs 50 lakh)<\/em> \u00b7 GTE (restricted below Rs 200 cr)<\/em><\/td><td>OTE (above Rs 50 lakh)<\/em> \u00b7 GTE \u00b7 eRA<\/strong><\/td><\/tr><tr><td>b) pre-qualification modes<\/strong>(restricted to shortlisted pre-qualified bidders; shortlisting itself through wide publicity akin to advertised tenders)<\/em><\/td><td>PQB \u00b7 AVL<\/td><td>PQB \u00b7 AVL (cross-ref to Goods para 4.7)<\/em><\/td><td>PQB \u00b7 AVL (cross-ref)<\/em><\/td><td>PQB \u00b7 AVL (cross-ref)<\/em><\/td><\/tr><tr><td>c) restricted modes<\/strong>(restricted to known, selected bidders; shortlisting based on less rigorous checks of capability and past experience \u2014 Rule 162)<\/em><\/td><td>LTE (up to Rs 50 lakh<\/strong>)<\/em> \u00b7 SLTE (above Rs 50 lakh<\/strong>)<\/em><\/td><td>LTE (up to Rs 10 lakh<\/strong>)<\/em> \u00b7 SLTE (above Rs 10 lakh<\/strong>)<\/em><\/td><td>LTE (up to Rs 50 lakh)<\/em> \u00b7 SLTE (above Rs 50 lakh)<\/em><\/td><td>LTE (up to Rs 50 lakh)<\/em> \u00b7 SLTE (above Rs 50 lakh)<\/em><\/td><\/tr><tr><td>d) nomination modes<\/strong>(from a single source in special circumstances \u2014 Rule 166)<\/em><\/td><td>PAC<\/strong> \u00b7 STE without PAC<\/td><td>STE or Selection by Nomination only \u2014 NO PAC<\/td><td>PAC \u00b7 STE without PAC<\/td><td>PAC \u00b7 STE without PAC (NC cites RULE 204 GFR, not Rule 166)<\/em><\/td><\/tr><tr><td>e) shopping modes<\/strong>(without tendering or calling for formal bids, for small-value procurements \u2014 Rules 154, 155)<\/em><\/td><td>Direct Procurement without Quotation \u00b7 Direct Procurement by Purchase Committee<\/td><td>\"Award of Work through Quotations\/ Shopping Modes\" \u2014 Procurement of Works through Quotations<\/td><td>Direct Procurement without Quotation \u00b7 by Purchase Committee<\/td><td>Direct Procurement without Quotation \u00b7 by Purchase Committee<\/td><\/tr><tr><td>f) framework agreements\/ rate contracts<\/strong>(listed as a SEPARATE family)<\/em><\/td><td>(RC is under Advertised Modes)<\/em><\/td><td>listed separately as family (f)<\/td><td>listed separately as family (f)<\/td><td>listed separately as family (f)<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">note the three structural differences:<\/p>\n<ol class=\"lst\"><li>Goods<\/strong> places Rate Contract and eRA inside the ADVERTISED family<\/strong>; Works, CS and NC<\/strong> create a separate sixth family<\/strong> called Framework Agreements\/ Rate Contracts<\/em> and do not list eRA as an advertised mode (NC lists eRA as advertised mode (a)(iii))<\/em>.<\/li><li>Works has NO Proprietary Article Certificate (PAC) mode at all<\/strong> \u2014 its nomination family contains only STE or Selection by Nomination<\/em>.<\/li><li>NC cites Rule 204 of GFR for its Nomination mode with an additional sentence not found elsewhere: \"If, in an exceptional situation, it becomes necessary to procure a non-consulting service from a specifically chosen contractor, the Competent Authority in the Ministry or Department May do so in consultation with the Financial Adviser. In such cases, detailed justification, the circumstances leading to the selection, and the special interest or purpose served by this procurement must form an integral part of the proposal.\"<\/em><\/li><\/ol><\/aside>\nW<\/span> additional footnote: *\"<\/strong>Please also refer to RULE 139 of GFR 2017 regarding the thresholds for modes of procurement pertaining to Works.\"*<\/p>\nW<\/span> descriptions of AVL and Framework Agreements:<\/p>\n<ul class=\"lst\"><li>AVL: \"Procurement is restricted to contractors who have been pre-approved and included on a long-term multi-use list based on their demonstrated ability to meet the required standards.\"<\/em><\/li><li>Framework Agreements: \"Also known as RATE CONTRACTS, are agreements with contractors to execute works at pre-agreed rates during a specified validity period.\"<\/em><\/li><\/ul>\n<h2>4.8<\/span>Open Tender Enquiry (OTE)<\/span><\/h2>\n(Rule 161 of GFR 2017)<\/em><\/p>\n1. What it is: In Open Tender Enquiry (OTE) \u2014 also known as national competitive bidding (ncb), or simply advertised tender enquiry, but this Manual would stick to OTE \u2014 an attempt is made to attract the widest possible competition by publishing the NIT simultaneously on the designated websites.<\/p>\nThis is the default mode of procurement and gives the best Value for Money, but the procedure is relatively complex and prolonged. The systemic cost of this procedure May be high enough to be unviable for smaller-value procurements.<\/p>\n2. When OTE procedures \u2014 through e-procurement or through traditional tendering \u2014 should be adopted:<\/p>\na) Procurements exceeding the threshold of:<\/p>\n<ul class=\"lst\"><li>[G, C, NC] \u2014 Rs. 50 lakh (Rupees Fifty Lakh);<\/li><li>W<\/span> \u2014 Rs. 10 lakh (Rupees Ten Lakh) in works procurement;<\/li><\/ul>\nB) all requirements with clear technical specifications;<\/p>\nc)<\/strong>G<\/span> For requirements that are ordinarily available in the open market<\/strong>, it is necessary to evaluate competitive offers to decide the most suitable and economical option available;<\/p>\nW<\/span> For requirements that can ordinarily be fulfilled by the players available in the open market<\/strong>, it is necessary to evaluate competitive offers to decide the most suitable and economical option available;<\/p>\nd) G<\/span> When requirements are not available from known sources, or sources are presently limited and need to be made broad-based. In such situations, even for procurements below Rs. 50 lakh, the OTE mode May be used if warranted.<\/p>\nW<\/span> When the requirement cannot be fulfilled from known contractors, or contractors are presently limited and the requirement is to be made broad-based. In such situations, even for procurements below Rs. 10 lakh, the OTE mode May be used if warranted.<\/p>\n<h3>4.8.1<\/span>Terms and Conditions<\/span><\/h3>\n1. No restriction on participation:<\/p>\n<ul class=\"lst\"><li>G<\/span> There should be no restriction on participation by prospective bidders who meet the eligibility criteria. Especially, prior registration with the Procuring Entity should not be insisted upon. However, bidders who are already registered are also free to participate.<\/li><li>W<\/span> Participation should not be restricted to only bidders enlisted with the Procuring Entity. Bidders already enlisted are also free to participate. However, a requirement that successful un-enlisted bidders May have to get enlisted with the Procuring Entity before the contract is placed on them<\/em> May be mentioned in the tender document.<\/li><\/ul>\n2. Advertisement:<\/p>\n<ul class=\"lst\"><li>G<\/span> Advertisements in such cases should be given on the GOVERNMENT e-MARKETPLACE (GeM) as well as<\/em> ON GeM-Central Public Procurement Portal (CPPP) at www.eprocure.gov.in.<\/li><li>W<\/span> Advertisements in such cases should be given on the GeM-Central Public Procurement Portal (GeM-CPPP) at www.eprocure.gov.in. (no separate GeM mention)<\/em><\/li><\/ul>\nan organisation that has its own website should also publish all its advertised tender enquiries on the website. The Procuring Entity should also post the complete tender document on its website and gem-cppp to enable prospective bidders to make use of the document by downloading it. The advertisements for the tender invitations should give the complete web address from which the tender documents can be downloaded.<\/p>\nWhile it is no longer mandatory to issue advertisements in newspapers, there is no bar to issuing such advertisements if the procuring entities consider them necessary.<\/p>\nTo promote wider participation and ease of bidding, no cost of tender documents May be charged<\/em> for the tender documents downloaded by the bidders.<\/p>\n3. Free availability: The sale\/ availability for downloading of tender documents against NIT should not be restricted and should be available freely. Tender documents should preferably be sold\/ made available for download up to the date of tender opening (W<\/span>: \"up to the tender closing date and time\")<\/em>.<\/p>\n4. Model Tender Document:<\/strong> The tender documents should be prepared based on the relevant approved Model Tender Document (MTD) for the procurement category.<\/strong>(Further details on preparing tender documents are provided in G<\/span> Chapter 5 \u00b7 W<\/span> Chapter 4.)<\/em><\/p>\n5. Records in off-line tenders: The Procuring Entity shall maintain proper records about the number of tender documents sold, the list of parties to whom sold, details of the amount received through sale, and the number of unsold tender documents \u2014 which are to be cancelled after the opening of the tenders.<\/p>\n6. Currency: In domestic tenders, bids can be submitted only in INR, and any bid in foreign currency should be summarily rejected. Foreign bidders can also participate if they submit a bid in INR. However, purchase preference for local content as per the PPP-MII shall apply.<\/p>\n7. Consortium bidding in domestic open tenders: In the case of a domestic open tender for projects (including turnkey projects) allowing consortium bidding, a foreign bidder can be a consortium member \u2014 subject to the condition that the consortium as a whole<\/em> Meets the minimum local content criteria, as per the Make in India order, 2017.<\/p>\nThe leader of the consortium can be a foreign party, and the bids are to be solicited in Indian rupee only \u2014 i.e., no payment can be made in foreign currency to the foreign consortium member.<\/p>\n<h3>4.8.2<\/span>OTE \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. The crux of this mode is attracting bids from all possible prospective bidders. The risk is that this May not be achieved, even after incurring the extra cost of open tendering. This could be due to: a) Insufficient publicity; b) Hindrances in the availability of tender documents; c) Insufficient time for bid preparation; or d) Due to the onerous cost of tender documents or EMD<\/td><td>it should be ensured that the NIT on the website is easily searchable and visible, not hidden under layers of clicks. The matter should not be left entirely to the website or media publicity alone. Due diligence should be done to locate likely bidders. All registered vendors\/ contractors \u2014 in particular past successful vendors\/ contractors \u2014 should be given intimation about forthcoming tenders via sms\/ mail\/ email. Further, a limited or open tender that results in only one effective offer<\/em> Shall be treated as a Single Tender Enquiry situation, with relevant powers of approval, etc. It should also be ensured that there is no impediment to the issue\/ access of tender documents. Ordinarily, the due date fixed for the opening of the tender shall be a minimum of 21 (twenty-one) days from the date of advertisement, which may vary considering the nature of the material called for and delivery requirements. The due date may be subsequently extended with the approval of the ca only if it is felt necessary to have better competition. The tender documents shall be priced minimally (if at all priced), keeping in view the value of the tender as well as the cost of preparation and publicity of the tender documents. EMD should be sufficient to ensure that bidders honour their bids but, at the same time, should not be large enough to reduce competition.<\/td><\/tr><tr><td>2. Lack of clarity in description\/ specification of requirement, or undue stringency in qualifying criteria or other conditions<\/td><td>Mitigations of such risks can be addressed at the time of need assessment and procurement planning (please refer to Chapter 2) to attract adequate competition.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.9<\/span>Global Tender Enquiry (GTE)<\/span><\/h2>\n(Rule 161 of GFR 2017)<\/em><\/p>\n1. What it is: GTE \u2014 also known as international competitive bidding (icb), but this Manual would stick to GTE \u2014 is like OTE, but through appropriate advertising and provision for payment in foreign currencies through Letter of Credit, it is aimed at inviting the participation of inter alia<\/em> Foreign firms.<\/p>\nBids in foreign currency in any other mode of procurement shall be summarily rejected.<\/p>\nSubject to restriction on GTE (Para 4.9.2 below), GTE can ALSO<\/em> Be in SLTE, LTE or STE mode if justified with proper approvals as per SoPP.<\/p>\nThe point of balance between VfM and the cost\/ complexity of the procedure is further aggravated as compared to OTE. The development of local industry also needs to be kept in mind.<\/p>\n2. Hence, GTE may be viable only in the following situations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>G<\/span> GOODS<\/th><th>W<\/span> WORKS<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>Where goods of required specifications\/ quality May not be available within the country, and alternatives available in the country are not suitable for the purpose, it is necessary to also look for suitable competitive offers from abroad<\/td><td>Where required technology\/ specifications\/ quality are not available within the country and alternatives available in the country are not suitable for the purpose<\/td><\/tr><tr><td>b<\/td><td>non-existence of a local branch of the global principal of the manufacturer\/ vendors\/ contractors<\/td><td>non-existence of a local branch of the global principal of the contractors<\/td><\/tr><tr><td>c<\/td><td>requirement for compliance with specific international standards in technical specifications<\/td><td>requirement for compliance with specific international standards in technical specifications<\/td><\/tr><tr><td>d<\/td><td>absence of a sufficient number of competent domestic bidders likely to comply with the required technical specifications, and in case of suspected cartel formation among indigenous bidders<\/em><\/td><td>in case the requirement cannot be executed by indigenous contractors at reasonable rates<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<h3 class=\"src-G\">4.9.1<\/span>Terms and Conditions<\/span>G<\/span>reproduced in abridged form in W<\/span><\/h3><div class=\"srcblock src-G\">\n1. Advertisement<\/strong> \u2014 as in OTE (see para 4.8.1-2 above)<\/em>.<\/p>\n2. Free availability of documents \u2014 as in OTE.<\/p>\n3. Pricing of documents \u2014 the tender documents shall be priced minimally (if at all priced), keeping in view the value of the tender as also the cost of preparation and publicity of the tender documents.<\/p>\n4. Language and standards: GTE tender documents must be in english and must contain technical specifications that are in accordance with national requirements or else based on an international trade standard.<\/p>\n5. E-procurement: In Global Tender Enquiry, e-procurement May not be mandatorily insisted upon. (But e-publishing remains mandatory \u2014 see Part A, para 4.6.1-4.)<\/em><\/p>\n6. Notice period: The due date fixed for the opening of the tender shall be a minimum of four weeks<\/em> From the date of advertisement \u2014 which may vary considering the nature of the material called for and the time required to prepare the bids. The due date may be subsequently extended with the approval of the CA to promote better competition and also considering the delivery requirement.<\/p>\n<aside class=\"note\">(Contrast OTE: minimum 21 days.)<\/em><\/p><\/aside>\n7. Incoterms: Relevant INCOTERMS (presently 2020 version) should be included in the tender.<\/p>\n8. Currency of Bidding G<\/span>: In GTE, foreign bidders have the flexibility to quote prices and receive payments in either<\/em> Indian rupees OR<\/em> Freely convertible currencies such as US dollars, euros, pound sterling, yen, other relevant currencies, or a combination thereof.<\/p>\nHowever, prices for goods, works, or services (including agency commission) performed or sourced in India<\/em> Must be quoted and paid for in Indian rupees.<\/p>\nIndian bidders are required to quote in INR only. During the evaluation, all quoted prices are converted into Indian Rupees.<\/p>\n<aside class=\"note\">Footnote: The Central Board of Indirect Taxes and Customs (CBIC)<\/strong> issues an Exchange Rate Notification under the Customs Act, 1962<\/strong>, which lists currencies and exchange rates for imported goods in Schedule I<\/strong> \u2014 which may indicate relevant currencies.<\/em><\/p><\/aside>\n9. Agency Commission G<\/span>: The amount of agency commission \u2014 normally not exceeding five per cent<\/em> \u2014 payable to the Indian agent (who shall provide self-attested documentary evidence about their identity and business details to establish that they are a bona fide business and conform to regulations) should not be more than what is specified in the agency agreement (a certified copy should be submitted along with the financial bid) between the bidder and the Indian Agent.<\/p>\nAgency commission shall be paid by the Procuring Entity in India in equivalent Indian rupees<\/em> On satisfactory completion of the project or supplies of goods and spares.<\/p>\nThe Indian agent will be required to submit a certificate along with their agency commission bill, confirming that the amount claimed as agency commission in the bill has been spent\/ will be spent strictly to render services to the foreign principal, in terms of the agency agreement.<\/p>\nThe Procuring Entity or their authorised agencies and\/ or any other authority of the Government of India shall have rights to examine the books of the Indian agent, and defects or misrepresentations in respect of the afore-indicated confirmation coming to light during such examinations will make the foreign principal (i.e., the contractor) AND<\/em> Their Indian agent liable to be debarred from having business dealings with the purchaser, following laid-down procedures for such debarment.<\/p>\n10. Delivery Terms G<\/span>: The delivery terms are to be expressed in terms of INCOTERMS.<\/p>\nAs per the revised policy of the Government<\/strong>(Ministry of Shipping's No. SC-18013\/1\/2013-ASO-I dated 08.09.2015)<\/em>:<\/p>\n<ul class=\"lst\"><li>All Public Procurement import contracts involving ocean freight of dry or liquid bulk cargoes<\/em> Are to be finalised only on a FOB (free on board)\/ FAS (free alongside ship)<\/em> BASIS, and in case of any departure therefrom, prior approval of the concerned administrative Ministry\/ Department May be obtained.<\/li><li>However, imports involving ocean freight of general liner cargoes, project cargoes, heavy lift, container, break bulk cargoes<\/em>, etc., can now be made on FOB\/ FAS\/ CFR (cost & freight)\/ CIF (cost, insurance & freight)\/ DDP (delivery duty paid at named place)<\/em> BASIS.<\/li><li>All importing Government departments\/ pses can now make their own shipping arrangements without needing to route their requirements through the chartering wing of the Ministry of shipping<\/em>.<\/li><li>As per the extant directive of the Government, airlifting of imported goods from abroad will be done only through an Indian carrier<\/em>, wherever applicable.<\/li><\/ul>\n11. Insurance G<\/span>: Wherever necessary, the goods supplied under the contract shall be fully insured in a freely convertible currency against loss or damage incidental to manufacture or acquisition, transportation, storage and delivery as specified in the contract.<\/p>\n<ul class=\"lst\"><li>If considered necessary, the insurance may be done for coverage on an \"all RISKS\" basis, including war risks and strike clauses.<\/li><li>The amount covered under insurance should be sufficient to cover the overall expenditure incurred by the purchaser for receiving the goods at the destination.<\/li><li>Insurance for imported goods\/ equipment would need to be arranged very carefully and only for cases where the value of individual shipments is expected to be more than rupees five crore<\/em>.<\/li><li>Procuring entities with substantial import contracts May arrange \"open cover (all risk)\" annual insurance for all imports during the year with insurance companies, instead of insurance for each import separately.<\/li><li>Where delivery of imported goods is required by the purchaser on CIF\/ CIP\/ DDP<\/em> Basis, the supplier shall arrange and pay for marine\/ air insurance, making the purchaser the beneficiary.<\/li><li>Where delivery is on a FOB\/ FAS<\/em> Basis, marine\/ air insurance shall be the purchaser's responsibility.<\/li><\/ul>\n12. Taxes on imports G<\/span>: Import of goods or services or both attracts integrated tax (IGST). The IGST rate and GST cess shall be applicable on the 'customs assessable value' PLUS<\/em> The 'basic customs duty applicable thereon'.<\/p>\nForeign bidders shall indicate the break-up of prices for: Freight, insurance, customs duty, port handling charges, clearing agency charges, related ITC (hs) code, IGST\/ GST cess, and related HSN code, as relevant to the quoted price basis.<\/p>\n<\/div><h3>4.9.2<\/span>Restrictions on Global Tenders up to Rs. 200 Crore<\/span><\/h3>\n1. The bar: No Global Tender Enquiry (GTE) shall be invited up to Rs. 200 crore, or any limit as May be prescribed by the Department of Expenditure from time to time.<\/p>\n2. The relaxation route: In exceptional cases where the Ministry or Department feels that there are special reasons for inviting GTE for tenders below such limit \u2014 including those in SLTE\/ LTE mode or on a single tender basis<\/em> \u2014 it May record its detailed justification and seek prior approval for relaxation<\/em> From the Competent Authority specified by the Department of Expenditure.<\/p>\na) The GTE Portal: The agencies\/ subordinate offices under the administrative control of a Ministry\/ Department that require to float a GTE for procurement of certain products\/ items\/ services shall submit their applications and comments online<\/em> Through the GTE portal under the e-samiksha platform via https:\/\/esamiksha.gov.in\/GTE_NFEProposalForm.aspx<\/em> OR https:\/\/cabsec.gov.in\/more\/globaltenderenquiryproposal\/<\/em> \u2014 starting from 5TH May 2022. No physical application will be received.<\/p>\nb) 'GTE portal', a user-friendly IT application under the e-Samiksha platform, was developed by the cabinet secretariat (ID No. 213\/2\/1\/2021-C.A.IV dated 02.05.2022)<\/em>. For more details, refer to GTE Guidelines on the eSamiksha portal.<\/p>\n3. The two mandatory pre-conditions before sending a GTE proposal:<\/p>\nA) a domestic open tender MUST<\/em> Be floated first<\/strong> to identify the domestic manufacturers\/ service providers for the items\/ services for which approval is being sought for issuance of Global Tenders.<\/p>\n<aside class=\"note\">If the Ministry\/ Department has not floated a domestic open tender after 15.05.2020<\/em> for the items to be procured through GTE, such proposals will not be entertained<\/em>.<\/p><\/aside>\nThe proposal must contain the details of domestic open tenders issued after 15.05.2020, covering:<\/p>\n<aside class=\"note\">Tender number \u00b7 date of opening \u00b7 number of offers received \u00b7 details of offers received \u00b7 reasons why domestic suppliers were not considered, etc.<\/p><\/aside>\nB) the proposal must contain details of deliberations with DPIIT\/ relevant industrial bodies regarding the identification of domestic manufacturers\/ service providers.<\/p>\n4. The eight exemptions from the Rs. 200 crore restriction:<\/p>\n<aside class=\"note\">It is emphasised that these exemptions are only from restrictions on GTE<\/em>, and the local content preferences and other features of MII policy would still be applicable<\/em>.<\/p><\/aside>\na) specialised research equipment: For procurement of specialised equipment required for research purposes, and spares and consumables for such equipment, for the use of educational and research institutes \u2014 the Secretary of the Ministry\/ Department concerned shall be the Competent Authority to approve the issue of GTEs, subject to fulfilment of conditions in sub-para 5 below. The equipment should be of a specialised nature and required for research purposes, not the routine equipment used in offices<\/em>. (OM No. 4\/1\/2021-PPD dated 11.06.2021)<\/em><\/p>\nb) ICT items: Gtes for procurement of ICT items, software and hardware such as blade servers, SAN storage, LAN switches, mobile testing devices, cloud orchestration & system software, network & web apts, mobile testing tools, integrated backup system (ibs), etc. Can be issued with the approval of the Secretary concerned, instead of Secretary (coordination)<\/em>, until further orders. (OM No. F.4\/1\/2022-PPD dated 29.08.2022)<\/em><\/p>\nc) nomination-basis procurements<\/strong>(as no competitive tenders are invited)<\/em>, inter alia<\/em> including:<\/p>\n<ul class=\"lst\"><li>I) procurement of spare parts of the equipment\/ plants & machinery, etc., on a nomination basis from original equipment manufacturers (OEMs) or original equipment suppliers (OES) or original part manufacturers (opms). (For this purpose, 'Spares' shall be taken to include CONSUMABLES for such equipment.)<\/em>(OM No. 12\/17\/2019-PPD dated 29.10.2020)<\/em><\/li><li>ii) procurement of services like Annual Maintenance Contract (AMC) and auxiliary\/ add-on components for existing equipment\/ plant & machinery, etc., which are procured from OEM\/ OES\/ OPM on a nomination basis. (OM No. F.4\/1\/2021-PPD dated 01.09.2021)<\/em><\/li><\/ul>\nd) PRE-15.05.2020 contractual commitments: Where procuring entities need to issue GTEs to fulfil contractual commitments\/ obligations entered by them before 15.05.2020 \u2014 i.e., a bid has been submitted by them to their clients before 15.05.2020. Similarly, where procuring entities need to issue GTEs in view of existing collaboration agreements they entered with foreign suppliers before 15.05.2020. (OM No. 4\/1\/2021-PPD dated 12.03.2021)<\/em><\/p>\ne) medical devices and drugs: Based on the reference received from the Ministry of Health & Family Welfare (MoH&fw), GTE can be floated for 354 medical devices<\/em> AND 120 DRUGS<\/em> (placed in Annexure 31 of the Goods Manual). These exemptions for medical devices and drugs are provided UP TO 31.03.2027<\/em> Till further orders. It is further clarified that:<\/p>\n<ul class=\"lst\"><li>I) the machine system includes spare parts and accessories, which May be procured by procuring entities together or separately.<\/li><li>ii) the Procuring Entity concerned May frame the detailed technical specifications for the above devices as per their requirement. (OM No. 4\/1\/2023-PPD(pt.) dated 28.06.2024 for devices; OM No. F.4\/1\/2023-PPD(pt) dated 07.06.2024 for drugs)<\/em><\/li><\/ul>\nf) mdb\/ bfa-funded projects: Projects funded by multilateral development banks (MDBs like The World Bank, Asian Development Bank, etc.)\/ bilateral funding agencies (BFAs), where the procurement is governed by the conditions negotiated in the loan agreement, and where the project executing agencies from time to time further award works to various Autonomous Bodies\/ CPSEs etc. \u2014 the Secretary of the Ministry\/ Department responsible for execution of such project shall be the Competent Authority for approval for issuance of GTEs by such autonomous bodies\/ CPSEs. (OM No. F.7\/12\/2021-PPD-I dated 27.07.2021)<\/em><\/p>\ng) semiconductor equipment: Procurement of SEMI-CONDUCTOR EQUIPMENT for the purpose of MANUFACTURING ELECTRONICS, and procurements by public-funded semiconductor and display fab facilities (including such facilities in institutes of high learning) \u2014 UP TO 31.03.2025. (OM No. F.4\/1\/2022-PPD-II dated 01.04.2022 and OM No. F.4\/1\/2023-PPD dated 23.03.2023)<\/em><\/p>\nh) procurement abroad for use abroad: GTE restriction up to Rs. 200 crore is not applicable<\/em> for bona-fide procurements done outside India for use outside India<\/em>, by CPSEs having international operations or by Indian missions abroad. Such entities should ensure that the bulk of procurement is done in India (and exported for their use abroad), as far as feasible \u2014 so as not only to promote Make in India but also to improve export performance.<\/p>\n5. The seven conditions attached to exemption 4(a) \u2014 Educational and Research Institutions<\/p>\nEducational, Research institutions, and other units will make full efforts towards reducing imports in the following manner. This will result in substantial effects both within the institutions and through impact on the eco-system:<\/p>\n<ol class=\"lst\"><li>Efforts should be made to promote technology transfer through agreements, or to encourage technological collaboration with foreign manufacturing in India with the start-ups set up in research parks.<\/li><li>Sharing and updating information about the availability of research equipment across various Indian institutes on a single portal \u2014 the I-STEM<\/em> portal has been developed for this purpose \u2014 so that the needy institutes can utilise those.<\/li><li>Without compromising quality, institutes should indicate alternative\/ equivalent technical specifications that could suit their requirement, so that there are more chances for local manufacturers to participate in the tender process.<\/li><li>Regular interaction between academia and Indian industry organisations at the level of the institution about the requirement of equipment of foreign origin and for encouraging domestic manufacturing.<\/li><li>Regular requirements of proprietary\/ non-proprietary research consumables May be assessed, and domestic alternatives May be explored for use.<\/li><li>The office of psa initiates a national-level programme for indigenous development of scientific equipment.<\/li><li>Without compromising quality, institutes should be flexible with specifications so that domestic manufacturers are encouraged to meet requirements.<\/li><\/ol>\n6. Guidelines for resorting to GTE (research institutions): a) market assessment should be done by the concerned institution, as certified by the head of the institution. Only after no Indian manufacturer is found<\/em> Should a GTE be issued. B) in case no Indian manufacturer\/ suppliers are found, procurement May be done through GTE, subject to compliance with provisions of GFR and the requirement of procurement through GeM. C) dean (r&d) or an appropriate authority within the institute will issue certificates as per sub-para 7 below before inviting GTE<\/em>. As a reporting matter in the board of governors, such certificates should be tabled and shared with the office of the psa, DPIIT, and the concerned administrative Ministry. d) The information about the procurement of equipment should be shared across various educational and research institutes through the i-stem portal. This will allow the equipment to be used by other institutions for research purposes too. e) analyse the equipment being procured time and again from abroad and help develop them in India by identifying potential manufacturers and providing them with technical assistance and expertise. This programme will be coordinated by the empowered technology group (constituted by Cabinet and chaired by the principal scientific adviser \u2014 psa). Half-yearly reports on this action are to be shared by the institutes with the office of the psa, DPIIT, and concerned administrative Ministry. f) preference for local suppliers over foreign suppliers, as per the existing Government of India guidelines, should be observed as applicable.<\/p>\n7. The three certificates to be issued: A) certification that locally available alternatives with equivalent specifications are not suitable for research purposes. B) the non-availability of such equipment for research purposes with nearby research institutes or within the institute. C) certification of the requirement of proprietary items of foreign origin for research purposes (where applicable).<\/p>\n<h3>4.9.3<\/span>GTE \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>Risks are the same as in OTE<\/td><td>the same mitigation as in the case of OTE also applies here.<\/td><\/tr><tr><td>The involvement of foreign bidder agents in GTE procurements is also a major risk area.<\/td><td>Procurements should preferably be made directly from the manufacturers<\/em>. Either the agent on behalf of the foreign principal OR<\/em> The foreign principal directly could bid in a tender \u2014 but not both<\/em>. Further, in cases where agents participate in a tender on behalf of one manufacturer, they should NOT<\/em> Be allowed to quote on behalf of another manufacturer along with the first manufacturer. Commissions and scope of services to\/ by the agents should be explicit and transparent in the bids\/ contracts.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2 class=\"src-G\">4.10<\/span>Rate Contract (RC)\/ Framework Agreement (FA)<\/span>G<\/span>text; W\/C\/NC list it as a separate family and cross-refer<\/span><\/h2><div class=\"srcblock src-G\"><h3>4.10.1<\/span>Definition<\/span><\/h3>\nA Rate Contract (commonly known as rc) is an agreement between the purchaser and the supplier for the supply of specified goods (and allied services, if any) at a set price and terms & conditions (as incorporated in the agreement) during the period covered by the Rate Contract.<\/p>\n<aside class=\"note\">Rc is most frequently used in the procurement of goods but can also be used mutatis mutandis<\/em> In works, services, and consultancy \u2014 where it is commonly known as a framework Agreement (fa)<\/em>.<\/p><\/aside>\nNo quantity is mentioned, nor is any minimum drawable quantity guaranteed in the Rate Contract.<\/p>\nThe Rate Contract is a standing offer<\/em> From the supplier firm. The firm and\/or the purchaser are entitled to withdraw\/ cancel the Rate Contract by serving an appropriate notice on each other, giving suitable notice (say thirty days).<\/p>\nHowever, once a supply order (also called withdrawal order<\/em>) is placed in terms of the Rate Contract, during the validity period of the Rate Contract, on the supplier for the supply of a definite quantity \u2014 that supply order becomes a valid and binding contract<\/em>.<\/p>\n<h3>4.10.2<\/span>The Nine Items Amenable to Rate Contract<\/span><\/h3>\nThe following types of items can be advantageously procured through Rate Contracts:<\/p>\n<ol class=\"lst\"><li>Goods that are regularly or repetitively required by more than one Procuring Entity\/ organisation.<\/li><li>The quantities required cannot be accurately forecast.<\/li><li>Individual requirements of procuring entities may be small, but the total aggregate requirements of all the procuring entities are more than rs. 50 lakh per annum.<\/li><li>The item has detailed specifications, drawings, and descriptions.<\/li><li>Prices of the items are stable \u2014 or, if prices are variable, they can be determined through a Price Variation Clause.<\/li><li>Items are not scarce\/ critical\/ 'perpetually in short supply' goods or services.<\/li><li>Demand for the item is not seasonal<\/em>, since Rate Contract holders May shy away from supplying the item during high seasonal demands and dump supplies during low demand season.<\/li><li>Spares used for maintenance of expensive equipment\/ machines, from OEMs, to facilitate uninterrupted supply of genuine spares.<\/li><li>Consumables used by advanced research, development and scientific institutes\/ organisations of the Government of India<\/strong>(e.g., glass wares, plastic wares, chemicals, bio-chemicals etc. \u2014 the examples are illustrative, not exhaustive).<\/em><\/li><\/ol>\n<h3>4.10.3<\/span>Merits of Rate Contract<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>a) Benefits to USERS<\/th><th>b) Benefits to SUPPLIERS<\/th><\/tr><\/thead><tbody><tr><td>I) competitive and economical price due to aggregation of demands<\/td><td>i) reduces marketing costs and efforts<\/td><\/tr><tr><td>ii) saves time, effort, person-hours, and related costs involved in the time-consuming and repetitive tender process \u2014 thus reduces lead time for procurement<\/td><td>ii) eliminates repetitive tendering and follow-up actions with multiple authorities<\/td><\/tr><tr><td>iii) availability of quality goods with full quality assurance backup<\/td><td>iii) provides single-point contact for govt. Supplies<\/td><\/tr><tr><td>iv) enables procurement as and when required \u2014 thus reduces inventory carrying cost<\/td><td>iv) aggregation of govt. Demand leads to economic production<\/td><\/tr><tr><td>V) advantageous even to small users and those located in remote areas<\/td><td>V) improves the credentials of the company<\/td><\/tr><tr><td>vi) provides one single point of contact to procure such items<\/td><td>vi) promotes quality discipline<\/td><\/tr><\/tbody><\/table><\/div>\n<h3>4.10.4<\/span>Terms and Conditions<\/span><\/h3><h4>1.<\/span>Conclusion of Rate Contracts, including Parallel Rate Contracts<\/span><\/h4>\na) any organisation can enter a Rate Contract for items amenable to the Rate Contract for its procuring entities' use (e.g., in different geographical regions\/ subsidiaries). A Central purchase organisation can also enter a Rate Contract for several organisations that require the subject goods. No indents are required to enter a Rate Contract; Only an estimate of the annual requirements<\/em> Of different ultimate users is needed.<\/p>\nInspection and testing of such goods or services, wherever required, may be arranged by the agency entering into the rate contract.<\/p>\nThe agency entering the Rate Contract should post the descriptions, specifications, prices and other salient details of the entire rate-contracted goods or services, appropriately updated, on its website for use by the procuring entities.<\/p>\nB) mode: Rate Contract enquiries should preferably<\/em> BE THROUGH e-procurement or Open Tender Enquiry \u2014 but Limited Tender Enquiry\/ Single Tender Enquiry can also be used if justified by the nature of the requirement. Specific special terms and conditions for the Rate Contract should be added to the Tender Documents.<\/p>\nC) past performance review: Performance against earlier\/ current rate contracts of past\/ current Rate Contract holders shall be critically reviewed<\/em> Before they are considered for award of new rate contracts. Specific performance and achievement criteria as on a selected cut-off date are to be evolved for this purpose and incorporated in the tender enquiry document. The tenderers will be asked to furnish the relevant details (along with their bids) to enable the purchaser to judge their performance and achievement against the past\/ current rate contracts.<\/p>\nd) Evaluation: Procedures stipulated for evaluation of bids and award of contract shall be applicable mutatis mutandis<\/em> In the finalisation of Rate Contract \u2014 including provisions for negotiations\/ counter-offer and splitting of contracts (parallel contracts).<\/p>\nE) parallel rate contracts: Depending on the anticipated demand of the item, location of the users, capacity of the responsive bidders, reasonableness of the prices quoted, etc. \u2014 parallel rate contracts May be awarded to more than one (preferably at least three<\/em>) supplier. For transparency and to avoid criticism, all such parallel rate contracts are to be issued simultaneously<\/em>, as far as feasible.<\/p>\n<h4>2.<\/span>Period of Rate Contract<\/span><\/h4>\nA Rate Contract should typically be for one year<\/em> for stable technology products. However, in exceptional cases, a shorter or longer period of not more than two years<\/em> May be considered.<\/p>\nAs far as possible, the validity period of rate contracts should be fixed in such a way as to ensure that new budgetary levies would not affect the price<\/em> And thereby frustrate the contracts.<\/p>\nAttempts should also be made to stagger<\/em> The period of rate contracts for different items throughout the year.<\/p>\n<h4>3.<\/span>The Nine Special Conditions Applicable for Rate Contract<\/span><\/h4>\n<aside class=\"note\">Some conditions of rate contracts differ from the usual conditions suitable for ad hoc contracts.<\/p><\/aside>\nA) the Procuring Entity May prescribe the amount of Bid Security in the tender document.<\/p>\nB) no quantity is mentioned in the Schedule of requirement; Only the anticipated drawable quantity is mentioned without commitment<\/em>.<\/p>\nC) the purchaser reserves the right to conclude one or more than one Rate Contract for the same item.<\/p>\nD) the purchaser and the supplier May short-close<\/em> The Rate Contract by serving suitable notice to each other. The prescribed notice period is generally fifteen to thirty days<\/em>.<\/p>\ne) Re-negotiation and repeat bidding: The purchaser can re-negotiate the price with the Rate Contract holders even during the validity<\/em> If market conditions change significantly \u2014 or undertake repeat competitive bidding through open\/ advertised tenders on the same terms and conditions, including specifications, during the validity period of existing valid r\/cs. In such cases, the existing r\/c holders can bid, apart from the new eligible bidders, and equal and fair opportunity would be provided. If the prices received are found lower than the existing r\/c prices, new r\/cs May be awarded at reduced prices, and existing r\/cs at higher prices May be short-closed \u2014 giving adequate notice \u2014 if they do not match such reduction in prices under the fall clause.<\/p>\nF) in an emergency, the purchaser May purchase the same item through an ad hoc contract with a new supplier.<\/p>\nG) the purchaser and the authorised users of the Rate Contract are entitled to place supply orders up to the last day of the validity<\/em> Of the Rate Contract \u2014 and though supplies against such supply orders will be delivered beyond<\/em> The validity period of the Rate Contract, the terms & conditions of the Rate Contract will guide all such supplies.<\/p>\nh) the fall clause \u2014 the price safety mechanism in rate contracts:<\/p>\nThe fall clause provides that if the Rate Contract holder reduces its price, or sells, or even offers to sell<\/em> The rate-contracted goods or services (following conditions of sale similar to those of the rate contract) at a price lower than the Rate Contract price, to any person or organisation<\/em> During the currency of the Rate Contract \u2014 the Rate Contract price will be automatically reduced with effect from that date<\/em> for all subsequent supplies under the Rate Contract, and the Rate Contract amended accordingly.<\/p>\nOther parallel Rate Contract holders, if any, are also to be allowed to reduce their price by notifying the reduced price to them, giving 07 (seven) days<\/em> To intimate their revised prices, if they so desire, in a sealed cover to be opened in public on the specified date and time, and further action taken as per standard practice.<\/p>\n<aside class=\"note\">The abuse warning: On many occasions, the parallel Rate Contract holders attempt to grab more orders by unethical means<\/em> By announcing a price reduction (after getting the Rate Contract) under the guise of the fall clause. This situation must be handled similarly. It is, however, very much necessary that the purchase organisations keep a particular watch on the performance of such Rate Contract holders who reduce their prices on one pretext or another. If their performances are not up to the mark, appropriately severe action should be taken against them \u2014 including deregistering<\/em> THEM, suspending business deals<\/em> With them, debarring them for up to two years<\/em> From participating in the tender enquiry floated by the concerned purchase organisation, etc.<\/p><\/aside>\nThe four exceptions \u2014 the provisions of the fall clause will NOT<\/em> Apply to:<\/p>\n<ul class=\"lst\"><li>I) export\/ deemed export by the supplier;<\/li><li>ii) sale of goods or services as original equipment<\/em> At prices lower than the price charged for routine replacement<\/em>;<\/li><li>iii) sale of goods (such as drugs) which have expiry dates<\/em>;<\/li><li>iv) sale of goods or services at lower prices \u2014 <\/li><li>1) on or after the date of completion of placement of order of goods by the Procuring Entity, under the existing or previous rate contracts;<\/li><li>2) under any previous contracts entered with the Central or State Government departments, including new undertakings (excluding joint sector companies and\/ or private parties<\/em>) and bodies.<\/li><\/ul>\nI) the fall clause certificate: The Rate Contract holder shall furnish the following certificate to the concerned paying authority along with each bill<\/em> for payment of supplies made:<\/p>\n<aside class=\"note\">\"I\/We certify that there has been no reduction in the sale price of the goods of description identical to the goods supplied under this contract, and such goods have not been offered\/ sold by me\/ us to any person\/ organisation \u2014 including the purchaser or any department of Central Government or any [State Government\/ PSU], as the case may be \u2014 up to the date of bill\/ the date of completion of supplies against all supply orders placed during the currency of the Rate contract, at a price lower than the price charged under the contract.\"<\/em><\/p><\/aside>\n<h4>4.<\/span>Performance Security<\/span><\/h4>\nDepending on the anticipated overall drawable annual quantity against a rate contract, and the anticipated number of parallel rate contracts to be issued for an item \u2014 the Department May consider obtaining Performance Security @ 3% to 5% of the value of supply order<\/em> In the supply orders issued against rate contracts on the Rate Contract holder.<\/p>\n<h4>5.<\/span>Placement of Supply Orders<\/span><\/h4>\na) Who may place them: Procuring entities nominated (CALLED direct demanding officers \u2014 DDO<\/em>) in the Rate Contract can place supply\/ withdrawal orders in terms of the rate contract during the validity period of the rate contract on the Supplier for the supply of definite quantities. An indent with required administrative and financial approvals is required before<\/em> A supply order can be placed.<\/p>\nAlternatively, the organisation managing the Rate Contract can centrally administer the placement of withdrawal orders against indents from the constituents.<\/p>\nb) The mandatory-use rule and its small-value escape: Once a Rate Contract is available, all nominated procuring entities (DDOs) must mandatorily<\/em> Procure the item only through supply orders on the Rate Contract holders.<\/p>\nIn case of an emergency, if a Procuring Entity directly procures rate-contracted goods or services from the suppliers \u2014 the prices to be paid for such goods or services shall not exceed<\/em> Those stipulated in the Rate Contract, and the other salient terms and conditions of the purchase should be in line with those specified in the Rate Contract. However, they May be permitted to procure a small value of their requirements directly \u2014 say up to Rs. One lakh at one time and not more than Rs. 5 lakh annually<\/em> \u2014 following relevant procedures.<\/p>\nC) upper threshold on supply orders: The Procuring Entity May stipulate an upper threshold of value for supply orders received against the Rate Contract by the rc holder. Except with prior approval of the Procuring Entity, the contractor shall not comply<\/em> With the supply orders received from the ddos exceeding such threshold amount.<\/p>\nD) the five criteria for choosing among parallel rc holders: All parallel rcs for an item \u2014 even at differential rates<\/em> \u2014 are assumed to be at reasonable rates. The Procuring Entity can select any rc holder, following transparent and equitable criteria. The following factors May be kept in view:<\/p>\n<ul class=\"lst\"><li>I) the Rate Contract price.<\/li><li>ii) the past performance of firms with reference to their capacity, quality of supplies, as well as timely delivery of the goods.<\/strong>Procuring Entities should maintain suitable records for past performance with respect to timely delivery and quality.<\/em><\/li><li>iii) there is a need for reputed brands in the case of sensitive, critical, and vital requirements.<\/li><li>iv) the proximity of the Rate Contract holder, where proximity is considered crucial for timely delivery, ease of progressing, and from the point of view of logistics and contract management, etc.<\/li><li>v) the delivery dates committed by various Rate Contract holders with respect to the delivery requirements of the Procuring Entities.<\/li><\/ul>\nE) the delivery-time problem in rate contracts: In rate contracts, if the time FOR delivery is not fixed by mutual agreement<\/em>, IT IS not the essence of the contract<\/em> AND IS not binding<\/em> On the supplier. Therefore, no Liquidated Damages can be levied<\/em> for non-supply or delay in supply against such orders.<\/p>\nThat being so, under section 46 of the contract Act, the goods are only to be delivered within a \"Reasonable time\"<\/em> \u2014 which is a rather vague concept.<\/p>\nBut where there has been an unreasonable delay in delivery, the direct demanding officer (DDO) has the right to give the contractor notice, fixing a reasonable time FOR delivery of the goods and stipulating that delivery within the time specified shall be the essence of the contract<\/em>. If the goods are not delivered within this period, the supply order can be cancelled by the agency that finalised the Rate Contract<\/em> (Since he alone, not the DDO<\/em>, is a party to the Rate Contract), and deficient performance is noted for future rate contracts.<\/p>\nf) The cure \u2014 obtaining a prior delivery commitment: However, in cases where the delivery date stipulated in the relevant order has been expressly agreed to by the supplier in writing before placing the relevant order<\/em> \u2014 Liquidated Damages CAN<\/em> Be recovered (by the agency that entered into the Rate Contract) from the supplier on account of delay in delivery beyond the stipulated delivery date \u2014 provided the agency that finalised the Rate Contract has not in any way interfered with the supplier's discretion to meet the said supply order by directing the supplier to give priority to some other supply orders. Therefore, it is advisable that, before placing the supply order<\/em> On a Rate Contract holder, a commitment is obtained from him for the delivery period.<\/p>\ng) Approval before ordering: Before creating the supply order, approval of the ca (depending on the value of procurement) May be taken by submitting information about all the available parallel rcs<\/em> And justifying the selection of a particular rc holder.<\/p>\nh) The ten essential details of a supply order:<\/p>\n<aside class=\"note\">i) Rate Contract No. and date; ii) QUANTITY (where there is more than one consignee, the quantity to be despatched to each consignee is to be indicated)<\/em>; iii) Price; iv) date of delivery by which supplies are required (a definite delivery date based on the delivery period stipulated in the rate contract is to be provided)<\/em>; v) Full address of the purchase organisation along with telephone no., fax no., and e-mail address; vi) Complete and correct designation and full postal address of the consignee(s)\/ goods receiving officer(s) along with telephone no., fax no., and e-mail address; vii) nearest railway siding (NRS) of the consignee(s), if applicable; viii) Despatch instructions; ix) Designation and address of the INSPECTING OFFICER, if any; x) Designation and address of the PAYING AUTHORITY to which the Supplier will raise the bills. Copies of supply orders are to be endorsed to all concerned.<\/strong><\/p><\/aside>\n<h4>6.<\/span>Renewal of Rate Contracts<\/span><\/h4>\nIt should be ensured that new rate contracts are made operative right after the expiry of the existing rate contracts without any gap<\/em> for all rate-contracted items.<\/p>\nIn case it is not possible to conclude new rate contracts for some special reasons, timely steps are to be taken to extend the existing rate contracts with the same terms, conditions, etc., for a suitable period, with the consent of the Rate Contract holders<\/em>.<\/p>\nRate contracts of the firms who do not agree<\/em> To such extension are to be left out.<\/p>\nAlso, while extending the existing rate contracts, it shall be ensured that the price trend is not lower<\/em>.<\/p>\n<h3>4.10.5<\/span>RC \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. A Rate Contract is not the right mode<\/em> For critical, strategic, and vital requirements, since the buyer-seller relationship is TRIPARTITE, and the timely supply of requirements and penalties thereof cannot be strictly enforced as in other modes. In situations where items have inadequate annual or seasonal capacities in the market, the rc holders May dump material<\/em> On the Procuring Entity during the wrong seasons and starve<\/em> Them during working seasons. This happens in, say, CEMENT \u2014 where government buyers are likely to be saddled with huge supplies during the rainy season, but RC holders may divert the bulk of supplies to the private market during the working season.<\/em> RC Purchase is not SUITABLE for requirements of dynamic technological and price changes \u2014 e.g., PCs, laptops, tablets, servers, and mobile phones \u2014 where the price of older models may crash as soon as a new model is announced. RC holders may slow down supplies initially but dump supplies when prices crash in the market.<\/td><td>Rcs May be avoided for critical\/ strategic and vital requirements. For seasonal and short-supply items, procuring entities May monitor and provide clauses to prevent dumping and starving of supplies. In technologically fast-changing products, the Procuring Entity May keep an eye on market prices and re-negotiate them as soon as market prices fall significantly due to new arrivals.<\/td><\/tr><tr><td>2. The existence of rcs May not be adequately made known to possible users. Moreover, the reverse risk is that many different offices May keep procuring the same item independently \u2014 thus missing the potential benefits of bulk prices and simplified processes if such items were brought under an rc.<\/td><td>The descriptions, specifications, and other salient details of all rcs should be appropriately updated and made available on the Procuring Entity website as well as the e-procurement portal. The e-procurement system should be able to offer alerts<\/em> About the availability of rc if an attempt is made to float a tender for the same item. To derive benefit from bulk prices in rc, all offices should furnish to the rc agency their annual requirement of items to enable the finalising of RCs after inviting quotations.<\/td><\/tr><tr><td>3. Rc procurements are at risk of being ordered more than actual requirements<\/em>, since the procurement scrutiny may not be as intense as in the case of other modes of procurement.<\/td><td>The quantity being ordered should be subject to the same level of scrutiny<\/em> As in other modes of procurement, to ensure that there is no abnormal, unexplainable trend in procurement.<\/td><\/tr><tr><td>4. Wherever there are PARALLEL RCs for the same item from several firms, there May be intense and often unhealthy lobbying (including corrupt practices) from them to seek orders.<\/td><td>1. Procuring entities must put in place adequate guidelines to handle rc procurements \u2014 including a transparent system of choosing the rc holders by rotation<\/em> In a transparent manner in case of parallel rcs. (Suggested criteria at para 4.10.4-5-d.)<\/em> The delegation of powers in this regard should also be restricted, keeping these risks in view. 2. The Procuring Entity should maintain suitable records of rc firms for past performance with respect to timely delivery and quality. 3. Wherever there are FAILURES against the rate contract in terms of timely delivery and quality of goods, such failures should be reported to the agency that entered the Rate Contract, and direct alternate procurement action May be taken to ensure the timely availability of quality materials to meet the needs of the Procuring Entity.<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h2>4.11<\/span>Dynamic Price Discovery \u2014 Electronic Reverse Auction (eRA)<\/span><\/h2>\n(Rule 167 of GFR 2017)<\/em><\/p>\n<aside class=\"note\">PLACEMENT NOTE: eRA appears as a mode of procurement in the Goods Manual (4.5), as a channel of procurement in the Works Manual (3.5.2), as both an advertised mode and a channel in the Non-Consultancy Manual (4.4-3-a-iii and 4.6.2), and is entirely absent from the consultancy Manual.<\/p>\nNC<\/span> states expressly: *\"<\/strong>electronic Reverse Auction (era): Not appropriate where QCBS system of evaluation is used in the procurement of non-consultancy services.\"*<\/p><\/aside>\n<h3>4.11.1<\/span>What eRA Is<\/span><\/h3>\nElectronic Reverse Auction (eRA \u2014 a type of auction classified as a dynamic procurement mode<\/em>) is an online real-time purchasing technique used to select a successful bid.<\/p>\neRA IS AN iterative process with automatic evaluation of bids<\/em>, where bidders can offer successively more favourable bids to displace the lowest bid at any given moment within the duration of the era.<\/p>\nThe following four parameters are announced before the start<\/em> Of the online Reverse Auction:<\/p>\n<aside class=\"note\">1. The starting price \u00b7 2. Minimum bid decrement \u00b7 3. Duration of the auction \u00b7 4. The maximum number of automatic extensions<\/p><\/aside>\nif a new lower bid is received within the last few minutes (pre-announced, say five minutes<\/em>) of closing time, the closing time May get automatically extended by a few minutes (pre-announced, say ten minutes<\/em>) for others to respond. A maximum number of such extensions May be pre-announced (say 50<\/em>).<\/p>\nThe most favourable bid at the end of the stipulated\/ extended time is declared as successful. It has, however, to be ensured that the entire process is conducted transparently and fairly.<\/p>\n<h3>4.11.2<\/span>The Four Reasons Why Caution Is Advised<\/span><\/h3>\nElectronic reverse auctions can be a powerful tool for procuring goods and services, but they also come with potential risks and drawbacks:<\/p>\nA) quality and supplier relationships: In an era, the focus is on price, and suppliers May be forced to cut corners<\/em> To win bids \u2014 affecting the overall quality of the product or service. Additionally, aggressive bidding can strain supplier relationships<\/em>, leading to long-term negative effects.<\/p>\nb) value for Money: While reverse auctions can drive down immediate costs, THEY may not optimise Value for Money<\/em>. Factors like Total Cost of Ownership, lifecycle costs, innovation, reliability, sustainability, and strategic alignment May get overlooked.<\/p>\nC) lack of technology development: Suppliers May hesitate to invest in innovation or process improvements if they are constantly pressured to lower prices. This can hinder long-term competitiveness and limit the introduction of new technologies or ideas in hi-tech goods and services.<\/p>\nD) risk of supplier dropouts: Aggressive bidding can lead to suppliers dropping out of the market segment<\/em>, reducing competition. If critical suppliers exit, it can disrupt the supply chain and impact availability.<\/p>\n<aside class=\"note\">Thus, while electronic reverse auctions can drive cost savings, they should be used judiciously<\/em>, considering the broader implications beyond price alone. Therefore, era should not be used indiscriminately or as a default mode of procurement<\/em>.<\/p><\/aside>\n<h3>4.11.3<\/span>Where eRA Is Appropriate, Where Caution Is Needed, and Where It Is Inappropriate<\/span><\/h3><h4>A) a Reverse Auction Would Be Appropriate Where:<\/span><\/h4>\n<ul class=\"lst\"><li>I) items are commodities, commercially-off-the-shelf items;<\/li><li>ii) it is feasible to formulate a detailed description of the subject matter of the procurement;<\/li><li>iii) there is a competitive market of bidders (say more than five<\/em>) anticipated to be qualified to participate in the era, so that effective competition is ensured;<\/li><li>iv) the criteria to be used by the Procuring Entity in determining the successful bid are quantifiable and can be expressed in monetary terms<\/em>.<\/li><\/ul>\n<h4>B) Where Caution is Needed in Using Reverse Auction:<\/span><\/h4>\n<ul class=\"lst\"><li>i) In the case of repetitive\/ regularly procured items, future procurements May be affected, as there may not be the same type of price reduction in future procurements as in the first Reverse Auction. Procuring entities May face a situation of not being able to justify the higher rates received subsequently<\/em>.<\/li><li>ii) where it is proposed to issue parallel orders by splitting the total order quantity among more than one supplier, a Reverse Auction May be avoided. However, in such a case, if the Reverse Auction is resorted to, then there should be adequate suppliers available \u2014 i.e., if the quantity is to be split into n parts, then suppliers available should be at least N+3<\/em>.<\/li><\/ul>\n<h4>C) Reverse Auction Would NOT<\/em> Be Appropriate For:<\/span><\/h4>\n<ul class=\"lst\"><li>I) the requirement is not of high enough value to generate competitive pressures on bidders;<\/li><li>ii) items of strategic\/ critical\/ vital\/ high technically complex nature; Items that are in short supply in the market;<\/li><li>iii)<\/strong>where the QCBS<\/em> System of selection is used<\/strong>(wherever permissible in case of Consultancy, Non-consultancy Services or Works)<\/em>;<\/li><li>iv) where FBS (Fixed Budget Based Selection)<\/em> System of selection is used in consultancy services, wherein the only parameter for evaluation is quality\/ technical criteria;<\/li><li>V) in engineered products having complexity in design;<\/li><li>vi) EPC contracts and complex works contracts;<\/li><li>vii) items where there are only a few suppliers.<\/li><\/ul>\n<h3>4.11.4<\/span>Terms and Conditions<\/span><\/h3><h4>A. The Procedure<\/span><\/h4>\ni) STAND-ALONE eRA: The procuring entity shall solicit bids through an invitation to the electronic Reverse Auction<\/em>, to be published or communicated in accordance with provisions like e-procurement. The invitation shall, in addition to the information as specified in e-procurement, include details relating to:<\/p>\n<aside class=\"note\">1) access to and registration for the auction; 2) opening and closing of the auction; 3) norms for the conduct of the auction; 4) any other information that May be relevant to the method of procurement.<\/p><\/aside>\nii) era preceded by PQB: If the consideration of quality requires competition only among qualified bidders, era May be preceded by a stage of PQB (on the same platform as era) to shortlist qualified bidders, who would only be allowed to participate in the era process that follows.<\/p>\niii) tender-cum-e-Reverse Auction (the combined procedure): Procuring entities May combine a full two-envelope e-procurement process with Reverse Auction. Then, after an e-procurement process, the e-Reverse Auction process is mandatorily conducted<\/em>, taking the L1 price as the benchmark (upper limit)<\/em>, after the financial bid opening (declaration of L-1 landed price\/s) \u2014 provided the number of valid bidders is not less than a stipulated number (3 if not specified)<\/em>.<\/p>\niv) the shortlisting formula for the combined procedure: Unless otherwise stipulated, the following procedure shall be followed for elimination\/ shortlisting of bidders (from among those qualified in the preceding e-Procurement process) eligible to participate in e-Reverse Auction:<\/p>\n1) the bids disallowed from participating in the Reverse Auction shall be the highest bidder(s)<\/em> In the tabulation of prices in the financial bid. If the highest bidders quote the same rate<\/em>, the price offer received LAST<\/em>, as per the time log of the portal, shall be removed first \u2014 on the principle of last in, first out<\/em> By the system.<\/p>\n2) the three bands:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Number of valid bidders<\/th><th>Consequence<\/th><\/tr><\/thead><tbody><tr><td>Less THAN the minimum stipulated number (or 3 if not specified)<\/td><td>a Reverse Auction shall NOT<\/em> Be conducted, and the financial bids from the e-procurement process shall be evaluated and finalised<\/td><\/tr><tr><td>4 TO 6 valid bidders<\/td><td>THE lowest three (3)<\/em> Bidders shall be allowed to participate in the Reverse Auction<\/td><\/tr><tr><td>More THAN 6 valid bidders<\/td><td>ONLY 50% of the bidders<\/em> (Rounded up to the next integer) shall be allowed to participate<\/td><\/tr><\/tbody><\/table><\/div>\n3) the preference override: However, if MSE bidders or class-i local suppliers<\/em> Under the Make in India policy do not meet the above criteria, but their prices in financial bids are within the policy's margin of preference<\/em>, they shall be allowed to participate. Such bidders would be over and above<\/em> The shortlist mentioned above.<\/p>\n<h4>B. The e-Reverse Auction Process (e-RAP)<\/span><\/h4>\n<aside class=\"note\">If the portal e-rap process is different from the one described below for the combined procedure, the portal provisions shall prevail<\/em>.<\/p><\/aside>\nI) there shall be no participation fees<\/em> for the e-Reverse Auction.<\/p>\nii) where pre-qualification precedes the era, an electronic invitation shall be issued, giving sufficient notice period<\/em> To the successful bidders, so that they can formulate pricing strategies. The starting price shall be decided by the Procuring Entity.<\/p>\niii) in case of the combined procedure, upon opening the financial bids, a Reverse Auction platform shall be created. The Reverse Auction shall start within the specified period (two hours if not specified<\/em>) of the bid. Unless modified by the Procuring Entity, THE L-1 landed price<\/em> In the financial bid (as per the calculation schema based on the Tender Document evaluation criteria) shall be the start bid price<\/em> On which the auction shall be initiated.<\/p>\niv) the decrement value: The Procuring Entity shall specify the decrement value before starting<\/em> THE e-Reverse Auction \u2014 or, if not specified, 0.5% of the start bid price<\/em>, rounded off to the next unit, tens, hundreds, thousands, etc., with a minimum of Rs. 1<\/em>. The reduction in bids shall have to be made as per decrement value or in multiples thereof.<\/p>\n<aside class=\"note\">A bid decrement that is too small<\/em> May prolong the auction, and a decrement that is too large<\/em> May restrict competition.<\/p><\/aside>\nV) the timing parameters and their defaults:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Parameter<\/th><th>Default if not specified<\/th><\/tr><\/thead><tbody><tr><td>Initial period of the reverse auction<\/td><td>two hours<\/td><\/tr><tr><td>Last-minute-bidding period<\/td><td>five minutes<\/strong> before the auction closing time<\/td><\/tr><tr><td>Auto-extension period<\/td><td>ten minutes<\/td><\/tr><tr><td>Maximum number of auto-extensions<\/td><td>50<\/td><\/tr><\/tbody><\/table><\/div>\nall times and periods are as per the server time stamp<\/em>.<\/p>\n<aside class=\"note\">The design cautions: The last-minute-bidding period should not be so small<\/em> That unscrupulous bidders May catch others off guard, preventing competitive responses. The auto-extension period should be sufficient to allow bidders to consider their next move<\/em>. The number of auto-extensions should not be too large<\/em> To prolong the auction, leading to bidder fatigue<\/em>.<\/p><\/aside>\nvi) service disruption: In case of service disruption at the service provider's end during the Reverse Auction, the Reverse Auction process shall start all over again<\/em>, with the last recorded lowest price of the prematurely ended e-rap as the 'start bid' price<\/em>.<\/p>\nThe prices quoted in the prematurely ended e-rap shall be binding on all the bidders<\/em> for consideration if the restarted process does not trigger within the stipulated time (or by 5.00 pm on the same day, if not stipulated<\/em>).<\/p>\nDisruption and restarting of e-rap shall be intimated to all the bidders through system\/ sms\/ e-mail through the e-procurement portal.<\/p>\nvii) What is displayed: Bidders must submit only the landed price<\/em> In the Reverse Auction, and only the item-wise L-1 price shall be displayed<\/em>, without disclosing the number of bids and names of the bidders. The landed price would not be the same for two bidders<\/em>, even if any bidder makes such an attempt.<\/p>\nWhile evaluating the bids, the exchange rate captured by the e-procurement system shall be considered for converting foreign currency into Indian rupees.<\/p>\nviii) Post-closure publication: After the auction's closing time, the bid history<\/em> Showing all the last valid bids offered, along with the names of the bidders<\/em>, shall be published. All bidders shall have the facility to see and get a print of the same for their records.<\/p>\nix) binding force: All electronic bids submitted during the Reverse Auction process shall be legally binding<\/em> On the bidder. Only the chronologically last bid<\/em> Submitted by a bidder until the end of the auction shall be considered the valid financial bid of that bidder, and consideration of the same for entering into a contract by the Procuring Entity shall be binding on the bidder.<\/p>\nX) non-participation in the combined procedure: If a bidder does NOT<\/em> Submit his bid in the Reverse Auction, the price quoted in the financial bid in the preceding e-procurement shall be considered the valid price of that bidder. The status of the bidder (L-1, L-2, etc.) shall be evaluated considering either the bid price submitted in the Reverse Auction, or the price quoted in the financial bid \u2014 whichever is lower<\/em>.<\/p>\nxi) purchase preference: Short-listed MSE or class-i local suppliers, eligible for any purchase preference policy as per the tender document, shall get an opportunity to match the L-1 prices concluded after the Reverse Auction<\/em>, if their final prices in the Reverse Auction fall within the permitted percentage.<\/p>\nxii) there shall NOT<\/em> Be any negotiation after the e-Reverse Auction process is closed.<\/p>\nxiii) the breakup of landed price: The successful L-1 bidder, after the Reverse Auction, must upload within a stipulated period (within 2 working days, if not specified<\/em>) THE breakup of landed prices<\/em> In the shortfall documents, at which the contract shall be awarded.<\/p>\nWhile giving the breakup, the bidder shall include the same taxes and duties<\/em> As quoted while submitting the financial bid. If the L-1 bidder FAILS<\/em> To submit the breakup of the landed price within the stipulated period, the Procuring Entity shall place an order based on the breakup of the financial bid submitted by the bidder<\/em>, and the same shall be binding on the bidder.<\/p>\nxiv) Monitoring for abuse: The Procuring Entity shall monitor whether there is improper use<\/em> Of the Reverse Auction \u2014 including, for example, evidence of predatory pricing, collusion, interference with the proper operation of the technology<\/em>, etc. Bidders (including their subsidiaries<\/em>) found to have engaged in collusive activities or other improper practices will be treated in accordance with the cartel\/ pool-rate provisions of the evaluation Chapter.<\/p>\n<h2>4.12<\/span>Pre-qualification Modes of Procurement<\/span><\/h2><h3>4.12.1<\/span>Why Pre-qualification Modes Exist<\/span><\/h3>\nWhere the procurement is significantly complex<\/em>, and the capability of the source of supply is crucial<\/em> for the successful performance of the contract, it May be necessary to ensure that:<\/p>\n<ul class=\"lst\"><li>There is competition only among bidders equally capable<\/em> Of performing the contract, and<\/li><li>incapable bidders don't queer the pitch<\/em> By their low-quality\/ low-price bids.<\/li><\/ul>\nIn such a situation, a pre-qualification of bidders May be required to shortlist bidders who are equally capable of performing the contract. Evaluation of techno-commercial and financial bids is restricted to this shortlist only.<\/p>\n<h3>4.12.2<\/span>Pre-qualification Bidding (PQB)<\/span><\/h3>\n1. What it is: In the situations mentioned above, where THE time, effort and money required from the bidder<\/em> To participate in a tender is high, a two-phase pre-qualification bidding<\/em> May be considered.<\/p>\nPre-qualification Bids (PQBs) should meet the norms of transparency, fairness, and maintenance of competition<\/em>.<\/p>\n<aside class=\"note\">Although there is a separate phase of PQB bidding, it is not semantically counted as a two-stage bidding<\/em>.<\/p><\/aside>\n2. The two phases:<\/p>\n<ul class=\"lst\"><li>In the first PQB phase, competent, qualified bidders are shortlisted by using a pre-qualification criterion (PQC), covering:<\/li><\/ul>\n<aside class=\"note\">I) past experience of similar contracts \u00b7 ii) performance capability \u00b7 iii) financial strength<\/p><\/aside>\nno techno-commercial or financial details are asked for in the first phase of PQB.<\/p>\n<ul class=\"lst\"><li>In the second phase, tender documents (techno-commercial and financial) are issued as usual through e-procurement\/ e-publishing; Bids only from shortlisted qualified bidders<\/em> Are evaluated, and others are rejected.<\/li><\/ul>\n3. Where PQB is NOT<\/em> Desirable:<\/p>\nSince the two-phase PQB system May strain the transparency principle<\/em>, and there is a heightened risk of anti-competitive practices<\/em>, two-phase PQB should be done only as an exception<\/em> Under specified circumstances.<\/p>\nHence, the procuring entities May lay down restricted powers to approve such modes at sufficiently high levels in SoPP<\/em>. It should NOT<\/em> Be a routine\/ normal mode of procurement, and qualification criteria as part of a single\/ two\/ multiple envelopes system should suffice in such situations.<\/p>\nPQB bidding as a separate phase is contraindicated<\/em> In the following circumstances:<\/p>\n<ul class=\"lst\"><li>A) where procurement is being done through limited tender enquiries<\/em>;<\/li><li>B) where the requirement is technically and commercially not complex enough<\/em> That pre-qualification of the bidder is not crucial for the performance of the contract \u2014 for example, commercial off-the-shelf (cots) requirements;<\/li><li>C) where the procurement is significantly complex and the time, effort and money required from the bidder to participate in a tender is not significant<\/em> \u2014 clear-cut, fail-pass pre-qualification criteria can be specified in single-stage tendering<\/em> (Instead of two-phase tendering).<\/li><\/ul>\n4. Pre-qualification criteria (PQC) \u2014 the two-sided test:<\/p>\n<aside class=\"note\">PQC should be unrestrictive enough not to leave out even one capable vendor\/ contractor<\/em> \u2014 otherwise, it can lead to higher procurement\/ works\/ services prices.<\/p>\nHowever, on the other hand, these criteria should be restrictive enough so as not to allow even one incapable vendor\/ contractor<\/em> And thus vitiate fair competition for capable vendors\/ contractors, to the detriment of the buyer's objectives. A misjudgement in either direction<\/em> May be detrimental.<\/p><\/aside>\n(A sample PQC is given in Annexure 12<\/strong> of the Goods Manual.)<\/em><\/p>\nDue consideration should be given while framing PQC to its effect on the adequacy of competition.<\/p>\nPQC should NOT<\/em> Result in unreasonable exclusion of 'class-i local supplier'\/ 'class-ii local supplier' who would otherwise be eligible, beyond what is essential for ensuring the quality or creditworthiness of the supplier.<\/p>\nTo encourage MSEs, local bidders and past successful bidders, a call May be taken as to whether PQC should apply to full quantity\/ packages<\/em> OR BE proportional to part quantity\/ package quoted<\/em> By a bidder.<\/p>\nIn case the requirement is suddenly multiple times the past procurements<\/em>, blind adoption of past pqcs (fractions\/ percentages) May lead to the disqualification of successful past vendors<\/em>, leading to inadequate competition.<\/p>\nPQC should, therefore, be carefully decided for each procurement<\/em> With the approval of ca for acceptance of the tender.<\/p>\nIt should be clarified in the PQB documents that bidders have to submit authenticated documents<\/em> In support of eligibility criteria.<\/p>\n5. Advertisement and Notification \u2014 and the notice periods:<\/p>\nThe invitation for the first-phase PQB shall be processed (advertised, tender document preparation, publicity, evaluation, and so on) in the same manner as a normal GTE or OTE<\/em> (As the situation calls for) tender, ensuring the widest possible coverage.<\/p>\nThe PQC and evaluation criteria should be clearly noted in the PQB documents<\/em>.<\/p>\nThe PQB documents should also indicate a complete Schedule of requirements<\/em> for which this PQB is being done, including approximate likely quantities<\/em> Of requirements.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Situation<\/th><th>Minimum period for submission of PQBs<\/th><\/tr><\/thead><tbody><tr><td>Normal (domestic)<\/td><td>3 WEEKS<\/td><\/tr><tr><td>Where FOREIGN BIDDERS are also involved<\/td><td>4 WEEKS<\/td><\/tr><tr><td>in case of urgency duly approved by ca<\/td><td>may be reduced to 10 (ten) DAYS<\/td><\/tr><\/tbody><\/table><\/div>\n6. Evaluation: At least in high-value and critical procurements, the credentials regarding experience and past performance submitted by the successful bidder May be verified as per PQC \u2014 as far as reasonably feasible \u2014 from the parties for whom work has been claimed to be done<\/em>.<\/p>\nThe procuring entity shall evaluate the qualifications of bidders only in accordance with the PQC specified<\/em>, and shall give due publicity to the particulars of the bidders that are qualified<\/em> On the relevant portals\/ websites.<\/p>\n7. Subsequent Procurement Tender \u2014 the single-use and six-month rules:<\/p>\nThe pre-qualification shortlist shall be for a single subsequent procurement<\/em>.<\/p>\nIn this subsequent procurement, bids are invited from these qualified bidders only, and all other bids May be treated as unsolicited offers, which are normally rejected<\/em>.<\/p>\nThis second phase of the procurement process is handled as a normal two-envelope tender.<\/p>\nThe time gap between the pre-qualification approval and the floating of the linked main procurement tender should normally be less than six months<\/em>.<\/p>\n<h3>4.12.3<\/span>Single Stage Pre-qualification<\/span><\/h3>\n1. When to use it instead: In the situation described above \u2014 i.e., significantly complex procurement; the capability of the source of supply is crucial; the necessity to ensure competition only among equally capable bidders \u2014 but where the time, effort and money required from the bidder to participate in a tender is not very high<\/em>:<\/p>\nInstead of a separate phase of pre-qualification bidding, a clear-cut, fail-pass pre-qualification criteria (PQC)<\/em> Can be asked to be submitted as the first (additional) envelope in a single-stage three-envelopes system<\/em>, so that a bidder's risk of having his bid rejected on the grounds of qualifications is remote if he exercises due diligence<\/em>.<\/p>\nIn e-procurement, separate files shall be uploaded by the bidder, mutatis mutandis<\/em>.<\/p>\n2. The terminological point: Strictly SPEAKING, this is not a pre-qualification but a post-qualification<\/em> Of bidders (i.e., after the techno-commercial and financial bids have been received).<\/p>\nIn respect of pre-qualification, in the first instance on the pre-announced bid opening date, only the PQB envelopes<\/em> (Also containing the EMD and other eligibility documents<\/em>) are opened and evaluated to shortlist the responsive bidders who pass the pre-qualification.<\/p>\n3. The rest of the procedure: The rest of the procedure is the same as the two-envelope system (techno-commercial and financial bids) for only qualified bidders.<\/p>\n<ul class=\"lst\"><li>In e-procurement, the other two envelopes of unqualified<\/em> Bidders would remain encrypted and unopened<\/em>.<\/li><li>In off-line tenders, the other two envelopes of unqualified bidders are returned unopened<\/em> To the respective bidders by registered acknowledgement due\/ reliable courier, or any other mode with proof of delivery.<\/li><\/ul>\n<h3>4.12.4<\/span>PQB Tendering \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. Pre-qualification criteria: PQB has the potential of getting misused or being applied without considering the restrictive nature of competition<\/em>. PQC should be relevant to the quality requirements, and neither very stringent nor very lax in restricting\/ facilitating the entry of bidders. These criteria should be clear, unambiguous, exhaustive, and yet specific. Also, there should be FAIR COMPETITION.<\/td><td>Lay down criteria for when prequalification in single-stage or two-stage tendering is warranted. Also, model PQC criteria for diverse types of procurements should be laid down<\/em> on the lines of Annexure 12.<\/td><\/tr><tr><td>2. Dangers of anti-competitive bidding: Since in a two-stage PQB, shortlisted bidders are announced<\/em>, there is a heightened possibility of these bidders forming a cartel and quoting anti-competitive prices<\/em> In the second stage of tendering.<\/td><td>Two-stage PQB should be done only in appropriately justified situations<\/em>. Alternatively, a single-stage multiple-envelope system<\/em> May be used for prequalification \u2014 in which the chances of anti-competitive behaviour and cycle time<\/em> Are significantly lower.<\/td><\/tr><tr><td>3. Two-phase PQB is a time-consuming process.<\/td><td>(as above)<\/em><\/td><\/tr><tr><td>4. Contentious and disputes: Both the successful and unsuccessful bidders tend to view the PQB process as a means for creating rights\/ privileges\/ entitlement<\/em> for them \u2014 by way of hair-splitting, contentious or viciously legalistic interpretations of PQC criteria<\/em>, disregarding the very rationale of the PQB and PQC.<\/td><td>In the PQC, a caveat against such tendencies<\/em> May be included \u2014 asserting the right of the procuring agency to interpret the PQC on common usage of terminologies and phrases in Public Procurement<\/em>, instead of legalistic and hair-splitting judgements \u2014 and that their decision in this regard would be final<\/em>.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2 class=\"src-G\">4.13<\/span>Approved Vendor List (AVL)<\/span>G<\/span>text; W\/C\/NC list it and cross-refer to Goods para 4.7<\/span><\/h2><div class=\"srcblock src-G\"><h3>4.13.1<\/span>Strategic, Safety and Security Requirements \u2014 the Justification<\/span><\/h3>\nMany organisations have regular and continuous<\/em> Requirements of tailor-made items<\/em> (for which the Procuring Entity is the monopoly buyer<\/em>), which are critical for the safety and security of its operations<\/em>, and where large investments and gestation periods<\/em> Are needed for developing manufacturing and quality control infrastructure\/ processes for its production.<\/p>\nIn view of heavy investments, vendors need regular and sustained offtake for financial viability<\/em>.<\/p>\nSuch procurement needs to be done over an extended period of time only from vendors who have undergone rigorous pre-qualification<\/em>.<\/p>\nThe firms are assessed for requisite infrastructure to produce consistent quality goods up to the assessed production capacity, with regular monitoring of the quality assurance system.<\/p>\nIt May even involve, if required, extended field trials of products and inspection of manufacturing\/ quality assurance facilities and processes<\/em>. Such time-consuming pre-qualification would not be feasible for each individual procurement<\/em>.<\/p>\n<aside class=\"note\">Examples given in the Manual: Railway signalling equipment \u00b7 locomotive assemblies \u00b7 track fittings. A quality glitch in these would be disastrous<\/em>.<\/p><\/aside>\n<h3>4.13.2<\/span>What an AVL Is<\/span><\/h3>\nIn such situations, a separate phase of PQB tendering is done with a much more stringent PQC<\/em> \u2014 but the resultant shortlist of qualified vendors is kept valid for an extended period (say 2 to 5 years)<\/em> As stipulated in the PQB documents.<\/p>\nThese are called approved vendor lists (AVL)<\/em>. In some countries, these May be referred to as multi-use lists<\/em>.<\/p>\n<h3>4.13.3<\/span>The Two Categories of Approved Vendors<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Basis of approval<\/th><th>Upgrade path<\/th><\/tr><\/thead><tbody><tr><td>\"Developmental vendors\" (may be named 'Temporarily or Provisionally Approved Vendors' in some organisations)<\/em><\/td><td>Approval is granted based on an assessment of infrastructure facilities available and satisfactory production of samples as per specification \u2014 but their capability to consistently produce the quality material giving satisfactory service life in the field<\/em> Is yet to be established<\/td><td>after these development vendors demonstrate a capability to produce consistent quality goods with required service life over a period (say 2 years)<\/em>, they are upgraded<\/td><\/tr><tr><td>\"Approved vendors\"<\/strong>(the regular category)<\/em><\/td><td>Demonstrated consistent quality over the qualifying period<\/td><td> \u2014 <\/td><\/tr><\/tbody><\/table><\/div>\n<h3>4.13.4<\/span>Procurement Restricted to AVL \u2014 and the 20:80 Split<\/span><\/h3>\nin all subsequent procurements, eligibility criteria restrict participation to the \"Approved Vendor List\" (regular and developmental)<\/em>, and all other bids are treated as unsolicited offers, which are normally rejected<\/em>.<\/p>\nOnly a part \u2014 say not more than 20%<\/em> \u2014 of the total tendered quantity is distributed among development vendors<\/em>, provided they quote lower than<\/em> The regular approved vendors.<\/p>\nThe rest of the quantity (say 80% or more<\/em>) is awarded to 'approved vendors'.<\/p>\nThis ensures that development vendors are able to demonstrate their capabilities for upgradation to the regular approved vendor category.<\/p>\nThus, it should be ensured that development orders are for a viable quantity<\/em> for production and for the purpose of proving their capability.<\/p>\n<h3>4.13.5<\/span>Benefits of AVL<\/span><\/h3>\nAn AVL is a powerful tool that contributes to cost control, reliability, and overall efficiency<\/em> In procurement for strategic, safety and security goods.<\/p>\nIt ensures that vendors have undergone rigorous vetting<\/em> And have demonstrated stability and reliability<\/em>.<\/p>\nWorking with approved vendors instils confidence in the quality<\/em> Of materials and components purchased and reduces the chances of defects<\/em>. Downtime due to failures and repairs is also minimised.<\/p>\n<h3>4.13.6<\/span>Monitoring and Updation<\/span><\/h3>\nAn AVL is a dynamic tool<\/em>, and its effectiveness depends on proactive management and adaptability<\/em>. Updating an AVL over time is crucial to maintain its effectiveness and relevance.<\/p>\n<ul class=\"lst\"><li>If a new vendor applies for inclusion in AVL, it May be added to AVL if it meets the PQC in the original PQB<\/em>.<\/li><li>Key performance indicators (KPIs) for vendors should be part of the PQB document \u2014 including on-time delivery, product quality, and responsiveness<\/em>.<\/li><li>These metrics May be used to conduct periodic reviews of the AVL (e.g., annually or biannually)<\/em>, and vendors who consistently fail to meet standards or demonstrate poor performance May be downgraded or removed<\/em> From the AVL.<\/li><li>Audits of existing vendors May be conducted to assess financial stability, production capabilities, and adherence to contractual terms<\/em>.<\/li><li>The procuring Entity should MONITOR industry trends, technological advancements, and new suppliers<\/em>.<\/li><li>Feedback May be gathered from stakeholders who use or maintain the goods<\/em>. Their insights can highlight areas for improvement or identify potential issues with specific vendors.<\/li><li>Vendors May be given support to enhance their capabilities and training, share best practices, and encourage continuous improvement<\/em>.<\/li><\/ul>\n<h3>4.13.7<\/span>Where AVL Is Not<\/em> Desirable<\/span><\/h3>\nThe same contra-indications as in PQB are much more accentuated<\/em> In the case of AVL, as the list is used over prolonged periods.<\/p>\nHence, the AVL mode for an item should be approved at the highest level<\/em> In the procuring organisation.<\/p>\nSince the AVL system strains the transparency principle<\/em> And there is a heightened risk of cartelisation and collusion<\/em>, AVL should NOT<\/em> Be a routine\/ normal mode of procurement and should be done only as an exception \u2014 otherwise, PQB modes of procurement May be used.<\/p>\nAVL is contraindicated in the following seven circumstances: A) where the requirement is not related to strategic, safety or security<\/em>. B) where the item is not tailor-made<\/em>, nor is the Procuring Entity a monopoly buyer<\/em>. C) where the item is not regularly and continuously procured<\/em>. D) where the requirement is technically and commercially not complex enough<\/em>. e) where large investment and prolonged gestation period are not required<\/em> In developing manufacturing\/ quality assurance facilities\/ processes. F) where the technology is not stable<\/em> And is evolving\/ changing at a fast pace. G) where procurement can be done through limited tender enquiries<\/em>.<\/p>\n<h3>4.13.8<\/span>AVL \u2014 Risks and Mitigations<\/span><\/h3>\n<aside class=\"note\">The same risks and mitigations as in PQB apply in this case to a deeper level<\/em>.<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. Dependency on vendors: It can shift the balance of power to the hands of the vendor \u2014 leading to many disadvantages: 1.1 anti-competitive practices: These approved vendors can easily form a cartel and indulge in anti-competitive practices. This includes a significant risk of collusion due to power in the hands of the procurement entity's personnel who inspect\/ monitor the facilities\/ quality. 1.2 cost escalation: Over time, vendor costs May increase, affecting overall procurement expenses. 1.3 supplier ethics and compliance: Approved vendors May engage in unethical practices or violate compliance standards.<\/td><td>1. Diversify the AVL by including multiple reliable vendors for critical goods. Maintain a backup list of development vendors<\/em> To mitigate sudden disruptions. Regularly monitor and update the AVL. 1.1 be alert about cartel\/ pool rates. Include a cartel clause<\/em> And take mitigation measures. The personnel in such jobs May be rotated frequently<\/em> And should not be allowed to be in the same position for more than 3 years<\/em>. If the same personnel who created<\/em> The AVL are also given the task of monitoring<\/em> it, it May create a conflict of interest<\/em>. So, personnel for these two tasks should be different<\/em>. The KPIs and PQC should be objectively measurable<\/em>. Every three years, a fresh PQB<\/em> May be done for new vendors. 1.2 benchmark costs periodically against market trends. Negotiate long-term contracts with price stability clauses<\/em>. 1.3 conduct due diligence on vendors' ethical practices<\/em>. Include compliance clauses for the Code of Integrity<\/em> In contracts and monitor adherence.<\/td><\/tr><tr><td>2. Lack of monitoring and updation: AVL is a dynamic tool that needs constant monitoring and updating. 2.1 complacency: Once vendors are approved, complacency May set in, leading to reduced performance. 2.2 quality fluctuations: Even approved vendors May occasionally deliver subpar quality due to production issues or changes in their processes.<\/td><td>2. Monitor and update the AVL lists. 2.1 continuously engage with vendors, encourage innovation, and set improvement targets. 2.2 regularly audit vendors to ensure consistent quality.<\/td><\/tr><tr><td>3. Market dynamics: Market dynamics (e.g., price fluctuations and technological advancements) impact vendor capabilities and competitiveness. 3.1 innovation gap: Sticking to the same vendors May hinder access to innovative solutions. A non-approved vendor offers an innovative solution that could significantly improve operations.<\/em><\/td><td>3. Stay informed about industry trends and adjust the AVL accordingly. 3.1 encourage vendors to propose new technologies or approaches. Consider adding emerging vendors to the AVL. Evaluate the benefits and risks. Seek approval for a temporary exception<\/em>, or consider adding the vendor to the AVL.<\/td><\/tr><tr><td>4. Inadequate or too-many vendors on AVL: Both an inadequate number of vendors AND too many vendors on AVL may be detrimental to the intended benefits. Too many vendors May force vendors to cartelise for survival<\/em> \u2014 having invested heavily in creating infrastructure. Too few vendors May create supply chain disruption and increased prices<\/em>.<\/td><td>Such situations may be specially monitored. In the PQB document, an upper limit May be indicated for the maximum number of suppliers to be taken on AVL<\/em>. A large number of vendors getting cleared for AVL is an indication that this item is not a fit case for AVL mode<\/em>. In case of inadequate numbers on AVL, a repeat PQB<\/em> May be done, and efforts May be made to induce new vendors with technological and preferential help in setting up infrastructure<\/em>.<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h2>4.14<\/span>Limited Tender Enquiry (LTE)<\/span><\/h2>\n(Rule 162 of GFR 2017)<\/em><\/p>\n<h3>4.14.1<\/span>What LTE Is<\/span><\/h3>\nLTE is a restricted competition procurement<\/em>, where a pre-selected panel of vendors is directly approached<\/em> for bidding.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>G<\/span> GOODS<\/th><th>W<\/span> WORKS<\/th><\/tr><\/thead><tbody><tr><td>Who is on the panel<\/td><td>vendors on the list of registered suppliers<\/em> For the subject matter of procurement \u2014 for goods and services not available on the GeM portal<\/em><\/td><td>bidders enlisted with the Procuring Entity<\/em>, along with those enlisted with other public works organisations\/ works PSUs<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nbids from uninvited bidders are treated as unsolicited<\/em> And are not entertained, except in exceptional circumstances.<\/p>\nHowever, ministries\/ departments should evolve a system by which requests for registration\/ enlistment of interested\/ unsolicited firms should be decided before the bid in the next round of tendering<\/em>.<\/p>\nThis mode provides a short and simple procedure<\/em> But May not provide as good a VfM as in the case of open tendering \u2014 but it is still a good balance for procurements below a threshold.<\/p>\n<h3>4.14.2<\/span>When LTE Is the Default Mode \u2014 THE THRESHOLD DIVERGENCE<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Threshold<\/th><\/tr><\/thead><tbody><tr><td>G<\/span> GOODS<\/td><td>LTE procedures should be the default mode<\/em> Of procurement when the estimated value of procurement is between Rs. 5 lakh to Rs. 50 lakh<\/em> (Rupees Five Lakh to Fifty Lakh)<\/td><\/tr><tr><td>W<\/span> WORKS<\/td><td>LTE procedures should be the default mode of procurement when the estimated value of procurement is up to Rs. 10 lakh<\/em> (Rupees Ten Lakh) \u2014 OR when limited numbers of tenderers are known to possess requisite skills, technology and resources, by reason of their highly complex or specialised nature<\/em>, OR FOR works of a secret nature<\/em><\/td><\/tr><tr><td>C<\/span> Consultancy \/ NC<\/span> Non-consultancy<\/td><td>Used for procurements up to Rs. 50 lakh<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">NOTE:<\/strong> The Works Manual adds two additional, NON-MONETARY grounds<\/strong> for using LTE which do not appear in the Goods Manual \u2014 high complexity\/ specialised nature<\/strong> and works of a secret nature<\/strong>.<\/p><\/aside>\n<h3>4.14.3<\/span>Terms and Conditions<\/span><\/h3>\n1. Prior approval of the panel: The shortlist of vendors\/ contractors from the list of registered suppliers\/ enlisted contractors for the subject matter of procurement, to whom it is proposed to send tender documents, shall be approved by the Competent Authority before floating the tender<\/em>.<\/p>\n2. Rotation where the panel is large: In case the number of registered\/ enlisted bidders for an item\/ work is large and unwieldy<\/em>, A transparent system of rotation of invitation to bid<\/em> May be used to keep the invited shortlist to a manageable number (SAY 8 TO 12<\/em>).<\/p>\n3. Despatch and mandatory publication: In off-line tendering, copies of the tender documents should be sent free of cost<\/em> (Except in case of priced specifications\/ drawings) directly by speed post\/ courier\/ e-mail<\/em> To the panel.<\/p>\nFurther, the Procuring Entity should also mandatorily publish its limited tender enquiries<\/em>:<\/p>\n<ul class=\"lst\"><li>G<\/span> \u2014 ON GeM as well as<\/em> ON GeM-CPPP<\/strong>;<\/li><li>W<\/span> \u2014 ON GeM-CPPP<\/strong>.<\/li><\/ul>\nApart from that, the organisations should publish the tender enquiries on its own\/ the department's or ministry's website.<\/p>\n4. The minimum number Rule: The minimum number of bidders to whom LTE should be sent is more than three<\/em>.<\/p>\nIn case less than three<\/em> Approved vendors\/ contractors are available, LTE May be sent to the available approved vendors\/ contractors with the approval of the ca, duly recording the reasons<\/em>.<\/p>\nEfforts should then be made to identify a higher number of approved suppliers\/ contractors<\/em> By the supplier registration\/ enlistment section, to obtain more responsive bids on a competitive basis.<\/p>\n5. Simplified tender document:<\/strong>A simplified tender document with brief terms and conditions<\/em> Should be used, instead of a detailed tender document.<\/strong>(G<\/span> Annexure 8 \u2014 Limited Tender Form \u00b7 C<\/span> Annexure 15 \u00b7 NC<\/span> Annexure 9.)<\/em><\/p>\nin any case, all registered vendors\/ contractors who are normally invited to quote in such limited tenders have already acknowledged acceptance of the \"general conditions of contract\" as part of the registration application<\/em>, which is applicable to such procurements \u2014 in addition to these brief \"terms and conditions\" in the LTE tender form.<\/p>\nIf necessary, specifications and drawings or any other document<\/em> May be enclosed with the limited tender form.<\/p>\n6. Currency: In domestic tenders, any bid in foreign currency should be summarily rejected<\/em>.<\/p>\n7. The security exemption: Since selected bidders are normally registered\/ enlisted with the Procuring Entity, bid Security (EMD) and Performance Security are normally not taken in LTE<\/em>.<\/p>\n<aside class=\"note\">(Contrast SLTE<\/strong> at para 4.15.2-4 below, where both ARE taken<\/strong>.)<\/em><\/p><\/aside>\n<h3>4.14.4<\/span>LTE \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. A major risk in this mode is that the demand May be artificially split to avoid OTE or higher-level approvals<\/em>.<\/td><td>The e-procurement portal May be programmed to raise an alert<\/em> If the same item is repeatedly attempted to be procured through LTE.<\/td><\/tr><tr><td>2. There is a risk that LTE May not attract enough bids<\/em>, and sometimes there May be a single acceptable offer<\/em>. It could be due to tender documents not reaching the targeted bidders \u2014 intentionally or otherwise<\/em>. It could also be due to bidders not getting adequate time to submit bids. This could also be due to an insufficient database of registered\/ known vendors<\/em>.<\/td><td>To ensure sufficient response, in addition to mails\/ emails to selected vendors, web-based publicity should be given for limited tenders<\/em> \u2014 with suitable clarifications that unsolicited bids shall not be considered<\/em>. Sufficient time should be allowed for the submission of bids \u2014 say two weeks<\/em>. A shorter or longer period, if considered sufficient, could be allowed if justified according to the urgency\/ complexity of the requirement. Further, a limited or open tender that results in only one effective offer<\/em> Shall be treated as a single Tender Enquiry situation<\/em>, with relevant powers of approval, etc.<\/td><\/tr><tr><td>3. There is also a risk that the selection of vendors May not be transparent<\/em>. At the evaluation stage, some invited bidders May be passed over on the grounds of being ineligible\/ unreliable<\/em>. On the other hand, unsolicited bidders May also quote<\/em>, causing a dilemma of transparency regarding the consideration of such offers.<\/td><td>Maintenance of a panel of registered suppliers for each subject matter of procurement is a sine qua non<\/em> for LTE (Rule 150 GFR 2017). Such panels of vendors should be reviewed every year<\/em> To ensure an adequate number of registered suppliers. The panel should not be changed after the LTE tender has been published<\/em>. ALL past successful vendors\/ bidders should invariably be invited<\/em>. In case it is proposed to exclude any registered\/ approved vendor\/ contractor from being shortlisted for inviting LTE, detailed reasons \u2014 such as failure in supply \u2014 should be duly recorded, and approval of the ca should be taken before exclusion<\/em>. Bidders should be selected with due diligence to ensure that bidders who do not meet eligibility criteria are not shortlisted. At the evaluation stage, in LTE, passing over of a duly shortlisted bidder on grounds of poor past performance or eligibility May raise questions about transparency<\/em>.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.15<\/span>Special Limited Tender Enquiry (SLTE)<\/span><\/h2>\n<aside class=\"note\">The Headline Divergence<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>G<\/span> GOODS<\/th><th>W<\/span> WORKS<\/th><th>C<\/span> \/ NC<\/span><\/th><\/tr><\/thead><tbody><tr><td>Section title<\/td><td>SLTE for Procurements more than Rs. 50 (Rupees Fifty) Lakh<\/strong><\/em><\/td><td>SLTE for Procurements more than Rs. 10 (Rupees Ten) Lakh<\/strong><\/em><\/td><td>SLTE \u2014 above Rs. Fifty lakh<\/strong> in exceptional circumstances<\/em><\/td><\/tr><tr><td>Rule cited<\/td><td>Rule 162 of GFR 2017<\/td><td>Rule 139(v) AND Rule 162 of GFR 2017<\/td><td>Rule 162<\/td><\/tr><\/tbody><\/table><\/div><\/aside>\n<h3>4.15.1<\/span>What SLTE Is and When It May Be Used<\/span><\/h3>\nLTE\/ SLTE mode is permissible in certain special circumstances for values higher than the LTE threshold, where normally OTE should have been done<\/em>.<\/p>\nPowers to sanction procurement on an LTE\/ SLTE basis in such exceptional cases May be laid down in SoPP, based on a certificate of urgency signed by the indentor<\/em>.<\/p>\nThis mode has the merit of being quicker<\/em>, but the VfM obtained May be less than in the case of OTE<\/em>; Hence, it should be restricted to the following four situations:<\/p>\n1. Urgency: The Competent Authority in the Ministry\/ Department certifies<\/em> That there is an existing or prospective urgency for operational or technical requirements<\/em>, and any additional expenditure involved by not procuring through advertised tender enquiry is justified in view of urgency<\/em>. The Ministry\/ Department should also put on record the nature of the urgency and reasons why the procurement could not be anticipated earlier<\/em>.<\/p>\n2. Public interest: There are sufficient reasons to be recorded in writing by the Competent Authority, indicating that it will not be in the public interest<\/em> To procure the goods\/ works through advertised tender enquiry.<\/p>\n3. Known sources: The sources of supply are definitely known<\/em>, and the possibility of fresh source(s) beyond those being tapped is remote<\/em>.<\/p>\n4. Policy: Government policy designates procurement from specific agencies<\/em>.<\/p>\n<h3>4.15.2<\/span>Terms and Conditions<\/span><\/h3>\n1. The tender process would be the same as in the case of a normal LTE<\/em> Described above. However, the tender documents are more detailed, as in the case of OTE<\/em>.<\/p>\n2. The indentor's certificate: The indentor should certify that there is an existing or prospective urgency for operational or technical requirements, and that any additional expenditure involved by not procuring through an advertised tender enquiry is justified in view of urgency. The indentor should also put on record the nature of the urgency and reasons why the procurement could not be anticipated.<\/p>\n3. Currency: In domestic tenders, any bid in foreign currency should be summarily rejected.<\/p>\n4. The security Rule \u2014 the opposite of LTE: Unlike LTE, bid Security and Performance Security are taken in SLTE, as in OTE tenders<\/em>.<\/p>\n<h3>4.15.3<\/span>SLTE \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>Risks as applicable in both LTE and OTE<\/em> Are also applicable here. In addition, there is a risk that this mode May be used unjustifiably to avoid open tendering (OTE)<\/em>.<\/td><td>All mitigation strategies of LTE and OTE shall also apply here. In addition, the checks and balances systems should be tighter<\/em> By way of enhanced and severely restricted delegation of powers for certification of urgency and approval of this mode of procurement<\/em>. A system of reports from the authority signing the urgency certificate<\/em>, AND post facto review of utilisation of received goods\/ works\/ services to tackle the expressed urgency<\/em>, May be laid down.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.16<\/span>Proprietary Article Certificate (PAC) Procurement<\/span><\/h2>\n(Rule 166(i) and (iii) of GFR 2017)<\/em><\/p>\n<aside class=\"note\">PAC exists in the goods, consultancy and non-consultancy Manuals \u2014 but is entirely absent from the works Manual<\/em>, whose nomination family contains only STE or selection by nomination<\/em>.<\/p><\/aside>\n<h3>4.16.1<\/span>When PAC May Be Certified<\/span><\/h3>\nIn the procurement of goods, certain items are procured only from original equipment manufacturers (OEMs) or manufacturers having proprietary rights (or their authorised dealers\/ stockists) against a PAC certificate<\/em>. (Format at Annexure 9 of the Goods Manual.)<\/em><\/p>\nthis mode May be the shortest<\/em>, but since it May provide lesser VfM than LTE\/ OTE<\/em> AND strains the transparency principle<\/em>, it should be used only in justifiable situations.<\/p>\nSuch situations may arise on the following three grounds where a PAC can be certified:<\/p>\n1. Sole manufacturer: It is in the user department's knowledge that only a particular firm is the manufacturer<\/em> Of the required goods.<\/p>\n2. Standardisation and warranty: For standardisation of machinery or components or spare parts to be compatible with the existing sets of machinery\/ equipment<\/em> (On the advice of a competent technical expert), or if it is a condition of the manufacturer's warranty that only OEM spares are to be used during the warranty period<\/em> \u2014 the required goods are to be purchased only from a selected firm duly approved by the Competent Authority.<\/p>\n3. Research continuity: In case of advanced educational, research, development and scientific institutes\/ organisations of national importance<\/em>, specialised equipment and their spares\/ consumables May have to be procured from the same original vendor<\/em> \u2014 on the advice of a competent technical expert and approved by the project in-charge \u2014 to maintain consistency\/ reproducibility\/ continuity of established\/ standardised methods\/ protocols to attain objectives of such projects<\/em>.<\/p>\n<h3>4.16.2<\/span>Terms and Conditions<\/span><\/h3>\n1. The certificate and its effect on powers: Users should enclose, with their indent, a PAC certificate signed by the appropriate authority as per DFPR\/ SoPP, with the concurrence of associated finance<\/em>, for sourcing an item from OEM or PAC firms or their authorised agents.<\/p>\nOnce a PAC is thus signed, the powers of procurement are the same as in normal conditions<\/em> As per the delegation of powers.<\/p>\n<aside class=\"note\">(Contrast STE<\/strong> at para 4.17.2-1 below, where powers are more restricted<\/strong>.)<\/em><\/p><\/aside>\n2. Proprietary items shall be purchased only from a nominated manufacturer, or its authorised dealer as recorded in the PAC certificate<\/em>.<\/p>\n3. In certain unavoidable cases, the procuring authority May have no alternative but to waive payment of EMD\/ SD<\/em> for procurement on a proprietary basis.<\/p>\n<h3>4.16.3<\/span>PAC \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. There is a risk that this mode May get used unjustifiably to restrict competition<\/em>. Such risks get aggravated in case of secrecy about such procedures<\/em>, as alternative vendors\/ contractors may not even come to know about such opportunities.<\/td><td>The delegation of powers should be restricted for signing the PAC<\/em>. Even in PAC procurements, the NIT and the award of contract should be put on gem-cppp and Procuring Entity websites<\/em>.<\/td><\/tr><tr><td>2. Once approved, there is a risk of a nexus getting developed<\/em>, and the mode May continue to be used for many years without fresh application of mind<\/em>.<\/td><td>No item should be procured on a PAC basis for more than three years<\/em>, after which a mandatory OTE mode May be used to test the market<\/em>. The procuring entity may also keep an eye on the GeM portal for other vendors<\/em> Who can supply such items.<\/td><\/tr><tr><td>3. The bidder May charge a price higher than the market<\/em>.<\/td><td>To the extent feasible, the PAC firm should be asked to accept a \"Fall clause\"<\/em> \u2014 undertaking that if it supplies or quotes a lower rate to other governments, the public sector, or private organisations, it shall reimburse the excess<\/em>. If the price offered is not acceptable, negotiation May be held with the PAC firm<\/em>.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.17<\/span>Single Tender Enquiry (STE) \/ Selection by Nomination<\/span><\/h2>\n(Rule 166 of GFR 2017 \u00b7 NC<\/span> cites Rule 204)<\/em><\/p>\n<h3>4.17.1<\/span>What STE Is and When It May Be Used<\/span><\/h3>\nG<\/span> A tender invitation to one firm only without a PAC certificate<\/em> is called a single tender.<\/p>\nW<\/span> The selection by direct negotiation\/ nomination<\/em> is called a single tender.<\/p>\nThis mode May be the shortest, but since it May provide lesser VfM as compared to LTE\/ OTE<\/em> And May also strain the transparency principle<\/em>, it should be resorted to only under the following conditions:<\/p>\n<h4>G<\/span> GOODS \u2014 ONE ground only (where a PAC cannot be certified)<\/em><\/span><\/h4>\n1. In the case of an existing or prospective emergency relating to operational or technical requirements to be certified by the indentor<\/em>, the required goods are necessary to be purchased from a particular source \u2014 subject to the reason for such decision being recorded and approval of the Competent Authority obtained<\/em>.<\/p>\n<h4>W<\/span> WORKS \u2014 SIX grounds<\/span><\/h4>\n1. Unforeseeable urgency: There is an urgent need for the work<\/em>, and engaging in a competitive tendering process would therefore be impractical<\/em> \u2014 provided that the circumstances giving rise to the urgency were neither foreseeable by the Procuring Entity nor the result of dilatory conduct on its part<\/em>.<\/p>\n2. Natural continuation \u2014 and the 25% cap: Works that represent a natural continuation of previous work carried out by the firm<\/em>, when \u2014 considering the limited size of the additional work in relation to the original procurement<\/em> And the reasonableness of the price<\/em> \u2014 it will be cost-effective to resort to single-source procurement.<\/p>\n<aside class=\"note\">However, the incremental work should not be more than 25 (twenty-five) per cent of the original contract value<\/em>.<\/p><\/aside>\n3. Emergency\/ disaster: In case of an emergency situation, situations arising after natural disasters, situations where timely completion of the work is of utmost importance<\/em> \u2014 subject to the reason for such decision being recorded and approval of the Competent Authority obtained.<\/p>\n4. Proprietary techniques\/ sole expertise: Situations where execution of the work May involve use of proprietary techniques<\/em>, OR only one contractor has the requisite expertise<\/em>.<\/p>\n5. National defence\/ security: The procurement entity engages in procurement involving national defence or national security<\/em> And determines that single-source procurement is the most appropriate method of procurement.<\/p>\n6. Overall interest: Under some special circumstances, it May become necessary to select a particular agency where adequate justification is available for such single-source selection in the context of the overall interest of the Ministry or Department<\/em>.<\/p>\n<h3>4.17.2<\/span>Terms and Conditions<\/span><\/h3>\n1. The restricted-powers Rule: The reasons for an STE AND<\/em> The selection of a particular firm must be recorded and approved by the ca<\/em> As per the delegation of powers laid down in DFPR\/ SoPP \u2014 prior to single tendering<\/em>. Unlike in PAC, the powers of procurement of STE are more restricted<\/em>.<\/p>\n2. G<\/span><\/strong>other terms and conditions of PAC procurement mentioned above would also apply in this case.<\/p>\n2. W<\/span> \u2014 Fairness and no-splitting: The Procuring Entity shall ensure fairness and equity<\/em> And shall have a procedure in place to ensure that:<\/p>\n<ul class=\"lst\"><li>The prices are reasonable and consistent with market rates<\/em> for work of a similar nature; And<\/li><li>the required work is not split into smaller-sized procurements<\/em>.<\/li><\/ul>\n3. The mandatory quarterly reporting of nomination awards W<\/span>C<\/span>NC<\/span>:<\/p>\nIn case of single tender procurements:<\/p>\nA) a report relating to such awards on a nomination basis shall be submitted every quarter<\/em> TO:<\/p>\n<ul class=\"lst\"><li>i) THE SECRETARY, in case of Ministries\/ Departments;<\/li><li>ii) the board of directors or equivalent managing body, in case of Public Sector Undertakings, Public Sector Banks, Insurance companies, etc.;<\/li><li>iii) the chief executive of the organisation where such a managing body is not in existence.<\/li><\/ul>\nb) THE audit committee or similar unit<\/em> In the organisation May be required to check at least 10% of such cases<\/em>.<\/p>\n<aside class=\"note\">Note:<\/strong> This reporting requirement appears in the Works, Consultancy and Non-Consultancy<\/strong> Manuals in the Modes\/ SSS sections. The Goods Manual carries it in the context of nomination-basis awards generally.<\/p><\/aside>\n<h3>4.17.3<\/span>STE \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>G<\/span><\/td><td>THE same but more heightened risks than PAC<\/em> Are present in this mode. The selection of a single vendor May be non-transparent and unjustified<\/em>.<\/td><td>The same mitigation strategies as in the case of PAC should apply. Procurements on an STE basis should be made from reputed firms after determining the reasonableness of rates<\/em>. The procurement powers for STE should be severely restricted<\/em>.<\/td><\/tr><tr><td>W<\/span><\/td><td>risks as applicable in both LTE and OTE are also applicable here. In addition, there is a risk that this mode May be used unjustifiably to avoid open tendering (OTE)<\/em>, thereby making the selection of the contractor non-transparent and unjustified<\/em>.<\/td><td>All mitigation strategies of LTE and OTE would apply here also. In addition, the systems of checks and balances should be tighter by way of enhanced and severely restricted delegation of powers in this regard for certification of urgency<\/em> And approval of this mode. A system of reports from the authority signing the urgency certificate, and post facto review of utilisation of executed works and receipt of incidental goods\/ services<\/em> To tackle the expressed urgency, May be laid down. Audit should take up the bulk of such cases<\/em> for review to judge the genuineness of urgency certification<\/em>.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.18<\/span>Direct Procurement without Quotation<\/span><\/h2>\n(Rule 154 of GFR 2017)<\/em><\/p>\n<h3>4.18.1<\/span>What It Is and When It May Be Used<\/span><\/h3>\ndirect procurement of goods without formal quotations is normally done for the smallest value procurements<\/em>. This is also called petty purchase<\/em>.<\/p>\nIt should be used for off-the-shelf goods with simple and standard specifications<\/em>, and when the required goods (of required specification or within the required delivery period, etc.) are not available on GeM<\/em>.<\/p>\nHowever, for procurement outside GeM, it is mandatory<\/em> for a buyer to generate a \"GeM availability report and past transaction summary\" (gemar&pts) with a unique id on the GeM portal using his login credentials.<\/p>\nThe procedure is the simplest and quickest<\/em>, BUT VfM May be poor<\/em>; Hence, it is suitable only for low-value, urgent and simple requirements<\/em> In the following three situations:<\/p>\n1. The value threshold and the scientific-ministry enhancement:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Limit per case\/ occasion<\/th><\/tr><\/thead><tbody><tr><td>General<\/td><td>Rs. 50,000 (Rupees Fifty Thousand) for each requirement\/ case<\/td><\/tr><tr><td>scientific ministries\/ departments \u2014 for scientific equipment and computers<\/td><td>ENHANCED to Rs. 1,00,000\/- (Rupees One Lakh) on each occasion (OM No. F.20\/42\/2021-PPD dated 20.05.2024)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">which ministries\/ departments count as \"scientific\" for this purpose:<\/p>\n(i) Department of Science and Technology \u00b7 Department of Biotechnology \u00b7 Department of Scientific & Industrial Research \u00b7 Department of Atomic Energy \u00b7 Department of Space \u00b7 Ministry of Earth Sciences \u00b7 Defence Research & Development Organisation \u00b7 Indian Council of Agricultural Research (ICAR), including its affiliated institutions and Universities \u00b7 Department of Health Research (DHR), including Indian Council of Medical Research (including all Autonomous Bodies under these Ministries\/ Departments)<\/em><\/p>\n(ii) Educational and Research Institutes conducting post-graduate\/ doctoral level courses or research, under any Ministry\/ Department.<\/p>\n(iii) it is also clarified that gfrs are not applicable to the projects executed by state-level institutions or by private universities\/ institutions\/ organisations \u2014 even if they are funded by the ministries\/ departments\/ organisations mentioned above<\/em>.<\/p>\n(iv) in such cases, it is for the Ministry\/ Department\/ organisation to put in appropriate financial controls<\/em> To achieve the intended purpose.<\/p><\/aside>\n2. The requirement is urgent but was not covered in the procurement plan<\/em>.<\/p>\n3. The requirement is for off-the-shelf goods of simple and standard specifications<\/em>. Examples of procurement are the day-to-day needs of the office and field units, and so on.<\/em><\/p>\n<h3>4.18.2<\/span>Terms and Conditions<\/span><\/h3>\n1. Who does it and the certificate: The competent officer of the Procuring Entity can initiate and complete this purchase after diligent enquiries from the market<\/em> And filling out the certificate prescribed (G<\/span> Annexure 10 \u00b7 C<\/span> Annexure 13 \u00b7 NC<\/span> Annexure 7)<\/em>.<\/p>\nSuch powers, to a limited extent, can also be given to various user sections for operational needs<\/em>.<\/p>\n2. The imprest system: Normally, an imprest amount (with facilities for cheque payments) sufficient for two months' estimated procurements<\/em> Can be sanctioned, so that officers can handle such procurements. The imprest amount can be recouped on a monthly basis by submission of expense vouchers<\/em>.<\/p>\n3. Records: IN A summary form<\/em>, records should be kept of the vendors\/ contractors approached and the prices they indicate<\/em>.<\/p>\n4. The essence of the mode: Selection of sellers by diligent market enquiry<\/em> is of the essence of this mode of procurement.<\/p>\n5. Where to survey: In larger cities, reputed shopping malls<\/em> May also be included in the market survey. Reputed internet shopping portals<\/em> May also be explored.<\/p>\n<h3>4.18.3<\/span>Direct Procurement without Quotations \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. The main risk is the splitting of demand to avoid higher approvals or higher modes of procurement<\/em>.<\/td><td>Supervisors should carry out periodic reviews<\/em> Of such procurements to ensure that the demand is not split into small quantities for the sole purpose of avoiding the necessity of getting approval from the higher authority, or for avoiding LTE or OTE mode. AN annual review<\/em> Of such procurements shall be carried out to ensure that future anticipated requirements are clubbed and procured through LTE\/ OTE\/ rc<\/em>. To keep better control, an annual ceiling May be fixed for each office<\/em> for such a mode of procurement \u2014 say, rupees five lakh for each office per year<\/em>. Each office should maintain records to monitor such limits.<\/td><\/tr><tr><td>2. Over a period, intentionally or otherwise, the due diligence of enquiries from the market May degenerate into a mechanical obtaining of quotations<\/em>, leading to the development of nexus and crony suppliers<\/em>. Vendor selection May be manipulated with fake supporting vouchers<\/em>. Since such small-value materials do not undergo accounting and inventory control<\/em>, there is a risk of the development of a nexus, leakages, and fake procurements and payments<\/em>. The same set of vendors May get patronised repeatedly for a wide variety of requirements. Since only cursory visual inspections<\/em> Are done, quality May be at risk.<\/td><td>Supervisors should cross-check a percentage of cases in the market<\/em> for prices, fake vouchers, and so on. Supervisors should also check that the same vendor(s) is not being patronised repeatedly<\/em>. for the sake of transparency, payments should be made by cheque or through electronic clearance service<\/em> \u2014 except that cash payment May be allowed up to Rs. 5,000 (rupees five thousand)<\/em>. Staff involved with such procurements should not continue in the same role for long and should be rotated frequently<\/em>.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.19<\/span>Direct Procurement by Purchase Committee<\/span><\/h2>\n(Rule 155 of GFR 2017)<\/em><\/p>\n<h3>4.19.1<\/span>What It Is and When It May Be Used<\/span><\/h3>\nthis mode of procurement is made by a local Purchase Committee consisting of three members of an appropriate level, constituted by hod<\/em>.<\/p>\nThis procedure is slightly more complex<\/em> And is likely to provide BETTER VfM<\/em> Than direct procurement without quotation; Hence, it is suitable for marginally higher thresholds<\/em>.<\/p>\nIt is used in the following conditions:<\/p>\n1. The value band and the scientific-ministry enhancement:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Limit per occasion<\/th><\/tr><\/thead><tbody><tr><td>General<\/td><td>Above Rs. 50,000\/- and up to rs. 5,00,000\/- (Rupees Five Lakh) only, on each occasion<\/td><\/tr><tr><td>scientific ministries\/ departments<\/td><td>ENHANCED to Rs. Ten LAKH (above Rs. 1 lakh, as in para 4.18.1-1 above) on each occasion (same OM and same list of qualifying Ministries as at para 4.18.1)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n2. GeM condition: Only in case when a certain item is not available on the GeM portal<\/em> (of required specification or within the required delivery period, etc.). However, for procurement outside geM, it is mandatory for a buyer to generate a GeMAR&PTS<\/em> With a unique id on the GeM portal.<\/p>\n3. Extension to small works and services: This mode of procurement is described in the parlance of procurement of goods; However, in principle, it is equally applicable to contingency expenditure on small works\/ services<\/em>.<\/p>\n<h3>4.19.2<\/span>Terms and Conditions<\/span><\/h3>\n1. The controlling Ministry May lay down an annual ceiling value per office\/ unit<\/em> for such procurements.<\/p>\n2. In case of emergency procurement<\/em>, the facility for withdrawing the requisite advance cash amount and its subsequent account<\/em> May also be considered.<\/p>\n3. This is intended to be a fast-track, simple mode<\/em> Of procurement. The committee will survey the market<\/em> To ascertain the reasonableness of rate, quality and specifications<\/em> And identify the appropriate supplier.<\/p>\n4. The essence \u2014 market survey, NOT<\/em> A mini-lte: The selection of suitable products and suppliers by actual market survey (not by calling tenders like a mini-lte)<\/em> is the essence of this mode.<\/p>\nTherefore, there is no question of obtaining quotations by email or otherwise<\/em>.<\/p>\nThe committee shall survey the market to ascertain the reasonableness of rate, quality and specifications and identify the appropriate supplier. The survey May include online internet shopping portals<\/em>, besides physical local market surveys.<\/p>\nFor organisations in smaller towns\/ hinterlands, surveys in nearby bigger cities\/ metros May also be included<\/em> As part of the survey, depending on the ease of logistics.<\/p>\n5. The certificate:<\/strong>Before recommending the placement of the purchase order, members of the committee will jointly record the certificate prescribed<\/strong><\/em>(G<\/span> Annexure 11 \u00b7 C<\/span> Annexure 14 \u00b7 NC<\/span> Annexure 8)<\/em>.<\/p>\n6. The committee shall survey the market to ascertain the reasonableness of rate, quality, and specifications; Identify the appropriate supplier; And jointly record a certificate before placing the purchase order<\/em>.<\/p>\n<h3>4.19.3<\/span>Direct Procurement by Purchase Committee \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>Risks are the same as in the case of direct procurement without quotation mentioned above \u2014 with mitigation due to the involvement of three members<\/em>. Over a period, intentionally or otherwise, the due diligence of enquiries from the market May degenerate into a system of floating and obtaining limited tenders<\/em> \u2014 leading to delays and the development of nexus and crony suppliers<\/em>.<\/td><td>Mitigation strategies are also the same as in direct procurement without quotation.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.20<\/span>Award of Work through Quotations [W ONLY]<\/span><\/h2>\n<aside class=\"note\">This mode exists only in the works Manual<\/em>. It is the Works analogue of the Goods \"Shopping Modes\", but it is structured differently \u2014 it uses quotations from at least three contractors<\/em>, whereas the Goods Purchase Committee mode expressly forbids obtaining quotations.<\/p><\/aside>\n1. The threshold and the permitted works: Use of quotations up to Rs. Five lakh in each instance<\/em> Shall be adopted for procurement of minor civil works<\/em> LIKE:<\/p>\n<aside class=\"note\">Construction of boundary walls \u00b7 installation of safety barriers or guardrails \u00b7 repairing\/ maintenance\/ plumbing works, etc.<\/p><\/aside>\n \u2014 for which there is an established market<\/em>.<\/p>\nProcuring Entity shall not divide its procurement into separate contracts to bring the amount less than the amount set forth for such purpose<\/em>.<\/p>\n2. The minimum of three: Procuring Entity shall request quotations from as many contractors as practicable, but positively from at least three contractors<\/em>.<\/p>\nEach contractor from whom a quotation is requested shall be informed whether any elements other than the charges for the works to be executed \u2014 such as transportation and insurance charges, duties and taxes \u2014 are to be included in the price<\/em>.<\/p>\n3. One quotation only, no revision: Each contractor is permitted to give only one price quotation<\/em> AND IS not permitted to change its quotation<\/em>.<\/p>\n4. Emergent cases only: Award of work through quotations shall be resorted to only in emergent cases<\/em>, AND suitable reasons shall be recorded<\/em>.<\/p>\n<h2>4.21<\/span>Award of Works in Stalled Contracts [W ONLY]<\/span><\/h2>\n<aside class=\"note\">This provision exists only in the works Manual<\/em> And has no counterpart in any other category.<\/p><\/aside>\n1. The problem: Where a contractor abandons or stops the work mid-way<\/em> \u2014 either due to insolvency or a dispute or other reason<\/em> \u2014 engagement of the new contractor takes considerable time<\/em>, and in the meanwhile:<\/p>\n<ul class=\"lst\"><li>Public money is locked up in assets which cannot be utilised<\/em>,<\/li><li>apart from inconvenience and loss of amenities to the general public<\/em> Due to such half-completed works.<\/li><\/ul>\n2. The solution \u2014 and its two conditions: Notwithstanding anything in the GFR or the Manual, procuring entities should devise methods (including limited\/ single tenders) to deal with part-completed contracts<\/em>, wherever the work is abandoned by the contractor mid-way.<\/p>\nHowever, for issuance of limited\/ single tenders in such cases:<\/p>\n<ul class=\"lst\"><li>Condition 1 \u2014 the 20% billing test: At least 20% of work should have been billed<\/em> By the contractor who has abandoned the work.<\/li><li>Condition 2 \u2014 elevated approval: Procurement approval of such limited\/ single tender should be at the next higher level<\/em>, or such level as May be prescribed.<\/li><\/ul>\n<h2>4.22<\/span>Mode Selection by Value \u2014 Non-Consultancy Services [NC ONLY]<\/span><\/h2>\n<aside class=\"note\">The Non-Consultancy Manual alone adds three paragraphs mapping the modes onto value bands.<\/p><\/aside>\n<h3>4.22.1<\/span>Higher Value Non-consultancy Services<\/span><\/h3>\n(Rule 201(ii) of GFR, 2017)<\/em><\/p>\nin procurements of non-consultancy services above Rs. 50 (rupees fifty) lakh<\/em>, it should normally be by an advertised mode (i.e., OTE)<\/em>.<\/p>\nServices which are available on GeM have to be mandatorily procured through that portal<\/em>.<\/p>\n<h3>4.22.2<\/span>Lower Value Non-consultancy Services<\/span><\/h3>\n(Rules 199 and 201(i) of GFR 2017)<\/em><\/p>\nfor procurement below Rs. 50 (rupees fifty) lakh<\/em>, LTE can be issued to a selected shortlist of likely service providers<\/em>.<\/p>\nThe three-step shortlisting procedure:<\/p>\n1. The long list: To start with, preparation of a long list of potential service providers<\/em> May be done on the basis of formal or informal enquiries<\/em> FROM:<\/p>\n<aside class=\"note\">Other ministries or departments or organisations involved in similar activities \u00b7 chambers of commerce & industry \u00b7 association of non-consultancy firms, etc.<\/p><\/aside>\n2. The moderated long list: The Procuring Entity should scrutinise the preliminary long list<\/em> Of likely service providers as identified above, and shortlist the prima facie eligible and capable service providers<\/em> From the long list.<\/p>\nThe number of service providers in this moderated long-list should be more than three<\/em>.<\/p>\n3. The standing panel: To smoothen this shortlisting of service providers, procuring entities who do frequent procurement<\/em> OF non-consultancy services May consider the preparation of a panel of qualified service providers, after evaluation of their credentials \u2014 on the lines of registration of vendors in the procurement of goods<\/em>.<\/p>\nServices that are available on GeM have to be mandatorily procured through that portal.<\/p>\n<h3>4.22.3<\/span>Small Value Non-consultancy Services<\/span><\/h3>\nThe rationale: In small-value procurement of non-consultancy services, the service provider May neither be capable of handling the bidding process<\/em>, nor May procurement be done by shopping mode of procurement.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Value<\/th><th>Mode to be used<\/th><\/tr><\/thead><tbody><tr><td>UP TO Rs. 50,000 (Fifty thousand)<\/td><td>THE 'Direct procurement without quotation'<\/em> Mode of procurement used in procurement of goods May very well be utilised in such cases (certificate at Annexure 7)<\/em><\/td><\/tr><tr><td>UP TO Rs. 5 (Rupees Five) LAKH<\/td><td>THE 'Direct procurement by a Purchase Committee'<\/em> Mode, as used in procurement of goods, May be utilised (certificate at Annexure 8)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nin all such modes of procurement, the procedure prescribed in the Manual for procurement of goods, 2024, May be followed<\/em>.<\/p>\n<h1>Appendix to Chapter 4 \u2014 Part B: Points of Difference<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>SLTE threshold<\/td><td>G\/C\/NC: above Rs. 50 LAKH \u00b7 W: above Rs. 10 LAKH<\/td><\/tr><tr><td>2<\/td><td>OTE threshold<\/td><td>G\/C\/NC: above Rs. 50 lakh \u00b7 W: above Rs. 10 lakh<\/td><\/tr><tr><td>3<\/td><td>LTE default band<\/td><td>G: Rs. 5 lakh to Rs. 50 lakh \u00b7 W: up to Rs. 10 lakh \u00b7 C\/NC: up to Rs. 50 lakh<\/td><\/tr><tr><td>4<\/td><td>Rule cited for LTE\/ SLTE threshold<\/td><td>G\/C\/NC: Rule 162 \u00b7 W: Rule 139(v) AND Rule 162<\/td><\/tr><tr><td>5<\/td><td>Additional non-monetary grounds for LTE (high complexity\/ specialised nature; works of a SECRET nature)<\/td><td>W ONLY<\/td><\/tr><tr><td>6<\/td><td>LTE panel drawn also from OTHER Public Works Organisations\/ Works PSUs<\/td><td>W ONLY<\/td><\/tr><tr><td>7<\/td><td>proprietary Article Certificate (PAC) as a mode<\/td><td>g, c, nc \u2014 absent from works entirely<\/td><\/tr><tr><td>8<\/td><td>STE grounds<\/td><td>G: One ground (emergency, indentor-certified)<\/strong> \u00b7 W: Six grounds<\/strong> including national defence\/ security and natural continuation<\/td><\/tr><tr><td>9<\/td><td>25% cap on incremental work under \"natural continuation\" STE<\/td><td>W ONLY<\/td><\/tr><tr><td>10<\/td><td>Rule cited for Nomination modes<\/td><td>G\/W\/C: Rule 166 \u00b7 NC: Rule 204, with an added requirement of consultation with the Financial Adviser and detailed justification forming an integral part of the proposal<\/td><\/tr><tr><td>11<\/td><td>Award of work through quotations (up to Rs. 5 lakh, at least 3 contractors, one quotation each, emergent cases only)<\/td><td>W ONLY<\/td><\/tr><tr><td>12<\/td><td>Award of works in stalled contracts (20% billing test; next-higher-level approval)<\/td><td>W ONLY<\/td><\/tr><tr><td>13<\/td><td>Direct Procurement without Quotation \/ by Purchase Committee<\/td><td>G (full text), C, NC \u2014 not in Works<\/td><\/tr><tr><td>14<\/td><td>Scientific Ministries enhancement (Rs. 1 lakh \/ Rs. 10 lakh) with the four-part qualifying list<\/td><td>G ONLY<\/td><\/tr><tr><td>15<\/td><td>RATE CONTRACT full text \u2014 items amenable, merits, fall clause, parallel RCs, DDO, renewal<\/td><td>G ONLY<\/strong> (W\/C\/NC list \"Framework Agreements\/ Rate Contracts\" as a separate sixth family and cross-refer)<\/td><\/tr><tr><td>16<\/td><td>Rate Contract listed under ADVERTISED modes vs as a SEPARATE FAMILY<\/td><td>G: under Advertised \u00b7 W\/C\/NC: separate family (f)<\/td><\/tr><tr><td>17<\/td><td>Approved Vendor List full text \u2014 Developmental vs Approved Vendors, 20:80 split, 3-year rotation rule, fresh PQB every three years<\/td><td>G ONLY<\/strong> (W\/C\/NC cross-refer to Goods para 4.7)<\/td><\/tr><tr><td>18<\/td><td>eRA \u2014 placement<\/td><td>g: A mode (4.5) \u00b7 w: A channel (3.5.2) \u00b7 nc: Both (4.4-3-a-iii and 4.6.2) \u00b7 c: Absent entirely<\/td><\/tr><tr><td>19<\/td><td>eRA expressly stated as inappropriate where QCBS is used in NC services<\/td><td>nc only<\/strong> (the general eRA text in G also excludes QCBS and FBS)<\/td><\/tr><tr><td>20<\/td><td>GTE viability ground (d)<\/td><td>G: absence of sufficient competent domestic bidders AND *suspected cartel formation \u00b7 W: requirement cannot be executed by indigenous contractors *at reasonable rates<\/strong><\/td><\/tr><tr><td>21<\/td><td>GTE Terms \u2014 Currency of Bidding, Agency Commission (5%), Delivery Terms\/ Incoterms, Insurance (Rs. 5 crore threshold, Open Cover), IGST break-up<\/td><td>G ONLY<\/td><\/tr><tr><td>22<\/td><td>The eight GTE exemptions (research equipment, ICT items, nomination-basis spares\/AMC, pre-15.05.2020 commitments, 354 medical devices + 120 drugs to 31.03.2027, MDB\/BFA projects, semiconductor to 31.03.2025, procurement abroad for use abroad)<\/td><td>G ONLY<\/td><\/tr><tr><td>23<\/td><td>The seven conditions + six guidelines + three certificates for research-institution GTE<\/td><td>G ONLY<\/td><\/tr><tr><td>24<\/td><td>Advertisement portals in OTE\/ LTE<\/td><td>G: GeM AND<\/em> GeM-CPPP \u00b7 W: GeM-CPPP only<\/td><\/tr><tr><td>25<\/td><td>Requirement that successful un-enlisted bidders get enlisted before contract placement<\/td><td>W ONLY<\/td><\/tr><tr><td>26<\/td><td>PQB\/ Single-Stage Pre-qualification full text \u2014 PQC two-sided test, 3\/4-week and 10-day notice, single-use shortlist, six-month gap<\/td><td>G ONLY<\/td><\/tr><tr><td>27<\/td><td>Mode selection by value bands for NC Services (above Rs 50 lakh \u2192 OTE; below \u2192 LTE with 3-step shortlisting; small value \u2192 Goods shopping modes)<\/td><td>nc only<\/td><\/tr><tr><td>28<\/td><td>\"More than three\" in the moderated long-list of NC service providers<\/td><td>nc only<\/td><\/tr><tr><td>29<\/td><td>Quarterly reporting of nomination awards + audit committee to check at least 10% of cases<\/td><td>W, C, NC<\/strong> state it in the modes\/ SSS sections<\/td><\/tr><tr><td>30<\/td><td>Common footnote: thresholds revised upwards vide PPD's OM No. F.1\/3\/2014-PPD dated 10.07.2024<\/td><td>all four<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 4 \u2014 part b (and of Chapter 4)<\/p>\n<aside class=\"note\">Next:<\/strong>Chapter 5 \u2014 bid invitation process<\/strong>(Goods Ch. 5 \u00b7 Works Ch. 4<\/strong> \u00b7 Consultancy Ch. 5 \u00b7 Non-Consultancy Ch. 5)<\/em> \u2014 one of only two chapters whose title is word-for-word identical in all four Manuals<\/strong>. Note that Works again runs one chapter number behind, and that Consultancy alone splits the tender document into REoI<\/strong> and RfP<\/strong> as separate sections.<\/p><\/aside><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch5\">Chapter 5<\/p><h1>Bid Invitation Process<\/h1><\/header>\nMerging: Goods Ch. 5 \u00b7 Works Ch. 4 \u00b7 Consultancy Ch. 5 \u00b7 Non-Consultancy Ch. 5<\/em><\/p><h2>Structural Notes for Students<\/span><\/h2>\n1. This is one of only two chapters whose title is word-for-word identical in all four Manuals (the other being Chapter 6, Forms of Securities\u2026)<\/em>. BUT the Works Manual numbers it CHAPTER 4, not Chapter 5.<\/p>\n2. Four common anchors run through all four Manuals, in the same order:<\/p>\n<aside class=\"note\">Preparation\/ Floating of Tender Documents \u2192 Obtaining Tender Documents and Submitting Bids \u2192 Opening of Bids \u2192 Transparency and Protecting Third-Party Rights of Bidders \u2192 Risks and Mitigations<\/p><\/aside>\n3. But the four Manuals organise the material very differently:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>Number of sections<\/th><th>Distinctive feature<\/th><\/tr><\/thead><tbody><tr><td>G<\/span> Goods<\/td><td>5<\/td><td>The base text; leanest treatment<\/td><\/tr><tr><td>W<\/span> Works<\/td><td>15<\/strong>the most granular<\/em><\/td><td>Promotes each sub-topic to a full section; adds fixed NIT\/ opening days, accessibility standards, entry window for sub-contractors<\/td><\/tr><tr><td>C<\/span> Consultancy<\/td><td>8<\/td><td>ALONE splits the tender document into two separate documents \u2014 REoI (5.2) and RfP (5.3)<\/td><\/tr><tr><td>NC<\/span> Non-Consultancy<\/td><td>5<\/td><td>Places the entire document-composition detail inside<\/em> 5.1 as sub-paras 5.1.3 to 5.1.12; adds Performance Standards\/ Method Statement<\/strong> and minimum-wage restrictions<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>Concordance for Chapter 5<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>Goods<\/th><th>Works<\/th><th>CS<\/th><th>NCS<\/th><\/tr><\/thead><tbody><tr><td>5.1<\/td><td>Model Tender Documents<\/td><td>5.1.1<\/td><td>(in 4.2)<\/em><\/td><td>5.1.1<\/td><td>5.1.1<\/td><\/tr><tr><td>5.2<\/td><td>Tender Documents \u2014 the fundamental document<\/td><td>5.1.2<\/td><td>4.1<\/td><td>5.1.2<\/td><td>5.1.2<\/td><\/tr><tr><td>5.3<\/td><td>Contents\/ Sections of Tender Documents<\/td><td>5.1.3<\/td><td>4.2<\/td><td>(see 5.4, 5.5)<\/em><\/td><td>5.1.3<\/td><\/tr><tr><td>5.3.1<\/td><td>Notice Inviting Tender (NIT)<\/td><td>5.1.3-2<\/td><td>4.2.1<\/td><td>(RFPL \u2014 5.3.2-2)<\/em><\/td><td>5.1.4<\/td><\/tr><tr><td>5.3.2<\/td><td>Instructions to Bidders (ITB) and AITB<\/td><td>5.1.3-3<\/td><td>4.2.2<\/td><td>(ITC \u2014 5.3.2-3)<\/em><\/td><td>5.1.5<\/td><\/tr><tr><td>5.3.3<\/td><td>General and Special Conditions of Contract<\/td><td>5.1.3-4<\/td><td>4.2.3<\/td><td>5.3.2-4<\/td><td>5.1.6<\/td><\/tr><tr><td>5.3.4<\/td><td>Schedule of Requirements<\/td><td>5.1.3-5<\/td><td>4.2.4<\/td><td>(ToR)<\/em><\/td><td>5.1.7<\/td><\/tr><tr><td>5.3.5<\/td><td>Technical Specifications\/ Drawings\/ QA<\/td><td>5.1.3-6<\/td><td>4.2.5<\/td><td> \u2014 <\/td><td>5.1.8<\/td><\/tr><tr><td>5.3.6<\/td><td>Qualification Criteria<\/td><td>5.1.3-7<\/td><td>4.2.6<\/td><td>5.2.2-6<\/td><td>5.1.9<\/td><\/tr><tr><td>5.3.7<\/td><td>Evaluation Criteria<\/td><td>5.1.2-6<\/td><td>4.2.7<\/td><td>5.3.2-6<\/td><td>(within 5.1.12)<\/em><\/td><\/tr><tr><td>5.3.8<\/td><td>Submission Forms and Formats<\/td><td>5.1.3-8<\/td><td>4.2.8<\/td><td>5.3.3<\/td><td>5.1.11<\/td><\/tr><tr><td>5.3.9<\/td><td>Financial Bid (BOQ Excel Sheet)<\/td><td>5.1.3-8-b<\/td><td>4.2.9<\/td><td>5.3.3-2<\/td><td>5.1.10<\/td><\/tr><tr><td>5.4<\/td><td>REoI Document<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>5.2<\/td><td> \u2014 <\/td><\/tr><tr><td>5.5<\/td><td>RfP Document<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>5.3<\/td><td> \u2014 <\/td><\/tr><tr><td>5.6<\/td><td>Mandatory e-Publishing<\/td><td>5.1.4<\/td><td>4.3<\/td><td>5.4<\/td><td>5.1.13<\/td><\/tr><tr><td>5.7<\/td><td>Amendment of Tender Documents<\/td><td>5.1.5<\/td><td>4.4<\/td><td>5.4.2<\/td><td>5.1.14<\/td><\/tr><tr><td>5.8<\/td><td>Extension of Deadline of Bid Submission<\/td><td>5.1.6<\/td><td>4.5<\/td><td>5.4.3<\/td><td>5.1.15<\/td><\/tr><tr><td>5.9<\/td><td>Availability and Cost of Tender Documents<\/td><td>5.2.1<\/td><td>4.6.1<\/td><td>5.5.1<\/td><td>5.2.1<\/td><\/tr><tr><td>5.10<\/td><td>Participation of Bidders \u2014 Eligibility<\/td><td>5.2.2<\/td><td>4.6.2<\/td><td>5.5.2<\/td><td>5.2.2<\/td><\/tr><tr><td>5.11<\/td><td>Pre-NIT and Pre-bid Conferences<\/td><td>5.2.3<\/td><td>4.7<\/td><td>5.5.3<\/td><td>5.2.3<\/td><\/tr><tr><td>5.12<\/td><td>Site Visit<\/td><td> \u2014 <\/td><td>4.7-3<\/td><td>5.5.4<\/td><td>5.2.4<\/td><\/tr><tr><td>5.13<\/td><td>Clarification of Tender Documents<\/td><td>5.2.4<\/td><td>4.8<\/td><td>5.5.5<\/td><td>5.2.5<\/td><\/tr><tr><td>5.14<\/td><td>Withdrawal\/ Amendment\/ Modification by Bidders<\/td><td>5.2.5<\/td><td>4.9<\/td><td>5.5.6<\/td><td>5.2.6<\/td><\/tr><tr><td>5.15<\/td><td>Sealing\/ Marking of Bids in off-line Tenders<\/td><td>5.2.6<\/td><td>4.10<\/td><td>5.5.7<\/td><td>5.2.7<\/td><\/tr><tr><td>5.16<\/td><td>Uploading\/ Submission of Bids<\/td><td>5.2.7<\/td><td>4.11<\/td><td>5.5.8<\/td><td>5.2.8<\/td><\/tr><tr><td>5.17<\/td><td>Bid Validity<\/td><td>5.2.8<\/td><td>4.12<\/td><td>5.5.9<\/td><td>5.2.9<\/td><\/tr><tr><td>5.18<\/td><td>Opening of Bids<\/td><td>5.3<\/td><td>4.13<\/td><td>5.6<\/td><td>5.3<\/td><\/tr><tr><td>5.19<\/td><td>Transparency and Third-Party Rights<\/td><td>5.4<\/td><td>4.14<\/td><td>5.7<\/td><td>5.4<\/td><\/tr><tr><td>5.20<\/td><td>Risks and Mitigations<\/td><td>5.5<\/td><td>4.15<\/td><td>5.8<\/td><td>5.5<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>5.1<\/span>Model Tender Documents<\/span><\/h2>\nthe Department of Expenditure (DoE), Ministry of Finance, Government of India, has issued model tender documents (MTD) for:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Date of issue<\/th><\/tr><\/thead><tbody><tr><td>Procurement of GOODS<\/td><td>October 2021<\/td><\/tr><tr><td>Procurement of NON-CONSULTANCY SERVICES<\/td><td>October 2021<\/td><\/tr><tr><td>Procurement of CONSULTANCY SERVICES<\/td><td>April 2023<\/strong>(includes a Model REoI<\/strong>)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nprocuring entities are URGED<\/em> To customise the relevant MTD to prepare tender documents for their procurements. Guidance notes annexed to the MTDs<\/em> Detail the process of customisation of MTD for an organisation and for each procurement.<\/p>\n<aside class=\"note\">W<\/span> \u2014 the Works position is different: The Works Manual does <\/strong>not refer to a DoE Model Tender Document. Instead: *\"<\/strong>The bid documents must be based on relevant standard bidding documents (SBD) FOR \u2014 the type of contract (Lump Sum, Item Rate etc.); Estimated value range; Bidding system (Single Envelope\/ Two Envelope\/ PQB) etc.*<\/p>\nSBD for e-procurement would be slightly different from the traditional SBD.<\/strong>To ensure uniformity, the standard provisions in most sections of the SBD are to be used unaltered. Any modification to suit a unique requirement of the specific procurement is to be done through variable sections \u2014 such as Appendix to instructions to bidders or special conditions of contract<\/strong> (these variable sections may have different nomenclatures in some organisations). Normally, if the organisation does not have its own SBD, it May follow those of other public works organisations like CPWD.<\/strong><\/p>\nBefore floating the tender, the bid document should be got approved by the Competent Authority.<\/strong>\"<\/p><\/aside>\n<h2>5.2<\/span>Tender Documents \u2014 the Fundamental Document<\/span><\/h2>\n1. Why it matters: The tender document is the fundamental document<\/em> In the Public Procurement process, as \u2014 after the award of the contract \u2014 it becomes part of the contract agreement<\/em>.<\/p>\nA carefully prepared tender document avoids delays and complaints<\/em>. This will also attract more bidders to formulate and submit their competitive bids with confidence<\/em>.<\/p>\nHence, it is worth spending time and effort on this \u2014 even in cases of urgency<\/em>.<\/p>\n<aside class=\"note\">W<\/span> adds two important sentences not in the other three:<\/p>\na) \"all necessary provisions governing the contract should be clearly provided in the tender document. Examples are technical specifications, drawings, commercial terms and conditions including payment terms, obligations of the procuring entity and the contractor, timeframe\/ milestones for execution of the project, tax implications, compliance framework for statutory and other norms, reporting on progress\/ quality of the work, dispute resolution.\"<\/em><\/p>\nb) \"Comprehensive survey & soil investigation report, area grading & mapping of underground facilities \u2014 where the project is to be executed \u2014 May be made available and made part of the tender document.\"<\/em><\/p><\/aside>\n2. Clarity requirement: Provisions\/ clauses in the tender document should be clear, self-contained, and comprehensive without any ambiguity<\/em> \u2014 to avoid differences in interpretation and possible disputes, time overrun, cost overrun and quality compromises<\/em>.<\/p>\n<h3>5.2.1<\/span>The Essential Aspects Every Tender Document Must Address<\/span><\/h3>\n(Rule 173 of GFR 2017)<\/em><\/p>\nWhile tender documents should be complete in themselves and may be slightly different for various categories of procurement, these must necessarily address the essential aspects below. Model Tender Documents issued by the DoE \u2014 which comply with all these requirements \u2014 may be used, with due customisation:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>Requirement<\/th><\/tr><\/thead><tbody><tr><td>a)<\/td><td>description of the subject matter of procurement, its specifications\/ drawings including the quality\/ nature\/ quality assurance, quantity, time and place or places of delivery\/ completion W<\/span> Variant: *\u2026Quantity, time and location where the construction is to be effective, any incidental services to be performed*<\/td><\/tr><tr><td>a-bis)<\/td><td>W<\/span> Only: The facilities and the inputs which will be provided to the contractor by the Ministry\/ Department<\/td><\/tr><tr><td>b)<\/td><td>limitation or preference for participation by bidders in terms of Government policies<\/td><\/tr><tr><td>c)<\/td><td>the procedure, as well as the date, time, and place for obtaining, submitting, and opening of the bids<\/td><\/tr><tr><td>d)<\/td><td>suitable provisions for enabling a bidder to question (W<\/span>: \"Seek clarification\/ question\")<\/em> The bidding conditions, bidding process and\/ or rejection of its bid. These provisions should include a time frame in which the Procuring Entity will address the bidder's questions<\/em><\/td><\/tr><tr><td>e)<\/td><td>criteria for determining the responsiveness<\/em> Of bids; Criteria as well as factors to be considered for evaluating the bids on a common platform<\/em>; And the criteria for awarding the contract to the responsive, most advantageous (lowest\/ highest as the case May be) bidder \u2014 should be clearly indicated<\/strong> W<\/span> Footnote on \"highest\":\"<\/strong>Highest, here, refers to the selection of the contractor using the quality and Cost Based Selection (QCBS) methodology \u2014 wherein the contractor securing the HIGHEST MARKS by combining the technical and financial evaluation scores is identified as the <\/em>Highest scorer or the h1 BIDDER*, and is eligible for award of contract.\"*<\/td><\/tr><tr><td>f)<\/td><td>THE eligibility<\/em> Criteria should take care of the supplier's\/ contractor's eligibility to participate in the tender process (W<\/span>: \"to receive such a government contract\")<\/em><\/td><\/tr><tr><td>f-bis)<\/td><td>W<\/span> Only: Requirements as to documentary evidence<\/em>, which must be submitted by contractors to demonstrate their qualifications<\/td><\/tr><tr><td>g)<\/td><td>THE qualification<\/em> Criteria should consider their capability to perform the resultant contract successfully, balancing considerations of quality, time, and cost<\/strong><\/em> W<\/span> variant: *\u2026should take care of the contractor's <\/strong>past performance, experience, technical competence, financial strength to handle the contract successfully, <\/strong>compliance with environmental protection regulations\/ environment management system and so on*<\/td><\/tr><tr><td>h)<\/td><td>commercial terms and conditions \u2014 e.g., payment terms, tax implications, respective obligations of the Procuring Entity and the suppliers, and compliance framework for statutory and other norms. The provision of price variation<\/em>, wherever considered appropriate, and the methodology for calculation<\/em>, shall be clearly stipulated<\/td><\/tr><tr><td>i)<\/td><td>the tender document should include a clause that \"If a firm quotes nil charges\/ consideration, the bid shall be treated as unresponsive and will not be considered.\"<\/em><\/td><\/tr><tr><td>j)<\/td><td>procedures for redressal of grievances or complaints from aggrieved bidders<\/td><\/tr><tr><td>k)<\/td><td>if applicable, the integrity Pact clause and format<\/em> To be signed shall be included<\/td><\/tr><tr><td>l)<\/td><td>suitable provision for settlement of disputes<\/em>, if any, emanating from the resultant contract<\/td><\/tr><tr><td>m)<\/td><td>essential terms of the procurement contract, including a suitable clause mentioning that the resultant contract will be interpreted under Indian laws<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<h3>5.2.2<\/span>Delegation, Eligibility vs Qualification vs Evaluation, and Time<\/span><\/h3>\n3. Delegation: Procuring entities May issue instructions regarding the appropriate delegation of authority for approval of the tender documents before these are floated\/ uploaded<\/em>.<\/p>\n4. The three-filter structure \u2014 the single most important conceptual point in this chapter:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Filter<\/th><th>Function<\/th><\/tr><\/thead><tbody><tr><td>Eligibility criteria<\/td><td>specify the criteria that a bidder should meet to be considered a responsive bid<\/em> To be evaluated further, beyond the preliminary evaluation\/ screening of bids<\/td><\/tr><tr><td>qualification criteria<\/td><td>determine the capability of bidders (who have passed the eligibility criteria) to perform the contract<\/em>. Only those bidders who meet the qualification criteria go to the next step of evaluation for award of contract<\/td><\/tr><tr><td>evaluation criteria<\/td><td>THE final filter<\/em> Used to select the bidders (who have passed the qualification criteria) for the award of the contract<\/td><\/tr><\/tbody><\/table><\/div>\n5. Qualification Criteria \u2014 the broad-basing rule: Qualification criteria should be clear and fair<\/em> in regard to the specific circumstances of the procurement. Public authorities should also keep the experience, technical and financial criteria broad-based<\/em>, so that bidders with experience in items\/ goods of a similar nature (W<\/span>: \"in execution of works of a similar nature\")<\/em> Can participate.<\/p>\nAppropriate parameters should be prescribed to enable the selection of the right type of bidders in the public interest<\/em>, balancing considerations of quality, time, and cost.<\/p>\n6. Evaluation Criteria \u2014 the permitted additional criteria:<\/strong> Depending on the requirement and VfM considerations, the Procuring Entity may consider including, besides price<\/strong>, one or more additional criteria:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>G<\/span> GOODS<\/th><th>W<\/span> WORKS<\/th><\/tr><\/thead><tbody><tr><td>Quality \u00b7 technical merit \u00b7 aesthetic and functional characteristics \u00b7 environmental characteristics \u00b7 running costs \u00b7 cost-effectiveness \u00b7 after-sales service and technical assistance \u00b7 delivery date and delivery period or period of completion<\/td><td>quality of workmanship \u00b7 technical merit \u00b7 aesthetic and functional characteristics \u00b7 environmental characteristics \u00b7 period of completion<\/td><\/tr><\/tbody><\/table><\/div>\nno criteria shall be used for the evaluation of tenders that cannot be verified<\/em>.<\/p>\n7. Default method: Open online tendering should be the default method<\/em> To ensure efficiency of procurement.<\/p>\n8. The time-allowed Rule: The Procuring Entity should allow enough time to the bidders to prepare their proposals<\/em>. The time allowed shall depend on the assignment, but:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Situation<\/th><th>Minimum period<\/th><\/tr><\/thead><tbody><tr><td>Normally<\/td><td>not less than three weeks<\/td><\/tr><tr><td>Where participation of INTERNATIONAL service providers\/ contractors is contemplated<\/td><td>not less than four weeks<\/td><\/tr><\/tbody><\/table><\/div>\n9. The four reserved rights: Tender documents should invariably<\/em> Reserve the Procuring Entity's right \u2014 without assigning any reason<\/em> \u2014 to: A) reject any or all of the bids; Or b) cancel the tender process; Or c) abandon the procurement of the goods\/ works\/ services; Or d) issue another tender for identical or similar goods\/ works\/ services.<\/p>\n<h2>5.3<\/span>Contents\/ Sections of the Tender Document<\/span><\/h2>\n(Rule 168 of GFR 2017)<\/em><\/p>\n<h3>5.3.0<\/span>The Section Structure<\/span><\/h3>\n<aside class=\"note\">G<\/span> and W<\/span> use the same ten sections \u2014 but note the ORDER of the last two is REVERSED.<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>Section<\/th><th>G<\/span> GOODS<\/th><th>W<\/span> WORKS<\/th><\/tr><\/thead><tbody><tr><td>I<\/td><td>Notice Inviting Tender (NIT) and its Appendix: Tender Information Summary (TIS)<\/td><td>(same)<\/em><\/td><\/tr><tr><td>II<\/td><td>Instructions to Bidders (ITB)<\/td><td>(same)<\/em><\/td><\/tr><tr><td>III<\/td><td>Appendix to Instructions to Bidders (AITB)<\/td><td>(same)<\/em><\/td><\/tr><tr><td>IV<\/td><td>General Conditions of Contract (GCC)<\/td><td>(same)<\/em><\/td><\/tr><tr><td>V<\/td><td>Special Conditions of Contract (SCC)<\/td><td>(same)<\/em><\/td><\/tr><tr><td>VI<\/td><td>Schedule of Requirements<\/td><td>(same)<\/em><\/td><\/tr><tr><td>VII<\/td><td>Technical Specifications and Quality Assurance<\/td><td>DRAWING, Technical Specifications and Quality Assurance<\/td><\/tr><tr><td>VIII<\/td><td>Qualification and Evaluation Criteria<\/td><td>(same)<\/em><\/td><\/tr><tr><td>IX \/ X<\/td><td>(i) Financial Bid (BOQ Excel Sheet) then (j) Submission forms and formats<\/td><td>(i) Submission forms and formats then (j) Financial Bid (BOQ Excel Sheet) \u2014 order reversed<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">W<\/span> caveat: *\"<\/strong>The contents of Bid Documents would therefore VARY, but will GENERALLY comprise the following (some of these sections May be named or organised differently in some organisations).\"*<\/p><\/aside>\n<h3>5.3.1<\/span>Notice Inviting Tender (NIT)<\/span><\/h3>\n1. Legal importance: NIT is of legal importance<\/em>, since it is this part of the tender document that solicits offers from the bidders<\/em>. G<\/span> adds: *The model NIT format in MTD should be used to publish the tender notice.*<\/p>\n2. Function and alerts: THE NIT (and its Appendix TIS) must contain sufficient information in brief<\/em> for a prospective bidder to decide whether to participate<\/em> In the tender and, if he decides to participate, how to go about it<\/em>.<\/p>\nTo ensure competition, the attention of all likely bidders<\/em> \u2014 for example, registered vendors\/ contractors, past suppliers\/ contractors, and other known potential suppliers\/ contractors \u2014 should be invited to the NIT through email\/ smss\/ letters<\/em>.<\/p>\nIn e-procurement, the website May be programmed to generate these alerts automatically<\/em>.<\/p>\n3. The mandatory note for limited tenders: In case of procurement through a limited tender, the NIT May be uploaded on geM (Goods only)<\/em> As well as on gem-cppp and the Procuring Entity's website, with a note saying<\/em>:<\/p>\n<aside class=\"note\">\"This notice is being published for information only and is not an open invitation to quote in this limited tender. Participation in this tender is by invitation only and is limited to the selected Procuring Entity's registered suppliers\/ contractors. Unsolicited offers are liable to be ignored. However, suppliers\/ contractors who desire to participate in such tenders in future May apply for registration with Procuring Entity as per procedure.\"<\/em><\/p><\/aside>\n4. Audit trails: Time-stamped audit trails for the e-publication shall be maintained by the procurement portal. Printouts May be taken only in case of off-line tenders<\/em>, if required \u2014 apart from ensuring maintenance of time-stamped audit trail of e-publication. The complete details of the dates on which advertisements appeared on the website should be indicated when sending cases to higher authorities.<\/p>\n<h3>5.3.2<\/span>Instructions to Bidders (ITB) and its Appendix (AITB)<\/span><\/h3>\nITB contains all relevant information as well as guidance to the prospective bidders regarding:<\/p>\n<aside class=\"note\">Obtaining tender documents \u00b7 preparing and submitting a response \u00b7 the process of establishing the eligibility\/ qualification credentials of the bidders \u00b7 as well as evaluation and comparison of tenders and award of contract<\/p>\nW<\/span> and C<\/span> add to this list:<\/strong>Code of Integrity in Public Procurement (CIPP) \u00b7 the process of grievance redressal *(and C<\/span> further adds: <\/strong>Declaration of results)*<\/p><\/aside>\nITB should NOT<\/em> Contain information on processes after the announcement of the award<\/em>, which should be covered in GCC \u2014 for example, the arbitration clause, resolution of disputes, and so on.<\/p>\nITB also contains an introduction\/ overview of the contents of the tender document.<\/p>\n<aside class=\"note\">W<\/span> adds: *\"<\/strong>it mentions the type of entities that May participate, specifically if consortium\/ JV are permitted to participate. It also excludes insolvent, bankrupt, debarred, and convicted firms with conflict of interest from participation. Restriction of participation of bidders from certain countries with land borders with India is also applicable.\"*<\/p><\/aside>\nthe AITB device: Instead of modifying ITB every time<\/em>, any changes warranted by exceptional circumstances May be indicated \u2014 with the prior approval of ca<\/em> \u2014 in a separate Appendix to ITB (AITB), and ITB May be included unchanged in every tender document<\/em>.<\/p>\nIt should also be indicated therein that the provisions in the AITB shall supersede the corresponding provisions in the ITB<\/em>.<\/p>\n<h3>5.3.3<\/span>General and Special Conditions of Contract (GCC and SCC)<\/span><\/h3>\nThe general conditions of contract (GCC) details the terms and conditions that would govern the resultant contract.<\/p>\nGCC covers all information on aspects after the announcement of the tender award till the closure of the contract and dispute resolution<\/em>. It should NOT<\/em> Cover any aspect up to the announcement of the award.<\/p>\nThe SCC device: Instead of modifying the GCC every time, any changes warranted by exceptional circumstances May be indicated in a separate section \u2014 special conditions of contract (SCC)<\/em> \u2014 with the prior approval of the ca, and GCC May be included unchanged in every tender document.<\/p>\nIt is also to be indicated therein that the provisions in the SCC will supersede the corresponding provisions in the GCC<\/em>.<\/p>\n<aside class=\"note\">W<\/span> Only \u2014 the four circumstances warranting an SCC clause: \"Conditions in SCC shall be need-based and specific, and the circumstances warranting them shall be duly considered, including but not limited to the following:\"<\/em><\/p>\na) where the wording in GCC specifically requires<\/em> That further information is to be included in SCC, and the conditions would not be complete without that information<\/em>;<\/p>\nB) where the wording in GCC indicates that supplementary<\/em> Information May be included in SCC, but the conditions would still be complete without that information<\/em>;<\/p>\nc) where THE type, circumstances or locality of the works<\/em> Requires additional clauses or sub-clauses; And<\/p>\nd) where the laws of the country, or exceptional circumstances<\/em>, necessitate alterations in GCC. Such alterations are effected by stating in SCC that a particular clause, or part of a clause in GCC, is deleted, and giving the substitute clause or part<\/em>, as applicable.<\/p><\/aside>\n<h3>5.3.4<\/span>Schedule of Requirements<\/span><\/h3><h4>G<\/span> Goods<\/span><\/h4>\nThis section describes the list of goods required, quantities, delivery requirements, destination, and scope of supply<\/em> (Concomitant accessories, spare parts, and incidental works\/ services).<\/p>\nIf there is no separate section on technical specifications (TS) and quality assurance (QA), then TS and QA May also be included here.<\/p>\nIt must be clarified whether the evaluation of eligibility\/ qualifications\/ financial bids would be done item-by-item in a Schedule<\/em> OR on the total of all items in a Schedule<\/em> \u2014 and, if there is more than one Schedule, whether the same would be done on a schedule-by-schedule basis<\/em> Or on the total of all schedules put together<\/em>.<\/p>\n<h4>W<\/span> Works<\/span><\/h4>\n1. For works procurement, this section should detail the scope of work, including the description of the works to be undertaken, quantities, quality standards, site location, and delivery requirements\/ milestones<\/em>. If there are no separate sections on TS and QA, these details should be incorporated here, specifying the standards and methodologies to be employed.<\/p>\n2. It should be clarified how the evaluation will be conducted \u2014 whether item-by-item, by lot, or for the entire scope of work<\/em>. Additionally, if the procurement involves multiple lots or sections of work<\/em>, it should be stated whether evaluations will be done on a lot-by-lot basis<\/em> Or based on the total of all lots or sections combined<\/em>.<\/p>\n3. This ensures transparency and clarity<\/em>, enabling bidders to understand the scope fully and submit their bids accordingly.<\/p>\n4. Identification of milestones<\/em> May be done in an optimal and sequential manner<\/em>, and the same May be stipulated in the tender document along with enabling provisions<\/em>.<\/p>\n<h4>NC<\/span> NON-CONSULTANCY \u2014 Schedule of Requirements and Services and Activities Schedule<\/span><\/h4>\nSchedule of Requirements and its sub-schedule \u2014 Service and Activities Schedule<\/em> \u2014 describes the background, purpose\/ objectives, description\/ scope, deliverables\/ outcomes, quantum, timelines of services required, etc.<\/p>\nThe requirements May consist of more than one Schedule<\/em>. Each Schedule May contain more than one service<\/em>.<\/p>\nIn case of multiple schedules of requirement in a tender of services, it should be clarified how bids for multiple schedules would be evaluated for award of contract \u2014 either Schedule by Schedule or in total<\/em>.<\/p>\nBidders must fill up compliance<\/em> Regarding these schedules.<\/p>\n<h3>5.3.5<\/span>Technical Specifications, Drawings and Quality Assurance<\/span><\/h3><h4>G<\/span> Goods<\/span><\/h4>\nTechnical specifications and quality assurance lays down the technical specifications and quality assurance requirements of the goods required. It would also stipulate, if required, any compliance required by Central and State pollution control boards<\/em>.<\/p>\n<h4>W<\/span> Works \u2014 and the Accessibility Mandate<\/span><\/h4>\n1. Construction drawings, technical specifications and quality assurance plan<\/em> Lay down the technical specifications and quality assurance requirements of the works to be executed. It would also stipulate, if required, any compliance required by Central and State Pollution Control Boards.<\/p>\n2. The mandatory accessibility clause \u2014 W<\/span> ONLY: \"The bidder shall ensure that all products, services, platforms, infrastructure, and other deliverables under contract must comply with applicable accessibility standards and guidelines as notified under the <\/em>rights of persons with disabilities Act, 2016, and the <\/em>rights of persons with disabilities Rules, 2017 As amended \u2014 including but not limited to:\"<\/em><\/p>\na) harmonised guidelines and standards for universal accessibility in India, issued by the Ministry of housing and urban affairs<\/em>.<\/p>\nb) IS 17802 (PART 1):2021 \u2014 Accessibility for ICT Products and Services Part I: Requirements<\/em>; and IS 17802 (PART 2):2022 \u2014 Accessibility for ICT Products and Services Part 2: Determination of Conformance<\/em> \u2014 issued by the bureau of Indian Standards<\/em>; and<\/p>\nc) any other relevant guidelines, notifications, or instructions from time to time by the Department of empowerment of persons with disabilities, Ministry of social justice and empowerment<\/em>, Government of India.<\/p>\n<h4>NC<\/span> NON-CONSULTANCY \u2014 Performance Standards and Quality Assurance; Method Statement; Work Plan; Critical Material Schedule<\/span><\/h4>\n1. Performance Standards and Quality Assurance STIPULATES THE quantitative\/ qualitative parameters\/ limits\/ thresholds for performance standards\/ service levels and functional\/ technical specifications<\/em> To which the service must be performed.<\/p>\nIt shall stipulate procedures for the measurement, reporting and monitoring<\/em> Of performance parameters \u2014 including institutional or third-party arrangements<\/em> for this purpose.<\/p>\nIt shall also stipulate the procedure for resolution and escalation in case of deficiency<\/em> In performance\/ quality\/ service levels.<\/p>\nIn the case of long-term and complex services<\/em>, it May stipulate a service-level agreement (SLA)<\/em> Which must be complied with during delivery of services.<\/p>\nPerformance standards shall also include statutory compliance required for occupational safety, health and working conditions<\/em> Requirements during delivery of services.<\/p>\n2. Procuring Entity May, if considered necessary, specify sub-schedules: Method statement, work plan, and critical material schedules<\/em> Required for the performance of services to desired quality and standards. Otherwise, these May be left to be quoted by the bidder<\/em>.<\/p>\n3. Bidders must fill up the relevant forms regarding this Schedule.<\/p>\n<h3>5.3.6<\/span>Qualification Criteria<\/span><\/h3>\n1. The general Rule (all four): If it is intended to use qualification criteria to evaluate a tender and determine whether a bidder has the required qualifications to perform the contract successfully, this point May be clearly specified in ITB\/ AITB or as a separate section<\/em> OF THE tender document.<\/p>\nThe bidder must ensure that he provides convincing proof<\/em> Of having fulfilled these criteria.<\/p>\nAny criteria not specified in the tender<\/em> Cannot be used for evaluation or qualification.<\/p>\n2. The content of Pre\/ Post Qualification Criteria: PQC shall be based entirely upon the capability and resources required to perform the particular contract satisfactorily<\/em>, considering:<\/p>\n<aside class=\"note\">Bidders' experience and past performance \u00b7 capabilities with respect to personnel, equipment and manufacturing facilities \u00b7 financial standing \u00b7 and relevant compliance with environmental protection regulations\/ environment management system<\/p><\/aside>\nTHE quantity, delivery, and value<\/em> Of the procurement shall be kept in view while the pre\/ post qualification criteria are fixed.<\/p>\nThere should be NO<\/em> Pre\/ post qualification criteria that would be advantageous to foreign manufactured goods at the cost of domestically manufactured goods<\/em>. (C<\/span> variant: \"advantageous to FOREIGN CONSULTANTS at the cost of domestically delivered services\".)<\/em><\/p>\n3. Relaxation for start-ups (all four)<\/em>: The condition of prior turnover and prior experience<\/em> May be relaxed for start-ups \u2014 only to start-ups recognised by DPIIT<\/em> \u2014 subject to meeting quality & technical specifications<\/em> And making suitable provisions in the tender document (Rule 173(i) of GFR 2017; OM No. F.20\/2\/2014-PPD (Pt.) dated 20.09.2016)<\/em>.<\/p>\nStart-ups May be MSMEs\/ MSEs or otherwise. Such relaxation can be provided in the case of procurement of works as well.<\/p>\nIt is further clarified that such relaxation is not optional but has to be ensured<\/em> \u2014 except in case of procurement of items related to public safety, health, critical security operations and equipment<\/em>, etc., where adequate justification exists for the Procuring Entity not to relax such criteria.<\/p>\n4. Demerged entities \u2014 W<\/span>, C<\/span>, NC<\/span> ONLY (DoE's OM No. F.8\/78\/2023-PPD dated 12.10.2023)<\/em>:<\/p>\nW<\/span> formulation:<\/strong>Demerged entities (by virtue of a corporate restructuring exercise etc.) May be permitted<\/em> To participate in the tender by using the credentials of the original\/ parent entity to satisfy the eligibility criteria \u2014 at least for the initial five years from the incorporation of the demerged entities<\/em>.<\/p>\nProcuring entities may, in suitable cases, consider the credentials based on the merit and circumstances of the cases<\/em> \u2014 like type of procurement, nature of demerger, number of eligible bidders available, etc.<\/p>\nTender documents must clearly mention<\/em> If the credentials of the demerged entity will be considered or not in the specific tender, and May give the conditions under which demerged entities May become eligible.<\/p>\n5. Entry window for sub-contractors in smaller contracts \u2014 W<\/span> ONLY:<\/p>\n<aside class=\"note\">It is of utmost importance<\/em> To develop new contractors and also to provide avenues to sub-contractors, since they May not get opportunities to accumulate the required credentials to compete in normal tenders<\/em>.<\/p>\nTo enable a window of entry for such sub-contractors, in small value contracts (e.g., repair contracts up to Rs. 60 lakh)<\/em>, the requirements regarding general construction experience, particular construction experience and available bid capacity<\/em> MAY not be insisted upon<\/em> \u2014 provided the bidders fulfil other criteria regarding financial\/ personnel\/ equipment capabilities<\/em>.<\/p>\nHowever, to avoid overstretching of their resources, no such contractors May be allowed to hold more than 2 contracts under relaxed credentials, at any given time<\/em>.<\/p><\/aside>\n6. The non-consultancy qualification criteria \u2014 NC<\/span> Only, with its three numbered criteria and worked example:<\/p>\nUnless otherwise stipulated, the Qualification Criteria shall include:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Criterion<\/th><th>Content<\/th><\/tr><\/thead><tbody><tr><td>Criteria 1: Experience and past performance<\/td><td>i) Experience of providing similar services ii) VOLUME of similar services: (1) 3 services > each 40% of the estimated cost; OR (2) 2 services > each 50% of the estimated cost; OR (3) 1 service > 80% of the estimated cost<\/td><\/tr><tr><td>Criteria 2: PERFORMANCE CAPABILITY \u2014 Managerial and Equipment<\/td><td>i) CONTRACT MANAGER \u2014 5 years' experience (3 as a manager) ii) Ownership\/ proposals for acquisition\/ hiring the essential equipment<\/td><\/tr><tr><td>criteria 3: Financial capability<\/td><td>i) Avg annual turnover AT least 3\u20137 TIMES the estimated cost ii) Financial Liquidity<\/td><\/tr><\/tbody><\/table><\/div>\nthe worked example given in the nc Manual:<\/p>\na) Past Experience:<\/p>\n<ul class=\"lst\"><li>i) The bidder must have at least three years' experience<\/em> (Ending month of March prior to the bid opening) of providing similar types of services to Central\/ State Government\/ PSUs\/ nationalised banks\/ reputed organisations<\/em>. Services rendered with a list of such organisations, with duration of service, shall be furnished.<\/li><li>ii) the bidder must have successfully executed\/ completed similar services (the definition of \"similar services\" should be clearly DEFINED)<\/em> Over the last seven financial years<\/em> Previous to the current financial year:<\/li><li>(1) three similar completed services with annualised value not less than 40% (forty per cent) of the estimated annualised cost; OR<\/li><li>(2) two similar completed services with annualised value not less than 50% (fifty per cent) of the estimated annualised cost; OR<\/li><li>(3) one similar completed service with annualised value not less than 80% (eighty per cent) of the estimated annualised cost.<\/li><\/ul>\nb) Performance Capability:<\/p>\n<ul class=\"lst\"><li>I) managerial capability: A contract Manager with five years' experience<\/em> In services of an equivalent nature and volume, including no less than three years as manager<\/em>.<\/li><li>ii) equipment capability: Ownership\/ proposals for the timely acquisition (own, lease, hire, etc.) of the essential equipment listed in the tender information summary (TIS)<\/em>.<\/li><\/ul>\nc) Financial Capability:<\/p>\n<ul class=\"lst\"><li>I) average annual gross billing during the last three years, ending 31ST March of the previous financial year, should be at least 3 times (for 1\u20133 year contracts) to 7 times (for contracts longer than 3 years)<\/em> The estimated annual cost \u2014 as far as feasible based on the nature of service and market condition.<\/li><\/ul>\n<aside class=\"note\">The reason given: \"Generally, the financial capability required in non-consultancy services as a multiple of annual tender value should be <\/em>higher than the multiple in works, because the service provider has to <\/em>sustain the services over a long period of time. That is why a multiple of 3 to 7 is mentioned above.\"<\/em><\/p><\/aside>\n<ul class=\"lst\"><li>ii) liquid assets and\/ or credit facilities \u2014 net of other contractual commitments and exclusive of any advance payments<\/em> Which May be made under the contract \u2014 of no less than the amount specified in the tender document.<\/li><\/ul>\nThe upper-cap Rule NC<\/span>: In higher-value procurements, the minimum annual turnover should not be blindly a multiplier<\/em> Of the assignment value \u2014 but there May be an upper cap on demanded turnover<\/em>, so as not to restrict competition only to the big or foreign firms.<\/p>\n<h3 class=\"src-W\">5.3.7<\/span>Evaluation Criteria \u2014 the Works elaboration<\/span>W<\/span><\/h3><div class=\"srcblock src-W\">\n1.<\/strong> These criteria can include:<\/p>\n<aside class=\"note\">The quality of work \u00b7 cost considerations \u00b7 technical excellence \u00b7 aesthetic and functional attributes of the proposed construction, aligning with the project's overall goals \u00b7 environmental considerations (reflecting the commitment to sustainability) \u00b7 running costs \u00b7 cost-effectiveness<\/p><\/aside>\nand \u2014 critically in safeguarding the Procuring Entity's interests:<\/p>\n<aside class=\"note\">Defect liability period (DLP) \u00b7 warranty period post-installation and commissioning \u00b7 long-term service agreements<\/p><\/aside>\n \u2014 ensuring that any defects identified within a specified period post-completion are rectified at the contractor's expense<\/em>, and that the project's integrity is maintained over time.<\/p>\nIt's crucial that the evaluation criteria \u2014 including those for the defect liability and warranty periods as well as long-term service commitments \u2014 are tangible and verifiable<\/em>. This ensures a transparent, equitable, and objective assessment process, enabling a holistic evaluation that considers not only the initial project execution but also its long-term sustainability, operational efficiency, and maintenance.<\/p>\nThe inclusion of the projected delivery date and completion timeline<\/em> Ensures the project adheres to strategic planning and timelines.<\/p>\n2. Conditional discounts \u2014 W<\/span> Only: Conditional discounts, or discounts offered post tender opening<\/em>, if any, shall not be considered during evaluation<\/em>. However, such discounts shall be availed if the bidder becomes otherwise eligible for award of contract<\/em>.<\/p>\n<\/div><h3>5.3.8<\/span>Submission Forms and Formats<\/span><\/h3>\nThis section contains the relevant forms for tender submission:<\/p>\n<aside class=\"note\">Various declarations by the bidder \u00b7 formats for the Bank Guarantee \u00b7 financial bid forms (BOQ excel sheet) \u00b7 exception and deviation forms \u00b7 contract forms and manufacturer's authorisation form \u00b7 Integrity Pact (if applicable), and so on.<\/p><\/aside>\n<h3>5.3.9<\/span>Financial Bid (BOQ Excel Sheet)<\/span><\/h3>\n1. Preparation by the Procuring Entity: The Procuring Entity should select an appropriate format of BOQ from the e-procurement portal<\/em> And upload it after filling up the entries for the complete Schedule of requirements and various price components (W<\/span> Adds: \"\/ Schedule of Rates\")<\/em> \u2014 to enable the system to automatically calculate the all-inclusive price of a bid and generate a comparative tabulation of all bids<\/em>.<\/p>\n<aside class=\"note\">W<\/span> footnote: *For reference, <\/strong>CPWD Schedule of Rates (SOR) can be referred, which serves as a comprehensive reference for construction projects. This schedule includes <\/strong>both BASIC RATES and FINISHED RATES for various items of work.*<\/p>\nC<\/span> and NC<\/span> add: \"Any procurement portal that does not have a facility for financial bids to be uploaded in excel format (providing detailed break-up in line with the type of contract and system of selection) should <\/em>endeavour to build such functionality \u2014 which is crucial for non-consultancy and consultancy services.\"<\/em><\/p><\/aside>\n2. The \"not entered = not paid\" Rule \u2014 C<\/span> and NC<\/span> Only: The bidder should fill in rates and prices for ALL<\/em> Items described in the excel sheet\/ services and activities Schedule.<\/p>\nItems for which no rate or price is entered<\/em> By the bidder will not be paid for<\/em> By the Procuring Entity when executed, and shall be deemed covered by the other rates and prices<\/em>.<\/p>\nThe priced schedule contains sections on remuneration for staff deployed, reimbursable expenses and miscellaneous expenses<\/em>.<\/p>\nAll duties, taxes, and other levies payable by the consultant\/ service provider under the contract \u2014 or for any other cause \u2014 as in the month prior to the month of the deadline for submission of bids<\/em> \u2014 should be included in the total bid price.<\/p>\nEven in tenders for lump-sum contracts<\/em>, for the purpose of determining the remuneration due for additional elements of work\/ additional services during the contract<\/em>, the bidder shall provide a breakdown of the lump-sum price<\/em>.<\/p>\nC<\/span> adds: *Bidding Documents should include a clause that \"<\/strong>if a firm quotes NIL service charges\/ consideration, the bid shall be treated as unresponsive and will not be considered\".*<\/p>\n3. Uploading discipline (all four): Bidders are to upload only the downloaded BOQ (in excel format)<\/em> After entering the relevant fields \u2014 without any alteration\/ deletion\/ modification of other portions of the excel sheet<\/em>.<\/p>\nThe quoted price shall be considered to include all relevant financial implications \u2014 including inter alia<\/em>:<\/p>\n<aside class=\"note\">The scope of the goods\/ works\/ services \u00b7 location of the bidder \u00b7 location of the consignee(s)\/ Procuring Entity \u00b7 terms of delivery \u00b7 extant Rules and regulations relating to taxes, duties, customs, transportation, environment, labour of the bidder's country and in India<\/p>\n(W<\/span> variant: applicable taxes, duties, permits, transportation, environment, and labour costs in accordance with the prevailing market rates and relevant regulations of India.)<\/em><\/p><\/aside>\n4. Restrictions regarding personnel deployed \u2014 NC<\/span> ONLY:<\/p>\nA) the minimum wage floor: The quoted rates shall not be less than the minimum wage fixed\/ notified by the Central\/ State Government (whichever is higher)<\/em> \u2014 where the service is performed \u2014 and shall include all statutory obligations and service charges\/ margin (including transaction charges) over such minimum wage<\/em>.<\/p>\nB) the 'nil' price Rule: Bids without any element of cost over and above such minimum wage<\/em> Shall be treated as 'Nil' price quotations and would be rejected<\/em>.<\/p>\nC) LCS for manpower outsourcing: Least cost system (LCS) should be considered for procurement of manpower outsourcing service<\/em>, wherever appropriate \u2014 especially in high-value cases<\/em>.<\/p>\nD) liability and character verification: The service provider shall be liable for all kinds of dues payable in respect of all personnel<\/em> Provided under the contract, and the Procuring Entity shall not be liable for any dues<\/em> for availing the services of the personnel. The service provider should ensure that the persons to be deployed are not alcoholics or drug addicts<\/em> And do not indulge in any activity prejudicial to the interest of the Procuring Entity. The service provider shall ensure to get the police verification for all the manpower deployed<\/em> By them, and the contractor should ensure that the manpower deputed should bear good moral character<\/em>.<\/p>\n<h2>5.4<\/span>Preparation of the Request for Expression of Interest (REoI) Document [C ONLY]<\/span><\/h2>\n<aside class=\"note\">This entire section exists only in the consultancy services Manual<\/em>. There is no counterpart in Goods, Works or Non-Consultancy.<\/p><\/aside>\n<h3>5.4.1<\/span>Basic Considerations<\/span><\/h3>\n1. DoE has issued Model Tender Documents for Procurement of Consultancy Services, which includes a MODEL REoI<\/em>.<\/p>\n2. Why two stages: It is important to hire consultants who have a reputation for relevant quality and competence<\/em>; hence Procurement of Consultancy is done in a two-stage process<\/em>:<\/p>\n<ul class=\"lst\"><li>The first stage (expression of Interest<\/em> Stage) \u2014 to shortlist such qualified consultants in a transparent and open<\/em> Manner.<\/li><li>In the next stage (RfP<\/em> Stage) \u2014 there is competition only among qualified shortlisted firms or individuals<\/em>, in which selection is based on the quality of the proposal<\/em> And, where appropriate, on the cost of services<\/em> To be provided.<\/li><\/ul>\n3. Therefore, the process of shortlisting is one of the most difficult and time-consuming tasks<\/em> In the selection process of a consultant. This could be eased by writing a clear description of service (objectives and scope) and shortlisting criteria<\/em>.<\/p>\n<h3>5.4.2<\/span>Contents of the REoI<\/span><\/h3>\nThe EoI document shall contain the following sections:<\/p>\nPart i: REoI process<\/p>\n<ul class=\"lst\"><li>Section I: Request for Expression of Interest (REoI)<\/li><li>Section II: Appendix<\/li><li>Section III: Qualification Criteria<\/li><\/ul>\npart II: Schedule of requirements<\/p>\n<ul class=\"lst\"><li>Section IV: Terms of Reference<\/li><\/ul>\npart III: EoI submission formats<\/p>\n<ul class=\"lst\"><li>Form 1: EoI Form (Covering Letter)<\/strong> \u2014 Form 1.1: Consultant Information \u00b7 Form 1.2: Eligibility Declarations<\/em><\/li><li>Form 2: Qualification Criteria \u2013 Compliance<\/strong> \u2014 Form 2.1: Performance Capability Statement \u00b7 Form 2.2: Financial Capability Statements \u00b7 Form 2.2.1: Financial Statement \u00b7 Form 2.2.2: Average Annual Turnover<\/em><\/li><li>Form 3: Checklist for Consultants<\/li><li>Other Annexures:<\/strong>Annexure 1: Authorisation to Attend Pre-EoI Conference \u00b7 Annexure 2: Code of Integrity<\/em><\/li><\/ul>\nSection-wise description:<\/p>\n<ul class=\"lst\"><li>Section I \u2014 REoI: A formal invitation<\/em> for Expression of Interest from interested bidders.<\/li><li>Section II \u2014 Appendix: Where variable parameters and information related to this specific REoI process<\/em> Are summarised.<\/li><\/ul>\nSection III \u2014 qualification criteria:<\/p>\na)<\/strong> This section lays down the qualification criteria which shall be applied by the Procuring Entity for shortlisting the consultants. The REoI should ask for sufficient information<\/em> So that the Procuring Entity May evaluate the consultant's capabilities and eligibility<\/em> To undertake the assignment.<\/strong> The Consultants must be asked:<\/p>\n<ul class=\"lst\"><li>I) requisite experience during a specified period (say 5 years) with volume of assignments similar in nature in general and specific sectors relevant to the subject assignment<\/em>;<\/li><li>ii) financial capability: Turnover (overall and from consultancy services)<\/em>.<\/li><\/ul>\nb) Relaxation for Start-ups<\/strong> \u2014 (as at para 5.3.6-3 above)<\/em>.<\/p>\nc) Qualification Criteria shall be based entirely upon capability and resources; there should be no qualification criteria advantageous to FOREIGN CONSULTANTS at the cost of domestically delivered services.<\/p>\nd) Qualification of demerged entities<\/strong> \u2014 (as at para 5.3.6-4 above)<\/em>.<\/p>\nE) what the REoI must NOT<\/em> ASK FOR \u2014 a critical restriction:<\/p>\n<aside class=\"note\">In addition, the consultants should indicate information relating to their eligibility and any conflict of interest<\/em> that they know may impact objective performance and impartial advice. CONSULTANTS should NOT<\/em> Be asked about their approach to the services<\/em>, or to submit any curricula vitae of key personnel<\/em> \u2014 because these documents will be dealt with in the RfP<\/em>. No legal documents \u2014 such as certificates of incorporation of the firm, powers of attorney, financial statements, or translations of standard brochures<\/em> \u2014 should be requested.<\/p>\nGiven the often-large number of submissions, the advertisement should stress the importance of brevity<\/em> Of the information to be sent. It may indicate the extent of dispensation, if any, allowed for start-ups.<\/p>\nUnless otherwise stated in Section II: Appendix, consultants May associate with other firms to enhance their qualifications \u2014 BUT should indicate clearly whether the association is in the form of a joint venture\/ consortium (JV\/C) and\/ or a sub-consultancy<\/em>.<\/p><\/aside>\nSection IV \u2014 terms of Reference (ToR): This section describes the background, purpose\/ objectives, description\/ scope of work, deliverables\/ outcomes, inputs to be provided by the Procuring Entity, and timelines of Consultancy Services (hereinafter called the 'Service') required.<\/p>\nThe 'service' May include incidental goods, works, and other services<\/em> If so indicated therein. Any generic reference to the 'Service' shall be deemed to include such incidental Goods, Works, and other Services. This may also include the place of execution of the assignment.<\/p>\n<h3>5.4.3<\/span>Important Provisions of the REoI<\/span><\/h3>\n1.<\/strong> REoI contains all relevant information and guidance regarding \u2014 obtaining tender documents, preparing and submitting a responsive bid, the process of establishing eligibility\/ qualification credentials, evaluation and comparison of tenders, code of Integrity in Public Procurement (CIPP), the process of grievance redressal, and declaration of results.<\/strong><\/p>\n2. Eligibility Criteria:<\/strong> Provisions relating to eligibility criteria, conflict of interest and applicable preferential policies<\/strong> regulate the participation of bidders of various categories and their agents.<\/p>\n<ul class=\"lst\"><li>It mentions the type of entities which may participate, specifically if JV\/C are permitted<\/em> to participate.<\/li><li>It shall also mention that the consulting company should be registered under the applicable Act with registered offices in India<\/em>.<\/li><li>It also excludes insolvent, bankrupt, debarred, convicted firms, and firms with conflict of interest from participation.<\/strong> Restriction of participation of bidders from certain countries having land borders with India also applies.<\/li><li>In case jv\/cs are permitted, it should be made clear if the experience of the bidders as a member of JV\/C would be considered or not<\/em>. If yes, then the manner of aggregating qualifications<\/em> Of members of JV\/C \u2014 say, only pro-rata experience proportionate to his percentage share declared in JV\/C MoU<\/em> \u2014 May be mentioned.<\/li><\/ul>\n3. Preferential Procurement Policies: applicable policies are mentioned (MSEs, Start-ups, Make in India etc.).<\/p>\n4. EoI validity: Eois shall remain valid for a period not less than 60 (sixty) days<\/em> From the deadline for the EoI submission.<\/p>\n<aside class=\"note\">(Contrast RfP validity: not less than 90 days<\/strong> \u2014 para 5.5.4-5 below.)<\/em><\/p><\/aside>\n5. Qualification Criteria:<\/strong> the qualification criteria for shortlisting the bidders and its scoring\/ marking scheme<\/strong> is detailed. It also specifies, if JV\/C are permitted, how credentials of members would be considered in evaluation.<\/p>\n6. ToR at the eoI STAGE \u2014 the \"not yet ready\" rule: At the EoI stage, ToR is relevant for bidders to decide whether they are interested in bidding<\/em> for this assignment. It is also relevant to decide the specific sector of experience required in the qualification criteria<\/em>.<\/p>\nNormally, ToR should be ready before REoI is floated<\/em>. However, if a detailed ToR is not ready<\/em>, at least the following should be included in the REoI: Description\/ scope of work, deliverables\/ outcomes, inputs to be provided by the Procuring Entity, and timelines<\/em> Of the required 'service'.<\/p>\nREoI should contain a clause retaining the right to make minor adjustments to ToR at the RfP stage<\/em>.<\/p>\n<h2>5.5<\/span>Preparation of the Request for Proposals (RfP) Document [C ONLY]<\/span><\/h2>\n(Rule 186 of GFR 2017)<\/em><\/p>\n<h3>5.5.1<\/span>What the RfP Is<\/span><\/h3>\nthe request for proposals (RfP) is the bidding document in which the technical and financial proposals from the consultants are obtained<\/em>.<\/p>\nFor procurement of consultancy services, the RfP is sent only to the short-listed consultants<\/em>.<\/p>\nIt contains the following sections:<\/p>\n<ul class=\"lst\"><li>Section I: Request for Proposal Letter (RFPL) and its Appendix: Tender Information Summary (TIS)<\/li><li>Section II: Instructions to Consultants (ITC)<\/li><li>Section III: Appendix to Instructions to Consultants (AITC)<\/li><li>Section IV: General Conditions of Contract (GCC)<\/li><li>Section V: Special Conditions of Contract (SCC)<\/li><li>Section VI: Terms of Reference (ToR)<\/strong> \u2014 Section VI-A: List of Key Experts and Required Qualifications<\/em><\/li><li>Section VII: Evaluation\/ Scoring Criteria<\/li><\/ul>\n<h3>5.5.2<\/span>Section-by-Section<\/span><\/h3>\n1. Section I \u2014 RFPL and TIS: Provides a synopsis of information relevant for a consultant to decide on participating in the RfP. RFPL states the intention of the Procuring Entity to enter into a contract<\/em> for the provision of consultancy services, details of the Procuring Entity, and date, time, and address for submission of proposals<\/em>.<\/p>\nIt plays the role played by NIT<\/em> In procurement of goods and services.<\/p>\n2. Section II \u2014 ITC and Section III \u2014 AITC:<\/strong> Contains all necessary information that would help the consultants prepare responsive proposals.<\/p>\nIt shall bring in as much transparency as possible<\/em> To the selection procedure by providing information on the evaluation process<\/em>, and by indicating the evaluation criteria and factors and their respective weights and minimum passing quality score<\/em>.<\/p>\nStandard information includes clauses relating to the procedure of bid submission, pre-bid meeting, seeking clarifications<\/em>, and so on \u2014 BUT should NOT<\/em> Contain information on processes after the announcement of the award, which should be covered in GCC.<\/p>\nThe assignment\/ job-specific information in AITC includes: Date and time of bid submission, contact address, qualification criteria, method of selection, evaluation process, factors of evaluation and their respective weights<\/em>, and so on.<\/p>\nThe ITC shall specify the proposal validity period \u2014 normally 90 (ninety) days<\/em>.<\/p>\n3. Sections IV and V \u2014 GCC and SCC: (as at para 5.3.3 above)<\/em>.<\/p>\n4. Section VI \u2014 ToR and Section VI-A \u2014 List of Key Experts:<\/p>\nA) ToR describes the background, purpose\/ objectives, description\/ scope, deliverables\/ outcomes, timelines, Procuring Entity's inputs and counterpart personnel, statutory requirements of services required, etc.<\/p>\nB) the budget-disclosure Rule: Since cost is part of the selection criterion, the ITC shall not indicate the budget<\/em> \u2014 except in case of fixed budget system of selection<\/em> \u2014 but shall indicate the expected input of key professionals (staff time)<\/em>.<\/p>\nSection VI-A: 'List of Key Experts and Required Qualifications' describes the team composition, expertise, experience, and professional qualifications required for each key expert<\/em>. Consultants, however, shall be free to prepare their own estimates of staff time<\/em> Necessary to carry out the assignment.<\/p>\nC) consultants May be encouraged to provide comments and suggestions<\/em> On ToR, counterpart staff, key experts and facilities to be provided by the Procuring Entity.<\/p>\nD) simplified technical proposal (stp) vs full technical proposal (ftp):<\/p>\n<aside class=\"note\">In the LCS<\/em> system of evaluation \u2014 since the technical scores are not ranked or weighted and added to financial scores<\/em> \u2014 it would suffice if, instead of a detailed marking scheme for the criteria\/ sub-criteria, minimum fail-pass qualifying benchmarks<\/em> Are laid down for each criteria\/ sub-criteria.<\/p>\nFor such an assignment, technical evaluation can be carried out by following a simplified procedure<\/em>, and only a simplified technical proposal (stp)<\/em> \u2014 instead of a full technical proposal (ftp)<\/em> \u2014 May be called for and indicated in the data sheet of the RfP document.<\/p>\nStp should be used when the assignment is:<\/p>\n<ul class=\"lst\"><li>I) unlikely to have significant downstream impact<\/em>;<\/li><li>ii) OF A routine nature<\/em>, where ToR already defines details of tasks to be performed and required output, and approach, methodology, organisation, and staffing could be evaluated without use of sub-criteria<\/em>; and<\/li><li>iii) that characteristics of work do not require further detailed evaluation of the consultant's experience<\/em> (e.g., engagement of accountants, auditors, consultant engineers etc.).<\/li><\/ul>\nSTP reduces the time and cost required to prepare the proposal<\/em> And could be evaluated faster<\/em> By the evaluation committee. For example, the following parameters can be used:<\/p>\n<ul class=\"lst\"><li>I) minimum experience, including number of assignments handled by the firm similar to the area of assignment;<\/li><li>ii) turnover and other financial parameters of the firm, if required;<\/li><li>iii) minimum educational qualifications of each of the key professionals;<\/li><li>iv) minimum requirement of experience of the key professionals in an area similar to the proposed assignment;<\/li><li>V) all the firms which meet the minimum qualifying standards\/ criteria so prescribed will stand technically qualified for consideration of their financial bids<\/em>.<\/li><\/ul><\/aside>\n5. Section VII \u2014 Evaluation\/ Scoring Criteria: Stipulates the scoring scheme for evaluating various technical criteria. These may cover scoring of criteria relating to:<\/p>\n<aside class=\"note\">The consultant's experience \u00b7 technical approach and methodology \u00b7 understanding of requirements \u00b7 qualification and experience of key experts (key experts need not be a permanent employee of the consultant)<\/em> \u00b7 transfer of knowledge, etc.<\/p><\/aside>\nIt may also lay down a minimum technical score to qualify for the next stage of financial evaluation<\/em>. In a specific evaluation scheme, instead of a scheme of scoring, a scheme may be laid down to evaluate criteria on a pass\/ fail basis<\/em>.<\/p>\n<h3 class=\"src-C\">5.5.3<\/span>Standard Formats for Technical and Financial Proposals<\/span>C<\/span><\/h3><div class=\"srcblock src-C\">\n1. Technical proposal forms:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Form<\/th><th>Content<\/th><\/tr><\/thead><tbody><tr><td>T-1<\/td><td>Proposal Form<\/strong> \u2014 to serve as a covering letter to BOTH<\/strong> the Techno-commercial and Financial Proposals<\/em> \u2014 (T-1A: Consultant's Commercial Information)<\/em><\/td><\/tr><tr><td>T-2<\/td><td>Consultant's Organisation and Experience<\/td><\/tr><tr><td>T-3<\/td><td>Comments and Suggestions on Terms of Reference, Counterpart Staff, and Inputs to be Provided by the Procuring Entity<\/td><\/tr><tr><td>T-4<\/td><td>Description of Approach, Methodology and Work Plan in Responding to the Terms of Reference<\/td><\/tr><tr><td>T-5<\/td><td>Work Schedule and Planning for Deliverables<\/td><\/tr><tr><td>T-6<\/td><td>Team Composition, Assignment, and Key Experts' Inputs<\/strong> \u2014 (Annex to T-6: Key Experts' Curriculum Vitae \u2014 CV)<\/em><\/td><\/tr><tr><td>T-7<\/td><td>Terms and Conditions \u2013 Compliance<\/td><\/tr><tr><td>T-8<\/td><td>Checklist for Consultants<\/td><\/tr><tr><td>T-9<\/td><td>Bank Guarantee Format for Earnest Money Deposit<\/td><\/tr><tr><td>T-10<\/td><td>Integrity Pact<\/td><\/tr><\/tbody><\/table><\/div>\n2. Financial proposal (BOQ excel sheet) \u2014 (see para 5.3.9 above)<\/em>.<\/p>\n3. OTHER FORMATS \u2014 Contract Form and its Appendices:<\/p>\n<aside class=\"note\">Appendix A: Terms of Reference \u00b7 Appendix B: Key Experts \u00b7 Appendix C: Remuneration Cost Estimates \u00b7 Annex to Appendix C: Breakdown of Agreed Fixed Rates in Consultant's Contract \u00b7 Appendix D: Reimbursable Expenses Cost Estimates \u00b7 Appendix E-1: Bank Guarantee Format for Performance Security \u00b7 Appendix E-2: Bank Guarantee Format for Advance Payment<\/p>\nPlus: Authorisation to Attend Pre-Proposal Conference<\/strong>(to be filled up, if required, by the Consultant)<\/em>.<\/p><\/aside>\n<\/div><h3 class=\"src-C\">5.5.4<\/span>Important Provisions of the ITC<\/span>C<\/span><\/h3><div class=\"srcblock src-C\">\n2. Eligibility to participate \u2014 the closed-list rule: As the RfP follows the earlier EoI shortlisting process, this invitation is open only to consultants who have been shortlisted therein or are specifically invited to participate<\/em>.<\/p>\nIT IS not permissible<\/em> for the shortlisted consultants to transfer this RfP to any other firm<\/em> Without the permission of the Procuring Entity.<\/p>\nProposals from consultants who have not been shortlisted shall not be entertained<\/em>.<\/p>\nThe shortlisted consultant must continue to meet the eligibility criteria prescribed in the EoI document<\/em> (based inter alia on which they were shortlisted) \u2014 including restrictions on consultants from specified countries \u2014 as of the date of his proposal submission<\/em>, and should continue to meet these till the award of the contract<\/em>. Consultants must provide evidence of their continued eligibility if requested.<\/p>\n3. Association among shortlisted consultants \u2014 and the 14-day approval rule:<\/p>\nUnless otherwise stipulated in TIS\/ AITC, if a shortlisted Consultant considers that it may enhance its expertise by associating with other consultants in the form of a joint venture or as sub-consultants<\/em>, it may do so with either:<\/p>\n<ul class=\"lst\"><li>(a) NON-SHORTLISTED Consultant(s), or<\/li><li>(b) SHORTLISTED Consultants<\/li><\/ul>\n \u2014 without vitiating the shortlisting criteria of the REoI.<\/p>\nThe lead member Rule:<\/p>\n<ul class=\"lst\"><li>The shortlisted consultant shall be the lead member<\/em> When associating with non-shortlisted<\/em> Firms as a joint venture.<\/li><li>IF shortlisted<\/em> Consultants associate with each other<\/em>, any of them can be a lead member<\/em>.<\/li><\/ul>\nA shortlisted consultant must obtain the Procuring Entity's written approval not later than 14 days before the RfP submission deadline<\/em>, in all such cases.<\/p>\nSuch approval shall be denied<\/em> IF:<\/p>\n<ul class=\"lst\"><li>(i) a shortlisted consultant proposes to associate with an ineligible consultant<\/em> \u2014 or, in case of an ineligible joint venture, any of its members<\/em>;<\/li><li>(ii) because of the change, the consultant no longer substantially meets the qualification criteria<\/em> Outlined in the REoI document; Or<\/li><li>(iii) if, in the opinion of the Procuring Entity, a substantial reduction in competition May result<\/em>.<\/li><\/ul>\n4. Preferential Procurement Policies:<\/strong> applicable policies are mentioned (MSEs, Start-ups, Make in India etc.).<\/p>\n5. RfP validity: RfP shall remain valid for a period not less than 90 (ninety) days<\/em> From the deadline for the RfP submission.<\/p>\n6. Evaluation\/ scoring criteria \u2014 the three heads, and the presentation rule:<\/p>\nEvaluation shall, inter alia, consider the Consultant's:<\/p>\n<ul class=\"lst\"><li>(i) \"specific experience of the consultant (as a firm) relevant to the assignment\";<\/li><li>(ii) \"adequacy and quality of the proposed methodology, and work plan\";<\/li><li>(iii) \"key experts' qualifications and competence for the assignment\".<\/li><\/ul>\nIt also specifies, if JV\/C are permitted, how credentials of members of JV\/C would be considered.<\/p>\nThe presentation Rule: The Procuring Entity May ask all shortlisted consultants<\/em> To deliver a presentation on their technical proposals.<\/p>\n<ul class=\"lst\"><li>This presentation shall only cover contents of the technical proposals already submitted<\/em> By the consultant.<\/li><li>Unless otherwise provided, no marks shall be assigned to the presentation<\/em>.<\/li><li>Opportunities for such presentations shall be provided in a manner to provide a level playing field<\/em> To all shortlisted consultants \u2014 including time limits<\/em> for such presentations.<\/li><\/ul>\n<\/div><h2>5.6<\/span>Uploading of Tender Documents: Mandatory e-Publishing<\/span><\/h2>\n(Rule 159 of GFR 2017)<\/em><\/p>\n1. The mandate and its reach: IT IS mandatory<\/em> for all ministries\/ departments of the Central Government, their attached and subordinate offices, and autonomous\/ statutory bodies to publish their tender enquiries, corrigenda thereof, and details of bid awards<\/em> Online on the gem-Central Public Procurement Portal (CPPP) \u2014 and also on their own website.<\/p>\nThese instructions apply to ALL<\/em> Of the following \u2014 whether they are advertised, issued to a limited number of parties, or to a single party:<\/p>\n<aside class=\"note\">Tender enquiries \u00b7 requests for proposals \u00b7 requests for expressions of interest \u00b7 notice for pre-qualification\/ registration \u00b7 or any other notice inviting bids or proposals in any form<\/p><\/aside>\nthe exclusions differ by Manual:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>These instructions would NOT apply to<\/th><\/tr><\/thead><tbody><tr><td>G<\/span>, C<\/span>, NC<\/span><\/td><td>the purchase of goods without quotations<\/em>, or the purchase of goods by the purchase Committee<\/em><\/td><\/tr><tr><td>W<\/span><\/td><td>works procurement through quotation<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n2. The national security exemption \u2014 and its quarterly reporting obligation:<\/p>\nIndividual cases where confidentiality is required for reasons of national security<\/em> Would be exempted from the mandatory e-publishing requirement.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Body<\/th><th>Who approves the exemption<\/th><\/tr><\/thead><tbody><tr><td>Ministry\/ Department<\/td><td>THE Secretary<\/em> Of the Ministry\/ Department, with the concurrence of the concerned Financial Adviser<\/em><\/td><\/tr><tr><td>Autonomous and Statutory bodies<\/td><td>THE head of the body<\/em>, with the concurrence of the head of the finance<\/em> \u2014 in each such case<\/td><\/tr><\/tbody><\/table><\/div>\nstatistical information on the number of cases in which exemption was granted and the value of the concerned contract<\/em> Should be intimated on a quarterly basis<\/em> To the Ministry of Finance, Department of Expenditure.<\/p>\n3. Fixed days for issuance of NIT and tender opening \u2014 W<\/span> ONLY:<\/p>\n<aside class=\"note\">In order to increase certainty in the procurement process<\/em>, all ministries\/ departments shall fix days in every month<\/em> for issuance of notice inviting tender (NIT), and tender opening, across various locations, divisions or levels.<\/p>\nExample given: The tenders may be released by the Ministries\/ Departments three times a month \u2014 i.e., on the 10th, 20th and 30th of every month \u2014 and the bid submission dates are so determined that bids are opened only on fixed scheduled dates, viz., the 7th, 17th and 27th of every month.<\/em><\/p>\nIn case there are practical difficulties due to large volume of tenders<\/em> In having fixed days across the whole organisation, the ministries\/ departments\/ cpsus May decide to have region-wise, zone-wise, or division-wise<\/em> Fixed days.<\/p>\nFor procurement of highly technological and complex works<\/em>, tender submission dates May be extended in order to reply to queries in the pre-bid meetings or any other justifiable reason.<\/p><\/aside>\nExample 1 \u2014 fixation of days by CPWD:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Region<\/th><th>Days for Issuance of NITs<\/th><th>Days for Tender Opening<\/th><\/tr><\/thead><tbody><tr><td>Delhi<\/td><td>Monday<\/td><td>Monday<\/td><\/tr><tr><td>Northern<\/td><td>Tuesday<\/td><td>Tuesday<\/td><\/tr><tr><td>Southern<\/td><td>Wednesday<\/td><td>Wednesday<\/td><\/tr><tr><td>Eastern<\/td><td>Thursday<\/td><td>Thursday<\/td><\/tr><tr><td>Western<\/td><td>Friday<\/td><td>Friday<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Note 1: One WEEK in the case of works with estimated cost put to tender up to Rs. 2 crore<\/em>, and two WEEKS in the case of works with estimated cost more than Rs. 2 crore<\/em>. If there is a holiday on a particular day, the day of inviting\/ uploading NIT May be proposed to an earlier day, and opening of tender May be postponed to the next day.<\/p>\nNote 2: However, in case of exigencies of work<\/em>, THE chief engineer\/ chief Project Manager or equivalent<\/em> Can allow to call and open tenders on another day instead of specific fixed days.<\/p><\/aside>\n<h2>5.7<\/span>Amendment of Tender Documents<\/span><\/h2>\n(Rule 173(iii) of GFR 2017)<\/em><\/p>\n1. At any time prior to the date of submission of bids<\/em>, the Procuring Entity May \u2014 suo motu<\/em> Or in response to a clarification sought by a prospective bidder (directly or in a pre-bid conference) \u2014 amend tender documents by issuing a corrigendum<\/em>.<\/p>\nCopies of such amendment\/ modification should be uploaded on the e-publishing portal and the Procuring Entity's own website<\/em>.<\/p>\nIn case of off-line tenders<\/em>, the copies of such amendment\/ modification are to be simultaneously despatched, free of cost, by registered\/ speed post\/ courier\/ e-mail<\/em>, to all the parties who have already purchased the tender documents \u2014 and copies of such amendments are also to be prominently attached in the unsold sets<\/em> Of the tender documents.<\/p>\nWhen the amendment\/ modification changes the requirement significantly<\/em> And\/ or when there is not much time left<\/em> for the bidders to respond and prepare a revised tender, the time and date of submission of tenders are also to be suitably extended (not less than 3 days)<\/em>.<\/p>\n2. The 21-DAY re-publication Rule \u2014 W<\/span> ONLY:<\/p>\n<aside class=\"note\">When the proposed amendment\/ modification substantially changes the procurement requirements originally envisaged<\/em>, and\/ or when insufficient time remains<\/em> for the tenderers to respond \u2014 the time and date of submission of tenders should also be extended suitably.<\/p>\nNormally, the extended time duration shall be 21 DAYS<\/em>, or consistent with the original bid submission duration.<\/p>\nDepending on the circumstances, such an amendment May also need fresh publication of the revised tender document<\/em>, following the same procedure as the original tender publication.<\/p>\nThis is crucial as the amendment May enable a new bidder to meet the qualifying criteria<\/em>, AND TO ensure a level playing field<\/em>.<\/p><\/aside>\n<h2>5.8<\/span>Extension of Deadline of Bid Submission<\/span><\/h2>\n1. Ordinary extension: To give sufficient time to bidders to prepare and submit their bids, the Procuring Entity may \u2014 suo motu<\/em>, or based on a justifiable request of bidder(s)<\/em>, or due to significant modification of tender documents<\/em> \u2014 extend the time and date of submission of tenders suitably (not less than three (3) days<\/em>), along with suitable changes in the corresponding time-frames for:<\/p>\n<aside class=\"note\">Receipt of tender \u00b7 bid validity period \u00b7 and validity period of the corresponding EMD\/ Bid Security<\/p><\/aside>\nDepending on the situation, such an amendment May also need fresh publication<\/em>, adopting the same procedure as for publication of the original tender enquiry.<\/p>\n2. Auto-extension of bids in case of lack of response \u2014 an important and easily-missed provision:<\/p>\nA) the information blackout: The e-procurement portal\/ GeM should not provide anybody \u2014 including the Procuring Entity \u2014 with the bid count before the tender opening time, even at their request<\/em>.<\/p>\nb) The set-up: The e-Procurement portal\/ GeM May facilitate the Procuring Entity in specifying, at the time of tender upload<\/em>:<\/p>\n<ul class=\"lst\"><li>THE minimum number of bids<\/em> Considered sufficient; And<\/li><li>THE pre-specified number of days for automatic extension<\/em> Of bid opening (not less than 7 days<\/em>).<\/li><\/ul>\nC) the declaration: The system shall declare in the tender details that in case of low competition (without specifying the number)<\/em>, the tender closing time shall be automatically extended by the specified number of days.<\/p>\nD) the operation: If bids received till the bid opening time are less than the specified minimum bids<\/em>, the system should automatically extend<\/em> The tender opening by the specified number of days \u2014 without seeking any input from or sharing any information with anyone, including the Procuring Entity<\/em>.<\/p>\nPurchasers and bidders shall only be informed<\/em> That \"due to less competition, the tender closing time has been extended up to (date and time).\"<\/p>\ne) ONCE only \u2014 G<\/span> Only: However, this automatic extension of bid opening shall be done only once, not repeatedly<\/em>.<\/p>\n<aside class=\"note\">(The Goods Manual states this twice \u2014 \"the system should automatically extend (only ONCE)\" and again in this sentence. The Works Manual omits the \"only once\" restriction entirely.)<\/em><\/p><\/aside>\nf) the 'one' device: If a Procuring Entity wants to go ahead even with low competition<\/em> (E.g., due to urgency), they May mention 'ONE'<\/em> As the minimum bid \u2014 so that if no bid is received, the tender is automatically extended; Otherwise, it is not<\/em>.<\/p>\nG) GeM and e-procurement portals shall update their systems accordingly<\/em>.<\/p>\n<h2>5.9<\/span>Availability and Cost of Tender Documents<\/span><\/h2>\n(Rule 161(v) of GFR 2017)<\/em><\/p>\n1. Availability window: Tender documents should preferably be sold or available for download after the date and time of the start of availability till the deadline for availability<\/em> As mentioned in the tender document (say up to the date of opening of tenders<\/em>) \u2014 and this should be clearly indicated in the documents<\/em>.<\/p>\nThe organisation should also post the complete tender document on the website<\/em> (W<\/span> adds: \"and on GeM-CPPP\") AND permit prospective bidders to make use of the document downloaded from the website<\/em>.<\/p>\nW<\/span> adds: *The advertisement for invitation of tenders should <\/strong>give the complete web-address from where bid documents can be downloaded.*<\/p>\n2. The cost Rule: Normally, no tender document fee should be charged<\/em>.<\/p>\nIn exceptional cases, a Procuring Entity May fix a bare minimum cost<\/em> Of tender documents to defray the expenses\/ effort of preparing documents, drawings<\/em>, ETC.<\/p>\nThe cost of the tender document is to be submitted to the authority nominated therein by the prospective bidder in the form of a demand draft\/ banker's cheque\/ pay order\/ online payment gateway<\/em>.<\/p>\n3. Who is exempt from the tender document cost \u2014 the two Manuals differ:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Firms eligible for exemption<\/th><\/tr><\/thead><tbody><tr><td>G<\/span> GOODS<\/td><td>MSEs AND<\/em> The Procuring Entity's registered units<\/strong>(for relevant items and monetary limit)<\/em><\/td><\/tr><tr><td>W<\/span> WORKS<\/td><td>only the Procuring Entity's registered units (for relevant grades of work and monetary limit)<\/em> \u2014 MSEs are not named<\/td><\/tr><\/tbody><\/table><\/div>\nSuch firms HAVE TO submit\/ upload scanned copies of documents in support of this exemption<\/em>.<\/p>\n<h2>5.10<\/span>Participation of Bidders \u2014 Eligibility Criteria<\/span><\/h2>\n1. The general rule: The tender document May lay down eligibility criteria<\/em> For participating in the tender process \u2014 e.g., restrictions on participation by bidders relating to:<\/p>\n<aside class=\"note\">Type of commercial entity (G<\/span> adds: e.g., the bidders must be a private or public registered entity)<\/em> \u00b7 insolvency \u00b7 ineligibility\/ debarment\/ convictions\/ conflict of interest \u00b7 Class of bidders (as per Make in India order) \u00b7 bidders from countries having land borders with India, etc.<\/p><\/aside>\nExcept for the eligibility criteria, participation shall be open to all bidders in open\/ global tender enquiries<\/em>.<\/p>\nIn the case of the second stage<\/em> (Of two-stage bidding or PQB) or limited tenders<\/em>, participation shall be open only to such bidders who have been previously shortlisted or specifically invited<\/em>.<\/p>\n2. Purchase preference policies: The Procuring Entity May reserve its right to grant preferences to eligible bidders under various Government policies\/ directives (policies relating to Make in India, MSME, Start-ups, etc.)<\/em>.<\/p>\n3. The additional works eligibility heads \u2014 W<\/span> ONLY (not in the Goods list)<\/em>:<\/p>\nA) legal status of the bidder: Individual bidder \u2014 a natural person, or a private entity, or a public entity (state-owned enterprise or institution), or a joint venture\/ consortium (JV\/C).<\/p>\nB) the Rs. 10 crore JV threshold: For package size exceeding certain values [say \u2014 Rs. 10 (ten) crore]<\/em>, JV\/C May be permitted to participate in the procurement of works in specific situations where the credentials required are not likely to be available with an individual bidder<\/em>.<\/p>\n<ul class=\"lst\"><li>Maximum number of partners in JV shall be limited (say \u2014 three)<\/em>.<\/li><li>In case of JV, all the partners shall be jointly and severally liable<\/em> for the successful completion of the work.<\/li><li>Participation of JV\/C is specifically discouraged<\/em> In the case of quality Oriented Procurement (QOP) with QCBS evaluation<\/em>.<\/li><\/ul>\nC) registrations\/ licences: GSTIN, PAN, EPF, ESI, labour, Private Security Agencies (PASARA), etc.<\/p>\nD) submission of requisite bid Security<\/em> (Or Bid Security declaration, if allowed) or proof of exemption therefrom.<\/p>\ne) FREE FROM financial insolvency, debarment, or convictions<\/em>.<\/p>\nf) A consistent history of litigation or arbitration<\/em> By the bidder May result in disqualification.<\/p>\nG) restriction as per Government policies:<\/strong> for Class-II Local Suppliers and Non-Local bidders under Make-in-India; and bidders from land-border countries or with a Specified ToT arrangement.<\/p>\n4. Conflict of interest \u2014 the four (or three) situations:<\/p>\nBidders having a conflict of interest shall not be eligible to participate<\/em> In the tender process \u2014 unless the conflict stemming from such relationship has been resolved in a manner acceptable to the Procuring Entity<\/em> Throughout the tender process and execution of the contract.<\/p>\n<aside class=\"note\">W<\/span> adds: *\"<\/strong>Such conflict of interest can lead to anti-competitive practices to the detriment of the Procuring Entity's interests.\"*<\/p><\/aside>\nThe bidder shall be considered to have a conflict of interest in the following situations:<\/p>\nA) personnel relationship: If its personnel have a close personal, financial, or business relationship<\/em> With any personnel of the Procuring Entity who are directly or indirectly related to the procurement or execution process of the contract, which can affect the decision of the Procuring Entity directly or indirectly.<\/p>\nB) prior involvement: The bidder (or his allied firm<\/em>) provided services for the need assessment\/ procurement planning<\/em> Of the tender process in which it is participating.<\/p>\n<aside class=\"note\">Footnote (all Manuals): \"need assessment\/ procurement planning\" means, inter alia, need assessment, preparation of feasibility\/ cost estimates\/ Detailed Project Report (DPR), design\/ technical specifications, terms of reference (ToR)\/ Activity Schedule\/ schedule of requirements or the Tender Document, etc.<\/em><\/p><\/aside>\nC) the agency Rule \u2014 G<\/span> Only: A principal can authorise only one agent<\/em>, and an agent should not represent or quote on behalf of more than one principal<\/em>. However, this shall not debar more than one authorised distributor<\/em> (With or without the OEM) from quoting equipment manufactured by an OEM in procurements under a Proprietary Article Certificate<\/em>.<\/p>\nD) multiple bids \u2014 and the two Manuals differ on the consequence:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>Consequence of participating in more than one bid<\/th><\/tr><\/thead><tbody><tr><td>G<\/span> GOODS<\/td><td>participation in any capacity by a bidder (including as a partner\/ JV member or sub-contractor in another bid or vice versa) in more than one bid shall result in the disqualification of all bids in which he is a party<\/em><\/td><\/tr><tr><td>W<\/span> WORKS<\/td><td>\u2026Shall result in the *disqualification of <\/strong>the bid in which he is a main\/ principal\/ lead bidder*<\/td><\/tr><\/tbody><\/table><\/div>\nHOWEVER (both Manuals): This DOES NOT<\/em> Limit the participation of an entity as a sub-contractor in more than one bid<\/em>, if he is not bidding independently in his own name or as a member of a JV\/ consortium<\/em>.<\/p>\n5. OEM\/ agents of supplier \u2014 G<\/span> ONLY:<\/p>\nA) the manufacturer's authorisation requirement: Except in the case of commercially-off-the-shelf (cots)<\/em> Items, when a firm sends a quotation for an item manufactured by some different company<\/em>, the firm is also required to attach, in its quotation:<\/p>\n<ul class=\"lst\"><li>THE manufacturer's authorisation certificate<\/em>; and<\/li><li>THE manufacturer's confirmation of extending the required warranty support<\/em> for that product<\/strong>(in addition to the bidder's own confirmation of the required warranty)<\/em>, as per formats given in Tender Documents.<\/li><\/ul>\nThis is necessary to ensure a quotation from a responsible party offering a genuine product backed by a warranty obligation from the concerned manufacturer<\/em>.<\/p>\nB) tender-specific authorisation for large contracts: In the case of large contracts, especially capital equipment<\/em>, the manufacturer's authorisation must be insisted upon on a tender-specific basis \u2014 not general authorisation\/ dealership<\/em> \u2014 by clearly declaring it in the tender documents.<\/p>\n<h2>5.11<\/span>Pre-NIT and Pre-bid Conferences<\/span><\/h2>\n(Rule 173(x) of GFR 2017)<\/em><\/p>\n<h3>5.11.1<\/span>Pre-Notice Inviting Tender (NIT) Conference \u2014 Market Consultation<\/span><\/h3>\nIN complex and innovative procurement cases<\/em>, or where the Procuring Entity May not have the required knowledge to formulate tender provisions<\/em>, A pre-nit conference (before finalising\/ publishing NIT)<\/em> May help the Procuring Entity in obtaining inputs from the industry<\/em>.<\/p>\nSuch conferences should be widely publicised<\/em> So that different potential suppliers\/ contractors can attend (DoE's OM No. F.1\/1\/2021-PPD dated 29.10.2021, para 9.2)<\/em>.<\/p>\nAll inputs received from the probable bidders in such a conference shall be compiled\/ minuted<\/em>, and requirements finalised (with the approval of the technical committee, if formed, by the Competent Authority<\/em>).<\/p>\nIn a more complex, large, and green-field\/ blue-sky project, two-stage tendering (with EoI) would be more appropriate and transparent<\/em>.<\/p>\n<h3>5.11.2<\/span>Pre-bid Conference<\/span><\/h3>\nWhen it must be provided for:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Trigger<\/th><\/tr><\/thead><tbody><tr><td>G<\/span> GOODS<\/td><td>in case of turnkey contract(s) and sophisticated and costly equipment, large works and complex consultancy assignments<\/em><\/td><\/tr><tr><td>W<\/span> WORKS<\/td><td>in case of turnkey contract(s) or contract(s) of special nature<\/em> for procurement of sophisticated and costly work\/ services\/ equipment<\/em> \u2014 or wherever felt necessary'<\/td><\/tr><\/tbody><\/table><\/div>\na suitable provision shall be kept in the tender documents for one or more pre-bid conferences (after the NIT and tender documents have been published)<\/em> \u2014 FOR clarifying issues\/ clearing doubts<\/em>, if any, and for ensuring a level playing field<\/em>, relating to the specifications and other allied technical\/ commercial details.<\/p>\nA) who May attend, and the deemed-no-issue Rule:<\/p>\n<ul class=\"lst\"><li>G<\/span> Participation in the pre-bid conference May be restricted to prospective bidders who have downloaded the tender document<\/em>.<\/li><li>Participation is not mandatory<\/em>.<\/li><li>However, if a bidder chooses not to (or fails to) participate in the pre-bid conference or does not submit a written query, it shall be assumed that they have no issues regarding the techno\/ commercial conditions<\/em>.<\/li><\/ul>\nB) the timing Rules:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Event<\/th><th>Timing<\/th><\/tr><\/thead><tbody><tr><td>Date of the pre-bid meeting<\/td><td>normally after 15 to 21 (fifteen to twenty-one) days<\/em> Of the issue of the tender document \u2014 and should be specified therein<\/em><\/td><\/tr><tr><td>Last date for written queries and for registration for participation<\/td><td>mentioned in the tender document \u2014 7 days before the date of the conference, if not specified<\/em><\/td><\/tr><tr><td>Mode<\/td><td>the pre-bid conference May also be held online<\/em> At the discretion of the Procuring Entity<\/td><\/tr><\/tbody><\/table><\/div>\nc) Timelines to be declared: Timelines for response to the pre-bid conference \u2014 E.G., replies to questions, issue of minutes of the pre-bid conference, corrigenda<\/em>, etc. \u2014 should be mandatorily mentioned in the tender document and complied with<\/em>.<\/p>\nD) identity requirement: Delegates participating in the pre-bid conference must provide a photo identity and an authorisation letter as per the specified format from their company\/ principals<\/em> \u2014 otherwise, they shall not be allowed to participate<\/em>.<\/p>\nE) the seven-day minutes Rule: After the pre-bid conference, minutes of the pre-bid conference shall be published on the Procuring Entity's portal within seven days of the conference<\/em>.<\/p>\nIf required, a clarification letter and corrigendum<\/em> To the tender document shall be issued, containing amendments to various provisions \u2014 which shall form part of the tender document<\/em>.<\/p>\nTo give reasonable time to the prospective bidders to take such clarifications into account in preparing their bids, the Procuring Entity May suitably extend, as necessary, the deadline for the bid submission<\/em>.<\/p>\n<h2 class=\"src-multi\">5.12<\/span>Site Visit<\/span>W<\/span>C<\/span>NC<\/span>NOT in Goods<\/span><\/h2><div class=\"srcblock src-multi\">\nThe bidder\/ consultant, at its own cost, responsibility and risk<\/em>, MAY visit and examine the site of work\/ required services and its surroundings<\/em>, and obtain all information that May be necessary for preparing the bid and entering into a contract<\/em> for the works\/ services.<\/p>\n<aside class=\"note\">This provision does not appear in the Goods Manual \u2014 a site visit has no analogue in a supply contract.<\/p><\/aside>\n<\/div><h2>5.13<\/span>Clarification of Tender Documents<\/span><\/h2>\nA prospective bidder requiring clarification on the tender documents May ask questions in writing\/ electronically<\/em> From the office\/ contact person as mentioned in the tender document.<\/p>\nThe three time limits:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>Time limit<\/th><\/tr><\/thead><tbody><tr><td>Questions must be raised<\/td><td>before the clarification end date<\/em> Mentioned in the tender document \u2014 or, if not mentioned, before 7 days of the deadline for the bid submission<\/em><\/td><\/tr><tr><td>Holiday rule<\/td><td>this deadline shall not be extended in case of any intervening holidays<\/em><\/td><\/tr><tr><td>Response by the Procuring Entity<\/td><td>a response will be sent in writing\/ digitally at least 5 days prior to the date of opening of the tenders<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nONLY material queries and their responses<\/em> Shall be uploaded on the website \u2014 without revealing the identity of the bidder making the query<\/em>.<\/p>\nWhen the response to clarification changes the requirement significantly<\/em> And\/ or when there is not much time left<\/em> for the bidders to respond, the time and date of submission of tenders May also be suitably extended (not less than 3 days)<\/em>.<\/p>\n<h2>5.14<\/span>Withdrawal\/ Amendments\/ Modifications to Bids by Bidders<\/span><\/h2>\n1. What is permitted before the deadline: The bidder, after submitting its bid, is permitted to substitute\/ alter\/ modify it, superseding the earlier bid<\/em> \u2014 so long as such revised bid is uploaded\/ received duly sealed and marked like the original bid, up to the deadline of submission of bids<\/em>.<\/p>\nResubmission of a bid shall require uploading all documents, including the financial bid, afresh<\/em>.<\/p>\nThe system shall consider only the last bid submitted<\/em> As a valid bid.<\/p>\nThe bidder May withdraw his bid before the bid submission deadline<\/em> \u2014 and it shall be marked as withdrawn and shall not be opened<\/em> During the bid opening.<\/p>\n2. What is prohibited after the deadline \u2014 and the penalty:<\/p>\nAny such action after the bid-submission deadline is not permitted<\/em>.<\/p>\nWithdrawal\/ amendment\/ modification\/ alteration\/ impairment\/ derogation of a bid, in any respect<\/em>, by its bidder between the deadline for submission of bids and the expiration of the period of bid validity<\/em> \u2014 his Bid Security\/ EMD shall be forfeited<\/em>, besides imposition of any other punitive remedy available to the Procuring Entity.<\/p>\nIn such cases, tender evaluation shall be proceeded with in terms of the evaluation chapter.<\/p>\n<h2>5.15<\/span>Sealing\/ Marking of Bids in Off-line Tenders<\/span><\/h2>\n1. The tender document should indicate the manner of submission\/ uploading of bids<\/em>.<\/p>\n2. The double-envelope discipline: In the case of off-line tenders, the total number of bid copies<\/em> (for example, duplicate or triplicate, and so on) required to be submitted should be specified.<\/p>\nThe bidder is to:<\/p>\n<ul class=\"lst\"><li>Seal the original and each copy<\/em> Of the bid in separate envelopes<\/em>, duly marking the same as \"original<\/em>\", \"duplicate<\/em>\", and so on;<\/li><li>Print the address of the purchasing office and the tender reference number<\/em> On the envelopes;<\/li><li>Further, the sentence \"Not to be opened before (the due date and time of tender opening)\"<\/em> is also to be printed on these envelopes;<\/li><li>The inner envelopes are then to be put inside a bigger outer envelope<\/em>, which will also be duly sealed, marked, and so on, as above.<\/li><\/ul>\nIf the outer envelope is not sealed and marked properly<\/em> As above, the Procuring Entity does not assume any responsibility for its misplacement, premature opening, late opening<\/em>, and so on.<\/p>\n<h2>5.16<\/span>Uploading\/ Submission of Bids<\/span><\/h2><h3>5.16.1<\/span>Uploading Bids in e-Procurement<\/span><\/h3>\n<aside class=\"note\">Different e-Procurement portals may have different provisions, but the following is the generic description. (Portals must be GCQE-compliant<\/strong> \u2014 Guidelines for Compliance to Quality Requirements of eProcurement, July 2021, STQC Directorate, MeitY.)<\/em><\/p><\/aside>\na) the Procuring Entity is neither a party nor a principal<\/em> In the relationship between the bidder and the organisation hosting the e-procurement portal (hereinafter called the portal).<\/p>\nBidders must acquaint and train themselves<\/em> With the Rules, regulations, procedures, and implied conditions\/ agreements of the portal. Bidders intending to participate shall be required to register with the portal, and must comply with its conditions \u2014 including registration and a compatible digital signature certificate (DSC). In the case of downloaded documents, the bidder must not make any changes to the contents of the documents while uploading<\/em> \u2014 except for filling in the required information.<\/p>\nB) any query\/ clarification\/ complaint regarding downloading tender documents and uploading bids on the e-procurement portal May be addressed to the portal's help desk<\/em>.<\/p>\nC) the primacy Rule: In case of conflict between the provisions of the portal and the tender document<\/em>, provisions of the portal shall prevail<\/em>.<\/p>\nD) no extension for office closure: Bids must be uploaded by the submission deadline. If the office happens to be closed on the deadline to submit the bids, this deadline shall not be extended<\/em>.<\/p>\ne) ONLY one copy<\/em> Of the bid can be uploaded, and the bidder shall digitally sign all statements, documents, and certificates<\/em> Uploaded by him \u2014 owning sole and complete responsibility for their correctness\/ authenticity<\/em> As per the provisions of the IT ACT 2000<\/em>, as amended.<\/p>\nf) The protected Price Schedule: The Bidder shall write his name in the space provided in the specified location only<\/em>. Bidder shall type rates in figure only<\/em> in the rate column of respective item(s) \u2014 without any blank cell or zero values in the rate column<\/em>, and without any alteration\/ deletion\/ modification of other portions of the excel sheet. If space is inadequate, the Bidder may upload additional documents under \"Additional Documents\" in the \"bid Cover Content\".<\/p>\nG) the server clock Rule: The date and time of the e-procurement server clock<\/em> \u2014 which is also displayed on the bidders' dashboard \u2014 shall be used as the reference time<\/em> for deciding the closing time of bid submission. No request on the account that the server clock was not showing the correct time, and that a particular bidder could not submit their bid because of this, shall be entertained. Failure or defects on the internet, or heavy traffic at the server, shall not be accepted as a reason for a complaint<\/em>. The Procuring Entity shall not be responsible for any failure, malfunction or breakdown of the electronic system<\/em> Used during the e-tender process.<\/p>\nh) Encryption: The bidder should ensure the correctness of the bid before uploading, and take a printout of the system-generated submission summary to confirm the successful bid upload<\/em>. All bids uploaded by the bidder to the portal shall be automatically encrypted<\/em>. The encrypted bid can only be decrypted\/ opened by the authorised persons on or after the due date and time<\/em>.<\/p>\ni) Scanned documents: Bidder must upload scanned copies of originals<\/em> (or self-attested copies of originals \u2014 as specified), and should ensure the clarity\/ legibility<\/em> of the scanned documents. The Procuring Entity reserves its right to call for verification of originals<\/em> Of all such self-certified documents from the bidders at any stage of evaluation<\/em> \u2014 especially from the successful bidder(s) before the issue of Letter of Award (LoA)<\/em>.<\/p>\nj) physical submission of originals \u2014 the one case where the deadline DOES extend: If so specified in the tender document, originals (or self-attested copies) of specified scanned, uploaded documents must be physically submitted before the deadline specified for it (before the bid submission deadline, if not so specified<\/em>), sealed in double cover, and acknowledgement must be obtained.<\/p>\nFailure to do so is likely to result in the bid being rejected<\/em>. If the office is closed on the deadline for the physical submission of originals<\/em>, IT shall stand extended to the next working day<\/em> At the same time and venue.<\/p>\n<aside class=\"note\">(Contrast sub-para (d) above \u2014 for electronic<\/strong> submission, office closure does NOT<\/strong> extend the deadline.)<\/em><\/p><\/aside>\nk)<\/strong>no Manual bids shall be made available or accepted for submission in e-procurement<\/strong>(except for originals of scanned copies as per sub-para (j) above)<\/em>.<\/p>\n<h3>5.16.2<\/span>Submission of Bids in the Offline Tender Process<\/span><\/h3>\n<aside class=\"note\">In offline tenders, receipt and custody of bids shall be done transparently to maintain the credibility of the process<\/em>.<\/p><\/aside>\nA) the technical and financial proposals shall be submitted at the same time<\/em>. To safeguard the integrity of the process, the technical and financial proposals shall be submitted in separate sealed envelopes and kept in an outer sealed envelope<\/em>.<\/p>\nb) the tender box and its two locks: The procuring entity shall maintain tender boxes<\/em> for receiving the bids at suitable locations, which would facilitate security and easy access for bidders<\/em>.<\/p>\nIf required, tender boxes should be separate for each day of the week of tender opening<\/em>, and should be sealed by the Bid Opening Committee (boc) of the day<\/em>. The tender box shall have two locks<\/em>. The key of one lock will be with the head of the office<\/em>, and the other key with the official nominated by him<\/em>.<\/p>\nc) Courier and prohibited modes: Bids received by courier<\/em> Shall be deposited in the tender box by the despatch section<\/em> Till the date and time of bid opening. Bids sent by telex, cable or facsimile are to be ignored and rejected<\/em>.<\/p>\nD) bulky\/ oversized bids: For bulky\/ oversized bids that cannot be dropped into tender boxes<\/em>, the officials authorised to receive such bids shall maintain proper records and provide a signed receipt with the date and time<\/em> To the bearer of the bid. He will also sign on the cover, duly indicating the date and time of receipt<\/em>. Names and designations of at least two such authorised officers<\/em> Should be mentioned in the tender documents.<\/p>\n<h3>5.16.3<\/span>Bid Security<\/span><\/h3>\nA self-attested scan of the original Bid Security\/ BSD<\/em> Should be uploaded along with bids. Bids not complying with these provisions shall be rejected<\/em>.<\/p>\nIn off-line tenders, bid Security or \u2014 if permitted \u2014 bid securing declaration (BSD) must accompany the bid<\/em> As per instructions in the tender document.<\/p>\n<h2>5.17<\/span>Bid Validity<\/span><\/h2>\nA bid shall remain valid for the period mentioned in the tender document \u2014 90 days if not so specified<\/em>.<\/p>\nA bid that is valid for a shorter period shall be rejected as non-responsive<\/em>.<\/p>\nIn case the day up to which the bids are to remain valid falls on \u2014 or is subsequently declared \u2014 a holiday\/ closed day<\/em> for the Procuring Entity, the bid validity shall automatically be deemed to be extended up to the next working day<\/em>.<\/p>\nThe validity period should not be unreasonably long<\/em>, as keeping the tender unconditionally valid for acceptance for a longer period entails the risk of getting higher prices from the bidders<\/em>.<\/p>\n<aside class=\"note\">C<\/span> comparison: EoI validity <\/strong>not less than 60 days; RfP validity <\/strong>not less than 90 days.<\/p><\/aside>\n<h2>5.18<\/span>Opening of Bids<\/span><\/h2>\n1. Timing and the holiday Rule: Immediately after the deadline for bid submission, the Procuring Entity shall proceed to the bid opening.<\/p>\nIf the specified date of bid opening falls on \u2014 or is subsequently declared \u2014 a holiday or closed day<\/em> for the Procuring Entity, the bids shall be opened at the appointed time on the next working day<\/em>.<\/p>\nComposition of the Bid Opening Committee (boc): In offline tenders, the boc shall comprise one officer each from the Procuring Entity and associated\/ integrated finance<\/em>.<\/p>\n2. E-procurement: All tenders uploaded by bidders are received, safeguarded, and opened online on the portal<\/em>.<\/p>\n3. The offline bid-opening procedure \u2014 ten steps:<\/p>\nA) letters of authority: The authorised representatives of bidders who intend to attend the tender opening in OTE\/ GTE\/ SLTE<\/em> ARE TO bring letters of authority<\/em> From the corresponding bidder with them. The prescribed format should be given in the tender document. All bid-opening activities should be carried out demonstrably before such a gathering<\/em>.<\/p>\n(Bid Opening Attendance Sheet cum Report \u2014 G<\/span> Annexure 13 \u00b7 W<\/span> Annexure 3 \u00b7 C<\/span> Annexure 5 \u00b7 NC<\/span> Annexure 5.)<\/em><\/p>\nb) opening the tender box \u2014 and the treatment of LATE and WRONGLY-DROPPED bids:<\/p>\n<ul class=\"lst\"><li>At a prescheduled date and time, the BOC of the day should get the tender box opened after ensuring and demonstrating that the seal on the box has not been tampered with<\/em>.<\/li><li>All bids should be collected from the tender box. Bids for tenders not opening on that day should be put back into the box and the box resealed<\/em>.<\/li><li>Sometimes, tenders are dropped wrongly<\/em> Into this tender box. Such wrongly dropped tenders, with appropriate endorsement<\/em>, should be put into the appropriate box<\/em> \u2014 OR sent to the Tender Committee (TC) concerned if the date of opening is over<\/em>.<\/li><li>The bids for different tenders opening on the day (including oversized bids, which were submitted to designated officers<\/em>) should be sorted, and a count for each tender should be announced and recorded<\/em> \u2014 particularly noting any modifying\/ altering\/ withdrawal of bids<\/em>.<\/li><li>Boc should ensure and demonstrate that bid envelopes are duly sealed and untampered<\/em>.<\/li><li>Late bids should be separately counted but kept aside and not opened<\/em>. In the case of an advertised tender enquiry or Limited Tender Enquiry, late bids (i.e., bids received after the specified date and time for receipt of bids) should not be considered<\/em> \u2014 Rule 165 of GFR 2017.<\/li><\/ul>\nC) the two-stage opening: The technical bids will be opened on the pre-announced date, and the financial proposals shall remain sealed and shall be opened publicly in due course of time only for those firms that have technically qualified<\/em>.<\/p>\nD) serial numbering and initialling: After opening, every tender shall be numbered serially<\/em> (say 3\/14 \u2014 if it is the third bid out of 14 total), initialled, and dated on the first page<\/em> By the boc.<\/p>\n<ul class=\"lst\"><li>Each page of the price Schedule or letter attached to it shall also be similarly initialled \u2014 particularly the prices, delivery period, and so on, which shall also be circled and initialled along with the date<\/em>.<\/li><li>Any other page containing significant information should also be dealt with similarly.<\/li><li>Blank pages, if any, should be crossed out across and marked accordingly<\/em> By the boc.<\/li><li>The original (and duplicate, if any) copies in a tender set are to be marked accordingly by the boc.<\/li><\/ul>\ne) the alterations protocol \u2014 one of the most detailed procedural rules in the Manuals:<\/p>\n<ul class=\"lst\"><li>Erasure\/ cutting\/ overwriting\/ use of whitener\/ columns left unfilled in tenders, if any, shall be initialled along with the date and time and numbered<\/em> By the officials opening the tenders.<\/li><li>THE total number of such noticed alterations (or the absence of any alteration) should be explicitly marked on the first page of the bid<\/em>.<\/li><li>Wherever quantity\/ amount is written only in figures<\/em>, the boc should write them in words<\/em>.<\/li><li>ALL rebates\/ discounts<\/em> Should be similarly circled, numbered, and signed<\/em>.<\/li><li>In the absence of any alteration\/ overwriting\/ whitener\/ blanks, the remark \"no corrections noted\"<\/em> Should be written. Similarly, the absence of discounts should be marked with \"no discounts noted\"<\/em>.<\/li><\/ul>\nF) what the boc announces \u2014 and what it May not do: The boc is to announce the salient features of the tenders<\/em> \u2014 such as description and specification of the goods, quoted price, terms of delivery, delivery period, discount (if any), whether EMD furnished or not, and any other distinctive feature<\/em> \u2014 for the information of the representatives attending the tender opening. Clarifications by the bidders shall not be allowed or recorded<\/em> During the bid opening. The boc has no authority to reject any tender at the tender opening stage<\/em>.<\/p>\ng) Samples: PROPER sealing and codification<\/em> Needs to be done on reference samples, as well as for samples that accompany the bid. These should be kept for reference under lock and key<\/em>. Details should be recorded in the sample register<\/em> Maintained in the opening section.<\/p>\n<aside class=\"note\">Footnote (in both G and W): Please note that calling for a sample along with the bid for evaluation is strictly discouraged.<\/em><\/p><\/aside>\nh) Financial instruments: Should BE noted in the bid opening report\/ register and handed over to the finance section for safe custody and monitoring<\/em>.<\/p>\ni) The Bid Opening Report: A bid opening report containing the names of the bidders (serial number wise) and salient features of the tenders, as read out during the public opening<\/em>, will be prepared by the tender opening officers and duly signed by them along with the date and time<\/em>.<\/p>\nThe tenders that have been opened, the list of the representatives attending<\/em> The tender opening, and the bid opening report are to be handed over to the nominated procuring officer \u2014 and an acknowledgement shall be obtained from him<\/em>.<\/p>\nj) A similar procedure shall later be followed during financial bid opening<\/em> In case of multiple-envelope bidding.<\/p>\n<h2>5.19<\/span>Transparency and Protecting Third-Party Rights of Bidders<\/span><\/h2>\n1. The public interest: Objectives of transparency in e-PROCUREMENT ARE amply served if data relating to the tender and award of contract are accessible to the public<\/em>.<\/p>\n2. The participating bidders' interest: As far as the bidders who have participated in a tender (participating bidders<\/em>) are concerned \u2014 for transparency, a comparative summary of technical (compliance details) and of financial bids (including QCBS calculations, wherever applicable)<\/em> Should also be accessible to them.<\/p>\nBUT not necessarily to the public at large<\/em> \u2014 unless sought and if permissible under the RTI Act<\/em>.<\/p>\n3. The trade-secrets concern: Bidders May have genuine concerns about techno-commercial and operational trade secrets<\/em> If their full technical and financial bids are accessible to their competitors or the public at large.<\/p>\nThis concern May get aggravated in complicated EPC\/ PPP\/ consultancy procurements<\/em>.<\/p>\nTechnical\/ financial bids should not be made accessible to the public at large<\/em>, AND a call needs to be taken based on the sensitivity of details in the bids to restrict access of even participating bidders to full technical\/ financial bids of their competitors<\/em>.<\/p>\nThe decision of the Procuring Entity to share or not share the full technical bids with other participating bidders should be clearly brought out in the tender documents<\/em>.<\/p>\n4. The reserved right: However, a clause May be added to the tender documents reserving the right of the Procuring Entity and the e-procurement portal to provide access to bidders' technical\/ financial bids to other participating bidders<\/em> \u2014 in addition to the comparative summary of technical and financial bids of all participating bidders.<\/p>\n<h2>5.20<\/span>Bid Invitation Process \u2014 Risks and Mitigations<\/span><\/h2>\n<aside class=\"note\">This five-row table is reproduced in essentially identical terms in all four Manuals.<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>exceptions to an open tender process are abused<\/em>, leading to single-source processes<\/em>.<\/td><td>Rigorously follow the conditions under which open tendering can be dispensed with.<\/td><\/tr><tr><td>2<\/td><td>WHEN short-lists<\/em> Are used, the process of preparation of short-lists May be non-transparent<\/em>, AND all eligible firms May not be included, and some ineligible firms May get included<\/em>.<\/td><td>Registration of bidders\/ contractors: All major procuring departments must keep a list of registered bidders for use in restricted tendering<\/em>. Publicise even restricted bids<\/em> On your website. Bidders for LTE\/ SLTE May be transparently selected with the approval of ca<\/em>.<\/td><\/tr><tr><td>3<\/td><td>pre-qualification criteria: PQB has the potential of getting misused or being applied without considering the restrictive nature of competition<\/em>. PQC should be relevant to the quality requirements, and neither very stringent nor very lax in restricting\/ facilitating the entry of bidders. These criteria should be clear, unambiguous, exhaustive, and yet specific. Also, there should be FAIR COMPETITION.<\/td><td>G<\/span>:<\/strong>Lay down criteria when PQB tendering<\/em> is warranted. Also, model PQC criteria for diverse types of procurements should be laid down<\/em>. W<\/span> variant:<\/strong>Lay down criteria when two-stage tendering<\/em> is warranted. Also lay down model PQC criteria for diverse types of procurements.<\/strong><\/td><\/tr><tr><td>4<\/td><td>invitation to tender (an open bid) is not well publicised or gives insufficient time<\/em> \u2014 thereby restricting the number of bidders that participate<\/em>.<\/td><td>Publicity and adequate time for bid submission must be ensured. Higher-level approval should be obtained for a shorter bid submission period<\/em>.<\/td><\/tr><tr><td>5<\/td><td>evaluation criteria are not set from the beginning<\/em>, OR ARE not objective<\/em>, OR not clearly stated<\/em> In the tender documents \u2014 thereby making them prone to being abused<\/em>.<\/td><td>Objective, relevant and clearly stated evaluation criteria must be specified in the tender document<\/em>.<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>Appendix to Chapter 5 \u2014 Points of Difference Between the Four Manuals<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Chapter number<\/td><td>G\/C\/NC: Chapter 5 \u00b7 W: CHAPTER 4<\/td><\/tr><tr><td>2<\/td><td>Chapter title<\/td><td>IDENTICAL in all four \u2014 one of only two such chapters<\/strong>(W spells its risk section \"Bidding<\/strong> Invitation Process\", as do C and NC; G says \"Bid<\/strong> Invitation Process\")<\/em><\/td><\/tr><tr><td>3<\/td><td>Number of sections<\/td><td>G: 5 \u00b7 W: 15 (most granular) \u00b7 C: 8 \u00b7 NC: 5<\/td><\/tr><tr><td>4<\/td><td>Model Tender Documents<\/td><td>G\/C\/NC cite DoE MTDs (Goods & NCS Oct 2021; Consultancy April 2023)<\/em> \u00b7 W refers instead to \"relevant standard bidding documents\" and says to follow CPWD's if the organisation has none<\/td><\/tr><tr><td>5<\/td><td>Survey & soil investigation report, area grading, mapping of underground facilities to be part of the tender document<\/td><td>W ONLY<\/td><\/tr><tr><td>6<\/td><td>\"Facilities and inputs which will be provided to the contractor by the Ministry\/ Department\" as an essential aspect<\/td><td>W ONLY<\/td><\/tr><tr><td>7<\/td><td>\"Requirements as to documentary evidence\" as an essential aspect<\/td><td>W ONLY<\/td><\/tr><tr><td>8<\/td><td>Footnote defining \"HIGHEST\" bidder as the H1 QCBS scorer<\/td><td>W ONLY<\/td><\/tr><tr><td>9<\/td><td>Order of the last two tender-document sections<\/td><td>G: Financial Bid then Submission Forms \u00b7 W: Submission Forms then Financial Bid<\/td><\/tr><tr><td>10<\/td><td>Section VII titled \"DRAWING, Technical Specifications and Quality Assurance\"<\/td><td>W<\/strong> (G omits \"Drawing\")<\/td><\/tr><tr><td>11<\/td><td>The four circumstances warranting an SCC clause<\/td><td>W ONLY<\/td><\/tr><tr><td>12<\/td><td>Evaluation by item\/ lot\/ entire scope; milestone identification \"in an optimal and sequential manner\"<\/td><td>W ONLY<\/td><\/tr><tr><td>13<\/td><td>ACCESSIBILITY MANDATE \u2014 RPwD Act 2016 & Rules 2017; Harmonised Guidelines (MoHUA); IS 17802 Parts 1 & 2<\/td><td>W ONLY<\/td><\/tr><tr><td>14<\/td><td>Performance Standards & QA; Method Statement; Work Plan; Critical Material Schedule; SLA; Occupational Safety, Health and Working Conditions<\/td><td>nc only<\/td><\/tr><tr><td>15<\/td><td>The three NC Qualification Criteria and the 3\u00d740% \/ 2\u00d750% \/ 1\u00d780% volume test<\/td><td>nc only<\/td><\/tr><tr><td>16<\/td><td>Contract Manager \u2014 5 years' experience, 3 as manager<\/td><td>nc only<\/td><\/tr><tr><td>17<\/td><td>Turnover multiple of 3\u20137 times, with the stated reason that NC needs a higher multiple than Works<\/td><td>nc only<\/td><\/tr><tr><td>18<\/td><td>Upper cap on demanded turnover in higher-value procurements<\/td><td>nc only<\/td><\/tr><tr><td>19<\/td><td>Entry window for sub-contractors \u2014 repair contracts up to Rs. 60 lakh; no more than 2 contracts under relaxed credentials<\/td><td>W ONLY<\/td><\/tr><tr><td>20<\/td><td>Demerged entities \u2014 five-year use of parent credentials<\/td><td>W, C, NC<\/strong> \u2014 not in Goods<\/em><\/td><\/tr><tr><td>21<\/td><td>Conditional discounts not considered at evaluation but availed if bidder otherwise eligible<\/td><td>W ONLY<\/td><\/tr><tr><td>22<\/td><td>REoI DOCUMENT \u2014 contents, forms, EoI validity 60 days, \"do not ask for CVs or approach at EoI stage\", right to make minor ToR adjustments at RfP stage<\/td><td>C ONLY<\/td><\/tr><tr><td>23<\/td><td>RfP DOCUMENT \u2014 rFPL\/ ITC\/ AITC, rfP validity 90 days, budget not to be disclosed except in FBS, STP vs FTP, 14-day association approval, presentation carries no marks<\/td><td>C ONLY<\/td><\/tr><tr><td>24<\/td><td>\"Any procurement portal without Excel BOQ facility should endeavour to build it\"<\/td><td>C + NC<\/td><\/tr><tr><td>25<\/td><td>\"Items for which no rate is entered will not be paid for and are deemed covered\"; lump-sum breakdown requirement<\/td><td>C + NC<\/td><\/tr><tr><td>26<\/td><td>Minimum wage floor; 'NIL' price rejection; LCS for Manpower Outsourcing; police verification and good moral character of deployed manpower<\/td><td>nc only<\/td><\/tr><tr><td>27<\/td><td>e-Publishing exclusion<\/td><td>G\/C\/NC: purchase without quotation & by purchase committee \u00b7 W: works procurement through quotation<\/td><\/tr><tr><td>28<\/td><td>Fixed days for NIT issuance and tender opening; CPWD region-wise table; Rs. 2 crore one-week\/ two-week rule<\/td><td>W ONLY<\/td><\/tr><tr><td>29<\/td><td>21-day extension norm and fresh publication where amendment substantially changes requirements<\/td><td>W ONLY<\/td><\/tr><tr><td>30<\/td><td>Auto-extension \"only ONCE, not repeatedly\"<\/td><td>G states it twice; W OMITS the restriction<\/td><\/tr><tr><td>31<\/td><td>Exemption from tender document cost<\/td><td>G: MSEs and<\/em> registered units \u00b7 W: registered units only (for relevant grades of work)<\/td><\/tr><tr><td>32<\/td><td>Legal status of bidder; Rs. 10 crore JV threshold; max 3 JV partners; JV discouraged in QOP\/QCBS; PASARA and other licences; litigation history disqualification<\/td><td>W ONLY<\/strong>(in this chapter)<\/em><\/td><\/tr><tr><td>33<\/td><td>Consequence of participating in more than one bid<\/td><td>g: Disqualification of ALL<\/em> BIDS in which he is a party \u00b7 W: disqualification of the bid in which he is main\/ principal\/ lead bidder<\/td><\/tr><tr><td>34<\/td><td>One-Principal-one-agent rule and the PAC exception for multiple authorised distributors<\/td><td>G ONLY<\/td><\/tr><tr><td>35<\/td><td>OEM authorisation certificate + warranty confirmation; tender-specific authorisation for capital equipment<\/td><td>G ONLY<\/td><\/tr><tr><td>36<\/td><td>Pre-bid conference trigger<\/td><td>G: turnkey, sophisticated\/ costly equipment, large works, complex consultancy \u00b7 W: adds \"or wherever felt necessary\"<\/td><\/tr><tr><td>37<\/td><td>Participation restricted to those who downloaded the Tender Document<\/td><td>G<\/strong> (W does not state this restriction)<\/td><\/tr><tr><td>38<\/td><td>site visit<\/td><td>W, C, NC \u2014 absent from Goods<\/td><\/tr><tr><td>39<\/td><td>Bid Opening Committee = one officer each from Procuring Entity and Integrated Finance<\/td><td>stated in G<\/strong><\/td><\/tr><tr><td>40<\/td><td>Risk table row 3 mitigation<\/td><td>G: \"when PQB tendering<\/em> is warranted\" \u00b7 W: \"when Two-STAGE tendering<\/em> is warranted\"<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 5<\/p>\n<aside class=\"note\">next: Chapter 6 \u2014 forms of securities, prices, payment terms and price variations (Goods Ch. 6 \u00b7 Works Ch. 5 \u00b7 Consultancy Ch. 6 \u00b7 Non-Consultancy Ch. 6)<\/em> \u2014 the second and last chapter whose title is word-for-word identical in all four Manuals, though its contents diverge sharply: Goods alone carries Incoterms 2020 and Exchange Rate Variation; Works alone carries Mobilisation and Secured Advances and the six-fold breakdown of securities; CS and NC carry the leanest version.<\/p><\/aside><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch6\">Chapter 6<\/p><h1>Forms of Securities, Prices, Payment Terms and Price Variations<\/h1><\/header>\nMerging: Goods Ch. 6 \u00b7 Works Ch. 5 \u00b7 Consultancy Ch. 6 \u00b7 Non-Consultancy Ch. 6<\/em><\/p><h2>Structural Notes<\/span><\/h2>\n1. This is the second and last chapter whose title is WORD-FOR-WORD IDENTICAL in all four Manuals. BUT the Works Manual numbers it CHAPTER 5, not Chapter 6.<\/p>\n2. Despite the identical title, this chapter has the sharpest content divergence of any \"common\" chapter. Three whole bodies of material exist in one Manual only:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Body of material<\/th><th>Exists only in<\/th><\/tr><\/thead><tbody><tr><td>Terms of Payment for Domestic Goods \u00b7 Terms of Payment for IMPORTED Goods \u00b7 Letter of Credit \u00b7 Air Freight Charges \u00b7 Exchange Rate Variation (ERV) \u00b7 INCOTERMS 2020 \u00b7 Customs Duty \u00b7 Insurance Surety Bond and e-BG (full text) \u00b7 Warranty Bank Guarantee<\/td><td>GOODS<\/td><\/tr><tr><td>Security Deposit\/ Retention Money \u00b7 Insurances and Indemnities \u00b7 Variations and Measurement Books \u00b7 Interim Payment Certificates \u00b7 MOBILISATION ADVANCE \u00b7 Plant\/ Machinery\/ Shuttering Advance \u00b7 SECURED ADVANCE against material at site<\/td><td>WORKS<\/td><\/tr><tr><td>The multi-year performance-security reduction rule for SERVICE contracts (5\u20137 years)<\/td><td>CS + NC<\/td><\/tr><\/tbody><\/table><\/div>\n3. The seven common anchors<\/strong>, present in all four in the same order:<\/p>\n<aside class=\"note\">Forms of Security \u2192 Payment Clause \u2192 Advance Payment \u2192 Firm\/ Variable Price \u2192 Statutory Taxes\/ Duties\/ Levies \u2192 Recovery of Public Money from the bill \u2192 Payment against Time-Barred Claims<\/p><\/aside>\n<h2>Concordance for Chapter 6<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>Goods<\/th><th>Works<\/th><th>CS<\/th><th>NCS<\/th><\/tr><\/thead><tbody><tr><td>6.1<\/td><td>Bid Security\/ EMD<\/td><td>6.1.1<\/td><td>5.1.1<\/td><td>6.1.1<\/td><td>6.1.1<\/td><\/tr><tr><td>6.2<\/td><td>Performance Security\/ Guarantee<\/td><td>6.1.2<\/td><td>5.1.2<\/td><td>6.1.2<\/td><td>6.1.2<\/td><\/tr><tr><td>6.3<\/td><td>Security Deposit\/ Retention Money<\/td><td> \u2014 <\/td><td>5.1.3<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>6.4<\/td><td>Insurance Surety Bond (ISB)<\/td><td>6.1.3<\/td><td>(cross-ref)<\/em><\/td><td>(cross-ref)<\/em><\/td><td>(cross-ref)<\/em><\/td><\/tr><tr><td>6.5<\/td><td>Electronic Bank Guarantee (e-BG)<\/td><td>6.1.4<\/td><td>(cross-ref)<\/em><\/td><td>(cross-ref)<\/em><\/td><td>(cross-ref)<\/em><\/td><\/tr><tr><td>6.6<\/td><td>Warranty Bank Guarantee<\/td><td>6.1.5<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>6.7<\/td><td>Verification of Bank Guarantees<\/td><td>6.1.6<\/td><td>5.1.4<\/td><td>6.1.3<\/td><td>6.1.3<\/td><\/tr><tr><td>6.8<\/td><td>Safe Custody and Monitoring<\/td><td>6.1.7<\/td><td>5.1.5<\/td><td>6.1.4<\/td><td>6.1.4<\/td><\/tr><tr><td>6.9<\/td><td>Insurances and Indemnities<\/td><td> \u2014 <\/td><td>5.1.6<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>6.10<\/td><td>Payment Clause \/ Payment Terms<\/td><td>6.2<\/td><td>5.2<\/td><td>6.2<\/td><td>6.2<\/td><\/tr><tr><td>6.11<\/td><td>Terms of Payment \u2014 Domestic Goods<\/td><td>6.3<\/td><td> \u2014 <\/td><td>6.3 (generic)<\/em><\/td><td>6.3 (generic)<\/em><\/td><\/tr><tr><td>6.12<\/td><td>Terms of Payment \u2014 Imported Goods; LC<\/td><td>6.4<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>6.13<\/td><td>Advance Payment<\/td><td>6.5<\/td><td>5.3<\/td><td>6.4<\/td><td>6.4<\/td><\/tr><tr><td>6.14<\/td><td>Prices, Firm Price and Variable Price<\/td><td>6.6<\/td><td>5.4<\/td><td>6.5<\/td><td>6.5<\/td><\/tr><tr><td>6.15<\/td><td>Exchange Rate Variation (ERV)<\/td><td>6.7<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>6.16<\/td><td>Statutory Taxes\/ Duties\/ Levies<\/td><td>6.8<\/td><td>5.5<\/td><td>6.6<\/td><td>6.6<\/td><\/tr><tr><td>6.17<\/td><td>Incoterms 2020<\/td><td>6.9<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>6.18<\/td><td>Recovery of Public Money from the bill<\/td><td>6.10<\/td><td>5.6<\/td><td>6.7<\/td><td>6.7<\/td><\/tr><tr><td>6.19<\/td><td>Payment against Time-Barred Claims<\/td><td>6.11<\/td><td>5.7<\/td><td>6.8<\/td><td>6.8<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>6.1<\/span>Bid Security \/ Earnest Money Deposit (EMD)<\/span><\/h2>\n(Rule 170 of GFR 2017)<\/em><\/p>\n1. Purpose and when taken: To safeguard against a bidder's withdrawing or altering its\/ his bid during the bid validity period<\/em> \u2014 in the case of advertised (OTE and GTE) tenders or Special Limited Tender Enquiry<\/em> \u2014 Bid Security (also known as earnest money deposit \u2014 EMD<\/em>) is to be obtained from the bidders along with their bids<\/em>.<\/p>\n2. The amount: The amount of Bid Security should ordinarily range between two (2) to five (5) per cent of the estimated value<\/em> Of the goods\/ works to be procured.<\/p>\nThe amount, rounded off to the nearest thousands of rupees<\/em>, as determined by the Procuring Entity, is to be indicated in the tender documents<\/em>.<\/p>\n<aside class=\"note\">W<\/span> Adds an upper ceiling provision: \"The Procuring Entity May, if considered justified, stipulate an upper ceiling on the Bid Security amount, in larger tenders \u2014 so as not to restrict competition.\"<\/em><\/p><\/aside>\n3. Forms of Bid Security \u2014 and the issuing-bank divergence:<\/p>\nBid security may be obtained in the form of:<\/p>\n<aside class=\"note\">Insurance surety bonds \u00b7 account payee demand draft \u00b7 banker's cheque \u00b7 Bank Guarantee (including e-Bank Guarantee) \u00b7 or payment online in an acceptable form<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Which banks may issue<\/th><\/tr><\/thead><tbody><tr><td>G<\/span> GOODS<\/td><td>from any of the commercial banks<\/em><\/td><\/tr><tr><td>W<\/span> WORKS<\/td><td>issued\/ CONFIRMED by any of the scheduled banks<\/em> (as defined in <\/strong>section 2(e) of the RBI Act 1934)<\/strong> W<\/span> Footnote: \"a Bank Guarantee merely advised by a scheduled bank is not acceptable, in lieu of being confirmed.<\/em>\"<\/td><\/tr><\/tbody><\/table><\/div>\nthe Rs. 5 lakh threshold: In case the Bid Security is more than a threshold (rupees five lakh)<\/em>, and in case of foreign bidders in GTE tenders<\/em>, it May be in the form of a bank Guarantee<\/em> (In equivalent foreign exchange amount, in case of GTE) issued\/ confirmed from any of the commercial\/ scheduled banks in India in an acceptable form.<\/p>\n4. Validity: The Bid Security is normally to remain valid for a period of 45 (forty-five) days beyond the final bid validity period<\/em>.<\/p>\n5. Bid securing declaration (BSD) \u2014 and the divergence in consequence:<\/p>\nIn place of a Bid Security, procuring entities \u2014 after seeking approval from the Competent Authority<\/em> \u2014 May consider asking bidders to submit a bid securing declaration (BSD)<\/em>, accepting that:<\/p>\n<ul class=\"lst\"><li>If they withdraw or modify their bids during the period of validity<\/em>; or<\/li><li>if they are awarded the contract and they fail to submit Performance Security, or to sign the contract<\/em>, before the deadline defined in the tender documents<\/li><\/ul>\n \u2014 it shall be considered as a violation of the Code of Integrity<\/em>, and they shall be:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Consequence<\/th><\/tr><\/thead><tbody><tr><td>G<\/span>, C<\/span>, NC<\/span><\/td><td>\"\u2026Shall be suspended<\/strong> for the time period specified in the BSD\"<\/td><\/tr><tr><td>W<\/span> WORKS<\/td><td>\"\u2026Shall be debarred<\/strong> for the time period specified in the BSD\"<\/td><\/tr><\/tbody><\/table><\/div>\n \u2014 from being eligible to submit bids\/ proposals for contracts with the Procuring Entity.<\/p>\n6. Exemptions from Bid Security \u2014 and the MSE divergence:<\/p>\nIn appropriate cases, submission of the bid security may be exempted with the Competent Authority's (ca's) approval<\/em> \u2014 especially in the case of:<\/p>\n<aside class=\"note\">Indigenisation\/ development tenders \u00b7 limited tenders \u00b7 G<\/span> Procurements directly from the manufacturer or authorised agents \u00b7 bidders that are currently registered, and will also continue to remain registered during the bid validity period<\/em> With the concerned Ministry\/ Department\/ Procuring Entity<\/p><\/aside>\nthe statutory exemptions:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Who is exempt from payment of EMD<\/th><\/tr><\/thead><tbody><tr><td>G<\/span> GOODS<\/td><td>BOTH \u2014 micro and Small Enterprises (MSEs)<\/em> as defined in the MSE Procurement Policy, AND<\/strong>registered startups<\/em> as recognised by DPIIT<\/td><\/tr><tr><td>W<\/span> WORKS<\/td><td>ONLY \u2014 registered startups<\/em> as recognised by DPIIT (MSEs are not named)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nIn case the bidder falls into these categories, the bidder should furnish a certified copy of its valid registration details<\/em>.<\/p>\nThe scope of the registered-bidder exemption:<\/p>\n<ul class=\"lst\"><li>G<\/span>:<\/strong>\"except for MSEs<\/em>, this exemption is valid for the trade group and monetary value<\/strong> Of registration only.\"<\/li><li>W<\/span>:<\/strong>\"This exemption is valid for the monetary value<\/strong> Of registration only.\"<\/li><\/ul>\n7. Forfeiture: A bidder's Bid Security shall be forfeited<\/em> IF:<\/p>\n<ul class=\"lst\"><li>The bidder withdraws or amends its bid<\/em>, OR impairs or derogates from the tender in any respect<\/em>, within the period of validity of the tender; Or<\/li><li>THE successful bidder fails to furnish the required Performance Security or to sign the contract<\/em> Within the specified period.<\/li><\/ul>\n8. Return of bid securities \u2014 the three timelines:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Situation<\/th><th>When returned<\/th><\/tr><\/thead><tbody><tr><td>UNSUCCESSFUL bidders<\/td><td>as soon as possible after the expiry of the final bid validity period \u2014 and, at the latest, by the 30TH day after the award of the contract<\/em><\/td><\/tr><tr><td>SUCCESSFUL bidder<\/td><td>UPON receipt of Performance Security<\/em><\/td><\/tr><tr><td>In two-packet or two-stage tendering \u2014 unsuccessful bidders of the first stage<\/td><td>within 30 days of declaration of the result of the first stage<\/em> (i.e., technical evaluation, etc.) (OM No. F.1\/2\/2022-PPD dated 01.04.2022)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>6.2<\/span>Performance Security \/ Performance Guarantee<\/span><\/h2>\n(Rule 171 of GFR 2017)<\/em><\/p>\n1. Purpose: TO ENSURE due performance of the contract<\/em>, Performance Security (or performance Bank Guarantee \u2014 PBG<\/em>, OR security Deposit \u2014 SD<\/em>) is to be obtained from the successful bidder awarded the contract.<\/p>\n<aside class=\"note\">G<\/span> \u2014 the goods-specific caveat: \"Unlike contracts of works and plants, in the case of contracts for goods, the need for Performance Security <\/em>depends on the market conditions and commercial practice for the particular kind of goods.\"<\/em><\/p><\/aside>\n2. The quantum \u2014 the key numerical divergence<\/strong>(OM No. F.1\/2\/2023-PPD dated 01.01.2024)<\/em>:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Performance Security<\/th><\/tr><\/thead><tbody><tr><td>GOODS<\/td><td>Three (3) TO five (5) PER CENT of the value of the contract<\/td><\/tr><tr><td>WORKS<\/td><td>Three (3) TO ten (10) PER CENT of the value of the contract<\/td><\/tr><tr><td>non-consultancy services<\/td><td>Three (3) TO five (5) PER CENT of the contract value<\/strong>(the NC Manual expressly notes \"3 to 10% for Works\")<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">W<\/span> \u2014 the high-value moderation Rule:\"<\/strong>to ensure competition, in <\/em>higher-value tenders (say > Rs. 50 crore), Performance Security amount May be based on an <\/em>appropriate lower percentage from the band of 3% to 10%*.\"*<\/p><\/aside>\n3. The upper ceiling \u2014 the illustrative example given in G<\/span> and NC<\/span>:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Tender value<\/th><th>Illustrative ceiling on Performance Security<\/th><\/tr><\/thead><tbody><tr><td>Up to Rs. 50 crore<\/td><td>Rs. 75 LAKH<\/td><\/tr><tr><td>above Rs. 50 crore but below Rs. 300 crore<\/td><td>Rs. 3 CRORE<\/td><\/tr><tr><td>higher than Rs. 300 crore<\/td><td>The Procuring Entity may decide the amount \u2014 but not less than Rs. 3 crore<\/em> mentioned above<\/td><\/tr><\/tbody><\/table><\/div>\nhowever, procuring entities are free to decide their own upper limits\/ quantum<\/em> for Performance Security (NC<\/span> Adds: \"Or dispense with it\")<\/em> \u2014 with the approval of Competent Authority and finance concurrence, based on their perception of performance risks vis-\u00e0-vis need for competition<\/em>.<\/p>\n4. Forms of Security:<\/strong> Performance security may be furnished in the form of:<\/p>\n<aside class=\"note\">Insurance Surety Bond \u00b7 account payee demand draft \u00b7 Bank Guarantee (including e-Bank Guarantee) issued\/ confirmed from any of the commercial\/ scheduled banks in India \u00b7 or online payment in an acceptable form<\/p><\/aside>\n \u2014 safeguarding the purchaser's\/ Procuring Entity's interest in all respects.<\/p>\n5. GTE contracts and URDG 758: In the case of GTE tenders, the Performance Security should be in the same currency as the contract<\/em> And must conform to the uniform Rules for demand guarantees (URDG 758)<\/em> \u2014 an international convention regulating international securities.<\/p>\n<aside class=\"note\">Footnote (all Manuals): A set of rules developed by the International Chamber of Commerce<\/strong>, first adopted in 1992<\/strong>. The latest version URDG 758<\/strong> provides a framework for harmonising international trading practices and establishes agreed-upon rules for independent guarantees and counter-guarantees among trading partners.<\/em><\/p><\/aside>\n6. Joint ventures \u2014 W<\/span> and NC<\/span>: In case of a JV, the BG towards Performance Security shall be provided by all partners in proportion to their participation in the project<\/em>.<\/p>\n7. The no-retention Rule for goods \u2014 G<\/span> Only: Unlike the procurement of works, in the procurement of goods, the concept of taking part of the performance guarantee as money retained from the first or progressive bills of the supplier is not acceptable<\/em>.<\/p>\n8. The value threshold below which Performance Security is not needed:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Provision<\/th><\/tr><\/thead><tbody><tr><td>G<\/span> GOODS<\/td><td>\"Submission of Performance Security is not necessary<\/strong> for a tender value up to rupees 50 lakh.\"<\/strong> (The Goods Manual prints \"Rupees 50 (twenty-five) lakh\" \u2014 an evident typographical inconsistency<\/strong> between the figure and the word.)<\/em><\/td><\/tr><tr><td>NC<\/span> Non-consultancy<\/td><td>\"Submission of Performance Security May not be insisted upon<\/strong> In lower-valued contracts (say up to rupees 50 (fifty) lakh).\"<\/td><\/tr><tr><td>W<\/span> WORKS<\/td><td>(no such threshold stated)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n9. Exemption from submission of Performance Security:<\/p>\nProcuring Entity may EXEMPT the following entities (on their specific requests or otherwise<\/em>): A) govt. Ministries, departments, attached and subordinate offices, autonomous bodies<\/p>\n<aside class=\"note\">Footnote in all Manuals: \"there is no bar from taking Performance Security from CPSEs.<\/em>\"<\/p><\/aside>\n<ol class=\"lst\"><li>G<\/span> and NC<\/span> ONLY:<\/strong>THE OEM in whose favour PAC<\/em> is issued, in tenders issued against PAC.<\/li><\/ol>\n<aside class=\"note\">(Absent from Works \u2014 consistent with the fact that Works has no PAC mode at all<\/strong> \u2014 see Chapter 4 Part B.)<\/em><\/p><\/aside>\n10. When furnished and how long valid:<\/p>\nPerformance Security is to be furnished by a specified date \u2014 generally 14 (fourteen) to 28 (twenty-eight) days after notification of the award<\/em>(G<\/span> and NC<\/span> add: \"depending on the amount\")<\/em>.<\/p>\nIt should remain valid for a period of 60 (sixty) days<\/em> \u2014 or any other period mentioned in the tender documents \u2014 beyond the date of completion of all contractual obligations<\/em>, including:<\/p>\n<ul class=\"lst\"><li>G<\/span>, NC<\/span>:<\/strong>Warranty obligations;<\/li><li>W<\/span>:<\/strong>Defect liability period (DLP)\/ warranty period.<\/li><\/ul>\n11. Multi-year contracts \u2014 the proportionate-reduction Rule, and its two versions:<\/p>\nG<\/span> \u2014 GOODS version:<\/strong>In the case of goods contracts (e.g., rate contracts and other long-term contracts<\/em>) spanning over multiple years, procuring entities May consider proportionately reducing Performance Security in proportion to the balance contract period<\/em>, wherever feasible \u2014 instead of retaining the full Performance Security over the complete contract period, which May be of 2\u20133 years or more<\/em>.<\/p>\nC<\/span> + NC<\/span> \u2014 the SERVICES version, with its stated rationale:<\/p>\n<aside class=\"note\">In the case of service contracts spanning over multiple years, care needs to be taken to decide on the amount of Performance Security being sought along with the duration<\/em>.<\/p>\nIt has been observed that procuring entities retain the Performance Security over the complete service contract period, which May be of 5\u20137 years or more<\/em>. This practice puts the service provider in a difficult situation, as they have to block a substantial amount of their working capital as security for the entire duration of the contract<\/em>.<\/p>\nIn such cases the following is suggested:<\/p>\nA) the balance to be struck: The right quantum of Performance Security has to strike a balance between protecting the Procuring Entity's interest in case of default in performance<\/em> VS. Avoiding increase in tendered price and\/ or reduced competition<\/em>.<\/p>\nIf the security is LOW<\/em>, the Procuring Entity May be adversely affected if and when default occurs<\/em>. If it is HIGH<\/em>, THE extra financial cost of furnishing such security will be factored in by bidders when quoting prices, and hence the cost May increase<\/em>.<\/p>\nB) sufficient flexibility is already available in the GFR<\/em> To design the Performance Security for procurement of services \u2014 both value and duration<\/em> \u2014 duly considering the market conditions and commercial practice for the particular kind of service.<\/p>\nC) procuring entities May consider proportionately reducing Performance Security in proportion to the balance service period<\/em>, wherever feasible. Wherever it is decided to take lower or proportionally reducing ps<\/em>, tender conditions May be suitably modified for the future cases<\/em>.<\/p><\/aside>\n12. Replacement of existing securities \u2014 W<\/span> and NC<\/span>: Securities in the existing<\/em> Contracts in the form of Bank Guarantee May be permitted by the Procuring Entity to be replaced by the contractors with insurance surety bonds or e-Bank Guarantee<\/em>. Adequate safeguards \u2014 such as requiring prior submission of new forms of security before releasing the original forms of security<\/em> \u2014 should be ensured.<\/p>\n13. Forfeiture and refund \u2014 and the \"partial execution\" rule:<\/p>\nThe Performance Security will be forfeited and credited to the Procuring Entity's account in the event of a breach of contract<\/em> By the contractor.<\/p>\nIt should be refunded to the contractor without interest<\/em> After he duly performs and completes the contract in all respects\u2026<\/p>\n<aside class=\"note\">G<\/span> Only \u2014 the parenthesis that matters: *\"\u2026(<\/strong>full Performance Security should be forfeited, even if the contractor has partially executed the work)\u2026\"*<\/p><\/aside>\n\u2026BUT not later than 60 (sixty) days<\/em> Of completion of all such obligations including the warranty (W<\/span>: \"of completion of the Defect Liability Period (DLP)\/ warranty period\")<\/em> Under the contract.<\/p>\n14. Monitoring and transparency: The senior officers should monitor the return of bid\/ performance securities<\/em>, and delays should be avoided. If feasible, the details of these securities May be listed in the e-procurement portal\/ website of the Procuring Entity to make the process transparent and visible<\/em>.<\/p>\n<h2>6.3<\/span>Security Deposit \/ Retention Money [W ONLY]<\/span><\/h2>\n<aside class=\"note\">This instrument exists only in the works Manual<\/em>. Note that the Goods Manual expressly says the retention concept is \"not ACCEPTABLE\" in goods procurement (para 6.2-7 above).<\/p><\/aside>\nIN addition<\/em> To Performance Security, contracts for works usually provide for a percentage \u2014 usually five per cent \u2014 of each running bill (periodic\/ interim payment) to be withheld as Security Deposit\/ retention money until final acceptance<\/em>.<\/p>\nThe earnest money, instead of being released, May form part of the Security Deposit<\/em>.<\/p>\nThe contractor's option to replace retention money \u2014 at two stages:<\/p>\nThe contractor may, at his option<\/em>, replace the retention amount with an unconditional BG\/ Insurance Surety Bond<\/em> From a bank acceptable to the Procuring Entity at the following stages:<\/p>\nA) after the amount reaches half the value of the limit<\/em> Of retention money; And<\/p>\nb) after the amount reaches the maximum limit<\/em> Of retention money.<\/p>\nThe two-halves release Rule:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Half<\/th><th>When released<\/th><\/tr><\/thead><tbody><tr><td>One-HALF of the retention money (or BG which replaced it)<\/td><td>shall be released on the issue of the taking-over certificate<\/em>. If the taking-over certificates (TOCs) are issued in parts<\/em>, then in such proportions as the engineer May determine<\/em>, having regard to the value of such part or section<\/td><\/tr><tr><td>the other half<\/td><td>shall be released upon expiration of 60 (sixty) days<\/em> \u2014 or any other period mentioned in the tender document \u2014 after the DLP\/ warranty period of the works, or final payment, whichever is earlier<\/em> \u2014 ON certification by the engineer<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nin the event of different defect liability periods\/ warranty periods being applicable to different sections or parts or equipment incidental to works<\/em>, the expiration of defect liability period\/ warranty period shall be the latest of such periods<\/em>.<\/p>\n<h2 class=\"src-G\">6.4<\/span>Insurance Surety Bond (ISB)<\/span>G<\/span>text; W\/C\/NC cross-refer to Goods para 6.1.3<\/span><\/h2><div class=\"srcblock src-G\">\nAn Insurance Surety Bond (isb) is a three-party agreement<\/em> That provides financial assurance to one party (the beneficiary) by another party (the surety or bonding company) on behalf of a third party (the principal).<\/p>\nIsb ensures that the principal fulfils their contractual obligations<\/em>.<\/p>\n<aside class=\"note\">The key distinction from a Bank Guarantee: Unlike a Bank Guarantee, it is a type of premium-based insurance product<\/em> AND does not require a deposit of a collateral amount by the principal with the surety<\/em>.<\/p><\/aside>\nThe three parties:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Party<\/th><th>Who it is<\/th><\/tr><\/thead><tbody><tr><td>1. Principal<\/td><td>The party that obtains<\/em> the surety bond \u2014 typically the contractor or service provider<\/em> who provides the Bid\/ performance security to the Procuring Entity<\/td><\/tr><tr><td>2. Beneficiary<\/td><td>The party (procuring Entity<\/em>) that requires<\/em> the Insurance surety bond. The beneficiary seeks financial protection in case the principal fails to meet their obligations<\/td><\/tr><tr><td>3. Surety insurer<\/td><td>The bond-issuing entity (bank or insurance company)<\/em>. They act as a guarantor<\/em>, assuring the beneficiary that the principal will perform as promised<\/td><\/tr><\/tbody><\/table><\/div>\nthe default procedure and its two timelines:<\/p>\nIf the principal defaults, the surety insurer assesses the extent of default and determines the amount payable<\/em> Under the bond. If the principal does not pay within 14 DAYS<\/em>, the surety insurer pays within 45 calendar days<\/em> Of receiving the necessary documentation.<\/p>\n<\/div><h2 class=\"src-G\">6.5<\/span>Electronic Bank Guarantee (e-BG)<\/span>G<\/span>text; W\/C\/NC cross-refer to Goods para 6.1.4<\/span><\/h2><div class=\"srcblock src-G\">\n1. What it is: Electronic Bank Guarantee is a dematerialised Bank Guarantee processed on national e-governance services limited (NeSL)<\/em> \u2014 AN information utility registered with the insolvency and bankruptcy board of India<\/em>, under the aegis of the insolvency and bankruptcy code.<\/p>\nIt handles all lifecycle events of e-bg<\/em> \u2014 execution by the issuing bank, intimation to and verification by the beneficiary, amendment, invocation or release by the beneficiary, cancellation, etc.<\/p>\nThe facility is available 24\/7, including non-working days<\/em>. Beneficiaries and banks can continue to use their own BG templates<\/em>.<\/p>\nAll bidders May be encouraged to submit e-bgs instead of traditional paper-based bank guarantees<\/em>.<\/p>\n2. Creation of e-BG: The procuring Entity should ensure that the bidder\/ contractor is informed (in the tender documents) of its unique identity number (UIN \u2014 which can be allotted by its bank) and email id<\/em>.<\/p>\nA clause regarding e-bgs May be included in the tender<\/em>, acknowledging and accepting the use of e-bgs as a valid form of Bank Guarantee for the tender process. The Procuring Entity May reserve the right to verify the authenticity of e-bgs<\/em> And take necessary actions in case of discrepancies.<\/p>\nThe UIN and email id of the beneficiary are specified by the issuing bank when creating the e-bg on the NeSL portal<\/em>, upon being approached by the bidder\/ contractor. On creation of e-bg, it is stored on the NeSL portal<\/em>.<\/p>\n3. Intimation to Beneficiary: NeSL shall send a notification to the email id of the beneficiary provided by the issuing bank<\/em> (As well as the beneficiary's registered email id) during issuance or subsequent event of e-bg (amendment\/ invocation, release\/ cancellation, etc.).<\/p>\nThe Procuring Entity can receive the email notification without registration<\/em> \u2014 BUT such an email shall not have the e-bg document attachment<\/em>.<\/p>\nThe issuing Bank can also arrange to forward the e-bg to the beneficiary through the applicant or any other mechanism<\/em>.<\/p>\n4. Registration and login: Beneficiaries and their authorised representatives must register with NeSL using UIN and email id<\/em>. They must log in to the NeSL portal using the same details to view, download, verify, or release\/ invoke<\/em> THE e-BG.<\/p>\nIntegration with Government procurement portals (CPPP, GeM, State govt procurement portals<\/em>) IS being explored<\/em> To facilitate e-bg access without needing to log into the NeSL portal.<\/p>\n5. EASY VERIFICATION \u2014 the significant benefit: Verification of the e-BG stored in NeSL is sufficient<\/em>, AND verification with the issuing bank is not required<\/em>. This is a significant benefit for procuring entities<\/em>.<\/p>\n6. Invocation and release: The e-bg process through NeSL facilitates beneficiaries submitting requests for invocation or any other consents through digitally signed submission in the NeSL portal \u2014 without the need to approach the issuing bank<\/em>.<\/p>\n<\/div><h2>6.6<\/span>Warranty Bank Guarantee [G ONLY]<\/span><\/h2>\nIn the case of works and capital equipment<\/em>, there is usually a defect liability\/ warranty clause<\/em> Against defects arising from design, material, workmanship, or any omission on the part of the vendor\/ contractor<\/em> During a specified period of months from the date of commissioning or the date of dispatch in case of goods \u2014 whichever is earlier<\/em>.<\/p>\nThe general Rule: In such cases, the performance guarantee is to be valid up to 60 (sixty) days beyond the warranty period<\/em>.<\/p>\nThe permitted alternative \u2014 the swap:<\/p>\nIt is normally permissible in such a situation to allow:<\/p>\n<ul class=\"lst\"><li>THE performance guarantee<\/em> To be valid up to 60 (sixty) days beyond the delivery\/ commissioning period<\/em>; AND<\/li><li>the contractor to submit a fresh warranty Bank Guarantee of 10 (ten) per cent of the value of the goods<\/em>, in the currency of the contract, valid up to 60 (sixty) days beyond the warranty period<\/em>.<\/li><\/ul>\nIn such cases, the performance guarantee is to be returned only after satisfactory delivery\/ commissioning and receipt of such a warranty Bank Guarantee<\/em>.<\/p>\nWhen no warranty clause is called for: In the procurement of goods other than capital equipment<\/em> \u2014 and in the case of low-value capital goods, say up to rupees one lakh<\/em> \u2014 a warranty clause is not called for<\/em>.<\/p>\n<h2>6.7<\/span>Verification of Bank Guarantees<\/span><\/h2>\n1. The general Rule: Bank guarantees submitted by the bidders\/ suppliers\/ contractors\/ consultants\/ service providers as EMD\/ performance securities need to be immediately verified from the issuing bank before acceptance<\/em>.<\/p>\nThere May not be any need to get the Bank Guarantee vetted by legal\/ finance authority if it is in the specified format<\/em>.<\/p>\n The five verification guidelines<\/strong>(for BGs against EMD\/ performance security\/ advance payments and for various other purposes)<\/em>:<\/p>\nA) BG shall be as per the prescribed formats<\/em>.<\/p>\nB) the BG contains the name, designation and code number of the bank officer(s) signing the guarantee(s)<\/em>.<\/p>\nc) THE address and other details (including telephone no.) of the controlling officer of the bank<\/em> Are obtained from the branch of the bank issuing the BG \u2014 this should be included in all bgs<\/em>.<\/p>\nd) the confirmation channels \u2014 and the Works addition:<\/p>\nThe confirmation from the issuing branch of the bank is obtained in writing<\/em> Through:<\/p>\n<aside class=\"note\">G<\/span>:<\/strong>Registered post\/ speed post\/ courier\/ SFMS<\/em> On the official portal of the Procuring Entity<\/p>\nW<\/span>:<\/strong>Registered post\/ speed post\/ courier\/ official email-id of the bank<\/em>\/ SFMS on the official portal of the Procuring Entity<\/p><\/aside>\nthe bank should be advised to confirm the issuance of the bgs \u2014 specifically quoting the letter of the Procuring Entity \u2014 on the printed official letterhead of the bank<\/em>, indicating the address and other details (including telephone nos.) of the bank and the name, designation and code number of the officer(s) confirming the issuance<\/em>.<\/p>\nE) the interim route: Pending receipt of confirmation as above, confirmation can also be obtained with the help of the responsible officer at the field office which is close to the issuing branch of the bank<\/em> \u2014 who should personally obtain the confirmation<\/em> From the issuing branch and forward the confirmation report<\/em> To the concerned Procuring Entity.<\/p>\n2. Genuineness: BANK GUARANTEES \u2014 either received in physical form or electronic form<\/em> \u2014 should be verified for their genuineness following the prescribed method<\/em>, and the organisations should do due diligence on the genuineness of the bank guarantees before acceptance<\/em>.<\/p>\n3. What is not acceptable: Corporate guarantee or indemnity bond shall NOT<\/em> Be accepted for bid Security (EMD) or Performance Security, or in lieu of any other Bank Guarantee<\/em> (e.g., for advance payment\/ warranty obligations).<\/p>\n4. Please note the ease with which an e-bg can be verified<\/em> (para 6.5-5 above).<\/p>\n<h2>6.8<\/span>Safe Custody and Monitoring of EMDs, Performance Securities and Other Instruments<\/span><\/h2>\n1. The mechanism: A suitable mechanism for safe custody and monitoring<\/em> Of emds, performance securities, and other instruments should be developed and implemented by each Procuring Entity<\/em>.<\/p>\nThe ministries\/ departments shall also make institutional arrangements for taking all necessary actions on time<\/em> FOR:<\/p>\n<aside class=\"note\">Extension \u00b7 G<\/span> Forfeiture\/ encashment \u00b7 W<\/span> Encashment \u00b7 or refund of emds and performance securities, as the case May be.<\/p><\/aside>\n2. The monthly review Rule: Monitoring should also include a monthly review of all bank guarantees and other instruments expiring in the next three months<\/em> \u2014 along with a review of the progress of the corresponding contracts<\/em>.<\/p>\n3. The extension Rule and the absolute prohibition: Extension of bank guarantees and other instruments, where warranted, should be sought immediately and implemented within their validity period<\/em>.<\/p>\n<aside class=\"note\">\"bank Guarantee should never be handed over to the supplier\/ contractor for the purpose of extension of validity<\/strong>.\"<\/p><\/aside>\nsuch a system of monitoring of securities and other instruments May be computerised with automatic alerts about lapse of validity<\/em>, ETC.<\/p>\n<h2>6.9<\/span>Insurances and Indemnities [W ONLY]<\/span><\/h2><h3>6.9.1<\/span>Insurances<\/span><\/h3>\nIN works and services contracts<\/em>, the contractor must take insurances against vicarious liabilities that May arise for the Procuring Entity<\/em> \u2014 i.e., under labour laws and workmen compensation<\/em>.<\/p>\n<aside class=\"note\">(This connects directly to the Law of Agency<\/strong> at para 1.15 of this Unified Manual \u2014 the Procuring Entity is vicariously liable for the acts of its agent.)<\/em><\/p><\/aside>\n<h3>6.9.2<\/span>Indemnity\/ Indenture Bonds<\/span><\/h3>\na) why they are needed: The Procuring Entity is potentially liable for injury, damage, or loss relating to a third party due to actions by the contractor during execution of the contract<\/em>.<\/p>\nViolation of laws and regulations (e.g., environmental issues<\/em>) also May result in liabilities for the Procuring Entity.<\/p>\nThe Procuring Entity also needs to be protected against damage to its assets during contract execution<\/em>. For such potential liabilities, instead of insurance, an indemnity bond May suffice<\/em>.<\/p>\nB) the statutory definition: Indemnity bonds are defined under section 124 of the Indian Contract Act<\/em>:<\/p>\n<aside class=\"note\">\"A contract by which one party promises to indemnify the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person, is called a contract of indemnity.\"<\/em><\/p><\/aside>\nit is also called an indenture bond<\/em> \u2014 especially in the context of secured advance payments in works contracts<\/em>.<\/p>\nAn indemnity bond is a bond intended to provide financial reimbursement to the holder for any actual or claimed harm\/ loss caused by the issuer's conduct or another person's conduct<\/em>.<\/p>\nIn many cases this could be an alternative to a BG \u2014 especially where the financial implication of default cannot be estimated<\/em>.<\/p>\nSome government departments (forest, mines, geology, environment, traffic<\/em>) may also ask for such bonds to allow a Contractor to carry out work related to their jurisdiction.<\/p>\nC) the three parties:<\/p>\n<ul class=\"lst\"><li>i) ISSUER<\/strong> \u2014 is legally required to obtain<\/em> a bond.<\/li><li>ii) HOLDER<\/strong> \u2014 is the party that imposes the bonding<\/em>. In some cases, as an added confidence, a third party 'surety provider' (usually a bank) is added<\/em>.<\/li><li>iii) SURETY (say a bank or the holding company of the issuer)<\/em> \u2014 guarantees the financial compensation if the issuer dithers or fails to guarantee.<\/li><\/ul>\nd) the critical weakness \u2014 why a BG is safer:<\/p>\nWhen getting indemnity bonds, the issuer signs an indemnity agreement with the surety provider, naming the holder as the beneficiary<\/em>, and submits it to the holder. It states that the full financial responsibility in case of bond claims belongs to the issuer rather than the surety<\/em>.<\/p>\nIn case the issuer does not perform his obligations and dithers or fails to compensate<\/em> The holder as per the indemnity bond, the only recourse is a civil case in the courts<\/em>.<\/p>\nSince this is a long-drawn and expensive proposition<\/em>, a BG is considered a safer option than an indemnity bond<\/strong>.<\/p>\n<h2>6.10<\/span>Payment Clause \/ Payment Terms<\/span><\/h2><h3>6.10.1<\/span>Elements of Price<\/span><\/h3>\n1. What determines the elements: The elements of price included in the quotation of a bidder depend on:<\/p>\n<aside class=\"note\">THE nature of the goods to be supplied\/ services to be performed<\/em> And the allied services \u00b7 the location of the supplier\/ consultant<\/em> \u00b7 THE location of the user<\/em> \u00b7 terms of delivery<\/em> \u00b7 extant Rules and regulations about taxes, duties<\/em> And so on, of the seller's country and the buyer's country<\/p><\/aside>\n2. The category-specific elements:<\/p>\nG<\/span> GOODS:<\/p>\n<ul class=\"lst\"><li>Indigenous goods: The main elements May include raw material, production cost, overhead, packing and forwarding charges, margin of profit, transit insurance, excise duty and other taxes and duties as applicable.<\/li><li>Imported goods:<\/strong> in addition to elements similar to the above (other than excise duty and taxes<\/em>), there may be customs duty, import duty, landing and clearing charges, and commission to Indian agents<\/strong>.<\/li><li>Further, depending on the nature of the goods, there may be cost elements towards installation and commissioning, operator's training<\/em>, and so on.<\/li><\/ul>\nNC<\/span> Non-consultancy \u2014 the admeasurement-driven price structure (unique to nc):<\/p>\n<aside class=\"note\">In case of non-consultancy services, the elements of price would depend on whether it is an input or output admeasurement contract<\/em>:<\/p>\n<ul class=\"lst\"><li>In case of input admeasurement<\/em> \u2014 unit price of each element, service charges and taxes thereon<\/em> Shall be the elements of the price Schedule. There May be miscellaneous costs also, other than inputs<\/em>.<\/li><li>In case of output admeasurement<\/em> \u2014 unit price of services delivered and taxes thereon<\/em> Shall be the elements of the price Schedule.<\/li><\/ul><\/aside>\n3. C<\/span> + NC<\/span> \u2014 the necessity of specifying delivery terms: It is therefore necessary that \u2014 to enable the bidders to frame their quotations properly in a meaningful manner<\/em> \u2014 the tender documents should clearly specify the desired terms of delivery and also the respective duties and responsibilities to be performed by the consultant\/ service provider and the Procuring Entity<\/em>.<\/p>\n4. Cost break-up (all four): Where the price has several components \u2014 such as the price of the goods, cost of installation and commissioning, operators' training<\/em>, and so on \u2014 bidders should be asked to furnish a cost break-up indicating the applicable prices and taxes for each of such components along with the overall price<\/em>. THE payment Schedule and terms will be linked to this cost break-up<\/em>.<\/p>\n5. CURRENCY \u2014 the general rule (all four):<\/p>\nThe tender documents are to specify the currency (currencies) in which the tenders are to be priced<\/em>.<\/p>\nAs a general Rule:<\/p>\n<ul class=\"lst\"><li>Domestic bidders are to quote and accept their payment in Indian currency<\/em>;<\/li><li>Indian agents of foreign suppliers\/ consultants\/ service providers are to receive their agency commission in Indian currency<\/em>;<\/li><li>Costs of imported goods\/ services directly imported against the contract<\/em> MAY BE quoted in foreign currency (currencies) and paid accordingly in that currency<\/em>;<\/li><\/ul>\n<aside class=\"note\">(NC<\/span> phrases this as: \"costs of services which are delivered from abroad or by foreign nationals against the contract\")<\/em><\/p><\/aside>\n<ul class=\"lst\"><li>the portion of the allied work and services to be undertaken in India<\/em> (like installation and commissioning of equipment) are to be quoted and paid in Indian currency<\/em>.<\/li><\/ul>\nG<\/span> \u2014 the additional GTE currency Rule: For domestic bidding<\/em>, regardless of whether the bidder is foreign or Indian, the currency of the bid and payment should be entirely in Indian rupees<\/em>. In GTE, foreign bidders have flexibility to quote in INR or freely convertible currencies<\/em> \u2014 but prices for goods, works or services (including agency commission) performed or sourced in India must be quoted and paid for in Indian rupees<\/em>. Indian bidders are required to quote in INR only<\/em>.<\/p>\n<h3 class=\"src-G\">6.10.2<\/span>Payment to Suppliers \u2014 the Ten Obligations<\/span>G<\/span><\/h3><div class=\"srcblock src-G\">\nThe governing principle: In a supply contract, the delivery of goods is the essence of the contract for the purchaser<\/em>. Similarly, receiving timely payment for the supplies is the essence of the seller's contract<\/em>.<\/p>\nA healthy buyer-supplier relationship is based on the twin foundation of timely and quality supply on the one hand, and prompt and full payment to the supplier on the other<\/em>.<\/p>\nIt should be ensured that all payments due to the firm \u2014 including the release of the Performance Security \u2014 are made on a priority basis without avoidable delay<\/em> As per the tender\/ contract conditions:<\/p>\nA) as far as possible, the payment terms and time Schedule should be given in the contract and must be adhered to<\/em>. Any foreseeable payment delays should be communicated to the suppliers in advance<\/em>.<\/p>\nB) the tax certificate obligation: Prompt and timely provision of statutory certificates to the seller for taxes deducted at source is as much a part of the payment as the amount actually released<\/em>.<\/p>\nA detailed payment advice showing the calculations and reasons for the amounts disallowed and taxes deducted must be issued to the supplier along with payment<\/em>. As soon as possible \u2014 but not later than the date of submission of tax returns<\/em> \u2014 the Procuring Entity must provide the statutory certificates for the taxes deducted, so that he can claim set-offs and refunds<\/em> From the concerned authorities. As far as MSME suppliers<\/em> Are concerned, the MSME Act 2006<\/em> Has provisions for timely payments within 45 days<\/em>, AND A levy of penal interest for delayed payment<\/em>, AND arbitration\/ conciliation for related complaints by Micro and Small Enterprises facilitation councils<\/em>.<\/p>\nC) release of payment and settlement of the final bill should be processed through the associated\/ integrated finance<\/em> As per the terms and conditions of the contract.<\/p>\nD) the absolute bar: No payments to contractors by way of compensation or otherwise \u2014 outside the strict terms of the contract or more than the contract rates \u2014 should be allowed<\/em>.<\/p>\nE) before the payment is made, the invoice should be cross-checked with the actual receipt of material\/ assets\/ services<\/em>, to ensure that the payment matches the actual performance<\/em>.<\/p>\nF) the contractor's certificate: While claiming the payment, the contractor must certify on the bill that the payment being claimed is strictly within the terms of the contract, and that all the obligations on his part for claiming this payment have been fulfilled<\/em>.<\/p>\nThere should also be a suitable provision for verification of the authenticity of the person signing the invoice<\/em>, and so on, to claim the payment.<\/p>\n<\/div><h3>6.10.3<\/span>Payment Terms in WORKS [W ONLY]<\/span><\/h3>\n<aside class=\"note\">The Works Manual replaces the \"Payment Clause\" with a six-part \"Payment Terms\" section built around the construction cycle.<\/p><\/aside>\n1. Variations in works contract:<\/p>\nVariations can include:<\/p>\n<aside class=\"note\">Changes in the quantity, character, quality, or kind of work<\/em> \u00b7 changes in levels, lines, positions, and dimensions<\/em> \u00b7 additional work necessary for completion<\/em> \u00b7 and changes in the sequence or timing<\/em> Of construction<\/p><\/aside>\nA written procedure must be part of the contract for issuing variation instructions<\/em>.<\/p>\nThe engineer needs prior approval from the Procuring Entity before instructing a variation<\/em> \u2014 except in certain situations specified in the SCC.<\/p>\nVariations are tracked using a variations register<\/em>. The register is updated monthly and summarised<\/em> To keep all involved agencies informed.<\/p>\nThe engineer must balance the risks of quick finalisation against the costs of delays<\/em>.<\/p>\nVariations involving extra costs are valued as per the contract's relevant clauses<\/em>. The engineer consults with the Procuring Entity and contractor to agree on suitable rates for items beyond the sor<\/em>.<\/p>\nThe financial implications of variations are kept up to date<\/em>, AND any significant cost and time overruns due to deviations must be reported to the Procuring Entity<\/em>.<\/p>\n2. Measurement and payment \u2014 the Measurement Book regime:<\/p>\nAll items with financial value shall be recorded in Measurement Books (mb) or level field books<\/em>, to maintain a complete record of the work performed<\/em> Under the contract.<\/p>\nMeasurements and levels are taken and signed jointly by the designated official and the contractor<\/em>.<\/p>\nThe contractor shall \u2014 without extra charge<\/em> \u2014 provide all assistance with every appliance, labour and other things necessary for measurements and recording levels<\/em>.<\/p>\nThe contractor shall not cover (or place it beyond reach) the work without written consent from the Procuring Entity<\/em> \u2014 otherwise the contractor shall have to uncover it at their own expense, or they will not be paid for that work<\/em>.<\/p>\nOrganisations are encouraged to implement electronic Measurement Books (e-mbs) and integrate them with it-based project monitoring systems<\/em>.<\/p>\n3. Interim payments and the Interim Payment Certificate (IPC):<\/p>\nPayment provisions \u2014 including amounts to be paid, Schedule of payments, and payment procedures<\/em> \u2014 shall be indicated in the tender document and also in the contract.<\/p>\nPayment terms prescribed in the tender document should be such that the payment made to contractors at every stage is commensurate with the quantum of work done<\/em> \u2014 subject to any requirements for initial mobilisation.<\/p>\nEach month, the contractor submits a statement showing the amounts they consider themselves entitled to<\/em>.<\/p>\nThe engineer issues an interim Payment Certificate (IPC)<\/em> AFTER:<\/p>\n<aside class=\"note\">Verifying the quantity of work completed<\/em> \u00b7 reconciling field measurements<\/em> \u00b7 reviewing claims for extra work<\/em> \u00b7 checking retention amounts<\/em> \u00b7 AND making price adjustments<\/em><\/p><\/aside>\ninterim monthly payments are made based on the IPC \u2014 net of retentions, recovery of advances, and statutory deductions<\/em>.<\/p>\n<aside class=\"note\">The critical saving clause: \"recording of measurements of any item of work in the Measurement Book and\/ or its payment in the interim, on account or final bill, shall not relieve the contractor from liabilities from any over-measurement or defects noticed till completion of the defects liability period \u2014 and IPC or final completion certificates issued are subject to modification in this regard<\/strong>.\"<\/p><\/aside>\n4. Delay in payments to contractors \u2014 the four hard timelines:<\/p>\nDelays in eligible payments to contractors can lead to project delays, cost overruns, and disputes<\/em>.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>Timeline<\/th><\/tr><\/thead><tbody><tr><td>Ad-hoc payment of at least 75%<\/em> of the eligible running account bill<\/td><td>must be made within 10 working days<\/em> Of bill submission<\/td><\/tr><tr><td>The REMAINING payment<\/td><td>should be made within 28 working days<\/em><\/td><\/tr><tr><td>if payments are delayed beyond 10 working days<\/td><td>A written explanation must be submitted to the next higher authority within three working days<\/em><\/td><\/tr><tr><td>if bills are delayed by more than 30 working days<\/td><td>public authorities May include a provision for interest payments \u2014 at the rate of interest in general provident fund<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n5. Final bills: The final bill must be submitted by the contractor in the same manner as interim bills<\/em>, within a specified time after the physical completion of work and the issuance of the final certificate of completion (FCC)<\/em> By the Department\/ Ministry.<\/p>\nPayment is made after verifying the bill on the personal certificate of the officer-in-charge<\/em>, who confirms that the work has been executed as per the contract specifications and industry standards<\/em>.<\/p>\nFinal payment should be paid to the contractor within three months after completion of work<\/em>.<\/p>\n<h3>6.10.4<\/span>Modes of Payment (common to all four)<\/em><\/span><\/h3>\nA) electronic by default: Procuring entities should make payments through the electronic clearance system (ECS)<\/em> \u2014 e.g., real-time gross settlement systems (RTGS), national electronic funds transfer (NEFT), or electronic payment gateways<\/em>.<\/p>\nAs per RBI guidelines, the ECS mandate in rbi's format May be obtained at the time of supplier\/ contractor\/ consultant\/ service provider registration and in the tender document<\/em>. The Format is available with all Banks.<\/p>\nb) The exception: HOWEVER, if ECS payments are not feasible<\/em>, payments May be made in exceptional circumstances by cheque\/ demand draft drawn on a Government treasury or branch of RBI, or any scheduled bank authorised by RBI for transacting Government business<\/em>.<\/p>\nC) payment to the supplier's bank \u2014 G<\/span> Only: Such payment can also be made to the supplier's bank<\/em>, if the bills are endorsed in favour of the bank with a pre-receipt embossed on the bills with the words \"received payment\"<\/em>, and the supplier authenticates both the endorsement and pre-receipt<\/em>. In addition, an irrevocable power of attorney is to be granted by the supplier in favour of the bank<\/em>.<\/p>\nD) TReDS (all four): Trade receivables discounting system (TReDS) is an electronic platform for facilitating the financing\/ discounting of trade receivables of MSMEs through multiple financiers<\/em>.<\/p>\nThese receivables can be due from corporates and other buyers, including Government departments and PSUs<\/em>.<\/p>\nPayments can also be made through this platform to MSE suppliers\/ contractors\/ consultants\/ service providers<\/em>.<\/p>\n<h2>6.11<\/span>Terms of Payment<\/span><\/h2><h3 class=\"src-G\">6.11.1<\/span>Terms of Payment for DOMESTIC GOODS<\/span>G<\/span><\/h3><div class=\"srcblock src-G\">\n1. The governing consideration: Terms of payment May be decided by the Procuring Entity safeguarding its interest<\/em>, based on the terms of delivery, nature of goods, type of inspection, mode of transport and risks<\/em> In such situations.<\/p>\n2. The four standard payment patterns:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Terms of delivery<\/th><th>Payment term<\/th><\/tr><\/thead><tbody><tr><td>FOR destination\/ delivery at site (no installation)<\/em><\/td><td>100% on receipt and acceptance of goods by the consignee and on the production of all required documents by the supplier<\/td><\/tr><tr><td>fOR dispatching station<\/strong>(no installation)<\/em><\/td><td>60 TO 90% ON proof of dispatch<\/em> And other related documents; Balance on receipt at site and acceptance by the consignee<\/em>(depending on the value and nature of the goods, mode of transportation, and so on)<\/em><\/td><\/tr><tr><td>fOR dispatching station<\/strong>(with installation and commissioning)<\/em><\/td><td>60% on proof of dispatch along with other specified documents \u00b7 30% on receipt of the goods at the site by the consignee \u00b7 balance 10% on successful installation and commissioning and acceptance by the consignee<\/em><\/td><\/tr><tr><td>fOR destination\/ delivery at site<\/strong>(with installation and commissioning)<\/em><\/td><td>90% on receipt and acceptance of goods by the consignee at destination and on production of all required documents \u00b7 balance 10% on successful installation and commissioning and acceptance<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">the note that matters: \"generally \u2014 especially for goods requiring installation and commissioning at the site by the supplier \u2014 the desirable terms of delivery are FOR destination\/ delivery at the site, so that the supplier remains responsible for the safe arrival of the ordered goods at the site. Therefore, unless otherwise decided, ex-works or FOR dispatching station terms should be avoided<\/strong>.\"<\/p><\/aside>\n3. The six documents for payment for domestic goods:<\/p>\n<ol class=\"lst\"><li>Supplier's invoice<\/strong>indicating, inter alia, description and specification of the goods, quantity, unit price, total value<\/em>;<\/li><li>Packing list;<\/li><li>Insurance certificate;<\/li><li>Proof of dispatch: Railway receipt\/ consignment note;<\/li><li>Quality assurance certificates:<\/strong>(a) manufacturer's guarantee certificate or in-house inspection certificate; Or (b) inspection certificate issued by purchaser's inspector<\/em>;<\/li><li>Any other document(s) as and if required in terms of the contract.<\/li><\/ol>\n<\/div><h3 class=\"src-multi\">6.11.2<\/span>Terms of Payment for SERVICES<\/span>C<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\">\n1. The standard term:<\/p>\n<ul class=\"lst\"><li>C<\/span> Consultancy:<\/strong>The usual payment term is 100 (hundred) per cent on receipt and acceptance of deliverables by the Procuring Entity<\/strong><\/em>, and on production of all required documents by the consultant.<\/li><li>NC<\/span> Non-consultancy:<\/strong>The usual payment term is 100 (hundred) per cent on acceptance of delivered services by the ultimate user<\/strong><\/em>, and on production of all required documents by the service provider.<\/li><\/ul>\n<aside class=\"note\">Note the divergence: acceptance by the procuring Entity<\/em> (C) vs. by the ultimate user<\/em> (NC).<\/p><\/aside>\n2. Payment provisions \u2014 including amounts to be paid, Schedule of payments, and payment procedures<\/em> \u2014 shall be indicated in the RfP\/ tender document and also in the contract<\/em>.<\/p>\nPayments May be made at regular intervals (as under time-based contracts)<\/em> OR for agreed outputs (as under lump sum contracts)<\/em>.<\/p>\n<\/div><h2>6.12<\/span>Terms of Payment for IMPORTED GOODS, and the Letter of Credit [G ONLY]<\/span><\/h2><h3>6.12.1<\/span>Terms of Payment<\/span><\/h3>\nUsual payment terms, unless otherwise directed by ca<\/em>:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Situation<\/th><th>Payment<\/th><\/tr><\/thead><tbody><tr><td>Installation, erection, and commissioning are NOT<\/em> the responsibility of the supplier<\/td><td>100% net price is to be paid against the production of stipulated documents<\/em><\/td><\/tr><tr><td>Installation, erection and commissioning ARE<\/em> the responsibility of the supplier<\/td><td>80\u201390% of the net price against production of stipulated documents; Balance within 21\u201330 (twenty-one to thirty) days of successful installation and commissioning at the consignee's premises and acceptance by the consignee<\/em><\/td><\/tr><tr><td>agency commission<\/td><td>THE entire 100% agency commission is paid (in equivalent non-convertible Indian rupees based on bc selling rate of exchange) after all other payments have been made to the supplier in terms of the contract<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<h3>6.12.2<\/span>Modes of Payment for Imported Goods<\/span><\/h3>\n1. Statutory compliance: It should be ensured that the imports into India conform with the export-import policy in force<\/em>; FEMA; FEMA (current account transactions) Rules, 2000; And directions issued by RBI under FEMA from time to time<\/em>.<\/p>\n2. The LC route: For imported goods, payment usually happens through the letter of Credit (LC)<\/em> Opened by the State bank of India or any other commercial bank<\/em> As decided by the Procuring Entity.<\/p>\nThe amount of LC should be equal to the total payable amount<\/em> And be released as per the clauses mentioned above. If the LC is not opened, payment can also be made to the seller through a direct bank transfer<\/em> \u2014 for which the buyer has to ensure that payment is released only after the receipt of prescribed documents<\/em>.<\/p>\n3. LC for domestic bidders too: To have uniform payment clauses in GTE tenders for foreign and domestic bidders<\/em>, the Procuring Entity May include a provision in its tender conditions \u2014 on the merits of the case, especially high-value contracts for sophisticated equipment\/ machinery<\/em> \u2014 allowing payment through LC to domestic bidders also<\/em>.<\/p>\n<h3>6.12.3<\/span>Documents for Payment for Imported Goods<\/span><\/h3>\nThe documents needed from the supplier are to be clearly specified in the contract<\/em>. The paying authority also verifies the documents received from the supplier with corresponding stipulations made in the contract before releasing the payment<\/em>. Documents are specified in the Letter of Credit but usually are:<\/p>\n<ol class=\"lst\"><li>Supplier's original invoice<\/strong> giving full details of the goods, including quantity, value, and so on;<\/li><li>Packing list;<\/li><li>Certificate of country of origin<\/em> Of the goods<\/strong> \u2014 to be given by the seller, or a recognised chamber of commerce, or another agency designated by the local Government<\/em> for this purpose;<\/li><li>Quality assurance certificates:<\/strong>(a) certificate of pre-dispatch inspection by the purchaser's representative; Or (b) manufacturer's test certificate and guarantee<\/em>;<\/li><li>Certificate of insurance;<\/li><li>Bill of Lading\/ airway bill\/ rail receipt<\/strong> or any other dispatch document issued by a Government agency (like the Department of Posts) or a duly authorised agency, indicating:<\/li><\/ol>\n<aside class=\"note\">A) name of the vessel\/ carrier \u00b7 b) Bill of Lading\/ airway bill \u00b7 c) port of loading \u00b7 d) date of shipment \u00b7 e) port of discharge and expected date of arrival of goods \u00b7 f) any other document(s) as required<\/p><\/aside>\n<h3>6.12.4<\/span>Air Freight Charges and Air Freight Consolidators<\/span><\/h3>\ngoods that are required to be airlifted are to be dispatched on a 'charge forward basis'<\/em>. All air freight charges shown on the relevant consignment note as chargeable to the consignee<\/em> Are to be paid to the airline in rupees<\/em>.<\/p>\nThe consolidator device: Some organisations need to import sophisticated instruments, tools, and kindred goods<\/em>. These are small in size and very delicate\/ fragile in nature<\/em>. Such goods invariably need to be airlifted<\/em> \u2014 but, quite naturally, form a small part of the air cargo carried by aircraft<\/em>.<\/p>\nFor such imports, procuring entities May engage air freight consolidators<\/em>, WHO consolidate the small air cargo of different customers and airlift them from one airport to another<\/em>.<\/p>\nThe hiring of airfreight consolidators' services should be done transparently, following standard principles of Public Procurement<\/em>.<\/p>\n<h3>6.12.5<\/span>Letter of Credit (LC)<\/span><\/h3>\n1. The four parties to the LC:<\/p>\nThe purchaser forwards a request to its bank (called the issuing bank<\/em>) in their prescribed format, along with all relevant details, including an authenticated copy of the contract<\/em>.<\/p>\nBased on this, the issuing bank opens the LC \u2014 promising to pay the specified amount to the supplier's (beneficiary's) bank <\/strong>based solely on the documents presented by the supplier as specified in the LC conditions, without physically ascertaining the shipment of goods<\/em>.<\/strong><\/p>\nThe issuing bank arranges with a bank in the supplier's region (called the advising bank<\/em>) to notify the supplier and his bank of the availability of the LC<\/em>.<\/p>\nSince the supplier May not be comfortable with the issuing bank<\/em>, it May ask a bank he trusts (called the confirming bank<\/em>) TO add a guarantee to ensure payments by the issuing bank<\/em>.<\/p>\n2. The five risks involved:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Risk<\/th><th>Description<\/th><\/tr><\/thead><tbody><tr><td>A) commercial risk<\/td><td>non-payment due to buyer's financial distress<\/em><\/td><\/tr><tr><td>b) global risk<\/td><td>political instability \u00b7 currency fluctuations \u00b7 import\/ export restrictions \u00b7 disruptions in international logistics<\/td><\/tr><tr><td>c) documentary risk<\/td><td>discrepancies in submitted documents, or interpretation of documents and LC conditions by various parties involved<\/em><\/td><\/tr><tr><td>d) BANK RISK<\/td><td>BANK insolvency or non-performance<\/em><\/td><\/tr><tr><td>e) FRAUD<\/td><td>shipment May not be physically dispatched<\/em>, OR dispatched in damaged condition or with inadequate packaging<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n3. The four precautions:<\/p>\nA) care should be taken to ensure that all details in the LC<\/em> \u2014 such as product description, quantity, payment terms, documents to be produced, LD clause, and shipping terms<\/em> \u2014 ARE accurate and identical to those shown in the contract, to avoid discrepancies<\/em>.<\/p>\nB) frequent amendments can lead to delays and complications<\/em>. Suppliers May use their own delays in supplies by asking for unnecessary amendments to LC (or contract)<\/em>.<\/p>\nC) provisions of uniform customs and practices for documentary credits (UCP 600)<\/em> Should be adhered to while opening the LC for import into India.<\/p>\n<aside class=\"note\">Footnote: The Uniform Customs and Practice for Documentary Credits (UCPDC or simply UCP)<\/strong> is a set of rules regarding techniques and methods for handling LCs in international trade finance, standardised by the International Chamber of Commerce<\/strong> \u2014 the current version being UCP 600<\/strong>.<\/em><\/p><\/aside>\nD) the seller must present documents in time within the tenure of the LC<\/em> To receive payment, and the documents submitted must match the LC requirements<\/em>.<\/p>\n4. The six charges and who bears them:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Charge<\/th><th>Borne by<\/th><\/tr><\/thead><tbody><tr><td>A) opening charges<\/strong>(including commitment fees<\/strong> \u2014 charged for the LC's validity period \u2014 and usance fees<\/strong>, if the LC allows deferred payment)<\/em><\/td><td>the Procuring Entity<\/td><\/tr><tr><td>b) advising fee<\/td><td>paid by the issuing bank to the advising bank \u2014 and is included in charges to the Procuring Entity<\/em><\/td><\/tr><tr><td>c) confirming bank's fee (if applicable)<\/em><\/td><td>paid to the confirming bank by the supplier<\/em><\/td><\/tr><tr><td>d) extension\/ amendment fee<\/strong>(when an LC needs to be extended or amended due to changes in delivery dates, terms, or other conditions)<\/em><\/td><td>THE party requesting<\/em> The extension or amendment (purchaser or seller)<\/td><\/tr><tr><td>e) retirement charges<\/td><td>levied by the supplier's (beneficiary's) bank on the supplier<\/em> To handle payment from the issuing bank<\/td><\/tr><tr><td>f) other charges<\/td><td>reimbursements for foreign trade law-related obligations<\/em>, if any, to be borne by the party of that country<\/em>.<\/strong>For example, if there are specific legal requirements related to foreign exchange regulations or documentation in the exporting country, the Seller<\/strong> may need to cover these. If there are specific taxes for foreign exchange remittances<\/strong>, then the purchaser<\/strong> may bear such charges.<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n5. The seven types of LC:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Type<\/th><th>Meaning<\/th><\/tr><\/thead><tbody><tr><td>A) revocable LC<\/td><td>CAN BE modified or cancelled without notice<\/em><\/td><\/tr><tr><td>b) irrevocable LC<\/td><td>cannot be amended, modified, or cancelled after issue without agreement and notice to the seller<\/em>. Generally, the irrevocable LC is opened<\/em>, so that the supplier is fully assured of his payment on fulfilling his obligations<\/td><\/tr><tr><td>c) confirmed LC<\/td><td>an intermediate bank in the supplier's country (confirming bank<\/em>) adds its confirmation at the request of the seller \u2014 guaranteeing that payment would be made as per LC conditions, even if the issuing bank or seller's bank demurs<\/em><\/td><\/tr><tr><td>d) unconfirmed LC<\/td><td>there is no additional confirmation beyond the issuing bank<\/em><\/td><\/tr><tr><td>e) transferable LC<\/td><td>the seller can transfer part of the LC to another party<\/em> (e.g., as a payment to his supply chain)<\/td><\/tr><tr><td>f) back-to-back LC<\/td><td>AN intermediary (second beneficiary)<\/em> is involved in this<\/td><\/tr><tr><td>g) revolving LC<\/td><td>covers multiple transactions over an extended period<\/em>. Specifically used for repeated shipments of the same product between the same buyer (importer) and seller (exporter)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n6. Deduction of Liquidated Damages (LD) under the LC:<\/p>\nTHE delivery Schedule and LD clause (including the amount of LD) are part of the LC conditions<\/em>.<\/p>\nIf the documents submitted (inspection certificate and dispatch documents<\/em>) show that these conditions of LC are violated, LD as per the LC conditions is deducted from the payment made to the supplier<\/em>.<\/p>\nIn case the delivery date of the contract is extended to take care of a delay in supply for which the supplier is responsible<\/em>, THE tenure of the LC is also to be extended<\/em> \u2014 BUT the expense incurred for such an extension (of LC) is to be borne by the supplier<\/em>.<\/p>\n<h2>6.13<\/span>Advance Payment<\/span><\/h2>\n(Rule 172(1) of GFR 2017)<\/em><\/p>\n<h3 class=\"src-multi\">6.13.1<\/span>The Common Conditions<\/span>G<\/span>C<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\">\n1. The governing principle and its economic rationale:<\/p>\nOrdinarily, payments for services rendered or supplies made should be released only after the services have been rendered or supplies made<\/em>.<\/p>\nHowever, in exceptional situations where substantial funds are to be sunk by the contractor before payment becomes due<\/em> \u2014 considering the lower cost of funds for the Government entity as compared to the higher cost of funds for the bidder<\/strong> \u2014 advance payment with safeguards (BG or Insurance Surety Bond or Letter of Credit)<\/em> May be considered.<\/p>\nG<\/span> \u2014 the two permitted situations: A) advance payment demanded by firms holding maintenance contracts for servicing of air-conditioners, computers, other costly equipment<\/em>, etc.; B) advance payment demanded by firms against fabrication contracts, turn-key contracts, or supply of complicated tailor-made goods<\/em>, and so on.<\/p>\n2. The quantum \u2014 the three ceilings:<\/p>\nThe quantum of such advance payments should not exceed the quantum of funds to be sunk by the contractor before payment becomes due in the contract<\/em>. The quantum should not generally exceed the following limits:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Recipient<\/th><th>Ceiling<\/th><\/tr><\/thead><tbody><tr><td>Private firms<\/td><td>thirty (30) per cent of the contract value<\/td><\/tr><tr><td>a State or Central Government agency or pse<\/td><td>forty (40) per cent of the contract value<\/td><\/tr><tr><td>In the case of a MAINTENANCE CONTRACT<\/td><td>the amount should not exceed the amount payable for six months<\/em> Under the contract<\/td><\/tr><\/tbody><\/table><\/div>\nin exceptional cases, the competent Authority May relax the ceilings<\/em> Mentioned above, with prior concurrence of the associated\/ integrated finance<\/em>.<\/p>\n3. INTEREST-FREE ADVANCE \u2014 and the default penalty:<\/p>\nSince the provision of advance payment leverages the difference in interest rate<\/em> As argued above, and considering the additional cost of Bank Guarantee for advances for the bidder<\/em> \u2014 interest-free advance payments May be considered with the approval of Competent Authority and finance concurrence<\/em>.<\/p>\nWhere an interest-free advance is permitted, a clause in the tender enquiry and the contract May be stipulated that \u2014 if the contract is terminated due to default of the contractor<\/em> \u2014 the advance payment would be deemed as an interest-bearing advance at the interest rate prevailing on the date of release of advance payment (e.g., the general provident fund \u2014 GPF \u2014 rate), plus 2%, to be compounded quarterly<\/strong>.<\/p>\nIn appropriate cases, the competent authority may stipulate advance payments with suitable interest rates (e.g., the GPF rate) to be recovered along with the instalments of recovery of advance payment<\/em>.<\/p>\n4. INSTALMENTS \u2014 the minimum-two rule: The advance payment should not be made in less than two instalments<\/em>, as per the expected infusion of funds required in the contract \u2014 except in exceptional circumstances, for the reasons to be recorded<\/em>. This will keep a check on contractor mis-utilisation of full advance when the contract is delayed considerably<\/em>.<\/p>\n5. RECOVERY \u2014 the \"whichever is earlier\" rule: ADVANCE PAYMENTS \u2014 especially interest-free advances<\/em> \u2014 should be recovered (from either running bills or from the performance\/ advance payment bank guarantees<\/em>) in instalments linked to milestones or specified periods \u2014 whichever is earlier<\/em>.<\/p>\nThis would ensure that even if the contractor is not executing the work or executing it at a slow pace, recovery of advance could commence \u2014 and the scope for misuse of such advance could be reduced<\/em>.<\/p>\n6. BANK GUARANTEE \u2014 the 110% rule and its exemptions:<\/p>\nWhile making any advance payment, adequate safeguards in the form of a Bank Guarantee (or e-Bank Guarantee) of at least 110% of the advance should be obtained from the firm<\/em>.<\/p>\nIn case the advances are to be paid\/ recovered in instalments, an equal number of part bgs (with proportionate amount and validity) May be taken instead of a lumpsum BG<\/em> \u2014 WITH each BG released after a related recovery is made<\/em>.<\/p>\nAN indemnity bond is not to be considered in place of a Bank Guarantee<\/em>.<\/p>\nThe two exemptions from the BG requirement:<\/p>\n<ul class=\"lst\"><li>No Bank Guarantee should be insisted on in case advance is being given to Central Ministry\/ Department, their attached\/ subordinate offices, or the autonomous bodies attached with them<\/em>;<\/li><li>The BG May also not be taken wherever a contract has been placed on a CPSE on nomination basis<\/em>.<\/li><\/ul>\n7. What is NOT<\/em> An advance payment \u2014 an important distinction:<\/p>\n\"milestone\/ stage payments or part payments against proof of dispatch documents should not be considered as advance payments for the purpose of this Para \u2014 as these payments are made after the sinking of funds by the contractor for achieving these milestones\/ stages\/ dispatches<\/strong>.\" (Rule 172(2) GFR 2017)<\/em><\/p>\nthese should be provisioned in the tender document\/ contract<\/em>, including Bank Guarantee to be taken, if any, in case of milestone\/ stage payments.<\/p>\n8. The pre-declaration Rule: Provision of advance payment should be anticipated at the procurement planning stage<\/em>.<\/p>\nTHE quantum of advance payment and related conditions should be declared in the tender documents<\/em> \u2014 with the approval of Competent Authority and concurrence of associated\/ integrated finance.<\/p>\nIF not so declared<\/em>, the condition of advance payment for a particular bid should not be agreed to<\/em>.<\/p>\n9. Documents for advance payments: Documents needed from the supplier for advance payment release are to be clearly specified in the contract<\/em>. The paying authority should also verify the documents received from the supplier with corresponding stipulations made in the contract before releasing the payment<\/em>.<\/p>\n10. Insurance \u2014 G<\/span> ONLY:<\/p>\nIN every case where advance payment or payment against dispatch documents is to be made, or LC is to be opened<\/em>, THE condition of insurance should invariably be incorporated in the terms and conditions<\/em>.<\/p>\nWherever necessary, the goods supplied under the contract shall be fully insured in a freely convertible currency against loss or damage incidental to manufacture or acquisition, transportation, storage and delivery<\/em>.<\/p>\nIf considered necessary, insurance may cover \"All risks\", including war risks and strike clauses<\/em>. The amount covered should be sufficient to cover the overall expenditure incurred by the Procuring Entity for receiving the goods at the destination<\/em>.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Delivery basis<\/th><th>Who arranges and pays for marine\/ air insurance<\/th><\/tr><\/thead><tbody><tr><td>CIF\/ CIP\/ DDP<\/td><td>the supplier shall arrange and pay \u2014 making the purchaser the beneficiary<\/em><\/td><\/tr><tr><td>FOB\/ FAS<\/td><td>marine\/ air insurance shall be the purchaser's responsibility<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h3>6.13.2<\/span>Advance Payments in Works \u2014 the Three Distinct Advances [W ONLY]<\/span><\/h3>\n<aside class=\"note\">The Works Manual replaces the general advance-payment regime with three separate, purpose-specific advances. None of these exist in the Goods, Consultancy or Non-Consultancy Manuals.<\/p><\/aside>\n<h4>A. Mobilisation Advance<\/span><\/h4>\n1. The 10% Rule: If considered justified in certain specialised and capital-intensive works<\/em>, the contract May provide for an interest-bearing mobilisation advance<\/em> To be paid to the contractor exclusively for the costs of mobilisation, at 10 (ten) per cent of the contract price<\/strong>, on the provision by the contractor of an unconditional BG<\/em>.<\/p>\nSuch bgs shall remain effective until the advance payment has been fully repaid<\/em> \u2014 but the amount thereof shall be progressively reduced by the amount repaid by the contractor<\/em>, as indicated in the interim payment certificates.<\/p>\n2. The two instalments of 5% each:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Instalment<\/th><th>When paid<\/th><\/tr><\/thead><tbody><tr><td>FIRST 5%<\/td><td>ON commencement of the work<\/em> And provision by the contractor of the unconditional BG in respect of the advance<\/td><\/tr><tr><td>second 5%<\/td><td>ON certification by the engineer of the contractor's having achieved a financial progress of 10 (ten) per cent of the contract price<\/em> \u2014 as also provision of a BG by the contractor for this part of the advance<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">what mobilisation expenditure does NOT<\/em> Include: \"mobilisation expenditure mentioned herein shall not include the margin money and bank commission, and so on, paid by the contractor for procurement of bgs against Performance Security and mobilisation advance<\/strong>.\"<\/p><\/aside>\n3. Need-based: Provision of mobilisation advance should essentially be need-based<\/em>. Suitable delegation of authority May be done in the organisation<\/em> To take the decision for grant of the mobilisation advance \u2014 whether interest-free or interest-bearing<\/em>.<\/p>\n4. Interest-free mobilisation advance and the time-based recovery Rule:<\/p>\nInterest-free mobilisation advance May also be given wherever the situation warrants in specific cases<\/em> \u2014 BUT it should be clearly stipulated in the tender document<\/em>.<\/p>\nAND its recovery should be time-based, not linked with progress of work<\/strong>.<\/p>\nThis would ensure that even if the contractor is not executing the work or executing it at a slow pace, recovery of advance could commence, and scope for misuse of such advance could be reduced<\/em>.<\/p>\n5. Part bank guarantees \u2014 one per instalment: Part 'bank guarantees' (bgs) against the mobilisation advance should be taken in as many numbers as the proposed recovery instalments<\/em>, and should be equivalent to the amount of each instalment<\/em>.<\/p>\nThis would ensure that \u2014 at any point of time, even if the contractor's money on account of work done is not available with the organisation<\/em> \u2014 recovery of such advance could be ensured by encashing the BG for the work supposed to be completed within a particular period of time<\/em>.<\/p>\n6. There should be a clear stipulation of interest to be charged on delayed recoveries<\/em> \u2014 either due to the late submission of bill by the contractor or any other reason<\/em>, besides the reason giving rise to the encashment of BG.<\/p>\n7. THE amount of mobilisation advance, interest to be charged (if any), its recovery Schedule, and any other relevant detail should be explicitly stipulated in the tender document upfront<\/em>.<\/p>\n8. Relevant format for BG should be provided in the tender document<\/em>, which should be enforced strictly<\/em> \u2014 and the authenticity of such bgs should also be invariably verified from the issuing bank, confidentially and independently by the organisation<\/em>.<\/p>\n9. In case of 'Machinery and equipment advance'<\/em>, insurance and hypothecation to the employer should be ensured<\/em>.<\/p>\n10. The utilisation certificate Rule: Utilisation certificate from the contractor for the mobilisation advance should be obtained<\/em>. Preferably, mobilisation advance should be given in instalments<\/em> \u2014 AND subsequent instalments should be released only after getting a satisfactory utilisation certificate from the contractor for the earlier instalment<\/em>.<\/p>\n<h4>B. Plant, Machinery and Shuttering Material Advance<\/span><\/h4>\n1. The 5% advance and its five conditions:<\/p>\nAnother interest-bearing advance of five (5) per cent of the contract price<\/em> \u2014 depending on the merits of the case \u2014 May be paid against the new key construction equipment purchased for the work and brought to the site<\/strong>, if so provided in the bid documents and so requested by the contractor.<\/p>\nThe advance should normally not be more than 50 (fifty) per cent of the depreciated cost<\/em> Of such plant and machinery, which should be hypothecated to the govt. Before the payment of advance is released<\/em>.<\/p>\nThis advance shall be subject to the following conditions:<\/p>\n<ul class=\"lst\"><li>(i) the contractor shall produce satisfactory proof of payment<\/em>;<\/li><li>(ii) such equipment is considered necessary by the engineer for the works<\/em>;<\/li><li>(iii) the equipment has been verified to have been brought to site<\/em>;<\/li><li>(iv)<\/strong>the contractor gives an undertaking on stamp paper that the equipment will work <\/strong>only on that job And will <\/strong>not be removed from the site without obtaining written approval from the engineer<\/em>; and<\/strong><\/li><li>(v) the contractor furnishes a BG to cover the advance<\/em>.<\/li><\/ul>\nNo advance shall be admissible on equipment purchased under a hire-purchase scheme\/ financing arrangement, or on hired equipment<\/em>.<\/p>\n2. Rate of interest: The rate of interest shall be stipulated in the bid documents (say 10 (ten) per cent per annum)<\/em>, or as May be notified by the procuring agency from time to time.<\/p>\n3. Repayment: The repayment of advances shall be done through proportionate percentage deductions from running bill (periodic\/ interim payment)<\/em>. THE time of commencement of repayment, rate of deductions from interim payments, and time by which the advance should be fully repaid<\/em> Will be as specified in the contract.<\/p>\n4. The misappropriation consequence: All advances shall be used by the contractor exclusively for mobilisation expenditure, including the acquisition of construction-related plant and equipment<\/em>.<\/p>\nShould the contractor misappropriate any portion of the advance<\/em>, it shall become due and payable immediately, and no further advance will be made to the contractor thereafter<\/strong>. In such cases, the contractor shall also be liable for appropriate action under the contract<\/em>.<\/p>\n<h4>C. Secured Advance Against Material Brought to Site<\/span><\/h4>\n1. The 75% Rule and the 90-DAY condition:<\/p>\nSecured advance on the security of materials \u2014 which are not combustible, fragile or perishable in nature<\/strong> \u2014 brought to the site but not yet incorporated in the works<\/em> Will be made up to:<\/p>\n<aside class=\"note\">75 (seventy-five) per cent of invoice value<\/strong>, OR<\/strong>75 (seventy-five) per cent of the corresponding value of the materials determined on the basis of BOQ rates<\/strong> \u2014 whichever is less<\/strong><\/p><\/aside>\n \u2014 subject to the condition that their quantities are not excessive and shall be used within a period of 90 (ninety) days<\/em>, and subject to other stipulations in the contract.<\/p>\nThe safeguards:<\/p>\n<ul class=\"lst\"><li>The contractor will be required to sign an indenture bond, hypothecating the goods to the Procuring Entity<\/em>, and also be responsible for their safe custody<\/em>.<\/li><li>Before the advance is released, the Procuring Entity May inspect the site to ensure that the contractor has safeguarded the materials against pilferage and deterioration<\/em>.<\/li><li>It May be ensured that the contractor has not taken any loan\/ limit from banks against hypothecation of the materials against which the secured advance is claimed<\/em>. AN undertaking in this regard May also be taken from the contractor<\/em>.<\/li><\/ul>\n2. The \"paid stock only\" Rule:<\/p>\nGenerally, as per the provisions of the contracts, the contractors are required to submit proof of cost of materials and the delivery of material at site<\/em> while claiming such advances.<\/p>\nTHE stock register should be maintained from the commencement of the contract<\/em> And \u2014 unless otherwise prescribed in the contracts \u2014 the stock so considered for advance should generally be only paid stock (and not brought on credit)<\/strong>.<\/p>\nWhere the materials are supplied from a captive source of the contractor<\/em>, THE reasonableness of the valuation of such materials May be ensured<\/em>.<\/p>\n3. The 120-DAY absolute recovery Rule:<\/p>\nThe advance will be repaid from each succeeding running bill (periodic\/ interim payment) to the extent materials for which advance has been previously paid have been incorporated into the works<\/em>.<\/p>\n<aside class=\"note\">\"in all cases, the repayment of the advance will be effected after expiry of a period of 120 days since payment of advance \u2014 whether the material is consumed in the work or not<\/strong>.\"<\/p><\/aside>\n<h2>6.14<\/span>Prices, Firm Price and Variable Price<\/span><\/h2><h3>6.14.1<\/span>Prices and the Bar on Undue Profiteering [G ONLY]<\/span><\/h3>\n1. Independent pricing: The prices should be arrived at independently \u2014 without restricting competition, any consultation, communication, or agreement with any other bidder or competitor<\/em>.<\/p>\n2. Without undue profiteering \u2014 the price ceilings:<\/p>\nA) the price quoted by the bidder shall not be higher than the controlled price fixed by law<\/em> for the goods, if any.<\/p>\nWhere there is no controlled price, it shall not exceed the prices or contravene the norms for fixation of prices, if any, laid down by Government<\/em>.<\/p>\nWhere the Government has fixed no such prices or norms, it shall not exceed the price appearing in any agreement, if any, relating to price regulation by any industry<\/em>.<\/p>\n<aside class=\"note\">In any case \u2014 save for special reasons stated in the bid, if any<\/em> \u2014 the price charged shall not be higher than the maximum retail price (MRP)<\/strong>.<\/p><\/aside>\nB) the disclosure obligation and its consequence: If the price quoted is higher than the controlled price<\/em>, the bidder shall specifically mention this fact in his bid, giving reasons for quoting a higher price(s)<\/em>. IF HE fails to do so or makes any misstatement<\/em>, it shall be lawful for the Procuring Entity either<\/em>:<\/p>\n<ul class=\"lst\"><li>TO revise the price at any stage to bring it in conformity with the sub-clause above<\/em>; or*<\/li><li>TO terminate the contract for default<\/em> As per the contract, and avail all the remedies available therein \u2014 in addition to other punitive actions for violation of Code of Integrity<\/em>.<\/li><\/ul>\n3. Price Components: The price Schedule should show all the specified components of prices<\/em>. The price components for goods offered from India<\/em> And those offered from abroad should be indicated separately<\/em> In the applicable price schedules.<\/p>\n<ul class=\"lst\"><li>The components should include, as applicable: GST, transportation, insurance, and price of incidental works\/ services<\/em> as mentioned in the Schedule of Requirements.<\/li><li>For goods offered from abroad<\/em>, the price components (indicating the currency, in the case of GTE<\/em>) should include: Customs duty, marine insurance, freight, and agency commission<\/em>, as applicable.<\/li><\/ul>\n<h3>6.14.2<\/span>Fixed Price \u2014 the Threshold Divergence<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Rule<\/th><\/tr><\/thead><tbody><tr><td>G<\/span> GOODS \u00b7 C<\/span> Consultancy \u00b7 NC<\/span> Non-consultancy<\/td><td>short-term contracts where the delivery period does not extend beyond 12 (twelve) months<\/em> Should normally be concluded on a firm and fixed price<\/em> (and not subject to variation on any account) by inviting tenders accordingly<\/td><\/tr><tr><td>W<\/span> WORKS<\/td><td>short-term contracts where the delivery\/ completion period does not extend beyond 18 (eighteen) months<\/em> Should normally be concluded with a firm and fixed price<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">W<\/span> states the corollary expressly: *\"<\/strong>provision of price variation \u2026 shall not be applicable in the contracts where period of completion is eighteen months or less.\"*<\/p><\/aside>\n<h3>6.14.3<\/span>Variable Price and the Price Variation Clause (PVC)<\/span><\/h3>\n1. When a PVC May be provided:<\/p>\nG<\/span>, C<\/span>, NC<\/span>:<\/strong>In tenders with deliveries longer than 12 (twelve) months<\/em>, a Price Variation Clause (PVC) May be provided to protect the purchaser's interests \u2014 particularly for high-value (more than rupees three crore) procurements<\/em>.<\/p>\nHowever, even for shorter deliveries or lower value<\/em>, the PVC May be stipulated for items with inputs (raw material, labour<\/em>, ETC.) prone to short-term price volatility<\/strong> \u2014 especially for critical or high-value items\/ services<\/em>.<\/p>\n<aside class=\"note\">The two-sided reason: \"otherwise, there is a possibility of the contract failing [if prices rise], or the purchaser having to pay a higher price if market prices fall<\/strong>.\"<\/p><\/aside>\nW<\/span> adds the competitive rationale: *\"<\/strong>provision of price variation \u2026 will deal with rise and fall of the prices in construction materials, labour and other key inputs. \u2026 the provision of price variation clauses enables contractors to factor this reduced risk and quote more competitive prices.\"*<\/p>\n2. The \"provide your own formula\" Rule: Where it is decided to conclude the contract with a variable price, an appropriate clause incorporating a suitable price variation formula<\/em> (to take care of the changes in the input cost of labour, material, and fuel\/ power<\/em> Components) should be provided in the tender documents.<\/p>\n<aside class=\"note\">\"it is best to proactively provide our own PVC formula and base dates of indices in the tender document \u2014 to discourage different bidders from quoting different formulae and different base dates, which May lead to problems in bringing their prices on a common comparable footing<\/strong>.\"<\/p><\/aside>\n3. Sources of indices and weighting: The variations are to be calculated periodically (usually quarterly)<\/em> By using indices published by:<\/p>\n<aside class=\"note\">Governments \u00b7 chambers of commerce \u00b7 London metal exchange \u00b7 any other neutral and fair source of indices<\/em><\/p><\/aside>\nsuitable weights are to be assigned to the applicable elements \u2014 i.e., Fixed overheads and various applicable inputs (material\/ fuel\/ labour \u2014 for which reliable indices are available)<\/em>.<\/p>\nIf the production of goods\/ delivery of services\/ works needs more than one raw material<\/em>, the input cost of material May be further sub-divided into various categories of material, for which cost indices are published<\/em>.<\/p>\n<aside class=\"note\">W<\/span> adds:\"<\/strong>indices shall be appropriate for their purpose and shall relate to the contractor's proposed source of supply of inputs, on the basis of which his contract price shall have been computed.\"<\/em>W<\/span> also assigns weightages specifically to material\/ labour\/ petroleum, oils and lubricants (pol)<\/em> and cost indices\/ base prices.<\/strong><\/p><\/aside>\n4. The twelve essential elements of a PVC<\/strong>(common to all four, with minor wording variations)<\/em>:<\/p>\nI) base date & time lag: The price agreed upon should specify the base date \u2014 that is, the month and year to which the contract\/ bid price is linked<\/em> \u2014 to enable variations to be calculated with reference to the price indices prevailing in that month and year. This base date should be a few weeks\/ months (the period is called time-lag) prior to the last date of submission of bids, when the last published price indices would be available<\/em>. Time lag applies both for the base date and the date of supply\/ delivery date<\/em>, AND must be specified in the tender documents<\/em>.<\/p>\nii) ignorable variation: The price variation formula must also stipulate a minimum percentage of variation of the contract price, only above which the price variation will be admissible<\/em>.<\/p>\n<aside class=\"note\">For example \u2014 where the resultant increase is lower than, say, two per cent of the contract price, no price adjustment will be made in favour of the supplier\/ contractor.<\/em><\/p><\/aside>\niii) inordinate variation \u2014 the ceiling and the frustration route:<\/p>\nIn rare cases, prices May go up to such an extent that it May render the contract unviable for either party, thus frustrating the contract<\/em>. Therefore, the Price Variation Clause should provide for a ceiling \u2014 a percentage per annum, or an overall ceiling, or both (say 20%\/ 25% of the original price)<\/strong> \u2014 on price variations, beyond which the price variation would be capped at this level<\/em>. As soon as it comes to light that price variations are likely to go beyond this ceiling \u2014 and if the supplier\/ contractor is not agreeable to the price variation being capped<\/em> \u2014 HE MAY notify the purchaser under 'frustration of contract' provisions in the tender document\/ clause, for short-closing the contract<\/em>.<\/p>\n<aside class=\"note\">G<\/span> cross-reference: A provision for this exists in the Model Tender Document for Procurement of Goods \u2014 clause 12.2.2.<\/em>G<\/span> and C<\/span> add the escape valve: \"However, if the short-closing is not in the interest of the Procuring Entity, the Competent Authority \u2014 with the concurrence of associated\/ integrated finance \u2014 May allow the continuation of the contract by relaxing\/ removing the cap on the price variation.\"<\/em><\/p><\/aside>\niv) no PVC on advance\/ stage payments: Where advance or stage payments are made<\/em>, there should be a further stipulation that no price variations will be admissible on such portions of the price, after the dates of such payment<\/strong>.<\/p>\nV) LD is calculated on the varied price: Where deliveries are accepted beyond the scheduled delivery date, subject to levy of Liquidated Damages as provided in the contract \u2014 the LD (if a percentage of the price) will be recoverable on the price as varied by the operation of the PVC<\/strong>.<\/p>\nvi) the asymmetric default Rule \u2014 the single most important PVC provision:<\/p>\n<aside class=\"note\">No upward price variation will be admissible beyond the original scheduled delivery date for defaults on the part of the supplier\/ contractor<\/strong> (e.g., when an extension of the delivery date is with LD).<\/p>\nHowever, a downward price variation would be availed by the purchaser, as per the Denial Clause in the letter of extension of the delivery period.<\/strong><\/p><\/aside>\nvii) price variation May be allowed beyond the original scheduled delivery date<\/em> \u2014 BY specific alteration of that date through an amendment to the contract<\/em> \u2014 in cases of force Majeure or defaults by Government<\/strong>.<\/p>\nviii) import\/ duty disclosure \u2014 W<\/span> Only: Where contract execution depends on imported (subject to customs duty and foreign exchange fluctuations) and\/ or locally sourced and\/ or locally manufactured (subject to excise duty and other duties and taxes)<\/em> Goods\/ works\/ services \u2014 the percentage and element of duties and taxes included in the price should be specifically stated, along with the selling rate of foreign exchange element taken into account in the calculation of the price of the imported item<\/em>.<\/p>\nix) the clause should also contain the mode and terms of payment of the price variation admissible<\/em>.<\/p>\nX) the downward-benefit provision: The buyer should ensure a provision in the contract for the benefit of any reduction in the price in terms of the PVC being passed on to him<\/strong>.<\/p>\nxi) An illustrative PVC clause is available at:<\/strong>G<\/span> Annexure 18 \u00b7 W<\/span> Annexure 5 \u00b7 C<\/span> Annexure 16 \u00b7 NC<\/span> Annexure 10.<\/p>\nxii) the final-payment certificate \u2014 W<\/span> ONLY:<\/p>\n<aside class=\"note\">Care should be exercised in contracts providing for price variation to finalise the price before final payment is made<\/em>, after obtaining data and documents in support of claims for escalation, if any. Where no such claims are submitted by the suppliers<\/em>, AN examination of whether there has been a downward trend in the cost \u2014 which the contractor May not bring out \u2014 is required<\/em>.<\/p>\nAt any rate, an undertaking should be obtained from the contractor<\/em> To the following effect, in case it becomes necessary to make the final payment before he has submitted the required data\/ documents:<\/p>\n<aside class=\"note\">\"It is certified that there has been no decrease in the price of price variation indices and, in the event of any decrease of such indices during the currency of this contract, we shall promptly notify this to the purchaser and offer the requisite reduction in the contract rate.\"<\/em><\/p><\/aside>\nnotwithstanding the above formalities, it should be appreciated that it is in the interest of the purchaser to be vigilant about downward variation \u2014 and it is, therefore, the basic responsibility of the purchase officers to make sure that the benefits of downward variation, wherever it occurs, are fully availed of<\/strong>.<\/p><\/aside>\n5. The statutory-regulation adjustment \u2014 W<\/span> ONLY:<\/p>\n<ul class=\"lst\"><li>To the extent that full compensation for any rise or fall in costs to the contractor is not covered by the provisions of the contract<\/em>, THE unit rates and prices included in the contract shall be deemed to include amounts to cover the contingencies of such uncovered portion of rise or fall of costs<\/em>.<\/li><li>IF any statutory regulations or bye-laws come into force after submission of the bids<\/em>, which cause additional or reduced cost to the contractor<\/em> In the execution of the contract \u2014 such statutory additional or reduced cost (except which are covered in cost indices<\/strong>) shall be added to or deducted from the contract price<\/em>.<\/li><\/ul>\n<h2>6.15<\/span>Exchange Rate Variation (ERV) [G ONLY]<\/span><\/h2>\n<aside class=\"note\">This entire section exists only in the goods Manual. It has no counterpart in Works, Consultancy or Non-Consultancy \u2014 because only goods procurement routinely involves a domestic contract with a substantial imported component.<\/p><\/aside>\n1. The two triggers:<\/p>\nIn case of domestic tender contracts<\/strong> Involving:<\/p>\n<ul class=\"lst\"><li>Substantial import content (say > 25% of the total price)<\/strong>, AND<\/strong><\/li><li>a long delivery period (exceeding one year from the date of the contract)<\/strong><\/li><\/ul>\n \u2014 an appropriate exchange Rate Variation (ERV) clause<\/em> May be formulated by the Procuring Entity in consultation with its associated\/ integrated finance<\/em>, as needed, and incorporated in the tender enquiry document<\/em>.<\/p>\nIn that clause, the bidders are to be asked to indicate:<\/p>\n<ul class=\"lst\"><li>THE import content and the currency(ies) used for calculating the value of import content(s)<\/em> In their total quoted price;<\/li><li>THE base exchange rate for each such foreign currency<\/em> Used for converting the foreign exchange content into Indian rupees; And<\/li><li>THE extent of foreign Exchange Rate Variation (ERV) risk they are willing to bear<\/em>.<\/li><\/ul>\n2. The base date, the variation window, and the 2.5% band:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Element<\/th><th>Rule<\/th><\/tr><\/thead><tbody><tr><td>Base date<\/td><td>THE deadline of bid submission<\/em> \u2014 OR seven days prior to it<\/em> (the purchase organisation is to adopt a suitable date)<\/td><\/tr><tr><td>variation window<\/td><td>between the above base date and the date of remittance to the foreign principal<\/em>, OR the mid-point of manufacture of the foreign component<\/em> (the purchase organisation is to choose the appropriate date)<\/td><\/tr><tr><td>applicable exchange rate<\/td><td>according to the \"Bill currency selling\"<\/strong> Exchange rate as quoted by a source as specified \u2014 if not specified, authorised exchange bankers approved by RBI<\/em> \u2014 in the tender document on the dates in question<\/td><\/tr><tr><td>the dead band<\/td><td>no variation in price in this regard will be allowed if the variation in the rate of exchange remains within the limit of plus\/ minus 2.5 per cent<\/strong> (or any other percentage fixed by the Procuring Entity)<\/td><\/tr><\/tbody><\/table><\/div>\nERV shall be applicable only for components used to manufacture supplied goods imported after the contract date<\/em>.<\/p>\n3. Who bears it \u2014 and the asymmetric default Rule:<\/p>\nANY increase or decrease in the landed price of import content (including customs duty)<\/em> By reason of the variation in the rate of exchange shall be charged to the buyer's account during the original delivery period<\/em>.<\/p>\n<aside class=\"note\">\"in case the delivery period is revised\/ extended, ERV will not be admissible if this is due to the supplier's default \u2014 however, ERV benefits arising out of downward trends should be passed on to the Procuring Entity<\/strong>.\"<\/p>\n(Note the parallel with the PVC denial rule at para 6.14.3-4-vi above.)<\/em><\/p><\/aside>\n4. The four documents for claiming ERV: A) a bill of ERV claim enclosing the working sheet<\/em>; B) banker's certificate\/ debit advice detailing the foreign exchange paid and exchange rate<\/em>; C) copies of the import order placed on the supplier<\/em>; D) supplier's invoice for the relevant import order<\/em>.<\/p>\n<h2>6.16<\/span>Statutory Taxes \/ Duties \/ Levies<\/span><\/h2><h3>6.16.1<\/span>Goods and Services Tax (GST)<\/span><\/h3>\n1. GST registration status and GSTIN (the 15-digit registration number) \u2014 the nine rules:<\/p>\nA) all bidders should ensure that they are GST compliant<\/em>, and that their quoted tax structure\/ rates are as per the GST Act\/ Rules<\/em>.<\/p>\nB) bidder should be registered under GST<\/em> And furnish their GSTIN number and GST registration certificate<\/em> In their offer \u2014 unless they are specifically exempted from registration<\/em> Under a specific notification\/ circular\/ section\/ Rule issued by statutory authorities.<\/p>\nC) multiple verticals: If the bidder has multiple business verticals in a State and has separate registrations for each vertical<\/em>, THE GSTIN of each vertical concerned with the supply and service involved \u2014 as per the scope of the Schedule of requirements and price Schedule \u2014 shall be quoted<\/em>.<\/p>\nD) multiple states: If the supply\/ service is from multiple states<\/em>, the bidder should mention GST registration numbers for each State separately<\/em>.<\/p>\nE) composition scheme: If the bidder has opted for a composition levy under section 10 of CGST<\/em>, he should declare the fact while bidding, along with GSTIN and GST registration certificate<\/em>.<\/p>\nf) exemption from registration \u2014 and the Reverse Charge Mechanism:<\/p>\nIf a bidder is not liable to take GST registration<\/em> (i.e., having turnover below threshold<\/em>), he shall submit an undertaking\/ indemnification against tax liability<\/em>. The bidder claiming exemption shall submit a valid certificate from a practising chartered accountant (ca)\/ cost accountant with the unique document identification number (din)<\/em>, to the effect that the bidder fulfils all conditions prescribed in the notification exempting him from registration<\/em>.<\/p>\nSuch bidder\/ dealer shall not charge any GST and\/ or GST cess in the bill\/ invoice<\/em>. In such a case, applicable GST shall be deposited under reverse charge mechanism (rcm)<\/em> \u2014 or otherwise as per GST Act \u2014 by the Procuring Entity directly to concerned authorities<\/em>. Bidder should note that his offer would be loaded with the payable GST under the rcm<\/em>. Further, the bidder should notify and submit to the Procuring Entity within 15 days of becoming liable for registration under GST<\/em>.<\/p>\nG) bidders must also consider the benefits of input tax credit<\/em> Under the GST legislation, as amended from time to time, on input goods\/ capital goods\/ input services<\/em> While quoting the prices.<\/p>\nH) the jurisdictional assessing officer Rule: In their bids, the bidders shall indicate the details of their GST jurisdictional assessing officers (designation, address, email id)<\/em>. In case of a contract award, the purchaser shall immediately forward a copy of the loa\/ purchase order to the jurisdictional assessing officer<\/em> Mentioned in the bidder's bid.<\/p>\nI) the Procuring Entity's state-wise gstins shall be indicated in tender documents<\/em>.<\/p>\n2. HSN code and GST rate \u2014 the four rules:<\/p>\na)<\/strong>if provided in the tender document, the HSN (harmonized system of nomenclature) code for the goods is <\/strong>only indicative. <\/strong>The bidder shall be responsible for ensuring that they quote the correct HSN code and corresponding GST rate<\/em>.<\/strong><\/p>\nB) the separate-disclosure Rule: As per the GST Act, the bid and contract must show the GST tax rates (and GST cess if applicable) and GST amount explicitly and separately from the bid\/ contract price (exclusive of GST)<\/em>.<\/p>\nSo, if a bidder asks for GST (and GST Cess if applicable) to be paid extra, the rate and nature of such applicable taxes should be shown separately<\/em>.<\/p>\nBidders should quote 'GST' if payable extra on the total basic rate of each cost element<\/em>, AND quote GST in '%' inclusive of cess<\/em>.<\/p>\nC) if the price is stated to include<\/em> GST, the bidder must declare the current GST rate (and GST cess, as applicable) included in the price<\/em>.<\/p>\nD) the blank-column Rule \u2014 a trap for bidders: If GST, other taxes, or duties are not specified, or the column is left blank<\/em> In the price Schedule, it shall be presumed that no such tax\/ levy is applicable or payable by the Procuring Entity. No Statutory Variation in GST shall be paid in such a case<\/strong>.<\/p>\n3. Refund from supplier: Sometimes, the supplier \u2014 after claiming and receiving reimbursements for GST from the purchaser<\/em> \u2014 applies to the concerned authorities for refunds, on genuine grounds, of certain portions of such duties and taxes paid by it, and receives the allowable refunds<\/em>. Such refunds contain the purchaser's share also<\/strong> (Out of the payments already made by the purchaser to that supplier). The tender enquiry document and the contract are to contain suitable provisions for obtaining such refunds from the supplier<\/em>.<\/p>\n4. The three statutory duties\/ taxes\/ levies to be entirely borne by the bidder \u2014 including any statutory variations thereon, for which the Procuring Entity would not be responsible:<\/p>\nA) personal and corporate tax: Bidder shall bear all personal\/ corporate taxes imposed on owners\/ company\/ joint venture\/ subcontractors or their employees<\/em>.<\/p>\nB) taxes on sub-contractors, vendors: Bidder shall bear all taxes \u2014 including GST<\/em> \u2014 as May be imposed on the contractor or supply-chain (sub-contractors, vendors, etc.)<\/em>.<\/p>\nC) duties\/ taxes on raw materials: The Procuring Entity is not liable for any claim from the contractor on account of fresh imposition and\/ or increase (including statutory increase) of GST, customs duty, or other duties on raw materials and\/ or components used directly in the manufacture of the contracted goods, taking place during the pendency of the contract<\/strong> \u2014 unless such liability is expressly agreed to in terms of the contract<\/em>.<\/p>\n5. Applicability to imported goods\/ services: Following the implementation of GST, the import of commodities shall not be subject to erstwhile applicable duties<\/em> LIKE safeguard duty, education cess, basic customs duty, anti-dumping duty<\/em>, ETC. All these supplementary customs duties are subsumed under GST<\/strong>.<\/p>\nIf imported into India, the supply of commodities, services, or both shall be considered as supply under inter-state commerce\/ trade, and shall attract integrated tax (IGST)<\/em>. THE IGST rate and GST cess shall be applicable on the 'customs assessable value' plus the 'basic customs duty applicable thereon'<\/em>.<\/p>\n<h3>6.16.2<\/span>Customs Duty on Imported Goods [G ONLY]<\/span><\/h3>\n1. The disclosure and the import-in-whose-name Rule: Regarding imported goods, the bidder shall specify the rate and the total amount of customs duty payable thereon<\/em>. Bidder shall also indicate the corresponding Indian tariff classification (ITC-HS)<\/em> Applicable for the goods. Any material imported directly from the supplier or manufacturer should be under the name of the Procuring Entity<\/em>. In this regard, all formalities will be completed by the Procuring Entity by engaging a customs house agent (CHA) and bearing the cost thereof<\/em>.<\/p>\n2. The three customs-duty exemptions: The Government has allowed exemption from payment of customs duty on certain types of goods for use by the following organisations: a) scientific and technical instruments imported by research institutes<\/em>; B) hospital equipment imported by Government hospitals<\/em>; C) consumable goods imported by a public-funded research institution or a university<\/em>.<\/p>\n3. The two certificates required: However, to avail of such exemptions, the organisations are required to produce \u2014 at the appropriate time<\/em> \u2014 :<\/p>\n<aside class=\"note\">A \"Customs Duty Exemption\" certificate<\/strong><\/strong>AND A \"Not Manufactured in India\" certificate<\/strong><\/p><\/aside>\n4. The MOOWR scheme 2019:<\/p>\nTHE manufacturing and other operations in a warehouse regulations (MOOWR) scheme 2019<\/em> Was introduced by the Central board of indirect taxes and customs (CBIC)<\/em> TO promote India as a global manufacturing hub and bolster the \"Make in India\" initiative<\/em>.<\/p>\nThis scheme allows importers to bring raw materials and capital goods into the country without paying customs duties<\/em>.<\/p>\n<aside class=\"note\">Notably, the MOOWR scheme is unique in that it is delinked from export obligations<\/strong> \u2014 extending benefits even to importers who intend to use goods for sale within the domestic market<\/em>.<\/p><\/aside>\nThese imported materials can then be utilised for manufacturing and other operations within private bonded warehouses<\/em>. Under the MOOWR Scheme: a) import duty is deferred<\/strong> When raw materials and capital goods are imported into India; B) if these materials are used for exports<\/strong>, THE deferred duty is exempt<\/strong>; C) if the inputs are utilised for goods sold in the domestic market (i.e., domestic tariff area)<\/strong>, import duty for such inputs used for domestic clearance must be paid<\/em>; D) import duty on capital goods<\/strong> is paid if they are cleared for the domestic market<\/em>.<\/p>\n5. THE relevant contemporary instructions covering these aspects should be incorporated in the tender enquiry document and the resultant contract<\/em>.<\/p>\n<h3>6.16.3<\/span>Deduction of Income Tax, etc., from Payments<\/span><\/h3>\nIf applicable under relevant tax laws and Rules, the Procuring Entity shall deduct from all payments and deposit required taxes to respective authorities<\/em>.<\/p>\n<h3>6.16.4<\/span>Statutory Variation Clause<\/span><\/h3>\n<aside class=\"note\">The Goods and Works Manuals cross-refer to their contract-management chapters. The Consultancy and Non-Consultancy Manuals set out the clause in full \u2014 reproduced here.<\/p><\/aside>\nUnless otherwise stated in the contract, statutory Variation in applicable GST rate<\/strong> \u2014 only during the period from the date of submission of the tender to the date of acceptance of the tender (that is, placement of the contract), and during the original\/ re-fixed delivery period of the contract<\/strong> \u2014 shall be borne by the Procuring Entity<\/strong>.<\/p>\nThe benefit of any reduction in the GST rate must be passed on to the Procuring Entity during the original and extended delivery period<\/em>.<\/p>\n<aside class=\"note\">(Note the asymmetry: increases are borne by the Procuring Entity only during the original\/ re-fixed<\/strong> period, but reductions must be passed on during the original AND extended<\/strong> period.)<\/em><\/p><\/aside>\nhowever, GST rate amendments shall be considered for the quoted HSN code only<\/strong>, against documentary evidence<\/em> \u2014 provided such an increase in GST rates is after the tender submission date<\/em>.<\/p>\nHowever, the statutory Variation shall not be applicable for any misquotation of the HSN number or incorrect GST rate by the bidder<\/strong>.<\/p>\n<aside class=\"note\">Note on \"re-fixed delivery period\": \"Re-fixed delivery period means the fresh delivery period which is arrived at by recasting the original contractual delivery period, after taking care of the lost period for which the supplier\/ service provider was not responsible.\"<\/em><\/p><\/aside>\n<h2>6.17<\/span>Incoterms 2020 \u2014 Terms of Delivery [G ONLY]<\/span><\/h2>\n<aside class=\"note\">This section exists only in the goods Manual. Incoterms govern the passing of title and risk in a sale of goods; they have no analogue in works or services contracts.<\/p><\/aside>\n1. The eleven INCOTERMS \u2014 seven for any mode, four for sea\/ inland waterway:<\/p>\n<h3>A. Rules for Any Mode of Transport (Seven)<\/em><\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>Incoterm<\/th><th>Applicable to<\/th><\/tr><\/thead><tbody><tr><td>EXW \u2014 ex-works<\/strong>(named place of delivery)<\/em><\/td><td>the seller makes the goods available at their premises or another named place<\/em><\/td><\/tr><tr><td>FCA \u2014 free carrier<\/strong>(named place of delivery)<\/em><\/td><td>the seller delivers the goods \u2014 cleared for export<\/em> \u2014 at a named place to a carrier or to another party nominated by the buyer<\/em><\/td><\/tr><tr><td>CPT \u2014 carriage paid to<\/strong>(named place of delivery)<\/em> \u2014 earlier C&F \u2014 Cost and Freight<\/strong><\/em><\/td><td>the seller is responsible for export clearance and freight costs for carriage to the named place of destination<\/em><\/td><\/tr><tr><td>CIP \u2014 carriage and insurance paid to (named place of delivery)<\/em><\/td><td>in addition to CPT responsibilities, the seller is required to obtain *insurance for the goods while in transit for 110% of the contract value under institute cargo clauses (a) of the institute of London underwriters\u200c<\/td><\/tr><tr><td>DAP \u2014 delivered at place<\/strong>(named place of delivery)<\/em><\/td><td>the seller delivers the goods \u2014 ready for unloading<\/strong> \u2014 at the named place of destination<\/td><\/tr><tr><td>DPU \u2014 delivered at place unloaded (named place of delivery)<\/em> \u2014 earlier DAT \u2014 Delivered At Terminal<\/em><\/td><td>in addition to DAP responsibilities, the seller is required to unload the goods<\/strong> At the named place of destination<\/td><\/tr><tr><td>DDP \u2014 delivered duty paid<\/strong>(named place of delivery)<\/em><\/td><td>in addition to DAP responsibilities, the seller is required to clear the goods through customs and pay import duties and taxes<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h3>B. Rules for Sea and Inland Waterway Transport (Four)<\/em><\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>Incoterm<\/th><th>Applicable to<\/th><\/tr><\/thead><tbody><tr><td>FAS \u2014 free alongside ship<\/td><td>alongside the buyer's vessel at the named port of shipment, the seller is to clear the goods for export<\/em>. However, if the parties wish the buyer<\/em> To clear the goods for export, explicit wording should be added to the contract<\/strong><\/td><\/tr><tr><td>FOB \u2014 free on-board<\/td><td>seller to arrange for export clearance and deliver goods on board a vessel that is to be designated by the buyer<\/em><\/td><\/tr><tr><td>CFR \u2014 cost and freight<\/td><td>in addition to FOB responsibilities, the seller pays for the carriage of the goods up to the named port of destination<\/em><\/td><\/tr><tr><td>CIF \u2014 cost, insurance and freight<\/td><td>in addition to CFR responsibilities, the seller is required to obtain *insurance for the goods while in transit for 110% of the contract value under institute cargo clauses (a)*<\/td><\/tr><\/tbody><\/table><\/div>\n2. History and the title-of-goods principle:<\/p>\nIN USE SINCE 1936<\/em>, INCOTERMS have been last revised in 2020<\/em>. Out of the 11 INCOTERMS options, seven apply to all modes of transportation, whereas four apply only to sea and inland waterway transportation<\/em>.<\/p>\nIncoterms rules describe the tasks, costs and risks involved in the delivery of goods from the seller to the buyer<\/em>.<\/p>\n<aside class=\"note\">The governing principle: \"the risk to goods (damage, loss, shortage, and so on) is the responsibility of the person who holds the 'title of goods' at that point in time. This May be different from the actual physical possession of such goods<\/strong>.\"<\/p><\/aside>\nnormally, unless otherwise defined, the title of goods passes from the supplier to the purchaser in accordance with the terms of delivery (for, CFR, among others)<\/em>. The terms of delivery, therefore, specify when the ownership and title of goods pass from the seller to the buyer, along with the associated risks<\/em>.<\/p>\nThe four allocations made by terms of delivery: A) control and care of the goods while in transit<\/em>; B) carrier selection, transfers, and related issues; C) costs of freight, insurance, taxes, duties and forwarding fees<\/em>; D) documentation, problem resolution and other related issues.<\/p>\n3. The spectrum: The options range from one extreme \u2014 the buyer takes full responsibility from the point of departure (EXW)<\/strong> \u2014 to the other extreme \u2014 the seller is responsible all the way through delivery to the buyer's location (DDP)<\/strong>(Annexure 19 of the Goods Manual)<\/em>.<\/p>\n4. The four special definitions within INCOTERMS:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Term<\/th><th>Special meaning<\/th><\/tr><\/thead><tbody><tr><td>Delivery<\/td><td>THE point in the transaction where the risk of loss or damage to the goods is transferred from the seller to the buyer<\/em><\/td><\/tr><tr><td>FREE<\/td><td>seller has an obligation to deliver the goods to a named place for transfer to a carrier<\/em><\/td><\/tr><tr><td>carrier<\/td><td>any person who, in a contract of carriage, is nominated by seller\/ buyer for transport by any mode<\/em><\/td><\/tr><tr><td>to clear for export<\/td><td>TO file the shipper's export declaration and get an export permit<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n5. The Indian national-transport terms: Within national transportation, certain terms have assumed acceptance due to usage<\/em>:<\/p>\n<ul class=\"lst\"><li>Free on rail (for)* has two versions: *For\/ dispatching* and *for\/ destination<\/strong>(the buyer is responsible from the nominated point mentioned till arrival point, as in DAP above<\/strong>)<\/em>;<\/li><li>On similar lines, infrequently, free on truck (fot) is also used in road transport<\/em>.<\/li><\/ul>\n<h2>6.18<\/span>Recovery of Public Money from the Supplier's\/ Contractor's\/ Consultant's\/ Service Provider's Bill<\/span><\/h2>\n<aside class=\"note\">Section titles: G<\/span>\u2026from Suppliers' Bill<\/em> \u00b7 W<\/span>\u2026from Contractor's Bill<\/em> \u00b7 C<\/span>\u2026from Consultant's Bill<\/em> \u00b7 NC<\/span>\u2026from Service Provider's Bill<\/em>.<\/p><\/aside>\nSometimes, requests are received from a different Ministry\/ Department<\/em> FOR withholding some payment from a supplier\/ contractor out of the payment or securities due to it against a contract<\/strong>.<\/p>\nSuch requests are to be examined by the Procuring Entity (which has received the request) on the merits of the case for further action<\/em>.<\/p>\n<aside class=\"note\">The liability Rule: \"it will, however, be the responsibility of the Ministry\/ Department asking for withholding of payment to defend the Government against any legal procedure arising out of such withholding, and for payment of any interest thereof<\/strong>.\"<\/p><\/aside>\n<h2>6.19<\/span>Payment against Time-Barred Claims<\/span><\/h2>\n1. The three-year Rule: Ordinarily, all claims against the Government are time-barred after a period of three years, calculated from the date when the payment falls due<\/em> \u2014 unless the payment claim has been under correspondence<\/strong>.<\/p>\n2. The admission-of-liability exception: However, the limitation is saved if there is an admission of liability to pay \u2014 and a fresh period of limitation starts from the time such admission is made<\/strong>.<\/p>\n3. The procedure: THE drill to be followed while dealing with time-barred claims will be decided by the Procuring Entity concerned, in consultation with the paying authority<\/em>.<\/p>\n4. The absolute bar on the paying authority: The paying authority is to ensure that no payment against such a time-barred claim is made till a decision has been taken in this regard by the ca<\/strong>.<\/p>\n<h1>Appendix to Chapter 6 \u2014 Points of Difference Between the Four Manuals<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Chapter number<\/td><td>G\/C\/NC: Chapter 6 \u00b7 W: CHAPTER 5<\/td><\/tr><tr><td>2<\/td><td>Chapter title<\/td><td>IDENTICAL in all four \u2014 the second and last such chapter<\/td><\/tr><tr><td>3<\/td><td>Issuing banks for Bid Security<\/td><td>g: *Commercial banks \u00b7 W: *SCHEDULED BANKS* (s.2(e) RBI Act 1934), with the footnote that a BG *MERELY ADVISED* is not acceptable in lieu of being *CONFIRMED<\/strong><\/td><\/tr><tr><td>4<\/td><td>Consequence under a Bid Securing Declaration<\/td><td>G\/C\/NC: bidder shall be *SUSPENDED \u00b7 W: bidder shall be *DEBARRED<\/strong><\/td><\/tr><tr><td>5<\/td><td>Who is EXEMPT from EMD<\/td><td>G: *MSEs <\/strong>AND DPIIT-recognised Start-ups \u00b7 W: *only DPIIT-recognised Start-ups<\/strong><\/td><\/tr><tr><td>6<\/td><td>Scope of the registered-bidder EMD exemption<\/td><td>G: valid for trade group and monetary value<\/em> \u00b7 W: valid for monetary value<\/em> only<\/td><\/tr><tr><td>7<\/td><td>Upper ceiling on Bid Security in larger tenders<\/td><td>W ONLY<\/td><\/tr><tr><td>8<\/td><td>performance Security quantum<\/td><td>G: 3\u20135%<\/strong> \u00b7 W: 3\u201310%<\/strong> \u00b7 NC: 3\u20135%<\/strong>(NC expressly notes \"3 to 10% for Works\")<\/em><\/td><\/tr><tr><td>9<\/td><td>Lower percentage from the 3\u201310% band for tenders > Rs 50 crore<\/td><td>W ONLY<\/td><\/tr><tr><td>10<\/td><td>Rs 75 lakh \/ Rs 3 crore illustrative ceiling table<\/td><td>G + NC<\/td><\/tr><tr><td>11<\/td><td>\"\u2026or dispense with it\" \u2014 power to waive performance security entirely<\/td><td>nc only<\/td><\/tr><tr><td>12<\/td><td>Threshold below which Performance Security not needed<\/td><td>G: Not necessary up to Rs 50 lakh (printed as \"Rs. 50 (twenty-five) lakh\" \u2014 a source typo)<\/em> \u00b7 nc: May not be insisted upon up to Rs 50 lakh \u00b7 W: no threshold<\/td><\/tr><tr><td>13<\/td><td>OEM in whose favour PAC issued \u2014 exempt from Performance Security<\/td><td>G + NC<\/strong>(absent from W, consistent with Works having no PAC mode)<\/em><\/td><\/tr><tr><td>14<\/td><td>Validity beyond completion of obligations<\/td><td>G\/NC: including warranty<\/em> obligations \u00b7 W: including defect liability period (DLP)\/ warranty<\/em><\/td><\/tr><tr><td>15<\/td><td>\"Full performance security should be forfeited even IF the Contractor has PARTIALLY EXECUTED the work\"<\/td><td>G ONLY<\/td><\/tr><tr><td>16<\/td><td>Retention of part of Performance Guarantee from progressive bills<\/td><td>G: expressly \"not acceptable<\/em>\" for goods \u00b7 W: this IS the Security Deposit\/ Retention Money regime<\/td><\/tr><tr><td>17<\/td><td>Multi-year proportionate reduction of Performance Security<\/td><td>G: framed for Rate Contracts, 2\u20133 years<\/em> \u00b7 C\/NC: framed for service contracts of 5\u20137 years or more<\/em>, with the working-capital rationale<\/td><\/tr><tr><td>18<\/td><td>JV \u2014 BG in proportion to participation<\/td><td>W + NC<\/td><\/tr><tr><td>19<\/td><td>Replacement of existing BGs with ISB\/ e-BG<\/td><td>W + NC<\/td><\/tr><tr><td>20<\/td><td>Security Deposit\/ retention money (5% of each running bill; two-stage replacement; two-halves release)<\/td><td>W ONLY<\/td><\/tr><tr><td>21<\/td><td>Insurance Surety Bond full text (three parties; 14-day\/ 45-day rule)<\/td><td>G ONLY<\/strong>(others cross-refer)<\/em><\/td><\/tr><tr><td>22<\/td><td>Electronic Bank Guarantee full text (NeSL, UIN, 24\/7, verification without issuing bank)<\/td><td>G ONLY<\/strong>(others cross-refer)<\/em><\/td><\/tr><tr><td>23<\/td><td>Warranty Bank Guarantee (10% of value; no warranty clause for non-capital goods or capital goods up to Rs 1 lakh)<\/td><td>G ONLY<\/td><\/tr><tr><td>24<\/td><td>BG confirmation channel includes the official email-id of the bank<\/em><\/td><td>W ONLY<\/td><\/tr><tr><td>25<\/td><td>Insurances and indemnities; Indemnity Bond under s.124 Contract Act; \"a BG is safer than an indemnity bond\"<\/td><td>W ONLY<\/td><\/tr><tr><td>26<\/td><td>Price elements driven by INPUT vs OUTPUT admeasurement<\/td><td>nc only<\/td><\/tr><tr><td>27<\/td><td>Payment to the supplier's bank on endorsement + irrevocable power of attorney<\/td><td>G ONLY<\/td><\/tr><tr><td>28<\/td><td>Ten payment obligations incl. MSME 45-day rule and statutory tax certificates<\/td><td>G ONLY<\/td><\/tr><tr><td>29<\/td><td>VARIATIONS; variations register; MEASUREMENT BOOKS and e-MBs; Interim Payment Certificate<\/td><td>W ONLY<\/td><\/tr><tr><td>30<\/td><td>DELAY-IN-PAYMENT TIMELINES \u2014 75% within 10 working days; balance within 28; explanation within 3; interest at GPF rate beyond 30 working days; final payment within 3 months<\/td><td>W ONLY<\/td><\/tr><tr><td>31<\/td><td>Acceptance for payment of services<\/td><td>c: By the *Procuring Entity \u00b7 nc: By the *ultimate user<\/strong><\/td><\/tr><tr><td>32<\/td><td>Terms of Payment for DOMESTIC GOODS (the four patterns) and for imported goods; LC; Air Freight Consolidators<\/td><td>G ONLY<\/td><\/tr><tr><td>33<\/td><td>Advance payment ceilings \u2014 30% private \/ 40% Govt agency or PSE \/ 6 months for maintenance contracts; 110% BG; two-instalment rule; GPF+2% compounded quarterly on default<\/td><td>G + C + NC<\/td><\/tr><tr><td>34<\/td><td>MOBILISATION ADVANCE (10% in two 5% instalments; time-based recovery if interest-free; part BGs per instalment; utilisation certificates)<\/td><td>W ONLY<\/td><\/tr><tr><td>35<\/td><td>Plant, machinery and shuttering advance (5%; not more than 50% of depreciated cost; five conditions; stamp-paper undertaking; no advance on hired\/ hire-purchase equipment)<\/td><td>W ONLY<\/td><\/tr><tr><td>36<\/td><td>Secured advance against material at site (75% of invoice or BOQ value whichever less; 90-day use; indenture bond; Paid stock only; 120-day absolute recovery)<\/td><td>W ONLY<\/td><\/tr><tr><td>37<\/td><td>fixed-price threshold<\/td><td>g\/c\/nc: *12 months \u00b7 w: *18 months<\/strong><\/td><\/tr><tr><td>38<\/td><td>Undue profiteering \/ MRP ceiling \/ controlled price disclosure<\/td><td>G ONLY<\/td><\/tr><tr><td>39<\/td><td>PVC weightages include POL (Petroleum, Oils and Lubricants)<\/em><\/td><td>W ONLY<\/td><\/tr><tr><td>40<\/td><td>PVC element on import\/ excise duty disclosure and FX selling rate<\/td><td>W ONLY<\/td><\/tr><tr><td>41<\/td><td>The final-payment \"no decrease in indices\" undertaking and the vigilance-about-downward-variation duty<\/td><td>W ONLY<\/td><\/tr><tr><td>42<\/td><td>Relaxing the PVC cap where short-closing is not in the Procuring Entity's interest<\/td><td>G + C<\/td><\/tr><tr><td>43<\/td><td>Exchange Rate Variation (ERV) \u2014 25% import content, >1 year delivery, \u00b12.5% dead band, four claim documents<\/td><td>G ONLY<\/td><\/tr><tr><td>44<\/td><td>GST \u2014 full nine-rule registration regime, HSN\/ rate rules, refund-from-supplier, three bidder-borne taxes<\/td><td>G<\/strong>(fullest); C\/W\/NC carry shorter versions<\/em><\/td><\/tr><tr><td>45<\/td><td>CUSTOMS DUTY, the three exemptions, the two certificates, and the MOOWR Scheme 2019<\/td><td>G ONLY<\/td><\/tr><tr><td>46<\/td><td>Statutory Variation Clause reproduced in full with the \"re-fixed delivery period\" note<\/td><td>C + NC<\/strong>(G and W cross-refer to their contract-management chapters)<\/em><\/td><\/tr><tr><td>47<\/td><td>INCOTERMS 2020 \u2014 all eleven terms, the title-of-goods principle, the four special definitions, FOR\/ FOT<\/td><td>G ONLY<\/td><\/tr><tr><td>48<\/td><td>Recovery of Public Money \u2014 section title<\/td><td>G: Suppliers' \u00b7 W: Contractor's \u00b7 C: Consultant's \u00b7 NC: Service Provider's<\/td><\/tr><tr><td>49<\/td><td>Payment against Time-Barred Claims \u2014 three-year rule, admission-of-liability exception, no payment till CA decides<\/td><td>COMMON to all four \u2014 and the closing section of the chapter in every Manual<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 6<\/p>\n<aside class=\"note\">Next:<\/strong>Chapter 7 \u2014 bid evaluation and award of contract<\/strong>(Goods Ch. 7 \u00b7 Works Ch. 6<\/strong> \u2014 <\/em>Evaluation of Bids and Award of Work \u00b7 Consultancy Ch. 8 \u2014 <\/strong>RfP<\/strong> Evaluation and Award of Contract \u00b7 Non-Consultancy Ch. 7)<\/em>.<\/p>\nTwo traps ahead:<\/strong> the Consultancy Manual places this at Chapter 8<\/strong> (because it inserts a whole Chapter 7 on Shortlisting\/ EoI<\/strong> first), and it alone uses a Consultancy Evaluation Committee (CEC)<\/strong> rather than a Tender Committee. The Works evaluation chapter is by far the most elaborate, carrying Abnormally Low Bids, Cartel Formation\/ Pool Rates, Handling Dissent among the Tender Committee, and Audit Trails<\/strong> \u2014 none of which appear in the others in the same form.<\/p><\/aside><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch7\">Chapter 7 \u2014 Part a<\/p><h1>Shortlisting, the Evaluation Committee, and Preliminary Examination<\/h1><\/header>Part I<\/span>Shortlisting, Committees and Preliminary Examination<\/em><\/p>\nMerging: Goods Ch. 7<\/strong> (Bid Evaluation and Award of Contract) \u00b7 Works Ch. 6<\/strong> (Evaluation of Bids and Award of Work) \u00b7 Consultancy Ch. 7<\/strong> (Shortlisting of Consultants, EoI) and Ch. 8<\/strong> (RfP Evaluation and Award of Contract) \u00b7 Non-Consultancy Ch. 7<\/strong> (Bid Evaluation and Award of Contract)<\/em><\/p><h2>Structural Warnings for Students<\/span><\/h2>\n1. Three different Chapter numbers for the same block:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Chapter<\/th><th>Title<\/th><\/tr><\/thead><tbody><tr><td>G<\/span> Goods<\/td><td>Chapter 7<\/td><td>Bid Evaluation and Award of Contract<\/em><\/td><\/tr><tr><td>W<\/span> Works<\/td><td>Chapter 6<\/td><td>Evaluation of Bids and Award of Work<\/strong><\/em><\/td><\/tr><tr><td>C<\/span> Consultancy<\/td><td>Chapter 8<\/td><td>RfP<\/strong> Evaluation and Award of Contract<\/em><\/td><\/tr><tr><td>NC<\/span> Non-Consultancy<\/td><td>Chapter 7<\/td><td>Bid Evaluation and Award of Contract<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nWhy consultancy is one Chapter ahead: The Consultancy Manual inserts an entire Chapter 7 \u2014 shortlisting of consultants, Expression of Interest (EoI)<\/em> before its evaluation chapter. That chapter has NO counterpart in any other Manual and is reproduced in full at para 7.1 below.<\/p>\n2. The committee is different in consultancy:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Evaluating body<\/th><\/tr><\/thead><tbody><tr><td>G<\/span>, W<\/span>, NC<\/span><\/td><td>tender Committee (TC)<\/strong> \u2014 also called Tender Evaluation Committee (TEC)<\/em> in some organisations<\/td><\/tr><tr><td>C<\/span><\/td><td>consultancy Evaluation Committee (CEC)<\/td><\/tr><\/tbody><\/table><\/div>\n3. Because of the volume (423 KB across the four Manuals), this chapter is issued in two parts:<\/p>\n<ul class=\"lst\"><li>PART A (this document)<\/strong> \u2014 Shortlisting\/ EoI \u00b7 Bid Evaluation Process \u00b7 Composition and Role of the Committee \u00b7 Dissent, Independence and Confidentiality \u00b7 Timely Processing \u00b7 Extension of Bid Validity \u00b7 Lack of Competition \u00b7 Committee Report \u00b7 Preliminary Examination.<\/li><li>PART B<\/strong> \u2014 Techno-commercial Evaluation \u00b7 Evaluation of Quality (Technical Proposals) \u00b7 Financial Evaluation \u00b7 lCS\/ QCBS\/ SSS\/ FBS \u00b7 Reasonableness of Prices \u00b7 Abnormally Low Bids \u00b7 Cartel Formation \u00b7 Negotiations \u00b7 Cancellation and Re-tender \u00b7 Award of Contract \u00b7 Audit Trails \u00b7 Risks and Mitigations.<\/li><\/ul>\n<h2>Concordance for Chapter 7 \u2014 Part A<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>Goods<\/th><th>Works<\/th><th>CS<\/th><th>NCS<\/th><\/tr><\/thead><tbody><tr><td>7.1<\/td><td>Shortlisting of Consultants \u2014 EoI<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>Ch. 7 entire<\/td><td> \u2014 <\/td><\/tr><tr><td>7.2<\/td><td>Bid Evaluation Process \u2014 importance<\/td><td>7.1-1<\/td><td>6.1.1<\/td><td>8.1.1<\/td><td>7.1.1<\/td><\/tr><tr><td>7.3<\/td><td>Evaluation in Different Tendering Systems<\/td><td>(in 7.1)<\/em><\/td><td>6.1.2<\/td><td>8.1.2<\/td><td>7.1.2<\/td><\/tr><tr><td>7.4<\/td><td>Preparation and Vetting of Comparative Statement<\/td><td>7.2<\/td><td>6.1.3<\/td><td>8.1.3<\/td><td>7.1.3<\/td><\/tr><tr><td>7.5<\/td><td>The Stages of Evaluation<\/td><td> \u2014 <\/td><td>6.1.4<\/td><td>8.1.4<\/td><td>7.1.4<\/td><\/tr><tr><td>7.6<\/td><td>Contacting Procuring Entity during evaluation<\/td><td>7.3.6<\/td><td>6.1.5<\/td><td>8.1.5<\/td><td>7.1.5<\/td><\/tr><tr><td>7.7<\/td><td>Composition of the Committee; SoPP<\/td><td>7.1-2, 7.1-3<\/td><td>6.2.1<\/td><td>8.2.1<\/td><td>7.2.1<\/td><\/tr><tr><td>7.8<\/td><td>Role of the Committee<\/td><td>7.1-2-c<\/td><td>6.2.2<\/td><td>8.2.2<\/td><td>7.2.2<\/td><\/tr><tr><td>7.9<\/td><td>Handling Dissent among the Committee<\/td><td>7.6.12<\/td><td>6.2.3<\/td><td>8.2.3<\/td><td>7.2.3<\/td><\/tr><tr><td>7.10<\/td><td>Independence, Impartiality, Confidentiality, No COI<\/td><td>7.6.13<\/td><td>6.2.4<\/td><td>8.2.4<\/td><td>7.2.4<\/td><\/tr><tr><td>7.11<\/td><td>Timely Processing of Tenders<\/td><td>7.6.1<\/td><td>6.2.5<\/td><td>8.2.5<\/td><td>7.2.5<\/td><\/tr><tr><td>7.12<\/td><td>Extension of Bid\/ Tender Validity Period<\/td><td>7.6.2<\/td><td>6.2.6<\/td><td>8.2.6<\/td><td>7.2.6<\/td><\/tr><tr><td>7.13<\/td><td>Consideration of Lack of Competition<\/td><td>7.6.10<\/td><td>6.2.7<\/td><td>8.2.7<\/td><td>7.2.7<\/td><\/tr><tr><td>7.14<\/td><td>Committee Recommendations\/ Report<\/td><td>7.6.14<\/td><td>6.2.8<\/td><td>8.2.8<\/td><td>7.2.8<\/td><\/tr><tr><td>7.15<\/td><td>Preliminary Examination<\/td><td>7.3<\/td><td>6.3<\/td><td>8.3<\/td><td>7.3.1<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>7.1 Shortlisting of Consultants \u2014 Expression of Interest (EoI) [C ONLY]<\/span><\/h1>\n<aside class=\"note\">this entire section is the consultancy manual's Chapter 7. It has no counterpart in the goods, works or non-consultancy Manuals.<\/p><\/aside>\n<h2>7.1.1<\/span>Basic Considerations<\/span><\/h2>\n1. Why two stages are necessary: Due to the inherent complexities of evaluation of physically non-measurable scope and quality standards of consultancy proposals<\/em>, IT IS too time-consuming and expensive<\/em> for the Procuring Entity to invite \u2014 as well as for the consultancy firms to prepare \u2014 and evaluate proposals from all consultants who want to compete<\/em>.<\/p>\nTherefore, procurement of consultancy is done in a two-stage process<\/em>.<\/p>\n2. The first stage: The qualified firms with requisite experience, technical and financial capabilities<\/em> \u2014 who can be trusted to deliver the required services at the desired level of quality<\/em> \u2014 ARE shortlisted transparently<\/em>. This shortlisting is done through the expression of Interest (EoI) process<\/em>.<\/p>\n<aside class=\"note\">The caution: \"care should be taken to avoid stipulation of shortlisting qualification criteria disproportionate to the requirement of the services, that May lead to restricted shortlist and lack of competition in the second stage<\/strong>.\"<\/p><\/aside>\nadequate time should be allowed for getting responses from interested consultants. The Procuring Entity shall make available copies of the EoI document to the interested consultants on its website and e-procurement portal (GeM\/ CPPP)<\/em>.<\/p>\n3. The second stage: In the second stage \u2014 request for proposals (RfP)<\/em> \u2014 proposals containing technical and financial bids<\/em> Are invited from such shortlisted bidders<\/em>. Selection of the winning bidder is based on the quality of the proposal and, where appropriate, on the cost of services<\/em> To be provided.<\/p>\n<h2>7.1.2<\/span>The Four Modes of EoI<\/span><\/h2><h3>A. Open Tender Enquiry (OTE) \u2014 Rule 183(ii) of GFR 2017<\/em><\/span><\/h3>\nFor procurement above Rs. 50 (rupees fifty) lakh<\/em>, shortlisting is done in an openly advertised competitive (OTE mode) shortlisting process called Expression of Interest (EoI)<\/em> \u2014 giving equal opportunity to all interested bidders<\/em> To be considered for shortlisting.<\/p>\nUnder EoI, the \"Request for Expression of Interest\" (REoI)<\/em> is advertised on the Central Public Procurement Portal (CPPP)<\/em> at www.eprocure.gov.in AND ON Government E-marketplace (GeM)<\/em>.<\/p>\nAn organisation having its own website should also publish all its advertised tender enquiries on the website<\/em>. The advertisements should give the complete web address from where the bidding documents can be downloaded<\/em>.<\/p>\nA complete ToR should be ready before requesting EoI.<\/strong><\/p>\nAttention of known reputed consultants May also be separately drawn<\/em> Wherever possible.<\/p>\nThe advertisement must include, among other things:<\/p>\n<aside class=\"note\">THE last date of submission of EoI<\/em> \u00b7 how to get\/ download a copy of the EoI document including ToR<\/em> \u00b7 contact information of the Procuring Entity with the name of contact person<\/em>, and so on<\/p><\/aside>\n<h3>B. Global Tender Enquiry (GTE)<\/span><\/h3>\nin case it is felt that likely consultants May not be available in India<\/em>, the EoI process May be done on global Tender Enquiry (GTE) process<\/em> \u2014 BY sending REoI notice to foreign embassies in India and Indian embassies in relevant countries<\/em>.<\/p>\n<aside class=\"note\">Subject to the restriction on GTE for tenders below Rs. 200 Crore<\/strong> \u2014 see Chapter 4 Part B, para 4.9.2.<\/em><\/p><\/aside>\n<h3>C. Limited Tender Enquiry (LTE) \u2014 Rule 183(i) of GFR 2017<\/em><\/span><\/h3>\nIn procurements of consultancy services below Rs. 50 (rupees fifty) lakh<\/em>, shortlisting is done without a formal published Expression of Interest<\/strong> \u2014 akin to a limited Tender Enquiry (LTE) process<\/em>.<\/p>\nThe three-step procedure:<\/p>\n<ol class=\"lst\"><li>To start with, the preparation of a long list of potential consultants<\/em> May be done on the basis of formal or informal enquiries<\/em> FROM: Other ministries or departments or organisations involved in similar activities \u00b7 chambers of commerce & industry \u00b7 association of consultancy firms<\/em>, etc.<\/li><li>The Procuring Entity should scrutinise the preliminary long list<\/em> AND shortlist the prima facie eligible and capable contractors<\/em> From the long list.<\/li><li>The number of consultants in this moderated long-list should not be less than three<\/em>. In case sufficient consultants cannot be located, then the responses May be called from a lesser number of consultants \u2014 but not less than three in any case, after taking ca's approval<\/strong>.<\/li><\/ol>\nThe panel device: To smoothen this shortlisting for projects below Rs. 50 lakh, procuring entities who do frequent procurement of consultancy services<\/em> May consider preparation of a panel of qualified consultants, after evaluation of their credentials \u2014 on the lines of registration of vendors in procurement of goods<\/em>.<\/p>\nIF THE complexity of the project so justifies<\/em>, A formal EoI May be advertised even for procurements below Rs. 50 lakh, with the approval of ca<\/strong>.<\/p>\n<h3>D. Special Limited Tender Enquiry (SLTE) \u2014 Rule 162 of GFR 2017<\/em><\/span><\/h3>\nLTE mode for EoI \u2014 even for values higher than Rs. 50 lakh<\/em>, where normally OTE should have been done \u2014 is permissible in certain exceptional circumstances<\/em>.<\/p>\nPowers to sanction procurement on LTE basis in such exceptional cases May be laid down in SoPP, based on a certificate of urgency signed by the indentor<\/em>.<\/p>\nThis mode has the merit of being quicker, but VfM obtained May be less than in case of OTE<\/em>; Hence it should be restricted to the following four situations: A) the Competent Authority certifies that there is an existing or prospective urgency for operational or technical requirements<\/em>, and any additional expenditure involved by not procuring through advertised tender enquiry is justified in view of urgency. The Ministry\/ Department should also put on record the nature of the urgency and reasons why the procurement could not be anticipated earlier<\/em>. b) THE sources of supply are definitely known<\/em>, and the possibility of fresh source(s) beyond those being tapped is remote<\/em>. c) THERE ARE sufficient reasons, to be recorded in writing by the Competent Authority<\/em>, indicating that it will not be in public interest<\/em> To procure the services through advertised tender enquiry. D) Government policy designates procurement from specific agencies<\/em>.<\/p>\n<h2>7.1.3<\/span>Evaluation of the REoI<\/span><\/h2><h3>A. General Norms<\/span><\/h3>\n<aside class=\"note\">For the role of the evaluation committee, general norms of evaluation, preliminary examination of bids, and evaluation of qualifications<\/em>, the provisions of paras 7.2 to 7.15 of this Unified Manual (CS paras 8.1\u20138.4) apply mutatis mutandis<\/em>.<\/p><\/aside>\n<h3>B. Evaluation of Responsiveness and Eligibility<\/span><\/h3>\n1. ONLY substantively responsive eois<\/em> Shall be evaluated for shortlisting. A substantively responsive EoI is complete and conforms to the REoI document's essential terms and conditions<\/em>.<\/p>\n2. The pass\/ fail Rule: The Procuring Entity shall determine whether the consultants are eligible as per laid-down eligibility criteria. The eligibility evaluation shall be on a \"pass\" or \"fail\" basis. A consultant must achieve a \"pass\" on all the criteria to proceed to the next step. Any consultant not achieving a 'pass' in any of the eligibility criteria shall be rejected as non-responsive<\/strong>.<\/p>\n<h3>C. Evaluation of Qualification \u2014 the Nine Rules<\/span><\/h3>\n1. The Procuring Entity shall evaluate the consultants for shortlisting, inter alia<\/em>, based on their past experience of handling general and similar consultancy assignments, and financial capability of the firm<\/em>.<\/p>\n2. No borrowed credentials: The determination shall not consider the qualifications of other firms \u2014 such as the consultant's subsidiaries, parent entities, affiliates, or any other entity different from the consultant<\/strong>. Assignments completed by the consultant's individual experts working privately or through other consulting firms<\/em>cannot be claimed as the relevant experience of the consultant, or that of the consultant's partners or sub-consultants<\/strong>.<\/p>\n3. The Procuring Entity reserves the right to waive minor deviations in the qualification criteria<\/em>, if they do not materially affect the capability of a consultant to perform the contract<\/em>.<\/p>\n4. Key experts are not evaluated at EoI stage \u2014 and the reason: The qualification and experience of key experts are not included in the shortlisting criteria but shall be evaluated at the RfP stage<\/em>.<\/p>\n<aside class=\"note\">Since the bidders who meet the REoI qualification can well manage to attract the right key experts during RfP.<\/strong><\/p><\/aside>\n5. In case a particular certification\/ licence is required<\/em> To perform the assignment, that May also be included in eligibility or qualification criteria<\/em>.<\/p>\n6. The suggested qualification criteria table and weightages:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Criteria \/ Sub-criteria<\/th><th>Suggested Values<\/th><th>Sub-criteria weight<\/th><th>Criteria weight<\/th><\/tr><\/thead><tbody><tr><td>Criteria 1 \u2014 general and similar experience<\/strong>(Bidders providing Consultancy services for at least the specified period and having completed the specified volume of general and similar consultancy assignments during the specified period)<\/em><\/td><td><\/td><td><\/td><td>70%<\/td><\/tr><tr><td>Similar assignments<\/em><\/td><td>define based on value, general and specific sector of work, region, key activities\/ methodologies\/ technologies<\/em> etc.<\/td><td><\/td><td><\/td><\/tr><tr><td>Consultants must have at least \u03b1 years' experience in Consultancy Services<\/td><td>\u03b1 = 7<\/td><td>20%<\/td><td><\/td><\/tr><tr><td>During the last \u03b1 years, Consultancy Assignments completed or substantially completed (at least \u03b3 payments received)<\/em> should be at least \u03b2<\/td><td>\u03b1 = 7 \u00b7 \u03b3 = 80% \u00b7 \u03b2 = 7<\/td><td>50%<\/td><td><\/td><\/tr><tr><td>Out of the Consultancy Assignments mentioned above, \u03b4 should be similar<\/em> assignments<\/td><td>\u03b4 = 2<\/td><td>30%<\/td><td><\/td><\/tr><tr><td>criteria 2 \u2014 financial capability<\/strong>(Overall financial strength of the consultant in terms of turnover, profitability, and cash flow \u2014 liquid assets \u2014 situation)<\/em><\/td><td><\/td><td><\/td><td>30%<\/td><\/tr><tr><td>turnover:<\/strong>Minimum average annual turnover of at least Rs. \u03b8 Crores, at least \u03ba of which should be from Consultancy Service Contracts (total payments received for contracts in progress or completed) within the last \u03b1 years<\/em><\/td><td>\u03b8 = 200% of the value of assignment \u00b7 \u03ba = 50% \u00b7 \u03b1 = 7<\/td><td>70%<\/td><td><\/td><\/tr><tr><td>financial viability \u2014 net worth: The Net Worth of the Bidder firm should not be negative on 'The Relevant Date' and should not have eroded by more than \u03be in the last 3 YEARS<\/em><\/td><td>\u03be = 30%<\/td><td>30%<\/td><td><\/td><\/tr><tr><td>relaxation for start-ups:<\/strong>Qualification criteria can be relaxed up to \u03bb% for start-ups, subject to meeting the quality and technical specifications during the RfP<\/em><\/td><td>\u03bb = 20% (twenty per cent)<\/td><td><\/td><td><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">note on evidence: \"during the RfP process, the consultant shall be asked to furnish documentary evidence to demonstrate his compliance to criteria 1 and criteria 2<\/strong>.\"<\/p>\nthe \"relevant date\" when the specified period ends:<\/p>\n<ol class=\"lst\"><li>For all annual reports<\/em> \u2014 periods mentioned are ending with the financial year of the company<\/em> [say 2023-24];<\/li><li>FOR other statements<\/em> \u2014 THE latest statement available on the last date of bid submission<\/em>.<\/li><\/ol><\/aside>\n7. Qualification criteria shall be based entirely upon the capability and resources required to perform the particular contract satisfactorily<\/em>, considering bidders' experience and past performance, capabilities with respect to personnel, equipment and manufacturing facilities, financial standing and relevant compliance with environmental protection regulations<\/em>. There should be no qualification criteria that would be advantageous to foreign consultants at the cost of domestically provided consultancy<\/em>.<\/p>\n8. Demerged entities: Tender documents must clearly mention if (and under what conditions) the demerged entity will be permitted to use credentials of original\/ parent entity (for initial five years from the incorporation of the demerged entities)<\/em> To satisfy the qualification criteria or not.<\/p>\n9. The turnover-multiple caution \u2014 an express criticism of prevailing practice:<\/p>\n<aside class=\"note\">\"it is also noted that, while shortlisting\/ selecting consultants, some procuring entities are keeping the minimum qualifying financial turnover at the level of 5\u201310 times of the estimated cost of the consultancy work. This, prima facie, appears high<\/strong>.\"<\/p>\n\"higher qualification criteria increase the likelihood of adequate experience\/ capacity but reduce the competition; If set unduly high, they May increase the cost without any improvement in quality<\/strong>.\"<\/strong>(DoE OM No. F.18\/13\/2020-PPD dated 13.07.2020)<\/em><\/p>\nit is suggested that the criteria should be fixed on a reasonable basis while drafting tender documents<\/em>, and such higher minimum qualifying turnover should be kept only if adequately justified<\/em>.<\/p>\n\"in higher-value procurements, the minimum annual turnover should not be blindly a multiplier of the assignment value \u2014 but there May be an upper cap on demanded turnover, so as not to restrict competition only to the big four or five consultancy firms<\/strong>.\"<\/p><\/aside>\n<h3>D. Simplified vs Marking-Scheme Evaluation at EoI<\/span><\/h3>\n10. The default \u2014 simplified criteria: In EoI, simplified evaluation criteria should be used, instead of marking schemes<\/em>. A fail-pass, minimum benchmark in each criteria\/ sub-criteria<\/em> Can be specified.<\/p>\n<aside class=\"note\">e.g., must have past experience of at least two similar projects; firm must have a turnover of at least Rs 10 (Rupees Ten) Crores, and so on. Any firm which passes these benchmarks is declared as qualified.<\/em><\/p><\/aside>\n11. The complex-case alternative \u2014 with a worked example: However, in a complex situation, marks\/ scores May be assigned to the response of each consultant based on weightages assigned to each of the criteria in the EoI<\/em>.<\/p>\n<aside class=\"note\">Worked example given in the Manual \u2014 in case of number of assignments in last 7 years<\/em>, out of a maximum of 35 marks for the sub-criteria, scoring can be: a) 3 marks per assignment up to 7 ASSIGNMENTS (BENCHMARK); and b) 3.5 marks for additional assignments, subject to a maximum of 35.<\/p><\/aside>\n12. The purpose of scoring \u2014 not merely disqualification: \"this exercise of scoring is not merely for disqualification of firms below a threshold, but to establish the relative strengths and weaknesses of the applicants \u2014 in order to arrive at a robust short list of qualified consultants who have the required experience and qualifications to deliver the required services at the desired level of quality<\/strong>.\"<\/p>\n13. The 75% threshold: The Procuring Entity shall shortlist all the consultants who secure the minimum required marks \u2014 normally 75% (seventy-five per cent)<\/em>. THE minimum qualifying requirement shall be specified in the EoI document<\/em>.<\/p>\n<h2>7.1.4<\/span>The EoI Evaluation Report<\/span><\/h2>\n1. The shortlist size Rule \u2014 minimum three, maximum eight:<\/p>\nThe short list of firms is required for the selection of consultancy services in a competitive process with:<\/p>\n<aside class=\"note\">A minimum of three (Rule 184 of GFR 2017)<\/strong> AND generally not more than eight<\/strong> \u2014 to avoid inordinate delays in evaluation of the subsequent RfP<\/em>.<\/p><\/aside>\nIf there are a larger number of consultants meeting the evaluation criteria<\/em>, the shortlist shall be restricted to a specified number of consultants<\/em> \u2014 if not specified, eight (8) consultants<\/strong> \u2014 based on higher average turnover<\/strong> (or any other criteria, if so stipulated therein).<\/p>\n2. National-only shortlists: The short list May comprise only national consultants<\/em> (firms registered or incorporated in the country and having registered office in India<\/em>) FOR small assignments<\/em> \u2014 AND indicated in the EoI<\/em>.<\/p>\nThis situation is applicable where:<\/p>\n<ul class=\"lst\"><li>Qualified national firms are available at a competitive cost; Or<\/li><li>the nature of the assignment is such that a foreign consultant's inclusion is not justified<\/em>(for example, a training or outreach to be carried out in local language)<\/em>; or<\/li><li>foreign consultants have not expressed any interest<\/em>.<\/li><\/ul>\n3. CONCURRENT ASSIGNMENTS \u2014 the capacity check: IF THE same firm is considered for concurrent assignments *(for example, a construction supervision consultant for different stretches\/ packages of rehabilitation\/ reconstruction of a road contract)*, the Procuring Entity shall *assess the firm's overall capacity to perform multiple contracts before including it in more than one short list*. HOWEVER, <\/strong>this needs to be pre-declared in the EoI documents<\/em>.<\/p>\n4. The evaluation committee May submit its EoI evaluation report to ca for approval<\/em>. THE tender Committee format at Annexure 6<\/em> Can be used mutatis mutandis<\/em> for this purpose.<\/p>\n<h2>7.1.5<\/span>Declaration of Shortlist and Issue of RfP<\/span><\/h2>\n1. Provisional shortlisting: Eois of consultants that succeed in the above evaluation shall be shortlisted. Provisionally shortlisted consultants will be informed of the condition(s) that must be met before submitting their proposal in the RfP process<\/em>.<\/p>\n2. Validity of the shortlist \u2014 the six-month rule: Only shortlisted (including provisionally shortlisted) consultants shall be invited to participate in the following RfP process<\/em>.<\/p>\nSuch shortlisting shall remain valid for a period specified in the REoI \u2014 six months from the date of declaration, if not so specified<\/strong>.<\/p>\n<aside class=\"note\">\"it's important that the RfP is issued as early as possible after shortlisting \u2014 since the qualification data on which shortlisting is based May tend to become outdated. In case such delay is more than 6 months, it would be better to re-invite EoI<\/strong>.\"<\/p><\/aside>\n3. Publication and the advertising bar: After the EoI evaluation report is accepted by the Competent Authority, the name and address of the shortlisted consultant(s) shall be published in the portal and notice board\/ bulletin\/ website of the Procuring Entity<\/em>.<\/p>\nAll consultants shall be advised about shortlisting of their eois or otherwise<\/em> \u2014 without disclosing the comparative position of their eois with that of others<\/strong>.<\/p>\nShortlisted consultants must not advertise or publish the same in any form without the prior written consent of the Procuring Entity.<\/strong><\/p>\n4. Shortlisting confers no rights: \"shortlisting a consultant is an administrative process and does not confer any legal or contractual rights on the shortlisted bidder. Since original documents\/ certificates are not being called for and examined at this stage, all shortlisting shall be conditional upon final verification of such documents\/ certificates during the RfP process<\/strong>.\"<\/p>\n<h2 class=\"src-C\">7.1.6<\/span>Shortlisting \u2014 Risks and Mitigation<\/span>C<\/span><\/h2><div class=\"srcblock src-C\">\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. Conflict of interest situations: It is possible that conflict of interest situations are not reported or declared by the participating consultants<\/em> \u2014 or sometimes by members of the evaluation committee<\/em>.<\/td><td>These situations need to be dealt with by signing declarations in specified formats<\/em> \u2014 both at the EoI bid stage as also in the technical proposal<\/strong> \u2014 AND by CEC members before undertaking the evaluation of proposals<\/strong>.<\/td><\/tr><tr><td>2. \"Qualifications leasing\":<\/strong>Local bidders with insufficient qualifications May show association with well-qualified (foreign or local) consultants \u2014 <\/strong>just to use their qualification documents to get the contract. These well-qualified consultants <\/strong>lease their qualification \u2014 but do not, or only minimally, contribute experience or key personnel at the execution stage<\/em>.<\/strong><\/td><td>This issue needs to be dealt with from the EoI stage<\/strong> BY: \u2022 very clearly identifying the qualified applicant<\/em>; and \u2022 putting on record\/ contract the guaranteed contribution from the partner with qualification<\/em>.<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>7.2 Bid Evaluation Process \u2014 the Governing Principle<\/span><\/h1>\nThe evaluation of bids is one of the most significant processes of procurement and must be transparent<\/em>.<\/p>\nAll bids are to be evaluated strictly based on the terms and conditions incorporated in the tender document and those stipulated by the bidders in their bids<\/strong>.<\/p>\nNo hearsay information or hitherto undeclared condition should be brought in while evaluating the bids.<\/strong><\/p>\nSimilarly, no tender enquiry condition (especially the significant\/ essential ones) should be overlooked\/ relaxed while evaluating the bids<\/strong>.<\/p>\n<aside class=\"note\">The aim: \"the aim should be to ensure that no bidder gets undue advantage at the cost of other bidders and\/ or at the cost of the Procuring Entity<\/strong>.\"<\/p><\/aside>\nG<\/span> \u2014 the single-vendor caution on preferences: \"care should be taken to ensure that preferences provided to any category of bidders on certain specified grounds do not result in a single vendor selection<\/strong>.\"<\/p>\nW<\/span> \u2014 the permitted evaluation factors: The Contracting Authority may include quality, price, technical merit, aesthetic and functional characteristics, environmental characteristics, running costs, cost-effectiveness, after-sales service and technical assistance, delivery date and delivery period or period of completion<\/em>, etc. \"no criteria shall be used for evaluation of tenders that cannot be verified or [are] not stated in the contract \u2014 with the exception of provisions of laws in force<\/strong>.\"<\/p>\n<h1>7.3 Evaluation in Different Tendering Systems<\/span>W<\/span>C<\/span>NC<\/span><\/h1>\n1. Single-stage single-envelope tendering: The evaluation of eligibility\/ qualification of bidders, technical, commercial, and financial aspects is done simultaneously<\/em>.<\/p>\nTHE lowest-priced bid that meets the eligibility\/ qualification criteria and technical and commercial conditions<\/em> Laid down in the tender documents is declared as successful<\/em>.<\/p>\n2. Single-stage two-envelope tendering \u2014 and the sanctity of the sealed financial bid:<\/p>\nInitially, only the techno-commercial bids would be opened and evaluated<\/em> for bids which successfully meet the eligibility\/ qualification criteria and techno-commercial aspects.<\/p>\nFinancial bids of such successful bidders only<\/em> Would be opened. The TC shall evaluate financial bids with a view to select the lowest (L1) bidder<\/em> Who meets the eligibility\/ qualification criteria and techno-commercial aspects.<\/p>\nEvaluators of technical proposals shall not have access to the financial proposals until the technical evaluation is concluded.<\/strong><\/p>\n<aside class=\"note\">The custody safeguard \u2014 an important practical instruction: \"it is of utmost importance that the authenticity, integrity, and sanctity of unopened financial bids must be ensured before their opening. All the financial bids May preferably be put in a large envelope, which May be dated, sealed, and signed (including by some of the bidders present) \u2014 to show that none of the bids were accessed during the custody<\/strong>.\"<\/p><\/aside>\n3. Two-stage bids: In two-stage bids, the PQB\/ EoI stage would have already been evaluated<\/em>, AND this second stage is for evaluation of responses to the second-stage two envelopes from the shortlisted qualified bidders<\/em>, following the procedure described in sub-para 2 above.<\/p>\n<h1>7.4 Preparation and Vetting of Comparative Statement<\/span><\/h1>\nExcept in cases up to Rs. 50 lakh (rupees fifty lakh)<\/strong>, the Procuring Entity should prepare a comparative statement of quotations (technical and financial) received in the order in which bids were opened<\/em>.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Type of bid<\/th><th>What the comparative statement contains<\/th><\/tr><\/thead><tbody><tr><td>Techno-commercial bid<\/td><td>information about deciding the responsiveness and eligibility of bids<\/em>, AND evaluating the technical suitability of offers<\/em><\/td><\/tr><tr><td>financial bid<\/td><td>information about rates quoted (including taxes), discounts if any<\/em>, AND any other information that has implications on the ranking of bids<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nthe concerned officers should sign the comparative statement<\/em> So prepared. It May also be vetted by the associated\/ integrated finance for veracity of information<\/em>.<\/p>\n<aside class=\"note\">W<\/span> \u2014 the e-procurement exemption:<\/strong>\"however, in case the comparative statement is prepared by the e-procurement portal, vetting by associated\/ integrated finance is not required<\/strong>.\"<\/p><\/aside>\n<h1>7.5 The Stages of Evaluation<\/span>W<\/span>C<\/span>NC<\/span><\/h1>\nthe evaluation of the bids shall be carried out in two stages<\/strong>:<\/p>\nAT THE first stage<\/em>, evaluation of responsiveness and technical bids<\/em> is taken up.<\/p>\nEvaluators of technical bids shall not have access to the financial bids until the technical evaluation is concluded<\/em> \u2014 AS THE envelope containing the financial bid is not opened till the technical evaluation is complete<\/em>.<\/p>\nThe financial bid of only such bidders will be opened which obtain minimum qualifying marks\/ standards prescribed for the technical bid<\/strong>.<\/p>\nThe evaluation shall be carried out in full conformity with the provisions of the tender document<\/strong>.<\/p>\n<h1>7.6 Contacting the Procuring Entity during the Evaluation<\/span><\/h1>\nFrom the time of bid submission to awarding the contract<\/em>, no bidder shall contact the Procuring Entity on any matter relating to the submitted bid<\/strong>.<\/p>\nIf a bidder needs to contact<\/em> The Procuring Entity for any reason relating to this tender and\/ or its bid, it should do so only in writing or electronically<\/strong>.<\/p>\n<aside class=\"note\">G<\/span> adds: \"The Procuring Entity shall keep these communications in view during the evaluation of bids, but is not expected to respond until the evaluation is complete.\"<\/em><\/p><\/aside>\nany effort by a bidder to influence the Procuring Entity during the processing of bids, evaluation, bid comparison or award decisions<\/strong> Shall be construed as a violation of the Code of Integrity<\/strong> \u2014 and the bid shall be liable to be rejected as non-responsive, in addition to other punitive actions<\/strong> for violation of the Code of Integrity as per the tender document.<\/p>\n<h1>7.7 Composition of the Tender Committee (TC)\/ Consultancy Evaluation Committee (CEC), and the SoPP<\/span><\/h1>\n<\/div><h2>7.7.1<\/span>The Direct Acceptance Threshold<\/span><\/h2>\nThere are delegations up to a threshold value \u2014 called the direct acceptance threshold<\/strong> \u2014 below which the evaluation of the bids May be entrusted solely and directly to the individual Competent Authority, without the involvement of a Tender Committee or any evaluation report<\/em>.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>The threshold<\/th><\/tr><\/thead><tbody><tr><td>G<\/span> GOODS<\/td><td>Tender Committee required for all cases having financial implications of more than Rs. 50 (rupees fifty) lakh<\/strong><\/td><\/tr><tr><td>W<\/span> WORKS<\/td><td>\"\u2026direct acceptance threshold \u2014 normally LTE threshold of Rs 50 lakhs<\/strong>\"<\/td><\/tr><tr><td>C<\/span> Consultancy<\/td><td>CEC required for all cases having financial implications of more than Rs. 50 lakh<\/strong> *(including SLTE or Nomination Basis)*; for cases less than Rs. 50 lakh<\/strong>, direct acceptance<\/td><\/tr><tr><td>NC<\/span><\/td><td>(same as Goods)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nhe would carry out all the steps in the evaluation described in this Chapter, instead of the TC\/ CEC<\/em>, AND directly record reasons and decisions in the file itself<\/em> (or online, where such systems exist).<\/p>\nHe May ask for a technical suitability report from user departments if needed<\/strong>.<\/p>\nIn procurements above such a threshold \u2014 including nomination and SLTE modes<\/em> \u2014 evaluation is to be done by a Tender Committee\/ CEC.<\/p>\n<h2>7.7.2<\/span>Composition<\/span><\/h2>\n1. The three-member norm: TC\/ CEC should normally comprise three members, including<\/em>:<\/p>\n<ul class=\"lst\"><li>A finance member<\/strong>(nominated by the Financial Adviser)<\/em> \u2014 C<\/span>: \"Financial Adviser or his representative\"<\/em>; and<\/li><li>A representative of the user<\/strong><\/li><\/ul>\n \u2014 as per soPP.<\/p>\n2. SIZE: \"TC\/ CEC should not be large\/ very large, as it May slow down the evaluation process<\/strong>.\"<\/p>\nhowever, suitable domain\/ technical experts May be included in the committee to render assistance in the evaluation of the bids<\/em>(W<\/span> adds: \"from the user department (or otherwise)\")<\/em>.<\/p>\n<aside class=\"note\">The no-second-committee Rule (in all four): \"there is no need to constitute any other committee for technical evaluation, preliminary evaluation, etc<\/strong>.\"<\/p><\/aside>\n3. The two independence Rules under Rule 173(xxii) of GFR 2017:<\/p>\n<aside class=\"note\">\"no member of the Tender Committee should be reporting directly to any other member of such committee, in case the estimated value of the procurement exceeds Rs. 50 lakhs<\/strong>.\"<\/p>\nW<\/span> and C<\/span> extend this to the accepting authority<\/em> as well: \"no member of the tender committee (or the accepting authority<\/strong>) should be reporting directly to any other member\u2026\"<\/p>\nG<\/span> and C<\/span> both urge extension below the threshold:<\/p>\n<ul class=\"lst\"><li>G<\/span>: *\"<\/strong>this provision should be ensured in the constitution of all purchase committees, irrespective of the value of procurement.\"*<\/li><li>C<\/span>: *\"<\/strong>Though the GFR stipulates this provision only when the estimated value of procurement exceeds Rs 50 lakh, it is desirable that the same provision should be followed in the constitution of all purchase committees irrespective of the value of procurement.\"*<\/li><\/ul>\nthe second Rule \u2014 recommending authority \u2260 accepting authority: \"the Tender Committee to consider bids May be so constituted that an authority holding powers for recommending the bids by virtue of his position as a member of the Tender Committee shall not also be the accepting authority for such tenders<\/strong>.\"<\/p><\/aside>\n4. The convenor: THE representative of the Procuring Entity will work as the convenor (member Secretary)<\/em> Of the TC\/ CEC.<\/p>\n5. Constitution at one level higher, and pre-nomination: \"tender committees May be constituted with the approval of one level higher than the Competent Authority<\/strong>.\"<\/p>\n\"it is advantageous for organisations doing procurements regularly to have pre-nominated (by designation) tender committees for various categories and value-slabs of procurements, included in the SoPP<\/strong>.\"<\/p>\n6. C<\/span> \u2014 the convenor's additional duty at the outset: \"he shall distribute the RfP to the CEC members and request them to familiarise themselves with the characteristics and requirements of the assignment, the selection procedures, and the evaluation criteria and sub-criteria. The convenor of the CEC should also call a meeting of the CEC members to review any questions they May have on the evaluation principles, procedures, and objectives<\/strong>.\"<\/p>\n<h2>7.7.3<\/span>The Schedule of Procurement Powers (SoPP) \u2014 the Six Approval Stages<\/span><\/h2>\nthe Competent Authority's written approval must be taken at various stages of procurement, before proceeding ahead<\/strong> \u2014 e.g.:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Stage requiring CA's written approval<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>administrative\/ financial sanctions\/ issue of tender (G<\/span> adds: including Tender Documents)<\/em><\/td><\/tr><tr><td>ii<\/td><td>approval of techno-commercial evaluation and opening of price bids<\/em> In case of a two-packet system (G<\/span> adds: and similar approvals in case of PQB modes and Two-Stage Tendering)<\/em><\/td><\/tr><tr><td>iii<\/td><td>price negotiations, if permitted under specified circumstances<\/em><\/td><\/tr><tr><td>iv<\/td><td>approval of financial evaluation and award of contract<\/em> To the selected bidder(s)<\/td><\/tr><tr><td>v<\/td><td>cancellation of procurement and re-tendering<\/td><\/tr><tr><td>vi<\/td><td>in some particular decisions during contract execution<\/em> \u2014 e.g., the exercise of the option clause or any variation beyond the laid-down percentage \u00b7 forfeiture\/ release of performance securities \u00b7 premature termination\/ foreclosure of contract<\/em>, etc.<\/td><\/tr><\/tbody><\/table><\/div>\nThe minister\/ board-level simplification (in all four):<\/p>\n<aside class=\"note\">\"wherever such Competent Authority is a minister of the Central Government (or board of directors in a CPSE), obtaining approvals at so many stages May delay the process and unnecessarily overburden them. Therefore, in such cases, their approval May only be obtained at the \"approval of financial evaluation and award of contract\". Powers for approvals at intermediate stages May be delegated to appropriate levels in such cases<\/strong>.\"<\/p><\/aside>\nthe Procuring Entity should lay down a Schedule of Procurement Powers (SoPP) detailing such thresholds<\/em>. It can also lay down the powers, jurisdiction, and composition of various levels of the Tender Committee and corresponding Competent Authority<\/em> for various categories of procurement and different threshold values.<\/p>\n<aside class=\"note\">(Suggested SoPP format \u2014 G<\/span> Annexure 4 \u00b7 W<\/span>, C<\/span>, NC<\/span> Annexure 2. The exact values of thresholds must be decided by the Procuring Entity in conformity with DFPR.<\/strong>)<\/em><\/p><\/aside>\n<h1>7.8 Role of the Tender Committee\/ CEC<\/span><\/h1>\n1. Custody: The member Secretary of the TC\/ CEC<\/strong> (OR THE competent Authority, in direct acceptance cases<\/em>) SHALL:<\/p>\n<ul class=\"lst\"><li>Receive the bids opened, along with other documents, from the Bid Opening Committee\/ tender opening officials<\/em>; and<\/li><li>BE responsible for the safe custody of the documents and for the processing involved at all steps in finalising the procurement<\/strong>.<\/li><\/ul>\n2. Scope of responsibility \u2014 and note how much wider the CEC's is:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>The Committee shall be responsible for<\/th><\/tr><\/thead><tbody><tr><td>G<\/span><\/td><td>ALL aspects and stages of the tender evaluation<\/em><\/td><\/tr><tr><td>W<\/span>, NC<\/span><\/td><td>all aspects and stages of the evaluation of technical and financial proposals, negotiations, and final award of contract<\/em><\/td><\/tr><tr><td>C<\/span><\/td><td>all aspects and stages of the consultant selection<\/strong> \u2014 that is: Evaluation of EoI \u00b7 shortlisting of consultants \u00b7 deciding tors \u00b7 issuance of RfP \u00b7 evaluation of technical and financial proposals \u00b7 negotiations \u00b7 and final selection of the consultant<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n3. The personal-discharge Rule \u2014 one of the most important governance provisions in the chapter:<\/p>\n<aside class=\"note\">\"TC\/ CEC duties are to be discharged personally by the nominated officers. They May take help of their subordinate officers by way of reports\/ evaluations \u2014 but they would still be answerable for such decisions.<\/strong><\/p>\n TC\/ CEC members cannot co-opt or nominate others to attend deliberations on their behalf.<\/strong><\/p>\n TC\/ CEC deliberations are best held across the table \u2014 and not through circulation of notes<\/strong>.\"<\/p><\/aside>\n4. The four pre-evaluation checks: After the proposals have been opened, the evaluation process can begin. Before starting the evaluation<\/strong>, the TC\/ CEC members should ensure that they: A) have no conflict of interest<\/strong>(W<\/span> adds: \"as defined in the tender document\")<\/em>; B) understand the evaluation criteria<\/strong> \u2014 C<\/span>: \"understand the rating and scoring system\"<\/em>; C) have been provided with evaluation worksheets<\/strong>; and d) AGREE ON how to evaluate the proposals<\/strong>.<\/p>\n<h1>7.9 Handling Dissent among the Tender Committee\/ CEC<\/span><\/h1>\n<aside class=\"note\">NOTE: The Consultancy Manual heads this section \"Handling Dissent among Tender Committee<\/em>\" \u2014 an apparent carry-over, since its committee is the CEC.<\/p><\/aside>\n1. Resolve by discussion, not by correspondence:<\/p>\n<aside class=\"note\">\"all members of the TC should resolve their differences through personal discussions \u2014 instead of making to-and-fro references in writing<\/strong>.\"<\/p><\/aside>\nin cases where it is not possible to come to a consensus<\/em> And differences persist amongst TC members:<\/p>\n<ul class=\"lst\"><li>THE reasons for dissent of a member should be recorded in a balanced manner, along with the majority's views on the dissent note<\/strong>;<\/li><li>THE final recommendations should be that of the majority view<\/strong>.<\/li><li>\"however, such situations should be rare.<\/strong>\"<\/li><li>the Competent Authority (ca) can overrule such dissent notes after recording reasons for doing so clearly. His decision would be final<\/strong>.<\/li><\/ul>\n2. Where the ca disagrees with the committee \u2014 the send-back procedure:<\/p>\n<aside class=\"note\">\"in cases where the ca does not agree with the majority or unanimous recommendations of the TC, he should record his views and, if possible, firstly send it back to TC to reconsider along the lines of the tender accepting authority's views.<\/strong><\/p>\nHowever, if the TC \u2014 after considering the views of the ca \u2014 sticks to its own earlier recommendations, the ca can finally decide as deemed fit, duly recording detailed reasons.<\/strong><\/p>\n He will be responsible for such decisions. However, such situations should be rare<\/strong>.\"<\/p><\/aside>\n<h1>7.10 Independence, Impartiality, Confidentiality and 'No Conflict of Interest' at All Stages of Evaluation of Bids<\/span><\/h1>\n1. No communication with bidders: Members of the TC\/ CEC should not have any conflict of interest, and should not directly engage in any communication with bidders \u2014 from the date of their appointment to the date on which the contract is awarded<\/strong>.<\/p>\n2. Confidentiality and its one exception:<\/p>\nInformation relating to the evaluation of bids and the committee's deliberations<\/em> Should be confidential, and not be shared with persons not officially connected with the process \u2014 until the award of the contract is notified to the successful firm<\/strong>.<\/p>\n<aside class=\"note\">The exception: \"\u2026Except that after technical evaluation, the list of successful bidders May be published, as required in the tender document.\"<\/em><\/p>\nthe absolute bar: \"under no circumstances should the tender file or confidential information contained therein be provided for scrutiny or for decision to any person\/ office who is not involved in decision-making<\/strong>.\"<\/p><\/aside>\n3. The declaration requirement \u2014 extended to non-members:<\/p>\n\"all technical, commercial and finance officials who have contributed to the techno-commercial or financial evaluation of bids \u2014 even though they May not be part of the TC \u2014 should:<\/strong><\/p>\n<ul class=\"lst\"><li>Deal with the procurement in an independent, impartial manner<\/strong>;<\/li><li>Have no conflict of interest with any of the bidders involved;<\/strong><\/li><li>Maintain confidentiality of the information processed during the evaluation process and not allow it to reach any unauthorised person<\/strong>.\"<\/li><\/ul>\nthey should sign a declaration at the end of their reports\/ notings<\/strong> Stating that:<\/p>\n<aside class=\"note\">\"I declare that i have no conflict of interest with any of the bidders in this tender.\"<\/strong><\/p><\/aside>\nTC members May also make such a declaration at the end of their reports.<\/em><\/p>\n4. Handling external references, grievances and directives during processing:<\/p>\n<aside class=\"note\">\"during the processing of the tender, all references\/ grievances\/ complaints\/ directives\/ requests for information from any sources \u2014 including higher-level officials\/ authorities within the Ministry or from outside \u2014 May be forwarded to the TC\/ convener of TC for its examination on merits and action as considered necessary \u2014 maintaining independence, impartiality, confidentiality and 'no conflict of interest'.<\/strong><\/p>\n An interim reply May be provided that the tender is still under consideration, and that a final response would be given after the declaration of the award of contract<\/strong>.\"<\/p><\/aside>\n<h1>7.11 Timely Processing of Tenders<\/span><\/h1>\n(Rule 174(i) of GFR 2017)<\/em><\/p>\n1. The 90 \u2192 60 \u2192 75 day Rule:<\/p>\n<aside class=\"note\">\"delays in finalising procurement deprive the public of the intended benefits and result in lost revenues and cost over-run.<\/strong><\/p>\nCurrently, the ministries\/ departments are generally awarding the contracts in 90 days from the date of tender opening \u2014 for which the ministries\/ departments are asking for a validity of offer by the contractors for 90 days.<\/strong><\/p>\n In order to further shorten the period for award of contract, the ministries\/ departments should try to shorten the procurement decision period to 60 days from the date of opening of the tenders in most of the cases.<\/strong><\/p>\n Only in exceptional cases \u2014 like two-packet\/ two-stage bidding \u2014 the period May be extended. However, in no case should this time period exceed 75 days<\/strong>.\"<\/p><\/aside>\n2. The CPWD example \u2014 maximum days for award of contract W<\/span>:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Procuring Officer<\/th><th>Limit of procurement (Rs. crore)<\/th><th>Maximum days for decision for award of contract<\/th><\/tr><\/thead><tbody><tr><td>Assistant Engineer<\/td><td>0.06<\/td><td>10 DAYS<\/td><\/tr><tr><td>Executive Engineer<\/td><td>1.00<\/td><td>15 DAYS<\/td><\/tr><tr><td>Superintending Engineer<\/td><td>10.00<\/td><td>30 DAYS<\/td><\/tr><tr><td>Chief Engineer<\/td><td>30.00<\/td><td>45 DAYS<\/td><\/tr><tr><td>Additional Director General and above<\/td><td>More than 30.00<\/td><td>60 DAYS<\/td><\/tr><\/tbody><\/table><\/div>\n3. The published Schedule and the accountability Rule:<\/p>\n\"the complete time Schedule of finalising the tender process \u2014 from the date of issuing the tender to the date of issuing the contract \u2014 should be published in the bid documents<\/strong>.\"<\/p>\n<aside class=\"note\">\"every official in the chain of the procurement operation is accountable for acting in a specified time, so that the tender is finalised on time. Any deviation from the Schedule May be monitored and explained, by way of a system of management reporting<\/strong>.\"<\/strong>(Appendices 4 and 5 of the Goods Manual.)<\/em><\/p>\na simple practical device: \"as a check, the proposed Schedule of tender process May be printed on the inside cover of the procurement file \u2014 where the actual date of completion of various stages May be recorded<\/strong>.\"<\/p><\/aside>\n4. The fixed weekly TC meeting day:<\/p>\n<aside class=\"note\">\"it has been also noted that delay in decision-making after opening of certain tenders is taking place because the tender committees are not meeting frequently.<\/strong><\/p>\nIn order to ensure that most of the tenders are decided as per the new timelines, it has been decided that the ministries\/ departments May notify at least one day of every week for the meeting of TC.<\/strong><\/p>\n Instructions May be issued by the concerned organisation that on such pre-fixed days, no member of the TC shall normally take leave or proceed on tour, etc<\/strong>.\"<\/p><\/aside>\n<h1>7.12 Extension of Bid\/ Tender Validity Period<\/span><\/h1>\n(Rule 174(iii) of GFR 2017)<\/em><\/p>\n1. The primary obligation: The entire process of scrutiny and evaluation of tenders, preparation of ranking statement and notification of award<\/em>must be done expeditiously and within the original tender validity period<\/strong>.<\/p>\n2. The extension procedure and its five Rules:<\/p>\nIf, due to some exceptional and unforeseen reasons<\/em>, the purchase organisation is unable to decide on the placement of the contract within the original validity period, it May:<\/p>\n<ul class=\"lst\"><li>Preferably request \u2014 before expiry of the original validity period<\/strong> \u2014 all the responsive tenderers<\/strong> To extend their tenders up to a specified period;<\/li><li>While asking for such extension, the tenderers are also to be asked to extend their offers \"as it is\", without any changes therein<\/strong>;<\/li><li>They May also be requested to extend the validity of the EMD for the corresponding additional period<\/strong> (which is to be specified in the request);<\/li><li>\"a tenderer May not agree to such a request \u2014 and this will not lead to forfeiture of its EMD<\/strong>\";<\/li><li>But the tenderers who do agree to extend the validity are to do so without changing any terms, conditions, and so on, of their original tenders<\/strong>;<\/li><li>Reasons for seeking extension of bid validity should be recorded by the procuring officers<\/strong>.<\/li><\/ul>\n3. TREATMENT OF \"not-EXTENDED\" AND \"WITHDRAWN\" BIDS \u2014 the three scenarios:<\/p>\n<aside class=\"note\">Definitions used:<\/strong>\"not-extended bids<\/em>\" = <\/strong>refusal by tenderer(s) to extend validity. <\/strong>\"withdrawn bids<\/em>\" = <\/strong>withdrawal of offer within validity.<\/p><\/aside>\nA) if it happens before completion of the techno-commercial evaluation<\/strong>:<\/p>\n<aside class=\"note\">Then the techno-commercial evaluation (including the not-extended and withdrawn bids) shall be completed<\/strong>. If a not-extended or withdrawn bid qualifies in techno-commercial evaluation<\/em>, the financial bid(s) of such bidders shall also be opened<\/strong>, and action shall be taken as per sub-para (b) below.<\/p><\/aside>\nB) if it happens after techno-commercial evaluation but before completion of financial bid evaluation<\/strong>:<\/p>\n<aside class=\"note\">Financial bid evaluation (including not-extended and withdrawn bids<\/strong>) shall be completed.<\/p>\n<ul class=\"lst\"><li>i) IF A withdrawn bid happens to be the L-1 bidder<\/strong> \u2014 (the lowest acceptable bidder, who is techno-commercially qualified for the supply of a bulk quantity, and would have been awarded a contract but for his refusal to extend validity)<\/em> \u2014 the tender must be re-tendered<\/strong>.<\/li><li>ii) since this May take some time, the Procuring Entity May cover their immediate short-term needs through an appropriate mode of procurement<\/strong>.<\/li><li>iii) the critical Rule: \"however, such L1 price of the not-extended or withdrawn bids shall not be taken as precedence for determining price estimates or reasonableness<\/strong>.\"<\/li><\/ul><\/aside>\nc) in case of QCBS<\/strong> System of evaluation:<\/p>\n<aside class=\"note\">The proposal obtaining the highest total combined score<\/strong> In evaluation of quality and cost is identified, which is ranked as H-1<\/strong>. If a not-extended or withdrawn bid happens to be the H-1 bidder, the tender must be re-tendered<\/strong>.<\/p><\/aside>\n<h1>7.13 Consideration of Lack of Competition in OTE\/ GTE and LTE<\/span><\/h1>\n(Rule 173(xx) and (xxi) of GFR 2017)<\/em><\/p>\n1. What counts as adequate competition:<\/p>\n\"the number of bids received which can indicate adequate competition depends on the parameters of procurement (value, specification, mode of procurement, tendering system, etc.) and the market situation. This has to be judged by the Tender Committee<\/strong>.\"<\/p>\n<aside class=\"note\">the benchmark: \"however, less than three independent bids (without suspicion of the cartel) May indicate a lack of competition<\/strong>.\"<\/p>\nthe mandatory paragraph: \"TC must record a paragraph in its report about the adequacy or otherwise of competition in the tender<\/strong>.\"<\/p><\/aside>\n2. THE 'single offer' situation \u2014 and the express criticism of routine re-tendering:<\/p>\nSometimes, against advertised\/ limited tender cases, the Procuring Entity May not receive a sufficient number of bids<\/em> And\/ or \u2014 after analysing the bids \u2014 ends up with only one responsive bid \u2014 a situation referred to as <\/strong>'Single offer'<\/em>.<\/p>\n<aside class=\"note\">AS PER Rule 173(xxi) of GFR 2017<\/em>, such a situation of 'single offer' is to be treated as single tender<\/strong>. The contract May be placed on the 'single offer' bidder, provided the quoted price is reasonable<\/strong>. However, restricted powers of single tender mode of procurement would apply<\/strong>.<\/p><\/aside>\nThe pre-retender check: \"before re-tendering, the Procuring Entity is first to check whether \u2014 while floating\/ issuing the enquiry \u2014 all necessary requirements and formalities such as standard conditions, industry-friendly specification, wide publicity, sufficient time for bidding, and so on, were fulfilled. If not, a fresh enquiry is to be issued after rectifying the deficiencies<\/strong>.\"<\/p>\n<aside class=\"note\">The express criticism \u2014 a passage worth memorising:<\/p>\n\"it has become a practice among some procuring entities to routinely assume that open tenders which result in single bids are not acceptable, and to go for re-tender as a safe course of action. This is not correct.<\/strong><\/p>\nRe-bidding has costs:<\/strong><\/p>\nFirstly, the actual costs of re-tendering;<\/strong><\/p>\nSecondly, the delay in execution of the work, with consequent delay in the attainment of the purpose for which the procurement is being done; And<\/strong><\/p>\nthirdly, the possibility that the re-bid May result in a higher bid.<\/strong><\/p>\n Lack of competition shall not be determined solely on the basis of the number of bidders<\/strong>.\"<\/p><\/aside>\nthe three conditions under which a single-bid process is valid:<\/p>\n<aside class=\"note\">\"even when only one bid is submitted, the process May be considered valid provided the following conditions are satisfied:<\/strong><\/p>\nA) the procurement was satisfactorily advertised, and sufficient time was given for submission of bids<\/strong>;<\/p>\nb) THE qualification criteria were not unduly restrictive<\/strong>; and<\/p>\nc) prices are reasonable in comparison to market values<\/strong>.\"<\/p><\/aside>\n3. The powers and the fallback: However, as far as delegation\/ Schedule of Procurement Powers<\/em> is concerned, the Competent Authority would be as in single tender mode<\/strong>. In case of price not being reasonable, negotiations (being L1) or re-tender May be considered as justifiable<\/strong>.<\/p>\n4. Unsolicited offers against LTEs \u2014 the general rule and its three exceptions:<\/p>\n\"unsolicited offers against ltes should be ignored; However, ministries\/ departments should evolve a system by which interested firms can enlist and bid in the next round of tendering.<\/strong>\"<\/p>\nhowever, under the following exceptional circumstances, these May be considered for acceptance at the next higher level of competency<\/strong>: A) inadequate competition; B) non-availability of suitable quotations from registered contractors; C) urgent demand, and capacity\/ capability of the firm offering the unsolicited [offer] being known<\/em>, etc.<\/p>\n<h1>7.14 Tender Committee\/ CEC Recommendations and Report<\/span><\/h1>\n1. What the committee must recommend:<\/p>\nThe TC has to make formal recommendations<\/strong> for the award of the contract to the bidder:<\/p>\n<ul class=\"lst\"><li>Whose bid has been determined to be substantially responsive<\/strong>; and<\/li><li>THE lowest evaluated bid<\/strong>;<\/li><li>Provided further that the bidder is determined to be qualified to perform the contract satisfactorily, and his credentials have been verified<\/strong>.<\/li><\/ul>\n<aside class=\"note\">(TC Minutes Format \u2014 G<\/span> Annexure 14 \u00b7 W<\/span> Annexure 4 \u00b7 C<\/span> Annexure 6 (CEC) \u00b7 NC<\/span> Annexure 6.)<\/em><\/p><\/aside>\n2. The good-practice Rule on deviations:<\/p>\n\"it is a good practice that TC should spell out salient terms and conditions of the offer(s) recommended for acceptance.<\/strong><\/p>\n<aside class=\"note\">It should also be ensured by the TC that any deviation\/ variation quoted by the contractor in his bid are not left un-deliberated and ruled upon in the TC \u2014 otherwise, there May be delay in acceptance of the contract by the contractor<\/strong>.\"<\/p><\/aside>\nthese recommendations are submitted for approval to the tender accepting authority<\/strong>.<\/p>\n3. No separate fa consultation \u2014 and the four-fold responsibility of the ca:<\/p>\n<aside class=\"note\">\"since a nominee of the Financial Adviser of the Department is usually a member of the Tender Committee, there is no need for the ca to consult the fa of the Department before accepting the TC recommendations.<\/strong><\/p>\n In any purchase decision, the responsibility of the ca is not discharged merely by selecting the cheapest offer or accepting TC recommendations \u2014 but [by] ensuring whether:<\/strong><\/p>\nA) offers have been invited in accordance with this Manual, and after following fair and reasonable procedures in prevailing circumstances;<\/strong><\/p>\nB) he is satisfied that the selected offer will adequately meet the requirement for which it is being procured;<\/strong><\/p>\nC) the price of the offer is reasonable and consistent with the quality required; And<\/strong><\/p>\nd) the accepted offer is the most appropriate, taking all relevant factors into account, in keeping with the standards of financial propriety<\/strong>.\"<\/p><\/aside>\n4. After the acceptance of these recommendations by the tender accepting authority, the letter (notification) of award (LoA) can be issued<\/strong>.<\/p>\n<h1>7.15 Preliminary Examination<\/span><\/h1>\n<h2>7.15.1<\/span>Unresponsive Bids<\/span><\/h2>\nThe definition: \"a substantively responsive bid is complete and conforms to the tender document's essential terms, conditions, and requirements \u2014 without substantive deviation, reservation, or omission<\/strong>.\"<\/p>\n\"only substantively responsive bids shall be considered for further evaluation. Other bids shall be treated as unresponsive and ignored. All bids received shall first be scrutinised to identify unresponsive bids, if any<\/strong>.\"<\/p>\nthe nine grounds on which a bid May be declared unresponsive:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Ground<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>the bid is not in the prescribed format<\/em>, OR IS unsigned<\/em>, OR not signed as per the stipulations<\/em> In the tender document<\/td><\/tr><tr><td>2<\/td><td>the required EMD has not been provided<\/em>, OR exemption from EMD is claimed without acceptable proof of exemption<\/em><\/td><\/tr><tr><td>3<\/td><td>the bidder is not eligible to participate<\/em> As per the eligibility criteria laid down (including conflict of interest and other provisions of CIPP<\/em>).<\/strong> In case procurement is on a limited tender basis<\/em>, or where procurement is restricted to pre-approved vendors<\/em>, it should be especially ensured that there is no conflict of interest<\/strong><\/td><\/tr><tr><td>4<\/strong>G<\/span> ONLY<\/td><td>the bidder has *quoted for goods manufactured by a different firm, <\/strong>without the required authority letter from the proposed manufacturer<\/td><\/tr><tr><td>5<\/td><td>the bid departs from the essential requirements<\/em> Specified in the tender document (for example, the bidder has not agreed to give the required performance security)<\/em><\/td><\/tr><tr><td>6<\/td><td>against a Schedule in the list of requirements, the bidder has not quoted for the entire requirement as specified in that Schedule<\/strong>. Worked example: \"in a schedule, it has been stipulated that the bidder will SUPPLY the equipment, INSTALL and COMMISSION it, and also TRAIN the purchaser's operators for operating the equipment. The bidder has, however, quoted only for the supply of the equipment.\"<\/em><\/td><\/tr><tr><td>7<\/td><td>bidder has quoted conditional bids, or more than one bid, or alternative bids<\/strong> \u2014 unless permitted explicitly in the tender document<\/em><\/td><\/tr><tr><td>8<\/td><td>THE bid validity is shorter than the required period<\/strong>. However, in case of STE\/ PAC procurement<\/strong> *(NC<\/span>: \"in case of STE procurement\")*, shorter bid validity May be accepted<\/strong><\/td><\/tr><tr><td>9<\/td><td>non-submission, or submission of illegible scanned copies<\/strong> Of stipulated documents\/ declarations<\/strong>(G<\/span> adds: \"if so stipulated in the Tender Document\")<\/em><\/td><\/tr><tr><td>10<\/strong>NC<\/span> ONLY<\/td><td>the bid has unresolved substantive deviations<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>7.15.2<\/span>Non-conformities between Figures and Words \u2014 the Four Correction Rules<\/span><\/h2>\n\"sometimes, non-conformities\/ errors are also observed in responsive tenders between the quoted prices in figures and words. This situation normally does not arise in the case of e-procurement.<\/strong>\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Discrepancy<\/th><th>Which prevails<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>between the unit price<\/em> And the total price<\/strong><\/em>(the total obtained by multiplying the unit price by the quantity)<\/em><\/td><td>THE unit price shall prevail<\/strong>, and the total price corrected accordingly<\/strong><\/td><\/tr><tr><td>2<\/td><td>an error in a TOTAL<\/em> Corresponding to the addition or subtraction of sub-totals<\/em><\/td><td>THE sub-totals shall prevail<\/strong>, and the total shall be corrected<\/strong><\/td><\/tr><tr><td>3<\/td><td>between WORDS<\/em> AND figures<\/em><\/td><td>THE amount in words shall prevail<\/strong><\/td><\/tr><tr><td>4<\/td><td>The procedural consequence<\/td><td>such a discrepancy in an offer should be conveyed to the bidder, asking him to respond by a target date<\/strong>. If the bidder does not agree to the Procuring Entity's observation, the bid is liable to be rejected<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>7.15.3<\/span>Discrepancies between Original and Additional\/ Scanned Copies of a Bid<\/span><\/h2>\n\"normally, as far as feasible, no submission of original documents in physical format should be asked for in e-procurement \u2014 other than: Cost of tender documents (if any), Bid Security, and statutory certificates (if any)<\/strong>.\"<\/p>\nin e-procurement, there could be discrepancies between the uploaded scanned copies and the originals submitted by the bidder<\/em>. In off-line tenders, discrepancies May be observed between the original copy and other copies of the responsive bids<\/em>.<\/p>\n<aside class=\"note\">The Rule: \"if discrepancies exist between the uploaded scanned or other copies and the originals submitted by the bidder, the original copy's text, etc., shall prevail<\/strong>.\"<\/p><\/aside>\nthis issue is also to be addressed with the bidder in the same manner as above<\/em>, and subsequent actions shall be taken accordingly.<\/p>\n<aside class=\"note\">The integrity consequence: \"any substantive discrepancy shall be construed as a violation of the Code of Integrity \u2014 and the bid shall be liable to be rejected as non-responsive, in addition to other punitive actions under the tender document<\/strong>.\"<\/p><\/aside>\n<h2>7.15.4<\/span>Deviations, Reservations and Omissions \u2014 Substantive or Minor<\/span><\/h2>\n1. The three definitions:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Term<\/th><th>Definition<\/th><\/tr><\/thead><tbody><tr><td>\"Deviation\"<\/td><td>IS A departure from the requirements<\/strong> Specified in the tender document<\/td><\/tr><tr><td>\"Reservation\"<\/td><td>IS THE setting of limiting conditions, or withholding from complete acceptance<\/strong> Of the requirements specified in the tender document<\/td><\/tr><tr><td>\"Omission\"<\/td><td>IS THE failure to submit part, or all, of the information or documentation<\/strong> Required in the tender document<\/td><\/tr><\/tbody><\/table><\/div>\n2. The three-limb test for a substantive<\/em> Deviation:<\/p>\n<aside class=\"note\">\"a deviation\/ reservation\/ omission from the requirements of the tender document shall be considered a substantive deviation as per the following norm \u2014 and the rest shall be considered a minor deviation:<\/strong><\/p>\nA) which affects in any substantive way the scope, quality, or performance of the product;<\/strong><\/p>\nB) which limits in any substantive way \u2014 inconsistent with the tender document \u2014 the Procuring Entity's rights, or the bidder's obligations under the contract; Or<\/strong><\/p>\nc) whose rectification would unfairly affect the competitive position of other bidders presenting substantively responsive bids<\/strong>.\"<\/p><\/aside>\n3. The consequence and its one exception: \"the decision of the Procuring Entity shall be final in this regard. Bids with substantive deviations shall be rejected as non-responsive.<\/strong>\"<\/p>\n<aside class=\"note\">the exception: \"however, bids with deviations May [be] accepted in case of STE\/ PAC procurement \u2014 with approval of competent financial authority, with reasons recorded for accepting such deviations<\/strong>.\"<\/p><\/aside>\n4. THE \"better than asked for\" RULE \u2014 a provision often missed:<\/p>\n<aside class=\"note\">\"variations and deviations and other offered benefits (techno-commercial or financial) above the scope\/ quantum of the goods specified in the tender document shall not influence evaluation of bids.<\/strong><\/p>\n [But] if the bid is otherwise successful, the Procuring Entity shall avail of such benefits \u2014 and these will become part of the contract<\/strong>.\"<\/p><\/aside>\n5. Examples of minor issues: During the preliminary examination, some minor infirmity and\/ or irregularity and\/ or non-conformity<\/em> May also be found in some bids. Such minor issues could be:<\/p>\n<aside class=\"note\">Missing pages\/ attachments \u00b7 illegibility in a submitted document \u00b7 or non-submission of the requisite number of copies of a document<\/strong><\/p><\/aside>\n6. Considering minor deviations \u2014 and the judicial precedent cited:<\/p>\n<aside class=\"note\">\"there have also been cases where the bidder submitted the amendment Bank Guarantee but omitted to submit the main portion of the document. The court ruled that this was a minor irregularity.<\/strong><\/p>\nThe court has consistently taken the view that the Procuring Entity is entitled to consider and allow minor deviations that do not amount to substantive deviations.<\/strong>\"<\/p><\/aside>\nthe four-fold test for accepting a minor deviation: \"the Procuring Entity reserves the right to accept bids with such minor issues \u2014 provided they:<\/strong><\/p>\n<ul class=\"lst\"><li>Do not constitute any substantive deviation;<\/strong><\/li><li>Do not have a fiscal impact;<\/strong><\/li><li>Do not prejudice, or affect the ranking order of the bidders; And<\/strong><\/li><li>do not grant the bidder any undue advantage vis-\u00e0-vis other bidders and the Procuring Entity<\/strong>.\"<\/li><\/ul>\nwherever necessary, the Procuring Entity shall convey its observation on such 'minor' issues to the bidder<\/em>. If the bidder does not reply by the specified date, or gives an evasive reply without clarifying the point at issue in clear terms \u2014 that bid shall be liable to be rejected as non-responsive<\/strong>.<\/p>\n<h2>7.15.5<\/span>Clarification of Bids \/ Shortfall Documents<\/span><\/h2>\n1. The clarification procedure and its three absolute bars:<\/p>\nDuring the evaluation and comparison of bids, the purchaser May \u2014 at his discretion<\/strong> \u2014 ask the bidder for clarifications on the bid<\/em>.<\/p>\nThe request for clarification shall be given in writing by registered\/ speed post\/ courier\/ email<\/strong>, asking the bidder to respond by a specified date \u2014 mentioning therein that if the bidder does not comply or respond by the date, his tender will be liable to be rejected<\/strong>.<\/p>\n<aside class=\"note\">The three bars:<\/p>\n<ul class=\"lst\"><li>\"no change in prices or substance of the bid, which May grant any undue advantage to such bidder, shall be sought, offered, or permitted.<\/strong>\"<\/li><li>\"no post-bid clarification at the initiative of the bidder shall be entertained.<\/strong>\"<\/li><\/ul><\/aside>\n2. The shortfall-documents Rule \u2014 the \"historical documents\" test:<\/p>\n<aside class=\"note\">\"the Procuring Entity reserves its right to \u2014 but without any obligation to do so \u2014 seek any shortfall information\/ documents:<\/strong><\/p>\n\u2022 only in case of historical documents that pre-existed at the time of the bid opening; And<\/strong><\/p>\n\u2022 which have not undergone change since then; And<\/strong><\/p>\n\u2022 which does not grant any undue advantage to any bidder.<\/strong>\"<\/p><\/aside>\nprovision May be made by e-procurement portals for requesting shortfall documents from the bidders. The system May further allow shortfall documents to be taken from any bidders only once after the technical bid opening<\/strong>.<\/p>\n<aside class=\"note\">Worked example: \"If the permanent account number or registration with GST has been asked to be submitted, and the bidder has not provided them \u2014 these documents may be asked for with a target date as above.\"<\/em><\/p><\/aside>\nThe qualification-documents Rule \u2014 and the crucial worked example:<\/p>\n<aside class=\"note\">\"as far as the submission of documents is concerned regarding qualification criteria \u2014 after submission of the bid, only related shortfall documents should be asked for and considered.<\/strong><\/p>\n for example: If the bidder has submitted a supply order without its completion\/ performance certificate, the certificate can be asked for and considered.<\/strong><\/p>\n However, no new supply order should be asked for to qualify the bidder<\/strong>.\"<\/p><\/aside>\n<h2>7.15.6<\/span>Evaluation of Eligibility<\/span><\/h2>\nthe Procuring Entity shall determine \u2014 to its satisfaction<\/strong> \u2014 whether the bidders are eligible as per the eligibility criteria in the tender document<\/strong> To participate in the tender process.<\/p>\nTenders that do not meet the required eligibility criteria prescribed shall be rejected as unresponsive.<\/strong><\/p>\n<h1>Appendix to Chapter 7 \u2014 Part a: Points of Difference<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Chapter number<\/td><td>G: Ch. 7 \u00b7 W: Ch. 6 \u00b7 C: Ch. 8 \u00b7 NC: Ch. 7<\/td><\/tr><tr><td>2<\/td><td>Chapter title<\/td><td>G\/NC: *Bid Evaluation and Award of Contract \u00b7 W: *Evaluation of Bids and Award of Worksuffix<\/strong> \u00b7 C: RfP Evaluation and Award of Contract<\/strong><\/td><\/tr><tr><td>3<\/td><td>Whole additional Chapter \u2014 Shortlisting of Consultants, EoI<\/td><td>C only (its Chapter 7)<\/td><\/tr><tr><td>4<\/td><td>the evaluating body<\/td><td>g\/w\/nc: *Tender Committee (TC) \u00b7 c: *Consultancy Evaluation Committee (CEC)<\/strong><\/td><\/tr><tr><td>5<\/td><td>Scope of the Committee's responsibility<\/td><td>G: all aspects of tender evaluation \u00b7 W\/NC: adds negotiations and final award \u00b7 C: adds evaluation of EoI, shortlisting, deciding ToRs, and issuance of RfP<\/em><\/td><\/tr><tr><td>6<\/td><td>EoI shortlist size<\/td><td>C only: minimum three (Rule 184 GFR) and generally not more than eight; if more qualify, restrict to eight based on higher Average Turnover<\/td><\/tr><tr><td>7<\/td><td>EoI shortlist validity<\/td><td>C only: Six months if not specified; beyond 6 months, better to re-invite EoI<\/td><\/tr><tr><td>8<\/td><td>EoI minimum qualifying marks<\/td><td>C only: normally 75%<\/td><\/tr><tr><td>9<\/td><td>Start-up relaxation at EoI<\/td><td>C only: up to \u03bb = 20%<\/td><\/tr><tr><td>10<\/td><td>The turnover-multiple criticism (5\u201310 times \"appears high\"); upper cap so as not to restrict competition to \"the big four or five Consultancy Firms\"<\/td><td>C ONLY<\/td><\/tr><tr><td>11<\/td><td>Key Experts not evaluated at EoI stage<\/td><td>C ONLY<\/td><\/tr><tr><td>12<\/td><td>\"Qualifications leasing\" risk<\/td><td>C ONLY<\/td><\/tr><tr><td>13<\/td><td>Direct acceptance threshold<\/td><td>G\/C\/NC: Rs 50 lakh \u00b7 W: \"normally LTE threshold of Rs 50 lakhs<\/em>\"<\/td><\/tr><tr><td>14<\/td><td>Rule 173(xxii) extended to the ACCEPTING AUTHORITY<\/td><td>W + C<\/strong>(G states it only for committee members)<\/em><\/td><\/tr><tr><td>15<\/td><td>Express urging to apply Rule 173(xxii) below the threshold too<\/td><td>G + C<\/td><\/tr><tr><td>16<\/td><td>Convenor's duty to distribute the RfP and call a familiarisation meeting<\/td><td>C ONLY<\/td><\/tr><tr><td>17<\/td><td>\"Understand the evaluation criteria\" vs \"understand the rating and scoring system\"<\/td><td>G\/W\/NC vs C<\/td><\/tr><tr><td>18<\/td><td>The large-envelope custody safeguard for unopened financial bids<\/td><td>W + C + NC<\/td><\/tr><tr><td>19<\/td><td>Comparative statement \u2014 vetting by Finance not required if prepared by the e-Procurement portal<\/td><td>W ONLY<\/td><\/tr><tr><td>20<\/td><td>The permitted evaluation factors list, and \"no criteria that cannot be verified OR are not stated in the contract\"<\/td><td>W ONLY<\/td><\/tr><tr><td>21<\/td><td>Caution that preferences must not result in single-vendor selection<\/td><td>G ONLY<\/td><\/tr><tr><td>22<\/td><td>CPWD table of maximum days for award (10\/15\/30\/45\/60 days)<\/td><td>W ONLY<\/td><\/tr><tr><td>23<\/td><td>\"Notify at least one day every week for TC meeting; no leave or tour on such days\"<\/td><td>W<\/strong>(also in C\/NC in similar terms)<\/em><\/td><\/tr><tr><td>24<\/td><td>Print the tender schedule on the inside cover of the Procurement File<\/td><td>W<\/td><\/tr><tr><td>25<\/td><td>Withdrawn L-1 bid \u2192 must re-tender; and such L1 price not to be taken as precedence for price estimates or reasonableness<\/td><td>Common \u2014 but the QCBS\/H-1 variant is in W, C, NC<\/td><\/tr><tr><td>26<\/td><td>Withdrawn\/ not-extended H-1 bid in QCBS \u2192 must re-tender<\/td><td>W + C + NC<\/strong>(no QCBS in Goods)<\/em><\/td><\/tr><tr><td>27<\/td><td>Ground 4 for unresponsiveness \u2014 quoting for goods of a different manufacturer without authority letter<\/td><td>G ONLY<\/td><\/tr><tr><td>28<\/td><td>Ground 10 \u2014 \"unresolved substantive deviations\"<\/td><td>nc only<\/td><\/tr><tr><td>29<\/td><td>Shorter bid validity acceptable in STE\/ PAC<\/em><\/td><td>G<\/strong> \u00b7 NC says only \"STE\"<\/strong>(consistent with Works and NC treatment of PAC)<\/em><\/td><\/tr><tr><td>30<\/td><td>Bids with deviations may be accepted in STE\/ PAC with CFA approval<\/td><td>G<\/td><\/tr><tr><td>31<\/td><td>The amendment-Bank-Guarantee judicial precedent on minor irregularity<\/td><td>G + W + NC<\/td><\/tr><tr><td>32<\/td><td>Shortfall documents may be taken only ONCE after technical bid opening<\/td><td>G<\/strong>(stated expressly)<\/em><\/td><\/tr><tr><td>33<\/td><td>\"No new supply order should be asked for to qualify the bidder\"<\/td><td>G + W<\/td><\/tr><tr><td>34<\/td><td>Unsolicited offers against LTE \u2014 three exceptional circumstances for acceptance at next higher level<\/td><td>W<\/strong>(fullest statement)<\/em><\/td><\/tr><tr><td>35<\/td><td>The express criticism of routine re-tendering on single bids, and the three validity conditions<\/td><td>W<\/strong>(fullest); echoed in G\/C\/NC<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 7 \u2014 part a<\/p>\n<aside class=\"note\">Next:<\/strong>Chapter 7 \u2014 part b: Techno-commercial evaluation, financial evaluation and award of contract<\/strong> \u2014 Evaluation of Eligible Techno-commercial Bids \u00b7 Evaluation of the Quality \u2013 Technical Proposals (C only, with its rating\/grading schemes to mitigate subjectivity)<\/strong> \u00b7 Ranking of Financial Bids \u00b7 LCS \u00b7 QCBS \u00b7 SSS \u00b7 FBS \u00b7 GTE evaluation \u00b7 Rate Contract evaluation \u00b7 Reasonableness of Prices \u00b7 Abnormally Low Bids<\/strong> \u00b7 Cartel Formation\/ Pool Rates\/ Bid Rigging<\/strong> \u00b7 Negotiations for Reduction of Prices \u00b7 Variation of Quantities and the Option Clause \u00b7 Splitting\/ Parallel Contracts \u00b7 Cancellation and Re-tender \u00b7 Negotiations to Freeze Description of Service (C only)<\/strong> \u00b7 LoA \u00b7 Publication of Award \u00b7 Framing of Contract \u00b7 Audit Trails<\/strong> \u00b7 Risks and Mitigations.<\/p><\/aside>Part II<\/span>Evaluation, Negotiation and Award<\/em><\/p>\nMerging: Goods Ch. 7<\/strong> (paras 7.4\u20137.8) \u00b7 Works Ch. 6<\/strong> (paras 6.4\u20136.6) \u00b7 Consultancy Ch. 8<\/strong> (paras 8.4\u20138.8) \u00b7 Non-Consultancy Ch. 7<\/strong> (paras 7.3.4\u20137.6)<\/em><\/p><h2>Concordance for Chapter 7 \u2014 Part B<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>Goods<\/th><th>Works<\/th><th>CS<\/th><th>NCS<\/th><\/tr><\/thead><tbody><tr><td>7.16<\/td><td>Evaluation of Eligible Techno-commercial Bids<\/td><td>7.4.2<\/td><td>6.4.1<\/td><td>8.3<\/td><td>7.3.4<\/td><\/tr><tr><td>7.17<\/td><td>Evaluation of the Quality \u2014 Technical Proposals<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.4<\/td><td> \u2014 <\/td><\/tr><tr><td>7.18<\/td><td>General Norms for Ranking of Financial Bids<\/td><td>7.5<\/td><td>6.4.2<\/td><td>8.5.1<\/td><td>7.4.1<\/td><\/tr><tr><td>7.19<\/td><td>Least Cost Selection (LCS)<\/td><td>(the default)<\/em><\/td><td>6.4.3<\/td><td>8.5.2<\/td><td>7.4.2<\/td><\/tr><tr><td>7.20<\/td><td>Quality and Cost Based Selection (QCBS)<\/td><td> \u2014 <\/td><td>6.4.5<\/td><td>8.5.3<\/td><td>7.4.4<\/td><\/tr><tr><td>7.21<\/td><td>Single Source Selection (SSS)<\/td><td> \u2014 <\/td><td>6.4.4<\/td><td>8.5.4<\/td><td>7.4.3<\/td><\/tr><tr><td>7.22<\/td><td>Fixed Budget Selection (FBS)<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.5.5<\/td><td> \u2014 <\/td><\/tr><tr><td>7.23<\/td><td>GTE Tenders \u2014 evaluation<\/td><td>7.5.2<\/td><td>6.4.6<\/td><td>8.5.6<\/td><td>7.4.5<\/td><\/tr><tr><td>7.24<\/td><td>Concurrent Application of MSE and MII Policies<\/td><td>7.5.1<\/td><td> \u2014 <\/td><td>8.5.8<\/td><td>7.4.6<\/td><\/tr><tr><td>7.25<\/td><td>Evaluation in Rate Contracts<\/td><td>7.5.3<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>7.26<\/td><td>Variation of Quantities at the Time of Award<\/td><td>7.6.3<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>7.27<\/td><td>Option Clause<\/td><td>7.6.4<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>7.28<\/td><td>Splitting of Contracts\/ Parallel Contracts<\/td><td>7.6.5<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>7.29<\/td><td>Reasonableness of Prices<\/td><td>7.6.6<\/td><td>6.4.7<\/td><td> \u2014 <\/td><td>7.4.7<\/td><\/tr><tr><td>7.30<\/td><td>Consideration of Abnormally Low Bids<\/td><td>7.6.7<\/td><td>6.4.8<\/td><td>8.5.7<\/td><td>7.4.8<\/td><\/tr><tr><td>7.31<\/td><td>Cartel Formation\/ Pool Rates\/ Bid Rigging<\/td><td>7.6.8<\/td><td>6.4.9<\/td><td>8.5.7<\/td><td>7.4.9<\/td><\/tr><tr><td>7.32<\/td><td>Negotiations for Reduction of Prices<\/td><td>7.6.9<\/td><td>6.4.10<\/td><td>8.5.7<\/td><td>7.4.10<\/td><\/tr><tr><td>7.33<\/td><td>Negotiations to Freeze Description of Service<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.6<\/td><td> \u2014 <\/td><\/tr><tr><td>7.34<\/td><td>Cancellation of Procurement\/ Rejection of All Bids\/ Re-tender<\/td><td>7.6.11<\/td><td>6.4.11<\/td><td>8.5.9<\/td><td>7.4.11<\/td><\/tr><tr><td>7.35<\/td><td>LoA to Successful Bidder<\/td><td>7.7.1<\/td><td>6.5.1<\/td><td>8.7.1<\/td><td>7.5.1<\/td><\/tr><tr><td>7.36<\/td><td>Publication of Award; Return of EMD<\/td><td>7.7.2<\/td><td>6.5.2<\/td><td>8.7.2<\/td><td>7.5.2<\/td><\/tr><tr><td>7.37<\/td><td>Performance Security<\/td><td>7.7.3<\/td><td>6.5.3<\/td><td> \u2014 <\/td><td>7.5.3<\/td><\/tr><tr><td>7.38<\/td><td>Acknowledgement and Execution of Contract<\/td><td>7.7.4<\/td><td>6.5.4<\/td><td> \u2014 <\/td><td>7.5.4<\/td><\/tr><tr><td>7.39<\/td><td>Framing of Contract<\/td><td>7.7.5<\/td><td>6.5.5<\/td><td> \u2014 <\/td><td>7.5.5<\/td><\/tr><tr><td>7.40<\/td><td>Audit Trails \u2014 Procurement Records<\/td><td>7.7.6<\/td><td>6.5.6<\/td><td> \u2014 <\/td><td>7.5.6<\/td><\/tr><tr><td>7.41<\/td><td>Risks and Mitigations<\/td><td>7.8<\/td><td>6.6<\/td><td>8.8<\/td><td>7.6<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>7.16 Evaluation of Eligible Techno-commercial Bids<\/span><\/h1>\n<h2>7.16.1<\/span>Evaluation of Qualification Criteria<\/span><\/h2>\n1. What is ascertained: In evaluating the techno-commercial bid, conformity to the eligibility\/ qualification criteria, technical specifications, and quality assurance; And commercial conditions of the offered goods to those in the tender document<\/strong> is ascertained.<\/p>\nAdditional factors incorporated in the tender document shall also be considered in the manner indicated therein<\/em>.<\/p>\nThis determination will, inter alia<\/em>, consider the bidder's financial, technical, and production capabilities<\/strong> To satisfy all the Procuring Entity's requirements as incorporated in the tender document.<\/p>\nSuch determination shall be based upon scrutiny and examination of all relevant data and details submitted by the bidder in its bid<\/strong>, as well as such other allied information as deemed appropriate by the Procuring Entity<\/em>.<\/p>\n<aside class=\"note\">The no-borrowed-credentials Rule: \"the determination shall not consider the qualifications of other firms \u2014 such as the bidder's subsidiaries, parent entities, allied firms, subcontractors (*other than specialised subcontractors, if permitted in the bidding document*), or any other firm(s) different from the bidder<\/strong>.\"<\/p><\/aside>\n2. Start-up relaxation: The condition of prior turnover and prior experience May be relaxed for start-ups<\/em> (Only to start-ups recognised by DPIIT), subject to meeting quality & technical specifications and making suitable provisions in the tender document (Rule 173(i) of GFR 2017)<\/em>. Such relaxation is not optional but has to be ensured<\/strong> \u2014 except for items related to public safety, health, critical security operations and equipment<\/em>, where adequate justification exists.<\/p>\n<h2>7.16.2<\/span>Evaluation of Technical Suitability<\/span><\/h2>\nTHE description, specifications, drawings, and other technical terms and conditions<\/strong> Are examined by the TC in general, and by a technical member of the TC in particular<\/strong>.<\/p>\n<aside class=\"note\">The absolute bar: \"nobody outside the TC should be allowed to determine this evaluation<\/strong>.\"<\/p><\/aside>\nthe alternative-offers Rule: \"the tender document should clearly State whether alternative offers\/ makes\/ models would be considered or not \u2014 and, in the absence of an express statement to the effect, these should not be allowed<\/strong>.\"<\/p>\nan important document is the exceptions\/ deviation form submitted by the bidder<\/strong>. It is important to judge whether an exception\/ deviation is minor or major<\/strong>. Minor exceptions\/ deviations May be waived following the criteria in part a, Para 7.15.4-6.<\/p>\n<h2 class=\"src-G\">7.16.3<\/span>Evaluation of Bids involving Samples\/ Demos<\/span>G<\/span><\/h2><div class=\"srcblock src-G\">\n<aside class=\"note\">Cross-reference: calling for a sample along with the bid for evaluation is strictly DISCOURAGED \u2014 see Chapter 2, para 2.4.3.<\/em><\/p><\/aside>\n\"evaluation of techno-commercial bids should not be done based on the evaluation of samples or demos \u2014 in view of the subjectivity involved<\/strong>.\"<\/p>\nThe permitted alternative \u2014 the reference-sample route:<\/p>\n<ul class=\"lst\"><li>IF A purchaser's reference sample has been displayed<\/em> for prospective bidders to illustrate the desired indeterminable characteristics<\/em>, the contract should mention that final supplies must meet such characteristics of the reference sample, in addition to the specifications\/ drawings<\/strong>.<\/li><li>If required, a provision for the submission of a pre-production sample matching the purchaser's reference sample by the successful bidder(s) May be stipulated before giving clearance for bulk production<\/strong>.<\/li><\/ul>\nThere should be a time limit for submission and approval of the pre-production sample<\/strong>.<\/p>\n<aside class=\"note\">The exit provision: \"in case the contractor is not able to come up with a satisfactory pre-production sample matching the purchaser's reference sample within the stipulated time-limit or a reasonable extension thereof \u2014 a provision should be provided for cancellation of the contract without repercussion on either side<\/strong>.\"<\/p><\/aside>\n<\/div><h2>7.16.4<\/span>Evaluation of Commercial Conditions \u2014 and the SEVEN \"CRITICAL PROVISIONS\"<\/span><\/h2>\nbidder must comply with all the commercial and other clauses<\/em> Of the tender document.<\/p>\nThe Procuring Entity shall evaluate the commercial conditions quoted by the bidder to confirm that all terms and conditions stipulated in the tender document have been accepted without substantive omissions\/ reservations\/ exception\/ deviation<\/strong>.<\/p>\n<aside class=\"note\">The deeming provision: \"deviations from, or objections or reservations to, critical provisions identified in the tender documents will be deemed to be a material deviation.<\/strong><\/p>\n If critical provisions are not explicitly stated in the tender document, then these shall be taken to be:<\/strong><\/p>\n1. Governing laws and jurisdiction<\/strong><\/p>\n2. Contractor's obligations and restrictions of its rights<\/strong><\/p>\n3. Performance bond\/ security<\/strong><\/p>\n4. Force Majeure<\/strong><\/p>\n5. Taxes & duties<\/strong><\/p>\n6. Code of Integrity<\/strong>\"<\/p><\/aside>\nONLY minor deviations May be accepted\/ allowed \u2014 provided these do not constitute substantive deviations<\/strong>.<\/p>\n<h2>7.16.5<\/span>Declaration of Successful Bidders<\/span><\/h2>\n1. Single-envelope tenders: In a single envelope\/ cover tender, TC proceeds to evaluate the price aspects without a reference to ca at this stage<\/strong>.<\/p>\n2. Multiple-envelope tenders \u2014 the technical evaluation report:<\/p>\nThe TC prepares a recommendation for a techno-commercial bid to declare successful bidders<\/strong>.<\/p>\n\"for each proposal, the report also should substantiate the results of the evaluation and indicate technical weaknesses or deviations from the terms set out in the tender documents \u2014 and comment on their acceptability<\/strong>.\"<\/p>\n<aside class=\"note\">the critical limit on the ca's power: \"the ca May ask the TC to explain the report \u2014 but should not request that evaluation be changed<\/strong>.\"<\/p><\/aside>\nit should review the tc's evaluation of each proposal<\/em> (On technical, contractual, and other aspects).<\/p>\nThe ca should decide how any acceptable deviation in each proposal should be handled during contract formulation, in case that proposal is ranked first<\/strong>.<\/p>\n<aside class=\"note\">Confidentiality and retention: \"the technical evaluation report is a confidential document, and its contents shall not be disclosed. All records relating to the evaluation shall be retained until completion of the project and its audit<\/strong>.\"<\/p><\/aside>\n3. Announcement and the two timelines:<\/p>\nAfter the approval of ca, the results of the techno-commercial bid evaluation are to be announced (including informing the failed bidders)<\/strong>.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Event<\/th><th>Timeline<\/th><\/tr><\/thead><tbody><tr><td>Return of Bid securities of unsuccessful bidders of the first stage<\/td><td>within 30 days of declaration of result of the first stage<\/strong> (i.e., technical evaluation)<\/td><\/tr><tr><td>Opening of FINANCIAL BIDS<\/td><td>Date\/ time and place (or on the portal in e-procurement) ANNOUNCED, in the presence of technically suitable bidders who are willing to attend<\/strong>. Such a date should be two to five (5) days after the announcement<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h1>7.17 Evaluation of the Quality \u2014 Technical Proposals [C ONLY]<\/span><\/h1>\n<aside class=\"note\">This entire section exists only in the consultancy Manual. It is the apparatus that gives effect to QCBS in consultancy, and it has NO counterpart in Goods, Works or Non-Consultancy.<\/p><\/aside>\n<h2>7.17.1<\/span>Responsiveness to the ToR<\/span><\/h2>\nThe CEC shall evaluate each proposal on the basis of its responsiveness to the ToR<\/strong>.<\/p>\nProposals not responding to the ToR fully and properly will be summarily rejected as being non-responsive<\/strong> \u2014 before taking up the appraisal of the technical proposal for evaluation of quality<\/strong>.<\/p>\n<aside class=\"note\">The price-leakage Rule: \"a technical proposal pre-disclosing any material pricing information shall also be rejected<\/strong>.\"<\/p><\/aside>\n<h2>7.17.2<\/span>Criteria and Sub-criteria \u2014 the Four Heads and the Absolute-Grading Rule<\/span><\/h2>\n1. The four criteria, totalling 100 marks: CEC shall evaluate the quality of the technical proposal by awarding marks so as to make the total maximum technical score of 100 (one hundred)<\/strong>, FOR:<\/p>\nA) the consultant's relevant experience<\/strong> for the assignment;<\/p>\nb) THE quality of the methodology<\/strong> Proposed;<\/p>\nc) THE qualifications of the key staff<\/strong> PROPOSED; and<\/p>\nd) capability for transfer of knowledge<\/strong> (if relevant).<\/p>\n<aside class=\"note\">The absolute-grading Rule \u2014 one of the most important principles in the chapter:<\/p>\n\"each proposal should be judged on its own merits and assigned an absolute \u2014 not comparative \u2014 grade against predefined criteria and sub-criteria.<\/strong><\/p>\nA comparative evaluation would single out the best proposal on a relative scale \u2014 but still could leave the Procuring Entity with a poor proposal<\/strong>.\"<\/p><\/aside>\n2. The model scheme of maximum\/ minimum marks:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Rated Criteria<\/th><th>Range of Percentage for Score<\/th><\/tr><\/thead><tbody><tr><td>1. Consultancy firm's experience relevant to assignment<\/td><td>5\u201310%<\/td><\/tr><tr><td>2. Proposed approach, methodology, work plan, and understanding of requirements<\/td><td>20\u201350%<\/td><\/tr><tr><td>3. Qualification and adequacy of experience of key staff<\/td><td>30\u201360%<\/td><\/tr><tr><td>4. Transfer of knowledge, if relevant\\*<\/td><td>0\u201310%<\/td><\/tr><tr><td>overall<\/td><td>100%<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">\\ If this criterion is not required, the marks can be <\/em>adjusted against some other criteria*.<\/p><\/aside>\nThe four explanatory Rules:<\/p>\n<ul class=\"lst\"><li>\"the weight given to the firm's experience can be relatively modest \u2014 since this criterion has already been considered when short-listing the consultant<\/strong>.\"<\/li><li>\"more weight shall be given to the methodology in the case of more complex assignments<\/strong> (for example, <\/strong>multidisciplinary feasibility or management studies).\"<\/strong><\/li><li>\"evaluation of only the key personnel is recommended. Since key personnel ultimately determine the quality of performance, more weight shall be assigned to this criterion if the proposed assignment is complex<\/strong>.\"<\/li><li>\"the CEC shall review the qualifications and experience of proposed key personnel in their curricula vitae \u2014 which must be accurate, complete, and signed by an authorised official of the consultant *and* the individual proposed<\/strong>.\"<\/li><li>\"the experience criteria mentioned in point 1 above holds true for a consultancy firm and not for an individual consultant<\/strong>.\"<\/li><\/ul>\n3. SUB-CRITERIA \u2014 kept to the minimum, with worked examples:<\/p>\n\"the CEC shall normally divide the above criteria into sub-criteria. However, the number of sub-criteria should be kept to the minimum that is considered essential<\/strong>.\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Criterion<\/th><th>Suggested sub-criteria and weights<\/th><\/tr><\/thead><tbody><tr><td>methodology<\/td><td>a) understanding of ToR \u2014 30% weightage b) acceptability and detailing of methodology and work plan \u2014 *50% weight<\/strong> <\/strong>c) innovation, if it is important \u2014 <\/em>20% weightage*<\/td><\/tr><tr><td>suitability of the key professionals<\/td><td>a) EDUCATIONAL QUALIFICATIONS \u2014 *20% weightage b) professional experience in the required area of assignment \u2014 *80% weight<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nthe simplified alternative: \"similar to in LCS and EoI, a simplified evaluation criteria laying down minimum qualifying fail-pass benchmarks for each criteria\/ sub-criteria (instead of marking schemes) May also be used in appropriate cases. All offers that pass the qualifying benchmarks are declared as technically qualified and their financial bids are opened<\/strong>.\"<\/p>\n<h2>7.17.3<\/span>Rating\/ Grading Schemes to Mitigate Subjectivity<\/span><\/h2>\n1. The problem stated:<\/p>\n<aside class=\"note\">\"technical proposals for consultancy services are an intellectual product. Their evaluation must be based on individual professional judgement of competent evaluators \u2014 and should not be reduced to a purely arithmetical exercise.<\/strong><\/p>\n The difficulty is to ensure that this judgement is not exercised in an unreasonable or arbitrary manner. It is important that subjectivity \u2014 implicit to any individual professional judgement \u2014 be complemented by transparency, consistency, and fairness.<\/strong><\/p>\n The individual evaluator entrusted with the evaluation, when required, should be able to explain \u2014 to the satisfaction of a qualified reviewer from the higher authority, or to enforcement agencies \u2014 the reason for his\/ her scoring and recommendation<\/strong>.\"<\/p><\/aside>\n2. Why slabs rather than a full range:<\/p>\n\"precise and exact markings of criteria and sub-criteria specified in technical evaluation \u2014 especially of unquantifiable criteria, e.g., evaluation of methodology \u2014 May neither be feasible nor warranted, especially when there is bound to be variation among marks by different members of CEC.<\/strong><\/p>\n<aside class=\"note\"> Instead of assigning marks over the full range of attributes, it is more appropriate to divide the range into 4\u20135 slabs of ratings<\/strong>.\"<\/p><\/aside>\n3. The five-grade rating scale \u2014 reproduced in full:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Rating<\/th><th>Assessment<\/th><th>Detailed Evaluation (in case of unquantifiable Criteria)<\/th><th>Marks<\/th><\/tr><\/thead><tbody><tr><td>A<\/td><td>very good<\/td><td>The consultants have outstanding, advanced expertise in specific problem areas<\/em> of the assignment, that can promise an excellent execution<\/em> of the assignment. The consultants' staff includes top experts in the field<\/em>. The consultants are considered world-class specialists<\/em> in the approaches and methodologies dealing with specific issues in the assignment. The consultants operate according to well-established quality management (ISO 9002 etc.) procedures<\/em>.<\/td><td>Full marks<\/td><\/tr><tr><td>B<\/td><td>GOOD<\/td><td>The consultants have extensive experience in the field<\/em> of the assignment, and have worked in regions and sectors with similar physical and institutional conditions, including similar critical issues<\/em>. Permanent staff are adequate and highly qualified<\/em>. The consultants have experience with advanced approaches and methodologies<\/em>.<\/td><td>80% of full marks<\/td><\/tr><tr><td>C<\/td><td>satisfactory<\/td><td>The consultants have experience in the field of assignments similar to the one being considered \u2014 but have not dealt with critical issues specific to it<\/em>(such as, for instance, delicate social or environmental issues)<\/em>. The consultants are experienced in the use of standard approaches and methodologies<\/em>. The consultants' permanent staff are adequate<\/em>.<\/td><td>60% of full marks<\/td><\/tr><tr><td>D<\/td><td>unsatisfactory<\/td><td>The consultant has experience which is not considered adequate for the quality needed by the project<\/em>.<\/td><td>30% of full marks<\/td><\/tr><tr><td>E<\/td><td>not relevant<\/td><td>The consultant's experience has no, or little, relevance to the project under consideration<\/em>.<\/td><td>10% of full marks<\/td><\/tr><\/tbody><\/table><\/div>\n4. The first reading \u2014 without scoring:<\/p>\n<aside class=\"note\">\"each member of the CEC should first read all proposals, without scoring them.<\/strong><\/p>\nThis first review helps determine whether the proposals are free of significant omissions or deviations from the ToR; It also allows CEC members to assess the overall clarity of the proposals and identify elements that will require special attention in the evaluation<\/strong>.\"<\/p><\/aside>\n5. The grading system must be defined before<\/em> The proposals are opened:<\/p>\nAfter the review, the CEC meets to define the grades of the rating system to be adopted<\/strong> (if not detailed in the RfP), according to the criteria and sub-criteria set out in the rfP.<\/p>\n\"to discourage subjectivity and avoid the use of points and fractions of points, the rating system provides a few grades (from three to four) for each criterion and sub-criterion<\/strong>.\"<\/p>\n\"minimum qualifying marks or relative qualifying method for quality of the technical proposal will be prescribed and indicated in the RfP<\/strong>.\"<\/p>\n<aside class=\"note\">the anti-bias Rule: \"the grading system must be defined before the technical proposals are opened \u2014 to prevent bias (or perceived bias) occurring because of the cec's knowledge of the opened proposal contents.<\/strong><\/p>\nIt is recommended that the evaluation and scoring of technical proposals be carried out only after defining the grading system<\/strong>.\"<\/p><\/aside>\nthe three reasons why undefined grading distorts evaluation:<\/p>\na) \"evaluators May differ, even widely, in their definition, understanding, or interpretation of the same criterion \u2014 and also because of their subjective experience and understanding of the ToR<\/strong>\";<\/p>\nb) \"disparities in evaluators' relative generosity or severity in judgment and ratings can easily be magnified by the lack of common definitions of the requirements to be considered for each criterion and sub-criterion<\/strong>\";<\/p>\nc) \"large differences in scores caused by inadequate understanding of the ToR or improper use of the evaluation criteria and sub-criteria are difficult to reconcile and explain<\/strong>.\"<\/p>\n<h2>7.17.4<\/span>Individual Scoring of Proposals<\/span><\/h2>\n\"CEC members should carry out the evaluation independently and score the proposal based on the rating criteria.<\/strong><\/p>\n The CEC evaluation should be based on the proposal as submitted. Under no circumstances can the CEC request information or clarifications that May change the proposals. Issues to be clarified with the selected consultant will have to be discussed during negotiations.<\/strong><\/p>\nIndividual evaluators' results are recorded on pre-established worksheets.<\/strong><\/p>\n After each member has independently rated all criteria and sub-criteria, it is good practice to read each proposal again \u2014 to ensure that scores reliably reflect the quality of the proposal<\/strong>.\"<\/p>\n<h2>7.17.5<\/span>Joint Review and Mitigation<\/span><\/h2>\n1. The reconciliation procedure:<\/p>\n<aside class=\"note\">\"the CEC should conduct a joint review and discuss the merits of individual evaluations and scores.<\/strong><\/p>\n Some evaluators tend to be generous while others will be rigid in their judgment and ratings. Such disparity does not matter \u2014 provided each evaluator is consistent and differences in scores are not too large.<\/strong><\/p>\n Large differences should be reviewed and explained \u2014 because they often are caused by improper or inaccurate use of the rating system.<\/strong><\/p>\nReconciling differences that are considered too large by the CEC May result in members revising some of their ratings and scores. As such, any changes should be recorded.<\/strong><\/p>\n If a discussion is needed to reach a final decision, an independent party should prepare minutes.<\/strong><\/p>\nFinally, the scores given by different members May be averaged out.<\/strong><\/p>\nDuring the meeting, the CEC should also comment on the strengths and weaknesses of all proposals that have met the minimum technical score indicated in the RfP. This will help identify any elements in the winning proposal that should be clarified during negotiations<\/strong>.\"<\/p><\/aside>\n2. The minimum qualifying mark and the debriefing duty:<\/p>\n\"eventually, for each of the technical proposals, the CEC should calculate the average of the scores allocated to each criterion by all members, establish the technical ranking of the proposals, identify the best, and propose it for award.<\/strong><\/p>\n The evaluation also establishes whether a proposal passes the minimum qualifying mark (or technical score \u2014 normally 75 (seventy-five)) provided for in the RfP.<\/strong><\/p>\n If one or more proposals fail to meet the minimum qualifying mark, both individual and joint assessments must be carefully reviewed and justified.<\/strong><\/p>\n Short-listed consultants are usually discouraged when their proposals are rejected \u2014 particularly when they are only a few points below the minimum mark; Therefore, the Procuring Entity should be prepared to debrief consultants to explain the evaluation of their proposals<\/strong>.\"<\/p>\n<h1>7.18 General Norms for Ranking of Financial Bids<\/span><\/h1>\n1. The basis \u2014 total outgo from the buyer's pocket:<\/p>\nUnless otherwise stipulated, evaluation of the financial bids shall be on the price criteria only<\/strong>. Financial bids of all techno-commercially suitable bids are evaluated and ranked to determine the lowest-priced bidder, based on the total outgo from the buyer's pocket<\/strong> \u2014 including:<\/p>\n<aside class=\"note\">GST \u00b7 transportation \u00b7 insurance \u00b7 price of incidental works\/ services \u00b7 customs duty \u00b7 marine insurance and freight \u00b7 agency commission, as applicable.<\/p>\nG<\/span> \u2014 the CPSE input tax credit Rule:<\/strong>\"for CPSEs availing input tax credit, the price shall be \"net of GST\" \u2014 considering the input tax credit on the GST portion to be availed by the CPSE<\/strong>.\"<\/p><\/aside>\n2. Evaluation of multiple schedules\/ items\/ destinations \u2014 the three cases G<\/span>:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Case<\/th><th>How ranking is done<\/th><\/tr><\/thead><tbody><tr><td>a) The list of requirements contains more than one Schedule\/ package<\/em><\/td><td>responsive, technically suitable bids shall be evaluated and compared separately for each Schedule<\/strong>. <\/strong>The bid for a Schedule will not be considered if the complete list of goods in that Schedule is not included in the bid<\/strong>. However, bidders have the option to quote for any one or more schedules<\/em>, and to offer *unconditional discounts for individual schedules*<\/td><\/tr><tr><td>b) There is only a list of items without grouping into schedules<\/em><\/td><td>ranking shall be done for each item separately<\/strong>. Bidder has the option to quote for any one or more items and to offer unconditional discounts for individual items. HOWEVER, bidder shall quote for all the destinations included in an item quoted<\/strong><\/td><\/tr><tr><td>c) There is only one item with several destinations<\/em><\/td><td>ranking shall be done separately for each destination<\/strong> included in that item; the Bidder has the option to quote for any one or more destinations, and to offer unconditional discounts for individual destinations<\/td><\/tr><\/tbody><\/table><\/div>\ndiscounts as above shall be considered for deciding the lowest evaluated bid. However, any conditional discounts are not considered for the ranking<\/strong>.<\/p>\n3. No loading unless pre-announced: \"unless explicitly announced beforehand in the tender documents, the quoted price should not be loaded based on deviations in commercial conditions. If it is decided to incorporate such clauses, these should be unambiguous and clear \u2014 and thereafter, there should be no relaxation during evaluation<\/strong>.\"<\/p>\nAdditionally, while purchasing sophisticated and costly equipment, machinery<\/em>, and so on, the procuring entity also gives special importance to factors such as high-quality performance, environmentally friendly features, low running cost, low maintenance cost. To take care of this, relevant details, and the criteria adopted to assess the benefit of such features, are to be clearly stipulated in the tender document, so that the bidders are aware of it and quote accordingly<\/em>.<\/p>\n4. The comparison basis: Unless otherwise stipulated, the comparison of the responsive bids shall be on total outgo from the Procuring Entity's pocket \u2014 to be paid to the supplier or any third party, including all elements of costs<\/strong> As per the terms of the proposed contract.<\/p>\nTherefore, it should normally be on a CIF\/ FOR destination basis, duly delivered, commissioned<\/strong>, as the case May be: A) goods manufactured in India, or goods of foreign origin already located in India \u2014 GST and any other duties\/ levies contractually payable (to the bidder) are to be added<\/em>; B) goods of foreign origin offered from abroad \u2014 customs duty and other similar import duties\/ taxes contractually payable are to be added<\/em>.<\/p>\n5. Purchase preferences: As per policies of the Government from time to time, the purchaser reserves his option to give price\/ purchase preferences as indicated in the tender document<\/em>.<\/p>\n6. VARIABLE-PRICE BIDS \u2014 the \"as on deadline\" rule: If the bids have been invited on a variable price basis<\/em>, they will be evaluated, compared, and ranked based on the position prevailing on the deadline of bid submission \u2014 and not based on any future date<\/strong>. If a bidder submits a firm price quotation against the requirement of a variable price quotation, that bid shall be prima facie acceptable and considered further \u2014 taking the price variation asked for by the bidder as nil<\/strong>.<\/p>\n7. Tie at the l-1 POSITION \u2014 the four-step tie-breaker G<\/span>:<\/p>\n\"rarely, there May be a tie at the lowest bid (L-1) position between two or more start-up\/ non-start-up bidders.<\/strong><\/p>\n it must be first determined whether it is a case of cartel formation or anti-competitive practices \u2014 and if so, it shall be dealt with accordingly.<\/strong><\/p>\nIf this is not a case of cartel formation, the decision will be taken in the following manner:<\/strong>\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>Rule<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>if one of the L1 bidders is an MSE owned by sc\/st or a woman entrepreneur<\/strong>, then the 25% quantity order reserved for MSEs will be placed on that MSE<\/strong>, subject to fulfilment of other tender conditions<\/td><\/tr><tr><td>ii<\/td><td>if one of the L1 bidders is an MSE, other than an MSE owned by sc\/st or a woman entrepreneur<\/strong>, then an order shall be placed on such MSE bidders<\/td><\/tr><tr><td>iii<\/td><td>in all other scenarios, the order shall be placed on the L1 bidder having a higher turnover in the previous financial year<\/strong>.<\/strong> In case there is a tie at L-1 between only start-up bidders and none of them has past turnover<\/strong>, the order will be placed on the start-up that was registered earlier with DPIIT<\/strong><\/td><\/tr><tr><td>iv<\/td><td>for tenders issued through the GeM PORTAL<\/strong>: THE tie-breaker methodology available on the GeM portal is to be followed<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n8. Ambiguous price bids: \"if the price bid is ambiguous, so that it May very well lead to two equally valid total price amounts \u2014 then the bid should be treated as unresponsive<\/strong>.\"<\/p>\n9. Suo motu and conditional discounts after bid opening \u2014 the two-limbed Rule:<\/p>\n<aside class=\"note\">\"sometimes, certain bidders offer suo motu discounts\/ rebates after the opening of the tender (techno-commercial or financial).<\/strong><\/p>\n Such discounts\/ rebates should not be considered for ranking the offer \u2014 but if such a firm does become L1 at its original offer, such suo motu discounts\/ rebates must be incorporated in the contracts.<\/strong><\/p>\nThis also applies to conditional rebates \u2014 for example, rebates for faster payments<\/strong>.\"<\/p><\/aside>\n10. C<\/span> \u2014 additional financial-opening Rules for consultancy:<\/p>\n<ul class=\"lst\"><li>The financial proposals shall be opened publicly in the presence of representatives of the technically qualified consultants who choose to attend<\/strong>. The evaluation committee demonstrably verifies that the financial proposals have remained sealed<\/strong> And then opens them.<\/li><li>THE name of the consultant, quality scores, and proposed prices shall be read aloud and recorded<\/strong>. No modification to financial proposals is permitted<\/strong>. When electronic submission is used, this information shall be posted online<\/strong>.<\/li><li>The arithmetic-correction Rule differs by contract type:<\/li><\/ul>\n<div class=\"tblwrap\"><table><thead><tr><th>Contract type<\/th><th>Rule<\/th><\/tr><\/thead><tbody><tr><td>Time-based contract<\/td><td>ANY arithmetical errors shall be corrected, and prices shall be adjusted if they fail to reflect all inputs<\/strong> That are included in the respective technical proposals<\/td><\/tr><tr><td>lump-sum contract<\/td><td>the consultant is deemed to have included all prices<\/strong> In its financial proposal \u2014 so neither arithmetical correction nor any other price adjustment shall be made<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<ul class=\"lst\"><li>for the purpose of evaluation, the total cost shall include all taxes and duties for which the Procuring Entity makes payments to the consultant, and other reimbursable expenses \u2014 such as travel, translation, report printing, or secretarial expenses<\/strong>.<\/li><li>THE GST misclassification Rule<\/strong>: \"the offers shall be evaluated based on the GST rate quoted by each bidder\u2026 the Procuring Entity shall not be responsible for any misclassification of HSN number or incorrect GST rate if quoted by the bidder. Any increase in GST rate due to misclassification of HSN number shall have to be absorbed by the consultant<\/strong>.\"<\/li><li>if GST is quoted extra, but with the provision that it shall be charged as applicable at the time of delivery<\/strong>, the offer shall be evaluated for comparison purposes by loading the maximum existing rate of GST for the product\/ HSN code<\/strong>.<\/li><\/ul>\n<h1>7.19 Least Cost Selection (LCS)<\/span><\/h1>\nUnder the LCS procedures, the financial proposals will be ranked in terms of their total evaluated cost<\/strong>.<\/p>\nTHE least cost proposal will be ranked as L-1<\/strong>, and the next higher and so on will be ranked as L-2, L-3<\/strong>, etc.<\/p>\nTHE least cost proposal (L-1) will be considered for award of contract<\/strong>.<\/p>\nC<\/span>:<\/strong>The CEC will put up a report on financial evaluation of the technically qualified consultants to the competent finance authority<\/strong>, along with the recommendation that the least cost proposal (L-1) can be approved\/ invited for negotiation and for final award of contract<\/strong>.<\/p>\n<aside class=\"note\">In the <\/strong>GOODS Manual, LCS is not named as a system \u2014 <\/strong>L1 selection among technically responsive bids is simply the default.<\/strong><\/p><\/aside>\n<h1>7.20 Quality and Cost Based Selection (QCBS)<\/span><\/h1>\n(Rule 192 of GFR 2017)<\/em><\/p>\n<aside class=\"note\">The Inverted Weightage \u2014 the Single Most Examinable Point in this Chapter<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>Technical\/ Quality weightage<\/th><th>Cost weightage<\/th><th>Ceiling<\/th><\/tr><\/thead><tbody><tr><td>C<\/span> Consultancy<\/td><td>70%<\/td><td>30%<\/td><td>\"or any other respective weightages as declared in the RfP (Example, 60:40, 50:50 \u2014 but not greater than 80%<\/strong>)\"<\/em><\/td><\/tr><tr><td>W<\/span> WORKS \u00b7 NC<\/span> Non-consultancy<\/td><td>not more than 30%<\/td><td>70% or more<\/td><td>the maximum weight of non-financial parameters shall in no case exceed 30%<\/strong><\/em><\/td><\/tr><\/tbody><\/table><\/div>\nnote the identical sentence appearing in both \u2014 pointing in opposite directions:<\/p>\nC<\/span>:\"<\/strong>since the weightage of the cost element adopted in consultancy services is as high as 70 (seventy) per cent, financial considerations would dominate the selection\u2026\"<\/em> *(an evident <\/strong>internal inconsistency in the CS Manual, since it has just stated that technical carries 70% and cost 30%)*<\/p>\nNC<\/span>: *\"<\/strong>since the weightage of the cost element adopted in nc services is as high as 70 (seventy) per cent, financial considerations would dominate the selection\u2026\"<\/em>(consistent with NC's own 70% cost weighting)*<\/p><\/aside>\n<h2>7.20.1<\/span>The Qualifying Benchmark<\/span><\/h2>\nin QCBS selection, minimum qualifying marks \u2014 normally 70\u201380 (seventy to eighty) out of a maximum of 100 marks<\/strong> \u2014 as a qualifying benchmark for quality of the technical proposal shall be prescribed and indicated in the tender document<\/strong>, along with a scheme for allotting marks for various technical criteria\/ attributes<\/strong>.<\/p>\nBids scoring less than the minimum threshold shall not be considered for further evaluation<\/strong>.<\/p>\n<aside class=\"note\">The reason the benchmark must be set high: \"since the weightage of the cost element adopted is as high as 70 per cent, financial considerations would dominate the selection \u2014 though to a lower extent as compared to LCS. In such cases, it is essential to ensure that the minimum qualifying marks in the evaluation is set sufficiently high \u2014 to weed out low-quality bids with low prices<\/strong>.\"<\/p><\/aside>\n<h2>7.20.2<\/span>The Two Scores and the Weighted Total<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Score<\/th><th>How computed<\/th><\/tr><\/thead><tbody><tr><td>technical\/ quality score<\/td><td>the proposal with the highest technical marks shall be given a score of 100<\/strong>, and other proposals given technical scores proportional to their marks w.r.t. The highest technical marks<\/strong><\/td><\/tr><tr><td>financial score<\/td><td>the proposal with the lowest cost May be given a financial score of 100<\/strong>, and other proposals given financial scores inversely proportional to their prices w.r.t. The lowest offer<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nTHE total score shall be obtained by weighing the quality and cost scores and adding them up<\/strong>.<\/p>\nThe proposal obtaining the highest total combined score will be ranked as H-1<\/strong>, followed by H-2, H-3<\/strong>, etc. THE H-1 proposal shall be recommended for award of contract<\/strong>(C<\/span> adds: \"will be invited for negotiations, if required\")<\/em>.<\/p>\n<aside class=\"note\">The tie-breaker: \"in the event two or more bids have the same score in final ranking \u2014 the bid with the higher technical score will be H-1<\/strong>.\"<\/p><\/aside>\n<h2>7.20.3<\/span>The QCBS Formula<\/span><\/h2>\nAN evaluated bid score (b)<\/strong> Will be calculated for each responsive bid using the following formula \u2014 which permits a comprehensive assessment of the bid price and the technical merits of each bid<\/strong>:<\/p>\n<aside class=\"note\">B = (C_low \/ C) \u00d7 X + (T \/ T_high) \u00d7 (1 \u2212 X)<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>Symbol<\/th><th>Meaning<\/th><\/tr><\/thead><tbody><tr><td>C<\/td><td>evaluated bid price<\/td><\/tr><tr><td>C_low<\/td><td>THE lowest<\/strong> Of all evaluated bid prices among responsive bids<\/td><\/tr><tr><td>T<\/td><td>THE total technical score<\/strong> Awarded to the bid<\/td><\/tr><tr><td>T_high<\/td><td>the technical score achieved by the bid that was scored best<\/strong> Among all responsive bids<\/td><\/tr><tr><td>X<\/td><td>THE weightage for the price<\/strong> As specified in the bds\/ tender document<\/td><\/tr><\/tbody><\/table><\/div>\nthe bid with the best evaluated bid score (b) among responsive bids shall be the most advantageous bid<\/strong>.<\/p>\n<h2>7.20.4<\/span>the Worked Examples \u2014 and How the Same Numbers Produce Different Winners<\/span><\/h2>\n<aside class=\"note\">This is the clearest demonstration of why the inverted weightage matters. The Consultancy and Non-Consultancy Manuals use identical input data<\/strong> \u2014 and reach different answers<\/strong>.<\/p><\/aside>\n<h3 class=\"src-C\">A. THE CONSULTANCY EXAMPLE \u2014 weightage 70 technical: 30 cost<\/span>C<\/span><\/h3><div class=\"srcblock src-C\">\nMinimum qualifying marks for technical qualification: 75<\/strong>. Three proposals A, B, C received.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>A<\/th><th>B<\/th><th>C<\/th><\/tr><\/thead><tbody><tr><td>Technical marks awarded<\/td><td>75<\/td><td>80<\/td><td>90<\/td><\/tr><tr><td>Technical points (T\/T_high)<\/td><td>75\/90 = 83<\/strong><\/td><td>80\/90 = 89<\/strong><\/td><td>90\/90 = 100<\/strong><\/td><\/tr><tr><td>Quoted price<\/td><td>Rs. 100<\/td><td>Rs. 104<\/td><td>Rs. 106<\/td><\/tr><tr><td>Financial points (C_low\/C)<\/td><td>100\/100 = 100<\/strong><\/td><td>100\/104 = 96<\/strong><\/td><td>100\/106 = 94<\/strong><\/td><\/tr><tr><td>Combined score (Tech \u00d7 0.70 + Fin \u00d7 0.30)<\/td><td>83\u00d70.70 + 100\u00d70.30 = 88.10<\/strong><\/td><td>89\u00d70.70 + 96\u00d70.30 = 91.10<\/strong><\/td><td>100\u00d70.70 + 94\u00d70.30 = 98.20<\/strong><\/td><\/tr><tr><td>RANK<\/td><td>H-3<\/td><td>H-2<\/td><td>H-1<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">the result: \"proposal c, at the evaluated cost of Rs. 106 (the highest-priced bid), was therefore declared as winner and recommended for negotiations\/ approval<\/strong>.\"<\/p><\/aside>\n<\/div><h3 class=\"src-NC\">B. THE NON-CONSULTANCY EXAMPLE \u2014 same data, weightage 30 technical: 70 cost<\/span>NC<\/span><\/h3><div class=\"srcblock src-NC\">\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>A<\/th><th>B<\/th><th>C<\/th><\/tr><\/thead><tbody><tr><td>Technical marks awarded<\/td><td>75<\/td><td>80<\/td><td>90<\/td><\/tr><tr><td>Technical points<\/td><td>83<\/td><td>89<\/td><td>100<\/td><\/tr><tr><td>Quoted price<\/td><td>Rs. 100<\/td><td>Rs. 104<\/td><td>Rs. 106<\/td><\/tr><tr><td>Financial points<\/td><td>100<\/td><td>96<\/td><td>94<\/td><\/tr><tr><td>Combined score (Tech \u00d7 0.30 + Fin \u00d7 0.70)<\/td><td>83\u00d70.30 + 100\u00d70.70 = 95<\/strong><\/td><td>89\u00d70.30 + 96\u00d70.70 = 94<\/strong><\/td><td>100\u00d70.30 + 94\u00d70.70 = 96<\/strong><\/td><\/tr><tr><td>RANK<\/td><td>H-2<\/td><td>H-3<\/td><td>H-1<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Note how the inversion completely re-orders B and A \u2014 B falls from H-2 to H-3, and A rises from H-3 to H-2.<\/p><\/aside>\n<\/div><h3 class=\"src-W\">C. THE WORKS EXAMPLE \u2014 weightage 30 technical: 70 cost, with different data<\/span>W<\/span><\/h3><div class=\"srcblock src-W\">\nMinimum qualifying marks: 75<\/strong>.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>A<\/th><th>B<\/th><th>C<\/th><\/tr><\/thead><tbody><tr><td>Technical marks awarded<\/td><td>80<\/td><td>75<\/td><td>90<\/td><\/tr><tr><td>Normalised technical score<\/td><td>80\u00d7100\/90 = 88.89<\/strong><\/td><td>75\u00d7100\/90 = 83.33<\/strong><\/td><td>90\u00d7100\/90 = 100.00<\/strong><\/td><\/tr><tr><td>Quoted price<\/td><td>Rs. 120<\/td><td>Rs. 100<\/td><td>Rs. 105<\/td><\/tr><tr><td>Normalised financial score<\/td><td>100\u00d7100\/120 = 83.33<\/strong><\/td><td>100\u00d7100\/100 = 100.00<\/strong><\/td><td>100\u00d7100\/105 = 95.24<\/strong><\/td><\/tr><tr><td>Combined score (Tech \u00d7 0.30 + Fin \u00d7 0.70)<\/td><td>85.00<\/td><td>95.00<\/td><td>96.67<\/td><\/tr><tr><td>RANK<\/td><td>H-3<\/td><td>H-2<\/td><td>H-1<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">the result: \"bid c at the evaluated cost of Rs. 105 (rupees one hundred and five, the second lowest bid) was therefore declared as winner and recommended for approval<\/strong>.\"<\/p><\/aside>\n<\/div><h2 class=\"src-NC\">7.20.5<\/span>Additional QCBS Rules in Non-Consultancy<\/span>NC<\/span><\/h2><div class=\"srcblock src-NC\">\na) the evaluation committee: \"for evaluation, a suitable committee shall be constituted. However, members of the STC [Special Technical Committee] shall not be involved<\/strong>.\"<\/p>\nb) joint ventures: \"joint ventures May be avoided in general in non-consultancy services \u2014 and particularly in the QCBS system<\/strong>.\"<\/p>\nc) the MII disapplication \u2014 an important consequence:<\/p>\n<aside class=\"note\">\"since the MII order is applicable 'where the bid is evaluated on price alone' \u2014 MII purchase preference would not be applicable where evaluation is based inter alia on non-price criteria \u2014 e.g., QCBS or FBS in services and works<\/strong>.\"<\/p><\/aside>\n<h1>7.21 Single Source Selection (SSS)<\/span><\/h1>\nthe single source in case of SSS selection shall be called for further negotiation, if need be \u2014 after opening and evaluation of its financial proposals<\/strong>.<\/p>\n<h1>7.22 Fixed Budget Selection (FBS) [C ONLY]<\/span><\/h1>\nUnder FBS, the selection of the consultant shall be made by one of the following two methods<\/strong>:<\/p>\nA) the competitive quality-only method: By a competitive selection process, based only on quality<\/strong>, using specific marking criteria for quality in the manner indicated in Rule 192(i) of the GFR<\/strong>.<\/p>\n<aside class=\"note\">\"the proposal with the highest technical score that meets the fixed budget requirement shall be considered for placement of contract<\/strong>.\"<\/p><\/aside>\nb) the empanelment method \u2014 for repetitive or multiple assignments: BY empanelling consultants for a period, using suitable eligibility\/ qualification criteria<\/strong>.<\/p>\n<aside class=\"note\">Thereafter, selection of a specific consultant for a specific assignment from such panel shall be based on overall considerations of public interest \u2014 including timeliness, practicability, number of other assignments already given to that consultant in the past<\/strong>, etc. \"in such cases, the budget for each assignment shall also be fixed by the Procuring Entity<\/strong>.\"<\/p><\/aside>\n<h1>7.23 GTE Tenders \u2014 Special Aspects of Financial Evaluation<\/span>G<\/span>fullest text<\/span><\/h1>\n1. Currency of bid and conversion:<\/p>\nIn GTE, foreign bidders have the flexibility to quote prices and receive payments in either Indian rupees or freely convertible currencies<\/strong> (US Dollars, Euros, Pound Sterling, Yen, other relevant currencies, or a combination).<\/p>\nHowever, prices for goods, works, or services (including agency commission) performed or sourced in India must be quoted and paid for in Indian rupees<\/strong>. Indian bidders are required to quote in INR only<\/strong>.<\/p>\n<aside class=\"note\">The conversion Rule: \"all offers are to be converted to Indian rupees based on the \"bill currency selling\" exchange rate on the deadline of bid submission \u2014 quoted by a source as specified (if not specified, authorised exchange bankers approved by RBI) in the tender document<\/strong>.\"<\/p><\/aside>\n2. The loading sequence to arrive at DDP\/ FOR destination cost \u2014 a step-by-step calculation:<\/p>\nA) taxes on import: Import of goods or services or both attracts integrated tax (IGST)<\/strong>. The IGST rate and GST cess shall be applicable on the 'Customs assessable value' plus the 'basic customs duty applicable thereon'<\/strong>. The offers would be compared based on the principle of the total outgo from the Procuring Entity's pockets<\/strong>.<\/p>\nB) the dual-quotation requirement: \"the foreign bidders are normally asked, in the tender documents, to quote both on a FAS\/ FOB basis and also on a CFR\/ CIF basis \u2014 duly indicating the break-up of prices for freight, insurance, and so on \u2014 with purchasers reserving the right to order on either basis. They should also indicate the customs tariff number and customs duty applicable in India<\/strong>.\"<\/p>\nthe seven-step loading:<\/p>\n<aside class=\"note\">In the case of FAS\/ FOB<\/em> offers, the freight and insurance shall be (after ascertaining, if not quoted) added to make up the CIF COST.<\/p>\nTo arrive at the DDP\/ for\/ (FOT) destination cost, the following is to be added over and above CIF:<\/p>\n<ol class=\"lst\"><li>One per cent as port handling charges<\/strong>;<\/li><li>Customs duty, countervailing duty, and surcharges \u2014 as applicable on the date of opening of the bid<\/strong>;<\/li><li>Clearing agency charges<\/strong>;<\/li><li>Inland freight<\/strong>; and<\/li><li>GST, as assessed<\/strong>.<\/li><li>For bids with letter of Credit (LC)<\/em> Payment \u2014 the likely LC charges (as ascertained from the Procuring Entity's bankers) should also be loaded<\/strong>.<\/li><\/ol><\/aside>\nc) the comparison basis \u2014 two cases:<\/p>\n<ul class=\"lst\"><li>IF both Indian and foreign bidders have quoted<\/strong>, the comparison would be made based on DDP\/ for\/ FOT destination, including all applicable taxes and duties<\/strong> (on the principle of the total outgo from the Procuring Entity's pockets).<\/li><li>In case there are no domestic bidders<\/strong>, a comparison of offers can be made based on CIF\/ landed costs \u2014 since the rest of the costs would be the same for all bidders<\/strong>.<\/li><\/ul>\n<h1>7.24 Evaluation of Concurrent Application: MSE and Make in India Policies<\/span><\/h1>\n\"the concurrent application of the two procurement preference orders \u2014 i.e., the MSE procurement order of 2012 and the PPP-MII order \u2014 May create confusion for the procuring entities on how to evaluate the bids falling within the purview of both policies.<\/strong><\/p>\nTo bring predictability both to the procuring entities and bidders, DoE has issued guidelines in this regard<\/strong>.\" (OM No. F.1\/4\/2021-PPD dated 18.05.2023.)<\/em><\/p>\n<aside class=\"note\">These guidelines, with worked examples, are at: G<\/span> Annexure 34 and its Annex \u00b7 C<\/span> Annexure 25 \u00b7 NC<\/span> Annexure 21.<\/p><\/aside>\n<h1>7.25 Evaluation in Rate Contracts [G ONLY]<\/span><\/h1>\n1. If stipulated in the tender documents that this is a tender process to enter \"Rate Contract(s)\"<\/strong>, THEN additional clauses (including Performance Security, fall clause, etc.) shall be incorporated therein<\/strong>, and the evaluation would be done accordingly.<\/p>\n2. Procedures stipulated in this Chapter shall be applicable mutatis mutandis<\/strong>. The procedure for negotiations\/ counter-offers and splitting of contracts (parallel contracts) is slightly different in Rate Contract<\/strong>. One-time or standing approval of the Secretary of the Department May be taken for this procedure<\/strong>.<\/p>\n3. The counter-offer procedure for parallel rate contracts:<\/p>\nA) initially, the Rate Contract would be awarded to the L-1 bidder<\/strong>. Then the price of L-1 shall be counter-offered to the higher-quoting responsive bidders (under intimation to L-1)<\/strong> \u2014 asking them to send their revised bids online on the e-procurement portal<\/strong>, to be opened at a specified place, date, and time. The L-1 bidder would be specifically informed that it May, if it desires, reduce its price<\/strong>, and send its revised bid accordingly.<\/p>\nThe bidders who accept the counter-offered rate or a rate lower than that would be awarded parallel rate contracts<\/strong>. If L-1 bidder lowers its rate in its revised offer, the same would also be accepted with effect from that date, and its Rate Contract would be amended accordingly<\/strong>.<\/p>\nB) where L-1'S price is not reasonable: \"price negotiation with the bidders should be severely discouraged. However, in the case where parallel rate contracts are necessary \u2014 even if the lowest responsive bidder (L-1) price is not reasonable \u2014 negotiation May be conducted with the L-1 bidder in the first instance.<\/strong><\/p>\n<aside class=\"note\">If the L1 bidder agrees to bring down the price to the desired level, a Rate Contract would be concluded with it, and parallel rate contracts would be concluded as above.<\/strong><\/p>\n If, however, L1 bidder does not agree to reduce its price in the first instance itself \u2014 then the price which has been decided as reasonable shall be counter-offered to all the higher-quoting responsive bidders (including L-1)<\/strong> for further action on the above lines.\"<\/p><\/aside>\nc) all such parallel rate contracts would be released transparently and simultaneously<\/strong>.<\/p>\n4. The catalogue basis \u2014 for products that cannot be equitably compared:<\/p>\nIf stipulated in the tender document, in the case of:<\/p>\n<aside class=\"note\">Vehicles \u00b7 machine tools \u00b7 information technology products \u00b7 OEM\/ specialised equipment and their spares\/ consumables<\/strong> and similar products<\/p><\/aside>\n \u2014 where the design feature, performance parameters, etc., differ significantly among the products of different manufacturers \u2014 and even between different models of the same manufacturer<\/strong> \u2014 and where equitable comparison of prices is not feasible<\/strong>:<\/p>\n<aside class=\"note\">Rate contracts May be concluded on a percentage rebate on net dealer price (NDP) or MRP basis \u2014 generally known as \"catalogue basis\"<\/strong>.<\/p><\/aside>\n5. Period: A Rate Contract shall be for the period specified in the tender document \u2014 or one year if not so specified<\/strong>.<\/p>\n<h1>7.26 Variation of Quantities at the Time of Award [G ONLY]<\/span><\/h1>\n<aside class=\"note\">\"at the time of awarding the contract, the quantity to be procured must be re-judged based on the current data \u2014 since the ground situation May have very well changed.<\/strong><\/p>\nIf so provided in the tender document, and if warranted, the tendered quantity can be increased or decreased by the percentage specified therein \u2014 15 (fifteen)% if percentage not specified \u2014 for ordering, at the discretion of the Procuring Entity.<\/strong><\/p>\n Any larger variation May throw up issues about transparency<\/strong>.\"<\/p><\/aside>\n<h1>7.27 Option Clause [G ONLY]<\/span><\/h1>\n1. When and at what percentage:<\/p>\nNormally, for raw materials\/ consumables of regular and year-on-year recurrent requirements<\/strong>, all tenders of value above Rs. 50 (rupees fifty) lakh<\/strong> \u2014 to take care of any change in the requirement during the currency of the contract \u2014 a plus\/ minus option clause [normally 25 (twenty-five) per cent]<\/strong> May be incorporated in the tender document.<\/p>\nHowever, the ca May approve the inclusion of such a clause in lower denomination tenders, if such items have a history of frequent disruptions in the continuity of supplies<\/strong>.<\/p>\nThe model clause:<\/p>\n<aside class=\"note\">\"The purchaser reserves the right to increase\/ decrease the ordered quantity by up to [25] per cent at any time, till the final delivery date (or the extended delivery date of the contract), by giving reasonable notice \u2014 even though the quantity ordered initially has been supplied in full before the last date of the delivery period (or the extended delivery period).\"<\/strong><\/p><\/aside>\n2. The hedging caution: \"the higher the option limit, the more uncertainty there is for the bidders in formulating their prices \u2014 and the more chance of hedging the prices quoted to take care of such uncertainties; Hence, the option limit should be carefully considered only in justifiable requirements<\/strong>.\"<\/p>\n3. There should be no option clause in development orders<\/strong>.<\/p>\n4. The ca-determination Rule: \"the quantum of the option clause will be excluded from the value of tenders for the purpose of determining the level of ca in the original tender<\/strong>.\"<\/p>\n<h1>7.28 Splitting of Contracts \/ Parallel Contracts [G ONLY]<\/span><\/h1>\n1. The default: \"unless otherwise stipulated in TIS\/ AITB, there shall be no parallel orders or splitting quantities among more than one bidder<\/strong>.\"<\/p>\n<\/div><h2>7.28.1<\/span>Case A \u2014 Splitting WITHOUT prior declaration<\/span><\/h2>\n\"however, after due processing, if it is discovered that the quantity to be ordered is more than what the L1 bidder alone is capable of supplying, and there was no prior declaration in the tender documents to split the quantities \u2014 then the quantity being finally ordered May be distributed among the other bidders in a manner that is fair, transparent and equitable, based on objective data available in the bids (e.g., eligibility criteria, quantity\/ delivery):<\/strong><\/p>\nA) as far as feasible, counter-offer the L1 rate to such firms;<\/strong><\/p>\nB) if distribution at the counter-offered rate is not feasible, then distribution May be done at the rates quoted by such bidders \u2014 if their rates are still within the zone of reasonableness<\/strong>.\"<\/p>\n<h2>7.28.2<\/span>Case B \u2014 Splitting WITH prior declaration, and the 70:30 \/ 50:30:20 ratios<\/span><\/h2>\nin case of:<\/p>\n<aside class=\"note\">THE critical\/ vital\/ safety\/ security nature of the item<\/strong> \u00b7 large quantity under procurement<\/strong> \u00b7 urgent delivery requirements<\/strong> \u00b7 inadequate vendor capacity<\/strong><\/p><\/aside>\n \u2014 it May be advantageous to decide in advance to have more than one source of supply<\/strong>.<\/p>\nIn such cases, a parallel contract clause should be added to the tender documents<\/strong>, clearly stating that the Procuring Entity reserves the right to split the contract quantity.<\/p>\nTHE manner of deciding the relative share of L1 and the rest should be clearly defined, along with the minimum number of suppliers sought<\/strong>.<\/p>\n<aside class=\"note\">The standard ratios:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Number of sources<\/th><th>Ratio<\/th><\/tr><\/thead><tbody><tr><td>Splitting in two<\/td><td>70: 30<\/td><\/tr><tr><td>Splitting in three<\/td><td>50: 30: 20<\/td><\/tr><\/tbody><\/table><\/div>\n\"A different ratio May also be justified.\"<\/strong><\/p><\/aside>\nthe variation latitude: \"these ratios are approximate, and the Procuring Entity May marginally vary quantities to suit: Capacity\/ past performance of the bidder \u00b7 unit loads of packing or transportation \u00b7 relative ranking of the bids \u00b7 delivery period offered \u00b7 existing load of bidder \u00b7 and other similar factors affecting smooth supplies<\/strong>.\"<\/p>\n<aside class=\"note\">The anti-cartel safeguard \u2014 critically important:<\/p>\n\"since such predefined splitting of quantity can potentially encourage cartel formation \u2014 the Procuring Entity May stipulate that bidders must quote at least for a minimum percentage (say, a minimum of the ratio of distribution \u2014 i.e., 30% or 20% in case of 70:30 and 50:30:20 respectively) of the total tender quantity \u2014 to be considered a responsive bidder<\/strong>.\"<\/p><\/aside>\n<h2>7.28.3<\/span>The Five Allocation Guidelines (applicable in BOTH cases)<\/span><\/h2>\na) L1 should be awarded at least the percentage mentioned above, or his quoted quantity\/ spare supply capacity \u2014 whichever is lower<\/strong>.<\/p>\nB) in case the quantity thus allocated for L1 is less than the prescribed percentage \u2014 higher percentages than those stipulated for L2 (and L3, and so on) May be considered<\/strong> To cover the entire tender quantity.<\/p>\nC) for the rest of the contract quantity, the lowest rate accepted will be counter-offered to the L2 party<\/strong>. On acceptance, the order will be placed on L2 for the respective (or increased) percentage or the quoted quantity\/ spare supply capacity, whichever is lower<\/strong> \u2014 and so on to other higher bidders. In case of non-acceptance by L2, a similar offer shall be made to L3 and L4, and so on.<\/p>\nD) in case of shortfalls, the percentage of allocation of bidders in sequence May be proportionately increased<\/strong> \u2014 and, if unavoidable, more bidders than the minimum number specified May be considered, keeping the sanctity of ranking of bidders<\/strong>.<\/p>\n<aside class=\"note\">\"if it is still not possible to cover the entire tender quantity, there would be no alternative but to re-tender the uncovered quantity<\/strong>.\"<\/p><\/aside>\ne) in case higher-priced bidders do not agree to match the L1 price, action as per case a(b) above May be considered.<\/p>\n<h2>7.28.4<\/span>The Two Pre-conditions Before Splitting<\/span><\/h2>\n\"in either situation, before splitting the quantity, distribution shall be subject to:<\/strong><\/p>\nI) purchase preference to MSME and 'class-i local supplier' (under Make in India order); And<\/strong><\/p>\nii) rates of L1 being considered reasonable \u2014 and if it is not reasonable, negotiation (if permissible) with the L1 party May be carried out before splitting of quantities, with the approval of the ca \u2014 otherwise there would be no alternative but to re-tender the requirement<\/strong>.\"<\/p>\n<h1>7.29 Reasonableness of Prices<\/span><\/h1>\n1. The mandatory declaration: \"in every recommendation of the TC for an award of contract, it must be declared that the rates recommended are reasonable<\/strong>.\"<\/p>\nif the rates received are considered abnormally low or unreasonably high<\/strong>, action May be taken as per Paras 7.30 and 7.32 respectively \u2014 or, as per Para 7.34, reject any or all bids; Abandon\/ cancel the tender process and issue another tender<\/strong>.<\/p>\n2. No blind reliance on the estimate: \"in large-value tenders, blind reliance on the cost estimate is not recommended for assessing reasonableness. More than one method of estimation of cost May be used to triangulate a reasonable price<\/strong>.\"<\/p>\n3. The seven cautions on using last purchase price (lpp):<\/p>\nWhere there is no estimated cost, a comparison with the last purchase price (lpp \u2014 the price paid in the latest successful contract)<\/strong> is the basis for judging reasonableness. The following points May be kept in mind:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Caution<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>THE basic price, taxes, duties, transportation charges, packing and forwarding charges should be indicated separately<\/strong> \u2014 and the comparison should be on basic price<\/strong><\/td><\/tr><tr><td>b<\/td><td>where the firm holding the lpp contract has defaulted<\/strong>, the fact should be highlighted \u2014 and the price paid against the latest contract placed prior to the defaulting lpp contract, where supplies have been completed, should be used<\/strong><\/td><\/tr><tr><td>c<\/td><td>where the supply against the lpp contract is yet to commence<\/strong> (i.e., delivery is not yet due), it should be taken as lpp with caution \u2014 especially if the supplier is new<\/strong>; the price paid against the previous contract may also be kept in view<\/td><\/tr><tr><td>d<\/td><td>where the price indicated in the lpp is subject to variation, or if it is more than a year old<\/strong> \u2014 THE updated basic lpp, as computed in case of the Price Variation Clause (PVC), May also be indicated<\/strong><\/td><\/tr><tr><td>e<\/td><td>in the case of wholly imported stores<\/strong>, the comparison of the last purchase rate should be made with the net CIF value at the current foreign exchange rate<\/strong><\/td><\/tr><tr><td>f<\/td><td>\"it is natural to have marginal differences in prices obtained at different cities\/ offices for the same item, due to their different circumstances. The prices obtained are greatly influenced by quantity, delivery period, and terms of the contract<\/strong>\"<\/td><\/tr><tr><td>g<\/td><td>\"prices paid in emergencies, or prices offered in a distress sale, are not accurate guidelines for future use. Such purchase orders and TC proceedings should indicate that: \"These prices are not valid lpp for comparison in future procurement.\"<\/strong>\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>7.30 Consideration of Abnormally Low Bids (ALB)<\/span><\/h1>\n1. The definition:<\/p>\n<aside class=\"note\">\"an abnormally low bid (alb) is one in which the bid price, in combination with other elements of the bid, appears so low that it raises material concerns as to the capability of the bidder to perform the contract at the offered price<\/strong>.\"<\/p><\/aside>\nthe procedure:<\/p>\n<ul class=\"lst\"><li>The Procuring Entity May seek written clarifications from the bidder \u2014 including detailed price analyses of its bid price in relation to<\/strong>:<\/li><\/ul>\n<aside class=\"note\">Scope \u00b7 Schedule \u00b7 W<\/span>resource mobilisation<\/strong> \u00b7 allocation of risks and responsibilities \u00b7 and any other requirements of the tender document<\/p><\/aside>\n<ul class=\"lst\"><li>if, after evaluating the price analyses, the Procuring Entity determines that the bidder has substantially failed to demonstrate its capability to deliver the contract at the offered price<\/strong> \u2014 the Procuring Entity May reject the bid\/ proposal, and evaluate the next higher bidder (and so on)<\/strong>.<\/li><\/ul>\n<aside class=\"note\">The critical Rule on what rate applies to the next bidder: \"\u2026At his\/ their own quoted rate (if considered reasonable) \u2014 and not by counter-offering the rate of the alb \u2014 for the award of contract<\/strong>.\"<\/p><\/aside>\n2. No normative percentage:<\/p>\n<aside class=\"note\">\"however, it would not be advisable to fix a normative percentage below the estimated cost, which would automatically be considered an abnormally low bid<\/strong>.\"<\/p><\/aside>\n\"due care should be taken while formulating the specifications [W<\/span>: \"preparing the drawings, formulating specifications\"] at the time of preparation of the tender document \u2014 to safeguard against the submission of abnormally low bids<\/strong>.\"<\/p>\n3. Predatory pricing:<\/strong> \"in the case of predatory pricing as well, procuring entities May refer to the above consideration of abnormally low bids to assist themselves in the finalisation of tenders<\/strong>.\" (OM No. F.12\/17\/2019-PPD dated 06.02.2020.)<\/em><\/p>\n4. The additional Security Deposit Rule \u2014 a common misconception corrected:<\/p>\n<aside class=\"note\">\" no provisions should be kept in the tender documents regarding the additional Security Deposit\/ Bank Guarantee (BG) in case of abnormally low bids.<\/strong><\/p>\n Wherever there are compelling circumstances to ask for an additional Security Deposit\/ BG in the case of albs, the same should be taken only with the approval of \u2014 the next higher authority competent to finalise the particular tender, or the Secretary of the Ministry\/ Department \u2014 whichever is lower<\/strong>.\" (OM No. F.9\/4\/2020-PPD dated 12.11.2020.)<\/em><\/p><\/aside>\n<h1>7.31 Cartel Formation \/ Pool Rates \/ Bid Rigging<\/span><\/h1>\n<h2 class=\"src-G\">7.31.1<\/span>The Statutory Definition<\/span>G<\/span><\/h2><div class=\"srcblock src-G\">\n\"the Competition Act defines bid rigging as agreements that have the effect of eliminating or reducing competition, or adversely affecting or manipulating the process of bidding<\/strong>.\"<\/p>\nthe forms of bid rigging:<\/p>\n<aside class=\"note\">Collusive bidding<\/strong>(dividing the market, setting prices, or limiting production \u2014 involves misrepresentation of independent bids<\/strong>)<\/em> \u00b7 bid rotation\/ suppression<\/strong> \u00b7 complementary bidding<\/strong>, etc.<\/p><\/aside>\n<\/div><h2>7.31.2<\/span>The Five Tell-tale Signs of a Cartel<\/span><\/h2>\nSometimes, a cartel of bidders quotes equal\/ marginally different rates (pool rates)<\/strong> Against a tender, whereas possibly:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>G<\/span> GOODS<\/th><th>W<\/span> WORKS<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>rates quoted (and breakup thereof) are equal \u2014 despite their manufacturing\/ logistics costs being different due to their scale of production\/ location<\/strong><\/td><td>quoted prices and scope of works: Prices quoted (and their detailed breakdowns) are suspiciously similar \u2014 despite significant differences in the proposed approach to completing the works<\/strong>. *Look for <\/strong>variations in methodologies, materials, or timelines that could justify price differences*<\/td><\/tr><tr><td>b<\/td><td>the rate manages to be L1<\/strong><\/td><td>the rates quoted by two or more bidders manage to be L1<\/strong><\/td><\/tr><tr><td>c<\/td><td>in a variation, the rates May not be exactly equal, but May be close enough to make the cartel members L1, L2, L3<\/strong>, etc.<\/td><td>(same)<\/em><\/td><\/tr><tr><td>d<\/td><td>respective quoted quantities by these bidders are much less than the tendered quantity \u2014 leaving no option but to distribute quantities among these bids<\/strong><\/td><td> \u2014 <\/td><\/tr><tr><td>e<\/td><td>their bids have other uncanny similarities \u2014 i.e., the same layout or typographical errors<\/strong>. \"bids from the same IP address raise suspicion \u2014 but by itself May not be a strong indicator of a cartel. In such cases, other factors mentioned in this Para should be assessed to judge cartelisation<\/strong>.\"<\/td><td>unexplained similarities in bids: Bids from different contractors exhibit unusual similarities beyond pricing<\/strong> \u2014 including identical typos, grammatical errors, formatting, or even the use of uncommon terminology<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>7.31.3<\/span>Why It Matters Even When Rates Are Reasonable<\/span><\/h2>\n<aside class=\"note\">\"if this rate is unreasonably high, this May be an attempt to force acceptance of higher rates by undermining the negotiating power of the buyer as per Rules.<\/strong><\/p>\n Even when rates are reasonable, this May be an attempt to force the Procuring Entity to distribute quantities as decided by the bidders among them \u2014 even in tenders where splitting of quantities is not envisaged<\/strong>.\"<\/p><\/aside>\nthe evidentiary difficulty G<\/span>:<\/p>\n<aside class=\"note\">\"cartels, by their very nature, are secretive \u2014 and thus it May not be possible to find the direct concrete evidence of their presence.<\/strong><\/p>\n The orders of the Competition Commission of India (CCI) clearly mention reliance on circumstantial evidence \u2014 both economic and conduct-based \u2014 to conclude the existence of a cartel agreement<\/strong>.\"<\/p><\/aside>\nthe legal characterisation: Such cartel formation\/ pool rates abuse the transparency of Public Procurement and are a violation of the Code of Integrity for Public Procurement<\/strong>. Such tactics leading to an \"Appreciable adverse effect on competition\" (AAEC) is an offence under the Competition Act, 2002<\/strong>, as amended by the Competition (Amendment) Act, 2007.<\/p>\n<h2>7.31.4<\/span>The Cartel Formation\/ Pool Rates Clause \u2014 Two Preventive Measures<\/span><\/h2>\nTo discourage such practices, the Procuring Entity May include in all tender documents a cartel formation\/ pool rates clause<\/strong>, reserving its rights to take the following actions without assigning any reasons<\/strong>:<\/p>\nA) the minimum-quantity requirement:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Minimum percentage a bidder must bid for<\/th><\/tr><\/thead><tbody><tr><td>G<\/span> GOODS<\/td><td>\"more than a minimum specified percentage \u2014 say 25% \u2014 of the tendered quantity; Otherwise, their offer shall be rejected<\/strong>\"<\/td><\/tr><tr><td>W<\/span> WORKS<\/td><td>\"for those works procurements where schedules or division of work is possible \u2014 more than a minimum specified percentage, say 20% or 30%<\/strong>\"<\/td><\/tr><\/tbody><\/table><\/div>\nb) the warning: Warn that the Procuring Entity May take any\/ all punitive actions available under the Code of Integrity<\/strong> \u2014 including removal from the list\/ panel of registered sources or debarment<\/strong> \u2014 besides reporting the transgression to the competition commission, and concerned trade associations like FICCI, ASSOCHAM, NSIC<\/strong> for suitable punitive action.<\/p>\nc) the negotiation bar \u2014 reproduced verbatim in the cartel section:<\/p>\n<aside class=\"note\">\"In no case, including where cartel rates are suspected, should negotiations be extended to those who had either not tendered originally, or whose tender was rejected because of unresponsiveness of bid, unsatisfactory credentials, inadequacy of capacity or unworkable rates.\"<\/strong><\/p><\/aside>\n<h2>7.31.5<\/span>The Four Ways to Decide a Tender Where a Cartel Is Suspected<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Permitted action<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>reject all bids from the suspected cartel formation and decide the tender accordingly<\/strong><\/td><\/tr><tr><td>ii<\/td><td>place an order on any one or more firms from among the cartel, for any quantity, with the exclusion of the rest \u2014 with or without negotiation or counter-offering<\/strong> NOTE: \"the selection of firms for this May be based on a transparent logistics parameter \u2014 i.e., quicker delivery, nearer location of source, relatively better past performance, etc<\/strong>.\"<\/td><\/tr><tr><td>iii<\/td><td>whenever a tender is floated for purchase exclusively from an Approved Vendor List<\/strong> [W: pre-qualified\/ approved sources<\/em>], and cartel formation is suspected among all such sources \u2014 the Procuring Entity May place orders on bidders who are not in the Approved Vendor List, for any quantity<\/strong><\/td><\/tr><tr><td>iv<\/td><td>wherever a specified ratio for splitting of quantities among 2\/3 sources<\/strong> is stipulated, and cartel formation is suspected among the lower 2\/3 bidders \u2014 place orders on any number of bids beyond such ratios<\/strong>, or decide the tender as per (i) or (ii) above<\/td><\/tr><\/tbody><\/table><\/div>\nW<\/span> \u2014 the additional remedial measures:<\/p>\n<aside class=\"note\">\"in case of evidence of cartel formation, detailed cost analysis May be done by associating experts if necessary.<\/strong><\/p>\n New firms May also be encouraged to get themselves enlisted for the subject works \u2014 to break the monopolistic attitude of the firms forming a cartel.<\/strong><\/p>\n Changes in the mode of procurement (post-qualification instead of pre-qualification) and packaging\/ slicing of the work May also be tried<\/strong>.\"<\/p><\/aside>\n<h1>7.32 Negotiations for Reduction of Prices<\/span><\/h1>\n(Rule 173(xiv) of GFR 2017)<\/em><\/p>\n<h2>7.32.1<\/span>The General Rule and the Two Absolute Bars<\/span><\/h2>\n<aside class=\"note\">\"negotiation with bidders for price reduction after bid opening must be severely discouraged.<\/strong><\/p>\nHowever, in exceptional circumstances where price negotiation is necessary due to some unavoidable circumstances \u2014 it should be held only with the lowest acceptable bidder (L1) \u2014 who is techno-commercially responsive for the supply of a bulk quantity, and on whom the contract would have been placed but for the decision to negotiate<\/strong>.\"<\/p>\nthe absolute bar: \"in no case \u2014 including where cartel rates are suspected \u2014 should negotiations be extended to those who:<\/strong><\/p>\n\u2022 had either not tendered originally; Or<\/strong><\/p>\n\u2022 whose bid was rejected because of: Unresponsiveness of bid \u00b7 unsatisfactory credentials \u00b7 inadequacy of capacity \u00b7 or unworkable rates<\/strong>.\"<\/p><\/aside>\n<h2>7.32.2<\/span>The Four Exceptional Circumstances<\/span><\/h2>\n\"price negotiations May not be considered except under the following exceptional circumstances:<\/strong>\"<\/p>\na) where THE L1 price is not considered to be reasonable<\/strong>, AND:<\/p>\n<ul class=\"lst\"><li>I) the procurement is done on a nomination basis<\/strong>; or<\/li><li>ii) procurement is from single or limited sources<\/strong>; or<\/li><li>iii) in situations where the requirements are urgent, and the delay in re-tendering for the entire requirement due to the unreasonableness of the quoted rates would jeopardise essential operations, maintenance, and safety<\/strong>:<\/li><\/ul>\n<aside class=\"note\">\"negotiations with L1 bidder(s) May be done for a bare minimum quantum of immediate requirements. The balance bulk requirement should, however, be procured through a re-tender, following the normal tender process<\/strong>.\"<\/p><\/aside>\nb) where there is suspicion of cartel formation \u2014 which should be recorded<\/strong>.<\/p>\n<h2>7.32.3<\/span>Who Decides, and the Recording Duty<\/span><\/h2>\n\"the decision whether to invite fresh tenders or to negotiate (and with whom) should be made by the tender accepting authority, based on the recommendations of the TC.<\/strong><\/p>\n Convincing reasons must be recorded by the authority recommending negotiations.<\/strong><\/p>\n The ca should exercise due diligence while accepting a tender, ordering negotiations, or calling for a re-tender \u2014 and a definite timeframe should be indicated<\/strong>.\"<\/p>\n<h2>7.32.4<\/span>What Counts as a Negotiation \u2014 and What Does Not<\/span><\/h2>\n<aside class=\"note\">\"normally, all counter-offers are considered negotiations by other means, and the principles of negotiations should apply to such counter-offers<\/strong>.\"<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>Situation<\/th><th>Is it a negotiation?<\/th><\/tr><\/thead><tbody><tr><td>a counter-offer TO L1<\/strong> To arrive at an acceptable rate<\/td><td>YES \u2014 shall amount to a negotiation<\/strong><\/td><\/tr><tr><td>A COUNTER-OFFER (at the rates accepted by L1) to L2, L3, and so on, in case of splitting of quantities<\/strong> (and in parallel Rate Contracts)<\/td><td>NO \u2014 shall not be deemed to be a negotiation<\/strong><\/td><\/tr><tr><td>dynamic bids in the reverse Auction<\/strong> Process<\/td><td>NO \u2014 are not to be considered as negotiations<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>7.32.5<\/span>The Four-Step Negotiation Procedure<\/span><\/h2>\nafter the ca has decided to call a specific bidder for negotiation:<\/p>\nA) extend validity first: \"it must be understood that if the period of validity of the original offer expires before the close of negotiations, the original offer will not be available for acceptance. The period of validity of the original offer must, therefore, be extended \u2014 wherever necessary \u2014 before negotiations<\/strong>.\"<\/p>\nb) the invitation letter: The bidder should be addressed as per the prescribed format, so that the rates originally quoted by him shall remain open for acceptance in the event of failure of the contemplated negotiation<\/strong>.<\/p>\n<aside class=\"note\">(Invitation and Declaration for Negotiations \u2014 G<\/span> Annexure 15 \u00b7 W<\/span> Annexure 6 \u00b7 NC<\/span> Annexure 14. Absent from the Consultancy Manual<\/strong> \u2014 see para 7.33.)<\/em><\/p><\/aside>\nc) the signed declaration: \"a negotiation meeting should be started only after obtaining a signed declaration from the negotiating supplier<\/strong>.\"<\/p>\nd) the revised bid \u2014 and the \"price only\" rule:<\/p>\n<aside class=\"note\">\"revised bids should be obtained in writing from the selected bidders at the end of the negotiations in the prescribed format.<\/strong><\/p>\n The bidder should not be permitted to change any other condition of his bid other than lowering the price.<\/strong><\/p>\nThe revised bids so obtained should be read out to the bidders or their representatives present immediately after completing the negotiations. If necessary, the negotiating party May be given some time to submit its revised offer.<\/strong><\/p>\nIn case the selected bidder prefers to send a revised bid instead of being present at the negotiation, the offer should be considered.<\/strong><\/p>\n In case a bidder does not submit the revised bid, decision shall be taken based on its original bid<\/strong>.\"<\/p>\n(Format of Revised Offer in Negotiations \u2014 G<\/span> Annexure 16 \u00b7 W<\/span> Annexure 7 \u00b7 NC<\/span> Annexure 15.)<\/em><\/p><\/aside>\n<h1>7.33 Negotiations to Freeze Description of Service [C ONLY]<\/span><\/h1>\n<aside class=\"note\">This section replaces price negotiation in the Consultancy Manual. It is the reason the Consultancy Manual carries NO \"Invitation and Declaration for Negotiations\" or \"Format of Revised Offer\" annexure \u2014 negotiation in consultancy is about SCOPE, not RATE.<\/p><\/aside>\n1. Why it is called \"negotiation\" at all:<\/p>\n<aside class=\"note\">\"in the consultancy services contract, the accepted ToR and methodology etc. Are laid down in the form of 'description of service'.<\/strong><\/p>\nTherefore, before the contract is finally awarded, discussions May be necessary with the selected bidder to freeze these aspects \u2014 especially when it is discouraged during evaluation of technical proposals to seek clarifications on these matters.<\/strong><\/p>\n However, such technical discussions do not amount to negotiations in the sense the word is used in procurement of goods and works.<\/strong><\/p>\n However, in procurement of consultancy, this discussion is termed as negotiations \u2014 since these discussions May have some financial ramifications, at least for the bidder<\/strong>.\"<\/p><\/aside>\n2. What May be discussed \u2014 and the anti-dilution rule:<\/p>\n\"negotiations are not an essential part of the selection process. In many cases, however, it is felt necessary to conduct negotiations with the selected consultant for discussions of:<\/strong><\/p>\n<aside class=\"note\">The ToR \u00b7 methodology \u00b7 staffing \u00b7 Procuring Entity's inputs \u00b7 and special conditions of the contract<\/strong><\/p>\n\"these discussions shall not substantially alter (or dilute) the original ToR or terms of the offer \u2014 lest the quality of the final product, its cost, and the initial evaluation be vitiated.<\/strong><\/p>\nThe final ToR and the agreed methodology shall be incorporated in \"description of services\" \u2014 which shall form part of the contract<\/strong>.\"<\/p><\/aside>\n3. FINANCIAL NEGOTIATIONS \u2014 the three strict limits:<\/p>\n<aside class=\"note\">\"financial negotiations shall only be carried out if:<\/strong><\/p>\n\u2022 due to negotiations, there is any change in the scope of work which has a financial bearing on the final prices; Or<\/strong><\/p>\n\u2022 if the costs\/ cost elements quoted are not found to be reasonable.<\/strong><\/p>\nIn such negotiations, the selected firm May also be asked to justify and demonstrate that the prices proposed in the contract are not out of line with the rates being charged by the consultant for other similar assignments.<\/strong><\/p>\n However, in no case should such financial negotiation result in an increase in the financial cost as originally quoted by the consultant, and on which basis the consultant has been called for the negotiations.<\/strong><\/p>\n If the negotiations with the selected consultant fail \u2014 the Procuring Entity shall cancel the bidding procedure and re-invite the bids<\/strong>.\"<\/p><\/aside>\n<h1>7.34 Cancellation of Procurement Process \/ Rejection of All Bids \/ Re-tender<\/span><\/h1>\n(Rule 173(xix) of GFR 2017)<\/em><\/p>\n1. The right and its limits:<\/p>\nThe Procuring Entity has the right to cancel the process of procurement or reject all bids at any time before intimating acceptance of a successful bid<\/strong>.<\/p>\n<aside class=\"note\">\"however, such rejections should be well considered, and normally be in cases where all the bids are either:<\/strong><\/p>\n\u2022 substantially in deviation from the specifications; Or<\/strong><\/p>\n\u2022 considered unreasonably high in cost \u2014 and, if in the latter case, the lowest qualified bidder during negotiations fails to reduce the costs to a reasonable level.<\/strong><\/p>\n If it is decided to re-invite the bids, the specifications should be critically reviewed\/ modified \u2014 so as to address the reasons for not receiving any acceptable bid in the earlier invitation<\/strong>.\"<\/p><\/aside>\nthe six grounds for cancellation:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Ground<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>IF THE quantity and quality of requirements have changed substantially<\/strong>, or there is an un-rectifiable infirmity in the tender process<\/strong><\/td><\/tr><tr><td>b<\/td><td>WHEN none of the bids is substantially responsive<\/strong> To the requirements of the procurement documents<\/td><\/tr><tr><td>c<\/td><td>none of the technical proposals meets the minimum technical qualifying score<\/strong><\/td><\/tr><tr><td>d<\/td><td>IF effective competition is lacking<\/strong>. <\/strong>However, lack of competition shall not be determined solely based on the number of bidders<\/strong><\/td><\/tr><tr><td>e<\/td><td>the bids'\/ proposals' prices are substantially higher than the updated cost estimate or available budget<\/strong><\/td><\/tr><tr><td>f<\/td><td>if the bidder whose bid has been found to be the lowest evaluated bid fails to sign the procurement contract, or fails to provide the Performance Security, or otherwise withdraws from the procurement process<\/strong> \u2014 the Procuring Entity shall re-tender the case<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n2. The balancing test \u2014 and the irreversibility Rule:<\/p>\n<aside class=\"note\">\"in cases where responsive bids are available, the aim should be to finalise the tender by taking mitigating measures \u2014 even in the conditions described above.<\/strong><\/p>\nIf it is decided to re-invite the tender, the justification should balance the perceived risks in the finalisation of the tender (marginally higher rates) against the certainty of resultant delays, cost escalations, and loss of transparency in the re-invited tender.<\/strong><\/p>\n it May be noted that once a tender is re-tendered, the bids in the old tender cannot be revived and reconsidered, as per the Indian Contract Act \u2014 even if prices received in the new tender turn out to be higher<\/strong>.\"<\/p><\/aside>\n3. Approval and communication: The ca should accord approval for re-tendering based on the reasons\/ proper justification in writing<\/strong>.<\/p>\nThe decision to cancel shall be immediately communicated to all bidders that participated<\/strong>; Bids, if not opened, would not be opened<\/strong> and, in off-line tenders, be returned unopened<\/strong>. EMD, cost of tender document (if any) etc. Should be promptly returned<\/strong>.<\/p>\n4. The pre-retender check: \"before re-tendering, the Procuring Entity is first to check whether \u2014 while floating\/ issuing the enquiry \u2014 all requirements and formalities such as standard conditions, industry-friendly qualification criteria, technical and commercial terms, wide publicity, sufficient time for tendering, and so on, were fulfilled. If not, a fresh enquiry is to be issued after rectifying the deficiencies<\/strong>.\"<\/p>\n<h1>7.35 Letter of Award (LoA) to the Successful Bidder<\/span><\/h1>\n1. The notification and when the contract is legally formed:<\/p>\nPrior to the expiry of the period of bid validity<\/strong>, the successful bidder will be notified \u2014 briefly indicating relevant details such as quantity, specification of the goods ordered, prices<\/em>, and so on \u2014 in writing by a registered letter or any other acknowledgeable and foolproof method<\/strong> That his bid has been accepted.<\/p>\n<aside class=\"note\">The legal point: \"legal communication of acceptance of the offer is considered complete as soon as it is submitted to postal authorities<\/strong>.\"<\/p><\/aside>\nin the same communication, the successful bidder is to be instructed to furnish the required Performance Security within a specified period (generally 14 to 28 days, depending on the amount)<\/strong>.<\/p>\n<aside class=\"note\">When the LoA itself forms the contract:<\/p>\n\"the Letter of Award (LoA) shall constitute the legal formation of the contract if it is not conditional on submission of Performance Security (as in tenders below Rs 50 lakh).<\/strong><\/p>\n In case Performance Security is stipulated, it would amount to a contract only after the furnishing of Performance Security.<\/strong><\/p>\nThe Procuring Entity, at its discretion, May directly issue the contract \u2014 subject only to the furnishing of Performance Security \u2014 skipping the issue of LoA<\/strong>.\"<\/p><\/aside>\n2. Verification of originals before the LoA:<\/p>\nBefore issuing an LoA, the Procuring Entity May \u2014 at its discretion<\/strong> \u2014 ask the bidder to submit for verification the originals of all such documents whose scanned copies were submitted online<\/strong>.<\/p>\nIf so decided, the photocopies shall be verified and signed by the competent officer and kept in the records as part of the contract agreement<\/strong>.<\/p>\n<aside class=\"note\">The consequence of failure: \"if the bidder fails to provide such originals \u2014 or in case of substantive discrepancies in such documents \u2014 it shall be construed as a violation of the Code of Integrity. Such a bid shall be liable to be rejected as unresponsive, in addition to other punitive actions. The evaluation of responsive bids shall proceed with the subsequent ranked offers<\/strong>.\"<\/p><\/aside>\n3. The value of the contract should include taxes\/ duties\/ levies<\/strong>, IF ANY.<\/p>\n4. The no-third-party Rule \u2014 a point frequently tested:<\/p>\n<aside class=\"note\">\"in some cases, the successful bidder (an OEM or an agent representing a principal firm) requests that the contract be placed on their subsidiary or an authorised dealer.<\/strong><\/p>\n This is legally not acceptable \u2014 as the contract can only be placed on the bidder in whose name the bid has been submitted, not on any third party<\/strong>.\"<\/p><\/aside>\n5. The GeM seller id requirement: \"it shall be mandatory for the successful bidder to register on GeM and obtain a unique GeM seller id \u2014 before the placement of LoA or the contract. This id shall be incorporated into the contract<\/strong>.\"<\/p>\n6. C<\/span> \u2014 the cross-checking duty at RfP stage: \"before a final award is announced, the technical and financial credentials of the selected bidders\/ consultant should be cross-checked to the extent feasible. This is especially important at RfP stage \u2014 since normally such a verification is not done at the EoI stage<\/strong>.\"<\/p>\n<h1>7.36 Publication of Award of Contract and Return of EMD<\/span><\/h1>\n(Rule 173(xviii) of GFR 2017)<\/em><\/p>\n1. Mandatory publication: The details of the award of the contract and the name of the successful bidder should be mentioned mandatorily on the CPPP\/ GeM (as relevant), and in the notice board\/ bulletin\/ website of the concerned Ministry or Department\/ e-procurement portal<\/strong>.<\/p>\n2. THE EXCEPTION \u2014 and the special CPSE six-month rule:<\/p>\n<aside class=\"note\">\"in case publication of such information is sensitive from commercial or security aspects \u2014 dispensation May be sought from publishing of such results, by obtaining sanction from the Secretary of the Department with the concurrence of associated finance.<\/strong><\/p>\n Open, transparent declaration of price, sources, and delivery Schedule of CPSE suppliers as per extant instructions adversely impacts the ability of CPSEs to compete in the highly competitive market. CPSEs are denied a level playing field.<\/strong><\/p>\nAt the time of tender formulation, commercial organisations like CPSEs will disclose whether the subject of procurement is for commercial resale.<\/strong><\/p>\n Contract award details of such cases May be shared on electronic procurement portals such as GeM, CPPP, etc., after six (06) months of finalisation of procurement.<\/strong><\/p>\nSuch a system shall protect the financial data of the CPSEs for a reasonable time, while also complying with the requirement of transparency<\/strong>.\"<\/p><\/aside>\n3. Return of bid securities: Upon the successful bidder furnishing the signed agreement and Performance Security<\/strong>, each unsuccessful bidder will be promptly notified, and their Bid Security shall be returned without interest within 30 (thirty) days of notice of award of contract<\/strong>.<\/p>\nThe successful supplier's Bid Security shall be adjusted against the SD, or returned as per the terms of the tender documents<\/strong>.<\/p>\n<h1>7.37 Performance Security at the Award Stage<\/span><\/h1>\nThe supplier receiving the LoA is required to furnish the required Performance Security (if it is part of tender conditions) in the prescribed form, within the period prescribed in the tender document (generally 14 to 28 days, depending on the amount)<\/strong>.<\/p>\nThe escalation sequence on failure:<\/p>\n<aside class=\"note\">\"in case Performance Security is not submitted within the stipulated time, the Procuring Entity May pursue the contractor up to a reasonable grace period for submission.<\/strong><\/p>\n In case the firm fails to submit the requisite Performance Security even thereafter \u2014 or fails to sign the contract \u2014 it May be treated as a withdrawal of an offer by the L1 bidder, and the tender May be re-invited \u2014 besides taking necessary punitive actions including forfeiture of EMD, deregistration and debarment against such bidders<\/strong>.\"<\/p><\/aside>\n<h1>7.38 Acknowledgement of Contract by the Successful Bidder and Execution<\/span><\/h1>\n1. After the successful bidder is notified, he will be sent an agreement in duplicate for signature and return \u2014 incorporating all agreements between the parties<\/strong>.<\/p>\n2. The acknowledgement timelines and exemptions:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Situation<\/th><th>Timeline<\/th><\/tr><\/thead><tbody><tr><td>OTE<\/td><td>acknowledge and unconditionally accept, sign, date and return the agreement within 14 (fourteen) days<\/strong> From the date of issue of the contract<\/td><\/tr><tr><td>GTE<\/td><td>within 28 (twenty-eight) days<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nwhen acknowledgement is not required:<\/p>\n<ul class=\"lst\"><li>IN low-value contracts below rupees two and a half lakh<\/strong>;<\/li><li>When the bidder's offer has been accepted in its entirety without any modifications<\/strong>;<\/li><li>\"if both parties simultaneously sign the contract across the table \u2014 further acknowledgement from the supplier is not required<\/strong>.\"<\/li><\/ul>\nif the supplier raises issues: \"while acknowledging the contract, the supplier May raise issues and\/ or ask for modifications against some entries; Such aspects shall be immediately investigated for necessary action \u2014 and thereafter, the supplier's unconditional acceptance of the contract must be obtained<\/strong>.\"<\/p>\nit should also be made known that if he does not furnish the required Performance Security or does not sign the contract within the stipulated target dates \u2014 such non-compliance will constitute sufficient ground for punitive actions<\/strong>.<\/p>\n\"the Procuring Entity May also consider getting the contract digitally signed<\/strong>.\"<\/p>\n3. Who May sign: \"all contracts shall be signed and entered into after receipt and verification of the requisite Performance Security \u2014 by an authority empowered to do so by or under the orders of the president<\/strong> [Article 299 of the Constitution].\"<\/p>\n<h1>7.39 Framing of Contract<\/span><\/h1>\nthe contract should be strictly as per the bid conditions and the accepted offer<\/strong>.<\/p>\n<aside class=\"note\">See the Risks table at para 7.41 \u2014 risk row 6 addresses the danger that *\"although there is a standard contract form in the tender documents, the contract may be drafted in a fashion that favours or discourages the successful bidder.\"*<\/p><\/aside>\n<h1>7.40 Audit Trails \u2014 Procurement Records<\/span><\/h1>\n1. The obligation: The Procuring Entity must maintain and retain audit trails, records and documents generated or received during its procurement proceedings \u2014 in chronological order<\/strong>. The files should be stored in an identified place and retrievable for scrutiny whenever needed, without wasting time<\/strong>.<\/p>\n2. The e-procurement dispensation:<\/p>\n<aside class=\"note\">\"however, many organisations now process procurements on their own or e-procurement portals. In such cases, taking printouts and making a physical file just for records May be counter-productive \u2014 provided the portals have provisions for audit trails<\/strong>.\"<\/p><\/aside>\nThe nine categories of documents to be maintained (electronically or physically): a) documents pertaining to the determination of the need<\/strong> for procurement; B) description of the subject matter<\/strong> Of the procurement; C) statement of the justification for the choice of a mode of procurement other than open competitive tendering<\/strong>; D) documents relating to pre-qualification and registration of bidders<\/strong>, if applicable; e) PARTICULARS OF issue, receipt, opening of the bids and the participating bidders at each stage<\/strong>; f) requests for clarifications and any reply thereto \u2014 including the clarifications given during pre-bid conferences<\/strong>; g) bids evaluated and documents relating to their evaluation<\/strong>; h) contracts and contract amendments<\/strong>; i) complaint handling; Correspondence with clients, consultants, and banks<\/strong>.<\/p>\n3. The physical-file structure \u2014 and the two-volume practice:<\/p>\nIn organisations where physical files are still maintained, the procurement file should start with the indent<\/strong> And related documents, followed by:<\/p>\n<aside class=\"note\">Procurement planning \u00b7 copy of tender document and documents relating to its formulation, publishing and issue\/ uploading \u00b7 bid opening \u00b7 bids received \u00b7 correspondence and documents (including technical evaluation and TC report) \u00b7 and finally, the contract copy<\/p><\/aside>\nin case of bulky bids received, all bids May be kept in a separate volume \u2014 with a copy of accepted bids later being put on the main volume<\/strong>.<\/p>\n<aside class=\"note\">The two-volume safeguard: \"to maintain the integrity of the records relating to procurement, these files should be kept secure \u2014 and for contract management, a new volume of files May be opened, to obviate frequent exposure of sensitive procurement files.<\/strong><\/p>\nIn the contract management volume, copies of successful bids, Tender Committee reports, and contract May also be kept for ready reference \u2014 besides correspondence and documents relating to contract management and its closure<\/strong>.\"<\/p><\/aside>\n<h1>7.41 Evaluation of Bids and Award of Contract \u2014 Risks and Mitigations<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>evaluation of bids is subjective, or leaves room for manipulation and biased assessments<\/em>. Some TC members May not be independent or neutral, or May have a conflict of interest (coi)<\/em>.<\/td><td>TC should give an undertaking at the appropriate time that none of the members has any coi<\/strong> With the companies\/ agencies participating. Any member having a coi should refrain from participating in the TC<\/strong>. \"some members of a TC May be subordinate to, or related to, others in a strictly hierarchical organisation \u2014 so that they are not free to express independent views. Such a situation must be avoided when constituting the TC<\/strong>.\"<\/td><\/tr><tr><td>2<\/td><td>discriminating against a best value bid<\/em>: \"in case a bidder's bid (not in the good books of the Procuring Entity) becomes the best value bid as per the evaluation criteria, some of the following actions May have risks of misuse. There is also a reverse risk in these actions if a favourite becomes the best value bid<\/strong>.\"<\/td><td>(Mitigation for each type is at rows 3\u20136 below.)<\/em><\/td><\/tr><tr><td>3<\/td><td>unwarranted re-tendering: Rejecting all bids and calling for re-tendering on the pretext of prices being high, change of specifications, budget not being available<\/em>, and so on.<\/td><td>Refer to para 7.34 for safeguards. <\/strong>\"in case a procurement is re-bid more than once, approval of one level above the ca May be taken<\/strong>.\" Also see the complaint mechanism.<\/td><\/tr><tr><td>4<\/td><td>sudden quantity reduction\/ increase or splitting of quantity\/ work at the time of award<\/em>. \"many organisations have provisions for change\/ splitting in the bid quantity at the time of award. Some organisations vary quantity even without such provisions<\/strong>.\"<\/td><td>bid conditions must specify a limit beyond which the originally announced quantity\/ scope cannot be reduced\/ increased<\/strong>. <\/strong>If parallel contracts are envisaged, clear criteria for the splitting May be specified in the tender documents beforehand<\/strong>.<\/td><\/tr><tr><td>5<\/td><td>unwarranted negotiations: Negotiations are called without justification. Sometimes, a counter-offer is made to discourage the lowest acceptable bidder<\/em>.<\/td><td>Normally, there should be no post-tender negotiations<\/strong>. In certain exceptional situations \u2014 procurement of proprietary items \u00b7 items with limited sources of supply \u00b7 items where there is suspicion of a cartel formation<\/em> \u2014 negotiations May be held with L-1<\/strong>. In case of L-1 backing out, there should be re-tendering<\/strong>.<\/td><\/tr><tr><td>6<\/td><td>unwarranted delays in finalising or varying the terms of the contract agreement: \"even after the TC recommendations are accepted, the signing of the contract is delayed on one pretext or the other. Although there is a standard contract form in the tender documents, the contract May be drafted in a fashion that favours or discourages the successful bidder<\/strong>.\"<\/td><td>A target timeline for the finalisation of procurement should be laid down<\/strong>. <\/strong>Delays and reasons thereof should be brought out before the ca on the file at the time of tc's acceptance or contract signing<\/strong>. \"the contract should be strictly as per the bid conditions and accepted offer<\/strong>.\"<\/td><\/tr><tr><td>7<\/td><td>anti-competitive practices: \"bidders which would otherwise be expected to compete, secretly conspire to frustrate the buyer's attempts to get VfM in a tender process. Anti-competitive conspiracies can take many forms. Sometimes, the officers involved in procurement May be part of such collusion<\/strong>.\" (The five named forms are set out below the table.)<\/em><\/td><td>\"these strategies, in turn, May result in patterns that procurement officials can detect \u2014 and steps can be taken to thwart such attempts.<\/strong>\" <\/strong>\"such anti-competitive activities come under the purview of competition law, which provides stringent penalties.<\/strong>\" \"regular training should be held for officers involved in procurement \u2014 to detect and mitigate such practices, and also to use the competition law against such bidders<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h2 class=\"src-G\">The Five Named Forms of Anti-Competitive Conduct<\/span>G<\/span><\/h2><div class=\"srcblock src-G\">\n<div class=\"tblwrap\"><table><thead><tr><th>Form<\/th><th>Definition<\/th><\/tr><\/thead><tbody><tr><td>1. Bid coordination<\/td><td>\"the bidders collude to quote the same or similar rates that are much higher than the reasonable price \u2014 to force the buyer to settle the procurement at exorbitant prices<\/strong>.\"<\/td><\/tr><tr><td>2. Cover bidding<\/td><td>\"cover bidding is designed to give the appearance of genuine competition, by way of supporting bids for the leading bid-rigger<\/strong>.\"<\/td><\/tr><tr><td>3. Bid suppression<\/td><td>\"bid suppression means that a company does not submit a bid for final consideration, in support of the leading bid-rigger<\/strong>.\"<\/td><\/tr><tr><td>4. Bid rotation<\/td><td>\"in bid-rotation schemes, conspiring firms continue to bid \u2014 but they agree to take turns being the winning (i.e., lowest qualifying) bidder in a group of tenders of a similar nature<\/strong>.\"<\/td><\/tr><tr><td>5. Market allocation<\/td><td>\"competitors carve up the market and agree not to give competitive bids for certain customers, or in certain geographic areas<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>Appendix to Chapter 7 \u2014 Part B: Points of Difference<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>QCBS weightage \u2014 inverted<\/td><td>C: Technical 70% \/ Cost 30% \u00b7 W & NC: Technical \u226430% \/ Cost \u226570%<\/td><\/tr><tr><td>2<\/td><td>The identical sentence \"since the weightage of the COST element \u2026 is as high as 70 per cent\" appears in both C and NC<\/td><td>An evident internal inconsistency in the CS Manual<\/em>, which has just assigned 70% to TECHNICAL<\/td><\/tr><tr><td>3<\/td><td>QCBS worked example \u2014 the winner<\/td><td>C: Proposal C at Rs. 106, the HIGHEST-priced<\/em> bid \u00b7 W: Bid C at Rs. 105, the second-lowest<\/em> bid \u00b7 NC: same data as C but H-1\/H-2\/H-3 order changes<\/td><\/tr><tr><td>4<\/td><td>QCBS tie-breaker<\/td><td>Common: the bid with the higher TECHNICAL score becomes H-1<\/em><\/td><\/tr><tr><td>5<\/td><td>evaluation of the quality \u2014 technical proposals<\/strong>(four criteria; absolute-not-comparative grading; 5-grade A\u2013E rating scale at 100\/80\/60\/30\/10%; first reading without scoring; grading defined before opening; individual scoring; joint review and averaging; 75 minimum qualifying mark; debriefing duty)<\/em><\/td><td>C ONLY<\/td><\/tr><tr><td>6<\/td><td>The model marks scheme (5\u201310% \/ 20\u201350% \/ 30\u201360% \/ 0\u201310%)<\/td><td>C ONLY<\/td><\/tr><tr><td>7<\/td><td>Methodology sub-criteria (30\/50\/20) and Key Professionals sub-criteria (20\/80)<\/td><td>C ONLY<\/td><\/tr><tr><td>8<\/td><td>Fixed budget selection (FBS) \u2014 the two methods<\/td><td>C ONLY<\/td><\/tr><tr><td>9<\/td><td>negotiations to freeze description of service<\/strong>(and the consequent absence of negotiation annexures in CS)<\/em><\/td><td>C ONLY<\/td><\/tr><tr><td>10<\/td><td>\"In no case should financial negotiation result in an INCREASE in the financial cost as originally quoted\"<\/td><td>C ONLY<\/td><\/tr><tr><td>11<\/td><td>Arithmetic correction permitted in TIME-BASED contracts but not in LUMP-SUM contracts<\/td><td>C ONLY<\/td><\/tr><tr><td>12<\/td><td>\"A technical proposal pre-disclosing any material pricing information shall also be rejected\"<\/td><td>C ONLY<\/td><\/tr><tr><td>13<\/td><td>MII purchase preference not applicable where evaluation uses QCBS or FBS<\/td><td>NC<\/strong>(stated expressly)<\/em><\/td><\/tr><tr><td>14<\/td><td>\"Members of the STC shall not be involved\" in the QCBS evaluation committee<\/td><td>nc only<\/td><\/tr><tr><td>15<\/td><td>evaluation in rate contracts<\/strong>(counter-offer procedure for parallel RCs; Catalogue basis on NDP\/MRP; one-year default period)<\/em><\/td><td>G ONLY<\/td><\/tr><tr><td>16<\/td><td>variation of quantities at award \u2014 15% default<\/td><td>G ONLY<\/td><\/tr><tr><td>17<\/td><td>OPTION CLAUSE \u2014 25%, above Rs 50 lakh, none in development orders, excluded from CA determination<\/td><td>G ONLY<\/td><\/tr><tr><td>18<\/td><td>Splitting\/ parallel contracts \u2014 70:30 and 50:30:20 ratios; the minimum-quote anti-cartel safeguard; five allocation guidelines<\/td><td>G ONLY<\/td><\/tr><tr><td>19<\/td><td>Tie at l-1 \u2014 the four-step tie-breaker (SC\/ST or Women MSE \u2192 other MSE \u2192 higher turnover \u2192 earlier DPIIT registration; GeM methodology on GeM)<\/td><td>G ONLY<\/td><\/tr><tr><td>20<\/td><td>Evaluation of multiple schedules\/ items\/ destinations \u2014 the three cases<\/td><td>G ONLY<\/td><\/tr><tr><td>21<\/td><td>\"Net of GST\" for CPSEs availing Input Tax Credit<\/td><td>G ONLY<\/td><\/tr><tr><td>22<\/td><td>GTE loading sequence \u2014 1% port handling, customs\/CVD\/surcharges, clearing agency, inland freight, GST, LC charges; CIF comparison where no domestic bidders<\/td><td>G ONLY<\/td><\/tr><tr><td>23<\/td><td>Evaluation of bids involving samples\/ demos; pre-production sample; cancellation without repercussion<\/td><td>G ONLY<\/td><\/tr><tr><td>24<\/td><td>The six \"critical provisions\" deemed material if deviated from<\/td><td>G<\/strong>(fullest statement)<\/em><\/td><\/tr><tr><td>25<\/td><td>\"The CA may ask the TC to explain the report but should not request that evaluation be changed\"<\/td><td>G<\/td><\/tr><tr><td>26<\/td><td>Financial bid opening to be 2\u20135 days after announcement of techno-commercial results<\/td><td>G<\/td><\/tr><tr><td>27<\/td><td>Abnormally Low Bids \u2014 \"resource mobilisation\" included in the price-analysis heads<\/td><td>W<\/strong>(G omits it)<\/em><\/td><\/tr><tr><td>28<\/td><td>ALB \u2014 \"due care while preparing the drawings, formulating specifications\"<\/td><td>W<\/strong>(G says only \"formulating the specifications\")<\/em><\/td><\/tr><tr><td>29<\/td><td>Cartel sign \u2014 \"quoted quantities much less than tendered quantity\" and \"same IP address raises suspicion but is not by itself a strong indicator\"<\/td><td>G ONLY<\/td><\/tr><tr><td>30<\/td><td>Cartel sign \u2014 \"prices suspiciously similar despite significant differences in the proposed approach\"<\/td><td>W ONLY<\/td><\/tr><tr><td>31<\/td><td>Minimum quote percentage to defeat cartels<\/td><td>G: say 25% \u00b7 W: say 20% or 30%, where schedules or division of work is possible<\/td><\/tr><tr><td>32<\/td><td>Cartel remedies \u2014 detailed cost analysis by experts; encouraging new firms to enlist; switching to post-qualification; packaging\/ slicing<\/td><td>W ONLY<\/td><\/tr><tr><td>33<\/td><td>Reporting cartels to FICCI, ASSOCHAM, NSIC by name<\/td><td>G ONLY<\/td><\/tr><tr><td>34<\/td><td>Reasonableness \u2014 the seven LPP cautions, incl. \"these prices are not valid LPP for comparison in future procurement\"<\/td><td>G ONLY<\/td><\/tr><tr><td>35<\/td><td>The five named forms of anti-competitive conduct (Bid Coordination, Cover Bidding, Bid Suppression, Bid Rotation, Market Allocation)<\/td><td>G ONLY<\/td><\/tr><tr><td>36<\/td><td>\"Once a Tender is re-tendered, the bids in the old tender cannot be revived, as per the Indian Contract Act\"<\/td><td>G<\/td><\/tr><tr><td>37<\/td><td>\"In case a procurement is re-bid more than once, approval of one level above the ca may be taken\"<\/td><td>G<\/td><\/tr><tr><td>38<\/td><td>LoA constitutes legal formation of contract if not conditional on performance security; acceptance complete on submission to postal authorities<\/td><td>G<\/td><\/tr><tr><td>39<\/td><td>Contract cannot be placed on a subsidiary or authorised dealer \u2014 only on the bidder in whose name the bid was submitted<\/td><td>G<\/td><\/tr><tr><td>40<\/td><td>Mandatory GeM Seller ID before LoA<\/td><td>G<\/td><\/tr><tr><td>41<\/td><td>CPSE commercial-resale disclosure and the six-month deferred publication of award details<\/td><td>G ONLY<\/td><\/tr><tr><td>42<\/td><td>Acknowledgement within 14 days (OTE)\/ 28 days (GTE); exemption below Rs 2.5 lakh<\/td><td>G<\/td><\/tr><tr><td>43<\/td><td>Audit Trails \u2014 the nine document categories and the two-volume file practice<\/td><td>G<\/strong>(also in W and NC)<\/em><\/td><\/tr><tr><td>44<\/td><td>Cross-checking credentials before final award \"especially important at RfP stage since verification is not done at EoI stage\"<\/td><td>C ONLY<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 7 (parts a and b)<\/p>\n<aside class=\"note\">Next:<\/strong>Chapter 8<\/strong> \u2014 but note the divergence: Goods Ch. 8<\/strong> is Procurements with Unique Features<\/em>; Consultancy Ch. 9<\/strong> is Special Types of Engagements<\/em>; Non-Consultancy Ch. 8<\/strong> is Special Types of Non-Consultancy Procurements<\/em>; and the Works Manual has NO such chapter at all<\/strong> \u2014 its Chapter 7 is Execution and Monitoring of Works and Quality Assurance<\/em>, which corresponds to the contract-management chapters of the other three.<\/p><\/aside><\/div><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch8\">Chapter 8<\/p><h1>Special and Unique Types of Procurement<\/h1><\/header>\nMerging: Goods Ch. 8<\/strong> (Procurements with Unique Features) \u00b7 Consultancy Ch. 9<\/strong> (Special Types of Engagements) \u00b7 Non-Consultancy Ch. 8<\/strong> (Special Types of Non-Consultancy Procurements)<\/em><\/p><h2>Structural Warning \u2014 the Works Manual Has No Such Chapter<\/span><\/h2>\nthree of the four Manuals carry a \"special types\" Chapter. The works Manual does not.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Chapter<\/th><th>Title<\/th><th>Sections<\/th><\/tr><\/thead><tbody><tr><td>G<\/span> Goods<\/td><td>Chapter 8<\/td><td>Procurements with Unique Features<\/em><\/td><td>7<\/td><\/tr><tr><td>W<\/span> Works<\/td><td> \u2014 NONE \u2014 <\/td><td>(its Chapter 7 is Execution and Monitoring of Works and Quality Assurance<\/strong> \u2014 which corresponds to the CONTRACT MANAGEMENT chapters of the other three)<\/em><\/td><td> \u2014 <\/td><\/tr><tr><td>C<\/span> Consultancy<\/td><td>Chapter 9<\/td><td>Special Types of Engagements<\/em><\/td><td>10<\/td><\/tr><tr><td>NC<\/span> Non-Consultancy<\/td><td>Chapter 8<\/td><td>Special Types of Non-Consultancy Procurements<\/em><\/td><td>12<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">why works has none:<\/strong> The Works Manual handles its variations \u2014 EPC, PPP, piece Work, stalled contracts<\/strong> \u2014 inside its Bidding Design chapter (Ch. 3)<\/strong>, covered at Chapter 4 Parts A and B of this Unified Manual. It has no separate \"special engagements\" chapter.<\/p><\/aside>\n<h2>The Three Chapters Barely Overlap<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>GOODS G<\/span><\/th><th>CONSULTANCY C<\/span><\/th><th>NON-CONSULTANCY NC<\/span><\/th><\/tr><\/thead><tbody><tr><td>Organising principle<\/td><td>transaction-structure variants<\/strong>(how the deal is shaped)<\/em><\/td><td>categories of provider<\/strong>(who is engaged)<\/em><\/td><td>categories of provider + named services (who, and for what)<\/em><\/td><\/tr><tr><td>Contents<\/td><td>Emergencies\/ Disaster \u00b7 Buy Back \u00b7 Capital Goods \u00b7 AMC \u00b7 NPV \u00b7 Turnkey \u00b7 Books & Print Media<\/td><td>SSS \u00b7 Individual Consultants \u00b7 Specialised Agencies \u00b7 NGOs \u00b7 Procurement Consultants \u00b7 Financial Advisors \u00b7 Auditors \u00b7 Logo Design Competitions \u00b7 Integrated IT Projects \u00b7 Digital India<\/td><td>EoI Shortlisting \u00b7 SSS \u00b7 Individual Service Providers \u00b7 Specialised Agencies \u00b7 NGOs \u00b7 Procurement Agents \u00b7 Inspection Agents \u00b7 Housekeeping \u00b7 Manpower Outsourcing \u00b7 Private Security \u00b7 Vehicle Hiring \u00b7 HaaS<\/td><\/tr><\/tbody><\/table><\/div>\nthe goods Chapter has ZERO<\/em> Overlap with the other two. Consultancy and non-consultancy share only four topics: SSS \u00b7 Individual providers \u00b7 Specialised Agencies\/ Institutions \u00b7 NGOs.<\/p>\n<h2>Concordance for Chapter 8<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>G<\/th><th>C<\/th><th>NC<\/th><\/tr><\/thead><tbody><tr><td>Part i \u2014 goods-only<\/td><td><\/td><td><\/td><td><\/td><td><\/td><\/tr><tr><td>8.1<\/td><td>Handling Procurement in Emergencies and Disaster Management<\/td><td>8.1<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>8.2<\/td><td>Buy Back Offer<\/td><td>8.2<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>8.3<\/td><td>Capital Goods\/ Equipment (M&P, IT Systems)<\/td><td>8.3<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>8.4<\/td><td>Annual Maintenance Contract (AMC)<\/td><td>8.4<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>8.5<\/td><td>Net Present Value (NPV)<\/td><td>8.5<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>8.6<\/td><td>Turnkey Contract<\/td><td>8.6<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>8.7<\/td><td>Procurement of Books and Print Media<\/td><td>8.7<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>part II \u2014 common to c and nc<\/td><td><\/td><td><\/td><td><\/td><td><\/td><\/tr><tr><td>8.8<\/td><td>EoI for Shortlisting of Service Providers<\/td><td> \u2014 <\/td><td>(Ch. 7)<\/em><\/td><td>8.1<\/td><\/tr><tr><td>8.9<\/td><td>Single Source Selection (SSS)<\/td><td> \u2014 <\/td><td>9.1<\/td><td>8.2<\/td><\/tr><tr><td>8.10<\/td><td>Selection of Individual Consultants\/ Service Providers<\/td><td> \u2014 <\/td><td>9.2<\/td><td>8.3<\/td><\/tr><tr><td>8.11<\/td><td>Selection of Specialised Agencies\/ Institutions<\/td><td> \u2014 <\/td><td>9.3<\/td><td>8.4<\/td><\/tr><tr><td>8.12<\/td><td>Selection of Non-governmental Organisations (NGO)<\/td><td> \u2014 <\/td><td>9.4<\/td><td>8.5<\/td><\/tr><tr><td>8.13<\/td><td>Procurement Consultants\/ Agents<\/td><td> \u2014 <\/td><td>9.5<\/td><td>8.6<\/td><\/tr><tr><td>part III \u2014 consultancy-only<\/td><td><\/td><td><\/td><td><\/td><td><\/td><\/tr><tr><td>8.14<\/td><td>Financial Advisors<\/td><td> \u2014 <\/td><td>9.6<\/td><td> \u2014 <\/td><\/tr><tr><td>8.15<\/td><td>Auditors<\/td><td> \u2014 <\/td><td>9.7<\/td><td> \u2014 <\/td><\/tr><tr><td>8.16<\/td><td>Public Competition for Design of Symbols\/ Logos<\/td><td> \u2014 <\/td><td>9.8<\/td><td> \u2014 <\/td><\/tr><tr><td>8.17<\/td><td>Procurement of Integrated IT Projects<\/td><td> \u2014 <\/td><td>9.9<\/td><td>(8.12.1)<\/em><\/td><\/tr><tr><td>8.18<\/td><td>Hiring Consultants for Digital India Projects<\/td><td> \u2014 <\/td><td>9.10<\/td><td> \u2014 <\/td><\/tr><tr><td>part IV \u2014 non-consultancy-only<\/td><td><\/td><td><\/td><td><\/td><td><\/td><\/tr><tr><td>8.19<\/td><td>Inspection Agents<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.7<\/td><\/tr><tr><td>8.20<\/td><td>Housekeeping Services<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.8<\/td><\/tr><tr><td>8.21<\/td><td>Manpower Outsourcing Services<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.9<\/td><\/tr><tr><td>8.22<\/td><td>Private Security Manpower Services<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.10<\/td><\/tr><tr><td>8.23<\/td><td>Vehicle Hiring for Office Use<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.11<\/td><\/tr><tr><td>8.24<\/td><td>IT Hardware as a Service (HaaS)<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.12<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>Part I \u2014 Procurements with Unique Features [GOODS ONLY]<\/span><\/h1>\n<h1>8.1 Handling Procurement in Emergencies and Disaster Management<\/span><\/h1>\n<h2>8.1.1<\/span>Procurements in Emergencies\/ Urgencies<\/span><\/h2>\n\"there are sufficient fast-track procurement modes and flexibilities in the procurement guidelines to tackle procurements in operational emergencies\/ urgencies. Enhanced delegations of procurement powers May be incorporated in SoPP to handle such situations<\/strong>.\"<\/p>\nthe four modes, in order of speed:<\/p>\nA) procurement through the GeM PORTAL<\/strong>;<\/p>\nb) direct procurement without quotation<\/strong>;<\/p>\nc) direct procurement by Purchase Committee<\/strong>;<\/p>\nd) SLTE\/ limited\/ Single Tender Enquiry \u2014 with reduced time for submission of bids<\/strong>.<\/p>\n<h2>8.1.2<\/span>Procurement in Crisis Situations \u2014 Disaster Management\/ Pandemic<\/span><\/h2>\n<aside class=\"note\">\"normal procurement modes, thresholds and bid systems are not tailored for procurement in crises like disaster management\/ pandemic. Hence, during such a situation, the following dispensations May be allowed with the approval of competent authorities<\/strong>.\"<\/p><\/aside>\n1. The declaration order: \"an order May be issued by the Competent Authority \u2014 declaring the crisis, and promulgating the start of procurement procedures under the crisis, with an estimated validity period till which these would apply<\/strong>.\"<\/p>\n2. NEED ASSESSMENT \u2014 the aggregation task: \"the most crucial task is to consolidate and aggregate the requirements from all jurisdictions. Specifications should be rationalised considering the market situation. A centralised list May be prepared containing the quantities (unit-wise) and specifications of each item. Such lists May be preserved for future use<\/strong>.\"<\/p>\n3. Prolonged or endemic crises: \"if a crisis is likely to extend over a prolonged period \u2014 or if such disasters are endemic to the region (floods\/ cyclones) \u2014 rate contracts May be entered into to cater to such situations<\/strong>.\"<\/p>\n4. \"this is not the time for complex methods\" \u2014 the eight dispensations:<\/p>\n<aside class=\"note\">\"this is not the time for complex methods, e.g., Reverse Auction, etc. The use of the following modes of procurement is suggested in order of speed.<\/strong><\/p>\n To speed up procurement, advance cash May be drawn for direct procurement modes and made available to the committees\/ officer \u2014 with accounts and vouchers to be submitted after purchase<\/strong>.\"<\/p><\/aside>\na) procurement through the GeM portal \u2014 which responds to such situations as COVID-19<\/strong>;<\/p>\nB) direct procurement without quotation;<\/p>\nC) direct procurement by Purchase Committee;<\/p>\nD) SLTE\/ limited\/ Single Tender Enquiry, with reduced time for submission of bids;<\/p>\ne) \"other than these, unlisted but fast modes of procurement \u2014 e.g., enhancement of quantity or repeat orders at the same terms in existing contracts \u2014 May be pursued. All contracts May be placed with clauses for quantity enhancements and repeat orders<\/strong>.\";<\/p>\nf) \"all procurement May be done using single-stage, single-envelope tendering systems<\/strong>.\";<\/p>\ng) \"even if pre-qualification is felt necessary, self-declaration in a single envelope May be called for \u2014 instead of a time-consuming pre-qualification bid<\/strong>.\";<\/p>\nh) \"pre-bid conferences May be replaced by informal market research<\/strong>.\"<\/p>\n5. Enhanced delegations: \"enhanced delegations of procurement powers in SoPP May be considered, with the approval of the Secretary of the Department<\/strong>.\"<\/p>\n6. \"deliveries that suit the urgent\/ emergent and disaster management situation May only be allowed<\/strong>.\"<\/p>\n7. Reasonableness of prices in a crisis: \"the reasonableness of prices in such situations May be judged by keeping in mind that prices in such situations May be higher than in normal procurement \u2014 to cater to express deliveries\/ disruptions, etc<\/strong>.\"<\/p>\n8. Model documents disapplied: \"model tender documents or general conditions of contract should not apply to emergency procurements<\/strong>.\"<\/p>\n9. Shortened timelines and alternative bid channels: \"minimum timelines for bid submission May be shortened (say 1\u20133 days). Bids by phone, email, and in-person May also be considered<\/strong>.\"<\/p>\n10. Single offer acceptable, no re-tender: \"norms of minimum bids in a tender May be relaxed \u2014 and even a single offer May be accepted without re-tendering. No tender should normally be allowed to be discharged or re-invited<\/strong>.\"<\/p>\n11. The seven norms that May be dispensed with or relaxed:<\/p>\n<aside class=\"note\">\"in emergency procurements, time-consuming norms for the following May be dispensed with or relaxed:<\/strong><\/p>\n<ol class=\"lst\"><li>Tender document costs<\/strong><\/li><li>earnest money deposit (EMD)<\/strong><\/li><li>security Deposit (SD or performance guarantee)<\/strong><\/li><li>vendor registration fee<\/strong><\/li><li>verification of eligibility\/ qualification \u2014 by putting the onus on the vendors to self-declare his eligibility, qualifications, and capability, with penalties for false declarations<\/strong>*<\/li><li>liquidated Damages (LD) or other penalties<\/strong><\/li><li>negotiations<\/strong><\/li><\/ol>\n Delegation in this regard May be enhanced and delegated to cutting-edge levels<\/strong>.\"<\/p><\/aside>\n12. Minimal documentation: \"documents required for various stages \u2014 bids, qualification, eligibility, inspection, and payment \u2014 must be barely minimum<\/strong>.\"<\/p>\n13. Inspection: \"instead of physical inspections, vendors' self-declaration of quality May be accepted<\/strong>.\"<\/p>\n14. THE GeM exception in a crisis \u2014 a rare permitted departure:<\/p>\n<aside class=\"note\">\"putting GeM at the centre of all such emergency procurement would help in transparency and price monitoring.<\/strong><\/p>\n However, in urgent\/ emergent and disaster management situations, in case of procurement below Rs. 50,000 \u2014 if deliveries are not suitable on GeM, procurement May be done locally as per sub-para 4 above \u2014 even if the items are available on GeM, as an exception to the Rule.<\/strong><\/p>\n Prior or post facto sanction May be taken from the Secretary of the Department<\/strong>.\"<\/p><\/aside>\n15. Ensuring transparency, integrity, and accountability:<\/p>\nA) as far as feasible, procurement May be done on the GeM portal<\/strong>.<\/p>\nB) the separate record-keeping team: \"all procuring agencies should constitute a separate team (without hampering people involved in procurement) to keep a record of justification and quantum of emergency procurements \u2014 for future accountability<\/strong>.\"<\/p>\nc) after the crisis is over \u2014 the four closing actions:<\/p>\n<aside class=\"note\">i) \"the Competent Authority May issue an order signalling the end of the crisis and the emergency procurement procedures<\/strong>.\";<\/p>\nii) \"special time-bound internal and external audits of all emergency procurements should be done with a large sampling size when normalcy returns. If need be, public or private agencies May be hired to assist with this large volume of audits<\/strong>.\";<\/p>\niii) \"any undelivered contract, if any, May be reviewed for cancellation<\/strong>.\";<\/p>\niv) \"unutilised stocks, if any, May be reviewed for gainful use<\/strong>.\"<\/p><\/aside>\n16. Getting ready for future disasters: \"such emergency procurement systems and lists May be formalised for future disasters \u2014 e.g., the enhanced delegations May be integrated into the normal SoPP as delegations in defined crisis<\/strong>.\"<\/p>\n<h1>8.2 Buy Back Offer<\/span>G<\/span><\/h1>\n(Rule 176 of GFR 2017)<\/em><\/p>\nwhen it is decided to replace an existing old item(s) with a new\/ better version<\/strong>, the Department May trade the existing old item while purchasing the new one<\/strong>, by issuing suitable tender documents for this purpose.<\/p>\nWhat the tender document must incorporate:<\/p>\n<aside class=\"note\">THE condition of the old item \u00b7 its location \u00b7 and the mode of its handing over to the successful bidder<\/strong>.<\/p>\nThe two-price requirement \u2014 the key mechanism:<\/p>\n\"further, the bidder should be asked to quote the prices for the item (to be offered by them):<\/strong><\/p>\n\u2022 with a rebate for the old item; And also<\/strong><\/p>\n\u2022 without any rebate (in case they do not want to lift the old item).<\/strong><\/p>\n This will provide an option for the Department to either trade or not trade the old item while purchasing the new one<\/strong>.\"<\/p><\/aside>\n<h1>8.3 Capital Goods\/ Equipment (Machinery and Plant \u2014 M&P, IT Systems, etc.)<\/span>G<\/span><\/h1>\n<h2>8.3.1<\/span>What Counts as Capital Goods<\/span><\/h2>\n\"capital goods are machinery and plants (m&p) which create new fixed assets\/ utility\/ functionality or benefits for the organisation, and have a long and useful life.<\/strong><\/p>\n This also refers to it procurements of IT systems \u2014 comprising one or more of: Hardware \u00b7 networking \u00b7 tailor-made and customised software \u00b7 installation\/ commissioning \u00b7 training \u00b7 AMC\/ CMC \u00b7 cloud services \u00b7 and other services<\/strong>.\"<\/p>\n<h2>8.3.2<\/span>The Seven Distinctive Features<\/span><\/h2>\n1. Investment decision and item-specific budget:<\/p>\n<aside class=\"note\">\"since the cost is generally high, there are detailed procedures for approval of technical, administrative, and budgetary provisions \u2014 before an indent is generated.<\/strong><\/p>\n Unlike consumable items (which are procured if a non-specific budgetary provision is there), capital goods are procured after an item-specific budgetary provision is included in the budget.<\/strong><\/p>\n Thus, the acquisition of capital goods is also an investment decision, and May require some form of investment justification. Some of the higher-value capital goods May be accounted for in the capital block of the organisation. However, these features May not apply to capital goods of smaller values<\/strong>.\"<\/p><\/aside>\n2. The alternatives to outright purchase \u2014 with the staff-car illustration:<\/p>\n<aside class=\"note\">\"there are also alternatives to outright purchasing\/ owning such equipment \u2014 like hiring\/ hire-purchase\/ leasing, or acquiring the functionality as a service.<\/strong><\/p>\nFor example, instead of buying a staff car, a monthly service\/ hiring contract can be entered into to provide vehicles as per requirements. The car can also be wet leased (including maintenance), and a service contract for drivers\/ cleaners can be entered into separately.<\/strong><\/p>\n This can be especially advantageous in equipment that undergo obsolescence quickly \u2014 e.g., IT equipment<\/strong>.\"<\/p><\/aside>\n3. The embedded works and services:<\/p>\nThe procurement involves elements of works and services like:<\/p>\n<aside class=\"note\">Installation \u00b7 commissioning \u00b7 training \u00b7 prolonged trials \u00b7 warranty \u00b7 after-sales services like post-warranty maintenance and assured availability of spares<\/strong><\/p><\/aside>\n\"all such elements have costs that May be quoted explicitly or implicitly.<\/strong><\/p>\nA suitable warranty clause should indicate the period of warranty and service levels, as well as penalties for delays in the restoration of defects.<\/strong><\/p>\n Clauses for including essential initial spares for two years' maintenance, to be supplied along with equipment, May be provided.<\/strong><\/p>\n If necessary, an appropriate number of years \u2014 say three to five or more years, depending on the lifespan of the equipment \u2014 AMC May be included in the procurement, detailing its conditions<\/strong>.\"<\/p>\n4. Total Cost of Ownership:<\/p>\n<aside class=\"note\">\"the cost of operations, maintenance, and disposal of the equipment over its life cycle May far outweigh the initial procurement cost.<\/strong><\/p>\nHence, Total Cost of Ownership (TCO) becomes an important consideration \u2014 which can be addressed in Public Procurement by way of:<\/strong><\/p>\n\u2022 appropriate description, specification, and contract conditions \u2014 like the inclusion of the cost of supply of initial essential spares; And<\/strong><\/p>\n\u2022 Net Present Value (NPV) of annual maintenance contracts (AMC) for a specified number of years \u2014 within the estimated cost and also the evaluation criteria of the procurement contract<\/strong>.\"<\/p><\/aside>\n5. When a turnkey contract is better: \"in case the plant and equipment (or an IT system) consists of several machines\/ components\/ systems that work in tandem \u2014 or if it includes services\/ works to be done by a third party \u2014 an all-encompassing turnkey contract May be a better alternative<\/strong>.\"<\/p>\n6. The evaluation complexity and its three remedies:<\/p>\n<aside class=\"note\">\"because of the complexity of specification evaluation, the technical suitability of offers in the procurement of capital goods involves complex issues about acceptance of alternatives, deviations, and compliance with various particulars of specification.<\/strong><\/p>\n Remedy 1: Acceptance or otherwise of alternatives should be made explicit.<\/strong><\/p>\n Remedy 2: A statement of deviation \u2014 including the detailed justification for the deviations from each clause of specification \u2014 should be requested from the bidder in the tender documents.<\/strong><\/p>\n Remedy 3: A Schedule of guaranteed particulars of specification, indicating the values of each parameter, May be included in the specification \u2014 where the bidder can quote the offered value of the parameters.<\/strong><\/p>\nIn complex cases, a pre-bid conference May help in reducing disputes and complexity at the time of evaluation<\/strong>.\"<\/p><\/aside>\n7. Fit for pre-qualification bidding: \"experience, capacity, and financial strength of a supplier are important determinants of quality and after-sales support for capital goods; Such procurements are a fit for pre-qualification bidding<\/strong>.\"<\/p>\n<h1>8.4 Annual Maintenance Contract (AMC)<\/span>G<\/span><\/h1>\n(Rule 169 of GFR 2017)<\/em><\/p>\n1. When an AMC starts: \"some goods \u2014 especially sophisticated equipment and machinery \u2014 need proper maintenance for trouble-free service. For this purpose, the purchase organisation May enter into a maintenance contract.<\/strong><\/p>\n<aside class=\"note\"> it must, however, be kept in mind that the maintenance contract is to start after the expiry of the warranty period \u2014 during which period the goods are to be maintained free of cost by the supplier<\/strong>.\"<\/p><\/aside>\n2. With whom: \"the maintenance contract May be entered into either with the OEM manufacturer\/ supplier of the goods, or with a competent and eligible firm \u2014 not necessarily the manufacturer\/ supplier of the goods in question. The purchase organisation should decide this aspect on a case-to-case basis on merit<\/strong>.\"<\/p>\n3. AMC as part of the equipment procurement \u2014 the NPV evaluation rule:<\/p>\n<aside class=\"note\">\"if the maintenance contract is to be made a part of the procurement of equipment, then suitable clauses are to be incorporated in the tender enquiry document itself.<\/strong><\/p>\nWhile evaluating the offers, the cost component towards the maintenance of the goods for the specified number of years is also to be added to the evaluated tender value on an overall basis \u2014 to decide the inter se ranking of the responsive bidders.<\/strong><\/p>\n Equipment with a lower quoted price May carry a higher maintenance liability. Therefore, the total cost (all-inclusive, based on total outgo from the pocket) on purchase and maintenance of the equipment over the period of the maintenance contract should be assessed to consider its suitability for purchase.<\/strong><\/p>\n While evaluating the bidders for maintenance of goods covering a longer period (say, three to five or more years, depending on the life span of the equipment) \u2014 the quoted prices pertaining to maintenance in future years are to be discounted to the Net Present Value (NPV) as appropriate, for comparing the tenders on an equitable basis and deciding the lowest evaluated responsive tender<\/strong>.\"<\/p><\/aside>\n4. AMC procured separately \u2014 and the OEM-authorisation rule:<\/p>\n\"if the maintenance contract is to be entered into with a competent and eligible supplier separately, then a separate tender enquiry is to be floated\u2026 here, the OEM supplier of the goods May also quote \u2014 and his quotation, if received, is to be considered along with other quotations received.<\/strong><\/p>\n<aside class=\"note\"> In some situations, OEM manufacturers\/ suppliers of goods authorise certain service providers to provide AMC support. In such cases, the service provider must produce such authorisation\/ letter from the OEM \u2014 confirming technical and spares support to the service provider<\/strong>.\"<\/p><\/aside>\n5. Payment periodicity: \"the terms of payment for the maintenance service will depend on the nature of the goods to be maintained as well as the nature of the services desired. Generally, payment for maintenance is made on a half-yearly or quarterly basis<\/strong>.\"<\/p>\n6. The Service Level Agreement (SLA) \u2014 what it must contain:<\/p>\nA SLA May be incorporated in complex and large maintenance contracts<\/strong>. SLA should indicate guaranteed levels of service parameters<\/strong> LIKE:<\/p>\n<aside class=\"note\">Percentage uptime to be ensured<\/strong> \u00b7 performance output levels to be ensured from the equipment<\/strong> \u00b7 a channel for registering service requests<\/strong> \u00b7 response time for resolving the request<\/strong> \u00b7 channel for escalation of a service request in case of delay or unsatisfactory resolution<\/strong> \u00b7 monitoring of service levels<\/strong><\/p><\/aside>\nthis would also include:<\/p>\n<aside class=\"note\">Provision of helplines \u00b7 complaint registration and escalation procedures \u00b7 response time \u00b7 percentage of uptime and availability of equipment \u00b7 non-degradation in performance levels after maintenance \u00b7 maintenance of an inventory of common spares \u00b7 use of genuine spares<\/strong><\/p><\/aside>\nthe maintenance contract May also include penalties (Liquidated Damages) for unacceptable delays in responses and degradation in the performance output of machines \u2014 including provisions for terminations<\/strong>.<\/p>\n7. What is included in the maintenance charge \u2014 the four ambiguities to resolve:<\/p>\n<aside class=\"note\">\"it should be indicated in the tender documents whether the maintenance charges would be inclusive of:<\/strong><\/p>\n1. Visiting charges<\/strong><\/p>\n2. Price of spares<\/strong> \u2014 (\"Many times, consumables such as rubber gasket, bulbs, and so on, are not included \u2014 even though major parts May be included\")<\/em><\/p>\n3. Price of consumables (fuel, lubricants, cartridges, and so on)<\/strong><\/p>\n If the costs of spares are to be borne by the Procuring Entity, then a guaranteed price list should be asked for along with the bids.<\/strong><\/p>\n4. It should also be clarified whether room\/ space, electricity, water connection, and so on would be provided free of cost to the contractor<\/strong>.\"<\/p><\/aside>\n8. The most-favoured-customer clause: \"a suitable provision should be incorporated in the tender enquiry document and the resultant maintenance contract, indicating that the prices charged by the maintenance contractor should not exceed the prevailing rates charged by him from others for similar services. While claiming payment, the contractor is also to give a certificate to this effect in his bill<\/strong>.\"<\/p>\n9. Performance security: If the goods to be maintained are sophisticated and costly<\/strong>, the tender enquiry document should also have a provision for obtaining Performance Security<\/strong>. The amount will depend on the nature of the goods, the period of maintenance<\/strong>, and so on.<\/p>\n10. Goods taken away for repair \u2014 the Rs 1 lakh BG rule:<\/p>\n<aside class=\"note\">\"sometimes, the maintenance contractor May have to take the goods or some components of the goods to his factory for repair, and so on.<\/strong><\/p>\n On such occasions, before handing over the goods or components valuing more than rupees one lakh \u2014 a suitable Bank Guarantee is to be obtained from the firm to safeguard the purchaser's interest<\/strong>.\"<\/p><\/aside>\n11. Withdrawal of the maintenance contract \u2014 and the model clause:<\/p>\n\"sometimes, during the tenure of a maintenance contract \u2014 especially with a longer tenure \u2014 it May become necessary for the purchase organisation to withdraw the maintenance contract due to some unforeseen reasons.<\/strong><\/p>\n<aside class=\"note\"> Depending on the cost and nature of the goods to be maintained, a suitable notice period (say one to three months) for such cancellation to come into effect is to be provided in the documents<\/strong>.\"<\/p>\nthe model clause:<\/p>\n\"The purchaser reserves its right to terminate the maintenance contract at any time after giving due notice, without assigning any reason. The contractor will not be entitled to claim any compensation against such termination. However, while terminating the contract, if any payment is due to the contractor for maintenance services already performed in terms of the contract, these would be paid to it\/ him as per the contract terms.\"<\/strong><\/p><\/aside>\n<h1>8.5 Net Present Value (NPV)<\/span>G<\/span><\/h1>\n<h2>8.5.1<\/span>The Concept and the Formula<\/span><\/h2>\n\"net Present Value (NPV) \u2014 or net present worth (npw) \u2014 of equipment procurement is the sum of the present values of the net cash flows for all the years of the equipment's economic life.<\/strong><\/p>\nThe net cash flows are discounted to arrive at the NPV of equipment, by applying a predetermined discount rate<\/strong>.\"<\/p>\n<aside class=\"note\">NPV = CF\u2080 + CF\u2081\/(1+r)\u00b9 + CF\u2082\/(1+r)\u00b2 + CF\u2083\/(1+r)\u00b3 + \u2026 + CF\u2099\/(1+r)\u207f<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>Symbol<\/th><th>Meaning<\/th><\/tr><\/thead><tbody><tr><td>r<\/td><td>THE discount rate (in fraction)<\/strong><\/td><\/tr><tr><td>CF\u2080<\/td><td>THE quoted price<\/strong><\/td><\/tr><tr><td>CF\u2081, CF\u2082, CF\u2083 \u2026 CF\u2099<\/td><td>THE Costs in the 1st, 2nd, 3rd \u2026 nth YEARS<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">the suggested discount rate: \"one possible rate to be used is the interest rate of the general provident fund (GPF)<\/strong>.\"<\/p><\/aside>\n<h2>8.5.2<\/span>Two Practical Rules<\/span><\/h2>\n1. Terminal disposal value: \"the terminal disposal value of the equipment is also to be taken as negative expenditure \u2014 but since these are most likely to be the same for all bidders, and there is uncertainty in estimating this \u2014 it is usually not included in calculating NPV in procurement decisions<\/strong>.\"<\/p>\n2. Calculation: \"the above formula for NPV need not be manually calculated; It can be calculated using the NPV function in excel<\/strong>.\"<\/p>\n<h2>8.5.3<\/span>THE SOLVED EXAMPLE \u2014 where the HIGHEST-priced offer becomes L1<\/span><\/h2>\n<aside class=\"note\">\"the discounting rate is taken as 7%. There are three offers against a tender for vehicles at different quoted costs:<\/strong><\/p>\n\u2022 offer 1 (lowest quoted price) incurs the highest operating cost;<\/strong><\/p>\n\u2022 offer 2 (higher quoted price) incurs a somewhat lesser operating cost;<\/strong><\/p>\n\u2022 offer 3 (highest quoted price) incurs the least operating cost.<\/strong><\/p>\nThe free warranty is for 2 years, and the firms have quoted 5 years' AMC after that. In this evaluation, NPV expenditures up to the AMC duration (2-YEAR warranty and 5 years' AMC) were made<\/strong>.\"<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>Row<\/th><th>Expenses<\/th><th>Offer 1<\/th><th>Offer 2<\/th><th>Offer 3<\/th><\/tr><\/thead><tbody><tr><td>2<\/td><td>Initial investment, including costs of initial spares, installation\/ commissioning, Training, etc.<\/td><td>\u20b9 4,00,000<\/td><td>\u20b9 5,00,000<\/td><td>\u20b9 6,00,000<\/td><\/tr><tr><td>3<\/td><td>Annual expenditure on operation (fuel, consumables)<\/td><td>\u20b9 1,50,000<\/td><td>\u20b9 1,00,000<\/td><td>\u20b9 50,000<\/td><\/tr><tr><td>4<\/td><td>Free Warranty \u2014 1st Year<\/td><td>\u20b9 0<\/td><td>\u20b9 0<\/td><td>\u20b9 0<\/td><\/tr><tr><td>5<\/td><td>Free Warranty \u2014 2nd Year<\/td><td>\u20b9 0<\/td><td>\u20b9 0<\/td><td>\u20b9 0<\/td><\/tr><tr><td>6<\/td><td>AMC in 3rd Year<\/td><td>\u20b9 40,000<\/td><td>\u20b9 50,000<\/td><td>\u20b9 60,000<\/td><\/tr><tr><td>7<\/td><td>AMC in 4th Year<\/td><td>\u20b9 40,000<\/td><td>\u20b9 50,000<\/td><td>\u20b9 60,000<\/td><\/tr><tr><td>8<\/td><td>AMC in 5th Year<\/td><td>\u20b9 40,000<\/td><td>\u20b9 50,000<\/td><td>\u20b9 60,000<\/td><\/tr><tr><td>9<\/td><td>AMC in 6th Year<\/td><td>\u20b9 40,000<\/td><td>\u20b9 50,000<\/td><td>\u20b9 60,000<\/td><\/tr><tr><td>10<\/td><td>AMC in 7th Year<\/td><td>\u20b9 40,000<\/td><td>\u20b9 50,000<\/td><td>\u20b9 60,000<\/td><\/tr><tr><td>11<\/td><td>NPV<\/td><td>\u20b9 13,51,644.26<\/td><td>\u20b9 12,17,992.50<\/td><td>\u20b9 10,84,340.74<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">THE RESULT \u2014 the whole point of the exercise:<\/p>\n\"it May be seen that offer 3, with the highest quoted price, has the lowest NPV \u2014 due to low operating costs, despite a higher AMC fee. This offer May, therefore, be considered an L1 offer<\/strong>.\"<\/p><\/aside>\nThe excel formula (for column B; mutatis mutandis<\/em> for C and D):<\/p>\n<aside class=\"note\"><code>NPV = NPV(0.07, (B3+B4), (B3+B5), (B3+B6), (B3+B7), (B3+B8), (B3+B9), (B3+B10)) + B2<\/code><\/p><\/aside>\n<h1>8.6 Turnkey Contract<\/span>G<\/span><\/h1>\n\"in the context of the procurement of goods, a turnkey contract May include:<\/strong><\/p>\n<aside class=\"note\">The manufacture, supply, assembly, installation\/ commissioning of equipment \u2014 *(or a group of plant and machines working in tandem \u2014 even though some of the machines May not be manufactured by the supplier himself)* \u2014 <\/strong>and some incidental works or services*.\"<\/strong><\/p><\/aside>\nwhat the Procuring Entity specifies:<\/p>\n<aside class=\"note\">\"generally, in the tender enquiry documents for a turnkey contract, the purchase organisation specifies the performance and output required from the plant proposed to be set up, and broadly outlines the various parameters it visualises for the desired plant.<\/strong><\/p>\n The inputs and other facilities that the purchase organisation will provide to the contractor are also indicated in the tender document.<\/strong><\/p>\n The contractor will design the plant and provide a quote accordingly<\/strong>.\"<\/p><\/aside>\nthe contractor's four responsibilities:<\/p>\n<ol class=\"lst\"><li>Supplying the required goods, machinery, equipment, etc., needed for the plant<\/strong>;<\/li><li>Assembling, installing, and erecting the same at the site as needed<\/strong>;<\/li><li>Commissioning the plant to meet the required output<\/strong>, etc., as specified in the tender enquiry documents.<\/li><\/ol>\n<h1>8.7 Procurement of Books and Print Media<\/span>G<\/span><\/h1>\n1. The categories and the selection factors:<\/p>\n\"the procurement of print media encompasses various categories such as books, journals, magazines, and newspapers \u2014 each serving distinct purposes like knowledge dissemination and education.<\/strong><\/p>\n<aside class=\"note\"> While books are often acquired for libraries or educational curricula \u2014 newspapers, magazines, etc., have a wider applicability<\/strong>.\"<\/p><\/aside>\nthe six factors for deciding procurement:<\/p>\n<aside class=\"note\">Author \u00b7 publisher \u00b7 subject matter \u00b7 content quality \u00b7 edition \u00b7 market availability<\/strong><\/p><\/aside>\n2. The method \u2014 net discount over published price:<\/p>\n<aside class=\"note\">\"once the category and specifications are determined, quotations May be solicited from vendors in the form of *net discount over the (published) price<\/strong>.*<\/p>\n The vendor offering the most competitive discount \u2014 referred to as L1 \u2014 is typically chosen<\/strong>.\"<\/p><\/aside>\n3. The one-year onboarding and Rate Contract:<\/p>\n<aside class=\"note\">\"additionally, the onboarding of the vendor should be for at least 1 year \u2014 to ensure stability and continuity in the procurement process.<\/strong><\/p>\n Rate contracts can be utilised for these procurements \u2014 providing a framework for consistent pricing and terms over the specified duration.<\/strong><\/p>\nThis process ensures that the Procuring Entity obtains the desired print media at the best possible price \u2014 balancing considerations of quality, content, and vendor stability<\/strong>.\"<\/p><\/aside>\n<h1>Part II \u2014 Common to Consultancy and NON-CONSULTANCY<\/span><\/h1>\n<h1>8.8 Expression of Interest (EoI) for Shortlisting of Service Providers<\/span>NC<\/span><\/h1>\n<aside class=\"note\">In the Consultancy Manual this occupies an entire chapter (Ch. 7 \u2014 reproduced at Chapter 7 Part A, para 7.1 of this Unified Manual). In the Non-Consultancy Manual it is compressed into para 8.1 \u2014 and it is framed as an EXCEPTION, not the norm.<\/p><\/aside>\n<h2>8.8.1<\/span>Why NC Normally Does NOT Use EoI \u2014 and When It Does<\/span><\/h2>\n<aside class=\"note\">\" Unlike procurement of consultancy services, procurement of non-consultancy services is done by a simpler process \u2014 akin to those of procurement of goods and works *(rule 206 of GFR 2017)*. It is normally done in single-stage two-envelope tendering containing technical and financial bids.<\/strong><\/p>\n In highly technical and complex services, where quality is important \u2014 *(say in studies like seismic surveys, airborne data acquisition, etc.)* \u2014 there is a danger of low-quality bids getting selected for award of contract by quoting unsustainably low price.<\/strong><\/p>\nIn such situations, to ensure that competition is not vitiated by low-quality bids \u2014 competition May be restricted only among equally qualified bidders.<\/strong><\/p>\nTherefore, instead of publicly inviting all interested bidders to present their bids \u2014 the EoI shortlisting process (similar to procurement of consultancy services) involves obtaining a limited number of proposals from pre-qualified firms that, in the Procuring Entity's view of experience, are capable and can be trusted to deliver the required services at the desired level of quality<\/strong>.\"<\/p><\/aside>\n<h2>8.8.2<\/span>The Two-Phase Process<\/span><\/h2>\n\"these considerations can be best addressed through competition exclusively between qualified shortlisted firms or individuals \u2014 in which selection is based on the quality of the proposal and, where appropriate, on the cost of services to be provided.<\/strong><\/p>\nSuch procurement needs to be done in a two-phase process:<\/strong><\/p>\n<aside class=\"note\">\u2022 first phase (the EoI stage) \u2014 the qualified firms are shortlisted transparently;<\/strong><\/p>\n\u2022 second phase \u2014 bids (technical and financial) are solicited from such shortlisted bidders to select the winning bidder.<\/strong><\/p><\/aside>\n Care should be taken to avoid formation of unreasonable qualification criteria prior to shortlisting of bidders, that May lead to restricted participation<\/strong>.\"<\/p>\n<h2>8.8.3<\/span>The Modes \u2014 Rule 183(ii) of GFR 2017<\/span><\/h2>\nfor procurement above Rs. 50 (rupees fifty) lakh<\/strong>, shortlisting is done in an openly advertised competitive shortlisting process called Expression of Interest (EoI)<\/strong>.<\/p>\nTHE \"Request for Expression of Interest\" (REoI) is advertised on CPPP and on GeM<\/strong>. An organisation having its own website should also publish all its advertised tender enquiries on the website.<\/p>\n\"a complete services and activities Schedule should be ready before requesting EoI. Attention of known reputed service providers May also be separately drawn wherever possible<\/strong>.\"<\/p>\n GTE route:<\/strong>\"in case it is felt that likely service providers May not be available in India \u2014 the EoI process May be done on Global Tender Enquiry (GTE) process, by sending REoI notice to foreign embassies in India and Indian embassies in relevant countries<\/strong>.\"<\/strong>(Subject to the Rs. 200 crore GTE restriction<\/strong> \u2014 Chapter 4 Part B, para 4.9.2.)<\/em><\/p>\n<h1>8.9 Single Source Selection (SSS)<\/span>C<\/span>NC<\/span><\/h1>\n<h2>8.9.1<\/span>The Three Objections to SSS<\/span><\/h2>\n<aside class=\"note\">\"selection of consultants through direct negotiations:<\/strong><\/p>\n1. Does not provide the benefits of competition in regard to quality and cost;<\/strong><\/p>\n2. Lacks transparency in selection; And<\/strong><\/p>\n3. Could encourage unacceptable practices.<\/strong><\/p>\n The reasons for SSS and the selection of a particular consultant must be recorded and approved by the ca as per the delegation of powers laid down in DFPR\/ SoPP \u2014 prior to single tendering.<\/strong><\/p>\n Powers of procurement of SSS must be severely restricted.<\/strong><\/p>\nTherefore, single-source selection shall be used only in exceptional circumstances, where it is inescapable over competitive selections<\/strong>.\"<\/p><\/aside>\n<h2>8.9.2<\/span>Continuity for Downstream Work \u2014 the pre-declaration rule<\/span><\/h2>\n<aside class=\"note\">\"when, in a project, continuity for downstream work is essential \u2014 the initial RfP shall outline this prospect; And, if practical, the factors used for the selection of the consultant should take the likelihood of continuation into account.<\/strong><\/p>\n Continuity in the technical approach, experience acquired, and continued professional liability of the same consultant May make continuation with the initial consultant preferable to a new competition \u2014 subject to satisfactory performance in the initial assignment.<\/strong><\/p>\nFor such downstream assignments, the Procuring Entity shall ask the initially selected consultant to prepare technical and financial proposals on the basis of ToR furnished by the Procuring Entity \u2014 which shall then be negotiated<\/strong>.\"<\/p><\/aside>\n<h2>8.9.3<\/span>the Two Cases Where SSS is NOT<\/em> Permitted for Downstream Work<\/span><\/h2>\n<aside class=\"note\">\" IF:<\/strong><\/p>\n\u2022 the initial assignment was not awarded on a competitive basis; Or<\/strong><\/p>\n\u2022 the downstream assignment is substantially larger in value;<\/strong><\/p>\n \u2014 a competitive process shall normally be followed, in which the consultant carrying out the initial work is not excluded from consideration if it expresses interest<\/strong>.\"<\/p><\/aside>\n<h2>8.9.4<\/span>The Justification, the Qualification Check and the Monthly Report<\/span><\/h2>\n4. For selecting a consultant under this method, the Procuring Entity should prepare a full justification and take the approval of the Competent Authority as per the SoPP<\/strong>.<\/p>\n5. The shortlisting-criteria test: \"while selecting the consultant under this method, the Procuring Entity shall ensure that the consultant has the requisite qualification and experience to undertake the assignment. Normally the Procuring Entity shall adopt the same short-listing criteria as applied to similar assignments while evaluating the EoI<\/strong>.\"<\/p>\n6. The monthly reporting duty:<\/p>\n<aside class=\"note\">\"it's the cfa's (competent financial authority's) responsibility to ensure that a statement of all selections by nominations, every month, are to be reported to Secretary\/ head of Ministry\/ Department<\/strong>.\"<\/p>\nNote the difference from the QUARTERLY nomination reporting requirement at Chapter 4 Part B, para 4.17.2-3 \u2014 that one goes to the Secretary\/ Board\/ Chief Executive every quarter, with the audit committee checking at least 10% of cases. This SSS provision requires a MONTHLY statement.<\/p><\/aside>\n<h1>8.10 Selection of Individual Consultants \/ Individual Service Providers<\/span>C<\/span>NC<\/span><\/h1>\n<h2>8.10.1<\/span>The Three Conditions for Employing an Individual<\/span><\/h2>\n\"individual consultants are normally employed on assignments for which:<\/strong><\/p>\na) teams of personnel are not required<\/strong>;<\/p>\nb) no additional outside professional support is required<\/strong>; and<\/p>\nc) the experience and qualifications of the individual are the paramount requirement<\/strong>.\"<\/p>\n<h2>8.10.2<\/span>The Selection Process \u2014 Five Steps<\/span><\/h2>\n\"the procedures for selecting individual consultants are similar to, but much simpler than, those for selecting teams of consultants from a firm<\/strong>.\"<\/p>\na) the package: Preparing a consultancy services package including:<\/p>\n<aside class=\"note\">The ToR \u00b7 time frame \u00b7 number of person-months \u00b7 budget \u00b7 EoI short-listing criteria<\/strong> \u2014 AND getting it approved by the ca<\/strong>.<\/p><\/aside>\nB) advertising: Advertisement should be given on CPPP<\/strong> AND ON GeM<\/strong>. An organisation having its own website should also publish all its advertised tender enquiries on the website.<\/p>\nc) method of selection \u2014 comparison of at least three candidates:<\/p>\n<aside class=\"note\">\"they shall be selected through comparison of qualifications of at least three candidates \u2014 among those who have expressed interest in the assignment, or have been approached directly by the Procuring Entity.<\/strong><\/p>\n Capability is judged on the basis of:<\/strong><\/p>\n\u2022 academic background;<\/strong><\/p>\n\u2022 experience; And<\/strong><\/p>\n\u2022 as appropriate, knowledge of the local conditions \u2014 such as local language, culture, administrative system, and Government organisation.<\/strong><\/p>\nSelection will be carried out by the CEC, which will award marks for educational qualifications and experience, and select the most suitable candidate.<\/strong><\/p>\n The CEC May also interview candidates and award marks for their performance in the interview \u2014 and recommend the remuneration to be paid<\/strong>.\"<\/p><\/aside>\nd) DIRECT NEGOTIATION \u2014 the three exceptional cases:<\/p>\n<aside class=\"note\">\"individual consultants May be selected on a direct negotiation basis, with due justification, in exceptional cases such as:<\/strong><\/p>\nA) tasks that are a continuation of previous work that the consultant has carried out, and for which the consultant was selected competitively;<\/strong><\/p>\nB) emergency situations resulting from natural disasters; And<\/strong><\/p>\nc) when the individual is the only consultant qualified for the assignment.<\/strong><\/p>\nIndividual consultants May be (among others): Independent consultants \u00b7 consultants recruited from firms \u00b7 or consultants recruited from academic, Government, or international agencies<\/strong>.\"<\/p><\/aside>\ne) staff or associates of consultancy firms \u2014 the conflict-of-interest extension:<\/p>\n<aside class=\"note\">\"if the candidate is permanent staff or associate of a consultancy firm \u2014 the conflict-of-interest provisions described in these guidelines shall apply to the parent firm<\/strong>.\"<\/p><\/aside>\n<h2>8.10.3<\/span>Retired Government Servants<\/span><\/h2>\na) the GFR bar: \"Rule 177 of GFR, 2017 says that consulting services do not include direct engagement of retired Government servants. They should not be engaged as consultants against regular vacant posts under this Rule. Such engagements should be handled as a personnel matter<\/strong>.\"<\/p>\nb) the governing instruction: \"engagement\/ hiring of retired Government servants should be regulated as per doe's OM f.no. 3-25\/2020-E.IIIA dated 9TH December 2020<\/strong>.\"<\/p>\n<aside class=\"note\">(See also Chapter 3, para 3.3.1-2 of this Unified Manual for the remuneration rules<\/strong> \u2014 full-time engagement at last pay drawn minus pension<\/strong>; part-time non-exclusive engagement on a per day\/ month or lump-sum basis.)<\/em><\/p><\/aside>\n<h1>8.11 Selection of Specialised Agencies \/ Institutions<\/span>C<\/span>NC<\/span><\/h1>\n1. Who they are: \"from time to time, ministries\/ departments May need to recruit a specialised agency or institution to undertake a specific consultancy\/ non-consultancy service, for which it is particularly well suited.<\/strong><\/p>\n<aside class=\"note\">Such agencies May be: Government\/ semi-government agencies \u00b7 universities \u00b7 or professional institutions<\/strong>.\"<\/p><\/aside>\n2. When SSS is worth considering: \"in some cases, the agency or institution has access to special expertise or special back-up and support facilities \u2014 that make it worthwhile considering recruitment on an SSS basis.<\/strong><\/p>\n<aside class=\"note\"> In such cases, there must be full justification that the use of SSS is in the best interests of the Procuring Entity<\/strong>.\"<\/p><\/aside>\n3. The government-agency Rule: \"in cases of Government and semi-government agency, SSS would be an appropriate method of recruitment<\/strong>.\"<\/p>\n4. \"individual consultants recruited from agencies and institutions May be selected in the same way as any other individual consultants<\/strong>.\"<\/p>\n<h1>8.12 Selection of Non-Governmental Organisations (NGO)<\/span>C<\/span>NC<\/span><\/h1>\n1. When an ngo-only shortlist is permitted \u2014 and the mandatory QCBS:<\/p>\n<aside class=\"note\">\"non-governmental organisations (NGOs \u2014 not-for-profit organisations) May be hired for consultancy\/ nc services \u2014 if they express interest and\/ or if the Procuring Entity finds their qualifications satisfactory.<\/strong><\/p>\n Assignments which emphasise experience in and bonding with grassroot historically disadvantaged communities \u2014 e.g., experience in community participation and in-depth local knowledge \u2014 are typically attributed to NGOs, and short lists May comprise NGOs entirely.<\/strong><\/p>\n In this case, QCBS should be followed \u2014 and the evaluation criteria of proposals should reflect the ngo-unique qualifications, such as the following<\/strong>:\"<\/p><\/aside>\nthe five ngo-unique qualification criteria:<\/p>\na) history of work with grassroots communities, and evidence of satisfactory performance<\/strong>;<\/p>\nb) familiarity with participatory development approaches and low-cost technologies<\/strong>;<\/p>\nc) experienced staff conversant with the cultural and socioeconomic dimensions of beneficiaries<\/strong>;<\/p>\nd) committed leadership and adequate management<\/strong>;<\/p>\ne) capacity to co-opt beneficiary participation<\/strong>.<\/p>\n2. When SSS May be used for an NGO \u2014 with the worked illustration:<\/p>\n<aside class=\"note\">\"procuring entities May select NGOs using SSS \u2014 provided the approvals and procedures laid down for the same are followed.<\/strong><\/p>\n for example, SSS May be adopted to hire a local NGO for a very small assignment in a remote area \u2014 where only one NGO is available, and competition is impractical<\/strong>.\"<\/p><\/aside>\n<h1>8.13 Procurement Consultants \/ Procurement Agents<\/span>C<\/span>NC<\/span><\/h1>\n<aside class=\"note\">This is the clearest illustration in the entire Manual family of how the same ENGAGEMENT may be a Consultancy or a Non-Consultancy service depending on its scope. Both Manuals carry near-identical text.<\/p><\/aside>\n<h2>8.13.1<\/span>Consultancy or Non-Consultancy \u2014 THE 30% QUALITY-WEIGHTAGE TEST<\/span><\/h2>\n\"hiring of procurement agents (pas) can either be done as a consultancy service or non-consultancy service \u2014 depending on the objectives and scope of assignment<\/strong>.\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>AS CONSULTANCY<\/th><th>AS NON-CONSULTANCY<\/th><\/tr><\/thead><tbody><tr><td>When<\/td><td>if the role primarily involves intellectual analysis, strategic planning, spend analysis, cost control, and advisory functions<\/strong><\/td><td>if their responsibilities are only outsourcing of routine procedures, without intellectual decision-making<\/strong><\/td><\/tr><tr><td>Illustration<\/td><td>\"when they are asked to design\/ implement a new system, or improve Value for Money, or develop strategic procurement, or carry out market building\/ sourcing<\/strong>\"<\/td><td>\"when they only operate the existing procedures, and crucial decisions are made by the client himself<\/strong>\"<\/td><\/tr><tr><td>the test<\/td><td>WHERE quality weightage of more than 30% is called for<\/strong><\/td><td>WHERE quality weightage can be 30% or less<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>8.13.2<\/span>Procurement of Specific Items<\/span><\/h2>\n\"when procurement consultants are specifically used for handling the procurement of specific items, and generally working from their own offices \u2014 they are paid:<\/strong><\/p>\n<aside class=\"note\">A percentage (either fixed or inversely proportional) of the value of the procurements handled \u2014 or of savings realised \u2014 or a combination of a percentage and a fixed fee<\/strong>.\"<\/p><\/aside>\nC<\/span> \u2014 the cost-weightage cap and its reason:<\/p>\n<aside class=\"note\">\"in such cases, they are selected under QCBS \u2014 with cost being given a weight of less than 50 (fifty) per cent.<\/strong><\/p>\n If the weight of the cost element adopted were as high as 50 per cent \u2014 financial considerations would dominate the selection, creating the risk of an unacceptably lower service quality.<\/strong><\/p>\n In such cases, it is essential to ensure that the quality threshold in the evaluation is set sufficiently high.<\/strong><\/p>\nThey shall be selected following the appropriate procedures for other consultancy assignments \u2014 using QCBS and time-based contracts<\/strong>.\"<\/p><\/aside>\nNC<\/span> \u2014 the shorter version: \"Procurement Agents as outsourcing of Non-consultancy services may be hired\u2026 they are paid a percentage (either fixed or inversely proportional) of the value of the procurements handled, or a combination of a percentage and a fixed fee. In such cases, they may be selected under QCBS.\"<\/em><\/p>\n<h2>8.13.3<\/span>Outsourcing of the Whole Procurement Function<\/span><\/h2>\n<ul class=\"lst\"><li>C<\/span>:<\/strong>\"when procurement agents provide services for procurement for a whole project in a specific unit of the Procuring Entity \u2014 it is usually a non-consultancy service, unless the intellectual-analysis criterion is met<\/strong>.\"<\/li><li>NC<\/span>:<\/strong>\"when pas provide support for a whole project in a specific unit of the Procuring Entity \u2014 they are usually paid based on the staff-months of effort provided, and they shall be selected following the appropriate procedures using QCBS and time-based contracts<\/strong>.\"<\/li><\/ul>\n<h1>Part III \u2014 CONSULTANCY-ONLY Engagements<\/span><\/h1>\n<h1>8.14 Financial Advisors [C ONLY]<\/span><\/h1>\n<h2>8.14.1<\/span>The Two Types of Assignment<\/span><\/h2>\n\"procuring entities May hire financial institutions to implement two main types of assignment:<\/strong><\/p>\na) in the preparation of studies and financial consultancy<\/strong>; or<\/p>\nb) as advisers on financial restructuring, mergers and acquisitions (m&a), or demerger<\/strong>, etc.\"<\/p>\n<h2>8.14.2<\/span>The Two Different Selection Regimes<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Type<\/th><th>Selection method<\/th><\/tr><\/thead><tbody><tr><td>TYPE (a) \u2014 studies and financial consultancy<\/td><td>the advisers can be selected under any of the methods<\/strong> (whichever is considered most suitable, depending on the scope of work)<\/td><\/tr><tr><td>TYPE (b) \u2014 restructuring, M&A, demerger<\/td><td>QCBS SHALL<\/strong> BE ADOPTED \u2014 whereby the RfP specifies technical evaluation criteria similar to those relevant to standard Consultancy assignments<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>8.14.3<\/span>The Two-Part Remuneration \u2014 Retainer plus Success Fee<\/span><\/h2>\nin type (b), the financial proposal would include two distinct forms of remuneration<\/strong>:<\/p>\na) <\/strong>A lump-sum retainer fee \u2014 to reimburse the consultant for services made available<\/strong>; and<\/p>\nb) <\/strong>A success fee \u2014 which is either fixed or, preferably, expressed as a percentage of the value of the privatisation transaction<\/strong>.<\/p>\nThe weighting between them:<\/p>\n<aside class=\"note\">\"depending on the type of activity and the circumstances of the Procuring Entity, the RfP specifies the relative weights assigned in the financial evaluation to the retainer and to the success fee, respectively.<\/strong><\/p>\n In some cases, the Procuring Entity offers a fixed retainer fee \u2014 and the consultant must compete only on the success fee as a percentage of the value of the privatisation transaction.<\/strong><\/p>\n for QCBS (notably for large contracts), cost May be given a weight higher than recommended for standard assignments (such as 30 (thirty) per cent) \u2014 or the selection May be based on LCS selection.<\/strong><\/p>\nThe RfP shall specify clearly how proposals will be presented and how they will be compared<\/strong>.\"<\/p><\/aside>\n<h2>8.14.4<\/span>When a Success Fee Is Appropriate<\/span><\/h2>\n<aside class=\"note\">\"success fees are most appropriate when:<\/strong><\/p>\n\u2022 it is relatively easy to measure results in meeting the Procuring Entity's objective (successful sale of assets); And<\/strong><\/p>\n\u2022 when the success is at least partly related to the efforts of the consultant involved.<\/strong><\/p>\n Therefore, success fees are more likely to be adopted at the transaction stage \u2014 because by that time the Procuring Entity's objective is to maximise revenue<\/strong>.\"<\/p><\/aside>\n<h1>8.15 Auditors [C ONLY]<\/span><\/h1>\n1. The fiduciary rationale:<\/p>\n<aside class=\"note\">\"quality audits of federal or State expenditures are an important accountability mechanism for ensuring financial integrity. Therefore, public organisations have a vital fiduciary responsibility to ensure that their audit is of the highest quality<\/strong>.\"<\/p><\/aside>\n2. What the ToR and the technical qualifications must cover:<\/p>\n\"auditors typically carry out auditing tasks under well-defined ToR and professional standards<\/strong>.\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Element<\/th><th>What it must consider\/ cover<\/th><\/tr><\/thead><tbody><tr><td>THE ToR<\/td><td>applicable statutory, Government, organisational requirements \u00b7 and applicable auditing and accounting standards<\/strong><\/td><\/tr><tr><td>scope of audit<\/td><td>the jurisdiction \u00b7 type of audit \u00b7 contract period \u00b7 and any additional services<\/strong><\/td><\/tr><tr><td>technical qualifications<\/td><td>licensing requirement \u00b7 general and similar experience \u00b7 quality certifications \u00b7 quality and adequacy of staffing \u00b7 financial capability \u00b7 auditing approach \u00b7 and scheduling of the auditor<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">the independence requirement: \"auditors' independence and lack of conflict of interest is also an important requirement<\/strong>.\"<\/p><\/aside>\n\"a presentation or interview also May be part of the RfP process. A pre-proposal conference May also be considered<\/strong>.\"<\/p>\n3. The QCBS recommendation \u2014 with its stated reason:<\/p>\n<aside class=\"note\">\" Since in recent times the quality of audit has been a matter of concern \u2014 selection of auditors May preferably be done as a consultancy service on QCBS basis, with emphasis on weightage of quality<\/strong>.\"<\/p><\/aside>\n<h1>8.16 Public Competition for Design of Symbols\/ Logos [C ONLY]<\/span><\/h1>\n(Rule 196 of GFR 2017)<\/em><\/p>\n1. The three governing principles:<\/p>\n\"certain ministries\/ departments are required to conduct competitions for the design of logos\/ symbols for their use \u2014 which should be conducted in a transparent, fair, and objective manner.<\/strong><\/p>\nThe following guidelines shall be followed by all ministries\/ departments, as well as their attached\/ subordinate offices and the autonomous bodies\/ organisations controlled by them<\/strong>:\"<\/p>\na) design competitions should be conducted in a transparent, fair, and objective manner<\/strong>;<\/p>\nb) wide publicity should be given to the competition \u2014 so as to ensure that the information is accessible to all possible participants<\/strong>. This should include publication on the website of the Ministry\/ Department\/ PSU\/ organisation concerned, as also the Central Public Procurement Portal<\/strong>. THE existing e-publishing module can be utilised<\/strong>;<\/p>\nC) the two statutes to be kept in view: \"Provisions of any applicable laws \u2014 including the official languages Act and the emblems and names (prevention of improper use) Act \u2014 should be kept in view while conducting the competition\"<\/strong>;<\/p>\n2. The eleven contents of the detailed competition notice:<\/p>\n\"a detailed competition notice should be drawn up and made public. The notice should, inter alia, [give] details on the following<\/strong>:\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Content of the Competition Notice<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>THE objectives of the design competition, and the key features expected in the proposed design<\/strong><\/td><\/tr><tr><td>ii<\/td><td>qualification criteria, if any, for participation<\/strong><\/td><\/tr><tr><td>iii<\/td><td>THE process of evaluation and evaluation criteria \u2014 whether it would be single or multi-stage<\/strong>. \"for symbols\/ logos intended to represent a drive\/ project\/ entity of national importance \u2014 it May be decided to have the selection through public voting. If so, the modalities should be clearly specified<\/strong>.\"<\/td><\/tr><tr><td>iv<\/td><td>THE manner of submission of entries, and the format\/ details etc. Expected with the design<\/strong><\/td><\/tr><tr><td>v<\/td><td>whether one participant can submit multiple designs<\/strong><\/td><\/tr><tr><td>vi<\/td><td>THE last date and time for submission<\/strong><\/td><\/tr><tr><td>vii<\/td><td>details of entry fees, if any, and the manner of submission<\/strong><\/td><\/tr><tr><td>viii<\/td><td>expected date for announcement of results, and the manner in which the results will be intimated<\/strong><\/td><\/tr><tr><td>ix<\/td><td>THE number of prizes to be awarded, and the amount payable for the successful design(s)<\/strong><\/td><\/tr><tr><td>x<\/td><td>\"it May be clearly stipulated that the intellectual property rights of the successful design(s) would rest with the sponsoring agency. The status of the unsuccessful designs \u2014 and whether it is intended to return them \u2014 should be indicated clearly<\/strong>.\"<\/td><\/tr><tr><td>xi<\/td><td>if the selection is to be done by a jury of experts nominated for the purpose \u2014 the composition of the jury May also be notified<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n3. After the competition: \"once the competition is over and the winning entry selected \u2014 this again should be notified in the public domain. If the selection has been by a jury of experts nominated for the purpose, the composition of the jury May be notified<\/strong>.\"<\/p>\n4. The customisation caveat: \"it is evident that every competition would have distinct features \u2014 and therefore, the aforesaid guidelines should be used as a general principle while preparing the detailed procedure\/ Rules for each such competition<\/strong>.\"<\/p>\n<h1>8.17 Procurement of Integrated IT Projects [C, with NC cross-reference]<\/span><\/h1>\n<h2>8.17.1<\/span>The Consultancy Characterisation and the Three Types<\/span><\/h2>\n\"procurement of integrated IT projects should normally be carried out as procurement of consultancy services \u2014 as the outcomes\/ deliverables vary from one service provider to another<\/strong>.\"<\/p>\nthe IT projects May include:<\/p>\na) bespoke software development<\/strong>;<\/p>\nb) cloud-based services<\/strong>; and<\/p>\nc) composite IT system integration services<\/strong> \u2014 involving <\/strong>design, development, deployment, commissioning of IT system including supply of hardware, development of software, bandwidth, and operation\/ maintenance of the system for a defined period after go-live, etc.<\/strong><\/p>\n<h2>8.17.2<\/span>QCBS with Quality Weightage up to 80%<\/span><\/h2>\n<aside class=\"note\">C<\/span>:<\/strong>\" Since quality is of prime importance in procurement of IT services \u2014 QCBS selection with due emphasis on quality weightage (even up to 80%, depending on quality requirements) May be used. In cloud services in particular, alternative pricing models May be allowed to be quoted<\/strong>.\"<\/p>\nNC<\/span> \u2014 para 8.12.1, cross-referring:<\/strong>\"procurement of it project\u2026 involve considerable intellectual inputs, hence these should be handled as procurement of consultancy services. Such procurements are done using QCBS selection method with 80%: 20% weightages for quality: Price<\/strong>.\"<\/p><\/aside>\n<h2>8.17.3<\/span>Caution against Restrictive and Discriminatory Qualification Conditions<\/span><\/h2>\n<aside class=\"note\">\"the Ministry of electronics & information technology (MeitY) has cautioned that qualification conditions for cloud service providers should not be restrictive\/ discriminatory \u2014 like insistence on 'gartner's magic quadrant' etc., and very high financial turnover \u2014 which impede the domestic service providers and do not add value to the users.<\/strong>(D.O. No. 10(13)\/2022-EG-II dated 25.08.2022)<\/em><\/p>\n They have also cited that DPIIT has a similar advisory that such discrimination against domestic players is a violation of the Make in India order, which provides purchase preference to local content requirement.<\/strong>(OM No. P-45021\/121\/2018-(B.E.-II) dated 20.06.2019)<\/em><\/p><\/aside>\n<h3>The Three Categories of Restrictive and Discriminatory Conditions \u2014 with Named Examples<\/span><\/h3>\na) restrictive and discriminatory eligibility criteria in tender conditions:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Example cited<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>mandatory presence in gartner magic quadrant<\/strong> \u2014 IT and Telecom Products<\/td><\/tr><tr><td>ii<\/td><td>mandatory USFDA\/ European ce<\/strong> \u2014 Medical Devices<\/td><\/tr><tr><td>iii<\/td><td>excessive turnover requirement \u2014 Rs. 1000 cr for procurement of Rs. 70 cr<\/strong><\/td><\/tr><tr><td>iv<\/td><td>excessive past experience \u2014 10 YEARS<\/strong><\/td><\/tr><tr><td>v<\/td><td>export experience to G8 countries<\/strong><\/td><\/tr><tr><td>vi<\/td><td>additional requirement of bank Guarantee for local supplier<\/strong><\/td><\/tr><tr><td>vii<\/td><td>delayed payment terms to local suppliers<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nb) restrictive and discriminatory specifications \u2014 foreign brands specified:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Brands named in the Manual<\/th><\/tr><\/thead><tbody><tr><td>Telecom products<\/td><td>cisco \u00b7 nec \u00b7 alcatel \u00b7 siemens<\/strong><\/td><\/tr><tr><td>IT products<\/td><td>hp \u00b7 dell \u00b7 lenovo<\/strong><\/td><\/tr><tr><td>LIFTS<\/td><td>otis \u00b7 mitsubishi \u00b7 schindler \u00b7 kone \u00b7 johnson<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nc) restrictive\/ discriminatory specifications or pre-approved foreign brands in works\/ turnkey projects:<\/p>\ni) local manufacturer not included in pre-approved list<\/strong>;<\/p>\nii) specification tailor-made to suit foreign products<\/strong>;<\/p>\niii) foreign technical standards indicated in the specification<\/strong>;<\/p>\niv) technical parameters to favour foreign products<\/strong> \u2014 viz.<\/em> \"(\u2013) 25-DEGREE temperature compatibility \u2014 for EPBX equipment being procured for an airport in Central India<\/strong>.\"<\/p>\n<h2>8.17.4<\/span>Bespoke Software Development<\/span><\/h2>\n\"bespoke software development involves creating customised software solutions tailored to specific organisational needs. Unlike off-the-shelf software, bespoke applications are designed from scratch \u2014 considering unique requirements, workflows, and business processes<\/strong>.\"<\/p>\na) DEFINING REQUIREMENTS \u2014 and the agile mandate: \"engage stakeholders, gather functional and non-functional requirements, and define clear objectives. Stipulate an agile development approach that allows iterative development, frequent feedback, and adaptability. Agile ensures alignment with evolving requirements and minimises risks<\/strong>.\"<\/p>\nb) technical qualifications: Evaluate bidders based on expertise, track record, and ability to deliver custom solutions<\/strong> \u2014 considering technical proficiency, domain knowledge, scalability, security, and support and project management capabilities<\/strong>.<\/p>\n<h2>8.17.5<\/span>Cloud-Based Services<\/span><\/h2>\nA) defining requirements:<\/p>\n<ul class=\"lst\"><li>I) slas and data privacy: Define slas regarding uptime, performance, and support<\/strong>. Address data privacy and compliance requirements \u2014 especially if handling sensitive information<\/strong>.<\/li><li>ii) migration strategy: \"plan the migration process carefully. Assess existing applications for cloud readiness, choose the right migration approach (lift-and-shift, re-architecting, or hybrid), and ensure minimal disruption<\/strong>.\"<\/li><\/ul>\nb) the three cloud service models:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Model<\/th><th>Meaning<\/th><\/tr><\/thead><tbody><tr><td>Software as a service (SaaS)<\/td><td>ready-to-use applications hosted by the provider<\/strong><\/td><\/tr><tr><td>platform as a service (PaaS)<\/td><td>development platforms and tools for building custom applications<\/strong><\/td><\/tr><tr><td>infrastructure as a service (IaaS)<\/td><td>virtualised computing resources (servers, storage, networking)<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nc) technical qualifications: Evaluate cloud providers based on reliability, security, compliance, data sovereignty<\/strong>. Consider well-established cloud services providers<\/strong>.<\/p>\n<h2>8.17.6<\/span>Composite IT System Integration Services<\/span><\/h2>\n\"composite IT system integration involves connecting disparate systems, applications, and data sources to create a cohesive ecosystem<\/strong>.\"<\/p>\na) defining requirement:<\/p>\n<ul class=\"lst\"><li>I) integration strategy: Define the integration scope \u2014 APIs, middleware, and data synchronisation<\/strong>. Consider whether real-time or batch processing is required<\/strong>.<\/li><li>ii) interoperability and scalability: Ensure that integrated components can communicate seamlessly<\/strong>. Scalability is crucial to accommodate future growth and changing business needs<\/strong>.<\/li><li>iii) testing and maintenance: Specify testing requirements \u2014 unit, integration, and end-to-end testing<\/strong>. Also outline ongoing maintenance and support expectations<\/strong>.<\/li><\/ul>\nB) technical qualification: Select vendors with expertise in integrating complex systems<\/strong>. Look for experience in integrating diverse technologies (ERP, CRM, legacy systems)<\/strong>.<\/p>\n<h1>8.18 Hiring Consultants for Digital India Projects [C ONLY]<\/span><\/h1>\n<h2>8.18.1<\/span>Overview and the NeGD Framework<\/span><\/h2>\n<aside class=\"note\">\"the Digital India initiative, under the Ministry of electronics and information technology (MeitY), seeks to transform India into a digitally empowered society and knowledge economy.<\/strong><\/p>\n The hiring of consultants is pivotal for implementing large-scale e-governance and technology projects that support this vision.<\/strong><\/p>\n National E-governance Division (NeGD) \u2014 an autonomous business division within Digital India corporation \u2014 has established a robust framework for hiring consultants through empanelment of qualified consulting organisations<\/strong>.* (F.No. N-22018\/33\/2022-NeGD dated 17.05.2024)<\/em><\/p><\/aside>\n<h2>8.18.2<\/span>Empanelment \u2014 the Three-plus-Two Year Validity<\/span><\/h2>\n<aside class=\"note\">\"NeGD has empanelled consulting organisations through a competitive request for empanelment (rfe) process.<\/strong><\/p>\n This empanelment is valid for three years, extendable by two years.<\/strong><\/p>\nThe empanelment framework simplifies the hiring process \u2014 ensuring quick access to skilled professionals while maintaining cost and quality control.<\/strong><\/p>\nThis ensures the availability of specialised skills, adherence to national standards, and alignment with the programme's vision. Government entities are encouraged to utilise this framework<\/strong>.\"<\/p><\/aside>\n<h2>8.18.3<\/span>The Three Pre-defined Categories<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Scope of services<\/th><\/tr><\/thead><tbody><tr><td>category a \u2014 project\/ programme management and advisory services<\/td><td>i) developing project proposals, roadmaps, and templates<\/strong>; <\/strong>ii) managing e-governance projects \u2014 including agile methodologies, bid processes, and change management<\/strong>; iii) conducting audits (security, performance, and quality) and risk assessments<\/strong><\/td><\/tr><tr><td>category b \u2014 digital ecosystem and architecture development<\/td><td>i) designing digital ecosystem blueprints in line with national standards<\/strong>; <\/strong>ii) preparing implementation plans \u2014 including business requirements, data governance strategies, and technology modernisation approaches<\/strong>; iii) supporting the adoption of scalable and agile solutions<\/strong><\/td><\/tr><tr><td>category c \u2014 technology management and emerging technologies<\/td><td>i) advising on emerging technologies such as AI, blockchain, IoT, and quantum computing<\/strong>; ii) ensuring technology compliance, and managing cybersecurity and GIS solutions<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>8.18.4<\/span>The Hiring Process \u2014 Four Steps<\/span><\/h2>\na) request for proposals or concept notes: \"ministries, departments, and other Government organisations leveraging negd's empanelment notify empanelled agencies about specific assignments. Agencies submit technical proposals or concept notes, which are evaluated on merit<\/strong>.\"<\/p>\nb) selection and deployment: \"selected agencies deploy consultants with expertise relevant to the project. Consultants are required to provide their own equipment, and work collaboratively with Government teams at designated project sites<\/strong>.\"<\/p>\nc) terms of engagement: \"empanelled consultants operate on a time-limited project basis, without implying employment obligations by NeGD. Sub-contracting of services is prohibited<\/strong>.\"<\/p>\nd) compliance and terms \u2014 the four obligations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Obligation<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>intellectual property rights: \"all intellectual property generated during the project belongs to NeGD or the client organisation<\/strong>.\"<\/td><\/tr><tr><td>ii<\/td><td>performance standards: \"consultants must adhere to timelines and quality benchmarks specified in the work order<\/strong>.\"<\/td><\/tr><tr><td>iii<\/td><td>penalties and termination: \"delays or non-performance can result in penalties up to 10% of the project value \u2014 or termination of the engagement<\/strong>.\"<\/td><\/tr><tr><td>iv<\/td><td>confidentiality: \"consultants must maintain confidentiality of all project-related data<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>Part IV \u2014 NON-CONSULTANCY-ONLY Services<\/span><\/h1>\n<h1>8.19 Inspection Agents [NC ONLY]<\/span><\/h1>\n1. Why it is a non-consultancy service:<\/p>\n<aside class=\"note\">\"hiring of inspection agents (ias) \u2014 to inspect and certify goods before shipment, or on arrival in the Procuring Entity's country \u2014 is generally a non-consultancy service, where their responsibilities are:<\/strong><\/p>\n\u2022 only operational\/ procedural;<\/strong><\/p>\n\u2022 for standardised goods\/ commodities;<\/strong><\/p>\n\u2022 without intellectual decision-making \u2014 i.e., when they only inspect within the established protocols; Repetitive work without intellectual inputs \u2014 <\/strong><\/p>\n Where quality weightage can be 30% or less<\/strong>.\"<\/p><\/aside>\n2. Selection and payment: \"inspection agents May be selected using QCBS. Payment is usually based on a percentage of the value of goods inspected and certified<\/strong>.\"<\/p>\n<h1>8.20 Housekeeping Services [NC ONLY]<\/span><\/h1>\n<aside class=\"note\">\"in the case of housekeeping\/ cleaning services, the GeM platform provides for options based on:<\/strong><\/p>\n(a) floor area-wise cleaning; And<\/strong><\/p>\n(b) MANPOWER.<\/strong><\/p>\n Usually, the floor area-wise cleaning option is more cost-effective.<\/strong><\/p>\n Accordingly, before a tender is floated, an exercise May be undertaken to determine the option which is considered beneficial for the Procuring Entity \u2014 duly recording reasons for such decision on file<\/strong>.\"<\/p><\/aside>\n<h1>8.21 Manpower Outsourcing Services [NC ONLY]<\/span><\/h1>\n(DoE, MoF's OM No. F.6\/1\/2023-PPD dated 06.01.2023)<\/em><\/p>\n<h2>8.21.1<\/span>The Regularisation Caution \u2014 and the I-Card Rule<\/span><\/h2>\n<aside class=\"note\">\" Hiring of manpower through contracts should be avoided \u2014 to ensure no future legal problems, as these employees May demand regularisation afterwards.<\/strong><\/p>\n Even if employed, there should be no direct correspondence with such people.<\/strong><\/p>\n Even i-cards should be issued indicating the person to be representative of the contractor (name of the contractor to be mentioned)<\/strong>.\"<\/p><\/aside>\n<h2>8.21.2<\/span>LCS for High-Value Cases<\/span><\/h2>\n\" Least cost system (LCS) should be considered for procurement of manpower outsourcing service, wherever appropriate \u2014 especially in high-value cases<\/strong>.\"<\/p>\n<h2>8.21.3<\/span>the Minimum and Maximum Service Charges \u2014 3.85% to 7%<\/span><\/h2>\n<aside class=\"note\">\"IN the Procurement of Manpower Outsourcing Service, the Minimum Service Charges (Minimum Floor Price, Inclusive of Transaction Charges) May Be Fixed as 3.85% (Inclusive of GST).<\/em><\/p>\nThe procuring entities can also fix the service charge above 3.85% with proper justification on file, wherever required.<\/strong><\/p>\n However, such charges should not exceed 7% (inclusive of GST) in any case<\/strong>.\" (DoE OM No. 6\/1\/2023-PPD dated 06.01.2023)<\/em><\/p><\/aside>\n<h2>8.21.4<\/span>The Two Clarifications<\/span><\/h2>\n4. No bar on awarding above the minimum:<\/strong>\"there is no bar on award of tenders to the lowest bidder, if he has quoted service charges more than the minimum prescribed service charges in the tender document (i.e., 3.85% to 7%)<\/strong>.\"<\/strong>(DoE OM No. 6\/1\/2023-PPD dated 17.01.2024)<\/em><\/p>\n5. When the floor price applies \u2014 the two limits:<\/p>\n<aside class=\"note\">\"this stipulation of minimum floor price is applicable only:<\/strong><\/p>\n\u2022 if standalone manpower is procured \u2014 not for manpower plus materials contracts; And<\/strong><\/p>\n\u2022 that too on the basis of service charges<\/strong>.\"<\/p><\/aside>\n<h1>8.22 Private Security Manpower Services [NC ONLY]<\/span><\/h1>\n<h2>8.22.1<\/span>What the Service Covers, and the PSARA Licence<\/span><\/h2>\n\"security services offer:<\/strong><\/p>\n<aside class=\"note\">Protection for life and property against theft, pilferage, fire, etc. \u00b7 safety to manpower \u00b7 guiding visitors to the premises \u00b7 regulating entry of unwanted visitors, salesmen \u00b7 and maintenance of visitors register<\/strong>.<\/p><\/aside>\n\" This is one of the most frequently outsourced non-consultancy services.<\/strong><\/p>\n The Private Security Agencies (regulation) Act, 2005 (PSARA) regulates the functioning of Private Security Agencies in India.<\/strong><\/p>\n A PSARA licence and labour licence are required for any person or entity that wants to operate a private security agency in India. The State Government (in which the agency will be operating) issues these licences<\/strong>.\"<\/p>\n<h2>8.22.2<\/span>The Ex-Servicemen (ESM) Resettlement Framework<\/span><\/h2>\n<aside class=\"note\">\"due to operational and administrative reasons, around 60,000 skilled armed forces personnel (skilled to undertake security guard-related duties) are retired (Ex-servicemen \u2014 ESM) every year \u2014 to maintain a youthful profile of the armed forces.<\/strong><\/p>\n Security agencies \u2014 with an ESM officer as proprietor and other ESM as security supervisors\/ guards \u2014 are empanelled for \"provision of security services\" by the directorate general resettlement (DGR), Department of Ex-servicemen welfare (desmw) \u2014 to facilitate resettlement of ESM.<\/strong><\/p>\n These agencies have to employ esms as security guards\/ supervisors in at least 90% of the deployed workforce. DGR monitors these agencies through reports\/ returns<\/strong>.\"<\/p><\/aside>\n<h2>8.22.3<\/span>The DGR Empanelment Certificate \u2014 Five Years or Age Sixty<\/span><\/h2>\n<aside class=\"note\">\"the 'empanelment certificate' by DGR is issued \u2014 only to eligible esms having labour licence and PSARA certification in the relevant State \u2014 for a duration of:<\/strong><\/p>\n Five years (05), *or* up to the date when the ESM proprietor turns sixty (60) years \u2014 whichever is earlier<\/strong>.\"<\/p><\/aside>\n<h2>8.22.4<\/span>The Sponsorship Requirement \u2014 and the Qualification Waiver<\/span><\/h2>\n<aside class=\"note\">\" Dgr-empanelled agencies\/ companies are only eligible through DGR sponsorship.<\/strong><\/p>\n Dgr-empanelled agencies\/ companies are not eligible for participating in the tender enquiry directly \u2014 i.e., without DGR sponsorship.<\/strong><\/p>\n Dgr-sponsored security agencies do not need to fulfil minimum experience, minimum turnover qualifications<\/strong>.\"<\/p><\/aside>\n<h2>8.22.5<\/span>The CPSE Mandate<\/span><\/h2>\n\"security manpower service for CPSEs is governed by orders from the Ministry of defence and the Department of public enterprises (DPE).<\/strong><\/p>\n<aside class=\"note\"> As per these instructions, CPSEs must avail security services only from dgr-empanelled Ex-servicemen (ESM) security service providers<\/strong>.\"<\/p>\n(MoD OM No. 28(3)\/2012-D(Res-1) dated 09.07.2012 and No. 28(75)\/2020-D(Res-1) dated 13 May 2021; DPE OM no. DPE-GM-12\/0001\/2016-GM-FTS-5410 dated 13.09.2018 and 14.02.2019.)<\/em><\/p><\/aside>\n<h2>8.22.6<\/span>The Mandatory GeM Route and the Three-Agency Sponsorship<\/span><\/h2>\n<aside class=\"note\">\" Since these services are available on GeM, procurement of these services through \"security manpower service\" (under the manpower resource outsourcing service) functionality on the GeM portal becomes mandatory.<\/strong><\/p>\nOn this functionality, the Procuring Entity can upload their requirements in the web-based format.<\/strong><\/p>\n DGR issues a sponsorship letter to at least three ESM service agencies, based on their criteria, to participate in such requirements on GeM<\/strong>.\"<\/p><\/aside>\n<h2>8.22.7<\/span>Selection \u2014 the 10% Negotiation Floor and the Seniority Tie-Breaker<\/span><\/h2>\n<aside class=\"note\">\" Selection of a service provider is based on the service charges quoted over the minimum wages.<\/strong><\/p>\n In no case May service charges be negotiated by CPSEs below the rate prescribed by DGR in its guidelines for empanelment of ESM security service agencies from time to time \u2014 which is up to 10% at present.<\/strong><\/p>\n The tie-breaker: In the eventuality of all the dgr-sponsored agencies quoting the same rates \u2014 the Procuring Entity shall award the contract to the senior-most sponsored agency.<\/strong><\/p>\n The order of seniority of sponsored agencies\/ private limited companies\/ corporations has been indicated in the sponsorship letter<\/strong>.\"<\/p><\/aside>\n<h1>8.23 Vehicle Hiring for Office Use [NC ONLY]<\/span><\/h1>\n<h2>8.23.1<\/span>Mode of Procurement and Type of Contract<\/span><\/h2>\n<aside class=\"note\">\" One of the most common outsourcings is hiring of staff cars for use of the executives.<\/strong><\/p>\n The procurement of vehicles for office use on a monthly basis shall be carried out as a Rate Contract through an Open Tender Enquiry (OTE).<\/strong><\/p>\nThis type of contract allows the Procuring Entity to hire vehicles at predetermined rates for a specified period \u2014 ensuring flexibility and cost-effectiveness<\/strong>.\"<\/p><\/aside>\n<h2>8.23.2<\/span>Contract Period<\/span><\/h2>\n<aside class=\"note\">\"the contract will initially be valid for one year \u2014 with the possibility of extension up to two times, contingent on performance and mutual agreement.<\/strong><\/p>\n Include provisions for early termination, due to unsatisfactory performance<\/strong>.\"<\/p><\/aside>\n<h2>8.23.3<\/span>Price Variation Clause (PVC)<\/span><\/h2>\n<aside class=\"note\">\"to account for fluctuations in operational costs \u2014 such as fuel prices and wages \u2014 the contract will include a Price Variation Clause (PVC) based on acceptable indices.<\/strong><\/p>\n This ensures fair compensation for the service provider and continuity of service in case of significant changes<\/strong>.\"<\/p><\/aside>\n<h2>8.23.4<\/span>Bid Design<\/span><\/h2>\n\"appropriate eligibility, qualification, and selection criteria will be defined. Requirements for vehicle quality, technical specifications, and driver standards will also be specified. Different car specifications May be outlined for varying purposes.<\/strong><\/p>\nA Service Level Agreement (SLA) will be included \u2014 which May cover:<\/strong><\/p>\n<aside class=\"note\">Uptime requirements \u00b7 monitoring and reporting \u00b7 complaint response, resolution and escalation \u00b7 penalties for non-compliance \u00b7 and KPIs<\/strong>.\"<\/p><\/aside>\n<h2>8.23.5<\/span>Basis of Payment \u2014 the Daily-Rate Formula<\/span><\/h2>\n<aside class=\"note\">\"payment for hired vehicles will be based on daily rates, which include:<\/strong><\/p>\n\u2022 specified working hours per day (e.g., 10 hours); And<\/strong><\/p>\n\u2022 a set distance (e.g., 100 kilometres per day);<\/strong><\/p>\n\u2022 within an overall monthly limit of 3,000 kilometres.<\/strong><\/p>\nRates for additional overtime hours or kilometres will also be specified. Additional charges \u2014 such as night service fees for specified hours (e.g., 11 pm to 6 am) \u2014 May also be included.<\/strong>\"<\/p><\/aside>\nthe payment periodicity and the quarterly kilometre adjustment:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Item<\/th><th>When paid<\/th><\/tr><\/thead><tbody><tr><td>Basic monthly charges; Overtime\/ night charges<\/td><td>PAID monthly<\/strong><\/td><\/tr><tr><td>payments for extra kilometres<\/td><td>processed on a quarterly basis<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">the carry-forward Rule: \"any net extra kms (after adjusting any shortfall kms) would be paid off at the end of the quarter \u2014 and any net shortfall in kms, if any, during the quarter shall be carried forward to the next quarter<\/strong>.\"<\/p><\/aside>\n<h1>8.24 Procurement of IT Hardware as a Service (HaaS) [NC ONLY]<\/span><\/h1>\n<h2>8.24.1<\/span>The Distinction from an Integrated IT Project<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>Characterisation<\/th><th>Selection method<\/th><\/tr><\/thead><tbody><tr><td>integrated IT project<\/td><td>involves considerable intellectual inputs<\/strong>, hence handled as procurement of consultancy services<\/strong><\/td><td>QCBS with 80%: 20% weightages for quality: Price<\/strong><\/td><\/tr><tr><td>hardware as a service (HaaS)<\/td><td>A non-consultancy service<\/strong> \u2014 hardware on a subscription or lease basis, with slas and maintenance<\/strong><\/td><td>LCS (L1), OR<\/strong> QCBS with e.g. 30% technical and 70% financial<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">\"when procuring IT hardware as a service (HaaS), the salient non-consultancy service tender and evaluation conditions must be clearly defined \u2014 to ensure compliance, competitiveness, and Value for Money.<\/strong><\/p>\n Given that HaaS involves the procurement of hardware on a subscription or lease basis, with service-level agreements (slas) and maintenance \u2014 the tender conditions must address both the hardware and the associated services<\/strong>.\"<\/p><\/aside>\n<h2>8.24.2<\/span>Scope of Services \u2014 the Thirteen Elements<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Element<\/th><th>Content<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>detailed specifications<\/td><td>clearly outline the specific IT hardware (desktops, laptops, servers, networking cabling\/ equipment, ups<\/strong>, etc.) with configurations and performance standards. Specify what software packages (including anti-virus and firewall software) would be included \u2014 and that licence shall be kept valid during the contract period<\/strong><\/td><\/tr><tr><td>b<\/td><td>service components<\/td><td>installation \u00b7 configuration \u00b7 maintenance \u00b7 repair\/ replacement\/ upgradation \u00b7 and dismantling\/ removal at the end of contract period<\/strong><\/td><\/tr><tr><td>c<\/td><td>delivery and deployment<\/td><td>specify timelines FOR delivery, installation, and commissioning of hardware at specified locations<\/strong><\/td><\/tr><tr><td>d<\/td><td>end-to-end support<\/td><td>help desk \u00b7 remote support \u00b7 on-site support \u00b7 and any additional managed services<\/strong><\/td><\/tr><tr><td>e<\/td><td>training and knowledge transfer<\/td><td>train the Procuring Entity's staff on using the hardware, managing configurations, basic troubleshooting and accessing support services<\/strong><\/td><\/tr><tr><td>g<\/td><td>data protection<\/td><td>\"if any data is handled by the hardware or service provider, stringent data protection clauses must be included \u2014 ensuring compliance with relevant Indian regulations such as the information technology Act, 2000 and its associated Rules<\/strong>.\"<\/td><\/tr><tr><td>h<\/td><td>cybersecurity standards<\/td><td>specify the required cybersecurity measures and standards (e.g., iso\/iec 27001 certification)<\/strong><\/td><\/tr><tr><td>i<\/td><td>audit rights<\/td><td>\"include clauses allowing the procuring authority to audit the service provider's performance, data security, and compliance with the contract at regular intervals<\/strong>.\"<\/td><\/tr><tr><td>j<\/td><td>risk management plan<\/td><td>require the bidder to submit a plan to mitigate risks related to hardware failure, service disruptions, or cybersecurity threats<\/strong><\/td><\/tr><tr><td>k<\/td><td>ownership model<\/td><td>\"clarify that the hardware is provided on a service model (HaaS) \u2014 and the ownership and risks remain with the service provider throughout the contract period<\/strong>.\"<\/td><\/tr><tr><td>l<\/td><td>insurance<\/td><td>\"service provider would keep the hardware insured at his cost<\/strong>.\"<\/td><\/tr><tr><td>m<\/td><td>asset tracking<\/td><td>requirements for tracking and monitoring hardware assets \u2014 including provisions for upgrading hardware during the contract period<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>8.24.3<\/span>Contract Period \u2014 and the Ten-Year QCBS Option<\/span><\/h2>\na) tenure: Specify the duration of the contract (e.g., 3 years, 5 years)<\/strong>, indicating whether the contract is renewable and under what conditions<\/strong>.<\/p>\n<aside class=\"note\">\"in case the contract is decided on QCBS basis \u2014 a longer contract period May be considered (say up to 10 years)<\/strong>.\"<\/p><\/aside>\nb) exit clauses: Include provisions for early termination or contract extensions, based on performance<\/strong>.<\/p>\n<h2>8.24.4<\/span>Service Level Agreement (SLA)<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Element<\/th><th>Requirement<\/th><\/tr><\/thead><tbody><tr><td>Uptime requirements<\/td><td>define minimum uptime guarantees (e.g., 99.9% availability) and penalties for breaches<\/strong><\/td><\/tr><tr><td>response and resolution times<\/td><td>set clear expectations (e.g., 4-HOUR response time for critical failures)<\/strong><\/td><\/tr><tr><td>maintenance & support<\/td><td>conditions for periodic preventive maintenance and replacement of faulty hardware at no additional cost<\/strong><\/td><\/tr><tr><td>monitoring and reporting<\/td><td>regular performance reports regarding hardware functionality, uptime, and SLA adherence<\/strong><\/td><\/tr><tr><td>penalties for non-compliance<\/td><td>\"define penalties for failure to meet SLA requirements, delayed delivery, or non-compliance. Penalties could include financial deductions, contract termination, or blacklisting from future tenders<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>8.24.5<\/span>Payment Terms<\/span><\/h2>\na) subscription model: Outline the payment model \u2014 typically on a monthly or quarterly subscription basis<\/strong>, with provisions for penalties in case of non-compliance with slas.<\/p>\nB) cost inclusions: Define the total cost \u2014 including hardware, software, service charges, taxes, transportation, and any other related costs<\/strong>.<\/p>\nC) milestone-based payments: Payment May be linked to delivery \u00b7 installation \u00b7 successful commissioning \u00b7 periodic payment \u00b7 and dismantling\/ removal at end of contract<\/strong>.<\/p>\n<h2>8.24.6<\/span>Qualification and Evaluation Criteria<\/span><\/h2>\nA) technical qualification:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Requirement<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>experience and expertise: Bidders must have prior experience in providing HaaS to Government departments or large enterprises<\/strong>. Minimum of 3 to 5 years' experience in managing similar contracts<\/strong><\/td><\/tr><tr><td>ii<\/td><td>certifications: Relevant certifications such as ISO 9001 (quality management) and ISO 20000 (IT service management)<\/strong> May be required<\/td><\/tr><tr><td>iii<\/td><td>OEM authorisation: \"if the bidder is not the OEM \u2014 an authorisation letter from the OEM must be submitted, to ensure genuine hardware, warranty, and after-sales support<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\nb) technical evaluation criteria:<\/p>\ni) compliance with specifications<\/strong> \u2014 hardware configuration requirements, SLAs, and support service expectations;<\/p>\nii) scalability<\/strong> \u2014 the solution must be capable of accommodating future upgrades or expansions;<\/p>\niii) vendor performance<\/strong> \u2014 past performance, compliance with SLAs, and customer satisfaction reports;<\/p>\niv) demonstrations\/ PoC<\/strong> \u2014 \"<\/strong>proof of concept (PoC) or demonstrations May be required to assess functionality and performance of the proposed solution.\"<\/strong><\/p>\nc) financial qualification: The bidder must demonstrate strong financial health \u2014 with required turnover and profitability over the last 3 to 5 years \u2014 to ensure financial stability for the duration of the contract<\/strong>.<\/p>\nd) financial evaluation criteria \u2014 the TCO basis and the two methods:<\/p>\n<aside class=\"note\">\"the evaluation will focus on the Total Cost of Ownership (TCO) over the contract period \u2014 including hardware subscription fees, service charges, penalties, and other associated costs.<\/strong><\/p>\n The Least Cost Selection (L1) method can be employed \u2014 ensuring all technical qualifications are met first.<\/strong><\/p>\n Alternatively, a QCBS method can be used \u2014 where technical parameters and financial bids are weighted (e.g., 30% technical and 70% financial) to select the best value proposal<\/strong>.\"<\/p><\/aside>\n<h1>Appendix to Chapter 8 \u2014 Points of Difference<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>whether the Chapter exists at all<\/td><td>G: Ch. 8 \u00b7 C: Ch. 9 \u00b7 NC: Ch. 8 \u00b7 W: NONE<\/em><\/td><\/tr><tr><td>2<\/td><td>Chapter title<\/td><td>G: Procurements with Unique Features\u2026<\/em> \u00b7 C: Special Types of Engagements\u2026<\/em> \u00b7 NC: *Special Types of Non-Consultancy Procurements\u2026*<\/td><\/tr><tr><td>3<\/td><td>Number of sections<\/td><td>G: 7 \u00b7 C: 10 \u00b7 NC: 12<\/td><\/tr><tr><td>4<\/td><td>Organising principle<\/td><td>G: Transaction structures<\/em> \u00b7 C and NC: Categories of provider<\/em><\/td><\/tr><tr><td>5<\/td><td>Overlap between G and the other two<\/td><td>ZERO<\/td><\/tr><tr><td>6<\/td><td>Overlap between C and NC<\/td><td>Only four topics: SSS \u00b7 Individual providers \u00b7 Specialised Agencies \u00b7 NGOs<\/td><\/tr><tr><td>7<\/td><td>Emergencies and Disaster Management<\/strong>(the 16 dispensations; crisis declaration order; single offer acceptable without re-tender; Rs 50,000 GeM exception; special time-bound audits after the crisis)<\/em><\/td><td>G ONLY<\/td><\/tr><tr><td>8<\/td><td>Buy Back Offer<\/strong>(the two-price with\/without rebate mechanism)<\/em><\/td><td>G ONLY<\/td><\/tr><tr><td>9<\/td><td>Capital Goods<\/strong>(item-specific budget; wet-lease alternative; TCO; the three evaluation remedies)<\/em><\/td><td>G ONLY<\/td><\/tr><tr><td>10<\/td><td>AMC<\/strong>(starts after warranty; NPV discounting of future AMC; the Rs 1 lakh BG for goods taken to the factory; the model termination clause)<\/em><\/td><td>G ONLY<\/td><\/tr><tr><td>11<\/td><td>net Present Value<\/strong>(the formula, the GPF discount rate, the solved example where the HIGHEST-priced offer becomes L1)<\/em><\/td><td>G ONLY<\/td><\/tr><tr><td>12<\/td><td>Turnkey Contract<\/td><td>G ONLY<\/td><\/tr><tr><td>13<\/td><td>Books and Print Media<\/strong>(Net Discount over Published Price; one-year onboarding; Rate Contract)<\/em><\/td><td>G ONLY<\/td><\/tr><tr><td>14<\/td><td>EoI for shortlisting<\/td><td>C: an entire chapter (Ch. 7) \u00b7 NC: compressed into para 8.1 and framed as an EXCEPTION to its normal single-stage two-envelope process<\/td><\/tr><tr><td>15<\/td><td>The seismic-survey\/ airborne-data-acquisition illustration of when NC needs EoI<\/td><td>nc only<\/td><\/tr><tr><td>16<\/td><td>SSS \u2014 the MONTHLY statement of all nomination selections to the Secretary\/ Head<\/td><td>C<\/strong>(distinct from the QUARTERLY nomination report in Ch. 4)<\/em><\/td><\/tr><tr><td>17<\/td><td>SSS \u2014 downstream continuity must be outlined in the INITIAL RfP; competitive process required if the initial award was non-competitive or the downstream assignment is substantially larger<\/td><td>C + NC<\/td><\/tr><tr><td>18<\/td><td>Individual Consultants \u2014 comparison of at least three candidates; CEC may interview and recommend remuneration; three direct-negotiation exceptions; COI extends to the parent firm<\/td><td>C + NC<\/td><\/tr><tr><td>19<\/td><td>Rule 177 GFR bar on retired Government servants; DoE OM F.No. 3-25\/2020-E.IIIA dated 09.12.2020<\/td><td>C<\/td><\/tr><tr><td>20<\/td><td>NGOs \u2014 QCBS mandatory where the shortlist is all-NGO; the five NGO-unique criteria; SSS permitted for a remote-area single-NGO case<\/td><td>C + NC<\/td><\/tr><tr><td>21<\/td><td>Procurement Consultants\/ Agents \u2014 THE 30% QUALITY-WEIGHTAGE TEST distinguishing Consultancy from Non-Consultancy<\/td><td>C + NC<\/strong>(near-identical text)<\/em><\/td><\/tr><tr><td>22<\/td><td>Cost weight less THAN 50% for procurement consultants handling specific items, with the stated reason<\/td><td>C ONLY<\/strong>(NC omits the 50% cap and its reasoning)<\/em><\/td><\/tr><tr><td>23<\/td><td>Financial Advisors \u2014 retainer plus success fee; QCBS mandatory for M&A\/ restructuring; cost may exceed 30% or LCS for large contracts; when success fees are appropriate<\/td><td>C ONLY<\/td><\/tr><tr><td>24<\/td><td>Auditors \u2014 QCBS preferred \"since in recent times the quality of audit has been a matter of concern\"<\/td><td>C ONLY<\/td><\/tr><tr><td>25<\/td><td>Logo\/ Symbol Design Competitions \u2014 Rule 196; Official Languages Act and Emblems and Names Act; the 11-point Competition Notice; IPR rests with the sponsoring agency; public voting for matters of national importance<\/td><td>C ONLY<\/td><\/tr><tr><td>26<\/td><td>Integrated IT Projects \u2014 quality weightage<\/td><td>C: \"even up to 80%\" \u00b7 NC (8.12.1): \"80%: 20% for Quality: Price\"<\/td><\/tr><tr><td>27<\/td><td>The MeitY\/ DPIIT list of restrictive and discriminatory conditions<\/strong>(Gartner Magic Quadrant; Rs 1000 Cr turnover for a Rs 70 Cr procurement; G8 export experience; named foreign brands; the \u221225\u00b0C EPBX-at-a-Central-India-airport example)<\/em><\/td><td>C ONLY<\/td><\/tr><tr><td>28<\/td><td>Digital India\/ NeGD \u2014 empanelment valid three years extendable by two; Categories A, B, C; sub-contracting PROHIBITED; IPR belongs to NeGD or client; penalties up to 10% of project value<\/td><td>C ONLY<\/td><\/tr><tr><td>29<\/td><td>Inspection Agents \u2014 generally NC because \"they only inspect within the established protocols\"; payment as a percentage of value inspected<\/td><td>nc only<\/td><\/tr><tr><td>30<\/td><td>Housekeeping \u2014 GeM offers floor-area-wise vs manpower-wise; \"usually the floor area wise cleaning option is more cost effective\"; reasons to be recorded on file<\/td><td>nc only<\/td><\/tr><tr><td>31<\/td><td>Manpower Outsourcing \u2014 the regularisation caution; I-cards must name the contractor; LCS for high-value; service charges floor 3.85% and ceiling 7% (both inclusive of GST); floor applies only to standalone manpower<\/td><td>nc only<\/td><\/tr><tr><td>32<\/td><td>Private Security \u2014 PSARA 2005; ~60,000 ESM retire annually; at least 90% ESM workforce; DGR certificate for 5 years or age 60 whichever earlier; DGR sponsorship mandatory; sponsored agencies exempt from minimum experience and turnover; mandatory GeM route; DGR sponsors at least three agencies; no negotiation below DGR rate (up to 10%); seniority tie-breaker<\/td><td>nc only<\/td><\/tr><tr><td>33<\/td><td>Vehicle Hiring \u2014 Rate Contract through OTE; one year extendable twice; PVC on fuel and wages; 10 hours\/ 100 km per day within 3,000 km monthly; night charges 11 PM\u20136 AM; extra km paid quarterly with shortfall carried forward<\/td><td>nc only<\/td><\/tr><tr><td>34<\/td><td>HaaS \u2014 ownership and risk remain with the service provider; provider insures at his own cost; up to 10-year contract if QCBS; ISO 9001 and ISO 20000; TCO-based evaluation via L1 or QCBS 30:70<\/td><td>nc only<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 8<\/p>\n<aside class=\"note\">Next:<\/strong>Chapter 9 \u2014 contract management and monitoring<\/strong>(Goods Ch. 9 \u00b7 Works Ch. 7<\/strong> \u2014 <\/em>Execution and Monitoring of Works and Quality Assurance \u00b7 Consultancy Ch. 10<\/strong> \u00b7 Non-Consultancy Ch. 9)<\/em>.<\/p>\nThe Works chapter here is by far the most elaborate in the entire Manual family \u2014 some 50 sub-sections \u2014 carrying <\/strong>ESHS concerns, Extension of Time, Liquidated Damages, the Denial Clause, Time at Large, Compensation Events, e-Bill processing, Closure of Contract with its four reconciliations, Excepted Matters, Adjudication, Mediation, Foreign Arbitration, and the CPSE dispute-resolution mechanism \u2014 most of which have no counterpart in the other three. Conversely, <\/strong>only Goods carries *Logistics: Transportation, Receiving, Storage and Issue of Goods, and only CS and NC carry *Concluding the Assignment and Post-Contract Review<\/strong>.<\/p><\/aside><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch9\">Chapter 9 \u2014 Part a<\/p><h1>Contract Management, Administration, Scope Control and Quality Assurance<\/h1><\/header>Part I<\/span>Administration, Scope Control and Quality Assurance<\/em><\/p>\nMerging: Goods Ch. 9<\/strong> (Contract Management) \u00b7 Works Ch. 7<\/strong> (Execution and Monitoring of Works and Quality Assurance) \u00b7 Consultancy Ch. 10<\/strong> (Monitoring Consultancy Services Contract) \u00b7 Non-Consultancy Ch. 9<\/strong> (Monitoring Non-consultancy Services Contract)<\/em><\/p><h2>Structural Notes<\/span><\/h2>\n1. Four different Chapter numbers and four different titles:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Chapter<\/th><th>Title<\/th><\/tr><\/thead><tbody><tr><td>G<\/span> Goods<\/td><td>Chapter 9<\/td><td>Contract Management<\/em><\/td><\/tr><tr><td>W<\/span> Works<\/td><td>Chapter 7<\/td><td>Execution and Monitoring of Works and Quality Assurance<\/strong><\/td><\/tr><tr><td>C<\/span> Consultancy<\/td><td>Chapter 10<\/td><td>Monitoring<\/strong> Consultancy Services Contract<\/em><\/td><\/tr><tr><td>NC<\/span> Non-Consultancy<\/td><td>Chapter 9<\/td><td>Monitoring<\/strong> Non-consultancy Services Contract<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n2. This is the largest Chapter in the entire Manual family \u2014 640 kb across the four Manuals.<\/strong> The Works<\/strong> chapter alone runs to some 50 sub-sections<\/strong> and is by far the most elaborate treatment of contract management anywhere in the four Manuals.<\/p>\n3. The three bodies of material that exist in one Manual only:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Body of material<\/th><th>Exists only in<\/th><\/tr><\/thead><tbody><tr><td>Logistics: Transportation, Receiving, Storage and Issue of Goods<\/td><td>GOODS<\/td><\/tr><tr><td>Aligning stakeholder interests \u00b7 Monitoring Team and System \u00b7 Prerequisites to Commencement \u00b7 Commencement of Work \u00b7 Mobilisation \u00b7 Monitoring Resources Deployed \u00b7 Enforcing Contractor's Obligations \u00b7 Safeguarding Assets \u00b7 ESHS \u00b7 Monitoring Variations\/ Extra\/ Substituted Items \u00b7 Revised DPR \u00b7 Compensation Events \u00b7 Time at Large \u00b7 e-Bill \u00b7 Closure of Contract with its four reconciliations<\/td><td>WORKS<\/td><\/tr><tr><td>Contract Monitoring Committee (CMC) \u00b7 Review of Inception Phase \u00b7 Incentives for Excellence in Contract Execution \u00b7 Concluding the Assignment and Post-Contract Review<\/td><td>CS + NC<\/td><\/tr><\/tbody><\/table><\/div>\n4. Because of the volume, this chapter is issued in three parts:<\/p>\n<ul class=\"lst\"><li>PART A (this document)<\/strong> \u2014 Purpose of Contract Management \u00b7 CMC \u00b7 Contract Administration \u00b7 Scope and Quantity Control \u00b7 Quality Assurance and Inspections.<\/li><li>PART B<\/strong> \u2014 Time Control (delays, EOT, Force Majeure, Denial Clause, LD, Performance Notice, Compensation Events, Time at Large) \u00b7 Cost Control (prices, taxes, payments) \u00b7 Logistics \u00b7 Closure of Contract \u00b7 Post-Contract Review.<\/li><li>PART C<\/strong> \u2014 Breach of Contract, Remedies and Termination \u00b7 Dispute Resolution (Excepted Matters, Adjudication, Mediation, Arbitration, Foreign Arbitration, Appointment of Arbitrator, Arbitral Procedure, Challenging Awards, the CPSE mechanism).<\/li><\/ul>\n<h2>Concordance for Chapter 9 \u2014 Part A<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>G<\/th><th>W<\/th><th>C<\/th><th>NC<\/th><\/tr><\/thead><tbody><tr><td>9.1<\/td><td>The Purpose of Contract Management<\/td><td>9.1.1<\/td><td>7.1<\/td><td>10.1.1<\/td><td>9.1.1<\/td><\/tr><tr><td>9.2<\/td><td>Contract Monitoring Committee (CMC)<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>10.1.2<\/td><td>9.1.2<\/td><\/tr><tr><td>9.3<\/td><td>Aligning the Interest of the Stakeholders<\/td><td> \u2014 <\/td><td>7.2.1<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.4<\/td><td>Monitoring Team and System<\/td><td> \u2014 <\/td><td>7.2.2<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.5<\/td><td>Notice to Proceed, Kick-off Meeting and Prerequisites<\/td><td> \u2014 <\/td><td>7.2.3<\/td><td>10.2.1<\/td><td>9.2.1<\/td><\/tr><tr><td>9.6<\/td><td>Commencement of Work<\/td><td> \u2014 <\/td><td>7.2.4<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.7<\/td><td>Mobilisation<\/td><td> \u2014 <\/td><td>7.2.5<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.8<\/td><td>Review of Inception Phase<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>10.2.2<\/td><td>9.2.2<\/td><\/tr><tr><td>9.9<\/td><td>Reporting and Monitoring of Progress<\/td><td> \u2014 <\/td><td>7.2.2-4<\/td><td>10.2.3<\/td><td>9.2.3<\/td><\/tr><tr><td>9.10<\/td><td>Issuing Contract Amendments\/ Variations<\/td><td>9.7.2<\/td><td>7.2.8<\/td><td>10.2.4<\/td><td>9.2.4<\/td><\/tr><tr><td>9.11<\/td><td>Obligations Control \u2014 Deployment of Resources<\/td><td>9.7.5<\/td><td>7.2.6, 7.2.7<\/td><td>10.2.5<\/td><td>9.2.5<\/td><\/tr><tr><td>9.12<\/td><td>Incentives for Excellence in Contract Execution<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>10.2.6<\/td><td>9.2.6<\/td><\/tr><tr><td>9.13<\/td><td>Safeguards for Handing Over Materials\/ Equipment<\/td><td>9.7.3<\/td><td>7.2.9<\/td><td>10.2.7<\/td><td>9.2.7<\/td><\/tr><tr><td>9.14<\/td><td>Environmental, Social, Health and Safety (ESHS)<\/td><td> \u2014 <\/td><td>7.2.10<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.15<\/td><td>Scope and Quantity Control<\/td><td>9.2<\/td><td>7.3.1\u20137.3.3<\/td><td>10.3<\/td><td>9.3<\/td><\/tr><tr><td>9.16<\/td><td>Quality Assurance and Inspections<\/td><td>9.4<\/td><td>7.3.4<\/td><td>10.3.2<\/td><td>9.3.2\u20139.3.3<\/td><\/tr><tr><td>9.17<\/td><td>Warranty Clause<\/td><td>9.4.8<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><\/tbody><\/table><\/div>\n<h1>9.1 The Purpose of Contract Management<\/span><\/h1>\n<h2>9.1.1<\/span>The Governing Proposition \u2014 common to all four<\/span><\/h2>\n<aside class=\"note\">\"the purpose of contract management is to ensure that contractors adhere to contract terms and deliver the desired outcomes as per the terms and conditions of the contract \u2014 such as timely deliveries, quality of goods supplied, adherence to the proper procedure for submitting invoices, and so on \u2014 and any problems are identified and resolved in a timely manner.<\/strong><\/p>\nIt also ensures that the payments made to the contractor match the performance.<\/strong><\/p>\nWithout Sound Contract Management, There Can Be No Assurance That \"WE Get What We Pay and Contract for \u2014 and Pay for Only What We GET.\"<\/em><\/p><\/aside>\nW<\/span>, C<\/span> and NC<\/span> add: \"implementation of the contract should be strictly monitored \u2014 and notices issued promptly whenever a breach of provisions occurs<\/strong>.\"<\/p>\n<h2>9.1.2<\/span>What Is Handled During This Phase \u2014 the four lists compared<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>G<\/span> GOODS (8 heads)<\/th><th>W<\/span> WORKS (7 heads)<\/th><th>C<\/span> CONSULTANCY \/ NC<\/span> NON-CONSULTANCY (5 heads)<\/th><\/tr><\/thead><tbody><tr><td>a) Scope of Supply and Quantity Control<\/td><td>a) Contract Administration<\/td><td>a) Contract Administration<\/td><\/tr><tr><td>b) Time Control \u2013 Monitoring Delays<\/td><td>b) Monitoring Scope of Work and Quality Assurance<\/td><td>b) Scope Control and Quality Assurance<\/td><\/tr><tr><td>c) Quality Assurance and Inspections<\/td><td>c) Time Monitoring<\/td><td>c) Time Control<\/td><\/tr><tr><td>d) Cost Control \u2013 Prices, Taxes and Payments<\/td><td>d) Financial Monitoring<\/td><td>d) Cost Control<\/td><\/tr><tr><td>e) Logistics: Transportation, Receiving, Storage and Issue of Goods<\/td><td>e) Closure of Contract<\/td><td>e) Post-contract evaluation<\/td><\/tr><tr><td>f) Contract Administration<\/strong> \u2014 Performance Security \u00b7 Amendments \u00b7 Safeguards for handing over materials \u00b7 Monitoring Supplier Performance \u00b7 Monitoring Supplier Obligations \u00b7 Contract closure<\/em><\/td><td>f) Resolving Disputes and Conflicts<\/td><td><\/td><\/tr><tr><td>g) Breach of Contract, Remedies and Termination<\/td><td>g) Breach and Termination of Contract<\/td><td><\/td><\/tr><tr><td>h) Dispute resolution<\/td><td><\/td><td><\/td><\/tr><\/tbody><\/table><\/div>\nTHE C<\/span> AND NC<\/span> Sub-heads of contract administration (nine items): I) issuing the notice to proceed<\/strong>; ii) meetings and reviews<\/strong>; iii) amendments\/ variations to the contract<\/strong>; iv) obligations control: Monitoring that key experts and contracted resources are actually employed<\/strong>; v) safeguards for handing over materials\/ equipment<\/strong>; vi) resolving problems faced by consultants<\/strong>; vii) dispute resolution and arbitration<\/strong>; viii) breach of contract, remedies, and termination of services prior to the end of the contract<\/strong>; ix) contract closure upon completion<\/strong>.<\/p>\nTHE C<\/span> AND NC<\/span> Sub-heads of scope control and quality assurance: I) deciding on possible modifications to scope of work and issuing contract variations<\/strong>; ii) monitor that all deliverables are delivered as per contract \u2014 reports including draft final report and the final report<\/strong>; iii) quality assurance: Review quality of outcomes at inception phase, mid-term, and final phase<\/strong>.<\/p>\n<h2 class=\"src-multi\">9.1.3<\/span>Why Services Contracts Need MORE Intense Monitoring<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\">\n<aside class=\"note\">\" Due to lack of physically\/ tangibly measurable outcomes in services contracts \u2014 intense and continuous monitoring of the contract by the Procuring Entity is essential for the success of the assignment.<\/strong><\/p>\n Suitable provision for this should be made in the contracts \u2014 which should also take care of the need to terminate\/ penalise the consultant, or to suspend payments till satisfactory progress has been achieved.<\/strong><\/p>\nThe Procuring Entity shall form a Contract Monitoring Committee (CMC) to monitor the contract.<\/strong><\/p>\n The Procuring Entity should also designate a counterpart Project Manager \u2014 with adequate technical qualification, managerial experience, and power and authority \u2014 as the nodal person to interact with the consultant's team.<\/strong><\/p>\n A system of reporting May be developed, so that a statement covering all ongoing consultancy contracts May be submitted within the Department in detail \u2014 so as to enable management by exception, based on various risk and mitigation strategies pointed out at relevant process milestones in this Manual<\/strong>.\" (Rule 195 of GFR 2017)<\/em><\/p><\/aside>\n<\/div><h2>9.1.4<\/span>Why Poor Contract Management Costs the Nation [W ONLY]<\/span><\/h2>\n<aside class=\"note\">\"poor management of public-funded projects costs the nation in terms of the following \u2014 be it in the owner organisation or in construction firms contracted to build a project<\/strong>:\"<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>The cost<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>additional expenditure burden due to increased costs \u2014 crowding out more deserving schemes and projects<\/strong><\/td><\/tr><tr><td>b<\/td><td>affects viability of projects due to increase in construction [cost] \u2014 causing losses to the CPSE or agency concerned<\/strong><\/td><\/tr><tr><td>c<\/td><td>economic burden, due to delayed return on investments<\/strong><\/td><\/tr><tr><td>d<\/td><td>imposes unnecessary economic burden on affected stakeholders<\/strong><\/td><\/tr><tr><td>e<\/td><td>\"creates a culture of acceptance of delay and avoidable costs \u2014 breeding more cases<\/strong>.\"<\/td><\/tr><tr><td>f<\/td><td>\"increased costs of procurement due to monetisation of higher risks, perceived by contractors, of delays and scope creep associated with public-funded projects<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>9.2 Contract Monitoring Committee (CMC) [C + NC ONLY]<\/span><\/h1>\n(Rule 205 of GFR 2017)<\/em><\/p>\n<h2>9.2.1<\/span>Constitution<\/span><\/h2>\n<aside class=\"note\">\" Rule 205 of GFR 2017 enjoins that the Ministry or Department be involved throughout the conduct of the contract, and continuously monitor the performance of the contractor.<\/strong><\/p>\nThe Procuring Entity shall constitute a CMC comprising at least three members at the appropriate level, including the user's representative \u2014 after the selection procedure is over \u2014 for monitoring the progress of the contract.<\/strong><\/p>\n If considered appropriate, the Procuring Entity May select all or any of the members of CEC as members of CMC.<\/strong><\/p>\n The Procuring Entity May also include individual experts from the Government\/ private sector\/ educational\/ research institute, or an individual consultant, in the CMC. The cost of such members, if any, shall be borne by the Procuring Entity<\/strong>.\"<\/p><\/aside>\n<h2>9.2.2<\/span>The Six Responsibilities of the CMC<\/span><\/h2>\n\"the CMC shall be responsible for<\/strong>:\"<\/p>\n<ol class=\"lst\"><li>monitoring the progress of the assignment<\/strong>;<\/li><li>To oversee that the assignment is carried out as per the contract<\/strong>;<\/li><li>To assess the quality of the deliverables<\/strong>;<\/li><li>To accept\/ reject any part of the assignment<\/strong>;<\/li><li>To levy appropriate Liquidated Damages or penalty \u2014 if the assignment is not carried out as per the contract, and if the quality of services is found inferior<\/strong>;<\/li><li>And for any such deficiency related to the completion of the assignment<\/strong>.<\/li><\/ol>\n<h2>9.2.3<\/span>The Expert-Assistance Provision<\/span><\/h2>\n<aside class=\"note\">\"for the assignments which are overly complex and\/ or are of a highly technical nature \u2014 the Procuring Entity May decide to appoint another qualified consultant to assist the CMC in carrying out its functions<\/strong>.\"<\/p><\/aside>\n<h1>9.3 Aligning the Interest of the Stakeholders [W ONLY]<\/span><\/h1>\n<h2>9.3.1<\/span>The Incentive-Structure Principle<\/span><\/h2>\n<aside class=\"note\">\"the incentive structure for all the key stakeholders of Public Procurement ought to be such that the system itself will ensure timely delivery of the projects\/ works in a qualitative manner within approved cost.<\/strong><\/p>\n A balanced framework and work culture \u2014 where risk and rewards are properly shared amongst stakeholders, and timely completion of quality projects is the common goal \u2014 can be the bedrock of efficient project management.<\/strong><\/p>\n An incentive structure \u2014 which May include pecuniary as well as non-pecuniary aspects (including public recognition) \u2014 linked with measurable parameters of outcome\/ output, can help align the interests of stakeholders.<\/strong><\/p>\n An ethics-based regime, where integrity of all the stakeholders is nurtured, can help increase efficiency in all aspects of project management<\/strong>.\"<\/p><\/aside>\n<h2>9.3.2<\/span>The Recognition Devices \u2014 including naming at work sites<\/span><\/h2>\n<aside class=\"note\">\"public authorities May devise strategies to provide incentives to contractors\/ concessionaires\/ consultants\/ architects\/ other stakeholders by various means \u2014 including bonus, better rating and recognition for early\/ timely\/ quality completion of the projects.<\/strong><\/p>\n Similar strategies May be devised for recognition of engineers\/ officers\/ other team members for early\/ timely and quality completion of the projects.<\/strong><\/p>\n The practice of mentioning the names of the contractor and the project-in-charge publicly at work sites May be implemented.<\/strong><\/p>\n Such recognition May be in a form which has a long shelf life \u2014 so as to associate the contractor and project in-charge with the life of the project<\/strong>.\"<\/p><\/aside>\n<h2>9.3.3<\/span>The Closing Aphorism<\/span><\/h2>\n<aside class=\"note\">\"COMING Together is a Beginning; Keeping Together is Progress; Working Together is SUCCESS.<\/em>\"<\/p>\n\"it is an accepted fact that the success of any project is dependent on a well-coordinated team working towards a common goal. For successful execution of any project within specified time, cost and quality \u2014 the interest of all the stakeholders needs to be aligned.<\/strong><\/p>\n Coordinated efforts of all stakeholders \u2014 such as contractors, consultants, public authority and project executing authority and public representatives \u2014 will bring about the best possible outcome<\/strong>.\"<\/p><\/aside>\n<h1>9.4 Monitoring Team and System [W ONLY]<\/span><\/h1>\n<h2>9.4.1<\/span>The Principle of Proportionality for Contract Management<\/span><\/h2>\n<aside class=\"note\">\"the time and resources applied to manage a contract should be proportional to its size, scope, complexity, duration, risk, and strategic importance. One size does not fit all.<\/strong><\/p>\n for example, [in] low-value [contracts], too many checks and balances can delay decision-making, impede the contractor's payments, and stifle innovation.<\/strong><\/p>\n Too little control can result in an undisciplined crisis management culture.<\/strong><\/p>\n Getting the balance exactly right ensures 'fit-for-purpose' contract management<\/strong>.\"<\/p><\/aside>\n<h2>9.4.2<\/span>Role of Apex and Management Levels<\/span><\/h2>\n\"procurement and contract management require various levels of authorisation or approvals for technical, administrative, and financial decisions. Many of these approvals are at apex\/ managerial levels \u2014 which are responsible for macro management of the contract, but May not be involved in day-to-day contract management. However, their roles are important for efficiency of the contract management process<\/strong>.\"<\/p>\n<h2>9.4.3<\/span>The Contract Manager<\/span><\/h2>\n<aside class=\"note\">\"best practice requires that a nodal person be appointed for management of each specific contract.<\/strong><\/p>\n Such a nodal person May be called differently \u2014 engineer \u00b7 Project Manager \u00b7 Contract Manager \u00b7 supply manager \u00b7 service manager \u00b7 employer's representative \u2014 in different organisations and in different categories of contract. This Manual generically refers to him as 'Contract Manager'.<\/strong><\/p><\/aside>\nThe scale Rule:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Contract type<\/th><th>Who the Contract Manager is<\/th><\/tr><\/thead><tbody><tr><td>Small, routine contracts<\/td><td>A single person, who has a portfolio of contracts to manage<\/strong><\/td><\/tr><tr><td>large, complex, high-value contracts<\/td><td>normally a team or entity<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nthe five attendant requirements:<\/p>\n<ol class=\"lst\"><li>\"a competent project management team should be set up \u2014 including training on project management to the team, if required<\/strong>.\";<\/li><li>\"a system of project monitoring for each work shall be prepared before start of the work \u2014 and the same shall be available at site of work<\/strong>.\";<\/li><li>\"'Deadlines' or 'contractual milestones' should be set up and tabulated to facilitate monitoring of the progress of work<\/strong>.\";<\/li><li>\"the work shall be monitored on a quarterly\/ monthly basis by the Works Committee \u2014 and a status report should be submitted to the Secretary in charge of the concerned Ministry\/ Department<\/strong>.\";<\/li><li>\"execution of the work shall primarily be the responsibility of the nominated Contract Manager. However, for large contracts, senior officers shall also review the progress and quality of the work at various stages of construction<\/strong>.\"<\/li><\/ol>\n<aside class=\"note\">the certification suggestion: \"it May also be useful to stipulate organisational standards and\/ or certifications for project managers\/ staff, in complex projects, as tender conditions \u2014 to minimise risk of cost and time overruns<\/strong>.\"<\/p><\/aside>\n<h2 class=\"src-W\">9.4.4<\/span>Progress Reporting and Review \u2014 the Fourteen-Point MIS Report<\/span>W<\/span><\/h2><div class=\"srcblock src-W\">\n\"there should be a stipulation in the contract for large-value works (magnitude to be specified) \u2014 for the contractor to submit a project-specific monthly progress report of the work in a computerised form (management information system reports \u2014 MIS reports)<\/strong>.\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Content of the Monthly MIS Progress Report<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>project information \u2014 giving the broad features of the contract<\/strong><\/td><\/tr><tr><td>ii<\/td><td>introduction \u2014 giving a brief scope of the work and the broad structural or other details<\/strong><\/td><\/tr><tr><td>iii<\/td><td>construction Schedule of the various components \u2014 through a bar chart for the next three quarters (or as specified) \u2014 showing the milestones, targeted tasks and up-to-date progress<\/strong><\/td><\/tr><tr><td>iv<\/td><td>progress chart of the various components planned and achieved \u2014 for the month as well as cumulative \u2014 with reasons for deviations, if any, in a tabular format<\/strong><\/td><\/tr><tr><td>v<\/td><td>plant and machinery statement \u2014 indicating those deployed in the work, and their working status<\/strong><\/td><\/tr><tr><td>vi<\/td><td>man-power statement \u2014 indicating individually the names of all the staff deployed in the work, along with their designations<\/strong><\/td><\/tr><tr><td>vii<\/td><td>financial statement \u2014 gross value of work done \u00b7 advances taken \u00b7 recoveries effected \u00b7 amounts withheld \u00b7 net payments \u00b7 details of cheque payments received<\/strong><\/td><\/tr><tr><td>viii<\/td><td>a statement showing the extra and substituted items submitted by the contractor and payments received against them \u00b7 broad details of the bank guarantees, indicating clearly their validity periods \u00b7 broad details of the insurance policies \u00b7 advances received and adjusted<\/strong><\/td><\/tr><tr><td>ix<\/td><td>progress photographs, in colour, of the various items\/ components of the work done up to date \u2014 to indicate visually the actual progress<\/strong><\/td><\/tr><tr><td>x<\/td><td>quality assurance and quality control tests conducted during the month, with the results thereof<\/strong><\/td><\/tr><tr><td>xi<\/td><td>any hold-up shall be specified<\/strong><\/td><\/tr><tr><td>xii<\/td><td>dispute, if any, shall also be highlighted<\/strong><\/td><\/tr><tr><td>xiii<\/td><td>monthly or fortnightly progress review by Contract Manager and Procuring Entity with contractor May be necessary \u2014 to ensure that the contractor deploys sufficient resources to meet the deadlines<\/strong><\/td><\/tr><tr><td>xiv<\/td><td>the photograph-and-video system \u2014 see below<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">The photograph and video provision \u2014 worth noting in full:<\/p>\n\"project executing authorities should put in place a system for capturing the photographs and videos of important and critical activities of construction. This May be implemented in projects above a threshold value \u2014 or, if possible, in all projects.<\/strong><\/p>\nSuch photos\/ videos May be uploaded in the it-based project monitoring system \u2014 to facilitate monitoring the progress and quality of work, as well as assessment of delay in execution of work by stakeholders and senior management.<\/strong><\/p>\n Apart from this, photographs and videos May serve as a permanent record of the project for posterity \u2014 in case needed for any eventuality, including litigation or enquiry\/ investigation<\/strong>.\"<\/p><\/aside>\n<\/div><h2 class=\"src-W\">9.4.5<\/span>Project Management Software<\/span>W<\/span><\/h2><div class=\"srcblock src-W\">\n<aside class=\"note\">\"all complex assignments require the use of proper project management tools \u2014 that enable the contract management team (Procuring Entity, Contract Manager, Project Manager, etc.) to collaboratively monitor the actual physical and financial progress of the contract against the planned physical and financial Schedule.<\/strong><\/p>\n The contract May also specify that the contractor engage certified project management professionals to train and monitor project progress (e.g., pmi-certified contract managers).<\/strong><\/p>\nSome of the common software programmes are \u2014 (no endorsements are intended; There are many more such software available):<\/strong><\/p>\n\u2022 microsoft project and portfolio management (ms ppm); And<\/strong><\/p>\n\u2022 oracle primavera P6 professional project management (P6 ppm).<\/strong><\/p>\n Information technology (IT) enabled project management systems can help in improving efficiency, transparency and aid faster decision-making in execution of projects<\/strong>.\"<\/p><\/aside>\n<h1>9.5 Notice to Proceed, Kick-off Meeting, and Ensuring Prerequisites to Commencement<\/span><\/h1>\n<\/div><h2>9.5.1<\/span>Ensuring Prerequisites to Commencement of Work W<\/span> \u2014 the Six Prerequisites<\/span><\/h2>\n1. Land acquisition: \"the process of land acquisition shall be started by the Procuring Entity well ahead, and completed entirely \u2014 or at least substantially \u2014 by the time the contract is awarded<\/strong>.\"<\/p>\n2. PERMITS\/ APPROVALS \u2014 and the delay-claim warning:<\/p>\nThe Procuring Entity shall seek requisite statutory approvals\/ permission\/ clearances\/ certificates<\/strong> From concerned local bodies and statutory authorities \u2014 including:<\/p>\n<aside class=\"note\">District authorities \u00b7 municipal corporation \u00b7 panchayati raj institutions \u00b7 town planning board \u00b7 electricity board\/ fire Department \u00b7 State\/ Central pollution control boards \u00b7 State\/ Central environmental authorities \u00b7 forest and wildlife authorities<\/strong><\/p><\/aside>\nthe illustrative list of what such clearances cover:<\/p>\n<aside class=\"note\">Removal of trees \u00b7 re-locating utilities \u00b7 conversion of railway level crossings \u00b7 laying of railway sidings needed by the project \u00b7 rehabilitation and resettlement of persons affected by the project \u00b7 traffic control \u00b7 mining of earth and stone \u00b7 interfering [with] protected monuments \u00b7 blasting permission \u00b7 environmental\/ forest\/ wildlife clearances \u00b7 and shifting of religious shrines<\/strong><\/p>\nthe warning: \"the Procuring Entity has to be aware that any delay in fulfilling the pre-requisites stipulated in the contract will attract delay claims from the contractor \u2014 besides causing time and cost overruns.<\/strong><\/p>\n Hence, all or most pre-requisites shall be fulfilled before award of the LoA<\/strong>.\"<\/p><\/aside>\nthe contractor's side: \"the contractor shall give all notices and obtain all other necessary permits and approvals as May be required for the construction \u2014 and shall pay for all such permits and approvals<\/strong>.\"<\/p>\n3. Approval of quarries, borrow areas and materials:<\/p>\n<aside class=\"note\">\"the contractor will obtain approval of the Contract Manager for each quarry and borrow area to be used in the project \u2014 prior to commencement of quarrying and\/ or borrow area excavation activities.<\/strong><\/p>\n All materials (whether natural, processed, manufactured, or designed) proposed by the contractor to be used on the works shall be first approved by the Contract Manager, to comply with the requirements of specifications.<\/strong><\/p>\n Contractor May seek Procuring Entity's permission for equivalent brands \u2014 if some brands are mentioned for certain materials in the contract documents<\/strong>.\"<\/p><\/aside>\n4. Safety at work site \u2014 the hazardous substances and the public-protection list:<\/p>\n<aside class=\"note\">\"the contractor must ensure safety of workmen as well as safety for the general public during construction in and around the work-site. He must follow the laws, codes and standards laid down in this regard.<\/strong><\/p>\n The workmen must be trained and provided protective gear, life-saving equipment and appropriate tools for their jobs.<\/strong><\/p>\n Special precautions must be used if hazardous chemicals are used or stored at workplace \u2014 lead, silica, asbestos, and wood\/ stone that will be cut and generate dust; Construction materials containing zinc, cadmium, beryllium and mercury.<\/strong><\/p>\n Besides protection from noise and environmental pollution \u2014 the public must also be safeguarded from:<\/strong><\/p>\nFalling through dug-up area \u00b7 electrocution \u00b7 flooding \u00b7 falling objects \u00b7 bridge-span dropping\/ failures \u00b7 crane falling\/ overturning \u00b7 and damage to building from vibrations\/ cave-ins from construction activities.<\/strong><\/p>\nCONTRACT Manager Must Ensure That Contractor Does not Adopt Any SHORT-CUT in this REGARD.<\/em><\/p><\/aside>\nThe SHE\/ ESHS apparatus: \"most large contracts have a well-defined safety, health & environment (SHE) \u2014 also called environmental, social, health and safety (ESHS, with addition of the social factor) \u2014 guideline embedded in the agreement.<\/strong><\/p>\n<aside class=\"note\"> Appointment of a site safety engineer by the contractor is a mandatory requirement in such cases.<\/strong><\/p>\n The Contract Manager shall engage safety experts to carry out frequent SHE audits and mandate correct measures<\/strong>.\"<\/p><\/aside>\n5. Advance payments: \"to enable mobilisation, advance payment(s) are to be given after the signing of the contract \u2014 if provided in the contract \u2014 on the contractor's submission of an unconditional BG in an acceptable form<\/strong>.\"<\/p>\n6. INSURANCES \u2014 the four checks:<\/p>\n\"insurance provisions are valuable risk management tools. The contracting entity must ensure the following<\/strong>:\"<\/p>\na) the insurance policies are in place in accordance with the contract<\/strong>;<\/p>\nb) the coverages are adequate and within the thresholds specified in the contract<\/strong>;<\/p>\nc) the insurance policies contain the essential information \u2014 such as coverage, duration, applicability<\/strong>;<\/p>\nd) due diligence is applied to checking the authenticity of the insurance document and payment of insurance premiums<\/strong>.<\/p>\n<h2 class=\"src-multi\">9.5.2<\/span>Issuing the Notice to Proceed and the Kick-off Meeting<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\">\nThe Consultancy and Non-Consultancy Manuals frame the same stage as \"Issuing Notice to Proceed, Kick-off Meeting and Pre-requisites\"<\/em> \u2014 the service analogue of the Works \"Work Order\" at para 9.6 below.<\/p>\n<h1>9.6 Commencement of Work [W ONLY]<\/span><\/h1>\n<aside class=\"note\">\"after the contract has been signed between the parties and Performance Security is deposited by the contractor \u2014 he should visit the site along with the Contract Manager, to identify any potential problem in relation to site.<\/strong><\/p>\nAfter reviewing the status of prerequisites, the Contract Manager issues a 'work order' to the contractor to 'commence the works'.<\/strong><\/p>\nWORK Order Should Be Issued Within a Reasonable Period \u2014 Say 2 Weeks, but not Later Than 6 Weeks from the Date of the Loa.<\/em><\/p><\/aside>\nThe contractor's three submissions: \"within the stipulated time, the contractor should submit to the Contract Manager for his consent:<\/strong><\/p>\na) THE work program \u2014 including the measures proposed by him for work zone safety and mitigation of environmental impact<\/strong>;<\/p>\nb) THE methods statement which the contractor proposes to adopt for execution of the works<\/strong>; and<\/p>\nc) THE quality assurance plan<\/strong>.\"<\/p>\n<aside class=\"note\">\"the Contract Manager should, on being satisfied with the contractor's submission, provide to the contractor total or partial possession of the site.<\/strong><\/p>\n The contractor will update the work program at intervals stipulated (usually every month) and submit it to the Contract Manager for approval. The updated program should include all variations ordered by the Contract Manager and their effect, if any, on the program.<\/strong><\/p>\nNO Work Shall Be Commenced Unless the Conditions Precedent as Laid Down in Para 1.17-13 [Of this Unified Manual] Have Been FULFILLED.<\/em><\/p><\/aside>\n<h1>9.7 Mobilisation [W ONLY]<\/span><\/h1>\n<aside class=\"note\">\"the commencement of works normally begins with a mobilisation or pre-construction phase \u2014 during which the site is prepared for construction.<\/strong><\/p>\n The mobilisation period should be carefully managed by the contracting parties, given its significance to the successful execution of a contract.<\/strong><\/p>\nThe mobilisation or pre-construction phase can include major activities such as:<\/strong><\/p>\nLand clearance \u00b7 excavation \u00b7 building of access roads to the site \u00b7 work site establishment \u00b7 and construction of accommodation for the contractor's personnel<\/strong>.\"<\/p><\/aside>\n Mobilisation of key resources:<\/strong>\"the Contract Manager must ensure that the technical [and other key resources are mobilised]<\/strong>\u2026\"<\/strong>(and see para 9.11 below on Monitoring Resources Deployed).<\/em><\/p>\n<h1>9.8 Review of Inception Phase [C + NC ONLY]<\/span><\/h1>\nThe Consultancy and Non-Consultancy Manuals provide for a distinct Review of Inception Phase<\/em> \u2014 the point at which the Procuring Entity satisfies itself, on the strength of the Inception Report (due about six weeks after the commencement date \u2014 see Chapter 2, para 2.6.3(c)), that the assignment can be carried out as planned, and that any major inconsistency in the ToR, staffing problems, or deficiency in the Procuring Entity's assistance has been surfaced early.<\/p>\n<aside class=\"note\">This has no counterpart in the Goods or Works Manuals, where the analogous checkpoint is the Work Order<\/strong> and the approval of the Work Program, Method Statement and Quality Assurance Plan<\/strong> (para 9.6 above).<\/em><\/p><\/aside>\n<h1>9.9 Reporting and Monitoring of Progress [C + NC; and W at para 9.4.4]<\/span><\/h1>\nCommon to all four is the requirement of periodic progress reporting, but the instruments differ:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>The reporting instrument<\/th><\/tr><\/thead><tbody><tr><td>W<\/span> WORKS<\/td><td>The fourteen-point monthly MIS progress report<\/strong> \u2014 see para 9.4.4 above<\/td><\/tr><tr><td>C<\/span> Consultancy<\/td><td>The inception \u00b7 progress \u00b7 interim \u00b7 and final reports<\/strong> \u2014 see Chapter 2, para 2.6.3(c)<\/td><\/tr><tr><td>NC<\/span> Non-consultancy<\/td><td>Reporting against the service Level Agreement (SLA) and key performance indicators<\/strong> \u2014 see para 9.15.4 below<\/td><\/tr><tr><td>G<\/span> GOODS<\/td><td>Monitoring of supplier performance and obligations<\/strong> \u2014 see para 9.11 below<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>9.10 Issuing Contract Amendments \/ Variations<\/span><\/h1>\nAll four Manuals provide for amendment of the contract during execution. The Works treatment is the most detailed, and is set out at Chapter 6, para 6.10.3-1 of this Unified Manual (Variations in Works Contracts, the Variations Register, and the requirement of the Engineer's prior approval from the Procuring Entity).<\/p>\n<aside class=\"note\">The common principle:<\/strong>amendments must be issued <\/strong>in writing, through a formal procedure specified in the contract, and \u2014 in Works \u2014 <\/strong>tracked in a Variations Register updated monthly and summarised to keep all involved agencies informed.<\/strong><\/p><\/aside>\n<h1>9.11 Obligations Control \u2014 Monitoring Resources Deployed and Enforcing Obligations<\/span><\/h1>\n<\/div><h2>9.11.1<\/span>The Common Object<\/span><\/h2>\n\" Monitoring that key experts and contracted resources are actually employed<\/strong>\"<\/strong>(the C<\/span> and NC<\/span> formulation)<\/em> \u2014 corresponding to W<\/span> paras 7.2.6 (Monitoring Resources Deployed by Contractor) and 7.2.7 (Enforcing Contractor's Obligations), and G<\/span> paras 9.7.4 and 9.7.5 (Monitoring Supplier Performance and Obligations)<\/strong>.<\/p>\n<aside class=\"note\">This is the single most important control in a <\/strong>services contract, because \u2014 as the CS and NC Manuals put it at para 9.1.3 above \u2014 there are <\/strong>no physically\/ tangibly measurable outcomes, and the deployment of the promised key personnel is the principal proxy for quality.<\/p><\/aside>\n<h2>9.11.2<\/span>The Works Apparatus<\/span><\/h2>\nThe Works Manual treats this in two distinct sections:<\/p>\n<ul class=\"lst\"><li>7.2.6 \u2014 monitoring resources deployed by contractor<\/strong>(plant, machinery, and manpower \u2014 cross-referenced to the Plant and Machinery Statement<\/strong> and Man-power Statement<\/strong> in the monthly MIS report at para 9.4.4 items (v) and (vi) above)<\/em>;<\/li><li>7.2.7 \u2014 enforcing contractor's obligations.<\/li><\/ul>\n<h1>9.12 Incentives for Excellence in Contract Execution [C + NC ONLY]<\/span><\/h1>\nThe Consultancy and Non-Consultancy Manuals carry a short section providing for incentives for excellence in contract execution \u2014 the services counterpart of the Works provisions on aligning stakeholder interests at para 9.3 above (bonus, better rating, public recognition, and naming at work sites).<\/p>\n<h1>9.13 Safeguards for Handing Over Procuring Entity Materials\/ Equipment to Contractors<\/span><\/h1>\n<aside class=\"note\">This section appears in all four Manuals. The Works text is reproduced below as the fullest version.<\/p><\/aside>\n<h2>9.13.1<\/span>What May Be Handed Over<\/span><\/h2>\n<aside class=\"note\">\"for performance of certain contracts, the Procuring Entity May have to loan stores, drawings, documents, equipment, and assets (such as accommodation, identity cards and gate passes, and so on) to the contractor.<\/strong><\/p>\n In certain situations, the contractor May also be supplied electricity, water, cranes, and weighing facilities on payment\/ hire basis<\/strong>.\"<\/p><\/aside>\n<h2>9.13.2<\/span>The Bank Guarantee Requirement \u2014 and the Rs 1 lakh waiver<\/span><\/h2>\n<aside class=\"note\">\"whenever stores or prototypes or sub-assemblies are required to be issued to the firm\/ contractor for guidance in fabrication \u2014 these should be issued against an appropriate Bank Guarantee.<\/strong><\/p>\n In addition to the Bank Guarantee, appropriate insurance May be asked for if it is considered necessary.<\/strong><\/p>\nFor low-value items of Less Than Rs. 1,00,000 (Rupees One Lakh) \u2014 or for Sending Spares for Repairs to the Oems \u2014 this Stipulation of the Bank Guarantee May Be Waived; and, if Feasible, an Indemnity Bond May Be TAKEN.<\/em><\/p><\/aside>\n<h2>9.13.3<\/span>The Contractor's Obligations in Respect of Loaned Assets<\/span><\/h2>\n<aside class=\"note\">\"the contractor shall use such property for the execution of the contract and no other purpose whatsoever.<\/strong><\/p>\n These assets shall remain the property of the Procuring Entity \u2014 and the contractor shall take all reasonable care of all such assets.<\/strong><\/p>\n The contractor shall be responsible for all damage or loss from whatever cause caused, while such assets are possessed or controlled by the contractor, staff, workers, or agents<\/strong>.\"<\/p><\/aside>\n<h2>9.13.4<\/span>The Transparency Requirement and the Closing Certificate<\/span><\/h2>\n<aside class=\"note\">pre-declaration: \"as a measure of transparency \u2014 the possibility of provision of such resources by the Procuring Entity should have been announced in the tender document, or at least requested by the contractor in the tender, and written in the contract<\/strong>.\"<\/p>\nthe certificate before final payment:<\/p>\n\"before the final payment or release of PBG\/ SD \u2014 a certificate May be taken from the concerned Department that the contractor has returned all:<\/strong><\/p>\nDocuments \u00b7 drawings \u00b7 protective gear \u00b7 material \u00b7 equipment \u00b7 facilities \u00b7 and assets loaned \u2014 including all id cards and gate passes \u2014 in good condition.<\/strong><\/p>\n Further, it should be certified that payment from the contractor has been received for usage of electricity, water, crane, accommodation, weighing facility, and so on<\/strong>.\"<\/p><\/aside>\n<h1>9.14 Environmental, Social, Health, and Safety (ESHS) Concerns [W ONLY]<\/span><\/h1>\n<h2>9.14.1<\/span>The ESHS Obligation and Its Staffing Consequence<\/span><\/h2>\n<aside class=\"note\">\"in works contracts, attention must be paid to environmental, social, health, and safety (ESHS) considerations \u2014 also termed safety, health, and environmental (SHE) in certain contracts.<\/strong><\/p>\n Such considerations must be indicated from the beginning as mandatory skills or experience in the bid documents.<\/strong><\/p>\n The contractor must ensure that he and his sub-contractors comply with legal and regulatory obligations relating to ESHS.<\/strong><\/p>\n it requires professionals with appropriate skills to be part of the contract's team. Such professionals May be required on a part-time or full-time basis \u2014 depending on the nature of the ESHS risks and impacts, and the role they are performing.<\/strong><\/p><\/aside>\n<h2>9.14.2<\/span>What ESHS Monitoring Involves During Implementation<\/span><\/h2>\n<aside class=\"note\">\"during contract implementation, the primary focus is to ensure that the contractual ESHS provisions are continuously adhered to. This will involve:<\/strong><\/p>\n\u2022 the timely preparation and\/ or review of documentation \u2014 such as the contractor's plans and procedures;<\/strong><\/p>\n\u2022 undertaking of inspection, supervision, and\/ or audit;<\/strong><\/p>\n\u2022 attending of progress meetings;<\/strong><\/p>\n\u2022 reporting; And<\/strong><\/p>\n\u2022 resolving issues that May occur<\/strong>.\"<\/p><\/aside>\n<h2>9.14.3<\/span>Safety of the Public and Labour<\/span><\/h2>\n\"the safety of all activities (including traffic safety) in and around the site, and safety of the public and labour, should be ensured by the contractor \u2014 as per prevalent labour laws\/ regulations and the conditions of contract.<\/strong><\/p>\n<aside class=\"note\"> The workmen must be trained and provided protective gear, life-saving equipment, and appropriate tools for their jobs<\/strong>.\"<\/p><\/aside>\nthe hazardous substances: \"special precautions must be used if hazardous chemicals are used or stored at the workplace \u2014 lead, silica, asbestos, and wood\/ stone that will be cut and generate dust; And construction materials containing zinc, cadmium, beryllium, and mercury<\/strong>.\"<\/p>\nthe public-protection list: \"besides protecting the public from noise and environmental pollution \u2014 they must be safeguarded from:<\/strong><\/p>\n<aside class=\"note\">Falls in dug-up areas \u00b7 electrocution \u00b7 flooding \u00b7 falling objects \u00b7 bridge-span dropping\/ failures \u00b7 crane falling\/ overturning \u00b7 and damage to building from vibrations\/ cave-ins from construction activities.<\/strong><\/p>\nTHE Contract Manager Must Ensure That the Contractor Does not Adopt Any Shortcut in this REGARD.<\/em><\/p><\/aside>\n<h1>9.15 Scope and Quantity Control<\/span><\/h1>\n<h2>9.15.1<\/span>Quantity Tolerance \u2014 Minor Short\/ Excess Deliveries [G ONLY]<\/span><\/h2>\n<aside class=\"note\">\"minor shortfall\/ excess deliveries in the last\/ final consignment are unavoidable due to the manufacturing and supply chain vagaries.<\/strong><\/p>\nAlthough to close the contract an amendment May require to be issued \u2014 yet, to simplify the process, the consignee receiving the material can be authorised to treat the contract as completed, provided the deliveries are:<\/strong><\/p>\nSHORT\/ Excess Up to 5 per Cent of the Total Value of the Contract, or Rs. 5 Lakhs \u2014 Whichever is less.<\/em><\/p>\n Payment will be made without the issue of a formal contract amendment, and without reference to the ultimate user\/ indentor. Only the supplied quantity shall be paid for, as per the terms of the contract.<\/strong><\/p>\nThis Shall not Be Applicable to Indivisible Items or Machinery and PLANT.<\/em><\/p><\/aside>\n<h2>9.15.2<\/span>The Option Clause at the Contract Management Stage [G ONLY]<\/span><\/h2>\n1. The right: \"under this clause, the purchaser retains the right to place orders for an additional quantity up to a specified percentage of the originally contracted quantity \u2014 at the same rate and terms of the contract \u2014 during the currency of the contract.<\/strong><\/p>\n<aside class=\"note\"> This clause and percentage should be part of the tender document and the contract, and ideally should not exceed 25\u201330%.<\/strong><\/p>\n Approval should be obtained from the ca (who originally approved the tender decision) to exercise the option clause, based on the value of the contract and the increased quantity.<\/strong><\/p>\n In case the recalculated value of the contract goes beyond the delegation of powers of the original ca \u2014 approval of the ca for the enhanced value May be taken<\/strong>.\"<\/p><\/aside>\n2. The eight conditions governing operation of the option clause:<\/p>\n<aside class=\"note\">\"additional demands should be available for coverage, and over-provisioning May be avoided by keeping informed the officers concerned with provisioning\/ tender evaluation for the next cycle of procurement.<\/strong>\"<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Condition<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>\"if the quantity has been increased under the option clause \u2014 the negative option clause should not be invoked thereafter, or vice versa<\/strong>.\"<\/td><\/tr><tr><td>b<\/td><td>\"in case of a decrease in the ordered quantity \u2014 it would be fair to allow the firm to supply work-in-progress or goods already put up for inspection<\/strong>.\"<\/td><\/tr><tr><td>c<\/td><td>\"there should be no declining trend in the price of the stores \u2014 as evidenced by the fact that no order has since been placed at lower rates, and no tender has been opened since the time offers have been received at lower rates \u2014 even if not finalised<\/strong>.\"<\/td><\/tr><tr><td>d<\/td><td>\"if the option clause exists during the provisioning of the next cycle, and tender evaluation in the next cycle shows an increasing price trend \u2014 the application of the option clause must be positively considered. The contract management authority must also keep an eye on delivery against the contract. If other conditions are satisfied, the option clause must be exercised<\/strong>.\"<\/td><\/tr><tr><td>e<\/td><td>\"the option clause is normally exercised after receipt of 50 (fifty) per cent quantity. If the delivery period is going to expire and other conditions are fulfilled \u2014 it can be exercised even earlier<\/strong>.\"<\/td><\/tr><tr><td>f<\/td><td>\"the option clause shall be exercised during the currency of the contract \u2014 so that the contractor has reasonable time\/ notice for executing such an increase. It can be exercised even if the quantity of the original order is completed before the original last date of delivery. If not already agreed upon, the delivery period shall be fixed for the additional quantity on the lines of the delivery period in the original order \u2014 this will satisfy the requirement of giving reasonable notice to the supplier<\/strong>.\"<\/td><\/tr><tr><td>g<\/td><td>\"this provision can also be exercised in case of PAC\/ single supplier OEM cases<\/strong>.\"<\/td><\/tr><tr><td>h<\/td><td>\"however, where parallel contracts on multiple suppliers are available \u2014 care should be taken in exercising the option clause, so that the original tender decision of splitting quantities and differential pricing is not upset or vitiated. Other things being equal, the supplier with the lower rate should first be considered for the option quantity<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h2 class=\"src-multi\">9.15.3<\/span>Scope of Services<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\">\n1. The performance obligation:<\/p>\n<aside class=\"note\">\"the contractor must perform\/ deliver services of the description, scope\/ quantum, performance standards and quality outlined in the contract \u2014 during the contract period specified therein.<\/strong><\/p>\n The services shall conform to performance and quality standards as stipulated in the contract \u2014 or as per the best standards in the market, where not so specified.<\/strong><\/p>\n The services shall include all incidental works\/ goods, and such other work-elements not mentioned explicitly in this contract \u2014 but that can be reasonably inferred from the contract as being required for attaining completion of the services<\/strong>.\"<\/p><\/aside>\n2. The standard of performance:<\/p>\n<aside class=\"note\">\"the contractor shall perform the services and its obligations with all due diligence, efficiency, and economy \u2014 observing sound management practices, and employ appropriate advanced technology and safe methods as per the performance standards and quality control parameters stipulated in the contract.<\/strong><\/p>\n for matters where the contract does not specify any standard \u2014 the services delivered shall conform to national\/ international standards, or generally accepted professional techniques and practices<\/strong>.\"<\/p><\/aside>\n<\/div><h2>9.15.4<\/span>Performance Standards and Quality Control C<\/span>NC<\/span> \u2014 and the 0.5% damages<\/span><\/h2>\n1. The notification of defects:<\/p>\n<aside class=\"note\">\"the Procuring Entity shall check the quality of the services and shall inspect the contractor's performance according to the contract.<\/strong><\/p>\n The Procuring Entity shall promptly notify the contractor of any identified defects \u2014 requesting the correction of the notified defect within a reasonable time<\/strong>.\"<\/p><\/aside>\n2. The cost-of-correction deduction:<\/p>\n<aside class=\"note\">\"if the contractor has not corrected the notified defect within the time stipulated in the Procuring Entity's notice \u2014 the Procuring Entity shall assess the cost of having the defect corrected.<\/strong><\/p>\n Without prejudice to any of its other remedies under this contract or applicable law \u2014 the Procuring Entity shall be legally entitled to deduct such cost from the contract's payments \u2014 together with the damages for the shortfall in performance, a sum equivalent to the percentage stipulated in the contract<\/strong>.\"<\/p><\/aside>\n3. Damages for shortfall in performance \u2014 the 0.5% Rule:<\/p>\n<aside class=\"note\">\"THE Procuring Entity Shall \u2014 Without Prejudice to Other Rights and Remedies under the Contract \u2014 Recover as Damages for the Shortfall in Performance, but not as a PENALTY:<\/em><\/p>\n0.5 (Half) per Cent (or Any Other Percentage Prescribed) of the Delivered Price (Including Elements of GST & Freight) of the Defective Services \u2014 Without Having to Prove Actual Loss INCURRED.<\/em><\/p>\nNote the phrase \"but not as a penalty\"<\/em> \u2014 this is the standard formulation for liquidated damages under Indian contract law, distinguishing a genuine pre-estimate of loss from an unenforceable penalty.<\/p><\/aside>\n<h2>9.15.5<\/span>Service Level Agreement (SLA) [NC ONLY]<\/span><\/h2>\nThe Non-Consultancy Manual carries a distinct section on the Service Level Agreement (para 9.3.3), which has no counterpart in the Consultancy Manual's scope-control section \u2014 consistent with the NC emphasis on measurable performance standards and KPIs (see Chapter 2, para 2.7.2(d)).<\/p>\n<h1>9.16 Quality Assurance and Inspections<\/span>G<\/span>fullest text<\/span><\/h1>\n<h2>9.16.1<\/span>The Three Components of Quality Assurance<\/span><\/h2>\n<aside class=\"note\">\"in the context of procurement of goods, the quality assurance (QA) process is needed to provide adequate confidence that a procured product will satisfy the standards of quality and serve the purpose for which it is being procured.<\/strong><\/p>\nQA consists of three components:<\/strong><\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Component<\/th><th>How it is done<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>defining quality standards<\/td><td>\"the description and TS define the quality standards expected from the product<\/strong>.\"<\/td><\/tr><tr><td>b<\/td><td>planning assurance of quality<\/td><td>\"by specifying the qualification criteria for the suppliers \u2014 to ensure that they have the technical, infrastructure and financial capabilities to meet the required quality standards. Specifications also lay down quality control requirements \u2014 to indicate parameters, target values, tolerances, and methods of measurement. This also involves laying down the type of inspection agency for inspection<\/strong>.\"<\/td><\/tr><tr><td>c<\/td><td>measurement of quality<\/td><td>\"done through a scheme of inspections at the contract management stage \u2014 which lays down the actual process of inspection<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>9.16.2<\/span>Inspections \u2014 Measuring Quality Standards<\/span><\/h2>\n\"the stages and modes of inspection May vary depending on:<\/strong><\/p>\n<aside class=\"note\">The nature of the goods \u00b7 the total value of the contract \u00b7 the location of the supplier \u00b7 the location of the user<\/strong>, and so on.\"<\/p><\/aside>\n<h2>9.16.3<\/span>Types of Inspection<\/span><\/h2><h3>A. Pre-dispatch Inspection<\/span><\/h3>\na) stage inspection and its purpose:<\/p>\n<aside class=\"note\">\"a pre-dispatch inspection May be conducted either during various stages of the production process (which is known as stage inspection) \u2014 or on the production of the finished products, but before the dispatch of the goods from the supplier's premises.<\/strong><\/p>\n Stage inspection May be used for highly technical goods \u2014 whose quality of the manufacturing process is likely to have a considerable effect on the final quality and durability of the goods.<\/strong><\/p>\nEven After PRE-DISPATCH Inspections, These Materials Should Be Inspected Again upon Receipt as a Matter of Abundant PRECAUTION.<\/em><\/p><\/aside>\nB) who inspects: \"inspection of the materials before dispatch shall be carried out by the inspection agency nominated in the contract, or by its representative, at the premises of the supplier \u2014 in accordance with the inspection procedure laid down and incorporated in the purchase order<\/strong>.\"<\/p>\nc) who pays for testing: \"the supplier should bear the testing charges for samples \u2014 and this should be made clear at the enquiry stage itself, to avoid claims later or affect his position in the comparative statement of offers. Any special testing involving significant financial implications shall be settled prior to placement of the order \u2014 and such costs should form part of the evaluation<\/strong>.\"<\/p>\nd)\u2013g) offshore supplies and the waiver route:<\/p>\n<ul class=\"lst\"><li>\"the Procuring Entity May depute its representative or a third-party inspection agency to the supplier's manufacturing premises to carry out\/ witness inspection and testing, performance testing \u2014 at its discretion<\/strong>\";<\/li><li>\"alternatively, the Procuring Entity shall retain an option to waive the above and accept the material based on the supplier's internal test report, guarantee and fitment certificate. In this regard, the written approval of the hod of the indenting Department should be obtained, and the reasons for it should be recorded<\/strong>\";<\/li><li>\"whenever the inspection is carried out at the supplier's manufacturing premises \u2014 an inspection on receipt of goods at the Procuring Entity shall also be carried out by an officer of the indenting Department or a third-party inspection agency<\/strong>.\"<\/li><\/ul>\nh) the inspector-hospitality prohibition \u2014 a direct instruction from DoE:<\/p>\n<aside class=\"note\">\"it has been brought to the notice of the Department of Expenditure that the contracts signed with suppliers by some of the ministries\/ departments have clauses of pre-inspection at the firm's premises \u2014 where there is a provision that the suppliers or the vendors will pay for the travel, stay, hospitality and other expenses of the inspecting officials.<\/strong><\/p>\nThis is not in Keeping with the Need to Safeguard the Independence of the Inspecting Teams. Such Provisions in Contracts Need to Be Discouraged, So That Inspections are not COMPROMISED.<\/em><\/p>\n Necessary steps May be taken to avoid such provisions in the contracts with suppliers\/ vendors strictly<\/strong>.\" (See also Chapter 3, para 3.8 \u2014 Conduct of Public Servants, Risk 1 on Hospitality.)<\/em><\/p><\/aside>\n<h3>B. Inspection of Goods on Receipt at Consignee\/ User's Site<\/span><\/h3>\n<aside class=\"note\">\"post-delivery inspection is carried out upon receipt of goods before acceptance.<\/strong><\/p>\n This should be typically done for goods that are available off-the-shelf and are bis-marked \u2014 all final goods that May be directly consumed or utilised on delivery (excluding machinery installations and so on), and for which detailed inspection [is not otherwise warranted]<\/strong>.\"<\/p><\/aside>\n<h2>9.16.4<\/span>Types of Inspection Agencies<\/span><\/h2>\n<aside class=\"note\">the governing Rule on changing the agency:<\/p>\n\"normally, inspection modalities or agencies for inspections specified in the contract should not be changed.<\/strong><\/p>\n In rare cases, when this becomes inescapable \u2014 it should be done with the approval of the ca, justifying the rare circumstances, and ensuring that no undue benefit accrues to the contractor<\/strong>.\"<\/p><\/aside>\n<h3>1.<\/span>Internal Inspection Authorities<\/span><\/h3>\n<aside class=\"note\">\"wherever technical expertise is available in-house \u2014 an internal officer of the indenting Department is nominated for inspection.<\/strong><\/p>\nTHE Consignee Should Be the Final Authority for the Acceptance of GOODS.<\/em><\/p><\/aside>\n<h3>2.<\/span>External Inspecting Authorities<\/span><\/h3>\nA) third-party inspection and the reserved right:<\/p>\n<aside class=\"note\">\"in case the Procuring Entity does not have the technical expertise \u2014 or for other relevant reasons \u2014 the inspection May also be entrusted to a third-party inspection authority.<\/strong><\/p>\nTHE Procuring Entity, However, Retains the Right to Reject the Consignment \u2014 Even if third-PARTY Inspection Authorities Have Cleared IT.<\/em><\/p><\/aside>\nb) external laboratory testing \u2014 the approved list and the five guidelines:<\/p>\n<aside class=\"note\">\"sometimes, it becomes necessary to conduct a type test, acceptance test, or special test at external laboratories \u2014 when facilities for these tests are not available in-house with the supplier, or if carrying out confirmatory tests is considered desirable before accepting the goods.<\/strong><\/p>\n The Procuring Entity should draw up a list of approved laboratories for this purpose \u2014 to which the samples drawn from the lots offered by the supplier can be sent for tests.<\/strong><\/p>\n The list should also contain approved laboratories which can be used as referral\/ appellate laboratories for retesting \u2014 when samples tested at one laboratory are decided to be re-tested<\/strong>.\"<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Guideline<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>\"external testing May invariably be done by nationally accredited or reliable laboratories \u2014 preference being given to the National Test House (NTH). For testing the samples drawn from the lots offered by the supplier \u2014 an inspection agent qualified to conduct random sampling in accordance with quality assurance requirements should make the selection of samples<\/strong>.\"<\/td><\/tr><tr><td>ii<\/td><td>\"test reports must contain the values obtained in the tests \u2014 besides fail\/ pass results. The laboratory must preserve the sample and test records for a period of three years<\/strong>.\"<\/td><\/tr><tr><td>iii<\/td><td>\"the Department should lay down a liability statement for costs expended on tests, dispatch of samples, transportation costs, test charges, and so on<\/strong>.\"<\/td><\/tr><tr><td>iv<\/td><td>\"in cases where the samples are to be tested at the supplier's cost because of the non-availability of his own testing arrangements \u2014 the responsibility of depositing the testing fees would rest with the supplier<\/strong>.\"<\/td><\/tr><tr><td>v<\/td><td>the default cost-allocation Rule and its exception \u2014 see below<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">The Default COST-ALLOCATION Rule:<\/p>\n\"normally, unless otherwise intended in the contract:<\/strong><\/p>\n\u2022 charges of routine testing prior to dispatch of materials are to be borne by the supplier; And<\/strong><\/p>\n\u2022 charges of testing of materials after receipt by the consignee are to be borne by the procuring agency.<\/strong><\/p>\n The contract should clearly State the responsibility for the cost of materials expended in tests, and charges for special tests \u2014 e.g., type tests or tests at external labs.<\/strong><\/p>\nEven Where the Procuring Entity is Responsible for Testing Charges \u2014 if the Material Fails in the Test, the Charges Shall Become the Responsibility of the SELLER.<\/em><\/p><\/aside>\n<h3>3.<\/span>Joint Inspection on Complaint<\/span><\/h3>\n<aside class=\"note\">\"in case a written complaint is received from the supplier disputing the rejection of goods by the Procuring Entity \u2014 it should be jointly investigated by a team consisting of:<\/strong><\/p>\n1. An authorised representative of the Procuring Entity;<\/strong><\/p>\n2. A senior representative of the inspecting agency who is conversant with the goods; And<\/strong><\/p>\n3. An authorised representative of the supplier.<\/strong><\/p>\nIN Case the Firm Fails to Associate with a Joint Inspection \u2014 IT Should Be Held with the PRE-INSPECTING AGENCY.<\/em><\/p><\/aside>\n<h2>9.16.5<\/span>Issue of Inspection Report<\/span><\/h2>\n\"after satisfactory inspection and tests \u2014 the acceptable goods shall be stamped, labelled<\/strong>\u2026\"<\/strong>(and the Inspection Report issued accordingly; see also the Goods Receipt and Inspection Report<\/strong> at Annexure 25 of the Goods Manual.)<\/em><\/p>\n<h2>9.16.6<\/span>Material Put Up for Inspection Towards the End of Delivery<\/span><\/h2>\nA distinct sub-section of the Goods Manual (9.4.6) governs the treatment of material offered for inspection at or near the expiry of the delivery period \u2014 read with para 9.3.11 (Handling Deliveries at the Last Moment or after Expiry of the Delivery Period), covered in Part B of this chapter.<\/p>\n<h2>9.16.7<\/span>Approval of Acceptable Deviations<\/span><\/h2>\nGoods para 9.4.7 provides for the formal approval of acceptable deviations discovered at inspection \u2014 the contract-management counterpart of the minor vs substantive deviation<\/em> test at the evaluation stage (Chapter 7 Part A, para 7.15.4).<\/p>\n<h1>9.17 Warranty Clause [G ONLY]<\/span><\/h1>\n<h2>9.17.1<\/span>The Warranty and Its Survival<\/span><\/h2>\n<aside class=\"note\">\"if included, in the case of works and capital equipment \u2014 the warranty clause in the contract warrants that goods supplied by the contractor would continue to conform to the description and quality during the specified warranty period:<\/strong><\/p>\nUSUALLY, 24 Months After Delivery, or 18 Months from the Date of Placement in Service \u2014 Whichever is SOONER.<\/em><\/p>\n Obligations of the contractor under the warranty clause shall survive \u2014 even though the goods May have been inspected, accepted, installed\/ commissioned, and paid for by the Procuring Entity, or the contract is terminated for any reason whatsoever.<\/strong><\/p>\nWhen no warranty clause is called for: \"in the procurement of goods other than capital equipment \u2014 and in the case of low-value capital goods, say up to rupees one lakh \u2014 a warranty clause is not called for<\/strong>.\"<\/p><\/aside>\n<h2>9.17.2<\/span>Notification of Defect<\/span><\/h2>\n<aside class=\"note\">\"the Procuring Entity shall promptly notify in writing to the contractor, during the period above \u2014 if the said goods\/ stores\/ articles are discovered not to conform to the description and quality, or have deteriorated, otherwise than by fair wear and tear.<\/strong><\/p>\n (The decision of the Procuring Entity in that behalf being final and conclusive.)<\/strong>\"<\/p><\/aside>\n<h2>9.17.3<\/span>The 14-Day Rectification Obligation<\/span><\/h2>\n<aside class=\"note\">\"upon receipt of such notice, the contractor shall \u2014 within 14 days (or within any other period, if stipulated in the contract) \u2014 expeditiously repair or replace the defective goods or parts thereof, free of cost, at the ultimate destination.<\/strong><\/p>\n The contractor shall take over the replaced parts\/ goods after providing their replacements \u2014 and no claim shall lie on the Procuring Entity for such replaced parts\/ goods thereafter<\/strong>.\"<\/p><\/aside>\n<h2>9.17.4<\/span>THE WARRANTY PENALTY REGIME \u2014 0.5% per week, capped at 5%<\/span><\/h2>\n<aside class=\"note\">\"A Penalty of 0.5% (Half per Cent, or as Specified in the Contract) of the Contract Value for Every Week of Delay in Response Time Beyond the Specified Time \u2014 Shall Be Recoverable from the Performance\/ Warranty GUARANTEE.<\/em><\/p>\nTHE Maximum Penalty for Warranty Failure Will Be 5% (Five per Cent) of the Contract Value During the Whole Warranty PERIOD.<\/em><\/p>\n If there is further such delay after reaching this limit \u2014 the Procuring Entity shall be entitled to encashment of the whole of performance\/ warranty guarantee bonds \u2014 besides recording the adverse performance of the contractor for future tenders<\/strong>.\"<\/p><\/aside>\n<h2>9.17.5<\/span>Warranty on Rectified\/ Replaced Goods \u2014 the no-extension rule<\/span><\/h2>\n<aside class=\"note\">\"IN Case of Any Rectification of a Defect or Replacement of Any Defective Goods During the Warranty Period \u2014 the Warranty for the Rectified\/ Replaced Goods Shall Remain Till the Original Warranty PERIOD.<\/em><\/p>\nThat is, replacement does not<\/strong> restart or extend the warranty clock.<\/em><\/p><\/aside>\n<h2>9.17.6<\/span>The 21-Day Breach Trigger<\/span><\/h2>\n<aside class=\"note\">\"IF the Contractor \u2014 Having Been Notified \u2014 Fails to Rectify\/ Replace the DEFECT(S) Within 21 Days (or Within Any Other Period, if Stipulated in the CONTRACT):<\/em><\/p>\nIT Shall Amount to a Breach of Contract for Default \u2014 and the Procuring Entity Shall Avail Any or All Remedial ACTION(S) Thereunder, Including Forfeiture of Warranty\/ Performance Bank GUARANTEE.<\/em><\/p><\/aside>\n<h1>Appendix to Chapter 9 \u2014 Part a: Points of Difference<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Chapter number and title<\/td><td>G: Ch. 9 Contract Management \u00b7 W: Ch. 7 *Execution and Monitoring of Works and Quality Assurance<\/strong> \u00b7 C: Ch. 10 <\/em>Monitoring\u2026 \u00b7 NC: Ch. 9 *Monitoring\u2026<\/strong><\/td><\/tr><tr><td>2<\/td><td>Number of heads under contract management<\/td><td>G: 8 \u00b7 W: 7 \u00b7 C and NC: 5 (with nine sub-heads under Contract Administration)<\/em><\/td><\/tr><tr><td>3<\/td><td>\"Post-contract evaluation\" as a distinct head<\/td><td>c + nc only<\/td><\/tr><tr><td>4<\/td><td>The six ways poor project management \"costs the nation\"<\/strong>(incl. \"creates a culture of acceptance of delay\" and \"monetisation of higher risks perceived by contractors\")<\/em><\/td><td>W ONLY<\/td><\/tr><tr><td>5<\/td><td>Why services contracts need more intense monitoring \u2014 \"lack of physically\/ tangibly measurable outcomes\"; Management by Exception; counterpart Project Manager<\/td><td>c + nc only<\/td><\/tr><tr><td>6<\/td><td>contract Monitoring Committee (CMC)<\/strong> \u2014 Rule 205; at least three members; CEC members may be reused; outside experts at Procuring Entity's cost; six responsibilities incl. power to levy LD<\/strong> and accept\/ reject any part<\/strong><\/td><td>c + nc only<\/td><\/tr><tr><td>7<\/td><td>Appointing another qualified consultant to assist the CMC in complex assignments<\/td><td>c + nc only<\/td><\/tr><tr><td>8<\/td><td>Aligning the interest of the stakeholders<\/strong> \u2014 incentive structure; pecuniary and non-pecuniary; naming the contractor and project-in-charge publicly at work sites<\/strong>; recognition with \"long shelf life\"<\/td><td>W ONLY<\/td><\/tr><tr><td>9<\/td><td>Principle of Proportionality<\/strong> \u2014 \"one size does not fit all\"; too many checks stifle innovation, too little control produces \"an undisciplined crisis management culture\"<\/td><td>W ONLY<\/td><\/tr><tr><td>10<\/td><td>The Contract Manager \u2014 the six alternative titles; single person for small contracts, team for large; quarterly\/ monthly monitoring by the Works Committee with status report to the Secretary<\/td><td>W ONLY<\/td><\/tr><tr><td>11<\/td><td>The fourteen-point monthly MIS Progress Report<\/strong> \u2014 incl. named manpower statement<\/strong>, colour progress photographs, hold-ups and disputes to be highlighted<\/td><td>W ONLY<\/td><\/tr><tr><td>12<\/td><td>The photograph\/ video system as \"a permanent record of the project for posterity\u2026 in case needed for litigation or enquiry\/ investigation\"<\/td><td>W ONLY<\/td><\/tr><tr><td>13<\/td><td>Project management software named \u2014 MS PPM and Oracle Primavera P6; PMI-certified contract managers<\/td><td>W ONLY<\/td><\/tr><tr><td>14<\/td><td>The six prerequisites to commencement<\/strong> \u2014 land acquisition, permits (with the delay-claim warning), quarries and borrow areas, safety at work site, advance payments, insurances<\/td><td>W ONLY<\/td><\/tr><tr><td>15<\/td><td>\"All or most pre-requisites shall be fulfilled before award of the LoA\"<\/td><td>W ONLY<\/td><\/tr><tr><td>16<\/td><td>Commencement of Work<\/strong> \u2014 Work Order within 2 weeks but not later than 6 weeks from LoA<\/strong>; the three contractor submissions (Work Program, Method Statement, QA Plan); possession of site<\/td><td>W ONLY<\/td><\/tr><tr><td>17<\/td><td>Mobilisation as a distinct pre-construction phase<\/td><td>W ONLY<\/td><\/tr><tr><td>18<\/td><td>Review of Inception Phase<\/td><td>c + nc only<\/td><\/tr><tr><td>19<\/td><td>Incentives for Excellence in Contract Execution<\/td><td>c + nc only<\/td><\/tr><tr><td>20<\/td><td>Safeguards for handing over materials \u2014 the Rs 1 lakh BG waiver and indemnity bond alternative; certificate on return of ID cards and gate passes; payment for electricity\/ water\/ crane<\/td><td>Common \u2014 W text fullest<\/td><\/tr><tr><td>21<\/td><td>ESHS\/ SHE<\/strong> \u2014 mandatory skills in Bid Documents; site safety engineer mandatory; frequent SHE audits; the hazardous-substances list; the public-protection list<\/td><td>W ONLY<\/td><\/tr><tr><td>22<\/td><td>Quantity tolerance \u2014 5% of contract value or Rs 5 lakh whichever is less; not applicable to indivisible items or machinery and plant<\/td><td>G ONLY<\/td><\/tr><tr><td>23<\/td><td>The eight conditions governing the Option Clause<\/strong> \u2014 no reverse invocation; exercise normally after 50% receipt; no declining price trend; must be exercised during currency; care with parallel contracts<\/td><td>G ONLY<\/td><\/tr><tr><td>24<\/td><td>Scope of Services \u2014 \"such other work-elements not mentioned explicitly but that can be reasonably inferred\"<\/td><td>c + nc only<\/td><\/tr><tr><td>25<\/td><td>Damages for shortfall in performance \u2014 0.5% of delivered price \"but not as a penalty\", without having to prove actual loss<\/td><td>c + nc only<\/td><\/tr><tr><td>26<\/td><td>Service Level Agreement as a distinct section<\/td><td>nc only<\/td><\/tr><tr><td>27<\/td><td>The three components of Quality Assurance (defining, planning, measuring)<\/td><td>G ONLY<\/td><\/tr><tr><td>28<\/td><td>Stage inspection; \"even after pre-dispatch inspections, materials should be inspected again upon receipt as a matter of abundant precaution\"<\/td><td>G ONLY<\/td><\/tr><tr><td>29<\/td><td>The prohibition on suppliers paying for inspectors' travel, stay and hospitality<\/td><td>G ONLY<\/td><\/tr><tr><td>30<\/td><td>\"The consignee should be the final authority for the acceptance of goods\"<\/td><td>G ONLY<\/td><\/tr><tr><td>31<\/td><td>\"The Procuring Entity retains the right to reject the consignment even if third-party inspection authorities have cleared it\"<\/td><td>G ONLY<\/td><\/tr><tr><td>32<\/td><td>External testing \u2014 preference to the National Test House; test reports must contain values not just fail\/pass; laboratory must preserve sample and records for three YEARS; referral\/ appellate laboratories<\/td><td>G ONLY<\/td><\/tr><tr><td>33<\/td><td>The default testing-cost rule (supplier pre-dispatch, procuring agency post-receipt) \u2014 and the exception that if the material FAILS, the charges become the seller's<\/td><td>G ONLY<\/td><\/tr><tr><td>34<\/td><td>Joint Inspection on Complaint \u2014 the three-member team; if the firm fails to associate, it is held with the pre-inspecting agency<\/td><td>G ONLY<\/td><\/tr><tr><td>35<\/td><td>Warranty Clause \u2014 24 months after delivery or 18 months from placement in service whichever sooner; obligations survive acceptance and even termination; 14-day rectification; 0.5% per week capped at 5%; replacement warranty runs only to the ORIGINAL warranty period; 21-day failure = breach<\/td><td>G ONLY<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 9 \u2014 part a<\/p>\n<aside class=\"note\">Next:<\/strong>Chapter 9 \u2014 part b: Time control, cost control, logistics and closure<\/strong> \u2014 Delivery Period \u00b7 Delays in Delivery\/ Execution \u00b7 Extension of Delivery and Extension of Time (EOT)<\/strong> \u00b7 Performance Notice \u00b7 Force Majeure<\/strong> \u00b7 Denial Clause<\/strong> \u00b7 Liquidated Damages, quantum and waiver<\/strong> \u00b7 Handling deliveries after expiry of the delivery period \u00b7 Compensation Events<\/strong> \u00b7 Time at Large<\/strong> \u00b7 Prices, Taxes and Statutory Variation \u00b7 Passing of bills and Payments \u00b7 Logistics: Transportation, Transfer of Title, Insurance, Receipt of Consignment, Storage and Issue [G only]<\/strong> \u00b7 Closure of Contract and its four reconciliations W<\/span> \u00b7 <\/strong>Concluding the Assignment and Post-Contract Review C<\/span>NC<\/span>.<\/p><\/aside>Part II<\/span>Time Control, Cost Control, Logistics and Closure<\/em><\/p>\nMerging: Goods Ch. 9<\/strong> (paras 9.3, 9.5, 9.6, 9.7.6) \u00b7 Works Ch. 7<\/strong> (paras 7.4, 7.5, 7.6) \u00b7 Consultancy Ch. 10<\/strong> (paras 10.4, 10.5, 10.6) \u00b7 Non-Consultancy Ch. 9<\/strong> (paras 9.4, 9.5, 9.6)<\/em><\/p><h2>Concordance for Chapter 9 \u2014 Part B<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>G<\/th><th>W<\/th><th>C<\/th><th>NC<\/th><\/tr><\/thead><tbody><tr><td>9.18<\/td><td>Delivery Period; Terms of Delivery<\/td><td>9.3.1, 9.3.2<\/td><td>7.4.1, 7.4.2<\/td><td> \u2014 <\/td><td>9.4.1<\/td><\/tr><tr><td>9.19<\/td><td>Delays in Delivery\/ Execution<\/td><td>9.3.3<\/td><td>7.4.5<\/td><td>10.4.1<\/td><td>9.4.2<\/td><\/tr><tr><td>9.20<\/td><td>Extension of Delivery \/ Extension of Time (EOT)<\/td><td>9.3.4<\/td><td>7.4.6<\/td><td>10.4.2<\/td><td>9.4.3<\/td><\/tr><tr><td>9.21<\/td><td>Performance Notice<\/td><td>9.3.5<\/td><td>7.4.9<\/td><td>10.4.3<\/td><td>9.4.4<\/td><\/tr><tr><td>9.22<\/td><td>Force Majeure (FM)<\/td><td>9.3.6<\/td><td>7.4.4<\/td><td>10.4.9<\/td><td>9.4.10<\/td><\/tr><tr><td>9.23<\/td><td>Denial Clause (DC)<\/td><td>9.3.7<\/td><td>7.4.8<\/td><td>10.4.4<\/td><td>9.4.5<\/td><\/tr><tr><td>9.24<\/td><td>Liquidated Damages, Quantum and Waiver<\/td><td>9.3.8\u20139.3.10<\/td><td>7.4.7<\/td><td>10.4.5\u201310.4.8<\/td><td>9.4.6\u20139.4.9<\/td><\/tr><tr><td>9.25<\/td><td>Handling Deliveries at the Last Moment\/ After Expiry<\/td><td>9.3.11<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.26<\/td><td>Compensation Events<\/td><td> \u2014 <\/td><td>7.4.10<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.27<\/td><td>Time At Large<\/td><td> \u2014 <\/td><td>7.4.11<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.28<\/td><td>Cost Control \u2014 Prices, Taxes and Payments<\/td><td>9.5<\/td><td>7.5<\/td><td>10.5<\/td><td>9.5<\/td><\/tr><tr><td>9.29<\/td><td>Electronic Bill (e-Bill) Processing System<\/td><td> \u2014 <\/td><td>7.5.8<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.30<\/td><td>Logistics: Transportation, Receiving, Storage and Issue<\/td><td>9.6<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.31<\/td><td>Closure of Contract<\/td><td>9.7.6<\/td><td>7.6<\/td><td>10.6<\/td><td>9.6<\/td><\/tr><tr><td>9.32<\/td><td>Concluding the Assignment and Post-Contract Review<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>10.6<\/td><td>9.6<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>9.18 Delivery Period and Terms of Delivery<\/span><\/h1>\n<h2 class=\"src-G\">9.18.1<\/span>The Delivery Period Must Be Specific<\/span>G<\/span><\/h2><div class=\"srcblock src-G\">\n<aside class=\"note\">\"the period FOR delivery of the ordered goods, and completion of any allied service(s) thereof \u2014 such as installation and commissioning of the equipment, operators' training, and so on \u2014 are to be properly specified in the contract with definite dates.<\/strong><\/p>\nAND These Shall Be Deemed to Be the Essence of the CONTRACT.<\/em><\/p>\n The delivery period stipulated in contracts should be specific and practical. Vague and ambiguous terms should be avoided<\/strong>.\"<\/p><\/aside>\n<\/div><h2 class=\"src-G\">9.18.2<\/span>Terms of Delivery Determine When Title Passes<\/span>G<\/span><\/h2><div class=\"srcblock src-G\">\n<aside class=\"note\">\"terms of delivery (for, FOB, CIF, CFR, and so on), inter alia, determine the delivery point of the ordered goods \u2014 from where the purchaser is to receive\/ collect the goods.<\/strong><\/p>\nIT Also Decides the Legally Critical Issue of When the 'Titles of the Goods' Have Passed to the PURCHASER.<\/em><\/p>\n The delivery period is to be read in conjunction with the terms of delivery. Therefore, the delivery is taken to have been made at the time when goods reach the delivery point as per the delivery terms<\/strong>.\"<\/p>\n(See Chapter 6, para 6.17 \u2014 Incoterms 2020<\/strong> \u2014 for the eleven delivery terms and the title-of-goods principle.)<\/em><\/p><\/aside>\n<\/div><h2 class=\"src-W\">9.18.3<\/span>Contract Effective Date and Work Program<\/span>W<\/span><\/h2><div class=\"srcblock src-W\">\nThe Works Manual replaces \"delivery period\" with Contract Effective Date (7.4.1) and the Work Program (7.4.2) \u2014 the latter being the contractor's submission approved by the Contract Manager at the commencement stage (see Part A, para 9.6).<\/p>\n<\/div><h2 class=\"src-NC\">9.18.4<\/span>Contract Period and Options<\/span>NC<\/span><\/h2><div class=\"srcblock src-NC\">\nThe Non-Consultancy Manual carries a distinct opening section on Contract Period and Options (9.4.1) \u2014 governing the initial contract term and the exercise of extension options in service contracts.<\/p>\n<h1>9.19 Delays in Delivery \/ Execution<\/span><\/h1>\n<\/div><h2>9.19.1<\/span>The Governing Principle \u2014 Time is the Essence<\/span><\/h2>\n<aside class=\"note\">\"suppliers shall be required to adhere to the delivery Schedule \u2014 including any instalment thereof, or incidental work\/ services (e.g., installation, commissioning, operator training) \u2014 specified in the purchase order (or as extended).<\/strong><\/p>\nAND, if There is a Delay in Supplies, IT Amounts to Breach of Contract \u2014 Since 'Time is the Essence of the CONTRACT'.<\/em><\/p><\/aside>\nThe two remedies: The Procuring Entity May, without prejudice to his other rights<\/strong>:<\/p>\na) recover from the contractor Liquidated Damages<\/strong>; or<\/p>\nb) treat the delay as a breach of contract and avail all the remedies therein<\/strong>.<\/p>\n<aside class=\"note\">The caution on using (b): \"although it is in the purchaser's interest to resort to this provision only as a last resort \u2014 in case of inordinate delays<\/strong>.\"<\/p><\/aside>\nC<\/span> adds the notification duty: \"the consultant should notify the Procuring Entity and explain the causes of such delays<\/strong>.\"<\/p>\n<h2>9.19.2<\/span>INORDINATE DELAYS \u2014 the 25% test and its consequence<\/span><\/h2>\n<aside class=\"note\">\" Inexcusable Delays of More Than one-FOURTH (25%) of the Total Completion Period Shall Be Treated as Inordinate DELAYS.<\/em><\/p>\n Such inordinate delays May be treated as a breach of contract \u2014 and shall be noted as deficient performance and held against the contractor in future tenders.<\/strong><\/p>\n A show-cause notice shall be issued to the contractor before declaring it a deficient performance.<\/strong><\/p>\nIN Case the Procuring Entity Decides to Allow Performance of Contract After Inordinate Delays \u2014 the Maximum Limit on LD Shall Be 10% (Instead of 5%) of the Total Contract VALUE.<\/em><\/p><\/aside>\n<h2>9.19.3<\/span>Delay for Which the Supplier is NOT Responsible \u2014 the four cases<\/span><\/h2>\n\"in cases where there is a delay for which the supplier is not responsible \u2014 the delivery period needs to be re-fixed without imposing any penalty on the supplier \u2014 i.e., without LD and without a Denial Clause.<\/strong><\/p>\nNormally, in the following circumstances, the supplier May not be considered responsible for the delay<\/strong>:\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Case<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>cases where the supplier is dependent on the approval of the pre-production sample \u2014 and the delay occurs in approving the sample, though submitted by the supplier in time<\/strong><\/td><\/tr><tr><td>ii<\/td><td>where extension is granted on account of some omission on the part of the purchaser, which affects the due performance of the contract by the supplier<\/strong><\/td><\/tr><tr><td>iii<\/td><td>cases where the purchaser controls the entire production Schedule of the supplier<\/strong><\/td><\/tr><tr><td>iv<\/td><td>cases where production and\/ or delivery has been affected by force Majeure, or statutory change, or specific executive instructions issued by govt.<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">The shared-fault Rule: \"there May be delays for which both buyer and supplier May be responsible to a different extent. In such cases, the levy of LD and Denial Clause May be decided on merits<\/strong>.\"<\/p>\nW<\/span> variant: *\"\u2026<\/strong>the procuring entity, with the approval of CA and concurrence of finance, may decide a lower quantum of LD, and consider waiver of Denial Clause on the merit of the case.\"*<\/p><\/aside>\n<h1>9.20 Extension of Delivery \/ Extension of Time (EOT)<\/span><\/h1>\n<h2 class=\"src-W\">9.20.1<\/span>THE TWO DISTINCT CONCEPTS \u2014 Re-fixation vs Extension<\/span>W<\/span>the clearest statement<\/span><\/h2><div class=\"srcblock src-W\">\n<aside class=\"note\">This Distinction is the Single Most Important Point in this Section<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>RE-FIXATION OF DELIVERY<\/th><th>EXTENSION OF TIME (EOT)<\/th><\/tr><\/thead><tbody><tr><td>When<\/td><td>the delay is not attributable to the contractor<\/strong> (or in case of Force Majeure)<\/td><td>the delay is attributable (fully or partly) to the contractor<\/strong><\/td><\/tr><tr><td>What it is<\/td><td>\"a fresh completion period, treated like the original completion period \u2014 which is arrived at by recasting the original contractual completion period, after taking care of the lost period for which the contractor was not responsible<\/strong>\"<\/td><td>the completion Schedule is extended<\/strong><\/td><\/tr><tr><td>LD<\/td><td>without LD<\/strong><\/td><td>with LD<\/strong><\/td><\/tr><tr><td>Denial Clause<\/td><td>Without the denial clause<\/strong><\/td><td>With the denial clause<\/strong><\/td><\/tr><tr><td>Approval<\/td><td>with the approval of Competent Authority<\/strong><\/td><td>(as above)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h2>9.20.2<\/span>The Contractor's Duty to Give Notice<\/span><\/h2>\n<aside class=\"note\">\"if at any time during the currency of the contract, the contractor encounters conditions hindering the timely delivery\/ completion \u2014 he shall promptly inform the concerned officer in writing.<\/strong><\/p>\n He should mention its likely duration, and request an extension of the Schedule accordingly<\/strong>.\"<\/p>\nW<\/span> \u2014 the \"do not leave it to the end\" Rule:<\/p>\n\" Extension of time (EOT) must not be left to the end; It should be dealt with promptly during the progress of the contract \u2014 and for ongoing critical delay, interim EOT May be awarded.<\/strong><\/p>\n After the final stage of completion is reached (final taking-over certificate issued) \u2014 EOT and LD May be reviewed, if required<\/strong>.\"<\/p><\/aside>\n<h2 class=\"src-G\">9.20.3<\/span>The Two Pre-conditions for Granting Extension<\/span>G<\/span><\/h2><div class=\"srcblock src-G\">\non approval from the ca, the Procuring Entity May agree to extend the delivery Schedule \u2014 with or without LD, and with or without the Denial Clause<\/strong> \u2014 provided:<\/p>\nA) the earlier-delivery test: \"that a higher rate in the original tender was not accepted against other lower quotations in consideration of the earlier delivery<\/strong>.\"<\/p>\nb) the falling-price test: \"in the case of fixed price contracts \u2014 there is no falling trend in prices for this item, as evidenced by the fact that, in the intervening period, neither orders have been placed at rates lower than this contract, nor any tender has been opened where such rates have been received \u2014 even though the tender is not yet decided.<\/strong><\/p>\n<aside class=\"note\"> In cases of certain raw material supplies where prices are linked to the PVC \u2014 extension May be granted even in case of a falling trend in price indices, since the price variation mechanism protects the purchaser's interests. However, in such cases it should be ensured that extensions are done with the Denial Clause<\/strong>.\"<\/p><\/aside>\n<\/div><h2>9.20.4<\/span>Extension Amounts to an Amendment \u2014 and Requires Consent<\/span><\/h2>\n<aside class=\"note\">\"EXTENSION of the Delivery Date Amounts to an Amendment of the Contract. Such an Extension Can Only Be Done with the Consent of Both PARTIES.<\/em><\/p>\nNO Extension of the Delivery Date is to Be Granted Suo Motu \u2014 Unless the Supplier Specifically Asks for IT.<\/em><\/p>\n However, in a few cases it May be necessary to grant an extension suo motu in the interest of the administration. In such cases, it is legally necessary to obtain clear acceptance of the extension letter from the supplier<\/strong>.\"<\/p><\/aside>\n<h2>9.20.5<\/span>EXTENSION AFTER EXPIRY \u2014 Section 63 of the Indian Contract Act [W ONLY]<\/span><\/h2>\n<aside class=\"note\">\" The power to extend the time for performance under section 63 of the Indian Contract Act is not inherently limited to extensions granted before the original deadline. It can be exercised even after the stipulated time has passed \u2014 provided there is consent from both parties.<\/strong><\/p>\n The contract does not automatically terminate upon the expiry of the initial delivery date \u2014 if there is a shared intention to continue the contractual relationship and fulfil the obligations, albeit under a revised timeline.<\/strong><\/p>\nTherefore, such extension\/ re-fixation of time can be done even after expiry of the original period \u2014 provided consent of the contractor is obtained.<\/strong><\/p>\nHOWEVER, IT is Prudent to Formalise the Extension Before the Original Delivery Period Expires \u2014 to Avoid Any Arguments About the CONTRACT'S Validity, or of Extension of Time After the Initial DEADLINE.<\/em><\/p><\/aside>\n<h2>9.20.6<\/span>THE CORRESPONDENCE TRAP \u2014 and the mandatory closing sentence<\/span><\/h2>\n<aside class=\"note\">\" No Correspondence Should Be Entered into with the Supplier After the Expiry of the Contract Delivery Period, or Towards the End of IT \u2014 Which Has the Legal Effect of Condoning the Delay\/ Breach of CONTRACT.<\/em><\/p>\nWhen it is necessary to obtain certain information regarding past supplies \u2014 it should be made clear that calling for such information:<\/strong><\/p>\n\u2022 is not intended to keep the contract alive;<\/strong><\/p>\n\u2022 that it does not waive the breach; And<\/strong><\/p>\n\u2022 that it is without prejudice to the rights and remedies available to the purchaser under the terms of the contract.<\/strong><\/p>\nThe Mandatory Last Line of Such a Communication:<\/p>\n\"This letter is issued without any prejudice to Procuring Entity's rights and remedies under the terms and conditions of the subject contract, and without any commitment or obligation.\"<\/strong><\/p><\/aside>\n<h2>9.20.7<\/span>THE LD WARNING TRAP \u2014 why \"without prejudice\" is NOT enough<\/span><\/h2>\n<aside class=\"note\">\"when it is decided to extend the delivery period subject to recovery of LD for delay in supplies \u2014 contractors must be given a warning to this effect in writing at the time of granting extensions.<\/strong><\/p>\n it is not correct to grant extensions without any mention of the LD \u2014 if it is proposed to recover such charges eventually.<\/strong><\/p>\nIT is Also not Correct to Grant an Extension of the Delivery Period by Merely Stating That the Extension is Granted \"without Prejudice to the Rights of the Purchaser under the Terms and Conditions of the CONTRACT\" \u2014 <\/em><\/p>\n Because this would mean that all the options given in the conditions of the contract would be available to the purchaser on expiry of the extended delivery period \u2014 and would not amount to exercise of the option to recover LD.<\/strong><\/p>\n To take care of the complex legalities brought out above \u2014 an extension of the delivery period, when granted, should only be done in writing in the prescribed [legally vetted] format<\/strong>.\"<\/p>\nW<\/span> adds: *\"<\/strong>Organisations may put in place a graded authority structure, whereby extension of time for [different durations is approved at different levels].\"*<\/p><\/aside>\n<h1>9.21 Performance Notice (Notice-cum-Extension Letter)<\/span><\/h1>\n<aside class=\"note\">The Situation IT Addresses:<\/p>\n\"a situation May arise where:<\/strong><\/p>\n\u2022 the supply\/ services\/ work have not been completed within the stipulated period, due to negligence\/ fault of the supplier;<\/strong><\/p>\n\u2022 however, the supplier has not made any request for an extension of the delivery period;<\/strong><\/p>\n\u2022 but the purchaser still requires the contracted goods\/ services; And<\/strong><\/p>\n\u2022 the purchaser does not want to terminate the contract at that stage.<\/strong><\/p>\nIN Such a Case, a Performance Notice \u2014 Also Known as a NOTICE-CUM-EXTENSION Letter \u2014 May Be Issued to the Supplier: by Suitably Extending the Delivery Date, and by Imposing LD with Denial CLAUSES.<\/em><\/p>\n The supplier's acceptance of the performance notice, and further action thereof, should also be processed in the same manner as an ordinary extension<\/strong>.\"<\/p><\/aside>\n<h1>9.22 Force Majeure Clause (FM)<\/span><\/h1>\n<h2>9.22.1<\/span>The Definition and Its Exclusions<\/span><\/h2>\n<aside class=\"note\">\"a Force Majeure (FM) means extraordinary events or circumstances beyond human control \u2014 such as:<\/strong><\/p>\nAn event described as an Act of god (like a natural calamity) \u00b7 or events such as a war, strike, riots, crimes.<\/strong><\/p>\nBut not including:<\/em><\/p>\n\u2022 negligence or wrong-doing;<\/strong><\/p>\n\u2022 predictable\/ seasonal rain; And<\/strong><\/p>\n\u2022 any other events specifically excluded in the clause.<\/strong><\/p><\/aside>\n<h2>9.22.2<\/span>What the FM Clause Does \u2014 suspension, NOT excuse<\/span><\/h2>\n<aside class=\"note\">\"AN FM Clause in the Contract Frees Both Parties from Contractual Liability and Obligation \u2014 When Prevented by Such Events from Fulfilling Their Obligations under the CONTRACT.<\/em><\/p>\nAN FM Clause Does not Entirely Excuse a PARTY'S NON-PERFORMANCE \u2014 but Only Suspends IT for the Duration of the FM.<\/em><\/p><\/aside>\n<h2>9.22.3<\/span>The Notice Requirement \u2014 14 days, and no ex post facto claim<\/span><\/h2>\n<aside class=\"note\">\"THE Firm Must Give Notice of FM Within a Reasonable Time as the Conditions Permit \u2014 Say, not Later Than 14 Days After its OCCURRENCE.<\/em><\/p>\nAnd it cannot Be Claimed Ex Post FACTO.<\/em><\/p><\/aside>\nFM affecting the purchaser: \"there May be an FM situation affecting the purchase organisation only. In such a situation, the purchase organisation is to communicate with the supplier along similar lines as above for further necessary action<\/strong>.\"<\/p>\n<h2>9.22.4<\/span>the 90-DAY Termination Option<\/span><\/h2>\n<aside class=\"note\">\"IF the Performance \u2014 in Whole or in Part, or Any Obligation under this Contract \u2014 is Prevented or Delayed by Any Reason of FM for a Period Exceeding 90 (Ninety) DAYS:<\/em><\/p>\nEITHER Party May, at its Option, Seek to Terminate the Contract Without Any Financial Repercussion on Either SIDE.<\/em><\/p><\/aside>\n<h2>9.22.5<\/span>The Immunity from Punitive Provisions<\/span><\/h2>\n<aside class=\"note\">\"notwithstanding the punitive provisions contained in the contract for delay or breach of contract \u2014 the supplier would not be liable for imposition of any such sanction, so long as the delay and\/ or failure of the supplier in fulfilling its obligations under the contract is the result of an event covered in the FM clause<\/strong>.\"<\/p><\/aside>\n<h1>9.23 Denial Clause (DC)<\/span><\/h1>\n<h2>9.23.1<\/span>What It Is and Why It Exists<\/span><\/h2>\n<aside class=\"note\">\"the buyer should protect himself against extra expenditure during the extended period \u2014 by stipulating a Denial Clause (over and above the levy of LD) in the letter informing the supplier of the extension of the delivery period.<\/strong><\/p><\/aside>\n<h2>9.23.2<\/span>the Asymmetric Operation of the Denial Clause<\/span><\/h2>\n<aside class=\"note\">\"IN the Denial Clause \u2014 Wherever Delay in Delivery is Due to a Default by the SELLER:<\/em><\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Direction<\/th><th>Who bears\/ benefits<\/th><\/tr><\/thead><tbody><tr><td>ANY increase<\/em> In statutory duties, and\/ or upward rise<\/em> In prices due to the PVC clause, and\/ or any adverse<\/em> Fluctuation in foreign exchange<\/td><td>are to be borne by the seller<\/strong> During the extended delivery period<\/td><\/tr><\/tbody><\/table><\/div><\/aside>\n| ANY downward<\/em> Revision in statutory duties, PVC, and foreign exchange rate | the purchaser reserves his right to get the benefit<\/strong> During such period |<\/p>\n<aside class=\"note\">The Consequence, Stated in One Sentence:<\/p>\n\"Thus, PVC, other variations, and foreign exchange clauses \u2014 in such cases \u2014 operate only during the original delivery period.\"<\/strong><\/p>\n(Compare Chapter 6, para 6.14.3-4-vi and para 6.15-3, where the same asymmetric rule is stated for the PVC and for ERV.)<\/em><\/p><\/aside>\n<h1>9.24 Liquidated Damages (LD) \u2014 Concept, Quantum and Waiver<\/span><\/h1>\n<h2>9.24.1<\/span>The Legal Concept<\/span><\/h2>\n<aside class=\"note\">\"COMPENSATION of Loss on Account of Late Delivery \u2014 Actually Incurred as Well as Notional \u2014 Where Loss is PRE-ESTIMATED and Mutually Agreed to \u2014 is Termed as Liquidated Damages (LD).<\/em><\/p>\nTHE Law Allows Recovery of PRE-ESTIMATED Loss \u2014 Provided Such a Term is Included in the Contract \u2014 and There is No Need to Establish Actual Loss Due to Late SUPPLY.<\/em><\/p>\n However, it would strengthen the Procuring Entity's rights if it were established and kept on record that inconvenience and loss have been caused due to the delay in supplies \u2014 though the loss cannot be exactly quantified \u2014 and hence Liquidated Damages are applicable as a genuine pre-estimate of the loss<\/strong>.\"<\/p><\/aside>\n<h2>9.24.2<\/span>Quantum of LD \u2014 the Rates Compared<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Rate per week of delay<\/th><th>Maximum<\/th><\/tr><\/thead><tbody><tr><td>G<\/span> GOODS<\/td><td>0.5 (half) per cent of the delivered price (including elements of GST, freight and variations)<\/em> of the delayed Goods and\/ or incidental Works\/ Services \u2014 for each week of delay or part thereof, until actual delivery or performance<\/td><td>5% of the total contract value<\/strong>(or any other percentage if prescribed)<\/em> 10% in case of INORDINATE DELAY<\/strong><\/td><\/tr><tr><td>W<\/span> WORKS \u2014 repair works costing UP TO Rs. 20 LAKH<\/td><td>1 PER CENT (1%) of the contract value<\/strong>(that includes variations, taxes and duties)<\/em>per week<\/strong><\/td><td>5% of contract value 10% in case of inordinate delays<\/td><\/tr><tr><td>W<\/span> Works \u2014 all other works<\/td><td>0.5 PER CENT (0.5%) of the contract value per week of delay<\/td><td>5% of contract value 10% in case of inordinate delays<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Note the works split: repair works up to Rs 20 lakh attract DOUBLE the weekly rate (1% instead of 0.5%).<\/p><\/aside>\n<h2>9.24.3<\/span>LD on the VARIED Price \u2014 and the no-supply rule<\/span><\/h2>\n<aside class=\"note\">\"in contracts governed by any variation (PVC, ERV or statutory variations) \u2014 lds (if a percentage of the price) will be applicable on the price as varied by the operation of the PVC.<\/strong><\/p>\nLds Accrue Only in Case of Delayed SUPPLIES.<\/em><\/p>\n Where \u2014 or as far as \u2014 no supplies have been made under a contract, upon cancellation, recovery of only the loss occasioned thereby can be made \u2014 notwithstanding the fact that, prior to the cancellation, one or more extensions of the delivery period with reservation of the right to LD are granted.<\/strong><\/p><\/aside>\n<h2>9.24.4<\/span>the GST Treatment of LD<\/span><\/h2>\n<aside class=\"note\">\"FOR Purpose of GST, Liquidated Damages Should Be Shown as Deductions on the Invoice Value by the CONTRACTOR.<\/em><\/p><\/aside>\n<h2 class=\"src-W\">9.24.5<\/span>Incentives \/ Bonus for Early Completion<\/span>W<\/span><\/h2><div class=\"srcblock src-W\">\n<aside class=\"note\">\"procuring entities are encouraged to explore strategies (such as offering bonuses, improved ratings, or recognition) that May incentivise contractors, service providers and consultants for early, timely, and quality completion of projects.<\/strong><\/p>\n Provision of incentives for completion of work before Schedule should be after careful assessment of tangible benefits therefrom \u2014 and disclosed in the tender documents in clear monetary terms.<\/strong><\/p>\nThe Illustrative Bonus:<\/p>\n\"Incentives\/ bonus \u2014 e.g., one per cent of the contract value per month, subject to a maximum of five per cent of contract value \u2014 for early completion, and penalties for delay, should be built into the contract very judiciously.\"<\/strong><\/p><\/aside>\nthe seven-day reporting condition: \"to avail of the incentive clause, it shall be mandatory on the part of the contractor to report the actual date of completion to the concerned Contract Manager.<\/strong><\/p>\n<aside class=\"note\"> The Contract Manager shall report the actual date of completion of the works as soon as possible, through fax or email \u2014 so that the report is received within seven days of such completion by the concerned ca<\/strong>.\"<\/p><\/aside>\n<\/div><h2>9.24.6<\/span>WAIVER OF LD \u2014 the three rules<\/span><\/h2>\n1. The general Rule:<\/p>\n<aside class=\"note\">\"THERE Should Normally Be No System of Waiver of Lds for Delayed Supplies in Supply Contracts \u2014 and IT May Strictly Be an Exception Rather Than a RULE.<\/em><\/p>\n for an extension of the delivery date with waiver of LD \u2014 approval of the ca with consultation of associated finance May be taken, and justifications recorded<\/strong>.\"<\/p><\/aside>\n2. GOVERNMENT ESTABLISHMENTS \u2014 the special dispensation:<\/p>\n<aside class=\"note\">\"GOVERNMENT Establishments\/ Departments \u2014 as Distinct from Psus \u2014 Which Execute Contract WORK:<\/em><\/p>\n\u2022 should not be dealt with as ordinary contractors;<\/strong><\/p>\n\u2022 should not generally be penalised for late delivery; And<\/strong><\/p>\n\u2022 claims for loss on risk-purchase should not be enforced against them.<\/strong><\/p>\n Serious cases of defaults should, however, be brought to the notice of the Head of Department or the Government Department concerned<\/strong>.\"<\/p><\/aside>\n3. Development\/ indigenisation contracts:<\/p>\n<aside class=\"note\">\"IN the Case of Development\/ Indigenisation Contracts \u2014 Lds are not LEVIED.<\/em><\/p><\/aside>\n<h1>9.25 Handling Deliveries at the Last Moment or After the Expiry of the Delivery Period [G ONLY]<\/span><\/h1>\n<h2>9.25.1<\/span>the VOLUNTARY-ABROGATION Trap<\/span><\/h2>\n<aside class=\"note\">\"AS per Law \u2014 if Stores are Accepted After the Expiry of the Delivery Date of a Particular Instalment, Without an Extension in the Delivery Period Having Been Given \u2014 Even Duly Reserving Our Rights to Levy LD:<\/em><\/p>\nIT Amounts to Voluntary Abrogation of Our Legal Rights under the Contract to Claim Lds or Other REMEDIES.<\/em><\/p><\/aside>\n<h2>9.25.2<\/span>LOCAL SUPPLIES \u2014 the Franking Clause<\/span><\/h2>\n\"if the contractor makes supplies locally after the expiry of the delivery period \u2014 the supplies May be provisionally retained under a franking clause reserving right \u2014 and the contractor May be asked to obtain an extension of the delivery period from an authorised officer, with or without any LD\/ Denial Clause<\/strong>.\"<\/p>\n<aside class=\"note\">The franking clause \u2014 reproduced in full:<\/p>\n\"Please note that materials have been supplied after the expiry of the contracted delivery date, and its provisional retention does not acquiesce or condone the late delivery. It does not intend or amount to an extension of the delivery period or keeping the contract alive. You May apply for an extension of delivery date from the Procuring Entity. The goods are being retained without prejudice to the rights of the Government of India under the terms and conditions of the contract.\"<\/strong><\/p><\/aside>\n<h2>9.25.3<\/span>Supplies from Outside Contractors \u2014 the consignee's intimation<\/span><\/h2>\n<aside class=\"note\">\"as regards supplies coming from outside contractors \u2014 if the contractor dispatches the stores after the expiry of the delivery period \u2014 the consignee should, after the receipt of the railway receipt, lorry receipt, goods consignment note or airway bill, send an intimation to the contractor stating:<\/strong><\/p>\n\u2022 that the action taken by him in dispatching the goods after expiry of the delivery date is at his own risk and responsibility;<\/strong><\/p>\n\u2022 that the consignee is not liable for any demurrage, wharfage and deterioration of goods at the destination station; And<\/strong><\/p>\n\u2022 that, in his interest, the contractor should get an extension of the delivery period from the purchasers.<\/strong><\/p>\n A copy of the communication sent to the contractor should also be sent to the purchaser<\/strong>.\"<\/p><\/aside>\n<h2>9.25.4<\/span>IMPORTS \u2014 and the Letter of Credit safeguard<\/span><\/h2>\n<aside class=\"note\">\"IN the Case of Imports, the Contractor Must not Dispatch the Consignment After the Expiry of the Delivery Period, Without Taking a Prior Extension of the Delivery PERIOD.<\/em><\/p>\nIN Any Case, the Terms of LC Should Be Such That \u2014 if There are Dispatches Beyond the Delivery Period \u2014 Payment Should Be Denied Without a Levy of Full LD, and Without a Formal Extension of the Delivery Period by the PURCHASER.<\/em><\/p><\/aside>\n<h1>9.26 Compensation Events [W ONLY]<\/span><\/h1>\n<h2>9.26.1<\/span>The Definition and the Four Categories<\/span><\/h2>\n<aside class=\"note\">\"compensation events are those which cause delays in completion of work (beyond a threshold specified in contract) \u2014 and hence financial loss to the contractor \u2014 due to defaults of the contracting entity.<\/strong><\/p><\/aside>\nThese can be due to delays or default by the contracting entity in:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Category<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>providing of encumbrance-free possession or access to site<\/strong><\/td><\/tr><tr><td>b<\/td><td>discharging of obligations by the contracting entity \u2014 drawings \u00b7 specifications \u00b7 instruction \u00b7 encumbrance-free site \u00b7 approving of sub-contractor \u00b7 payment \u00b7 and completion certificates<\/strong><\/td><\/tr><tr><td>c<\/td><td>infructuous additional or tests, works \u00b7 delays due to the contracting entity's orders, default, or risks<\/strong><\/td><\/tr><tr><td>d<\/td><td>unforeseen adverse conditions \u2014 than could reasonably have been assumed after due diligence<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>9.26.2<\/span>THE 'EARLY WARNING' REQUIREMENT \u2014 and the consequence of failure<\/span><\/h2>\n<aside class=\"note\">\"IF a Compensation Event Occurs During the Execution of the Contract \u2014 the Contractor Must Give an 'Early Warning' to the Contracting ENTITY.<\/em><\/p>\nFAILING Which, No Compensation Would Be GRANTED.<\/em><\/p>\n If the contractor proves that a compensation event would delay the completion of work \u2014 the Contract Manager will assess whether, and by how much, the intended completion date should be extended without LD.<\/strong><\/p>\n Proposals for grant of EOT should be considered and approved by the Competent Authority. The contracting entity May finalise the grant of EOT within a maximum period of two months on receipt of such a proposal from the Contract Manager<\/strong>.\"<\/p><\/aside>\n<h2>9.26.3<\/span>Payment May Continue While the EOT Proposal is Pending<\/span><\/h2>\n<aside class=\"note\">\"THE Payment Against Actual Work Done and Claimed in the Monthly Bills by the Contractor, and Recommended for Payment by the Contract Manager \u2014 May Continue to Be Made to the Contractor, Without Recovery of LD \u2014 Where a Proposal Has Been Received from the Contract Manager for Grant of EOT.<\/em><\/p>\nIF the EOT Proposal is Finally Rejected \u2014 LD Must Be RECOVERED.<\/em><\/p>\n Besides EOT, the contractor is entitled to claim compensation for any financial loss due to such events. In each contract, there are specific provisions defining compensation events, how to determine the EOT, and\/ or compensation<\/strong>.\"<\/p><\/aside>\n<h1>9.27 Time at Large [W ONLY]<\/span><\/h1>\n<aside class=\"note\">This is One of the Most Important Legal Concepts in the Entire Works Manual \u2014 and IT Has No Counterpart in the Other Three.<\/p>\n\"When the Procuring Entity Does not Explicitly Express and Reserve its Rights and Remedies under the Contract for Delays in Execution \u2014 IT Legally Forfeits His Right to Such REMEDIES.<\/em><\/p>\nUnder Such Circumstances, Time is Said to Become \"AT LARGE\" \u2014 and the Contractor Gets Freed from His Obligation to Complete Within the Specified TIME.<\/em><\/p><\/aside>\nHow to avoid it \u2014 the four-step prescription:<\/p>\n<aside class=\"note\">\"to avoid such a situation \u2014 before the expiry of the originally stipulated date of completion, the Procuring Entity should:<\/strong><\/p>\n1. Extend the currency of the agreement;<\/strong><\/p>\n2. Set a new time limit for completion;<\/strong><\/p>\n3. Make the extended time the essence of the contract; And<\/strong><\/p>\n4. Stipulate that this is being done without prejudice to his right to recover damages and other remedies as per the contract.<\/strong><\/p>\nRead this together with para 9.20.6 (the correspondence trap) and para 9.20.7 (why \"without prejudice\" alone is insufficient to preserve the LD right) \u2014 the three provisions together form the Manual's treatment of how a Procuring Entity can inadvertently lose its remedies for delay<\/strong>.<\/em><\/p><\/aside>\n<h1>9.28 Cost Control \u2014 Prices, Taxes and Payments<\/span><\/h1>\n<h2 class=\"src-G\">9.28.1<\/span>Prices Must Be Firm and As Quoted<\/span>G<\/span><\/h2><div class=\"srcblock src-G\">\n<aside class=\"note\">\"prices to be charged by the contractor for the supply of goods and provision of incidental works\/ services shall be fixed and firm, and the same as the corresponding prices quoted by the contractor in its bid \u2014 or during negotiations, if any \u2014 and incorporated in the contract.<\/strong><\/p>\n Except for any price adjustment authorised in the contract.<\/strong><\/p><\/aside>\n The controlled-price recovery right:<\/strong>\"if the prices charged are discovered to be higher than any controlled or regulated price \u2014 the Procuring Entity shall have the right to either recover [the excess]<\/strong>\u2026\"<\/strong>(see Chapter 6, para 6.14.1-2 on undue profiteering and the MRP ceiling).<\/em><\/p>\n<\/div><h2>9.28.2<\/span>Payment of Taxes and Duties; Statutory Variation Clause<\/span><\/h2>\nCovered in full at Chapter 6, paras 6.16.1 to 6.16.4 of this Unified Manual \u2014 GST registration and HSN rules, the three bidder-borne taxes, customs duty, and the Statutory Variation Clause with its asymmetric operation (increases borne by the Procuring Entity only during the original\/ re-fixed period; reductions passed on during the original and extended<\/em> period).<\/p>\n<h2 class=\"src-W\">9.28.3<\/span>Financial Monitoring<\/span>W<\/span><\/h2><div class=\"srcblock src-W\">\n<aside class=\"note\">\"besides administering the contract with regard to its quality and completion \u2014 the Contract Manager will regularly assess the financial position and exercise financial control.<\/strong><\/p>\nHE Will Update, on a Quarterly Basis: Cash Flow Projections \u00b7 Cost Estimates \u00b7 and Yearly\/ Quarterly Milestones \u2014 and Submit Them to the Procuring ENTITY.<\/em><\/p><\/aside>\n<\/div><h2>9.28.4<\/span>Payments to Contractors and Handling of Securities<\/span><\/h2>\nThe payment machinery \u2014 <\/strong>Interim Payment Certificates, the Measurement Book regime, the 75%-within-10-working-days rule, and final bills within three months \u2014 is set out at <\/strong>Chapter 6, para 6.10.3 of this Unified Manual.<\/strong><\/p>\n<h1>9.29 Electronic Bill (e-Bill) Processing System [W ONLY]<\/span><\/h1>\nThe Works Manual carries a distinct section (7.5.8) on the e-Bill Processing System \u2014 the electronic submission and processing of contractors' running account bills, integrated with the Public Financial Management System. It has no counterpart in the other three Manuals.<\/p>\n<h1>9.30 Logistics: Transportation, Receiving, Storage and Issue of Goods [G ONLY]<\/span><\/h1>\n<aside class=\"note\">This entire section exists only in the goods Manual \u2014 because only goods procurement involves the physical movement, receipt, custody and issue of stores.<\/p><\/aside>\n<h2>9.30.1<\/span>Special Instructions for Transportation, Packaging and Storage<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Instruction<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>WHERE critical equipment of high value is involved \u2014 suitable special instructions shall be conveyed to the supplier about the mode of transport, loading, avoidance of transhipment \u2014 and, if necessary, provision of escorts<\/strong><\/td><\/tr><tr><td>b<\/td><td>in the case of chemicals, powdery materials, liquid materials<\/strong> \u2014 parties May be advised on proper packaging to avoid spillage en route, pollution problems \u2014 and conforming to the ISO 14001 standard<\/strong><\/td><\/tr><tr><td>c<\/td><td>special attention should be paid to perishable goods, considering their time-sensitive nature<\/strong> \u2014 regarding packaging \u00b7 transportation \u00b7 handling \u00b7 storage (cold storage\/ cold chain) \u00b7 and fifo (first in first out) system of delivery<\/strong><\/td><\/tr><tr><td>d<\/td><td>in case the Procuring Entity arranges transport \u2014 suitable instructions May be incorporated in the transportation contract<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>9.30.2<\/span>Full Truck Loads and the \"Not to Self\" Rule<\/span><\/h2>\n<aside class=\"note\">\"wherever the items make a full truckload \u2014 the suppliers should be advised to dispatch such items in a full truck direct to the designated consignee on a door delivery basis to the site.<\/strong><\/p>\nIn such cases, the Procuring Entity shall advise the supplier to send a consignee copy of the lorry receipt to the consignee along with the consignment.<\/strong><\/p>\nAND the Consignment Shall Be Booked to the Procuring Entity \u2014 and not \"SELF.\"<\/em><\/p>\n All dispatch documents \u2014 railway\/ lorry receipts, goods consignment notes, airway bills, invoices, packing lists, freight memos, test certificates \u2014 shall be sent to the associated\/ integrated finance, which will arrange to make the payment. If the payment is to be made through the bank \u2014 all original documents are to be sent through the designated bank<\/strong>.\"<\/p><\/aside>\n<h2>9.30.3<\/span>Shipping Arrangements \u2014 the six-week notice<\/span><\/h2>\n<aside class=\"note\">\"in the case of FOB\/ FAS contracts \u2014 the Procuring Entity shall make shipping arrangements.<\/strong><\/p>\nTHE Contractor Shall Give Adequate Notice to the Procuring Entity and its Forwarding Agents\/ Nominees About the Readiness of the Cargo \u2014 and at Least Six Weeks' Notice in Advance of the Required Date of Dispatch \u2014 for Finalising the Shipping ARRANGEMENTS.<\/em><\/p>\n In the case of CFR contracts \u2014 the contractor shall arrange the shipment as per the instructions from the Procuring Entity.<\/strong><\/p>\n Should the Procuring Entity intend to airlift all or some of the goods \u2014 the contractor shall pack the goods accordingly upon receiving intimation to that effect. Such deliveries shall be agreed upon well in advance and paid for as May be mutually agreed<\/strong>.\"<\/p><\/aside>\n<h2>9.30.4<\/span>Transfer of Title of Goods<\/span><\/h2>\n1. The intention Rule: \"the title of goods, and resultant rights and liabilities, is transferred to the buyer at such time as the parties to the contract intend this to happen \u2014 as recorded in the terms of the contract<\/strong>.\"<\/p>\n2. The risk Rule \u2014 and the \"notwithstanding\" chain:<\/p>\n<aside class=\"note\">\"Unless Otherwise Stated in the Contract \u2014 notwithstanding:<\/em><\/p>\n\u2022 any inspection and approval by the inspecting officer on the contractor's premises;<\/strong><\/p>\n\u2022 dispatch\/ delivery\/ in-transit; Or<\/strong><\/p>\n\u2022 any payments made to the contractor \u2014 <\/strong><\/p>\nTITLE of Goods Shall Pass on to the Procuring Entity as Specified by the Terms of Delivery and Other Conditions of the CONTRACT.<\/em><\/p>\nTILL Such Time \u2014 the Goods, and Every Constituent Part Thereof (Whether in the Possession or Control of the Contractor, His Agents or Servants or a Carrier, or the Joint Possession of the Contractor and the Procuring Entity) \u2014 Shall Remain in Every Respect at the Risk of the CONTRACTOR.<\/em><\/p>\n And the contractor shall be responsible for all loss, destruction, damage, or deterioration of or to the goods from any cause whatsoever.<\/strong><\/p><\/aside>\n3. Claims against the carrier: \"the contractor shall alone be entitled and responsible for making claims against any carrier \u2014 in respect of non-delivery, short delivery, mis-delivery, loss, destruction, damage, or deterioration of the goods entrusted to such carrier by the contractor for transmission to the ultimate consignee or the interim consignee<\/strong>.\"<\/p>\n<h2>9.30.5<\/span>Insurance in Transit<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Basis<\/th><th>Who insures<\/th><\/tr><\/thead><tbody><tr><td>DOMESTIC GOODS supplied on a CIF\/ FOR destination<\/em> basis<\/td><td>the contractor is responsible until all the goods contracted arrive in good condition at the destination<\/strong>. <\/strong>The contractor May, at its option, cover the transit risk by getting the goods duly insured in his own name at his own cost<\/strong><\/td><\/tr><tr><td>IMPORT of goods on FOB and CFR<\/em> offers<\/td><td>THE procuring Entity shall arrange the insurance<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">The Coordination Duty:<\/p>\n\"however, the contractor must give sufficient notice to the Procuring Entity before the date of shipment \u2014 so that the insurance cover for the shipment can be activated.<\/strong><\/p>\n The contractor must coordinate to ensure that the shipment sails only with insurance cover in place.<\/strong><\/p>\n In the case of the import of goods, the purchaser should proactively take timely and complete action as per the terms of the insurance contract \u2014 to protect the interest of the organisation after the title of the goods has passed to him<\/strong>.\"<\/p><\/aside>\n<h2>9.30.6<\/span>Distribution of Dispatch Documents \u2014 the 24-hour rule<\/span><\/h2>\n<aside class=\"note\">\"the supplier shall send all the relevant dispatch documents to the purchaser in time \u2014 to enable the purchaser to clear or receive (as the case May be) the goods in terms of the contract.<\/strong><\/p>\nWithin 24 (TWENTY-four) Hours of Dispatch \u2014 the Supplier Shall Notify the Purchaser or Consignee (and Others Concerned) of the Complete Details of DISPATCH.<\/em><\/p><\/aside>\n<h2>9.30.7<\/span>Receipt of Consignment<\/span><\/h2><h3>A. Preliminary Inspection and Receipt<\/span><\/h3>\n<aside class=\"note\">\"at the time of the delivery at the stores \u2014 the storekeeper should receive the goods on a \"subject to inspection\" basis, and should issue the preliminary receipt after a preliminary inspection.<\/strong><\/p>\nAS an Acknowledgement of Having Received the Claimed Quantity (not the Quality) of CONSIGNMENT.<\/em><\/p><\/aside>\nWhat the preliminary inspection covers:<\/p>\n<aside class=\"note\">\"when opening the packages, the storekeeper should initiate a preliminary inspection of the goods received. This should include:<\/strong><\/p>\n\u2022 checks for any obvious damage in transit;<\/strong><\/p>\n\u2022 other physical or visual checks specific to the functional characteristics of the product; And<\/strong><\/p>\n\u2022 verification of the quantity against the purchase order and the supplier's invoice.<\/strong><\/p>\nThe package-sampling Rule: \"when goods are supplied in boxes, bundles, or coils \u2014 as in the case of tools, rope, canvas, cables \u2014 each of which is required to contain a specified quantity: A reasonable number of such packages should be opened and checked for quantity per package.<\/strong><\/p>\n The quantity received should also be mentioned in the preliminary receipt to be given to the supplier. Any discrepancies in packages or quantity should be mentioned therein<\/strong>.\"<\/p><\/aside>\n<h3>B. the SHELF-LIFE Rule \u2014 75%<\/span><\/h3>\n<aside class=\"note\">\"FOR Goods with a Limited Shelf Life \u2014 the Contractor Shall Ensure That at Least 75% (or Any Other Percentage Stipulated in the Contract) of Shelf Life Remains as Balance on the Delivery DATE.<\/em><\/p>\nTHE Procuring Entity Reserves its Rights to Reject Expired Products with Less Than Such Specified Shelf LIFE.<\/em><\/p><\/aside>\n<h3>C. Detailed Inspection on Receipt<\/span><\/h3>\n<aside class=\"note\">\"before accepting the ordered goods, the storekeeper must ensure that the goods have been manufactured as per the required specifications, and can perform the functions specified in the contract.<\/strong><\/p>\n The required inspections and tests should be carried out by technically qualified and competent personnel. If the procurement agency does not have such qualified personnel \u2014 it May engage competent professionals from other departments, or even outside agencies<\/strong>.\"<\/p><\/aside>\n<h3>D. CONSIGNEE'S Right of Rejection of PRE-INSPECTED Goods \u2014 the 90-Day Rule<\/span><\/h3>\n<aside class=\"note\">\" Notwithstanding Any Approval Which the Inspecting Officer May Have Given in Respect of the Goods, Materials, Particulars, Work or Workmanship (Whether with or Without Any Test) \u2014 and Notwithstanding Delivery of the Goods, Where So Provided, to the Interim CONSIGNEE:<\/em><\/p>\nIT Shall Be Lawful for the Consignee, on Behalf of the Procuring Entity, to Inspect, Test and \u2014 if Necessary \u2014 Reject the Goods or Any Part, Portion or Consignment Thereof, After the Goods' Arrival at the Final DESTINATION.<\/em><\/p>\nWithin a Reasonable Time \u2014 Usually Within 90 Days of the Original Inspection Report \u2014 After Actual Delivery Thereof to Him at the Place of Destination Stipulated in the CONTRACT.<\/em><\/p>\n If such goods are not in all respects in conformity with the terms and conditions of the contract \u2014 whether on account of any loss, deterioration or damage before despatch or delivery, or during transit, or otherwise howsoever<\/strong>.\"<\/p><\/aside>\n<h2>9.30.8<\/span>Goods Receipt and Inspection Report (GRIR)<\/span><\/h2><h3>A. What a GRIR Is \u2014 and how it differs from a preliminary receipt<\/span><\/h3>\n<aside class=\"note\">\"While a Preliminary Receipt is Only an Acknowledgement of the Quantity Received \u2014 <\/em><\/p>\nGRIR is an Acknowledgement of Receipt of the Correct Quantity <\/em>AS Well as QUALITY of GOODS.<\/em><\/p><\/aside>\nThe two functions of the GRIR:<\/p>\n<aside class=\"note\">\"GRIR is:<\/strong><\/p>\n\u2022 a voucher that forms the basis for the supplier to claim payment as per the contract; And<\/strong><\/p>\n\u2022 a voucher for the amount of material received in the inventory accounts.<\/strong><\/p>\n Along with the GRIR, material is handed over to the warehouse where it is to be stored<\/strong>.\"<\/p><\/aside>\nwhen a GRIR is prepared: \"accounting of the material received shall be based on the GRIR prepared after inspection and acceptance of the material, which the concerned officers will sign.<\/strong><\/p>\n<aside class=\"note\"> This includes cases where payment is made to the supplier on proof of dispatch \u2014 for which inspection at the suppliers' premises is conducted prior to dispatch.<\/strong><\/p>\n This excludes cases of imported materials \u2014 where accounting will be done on completion of certain further formalities as per regulations and practices<\/strong>.\"<\/p><\/aside>\n<h3>B. THE REJECTION GRIR \u2014 and the yellow paint mark<\/span><\/h3>\n<aside class=\"note\">\"in case the received material fails to pass quantity and quality checks \u2014 a rejection GRIR is issued, noting the reasons for rejection.<\/strong><\/p>\nIF Feasible, a Yellow Paint (or Chisel) Mark Should Be Put on the Rejected Material \u2014 to Prevent its Resubmission by the SUPPLIER.<\/em><\/p>\n The associated finance\/ fa should be asked to recover any advance payment or freight charges paid for the rejected quantity.<\/strong><\/p><\/aside>\nThe 21-DAY removal Rule and the risk-and-cost position:<\/p>\n<aside class=\"note\">\"THE Rejection GRIR Contains Instructions for the Supplier to Take Back the Rejected Goods Within a Stipulated Number of Days \u2014 Usually 21.<\/em><\/p>\nDURING Such Time, the Material Lies with the Consignee at the SUPPLIER'S Risk and COST.<\/em><\/p>\nSuch Removal Should Be Permitted Only After the Advance Payment\/ Freight Paid is RECOVERED.<\/em><\/p>\n Lots that are under inspection, accepted, or rejected should be properly tagged, segregated, and identified<\/strong>.\"<\/p><\/aside>\n<h3>C. Ground Rent on Unlifted Rejected Goods<\/span><\/h3>\n<aside class=\"note\">\"IN Case the Supplier Does not Lift the Rejected Goods Within the Stipulated Time \u2014 a Ground Rent [may Be CHARGED], Say at 0.2% to 0.5% per Day of the Value of Goods as per CONTRACT.<\/em><\/p>\n If the supplier does not respond within a reasonable time \u2014 the Procuring Entity May treat the material as [abandoned and dispose of it accordingly]<\/strong>.\"<\/p><\/aside>\n<h2>9.30.9<\/span>Storage and Issue of Inspected Goods<\/span><\/h2>\nGoods para 9.6.7 governs the storage and issue of inspected goods \u2014 the handover to the warehouse against the GRIR, and the subsequent issue of stores to indenting sections.<\/p>\n<h1>9.31 Closure of Contract<\/span><\/h1>\n<h2>9.31.1<\/span>Completion of Construction W<\/span> \u2014 the seven closing steps<\/span><\/h2>\n1. The completion certificate and its two accompanying documents:<\/p>\n<aside class=\"note\">\"when the work has been executed and the assets created commissioned \u2014 the contractor should request the Contract Manager to issue a 'completion certificate'.<\/strong><\/p>\nThe contractor May, if so specified, submit the following along with his request:<\/strong><\/p>\nA) completion drawings of the entire project; And<\/strong><\/p>\nb) videography\/ photographs of the works covering various phases of the project.<\/strong><\/p>\n Reasonable advance information of completion of work should be given to the concerned Ministry\/ Department \u2014 to enable them to plan for taking over<\/strong>.\"<\/p><\/aside>\n2. The joint inspection and \"as built\" drawings:<\/p>\n<aside class=\"note\">\"the Ministry\/ Department May carry out a detailed joint inspection of the commissioned project with the contractor \u2014 to ensure that no deficiencies are there before taking over.<\/strong><\/p>\n \"As built\" drawings of the work shall be got prepared through the contractor or otherwise \u2014 to facilitate proper maintenance of the assets, additions to the assets at subsequent dates, etc. \u2014 and to form part of the records of the Ministry\/ Department<\/strong>.\"<\/p><\/aside>\n3. Occupancy certificates and nocs: \"the contractor\/ PWO\/ PSU would be responsible for obtaining completion\/ occupancy certificates\/ clearances and no-objection-certificates (nocs), if applicable, from the local civic authorities \u2014 for completed work and facilities, before handing over the same to the 'Procuring Entity' for putting them to functional use<\/strong>.\"<\/p>\n4. Restoration of auxiliary services:<\/p>\n<aside class=\"note\">\"Before the Completed Work is Taken over by the Ministry\/ Department \u2014 IT Must Ensure That the Contractor Restores to Original Status the Auxiliary Services\/ FACILITIES:<\/em><\/p>\nRoads \u00b7 sewerage \u00b7 utilities \u2014 including removal of garbage and debris \u2014 affected during the construction process.<\/strong><\/p><\/aside>\n5. What must be handed over: The contractor\/ PWO\/ PSU shall hand over the completed work \u2014 including all services and facilities constructed in accordance with the approved plans and specifications, fulfilling all agreed techno-functional requirements \u2014 along with:<\/p>\n<aside class=\"note\">Inventory \u00b7 as-built drawings \u00b7 maintenance Manual\/ standard operating procedure (sop) for equipments and plants \u00b7 all clearances\/ certificates from statutory authorities, local bodies<\/strong><\/p><\/aside>\n6. The Project Completion Report (PCR) \u2014 and the one-month deadline:<\/p>\n<aside class=\"note\">\"ON Completion of the Work, a Project Completion Report (PCR) Shall Be Submitted by the Contractor\/ PWO\/ PSU \u2014 Duly Bringing OUT:<\/em><\/p>\n\u2022 the final project completion cost;<\/strong><\/p>\n\u2022 the total time period taken to complete the work; And<\/strong><\/p>\n\u2022 the completed project components \u2014 <\/strong><\/p>\n As against the approved cost, time and project components.<\/strong><\/p>\nThe PCR shall Be Submitted Along with Final Project Accounts \u2014 Including Return of Unspent Balance Amount \u2014 to the Ministry\/ Department Within One Month of Settlement of Final BILLS.<\/em><\/p><\/aside>\n7. Record keeping: \"record keeping should be created at every work centre, to facilitate proper stacking of records pertaining to the completed works. The records should be preserved in such a manner that the same can be retrieved whenever required<\/strong>.\"<\/p>\n<h2>9.31.2<\/span>Completion of CONTRACT \u2014 and the single Defects Liability Certificate<\/span><\/h2>\n<aside class=\"note\">\"THE Contract is not to Be Treated as Completed Until a Defects Liability Certificate (DLC) Has Been ISSUED.<\/em><\/p>\nTHERE Will Be Only One DLC. It will Be Issued When the Contractor Has Completed All His Obligations under the CONTRACT.<\/em><\/p>\n While making the final payment to the contractor and before releasing the PBG \u2014 it should be ensured that there is nothing outstanding from the contractor.<\/strong><\/p>\nBecause it would Be Difficult to Retrieve Such Amounts After Releasing the Bank Guarantee\/ Final PAYMENT.<\/em><\/p>\n Before the Bank Guarantee is released, a \"no claim certificate\" May be taken from the contractor<\/strong>.\"<\/p>\nThe Rs 25 Lakh Threshold for the Three Reconciliations:<\/p>\n\"at least in large contracts (above Rs. 25 (twenty-five) lakh) \u2014 it should be ensured that, before the release of the Bank Guarantee (or final payment, if there is no Bank Guarantee) \u2014 the following reconciliations should be done across departments involved in the execution of the contract<\/strong>.\"<\/p><\/aside>\n<h2 class=\"src-W\">9.31.3<\/span>RECONCILIATION 1 \u2014 Material and Works Reconciliation<\/span>W<\/span><\/h2><div class=\"srcblock src-W\">\n<aside class=\"note\">\"the Ministry\/ Department should confirm that all works ordered in the contract and paid for have been taken over in good condition, and there is no shortcoming.<\/strong><\/p>\nFull Reconciliation of All Materials, Machinery and Assets Provided to the Contractor Should Be Done \u2014 Including Wastages and Return of Scrap\/ OFF-CUTS.<\/em><\/p><\/aside>\n<\/div><h2 class=\"src-W\">9.31.4<\/span>RECONCILIATION 2 \u2014 Reconciliation with the User Department<\/span>W<\/span><\/h2><div class=\"srcblock src-W\">\n\"besides works reconciliation \u2014 the user Department should certify in writing that the following activities (wherever applicable) have been completed by the contractor, to the department's satisfaction, as per the contract<\/strong>:\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Item to be certified<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>achievement of performance standards of work<\/strong><\/td><\/tr><tr><td>b<\/td><td>installation and commissioning, if any<\/strong><\/td><\/tr><tr><td>c<\/td><td>support service during the defect liability period \u2014 which has ended on ______<\/strong><\/td><\/tr><tr><td>d<\/td><td>as made drawings<\/strong><\/td><\/tr><tr><td>e<\/td><td>return of all id cards, gate passes, documents, drawings, protective gear, material, equipment, facilities and assets loaned to contractor<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h2 class=\"src-W\">9.31.5<\/span>RECONCILIATION 3 \u2014 Payment Reconciliation<\/span>W<\/span><\/h2><div class=\"srcblock src-W\">\n<aside class=\"note\">\"the ministries\/ departments May reconcile payments made to the contractor \u2014 to ensure that there is no liability outstanding against the contractor on account of:<\/strong><\/p>\n\u2022 LD;<\/strong><\/p>\n\u2022 [and the other recoverable heads \u2014 advances, statutory deductions, ground rent, recoveries for materials, and so on].<\/strong><\/p><\/aside>\n<h1>9.32 Concluding the Assignment and Post-Contract Review [C + NC ONLY]<\/span><\/h1>\n<aside class=\"note\">This Section Has No Counterpart in the Goods or Works Manuals.<\/p><\/aside>\nThe Consultancy Manual (para 10.6) and the Non-Consultancy Manual (para 9.6) both carry a section titled \"Concluding the Assignment and Post Contract review\"<\/strong> \u2014 giving effect to the fifth head of contract management in those Manuals, \"Post contract evaluation\"<\/strong> (see Part A, para 9.1.2).<\/p>\nIt governs:<\/p>\n<ul class=\"lst\"><li>THE acceptance of the final deliverables<\/strong> \u2014 including the <\/strong>Final Report, in respect of which (see Chapter 2, para 2.6.3(c)) \"<\/strong>the consultants alone are responsible for their findings; although changes may be suggested in the course of the discussions, consultants should not be forced to make such changes\"<\/em>;<\/strong><\/li><li>THE release of final payment and guarantees (if any), and closing the contract<\/strong>; and<\/li><li>THE post-contract review<\/strong> \u2014 the retrospective evaluation of how the assignment performed, feeding back into future need assessment, ToR drafting and shortlisting criteria.<\/li><\/ul>\n<h1>Appendix to Chapter 9 \u2014 Part B: Points of Difference<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Delivery Period \"deemed to be the essence of the contract\"; terms of delivery determine when TITLE passes<\/td><td>G ONLY<\/td><\/tr><tr><td>2<\/td><td>Contract Effective Date and Work Program as the opening time-control provisions<\/td><td>W ONLY<\/td><\/tr><tr><td>3<\/td><td>Contract Period and Options as the opening time-control provision<\/td><td>nc only<\/td><\/tr><tr><td>4<\/td><td>INORDINATE DELAY \u2014 the 25% test; show-cause notice; deficient performance recorded for future tenders; LD cap rises from 5% to 10%<\/td><td>G + W<\/td><\/tr><tr><td>5<\/td><td>The four cases where the supplier is not responsible for delay<\/strong>(pre-production sample approval; purchaser's omission; purchaser controls the production schedule; FM\/ statutory change\/ executive instructions)<\/em><\/td><td>G ONLY<\/td><\/tr><tr><td>6<\/td><td>RE-FIXATION (no LD, no denial clause) vs extension of time (with LD, with denial clause)<\/td><td>W states the distinction most clearly; G and C\/NC apply the same substance<\/td><\/tr><tr><td>7<\/td><td>\"EOT must not be left to the end\u2026 interim EOT may be awarded\"; EOT and LD reviewed after the Final Taking-Over Certificate<\/td><td>W ONLY<\/td><\/tr><tr><td>8<\/td><td>The two pre-conditions for extension \u2014 the earlier-delivery test and the falling-price test; PVC-linked raw materials may be extended even on a falling trend but with the denial clause<\/td><td>G ONLY<\/td><\/tr><tr><td>9<\/td><td>Extension after expiry permissible under SECTION 63 of the Indian Contract Act with mutual consent \u2014 \"the contract does not automatically terminate upon expiry\"<\/td><td>W ONLY<\/td><\/tr><tr><td>10<\/td><td>The correspondence trap and the mandatory closing sentence<\/td><td>G + W<\/td><\/tr><tr><td>11<\/td><td>Why \"without prejudice\" alone does not preserve the right to LD<\/td><td>G + W<\/td><\/tr><tr><td>12<\/td><td>Graded authority structure for granting extensions<\/td><td>W ONLY<\/td><\/tr><tr><td>13<\/td><td>Performance Notice (notice-cum-extension letter)<\/td><td>All four<\/td><\/tr><tr><td>14<\/td><td>Force Majeure \u2014 expressly EXCLUDES \"predictable\/ seasonal rain\"; notice within 14 days; cannot be claimed ex post facto; 90-day termination option without financial repercussion<\/td><td>G ONLY<\/strong>(fullest); W, C, NC carry shorter versions<\/em><\/td><\/tr><tr><td>15<\/td><td>The Denial Clause and its asymmetric operation \u2014 \"PVC, other variations and foreign exchange clauses operate only during the ORIGINAL delivery period\"<\/td><td>G + W<\/td><\/tr><tr><td>16<\/td><td>LD quantum<\/td><td>G: 0.5% per week, max 5% (10% if inordinate) \u00b7 W: 1% per week for repair works up to Rs 20 lakh; 0.5% for all other works; max 5% (10% if inordinate)<\/td><\/tr><tr><td>17<\/td><td>LD applies on the price AS VARIED by PVC; LDs accrue only on delayed supplies; on cancellation only the loss occasioned can be recovered<\/td><td>G + W<\/td><\/tr><tr><td>18<\/td><td>For GST, LD to be shown as a DEDUCTION on the invoice value by the contractor<\/td><td>G + W<\/td><\/tr><tr><td>19<\/td><td>Incentive\/ bonus for early completion \u2014 1% of contract value per month, max 5%; actual completion date to reach the CA within seven days<\/td><td>W ONLY<\/td><\/tr><tr><td>20<\/td><td>Waiver of LD \u2014 \"strictly an exception rather than a rule\"; Government establishments as distinct from PSUs not to be penalised and risk-purchase claims not enforced; NO LD in development\/ indigenisation contracts<\/td><td>G ONLY<\/td><\/tr><tr><td>21<\/td><td>Handling deliveries after expiry \u2014 the voluntary-abrogation trap; the FRANKING CLAUSE text; the consignee's intimation on demurrage and wharfage; the LC safeguard for imports<\/td><td>G ONLY<\/td><\/tr><tr><td>22<\/td><td>COMPENSATION EVENTS \u2014 four categories; the 'EARLY WARNING' requirement failing which no compensation; EOT to be finalised within two months; payment continues without LD recovery while the EOT proposal is pending<\/td><td>W ONLY<\/td><\/tr><tr><td>23<\/td><td>Time At Large \u2014 the contractor is freed from his obligation to complete within the specified time; the four-step prescription to avoid it<\/td><td>W ONLY<\/td><\/tr><tr><td>24<\/td><td>Quarterly update of cash flow projections, cost estimates and milestones by the Contract Manager<\/td><td>W ONLY<\/td><\/tr><tr><td>25<\/td><td>Electronic Bill (e-Bill) Processing System<\/td><td>W ONLY<\/td><\/tr><tr><td>26<\/td><td>LOGISTICS \u2014 ISO 14001 packaging for chemicals; FIFO and cold chain for perishables; \"booked to the Procuring Entity and not 'self'\"; six weeks' notice for shipping; 24-hour dispatch notification<\/td><td>G ONLY<\/td><\/tr><tr><td>27<\/td><td>Transfer of title \u2014 risk remains with the contractor notwithstanding inspection, dispatch or payment; contractor alone entitled to claim against the carrier<\/td><td>G ONLY<\/td><\/tr><tr><td>28<\/td><td>The 75% shelf-life rule and the right to reject<\/td><td>G ONLY<\/td><\/tr><tr><td>29<\/td><td>Consignee's right to reject pre-inspected goods within 90 days of the original Inspection Report<\/td><td>G ONLY<\/td><\/tr><tr><td>30<\/td><td>GRIR vs preliminary receipt (quality AND quantity vs quantity only); the yellow paint\/ chisel mark on rejected material; 21 days to lift at supplier's risk and cost; removal only after recovery of advance\/ freight; ground rent 0.2%\u20130.5% per day<\/td><td>G ONLY<\/td><\/tr><tr><td>31<\/td><td>Closure of contract \u2014 completion certificate with completion drawings and videography; restoration of auxiliary services including removal of garbage and debris; Maintenance Manual\/ sop; Project Completion Report within one MONTH of settlement of final bills<\/td><td>W ONLY<\/td><\/tr><tr><td>32<\/td><td>\"There will be only one DLC\"; no-claim certificate before releasing the BG; the Rs 25 lakh threshold for the three reconciliations<\/td><td>W ONLY<\/td><\/tr><tr><td>33<\/td><td>The three reconciliations \u2014 Material and Works \u00b7 User Department \u00b7 Payment<\/td><td>W ONLY<\/td><\/tr><tr><td>34<\/td><td>Concluding the Assignment and POST-CONTRACT REVIEW<\/td><td>c + nc only<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 9 \u2014 part b<\/p>\n<aside class=\"note\">Next: CHAPTER 9 \u2014 part c: Breach, termination and dispute resolution \u2014 Breach of Contract \u00b7 Termination for Default \u00b7 Determination for Convenience \u00b7 Frustration of Contract \u00b7 Limitation of Liabilities \u00b7 Disputes \u00b7 Excepted Matters \u00b7 Adjudication \u00b7 Mediation \u00b7 Arbitration \u00b7 Foreign Arbitration \u00b7 Notice for and Reference to Arbitration \u00b7 Appointment of Arbitrator \u00b7 The Arbitral Procedure \u00b7 Challenging Arbitration\/ Judicial Awards \u00b7 The Mechanism for Resolution of Commercial Disputes between CPSEs (AMRCD).<\/p>\nNote: the dispute-resolution apparatus is one of the very few blocks that is substantially COMMON to all four Manuals \u2014 running to roughly 800 lines in each \u2014 which makes Part C the most nearly-uniform part of the entire Unified Manual.<\/p><\/aside><\/div>Part III<\/span>Breach, Termination and Dispute Resolution<\/em><\/p>\nMerging: Goods Ch. 9<\/strong> (paras 9.8\u20139.10) \u00b7 Works Ch. 7<\/strong> (paras 7.7\u20137.9) \u00b7 Consultancy Ch. 10<\/strong> (paras 10.7\u201310.9) \u00b7 Non-Consultancy Ch. 9<\/strong> (paras 9.7\u20139.9)<\/em><\/p><h2>A Note on this Part \u2014 the Most NEARLY-UNIFORM Block in the Entire Manual Family<\/span><\/h2>\nUnlike every other chapter, the dispute-resolution apparatus is substantially COMMON to all four Manuals<\/strong>, running to roughly the same 800 lines in each.<\/p>\nThe reason is that it does not derive from the character of the procurement at all. It derives from a single set of statutes and a single set of DoE instructions applying uniformly:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Source<\/th><th>Instrument<\/th><\/tr><\/thead><tbody><tr><td>Statute<\/td><td>Indian Contract Act, 1872 \u00b7 Arbitration and Conciliation Act, 1996 (amended 2015 and 2021)<\/em> \u00b7 Mediation Act, 2023 \u00b7 msmed Act, 2006 \u00b7 Indian evidence Act (replaced by Bhartiya Sakshya Adhiniyam 2023 from 1 July 2024)<\/em><\/td><\/tr><tr><td>DoE instructions<\/td><td>OM No. F.11\/21\/2024-PPD dated 03.06.2024 (the governing instruction on arbitration, mediation and challenging awards)<\/em> \u00b7 OM No. F.1\/1\/2021-PPD dated 29.10.2021 (General Instructions on Procurement and Project Management, incl. Rule 227A of GFR)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nThe only substantial divergences are noted in the Appendix at the end.<\/p>\n<h2>Concordance for Chapter 9 \u2014 Part C<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>G<\/th><th>W<\/th><th>C<\/th><th>NC<\/th><\/tr><\/thead><tbody><tr><td>9.33<\/td><td>Breach of Contract<\/td><td>9.8.1<\/td><td>7.8.1<\/td><td>10.8.1<\/td><td>9.8.1<\/td><\/tr><tr><td>9.34<\/td><td>Termination of Contract for Default<\/td><td>9.8.2<\/td><td>7.8.2<\/td><td>10.8.2<\/td><td>9.8.2<\/td><\/tr><tr><td>9.35<\/td><td>Determination for Convenience \/ Frustration<\/td><td>9.8.3, 9.8.4<\/td><td>7.8.3<\/td><td>10.8.3<\/td><td>9.8.3<\/td><\/tr><tr><td>9.36<\/td><td>Limitation of Liabilities<\/td><td>9.8.5<\/td><td>7.8.4<\/td><td>10.8.4<\/td><td>9.8.4<\/td><\/tr><tr><td>9.37<\/td><td>Disputes<\/td><td>9.9.1<\/td><td>7.7.1<\/td><td>10.7.1<\/td><td>9.7.1<\/td><\/tr><tr><td>9.38<\/td><td>Excepted Matters<\/td><td>9.9.2<\/td><td>7.7.2<\/td><td>10.7.2<\/td><td>9.7.2<\/td><\/tr><tr><td>9.39<\/td><td>Adjudication<\/td><td>9.9.3<\/td><td>7.7.3<\/td><td>10.7.3<\/td><td>9.7.3<\/td><\/tr><tr><td>9.40<\/td><td>Mediation<\/td><td>9.9.4<\/td><td>7.7.4<\/td><td>10.7.4<\/td><td>9.7.4<\/td><\/tr><tr><td>9.41<\/td><td>Arbitration<\/td><td>9.9.5<\/td><td>7.7.5<\/td><td>10.7.5<\/td><td>9.7.5<\/td><\/tr><tr><td>9.42<\/td><td>Foreign Arbitration<\/td><td>9.9.6<\/td><td>7.7.6<\/td><td>10.7.6<\/td><td>9.7.6<\/td><\/tr><tr><td>9.43<\/td><td>Notice for and Reference to Arbitration<\/td><td>9.9.7, 9.9.8<\/td><td>7.7.7, 7.7.8<\/td><td>10.7.7\u20138<\/td><td>9.7.7\u20138<\/td><\/tr><tr><td>9.44<\/td><td>Appointment of Arbitrator<\/td><td>9.9.9<\/td><td>7.7.9<\/td><td>10.7.9<\/td><td>9.7.9<\/td><\/tr><tr><td>9.45<\/td><td>The Arbitral Procedure<\/td><td>9.9.10<\/td><td>7.7.10<\/td><td>10.7.10<\/td><td>9.7.10<\/td><\/tr><tr><td>9.46<\/td><td>Challenging Arbitration\/ Judicial Awards<\/td><td>9.9.11<\/td><td>7.7.11<\/td><td>10.7.11<\/td><td>9.7.11<\/td><\/tr><tr><td>9.47<\/td><td>AMRCD \u2014 CPSE Disputes Mechanism<\/td><td> \u2014 <\/td><td>7.7.12<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.48<\/td><td>Contract Management \u2014 Risks and Mitigations<\/td><td>9.10<\/td><td>7.9<\/td><td>10.9<\/td><td>9.9<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>9.33 Breach of Contract<\/span><\/h1>\n<h2>9.33.1<\/span>What Constitutes a Breach<\/span><\/h2>\n<aside class=\"note\">\"in case the contractor undergoes insolvency or receivership \u00b7 neglects \u00b7 or defaults \u00b7 or expresses inability or disinclination to honour his obligations relating to:<\/strong><\/p>\n\u2022 the performance of the contract; Or<\/strong><\/p>\n\u2022 ethical standards; Or<\/strong><\/p>\n\u2022 any other obligation that substantively affects the Procuring Entity's rights and benefits under the contract \u2014 <\/strong><\/p>\n[these] Amount to a Breach of CONTRACT.<\/em><\/p><\/aside>\nThe three named categories of default:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Category<\/th><th>Content<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>default in performance and obligations<\/td><td>\"if the contractor fails to deliver any or all the goods, or fails to perform any other contractual obligations \u2014 including Code of Integrity, or the obligation to maintain production capability (equipment & manufacturing facilities) based on which the contract was awarded \u2014 within the period stipulated in the contract, or within any extension thereof granted by the Procuring Entity \u2014 it shall be treated as a breach of contract<\/strong>.\"<\/td><\/tr><tr><td>b<\/td><td>insolvency<\/td><td>if the contractor or any partner shall at any time be adjudged insolvent \u00b7 or shall have a receiving order or order for the administration of his estate made against him \u00b7 or shall take any proceeding for composition under any insolvency Act \u00b7 or make any conveyance or assignment of his effects \u00b7 or enter into any assignment or composition with his creditors \u00b7 or suspend payment \u00b7 or if the firm be dissolved under the partnership Act<\/strong> \u2014 the Procuring Entity May consider it as a breach of contract<\/td><\/tr><tr><td>c<\/td><td>liquidation<\/td><td>if the contractor is a company being wound up voluntarily or by order of a court \u00b7 or a receiver, liquidator or manager on behalf of the debenture-holders is appointed \u00b7 or circumstances shall have arisen which entitle the court or debenture-holders to appoint a receiver, liquidator or manager<\/strong> \u2014 the Procuring Entity May consider it as a breach of contract<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">W<\/span> variant of the opening: *\"<\/strong>In case the contractor is unable to honour important stipulations of the contract, or gives notice of his intention of not honouring \u2014 or his inability to honour \u2014 such a stipulation, a breach of contract is said to have occurred. Mostly, such breaches occur in relation to the performance of the contract, in terms of inability to complete the Work within stipulated time.\"*<\/p><\/aside>\n<h2>9.33.2<\/span>THE 'NOTICE OF DEFAULT' \u2014 two weeks, and the withholding of payments<\/span><\/h2>\n<aside class=\"note\">\"AS Soon as a Breach of Contract is Noticed \u2014 a SHOW-CAUSE 'Notice of Default' Shall Be Issued to the Contractor, Giving Two Weeks' Notice, Reserving the Right to Invoke Contractual REMEDIES.<\/em><\/p>\nAfter Such a SHOW-CAUSE Notice \u2014 All Payments to the Contractor Would Be Temporarily Withheld, to Safeguard Needed Recoveries That May Become Due on Invoking Contractual REMEDIES.<\/em><\/p>\n If there is an unsatisfactory resolution \u2014 remedial action May be taken immediately<\/strong>.\"<\/p><\/aside>\n<h1>9.34 Termination of Contract for Default<\/span><\/h1>\n<h2>9.34.1<\/span>The Notice of Termination and the Three Savings<\/span><\/h2>\n<aside class=\"note\">\"in the event of an unsatisfactory resolution of 'notice of default' within two weeks of its issue \u2014 the Procuring Entity, if so decided, shall by written 'notice of termination for default' sent to the contractor \u2014 terminate the contract in whole or in part, without compensation to the contractor.<\/strong><\/p>\nBefore Cancelling the Contract and Taking Further Action \u2014 IT May Be Desirable to Obtain Legal ADVICE.<\/em><\/p><\/aside>\nSuch termination shall not:<\/p>\na) prejudice or affect the rights and remedies which have accrued and\/ or shall accrue to the Procuring Entity after that<\/strong>;<\/p>\nb) affect the performance of the contract to the extent not terminated<\/strong> \u2014 unless otherwise instructed by the Procuring Entity;<\/p>\nc) extinguish warranty obligations of the contractor for the goods already supplied, if any<\/strong>.<\/p>\n<h2>9.34.2<\/span>the Seven Additional Recourses on Termination<\/span><\/h2>\n\"if the contract is terminated in whole or in part \u2014 additionally, recourse May be taken to any one or more of the following actions<\/strong>:\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Recourse<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>temporarily withhold payments due to the contractor \u2014 till recoveries due to invocation of other contractual remedies are complete<\/strong><\/td><\/tr><tr><td>b<\/td><td>call back any loaned property or advances of payment, if any \u2014 with the levy of interest rate (e.g., the interest rate of the general provident fund \u2014 GPF) prevailing on the date of release of advance payment, plus 2%, to be compounded quarterly<\/strong><\/td><\/tr><tr><td>c<\/td><td>recover Liquidated Damages and invoke the Denial Clause for delays<\/strong><\/td><\/tr><tr><td>d<\/td><td>prefer claims against insurance, if any<\/strong><\/td><\/tr><tr><td>e<\/td><td>encash and\/ or forfeit Performance Security<\/strong><\/td><\/tr><tr><td>f<\/td><td>invoke any other contractual securities<\/strong><\/td><\/tr><tr><td>g<\/td><td>initiate proceedings in a court of law \u2014 for the transgression of the law, tort, and loss, which are not addressable by the above means<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Note the identity between recourse (b) and the interest formula applied to interest-free advances on default \u2014 see Chapter 6, para 6.13.1-3.<\/em><\/p><\/aside>\n<h1>9.35 Determination of Contract for Convenience of the Procuring Entity, or Frustration of Contract<\/span><\/h1>\n<h2>9.35.1<\/span>The 'Notice for Determination of Contract'<\/span><\/h2>\n<aside class=\"note\">\"after placement of the contract, there May be an unforeseen situation compelling the Procuring Entity to terminate the contract, in whole or in part, for its own convenience \u2014 by serving a written 'notice for determination of contract' on the contractor at any time during the currency of the contract.<\/strong><\/p>\nThe notice shall indicate, inter alia:<\/strong><\/p>\n\u2022 that the termination is for the convenience of the Procuring Entity, or the frustration of the contract;<\/strong><\/p>\n\u2022 the extent to which the contractor's performance under the contract is terminated; And<\/strong><\/p>\n\u2022 the date with effect from which such termination shall become effective.<\/strong><\/p><\/aside>\nThe three savings:<\/p>\n<ul class=\"lst\"><li>\"such termination shall not prejudice or affect the rights and remedies accrued, and\/ or that shall accrue after that, to the parties<\/strong>\";<\/li><li>\"unless otherwise instructed, the contractor shall continue to perform the contract to the extent not terminated<\/strong>\";<\/li><li>\"all warranty obligations, if any, shall continue to survive despite the termination<\/strong>.\"<\/li><\/ul>\n<h2>9.35.2<\/span>THE CRITICAL LEGAL POINT \u2014 determination for convenience is NOT a legal right<\/span><\/h2>\n<aside class=\"note\">\" Determining the Contract by the Procuring Entity for its Convenience is not its Legal Right \u2014 and the Contractor Must Be Persuaded to ACQUIESCE.<\/em><\/p>\nDEPENDING on the Merits of the Case \u2014 the Supplier May Have to Be Suitably Compensated on Mutually Agreed Terms for Terminating the CONTRACT.<\/em><\/p>\n Suitable provisions to this effect should be incorporated in the tender document as well as in the resultant contract<\/strong>.\"<\/p><\/aside>\n<h2>9.35.3<\/span>The Thirty-Day Rule on Completed Goods<\/span><\/h2>\n<aside class=\"note\">\"the goods and incidental works\/ services that are complete and ready in terms of the contract FOR delivery and performance within thirty days after the contractor's receipt of the [notice] \u2026<\/strong>\"<\/strong>(shall be accepted and paid for at the contract terms and prices).<\/em><\/p><\/aside>\n<h2>9.35.4<\/span>FRUSTRATION OF CONTRACT \u2014 the 60-day mutual-agreement window<\/span><\/h2>\n<aside class=\"note\">\"[On the occurrence of a frustration event, a party shall give a] 'notice of frustration event' to the other party, giving justification.<\/strong><\/p>\nThe parties shall use reasonable efforts to agree to amend the contract as May be necessary to complete its performance.<\/strong><\/p>\nHOWEVER, if the Parties Cannot Reach a Mutual Agreement Within 60 Days of the Initial Notice \u2014 the Procuring Entity Shall Issue a 'Notice for Determining the Contract' and Terminate the Contract Due to its Frustration \u2014 Without Repercussions on Either SIDE.<\/em><\/p><\/aside>\n<h1>9.36 Limitation of Liabilities<\/span><\/h1>\n<h2>9.36.1<\/span>The Aggregate Cap \u2014 and its three exclusions<\/span><\/h2>\n<aside class=\"note\">\"Except in Cases of Criminal Negligence or Wilful Misconduct \u2014 the Aggregate Liability of the Parties, Whether under the Contract, in Tort or Otherwise, Shall not Exceed the Total Contract Price (Less Payments Already Made, in Case of the Procuring ENTITY).<\/em><\/p>\nProvided That this Limitation Shall not Apply TO:<\/em><\/p>\n\u2022 the cost of repairing or replacing defective equipment\/ work under the warranty clause, defect liability clause or otherwise; Or<\/strong><\/p>\n\u2022 any obligation of the contractor to indemnify the Procuring Entity concerning IPR infringement.<\/strong><\/p><\/aside>\n<h2>9.36.2<\/span>The Consequential-Loss Exclusion \u2014 and the LD carve-out<\/span><\/h2>\n<aside class=\"note\">\"NEITHER Party Shall Be Liable to the Other Party \u2014 Whether in Contract, Tort, or Otherwise \u2014 for any:<\/em><\/p>\n\u2022 indirect or consequential loss or damage;<\/strong><\/p>\n\u2022 loss of use;<\/strong><\/p>\n\u2022 loss of production; Or<\/strong><\/p>\n\u2022 loss of profits or interest costs \u2014 <\/strong><\/p>\nwhich the other party May suffer in connection with the contract.<\/strong><\/p>\nProvided That this Exclusion Shall not Apply to Any Obligation of the Contractor to Pay Liquidated Damages to the EMPLOYER.<\/em><\/p><\/aside>\n<h1>9.37 Disputes<\/span><\/h1>\n<h2>9.37.1<\/span>The Definition of a \"Dispute\"<\/span><\/h2>\n<aside class=\"note\">\"normally, there should not be any scope for dispute between the purchaser and supplier after entering a mutually agreed valid contract. However, due to various unforeseen reasons, problems May arise during the contract.<\/strong><\/p>\nTherefore, the conditions governing the contract should contain suitable provisions for the settlement of such disputes or differences, binding on both parties<\/strong>.\"<\/p><\/aside>\nThe formal definition \u2014 note the four elements:<\/p>\n<aside class=\"note\">\"all disputes and differences between the parties:<\/strong><\/p>\n\u2022 as to the construction or operation of the contract, or the respective rights and liabilities of the parties on any matter in question or any other account whatsoever;<\/strong><\/p>\n\u2022 but excluding the Excepted Matters;<\/strong><\/p>\n\u2022 arising out of or in connection with the contract, within thirty (30) days from the aggrieved party notifying the other party of such matters;<\/strong><\/p>\n\u2022 whether before or after the completion\/ termination of the contract;<\/strong><\/p>\n\u2022 that cannot be resolved amicably between the procurement officer and the contractor within thirty (30) days of one party notifying the other \u2014 <\/strong><\/p>\nShall Be Referred to as a \"DISPUTE\".<\/em><\/p><\/aside>\n<h2>9.37.2<\/span>THE DoE DIRECTIVE ON CONTRACTUAL DISPUTES \u2014 a passage worth memorising<\/span><\/h2>\n<aside class=\"note\">\"GOVERNMENT Departments\/ Entities\/ Agencies Should Avoid and\/ or Amicably Settle as Many Disputes as Possible \u2014 Using Mechanisms Available in the CONTRACT.<\/em><\/p>\nDECISIONS Should Be Taken in a Pragmatic Manner, in Overall LONG-TERM Public Interest, Keeping Legal and Practical Realities in View \u2014 Without Shirking or Avoiding Responsibility, or Denying Genuine Claims of the Other PARTY.<\/em><\/p>\n \u2014 OM No. F.11\/21\/2024-PPD dated 03.06.2024, PPD, DoE, MoF<\/em><\/p><\/aside>\n<h2>9.37.3<\/span>THE SEQUENTIAL RULE \u2014 and the three mechanisms<\/span><\/h2>\n<aside class=\"note\">\"the aggrieved party shall give a 'notice of dispute' \u2014 indicating the dispute and claims, citing relevant contractual clauses \u2014 to the designated authority, and requesting to invoke the following dispute resolution mechanisms.<\/strong><\/p>\nThe dispute shall be attempted to be resolved \u2014 as far as feasible, before recourse to courts \u2014 through dispute resolution mechanisms available in the contract, in the sequence as mentioned below.<\/strong><\/p>\nAND the Next Mechanism Shall not Be Invoked Unless the Earlier Mechanism Has Been Invoked, or Has Failed to Resolve IT Within the Deadline Mentioned THEREIN.<\/em><\/p><\/aside>\n<h2>The THREE-STEP Ladder:<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>Mechanism<\/th><th>Governing instrument<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>adjudication<\/td><td>(contractual)<\/em><\/td><\/tr><tr><td>2<\/td><td>mediation<\/td><td>the Mediation Act, 2023<\/td><\/tr><tr><td>3<\/td><td>arbitration<\/td><td>the Arbitration and Conciliation Act, 1996<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">A Critical Footnote Appearing in All Four Manuals:<\/p>\n\"The conciliation part of the Arbitration and Conciliation Act, 1996 has been replaced by mediation by the recent Mediation Act, 2023.\"<\/strong><\/p><\/aside>\nthe legal-advice duty: \"while processing a case for dispute resolution\/ litigation\/ arbitration \u2014 the Procuring Entity is to take legal advice at appropriate stages<\/strong>.\"<\/p>\n<h1>9.38 Excepted Matters<\/span><\/h1>\n<h2>9.38.1<\/span>The Definition and the Reciprocity Exception<\/span><\/h2>\n<aside class=\"note\">\"MATTERS for Which Provision Has Been Made in Any Clause of the Contract Shall Be Deemed as 'Excepted Matters' (Matters not Disputable\/ Arbitrable) \u2014 and Decisions of the Procuring Entity Thereon Shall Be Final and Binding on the CONTRACTOR.<\/em><\/p>\nTHE 'Excepted Matters' Shall Stand Expressly Excluded from the Purview of the Dispute Resolution Mechanism \u2014 Including ARBITRATION.<\/em><\/p>\nHOWEVER \u2014 Where the Procuring Entity Has Raised the Dispute, this SUB-CLAUSE Shall not APPLY.<\/em><\/p>\nThat is, the exclusion operates only against the contractor<\/strong> \u2014 it does not bar the Procuring Entity from raising a dispute on an excepted matter.<\/em><\/p><\/aside>\n<h2>9.38.2<\/span>What Excepted Matters Include<\/span><\/h2>\n\"unless otherwise stipulated in the contract \u2014 Excepted Matters shall include, but not be limited to<\/strong>:\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Excepted matter<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>ANY controversies or claims brought by a third party for bodily injury, death, [or] property [damage]<\/strong><\/td><\/tr><tr><td>\u2026<\/td><td>(and the further heads specified in the contract)<\/em><\/td><\/tr><tr><td>6<\/td><td>provisions incorporated in the contract which are beyond the purview of the Procuring Entity, or are in pursuance of policies of Government<\/strong> \u2014 including but not limited to:<\/td><\/tr><tr><td>6(a)<\/td><td>provisions of restrictions regarding local content and purchase preference to local suppliers<\/strong> In terms of the Make in India policy<\/td><\/tr><tr><td>6(b)<\/td><td>provisions regarding restrictions on entities from countries having land-borders with India<\/strong><\/td><\/tr><tr><td>6(c)<\/td><td>purchase preference policies regarding MSEs and start-ups<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Why this Matters:<\/p>\nThe effect of head 6 is that a contractor <\/strong>cannot arbitrate against the operation of the Make in India Order, the land-border restrictions, or the MSE\/ Start-up preferences \u2014 because these are Government policy, not matters within the Procuring Entity's discretion.<\/strong><\/p><\/aside>\n<h1>9.39 Adjudication \u2014 Step 1<\/span><\/h1>\n<h2>9.39.1<\/span>The Notice of Adjudication<\/span><\/h2>\n<aside class=\"note\">\"after exhausting efforts to resolve the dispute with the purchasing officer executing the contract on behalf of the Procuring Entity \u2014 the contractor shall give a 'notice of adjudication' specifying:<\/strong><\/p>\n\u2022 the matters which are in question, or subject of the dispute or difference;<\/strong><\/p>\n\u2022 indicating the relevant contractual clause; And<\/strong><\/p>\n\u2022 the amount of claim item-wise \u2014 <\/strong><\/p>\nto the head of procurement, or any other authority mentioned in the contract (hereinafter called the \"adjudicator\")<\/strong>.\"<\/p><\/aside>\n High-value matters:<\/strong>\"where necessary \u2014 e.g., matters of high value \u2014 the Procuring Entity May proceed with adjudication by a high-level committee<\/strong>\"<\/strong>(constituted on the lines of the HLC described at para 9.40.3 below).<\/em><\/p>\n<h2>9.39.2<\/span>The 60-Day Decision and the Stay on Other Proceedings<\/span><\/h2>\n<aside class=\"note\">\"DURING His Adjudication \u2014 the Adjudicator Shall Give the Contractor an Adequate Opportunity to Present His CASE.<\/em><\/p>\nWithin 60 Days After Receiving the Representation \u2014 the Adjudicator Shall Make and Notify Decisions in Writing on All Matters Referred to HIM.<\/em><\/p>\nTHE Parties Shall not Initiate, During the Adjudication Proceedings, Any Conciliation, Arbitral or Judicial Proceedings in Respect of a Dispute That is the Subject Matter of the Adjudication PROCEEDINGS.<\/em><\/p><\/aside>\n<h2>9.39.3<\/span>Escalation to Mediation<\/span><\/h2>\n<aside class=\"note\">\"if not satisfied by the decision in adjudication \u2014 or if the adjudicator fails to notify his decision within the abovementioned time-frame \u2014 the contractor May proceed to invoke the process of mediation<\/strong>.\"<\/p><\/aside>\n<h1>9.40 Mediation \u2014 Step 2<\/span><\/h1>\n(The Mediation Act, 2023)<\/em><\/p>\n<h2>9.40.1<\/span>Invoking Mediation<\/span><\/h2>\n<aside class=\"note\">\"any party May invoke mediation by submitting a \"notice of mediation\" to the head of the procuring organisation. A neutral third party, known as the mediator, facilitates the mediation process.<\/strong><\/p>\nIF the Other Party is not Agreeable to Mediation \u2014 the Aggrieved Party May Invoke Arbitration, if Available in the CONTRACT.<\/em><\/p>\nFootnote in all four Manuals: \"The [Mediation] Act would be fully notified at a later date. Hence some of the provisions \u2014 like registration of mediators, and MSPs\/ MCI \u2014 may get activated later.\"<\/em><\/p><\/aside>\n<h2>9.40.2<\/span>THE DoE GUIDELINES ON MEDIATION \u2014 the High-Level Committee (HLC)<\/span><\/h2>\n\"Government departments\/ entities\/ agencies are encouraged to adopt mediation under the Mediation Act 2023, and\/ or negotiate amicable settlements to resolve disputes.<\/strong>\"<\/p>\na) the HLC and its composition:<\/p>\n<aside class=\"note\">\"Government departments\/ undertakings May \u2014 where they consider appropriate, e.g., in high-value matters \u2014 constitute a high-level committee (HLC) for dispute resolution, which May include the following (this composition is purely indicative and not prescriptive):<\/strong><\/p>\nI) a retired judge;<\/strong><\/p>\nii) a retired high-ranking officer and\/ or technical expert.<\/strong><\/p><\/aside>\nB) the three ways an HLC May be used:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Mode<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>negotiate directly with the other party, and place a tentative proposed solution before the HLC<\/strong><\/td><\/tr><tr><td>ii<\/td><td>conduct mediation through a mediator, and then place the tentative mediated agreement before the HLC<\/strong><\/td><\/tr><tr><td>iii<\/td><td>use the HLC itself as the mediator<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nc) THE RATIONALE \u2014 arm's length scrutiny:<\/p>\n<aside class=\"note\">\"This Will Enable Decisions Taken for Resolving Disputes in Appropriate Matters to Be Scrutinised by a HIGH-RANKING Body at ARM'S Length from the Regular DECISION-MAKING Structure \u2014 Thereby Promoting Fair and Sound Decisions in the Public Interest, with PROBITY.<\/em><\/p><\/aside>\nD) renegotiation in long-duration works contracts:<\/p>\n<aside class=\"note\">\"there May be rare situations in long-duration works contracts where a renegotiation of the terms May best serve public interest, due to unforeseen major events.<\/strong><\/p>\n In such circumstances \u2014 the terms of the tentative re-negotiated contract May be placed before a suitably constituted high-level committee before approval by the Competent Authority<\/strong>.\"<\/p><\/aside>\ne) APPROVAL: \"approval of the appropriate authority will need to be obtained for the final accepted solution. Section 49 of the Mediation Act 2023 is also relevant in this regard<\/strong>.\"<\/p>\nf) the non-routine Rule:<\/p>\n<aside class=\"note\">\"MEDIATION Agreements Need not Be Routinely or Automatically Included in Procurement Contracts\/ TENDERS.<\/em><\/p>\nTHE Absence of a Mediation Agreement in the Contract Does not Preclude PRE-LITIGATION Mediation. Such a Clause May Be Incorporated Where IT is Consciously Decided to Do SO.<\/em><\/p><\/aside>\ng) \"disputes not covered in an arbitration clause \u2014 and where the methods outlined above are unsuccessful \u2014 should be adjudicated by the courts<\/strong>.\"<\/p>\nh) the modification authority: \"general or case-specific modification in the application of the above guidelines May be authorised by:<\/strong><\/p>\n<aside class=\"note\">\u2022 the Secretary concerned (or an officer not below the level of Joint Secretary to whom the authority is delegated by him) \u2014 in respect of Government Ministries\/ Departments, attached\/ subordinate offices and autonomous bodies; or<\/strong><\/p>\n\u2022 the managing director \u2014 in respect of Central Public Sector Enterprises, including Banks and Financial Institutions<\/strong>.\"<\/p><\/aside>\n<h2>9.40.3<\/span>Appointment of Mediator(s)<\/span><\/h2>\n<aside class=\"note\">\"mediators can be of any nationality, and must be:<\/strong><\/p>\n\u2022 registered with the mediation council of India (MCI); Or<\/strong><\/p>\n\u2022 empanelled by a court-annexed mediation centre; Or<\/strong><\/p>\n\u2022 empanelled by an authority constituted under the legal services authorities Act, 1987; Or<\/strong><\/p>\n\u2022 empanelled [by a recognised mediation service provider].<\/strong><\/p><\/aside>\n<h2>9.40.4<\/span>Confidentiality \u2014 and the recording prohibition<\/span><\/h2>\n<aside class=\"note\">\"[MEDIATION Communications Shall not BE] Admissible as Evidence in Any Subsequent Court Proceedings \u2014 Nor Be Asked to Be Disclosed by Any Court\/ TRIBUNAL.<\/em><\/p>\nNO Audio or Video Recording of the Mediation Proceedings Shall Be Made or Maintained by the Parties or the Participants \u2014 Including the Mediator and Mediation Service Provider \u2014 Whether Conducted in Person or ONLINE.<\/em><\/p><\/aside>\nOnline mediation: \"the Act allows parties to opt for online\/ virtual mediation \u2014 which shall be deemed to occur within the jurisdiction of a competent court. The Act also requires online mediation communication mechanisms to ensure confidentiality<\/strong>.\"<\/p>\n<h2>9.40.5<\/span>How the Mediator Works<\/span><\/h2>\n<aside class=\"note\">\"the mediator initially meets the parties separately, and communicates the view of each party to the other \u2014 to the extent agreed upon by them.<\/strong><\/p>\nHe assists them in:<\/strong><\/p>\nIdentifying issues \u00b7 advancing better understanding \u00b7 clarifying priorities \u00b7 exploring areas of the parties' responsibility \u00b7 identifying common interests \u00b7 and encouraging compromise.<\/strong><\/p>\nHe then meets them jointly to encourage a mutually acceptable resolution.<\/strong><\/p>\n At any stage of the mediation proceedings \u2014 at the parties' request, the mediator May suggest a dispute settlement in writing<\/strong>.\"<\/p><\/aside>\n<h2>9.40.6<\/span>Termination of Mediation \u2014 120 Days Plus 60<\/span><\/h2>\n<aside class=\"note\">\"THE Process Must Be Completed Within 120 Days \u2014 Though Parties Can Extend IT by Another 60 Days Through Mutual CONSENT.<\/em><\/p>\nIF Mediation is not Completed Within this Timeline \u2014 the Mediator Shall Prepare a NON-SETTLEMENT Report \u2014 Without Disclosing the Cause of NON-SETTLEMENT, or Any Other Matter or Thing Referring to Their Conduct During MEDIATION.<\/em><\/p>\n Mediation shall also stand terminated:<\/strong><\/p>\n\u2022 on a declaration of the mediator \u2014 after consultation with the parties or otherwise \u2014 that further efforts at mediation are no longer justified; Or<\/strong><\/p>\n\u2022 on communication by a party in writing, addressed to the mediator and the other parties, that they wish to opt out of mediation.<\/strong><\/p>\nOn termination of mediation \u2014 if the dispute is still alive, the aggrieved party shall be free to invoke arbitration<\/strong>.\"<\/p><\/aside>\n<h2>9.40.7<\/span>Mediated Settlement Agreement (MSA)<\/span><\/h2>\na) what it is: \"if the parties resolve the dispute and execute a mediated settlement agreement (\"MSA\") \u2014 then the mediation is successful.<\/strong><\/p>\n<aside class=\"note\">An MSA is a written agreement settling some or all disputes \u2014 and May extend beyond the disputes referred to mediation.<\/strong><\/p>\n it must be valid under the Indian Contract Act, signed by both parties, and duly authenticated by the mediator for the parties or the MSP. The Act provides options for MSA registration<\/strong>.\"<\/p><\/aside>\nb) challenge to MSA \u2014 90 days, four grounds only:<\/p>\n<aside class=\"note\">\"MSA Can Be Challenged Within 90 Days on Limited Grounds OF:<\/em><\/p>\n(a) fraud; (b) corruption; (c) impersonation; And (d) subject matter being unfit for mediation.<\/strong><\/p><\/aside>\nc) EXECUTION \u2014 enforceable as a decree:<\/p>\n<aside class=\"note\">\"IF There is No Challenge \u2014 or a Challenge is Unsuccessful \u2014 the Act Ensures That the MSA is Binding and Enforceable, Akin to a Judgment or DECREE.<\/em><\/p>\nThis means that if one party fails to comply with the MSA \u2014 the non-defaulting party has a right to enforce it through the court<\/strong>.\"<\/p><\/aside>\n<h2>9.40.8<\/span>Costs and the Interest Moratorium<\/span><\/h2>\na) COSTS: \"the parties shall equally bear all costs of mediation \u2014 including the fees of the mediator and the charges of the mediation service provider<\/strong>.\"<\/p>\nb) no claim of interest during mediation:<\/p>\n<aside class=\"note\">\"PARTIES Shall not Claim Any Interest on Claims\/ COUNTER-CLAIMS from the Date of Notice Invoking Mediation Till the Execution of the Settlement Agreement, if So ARRIVED.<\/em><\/p>\nIF Parties Cannot Resolve the Dispute \u2014 Either Party Shall Claim No Interest from the Date of Notice Invoking Mediation Until the Date of Termination of Mediation PROCEEDINGS.<\/em><\/p><\/aside>\nC) the stay on other proceedings: \"the parties shall not initiate, during the mediation proceedings, any arbitral or judicial proceedings in respect of a dispute that is the subject matter of the mediation proceedings<\/strong>.\"<\/p>\n<h1>9.41 Arbitration \u2014 Step 3<\/span><\/h1>\n(The Arbitration and Conciliation Act, 1996 \u2014 amended 2015 and 2021)<\/em><\/p>\n<h2>9.41.1<\/span>The Arbitration Agreement and Its Survival<\/span><\/h2>\n<aside class=\"note\">\"if an amicable settlement is not forthcoming \u2014 recourse May be taken to the settlement of disputes through arbitration as per the Indian Arbitration and Conciliation Act, 1996.<\/strong><\/p>\nFor this purpose, when the contract is with a domestic supplier \u2014 a standard arbitration clause May be included in the tender document, indicating the arbitration procedure to be followed \u2014 based on which the arbitration Act shall become applicable.<\/strong><\/p>\nThis Agreement Shall Continue to Survive Termination, Completion, or Closure of the Contract for 120 Days After that.<\/em><\/p>\nTHE Venue of Arbitration Should Be the Place from Where the Contract Has Been ISSUED.<\/em><\/p><\/aside>\n<h2>9.41.2<\/span>the Msmed Override<\/span><\/h2>\n<aside class=\"note\">\"THE Micro, Small and Medium Enterprises Development (Msmed) Act, 2006 Provides [FOR] Parties to a Dispute \u2014 Where One of the Parties is a Micro or Small Enterprise \u2014 to Be Referred to the Micro and Small Enterprises Facilitation Council, if the Dispute is Regarding Any Amount Due under Section 17 of the Msmed Act, 2006.<\/em><\/p>\nIF a Micro or Small Enterprise, Being a Party to Dispute, Refers to the Provisions in the Msmed Act 2006 \u2014 These Provisions Shall Prevail over this [ARBITRATION] AGREEMENT.<\/em><\/p><\/aside>\n<h2>9.41.3<\/span>the Government Guidelines on Arbitration \u2014 the Rs 10 Crore Rule<\/span><\/h2>\n(OM No. F.11\/21\/2024-PPD dated 03.06.2024)<\/em><\/p>\n\"DoE has issued the following guidelines for arbitration in contracts of domestic procurement by the Government and by its entities and agencies \u2014 including CPSEs, public sector banks (PSBs), and Government companies<\/strong>:\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Guideline<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>## \"arbitration as a method of dispute resolution should not be routinely or automatically included in procurement contracts\/ tenders \u2014 especially in large contracts<\/strong>.\"<\/td><\/tr><tr><td>b<\/td><td>## \"as a norm \u2014 arbitration (if included in contracts) May be restricted to disputes with a value less than Rs. 10 crores.<\/strong> This figure is regarding the value of the dispute \u2014 not the [value of the contract]<\/strong>.\"<\/td><\/tr><tr><td>d<\/td><td>\"*In matters where arbitration is to be resorted to \u2014 institutional arbitration May be given preference (where appropriate, after considering the reasonableness of the cost of arbitration relative to the value involved).\"<\/td><\/tr><tr><td>e<\/td><td>general or case-specific modification May be authorised by the Secretary concerned<\/strong> (or an officer not below Joint Secretary to whom delegated) for Ministries\/ Departments\/ attached and subordinate offices\/ autonomous bodies \u2014 or by the managing director<\/strong> for CPSEs, Banks and Financial Institutions<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>9.42 Foreign Arbitration<\/span><\/h1>\n<aside class=\"note\">\"the Arbitration and Conciliation Act 1996 has provisions for international commercial arbitration \u2014 which shall be applicable if one of the parties has its Central management and control in any foreign country.<\/strong><\/p>\nWhen the Contract is with a Foreign Supplier \u2014 the Supplier Has the Option to Choose EITHER:<\/em><\/p>\n\u2022 the Indian Arbitration and Conciliation Act, 1996; Or<\/strong><\/p>\n\u2022 arbitration in accordance with the provisions of the united nations commission on international trade law (UNCITRAL) arbitration Rules.<\/strong><\/p>\n The arbitration clause with foreign firms should be in the form of self-contained agreements \u2014 especially for large-value contracts, or those for costly plant and machinery.<\/strong><\/p>\nTHE Venue of Arbitration Should Be in Accordance with UNCITRAL or INDIA'S Arbitration Rules \u2014 Whereby IT May Be in India or Any Neutral COUNTRY.<\/em><\/p><\/aside>\n<h1>9.43 Notice for Arbitration and Reference to Arbitration<\/span><\/h1>\n<h2>9.43.1<\/span>The Appointing Authority<\/span><\/h2>\n<aside class=\"note\">\"'The appointing authority' to appoint the arbitrator shall be the head of the procuring organisation named in the contract \u2014 and includes, if there be no such authority, the officer who is for the time being discharging the functions of that authority, whether in addition to other functions or otherwise<\/strong>.\"<\/p><\/aside>\n<h2>9.43.2<\/span>the 60\u2013120 Day Window for the Notice for Arbitration<\/span><\/h2>\n<aside class=\"note\">\"IN the Event of Any Dispute \u2014 if the Adjudicator Fails to Decide Within 60 Days, or the Mediation is Terminated \u2014 Then the Parties to the CONTRACT:<\/em><\/p>\nAfter 60 Days but Within 120 Days of the 'Notice of Dispute' \u2014 Shall Request the Appointing Authority Through a \"NOTICE for ARBITRATION\" in Writing, Requesting That the Dispute or Difference Be Referred to ARBITRATION.<\/em><\/p>\nThe \"notice for arbitration\" shall specify:<\/strong><\/p>\n\u2022 the matters in question, or the subject of the dispute or difference;<\/strong><\/p>\n\u2022 the relevant contractual clause; And<\/strong><\/p>\n\u2022 the amount of claim item-wise.<\/strong><\/p><\/aside>\n<h2>9.43.3<\/span>Reference to Arbitration \u2014 the jurisdictional limit<\/span><\/h2>\n<aside class=\"note\">\"After Appointing ARBITRATOR(S) \u2014 the Appointing Authority Shall Refer the Dispute to THEM.<\/em><\/p>\nOnly Such Dispute or Difference Shall Be Referred to Arbitration Regarding Which the Demand Has Been Made \u2014 Together with COUNTER-CLAIMS or Set OFF.<\/em><\/p>\nOTHER Matters Shall Be Beyond the Jurisdiction of the ARBITRATOR(S).<\/em><\/p><\/aside>\n<h1>9.44 Appointment of Arbitrator<\/span><\/h1>\n<h2>9.44.1<\/span>Qualification of Arbitrators \u2014 the five rules<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Rule<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>RETIRED OFFICERS of the Procuring Organisation: Must HAVE retired in the rank of Senior Administrative Grade (or equivalent)<\/strong> \u00b7 must have retired at least 1 year prior<\/strong> \u00b7 AND must not be over 70 years of age on the date of notice for arbitration<\/strong><\/td><\/tr><tr><td>b<\/td><td>serving officers: Shall not be below ja grade level<\/strong><\/td><\/tr><tr><td>c<\/td><td>## the no-prior-involvement Rule: \"he\/ they shall not have had an opportunity to deal with the matters to which the contract relates \u2014 or who, in the course of his\/ their duties as an officer of the procuring organisation, expressed views on any or all the matters under dispute or differences.<\/strong> *A declaration to this effect shall be taken from the arbitrators.\"<\/td><\/tr><tr><td>d<\/td><td>\"an arbitrator May be appointed notwithstanding the total number of arbitration cases in which he has been appointed in the past<\/strong>.\"<\/td><\/tr><tr><td>e<\/td><td>## \"not be other than the person appointed by the appointing authority \u2014 and if for any reason that is not possible, the matter shall not be referred to arbitration at all<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>9.44.2<\/span>Panel of Arbitrators \u2014 and the two caps<\/span><\/h2>\n<aside class=\"note\">\"the procuring organisation May prepare \u2014 with the approval of the head of the procuring organisation \u2014 a panel of serving and retired officers who are willing and qualified to be empanelled as arbitrators, based on:<\/strong><\/p>\nIntegrity \u00b7 ethics \u00b7 the experience of dealing in contracts\/ tenders \u00b7 temperament of taking fair decisions \u00b7 feedback \u00b7 general image \u00b7 career profile.<\/strong><\/p>\nSuch Persons Should Have Vigilance Clearance \u2014 and Should not Be Working in the Vigilance WING.<\/em><\/p>\n The performance of empanelled arbitrators should be reviewed annually.<\/strong><\/p>\nThe Two Caps:<\/p>\n\u2022 \"the empanelment of a retired officer as arbitrator shall be limited to three procuring entities only.\"<\/strong><\/p>\n\u2022 \"at any given time, a maximum of two arbitration cases shall be assigned to any arbitrator in a Procuring Entity.\"<\/strong><\/p><\/aside>\n<h2>9.44.3<\/span>Replacement of Arbitrators<\/span><\/h2>\n<aside class=\"note\">\"if one or more of the arbitrators: Refuses to Act \u00b7 withdraws from his office \u00b7 dies \u00b7 neglects\/ is unable or unwilling or refuses to Act for any reason \u00b7 his award being set aside by the court for any reason \u00b7 or in the opinion of the appointing authority fails to Act without undue delay \u2014 <\/strong><\/p>\nthe appointing authority shall appoint new arbitrator(s) to Act in his\/ their place in the same manner in which the earlier arbitrator(s) had been appointed.<\/strong><\/p>\nSuch a RE-CONSTITUTED Tribunal May, at its Discretion, Proceed with the Reference from the Stage at Which the Previous ARBITRATOR(S) Left IT.<\/em><\/p><\/aside>\n<h2>9.44.4<\/span>THE FOUR APPOINTMENT REGIMES \u2014 turning on Section 12(5) waiver and value<\/span><\/h2>\n<aside class=\"note\">This is the Most Intricate Table in the Chapter. Note That the Thresholds Differ Depending on Whether Section 12(5) of the Arbitration Act Has Been Waived.<\/p><\/aside>\n<h3>A. Where Section 12(5) Has Been Waived<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>Value of all claims added together<\/th><th>Composition of the Arbitral Tribunal<\/th><\/tr><\/thead><tbody><tr><td>Does not exceed \u20b9 1,00,00,000 (one crore)<\/td><td>A sole arbitrator<\/strong> \u2014 who shall be a serving officer of the procuring organisation, not below Junior Administrative Grade<\/strong>, nominated by the appointing authority. <\/strong>Appointed within 60 days<\/strong> From the day when a written and valid demand for arbitration is received<\/td><\/tr><tr><td>all other cases<\/td><td>a panel of three serving officers not below Junior Administrative Grade<\/strong> \u2014 OR two serving officers not below jag and one retired officer<\/strong> (retired not below the rank of Senior Administrative Grade)<\/td><\/tr><\/tbody><\/table><\/div>\nThe four-name panel procedure (for the three-member tribunal):<\/p>\n<aside class=\"note\">1. The appointing authority shall send a panel of at least four (4) names of officers \u2014 which May also include retired officers empanelled to work as arbitrator \u2014 to the contractor within 60 days of the demand.<\/strong><\/p>\n2. The contractor will be asked to suggest at least 2 names out of the panel for appointment as the contractor's nominee \u2014 within 30 days from the date of dispatch of the request.<\/strong><\/p>\n3. The appointing authority shall appoint at least one out of them as the contractor's nominee \u2014 and shall also simultaneously appoint the balance number of arbitrators, either from the panel or from outside the panel \u2014 duly indicating the 'presiding arbitrator' from amongst the 3 arbitrators so appointed.<\/strong><\/p>\n4. The appointing authority shall complete this exercise within 30 days from the receipt of the names of the contractor's nominees.<\/strong><\/p>\nThe Finance\/ Accounts Requirement:<\/p>\n\"While nominating the arbitrators \u2014 it shall be necessary to ensure that one of them is from the finance\/ accounts Department.<\/strong><\/p>\n (An officer of selection grade of the finance\/ accounts Department shall be considered as of equal status to the officers in Senior Administrative Grade of other departments for appointment of an arbitrator.)\"<\/strong><\/p>\nthe post-retirement continuation Rule: \"the serving officer working in an arbitral tribunal in ongoing arbitration cases can continue as arbitrator in the tribunal even after his retirement<\/strong>.\"<\/p><\/aside>\n<h3>B. Where Section 12(5) Has not Been Waived<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>Value of all claims added together<\/th><th>Composition<\/th><\/tr><\/thead><tbody><tr><td>does not exceed \u20b9 50,00,000 (fifty lakh)<\/td><td>A retired officer<\/strong> \u2014 retired not below the rank of Senior Administrative Grade officer<\/strong> \u2014 as the sole arbitrator<\/strong><\/td><\/tr><tr><td>exceeds \u20b9 50,00,000 (fifty lakh)<\/td><td>a panel of three (3) retired officers<\/strong> \u2014 retired not below the rank of Senior Administrative Grade officer<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nThe same four-name panel \/ 60-day \/ 30-day \/ 30-day procedure applies, but drawn entirely from RETIRED officers<\/strong>, with their retirement dates duly indicated.<\/p>\n<h2>9.44.5<\/span>FAILURE TO APPOINT \u2014 who designates the institution<\/span><\/h2>\n<aside class=\"note\">\"IF the Appointing Authority Fails to Appoint an Arbitrator \u2014 or Two Appointed Arbitrators Fail to Agree on the Third Arbitrator \u2014 Within 60 (Sixty) Days, Then, Subject to the Survival of this Arbitration AGREEMENT:<\/em><\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Type of arbitration<\/th><th>Who designates the arbitral institution<\/th><\/tr><\/thead><tbody><tr><td>International commercial arbitration<\/td><td>THE supreme court of India<\/strong> Shall designate the arbitral institution<\/td><\/tr><tr><td>national arbitrations<\/td><td>THE high court<\/strong> Shall designate arbitral institutions<\/td><\/tr><\/tbody><\/table><\/div>\nTHE Arbitration Council of India Must Have Graded These Arbitration INSTITUTIONS.<\/em><\/p>\nThese Arbitral Institutions Must Complete the Selection Process Within Thirty Days of Accepting the Request for the ARBITRATOR'S APPOINTMENT.<\/em><\/p><\/aside>\n<h1>9.45 the Arbitral Procedure<\/span><\/h1>\n<h2>9.45.1<\/span>Effective Date of Entering Reference<\/span><\/h2>\n<aside class=\"note\">\"THE Arbitral Tribunal Shall Be Deemed to Have Entered the Reference on the Date on Which the ARBITRATOR(S) Have Received Notice of Their APPOINTMENT.<\/em><\/p>\nAll Subsequent Time Limits Shall Be Counted from Such DATE.<\/em><\/p><\/aside>\n<h2>9.45.2<\/span>SEAT vs VENUE of Arbitration \u2014 the critical distinction<\/span><\/h2>\n<aside class=\"note\">\"THE Seat of Arbitration Shall Be the Place from Which the Letter of Award or the Contract is ISSUED.<\/em><\/p>\nThe venue of arbitration shall be the same as the seat of arbitration.<\/strong><\/p>\nHOWEVER, in Terms of Section 20 of the Arbitration Act \u2014 the Arbitrator, at His Discretion, May Determine a Venue Other Than the Seat of the Arbitration \u2014 Without in Any Way Affecting the Legal Jurisdictional Issues Linked to the Seat of the ARBITRATION.<\/em><\/p><\/aside>\n<h2>9.45.3<\/span>The Duty to Send Parties Back if Earlier Steps Were Skipped<\/span><\/h2>\n<aside class=\"note\">\"IF the Adjudication and\/ or Mediation Mechanisms Had not Been Exhausted Before Such Reference to Arbitration \u2014 the Arbitrator Should Ask the Aggrieved Party to Approach the Designated Authority for Such Mechanisms Before the Arbitration Proceedings are STARTED.<\/em><\/p><\/aside>\n<h2>9.45.4<\/span>Pleadings \u2014 the 30 \/ 60 \/ six-month timetable<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>Time limit<\/th><\/tr><\/thead><tbody><tr><td>CLAIMANT to submit claims<\/strong>(stating the facts supporting the claims, with all relevant documents, and the relief or remedy sought against each claim)<\/em><\/td><td>within 30 DAYS<\/strong> From the date of appointment of the arbitral tribunal \u2014 unless it has granted an extension<\/td><\/tr><tr><td>RESPONDENT to submit defence statement and counter-claim(s), if any<\/td><td>within 60 DAYS<\/strong> Of receipt of the copy of claims \u2014 unless the Tribunal has granted an extension<\/td><\/tr><tr><td>COMPLETION of statements of claims, counter-claims and defence<\/td><td>## within six months<\/strong> From the effective reference date<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">The NO-NEW-CLAIM Rule:<\/p>\n\"no new claim shall be added during proceedings by either party.<\/strong><\/p>\n However, a party May amend or supplement the original claim or defence thereof during arbitration proceedings \u2014 subject to acceptance by the tribunal, having due regard to the delay in making it.\"<\/strong><\/p><\/aside>\n<h2>9.45.5<\/span>Oral Arguments on a Day-to-Day Basis \u2014 and exemplary costs<\/span><\/h2>\n<aside class=\"note\">\"ORAL Arguments \u2014 as Far as Possible \u2014 Shall Be Heard by the Arbitral Tribunal on a DAY-TO-DAY Basis, and No Adjournments Shall Be Granted Without Sufficient CAUSE.<\/em><\/p>\nThe arbitrator(s) may Impose an Exemplary Cost on the Party Seeking Adjournment Without Sufficient CAUSE.<\/em><\/p><\/aside>\n<h2>9.45.6<\/span>AWARD WITHIN 12 MONTHS \u2014 and the extension ladder<\/span><\/h2>\n<aside class=\"note\">\"THE Arbitral Tribunal is Statutorily Bound to Deliver an Award Within 12 (Twelve) Months from the Date When the Arbitral Tribunal Enters REFERENCE.<\/em><\/p>\nTHE Award Can Be Delayed by a Maximum of Six Months Only under Exceptional Circumstances \u2014 Where All Parties Consent to Such Extension of TIME.<\/em><\/p>\nThe court's approval Shall Be Required for Further Extension, if the Award is not Made Out Within Such an Extended PERIOD.<\/em><\/p>\n During the period of an application for an extension of time awaiting before the court \u2014 the arbitrator's proceedings shall continue until the disposal of the application<\/strong>.\"<\/p><\/aside>\n<h2>9.45.7<\/span>Cost of Arbitration and Fees of the Arbitrators<\/span><\/h2>\n<aside class=\"note\">\"the concerned parties shall bear the cost of arbitration in terms of section 31(A) of the arbitration Act. The cost shall inter alia include fees of the arbitrator.<\/strong><\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Fee entitlement<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>A sole arbitrator shall be entitled to a 25% extra fee<\/strong> Over the prescribed fee<\/td><\/tr><tr><td>2<\/td><td>the arbitrator shall be entitled to a 50 per cent extra fee if the award is made within 6 months<\/strong> \u2014 in terms of section 29(A)(2) of the Arbitration Act<\/td><\/tr><tr><td>3<\/td><td>the arbitrator shall also be entitled to this extra fee where the fast track procedure<\/strong> in terms of section 29(B) is followed<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>9.45.8<\/span>FAST TRACK PROCEDURE \u2014 four salient features<\/span><\/h2>\n<aside class=\"note\">\"the parties to arbitration May choose to opt for a fast-track procedure \u2014 either before or after the commencement of the arbitration.<\/strong><\/p>\nTHE Award in FAST-TRACK Arbitration is to Be Made Out Within Six Months \u2014 and the Arbitral Tribunal Shall Be Entitled to Additional FEES.<\/em><\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Feature<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>## \"the dispute is to be decided based on written pleadings only. Procuring entities May encourage fast track procedure based on written pleadings only<\/strong>.\"<\/td><\/tr><tr><td>b<\/td><td>\"the arbitral tribunal shall have the power to call for clarifications in addition to the written pleadings where it deems necessary<\/strong>.\"<\/td><\/tr><tr><td>c<\/td><td>\"an oral hearing May be held only if all the parties request, or the arbitral tribunal considers it necessary<\/strong>.\"<\/td><\/tr><tr><td>d<\/td><td>\"the parties are free to decide the fees of the arbitrator(s) for a fast-track procedure<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>9.45.9<\/span>Powers of the Arbitral Tribunal to Grant Interim Relief<\/span><\/h2>\n<aside class=\"note\">\"the parties to arbitration May approach the arbitral tribunal to seek interim relief on the grounds available under section 9 of the Act.<\/strong><\/p>\n The tribunal has the powers of a court to make interim awards<\/strong>.\"<\/p><\/aside>\n<h2>9.45.10<\/span>THE AWARD \u2014 reasons, no pre-award interest, and corrections<\/span><\/h2>\n<aside class=\"note\">\"[The award shall State] item-wise the sum and reasons upon which it is based.<\/strong><\/p>\nTHE Analysis and Reasons Shall Be Detailed Enough So That the Award Can Be Inferred from IT.<\/em><\/p>\nThe no-pre-award-interest term:<\/p>\n\"it shall be further a term of this arbitration agreement that \u2014 where the arbitral award is for the payment of money \u2014 no interest shall be payable on the whole or any part of the money for any period till the date on which the award is made \u2014 in terms of section 31(7)(a) of the arbitration Act.\"<\/strong><\/p><\/aside>\nfinality and corrections:<\/p>\n<ul class=\"lst\"><li>\"the award of the arbitrator shall be final and binding on the parties to this contract<\/strong>\";<\/li><li>\"a party May apply for corrections of any computational errors, typographical or clerical errors, or any other error of a similar nature occurring in the award \u2014 or interpretation of a specific point of the award \u2014 to the tribunal within 60 days of receipt of the award<\/strong>\";<\/li><li>\"a party May apply to the tribunal within 60 days of receiving the award to make an additional award \u2014 as to claims presented in the arbitral proceedings but omitted from the arbitral award<\/strong>.\"<\/li><\/ul>\n<h1>9.46 Challenging Arbitration \/ Judicial Awards<\/span><\/h1>\n<aside class=\"note\">This is One of the Most Candid Passages in the Entire Manual Family, and is Reproduced at Length.<\/p><\/aside>\n<h2>9.46.1<\/span>The Non-Routine Rule<\/span><\/h2>\n<aside class=\"note\">\"IN Cases Where There is a Decision Against the Government\/ Public Sector Enterprise \u2014 the Decision to Challenge\/ Appeal Should not Be Taken ROUTINELY.<\/em><\/p>\nBUT Only When the Case Genuinely Merits Going for Challenge\/ Appeal, and There are High Chances of Winning in the Court\/ Higher COURT.<\/em><\/p><\/aside>\n<h2>9.46.2<\/span>the 75% Payment Rule \u2014 Rule 227A of GFR, 2017<\/span><\/h2>\n<aside class=\"note\">\"IN Cases Where the Ministry\/ Department Has Challenged an Arbitral Award \u2014 and, as a Result, the Amount of the Arbitral Award Has not Been PAID:<\/em><\/p>\n75% of the Arbitral Award (Which May Include Interest Up to Date of the Award) Shall Be Paid by the Ministry\/ Department to the Contractor\/ Concessionaire Against a Bank Guarantee (BG).<\/em><\/p>\nThe BG shall Only Be for the Said 75% of the Arbitral Award \u2014 and not for the Interest, Which May Become Payable to the Ministry\/ Department Should the Subsequent Court Order Require a Refund of the Said AMOUNT.<\/em><\/p><\/aside>\n<h2>9.46.3<\/span>the Escrow Account and the Waterfall<\/span><\/h2>\n<aside class=\"note\">\"the payment May be made into a designated escrow account, with the stipulation that the proceeds will be used:<\/strong><\/p>\n1. First \u2014 for payment of lenders' dues;<\/strong><\/p>\n2. Second \u2014 for completion of the project; And<\/strong><\/p>\n3. Then \u2014 for completion of other projects of the same Ministry\/ Department, as mutually agreed\/ decided.<\/strong><\/p>\n Any balance remaining in the escrow account \u2014 after settlement of lenders' dues and completion of projects of the Ministry\/ Department \u2014 May be allowed to be used by the contractor\/ concessionaire, with the prior approval of the lead banker and the Ministry\/ Department.<\/strong><\/p>\n If otherwise eligible, and subject to contractual provisions \u2014 other amounts withheld May also be released against BG<\/strong>.\"<\/p><\/aside>\n<h2>9.46.4<\/span>the Candid Passage on Casual Appeals<\/span><\/h2>\n<aside class=\"note\">\"ARBITRATION\/ Court Awards Should Be Critically Reviewed. in Cases Where There is a Decision Against Government\/ Pse \u2014 the Decision to Appeal Should not Be Taken ROUTINELY.<\/em><\/p>\nTHERE is a Perception That Such Appeals are Sometimes Resorted to in Order to Postpone the Problem and Defer Personal ACCOUNTABILITY.<\/em><\/p>\nCASUAL Appeals in Arbitration\/ Court Cases Have Resulted in the Payment of Heavy Damages\/ Compensation\/ Additional Interest Cost \u2014 Thereby Causing More Harm to the Exchequer, in Addition to Tarnishing the Image of the GOVERNMENT.<\/em><\/p><\/aside>\n<h2>9.46.5<\/span>The Monitoring, Delegation and Board\/ Committee Requirements<\/span><\/h2>\n<aside class=\"note\">\"the organisation should monitor the success rate of appealing against arbitration awards.<\/strong><\/p>\n There should be a clear delegation to empower officials to accept arbitration\/ court orders.<\/strong><\/p>\nA Special Board\/ Committee May Be Set Up to Review the Case Before an Appeal is Filed Against an ORDER.<\/em><\/p>\nArbitration\/ court awards should not be routinely appealed, without due application of mind to all facts and circumstances \u2014 including realistic probability of success.<\/strong><\/p>\nThe Certification the Board\/ Committee Must Make:<\/p>\n\"The board\/ committee or other authority deciding on the matter shall clarify that it has considered both legal merits and the practical chances of success \u2014 and, after considering the cost of (and rising through) litigation\/ appeal\/ further litigation, as the case May be:<\/strong><\/p>\n it is satisfied that such litigation\/ appeal\/ further litigation cost is likely to be financially beneficial compared to accepting the arbitration\/ court award.\"<\/strong><\/p><\/aside>\n<h2>9.46.6<\/span>THE STATISTICAL JUSTIFICATION \u2014 why the 75% risk is worth taking<\/span><\/h2>\n<aside class=\"note\">\"STATISTICS Have Shown That \u2014 in Cases Where the Arbitration Award is Challenged, a Large Majority of Cases are Decided in Favour of the CONTRACTOR.<\/em><\/p>\nIN Such Cases, the Amount Becomes Payable with Interest at a Rate That is Often Far Higher Than the GOVERNMENT'S Cost of Funds. this Results in Huge Financial Losses to the GOVERNMENT.<\/em><\/p>\nHENCE, in the Aggregate \u2014 IT is in the Public Interest to Take the Risk of Paying a Substantial Part of the Award Amount, Subject to the Result of the Litigation \u2014 Even if, in Some Rare Cases of Insolvency Etc., Recovery of the Amount in Case of Success May Become DIFFICULT.<\/em><\/p><\/aside>\n<h2>9.46.7<\/span>the Personal Accountability Provision<\/span><\/h2>\n<aside class=\"note\">\"THE Only Circumstances in Which Such Payment Need not Be Made are When the CONTRACTOR:<\/em><\/p>\n\u2022 declines or is unable to provide the requisite Bank Guarantee; And\/ or<\/strong><\/p>\n\u2022 fails to open an escrow account as required.<\/strong><\/p>\nPERSONS Responsible for not Adhering to this are Liable to Be Held Personally Accountable for the Additional Interest Arising in the Event of the Final Court Order Going Against the Procuring ENTITY.<\/em><\/p>\n \u2014 Rule 227A of GFR, 2017, as notified under paras 16.1 to 16.5 of OM No. F.1\/9\/2021-PPD dated 29.10.2021<\/em><\/p><\/aside>\n<h1>9.47 Mechanism for Resolution of Commercial Disputes Between Cpses and Government Agencies (AMRCD) [W ONLY]<\/span><\/h1>\n<h2>9.47.1<\/span>Introduction \u2014 and what AMRCD superseded<\/span><\/h2>\n<aside class=\"note\">\"to streamline and ensure the effective resolution of commercial disputes between Central public sector enterprises (CPSEs) and Government departments\/ organizations \u2014 the Government of India has established the:<\/strong><\/p>\nADMINISTRATIVE Mechanism for Resolution of Cpses Disputes (AMRCD)<\/em><\/p>\nThis Mechanism \u2014 Effective from May 22, 2018 \u2014 Supersedes the Earlier Permanent Machinery of Arbitration (PMA).<\/em><\/p><\/aside>\nSCOPE \u2014 it applies to all commercial disputes concerning the interpretation and application of provisions in contracts between:<\/p>\na) CPSEs inter se<\/strong>; and<\/p>\nb) CPSEs and Government departments\/ organizations<\/strong> \u2014 <\/p>\n<aside class=\"note\">EXCLUDING Disputes Related to: Railways \u00b7 Income Tax \u00b7 Customs \u00b7 and Excise DEPARTMENTS.<\/em><\/p><\/aside>\n<h2>9.47.2<\/span>the TWO-TIER Structure<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Tier<\/th><th>Composition \/ Authority<\/th><\/tr><\/thead><tbody><tr><td>First level (tier 1)<\/td><td>disputes are initially referred to a committee comprising<\/strong>: \u2022 THE secretaries of the respective administrative ministries\/ departments involved<\/strong>; AND \u2022 THE Secretary of the Department of legal affairs<\/strong>. THE financial advisors (fas) of the concerned ministries\/ departments represent the issues before this committee<\/strong><\/td><\/tr><tr><td>second level (tier 2)<\/td><td>if the dispute remains unresolved at the first level \u2014 it is escalated to the Cabinet Secretary<\/strong>. ## WHOSE decision is final and binding<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>9.47.3<\/span>Procedure \u2014 the three-month and 15-day rules<\/span><\/h2>\n<aside class=\"note\">\"the claiming party must approach the financial advisor of its administrative Ministry\/ Department to initiate the dispute resolution process.<\/strong><\/p>\nMeetings are held to examine and resolve the dispute on its merits.<\/strong><\/p>\nTHE Committee is Expected to Finalize its Decision Within Three Months of Receiving the Dispute NOTICE.<\/em><\/p>\nAN Aggrieved Party Can Appeal the first-LEVEL Decision to the Cabinet Secretary Within 15 DAYS.<\/em><\/p><\/aside>\n<h2>9.47.4<\/span>Inclusion in Contracts \u2014 mandatory, including retrospectively<\/span><\/h2>\n<aside class=\"note\">\"All Cpses Must Include a Specific Clause in Relevant Contracts \u2014 to Ensure That Disputes are Resolved Through the AMRCD as Stipulated in the Dpe O.M..<\/em><\/p>\nONGOING Contracts Should Also Be Amended to Incorporate this CLAUSE.<\/em><\/p><\/aside>\n<h1>9.48 Contract Management \u2014 Risks and Mitigations<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>advance payments: \"this is an area of risk in Public Procurement with undue and unintended benefits to the contractor \u2014 which vitiates the original selection criteria<\/strong>.\"<\/td><td>any mobilisation or other advance payments should be as per the tender document\/ contract, and only for justifiable cases<\/strong>. Terms of such advances should be expressly stated in the NIT\/ tender documents<\/strong>. The advance payment May be released in not less than two stages<\/strong>, depending upon the progress of the contract. The advance should be progressively adjusted against bills cleared for payment<\/strong>. ## \"interest should be charged on delayed recoveries irrespective of the reason stated<\/strong>.\"<\/td><\/tr><tr><td>2<\/td><td>contract changes and renegotiations: \"this is also a risk area where the Procuring Entity May not get what it contracted and paid for, or May pay for what it has not received. On the other hand, the contractor May not get timely or proper amendments due to changes asked by the procuring entities<\/strong>.\"<\/td><td>## \"contract modifications and renegotiations should not substantially alter the nature of the contract. It should not vitiate the basis of the selection of the contractor. It should not give undue or unintended benefits to the contractor.<\/strong> *However, for any changes caused by the Procuring Entity \u2014 the contractor should be adequately and timely compensated within the contractual terms.\"<\/td><\/tr><tr><td>3<\/td><td>\"supervising agencies\/ individuals are unduly influenced to alter the contents of their reports \u2014 so changes in quality, performance, equipment, and characteristics go unnoticed<\/strong>.\"<\/td><td>A contract management Manual or operating procedure should be prepared for large-value contracts<\/strong>. <\/strong>There should be built-in systems for checks and balances<\/strong><\/td><\/tr><tr><td>4<\/td><td>\"the contractor's claims are false or inaccurate \u2014 and are protected by the person in charge of revising them<\/strong>.\"<\/td><td>## \"all large contracts should be formally reconciled for closure \u2014 to ensure that the scope of the work and warranty\/ defect liability period is completed.<\/strong> *This should include the dispute resolution forum for resolving disputes in a fixed timeframe, with the provision of escalation level.\"<\/td><\/tr><tr><td>5<\/td><td>\"payment to the contractor is delayed intentionally or otherwise<\/strong>.\"<\/td><td>\"all payments\/ recoveries should also be reconciled<\/strong>.\"<\/td><\/tr><tr><td>6<\/td><td>\"the contractor gets the final payment \u2014 but contract closure has not been formally done. As a result, material\/ assets loaned to him are not accounted for<\/strong>.\"<\/td><td>## \"*it should also be ensured that material\/ assets loaned to him \u2014 including security passes \u2014 are accounted for.\"<\/td><\/tr><tr><td>7<\/td><td>## \"every dispute lands up in arbitration or court cases \u2014 since the Procuring Entity is reluctant to grant compensation for its lapses to the contractor<\/strong>.\"<\/td><td>(addressed by the dispute-resolution ladder at paras 9.37\u20139.46, and by the DoE directive at para 9.37.2)<\/em><\/td><\/tr><tr><td>8<\/td><td>\"agents\/ sub-contractors and partners \u2014 chosen in a non-transparent way \u2014 are unaccountable, or are used to channel bribes<\/strong>.\"<\/td><td>\"agents should only be as per the terms of the contract.<\/strong> ## *sub-contracting of the contract should normally not be allowed in the procurement of goods.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>Appendix to Chapter 9 \u2014 Part C: Points of Difference<\/span><\/h1>\n<aside class=\"note\">As noted at the head of this Part, the dispute-resolution block is substantially COMMON to all four Manuals. The divergences below are therefore few \u2014 but correspondingly significant.<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>AMRCD \u2014 the Administrative Mechanism for Resolution of CPSEs Disputes<\/strong>(effective 22 May 2018, superseding the Permanent Machinery of Arbitration; two-tier structure ending with the Cabinet Secretary; three-month decision; 15-day appeal; excludes Railways, Income Tax, Customs and Excise)<\/em><\/td><td>W ONLY<\/td><\/tr><tr><td>2<\/td><td>Definition of breach<\/td><td>G\/C\/NC: framed around insolvency, receivership, neglect, default, or disinclination to honour obligations<\/em> \u2014 expressly including ETHICAL STANDARDS and the obligation to maintain production capability \u00b7 W: framed around *inability to honour important stipulations*, noting that breaches mostly relate to inability to complete the Work within stipulated time<\/strong><\/td><\/tr><tr><td>3<\/td><td>\"Obligation to maintain production capability (equipment & manufacturing facilities) based on which contract was awarded\"<\/td><td>G<\/strong>(a goods-specific default)<\/em><\/td><\/tr><tr><td>4<\/td><td>Warranty obligations survive termination<\/td><td>G<\/strong>(consistent with the Goods-only Warranty Clause at Part A, para 9.17)<\/em><\/td><\/tr><tr><td>5<\/td><td>Sub-contracting \"should normally not be allowed in the procurement of GOODS\"<\/td><td>G<\/strong>(contrast the Works and NC positions permitting sub-contracting subject to limits \u2014 Chapter 3, para 3.3.3 and Chapter 4 Part A, para 4.3.3-E)<\/em><\/td><\/tr><tr><td>6<\/td><td>Excepted matters head 6 \u2014 Make in India, land-border restrictions, MSE and Start-up preferences excluded from arbitration<\/td><td>Common to all four<\/td><\/tr><tr><td>7<\/td><td>The three-step ladder \u2014 Adjudication \u2192 Mediation \u2192 Arbitration, with the sequential rule<\/td><td>Common to all four<\/td><\/tr><tr><td>8<\/td><td>The Mediation Act 2023 replacing the conciliation part of the Arbitration and Conciliation Act 1996<\/td><td>Common footnote in all four<\/td><\/tr><tr><td>9<\/td><td>Rs 10 crore norm restricting arbitration; institutional arbitration preferred; arbitration not to be routinely included<\/td><td>Common to all four<\/strong>(OM dated 03.06.2024)<\/em><\/td><\/tr><tr><td>10<\/td><td>The four appointment regimes turning on Section 12(5) waiver \u2014 Rs 1 crore \/ Rs 50 lakh thresholds; the four-name panel; the Finance\/ Accounts member requirement<\/td><td>Common to all four<\/td><\/tr><tr><td>11<\/td><td>75% payment against BG on challenging an award; the escrow waterfall; personal accountability for non-adherence<\/td><td>Common to all four<\/strong>(Rule 227A of GFR 2017)<\/em><\/td><\/tr><tr><td>12<\/td><td>Risk row 8 mitigation \u2014 \"sub-contracting should normally not be allowed\"<\/td><td>G<\/strong>(the other Manuals' risk tables address agents differently)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 9 (parts a, b and c)<\/p>\n<aside class=\"note\">The Unified Manual is Now Complete for Chapters 1 to 9.<\/p>\nWhat remains in the source Manuals beyond this point are the <\/strong>ANNEXURES and APPENDICES \u2014 which differ substantially in numbering between the four Manuals, and which have been cross-referenced throughout this Unified Manual at the point where each is invoked (for example: Integrity Pact \u2014 G Annexure 30 \u00b7 W Annexure 14 \u00b7 C Annexure 18 \u00b7 NC Annexure 12)<\/em>.<\/p>\nA consolidated ANNEXURE CONCORDANCE \u2014 mapping every annexure of all four Manuals to its counterparts \u2014 would be the natural next deliverable.<\/p><\/aside><\/section>\n<\/div><\/main>\n<\/div>\n<button class=\"upm-navbtn\" type=\"button\">Chapters<\/button>\n<button class=\"upm-top\" type=\"button\">Top<\/button>\n<script>\n\/* ===================================================================\n SET YOUR PDF URL HERE \u2014 paste the File URL from Media Library.\n Leave it empty to use the PDF sitting beside this page.\n =================================================================== *\/\nvar UPM_PDF_URL = \"\";\n\/* =================================================================== *\/\n\n(function(){\n var root=document.querySelector('.upm'); 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margin:18mm 15mm}\n}\n<\/style>\n\n<section class=\"upm-hero\">\n <div class=\"upm-hero-in\">\n \n <h1>The Unified Manual for Public Procurement<\/em><\/h1>\n Four procurement Manuals merged into one continuous text. Where they agree,\n the provision is stated once. Where they differ, the divergence is set out openly, with the\n position of each Manual identified. Nothing has been dropped in the merging.<\/p>\n <div class=\"upm-src\">\n G<\/b> Goods, 2024<\/span>\n W<\/b> Works, 2025<\/span>\n C<\/b> Consultancy Services, 2025<\/span>\n NC<\/b> Non-Consultancy Services, 2025<\/span>\n <\/div>\n <div class=\"upm-cta\">\n <a class=\"upm-btn upm-btn-a\" href=\"Unified-Manual-for-Public-Procurement.pdf\" data-pdf=\"Unified-Manual-for-Public-Procurement.pdf\" download rel=\"noopener\"><svg viewBox=\"0 0 24 24\" fill=\"none\" stroke=\"currentColor\" stroke-width=\"2.2\" stroke-linecap=\"round\" stroke-linejoin=\"round\" aria-hidden=\"true\"><path d=\"M12 3v12m0 0l-4-4m4 4l4-4M4 19h16\"\/><\/svg>Download PDF 361 pp · 5.8 MB<\/span><\/a>\n <a class=\"upm-btn upm-btn-b\" href=\"#upm-ch00\">Start reading<\/a>\n <a class=\"upm-btn upm-btn-b\" href=\"#\" data-print>Print this page<\/a>\n <\/div>\n <\/div>\n<\/section>\n<div class=\"upm-shell\">\n<nav class=\"upm-nav\" aria-label=\"Chapters\"><h2>Chapters<\/h2><ol><li><a href=\"#upm-ch00\">00<\/span>How to Use this ManualTags, colour key, contents and the three master concordance tables<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch1\">1<\/span>Principles and PoliciesApplicability, the Five R's, Value for Money, MSE, Make in India, land border restrictions<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch2\">2<\/span>Need Assessment and PlanningIndent, Perspective Plan, Procurement Proposal, cost estimation, TS \/ DPR \/ ToR \/ Activities Schedule<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch3\">3<\/span>Bidders and GovernanceEligibility, Code of Integrity, Integrity Pact, grievances, registration, debarment<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch4\">4<\/span>Bidding Design and Modes of ProcurementTypes of contract, QCBS, tendering systems, channels; OTE, GTE, Rate Contract, LTE, SLTE, PAC, STE<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch5\">5<\/span>Bid Invitation ProcessModel Tender Documents, NIT, ITB, GCC, REoI and RfP, e-publishing, pre-bid, bid opening<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch6\">6<\/span>Securities, Prices, PaymentsBid and performance security, retention money, advances, price variation, ERV, taxes, Incoterms<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch7\">7<\/span>Bid Evaluation and Award of ContractShortlisting, Tender Committee and CEC, LCS, QCBS, SSS, FBS, abnormally low bids, cartels, award<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch8\">8<\/span>Special Types of ProcurementEmergencies, buy back, AMC, NPV, turnkey, consultants, NGOs, security, manpower, HaaS<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch9\">9<\/span>Contract ManagementAdministration, quality assurance, time and cost control, logistics, closure, breach, disputes<\/span><\/span><\/a><\/li><\/ol>Merging the Goods (2024), Works (2025), Consultancy Services (2025) and Non-Consultancy Services (2025) Manuals of the Department of Expenditure.<\/p><\/nav>\n<main class=\"upm-body\"><div class=\"upm-body-in\">\n<div class=\"upm-filter\">\nShow<\/b>\n<button type=\"button\" data-f=\"all\" class=\"on\">All four<\/button>\n<button type=\"button\" data-f=\"G\">Goods<\/button>\n<button type=\"button\" data-f=\"W\">Works<\/button>\n<button type=\"button\" data-f=\"C\">Consultancy<\/button>\n<button type=\"button\" data-f=\"NC\">Non-Consultancy<\/button>\nCommon text always stays visible<\/span>\n<\/div>\n<section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch00\">Front Matter<\/p><h1>How to Use this Manual<\/h1><\/header><div class=\"upm-key\">\nHow to read the colours<\/b>\n<div class=\"row\">\nPlain white \u2014 common to all four Manuals<\/span>\nGoods only<\/span>\nWorks only<\/span>\nConsultancy only<\/span>\nNon-Consultancy only<\/span>\nTwo or three Manuals<\/span>\n<\/div>\nAnything on a tinted background appears in the named Manual or Manuals\nalone<\/em>, and cannot be inferred from the others. Text on plain white applies to all four.\nA tinted section carries a label in its top-left corner; a single tinted paragraph, list item or\ntable row carries a coloured spine on its left. Grey callouts are ordinary notes \u2014 they carry no\ncolour, so colour never means two different things.<\/p>\n<\/div><h2>0.1<\/span>Purpose and Scope of this Manual<\/span><\/h2>\nThis Manual consolidates, into a single continuous text, the four procurement Manuals issued by the Department of Expenditure, Ministry of Finance, Government of India. It is written for officers preparing for departmental promotion and competitive examinations, and for practitioners who must work across more than one category of procurement.<\/p>\nEach of the four source Manuals is complete in itself, and each is written as though the other three did not exist. In practice they overlap heavily, diverge sharply at particular points, and use different chapter numbers for the same subject matter. A candidate who studies them separately must hold four parallel structures in mind and reconcile them under examination conditions.<\/p>\nThis Manual removes that burden. Where the four Manuals agree, the provision is stated once. Where they differ, the divergence is stated openly, with the position of each Manual identified. Nothing has been dropped in the process of merging: every provision of every source Manual appears somewhere in this text.<\/p>\n<h2>0.2<\/span>The Four Source Manuals<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Tag<\/th><th>Manual<\/th><th>Edition<\/th><\/tr><\/thead><tbody><tr><td>G<\/td><td>Manual for Procurement of Goods<\/td><td>Second Edition, 2024<\/td><\/tr><tr><td>W<\/td><td>Manual for Procurement of Works<\/td><td>Second Edition, 2025<\/td><\/tr><tr><td>C<\/td><td>Manual for Procurement of Consultancy Services<\/td><td>Second Edition, 2025<\/td><\/tr><tr><td>NC<\/td><td>Manual for Procurement of Non-Consultancy Services<\/td><td>2025<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>0.3<\/span>How to Read this Manual<\/span><\/h2>\nUntagged text applies to all four categories.<\/strong> Where a provision is confined to one or more categories, the relevant tag appears against the heading or in the body of the text:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Tag<\/th><th>Category<\/th><th>Meaning of the tag<\/th><\/tr><\/thead><tbody><tr><td>G<\/td><td>Goods<\/td><td>The provision appears only in the Goods Manual<\/td><\/tr><tr><td>W<\/td><td>Works<\/td><td>The provision appears only in the Works Manual<\/td><\/tr><tr><td>C<\/td><td>Consultancy Services<\/td><td>The provision appears only in the Consultancy Manual<\/td><\/tr><tr><td>NC<\/td><td>Non-Consultancy Services<\/td><td>The provision appears only in the Non-Consultancy Manual<\/td><\/tr><\/tbody><\/table><\/div>\nTags may be combined. A heading marked G + W<\/em> is common to Goods and Works but absent from the two services Manuals.<\/p>\nShaded panels<\/strong> carry three kinds of material: a divergence between the Manuals that a reader must not merge in the mind; a passage from a source Manual reproduced because its exact wording matters; or a caution that the source Manual itself states in emphatic terms.<\/p>\nBold within the running text<\/strong> marks the operative words of a provision \u2014 the words on which its legal effect turns. It is used sparingly and deliberately.<\/p>\nEvery chapter closes with a table of points of difference<\/strong> between the four Manuals. That table is the single most useful revision aid in this Manual, and should be read before and after the chapter body.<\/p>\n<h2>0.4<\/span>Contents<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Chapter<\/th><th>Title<\/th><th>What it covers<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Introduction \u2014 Principles and Policies<\/td><td>Applicability, categorisation, the Five R's, Value for Money, the five Fundamental Principles, Canons of Financial Propriety, procurement infrastructure, and the whole body of preferential and restricted purchase policy \u2014 MSE, Make in India, land border restrictions, Start-ups and DMI&SP<\/td><\/tr><tr><td>2<\/td><td>Need Assessment, Formulation of the Requirement, and Procurement Planning<\/td><td>The indent, the Perspective Plan and the Procurement Proposal; cost estimation; and the four different instruments by which a requirement is described \u2014 Technical Specifications, the DPR sequence, the Terms of Reference, and the Services and Activities Schedule<\/td><\/tr><tr><td>3<\/td><td>Participation of Bidders, Vendor Relationship Management and Governance<\/td><td>Eligibility and legal status of bidders, the Code of Integrity, the Integrity Pact, grievance redressal, conduct of public servants, registration and enlistment, debarment, and Indian agents<\/td><\/tr><tr><td>4<\/td><td>Bidding Design (Parts A and B)<\/em><\/td><td>Agency for procurement, admeasurement, types of contract, systems of selection including QCBS, tendering systems, channels of procurement; and the full range of modes of procurement from Open Tender to Direct Procurement<\/td><\/tr><tr><td>5<\/td><td>Bid Invitation Process<\/td><td>Model Tender Documents, the contents and sections of the tender document, the REoI and RfP, e-publishing, amendment and extension, pre-bid conferences, bid submission, and bid opening<\/td><\/tr><tr><td>6<\/td><td>Forms of Securities, Prices, Payment Terms and Price Variations<\/td><td>Bid security and performance security, Security Deposit, Insurance Surety Bond and e-BG, payment terms, advance payments, price variation, Exchange Rate Variation, taxes, and Incoterms<\/td><\/tr><tr><td>7<\/td><td>Bid Evaluation and Award of Contract (Parts A and B)<\/em><\/td><td>Shortlisting and EoI, the Tender Committee and the CEC, preliminary examination, techno-commercial and financial evaluation, LCS, QCBS, SSS and FBS, abnormally low bids, cartels, negotiations, and award<\/td><\/tr><tr><td>8<\/td><td>Special and Unique Types of Procurement<\/td><td>Emergencies and disaster management, buy back, capital goods, AMC, Net Present Value, turnkey; and the special engagements \u2014 individual consultants, NGOs, procurement agents, auditors, IT projects, security and manpower services<\/td><\/tr><tr><td>9<\/td><td>Contract Management (Parts A, B and C)<\/em><\/td><td>Contract administration and quality assurance; time control, cost control, logistics and closure; and breach, termination and the whole dispute resolution apparatus<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>0.5<\/span>Master Concordance \u2014 Chapter Numbering across the Four Manuals<\/span><\/h2>\nThe single most frequent source of error in examination is that the same subject carries a different chapter number in each Manual. This table should be memorised before anything else in this book.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Subject<\/th><th>This Manual<\/th><th>G<\/th><th>W<\/th><th>C<\/th><th>NC<\/th><\/tr><\/thead><tbody><tr><td>Introduction, principles and policies<\/td><td>1<\/td><td>1<\/td><td>1<\/td><td>1<\/td><td>1<\/td><\/tr><tr><td>Need assessment and procurement planning<\/td><td>2<\/td><td>2<\/td><td>2<\/td><td>2<\/td><td>2<\/td><\/tr><tr><td>Bidders, governance and debarment<\/td><td>3<\/td><td>3<\/td><td>8<\/td><td>3<\/td><td>3<\/td><\/tr><tr><td>Bidding design and modes of procurement<\/td><td>4<\/td><td>4<\/td><td>3<\/td><td>4<\/td><td>4<\/td><\/tr><tr><td>Bid invitation process<\/td><td>5<\/td><td>5<\/td><td>4<\/td><td>5<\/td><td>5<\/td><\/tr><tr><td>Securities, prices and payment terms<\/td><td>6<\/td><td>6<\/td><td>5<\/td><td>6<\/td><td>6<\/td><\/tr><tr><td>Shortlisting of consultants (EoI)<\/td><td>7A<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>7<\/td><td> \u2014 <\/td><\/tr><tr><td>Bid evaluation and award of contract<\/td><td>7<\/td><td>7<\/td><td>6<\/td><td>8<\/td><td>7<\/td><\/tr><tr><td>Special and unique types of procurement<\/td><td>8<\/td><td>8<\/td><td>none<\/td><td>9<\/td><td>8<\/td><\/tr><tr><td>Contract management and monitoring<\/td><td>9<\/td><td>9<\/td><td>7<\/td><td>10<\/td><td>9<\/td><\/tr><\/tbody><\/table><\/div>\nThree consequences follow, and each has been the subject of examination questions:<\/p>\n<ol class=\"lst\"><li>The Works Manual runs one chapter behind<\/strong> the others from Bidding Design onwards, because it places governance and debarment at the end, as Chapter 8, rather than early, as Chapter 3.<\/li><li>The Consultancy Manual runs one chapter ahead<\/strong> from Bid Evaluation onwards, because it inserts an entire chapter on Shortlisting of Consultants, which has no counterpart anywhere.<\/li><li>The Works Manual has no chapter on special types of procurement at all.<\/strong> Its variants \u2014 EPC, PPP, piece Work and stalled contracts \u2014 are dealt with inside its Bidding Design chapter.<\/li><\/ol>\n<h2>0.6<\/span>Master Concordance \u2014 Where the Four Manuals Stand Alone<\/span><\/h2>\nA provision found in only one Manual cannot be inferred from the others. The following are the principal bodies of material that exist in a single Manual, and they account for most of the difference in length between the four.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Body of material<\/th><th>Only in<\/th><th>Where in this Manual<\/th><\/tr><\/thead><tbody><tr><td>Reservation of Khadi, pharmaceuticals and 358 MSE-reserved items<\/td><td>G<\/td><td>1.11.1<\/td><\/tr><tr><td>Right to Information and proactive disclosures<\/td><td>G<\/td><td>1.16<\/td><\/tr><tr><td>Basic principles of undertaking works; administrative control<\/td><td>W<\/td><td>1.17, 1.18<\/td><\/tr><tr><td>Law of Agency<\/td><td>W + C + NC<\/td><td>1.15<\/td><\/tr><tr><td>Technical Specifications, Ecomark, BEE star ratings<\/td><td>G<\/td><td>2.4<\/td><\/tr><tr><td>The PPR, DPR, technical Sanction and Reference Documents sequence<\/td><td>W<\/td><td>2.5<\/td><\/tr><tr><td>Terms of Reference, activity-based and position-based<\/td><td>C<\/td><td>2.6<\/td><\/tr><tr><td>Services and Activities Schedule, Method Statement, KPIs<\/td><td>NC<\/td><td>2.7<\/td><\/tr><tr><td>Agency for Procurement \u2014 PWO, PSU, works Committee<\/td><td>W<\/td><td>4.1<\/td><\/tr><tr><td>Admeasurement of services, input and output<\/td><td>NC<\/td><td>4.2<\/td><\/tr><tr><td>Types of contract \u2014 Item Rate, Percentage Rate, Piece Work, EPC, PPP<\/td><td>W<\/td><td>4.3.3<\/td><\/tr><tr><td>Fixed Budget based Selection<\/td><td>C<\/td><td>4.4.5, 7.22<\/td><\/tr><tr><td>Quality Oriented Procurement and the Special Technical Committee<\/td><td>W + NC<\/td><td>4.4.4<\/td><\/tr><tr><td>Rate Contract, Approved Vendor List, Proprietary Article Certificate<\/td><td>G<\/td><td>4.10, 4.13, 4.16<\/td><\/tr><tr><td>Award of work through quotations; stalled contracts<\/td><td>W<\/td><td>4.20, 4.21<\/td><\/tr><tr><td>Accessibility standards under the RPwD Act<\/td><td>W<\/td><td>5.3.5<\/td><\/tr><tr><td>Fixed days for issue of NIT and tender opening<\/td><td>W<\/td><td>5.6<\/td><\/tr><tr><td>Incoterms, Exchange Rate Variation, Letter of Credit, customs<\/td><td>G<\/td><td>6.12, 6.15, 6.17<\/td><\/tr><tr><td>Mobilisation, plant and secured advances<\/td><td>W<\/td><td>6.13.2<\/td><\/tr><tr><td>Evaluation of the quality of technical proposals; the A\u2013E rating scale<\/td><td>C<\/td><td>7.17<\/td><\/tr><tr><td>Splitting of contracts; the option clause; variation of quantities<\/td><td>G<\/td><td>7.26 \u2013 7.28<\/td><\/tr><tr><td>Emergencies, buy back, capital goods, AMC, Net Present Value<\/td><td>G<\/td><td>8.1 \u2013 8.6<\/td><\/tr><tr><td>Logo design competitions; Digital India; financial advisors; auditors<\/td><td>C<\/td><td>8.14 \u2013 8.18<\/td><\/tr><tr><td>Housekeeping, manpower, private security, vehicle hiring, HaaS<\/td><td>NC<\/td><td>8.20 \u2013 8.24<\/td><\/tr><tr><td>Logistics \u2014 transport, title, receipt, storage, GRIR<\/td><td>G<\/td><td>9.30<\/td><\/tr><tr><td>Compensation Events; Time at Large; the three closure reconciliations<\/td><td>W<\/td><td>9.26, 9.27, 9.31<\/td><\/tr><tr><td>Contract Monitoring Committee; post-contract review<\/td><td>C + NC<\/td><td>9.2, 9.32<\/td><\/tr><tr><td>The AMRCD mechanism for CPSE disputes<\/td><td>W<\/td><td>9.47<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>0.7<\/span>Master Concordance \u2014 The Principal Numerical Divergences<\/span><\/h2>\nWhere the four Manuals prescribe different figures for the same thing, the difference is almost always examinable. These are collected here for revision; each is dealt with in its place in the text.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Provision<\/th><th>G<\/th><th>W<\/th><th>C<\/th><th>NC<\/th><th>See<\/th><\/tr><\/thead><tbody><tr><td>Open Tender Enquiry applies above<\/td><td>Rs 50 lakh<\/td><td>Rs 10 lakh<\/td><td>Rs 50 lakh<\/td><td>Rs 50 lakh<\/td><td>4.8<\/td><\/tr><tr><td>Special Limited Tender Enquiry above<\/td><td>Rs 50 lakh<\/td><td>Rs 10 lakh<\/td><td>Rs 50 lakh<\/td><td>Rs 50 lakh<\/td><td>4.15<\/td><\/tr><tr><td>QCBS \u2014 weight of quality<\/td><td>not used<\/em><\/td><td>not above 30%<\/td><td>70%<\/td><td>not above 30%<\/td><td>4.4.3, 7.20<\/td><\/tr><tr><td>Performance security<\/td><td>3 \u2013 5%<\/td><td>3 \u2013 10%<\/td><td> \u2014 <\/td><td>3 \u2013 5%<\/td><td>6.2<\/td><\/tr><tr><td>Firm price contracts up to<\/td><td>12 months<\/td><td>18 months<\/td><td>12 months<\/td><td>12 months<\/td><td>6.14.2<\/td><\/tr><tr><td>Consequence under a Bid Securing Declaration<\/td><td>suspended<\/td><td>debarred<\/td><td>suspended<\/td><td>suspended<\/td><td>6.1<\/td><\/tr><tr><td>Exemption from bid security<\/td><td>MSEs and Start-ups<\/td><td>Start-ups only<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>6.1<\/td><\/tr><tr><td>Liquidated damages per week<\/td><td>0.5%<\/td><td>1% for repair works up to Rs 20 lakh, otherwise 0.5%<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>9.24.2<\/td><\/tr><tr><td>Debarment for breach of the Code of Integrity<\/td><td>not less than 6 months<\/td><td>not less than 6 months<\/td><td>not exceeding 2 years<\/td><td>not less than 6 months<\/td><td>3.5.5<\/td><\/tr><tr><td>Reference to the Competition Commission signed by<\/td><td>Joint Secretary<\/td><td>Joint Secretary<\/td><td>Competent Authority<\/td><td>Joint Secretary<\/td><td>3.5.5<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>0.8<\/span>A Note on the Source Texts<\/span><\/h2>\nTwo errors in the source Manuals have been retained and flagged rather than silently corrected, because a candidate may be examined on the text as printed:<\/p>\n<ol class=\"lst\"><li>The Goods Manual states the threshold below which performance security is not necessary as \"Rupees 50 (twenty-five) lakh\"<\/em> \u2014 the figure and the word do not agree.<\/li><li>The Goods and Consultancy Manuals cite the rule on enlistment of Indian agents as \"Rule 52\"<\/em>; the Works and Non-Consultancy Manuals correctly cite Rule 152<\/strong> of the General Financial Rules, 2017.<\/li><\/ol>\nA third point of substance should also be noted. The Consultancy Manual assigns 70% weight to the technical score and 30% to cost, and then states two paragraphs later that \"the weightage of the cost element adopted in Consultancy services is as high as 70 per cent.\"<\/em> That sentence is correct in the Non-Consultancy Manual, where cost does carry 70%, but is internally inconsistent in the Consultancy Manual. Both sentences are reproduced in this Manual at paragraph 7.20.<\/p><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch1\">Chapter 1<\/p><h1>Introduction \u2014 Principles and Policies<\/h1><\/header><div class=\"upm-key\">\nHow to read the colours<\/b>\n<div class=\"row\">\nPlain white \u2014 common to all four Manuals<\/span>\nGoods only<\/span>\nWorks only<\/span>\nConsultancy only<\/span>\nNon-Consultancy only<\/span>\nTwo or three Manuals<\/span>\n<\/div>\nAnything on a tinted background appears in the named Manual or Manuals\nalone<\/em>, and cannot be inferred from the others. Text on plain white applies to all four.\nA tinted section carries a label in its top-left corner; a single tinted paragraph, list item or\ntable row carries a coloured spine on its left. Grey callouts are ordinary notes \u2014 they carry no\ncolour, so colour never means two different things.<\/p>\n<\/div>\n<h2>1.1<\/span>Procurement Rules and Regulations; and this Manual<\/span><\/h2>\n<ol class=\"lst\"><li>Various Ministries, Departments, attached and subordinate offices, local urban bodies, public sector enterprises, and other Government (including autonomous) bodies (hereinafter referred to as 'Procuring Entities<\/strong>') spend a sizeable amount of their budget on the Procurement of goods, works and services to fulfil their stated objectives, assigned duties\/ obligations\/ responsibilities\/ functions, and activities in alignment with desired policy outcomes.<\/li><li class=\"srcmark src-multi\" data-src=\" G C NC \">G<\/span>C<\/span>NC<\/span> The Ministries\/ Departments have been delegated full powers<\/strong> to make their own arrangements for the procurement of goods and services that are not<\/strong> available on the Government e-Marketplace (GeM). These powers must be exercised as per the Delegation of Financial Power Rules and in conformity with the 'Procurement Guidelines' described below. Common use Goods and Services available on GeM are required to be procured mandatorily<\/strong> through GeM as per Rule 149 of GFR, 2017<\/strong>.<\/li><\/ol>\nW<\/span> The Ministries\/ Departments have been delegated powers to make their own arrangements for procurement of works under the Delegation of Financial Power Rules, which have to be exercised in conformity with the 'Procurement Guidelines' described below.<\/p>\n<ol class=\"lst\"><li>To ensure that these procurements are made by following a uniform, systematic, efficient and cost-effective procedure, and also to ensure fair and equitable treatment of suppliers\/ bidders\/ contractors\/ consultants\/ service providers<\/strong>, there are guidelines comprising a hierarchy of Statutory framework, Rules and Regulations, Manuals of Procurement and Procurement Documents as detailed in Annexure 1 of the Manual for Procurement of Goods, Second Edition, 2024<\/strong> (hereinafter referred to as 'Procurement Guidelines<\/strong>').<\/li><\/ol>\n<aside class=\"note\">C<\/span> adds: there is a hierarchy of statutory provisions, rules, financial, vigilance, security, safety, counter-trade and other regulations; orders and guidelines of the Government about public procurement.<\/p><\/aside>\n<ol class=\"lst\"><li>At the apex of the Statutory framework governing public Procurement is Article 299 of the Constitution of India<\/strong>, which stipulates that contracts legally binding on the Government must be executed in writing by officers specifically authorised to do so. The Constitution also enshrines Fundamental Rights \u2014 in particular Article 14<\/strong> (Right to Equality before Law) and Article 19(1)(g)<\/strong> (Right to practise any profession, or to carry on any occupation, trade, or business) \u2014 which have implications for Public Procurement.<\/li><\/ol>\nFurther:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-multi\" data-src=\" G C NC \">G<\/span>C<\/span>NC<\/span> The Indian Contract Act, 1872<\/strong> and the Sale of Goods Act, 1930<\/strong> are significant legislations governing contracts of sale\/ purchase of goods in general.<\/li><li class=\"srcmark src-W\" data-src=\" W \">W<\/span> The Indian Contract Act, 1872<\/strong> is a significant legislation governing contracts in general.<\/li><\/ul>\nThere are other mercantile laws that may be attracted in Public Procurement transactions:<\/p>\n<ul class=\"lst\"><li>Arbitration and Conciliation Act, 1996<\/li><li>Mediation Act, 2023<\/strong>(in G, W, NC)<\/em><\/li><li>Competition Act, 2002<\/li><li>Information Technology Act, 2000<\/li><li>Indian Stamp Act, 1899 (in W, C, NC)<\/em><\/li><\/ul>\n \u2014 all as amended from time to time.<\/p>\n<ol class=\"lst\"><li>In the Central Government, there is no law exclusively governing public procurement<\/strong>. However, comprehensive Rules and Regulations in this regard are available in:<\/li><li class=\"srcmark src-W\" data-src=\" W \">General Financial Rules (GFR), 2017<\/strong> \u2014 especially [G, C, NC]<\/strong> Chapters 6 to 9; W<\/span> Chapters 5 to 9;<\/li><li>Delegation of Financial Powers Rules (DFPR) \u2014 [W, C, NC] cite DFPR, 2024;<\/li><li class=\"srcmark src-W\" data-src=\" W \">Government orders regarding purchase preference\/ restrictions, such as the Public Procurement (Preference to Make in India) Order, 2017<\/strong>; facilities to Micro and Small Enterprises<\/strong> and Start-ups<\/strong>; Restrictions on Entities from a Class of Countries (Rule 144(xi), GFR 2017)<\/strong>; and W<\/span> relaxation of the conditions of prior turnover and prior experience for start-up enterprises.<\/li><li>Without purporting to be a comprehensive compendium of all such 'Procurement Guidelines', this Manual is intended to serve as a portal to enter this vast area<\/strong> and draw attention to basic norms and practices governing public procurement.<\/li><\/ol>\n<h2>1.2<\/span>Clarification, Amendments and Revision of this Manual<\/span><\/h2>\nThe Procurement Policy Division, Department of Expenditure, Ministry of Finance<\/strong> would be the nodal authority<\/strong> for this Manual's revision, interpretation, and clarification.<\/p>\n<h2>1.3<\/span>Applicability of this Manual<\/span><\/h2><h3>1.3.1<\/span>Category of Procurements<\/span><\/h3>\nG<\/span> The Goods Manual applies to the Procurement of all \"Goods<\/strong>\" as defined in the 'Procurement Glossary' section. What is unique about the Procurement of goods (as compared to services and works) is the ability to precisely describe the technical specification and scope of the requirement<\/strong>. The other Manuals (Consultancy Services, Non-consultancy Services and Works) are generically based on the Goods Manual<\/strong>. Hence, for any topic for which guidance cannot be found in those Manuals, the Manual for Procurement of Goods shall apply mutatis mutandis<\/strong><\/em>. For the sake of brevity, those Manuals refer to some of the sections of the Goods Manual without reproducing them.<\/p>\nW<\/span> The Works Manual applies to procurement of all \"Works<\/strong>\" as defined in the 'Procurement Glossary' section.<\/p>\nC<\/span> The Consultancy Manual applies to procurement of \"Consultancy Services<\/strong>\" as defined in the 'Procurement Glossary' section. For any circumstances not covered, the Procuring Entity may refer to the Manual for Procurement of Goods, 2024.<\/p>\nNC<\/span> The Non-Consultancy Manual applies to procurement of \"Non-consultancy Services<\/strong>\" (including \"Outsourcing of Services\"<\/strong>) as defined in the 'Procurement Glossary' section. For any circumstances not covered, the Procuring Entity may refer to the Manual for Procurement of Goods, 2024 (Rule 206 of GFR, 2017<\/strong>).<\/p>\n<h3 class=\"src-W srchead\" data-src=\" W \">1.3.2<\/span>Classification of Works<\/span>W<\/span><\/h3><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\nThe civil works are classified in GFR 2017 (Rule 130)<\/strong> into three categories:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Meaning<\/th><\/tr><\/thead><tbody><tr><td>(a) Original Works<\/td><td>All new constructions, site preparation, additions and alterations to existing works. Also includes special repairs to newly purchased or previously abandoned buildings or structures, including remodelling or replacement.<\/td><\/tr><tr><td>(b) Minor Works<\/td><td>Works which add capital value to existing assets but do not create new assets.<\/td><\/tr><tr><td>(c) Repair Works<\/td><td>Works undertaken to maintain building and fixtures. Expenditure on Repair Work does not add to the value of the asset and only restores the functionality of the asset.<\/td><\/tr><\/tbody><\/table><\/div>\nRepair Work can be further categorised as:<\/p>\n<ol class=\"lst\"><li>Annual repairs<\/strong> \u2014 covering routine and yearly operation and maintenance work on buildings and fixtures;<\/li><li>Special repairs<\/strong> \u2014 undertaken as and when required, covering major repairs to existing buildings or structures. Some types of Special repairs may qualify to be categorised as 'Original Work' as mentioned above.<\/em><\/li><\/ol>\n<\/div><h3>1.3.3<\/span>Procuring Entities<\/span><\/h3>\n<ol class=\"lst\"><li>This Manual shall apply to all Procuring Entities covered by Rule 1 of GFR<\/strong>, i.e., all Central Government Ministries\/ Departments, attached and subordinate bodies. These provisions shall also apply, as per the same rule, to autonomous bodies<\/strong> except to the extent that the bye-laws of an autonomous body provide separate procurement guidelines* that the Government has approved.<\/li><\/ol>\n<aside class=\"note\">\\* Such approved guidelines must retain fundamental provisions relating to the Constitution and Government instructions relating to Preferential Procurement Policies, GTE and Land Border restriction, General Instructions on Procurement and Project Management (No. F.1\/1\/2021-PPD dated 20.10.2021).<\/p><\/aside>\n<ol class=\"lst\"><li class=\"srcmark src-W\" data-src=\" W \">W<\/span> \u2014 additional provisions on addressees:<\/li><li>This Manual inter alia<\/em> covers fundamental provisions relating to the Constitution; Government instructions relating to Preferential Procurement Policies; GTE; Land Border restriction; and General Instructions on Procurement and Project Management (No. F.1\/1\/2021-PPD dated 20.10.2021), which are mandatory for all entities of Central Government<\/strong>.<\/li><li>This Manual is addressed to Ministries\/ Departments, their attached and subordinate offices, and autonomous bodies whose in-house capabilities are limited to repair works of up to Rs 60 lakh<\/strong> and who assign larger repair works (and original works) to third parties (Public Works Organisations or CPSEs) \u2014 Rule 133 of GFR, 2017 (as amended)<\/em>. Refer para 3.1 of the Works Manual for further details.<\/li><li>This Manual may also be useful for Ministries\/ Departments, their attached and subordinate offices, and autonomous bodies who have in-house capabilities for direct execution of larger works<\/strong> but may not have their own detailed procurement guidelines.<\/li><li>The Manual does not purport to address<\/strong> procurement of larger works for which major works procuring Ministries\/ Departments \u2014 like the Central Public Works Department (CPWD); Military Engineering Service (MES); Border Roads Organisation (BRO); Ministries of Railways; Information & Broadcasting; and Departments of Posts and Space<\/strong>, etc. \u2014 already have their own detailed guidelines tailored to unique individual requirements. They may, however, ensure that their procurement guidelines comply with the mandatory provisions mentioned in sub-para (a) above.<\/li><\/ol>\n<h3>1.3.4<\/span>Statutory Bodies and CPSEs<\/span><\/h3>\nThese guidelines shall also be applicable to bodies substantially owned or controlled by, or receiving substantial financial assistance from<\/strong>, the Central Government \u2014 inter alia<\/em>:<\/p>\n<ul class=\"lst\"><li>Central Public Sector Enterprises (CPSEs or undertakings, including their subsidiary companies\/ Ventures);<\/li><li>Public Sector Banks (PSBs);<\/li><li>Public Sector Insurance Companies (PSICs);<\/li><li>Public Sector Financial Institutions (FIs);<\/li><li>Constitutional or Statutory Bodies;<\/li><li>Public Academic Institutions (National\/ Central institutes); and<\/li><li>Commissions created under the Constitution of India or specific legislations<\/li><\/ul>\n \u2014 except to the extent of deviations that have been approved by their competent authority (e.g., Board of Directors<\/strong> in CPSEs).<\/p>\n<h3>1.3.5<\/span>Indian Missions and CPSE Units Abroad<\/span><\/h3>\nWhile the applicability of the Manual in the case of Indian Missions abroad and CPSE Units abroad shall be as per paras 1.3.3 and 1.3.4 above respectively, the following is clarified:<\/p>\na) Adopting Financial Limits\/ Thresholds in Local Currency:<\/strong> For procurements done and for use outside India, in the host country's local currency, Indian Missions and CPSE units abroad may adopt General Financial Rules (GFR) financial limits\/ thresholds of procurements (as mentioned in this Manual at various instances, e.g., selection of mode of Procurement etc.) by using the latest INR-PPP conversion rates<\/strong> for the local currency as published by the IMF<\/strong> (International Monetary Fund). For convenience, such converted limits\/ thresholds may be reviewed annually<\/strong>. Even if the Procurement is to be done in a currency other than the local currency, the applicable financial limits\/ thresholds of procurements shall be in terms of the INR-PPP conversion rate for the local currency only<\/strong>. If the IMF does not publish the PPP conversion rate for local currency, then the conversion may be done to the currency most relevant to that mission\/ unit in consultation with the Financial Adviser<\/strong>.<\/p>\n<aside class=\"note\">Illustration (as given in all four Manuals):<\/strong> Financial limits in GFR are to be calculated for the Indian Mission in Bangladesh, where the relevant local currency is Bangladesh Taka (BT). Let the PPP conversion rate (as per international dollar) published by the IMF for INR and BT in a particular year be as follows:<\/p>\nRs. 22.947 = 1 USD = 31.98 BT<\/strong> The PPP-based conversion rate for BT\/INR may be calculated as 31.98 \u00f7 22.947 = 1.394<\/strong>. Thus, a threshold of INR 25,00,000<\/strong> (say the threshold for OTE) would then be 34,85,000 BT<\/strong>.<\/p><\/aside>\nb) Exemptions:<\/strong> For exemptions from restrictions relating to Global Tenders<\/strong>, bidders from Land-border countries<\/strong>, and eProcurement<\/strong> for bona fide procurements and use outside India by Indian Missions and CPSE Units abroad, please refer to paragraphs 4.3.2-4-g)<\/strong>(W cites 4.3.2-4-h)<\/em>, 1.11.4-3-f)ii)<\/strong>, and 4.17.1-4<\/strong>(W cites 4.17.1-5)<\/em> respectively, in the Manual for Procurement of Goods, 2024<\/strong>.<\/p>\n<h3>1.3.6<\/span>Portals<\/span><\/h3>\n<ul class=\"lst\"><li class=\"srcmark src-G\" data-src=\" G \">G<\/span> GeM portal, GePNIC portal (Government e-Procurement of NIC, eproc.gov.in), and various such platforms of different Organisations carry out a substantial proportion of Public Procurement. Hence, the procedures for such platforms should conform to these 'Procurement Guidelines'.<\/li><li class=\"srcmark src-W\" data-src=\" W \">W<\/span> Central Public Procurement Portal (CPPP of NIC, eproc.gov.in), and various such platforms.<\/li><li class=\"srcmark src-multi\" data-src=\" C NC \">C<\/span>NC<\/span> GeM portal, CPPP (Central Public Procurement Portal), and various such platforms \u2014 the procedures for such platforms should generally<\/strong> conform to these 'Procurement Guidelines'.<\/li><\/ul>\n<h3>1.3.7<\/span>Outsourced Procurement<\/span><\/h3>\nThese procurement guidelines would continue to apply<\/strong> if these procuring entities:<\/p>\n<ul class=\"lst\"><li>outsource the procurement process, or<\/li><li>bundle the procurement process with other contractual arrangements, or<\/li><li>utilise the services of a procurement support agency<\/strong> or procurement agents<\/strong> to carry out the Procurement on their behalf.<\/li><\/ul>\n<h3>1.3.8<\/span>Customisation<\/span><\/h3>\nThis Manual is to be taken as generic guidelines<\/strong>, which are necessarily broad in nature. (C<\/span>NC<\/span> add: Subject to the observance of these generic guidelines,)<\/em> Procuring Entities are advised to customise these Manuals, with the approval of competent authority and financial concurrence<\/strong>, to suit their local\/ specialised needs by issuing their own detailed Manuals (including customised formats); Model Tender Documents; Schedule of Procurement Powers; and Checklists \u2014 to serve as practical instructions for their officers and to ensure completeness of examination of cases.<\/p>\nFor procuring organisations that have their own detailed manuals or procedure orders, the initiation, authorisation, Procurement, and execution of contracts<\/strong> undertaken by them shall be regulated by detailed rules and orders contained in their respective regulations and by other special orders applicable to them.<\/p>\n<h3>1.3.9<\/span>Exemptions<\/span><\/h3>\nThese procurement guidelines would not apply to procurements by procuring entities mentioned above for their own use from their subsidiary companies, including Joint Ventures, where they have a controlling share.<\/p>\nMoreover, by a general or special notification, the Government may permit certain 'Procuring Entities' mentioned above, considering unique conditions under which they operate, for all or certain categories of procurement, to adopt detailed approved guidelines for procurement which may deviate in some respects but conform with all other essential aspects<\/strong> of these 'Procurement Guidelines'.<\/p>\n<h3>1.3.10<\/span>Procurements financed by Loans\/ Grants extended by International Funding Agencies<\/span><\/h3>\n<ol class=\"lst\"><li>For projects funded by the World Bank<\/strong>, Asian Development Bank<\/strong>, and other International Funding Agencies (IFA)<\/strong>, the Articles of Agreement, with the approval of the Ministry of Finance, stipulate either the Indian (or State) Government's own procurement procedures or<\/strong> the IFA's specific procurement procedures to be followed by the borrowers.<\/li><li>These guidelines would not<\/strong> be applicable to projects funded by the World Bank using the Investment Project Financing (IPF)<\/strong> instrument and similar instruments of other IFAs, as stipulated under Articles of Agreement as mentioned under sub-para (a) above. IFA's specific procurement procedures shall be applicable as permitted under Rule 264 of GFR, 2017<\/strong>.<\/li><li>However, for projects financed using instruments such as Program-for-Results (PforR)<\/strong> of the World Bank, and Results-based Lending (RBL)<\/strong> of the Asian Development Bank, and similar instruments of other IFAs, the application of these guidelines as expressly agreed in the legal agreements<\/strong> shall be followed.<\/li><\/ol>\n<h2>1.4<\/span>Categorisation of Procurements<\/span><\/h2><h3>1.4.1<\/span>Categories<\/span><\/h3>\nCategorisation of Procurements helps prepare guidelines for Procurements and Model Tender Documents, which cater to peculiar contractual conditions of the categories of procurements. G<\/span> These categories may be further sub-categorised, e.g., Capital Equipment procurement in Goods.<\/p>\nFollowing are the categories of procurements (please refer to their definitions in the 'Procurement Glossary' section):<\/p>\n<ul class=\"lst\"><li>a) Goods<\/li><li>b) Services<\/li><li>i) Consultancy Services, and<\/li><li>ii) Non-consultancy services (NC services)<\/li><li>c) Works<\/li><\/ul>\n<h3>1.4.2<\/span>Distinctive Features<\/span><\/h3>\nNormally, such categorisation is evident from their definition, and Procurement should be done accordingly, following the relevant guidelines and Model Tender Documents. The boundaries between such categorisation may not be clear-cut and may overlap<\/strong>. It may neither be possible nor necessary to distinguish precisely between the categories in overlapping areas. Though simplistic, the main distinguishing factors between these are:<\/p>\n<ol class=\"lst\"><li>While both Goods<\/strong> and Works<\/strong> lead to tangible outputs<\/strong> (with some exceptions like IPR materials), the main difference between goods and works is that the manufacture of goods is done on the supplier's own premises<\/strong> (other than installation\/ commissioning), whereas 'Works<\/strong>' is executed on the premises of the procuring entity<\/strong> (other than pre-fabricated components). Works may include incidental 'Goods' and vice versa.<\/li><li>The main difference between 'Goods<\/strong>' or 'Works<\/strong>' on the one hand and 'Services<\/strong>' on the other is the intangibility of the outputs of Services<\/strong>.<\/li><li>The main difference between Consultancy and Non-consultancy services is the level of intellectual input, which is predominant in Consultancy and not central to Non-consultancy. Another difference is that non-consultancy services are repetitive routines with measurable and standardised outputs, while consultancy services are one-off and non-routine, with outputs that are neither precisely measurable nor standardised.<\/li><\/ol>\n<h3>1.4.3<\/span>In Case of Doubt<\/span><\/h3>\nProcurement in cases of doubts about categorisation may be handled as follows:<\/p>\na) Simpler procedure rule:<\/strong> In the case of blurred border lines and grey areas, a simpler procurement procedure<\/strong> should be followed. In case of doubt between:<\/p>\n<ul class=\"lst\"><li>i) Goods<\/strong> and works\/ NC services\/ consultancy \u2192 process as Procurement of Goods<\/strong>;<\/li><li>ii) Works<\/strong> and NC service\/ consultancy \u2192 process as Procurement of Works<\/strong>;<\/li><li>iii) Non-consultancy and Consultancy services \u2192 process as Procurement of Non-consultancy services.<\/li><\/ul>\nb) IT Projects:<\/strong> The Procurement of IT projects should usually be carried out as a procurement of Consultancy services<\/strong>, as the outcomes\/ deliverables vary from one service provider to another. The IT Projects may include:<\/p>\n<ul class=\"lst\"><li>i) tailor-made\/ bespoke software development<\/strong>;<\/li><li>ii) cloud-based services;<\/li><li>iii) composite IT system integration services<\/strong> involving the design, development, deployment and commissioning of IT systems, including hardware supply, software development, bandwidth, and operation\/ maintenance of the system for a defined period after going live, etc.<\/li><\/ul>\nc) Composite Contracts<\/strong>(PPD's OM No. F6\/2\/2023-PPD dated 13.01.2023)<\/em>: Composite contracts may involve mixed elements of Goods, Works, and Services. For example, in the Procurement of large machinery, some works and services like Installation, Commissioning, Training, Annual Maintenance Contract (AMC) or a Comprehensive Maintenance Contract (CMC), and so on, may be incidental to the supply of goods. The relationship of primacy between the goods element and the works\/ services element may be examined, irrespective of the relative values.<\/strong><\/p>\n<ul class=\"lst\"><li>If the primary intention\/ objective is the Procurement of goods<\/strong> with services\/ works being incidental to it, it may be processed as Procurement of Goods<\/strong>.<\/li><li>However, if the primary intention\/ objective is Procurement of Works\/ Services<\/strong> with Procurement of goods being incidental, then it should generally be processed as Procurement of Works\/ Services<\/strong> (as the case may be), irrespective of the relative values<\/strong>.<\/li><li>A possible alternative approach could be to have separate but linked contracts<\/strong> for such elements of Goods, Works, and Services, but implementation may become challenging.<\/li><\/ul>\nW<\/span>C<\/span>NC<\/span> \u2014 further refinements:<\/p>\n<ul class=\"lst\"><li>i) Procurement of \"new product<\/strong>\" viz. Mechanical, Electrical or ICT assets etc. of the nature of Machinery and Plant<\/strong>, with incidental works\/ services like fabrication, installation, erection, commissioning, AMC\/CMC, should be handled as procurement of Goods<\/strong> \u2014 except for procurement of IT Projects as specified above.<\/li><li>ii) AMC\/ CMC of existing<\/strong> Mechanical, Electrical or ICT assets of the nature of Machinery and Plant should be treated as procurement of Non-Consultancy Services<\/strong>.<\/li><\/ul>\n<aside class=\"note\">Notes:<\/p>\n<ol class=\"lst\"><li>If the NC services primarily involve construction, fabrication, repair, maintenance, overhaul, renovation, decoration, installation, erection, excavation, dredging and so on of Civil assets, then it should be handled as procurement of Works.<\/li><li class=\"srcmark src-G\" data-src=\" G \">G<\/span> variant: *In case of fabrication, repair, maintenance, overhaul, renovation, decoration, installation, erection and so on, of mechanical, electrical or ICT assets \u2014 e.g. Annual Maintenance Contracts or installation\/ commissioning of Machinery and Plant \u2014 it may be handled as Procurement of Goods rather than Procurement of Services.*<\/li><li class=\"srcmark src-multi\" data-src=\" W C NC \">W<\/span>C<\/span>NC<\/span> Procurement of new mechanical and electrical works<\/strong> (not<\/strong> in the nature of Machinery and Plant) involving fabrication, installation, or erection of a mechanical or electrical nature should be treated as procurement of Works<\/strong>, if elements of procurement of Goods are incidental.<\/li><li class=\"srcmark src-multi\" data-src=\" W C NC \">W<\/span>C<\/span>NC<\/span> Repair, renovation, maintenance, overhauling, decoration, AMC\/ CMC or similar work for existing<\/strong> Mechanical, Electrical or ICT assets NOT<\/strong> of the nature of Machinery and Plant etc. should normally be handled as procurement of Services<\/strong>.<\/li><\/ol><\/aside>\nd) Consultancy vs Non-Consultancy \u2014 the \"primary objective\" test W<\/span>C<\/span>NC<\/span>:<\/strong> It is possible that, depending on the nature and complexity of the assignment, a task could be dealt with either<\/strong> as a consultancy or<\/strong> a non-consultancy service. In essence, if the intellectual and advisory part<\/strong> of services is the primary objective<\/strong> (irrespective of the relative value of this component), the selection needs to be dealt with in Consultancy mode<\/strong>.<\/p>\n<aside class=\"note\">Example given in the Manuals:<\/strong> If the task is looking at the condition of a dam (for dam safety) by physically inspecting the dam through underwater observation, this task is a collection of data using technologies and photography \u2014 but the actual analysis is an intellectual and advisory task<\/strong> and is the primary objective<\/strong> of the assignment. Therefore, the entire task<\/strong> needs to be dealt with as the selection of a consultant<\/strong>.<\/p><\/aside>\n<h2>1.5<\/span>Authorities Competent to Incur Expenditure on Procurements and Consultation with Financial Advisers<\/span><\/h2>\n<ol class=\"lst\"><li>The first step in procurement<\/strong> is the decision to procure<\/strong> something \u2014 goods, services, works, etc. \u2014 involving a formal decision to procure along with the exact or approximate expenditure<\/strong> to be incurred. A Competent Authority that is competent to incur expenditure may accord administrative sanction\/ approval<\/strong> to incur expenditure on a specific procurement in accordance with the Delegation of Financial Powers Rules (DFPR)<\/strong> by following the 'Procurement Guidelines' (Rule 145 of GFR 2017<\/strong>).<\/li><\/ol>\nEach 'Procuring Entity' may issue a Schedule of Procurement Powers (SoPP)<\/strong>, adding further details to the broad delegations in the DFPR based on assessing risks<\/strong> involved in different decisions\/ approvals at various stages of the Procurement Cycle.<\/p>\n<aside class=\"note\">Annexure references:<\/strong> DFPR extract \u2014 G<\/span> Annexures 2 and 3; [W, C, NC]<\/strong> Annexure 1. Suggested structure of SoPP \u2014 G<\/span> Annexure 4; [W, C, NC]<\/strong> Annexure 2.<\/p><\/aside>\n<ol class=\"lst\"><li>Being a decision with a financial bearing, it invariably requires consultation of the Financial Adviser<\/strong> (unless validly re-delegated within permissible limits or otherwise permitted by DoE through specific orders). The extent of involvement of the Financial Adviser and the Integrated Finance Division (IFD) in subsequent stages of procurement matters may be based on one of the following procedures<\/strong> (Para 19, Charter for Financial Advisers, 2023<\/strong>):<\/li><\/ol>\na) Normal Procedure: Under this procedure, the concurrence of the Financial Adviser\/ IFD shall be required on all procurement matters, except for matters where re-delegation has been done within the permissible limits under the rules\/ general orders\/ general instructions of DoE. Unless the Secretary of the Department approves a special procedure with the concurrence of DoE, this procedure shall be followed.<\/p>\nb) Special Procedure:<\/strong> With the prior concurrence of Secretary (Expenditure)<\/strong>, the Secretary of the Department may decide on a different level of involvement<\/strong> of the Financial Adviser\/ IFD specific to the Department. The procedure shall lay out the types\/ classes of cases where the Financial Adviser\/ IFD consultation would be required, which may be in terms of:<\/p>\n<ul class=\"lst\"><li>threshold financial limits,<\/li><li>stages in Procurement, or<\/li><li class=\"srcmark src-NC\" data-src=\" NC \">types of Procurement and contracts, viz. consultancy (NC<\/span> adds: \/ non-consultancy)<\/em>, goods and works contracts, etc.,<\/li><li>or any permutation thereof.<\/li><\/ul>\nG<\/span> clarification: It is further clarified that <\/strong>this system will be applicable only to Ministries\/ Departments etc. covered under the FA Charter. All other organisations, including CPSEs, are free to devise their own system.<\/p>\n<ol class=\"lst\"><li>In all procedures, payments under approved contracts shall not require IFD consultation, except in cases where the payments are in relaxation\/ variation to approved contract conditions.<\/li><\/ol>\n<h2>1.6<\/span>Basic Aims of Procurement \u2014 the Five R's of Procurement<\/span><\/h2>\nIn every Procurement, public or private, the basic aim is to achieve just the right balance between costs and requirements<\/strong> with respect to five parameters called the Five 'R's of Procurement<\/strong>. The entire process of Procurement \u2014 from the time the need for an item, facility or service is identified till the need is satisfied \u2014 is designed to achieve such a right balance. The word 'Right<\/strong>' is used in the sense of 'optimal balance<\/strong>'.<\/p>\n<aside class=\"note\">[W, C, NC] note:<\/strong> Although couched in the jargon of procurement of Goods, the Five R's are equally applicable<\/strong> to procurement of Works, Consultancy Services and Non-consultancy Services.<\/p><\/aside>\nThe Five R's are: 1. Right Quality; 2. Right Quantity; 3. Right Price; 4. Right Time and Place; and 5. Right Source.<\/p>\n<h3>1.6.1<\/span>Right Quality<\/span><\/h3>\nProcurement aims to buy just the right quality that will suit the needs \u2014 no more and no less<\/strong> \u2014 with precise specifications of the procuring entity's requirements, a proper understanding of the functional value and cost, and an understanding of the bidder's quality system and quality awareness. The concept of the right balance of quality can be further refined to the concept of utility\/ value<\/strong> (refer para 1.7 below). Technical specifications and quality assurance plans are the most vital ingredients for the right quality.<\/strong> In public procurement, it is essential to give due consideration to value for money<\/strong> while preparing the specifications.<\/p>\n<h3>1.6.2<\/span>Right Quantity<\/span><\/h3>\nThere are extra costs and systemic overheads<\/strong> involved with both<\/strong> procuring a requirement too frequently in small quantities and<\/strong> buying significant quantities for prolonged use. Hence, the right quantity should be procured (in the appropriate size of the contract), which balances extra costs associated with larger and smaller quantities<\/strong>.<\/p>\n<h3>1.6.3<\/span>Right Price<\/span><\/h3>\nIt is not correct to aim at the cheapest<\/strong> materials\/ facilities\/ services available. The price should be just right for the quality, quantity, and other factors involved<\/strong> \u2014 or should not be abnormally low<\/strong> for facilities, works, or services, which could lead to a situation of non-performance or failure of contract. The concept of price can be refined further to consider not only the initial price paid for the requirement but also other costs such as maintenance costs, operational costs, and disposal costs<\/strong> (also termed life cycle costing<\/strong> \u2014 refer para 1.7 below).<\/p>\n<h3>1.6.4<\/span>Right Time and Place<\/span><\/h3>\nIf an organisation needs the material (or facility or services) in three months, it will be costly to procure it too late or too early<\/strong>. Similarly, if the vendor delivers the materials\/ facilities\/ services in another city, extra time and money would be involved in logistics<\/strong>. An unrealistic time schedule<\/strong> for completion of a facility may lead to delays, claims, and disputes<\/strong>.<\/p>\n<h3>1.6.5<\/span>Right Source<\/span><\/h3>\nThe source of delivery of Goods, Works and Services must have just the right financial capacity and technical capability<\/strong> for our needs \u2014 demonstrated through satisfactory past performance of contracts of the same or similar nature<\/strong>. Buying a few packets of printer paper directly from a large manufacturer may not be the right strategy. On the other hand, if our requirements are large, buying such requirements through dealers or intermediaries<\/strong> may also not be right.<\/p>\n<aside class=\"note\">These advanced concepts are further explained in Appendix 1: Advanced Concepts of Value for Money<\/strong> of the Manual for Procurement of Goods, 2024.<\/em><\/p><\/aside>\n<h2>1.7<\/span>Refined Concepts of Cost and Value \u2014 Value for Money<\/span><\/h2>\nThe concept of price or cost has been further refined into:<\/p>\n<ul class=\"lst\"><li>Total Cost of Ownership (TCO),<\/li><li>Life Cycle Cost (LCC), or<\/li><li>Whole-of-Life (WOL) cost<\/li><\/ul>\n \u2014 to consider not only the initial acquisition cost<\/strong> but also the cost of operation, maintenance, and disposal<\/strong> during the lifetime of the external resource procured.<\/p>\nSimilarly, the concept of quality<\/strong> is linked to the need and is refined into the concept of utility\/ value<\/strong>.<\/p>\nThese two, taken together, are used to develop the concept of Value for Money (VfM)<\/strong> \u2014 also called Best Value for Money<\/strong> in certain contexts.<\/p>\nVfM means the effective, efficient, and economical use of resources, which may involve the evaluation of:<\/p>\n<ul class=\"lst\"><li>relevant costs and benefits<\/strong>, along with<\/li><li>an assessment of risks<\/strong>,<\/li><li>non-price attributes<\/strong> \u2014 e.g., goods and\/or services that contain recyclable content, are recyclable, minimise waste and greenhouse gas emissions, conserve energy and water, minimise habitat destruction and environmental degradation, are non-toxic, etc., and\/or<\/li><li>life cycle costs<\/strong>, as appropriate.<\/li><\/ul>\nPrice alone may not necessarily represent VfM.<\/p>\nIn public Procurement, VfM is achieved by attracting the widest competition by way of:<\/p>\n<ul class=\"lst\"><li>optimal description of need;<\/li><li>development of value-engineered specifications\/ Terms of Reference (ToR);<\/li><li>appropriate packaging\/ slicing<\/strong> of requirement;<\/li><li>selection of an appropriate mode of Procurement<\/strong> and tendering system<\/strong>.<\/li><\/ul>\n<aside class=\"note\">These advanced concepts are explained in Appendix 1: Advanced Concepts of Value for Money<\/strong> of the Manual for Procurement of Goods, 2024.<\/em><\/p><\/aside>\n<h2>1.8<\/span>Fundamental Principles of Public Procurement<\/span><\/h2>\nGeneral Financial Rules, 2017 (Rule 144)<\/strong> lay down the Fundamental Principles of Public Procurement. These principles and other additional obligations of procuring authorities in public Procurement can be organised into five fundamental principles of public Procurement<\/strong>, which all procuring authorities must abide by and be accountable for<\/strong>:<\/p>\n<ol class=\"lst\"><li>Transparency Principle<\/li><li>Professionalism Principle<\/li><li>Broader Obligations Principle<\/li><li class=\"srcmark src-multi\" data-src=\" W C \">Extended Legal Responsibilities Principle<\/strong>(C<\/span> terms it \"Extrinsic legal principle\"; W<\/span> terms it \"Extended legal principle\")<\/em><\/li><li>Public Accountability Principle<\/li><\/ol>\n<h3>1.8.1<\/span>Transparency Principle<\/span><\/h3>\nAll procuring authorities are responsible and accountable<\/strong> for ensuring transparency, fairness, equality, competition, and appeal rights<\/strong>. This involves simultaneous, symmetric, and unrestricted dissemination of information<\/strong> to all likely bidders, sufficient for them to know and understand the availability of bidding opportunities and the actual means, processes and time-limits prescribed for completion of registration of bidders, bidding, evaluation, grievance redressal, award, and management of contracts.<\/p>\nIt implies that such officers must ensure:<\/p>\n<ul class=\"lst\"><li>consistency<\/strong> (absence of subjectivity),<\/li><li>predictability<\/strong> (absence of arbitrariness),<\/li><li>clarity,<\/li><li>openness<\/strong> (absence of secretiveness), and<\/li><li>equal opportunities<\/strong> (absence of discrimination) in processes.<\/li><\/ul>\nIn essence, the Transparency Principle also enjoins upon the Procuring Authorities to do only that which they professed to do as pre-declared in the relevant published documents, and not to do anything that had not been so declared.<\/p>\nAs part of this principle, all procuring entities should ensure that offers are invited following a fair and transparent procedure and ensure publication of all relevant information on the Government e-Marketplace (GeM) and GeM-Central Public Procurement Portal (CPPP).<\/p>\n<h3>1.8.2<\/span>Professionalism Principle<\/span><\/h3>\n<ol class=\"lst\"><li>As per these synergic attributes, the procuring authorities have a responsibility and accountability to ensure professionalism, economy, efficiency, effectiveness, and integrity<\/strong> in the procurement process. They must avoid wasteful, dilatory, and improper practices<\/strong> violating the Code of Integrity for Public Procurement (CIPP)<\/strong>. They should, at the same time, ensure that the methodology adopted for Procurement is reasonable and appropriate for the cost and complexity<\/strong> and that it effectively achieves the planned objective of the Procurement. As part of this principle, the Government may prescribe professional standards and specify suitable training and certification requirements<\/strong> for officials dealing with procurement matters.<\/li><li>In reference to the above two principles \u2014 Transparency and Professionalism \u2014 it may be useful to refer to the following provision in the General Financial Rules, 2017:<\/li><\/ol>\n<aside class=\"note\">GFR, 2017, Rule 144 \u2014 Fundamental principles of public buying<\/strong>(for all procurements, including Procurement of works)<\/em>: Every authority delegated with the financial powers of procuring goods in the public interest shall have the responsibility and accountability to bring efficiency, economy, and transparency<\/strong> in matters relating to public procurement and for fair and equitable treatment of suppliers<\/strong> and promotion of competition<\/strong> in public procurement.<\/p><\/aside>\n<ol class=\"lst\"><li>The procedure to be followed in making public Procurement must conform to the following yardsticks<\/strong> (Rule 144, GFR 2017):<\/li><li>offers should be invited following a fair, transparent, and reasonable procedure<\/strong>;<\/li><li>the procuring authority should be satisfied that the selected offer adequately meets the requirement in all respects;<\/li><li>the procuring authority should satisfy itself that the price of the selected offer is reasonable and consistent with the quality required.<\/li><\/ol>\n<h3>1.8.3<\/span>Broader Obligations Principle<\/span><\/h3>\n<ol class=\"lst\"><li>Over and above transparency and professionalism, the procuring authorities also have the responsibility and accountability to conduct public Procurement in a manner that facilitates the achievement of the broader objectives, social policies and programme objectives<\/strong> of the Government \u2014 for example, economic growth, strengthening of local industry (Make in India), Ease of Doing Business, job and employment creation, and so on \u2014 to the extent these are specifically included in the 'Procurement Guidelines'. These policies are detailed in para 1.11<\/strong> below.<\/li><li>To support social policies<\/strong> \u2014 reservation of Procurement of specified goods from MSEs, weaker sections, backward regions<\/strong>, and reservation of Procurement of certain goods from MSEs.<\/li><li>To strengthen local industry and job\/ employment creation \u2014 preferential Procurement of locally manufactured goods or services (Rule 153(iii) of GFR, 2017) and support to Start-up enterprises (Rule 170(i), 173(i) of GFR, 2017).<\/li><li>To achieve programme objectives<\/strong> \u2014 reservation of Procurement of a specified class of goods from or through certain nominated CPSEs or Government Organisations<\/strong>.<\/li><li>On grounds of defence of India<\/strong> or matters directly or indirectly related thereto, including national security<\/strong> \u2014 impose restrictions, including prior registration and\/or screening<\/strong>, on Procurement from bidders from, or bidders having commercial arrangements with an entity from, a certain country or countries, or a class of countries \u2014 Rule 144(xi) of GFR, 2017<\/strong>.<\/li><li>Facilitating broader objectives of other Departments<\/strong> of Government \u2014 for example, ensuring tax or environmental compliance<\/strong> by participants, Energy Conservation<\/strong>, accessibility for People with Disabilities<\/strong>, etc. Procurement policies and procedures must comply with accessibility criteria<\/strong> that the Government may mandate from time to time.<\/li><\/ol>\n<aside class=\"note\">Footnote on accessibility criteria G<\/span>:<\/strong> Accessibility criteria for buildings and facilities are requirements that ensure that people with disabilities can access and use the buildings and facilities without barriers. These are contained in the National Building Code (NBC)<\/strong> and ISO 21542:2011<\/strong>. The \"Accessible India Campaign (Sugamya Bharat Abhiyan)<\/strong>\" is a nationwide campaign launched by the Department of Empowerment of Persons with Disabilities (DEPwD), Ministry of Social Justice & Empowerment, to provide universal accessibility to persons with disabilities.<\/p><\/aside>\n<h3>1.8.4<\/span>Extended Legal Responsibilities Principle<\/span><\/h3>\nProcuring authorities must fulfil additional legal obligations<\/strong> in public Procurement, over and above mere conformity to the mercantile laws (which even private sector procurements must comply with).<\/p>\nThe Constitution of India<\/strong> has certain provisions regarding fundamental rights and public Procurement. Courts have, over time, taken a broader view of public Procurement as a function of the 'State'<\/strong>, interpreting these to extend the responsibility and accountability of public procurement authorities. Courts in India thus exercise additional judicial review<\/strong> (beyond contractual issues) over public Procurement in relation to the manner of decision-making<\/strong> with respect to fundamental rights, fair play, and legality<\/strong>.<\/p>\nSimilarly, procuring authorities also have the responsibility and accountability to comply with the laws relating to Governance Issues<\/strong> like the Right to Information (RTI) Act<\/strong> and the Prevention of Corruption Act<\/strong>, and so on.<\/p>\n<aside class=\"note\">Details of such extended legal obligations are given in Appendix 2: Legal Aspects of Public Procurement<\/strong> of the Manual for Procurement of Goods, 2024. See also para 1.14 of this Unified Manual.<\/em><\/p><\/aside>\n<h3>1.8.5<\/span>Public Accountability Principle<\/span><\/h3>\n<ol class=\"lst\"><li>Procuring authorities are accountable for all the above principles to several statutory and official bodies in the Country \u2014 the Legislature and its Committees, Central Vigilance Commission, Comptroller and Auditor General of India, Central Bureau of Investigation and so on \u2014 in addition to administrative accountability. As a result, each individual public procurement transaction is liable to be scrutinised independently and in isolation, besides judging the overall outcomes of the procurement process over a period. Procuring authorities thus have responsibility and accountability for compliance with rules and procedures in each individual procurement transaction, as well as the achievement of overall procurement outcomes.<\/li><li>The procuring authority, at each stage of Procurement<\/strong>, must therefore place on record, in precise terms, the considerations that weighed with it<\/strong> while making the procurement decision \u2014 from need assessment to fulfilment of need (Rule 144(viii), GFR 2017<\/strong>).<\/li><li>Such records must be preserved, retained in easily retrievable form, and made available to such oversight agencies on demand. The procuring entity shall therefore maintain and retain audit trails, records and documents generated or received during its procurement proceedings in chronological order. The files shall be stored in an identified place and retrievable for scrutiny whenever needed without wasting time.<\/li><\/ol>\n<h2 class=\"src-multi srchead\" data-src=\" G W \">1.9<\/span>Standards (Canons) of Financial Propriety<\/span>G<\/span>W<\/span><\/h2><div class=\"srcblock src-multi\" data-src=\" G W \" data-label=\"Goods + Works only\">\nPublic Procurement, like any other expenditure in Government, must conform to the Standards (also called Canons) of Financial Propriety<\/strong>. It may be useful to refer to the relevant provisions in the General Financial Rules, 2017:<\/p>\n<aside class=\"note\">Rule 21 \u2014 Standards of Financial Propriety:<\/strong> Every officer incurring or authorising expenditure from public moneys should be guided by high standards of financial propriety<\/strong>. Every officer should also enforce financial order and strict economy<\/strong> and see that all relevant financial rules and regulations are observed, by his own office and by subordinate disbursing officers. Among the principles on which emphasis is generally laid are the following:<\/p>\ni) Every officer is expected to exercise the same vigilance in respect of expenditure incurred from public moneys as a person of ordinary prudence would exercise in respect of expenditure of his own money.<\/p>\nii) The expenditure should not be prima facie more than the occasion demands.<\/p>\niii) No authority should exercise its powers of sanctioning expenditure to pass an order which will be directly or indirectly to its own advantage.<\/p>\niv) Expenditure from public moneys should not be incurred for the benefit of a particular person or a section of the people, unless \u2014 a) a claim for the amount could be enforced in a Court of Law, or b) the expenditure is in pursuance of a recognised policy or custom.<\/p>\nv) (reproduced in W<\/span> only)<\/em> The amount of allowances granted to meet expenditure of a particular type should be so regulated that the allowances are not, on the whole, a source of profit to the recipients.<\/p>\nNote for students:<\/strong> Sub-clause (v)<\/strong> is reproduced only in the Works Manual; the Goods Manual stops at (iv). Both are extracts of the same Rule 21 of GFR 2017. This section does not<\/strong> appear at all in the Consultancy and Non-Consultancy Manuals.<\/p><\/aside>\n<\/div><h2>1.10<\/span>Public Procurement Infrastructure at the Centre<\/span><\/h2>\nPublic Procurement is a complex function<\/strong>, and the infrastructure needed to execute it is equally complex. In India, the following administrative, oversight, and digital infrastructure<\/strong> exists for Public Procurement:<\/p>\n<ol class=\"lst\"><li>Procurement Policy Division (PPD)<\/li><li>Central Public Procurement Portal (CPPP)<\/li><li>Government e-Marketplace (GeM)<\/li><li>Comptroller and Auditor General (CAG) of India<\/li><li>Lokpal\/ Lokayukta \u2014 Anti-corruption Ombudsman<\/li><li>Central Vigilance Commission (CVC)<\/li><li>Central Bureau of Investigation (CBI)<\/li><\/ol>\n<aside class=\"note\">The Works, Consultancy and Non-Consultancy Manuals list these seven institutions and cross-refer to the Goods Manual for details. The details below are from the Goods Manual.<\/em><\/p><\/aside>\n<h3>1.10.1<\/span>Procurement Policy Division (PPD)<\/span><\/h3>\nThe Procurement Policy Division (PPD) in the Department of Expenditure, Ministry of Finance has been created to encourage uniformity and harmonisation in public procurement processes by:<\/p>\n<ul class=\"lst\"><li>disseminating best practices<\/strong>,<\/li><li>providing guidance, oversight and capacity building,<\/li><li>issuing procurement manuals and Model Tender Documents.<\/li><\/ul>\nHowever, centralisation of Procurement or involvement in procurement processes is not the intended purpose of the creation of PPD.<\/p>\n<h3>1.10.2<\/span>Central Public Procurement Portal (CPPP)<\/span><\/h3>\nThe Central Public Procurement Portal (CPPP)<\/strong> has been designed, developed and hosted by the National Informatics Centre (NIC, Ministry of Electronics & Information Technology)<\/strong> in association with the Department of Expenditure to ensure transparency in the public procurement process.<\/p>\n<ul class=\"lst\"><li>Primary objective:<\/strong> to provide single-point access<\/strong> to the information on procurements made across various Ministries and Departments.<\/li><li>The CPPP has e-publishing<\/strong> and e-procurement<\/strong> modules.<\/li><li>It is mandatory<\/strong> for all Ministries\/ Departments of the Central Government, CPSEs<\/strong>, and Autonomous and Statutory Bodies<\/strong> to publish on the CPPP all their tender enquiries and information about the resulting contracts<\/strong>.<\/li><li>CPPP provides access to information on documents relating to pre-qualification, bidders' registration, Tender Documents, details of bidders, their pre-qualification, registration, exclusions\/ debarments, decisions taken regarding pre-qualification and selection of successful bids.<\/li><li>Implementing end-to-end e-procurement<\/strong> for all procurements is now mandatory<\/strong> \u2014 either through the CPPP portal or any other suitable GCQE-compliant<\/strong> portal.<\/li><\/ul>\n<aside class=\"note\">GCQE<\/strong> = Guidelines for Compliance to Quality Requirements of eProcurement, July 2021, issued by the Standardisation Testing and Quality Certification (STQC) Directorate<\/strong>, an attached office of MeitY.<\/p><\/aside>\n<h3>1.10.3<\/span>Government e-Marketplace (GeM)<\/span><\/h3>\nGeM is the 'National Public Procurement Portal', serving as an end-to-end online marketplace for various entities.<\/p>\n<ul class=\"lst\"><li>The Procurement of Goods and Services available on GeM (as per Rule 149 of GFR, 2017<\/strong>) is mandatory<\/strong> for Ministries\/ Departments (including attached\/ subordinate offices), CPSEs, autonomous bodies and local bodies<\/strong>.<\/li><li>GeM facilitates the Procurement of common-use goods and services<\/strong> by such entities.<\/li><li>The portal aims to enhance efficiency, transparency, and speed<\/strong> in public Procurement.<\/li><li>Through this paperless, contactless, and cashless<\/strong> platform, registered government buyers<\/strong> can seamlessly procure goods and services from registered sellers<\/strong>.<\/li><\/ul>\n<h3>1.10.4<\/span>Comptroller and Auditor General (CAG) of India<\/span><\/h3>\n<ol class=\"lst\"><li>The CAG of India<\/strong>, established under Articles 149\u2013151 of the Constitution of India<\/strong>, holds a pivotal role as the Supreme Audit Institution of India (SAII)<\/strong>. CAG plays a crucial role in promoting accountability, transparency, and good governance<\/strong> through high-quality auditing and accounting. It provides independent and timely assurance<\/strong> to the legislature, the public, and the executive that public funds are being collected and utilised effectively and efficiently.<\/li><li>The CAG's mandate encompasses a wide spectrum of audit and reporting responsibilities:<\/li><li>Government Departments and Entities;<\/li><li>Government Companies and Corporations;<\/li><li>Autonomous Bodies and Authorities<\/strong> that receive government funding (e.g., municipal bodies, IIMs, IITs, state health societies);<\/li><li>Special Requests and Initiatives<\/strong> \u2014 the CAG can audit the accounts of any other body or authority upon request of the President\/ Governor<\/strong>, or on its own initiative.<\/li><li>CAG conducts multiple types of audits, namely:<\/li><li>Compliance Audits<\/li><li>Financial Audits<\/li><li>Performance Audits<\/li><li>Thematic Audits<\/li><li>IT Audits<\/li><\/ol>\nThese audits, especially the performance audits, are noted to cover Procurement, but only with the perspective of identifying if any wastage, malpractice, and fraud have occurred.<\/p>\n<ol class=\"lst\"><li>To carry out its extensive audit mandate effectively, the CAG is endowed with significant powers:<\/li><li>Inspection Authority<\/strong> \u2014 power to inspect any office or organisation subject to its audit.<\/li><li>Transaction Examination<\/strong> \u2014 can examine all transactions and question the executive regarding financial matters.<\/li><li>Record Access<\/strong> \u2014 can call for records, papers, and documents from any audited entity.<\/li><li>Audit Extent and Manner<\/strong> \u2014 authority to decide the extent and manner of audit to ensure thorough scrutiny.<\/li><\/ol>\n<h3>1.10.5<\/span>Lokpal\/ Lokayukta \u2014 Anti-corruption Ombudsman<\/span><\/h3>\n<ol class=\"lst\"><li>The Lokpal and Lokayukta Act, 2013<\/strong> and its amendment in 2016<\/strong> (the Act) provides for a Lokpal in the Central (Union) Government<\/strong> and Lokayukta in the State Governments<\/strong> as the statutory anti-corruption Ombudsman<\/strong> to inquire into allegations of corruption against public servants and for related matters. Once appointed \u2014 by the President<\/strong> in the case of Lokpal, or the Governor<\/strong> in the case of Lokayukta \u2014 they cannot be transferred or removed except by impeachment proceedings<\/strong> undertaken by Parliament or the State legislatures respectively.<\/li><li>The Act outlines the Lokpal's and Lokayuktas' roles, powers, and responsibilities<\/strong>. It has a broad scope<\/strong> regarding the individuals it covers \u2014 extending to:<\/li><li>Union Ministers<\/strong> (including the serving and former Prime Ministers),<\/li><li>Members of Parliament, and<\/li><li>various categories of public servants<\/strong>, including those in Group 'A', 'B', 'C', or 'D'<\/strong> positions as defined in the Prevention of Corruption Act, 1988<\/strong>.<\/li><li>All entities (NGOs<\/strong>) receiving donations from foreign sources under the Foreign Contribution Regulation Act (FCRA)<\/strong>above Rs 10 lakh per year<\/strong> are also under the jurisdiction of Lokpal.<\/li><\/ol>\nThe Act grants Lokpal powers to sanction prosecution<\/strong> against public servants.<\/p>\n<ol class=\"lst\"><li>There are exceptions<\/strong> in matters related to international relations, external and internal security, public order, atomic energy, and space<\/strong>. To initiate an inquiry into such cases, at least two-thirds of Lokpal members must approve<\/strong>. The Act emphasises confidentiality<\/strong> \u2014 if Lokpal concludes a complaint is baseless, the inquiry records remain undisclosed<\/strong> to the public or any party involved.<\/li><li>One significant aspect of the Act is the requirement for public servants to declare their assets<\/strong> in a specified manner. This transparency measure aims to deter corruption and promote accountability<\/strong>.<\/li><li>Composition: One Chairperson and a maximum of eight other members.<\/li><li>The age<\/strong> of Lokpal (Chairperson or member) on the date of assuming office should not be under 45 years<\/strong>.<\/li><li>Of the eight members, four are judicial members who are or have been judges of the Supreme Court or a Chief Justice of a High Court.<\/li><li>The remaining four are non-judicial members \u2014 people of impeccable integrity and outstanding ability, having special knowledge and expertise of not less than twenty-five years in matters relating to anti-corruption policy, public administration, vigilance, finance including insurance and banking, law, and management.<\/li><li>Fifty per cent of the Members shall be from Scheduled Castes\/ Scheduled Tribes\/ Other Backward Classes\/ Minorities and women.<\/li><li>Selection Committee:<\/strong> The Chairperson and Lokpal members are selected through a selection committee consisting of:<\/li><li>the Prime Minister,<\/li><li>the Speaker of Lok Sabha,<\/li><li>the Leader of Opposition in Lok Sabha,<\/li><li>the Chief Justice of India (CJI)<\/strong> or a sitting Supreme Court judge nominated by CJI, and<\/li><li>another eminent jurist<\/strong> nominated by the President of India<\/strong> based on the recommendations of the first four members of the selection committee \"through consensus<\/strong>\".<\/li><li>Lokpal may refer complaints for investigation to the CBI. For such cases, CBI would work under Lokpal's supervision. It envisages a 'Directorate of Prosecution' under the overall control of the Director, CBI, with a fixed tenure of two years. The appointment of the Director of Prosecution is to be based on the recommendation of the Central Vigilance Commission. Transfer of CBI officers investigating cases referred by Lokpal shall be with the CVC's approval.<\/li><li>The Act lays down clear timelines for preliminary enquiry, investigation and trial and has provisions for attachment and confiscation of property acquired by corrupt means, even while prosecution is pending.<\/li><\/ol>\n<h3>1.10.6<\/span>Central Vigilance Commission (CVC)<\/span><\/h3>\n<ol class=\"lst\"><li>Under the Central Vigilance Commission Act, 2003, the CVC is a statutory body headed by the Central Vigilance Commissioner and comprising not more than two Commissioners. It is conceived to be the apex oversight institution, independent from any executive authority. There are two Chief Technical Examiners (CTE) who oversee public procurement.<\/li><li>All Central (Union) Government entities appoint a Chief Vigilance Officer (CVO)<\/strong> in consultation with the CVC. CVOs undertake system audits and preventive\/ forensic investigations<\/strong> in the Entity and report them to the CVC.<\/li><li>CVC only investigates and recommends<\/strong> punitive and follow-up actions to the concerned entity but has no punitive powers by itself<\/strong>. The recommendations are not binding<\/strong> on the entities, but CVC may report any deviations from recommendations to Parliament<\/strong>. It has an advisory role in Discipline and Appeal cases<\/strong> arising from its investigations. It plays a role in sanctioning prosecutions<\/strong> related to corruption and consultations in key appointments<\/strong>. CVC also has a role in the appointment of Independent External Monitors (IEM)<\/strong> under the Integrity Pact<\/strong> (wherever applicable) for Central (Union) Government Entities. CVC submits an annual report to Parliament<\/strong> regarding its investigations.<\/li><li>CVC has superintendence over the functioning of the CBI<\/strong> regarding the investigation of offences related to corruption in Central (Union) Government Agencies. CVC has jurisdiction over cases under the Lokpal and Lokayukta Act<\/strong>, Whistle Blowers Act<\/strong>, and Money Laundering Act<\/strong>.<\/li><li>It has the powers of a civil court<\/strong> when conducting any inquiry. CVC and CVOs do not have the powers of Police<\/strong> to arrest, seize properties, and enforce compliance from non-government agencies. Therefore, cases requiring such action are entrusted to the CBI<\/strong>.<\/li><li>To avoid conflict of interest, CVO and vigilance officers shall not associate with decision-making that may have vigilance sensitivities. Some organisations have a system wherein executive work \u2014 like the shortlisting of arbitrators or the debarment of firms \u2014 is entrusted fully\/ partially to vigilance. The same is not appropriate and is also against the CVC Vigilance Manual.<\/li><li>The following levels\/ categories of officials are covered under the jurisdiction of the CVC<\/strong>:<\/li><\/ol>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Coverage<\/th><\/tr><\/thead><tbody><tr><td>a) All India Services & Central Government<\/td><td>Members of All India Services serving in connection with the affairs of the Union, and Group 'A' officers<\/strong> of the Central Government. Officers of central services, even those working in state governments<\/strong>, are also under its jurisdiction.<\/td><\/tr><tr><td>b) Schedule 'A' and 'B' PSUs of the Central Government<\/td><td>Chief Executives and Executives on the Board and other officers of level E-8 and above<\/strong><\/td><\/tr><tr><td>c) Schedule 'C' and 'D' PSUs of the Central Government<\/td><td>Chief Executives and Executives on the Board and other officers of level E-7 and above<\/strong><\/td><\/tr><tr><td>d) Public Sector Banks<\/td><td>Officers of the rank of Scale V and above<\/strong><\/td><\/tr><tr><td>e) Reserve Bank of India, NABARD and SIDBI<\/td><td>Officers in Grade 'D' and above<\/td><\/tr><tr><td>f) General Insurance Companies<\/td><td>Managers and above<\/td><\/tr><tr><td>g) Life Insurance Corporation of India<\/td><td>Senior Divisional Managers and above<\/td><\/tr><tr><td>h) Societies and local authorities owned or controlled by the Central Government<\/td><td>Officers drawing a salary of Rs 8,700\/- per month and above<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h3>1.10.7<\/span>Central Bureau of Investigation (CBI)<\/span><\/h3>\n<ol class=\"lst\"><li>Under the Delhi Special Police Establishment Act, 1946<\/strong>, the CBI<\/strong> \u2014 a police organisation under the Department of Personnel, Ministry of Personnel, Pension & Public Grievances<\/strong> \u2014 is the only oversight agency with police powers<\/strong>. It investigates and prosecutes corruption cases<\/strong> (including those related to public procurement) requiring arrest, seizure of properties and enforcement of compliance from non-government agencies<\/strong>. The prosecutions are carried out under, inter alia<\/em>, the Prevention of Corruption Act, 1988<\/strong>. It takes up cases based on complaints received from stakeholders or the general public.<\/li><\/ol>\nJurisdiction: Though its jurisdiction is restricted to Delhi and UTs, under sections 5 & 6 of the Act, the Central Government can extend its powers and jurisdiction to a State with the consent of the government of that State for investigation of specified offences (generally related to All India Services or Members of Parliament). High Courts and the Supreme Court can also order the CBI to investigate cases outside its normal jurisdiction, for which no consent is required from the State.<\/p>\n<ol class=\"lst\"><li>The Delhi Special Police Establishment (DSPE), which forms a part of the CBI, has two Divisions:<\/li><\/ol>\n<div class=\"tblwrap\"><table><thead><tr><th>Division<\/th><th>Investigates<\/th><\/tr><\/thead><tbody><tr><td>(i) Anti-Corruption Division (ACD)<\/td><td>All cases registered under the Prevention of Corruption Act, 1988<\/strong>. If an offence under any section of the Indian Penal Code, 1860 (replaced by the Bharatiya Nyaya Sanhita (BNS), 2023<\/strong> from 1st July 2024<\/em>) or any other law is committed along with<\/strong> the offence of bribery and corruption, it shall also be investigated by the ACD. The ACD also investigates cases of serious irregularities allegedly committed by public servants<\/strong>.<\/td><\/tr><tr><td>(ii) Special Crimes Division (SCD)<\/td><td>All cases of Economic offences<\/strong> and all cases of conventional crime<\/strong>, such as offences relating to internal security, espionage, sabotage, narcotics and psychotropic substances, antiquities, murders and dacoities\/ robberies, cheating, criminal breach of trust, forgery, dowry deaths, suspicious deaths, etc.<\/td><\/tr><\/tbody><\/table><\/div>\n<ol class=\"lst\"><li>While the superintendence of DSPE<\/strong>, as far as it relates to investigation of offences under the Prevention of Corruption Act, 1988, vests in the CVC<\/strong>; for all other matters<\/strong>, the superintendence of DSPE vests in the Central Government<\/strong>.<\/li><li>The administration of DSPE vests in the Director of the CBI<\/strong>, who is appointed on the recommendations of a committee headed by the Central Vigilance Commissioner<\/strong>. He holds office for a period of not less than two years<\/strong>. The Director of CBI exercises, in respect of DSPE, powers exercisable by an Inspector General of Police<\/strong> regarding the police force in a State.<\/li><li>DSPE cannot conduct any inquiry or investigation<\/strong> into any offence alleged to have been committed under the Prevention of Corruption Act, 1988, except with the prior approval of the Central Government<\/strong>, where such allegation relates to employees at the level of Joint Secretary and above<\/strong> in the Central Government, or corporations established by or under any Central Act, Government companies, societies, and local authorities owned or controlled by it.<\/li><li>No such approval, however, is necessary for cases involving the arrest of a person on the spot on the charge of accepting or attempting to accept any gratification other than legal remuneration.<\/li><\/ol>\n<h2>1.11<\/span>Preferential \/ Mandatory \/ Restricted Purchase from Certain Sources<\/span><\/h2>\n<aside class=\"note\">Section titles in the four Manuals:<\/p>\nG<\/span>Reserved Items and Other Purchase\/ Price Preference Policies<\/em> \u00b7 W<\/span>Preferential\/ Restriction on Purchase from certain sources<\/em> \u00b7 C<\/span>Preferential Purchase from certain sources<\/em> \u00b7 NC<\/span>Preferential\/ Mandatory Purchase from certain sources<\/em><\/p><\/aside>\nThe Central Government may, by notification, provide for mandatory procurement of any goods or services from any category of bidders, or provide for preference to bidders on the grounds of promotion of locally manufactured goods or locally provided services (General Financial Rules, 2017, Rule 153).<\/p>\n<aside class=\"note\">Note: Before considering any Purchase Preference\/ Product Reservation mentioned below, the Procuring Entity should check the latest directives in this regard for necessary action. Product Reservation\/ Purchase Preference provision shall invariably be part of the Notice Inviting Tender (NIT) and Instructions to Bidders\/ Consultants (ITB\/ ITC).<\/p><\/aside>\nW<\/span>Presently the following policies are in vogue.<\/em><\/p>\n<h3 class=\"src-G srchead\" data-src=\" G \">1.11.1<\/span>Reservation of Procurement of Certain Class of Products from Certain Agencies<\/span>G<\/span><\/h3><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\"><h4>1.<\/span>Khadi Goods \/ Handloom Textiles<\/span><\/h4>\nOut of the total procurement of handloom origin textiles<\/strong> required by Central Government departments throughout the year, it shall be mandatory to make procurement of at least 20%<\/strong> from:<\/p>\n<ul class=\"lst\"><li>the Khadi & Village Industries Commission (KVIC), and\/or<\/li><li>Handloom Clusters<\/strong> such as Co-operative Societies, Self Help Group (SHG) Federations, Joint Liability Groups (JLG), Producer Companies (PC), Corporations etc., including Weavers having Pehchan Card<\/strong>.<\/li><\/ul>\n(Notified vide OM No. F.10\/2\/2019-PPD(Pt.) issued by Department of Expenditure dated 17.02.2020.)<\/em><\/p>\nKhadi and Handloom goods are also available on GeM. (GFR Rule 153(i)<\/strong>.)<\/p>\n<h4>2.<\/span>Pharmaceuticals from Pharmaceutical CPSEs<\/span><\/h4>\na) The Pharmaceuticals Purchase Policy, 2013<\/strong>(Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers, OM 50(9)\/2010-PI-IV dated 10.12.2013)<\/em> is intended to ensure:<\/p>\n<ul class=\"lst\"><li>i) Optimum utilisation of the installed capacity<\/strong> and the provision of a necessary fillip in reviving these ailing pharmaceutical CPSEs;<\/li><li>ii) Availability of quality medicines at low prices to the masses;<\/li><li>iii) Drug security of the nation.<\/li><\/ul>\nb) Salient features of this policy:<\/p>\n<ul class=\"lst\"><li>i) The Policy in respect of 103 medicines<\/strong>, originally valid for a period of five years<\/strong>, has now been renewed and extended<\/strong>(as approved by the Union Cabinet in its meeting held on 20.11.2019)<\/em>till the final closure\/ strategic disinvestment<\/strong> of the Pharma PSEs mentioned below.<\/li><li>ii) The Policy extends only to CPSEs under the administrative control of the Department of Pharmaceuticals, such as:<\/li><li>Indian Drugs and Pharmaceuticals Limited (IDPL)<\/li><li>Hindustan Antibiotics Limited (HAL)<\/li><li>Bengal Chemicals and Pharmaceuticals Limited (BCPL)<\/li><li>Karnataka Antibiotics and Pharmaceuticals Limited (KAPL)<\/li><li>Rajasthan Drugs and Pharmaceuticals Limited (RDPL)<\/li><\/ul>\nand their subsidiaries where the Government of India owns 51% or above shares.<\/p>\n<ul class=\"lst\"><li>iii) Applicable to purchases by Central Government Departments, their PSUs, Autonomous Bodies, etc. Also applicable to the purchase of medicines by State Governments under health programmes funded by the Government of India, such as the National Rural Health Mission.<\/li><li>iv) Pricing of the products would be done by the National Pharmaceutical Pricing Authority (NPPA) using the cost-based formula, as mentioned in the Drugs Price Control Order, 1995. A uniform discount of 16% would be extended to all products. All taxes, whatsoever, would have to be passed on to buyers.<\/li><li>v) Annual revision of prices<\/strong> would be linked to the Wholesale Price Index<\/strong>, as per provisions contained in the Drugs Prices Control Order, 2013<\/strong>.<\/li><li>vi) The procuring entity would purchase from pharma CPSEs and their subsidiaries subject to their meeting Good Manufacturing Practices (GMP) norms<\/strong> as per Schedule 'M' of the Drugs & Cosmetics Rules<\/strong>.<\/li><li>vii) In case pharma CPSEs and their subsidiaries fail to supply<\/strong> the medicines, the procuring entity would be at liberty to make purchases from other manufacturers<\/strong>. If the pharma CPSEs or their subsidiaries fail to perform<\/strong> as per the purchase order, they would also be subject to payment of liquidated damages or any other penalty<\/strong> as per the terms of the contract.<\/li><li>viii) The list of medicines<\/strong> (Annexure 29 of the Goods Manual) may be reviewed and revised by the Department of Pharmaceuticals<\/strong> as per requirement.<\/li><\/ul>\n<h4>3.<\/span>Reservation of specific items for procurement from Micro and Small Enterprises (MSE)<\/span><\/h4>\nTo enable wider dispersal of enterprises in the country, particularly in rural areas, the Central Government Ministries\/ Departments\/ Public Sector Undertakings shall continue to procure items reserved for procurement exclusively from MSE \u2014 presently 358 items (including eight items of Handicrafts), which have been reserved for exclusive purchase from them. The latest list can be found on the MSME Ministry's website.<\/p>\nThe Ministry of MSME has clarified that laminated paper Gr. I, II and III are not covered<\/strong> under the paper conversion product (Sl. No. 202) of the Public Procurement Policy (Policy Circular No. 21(6)\/2016-MA dated 26.05.2016)<\/em>.<\/p>\nNSIC may be contacted to locate the sources of such reserved items.<\/p>\n<\/div><h3>1.11.2<\/span>Public Procurement Policy for Micro and Small Enterprises (MSEs)<\/span><\/h3>\n(Rule 153(ii) of GFR 2017)<\/em><\/p>\n<h4>1.<\/span>The Policy<\/span><\/h4>\nFrom time to time, the Government of India lays down procurement policies to help inclusive national economic growth<\/strong> by providing long-term support to micro, small and medium enterprises<\/strong>, and to disadvantaged sections of society<\/strong>(C<\/span> adds: \"and to address environmental concerns\")<\/em>.<\/p>\nThe Procurement Policy for Micro and Small Enterprises, 2012 [amended 2018 and 2021]<\/strong> has been notified by the Government in exercise of the powers conferred in Section 11 of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006<\/strong>, which is mandatory to be followed<\/strong> by Central Government Ministries\/ Departments\/ Public Sector Undertakings. Details of the policy, along with the amendments issued in 2018<\/strong> and 2021<\/strong>, are available on the MSME website<\/strong>.<\/p>\n<h4>2.<\/span>Eligibility<\/span><\/h4>\n<ol class=\"lst\"><li>Micro and Small Enterprises (MSEs) registered under Udyam Registration are eligible to avail the benefits under the policy.<\/li><li>This Policy provides preferential procurement of goods produced and services rendered by MSEs. Traders\/ distributors\/ sole agents\/ Works Contracts are EXCLUDED from the purview of the policy.<\/li><li>i) (Notified by MSME Ministry vide S.O. 4926(E) dated 18.10.2022)<\/em> In case of an upward change in terms of investment in plant and machinery or equipment or turnover or both, and consequent re-classification, an enterprise shall continue to avail of all non-tax benefits of the category (micro, small, or medium) it was in before the re-classification, for a period of three years from the date of such upward change.<\/li><\/ol>\n<aside class=\"note\">C<\/span> adds: Non-tax benefits include benefits of various schemes of the Government, including <\/strong>Public Procurement Policy, Delayed Payments, etc.<\/p><\/aside>\n<ul class=\"lst\"><li>ii) MSEs would be treated as owned by SC\/ST or Women entrepreneurs where:<\/li><li>In the case of a proprietary MSE<\/strong> \u2014 the proprietor(s) are SC\/ST or Woman;<\/li><li>In the case of a partnership MSE<\/strong> \u2014 the SC\/ST or Women partners hold at least 51%<\/strong> shares in the unit;<\/li><li>In the case of Private Limited Companies<\/strong> \u2014 SC\/ST or Women promoters hold at least 51%<\/strong> share.<\/li><\/ul>\n<h4>3.<\/span>Applicability and Exemptions<\/span><\/h4>\n<ol class=\"lst\"><li>The policy is applicable to Central Government Ministries\/ Departments\/ Public Sector Undertakings.<\/li><li>The policy is not applicable to State Government Ministries\/ Departments\/ State PSEs<\/strong>, but they have similar policies applicable in their state.<\/li><li>Exemptions:<\/strong> Given their unique nature, defence armament imports shall not be included in computing the 25% goal for the Ministry of Defence<\/strong>. In addition, defence equipment like weapon systems, missiles, etc., shall remain out of the purview<\/strong> of such a reservation policy. Monitoring of goals<\/strong> set under the policy will be done, as far as they relate to the Defence sector, by the Ministry of Defence itself<\/strong>, in accordance with suitable procedures to be established by them.<\/li><\/ol>\n<h4>4.<\/span>Facilities for MSE<\/span><\/h4>\na) Reduced Transaction Costs:<\/strong> To reduce the transaction cost of doing business, MSEs will be facilitated by:<\/p>\n<ul class=\"lst\"><li>providing them tender documents free of cost,<\/li><li>exempting MSEs from payment of Earnest Money Deposits, and<\/li><li>adopting e-procurement<\/strong> to bring transparency in the tender process.<\/li><\/ul>\nHowever, exemption from paying Performance Bank Guarantee\/ Security Deposit is not covered under the policy.<\/p>\nb) Relaxation in Prior Turnover and Experience: The Procuring Entity may relax the condition of prior turnover and prior experience for start-up enterprises recognised by DPIIT, subject to meeting quality & technical specifications. Start-ups may be MSMEs\/ MSEs or otherwise. Such relaxation can be provided in the case of procurement of works as well.<\/p>\nIt is further clarified that such relaxation is not optional but normally has to be ensured<\/strong>, except in the case of procurement of items related to public safety, health, critical security operations and equipment<\/strong>, etc., where adequate justification exists<\/strong> for the Procuring Entity not to relax such criteria (Notified vide OM No. F.20\/2\/2014-PPD(Pt.) issued by Department of Expenditure dated 29.09.2016)<\/em>. The decision of the Procuring Entity in this regard shall be final.<\/strong> (Rule 173(i) of GFR 2017<\/strong>.)<\/p>\n<aside class=\"note\">Footnote [C, W, NC]:<\/strong> Such relaxation can be partial<\/strong> \u2014 e.g., 25% relaxation<\/strong> over specified turnover and experience.<\/p><\/aside>\nc) Timely Payments:<\/strong>Chapter V of the MSMED Act, 2006<\/strong> has provisions for ensuring timely payments to MSE suppliers:<\/p>\n<ul class=\"lst\"><li>The period agreed upon for payment must not exceed forty-five (45) days<\/strong> from the deemed acceptance<\/strong> of the materials supplied by the MSEs.<\/li><li>In case of any discrepancies in the supplies, the Procuring Entity shall raise an objection to the MSE supplier within 15 days from the date of receipt of materials. If such objection is not raised, then it will be taken as deemed acceptance.<\/li><li>For delays in payment<\/strong>, the buyer shall be liable to pay compound interest<\/strong> to the supplier on the delayed amount at three times the bank rate notified by the Reserve Bank<\/strong>.<\/li><li>For arbitration and conciliation<\/strong> regarding the recovery of such payments and interest, the Micro and Small Enterprises Facilitation Council<\/strong> has been set up in various states.<\/li><\/ul>\n<h4>5.<\/span>Purchase Preference<\/span><\/h4>\na) The 25% annual target:<\/strong> Under the amended Public Procurement Policy for MSEs, Order 2012, the Central Government Ministries\/ Departments\/ PSUs shall procure a minimum of 25 per cent of their annual value of goods or services from MSEs<\/strong> (in accordance with GFR 2017, Rule 153(ii)<\/strong>).<\/p>\n<ul class=\"lst\"><li>i) The annual goal of procurement from MSEs also includes sub-contracts to MSEs by large enterprises and consortia of MSEs formed by the National Small Industries Corporation. If a sub-contract is given to MSEs, it will be considered as procurement from MSEs.<\/li><li class=\"srcmark src-multi\" data-src=\" C NC \">ii) C<\/span>NC<\/span> \u2014 important clarification: The <\/strong>annual target of 25% procurement from MSEs is only a MINIMUM. The <\/strong>MSE purchase preference is mandatory for all procurements (except for exemptions as per sub-para 3-c above), <\/strong>even after this target is achieved. For example, <\/strong>it is not permissible for organisations to earmark only some goods\/ services to be procured exclusively from MSEs to achieve the annual target and not apply MSE procurement preferences to the rest of the goods\/ services.<\/li><\/ul>\nb) The L1+15% price band: In a tender, if the L1 price is from someone other than an MSE, participating MSEs quoting prices within a price band of L1 + 15% shall be allowed to supply up to 25% of the total tendered value by bringing down their price to the L1 price. If there is more than one eligible MSE within such price band who agrees to match the L1 price, the 25% quantity is to be distributed proportionately to them.<\/p>\n<aside class=\"note\">Note:<\/strong> If the procuring entity negotiates<\/strong> with the non-MSE L1 bidder, the price band (L1+15%<\/strong>) should be calculated based on the ORIGINAL L1 price, not the lower negotiated price<\/strong>, and such eligible MSE bidders shall be called to match the new negotiated L1 price<\/strong> as per the procedure mentioned above for placement of the 25% quantity.<\/p><\/aside>\n<ul class=\"lst\"><li>i) Non-divisible items:<\/strong> In case the tender item cannot be split or divided<\/strong>, etc., the MSE quoting a price within the band L1+15% may be awarded for full\/ complete supply of the total tendered value<\/strong>, considering the spirit of the Policy for enhancing Government procurement from MSEs.<\/li><li>ii) Sub-targets: Out of the target of 25% of annual procurement from MSEs (not in the specific tender):<\/li><li>a sub-target of 4% of annual procurement<\/strong> is earmarked for procurement from MSEs owned by SC\/ST entrepreneurs<\/strong>, and<\/li><li>3% of annual procurement is earmarked for procurement from MSEs owned by women entrepreneurs.<\/li><\/ul>\nHowever, in the event of failure of such MSEs to participate<\/strong> in the tender process or to meet tender requirements and L1 price, the 4% sub-target (SC\/ST) and 3% (women) will also be met from other MSEs<\/strong>.<\/p>\n<h4>6.<\/span>Developing MSE Vendors<\/span><\/h4>\nThe Central Ministries\/ Departments\/ PSUs shall take necessary steps to develop appropriate vendors<\/strong> by organising:<\/p>\n<ul class=\"lst\"><li>Vendor Development Programmes (VDP), or<\/li><li>Buyer-Seller Meets<\/li><\/ul>\nfocused on developing MSEs for procurement through the GeM Portal<\/strong>.<\/p>\nTo enhance the participation of MSEs owned by SCs\/ STs\/ Women<\/strong> in Government procurement, Central Government Ministries\/ Departments\/ CPSEs should conduct Special Vendor Development Programmes\/ Buyer-Seller Meets for SC\/ST and Women MSEs<\/strong>.<\/p>\n<h4>7.<\/span>Policy Implementation<\/span><\/h4>\n<ol class=\"lst\"><li>A Review Committee<\/strong> has been constituted under the Chairmanship of the Secretary, Ministry of MSME<\/strong>, to monitor and review the Public Procurement Policy for MSEs. M\/o MSME will review and\/or modify the composition of the Committee as and when required. This Committee will, inter alia<\/em>:<\/li><li>review the list of 358 items<\/strong> reserved for exclusive purchase from MSEs on a continuous basis,<\/li><li>consider requests from Central Government Departments\/ CPSEs for exemption from the 25% target on a case-to-case basis, and<\/li><li>monitor achievements<\/strong> under the Policy.<\/li><li>To monitor the progress of procurement by Central Government Ministries\/ Departments and CPSEs from MSEs, the Ministry of MSME launched the MSME 'Sambandh' Portal on 8th December 2017<\/strong> for uploading procurement details by all CPSEs on a monthly and annual basis<\/strong>, which the Ministry regularly monitors.<\/li><\/ol>\n<aside class=\"note\">Any payment grievances filed by the MSMEs against a Procuring Entity may be monitored and progress updated therein. Total value of month-end payments due to the MSMEs may be updated.<\/em><\/p><\/aside>\n<ol class=\"lst\"><li>To redress the grievances of MSEs related to non-compliance with the policy, a Grievance cell named \"CHAMPION Portal\"<\/strong> has been set up in the Ministry of MSME.<\/li><li class=\"srcmark src-G\" data-src=\" G \">G<\/span> A National SC\/ST Hub (NSSH)<\/strong> scheme was launched in October 2016<\/strong> to provide handholding support to SC\/ST entrepreneurs<\/strong>, and it is being coordinated\/ implemented by the NSIC<\/strong> under this Ministry.<\/li><li>Clarifications:<\/strong> The Office of the Development Commissioner (Micro, Small & Medium Enterprises) issued an FAQ on the Public Procurement Policy for MSE Order, 2012<\/strong>.<\/li><\/ol>\n<aside class=\"note\">Annexure references:<\/strong>G<\/span> Annexure 32 \u00b7 C<\/span> Annexure 19 \u00b7 NC<\/span> Annexure 13.<\/p><\/aside>\n<h3>1.11.3<\/span>Procurement Preference to Make in India (MII Policy)<\/span><\/h3>\n(Rule 153(iii) of GFR, 2017)<\/em><\/p>\n<h4>1.<\/span>Purpose<\/span><\/h4>\nTo encourage 'Make in India' and promote manufacturing and production of goods and services in India with a view to enhancing income and employment, the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, Government of India, issued the Public Procurement (Preference to Make in India) Order, 2017.<\/p>\n<aside class=\"note\">Latest revision to the Order notified vide OM No. P-45021\/2\/2017-PP (BE-II)-Part(4)Vol.II issued by DPIIT, dated 19.07.2024<\/strong>.<\/em><\/p>\nG<\/span> footnote: The earlier '<\/strong>Domestically Manufactured Electronic Products (DMEP)', also called <\/strong>Preference for Domestically Manufactured Electronic Goods (PMA), <\/strong>stands subsumed in the MII policy.<\/p><\/aside>\nThe Order is issued pursuant to Rule 153(iii) of GFR, 2017<\/strong> and is applicable to the procurement of Goods, Works, and Services<\/strong>.<\/p>\n<h4>2.<\/span>Definitions<\/span><\/h4>\nFor the purpose of this Order:<\/p>\n<ol class=\"lst\"><li>'L1<\/strong>' means the lowest tender or lowest bid, or the lowest quotation<\/strong> received in a tender, tender\/ bidding process or other procurement solicitation, as adjudged in the evaluation process<\/strong> as per the tender or other procurement solicitation.<\/li><li>'Local Content<\/strong>' means the amount of value added in India<\/strong>, which shall \u2014 unless otherwise prescribed by the Nodal Ministry \u2014 be:<\/li><\/ol>\n<aside class=\"note\">the total value of the item procured (excluding net domestic indirect taxes) MINUS the value of imported content in the item (including all customs duties), as a proportion of the total value, in percent.<\/p><\/aside>\nExplanatory notes for calculation of local content:<\/p>\n<ul class=\"lst\"><li>i) Imported items sourced locally from resellers\/ distributors shall be EXCLUDED from calculation of local content.<\/li><li>ii) The license fees\/ royalties paid\/ technical charges paid out of India shall be EXCLUDED from local content calculation.<\/li><li>iii) Procurement\/ supply of repackaged\/ refurbished\/ rebranded<\/strong> imported products, as commonly understood, shall be treated as reselling of imported products<\/strong> and shall be excluded<\/strong> from calculation of local content. Definitions:<\/li><li>'Refurbishing' means repair or reconditioning of an imported product \u2014 this does not amount to manufacture because no new goods come into existence.<\/li><li>'Repackaging' means repacking of imported goods from bulk pack to smaller packs \u2014 this would not ordinarily amount to manufacture of a new item.<\/li><li>'Rebranding' means relabelling or renaming or change in symbol or logo\/ makes or corporate image of a company\/ organisation\/ firm for an imported product \u2014 this would amount to rebranding.<\/li><li>iv) To ensure that imported items sourced locally from resellers\/ distributors are excluded from calculation of local content, procuring entities are to obtain from bidders the cost of such locally-sourced imported items (inclusive of taxes)<\/strong> along with a break-up on license\/ royalties paid\/ technical expertise cost etc. sourced from outside India<\/strong>. For items sold by a bidder as reseller<\/strong>, an OEM certificate for country of origin<\/strong> is to be submitted.<\/li><li>v) For contracts involving supply of multiple items<\/strong>, a weighted average of all items<\/strong> is to be taken while calculating the local content.<\/li><li class=\"srcmark src-multi\" data-src=\" W C NC \">W<\/span>C<\/span>NC<\/span> \u2014 Class definitions (these definitions appear in the Chapter 1 text of the Works, Consultancy and Non-Consultancy Manuals; in the Goods Manual they are in the Procurement Glossary):<\/em><\/li><\/ul>\n<div class=\"tblwrap\"><table><thead><tr><th>Term<\/th><th>Definition<\/th><\/tr><\/thead><tbody><tr><td>'Class-I local supplier'<\/td><td>A supplier or service provider whose goods, services or works offered for procurement meets the minimum local content as prescribed for 'Class-I local supplier' under this Order.<\/td><\/tr><tr><td>'Class-II local supplier'<\/td><td>A supplier or service provider whose goods, services or works offered for procurement meets the minimum local content as prescribed for 'Class-II local supplier' but less than that prescribed for 'Class-I local supplier' under this Order.<\/td><\/tr><tr><td>'Non-Local supplier'<\/td><td>A supplier or service provider whose goods, services or works offered for procurement has local content less than that prescribed for 'Class-II local supplier' under this Order.<\/td><\/tr><\/tbody><\/table><\/div>\n<ol class=\"lst\"><li>'Margin of purchase preference' means the maximum extent to which the price quoted by a \"Class-I local supplier\" may be above the L1 for the purpose of purchase preference. It has been fixed as 20 per cent.<\/li><li>'Nodal Ministry<\/strong>' means the Ministry or Department identified pursuant to this Order with respect to a particular item of goods or services or works.<\/li><li>'Procuring entity' means a Ministry or Department or attached or subordinate office of, or autonomous body controlled by, the Government of India, and includes Government companies as defined in the Companies Act.<\/li><li>'Works' means all works as per Rule 130 of GFR 2017 and will also include 'turnkey works'.<\/li><\/ol>\n<h4>2A. Special Treatment for Items Covered under the PLI Scheme<\/span><\/h4>\nThe manufacturers manufacturing an item under the Production Linked Incentive (PLI) scheme<\/strong> shall be treated as deemed Class-II local supplier<\/strong> for that item, unless<\/strong> they have minimum local content equal to or higher than<\/strong> that notified for Class-I local supplier for that item, provided<\/strong> the manufacturer has received incentive from the concerned PLI Ministry<\/strong> for the item. The above shall be applicable for the specific time period only<\/strong>, as notified by the concerned PLI Ministry.<\/p>\n<h4>3.<\/span>Eligibility of 'Class-I local supplier' \/ 'Class-II local supplier' \/ 'Non-local suppliers' for Different Types of Procurement<\/span><\/h4>\n<ol class=\"lst\"><li>In the procurement of all goods, services or works in respect of which the Nodal Ministry\/ Department has communicated that there is sufficient local capacity and local competition, only a 'Class-I local supplier' shall be eligible to bid, irrespective of purchase value.<\/li><li>Only 'Class-I local supplier' and 'Class-II local supplier' shall be eligible to bid in procurements undertaken by procuring entities, except when a Global Tender Enquiry has been issued. In global tender enquiries, 'Non-local suppliers' shall also be eligible to bid along with Class-I and Class-II local suppliers.<\/li><\/ol>\nIn procurement of all goods, services or works not covered by sub-para (a) above, and with estimated value of purchases less than Rs. 200 Crore, in accordance with Rule 161(iv) of GFR, 2017 (W<\/span> cites Rule 161(iv)(b))<\/em>, a Global Tender Enquiry shall not be issued except with the approval of the competent authority as designated by the Department of Expenditure.<\/p>\n<ol class=\"lst\"><li>For the purpose of this Order, works include Engineering, Procurement and Construction (EPC) contracts, and services include System Integrator (SI) contracts.<\/li><\/ol>\n<h4>3A. Mandatory Sourcing of Items with Sufficient Local Capacity and Competition, from Class-I Local Suppliers in SI\/ EPC\/ Turnkey Contracts\/ Service Tenders<\/span><\/h4>\n<ol class=\"lst\"><li>The items notified as having sufficient local capacity and competition shall mandatorily be sourced from Class-I local suppliers in si\/ EPC\/ turnkey Contracts\/ Services tenders. This provision will be applicable only for those items which have been notified by the Nodal Ministry as Class-I \u2014 i.e., having sufficient local capacity and competition, with specific HSN codes.<\/li><li>Notwithstanding the above, if in any project it is considered that it is not practically feasible<\/strong> to source such items from Class-I local suppliers, it may take relaxation from such stipulation with the approval of the Secretary of the administrative Ministry\/ Department concerned<\/strong>, or with the approval of the Competent Authority specified by the Administrative Ministry\/ Department, on a case-specific basis<\/strong>.<\/li><\/ol>\n<h4>4.<\/span>Purchase Preference<\/span><\/h4>\n<ol class=\"lst\"><li>Subject to the provisions of the Order and to any specific instructions issued by the Nodal Ministry, purchase preference shall be given to 'Class-I local supplier'<\/strong> in procurements undertaken by procuring entities in the manner specified hereunder.<\/li><li>Divisible procurements:<\/strong> In the procurements of goods or works covered by para 3(b) above which are DIVISIBLE in nature<\/strong>, the 'Class-I local supplier' shall get purchase preference over 'Class-II local supplier' as well as 'Non-local supplier', as per the following procedure:<\/li><\/ol>\n<aside class=\"note\">Notes:<\/p>\n1.<\/strong> If the procuring entity negotiates with the L1 bidder who is not a Class-I Local Supplier<\/strong>, the margin of purchase preference (L1+20%<\/strong>) should be calculated based on the ORIGINAL L1 price, not the lower negotiated price<\/strong>, and such eligible Class-I Local Suppliers shall be called to match the new negotiated L1 price<\/strong> as per the procedure mentioned above for placement of the 50% quantity.<\/p>\n2. Since, as per sub-para (c) below, the MII order is applicable 'where the bid is evaluated on price alone' \u2014 MII purchase preference would not be applicable where evaluation is based inter alia<\/em> on non-price criteria, e.g., QCBS or FBS in Services and Works.<\/p><\/aside>\n<ul class=\"lst\"><li>i) Among all qualified bids, the lowest bid will be termed L1. If L1 is a 'Class-I local supplier', the contract for the full quantity will be awarded to L1.<\/li><li>ii) If the L1 bid is not a 'Class-I local supplier':<\/li><li>50% of the order quantity shall be awarded to L1.<\/li><li>Thereafter, the lowest bidder among the 'Class-I local suppliers' will be invited to match the L1 price for the remaining 50% quantity<\/strong>, subject to the Class-I local supplier's quoted price falling within the margin of purchase preference (L1+20%)<\/strong>, and the contract for that quantity shall be awarded to such Class-I local supplier subject to matching the L1 price.<\/li><li>In case the lowest eligible Class-I local supplier fails to match the L1 price or accepts less than the offered quantity<\/strong>, the next higher Class-I local supplier within L1+20% shall be invited<\/strong> to match the L1 price for the remaining quantity, and so on, and the contract shall be awarded accordingly.<\/li><li>In case some quantity out of the 50% (for the eligible Class-I Local Suppliers) is still left uncovered, then such balance quantity may also be ordered on the L1 bidder.<\/li><li>Non-divisible procurements and services evaluated on price alone:<\/strong> In the procurements of goods or works covered by para 3(b) above which are not divisible in nature<\/strong>, and in the procurement of services where the bid is evaluated on price alone<\/strong>, the 'Class-I local supplier' shall get purchase preference over 'Class-II local supplier' as well as 'Non-local supplier', as per the following procedure:<\/li><li>Among all qualified bids, the lowest bid will be termed L1. If L1 is a 'Class-I local supplier', the contract will be awarded to L1.<\/strong><\/li><li>If L1 is not a 'Class-I local supplier'<\/strong>, the lowest bidder among the 'Class-I local suppliers' will be invited to match the L1 price<\/strong>, subject to the Class-I local supplier's quoted price falling within the margin of purchase preference (L1+20%<\/strong>), and the contract shall be awarded to such Class-I local supplier subject to matching the L1 price.<\/li><li>In case the lowest eligible Class-I local supplier fails to match<\/strong> the L1 price, the Class-I local supplier with the next higher bid within L1+20% shall be invited<\/strong> to match the L1 price, and so on, and the contract shall be awarded accordingly. In case none of the Class-I local suppliers within the margin of purchase preference matches the L1 price, the contract may be awarded to the L1 bidder.<\/strong><\/li><li>\"Class-II local supplier<\/strong>\" will not get a preference<\/strong> for any procurement undertaken by procuring entities.<\/li><\/ul>\n<h4>4A. Applicability in Tenders where the Contract is to be Awarded to Multiple Bidders<\/span><\/h4>\nIn tenders where the contract is awarded to multiple bidders<\/strong>, subject to matching of L1 rates or otherwise, the 'Class-I local supplier' shall get purchase preference over 'Class-II local supplier' as well as 'Non-local supplier', as per the following procedure:<\/p>\n<ul class=\"lst\"><li>i) In case there is sufficient local capacity and competition<\/strong> for the item to be procured, as notified by the Nodal Ministry, only Class-I local suppliers shall be eligible to bid<\/strong>. As such, the multiple suppliers who would be awarded the contract should be all and only 'Class-I Local suppliers'<\/strong>.<\/li><li>ii) In other cases<\/strong>, 'Class-II local suppliers' and 'Non-local suppliers' may also participate in the tender process along with 'Class-I local suppliers' as per provisions of the Order.<\/li><li>iii) If 'Class-I Local suppliers' qualify for the award of contract for at least 50% of the tendered quantity in any tender, the contract may be awarded to all the qualified bidders as per the award criteria stipulated in the tender documents.<\/li><li>iv) However, in case 'Class-I Local suppliers' do not qualify for the award of contract for at least 50% of the tendered quantity, purchase preference should be given to the 'Class-I local supplier' over Class-II local suppliers\/ Non-local suppliers, provided their quoted rate falls within the 20% margin of purchase preference of the HIGHEST quoted bidder considered for award of contract \u2014 so as to ensure that the Class-I Local suppliers, taken in totality, are considered for award of contract for at least 50% of the tendered quantity.<\/li><li>v) Only those 'Class-I local suppliers' whose quoted rates fall within the 20% margin of purchase preference would be eligible for purchase preference, subject to meeting the prescribed criteria for award of contract as also the constraint of maximum quantity that can be sourced from any single supplier.<\/li><li>First, purchase preference must be given to the lowest quoting eligible 'Class-I local supplier'.<\/li><li>If the lowest quoting Class-I local supplier does not qualify<\/strong> for purchase preference because of the aforesaid constraints, or does not accept the offered quantity<\/strong>, an opportunity may be given to the next higher eligible Class-I local supplier<\/strong>, and so on.<\/li><li>In case the quantity thus allocated to eligible Class-I local suppliers is short of 50%<\/strong> of the tendered quantity, then this shortfall quantity may be distributed among all other qualified bidders<\/strong> as per the award criteria stipulated in the tender documents.<\/li><li>vi) To avoid any ambiguity during the bid evaluation process, the procuring entities may stipulate their own tender-specific criteria<\/strong> for the award of contracts amongst different bidders, including the procedure for purchase preference to 'Class-I local supplier', within the broad policy guidelines stipulated in the sub-paras above.<\/li><\/ul>\n<h4>5.<\/span>Exemption of Small Purchases<\/span><\/h4>\nNotwithstanding anything contained above, procurements where the estimated value to be procured is less than Rs. 5 lakh shall be EXEMPT from the Order. However, it shall be ensured by procuring entities that procurement is not split for the purpose of avoiding the provisions of this Order.<\/p>\n<h4>5A. Exemption in Sourcing of Spares and Consumables of Closed Systems<\/span><\/h4>\nProcurement of spare parts, consumables for closed systems, and Maintenance\/ Service contracts with the Original Equipment Manufacturer\/ Original Equipment Supplier\/ Original Part Manufacturer shall be exempted from this Order.<\/p>\n<h4>6.<\/span>Minimum Local Content<\/span><\/h4>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Minimum Local Content<\/th><\/tr><\/thead><tbody><tr><td>Class-I local supplier<\/td><td>50%<\/td><\/tr><tr><td>Class-II local supplier<\/td><td>20%<\/td><\/tr><\/tbody><\/table><\/div>\nThe Nodal Ministry\/ Department may prescribe only a higher percentage<\/strong> of the minimum local content requirement to categorise a supplier as Class-I\/ Class-II local supplier. For items for which the Nodal Ministry\/ Department has not prescribed a higher minimum local content<\/strong> notification under the Order, it shall be 50% and 20%<\/strong> for Class-I and Class-II local supplier respectively.<\/p>\n<aside class=\"note\">Important: Local content is not related to the nationality of the firm \u2014 a foreign-owned firm may also become a Class-I or Class-II local supplier by adding local value addition.<\/p><\/aside>\n<h4>7.<\/span>Requirement for Declaration\/ Specification in Advance<\/span><\/h4>\nThe minimum local content, the margin of purchase preference, and the procedure for preference to Make in India shall be declared in the Notice Inviting Tenders or other forms of procurement solicitation, and shall not be varied during a particular procurement transaction.<\/p>\n<h4>8.<\/span>Government e-Marketplace<\/span><\/h4>\nIn respect of procurement through GeM, GeM shall, as far as possible, specifically mark the items that meet the minimum local content while registering the item for display, and shall, wherever feasible, make provision for automated comparison with purchase preference and without purchase preference, and for obtaining consent of the local supplier in those cases where purchase preference is to be exercised.<\/p>\n<h4>9.<\/span>Verification of Local Content<\/span><\/h4>\n<ol class=\"lst\"><li>The Class-I\/ Class-II local supplier shall, at the time of tender, bidding or solicitation<\/strong>, be required to indicate the percentage of local content<\/strong> and provide self-certification<\/strong> that the item offered meets the local content requirement for Class-I\/ Class-II local supplier, as the case may be. They shall also give details of the location(s) at which the local value addition is made<\/strong>.<\/li><li>In cases of procurement for a value more than Rs. 10 crore<\/strong>, the Class-I\/ Class-II local supplier shall be required to provide a certificate from the statutory auditor or cost auditor of the company<\/strong> (in the case of companies), or from a practising cost accountant or practising chartered accountant<\/strong> (in respect of suppliers other than companies), giving the percentage of local content<\/strong>.<\/li><li>The bidder shall give self-certification for local content in the quoted item (goods\/ works\/ services) at the time of tendering. However, at the time of execution of the project, for all contracts above INR 10 Crore, the contractor\/ supplier shall be required to give local content certification duly certified by a cost\/ chartered accountant in practice.<\/li><\/ol>\nFor cases where it is not possible<\/strong> to provide certification by Cost\/ Chartered Accountant at the time of execution of the project, the supplier shall be permitted to provide the certificate after completion of the contract<\/strong>, within the limit acceptable to the procuring entity.<\/p>\nIn case the contractor\/ supplier does not meet the stipulated local content requirement and the category of the supplier changes from Class-I to Class-II\/ Non-local, or from Class-II to Non-local \u2014 a penalty up to 10% of the contract value may be imposed. However, the contract once awarded shall not be terminated on this account.<\/p>\n<ol class=\"lst\"><li>Decisions on complaints<\/strong> relating to the implementation of this Order shall be made by the competent authority empowered to investigate procurement-related complaints<\/strong> relating to the procuring entity.<\/li><li>Nodal Ministries may constitute committees with internal and external experts for independent verification of self-declarations and auditor's\/ accountant's certificates \u2014 on a random basis and in the case of complaints.<\/li><li>Nodal Ministries and procuring entities may prescribe fees for such complaints.<\/li><li>False declarations will be in breach of the Code of Integrity under Rule 175(1)(i)(h) of the GFR<\/strong>, for which a bidder or its successors can be DEBARRED for up to two years<\/strong> as per Rule 151(iii) of the GFR<\/strong>, along with such other actions as may be permissible under law. The Department of Expenditure shall issue suitable instructions for the effective and smooth operation of this process, so that:<\/li><li>i) The fact and duration of debarment<\/strong> for violation of the Order by any procuring entity are promptly brought to the notice of the Member-Convenor of the Standing Committee and the Department of Expenditure<\/strong> through the concerned Ministry\/ Department or in some other manner;<\/li><li>ii) On a periodical basis, such cases are consolidated, and a centralised or decentralised list of such suppliers with the period of debarment is maintained and displayed on the website(s);<\/li><li>iii) With respect to procuring entities other than the one that has carried out the debarment, the debarment takes effect PROSPECTIVELY from the date of uploading on the website(s), in such a manner that ongoing procurements are not disrupted;<\/li><li>iv) A supplier who has been debarred by any procuring entity for violation of the Order shall not be eligible for preference under the Order for procurement by any other procuring entity for the duration of the debarment<\/strong>. The debarment for such other procuring entities shall take effect prospectively from the date on which it comes to the notice of other procuring entities<\/strong> in the manner prescribed above.<\/li><\/ol>\n<h4>10.<\/span>Specifications in Tenders and Other Procurement Solicitations<\/span><\/h4>\n<ol class=\"lst\"><li>Every procuring entity shall ensure that the eligibility\/ qualification conditions with respect to previous experience fixed in any tender or solicitation do not require proof of supply in other countries or proof of exports.<\/li><li>Procuring entities shall endeavour to see that eligibility\/ qualification conditions \u2014 including on matters like turnover, production capability, and financial strength<\/strong> \u2014 do not result in unreasonable exclusion of Class-I\/ Class-II local suppliers<\/strong> who would otherwise be eligible, beyond what is essential for ensuring quality or creditworthiness<\/strong> of the supplier.<\/li><li>Procuring entities shall review all existing eligibility norms and conditions<\/strong> with reference to sub-paragraphs (a) and (b) above.<\/li><li>Specifying foreign certifications\/ unreasonable technical specifications\/ brands\/ models in the tender document is a restrictive and discriminatory practice against local suppliers. If foreign certification is required to be stipulated because of the non-availability of Indian Standards and\/or for any other reason, the same shall be done only after written approval of the Secretary of the Department concerned, or any other Authority designated such power by the Secretary of the Department concerned.<\/li><li class=\"srcmark src-multi\" data-src=\" G C \">G<\/span>C<\/span> \"All administrative Ministries\/ Departments whose procurement exceeds Rs. 1000 Crore per annum<\/strong> shall notify\/ update their procurement projections every year<\/strong>, including those of the PSEs\/ PSUs, for the next five years on their respective website<\/strong>.\"<\/li><\/ol>\n<h4>11.<\/span>Reciprocity Clause<\/span><\/h4>\n<ol class=\"lst\"><li>When a Nodal Ministry\/ Department identifies that Indian suppliers of an item are not allowed to participate and\/or compete in procurement by any foreign government due to restrictive tender conditions which have the direct or indirect effect of barring Indian companies \u2014 such as registration in the procuring country, execution of projects of specific value in the procuring country, etc. \u2014 it shall provide such details to all its procuring entities, including CMDs\/ CEOs of PSEs\/ PSUs, State Governments and other procurement agencies under their administrative control, and GeM, for appropriate reciprocal action.<\/li><li>Entities of countries identified by the Nodal Ministry\/ Department as not allowing Indian companies to participate in their Government procurement for any item related to that Nodal Ministry shall not be allowed to participate in Government procurement in India for all items related to that Nodal Ministry\/ Department, except for the list of items published by the Ministry\/ Department permitting their participation.<\/li><li>The stipulation in (b) above shall be part of all tenders invited by the Central Government procuring entities<\/strong> stated in (a) above. All purchases on GeM shall also necessarily have the above provisions<\/strong> for items identified by the Nodal Ministry\/ Department.<\/li><li>State Governments should be encouraged to incorporate similar provisions in their respective tenders.<\/li><li>The term 'entity<\/strong>' of a country shall have the same meaning as under the FDI (Foreign Direct Investment) Policy of DPIIT<\/strong>, as amended from time to time.<\/li><\/ol>\n<h4>12.<\/span>Action for Non-Compliance with the Provisions of the Order<\/span><\/h4>\nIn case restrictive or discriminatory conditions against domestic suppliers are included in tender documents, an inquiry shall be conducted by the Administrative Department undertaking the procurement (including procurement by any entity under its administrative control) to fix responsibility for the same. Thereafter, appropriate action \u2014 administrative or otherwise \u2014 shall be taken against erring officials of procuring entities under relevant provisions. Intimation on all such actions shall be sent to the Standing Committee.<\/p>\n<h4>13.<\/span>Assessment of Supply Base by Nodal Ministries<\/span><\/h4>\nThe Nodal Ministry shall keep in view the domestic manufacturing\/ supply base and assess the available capacity and the extent of local competition while identifying items and prescribing the higher minimum local content or the manner of its calculation \u2014 with a view to avoiding cost increase from the operation of this Order.<\/p>\n<h4>14.<\/span>Increase in Minimum Local Content<\/span><\/h4>\nThe Nodal Ministry may annually review the local content requirements with a view to INCREASING them, subject to the availability of sufficient local competition with adequate quality.<\/p>\n<h4>15.<\/span>Manufacture under Licence\/ Technology Collaboration Agreements with Phased Indigenisation<\/span><\/h4>\n<ol class=\"lst\"><li>While notifying the minimum local content, Nodal Ministries may make special provisions for exempting suppliers from meeting the stipulated local content if the product is being manufactured in India under a licence from a foreign manufacturer who holds intellectual property rights, and where there is a technology collaboration agreement\/ transfer of technology agreement for indigenous manufacture of a product developed abroad with clear phasing of increase in local content.<\/li><li>In the procurement of all goods, services or works in respect of which there is a substantial quantity of public procurement, and for which the Nodal Ministry has not notified that there is sufficient local capacity and local competition, the concerned Nodal Ministry shall notify an upper threshold value of procurement beyond which foreign companies shall enter into a JOINT VENTURE with an Indian company to participate in the tender. Procuring entities, while procuring such items beyond the notified threshold value, shall prescribe in their respective tenders that foreign companies may enter into a joint venture with an Indian company to participate in the tender. The procuring Ministries\/ Departments shall also make special provisions to exempt such joint ventures from meeting the stipulated minimum local content requirement, which shall be increased in a phased manner.<\/li><\/ol>\n<h4>16.<\/span>Powers to Grant Exemption and to Reduce Minimum Local Content<\/span><\/h4>\n<ol class=\"lst\"><li>The Administrative Department undertaking the procurement (including procurement by any entity under its administrative control), with the approval of their Minister-in-charge, may \u2014 by written order, for reasons to be recorded in writing:<\/li><li>i) reduce the minimum local content below the prescribed level; or<\/li><li>ii) reduce the margin of purchase preference below 20 per cent; or<\/li><li>iii) exempt any item or supplying entities from the operation of this Order or any part of the Order.<\/li><li>The Administrative Department, while seeking exemption under this para, shall certify that such item(s) has not been notified by the Nodal Ministry\/ Department concerned.<\/li><li>A copy of every such order shall be provided to the Standing Committee and the concerned Nodal Ministry\/ Department. The Nodal Ministry\/ Department will continue to have the power to vary its notification on Minimum Local Content.<\/li><\/ol>\n<h4>17.<\/span>Directions to Government Companies<\/span><\/h4>\nWith respect to Government companies and other procuring entities not governed by the General Financial Rules, the administrative Ministry or Department shall issue policy directions requiring compliance with this Order.<\/p>\n<h4>18.<\/span>Standing Committee<\/span><\/h4>\n<ol class=\"lst\"><li>A Standing Committee<\/strong> is constituted with the following membership:<\/li><\/ol>\n<div class=\"tblwrap\"><table><thead><tr><th>Position<\/th><th>Member<\/th><\/tr><\/thead><tbody><tr><td>Chairman<\/td><td>Secretary, Department for Promotion of Industry and Internal Trade (DPIIT)<\/td><\/tr><tr><td>Member<\/td><td>Secretary, Commerce<\/td><\/tr><tr><td>Member<\/td><td>Secretary, Ministry of Electronics and Information Technology<\/td><\/tr><tr><td>Member<\/td><td>Joint Secretary (Public Procurement), Department of Expenditure<\/td><\/tr><tr><td>Member-Convenor<\/td><td>Joint Secretary (DPIIT)<\/td><\/tr><\/tbody><\/table><\/div>\n<ol class=\"lst\"><li>The Secretary of the Department concerned with a particular item shall be a member<\/strong> in respect of issues relating to such item. The Chairman of the Committee may co-opt technical experts<\/strong> as relevant to any issue or class of issues under its consideration.<\/li><\/ol>\n<h4>19.<\/span>Functions of the Standing Committee<\/span><\/h4>\nThe Standing Committee shall meet as often as necessary, but not less than once every six months. The Committee:<\/p>\n<ol class=\"lst\"><li>shall oversee the implementation<\/strong> of this Order and the issues arising from it, and make recommendations<\/strong> to Nodal Ministries and procuring entities;<\/li><li>shall annually assess and periodically monitor compliance with this Order;<\/li><li>shall identify Nodal Ministries and the allocation of items among them for the issue of notifications on minimum local content;<\/li><li>may require the furnishing of details or returns<\/strong> regarding compliance with this Order and related matters;<\/li><li>may, during the annual review or otherwise, assess issues where the manner of implementation of the Order results in any restrictive practices, cartelisation, or increase in public expenditure, and suggest remedial measures;<\/li><li>may examine cases covered by para 15 above relating to manufacture under licence\/ technology transfer agreements, with a view to satisfying itself that adequate mechanisms exist for enforcement of such agreements and for attaining the underlying objective of progressive indigenisation;<\/li><li>may consider any other issue<\/strong> relating to this Order that may arise.<\/li><\/ol>\n<h4>20.<\/span>Removal of Difficulties<\/span><\/h4>\nMinistries\/ Departments and the Boards of Directors of Government companies<\/strong> may issue such clarifications and instructions<\/strong> as may be necessary for the removal of any difficulties<\/strong> arising in the implementation of the Order.<\/p>\n<h4>21.<\/span>Ministries Having Existing Policies<\/span><\/h4>\nWhere any Ministry or Department has its own policy for preference to local content approved by the Cabinet after 1st January 2015<\/strong>, such policies will PREVAIL over the provisions of the Order<\/strong>. All other existing orders on preference to local content shall be reviewed by the Nodal Ministries and revised as needed<\/strong>(W<\/span> adds: \"to conform to this Order, within two months of the issue of this Order\")<\/em>.<\/p>\n<h4>22.<\/span>Faqs<\/span><\/h4>\nPlease refer to the FAQs related to the PPP-MII Order issued by DPIIT.<\/p>\n<aside class=\"note\">Annexure references:<\/strong>G<\/span> Annexure 28 \u00b7 W<\/span> Annexure 18 \u00b7 C<\/span> Annexure 26 \u00b7 NC<\/span> Annexure 22.<\/p><\/aside>\n<h3>1.11.4<\/span>Restrictions\/ Prior Registration on Entities from a Class of Countries<\/span><\/h3>\n(Rule 144(xi), GFR 2017 \u2014 the \"Land Border\" Order)<\/em><\/p>\n<h4>1.<\/span>Requirement of Registration<\/span><\/h4>\nRule 144 of GFR, 2017 has been amended to include a new sub-para (xi)<\/strong> as follows:<\/p>\n<aside class=\"note\">\"Notwithstanding anything contained in these Rules, the Department of Expenditure may, by order in writing, impose restrictions, including prior registration and\/or screening, on procurement from bidders from, or bidders having commercial arrangements with an entity from, a country or countries, or a class of countries, on grounds of defence of India, or matters directly or indirectly related thereto including national security; No procurement shall be made in violation of such restrictions.\"<\/p><\/aside>\n<h4>2.<\/span>Detailed Provisions<\/span><\/h4>\n(Notified by the Department of Expenditure's OM No. F.7\/10\/2021-PPD(1) dated 23.02.2023)<\/em><\/p>\n<ol class=\"lst\"><li>Any bidder from a country that shares a land border with India will be eligible to bid in any procurement \u2014 whether of goods, services (including consultancy services and non-consultancy services) or works (including turnkey projects) \u2014 only IF the bidder is REGISTERED with the Competent Authority (see sub-para 10 below).<\/li><li>Any bidder (including an Indian bidder) who has a Specified Transfer of Technology (ToT) arrangement with an entity from a country that shares a land border with India<\/strong> will be eligible to bid in any procurement \u2014 whether of goods, services (including consultancy and non-consultancy services) or works (including turnkey projects) \u2014 only if the bidder is registered with the Competent Authority<\/strong>. (See also sub-para 5 below.)<\/li><li>Effective dates:<\/li><\/ol>\n<div class=\"tblwrap\"><table><thead><tr><th>Provision<\/th><th>Applicable from<\/th><\/tr><\/thead><tbody><tr><td>Registration for bidders under para (a)<\/td><td>23.07.2020<\/td><\/tr><tr><td>Registration for bidders under para (b) \u2014 ToT arrangements<\/td><td>All procurements where tenders are issued\/ published after 01.04.2023<\/td><\/tr><\/tbody><\/table><\/div>\n<ol class=\"lst\"><li>In tenders issued after 23.07.2020 or 01.04.2023, as the case may be, the requirements for registration of bidders and other relevant provisions of this Order shall be incorporated in the tender conditions.<\/li><\/ol>\n<h4>3.<\/span>Applicability<\/span><\/h4>\nApart from Ministries\/ Departments, attached and subordinate bodies, notwithstanding anything contained in Rule 1 of the GFRs 2017<\/strong>, the Order shall also<\/strong> be applicable:<\/p>\n<ol class=\"lst\"><li>to all Autonomous Bodies;<\/li><li>to public sector banks and public sector financial institutions;<\/li><li>to all Central Public Sector Enterprises;<\/li><li>to all procurement in Public Private Partnership projects receiving financial support from the Government or public sector enterprises\/ undertakings;<\/li><li>to Union Territories, the National Capital Territory of Delhi, and all agencies\/ undertakings thereof.<\/li><\/ol>\nf) The Order is not applicable:<\/p>\n<ul class=\"lst\"><li>i) In projects that receive international funding with the approval of the Department of Economic Affairs (DEA)<\/strong>, Ministry of Finance \u2014 the procurement guidelines applicable to the project shall normally be followed, notwithstanding anything contained in this Order and without reference to the Competent Authority<\/strong>. Exceptions to this shall be decided in consultation with DEA.<\/strong><\/li><li>ii) On procurements made by Indian missions and by offices of government agencies\/ undertakings located outside India.<\/li><li>iii) On bidders (or entities) from those countries \u2014 even if sharing a land border with India \u2014 to which the Government of India has extended lines of credit, or in which the Government of India is engaged in development projects. Updated lists are given on the Ministry of External Affairs' website.<\/li><li>iv) On procurement of spare parts and other essential service support like AMC\/ CMC, including consumables for closed systems, from Original Equipment Manufacturers (OEMs) or their authorised agents<\/strong> \u2014 exempted from the requirement of registration as mandated under Rule 144(xi) of GFR, 2017 (Notified vide OM No. F.12\/1\/2021-PPD(Pt.) dated 02.03.2021)<\/em>.<\/li><li>v) A bidder is permitted to procure raw materials, components, sub-assemblies, etc. from vendors from countries that share a land border with India. Such vendors will not be required to be registered with the Competent Authority, as it is not regarded as \"sub-contracting\". However, if a bidder proposes to supply FINISHED GOODS procured directly\/ indirectly from vendors from countries sharing a land border with India, such vendors WILL be required to be registered with the Competent Authority (Notified vide OM No. F.18\/37\/2020-PPD dated 08.02.2021)<\/em>.<\/li><\/ul>\n<h4>4.<\/span>Definitions<\/span><\/h4>\na) \"Bidder\"<\/strong> \u2014 for the purpose of the Order (including the terms 'bidder<\/strong>', 'consultant<\/strong>', 'vendor<\/strong>' or 'service provider<\/strong>' in certain contexts) means any person, firm or company, including any member of a consortium or joint venture<\/strong> (that is, an association of several persons, or firms or companies), every artificial juridical person<\/strong> not falling in any of the descriptions of bidders stated hereinbefore, including any agency, branch or office controlled by such person<\/strong>, participating in a procurement process.<\/p>\nb) \"Tender\"<\/strong> \u2014 for the purpose of the Order will include other forms of procurement<\/strong>, except where the context requires otherwise.<\/p>\nc) \"Transfer of Technology\" \u2014 means dissemination and transfer of all forms of commercially usable knowledge, such as transfer of know-how, skills, technical expertise, designs, processes and procedures, and trade secrets, which enables the acquirer of such technology to perform activities using the transferred technology independently.<\/p>\n<aside class=\"note\">Matters of interpretation of this term shall be referred to the Registration Committee constituted by DPIIT<\/strong>, and the interpretation of the Committee shall be final<\/strong>.<\/em><\/p><\/aside>\nd) \"Specified Transfer of Technology\" \u2014 means a transfer of technology in the sectors and\/or technologies specified in sub-para 5 below, occurring on or after 23.07.2020.<\/p>\ne) \"Bidder (or entity) from a country which shares a land border with India\" \u2014 means:<\/p>\n<ul class=\"lst\"><li>i) An entity incorporated, established, or registered in such a country; or<\/li><li>ii) A subsidiary<\/strong> of an entity incorporated, established, or registered in such a country; or<\/strong><\/li><li>iii) An entity substantially controlled through entities<\/strong> incorporated, established, or registered in such a country; or<\/strong><\/li><li>iv) An entity whose beneficial owner is situated in such a country; or<\/li><li>v) An Indian (or other) AGENT of such an entity; or<\/li><li>vi) A natural person who is a citizen of such a country; or<\/li><li>vii) A consortium or joint venture where any member<\/strong> of the consortium or joint venture falls under any of the above.<\/li><\/ul>\nf) \"Agent\" \u2014 for the purpose of the Order, is a person employed to do any act for another, or to represent another in dealings with third persons.<\/p>\n<aside class=\"note\">Notes:<\/p>\n1. A person who procures and supplies FINISHED GOODS from an entity from a country that shares a land border with India will \u2014 regardless of the nature of his legal or commercial relationship with the producer of the goods \u2014 be deemed to be an AGENT for the purpose of this Order.<\/p>\n2. However, a bidder who only procures raw material, components, etc. from an entity from a country that shares a land border with India and then manufactures or converts them into other goods will not be treated as an Agent.<\/p><\/aside>\ng) \"Beneficial owner\"<\/strong> \u2014 for the purposes of point (e)(iv) will be as follows:<\/p>\n<ul class=\"lst\"><li>i) In the case of a company or Limited Liability Partnership, the beneficial owner is the natural person(s) who, whether acting alone or together, or through one or more juridical person(s), has a controlling ownership interest, or who exercises CONTROL through other means.<\/li><\/ul>\n<aside class=\"note\">Explanation:<\/p>\n<ol class=\"lst\"><li>\"Controlling ownership interest<\/strong>\" means ownership of, or entitlement to, more than twenty-five per cent (25%)<\/strong> of shares or capital or profits of the company;<\/li><li>\"Control\" shall include the right to appoint the majority of the directors, or to control the management or policy decisions \u2014 including by virtue of their shareholding or management rights or shareholders' agreements or voting agreements.<\/li><\/ol><\/aside>\n<ul class=\"lst\"><li>ii) In the case of a partnership firm<\/strong>, the beneficial owner is the natural person(s) who, whether acting alone or together, or through one or more juridical persons, has ownership of\/ entitlement to more than fifteen per cent (15%) of capital or profits<\/strong> of the partnership.<\/li><li>iii) In the case of an unincorporated association or body of individuals<\/strong>, the beneficial owner is the natural person(s) who, whether acting alone or together, or through one or more juridical persons, has ownership of or entitlement to more than fifteen per cent (15%) of the property or capital or profits<\/strong> of such association or body of individuals.<\/li><li>iv) Where NO natural person is identified under (i), (ii) or (iii) above, the beneficial owner is the relevant natural person who holds the position of senior managing official.<\/li><li>v) In the case of a TRUST<\/strong>, the identification of beneficial owner(s) shall include identification of:<\/li><li>the author of the trust,<\/li><li>the trustee,<\/li><li>the beneficiaries with fifteen per cent (15%) or more interest in the trust, and<\/li><li>any other natural person exercising ultimate effective control over the trust through a chain of control or ownership.<\/li><li>vi) To determine nationality<\/strong> while assessing the beneficial ownership of the bidder, the nationality mentioned in the beneficial owner's PASSPORT<\/strong> should be considered. In case of the possibility of dual citizenship<\/strong>, nationality on all the passports should be considered through a suitable declaration<\/strong>. If nationality in any of the passports<\/strong> of the person whose beneficial ownership is being assessed is recorded to be from a country sharing a land border with India, the provisions contained under this Order shall apply<\/strong>.<\/li><\/ul>\n<aside class=\"note\">Hong Kong and Macau are to be considered as part of China for the purpose of this Order.<\/p><\/aside>\n<h4>5.<\/span>Sensitive Sectors\/ Technologies<\/span><\/h4>\n(Relevant only for the provisions on ToT arrangements \u2014 refer sub-para 2(b) above)<\/em><\/p>\n<ol class=\"lst\"><li>Certain sectors and technologies have been identified as sensitive from the national security point of view:<\/li><li>Sectors listed in Schedule I \u2192 Category-I sensitive sectors<\/li><li>Sectors listed in Schedule II \u2192 Category-II sensitive sectors<\/li><li>Technologies listed in Schedule III \u2192 sensitive technologies<\/li><\/ol>\nList of Category-I Sensitive Sectors (Schedule-I)<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>S. No.<\/th><th>Sector<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Atomic Energy<\/td><\/tr><tr><td>2<\/td><td>Broadcasting\/ Print and Digital Media<\/td><\/tr><tr><td>3<\/td><td>Defence<\/td><\/tr><tr><td>4<\/td><td>Space<\/td><\/tr><tr><td>5<\/td><td>Telecommunications<\/td><\/tr><\/tbody><\/table><\/div>\nList of Category-II Sensitive Sectors (Schedule-II)<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>S. No.<\/th><th>Sector<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Power and Energy (including exploration\/ generation\/ transmission\/ distribution\/ pipeline)<\/td><\/tr><tr><td>2<\/td><td>Banking and Finance, including Insurance<\/td><\/tr><tr><td>3<\/td><td>Civil Aviation<\/td><\/tr><tr><td>4<\/td><td>Construction of ports and dams & river valley projects<\/td><\/tr><tr><td>5<\/td><td>Electronics and Microelectronics<\/td><\/tr><tr><td>6<\/td><td>Meteorology and Ocean Observation<\/td><\/tr><tr><td>7<\/td><td>Mining and extraction (including deep sea projects)<\/td><\/tr><tr><td>8<\/td><td>Railways<\/td><\/tr><tr><td>9<\/td><td>Pharmaceuticals & Medical Devices<\/td><\/tr><tr><td>10<\/td><td>Agriculture<\/td><\/tr><tr><td>11<\/td><td>Health<\/td><\/tr><tr><td>12<\/td><td>Urban Transportation<\/td><\/tr><\/tbody><\/table><\/div>\nList of Sensitive Technologies (Schedule-III)<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>S. No.<\/th><th>Technology<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Additive Manufacturing (e.g., 3D Printing)<\/td><\/tr><tr><td>2<\/td><td>Any equipment having electronic programmable components or autonomous systems (e.g., SCADA systems)<\/td><\/tr><tr><td>3<\/td><td>Any technology used for uploading and streaming data, including broadcasting, satellite communication, etc.<\/td><\/tr><tr><td>4<\/td><td>Chemical Technologies<\/td><\/tr><tr><td>5<\/td><td>Biotechnologies, including Genetic Engineering and Biological Technologies<\/td><\/tr><tr><td>6<\/td><td>Information and Communication Technologies<\/td><\/tr><tr><td>7<\/td><td>Software<\/td><\/tr><\/tbody><\/table><\/div>\n<ol class=\"lst\"><li>For Category-I sensitive sectors<\/strong>, bidders with a ToT arrangement in any technology<\/strong> with an entity from a country that shares a land border with India shall require registration<\/strong>.<\/li><li>For Category-II sensitive sectors<\/strong>, bidders with a ToT arrangement in the sensitive technologies listed in Schedule III<\/strong> with an entity from a country that shares a land border with India shall require registration<\/strong>.<\/li><li>In Category-II sensitive sectors, the Secretary (or an officer not below the rank of Joint Secretary to the Government of India, so authorised by the Secretary) of the Ministry\/ Department of the Government of India is empowered, after due consideration, to WAIVE the requirement of registration for a particular item\/ application or a class of items\/ applications, even if included in Schedule III. The Ministry\/ Department concerned shall INFORM DPIIT and the National Security Council Secretariat (NSCS) of their decision to waive the requirement of registration. Ministries\/ Departments are not required to consult DPIIT\/ nscs before deciding, and are only required to inform DPIIT\/ nscs of the decision. If DPIIT\/ NSCS raises any point, it should be considered in future procurements, and the ongoing procurement for which the waiver was granted need not be interrupted or altered.<\/li><li>Based on security considerations<\/strong>, a Ministry\/ Department in a Category-II sensitive sector, or other Ministries\/ Departments, may recommend to DPIIT the inclusion of any other technology in the list of sensitive technologies<\/strong> \u2014 either generally or for their Ministry\/ Department.<\/li><\/ol>\n<h4>6.<\/span>Sub-contracting in Works Contracts<\/span><\/h4>\nIn works contracts, including turnkey contracts, contractors shall not be allowed to sub-contract works to any contractor from a country that shares a land border with India unless such contractor is REGISTERED with the Competent Authority. The definition of \"contractor from a country which shares a land border with India\" shall be as in sub-para 4(e) above. This shall not apply to sub-contracts already awarded on or before the date of the Order (i.e., 23rd July 2020).<\/p>\n<aside class=\"note\">[Note: Procurement of raw material, components, etc. does not constitute sub-contracting.]<\/p><\/aside>\n<h4>7.<\/span>Model Clauses\/ Certificate Regarding Compliance<\/span><\/h4>\nAn undertaking\/ certificate shall be taken from bidders in the tender documents that the extant guidelines for participation in the tenders (which should include conditions for implementation of this Order) have been complied with. If such a certificate is given by a bidder whose bid is accepted and is found to be FALSE, this would be grounds for DEBARMENT and further legal action in accordance with law.<\/p>\nModel Clauses and Model Certificates<\/strong>, which may be inserted in tenders\/ obtained from Bidders, are given in the Annexures. While adhering to the substance<\/strong> of the Order, procuring entities are free to appropriately modify the wording of these clauses<\/strong> based on their past experience, local needs, etc.<\/p>\n<aside class=\"note\">Annexure references:<\/strong>G<\/span> Annexure 33 \u00b7 W<\/span> Annexure 19 \u00b7 C<\/span> Annexure 17 \u00b7 NC<\/span> Annexure 11.<\/p><\/aside>\n<h4>8.<\/span>Validity of Registration<\/span><\/h4>\n<ul class=\"lst\"><li>With respect to tenders, registration should be valid at the time of SUBMISSION of bids AND at the time of ACCEPTANCE of bids.<\/li><li>With respect to supplies other than by tender, registration should be valid at the time of placement of the order.<\/li><li>If the bidder was validly registered at the time of acceptance\/ placement of the order, registration shall not be a relevant consideration during contract execution.<\/li><\/ul>\n<h4>9.<\/span>Government e-Marketplace<\/span><\/h4>\nGeM shall REMOVE non-compliant entities from GeM unless\/ until they are registered in accordance with this Order.<\/p>\n<h4>10.<\/span>Competent Authority and Procedure for Registration<\/span><\/h4>\n<ol class=\"lst\"><li>The Competent Authority<\/strong> for the purpose of registration under this Order shall be the Registration Committee constituted by DPIIT<\/strong>(Notified vide OM No. F.6\/18\/2019-PPD issued by Department of Expenditure dated 23.07.2020)<\/em>.<\/li><\/ol>\n<aside class=\"note\">Footnote on States: (i) In respect of application of the Order to procurement by\/ under State Governments, all functions assigned to DPIIT shall be carried out by the State Government concerned through a specific department or authority designated by it. The composition of the Registration Committee shall be as decided by the State Government. However, the requirement of political and security clearance as per para 10(d) shall remain, and no registration shall be granted without such clearance. (ii) Registration granted by State Governments shall be valid only for procurement by that State Government and its agencies\/ public enterprises etc., and shall not be valid for procurement in other states or by the Government of India and their agencies\/ public enterprises etc.<\/p><\/aside>\n<ol class=\"lst\"><li>The Registration Committee<\/strong> shall have the following members:<\/li><li>i) An officer not below the rank of Joint Secretary, designated for this purpose by DPIIT, who shall be the Chairperson;<\/li><li>ii) Officers (ordinarily not below the rank of Joint Secretary) representing the Ministry of Home Affairs, Ministry of External Affairs, and those Departments whose sectors are covered by applications under consideration;<\/li><li>iii) Any other officer whose presence is deemed necessary by the Chairperson of the Committee.<\/li><li>DPIIT has laid down the method of application, format, etc. for such bidders as covered by the Order.<\/li><li>On receipt of an application seeking registration from a bidder covered by sub-para 2(a) and 2(b) above, the Competent Authority shall first seek POLITICAL and SECURITY CLEARANCES from the Ministry of External Affairs and Ministry of Home Affairs<\/strong>, as per guidelines issued from time to time. Registration shall not be given unless political and security clearance have both been received.<\/strong><\/li><li>The Ministry of External Affairs and Ministry of Home Affairs may issue guidelines for internal use regarding the procedure for scrutiny of such applications.<\/li><li>The decision of the Competent Authority to register such bidder may be for all kinds of tenders or for a specified type(s) of goods or services, and may be for a specified or unspecified duration of time, as deemed fit. The decision of the Competent Authority shall be final.<\/li><li>Registration granted by the Competent Authority of the Government of India shall be valid not only for procurement by the Central Government and its bodies specified in sub-para 3 above, BUT also for procurement by State Governments and their agencies\/ public enterprises, etc. No fresh registration at the State level shall be required.<\/li><li>The Competent Authority is empowered to CANCEL the registration already granted if it determines that there is sufficient cause. Such cancellation by itself, however, will not affect the execution of contracts already awarded. Pending cancellation, it may also SUSPEND the registration of a bidder, and the bidder shall not be eligible to bid in any further tenders during the period of suspension.<\/li><li>For national security reasons, the Competent Authority shall not be required to give reasons for rejection\/ cancellation of registration of a bidder.<\/li><\/ol>\n<h4>11.<\/span>Clarifications Regarding Applicability of the Restrictions under Rule 144(xi)<\/span><\/h4>\n<ol class=\"lst\"><li>Proprietary purchases are not excluded<\/strong> from the provisions of Rule 144(xi) of GFR, 2017.<\/li><li>The rule is applicable to all purchases irrespective of the order value.<\/li><li>Sub-contracting is not permitted<\/strong> by any contractor to a contractor from a country sharing a land border with India unless registered with the competent authority<\/strong>. However, it is to be noted that procurement of raw materials, components, sub-assemblies, etc. does not constitute sub-contracting<\/strong>. In case a bidder has proposed to supply finished goods<\/strong> procured directly\/ indirectly from vendors from countries that share a land border with India, such vendor will be required to be registered<\/strong> with the Competent Authority.<\/li><li>There is NO bar on the contractor from procuring raw material from a firm that has been ACQUIRED by another firm belonging to a country that shares a land border with India.<\/li><li>Contract Manufacturing outside India: If the bidder is getting the subject product manufactured outside India, this is treated as contract manufacturing, and the beneficial ownership of the actual manufacturing entity must be verified. If the actual manufacturer does not meet the beneficial ownership criteria \u2014 then the bidder must submit DPIIT registration of such manufacturer to participate in the procurement.<\/li><li>The Hiring of Services:<\/strong> Suppose a Bidder (Indian\/ Foreign) who is not<\/strong> from a country sharing a land border with India offers services to a procuring entity by arranging equipment from another company<\/strong>. Then the following scenarios may appear:<\/li><\/ol>\n<div class=\"tblwrap\"><table><thead><tr><th>S. No.<\/th><th>Scenario<\/th><th>Applicability of Rule 144(xi)<\/th><\/tr><\/thead><tbody><tr><td>a)<\/td><td>The equipment\/ goods have been purchased or will be purchased from a company (manufacturer) from a country that shares a land border with India.<\/td><td>The bidder has procured certain goods<\/strong> to offer the requisite services to a procuring entity. In such case, the bidder does not fall within the definition of the term \"bidder\"<\/strong> as defined under para 4(e) above. Hence, the provisions of Rule 144(xi) of GFR, 2017 do not apply<\/strong> to this case.<\/td><\/tr><tr><td>b)<\/td><td>By entering into an MOU\/ lease agreement with the company (who OWNS the equipment\/ goods) from a country that shares a land border with India.<\/td><td>Here, the bidding vendor proposes to hire services from a company that belongs to a country that shares a land border with India<\/strong>. This prima facie<\/em> becomes a case of INDIRECT SUPPLY of services<\/strong> by a company that owns the equipment\/ goods by introducing an intermediary<\/strong>. The intermediary merely acts as an AGENT<\/strong> to the company providing services of the equipment. In such a case, the company owning the equipment and indirectly supplying the services shall be required to be registered<\/strong> with the competent authority \u2014 thereby requiring the fulfilment of the provisions of Rule 144(xi).<\/td><\/tr><tr><td>c)<\/td><td>By entering into an MOU\/ lease agreement with company 'X' (the present owner of the equipment) from a country that does not share a land border with India. The equipment has been purchased from the manufacturer company 'Y', which is from a country that SHARES a land border with India.<\/td><td>In this case, the actual supplier of services, prima facie<\/em>, shall be 'X'. The status of 'X' in this case does not attract the provisions of Rule 144(xi).<\/td><\/tr><\/tbody><\/table><\/div>\n<h4>12.<\/span>Illustrative Examples of the Applicability of Restrictions under Rule 144(xi)<\/span><\/h4>\na) The \"sister company \/ offshore production unit\" example:<\/p>\nA vendor, say 'Party A' from India, is procuring an item from their sister company 'Party B', which is registered in a country that does not share a land border with India. Both Party A and Party B are owned by an entity, say 'Party C'. Party C does not belong to a country sharing a land border with India. However, Party B has its production facility in a country sharing a land border with India, and the manufactured item will be procured by Party A from Party B from that production facility. The production unit is wholly owned by Party B.<\/p>\nParty A claims that Rule 144(xi) does not apply to it because neither Party A nor Party B is:<\/p>\n<ul class=\"lst\"><li>i) An entity incorporated, established or registered in such a country \u2014 as Party A is registered in India and Party B is registered in a country not sharing a land border with India;<\/li><li>ii) A subsidiary of an entity incorporated, established or registered in such a country \u2014 as they are 100% owned subsidiaries of Party C, which is incorporated, registered and established in a country not sharing a land border with India;<\/li><li>iii) An entity controlled through entities incorporated, established or registered in such a country \u2014 as they are 100% owned by Party C;<\/li><li>iv) An entity whose beneficial owner is situated in such a country \u2014 as their beneficial owner is Party C;<\/li><li>v) An Indian (or other) agent of such an entity;<\/li><li>vi) A natural person who is a citizen of such a country;<\/li><li>vii) A consortium or joint venture where any member falls under any of the above \u2014 though it has a wholly owned subsidiary<\/strong> in a country that shares a land border with India, it is not a JV or consortium<\/strong> (a subsidiary does not qualify as a JV or consortium<\/strong>);<\/li><li>viii) In addition, Party A claims that they are not procuring finished goods directly\/ indirectly from vendors from countries sharing land borders with India, as the item is being manufactured in their own production units.<\/li><\/ul>\n<aside class=\"note\">ix) clarification:<\/strong> In light of the above facts and claims, it is important to clarify to procurers that Party A acts as an AGENT for Party B<\/strong>, which manufactures goods in a country sharing a land border with India. Party B supplies goods manufactured at premises established in a country that shares a land border with India.<\/strong> In such a case, registration is required for party b<\/strong> (and not necessarily for Party A<\/strong>, who is only an agent and not from a country sharing a land border with India).<\/p><\/aside>\nb) IT goods and services examples:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Scenario<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>i) The contractor is only supplying the servers as-is from an OEM that belongs to a country sharing a land border with India, and there is NO value addition done by the contractor<\/td><td>The contractor acts as an AGENT for the OEM, and registration of both the OEM and the agent (contractor) is required as per Rule 144(xi) of GFR 2017.<\/td><\/tr><tr><td>ii) The contractor supplies value-added services on hardware and the contractor outsources the procurement of hardware<\/td><td>OEM registration is not required.<\/td><\/tr><tr><td>iii) There is deployment of IT services that includes both hardware and software customisation, and the contractor has sourced hardware which is made in the country sharing a land border with India<\/td><td>The requirement of registration as per Rule 144(xi) is not applicable.<\/td><\/tr><\/tbody><\/table><\/div>\n<h3>1.11.5<\/span>Support to Start-up Enterprises<\/span><\/h3><h4>1.<\/span>Definition of Start-up Enterprises<\/span><\/h4>\n<ol class=\"lst\"><li>As defined by DPIIT<\/strong>, an entity shall be considered a 'Start-up<\/strong>':<\/li><li>i) Up to a period of ten YEARS from the date of incorporation\/ registration<\/strong>, if it is incorporated as a private limited company<\/strong> (as defined in the Companies Act, 2013) or<\/strong> registered as a partnership firm<\/strong> (registered under section 59 of the Partnership Act, 1932) or<\/strong> a limited liability partnership<\/strong> (under the Limited Liability Partnership Act, 2008) in India<\/strong>; and<\/strong><\/li><li>ii) Turnover of the entity for any of the financial years since incorporation\/ registration has not exceeded one hundred crore rupees; and<\/li><li>iii) The entity works towards INNOVATION, DEVELOPMENT, or IMPROVEMENT of products, processes, or services, or a scalable business model with a high potential for EMPLOYMENT GENERATION or WEALTH CREATION.<\/li><li>Provided that an entity formed by SPLITTING UP or RECONSTRUCTING an existing business shall not be considered a 'Start-up'.<\/li><li>Provided further that<\/strong>, in order to obtain benefits, a Start-up so identified under the above definition shall be required to be RECOGNISED as a Start-up by DPIIT<\/strong>.<\/li><\/ol>\n<h4>2.<\/span>Support to Start-ups<\/span><\/h4>\nThe Government of India has ordered the following support to Start-ups (as defined by DPIIT):<\/p>\na) Exemption from submission of Bid Security: Such Start-ups shall be EXEMPTED from payment\/ submission of Earnest Money Deposit\/ Bid Security.<\/p>\nb) Relaxation in Prior Turnover and Experience: The Procuring Entity reserves its right to relax the condition of prior turnover and prior experience for start-up enterprises recognised by DPIIT, subject to meeting quality & technical specifications. Start-ups may be MSMEs\/ MSEs or otherwise. Such relaxation can be provided in the case of procurement of works as well.<\/p>\nIt is further clarified that such relaxation is not optional but normally has to be ensured, except in the case of procurement of items related to public safety, health, critical security operations and equipment, etc., where adequate justification exists for the Procuring Entity not to relax such criteria. The decision of the Procuring Entity in this regard shall be final. (Rule 173(i) of GFR 2017.)<\/p>\n<aside class=\"note\">Footnote:<\/strong> Such relaxation can be PARTIAL<\/strong> \u2014 e.g., 25% relaxation<\/strong> over specified turnover and experience.<\/p>\nW<\/span>C<\/span> additional clarification: The <\/strong>benefits under Start-up policy will be applicable only for the particular industry\/ sector for which they are registered with DPIIT (<\/strong>necessary certificate to be obtained from the bidder in this regard).<\/p><\/aside>\n<h3 class=\"src-multi srchead\" data-src=\" G W \">1.11.6<\/span>Domestically Manufactured Iron & Steel Products (DMI&SP) Policy<\/span>G<\/span>W<\/span><\/h3><div class=\"srcblock src-multi\" data-src=\" G W \" data-label=\"Goods + Works only\">\n<aside class=\"note\">Critical note for students:<\/strong> The two Manuals reproduce two different versions<\/strong> of this Policy.<\/p>\n<ul class=\"lst\"><li>The Goods Manual, 2024<\/strong> reproduces the DMI&SP Policy, 2019<\/strong> (first notified May 2017, revised May 2019, amended December 2020, extended by Ministry of Steel notification dated 8 March 2024 till November 2024).<\/li><li>The Works Manual, 2025 reproduces the DMI&SP Policy \u2014 REVISED, 2025, notified by the Ministry of Steel vide notification no. G.S.R. 341(E) dated 26th May 2025, and presents it as applicable to EPC tenders.<\/li><\/ul>\nThe 2025 version is the later instrument<\/strong>. Both are set out below in full, because the Goods Manual has not yet been updated to the 2025 version and each is examinable in its own right.<\/p>\nThis Policy does not appear in the Consultancy Services or Non-Consultancy Services Manuals.<\/p><\/aside>\n<h4 class=\"src-G srchead\" data-src=\" G \">PART A \u2014 DMI&SP POLICY, 2019 (as reproduced in the Goods Manual, 2024)<\/span>G<\/span><\/h4><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\n1. Background: The DMI&SP policy provides a preference for Domestically Manufactured Iron and Steel Products in Government procurement. By promoting domestically manufactured iron and steel products as well as capital goods used for manufacturing iron and steel products, the Policy contributes to the growth of the Indian iron and steel industry. It was first notified in May 2017, revised in May 2019, and further amended in December 2020. The Ministry of Steel notified on March 8, 2024 the extension of this Policy till November 2024.<\/p>\n2. Applicability:<\/p>\na) Iron & Steel Products:<\/p>\n<ul class=\"lst\"><li>i) The Policy applies to the government procurement of iron & steel products (listed in Appendix A of the Policy, produced in compliance with prescribed quality standards) by every Ministry or Department of Government and all agencies\/ entities under their administrative control, and to projects funded by these agencies. All Central Sector Schemes (CS)\/ Centrally Sponsored Schemes (CSS) for which States and Local Bodies make procurement would come within the purview of this Policy if the Government of India fully\/ partly funds that project\/ scheme.<\/li><li>However, this Policy shall not apply to purchasing iron & steel products with a view to COMMERCIAL RESALE or to use in producing goods for COMMERCIAL SALE.<\/li><li>The Policy also applies to private agencies' purchase of iron & steel products to fulfil an EPC contract and\/or any other requirement of the Ministry or Department of Government or their PSEs.<\/li><li>ii) The Policy shall apply to projects where the procurement value of iron and steel products exceeds Rs. 5 lakh. The Policy shall also be applicable for other procurements (non-project) where the ANNUAL procurement value of iron and steel products for that Government organisation is more than Rs. 5 lakh. However, it shall be ensured by procuring entities that procurement is not SPLIT to avoid the provisions of this Policy.<\/li><\/ul>\nb) Capital Goods for Manufacturing Iron & Steel Products:<\/p>\n<ul class=\"lst\"><li>i) For government procurement of capital goods for manufacturing iron & steel products listed in Appendix B of the Policy (produced in compliance with prescribed quality standards, as applicable), the policy is applicable \u2014 irrespective of the project size \u2014 to all public sector steel manufacturers and all agencies\/ entities under their administrative control, but not for commercial resale. The Policy also applies to the purchase of capital goods for manufacturing iron & steel products by private agencies for fulfilling an EPC contract and\/or any other requirement of public sector steel manufacturers and all agencies\/ entities under their administrative control.<\/li><li>ii) NO Global Tender Enquiry (GTE) shall be invited for tenders related to the procurement of Capital Goods for manufacturing iron & steel products (Appendix-B) having estimated value UP TO Rs. 200 Crore, except with the approval of the competent authority as designated by the Department of Expenditure.<\/li><\/ul>\n3. Waivers: Waivers shall be granted by the Ministry of Steel, subject to the conditions below. The exclusion requests shall be submitted to the Standing Committee along with sufficient proof of unavailability of domestically manufactured iron & steel products: a) Where specific grades of steel are not manufactured in the country; or b) Where the quantities as per the demand of the project cannot be met through domestic sources.<\/p>\n4. Purchase Preferences: a) NO Global Tender Enquiry (GTE) shall be invited for tenders related to the procurement of iron and steel products (Appendix-A). The procurement process shall be open only to the manufacturers\/ suppliers capable of meeting\/ exceeding the domestic value-addition targets. Manufacturers\/ suppliers not meeting the domestic value addition targets shall not be eligible to participate in the bidding. b) Purchase preference shall be provided to domestically manufactured capital goods listed in Appendix B if their quoted price falls within 20% of the price quoted for corresponding imported capital goods. If the procuring company considers that the procured quantity cannot be divided in the prescribed ratio of 50:50, they shall have the right to award the contract to the eligible domestic manufacturer for a quantity not less than 50%, as may be divisible. The contract can be awarded to the eligible domestic manufacturer for the entire quantity if the tendered capital goods are NON-DIVISIBLE. If none of the eligible manufacturers meets domestic value addition requirements and matches the L1 bid, the original bidder holding the L1 bid shall secure the order for the entire procurement value.<\/p>\n5. Clause in Tender Document:<\/strong> The tender document for procurement of both Goods as well as for EPC contracts<\/strong> should explicitly outline the eligibility\/ qualification criteria for adherence to minimum prescribed domestic value addition<\/strong> by the bidder for iron and steel products and capital goods (as indicated in Appendix A and Appendix B).<\/p>\n6. Standing Committee: A Standing Committee under the Ministry of Steel (MoS), chaired by the Secretary (Steel), shall be constituted to oversee implementation. The Committee shall comprise experts from Industry\/ Industry Association\/ Government Institution or Body\/ Ministry of Steel. Its mandate: a) Monitoring the implementation of the Policy; b) Review and notify the Iron & Steel products list and the domestic value addition requirement criteria mentioned in Appendix A and Appendix B; c) Issue necessary clarifications for implementation of the Policy, including grant of exclusions to procuring agencies as per section 3; d) Constitute a separate committee to carry out grievance redressal; e) The Standing Committee shall submit its recommendations for approval to the Ministry of Steel.<\/p>\n7. Certification of Local Content:<\/strong> a) To qualify as domestically manufactured iron and steel products\/ capital goods for purchase preference under this Policy, a minimum domestic value addition of 20% to 50% is specified in Appendix A<\/strong> (domestically manufactured iron and steel products) and 50% for Appendix B<\/strong> (capital goods for manufacturing iron & steel products). The domestic value-addition is based on SELF-CERTIFICATION.<\/strong> b) For products in Appendix A<\/strong>, each domestic manufacturer shall furnish the Affidavit of self-certification in the prescribed format<\/strong> to the procuring agency declaring that the iron & steel products are domestically manufactured in terms of the domestic value addition prescribed. It shall be the responsibility of the domestic manufacturer to ensure that the products supplied are indeed domestically manufactured<\/strong> in terms of the domestic value addition prescribed for the product. c) For capital goods in Appendix B<\/strong>, the bidder shall furnish the certification issued by the STATUTORY AUDITOR of the domestic manufacturer<\/strong> declaring that the capital goods are domestically manufactured in terms of the domestic value addition prescribed. The bidder shall also be required to provide a domestic value addition certificate on a HALF-YEARLY basis (September 30 and March 31), within 60 days of commencement of each half-year<\/strong>, duly certified by the Statutory Auditors of the domestic manufacturer, to the concerned procuring agencies till the completion of the supply<\/strong> \u2014 that the claims of domestic value addition made for the product during the preceding 6 months are in accordance with the Policy. d) Bidders who are selling agents\/ authorised distributors\/ authorised dealers\/ authorised supply houses<\/strong> of the domestic manufacturers of iron & steel products are ELIGIBLE to bid on behalf of the domestic manufacturers<\/strong> under the Policy. However, this shall be subject to the following conditions:<\/p>\n<ul class=\"lst\"><li>i) The bidder shall furnish the authorisation certificate issued by the domestic manufacturer<\/strong> for selling domestically manufactured iron & steel products;<\/li><li>ii) In case the procurement is covered under Appendix A<\/strong>, the bidder shall furnish the Affidavit of self-certification issued by the domestic manufacturer<\/strong> to the procuring agency;<\/li><li>iii) In case the procurement is covered under Appendix B<\/strong>, the bidder shall furnish the certification issued by the statutory auditor to the domestic manufacturer<\/strong>;<\/li><li>iv) The bidder shall be responsible for furnishing other documents required to be issued by the domestic manufacturer to the procuring agency as per the Policy.<\/li><\/ul>\n8. Complaints and Penalties: a) Complaints relating to mis-declaration made to the procuring agency or Ministry of Steel shall be dealt with in the prescribed time frame by examining the documents at the bidder's cost. A refundable cautionary deposit is required for complaints to the Ministry of Steel. b) Each procuring agency shall define the penalties in the tender document in case of wrong declaration by the bidder of the prescribed domestic value addition. The penalties may include forfeiting the EMD, other financial penalties, and debarment of the manufacturer\/ service provider.<\/p>\n9. Specifications in Tenders and Other Procurement Solicitations:<\/strong> a) Every procuring entity shall ensure that the eligibility conditions with respect to previous experience do not require proof of supply in other countries or proof of exports<\/strong>. b) Procuring entities shall endeavour to see that eligibility conditions \u2014 including on turnover, production capability and financial strength<\/strong> \u2014 do not result in unreasonable exclusion of local suppliers<\/strong> who would otherwise be eligible, beyond what is essential for ensuring quality or creditworthiness. c) Procuring entities shall review all existing eligibility norms and conditions<\/strong> with reference to (a) and (b) above. d) Reciprocity:<\/strong> If the Ministry of Steel<\/strong> is satisfied that Indian suppliers of iron and steel products are not allowed to participate and\/or compete in procurement by any foreign government<\/strong> due to restrictive tender conditions which have the direct or indirect effect of barring Indian companies \u2014 such as registration in the procuring country, execution of a project of specific value in the procuring country, etc. \u2014 it may, if deemed appropriate, RESTRICT or EXCLUDE bidders from that country<\/strong> from eligibility for procurement of that item and\/or other items relating to the Ministry of Steel. e) For the purpose of (d) above, a supplier or bidder shall be considered to be from a country<\/strong> if:<\/p>\n<ul class=\"lst\"><li>(i) the entity is incorporated in that country, or<\/li><li>(ii) a majority of its shareholding or effective control of the entity is exercised from that country, or<\/li><li>(iii) more than 50% of the value of the item being supplied has been added in that country.<\/li><\/ul>\nIndian suppliers shall mean those entities that meet any of these tests with respect to India. The term 'entity' of a country shall have the same meaning as under the FDI Policy of DPIIT, as amended from time to time. f) In case restrictive or discriminatory conditions against domestic suppliers are included in tender documents, an inquiry shall be conducted by the Administrative Department undertaking the procurement to fix responsibility. Thereafter, appropriate action \u2014 administrative or otherwise \u2014 shall be taken against erring officials. Intimation on all such action shall be sent to the Standing Committee under the DMI&SP Policy.<\/p>\n<\/div><h4 class=\"src-W srchead\" data-src=\" W \">PART B \u2014 DMI&SP POLICY (REVISED), 2025 \u2014 as applicable to EPC tenders<\/span>W<\/span><\/h4><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n1. Background: a) This policy, issued by the Ministry of Steel vide notification no. G.S.R. 341(E) dated 26th May 2025, provides preference for Domestically Manufactured Iron and Steel Products (DMI&SP) in Government procurement. b) The policy applies to procurement of iron & steel products notified in Appendix A. In Appendix B, the minimum domestic content and an exempted list of capital goods for manufacturing iron & steel products which can be imported have been listed. Appendix C contains the policy for promoting the procurement of technology from indigenous technology suppliers.<\/p>\n2. Definitions:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Term<\/th><th>Definition<\/th><\/tr><\/thead><tbody><tr><td>Bidder<\/td><td>May be a domestic\/ foreign manufacturer of iron & steel, or their selling agents\/ authorised distributors\/ authorised dealers\/ authorised supply houses, or any other company engaged in the bidding of projects funded by Government agencies.<\/td><\/tr><tr><td>Domestically Manufactured Iron & Steel Products<\/td><td>Those iron and steel products that are manufactured by entities that are registered and established in India, INCLUDING in Special Economic Zones (SEZs).<\/td><\/tr><tr><td>Domestic Manufacturer<\/td><td>A manufacturer of iron & steel products conforming to guidelines in section 7 and the definition of 'manufacturer<\/strong>' as per the Central Excise Act<\/strong>.<\/td><\/tr><tr><td>Domestic value addition<\/td><td>The amount of value added in India = total value of the item to be procured (excluding net domestic indirect taxes) MINUS the value of imported content in the item (including all customs duties), as a proportion of the total value of the item to be procured, in percent. The definition shall be in line with DPIIT guidelines and shall be suitably amended in case of any future changes by DPIIT. For the purpose of this policy document, \"domestic value addition\" and \"local content\" have been used INTERCHANGEABLY. % Domestic value addition = {Total value of the item to be procured (excluding net domestic indirect taxes) \u2212 Value of imported content in the item (including all customs duties)} \u00d7 100 \u00f7 {Total value of the item to be procured}<\/td><\/tr><tr><td>Finished Steel<\/td><td>Flat and long products<\/strong>, which can be subsequently processed into manufactured items.<\/td><\/tr><tr><td>Government<\/td><td>For the purpose of the Policy, means Government of India<\/strong>.<\/td><\/tr><tr><td>Government agencies<\/td><td>Include Government PSUs, Societies, Trusts, and Statutory bodies set up by the Government of India.<\/td><\/tr><tr><td>Indigenous Technology<\/td><td>A technology shall be deemed to be Indigenous technology if at least 51% of the entity's equity is held by Indian residents, AND the IPR is owned or co-owned by an Indian entity or licensed exclusively to them, AND the core engineering R&D and project execution capabilities reside in India.<\/td><\/tr><tr><td>L1<\/td><td>The lowest tender or the lowest bid, or the lowest quotation<\/strong> received in a tender, bidding process, or other procurement solicitation, as adjudged in the evaluation process.<\/td><\/tr><tr><td>MoS<\/td><td>Ministry of Steel, Government of India.<\/td><\/tr><tr><td>Margin of purchase preference<\/td><td>The maximum extent to which the price quoted by a domestic supplier may be above L1<\/strong> for the purpose of purchase preference. In the case of DMI&SP policy, the margin of purchase preference shall be 20% for items in Appendix B<\/strong>.<\/td><\/tr><tr><td>Melt & Pour<\/td><td>The steel that has been produced in a steel-making furnace and poured into its first solid shape. The location where this process takes place is called the country of melt and pour (COM). The COM is the original location where crude steel is first produced in a liquid state and poured into its first solid shape. The first solid shape can be a semi-finished product \u2014 like a slab, billet, ingot \u2014 or a finished steel mill product.<\/td><\/tr><tr><td>Net Selling Price<\/td><td>The invoiced price excluding net domestic taxes and duties.<\/td><\/tr><tr><td>Semi-Finished Steel<\/td><td>Ingots, billets, blooms, and slabs<\/strong>, which can be subsequently processed into finished steel.<\/td><\/tr><\/tbody><\/table><\/div>\n3. Exclusions: a) Waivers may be granted by the Ministry of Steel to all such Government procurements subject to the below conditions: b) Where specific grades of steel are not manufactured in the country, or c) Where the quantities as per the demand of the project cannot be met through domestic sources. d) Exemption requests shall be submitted to the Standing Committee along with sufficient proof of unavailability of iron & steel products domestically.<\/p>\n4. Standing Committee: a) A Standing Committee chaired by the Secretary (Steel) shall oversee the implementation of the policy. b) The Committee shall comprise experts drawn from Industry\/ Industry Association\/ Government Institution or Body\/ Ministry of Steel. Mandate:<\/p>\n<ul class=\"lst\"><li>i) Monitor the implementation of the policy;<\/li><li>ii) Review and notify the list of Iron & Steel products, the domestic content requirement criteria and policy directives as mentioned in Appendix A, Appendix B and Appendix C;<\/li><li>iii) Issue necessary clarifications<\/strong> for implementation of the policy, including grant of exclusions<\/strong> to procuring agencies as per Para 3;<\/li><li>iv) Constitute a grievance redressal committee<\/strong> for preliminary examination of complaints related to implementation of this policy;<\/li><li>v) Issue directions for suitable action to Ministries\/ Departments concerned in case of non-compliance with this policy by the procuring agency, and advise.<\/li><li>Wherever a procuring entity concludes that an unreasonably high price has been quoted by the SOLE bidder\/ manufacturer, the matter may be referred to the committee. In such cases, the procuring entity would be required to substantiate its case with complete and thorough documentation.<\/li><li>Specifying foreign certifications\/ unreasonable technical specifications in the bid document is a restrictive and discriminatory practice against local suppliers. If foreign certification is required to be stipulated because of non-availability of Indian Standards and\/or for any other reason, the same shall be done only after written approval of the Committee.<\/li><\/ul>\n5. Applicability: a) The policy applies to every Ministry or Department of Government and all agencies\/ entities under their administrative control, and to projects funded by these agencies, for the purchase of iron & steel products for government projects. All Central Sector Schemes (CS)\/ Centrally Sponsored Schemes (CSS) for which procurement is made by States and Local Bodies come within the purview of this Policy if that project\/ scheme is fully\/ partly funded by the Government of India. b) The policy applies to public sector steel manufacturers and agencies\/ entities under their administrative control for purchase of capital goods (Appendix-B) for manufacturing iron & steel products. c) Appendix-B contains the exemption list of capital goods used in manufacturing iron & steel products which can be imported, and the minimum domestic content requirement for respective packages. The domestic value addition for Capital Goods, as indicated, is subject to change; for example, if some capital goods components can be manufactured in the country, the domestic value addition percentage may go up. d) A purchase preference of 20% is applicable for capital goods used in steel manufacturing.<\/p>\n<aside class=\"note\">Example given in the Manual: If the lowest bidder (L1) for an importable capital good is a foreign company with a quoted price of INR 100 crores for the product package, under the policy a procurement preference of 20% will be applicable to a domestic supplier of the same capital good.<\/p><\/aside>\n<ol class=\"lst\"><li>Appendix-C contains directives and methodology for steelmaking CPSEs to procure from indigenous technology suppliers.<\/li><li>The policy shall apply to projects AND non-projects where the total procurement value of iron and steel products (Appendix-A) in a contract is greater than rs. 5 lakh, on an ITEMISED BASIS.<\/li><li>NO Global Tender Enquiry (GTE) shall be invited<\/strong> for tenders related to the procurement of iron and steel products (Appendix-A)<\/strong>. NO GTE shall be invited<\/strong> for tenders related to the procurement of Capital Goods for manufacturing iron & steel products (Appendix-B) having estimated value UP TO Rs. 200 Crore<\/strong>, except with the approval of the competent authority as designated by the Department of Expenditure.<\/li><li>The policy applies to the purchase of iron & steel products by PRIVATE agencies for fulfilling an EPC contract and\/or any other requirement of a Ministry or Department of Government or their PSUs.<\/li><\/ol>\n6. Tender Procedure for Procurement: a) Procuring agencies shall follow standard procurement procedures, in accordance with instructions of the Ministry of Finance and CVC, while adhering to DMI&SP policy. b) The tender document, for procurement of both Goods as well as for EPC contracts, should explicitly outline the qualification criteria for adherence to the requirement as mentioned in Appendix A and Appendix B. c) Domestic manufacturers of products under Appendix-A and Appendix-B shall SELF-CERTIFY the local content as per Form-1 placed in the policy, at the time of bidding. d) Bidders who are selling agents\/ authorised distributors\/ authorised dealers\/ authorised supply houses of the domestic manufacturers of iron & steel products covered by Appendix-A are eligible to bid with self-certification on behalf of the domestic manufacturers under the policy, subject to the bidder furnishing an authorisation certificate issued by the domestic manufacturer at the time of delivery. e) For products covered under Appendix B, the bidder shall furnish certification issued by the statutory auditor or cost auditor of the company (in the case of companies), or from a practising cost accountant or practising chartered accountant (in respect of suppliers other than companies), declaring that the capital goods to be used in the iron & steel industry are domestically manufactured in terms of the domestic value addition prescribed. f) If Indian suppliers of an item are not allowed to participate and\/or compete in procurement by any foreign government, due to restrictive tender conditions which have the direct or indirect effect of barring Indian companies \u2014 such as registration in the procuring country, execution of projects of specific value in the procuring country, etc. \u2014 it shall provide such details to the procuring entities for appropriate RECIPROCAL action. g) Entities of countries identified by the Ministry of Steel as not allowing Indian companies to participate in their Government procurement for any item related to the Ministry of Steel shall not be allowed to participate in Government procurement in India for all items related to the Ministry of Steel, except for the list of items published by the Ministry of Steel permitting their participation. h) The stipulation above shall be part of all tenders, including those on the GeM portal, invited by the Central Government procuring entities. i) In case restrictive or discriminatory conditions against domestic suppliers are included in bid documents, an inquiry shall be conducted by the Administrative Department undertaking the procurement to fix responsibility. Thereafter, appropriate action \u2014 administrative or otherwise \u2014 shall be taken against erring officials. Intimation on all such action shall be sent to the Standing Committee under the DMI&SP policy. j) A supplier DEBARRED by any procuring entity for violation of this Order shall not be eligible for preference under this Order for procurement by any OTHER procuring entity for the duration of the debarment. The debarment for such other procuring entities shall take effect prospectively from the date on which it comes to the notice of other procurement entities. k) Grievance redressal timelines: In case the matter is referred to the Ministry of Steel, the grievance redressal committee set up under the MoS shall dispose of the complaint within 4 WEEKS of its reference and receipt of all documents from the bidder, after taking into consideration the view of the Government Agency. The bidder shall be required to furnish the necessary documentation in support of domestic value addition claimed in iron & steel products to the grievance redressal committee under MoS within 2 WEEKS of the reference of the matter. l) The procuring agency shall define the penalties in the tender document in case of a wrong declaration by the bidder of the prescribed domestic value addition. The penalties may include forfeiting of the EMD, other financial penalties, and BLACKLISTING of such manufacturer\/ service provider, etc., in terms of extant rules.<\/p>\n7. Implementation Monitoring by the Ministry of Steel: a) The policy provisions shall be applicable for 5 YEARS from the date of publication and may further be extended at the discretion of the Ministry of Steel. b) MoS shall be the NODAL MINISTRY to monitor the implementation of the policy. c) Agencies covered under the DMI&SP policy shall send a declaration on a QUARTERLY basis indicating the extent of compliance to the policy and reasons for non-compliance thereof, during the preceding financial year.<\/p>\n8. Conclusion \u2014 Applicability to EPC Tenders W<\/span>:<\/p>\nPara 6(b) of the policy above makes it explicitly applicable to both Goods and EPC tenders. Except for the rare cases of EPC tenders for setting up of Steel Manufacturing facilities (where Appendix B and C shall also be applicable), normally only Appendix A shall be applicable in EPC tenders, and these products can only be procured from domestic sources. Purchase preference of 20% is applicable only to capital goods as per Appendix B and not to Appendix A.<\/p>\n<aside class=\"note\">Appendix A, B & C and Form 1 of this policy are given in Annexures 20 and 21<\/strong> of the Works Manual.<\/p><\/aside>\n<\/div><\/div><h2 class=\"src-multi srchead\" data-src=\" C NC \">1.12<\/span>When is Procurement of Services Justified<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\"><h3 class=\"src-C srchead\" data-src=\" C \">1.12.1<\/span>Consultancy Services<\/span>C<\/span><\/h3><div class=\"srcblock src-C\" data-src=\" C \" data-label=\"Consultancy Manual only\">\nRules 178 & 180 of GFR 2017 permit Ministries\/ Departments to hire external professionals, consultancy firms or consultants (referred to as 'consultant' hereinafter) for a specific job, which is well defined in terms of content and time frame for its completion.<\/p>\nEngagement of consultants may be resorted to in situations requiring high quality services for which the Procuring Entity does not have the requisite expertise. Approval of the competent authority should be obtained before engaging consultant(s).<\/p>\nThe need for Procurement of Consultancy Services may be justified on consideration of:<\/p>\n<ol class=\"lst\"><li>The assignment should be well defined in terms of content and time frame for its completion;<\/li><li>The inadequacy of Capability or Capacity of required expertise IN-HOUSE;<\/li><li>The need to have qualified consultants for providing a specialised high-quality service;<\/li><li>Need for impartial advice<\/strong> from a consultant (acting independently from any affiliation) to avoid conflicts of interest<\/strong>;<\/li><li>The need, in some cases, for Transfer of Knowledge\/ Training\/ Capacity and capability building as a by-product of such engagement;<\/li><li>Need to acquire information about\/ identifying and implementing new methods and systems;<\/li><li>Need for planning and implementing ORGANISATIONAL CHANGE;<\/li><li>There may be internal capacity\/ capability to do the job, BUT there are considerations of ECONOMY, SPEED, and EFFICIENCY in relation to additional requirement\/ commitment\/ usage of:<\/li><li>i) Staff\/ Management\/ Organisation;<\/li><li>ii) Technological and Material Resources;<\/li><li>iii) Money<\/strong>; and<\/li><li>iv) Time\/ Speed of execution.<\/li><\/ol>\n<\/div><h3 class=\"src-NC srchead\" data-src=\" NC \">1.12.2<\/span>Non-Consultancy Services<\/span>NC<\/span><\/h3><div class=\"srcblock src-NC\" data-src=\" NC \" data-label=\"Non-Consultancy Manual only\">\nIn the interest of economy, efficiency and to provide more effective delivery of public services, Rule 198 of GFR, 2017 permits Ministries\/ Departments to procure\/ outsource NC services (e.g. non-core, auxiliary and support services). Approval of the competent authority should be obtained before engaging service providers.<\/p>\nThe need for Procurement of NC services may be justified on consideration of:<\/p>\n<ol class=\"lst\"><li>Economy, speed and efficiency and more effective delivery of public services relating to additional requirement\/ commitment\/ usage of:<\/li><li>Staff\/ Management\/ Organisation;<\/li><li>Technological and Material Resources;<\/li><li>Money<\/strong>; and<\/li><li>Time\/ Speed of execution.<\/li><li>An administrative policy decided by the Ministry\/ Department to outsource specific (or a class of) services.<\/li><\/ol>\n<\/div><\/div><h2 class=\"src-multi srchead\" data-src=\" C NC \">1.13<\/span>Principles for Public Procurement of Services<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\">\nOther principles of Public Procurement as mentioned in para 1.8 above are also equally applicable to Procurement of Consultancy and Non-consultancy services. To ensure value for money during procurement of services, the following additional principles shall be considered:<\/p>\n<div class=\"tblwrap\"><table><thead><tr class=\"\" ><th>#<\/th><th>Consultancy Services C<\/span><\/th><th>Non-Consultancy Services NC<\/span><\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>Services to be procured should be justifiable<\/strong> in accordance with para 1.12 above<\/td><td>Services to be procured should be justifiable<\/strong> in accordance with para 1.12 above<\/td><\/tr><tr><td>b<\/td><td>Terms of Reference \u2014 a document covering well-defined scope of work\/ description of services and the time frame for which services are to be availed \u2014 should be consistent with the overall objectives of the Procuring Entity<\/td><td>In Non-consultancy Services, the Activities Schedule \u2014 a document covering well-defined scope of work\/ description of services and the time frame for which services are to be availed \u2014 should be consistent with the overall objectives of the Procuring Entity<\/td><\/tr><tr><td>c<\/td><td>Equal opportunity to all qualified Consultants to compete should be ensured<\/td><td>Equal opportunity to all qualified service providers to compete should be ensured<\/td><\/tr><tr><td>d<\/td><td>Engagements should be economical and efficient<\/strong><\/td><td>Engagements should be economical and efficient<\/strong><\/td><\/tr><tr><td>e<\/td><td>Transparency and integrity in the Consultancy process \u2014 that is, proposed, awarded, administered, and executed according to the highest ethical standards<\/td><td>Transparency and integrity in the selection process \u2014 that is, proposed, awarded, administered, and executed according to the highest ethical standards<\/td><\/tr><tr><td>f<\/td><td>Additionally, in procurement of consultancy services, consultants should be of HIGH QUALITY<\/strong>, in line with the justification as per para 1.12 above (Rule 180 of GFR 2017)<\/em><\/td><td> \u2014 <\/td><\/tr><\/tbody><\/table><\/div>\nC<\/span> \u2014 the two-stage requirement: In Procurement of Consultancy, these considerations can be <\/strong>best addressed through unrestricted competition among qualified shortlisted firms or individuals, in which <\/strong>selection is based on the QUALITY of the proposal and, where appropriate, on the COST of services to be provided. <\/strong>Hence Procurement of Consultancy needs to be done in a two-STAGE PROCESS.<\/p>\n<\/div><h2>1.14<\/span>Legal Aspects Governing Public Procurement<\/span><\/h2>\nA public procurement contract, besides being a commercial transaction, is also a legal transaction. There are several laws that may affect various commercial aspects of public procurement contracts. A public procurement professional is expected to be generally aware of the implications of the following basic laws affecting procurement; however, he or she is not expected to be a legal expert. In different contexts of the scope of work, an additional set of laws may be relevant.<\/p>\n<aside class=\"note\">G<\/span> The Goods Manual places this material in Appendix 2: Legal Aspects of Public Procurement<\/strong>, covering: (1) Relevant Provisions of the Constitution of India; (2) Salient Features of the Indian Contract Act; (3) Salient Features of the Sale of Goods Act, 1930; (4) Salient Features of the Indian Arbitration & Conciliation Act, 1996; (5) The Mediation Act, 2023; (6) Salient Features of the Competition Act, 2002 relating to Anti-competitive Practices; (7) Salient Features of the Whistle Blowers Protection Act, 2011 and the Whistle Blowers Protection (Amendment) Act, 2015.<\/p>\nC<\/span>NC<\/span> cross-refer to Appendix 2 of the Goods Manual<\/strong> without listing the statutes.<\/p><\/aside>\nW<\/span> \u2014 the list of applicable laws, as enumerated in the Works Manual:<\/p>\n<ol class=\"lst\"><li>The Constitution of India<\/li><li>Indian Contract Act, 1872<\/li><li>Arbitration and Conciliation Act, 1996<\/strong>, as amended by the Arbitration and Conciliation (Amendment) Acts, 2015, 2019 and 2021<\/strong><\/li><li>Competition Act, 2002<\/strong>, as amended by the Competition (Amendment) Acts, 2007 and 2023<\/strong><\/li><li>The Information Technology Act, 2000<\/strong> (IT Act \u2014 regarding e-procurement and e-auction<\/strong>, popularly called the Cyber Law<\/strong>), as amended by the Information Technology (Amendment) Acts 2008 and 2015<\/strong>, and as modified by the Jan Vishwas (Amendment of Provisions) Act, 2023<\/strong><\/li><li>Right to Information (RTI) Act, 2005<\/li><li>Central Vigilance Commission Act, 2003<\/li><li>Delhi Special Police Establishment Act, 1946<\/strong> (DSPE \u2014 basis of the Central Bureau of Investigation)<\/li><li>Prevention of Corruption Act, 1988<\/strong>, as amended by the Prevention of Corruption (Amendment) Act, 2018<\/strong><\/li><li>Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) \u2014 replaces the Code of Criminal Procedure, 1973; Section dealing with sanction for prosecution \u2014 \u00a7218<\/li><li>Insolvency and Bankruptcy Code, 2016<\/strong>, as amended by the Insolvency and Bankruptcy Code (Amendment) Acts 2018, 2019, 2020 and 2021<\/strong> \u2014 governs insolvency and liquidation of business enterprises<\/strong> \u2014 and other allied laws applicable to business entities participating in works contracts<\/li><li>Various labour laws<\/strong> applicable at the works' site<\/li><li>Various building and safety acts, codes, standards<\/strong> applicable in the context of the scope of work; and<\/li><li>Various environmental and mining laws, codes, standards<\/strong> applicable in the context of the scope of work.<\/li><\/ol>\n<h2 class=\"src-multi srchead\" data-src=\" W C NC \">1.15<\/span>The Law of Agency<\/span>W<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\" data-src=\" W C NC \" data-label=\"Works + Consultancy + Non-Consultancy only\">\nIn addition to the laws applicable to Public Procurement referred to above, the Law of Agency (Sections 182 to 238 of the Indian Contract Act, 1872)<\/strong> implies that the contractor\/ consultant\/ service provider would be an AGENT of the Procuring Entity<\/strong>, acting as a 'Principal<\/strong>', to execute the works\/ carry out the service on its behalf<\/strong>.<\/p>\nHence, there exists a PRINCIPAL\/ EMPLOYER and AGENT relationship<\/strong> between the Procuring Entity and such contractor\/ consultant\/ service provider.<\/p>\nAs per this law, the principal\/ employer (i.e., the Procuring Entity) is vicariously, legally and financially liable for the actions of its Agents.<\/p>\n<aside class=\"note\">Example given in the Manuals:<\/strong> A violation of certain labour laws<\/strong> in deputing staff for the Procuring Entity's contract by the agent (contractor\/ consultant\/ service provider) may render the Procuring Entity legally and financially liable\/ answerable for such violations<\/strong>, under certain circumstances.<\/p><\/aside>\nThe Procuring Entities need to be AWARE of such eventualities. Standard\/ Model Bidding\/ Tender Documents should take care of this aspect.<\/p>\n<aside class=\"note\">Note:<\/strong> This section does not<\/strong> appear in the Goods Manual.<\/p><\/aside>\n<\/div><h2 class=\"src-G srchead\" data-src=\" G \">1.16<\/span>Right to Information and Proactive Information Disclosures<\/span>G<\/span><\/h2><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\nSection 4(1)(b) of the RTI Act lays down the information to be disclosed by public authorities on a SUO-MOTU or PROACTIVE basis, and Section 4(2) and Section 4(3) prescribe the method of its dissemination \u2014 to enhance transparency and also to reduce the need for filing individual RTI applications.<\/p>\nThe Department of Personnel & Training, Ministry of Personnel, Public Grievances & Pensions<\/strong>, Government of India, has issued \"Guidelines on suo motu disclosure under Section 4 of the RTI Act<\/strong>\" vide their OM No. 1\/6\/2011-IR dated April 15, 2013<\/strong>. The relevant guidelines relating to information disclosure relating to procurement are reproduced below:<\/p>\n<aside class=\"note\">\"Information relating to procurement made by public authorities \u2014 including publication of notice\/ tender enquiries, corrigenda thereon, and details of bid awards detailing the name of the Vendor\/ Contractor of goods\/ services being procured or the works contracts entered, or any such combination of these, and the rate and total amount at which such procurement or works contract is to be done \u2014 should be disclosed.<\/p>\nAll information disclosable as per Ministry of Finance, Department of Expenditure's O.M. No. 10\/1\/2011-PPC dated 30th November 2011 (and 05th March 2012) on Mandatory Publication of Tender Enquiries on the Central Public Procurement Portal, and O.M. No. 10\/3\/2012-PPC dated 09th January 2014 on implementation of comprehensive end-to-end e-procurement, should be disclosed under Section 4 of the Right to Information Act.\"<\/p><\/aside>\n<\/div><h2 class=\"src-W srchead\" data-src=\" W \">1.17<\/span>The Basic Principles of Undertaking Works<\/span>W<\/span><\/h2><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n<ol class=\"lst\"><li>No new works should be sanctioned without:<\/li><li>Careful assessment of the assets or facilities already available, and the time and cost required to complete the new works;<\/li><li>A concept plan\/ preliminary drawing having been approved by the Authority competent to accord sanction. While designing projects, to the extent possible, principles of life cycle costing may also be considered.<\/li><li>As budgetary resources are limited and granted on an annual basis, adequate provisions should be ensured for works and services already in progress before new works are undertaken.<\/li><li>NO project or work will be SPLIT UP to bring it within the sanctioning powers of a lower authority.<\/li><li>(Rule 137, GFR 2017)<\/em> For the purpose of approval and sanctions, a group of works which forms one PROJECT shall be considered as one WORK<\/strong>. The approval or sanction of the higher authority for such a project consisting of a group of works should not be circumvented by resorting to approval of individual works using the powers of approval or sanction of a lower authority<\/strong>.<\/li><li>(MoF OM No. F.1(26)-E-II(A)\/66 dated 04.01.1967 & 27.10.1967)<\/em>If the component parts of a project are MUTUALLY INDEPENDENT of each other<\/strong> and are not dependent on the execution of one or more such component parts, each such part should be treated as a SEPARATE PROJECT<\/strong>.<\/li><li>In case the functioning of a project is DEPENDENT on the execution of one or more other projects, the entire group of such projects should be taken as a SINGLE scheme\/ project and provision made accordingly.<\/li><\/ol>\nIf, however, a scheme consists of revenue component, capital expenditure and loan content, etc., the provision for which is required to be exhibited separately under respective Heads of Account, there is no objection to the provision being made in the relevant Heads of Account; but the authorities concerned should ensure that the sanction of the Competent Authority is obtained for the integrated scheme as a whole, depending on the total COST of the scheme. It will not be permissible in such cases to split up a scheme, treating each part as a scheme, in order to avoid the sanction of a higher authority.<\/p>\n<ol class=\"lst\"><li>(Rule 138, GFR 2017)<\/em> Any anticipated or actual SAVINGS from a sanctioned estimate for a definite project shall not, without special authorisation, be applied to carry out ADDITIONAL WORK not contemplated in the original project.<\/li><li>(Rule 136(3), GFR 2017)<\/em> Any development of a project considered necessary while a work is in progress, which is not contingent on the execution of the work first sanctioned, shall have to be covered by a SUPPLEMENTARY ESTIMATE.<\/li><li>The construction period and sanctioned cost stipulated in the sanction of the Project will not be exceeded as far as possible.<\/li><li>(Rule 135(2), GFR 2017)<\/em> Ministry or Department shall put in place, as far as possible, empowered project teams for all large value projects, and these teams should be tasked only with project execution and not given other operational duties.<\/li><li>The competent financial authority according the administrative approval should be KEPT INFORMED of the physical and financial progress of the work till their completion, through regular periodical reports.<\/li><li>(Rule 135(1) and 139(i), GFR 2017)<\/em> Subject to the observance of general rules (Rules 130\u2013141, Rule 144 of GFR, 2017), the initiation, authorisation, procurement and execution of works allotted to a particular Ministry or Department shall be regulated by detailed rules and orders contained in the respective departmental regulations and by other special orders applicable to them. The detailed procedure relating to expenditure on such works shall be prescribed by departmental regulations framed in consultation with the accounts officer, generally based on the procedures and the principles underlying the financial and accounting rules prescribed for similar works carried out by the Central Public Works Department (CPWD).<\/li><li>(Rule 136(1) and 139(vi), GFR 2017)<\/em> NO works shall be commenced or liability incurred in connection with it until:<\/li><li>Feasibility Study Report\/ Preliminary Project Report (PPR) has been prepared in case of works of substantial value;<\/li><li>A proper Detailed Project Report (DPR) has been prepared by a competent agency;<\/li><li>Administrative Approval (A\/A)<\/strong> has been obtained from the appropriate authority, in each case;<\/li><li>Expenditure Sanction (E\/S)<\/strong> to incur expenditure has been obtained from the competent authority;<\/li><li>Technical approval has been obtained of the detailed and coordinated design of all the Architectural, Civil, Electrical, Mechanical, Horticulture and any other services included in the scope of the sanction, and of the Detailed Cost Estimates containing the detailed specifications and quantities of various items prepared on the basis of the schedule of rates maintained by CPWD or other Public Works Organisations;<\/li><li>Funds to cover the work, which will be executed at least during the current year, have been provided by competent authority;<\/li><li>Tenders have been invited and processed in accordance with rules;<\/li><li>Award of work and execution of Contract Agreement;<\/li><li>A work order has been issued;<\/li><li>Statutory and other clearances: Time taken in the grant of statutory and other clearances also contributes to the time and cost overrun in public projects. These clearances are required to achieve specific objectives like concern for the environment, aviation safety, preservation of national heritage, conservation of forest and wildlife, etc. Public Authorities\/ Project Executing Authorities should plan for obtaining all necessary clearances quickly and proper efforts be made for the same, which also should be duly recorded. The progress regarding follow-up of obtaining the statutory clearances should be closely monitored.<\/li><li>Land acquisition: The process of land acquisition shall be started by the Procuring Entity well ahead and completed entirely, or at least substantially, before the work is started. Availability of auxiliary services has been ensured \u2014 like roads\/ access, power, water, solid & liquid waste disposal system, street lighting and other civic services.<\/li><li>It is desirable to have 100% of the required land in possession before award of contract; however, it may not always be possible to have the entire land due to prevailing circumstances.<\/li><li>Also, it may not be prudent to put the entire process of award of contract on hold for want of the remaining portion of land, which \u2014 in the assessment of the public authority or project executing authority \u2014 could possibly be acquired in a targeted manner after award of the contract, without affecting progress.<\/li><li>Minimum necessary encumbrance-free land should be available before award of contract. The minimum may be determined based on the circumstances of each case or general guidelines issued by the concerned authorities. Such land, non-availability of which will prevent essential components of work from execution, should be insisted upon.<\/li><li>Public Authorities\/ Project Executing Authorities should plan for acquiring balance land quickly and proper efforts be made for the same, which also should be duly recorded. The progress regarding land acquisition should be closely monitored.<\/li><\/ol>\n<\/div><h2 class=\"src-W srchead\" data-src=\" W \">1.18<\/span>Administrative Control and Powers to Sanction<\/span>W<\/span><\/h2><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n1. Administrative control of works includes (Rule 131, GFR 2017)<\/em>: a) Assumption of full responsibility for construction, maintenance and upkeep; b) Proper utilisation of buildings and allied works; c) Provision of funds for execution of these functions.<\/p>\n2. Powers to Sanction Works (Rule 132, GFR 2017)<\/em>: The powers delegated to various subordinate authorities to accord administrative approval, sanction expenditure and re-appropriate funds for works are regulated by the Delegation of Financial Powers Rules (DFPR) and other orders contained in the respective departmental regulations. The powers of the Department relating to works are detailed in Rule 133(1) and 133(2) of GFR, 2017.<\/p>\n3. Work under the administrative control of the Public Works Departments (Rule 134, GFR 2017)<\/em>: Works not specifically allotted to any Ministry or Department shall be included in the Grants for Civil Works to be administered by the Central Public Works Department. NO such work may be financed partly from funds provided in the departmental budget and partly from the budget for civil works.<\/p>\n<\/div><h2>1.19<\/span>Public Procurement Cycle<\/span><\/h2>\nThe procurement process for goods, works and\/or services typically involves the following cycle of activities, undertaken in the order stated below<\/strong>. Details and procedures of the various stages of the procurement cycle are described in the subsequent Chapters.<\/p>\nCommon four-stage spine (all four Manuals):<\/p>\nNeed Assessment \u2192 Bid Invitation Process \u2192 Bid Evaluation and Award of Contract \u2192 Contract Management<\/p>\n<h3 class=\"src-G srchead\" data-src=\" G \">1.19.1<\/span>Goods<\/span>G<\/span><\/h3><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\n<div class=\"tblwrap\"><table><thead><tr><th>Stage<\/th><th>Content<\/th><\/tr><\/thead><tbody><tr><td>a) Need Assessment<\/td><td>Need assessment, formulation of Specifications and Procurement Planning (including market consultation, if required)<\/td><\/tr><tr><td>b) Bid Invitation Process<\/td><td>Preparing tender documents, publication, receipt and opening of bids<\/td><\/tr><tr><td>c) Bid Evaluation and Award of Contract<\/td><td>Evaluation of bids and award of contract<\/td><\/tr><tr><td>d) Contract Management<\/td><td>Contract management and closure<\/strong><\/td><\/tr><tr><td>e) Disposal of Scrap<\/td><td>Disposal of Scrap through various modes of disposal<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h3 class=\"src-W srchead\" data-src=\" W \">1.19.2<\/span>Works<\/span>W<\/span><\/h3><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\nFollowing are the stages in planning, sanctioning and execution of work:<\/p>\n1. Need Assessment: a) Perspective Planning for works; b) Preparation of Preliminary Project Report (PPR) or Rough Cost Estimate; c) Acceptance of necessity and issue of in-Principle Approval; d) Preparation of Detailed Project Report (DPR) or Preliminary Estimate (PE); e) Administrative Approval and Expenditure Sanction (A\/A & E\/S) or 'Go ahead' Approval; f) Detailed Design, Estimate and Technical Sanction; g) Appropriation\/ re-appropriation of funds.<\/p>\n2. Bid Invitation Process:<\/strong> Preparation of Bid documents, Publication, Receipt and Opening of Bids.<\/p>\n3. Bid Evaluation and Award of Contract: a) Preliminary Examination and Evaluation of technical proposals \u2014 consideration of quality; b) Evaluation of financial proposals; c) Selection of winning proposal and award of the contract to the selected firm.<\/p>\n4. Contract Management: Execution and Monitoring of works and Quality Assurance.<\/p>\n<aside class=\"note\">Note W<\/span>: For repair works up to Rs. 60 (Sixty) lakh, expenditure sanction may be given on the basis of the Preliminary Project Report itself. Annexure 11 of the Works Manual shows the above-mentioned process of procurement of Public Works as a flow-chart.<\/p><\/aside>\n<\/div><h3 class=\"src-C srchead\" data-src=\" C \">1.19.3<\/span>Consultancy Services<\/span>C<\/span><\/h3><div class=\"srcblock src-C\" data-src=\" C \" data-label=\"Consultancy Manual only\">\nThe entire process of procurement and implementation of Consultancy services shall include the following steps:<\/p>\n1. Need Assessment: a) Preparation of Procurement Proposal (Concept Paper) and obtaining in-principle approvals; b) Preparation of the Terms of Reference (ToR), cost estimate and seeking administrative and budgetary approval; c) Developing a Procurement Plan.<\/p>\n2. Shortlisting of Qualified Consultants \u2014 EOI process.<\/p>\n3. RfP Invitation Process:<\/strong> Preparing 'Request for Proposal (RfP) Document<\/strong>', publication, receipt and opening of bids.<\/p>\n4. Bid Evaluation and Award of Contract: a) Preliminary Examination and Evaluation of technical proposals \u2014 consideration of quality; b) Evaluation of financial proposals; c) Selection of winning proposal; NEGOTIATIONS and award of the contract to the selected firm.<\/p>\n5. Contract Management: Execution and Monitoring of Consultancy Assignments.<\/p>\n<\/div><h3 class=\"src-NC srchead\" data-src=\" NC \">1.19.4<\/span>Non-Consultancy Services<\/span>NC<\/span><\/h3><div class=\"srcblock src-NC\" data-src=\" NC \" data-label=\"Non-Consultancy Manual only\">\nThe entire process of procurement and implementation of Non-consultancy services shall include the following steps:<\/p>\n1. Need Assessment:<\/strong> a) Preparation of Procurement Proposal (Concept Paper)<\/strong> and obtaining in-principle approvals; b) Preparation of the Services and Activities Schedule, cost estimate<\/strong> and seeking administrative and budgetary approval; c) Developing a Procurement Plan<\/strong>.<\/p>\n2. Bid Invitation Process:<\/strong> Preparing tender documents, publication, receipt and opening of bids.<\/p>\n3. Bid Evaluation and Award of Contract:<\/strong> a) Preliminary Examination and Evaluation of technical proposals \u2014 consideration of quality; b) Evaluation of financial proposals; c) Selection of winning proposal and award of the contract to the selected firm.<\/p>\n4. Contract Management: Execution and Monitoring of Service Contract.<\/p>\n<aside class=\"note\">Comparison at a glance \u2014 what differs between the four cycles:<\/p>\n<ul class=\"lst\"><li>Only Goods has a fifth stage: Disposal of Scrap.<\/li><li>Only Works<\/strong> breaks Need Assessment into seven sanctioning steps<\/strong> (PPR \u2192 in-principle approval \u2192 DPR\/PE \u2192 A\/A & E\/S \u2192 Technical Sanction \u2192 appropriation of funds).<\/li><li>Only Consultancy<\/strong> has a separate stage for Shortlisting\/ EoI<\/strong>, and an RfP Invitation Process<\/strong> in place of the ordinary Bid Invitation Process, and expressly includes Negotiations<\/strong> before award.<\/li><li>CS and NC both begin with a Procurement Proposal (Concept Paper).<\/li><\/ul><\/aside>\n<\/div><h2>1.20<\/span>Nomenclature Conundrum<\/span><\/h2>\n<ol class=\"lst\"><li>There is NO standardised nomenclature in Public Procurement in India, and a mix of American, European, and British\/ Indian nomenclature has become common.<\/li><\/ol>\n'Tender<\/strong>' is taken to mean:<\/p>\n<ul class=\"lst\"><li>(i) the 'Tender Document' or 'Tender Process', as well as<\/li><li>(ii) the 'Bid<\/strong>' submitted by the 'bidders<\/strong>'.<\/li><\/ul>\nThe Tender Document floated by the Procuring Entity is also called a Bid (or Bidding) Document. Similarly, participants in a 'tender' are alternatively called BIDDERS and TENDERERS. This duality is reflected in \"Notice Inviting Tenders\" and \"Instructions to Bidders\", etc.<\/p>\n<ol class=\"lst\"><li>An attempt is made in these Manuals to standardise:<\/li><li>the term 'Tender<\/strong>' for the 'Tender Document<\/strong>' (document prepared and published by the Procuring Entity \u2014 instead of bid\/ bidding document) or the 'Tender Process<\/strong>'; and<\/li><li>'Bid<\/strong>' for the bid submitted by the bidders \u2014 and hence 'bidder<\/strong>' is used instead of 'tenderer<\/strong>'.<\/li><\/ol>\nSimilar attempts are made to standardise other nomenclature in these documents without DISTURBING the nomenclature (e.g., 'Pre-qualification Bidding') already embedded in the CPPP or GeM portals.<\/p>\n<h1>Appendix to Chapter 1 \u2014 Points of Difference Between the Four Manuals<\/span><\/h1>\nA ready-reckoner of every place in Chapter 1 where the four Manuals genuinely differ, rather than merely rename.<\/em><\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Delegation of powers for procurement<\/td><td>G\/C\/NC:<\/strong> \"full powers<\/strong>\" for goods and services not on GeM; GeM mandatory under Rule 149. W:<\/strong> \"powers\" under DFPR only \u2014 no GeM mandate stated<\/strong><\/td><\/tr><tr><td>2<\/td><td>Relevant GFR chapters<\/td><td>G, C, NC:<\/strong> Chapters 6 to 9<\/strong>. W:<\/strong> Chapters 5 to 9<\/strong><\/td><\/tr><tr><td>3<\/td><td>Sale of Goods Act, 1930<\/td><td>Cited in G, C, NC<\/strong>; NOT<\/strong> in W<\/strong><\/td><\/tr><tr><td>4<\/td><td>Mediation Act, 2023<\/td><td>Cited in G, W, NC<\/strong>; NOT<\/strong> in C<\/strong>'s para 1.1 list<\/td><\/tr><tr><td>5<\/td><td>Indian Stamp Act, 1899<\/td><td>Cited in W, C, NC<\/strong>; NOT<\/strong> in G<\/strong><\/td><\/tr><tr><td>6<\/td><td>Classification of Works<\/strong> (Original\/ Minor\/ Repair \u2014 Rule 130)<\/td><td>W only<\/td><\/tr><tr><td>7<\/td><td>Rs 60 lakh in-house repair-work threshold<\/td><td>W only<\/td><\/tr><tr><td>8<\/td><td>Portals named<\/td><td>G:<\/strong> GeM + GePNIC<\/strong>. W:<\/strong>CPPP only<\/strong>. C\/NC:<\/strong> GeM + CPPP (\"generally<\/strong> conform\")<\/td><\/tr><tr><td>9<\/td><td>Composite contract refinements<\/strong> (new product vs AMC\/CMC; Notes 1\u20133)<\/td><td>W, C, NC<\/strong>; G<\/strong> has only the shorter version<\/td><\/tr><tr><td>10<\/td><td>Consultancy-vs-NC \"primary objective\" test (dam safety example)<\/td><td>W, c, nc; Not in G<\/td><\/tr><tr><td>11<\/td><td>FA Charter applies only to Ministries\/ Departments; CPSEs free to devise own system<\/td><td>G only<\/td><\/tr><tr><td>12<\/td><td>Standards (Canons) of Financial Propriety<\/td><td>G, W only<\/strong> \u2014 absent from C<\/strong> and NC<\/strong><\/td><\/tr><tr><td>13<\/td><td>Rule 21 clause (v)<\/strong> \u2014 allowances not a source of profit<\/td><td>W only<\/td><\/tr><tr><td>14<\/td><td>National SC\/ST Hub (NSSH)<\/td><td>G only<\/td><\/tr><tr><td>15<\/td><td>\"25% is only a minimum; MSE preference mandatory for all procurements\"<\/td><td>C, NC only<\/td><\/tr><tr><td>16<\/td><td>Non-tax benefits explained (schemes, delayed payments)<\/td><td>C only<\/td><\/tr><tr><td>17<\/td><td>Definitions of Class-I \/ Class-II \/ Non-local supplier in Chapter 1<\/td><td>W, C, NC<\/strong>; in G<\/strong> these are in the Glossary<\/strong><\/td><\/tr><tr><td>18<\/td><td>\"Rs 1000 Crore per annum \u2192 five-year procurement projections on website\"<\/td><td>G, C<\/td><\/tr><tr><td>19<\/td><td>Start-up benefits limited to the DPIIT-registered industry\/ sector<\/td><td>W, C<\/td><\/tr><tr><td>20<\/td><td>\"Relaxation can be partial \u2014 e.g. 25%\" footnote<\/td><td>W, C, NC<\/td><\/tr><tr><td>21<\/td><td>DMI&SP Policy<\/td><td>G:<\/strong> 2019 version. W:<\/strong>Revised 2025<\/strong> version (G.S.R. 341(E) dated 26.05.2025), framed for EPC tenders. Absent from C and NC<\/strong><\/td><\/tr><tr><td>22<\/td><td>\"When is procurement justified\"<\/td><td>C, NC only<\/td><\/tr><tr><td>23<\/td><td>\"Principles for Public Procurement of Services\"<\/td><td>C, NC only<\/td><\/tr><tr><td>24<\/td><td>Two-stage process mandated for Consultancy<\/td><td>C only<\/td><\/tr><tr><td>25<\/td><td>Enumerated list of 14 applicable laws<\/td><td>W only<\/strong> (G places them in Appendix 2; C\/NC cross-refer)<\/td><\/tr><tr><td>26<\/td><td>Law of Agency<\/td><td>W, c, nc; Not in G<\/td><\/tr><tr><td>27<\/td><td>RTI and Proactive Disclosures<\/td><td>G only<\/td><\/tr><tr><td>28<\/td><td>Basic Principles of Undertaking Works (13 principles)<\/td><td>W only<\/td><\/tr><tr><td>29<\/td><td>Administrative Control and Powers to Sanction<\/td><td>W only<\/td><\/tr><tr><td>30<\/td><td>Procurement Cycle \u2014 fifth stage \"Disposal of Scrap\"<\/td><td>G only<\/td><\/tr><tr><td>31<\/td><td>Procurement Cycle \u2014 Shortlisting\/ EoI as a separate stage; RfP in place of Bid Invitation; Negotiations named<\/td><td>C only<\/td><\/tr><tr><td>32<\/td><td>Procurement Cycle \u2014 Procurement Proposal (Concept Paper) as first step<\/td><td>C, NC<\/td><\/tr><tr><td>33<\/td><td>Repair works up to Rs 60 lakh \u2014 expenditure sanction on PPR alone<\/td><td>W only<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 1<\/p>\n<aside class=\"note\">Next:<\/strong> Chapter 2 \u2014 Need Assessment, Formulation of Specifications\/ Estimates\/ ToR\/ Activities Schedule, and Procurement Planning<\/em> (merging Goods Ch. 2, Works Ch. 2, Consultancy Ch. 2 and Non-Consultancy Ch. 2).<\/p><\/aside><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch2\">Chapter 2<\/p><h1>Need Assessment, Formulation of the Requirement, and Procurement Planning<\/h1><\/header>\nMerging: Goods Ch. 2 (Need Assessment, Formulation of Specifications and Procurement Planning) \u00b7 Works Ch. 2 (Need Assessment and Procurement Planning) \u00b7 Consultancy Ch. 2 \u00b7 Non-Consultancy Ch. 2<\/em><\/p><h2>The Central Idea of this Chapter<\/span><\/h2>\nThis is the chapter where the four Manuals genuinely diverge the most.<\/strong> Chapter 1 was largely common text; Chapter 2 is not. The reason is simple:<\/p>\n<aside class=\"note\">Every procurement must be described before it can be tendered \u2014 but the INSTRUMENT of description is different in each of the four categories.<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Initiating document<\/th><th>Description-of-requirement instrument<\/th><th>Approval architecture<\/th><\/tr><\/thead><tbody><tr><td>Goods<\/td><td>Indent \/ Purchase Requisition (Annexure 5)<\/td><td>Technical Specifications (TS)<\/td><td>Technical + Administrative + Budgetary sanction; signing of Indent<\/td><\/tr><tr><td>Works<\/td><td>Requisition \u2192 Perspective Plan<\/td><td>PPR\/ Rough Cost Estimate \u2192 DPR\/ Preliminary Estimate \u2192 Detailed Designs & Detailed Estimates<\/td><td>In-Principle Approval \u2192 A\/A and E\/S \u2192 Technical Sanction \u2192 Appropriation of funds<\/td><\/tr><tr><td>Consultancy<\/td><td>Procurement Proposal (Concept Paper) (Annexure 3)<\/td><td>Terms of Reference (ToR) (Annexure 4)<\/td><td>In-principle approval \u2192 Final Administrative and Budgetary Approval<\/td><\/tr><tr><td>Non-Consultancy<\/td><td>Procurement Proposal (Concept Paper) (Annexure 3)<\/td><td>Services and Activities Schedule (Annexure 4)<\/td><td>In-principle approval \u2192 Final Administrative and Budgetary Approval<\/td><\/tr><\/tbody><\/table><\/div>\nEverything else in this chapter \u2014 cost estimation principles, procurement planning, packaging\/slicing, cartel mitigation, annual procurement plans, risks and mitigations \u2014 is largely common and is stated once below.<\/p>\n<h2>Concordance for Chapter 2<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>Goods<\/th><th>Works<\/th><th>CS<\/th><th>NCS<\/th><\/tr><\/thead><tbody><tr><td>2.1<\/td><td>Need Assessment and the Initiating Document<\/td><td>2.1<\/td><td>2.1<\/td><td>2.1, 2.2<\/td><td>2.1, 2.2<\/td><\/tr><tr><td>2.2<\/td><td>Matters decided during Need Assessment<\/td><td>2.1-2<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>2.3<\/td><td>Estimation of Cost<\/td><td>2.1-2-f)<\/td><td>2.2, 2.4<\/td><td>2.4<\/td><td>2.3.2<\/td><\/tr><tr><td>2.4<\/td><td>Formulation of the Requirement \u2014 Goods: Technical Specifications<\/strong><\/td><td>2.2<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>2.5<\/td><td>Formulation of the Requirement \u2014 Works: PPR, DPR, designs, Estimates, Sanctions<\/td><td> \u2014 <\/td><td>2.2\u20132.8<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>2.6<\/td><td>Formulation of the Requirement \u2014 Consultancy: Terms of Reference<\/strong><\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>2.3<\/td><td> \u2014 <\/td><\/tr><tr><td>2.7<\/td><td>Formulation of the Requirement \u2014 NC: Services and Activities Schedule<\/strong><\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>2.3.1<\/td><\/tr><tr><td>2.8<\/td><td>Obtaining Sanctions\/ Approvals<\/td><td>2.3<\/td><td>2.3, 2.5, 2.7<\/td><td>2.5<\/td><td>2.3.3<\/td><\/tr><tr><td>2.9<\/td><td>Need Assessment & Formulation \u2014 Risks and Mitigations<\/td><td>2.4<\/td><td> \u2014 <\/td><td>2.6<\/td><td>2.3.4<\/td><\/tr><tr><td>2.10<\/td><td>Procurement Planning<\/td><td>2.5.1<\/td><td>2.9<\/td><td>2.7.1<\/td><td>2.4.1<\/td><\/tr><tr><td>2.11<\/td><td>Procurement Planning \u2014 Risks and Mitigations<\/td><td>2.5.2<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>2.4.2<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>2.1<\/span>Need Assessment and the Initiating Document<\/span><\/h2><h3 class=\"src-G srchead\" data-src=\" G \">2.1.1<\/span>Goods \u2014 the Indent<\/span>G<\/span><\/h3><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\n<ol class=\"lst\"><li>Procurements should be initiated only on the basis of an INDENT (please refer to Annexure 5 \u2014 Purchase Requisition (Indent) for Goods (Non-stock)) from the user Department.<\/li><li>The authority in the user Department initiating the indent for procurement shall first determine the need (including anticipated quantum) for the subject matter of the procurement.<\/li><li>Description and Specification of Need assessment is of FUNDAMENTAL IMPORTANCE in ensuring value for money, transparency, competition, and a level playing field in procurement.<\/li><li>The user department shall maintain all documents relating to the determination and technical\/ financial\/ budgetary approvals needed for procurement.<\/li><\/ol>\n<\/div><h3 class=\"src-W srchead\" data-src=\" W \">2.1.2<\/span>Works \u2014 Perspective Planning for Works<\/span>W<\/span><\/h3><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n<ol class=\"lst\"><li>Each Ministry\/ Department shall prepare a perspective plan for undertaking different types of works. There shall also be a provision for ANNUAL REVIEW of the plan for making modifications, if any.<\/li><li>During procurements, in place of considering only the initial acquisition cost<\/strong>, other costs like cost of operation, maintenance, and disposal during the lifetime<\/strong> of the external resource procured should also be considered. This practice refers to the concept of Total Cost of Ownership (TCO) or Life Cycle Cost (LCC) or Whole-of-Life (WOL)<\/strong>, as mentioned under para 1.7<\/strong> above.<\/li><\/ol>\n<\/div><h3 class=\"src-multi srchead\" data-src=\" C NC \">2.1.3<\/span>Consultancy and Non-Consultancy Services \u2014 the Procurement Proposal<\/span>C<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\">\n<ol class=\"lst\"><li>Procurement Proposal:<\/strong> A critical part of the procurement of Services process is preparing an appropriately staffed and budgeted Procurement Proposal\/ Concept Paper<\/strong> \u2014 which serves the function that an INDENT serves in procurement of Goods<\/strong>. The authority in the user Department initiating the procurement proposal shall first determine the need (including anticipated quantum)<\/strong> for the subject matter of the procurement.<\/li><\/ol>\nPurpose\/ Objective Statement of Services, Service Outcome Statement, and justification for the procurement of Services are important parts of the procurement proposal.<\/p>\n<ol class=\"lst\"><li>The description instrument:<\/li><li class=\"srcmark src-C\" data-src=\" C \">C<\/span>Terms of Reference<\/strong> containing Scope of Work, Time-frame, Key Staff, Deliverables\/ Milestones<\/strong> is of fundamental importance in ensuring value for money, transparency, competition, and a level playing field in procurement of Consultancy Services.<\/li><li class=\"srcmark src-NC\" data-src=\" NC \">NC<\/span>Services and Activity Schedule<\/strong> containing Service Outcomes, Description\/ Scope of Services, Quantum and Length (Duration\/ Frequency\/ Shifts) of activities<\/strong> is of fundamental importance in ensuring value for money, transparency, competition, and a level playing field in procurement of NC Services.<\/li><\/ol>\nThe user Department shall maintain all documents relating to the determination and technical\/ financial\/ budgetary approvals of the need for procurement.<\/p>\n<h4 class=\"src-multi srchead\" data-src=\" C NC \">2.1.3.1<\/span>Preparing the Procurement Proposal\/ Concept Paper<\/span>C<\/span>NC<\/span><\/h4><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\">\nAs a first step towards procurement of services, a formal written brief Proposal and Justification for the Services should be prepared (suggested format at Annexure 3: Format of Procurement Proposal). It is akin to the Indent for Materials\/ Material Requisition in the case of Procurement of Goods.<\/p>\nThe User should prepare, in simple and concise language, the requirement, purpose\/ objectives and the scope\/ outcomes of the assignment\/ Services, and justify the procurement based on analysis of in-house available capacity\/ capability.<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-C\" data-src=\" C \">C<\/span>The eligibility and PRE-QUALIFICATION criteria to be met by the consultants<\/strong> should also be clearly identified at this stage.<\/li><li class=\"srcmark src-NC\" data-src=\" NC \">NC<\/span>The eligibility and QUALIFICATION criteria to be met by the service providers<\/strong> should also be clearly identified at this stage.<\/li><\/ul>\nJustifications for procurement of Services as given in para 1.12 may be kept in view. It is the basic document for initiating procurement of services. It is also the document from which the subsequent detailing of the ToR C<\/span> \/ Services and Activities Schedule NC<\/span> is drawn up.<\/p>\nA procurement proposal should contain:<\/p>\n1. Purpose\/ Objective Statement of Services: The user should prepare a \"Purpose\/ Objective Statement of Services\". One of the important contents of this statement is the description of service to describe the subject matter of procurement, which would be used in all subsequent documents. Bringing out the background and context, this should justify how the proposed procurement of services would fit in with the short-term and strategic goals of the Procuring Entity. Making such a statement is important to put the need for services in clear perspective. It may seem elementary or academic, but is a necessary and critical first step in properly designing a procurement proposal.<\/p>\n2. Service Outcome Statement:<\/strong> Once the \"Purpose\/ Objective of Services\" has been clearly defined, the next step is to formulate a 'Service Outcome Statement<\/strong>'. This should list out QUALITATIVELY and QUANTITATIVELY the outcomes expected<\/strong> from the Procurement of Services, as well as the expected Time-frame<\/strong> and a rough estimate of cost<\/strong> of Procurement of services (including related costs to be incurred by the organisation<\/strong>).<\/p>\nAt this stage, it is not necessary to go into details of all the activities<\/strong> required to achieve the service outcomes, but it should list at least the BROAD activities<\/strong>, which would help in putting a rough estimate to the cost of the assignment.<\/p>\nA 'Service Outcome Statement' should provide a concrete basis for subsequently defining the type and amount of work that needs to be done by the Consultant\/ service provider, and the time-frame within which the output needs to be received by the user. The estimated cost is needed to ascertain the level of administrative\/ financial approvals necessary as per the SoPP.<\/p>\n3. Justification for the Procurement of Services: The Concept Paper\/ Procurement Proposal should analyse the capabilities\/ capacities REQUIRED to carry out the assignment. It should also analyse the AVAILABLE IN-HOUSE capabilities\/ capacities and COMPARE these with the ones required for the assignment. Based on this assessment, the Procurement should be justified in the light of para 1.12.<\/p>\n<\/div><h4 class=\"src-multi srchead\" data-src=\" C NC \">2.1.3.2<\/span>In-principle Approval for initiating procurement of Services<\/span>C<\/span>NC<\/span><\/h4><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\">\nBased on the justification contained in the Procurement Proposal, in-principle administrative approval and BUDGETARY SANCTION for initiating procurement of such services should be accorded by the Competent Authority (CA) as laid down in the SoPP.<\/p>\nFurther stages May be proceeded with only after such approvals. (C<\/span> cites Rule 180 of GFR 2017.)<\/em><\/p>\n<\/div><\/div><h2 class=\"src-G srchead\" data-src=\" G \">2.2<\/span>Matters Decided During Need Assessment<\/span>G<\/span>of general application<\/span><\/h2><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\nDuring need assessments, the following matters are decided to comply with the 'Procurement Guidelines':<\/p>\n<h3>a) Expression\/ Description of the Need<\/span><\/h3>\nThe expression\/ description of the need is an important determinant of Value for Money (VfM) and wide competition<\/strong>. Therefore, to the extent practicable, it should be:<\/p>\n<ul class=\"lst\"><li>i) Unambiguous, complete, using common terminology prevalent in the relevant trade;<\/li><li>ii) In accordance with the guidelines prescribed, if any, in this regard;<\/li><li>iii) Except in the case of proprietary purchase from a selected single source, reference to trademark, brand\/ trade names, catalogue numbers, or other details that limit any materials or items to specific manufacturer(s) should be AVOIDED as far as possible. Where unavoidable, such item descriptions should always be followed by the words \"or substantially equivalent.\"<\/li><\/ul>\n<h3>b) Method of Satisfying the Need<\/span><\/h3>\nThe method of satisfying the need \u2014 owning\/ leasing\/ hiring\/ outsourcing or through Public Private Partnership (PPP)<\/strong>, and so on \u2014 may be determined:<\/p>\n<ul class=\"lst\"><li>as per policies declared in this regard, or<\/li><li>based on a techno-economic evaluation (using life cycle cost if feasible) of various alternative methods of satisfaction of the need, and compatibility and inter-operability with existing infrastructure or systems.<\/li><\/ul>\nThere are now new procurement approaches like:<\/p>\n<ul class=\"lst\"><li>Hardware as a Service (HaaS)<\/strong>, also known as Infrastructure as a Service (IaaS)<\/strong> \u2014 it allows customers to outsource their IT infrastructures, such as servers, networking, processing, storage, virtual machines, and other resources. Customers access these resources on the Internet using a pay-as-per-use model.<\/em><\/li><li>Software as a Service (SaaS)<\/strong> \u2014 the SaaS provider is responsible for operating, managing, and maintaining the application software hosted on the cloud and the infrastructure on which it runs. The customer simply creates an account, pays a fee and uses the software over an internet connection by way of a web browser, mobile app or thin client.<\/em><\/li><\/ul>\n<h3>c) Quantity of the Subject Matter of Procurement, Commensurate with Economy<\/span><\/h3>\n<ul class=\"lst\"><li>i) Care should be taken to avoid purchasing quantities in excess of the requirement to avoid inventory carrying costs. Where scales of consumption or usage limits of requirements have been laid down by the Competent Authority, the officer signing the indent should also CERTIFY that the prescribed scales or limits are not exceeded. It is also necessary to round off the calculated quantity to the nearest wagon load\/ truckload\/ package to economise on transportation.<\/li><li>ii) An appropriate size of the tender has a great impact on value for money and the level of competition. A balance is achieved by judicious packaging requirements of different users or slicing requirements into smaller tenders (see para 2.10 below on the merits and demerits of packaging and slicing).<\/li><li>iii) units of quantity are an important parameter. Some items may be manufactured in metric tons but used in units of numbers or units of length (for example, steel sheets\/ structurals). For the sake of transparency, it is important to buy an item in units of manufacture. For example, it is better to buy steel\/ structurals in units of WEIGHT, since it has a tolerance in weight per unit of length; this usually works to the disadvantage of the buyer if it is bought in units of length. The buying and issuing units of an item may be different \u2014 but should be standardised.<\/li><\/ul>\n<h3>d) Time-schedule and Place of Product\/ Work\/ Service Delivery<\/span><\/h3>\nNeed assessment and generation of indent for procurement should be done sufficiently in advance of the time when goods are required. Delays in need assessment have an ADVERSE IMPACT on value for money and transparency.<\/p>\nGreat care is required to be exercised in filling up REALISTIC DATES for the requirement of material. The procuring entity should be allowed time in accordance with the established lead times.<\/p>\nIn urgent cases, the procuring entity may entertain indents providing shorter periods, but such urgencies must be approved by the authority empowered to grant administrative approval for the indent, and must be accompanied by PROPER JUSTIFICATION.<\/p>\n<h3>e) Formulation of Specifications<\/span><\/h3>\nFormulation of Specifications ensures value for money, transparency, a level playing field, and the widest competition. (Detailed at paras 2.4 to 2.7 below, category-wise.)<\/em><\/p>\n<h3>f) Estimation of Cost<\/span><\/h3>\n(Detailed at para 2.3 below.)<\/em><\/p>\n<\/div><h2>2.3<\/span>Estimation of Cost<\/span><\/h2><h3 class=\"src-G srchead\" data-src=\" G \">2.3.1<\/span>Why the Estimate Matters<\/span>G<\/span>of general application<\/span><\/h3><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\nThe estimated cost in the indent is a VITAL ELEMENT in:<\/p>\n<ul class=\"lst\"><li>various procurement processes,<\/li><li>approvals, and<\/li><li>the establishment of reasonable prices at the time of evaluation of the bids.<\/li><\/ul>\nTherefore, it should be worked out REALISTICALLY and OBJECTIVELY.<\/p>\nFollowing are some suggested methods of cost estimates. These are neither mandatory nor comprehensive nor in any order of preference. These methods are not mutually exclusive, and TRIANGULATION from different methods would give a more accurate estimate of cost.<\/p>\n<h4>A. Where historical cost data IS available<\/span><\/h4>\nLast purchase price<\/strong> (or estimated rate in past indents) of this or similar or nearly equivalent requirements \u2014 after due updation<\/strong> as per D below.<\/p>\n<h4>B. Where NO historical cost data is available \u2014 Costing Analysis<\/span><\/h4>\nCosting analysis through internal or external expert costing agencies provides a reliable estimate of cost.<\/p>\n<h4>C. Where NO historical cost data is available AND Costing Analysis is NOT feasible<\/span><\/h4>\nIn such situations, a rough assessment of cost can be arrived at \u2014 but should be used with CAUTION for evaluation of the reasonableness of bids:<\/p>\n<ol class=\"lst\"><li>Rough assessment from the price of the assembly\/ machine of which the item is a part, or vice versa;<\/li><li>Published catalogues\/ Maximum Retail Price (MRP) printed on the item is the main source for establishing the estimated cost of items. It may be noted that MRPs usually include SIGNIFICANT MARGINS for distributors, wholesalers, and retailers;<\/li><li>As a LAST RESORT, a rough assessment of the opportunity cost of not using this item at all;<\/li><li>Market Survey: For commercially available goods, a formal market survey online (GeM portal or other commercial market apps) or a physical survey of the market can provide a reasonable estimate of cost;<\/li><li>Budgetary Quotes: For equipment\/ craft that are custom-built to the buyer's specifications, the best way to get a rough assessment of costs is by obtaining budgetary quotes from potential parties.<\/li><li>Ideally, there should be three quotes.<\/li><li>However, there is a need to have a time schedule for receipt of quotes<\/strong> to ensure some timeframe for this activity.<\/li><li>An attempt should be made to obtain as many budgetary quotes as possible from reputed\/ potential firms, and a time (if feasible, ten to twenty-one days) should be indicated.<\/li><li>In the event of receipt of less than three budgetary quotes, two EXTENSIONS (if feasible, of five days each) may be considered.<\/li><li>In the event of the non-availability of three quotes within the above extended period, the estimates should be prepared based on the number of budgetary quote(s) received \u2014 which May even be one.<\/li><li>Where more than one budgetary quote is received, the estimate should be framed on an AVERAGE of the quotes, which will reduce variations and fluctuations.<\/li><li>CAUTION: Budgetary quotes are not exact estimates \u2014 the bidder who EXPECTS to be short-listed may quote HIGH rates, and the bidder who does not expect to be shortlisted may quote ABNORMALLY LOW prices to queer the pitch for others.<\/li><\/ol>\n<h4>D. Updation of Historical Data<\/span><\/h4>\nHistorical cost data can be supplemented with escalations to cater for inflation, price increases of raw materials, labour, energy, statutory changes, price indices, and so on, to make them usable in conditions prevailing currently. In the case of foreign currencies, the rate should be reduced to a common denomination of Indian Rupees.<\/p>\nPrice indices can be obtained from the following websites<\/strong>(some may require prior free registration, and some have paid subscriptions)<\/em>:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Purpose<\/th><th>Source<\/th><\/tr><\/thead><tbody><tr><td>Price indices of indigenous items<\/strong><\/td><td>http:\/\/www.eaindustry.nic.in\/home.asp.in \u2014 Ministry of Industry<\/td><\/tr><tr><td>Metals and other minerals<\/td><td>http:\/\/www.mmronline.com\/ \u00b7 http:\/\/www.metalprices.com\/index.asp \u00b7 http:\/\/www.asianmetal.com\/<\/td><\/tr><tr><td>Price trends of non-ferrous metals<\/td><td>London Metal Exchange<\/strong> \u2014 https:\/\/www.lme.com\/ (often show volatile trends<\/em>)<\/td><\/tr><tr><td>General economic\/ trade intelligence<\/td><td>http:\/\/www.tradeintelligence.com\/ \u00b7 http:\/\/www.cmie.com\/ (Centre for Monitoring Indian Economy<\/strong>)<\/td><\/tr><tr><td>Price trends of different countries<\/td><td>http:\/\/www.imf.org\/external\/pubs\/ft\/weo\/2015\/01\/ \u2014 International Monetary Fund<\/strong><\/td><\/tr><tr><td>Industry chambers<\/td><td>www.ieema.org \u2014 Indian Electrical and Electronics Manufacturers' Association<\/td><\/tr><tr><td>Commodity Prices<\/td><td>Multi Commodity Exchange of India Limited (MCX) \u2014 https:\/\/www.mcxindia.com\/home<\/td><\/tr><tr><td>Cross-commodity price reporting agency (PRA)<\/td><td>Fastmarkets<\/strong> \u2014 https:\/\/www.fastmarkets.com\/<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h3 class=\"src-C srchead\" data-src=\" C \">2.3.2<\/span>Cost Estimation for Consultancy Services<\/span>C<\/span><\/h3><div class=\"srcblock src-C\" data-src=\" C \" data-label=\"Consultancy Manual only\">\nPreparation of a well-thought-through cost estimate is ESSENTIAL if realistic budgetary resources are to be earmarked.<\/p>\na) Categories:<\/strong> Costs shall be divided into Two broad categories<\/strong>:<\/p>\n<ul class=\"lst\"><li>(a) fee or remuneration<\/strong> (according to the type of contract used); and<\/li><li>(b) reimbursable costs.<\/li><\/ul>\nDepending on the nature of the assignment, cost estimates may be prepared either in local currency or with a combination of local plus foreign currencies. Cost estimate should provide for forecast of inflation during the period of assignment.<\/p>\nb) Estimated Resources:<\/strong> The cost estimate shall be based on the Procuring Entity's assessment of the resources needed<\/strong> to carry out the assignment:<\/p>\n<ul class=\"lst\"><li>i) Staff time;<\/li><li>ii) Logistical support<\/strong> (City, National and International Travels\/ Trips and durations); and<\/li><li>iii) Physical inputs<\/strong> (for example, vehicles, laboratory equipment);<\/li><li>iv) Miscellaneous<\/strong> (Support services, contingencies, and Profit element, taxes, and duties).<\/li><\/ul>\nc) Rates:<\/strong> Costs are normally estimated using UNIT RATES<\/strong> (staff remuneration rates, reimbursable expenses) and quantities<\/strong> (exceptionally, some items may be estimated on a lump-sum basis or percentage basis<\/strong> \u2014 Contingencies and support services). Rates of payment should be identified (including applicable taxes, if any) in LOCAL and FOREIGN currency<\/strong> for Staff Time, Logistics Costs and Costs of various physical inputs\/ support services.<\/p>\nd) Staff Costs: The estimate of staff cost is based on an estimate of the personnel time (staff-months or staff-hours) required for carrying out the assignment, taking into account the time required by each expert, his or her BILLING RATE, and the related DIRECT COST component.<\/p>\nIn general, staff remuneration rates include: Basic salary, social charges, overheads, fees or profit, and ALLOWANCES.<\/p>\nIt is useful to prepare a bar chart<\/strong> indicating:<\/p>\n<ul class=\"lst\"><li>the duration of each main activity (WORK SCHEDULE), and<\/li><li>time to be spent by different members of the consultancy team (STAFFING SCHEDULE),<\/li><\/ul>\ndistinguishing tasks to be carried out by FOREIGN and LOCAL consultants. Due consideration should be given to the expected breakdown of a consultant's time in the home office and client's countries, and away-from-home-office allowance.<\/p>\ne) Logistic Costs: The number of trips required should be estimated as required to carry out various activities. Travel costs may be included for city travel, National and International travel and stay.<\/p>\nf) Physical Inputs Costs: Assessment of such costs would depend on the technical requirements of equipment.<\/p>\ng) Miscellaneous costs: Support services may be taken as a percentage of staff costs. Contingencies and Profit elements are usually taken as a percentage of the total cost of the Consultancy. To this would be added the taxes and duties likely to be incurred by the consultants.<\/p>\nCost categories for breaking down an assignment C<\/span>: Although assignments vary in size, length, and nature, it is possible to make a cost estimate by breaking down the assignment's activities into the following cost categories: a) Professional and support staff; b) Travel, Hotel, and transport; c) Mobilisation and demobilisation; d) Office rent, Furniture\/ Equipment, supplies, Utilities, IT equipment and communication; e) Assignment-related surveys, training programmes; f) Translation, report printing; g) Contingencies: miscellaneous, insurance, shipping; and h) Indirect local taxes and duties in connection with carrying out the services.<\/p>\n<aside class=\"note\">A MISMATCH between the cost estimate and the ToR is likely to MISLEAD CONSULTANTS on the desired scope, depth, and details of service required, and this could lead to SERIOUS PROBLEMS during contract negotiations or during implementation of the assignment.<\/p><\/aside>\n<\/div><h3 class=\"src-NC srchead\" data-src=\" NC \">2.3.3<\/span>Cost Estimation for Non-Consultancy Services<\/span>NC<\/span><\/h3><div class=\"srcblock src-NC\" data-src=\" NC \" data-label=\"Non-Consultancy Manual only\">\nPreparation of a well-thought-through cost estimate is essential if realistic budgetary resources are to be earmarked. The cost estimate shall be based on the Procuring Entity's assessment of the resources needed to carry out the services: managerial and staff time and physical inputs (for example, materials, consumables, tools and machines).<\/p>\nCosts shall be divided into three broad categories.<\/strong>Profit element, Taxes and duties should be ADDED to the estimated costs:<\/strong> a) Remunerations for Personnel deployed<\/strong>; b) Reimbursable:<\/strong> Travel, logistics, Consumables, Materials, Tools, Hiring of third-party services, etc.; c) Administrative and Miscellaneous:<\/strong> Mobilisation, demobilisation, Temporary Structures, Administrative expenses, office and IT equipment, contingencies, financing costs, Costs for hiring\/ depreciation\/ financing of machinery and equipment, etc.<\/p>\nRates:<\/strong> Costs are normally estimated using unit rates<\/strong> (staff remuneration rates, reimbursable expenses) and quantities<\/strong> (exceptionally some items may be estimated on a lump-sum basis or percentage basis<\/strong> \u2014 Contingencies and support services).<\/p>\nStaff Costs: The estimate of staff cost is based on an estimate of the personnel time (staff-months\/ weeks\/ days) required for delivering the services, considering the time required by each staff, his remuneration rate (or the minimum wage rate, if applicable), and the related direct cost component. In general, staff remuneration rates include basic salary, social charges, overheads, fees or profit and allowances.<\/p>\n<aside class=\"note\">A MISMATCH between the cost estimate and the Services and Activities Schedule is likely to mislead service providers on the desired scope, quantum, and frequency of service required, and this could lead to SERIOUS PROBLEMS during contract implementation.<\/p>\nNote the difference:<\/strong>C<\/span> uses TWO<\/strong> cost categories (fee\/ remuneration + reimbursable), with profit\/ taxes folded into \"Miscellaneous\". NC<\/span> uses THREE<\/strong> categories (Remuneration + Reimbursable + Administrative & Miscellaneous), with profit, taxes and duties added on top<\/strong>. NC<\/span> alone refers to the minimum wage rate<\/strong>.<\/p><\/aside>\n<\/div><h3 class=\"src-W srchead\" data-src=\" W \">2.3.4<\/span>Cost Estimation for Works<\/span>W<\/span><\/h3><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n(Works cost estimation is embedded in the PPR \u2192 DPR \u2192 Detailed Estimates sequence \u2014 see para 2.5 below, and the reference documents at para 2.5.7.)<\/em><\/p>\n<\/div><h2 class=\"src-G srchead\" data-src=\" G \">2.4<\/span>Formulation of the Requirement \u2014 GOODS: Technical Specifications (TS)<\/span>G<\/span><\/h2><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\"><h3>2.4.1<\/span>Value for Money and Technical Specifications<\/span><\/h3>\nThe procuring authority should ensure that specifications are developed to ensure VfM, a level playing field and wide competition in procurement [Rule 173(ix) of GFR 2017].<\/p>\nThe TS constitute the BENCHMARKS against which the procuring entity will verify the technical responsiveness of bids and, subsequently, evaluate the bids. Therefore, well-defined TS will facilitate:<\/p>\n<ul class=\"lst\"><li>the preparation of responsive bids by bidders, as well as<\/li><li>the examination, evaluation, and comparison of the bids by the procuring entity.<\/li><\/ul>\nIt would also help in ensuring the QUALITY of the supplied goods.<\/p>\nThe procuring authority should ensure that the specification should:<\/p>\n1. Ensure a level playing field and the widest competition;<\/p>\n2. Be unambiguous, precise, objective, functional, broad-based\/ generic, standardised (for items procured repeatedly) and measurable. TS should be broad enough to avoid restrictions on workmanship, materials and equipment commonly used in manufacturing similar kinds of goods;<\/p>\n3. Set out the required technical, qualitative and performance characteristics to meet just the bare essential specific needs of the procuring entity, without including SUPERFLUOUS and NON-ESSENTIAL features, which may result in unwarranted expenditure;<\/p>\n4. Standards:<\/p>\n<ul class=\"lst\"><li>Normally, these standards should be based on national technical regulations or recognised national standards (Bureau of Indian Standards \u2014 BIS) or building codes, wherever such standards exist. Preference should be given to procure the goods which carry the BIS mark.<\/li><li>In the absence of national standards, TS may be based on the relevant INTERNATIONAL standards.<\/li><li>Provided that an indenting authority may, for reasons to be recorded in writing, base the TS on equivalent international standards even in cases where BIS standards exist.<\/li><li>For any deviations from Indian standards or for any additional parameters for better performance, specific reasons for deviations\/ modifications should be duly recorded with the approval of the Competent Authority.<\/li><li>Where the technical parameters are only MARGINALLY different, Indian standards may be specified, and the Departmental specifications could cover only such additional details as packing, marking, inspection, and so on, as are specially required for a particular end use.<\/li><\/ul>\n<aside class=\"note\">Footnote: It has been reiterated by the Department of Expenditure vide OM F.No. 12\/17\/2019-PPD dated 12.05.2020 that wherever Indian Technical specifications and Quality Certifications exist, the procuring entity should prescribe them. In those rare or exceptional cases where, despite the existence of Indian technical specifications, the procuring entity intends to specify foreign Technical Certifications and Accreditations, it must record its reasons in writing for adoption of such other technical specifications. This may also be subject to matter of audit.<\/p><\/aside>\n5. Units: All dimensions incorporated in the specifications shall be indicated in metric units. If, for some unavoidable reason, dimensions in FPS units are to be mentioned, the corresponding equivalents in the metric system must also be indicated. In the case of Government of India funded projects ABROAD, the technical specifications may be framed based on the requirements and standards of the host beneficiary Government, where such standards exist \u2014 provided that a procuring entity may, for reasons to be recorded in writing, adopt any other technical specification;<\/p>\n6. Make use of best practices: Examples of specifications from successful similar procurements in other organisations or sectors may provide a sound basis for drafting the TS;<\/p>\n7. Avoid obsolescence: Commensurate with VfM, avoid procurement of obsolete goods, and require that all goods and materials be NEW, UNUSED and of the most recent or current models, and that they incorporate all recent improvements in design and materials, unless provided for otherwise in the tender documents;<\/p>\n<h3 class=\"src-G srchead\" data-src=\" G \">2.4.2<\/span>Environmental Issues, Green Procurement, Sustainable Development Goals<\/span>G<\/span><\/h3><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\na) Comply with sustainability criteria and legal requirements of environment or pollution control and other mandatory and statutory regulations or internal guidelines, if any, applicable to the goods to be purchased.<\/p>\nb) While specifying packaging requirements in the supply of Goods\/ Works\/ Services, the procuring entity may emphasise packaging that has minimal impact on the environment without compromising on safety and security.<\/p>\nc) Ecomark:<\/strong> The procuring Entity may include a requirement for the Ecomark Label<\/strong>, to the extent feasible, in their Description\/ Specification of the goods being procured.<\/p>\nThe Government of India has promulgated the Ecomark Certification Rules, 2023<\/strong> for:<\/p>\n<ul class=\"lst\"><li>labelling environmentally friendly products<\/strong> that meet the approved environment criteria, and<\/li><li>ensuring environmental performance of such products with respect to resource efficiency, circular economy and environmental impacts \u2014 in particular the impact on climate change, the impact on nature and biodiversity, generation of waste, emissions to all environmental media, pollution through physical effects, and use and release of hazardous substances<\/li><\/ul>\n \u2014 thereby supporting the principles of 'LiFE (Lifestyle for Environment)'.<\/p>\nObjective: to encourage consumers to adopt such products and the manufacturers to transition to the production of Ecomark-certified products to promote sustainability. It shall be applicable to any product that is produced or supplied for distribution or use in the market, unless otherwise excluded under the Ecomark Certification Rules. It would also prevent misleading information on the environmental aspects of products.<\/p>\nd) Efficiency factors: Specifications should emphasise factors such as efficiency, optimum fuel\/ power consumption, use of environmentally friendly materials, reduced noise and emission levels, low maintenance cost, and so on.<\/p>\ni) Bureau of Energy Efficiency (BEE): The Government of India set up the BEE (https:\/\/beeindia.gov.in\/en) on 1 March 2002, under the provisions of the Energy Conservation Act, 2001, with the primary objective of reducing the energy intensity of the Indian economy. The Bureau initiated the Standards & Labelling Programme for equipment and appliances in 2006 to provide the consumer with an informed choice about energy saving and, thereby, the cost-saving potential of the relevant marketed product.<\/p>\nii) Coverage: The scheme is invoked for 34 equipment\/ appliances, out of which labelling is mandatory for 11 equipment\/ appliances, i.e.:<\/p>\n<aside class=\"note\">Frost-Free Refrigerator \u00b7 Stationary Storage Type Electric Water Heater \u00b7 Colour Television \u00b7 Room Air Conditioner (RAC \u2014 Variable Speed; Fixed Speed; Cassette; Floor Standing Tower; Ceiling; Corner) \u00b7 TFL \u00b7 LED Lamps \u00b7 Distribution Transformer \u00b7 Direct Cool Refrigerator \u00b7 Ceiling Fan<\/p><\/aside>\nThe other appliances are presently under the VOLUNTARY labelling phase.<\/p>\niii) Star ratings: The energy efficiency labelling programmes under BEE are intended to reduce the energy consumption of appliances without DIMINISHING the services they provide to consumers. The higher the stars, the more EFFICIENT the appliance. The threshold ratings prescribed by the Ministry of Finance are:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Appliance<\/th><th>Threshold Star Rating<\/th><\/tr><\/thead><tbody><tr><td>Split Air Conditioners<\/td><td>5 Star<\/strong> (under normal conditions where annual usage is expected to be more than 1000 Hrs<\/strong>) 3 Star<\/strong> (where usage of AC is limited<\/strong>, e.g., in conference rooms)<\/td><\/tr><tr><td>Frost Free Refrigerators<\/td><td>4 Star<\/td><\/tr><tr><td>Ceiling Fans<\/td><td>5 Star<\/td><\/tr><tr><td>Water Heaters<\/td><td>5 Star<\/td><\/tr><\/tbody><\/table><\/div>\niv) Building it into the TS:<\/strong> The procuring Entity should try to build either the BEE Star rating<\/strong>, where applicable, and minimum energy efficiency<\/strong>, where such star ratings are not yet available, into the TS<\/strong> (in accordance with Rule 173(xvii) of GFR 2017<\/strong>). Such benchmarking illustrates the use of neutral and dependable benchmarking<\/strong> in the procurement of sustainable, environmentally favourable goods by way of appropriately formulated Technical Specifications.<\/p>\nIn a similar fashion, to implement sustainability goals, TS may include an Environmental Product Declaration (EPD) as defined by ISO 14025 as a Type III declaration that \"quantifies environmental information on the life cycle of a product to enable comparisons between products fulfilling the same function\". Voluntary environmental standards can also be used to specify environmental sustainability criteria.<\/p>\n<\/div><h3 class=\"src-G srchead\" data-src=\" G \">2.4.3<\/span>Discourage Procurement Involving Evaluation of Samples\/ Demonstration of Equipment<\/span>G<\/span><\/h3><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\nAccording to the existing guidelines on public procurement of goods, purchase in accordance with a sample, or requiring demonstration of equipment, should not be usually undertaken.<\/p>\na) Calling for a sample along with the tender, or requiring a demonstration of equipment after bid opening, and deciding based on evaluation of the sample\/ demonstration of equipment should not be done.<\/p>\nb) Built-in sample clauses: In certain specifications, there may be a built-in sample clause. Usually, such clauses are stipulated to illustrate INDETERMINABLE CHARACTERISTICS such as shade\/ tone, make-up, feel, finish, workmanship, and so on. In some specifications there may not be a sample clause, but such indeterminable characteristics are left to be agreed between the seller and buyer. One way to procure\/ indigenise certain spares whose drawings\/ specifications are not available is to procure in accordance with an available sample of the part. In such cases, the supply must conform to an agreed reference sample only, whereas the remaining characteristics must conform to the drawings\/ specifications.<\/p>\nc) The reference-sample procedure: However, NO sample should be called for or evaluated along with the bids. If desired:<\/p>\n<ul class=\"lst\"><li>Three COPIES of the purchaser's REFERENCE SAMPLE with seal\/ label may be DISPLAYED<\/strong> for prospective bidders to illustrate the desired indeterminable characteristics, which final supplies from successful bidder(s) will have to meet in addition to the specifications\/ drawings<\/strong>.<\/li><li>If required, in addition to the purchaser's reference sample, the provision for the submission of a PRE-PRODUCTION SAMPLE matching the purchaser's sample by the successful bidder(s) may be stipulated for indeterminable characteristics before giving clearance for bulk production of the supply.<\/li><li>On placement of the contract, the three copies of the purchaser's reference sample are distributed as follows:<\/li><li>One copy \u2192 to the CONTRACTOR<\/strong> for preparing pre-production sample\/ supplies;<\/li><li>One copy \u2192 to the CONSIGNEE<\/strong> for matching with the pre-production sample\/ supplies;<\/li><li>One copy \u2192 kept secure under lock and key in the SAMPLE ROOM of the procuring entity.<\/li><li>The Indent for items that are to be procured in accordance with a sample must be accompanied by three sealed reference samples, as far as possible.<\/li><\/ul>\nd) Demonstration: If a demonstration of equipment (say, entirely newly developed equipment) is considered necessary, it may be planned only during the PRE-BID stage \u2014 but the evaluation of tenders should not be based on this.<\/p>\n<\/div><h3 class=\"src-G srchead\" data-src=\" G \">2.4.4<\/span>Essential Technical Particulars<\/span>G<\/span><\/h3><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\nThe essential Technical particulars to be specified in the tender document<\/strong> shall include the following, to the extent applicable for a particular purchase<\/strong>:<\/p>\n<ol class=\"lst\"><li>Scope of supply and END USE<\/strong> of the required goods;<\/li><li>All essential technical, qualitative, functional, environmental and performance characteristics and requirements \u2014 such as material composition, physical dimensions and tolerances, workmanship, and manufacturing process wherever applicable; test schedule, if any \u2014 including guaranteed or acceptable MAXIMUM or MINIMUM values, as appropriate.<\/li><\/ol>\n<aside class=\"note\">Whenever necessary, the user may include an additional format for guaranteed technical parameters (as an attachment to the bid submission sheet), where the bidder shall provide detailed information on such technical performance characteristics in reference to the corresponding acceptable or guaranteed values.<\/p><\/aside>\n<ol class=\"lst\"><li>Drawings;<\/li><li>Requirement of the BIS mark, where applicable \u2014 mentioning all parameters where such a specification provides options;<\/li><li>Requirement of a PRE-PRODUCTION SAMPLE, if any, at the post-contract stage before bulk production;<\/li><li>Specific requirements of PRESERVATION, PACKING and MARKING, if any;<\/li><li>INSPECTION PROCEDURE for goods ordered and criteria of conformity;<\/li><li>Requirements of SPECIAL TESTS or type test certificate or TYPE APPROVAL for compliance of statutory requirements with reference to pollution, emission, noise, if any;<\/li><li>Other additional work and\/or related services required to achieve full delivery\/ completion, installation, commissioning, training, technical support, after-sales service, and Annual Maintenance Contract (AMC) requirements, if any;<\/li><li>WARRANTY requirements;<\/li><li>QUALIFICATION CRITERIA of the bidders, if any;<\/li><li>Any other aspects PECULIAR to the goods in question \u2014 such as the shelf life of the equipment, and so on.<\/li><\/ol>\n<\/div><\/div><h2 class=\"src-W srchead\" data-src=\" W \">2.5<\/span>Formulation of the Requirement \u2014 WORKS: PPR, DPR, Designs, Estimates and Sanctions<\/span>W<\/span><\/h2><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n<aside class=\"note\">This is the longest and most legally-loaded part of any of the four Chapter 2s. It runs through a seven-step sanctioning sequence: PPR \u2192 In-Principle Approval \u2192 DPR\/PE \u2192 A\/A and E\/S \u2192 Detailed Designs & Technical Sanction \u2192 Appropriation of funds \u2192 Tendering.<\/p><\/aside>\n<h3>2.5.1<\/span>Preparation of Preliminary Project Report (PPR) or Rough Cost Estimate<\/span><\/h3>\nWHO prepares it:<\/p>\n<ul class=\"lst\"><li>If the work is to be executed under its OWN arrangement by the Ministry\/ Department \u2014 a PPR or Rough Cost Estimate shall be prepared by the WORKS COMMITTEE, based on Land, Site Details, functional and space requirements (or Various Facilities, Special Requirements\/ Features and Broad Specifications for specialised Equipment and Plants), Layout Plans etc. \u2014 with the technical details\/ documents mentioned below being prepared by (or under the guidance of) the TECHNICAL MEMBER(S) of the Works Committee.<\/li><li>If the Work is executed through a Public Works Organisation (PWO) or a Public Sector Undertaking (PSU) \u2014 on requisition from the Ministry\/ Department for procurement of works, the PWO or PSU to whom the work is entrusted for execution shall prepare such PPR or Rough Cost Estimate and submit it to the requiring Department\/ Ministry.<\/li><\/ul>\nWHAT it triggers: Based on the PPR and Rough Cost Estimate, the competent authority in the Administrative Ministry\/ Department grants IN-PRINCIPLE APPROVAL, indicating approval of the CONCEPT and SCOPE of the project at the ROUGH COST assessed.<\/p>\n<aside class=\"note\">Ministry of Finance (DoE) has issued detailed instructions regarding appraisal and approval of Public Funded projects\/ schemes<\/strong> \u2014 OM No. 24(35)\/PF-II\/2012 dated 05.08.2016<\/strong> (where \"Schemes\"<\/strong> refers to a collection of Projects\/Works of either Central Sector Schemes or Centrally Sponsored Schemes, and \"Project\"<\/strong> refers to work which can be standalone or part of a scheme). It is suggested that the website of the Department of Expenditure be checked for the latest instructions (https:\/\/doe.gov.in\/appraisal-and-approval).<\/em><\/p><\/aside>\nThe Preliminary Project Report shall provide the following details:<\/p>\n<ol class=\"lst\"><li>Background of the work\/ project justifying the NEED for the work;<\/li><li>Details of SCOPE of the project;<\/li><li>EXCLUSIONS (if any)<\/strong> \u2014 this will cover part of the work which is not included<\/strong> in this particular project estimate;<\/li><li>Availability of LAND \u2014 there should be a clear indication about the availability of land required for completion of the whole project. The land shall be made available free of all encumbrances;<\/li><li>Availability of AUXILIARY SERVICES \u2014 like roads, power, water, solid & liquid waste disposal system, street lighting and other civic services shall be ensured;<\/li><li>Reference to Concept Plans\/ Preliminary Drawings, if any, and their acceptance \u2014 this shall indicate the details of Concept Plans\/ Preliminary Drawings prepared and their approval by the requisitioning authority;<\/li><li>AGENCY of Procurement \u2014 through direct procurement, outsourcing to PWO\/ PSUs or otherwise;<\/li><li>Rough Cost Estimate: Ministries\/ Departments may carefully assess alternative technological options, their area requirements, and obtain Rough Cost on the basis of prevailing plinth area rates (or any other reliable basis) without preparation of drawings, to enable the competent authority to accord in-principle approval;<\/li><li>If relevant, cost benefit analysis of the project, including evaluation of options for cost sharing\/ recovery (user charges) for infrastructure\/ services. Principles of Life Cycle Cost may also be considered, to the extent feasible;<\/li><li>CASH FLOW \u2014 this will show year-wise requirement;<\/li><li>Source & availability of funds \u2014 the manner of transferring the fund to the executing agency to be spelt out;<\/li><li>Appendices:<\/li><li>i) Requisition of the Department\/ Ministry;<\/li><li>ii) Concept Plans\/ Preliminary Drawings;<\/li><li>iii) Reference to approval of Concept Plans\/ Preliminary Drawings;<\/li><li>Any other relevant documents;<\/li><li>PRESENTATION on the findings of the feasibility study\/ PPR: As directed in the Department of Expenditure's General Instructions on Procurement and Project Management (OM No. F.1\/1\/2021-PPD dated 29.10.2021), a presentation may be made by a team (which may include engineers\/ consultants\/ outside experts, finance officers etc.) before the public authority\/ designated competent authority. This is to provide an opportunity to the public authority to have an overall assessment of the situation, appraisal of various options, as well as likely challenges and mitigation measures. In the case of VERY LARGE projects, such presentation may be made to the HEAD of the public authority. The record of discussions during the presentation may become part of the DPR and tender file\/ project record.<\/li><\/ol>\n<h3>2.5.2<\/span>Acceptance of Necessity and Issue of In-Principle Approval<\/span><\/h3>\nApproval of the competent financial authority for accepting the necessity of works and its SCOPE should be sought on the basis of the PPR or Rough Cost Estimate, and In-Principle Approval of the concerned Ministry\/ Department shall be made available for preparation of the Detailed Project Report or Preliminary Estimates.<\/p>\n<h3>2.5.3<\/span>Preparation of Detailed Project Report (DPR)\/ Preliminary Estimates (PE)<\/span><\/h3>\n1. On receipt of In-Principle Approval of the project, the procuring entity shall finalise the Detailed Project Report with due care and accuracy, using the latest technological tools, collecting all relevant ground information, including consultation with the field units wherever applicable, giving reference to the documents mentioned below. The DPR should provide a level playing field to the bidders and should ensure, as far as feasible, the widest possible competition.<\/p>\nThe DPR shall contain:<\/p>\n<ol class=\"lst\"><li>Reference to Concept plan\/ preliminary drawings and their acceptance;<\/li><li>Details of SCOPE of the project, indicating clearly the list of Engineering Services (Mechanical\/ Electrical\/ Plumbing) as well as Operation and Maintenance \u2014 included or not included in the DPR\/PE;<\/li><li>Preliminary estimated cost \u2014 this will also include the expected ESCALATION for the period of completion of the project, and also the departmental or lump sum charges to be paid to the executing agency (PWO or PSUs). Cash flow projection should show year-wise requirement. While designing the projects, if and to the extent possible, principles of Life Cycle Cost may also be considered;<\/li><li>Time of completion \u2014 this will consist of two PARTS: one for PRE-CONSTRUCTION activity till award of the work, and the other for the EXECUTION;<\/li><li>Details of LAND required along with land plan Schedule<\/strong> to implement timely land acquisition procedures;<\/li><li>Environmental Impact Assessment (EIA) of the project and approval thereof, wherever applicable;<\/li><li>Social Impact Assessment and Resettlement and Rehabilitation: Social Impact Assessment needs to be done, based on baseline socio-economic survey and census survey data, to identify the Project Affected People (PAPs). A Resettlement and Rehabilitation Plan should be prepared for the PAPs in accordance with the LARR Act 2013 or the National Policy on Resettlement and Rehabilitation (NPRR), and State Governments' framework of resettlement policies and other social safeguard policies designed to protect the rights of the affected persons and communities as applicable;<\/li><li>List of Approvals of STATUTORY BODIES required;<\/li><li>Annual plan allocation and cash flow;<\/li><li>Systems to be adopted for PROJECT MONITORING;<\/li><li>Works accounting system;<\/li><li>QUALITY ASSURANCE system\/ mechanism;<\/li><li>Bidding systems<\/strong> \u2014 Single, two parts, pre-qualification, Post-qualification;<\/li><li>WHO prepares: In case the work is being executed by the Ministry\/ Department themselves, DPR and PE will be prepared by the Ministry\/ Department itself. In case the Work is assigned to a PWO or PSU, that agency shall prepare the DPR and PE;<\/li><li>EXEMPTION: For repair works costing up to rs. 60 (SIXTY) LAKH, preparation of DPR and pe May be dispensed with, since repair work does not need detailed designing. Sanction may be accorded by the competent authority based on the PPR itself.<\/li><\/ol>\n2. The consultant-quality problem: A major reason for problems in works contracts \u2014 in particular relating to construction of roads, highways, ports, runways, dams etc. on item-rate or percentage rate basis \u2014 is the OUTSOURCING of preparation of Detailed Project Reports to consultants without sufficient relevant experience, or without giving them sufficient TIME to do so.<\/p>\n<ul class=\"lst\"><li>It is therefore essential to STIPULATE & ENSURE successful project design\/ supervision experience while selecting consultants, especially for large works contracts.<\/li><li>DPR in such contracts is required to be based on proper ground investigation at each specified stretch (normally 50 METRES), called a \"REACH\", and the Consultant be directed to exercise such due diligence.<\/li><li>Wherever consultants are appointed for preparation of DPR, field units of the public authorities should also be associated with the process. The inputs from these field units can be useful in proposing best solutions for design and execution of the work, as they are the custodian of legacy data, which may not be available with the consultants, as they may not be operating regularly in that geographical region.<\/li><\/ul>\n3. Involvement of the Ministry\/ Department: The involvement of the Ministry\/ Department in providing proper inputs, including USER REQUIREMENTS, during the preparation of the DPR and before accepting the draft DPR, is PARAMOUNT in ensuring successful implementation.<\/p>\n<ul class=\"lst\"><li>Proper FIELD SURVEYS and INVESTIGATIONS of ground conditions are CRITICAL in preparation of a reliable DPR.<\/li><li>Providing scientifically valid data to bidders will depend on the quality of the investigations done by the DPR consultant.<\/li><li>As a corollary, the Ministry\/ Department must INSIST on a qualified team of engineers with experience for carrying out DPR studies.<\/li><li>It is also essential that the Ministry\/ Department insists that the Consultant offers them TECHNOLOGY OPTIONS at the EARLY stage of preparation of the DPR, so that a cost-efficient choice may be made using principles of life cycle costing.<\/li><\/ul>\n4. Consequences of a defective DPR: In case the deviations between the actual ground situation and the situation recorded in such DPR result in significant COST and TIME OVER-RUNS, the Engineer, while doing valuation of variations, must bring to the Procuring Entity's notice the reach-wise differences, and the Ministry\/ Department May consider stringent action against the consultant who has prepared such DPRs \u2014 including debarment from future consultancy contracts, after following due procedure. Such clauses May be included in the contracts for preparation of DPR.<\/p>\n5. Presentation on the DPR: A presentation may be made about the DPR before the public authority, for projects above a THRESHOLD VALUE as decided by Project Executing Authorities. The presentation may include:<\/p>\n<aside class=\"note\">salient features of the project including general layout, architectural drawings, broad specifications, cash flow (over the life of the project), composition of the project team, quality management plan for the project, important milestones in the project execution, obligations of the authority and the contractor\/ concessionaire, and possible risks and mitigation measures.<\/p><\/aside>\nIn the case of very large projects, such presentation may be made to the HEAD of the public authority. The record of discussions during the presentation shall become part of the tender file\/ project record.<\/p>\n<h3>2.5.4<\/span>Administrative Approval and Expenditure Sanction (A\/A and E\/S)<\/span><\/h3>\n1. A\/A and E\/S will be accorded to the execution of work by the competent financial authority in the Ministry\/ Department after due examination of the Detailed Project Report and Preliminary Estimates.<\/p>\nPOST-SANCTION CHANGES in scope and specification lead to delay, loss of quality and contractual penalties. Therefore, such A\/A and E\/S shall be accorded after carefully assessing their requirements.<\/p>\nThe estimates framed by a PWO or other engineering organisation May be modified for such sanction only with their concurrence.<\/p>\n2. The sanction order should contain:<\/p>\n<ul class=\"lst\"><li>SCOPE of work,<\/li><li>estimated cost, and<\/li><li>TIME SCHEDULE for completion of work, and<\/li><li>funding sources along with the break-up of the share of each funding agency.<\/li><\/ul>\n3. A Department of Government of India may sanction expenditure on any scheme or project as per the powers delegated from time to time by the Finance Ministry (DoE's O.M. No. 24(35)\/PF-II\/2012 dated 05.08.2016)<\/em>, subject TO its outlay having been APPROVED by the Competent Authority in accordance with the appraisal and approval process prescribed by the Finance Ministry from time to time. (Rule 16, DFPR 2024)<\/em><\/p>\n<h3>2.5.5<\/span>Detailed Designs, Detailed Estimates and Technical Sanction<\/span><\/h3>\n1. Except where the work is to be undertaken in the EPC (Turnkey) mode, on receipt of sanction of the project (based on DPR or PE) and assurance of funds, the procuring entity, in consultation with the Works Committee, shall prepare and accord TECHNICAL SANCTION to:<\/p>\n<ul class=\"lst\"><li>the detailed and coordinated DESIGN of all the Architectural, Civil, Electrical, Mechanical, Horticulture and any other services included in the scope of the sanction, and<\/li><li>the detailed cost estimates containing the detailed SPECIFICATIONS and QUANTITIES of various items, prepared on the basis of the Schedule of Rates maintained by CPWD or other Public Works Organisations<\/li><\/ul>\n \u2014 so as to ensure that proposals are STRUCTURALLY SOUND and that the estimates are accurately calculated based on adequate data.<\/p>\nIn case the work is to be executed through a PWO or PSU, preparation of detailed design\/ estimates and technical sanction shall be done\/ accorded by that organisation.<\/p>\n2. Architectural and structural drawings: Architectural and structural drawings (\"fit for construction\") are among the CORE REQUIREMENTS for projects.<\/p>\n<ul class=\"lst\"><li>Finalisation of these drawings at the EARLIEST \u2014 preferably at the time of preparation of the cost estimate itself \u2014 can help to determine quantities of various items of the work.<\/li><li>Adverse consequences of not preparing these drawings before invitation of tenders may manifest in the form of delay in execution of the work and deviations in quantities of the items of work.<\/li><li>Hence, APPROVED architectural and structural drawings should be available before invitation of tenders.<\/li><li>\"Fit for construction\" (sometimes called \"Good for construction\") drawings means the architectural and structural drawings approved by the project executing authority as well as by the authority governing the extant Rules\/ laws, including byelaws, such as local authorities.<\/li><\/ul>\n3. Enlarging the Schedule of Rates: Endeavour may be made to enlarge the base of the 'Schedule of Rates' published by various organisations, to bring a maximum number of items under its ambit. For NON-SCHEDULED ITEMS, rates may be finalised by a COMMITTEE constituted by the organisation concerned\/ consultants, as the case may be.<\/p>\n<h3>2.5.6<\/span>Appropriation of Funds<\/span><\/h3>\nBefore taking up the execution of work, it shall be ensured that proper funds are available to meet the expenditure on the work.<\/p>\nIt should also be emphasised that the DPR CONSULTANT is able to provide realistic year-wise requirement of funds. This information is necessary so that concerned Ministries\/ organisations may be intimated regarding the same, which will enable them to include such funds projection in their BUDGET.<\/p>\n<h3>2.5.7<\/span>Reference Documents Used in Preparation of Estimates<\/span><\/h3>\nFor preparation of estimates and during execution of work<\/strong>, the following reference documents are used by PWOs. These may be SEPARATE for different regions, and for various types of works \u2014 Building, Electrical and Mechanical.<\/strong>(Annexure 12 of the Works Manual lists further resources regarding Procurement of Works.)<\/em><\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Document<\/th><th>Purpose<\/th><th>Example<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Plinth Area Rates<\/td><td>Provide a quick but fairly accurate method of estimation of cost of buildings<\/td><td>CPWD DPAR \u2014 Delhi Plinth Area Rates<\/td><\/tr><tr><td>2<\/td><td>Schedule of Rates<\/td><td>For each kind of work commonly executed, to facilitate the preparation of estimates, and also to serve as a guide in settling rates in connection with contract agreements \u2014 maintained up to date<\/td><td>CPWD DSR \u2014 Delhi Schedule of Rates<\/td><\/tr><tr><td>3<\/td><td>Analysis of Rates<\/td><td>By taking market rates of labour, materials, cartage<\/strong> etc. and their quantities<\/strong> for each kind of work commonly executed<\/td><td>CPWD Analysis of Rates<\/td><\/tr><tr><td>4<\/td><td>Specifications<\/td><td>Describing inputs, processes, tests and mode of measurement<\/strong> for each kind of work commonly executed<\/td><td>CPWD Specifications<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Repeated instruction: Endeavour may be made to enlarge the base of the 'Schedule of Rates' published by various organisations to bring a maximum number of items under its ambit. For non-scheduled items, rates may be finalised by a committee constituted by the organisation concerned\/ consultants, as the case may be.<\/p><\/aside>\n<\/div><h2 class=\"src-C srchead\" data-src=\" C \">2.6<\/span>Formulation of the Requirement \u2014 CONSULTANCY: Terms of Reference (ToR)<\/span>C<\/span><\/h2><div class=\"srcblock src-C\" data-src=\" C \" data-label=\"Consultancy Manual only\"><h3>2.6.1<\/span>What the ToR Is and Why It Matters<\/span><\/h3>\n1. The ToR is akin to description, Quantity and Technical Specification in Procurement of Goods. This is the first STEP in the selection of the consultants once a need has been identified.<\/p>\nIt explains:<\/p>\n<ul class=\"lst\"><li>the purpose\/ objectives of the assignment,<\/li><li>scope of work,<\/li><li>activities,<\/li><li>tasks to be performed,<\/li><li>respective responsibilities of the Procuring Entity AND consultant,<\/li><li>expected results, and<\/li><li>deliverables of the assignment.<\/li><\/ul>\nIt is important for an understanding of the assignment and its correct execution to ensure that the objectives of the assignment are achieved.<\/p>\n<ul class=\"lst\"><li>It reduces the risk for the PROCURING ENTITY of unnecessary extra work, delays, and additional expenses.<\/li><li>In addition, it helps reduce for the bidders the risk of ambiguities during the preparation of bidders' proposals, contract negotiation, and execution of Consultancy.<\/li><\/ul>\n2. The balance to strike: Hence the ToR should be COMPREHENSIVE and UNAMBIGUOUS. HOWEVER, it should not be too detailed and inflexible, so that competing consultants may be in a position to propose their own methodology and staffing. Bidders shall be encouraged to comment on the ToR in their proposals.<\/p>\n<h3>2.6.2<\/span>Contents of the ToR<\/span><\/h3>\nThe ToR shall include:<\/p>\n<ol class=\"lst\"><li>Procuring Entity's organisation background and Project background;<\/li><li>Purpose and Service Outcomes Statement of the assignment;<\/li><li>Detailed scope of work Statement, including schedule for completing the assignment;<\/li><li>Expected requirement of KEY PROFESSIONALS and kind of EXPERTISE;<\/li><li>Capacity-building programme and transfer of knowledge, if any;<\/li><li>Deliverables<\/strong> \u2014 List of reports<\/strong> (or documents, data, maps, surveys, designs, drawings), schedule of deliveries<\/strong>, and period of performance<\/strong>;<\/li><li>Background material<\/strong> \u2014 Data, reports, records of previous surveys, and so on \u2014 available and to be provided to the consultant<\/strong>;<\/li><li>FACILITIES such as local conveyance, office space, office machines, secretarial assistance, utilities, local services, etc., which would be provided to the consultant by the Procuring Entity;<\/li><li>Institutional and organisational arrangement; and<\/li><li>Procedure for REVIEW of the work of the consultant after award of contract.<\/li><\/ol>\n(A template for developing a ToR is given at Annexure 4<\/strong> of the Consultancy Manual. Rule 185 of GFR 2017<\/strong>.)<\/em><\/p>\n<h3>2.6.3<\/span>Detailed Guidance on Key ToR Elements<\/span><\/h3><h4>a) Detailed Scope of Work<\/span><\/h4>\nAs part of the ToR, at its simplest, the 'Detailed Scope of Work<\/strong>' will contain:<\/p>\n<ul class=\"lst\"><li>the TYPE and VOLUME of activity<\/strong> to be undertaken, and<\/li><li>the TIME-FRAME of activity involved<\/li><\/ul>\nto achieve the Purpose and Service Outcomes<\/strong> as envisaged in the 'Brief Proposal and Justification of the Services'.<\/p>\nMethod: Starting from END-OUTCOMES BACKWARDS, the process to achieve the outcomes is BROKEN DOWN into a discrete number of interrelated tasks, which the consultant will have to undertake.<\/p>\n<aside class=\"note\">Critical Rule: In Consultancy Services, the 'Detailed Scope of Work' should describe only the activities \u2014 not the APPROACH or METHODOLOGY by which the results are to be achieved, since these are the task of the consultants. However, SUGGESTIONS may be provided on the approach or the methodology that the consultants COULD or should use to execute the assignment.<\/p><\/aside>\nAfter the tasks are identified, a LOGICAL SEQUENCING of the tasks must be determined. Usually a simple BAR CHART (or GANTT CHART) is the best way to illustrate required outputs over time and their relationship to each other. The 'Detailed Scope of Work' contains such a sequence of tasks over a timeline, and also tangible outputs and activities such as reports, workshops, or seminars.<\/p>\n<h4>b) Expected Requirement of Key Professionals and Kind of Expertise<\/span><\/h4>\nExcept in very complex consultancies, it is DESIRABLE not to distinguish the tasks of individual experts, but instead to prepare a longer and more detailed description of what the consultancy team, as a whole, will provide \u2014 without splitting up tasks.<\/p>\n<aside class=\"note\">These are generally known as \"activity-based<\/strong>\" ToR, as opposed to \"position-based<\/strong>\" ToR.<\/p><\/aside>\nThe ToR would list a range of tasks without regard to who will have the responsibility to undertake them. In most cases, where the number of experts is small, the work to be done is not clearly defined, and a degree of flexibility is required \u2014 this is ACCEPTABLE.<\/p>\nIn consultancy services, key professionals are usually named, and their credentials carry weightage in technical evaluation.<\/p>\n<h4>c) Deliverables and Reports Requirements<\/span><\/h4>\nThe assignment's deliverables and reporting should be clearly specified. In particular, for inception and progress reports, there should be a BALANCE between keeping the Procuring Entity well informed and not forcing consultants to spend an excessive amount of time preparing minor reports.<\/p>\nThe ToR should indicate: the FORMAT, FREQUENCY, and CONTENT of reports, as well as the number of copies, the LANGUAGE, and the names of the prospective recipients of the reports.<\/p>\n<aside class=\"note\">For all MAJOR reports, an EXECUTIVE SUMMARY is recommended as a SEPARATE SECTION.<\/p><\/aside>\nDepending on the assignment, the following reports are usually required:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Report<\/th><th>Timing<\/th><th>Purpose and Content<\/th><\/tr><\/thead><tbody><tr><td>i) Inception Report<\/td><td>About six WEEKS after the commencement date<\/td><td>Any major inconsistency in the toR, STAFFING PROBLEMS, or deficiency in the Procuring Entity's assistance that have become apparent during this period should be included. The inception report is designed to give the Procuring Entity confidence that the assignment can be carried out as planned and as agreed upon in the contract, and should bring to its attention major problems that might affect the direction and progress of the work.<\/td><\/tr><tr><td>ii) Progress Reports<\/td><td>Monthly or bimonthly, depending on the assignment. \u2022 Feasibility studies and design assignments \u2192 two-month intervals is satisfactory \u2022 Technical assistance and implementation supervision (e.g. construction) \u2192 best submitted MONTHLY<\/td><td>Keep the Procuring Entity regularly informed about the progress of the assignment. They may also provide WARNINGS of anticipated problems or serve as a reminder for payment of invoices due. Progress reports may include a BAR CHART showing details of progress and any changes in the assignment schedule. Photographs with time-stamping are a quick and easy way of conveying the status of a project, and their use in progress reports should be encouraged. For technical assistance services, progress reports also serve as a means of setting out the WORK PROGRAM for the following months. Each team member usually contributes to the preparation of the monthly report.<\/td><\/tr><tr><td>iii) Interim Reports<\/td><td>If the assignment is PHASED<\/td><td>Required to inform the Procuring Entity of preliminary results, alternative solutions, and major decisions that need to be made. Since the recommendations of an interim report may affect later PHASES of the assignment and even influence the results of the project, the Procuring Entity should DISCUSS the draft interim reports with consultants in the field. The Procuring Entity should not take more than 15 (FIFTEEN) DAYS to review and approve draft interim reports.<\/td><\/tr><tr><td>iv) Final Report<\/td><td>Due at the COMPLETION of the assignment<\/td><td>The Procuring Entity and consultants should DISCUSS the report while it is still in draft form. The consultants alone are responsible for their findings; although changes may be SUGGESTED in the course of the discussions, consultants should not be forced to make such changes. If the consultants do not accept comments or recommendations from the Procuring Entity, these should be noted in the report. The consultants should include in the report the reasons for not accepting such changes.<\/td><\/tr><\/tbody><\/table><\/div>\n<h4>d) Background Material and Records of Previous Surveys<\/span><\/h4>\nThis would vary from project to project, but TRANSPARENCY DEMANDS that such information should be transparently and equitably shared with all prospective bidders.<\/p>\n<h4>e) Facilities to be Provided by the Procuring Entity<\/span><\/h4>\nFacilities such as local conveyance, office space, secretarial assistance<\/strong> etc. which can be provided to the consultant.<\/p>\n<aside class=\"note\">This aspect has a great bearing on the cost that will be quoted by the bidders. This can have implications in vitiating the selection process either way \u2014 a facility to be provided may not get declared, or a declared facility may not be provided ultimately. So great care and reality check is necessary while preparing this statement.<\/p><\/aside>\n<h4>f) Procedure for Review of the Consultancy after Award of Contract<\/span><\/h4>\nIn consultancy services, the contract Monitoring Committee (CMC), and the procedure for review and approval of the work of the consultant after the award of contract, should also be declared and adhered to.<\/p>\n<\/div><h2 class=\"src-NC srchead\" data-src=\" NC \">2.7<\/span>Formulation of the Requirement \u2014 NON-CONSULTANCY: Services and Activities Schedule<\/span>NC<\/span><\/h2><div class=\"srcblock src-NC\" data-src=\" NC \" data-label=\"Non-Consultancy Manual only\"><h3>2.7.1<\/span>What the Services and Activities Schedule Is<\/span><\/h3>\n1. The Services and Activities Schedule is akin to description, Quantity and Technical Specification in Procurement of Goods. This is the first STEP in the selection of the Service Provider once a need has been identified.<\/p>\nIt explains:<\/p>\n<ul class=\"lst\"><li>the background and context,<\/li><li>purpose\/ objectives of the services,<\/li><li>scope, quantum, duration\/ frequency of activities\/ tasks to be performed,<\/li><li>respective responsibilities of the Procuring Entity and service provider,<\/li><li>expected outcomes, and<\/li><li>deliverables of the Service.<\/li><\/ul>\nIt is important for an understanding of the service requirement and its correct execution to ensure that the outcomes of the service are achieved. It reduces the risk for the Procuring Entity of unnecessary extra work, delays, and additional expenses. In addition, it helps reduce for the bidders the risk of ambiguities during the preparation of bidders' proposals and contract execution. Hence, the Services and Activities Schedule should be COMPREHENSIVE and UNAMBIGUOUS.<\/p>\nThe OBJECTIVES of the Services and Activities Schedule are:<\/p>\n<ul class=\"lst\"><li>a) To provide sufficient information on the quantum, scope, duration\/ frequency and TIMELINES of Services to be performed, to enable bids to be prepared efficiently and accurately; and<\/li><li>b) When a Contract has been entered into, to provide a PRICED Services and Activities Schedule for use in the PERIODIC VALUATION of Services executed.<\/li><\/ul>\n<h3>2.7.2<\/span>Contents of the Services and Activities Schedule<\/span><\/h3>\nBesides detailing the activities, quantum and time frame<\/strong>, the Services and Activities Schedule should contain the following sections also:<\/p>\n<h4>a) Background<\/span><\/h4>\n<ul class=\"lst\"><li>i) Procuring Entity's organisation and Project background;<\/li><li>ii) Purpose and Service Outcomes Statement;<\/li><li>iii) Short Description and Scope of Services<\/strong> (including any incidental works\/ goods<\/strong>) that would help the bidders understand the service requirement;<\/li><li>iv) Contract period (and provision of extension, if any), duration\/ frequency\/ timeline of outcomes\/ deliverables;<\/li><li>v) Type of Contract\/ BOQ \u2014 Time-based, Unit-Rate, Indefinite delivery, Lumpsum or Percentage-Based;<\/li><li>vi) Expected requirement of RESOURCES: Man-power, Materials, Equipment;<\/li><li>vii) FACILITIES such as office space, office machines, utilities, local services, etc., which would be provided to the Service Provider by the Procuring Entity;<\/li><li>viii) INSURANCES required, if any;<\/li><li>ix) Statutory and Contractual OBLIGATIONS to be complied with by the Service Providers;<\/li><li>x) Institutional and organisational arrangement for Services \u2014 Counterpart Contract Management Team, Chain of Command, Interim\/ ultimate beneficiaries\/ stakeholders of Services; and<\/li><li>xi) Procedure for REVIEW of the Service delivery after award of contract, including service Level Agreement, if any.<\/li><\/ul>\n<h4>b) Description of Services<\/span><\/h4>\nA brief description of the service required is important information that would help the bidders understand the service requirement. It should cover background about the Procuring Entity's organisation and about the project\/ service. The Purpose and Service Outcome statement should be INCLUDED in the description of services (as finalised for initiating the procurement) to help the service providers understand the requirement.<\/p>\n<h4>c) Services and Activities Schedule<\/span><\/h4>\nIn order to attain the objectives, Services should be itemised in sufficient detail to DISTINGUISH:<\/p>\n<ul class=\"lst\"><li>between the different CLASSES of Services, or<\/li><li>between Services of the same NATURE carried out in different LOCATIONS or in other circumstances which may give rise to different considerations of cost.<\/li><\/ul>\nThere may be more than one schedule of Services, based on grouping similar services in one Schedule. Each Service should be described and broken down into DISCRETE ACTIVITIES required to deliver the service.<\/p>\nThe description\/ Scope of Service and Activities should indicate WHAT IS \u2014 and, more important, what is not \u2014 included in the scope, and the conditions under which services are to be performed.<\/p>\nConsistent with these requirements, the layout and content of the Services and Activities Schedule should be as simple and brief as possible. All information relevant for the bidder to quote a price may be included \u2014 e.g., the location, frequency\/ shifts\/ length and quantum, and time-frame\/ duration of completion of activities to be performed.<\/p>\n<aside class=\"note\">Simplification technique: In a Services and Activities Schedule containing scores of items, evaluation can be SIMPLIFIED if the system used in WORKS CONTRACTS is borrowed, if feasible \u2014 where the Schedule of Rates (SoR) for each activity is specified in the bid documents by the Procuring Entity, and only a percentage +\/- above the soR (separately for different Schedules or combined) is asked to be quoted by the bidders.<\/p><\/aside>\n<h4>d) Performance Standards and Quality Assurance<\/span><\/h4>\nPerformance standards\/ Service Levels; functional\/ materials\/ technical specifications (indicating QUANTITATIVE and QUALITATIVE parameters\/ limits\/ thresholds for performance) should be specified OVERALL for the Service AND for each activity, materials, tools and machines to be used in the activity.<\/p>\nIt should also include:<\/p>\n<ul class=\"lst\"><li>i) Any reporting requirement, periodic meetings or other submissions;<\/li><li>ii) Any service Level Agreement, if required<\/strong> \u2014 say, for the outsourcing of services;<\/li><li>iii) key performance indicators indicating how MEASUREMENT, REPORTING, and TRACKING of performance parameters would be done for Quality Assurance and Monitoring of Service (indicate procedure for quality assurance and monitoring of services, including institutional or third-PARTY arrangements for this purpose);<\/li><li>iv) Procedure for RESOLUTION and ESCALATION procedures in case of DEFICIENCY in performance\/ quality\/ service levels;<\/li><li>v) METHOD STATEMENT (Sequencing and inter-dependencies of activities), methodology, Service Level Agreement, arrangements to ensure environmental, social, gender, health, and SAFETY requirements if relevant. The Method Statement must be supplemented by information in sub-schedules for work plan; and<\/li><li>vi) Schedule for Forms of BOQ\/ Contract based on INPUT-ADMEASUREMENT \u2014 Key Inputs deployments (Personnel Deployment, Critical Equipment Deployment and Critical Materials Deployment) May not be essential \u2014 but list these if required to achieve the performance standards and quality. If the service is not dependent on any of the key inputs, that May be omitted.<\/li><\/ul>\n<h4>e) Labour\/ Personnel Schedule<\/span><\/h4>\nIf labour\/ personnel are used in the activity, these may be QUANTIFIED, specifying PLACE, SHIFTS and frequency of utilisation in the Services and Activities Schedule.<\/p>\nIn case any KEY PROFESSIONALS or PROJECT MANAGER is required, their qualification and experience required may also be mentioned.<\/p>\n<aside class=\"note\">Any RELIEVERS and LEAVE RESERVE for deploying the personnel should be included in the rate for such personnel and would not be separately payable.<\/p><\/aside>\n<h4>f) Critical Material Schedule<\/span><\/h4>\nIn case any Materials\/ Consumables\/ tools of trade are to be consumed\/ deployed, a SEPARATE Materials Schedule should be included, indicating the specification and quantity of such materials\/ consumables\/ tools to be consumed\/ deployed per unit activity\/ day\/ location\/ per manpower deployed.<\/p>\nThe price of all these materials\/ tools etc. is to be shown as a separate lump-sum cost in the financial bid by the bidder.<\/p>\n<h4>g) Critical Equipment Schedule<\/span><\/h4>\nAny ESSENTIAL equipment or machinery \u2014 Trucks, Cranes, Washing Machines, Vessels\/ crafts, plant and machinery, etc. \u2014 that the service provider must HAVE and should DEPLOY as a QUALIFYING REQUIREMENT must be mentioned, along with specifications, capacity, age of equipment etc.<\/p>\nIt should be ensured that OPERATORS for such equipment must be mentioned in the Labour\/ Personnel Schedule.<\/p>\nIn case of INPUT ADMEASUREMENT, indicate only Critical Equipment (not others) required to carry out the Services to required standards and quality. CATEGORISE the equipment \u2014 IT Equipment\/ Motor Vehicles, Cranes, Washing Machines, vessels\/ crafts, plant & machinery etc. Give estimated number LOCATION-WISE, CATEGORY-WISE.<\/p>\n<aside class=\"note\">This schedule May not be essential for output-admeasurement BOQ\/ contracts, but list these if required. If the service is not dependent on Critical Equipment, this may be OMITTED.<\/p><\/aside>\n<h4>h) Statutory and Contractual Obligations to be Complied with by the Contractor<\/span><\/h4>\nThe service provider mostly works within the premises of the Procuring Entity, along with the staff of the Procuring Entity.<\/p>\nMany services are subject to various STATUTORY PROVISIONS relating to:<\/p>\n<aside class=\"note\">labour, taxation, Workmen's Safety, Child and Women Labour, Private Security Agencies, Environmental Protection, Mining, Forest clearance, Employment reservations, etc.<\/p><\/aside>\nThe bidder must have:<\/p>\n<ul class=\"lst\"><li>a Service Tax Number,<\/li><li>ESI<\/strong> registration,<\/li><li>EPF Registration Certificate,<\/li><li>Registration Declaration of ownership under the Indian Registration Act, 1908,<\/li><li>a Labour Licence, and<\/li><li>PAN (Income Tax).<\/li><\/ul>\nMoreover, the Procuring Entity itself may have its OWN regulations about safety, security, confidentiality, etc. All such statutory and contractual obligations must be listed, so that price implications and compliance are taken care of by the bidder.<\/p>\n<aside class=\"note\">In the case of SECURITY SERVICES contracts, the bidder must have a valid LICENCE to run the business of a private security agency in the state, issued by the appropriate authority for operating Security Services.<\/p><\/aside>\n<h4>i) Facilities and Utilities to be Provided by the Procuring Entity at the Site<\/span><\/h4>\nIt should be mentioned if any facility\/ utility \u2014 IT\/ Communication Services, Emergency Medical, Room, Furniture, Electricity connection, Water connection, etc. \u2014 would be made available to the successful bidder to carry out the service.<\/p>\nIn case it is proposed to CHARGE for the Electricity\/ Water supplied to the service provider, the same may be mentioned, including the rate of charges.<\/p>\n<aside class=\"note\">This aspect has a great bearing on the cost that will be quoted by the bidders. This can have implications in vitiating the selection process either way \u2014 a facility to be provided may not get declared, or a declared facility may not be provided ultimately. So great care and reality check is necessary while preparing this Statement.<\/p><\/aside>\nSPECIALLY MENTION facilities and utilities which WILL not be provided, or the facilities which would be provided on a CHARGEABLE basis.<\/p>\nIt should be clearly MENTIONED that the service provider will not be allowed to use any of the Procuring Entity's facility\/ area which are not LISTED in this section.<\/p>\n<h4>j) Institutional Arrangements and Procedure for Review of Work of Service Provider after the Award of Contract<\/span><\/h4>\nInstitutional arrangements like the placement in a Department, name of Project Manager, and chain of command for reporting may be specified. The process of Review of Service Outcomes and deployment of personnel and resources should be clearly brought out.<\/p>\n(A template for the Services and Activities Schedule is given in Annexure 4<\/strong> of the Non-Consultancy Manual.)<\/em><\/p>\n<\/div><h2>2.8<\/span>Obtaining Technical, Administrative and Budgetary Sanctions\/ Approvals<\/span><\/h2><h3 class=\"src-G srchead\" data-src=\" G \">2.8.1<\/span>Goods \u2014 Sanctions and Signing of Indents<\/span>G<\/span><\/h3><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\nProcuring Entities may lay down a Schedule of powers for administrative and budgetary approval of indents generated for the procurement of goods (please refer to Annexure 4 for the suggested Structure of SoPP).<\/p>\nBefore granting such approvals, it should be CERTIFIED that:<\/p>\n<ul class=\"lst\"><li>Funds in the budget are available, and<\/li><li>liability for this indent is noted against the total available budget.<\/li><\/ul>\nIn case the delivery schedule is URGENT (or shorter than the usual lead time), an URGENCY CERTIFICATE should be recorded to JUSTIFY the urgency.<\/p>\nThe indenting authority may submit an indent in the form of a PURCHASE REQUISITION (Annexure 5) to the procuring entity, giving it ADEQUATE TIME for procurement.<\/p>\nMonitoring registers:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Register<\/th><th>Maintained by<\/th><th>Format<\/th><\/tr><\/thead><tbody><tr><td>Progress of Indents submitted<\/strong><\/td><td>Indentors<\/strong> \u2014 Indentors should monitor the progress of the Indents they submit<\/em><\/td><td>Annexure 6<\/strong> \u2014 Purchase Requisition Register for Indentors<\/td><\/tr><tr><td>Progress of Indents received<\/strong><\/td><td>Procuring authority<\/strong> \u2014 on receipt from the indenting authority, the progress of such Indents should be monitored<\/em><\/td><td>Annexure 7<\/strong> \u2014 Purchase Requisition Register for Procuring Entity<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h3 class=\"src-W srchead\" data-src=\" W \">2.8.2<\/span>Works \u2014 the Sanctioning Sequence<\/span>W<\/span><\/h3><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n(See paras 2.5.2, 2.5.4, 2.5.5 and 2.5.6 above \u2014 In-Principle Approval \u2192 A\/A and E\/S \u2192 Technical Sanction \u2192 Appropriation of Funds.)<\/em><\/p>\n<\/div><h3 class=\"src-multi srchead\" data-src=\" C NC \">2.8.3<\/span>Consultancy and Non-Consultancy \u2014 Final Administrative and Budgetary Approvals<\/span>C<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\">\n1. Compatibility with budget and iteration:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-C\" data-src=\" C \">C<\/span> The scope of the work described in the ToR shall be compatible with the available budget.<\/li><li class=\"srcmark src-NC\" data-src=\" NC \">NC<\/span> The Services and Activities Schedule shall be compatible with the available budget.<\/li><\/ul>\nThe most important step is to determine whether all TASKS required to achieve the desired output have been INCLUDED.<\/p>\nThe NEXT STEP is to determine whether an ADEQUATE BUDGET has been ALLOCATED to implement the ToR\/ services as designed\/ proposed.<\/p>\n<aside class=\"note\">Since the budget may be fixed or limited, a series of iterations may be required before a final, acceptable toR\/ Services and Activities Schedule is formulated.<\/p><\/aside>\nThe Competent Authority's approval may be taken for the ToR\/ the Procurement before proceeding ahead.<\/p>\nAfter administrative approval, provision May be made in the budget; or, if that is not feasible, additional confirmation at the time of seeking Administrative approval may be taken from the CA for inclusion in the revised estimate stage of budget.<\/p>\nProcurement May be initiated only after such budgetary provisions\/ confirmations.<\/p>\n2. Schedule of powers: Procuring Entities may lay down a Schedule of powers for administrative and budgetary approval of procurement proposals for services. Before granting such approvals, it should be CERTIFIED that funds in the budget are available and liability for this procurement proposal is noted against the total available budget.<\/p>\n<\/div><h2>2.9<\/span>Need Assessment and Formulation of the Requirement \u2014 Risks and Mitigations<\/span><\/h2>\n<aside class=\"note\">Section titles:<\/strong>G<\/span>Need Assessment and Technical Specification \u2013 Risks and Mitigations<\/em> \u00b7 C<\/span> and NC<\/span>Need assessment, Formulation of Terms of Reference, and Procurement Planning \u2013 Risks and Mitigations<\/em> \u00b7 W<\/span> \u2014 no corresponding risk table in Chapter 2.<\/em><\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>The need is either ARTIFICIALLY CREATED or EXAGGERATED<\/strong>, with the intention to channel benefits to an individual or an organisation<\/strong>. For example, demand is created for a good that is not needed<\/strong>, simply to benefit the company's owner.<\/td><td>Keep records and involve stakeholders: Records of decision-making and data used should be kept. Involve PROCUREMENT and FINANCE functions at this stage also. END-USER and STAKEHOLDER CONSULTATIONS should be part of the process.<\/td><\/tr><tr><td>2<\/td><td>DELAYS in the Assessment of Need and generation of the Indent\/ Purchase Proposal for Procurement may lead to SHORTCUT procurement procedures that DILUTE TRANSPARENCY and PREVENT the achievement of value for money. It may also lead to delays in the delivery of goods\/ services.<\/td><td>Need assessment should be done sufficiently in advance of the time when goods\/ services are required. In the case of URGENT requirements, the URGENCY CERTIFICATE should be approved by an authority empowered to grant administrative approval for the indent, RECORDING JUSTIFICATION \u2014 why the need could not be formulated earlier.<\/td><\/tr><tr><td>3<\/td><td>The estimate of the costs may be INADEQUATE. This may lead to an inadequate response from the bidders and may delay the finalisation of procurement. It may also adversely affect the QUALITY of supplies.<\/td><td>Estimates of procurement should be prepared with DUE DILIGENCE, keeping inflation, technology changes, profit margins, etc., in view.<\/td><\/tr><tr class=\"srcmark src-G\" data-src=\" G \"><td>4<\/strong>G<\/span><\/td><td>Need Description\/ Specifications involving SUBJECTIVITY: Procurements where samples are asked to be submitted along with the offer, and the evaluation is based on the SUBJECTIVE EVALUATION of samples \u2014 which may lead to allegations of corruption.<\/td><td>If required, a STOCK SAMPLE for INDETERMINABLE PARAMETERS \u2014 such as shade\/ tone, size, make-up, feel, finish, and workmanship \u2014 may be DISPLAYED during procurement, to which the offers must conform. If necessary, provide for submission of a PRE-PRODUCTION SAMPLE by the successful bidder(s) before giving clearance for bulk production of the supply. (See para 2.4.3.)<\/em><\/td><\/tr><tr><td>5<\/td><td>Need Description\/ Specifications\/ Terms of Reference\/ Activity Schedule are DISPROPORTIONATE to the need identified, or made to tilt in favour of one or a group of vendor(s) or contractor(s) to artificially restrict competition.<\/td><td>Use a formal market discovery tool: A pre-bid conference and\/or well-publicised EoI may be used to discover the market. Otherwise, encourage and invite comments on the technical and commercial conditions in the tender document, or hold a pre-bid conference.<\/td><\/tr><tr><td>6<\/td><td>ASYMMETRIC DISSEMINATION of vital need information: Dialogue for determining solutions available in the market is held only with SELECTED prospective bidders, giving them an UNDUE ADVANTAGE in preparing for the bidding. Selected prospective bidders get access to INSIDE INFORMATION that has not been disclosed, or DISCLOSED LATE, to others.<\/td><td>(Same mitigation as Risk 5 above \u2014 formal market discovery tool.)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>2.10<\/span>Procurement Planning<\/span><\/h2><h3 class=\"src-multi srchead\" data-src=\" W C NC \">2.10.1<\/span>The Requirement is Usually Part of a Larger Project<\/span>W<\/span>C<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\" data-src=\" W C NC \" data-label=\"Works + Consultancy + Non-Consultancy only\">\nThe Works\/ Consultancy Services\/ NC Services may be part of a LARGER PROJECT in which there may be other components of Work, Goods, or Consultancy\/ NC services.<\/p>\nOnce a project or a programme is identified, the Procuring Entity needs to develop a synchronised procurement plan for all the various components of the project\/ programme. This will also require:<\/p>\n<ul class=\"lst\"><li>planning of the SEQUENCE and CONTENTS of the different components,<\/li><li>adoption of the most appropriate method of selection and type of contract, and<\/li><li>ensuring that selection of the contractor\/ consultant\/ service provider is initiated and completed in a timely manner to meet the overall requirements of project implementation.<\/li><\/ul>\n<aside class=\"note\">Example C<\/span>: If a consultant is required for a large road project construction supervision, the entire sequence of preparation of the feasibility report, detailed design and bidding document, time required for inviting bids for construction work, and award of contract has to be considered \u2014 so that the construction supervision consultant is mobilised before the award of the construction contract.<\/p>\nExample W<\/span>NC<\/span>: If a contractor\/ service provider is required for HOUSEKEEPING SERVICES for a hostel still under construction, the entire sequence of preparation of feasibility report, detailed design and bidding document, the time required for inviting bids for construction work, and award of contract has to be considered \u2014 so that the housekeeping contractor is mobilised at the right time when the hostel is ready for occupation.<\/p><\/aside>\nProcurement planning is a crucial stage of decision-making for a better outcome and for VfM considerations.<\/p>\n<\/div><h3 class=\"src-G srchead\" data-src=\" G \">2.10.2<\/span>Critical Review of the Indent<\/span>G<\/span><\/h3><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\nWithin 10 (ten) working days of receipt of the indent from the user Department, the procuring authorities should CRITICALLY REVIEW the description and TS enclosed with the indent for:<\/p>\n<ul class=\"lst\"><li>completeness\/ approvals\/ funding,<\/li><li>VfM<\/strong>, and<\/li><li>possibility of the widest competition<\/li><\/ul>\n \u2014 and seek clarifications from the indenting officer, if needed, before initiating such procurement.<\/p>\n<\/div><h3>2.10.3<\/span>Reassessment of Quantity and Packaging\/ Bundling\/ Slicing of Requirement<\/span><\/h3>\ni) The general rule (Rule 157 of GFR 2017)<\/em>: The procuring authority shall normally neither package nor divide its procurement, or take any other action to LIMIT COMPETITION among bidders, or to avoid the necessity of obtaining the sanction of a higher authority required with reference to the estimated value of the total demand.<\/p>\nii) the exception: Provided that \u2014 in the interest of efficiency, economy, timely completion or supply, wider competition, or access to MSEs (W<\/span> says: access to SMALLER CONTRACTORS)<\/em> \u2014 a procuring authority May, for reasons to be recorded in writing, divide its procurement into APPROPRIATE PACKAGES, or club requirements of other users for procurement.<\/p>\niii) Market-facing considerations: Packaging of the contract and procurement planning should be done while keeping in view:<\/p>\n<ul class=\"lst\"><li>Market conditions and availability,<\/li><li>the possibility of eliciting the interest of the qualified firms,<\/li><li>EFFECTIVE COMPETITION for the type and size of the contract, and<\/li><li class=\"srcmark src-W\" data-src=\" W \">access to MSEs<\/strong>(W<\/span>: smaller contractors)<\/em>.<\/li><\/ul>\n<aside class=\"note\">An exceptionally large value package contract May restrict competition to big firms.<\/p><\/aside>\niv) Mixed-category requirements:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-G\" data-src=\" G \">G<\/span> Some requirements, e.g., IT Systems, may have elements of Goods, Works, and Services. It could be either SLICED into separate Goods, Works and Services elements, or COMBINED into a single package.<\/li><li class=\"srcmark src-multi\" data-src=\" W C NC \">W<\/span>C<\/span>NC<\/span> For example, for a particular contract, material to be procured may constitute more THAN 50 (fifty) per cent of the total cost of works, or there are services which are a mix of consultancy services with a substantial element of goods, such as procurement of an IT system. Such procurement could be done as a single composite contract comprising all components, or divided into separate procurements\/ contracts for each category of procurement.<\/li><\/ul>\nv) The test to apply: In all such situations, the DOMINANT ASPECT of the requirement, and the value for Money aspects of a composite all-inclusive contract versus dividing the contract into respective categories, should be carefully examined at the time of need assessment\/ procurement planning. This is a crucial stage of decision-making in procurement planning for a better outcome and for VfM considerations.<\/p>\n<h3>2.10.4<\/span>Eligibility for Participation in Tender<\/span><\/h3>\nDetermine and declare in documents any limitation on the participation of bidders as per the Government's procurement policy regarding preference for certain sections of industry, if any.<\/p>\nThe procuring entity shall not establish any requirement aimed at LIMITING the participation of bidders in the procurement process that discriminates against or amongst bidders, or against any category thereof \u2014 except to lay down a reasonable and justifiable eligibility or pre-qualification criteria for the bidders.<\/p>\n<h3>2.10.5<\/span>Type of Contract, System of Tendering and Mode of Procurement<\/span><\/h3>\na) Type of Contract [W only]: Decide upon the type of contract suitable to the procurement requirement \u2014 Lump sum; Item Rate; Percentage Rate; Piece Work; EPC or PPP.<\/p>\nb) Selection of a system of tendering: single\/ two stage; single\/ two bids; suitability for e-procurement or reverse auction.<\/p>\nc) Select the mode of procurement: open tenders, limited tenders, single tenders, and so on.<\/p>\n<h3>2.10.6<\/span>Time Frame<\/span><\/h3>\nDecisions on the TIMEFRAME for completing various stages of procurement \u2014 from the date of issuing the tender to the date of issuing the contract \u2014 which should be DECLARED in the pre-qualification\/ bidder registration or tender documents. (Rule 144(ix), GFR 2017)<\/em><\/p>\nThe procuring entity should endeavour to adhere to the time limit so decided, and RECORD REASONS for any modification of such limits.<\/p>\n<h3 class=\"src-W srchead\" data-src=\" W \">2.10.7<\/span>Availability of Land and Statutory Clearances<\/span>W<\/span><\/h3><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n<ol class=\"lst\"><li>It is DESIRABLE to have 100% of the required land in possession before award of contract; however, it may not always be possible to have the entire land due to prevailing circumstances. Also, it may not be prudent to put the entire process of award of contract ON HOLD for want of the remaining portion of land, which in the assessment of the public authority or the project executing authority could possibly be acquired in a targeted manner after award of the contract, without affecting progress.<\/li><li>Minimum necessary encumbrance-free land should be available before award of contract. The minimum may be determined based on the circumstances of each case, or general guidelines issued by the concerned authorities. Only such land, non-availability of which will prevent essential components of work from execution, should be INSISTED UPON.<\/li><li>Time taken in the grant of statutory and other clearances also contributes to the time and cost of public projects. These clearances are required to achieve specific objectives like concern for the environment, aviation safety, preservation of national heritage, conservation of forest and wildlife, etc. Public Authorities\/ Project Executing Authorities should PLAN for obtaining all necessary clearances QUICKLY and CLOSELY MONITOR the progress.<\/li><\/ol>\n<\/div><h3 class=\"src-W srchead\" data-src=\" W \">2.10.8<\/span>Architectural and Structural Drawings<\/span>W<\/span><\/h3><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\nArchitectural and structural drawings (\"fit for construction\") are among the CORE REQUIREMENTS for projects. Finalisation of these drawings at the EARLIEST \u2014 preferably at the time of preparation of the cost estimate itself \u2014 can help to determine QUANTITIES of various items of the work.<\/p>\nADVERSE CONSEQUENCES of not preparing these drawings before invitation of tenders may manifest in the form of delay in execution of the work and deviations in quantities of the items of work.<\/p>\nHence, APPROVED architectural and structural drawings should be available before invitation of tenders.<\/strong>(\"Fit for construction\", sometimes called \"Good for construction\", drawings means the architectural and structural drawings approved by the project executing authority as well as by the authority governing the extant rules\/ laws, including byelaws, such as local authorities.)<\/em><\/p>\n<\/div><h3>2.10.9<\/span>Annual Procurement Plans<\/span><\/h3>\nW<\/span>C<\/span>NC<\/span> \u2014 the mandatory 30-day rule:<\/strong>GFR 2017 [Rule 144(x)] mandates that all ministries\/ departments shall prepare an annual procurement plan within 30 (thirty) days of budget approval, before the commencement of the year, and the same should also be placed on their website.<\/p>\n[All four] \u2014 publication: The procuring entity shall\/ may publish information regarding the planned procurement activities for the forthcoming year or years on:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-G\" data-src=\" G \">G<\/span> the Government e-Marketplace (GeM), GeM-Central Public Procurement portal, and the website\/ e-procurement portal used by the procuring entity;<\/li><li class=\"srcmark src-multi\" data-src=\" W NC \">W<\/span>NC<\/span>CPPP and website\/ e-procurement portal used by the procuring entity<\/strong>;<\/li><li class=\"srcmark src-C\" data-src=\" C \">C<\/span> the central public procurement portal and website\/ e-Procurement portal used by the procuring entity<\/li><\/ul>\n \u2014 with a caveat that such publication shall not be construed as an initiation of a procurement process, and shall not cast any obligation on the Procuring Entity to issue the tender document or confer any right on prospective bidders. (Rule 144(x), GFR 2017)<\/em><\/p>\n[All four] \u2014 the integrated plan: An integrated annual procurement plan should be prepared for goods, works and services for the ensuing financial year, based on:<\/p>\n<ul class=\"lst\"><li>The latest cost estimates, and<\/li><li>a realistic time Schedule for procurement activities and contract implementation<\/li><\/ul>\n \u2014 and thus Schedule and stagger the procurements over the year, with a view to:<\/p>\n<ul class=\"lst\"><li>Ensure an even load on the Procuring Entity and the market, and<\/li><li>Co-ordinate matching procurements of Goods, Works, and Services for a project.<\/li><\/ul>\n<h3>2.10.10<\/span>Mitigating Cartel Formation<\/span><\/h3>\n<aside class=\"note\">Need assessment and procurement planning is the main stage where this menace can be addressed effectively.<\/p><\/aside>\na) Inadequate competition due to an inadequate number of suppliers\/ contractors\/ consultants\/ service providers in the list\/ panel of registered vendors \u2014 may empower bidders to conspire against the Procuring Entity:<\/p>\n<ul class=\"lst\"><li>i) new firms May be encouraged to register themselves<\/strong> for the subject goods\/ category\/ services.<\/li><li>ii) Review the description of requirement:<\/li><li class=\"srcmark src-G\" data-src=\" G \">G<\/span> A review of TECHNICAL SPECIFICATIONS (especially TAILOR-MADE specifications) may be done to examine why a commercially available alternative cannot be used instead, or at least review its features so that more suppliers become eligible. Consider using SUBSTITUTE ITEMS or new developments in the market.<\/li><li class=\"srcmark src-W\" data-src=\" W \">W<\/span> Various items in the BOQ May be reviewed (using packaging\/ slicing) so that more contractors become eligible. Insisting on costly machinery to be used May reduce competition and encourage cartel formation.<\/li><li class=\"srcmark src-multi\" data-src=\" C NC \">C<\/span>NC<\/span> Various services and activities in the Services and Activities Schedule may be reviewed so that more consultants\/ service providers become eligible. Insisting on costly machinery to be used may reduce competition and encourage cartel formation.<\/li><\/ul>\nb) Pre-bid conferences: Processes \u2014 e.g., PRE-BID CONFERENCES, where a considerable number of competing bidders come together on a platform \u2014 May facilitate such cartel formation. This may be AVOIDED as far as feasible, or be held only VIRTUALLY.<\/p>\nHOWEVER, a pre-bid conference May be advantageous in the case of:<\/p>\n<aside class=\"note\">Turnkey contract(s), sophisticated and costly equipment, large works, and complex consultancy\/ service assignments.<\/p><\/aside>\nG<\/span> adds:<\/strong>Pre-bid conferences must be done wherever necessary.<\/p>\nc) Varying quantity and conditions: Tendering similar quantities\/ works\/ services with similar conditions, year on year, provides a stable conspiring environment for the bidders to come to an agreement for quoting prices and quantities. Therefore, the following action can be considered to vary quantity and conditions to make it difficult for cartels:<\/p>\n<ul class=\"lst\"><li>i) change the mode of procurement \u2014 OTE instead of LTE, or GTE instead of OTE; or bypass the pre-qualification stage and vice versa.<\/li><li>ii) change the quantity\/ packaging:<\/li><li class=\"srcmark src-G\" data-src=\" G \">G<\/span> Change the quantity to be procured by PACKAGING\/ SLICING the tendered quantity, or by clubbing more than one similar item in a tender (or vice versa).<\/li><li class=\"srcmark src-W\" data-src=\" W \">W<\/span> Change the packaging\/ slicing by clubbing\/ slicing WORKS in a tender.<\/li><li class=\"srcmark src-multi\" data-src=\" C NC \">C<\/span>NC<\/span> Change the packaging\/ slicing by clubbing\/ slicing SERVICES\/ ACTIVITIES in a tender.<\/li><li>iii) change the pre-qualification criteria, especially in the case of slicing\/ packaging, to broaden the target bidders.<\/li><\/ul>\n<h3 class=\"src-multi srchead\" data-src=\" G W \">2.10.11<\/span>Strategising Large Procurement<\/span>G<\/span>W<\/span><\/h3><div class=\"srcblock src-multi\" data-src=\" G W \" data-label=\"Goods + Works only\">\nLarge procurements warrant strategies to achieve competition and VfM. Large procurements require the application of mind during need assessment, cost estimation and procurement planning \u2014 where the blind application of Rules May not bring VfM.<\/p>\nFormal market research can reveal important parameters of the market<\/strong> that can be used for designing optimal procurement strategies<\/strong> \u2014 alternative methods of procurement, slicing\/ packaging, mitigating cartels, optimising various features\/ specifications of the item\/ work \u2014 to maximise VfM and competition.<\/strong><\/p>\nSome of the market parameters to look for are:<\/p>\n<div class=\"tblwrap\"><table><thead><tr class=\"\" ><th>#<\/th><th>Parameter<\/th><th>G<\/span> \u2014 Goods<\/th><th>W<\/span> \u2014 Works<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>Capacity vs demand<\/td><td>Total Production Capacities and total demand for the ITEM in the country and abroad. Is there an unbalanced demand\/ supply?<\/td><td>Total Production Capacities and total demand for similar works in the region or the State. Is there an unbalanced demand\/ supply?<\/td><\/tr><tr><td>b<\/td><td>Volumes of procurement<\/td><td>How SIGNIFICANT is our requirement vis-\u00e0-vis the market? Would CLUBBING DEMANDS increase BARGAINING POWER? Can we COLLABORATE with another large public-sector buyer? Has there been a recent major procurement that may CONSTRICT available capacity?<\/td><td>(same)<\/em><\/td><\/tr><tr><td>c<\/td><td>Level of competition<\/td><td>Location-wise number of SUPPLIERS, co-ordination\/ cartelisation among them, major suppliers\/ buyers CONTROLLING the market<\/td><td>Location-wise number of CONTRACTORS, co-ordination\/ cartelisation among them, major contractors\/ buyers controlling the market<\/td><\/tr><tr><td>d<\/td><td>Bottlenecks<\/td><td>SUPPLY CHAIN constraints, RAW MATERIALS bottlenecks, LOGISTICS, GEOPOLITICAL issues<\/td><td>MANPOWER constraints, SKILLS\/ MANPOWER bottlenecks, LOGISTICS, GEOPOLITICAL issues<\/td><\/tr><tr><td>e<\/td><td>Specifications\/ statutory constraints<\/td><td>Specifications and variations: Patents, manufacturing processes, pollution, and other LEGAL RESTRICTIONS, etc. Should we tinker with specifications to get VfM?<\/td><td>Statutory Constraints: Patents, construction processes, pollution, and other legal restrictions, etc. Should we tinker with specifications to get VfM?<\/td><\/tr><tr><td>f<\/td><td>Pricing Trends [G only]<\/td><td>seasonality of prices \u2014 is it the appropriate time to enter the market?<\/td><td> \u2014 <\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h2 class=\"src-multi srchead\" data-src=\" G NC \">2.11<\/span>Procurement Planning \u2014 Risks and Mitigations<\/span>G<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\" data-src=\" G NC \" data-label=\"Goods + Non-Consultancy only\">\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>Packaging, bundling, and slicing of requirements are done to avoid open competition or reduce competition. Or it is TOO LARGE to make it difficult for MSEs to participate. Possible CLUBBING\/ COLLABORATION among different units having the same NEEDS has not been explored.<\/td><td>Lay down a clear policy for packaging and bundling of requirements. In LARGE PACKAGES, the affordability of EMD and the resultant restriction on competition may be kept in view, and bidders May be allowed to bid for slices of the package by depositing proportional EMD.<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>Appendix to Chapter 2 \u2014 Points of Difference Between the Four Manuals<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Chapter title<\/td><td>G:<\/strong>Need Assessment, Formulation of Specifications and Procurement Planning<\/em> \u00b7 W:<\/strong>Need Assessment and Procurement Planning<\/em> \u00b7 C\/NC:<\/strong>Need assessment and Procurement Planning<\/em><\/td><\/tr><tr><td>2<\/td><td>Number of sections<\/td><td>G: 5 \u00b7 W: 9 (the most) \u00b7 C: 7 \u00b7 NC: 4 (the fewest)<\/td><\/tr><tr><td>3<\/td><td>Initiating document<\/td><td>G: Indent\/ purchase Requisition (Annexure 5) \u00b7 W: Requisition + Perspective Plan \u00b7 C\/NC: Procurement Proposal (Concept Paper) (Annexure 3)<\/td><\/tr><tr><td>4<\/td><td>Description-of-requirement instrument<\/td><td>G: Technical Specifications (TS) \u00b7 W: PPR \u2192 DPR\/PE \u2192 Detailed Designs & Detailed Estimates \u00b7 C: Terms of Reference (ToR) \u00b7 NC: Services and Activities Schedule<\/td><\/tr><tr><td>5<\/td><td>Perspective Plan with annual review<\/td><td>W only<\/td><\/tr><tr><td>6<\/td><td>\"Matters decided during need assessment\"<\/strong> (method of satisfying need, HaaS\/ SaaS, units of quantity, wagon-load rounding)<\/td><td>G only<\/td><\/tr><tr><td>7<\/td><td>Detailed cost-estimation methods<\/strong> (last purchase price, costing analysis, MRP, market survey, budgetary quotes with 3-quote\/ 10\u201321 day\/ two 5-day extension rule, price-index websites)<\/td><td>G only<\/td><\/tr><tr><td>8<\/td><td>Cost categories<\/td><td>C:<\/strong>TWO<\/strong> (fee\/ remuneration + reimbursable) \u00b7 NC:<\/strong>THREE<\/strong> (Remuneration + Reimbursable + Administrative & Miscellaneous), with profit, taxes and duties added on top<\/strong><\/td><\/tr><tr><td>9<\/td><td>Minimum wage rate referenced in staff costing<\/td><td>NC only<\/td><\/tr><tr><td>10<\/td><td>Green procurement \u2014 Ecomark Rules 2023, BEE star ratings table, EPD\/ISO 14025<\/td><td>G only<\/td><\/tr><tr><td>11<\/td><td>Samples and demonstration of equipment \u2014 three-copy reference-sample procedure<\/td><td>G only<\/td><\/tr><tr><td>12<\/td><td>Essential Technical Particulars (12-item list)<\/td><td>G only<\/td><\/tr><tr><td>13<\/td><td>PPR \/ Rough Cost Estimate with 14-item content list<\/td><td>W only<\/td><\/tr><tr><td>14<\/td><td>In-Principle Approval as a distinct sanction step<\/td><td>W only<\/strong> (C\/NC have an in-principle approval<\/em> on the Concept Paper, but not the works sequence)<\/td><\/tr><tr><td>15<\/td><td>DPR\/PE with 15-item content list; EIA; Social Impact Assessment & LARR Act 2013<\/td><td>W only<\/td><\/tr><tr><td>16<\/td><td>50-metre \"reach\" ground investigation rule; debarment of DPR consultants<\/td><td>W only<\/td><\/tr><tr><td>17<\/td><td>A\/A and E\/S; sanction order contents; Rule 16 DFPR 2024<\/td><td>W only<\/td><\/tr><tr><td>18<\/td><td>Technical Sanction; \"fit for construction\" drawings; Schedule of Rates enlargement<\/td><td>W only<\/td><\/tr><tr><td>19<\/td><td>Appropriation of funds as a distinct step<\/td><td>W only<\/td><\/tr><tr><td>20<\/td><td>Reference documents (Plinth Area Rates, Schedule of Rates, Analysis of Rates, Specifications)<\/td><td>W only<\/td><\/tr><tr><td>21<\/td><td>Rs 60 lakh repair-works exemption from DPR\/PE<\/td><td>W only<\/td><\/tr><tr><td>22<\/td><td>Activity-based vs position-based ToR; four report types (Inception\/ Progress\/ Interim\/ Final); 6-week inception; 15-day interim review; \"consultants alone are responsible for their findings\"<\/td><td>C only<\/td><\/tr><tr><td>23<\/td><td>Contract Monitoring Committee (CMC)<\/td><td>C only<\/td><\/tr><tr><td>24<\/td><td>Performance Standards & QA, KPIs, SLA, Method Statement<\/td><td>NC only<\/td><\/tr><tr><td>25<\/td><td>Labour\/ Personnel Schedule; relievers and leave reserve not separately payable<\/td><td>NC only<\/td><\/tr><tr><td>26<\/td><td>Critical Material Schedule; Critical Equipment Schedule; input- vs output-admeasurement<\/td><td>NC only<\/td><\/tr><tr><td>27<\/td><td>Statutory obligations list (ESI, EPF, labour Licence, PAN, Private Security Agency licence)<\/td><td>NC only<\/td><\/tr><tr><td>28<\/td><td>\"Borrow the Works SoR + percentage above\/below\" simplification for large activity schedules<\/td><td>NC only<\/td><\/tr><tr><td>29<\/td><td>10 working days for critical review of indent<\/td><td>G only<\/td><\/tr><tr><td>30<\/td><td>Access to MSEs vs access to smaller contractors (packaging exception)<\/td><td>G\/C\/NC: MSEs \u00b7 W: smaller contractors<\/td><\/tr><tr><td>31<\/td><td>Type of contract decision in planning (Lump sum\/ Item Rate\/ Percentage Rate\/ Piece Work\/ EPC\/ PPP)<\/td><td>W only<\/td><\/tr><tr><td>32<\/td><td>Land availability & statutory clearances in procurement planning<\/td><td>W only<\/td><\/tr><tr><td>33<\/td><td>Annual Procurement Plan \u2014 express 30-day-from-budget-approval mandate<\/td><td>W, C, NC<\/strong> (G<\/strong> states the publication obligation under Rule 144(x) but not the 30-day deadline)<\/td><\/tr><tr><td>34<\/td><td>Strategising Large Procurement (market research parameters)<\/td><td>G + W only<\/td><\/tr><tr><td>35<\/td><td>\"Pricing Trends \/ seasonality\" as a market parameter<\/td><td>G only<\/td><\/tr><tr><td>36<\/td><td>Procurement Planning \u2014 Risks and Mitigations table<\/td><td>G + NC only<\/td><\/tr><tr><td>37<\/td><td>Need Assessment \u2014 Risks and Mitigations table<\/td><td>G, C, NC \u2014 absent from W<\/td><\/tr><tr><td>38<\/td><td>Subjectivity-of-samples risk row in the risk table<\/td><td>G only<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 2<\/p>\n<aside class=\"note\">Next:<\/strong> Chapter 3 \u2014 Vendor Governance: Supplier\/ Contractor Relationship Management, Participation of Bidders, Code of Integrity, Integrity Pact, Grievance Redressal, Registration\/ Enlistment, Debarment and Indian Agents<\/em> (merging Goods Ch. 3, Works Ch. 8<\/strong>, Consultancy Ch. 3 and Non-Consultancy Ch. 3).<\/p><\/aside><\/div><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch3\">Chapter 3<\/p><h1>Participation of Bidders, Vendor Relationship Management and Governance Issues<\/h1><\/header>\nMerging: Goods Ch. 3 (Supplier Relationship Management) \u00b7 Works Ch. 8<\/strong> (Registration\/ Enlistment of Contractors and Governance Issues) \u00b7 Consultancy Ch. 3 (Participation of Bidders and Governance Issues) \u00b7 Non-Consultancy Ch. 3 (Participation of Bidders and Governance Issues)<\/em><\/p><h2>Structural Warning for Students<\/span><\/h2>\nThis block of subject matter is CHAPTER 3 in the Goods, Consultancy and Non-Consultancy Manuals \u2014 but CHAPTER 8 in the Works Manual.<\/p>\nThe Works Manual moves the entire vendor-governance block to the END<\/strong> of the Manual (after Contract Execution), whereas the other three place it before Bidding Design<\/strong>. The content<\/em> is substantially the same; only the location<\/em> differs. Any exam question citing \"para 8.2\" of Works corresponds to \"para 3.2\" of Goods.<\/p>\n<h2>Concordance for Chapter 3<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>Goods<\/th><th>Works<\/th><th>CS<\/th><th>NCS<\/th><\/tr><\/thead><tbody><tr><td>3.1<\/td><td>Supplier\/ Contractor Relationship Management<\/td><td>3.1<\/td><td>8.1<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>3.2<\/td><td>Eligibility Criteria for Participation in Tender Process<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>3.1<\/td><td>3.1<\/td><\/tr><tr><td>3.3<\/td><td>Legal Status of Bidders<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>3.2<\/td><td>3.2<\/td><\/tr><tr><td>3.4<\/td><td>Governance Issues \u2014 Canons of Financial Propriety; RTI<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>3.3.1, 3.3.2<\/td><td>3.3.1, 3.3.2<\/td><\/tr><tr><td>3.5<\/td><td>Code of Integrity for Public Procurement (CIPP)<\/td><td>3.2<\/td><td>8.2<\/td><td>3.3.3<\/td><td>3.3.3<\/td><\/tr><tr><td>3.6<\/td><td>Integrity Pact (IP)<\/td><td>3.3<\/td><td>8.3<\/td><td>3.4<\/td><td>3.4<\/td><\/tr><tr><td>3.7<\/td><td>Grievances and its Redressal<\/td><td>3.4<\/td><td>8.4<\/td><td>3.5<\/td><td>3.5<\/td><\/tr><tr><td>3.8<\/td><td>Conduct of Public Servants \u2014 Risks and Mitigations<\/td><td>3.5<\/td><td>8.5<\/td><td>3.6<\/td><td>3.6<\/td><\/tr><tr><td>3.9<\/td><td>Development of New Sources and Registration\/ Empanelment\/ Enlistment\/ Pre-qualification<\/td><td>3.6<\/td><td>8.6<\/td><td>3.7<\/td><td>3.7<\/td><\/tr><tr><td>3.10<\/td><td>Debarment<\/td><td>3.7<\/td><td>8.7<\/td><td>3.8<\/td><td>3.8<\/td><\/tr><tr><td>3.11<\/td><td>Enlistment of Indian Agents<\/td><td>3.8<\/td><td>8.8<\/td><td>3.9<\/td><td>3.9<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Note on the order of the last four topics: In all four Manuals, the sequence Development of New Sources\/ Registration \u2192 Debarment \u2192 Enlistment of Indian Agents appears in the same relative order as the closing sections of the chapter. This is a reliable memory anchor.<\/p><\/aside>\n<h2 class=\"src-multi srchead\" data-src=\" G W \">3.1<\/span>Supplier\/ Contractor Relationship Management<\/span>G<\/span>W<\/span><\/h2><div class=\"srcblock src-multi\" data-src=\" G W \" data-label=\"Goods + Works only\">\nSupplier Relationship Management G<\/span> \/ Contractor Relationship Management W<\/span> comprises the following three functions:<\/p>\n<ol class=\"lst\"><li>Ensuring COMPLIANCE of suppliers\/ contractors to the Code of Integrity for Public Procurement and Integrity Pact (CIPP), if stipulated in Tender\/ Bid Documents;<\/li><li>REMOVAL from the list of registered\/ enlisted suppliers\/ contractors, and DEBARMENT of firms;<\/li><li>Development of new sources and registration\/ enlistment of suppliers\/ contractors.<\/li><\/ol>\n<aside class=\"note\">C<\/span>NC<\/span> do not<\/strong> carry a corresponding \"Relationship Management\" heading. They instead open the chapter with Eligibility Criteria<\/strong> and Legal Status of Bidders<\/strong> (paras 3.2 and 3.3 below), which have no counterpart in the Goods or Works Manuals in this chapter<\/strong>.<\/p><\/aside>\n<\/div><h2 class=\"src-multi srchead\" data-src=\" C NC \">3.2<\/span>Eligibility Criteria for Participation in Tender Process<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\">\n1.<\/strong>Normally, participation in the Tender Process should be open to all bidders.<\/strong> However, the procuring entity should lay down 'Eligibility<\/strong>' criteria, based on the requirement of the procurement and Government Policies.<\/p>\n<aside class=\"note\">The critical distinction:<\/p>\n'ELIGIBILITY' and 'QUALIFICATION' criteria (Experience; Performance and Financial Capabilities) are entirely different criteria and should not be mixed up.<\/p>\n<ul class=\"lst\"><li>'ELIGIBILITY' criteria regulate the participation of bidders in the Tender process.<\/li><li>'QUALIFICATION' criteria are for EVALUATION of bidders for award of the contract.<\/li><\/ul><\/aside>\nTiming rule: The bidder should meet the eligibility criteria as of the date of his bid submission \u2014 AND should continue to meet these till the award of the contract. Otherwise, his bid would be rejected as non-responsive and would not be evaluated for award of contract.<\/p>\nThe bidder shall be required to DECLARE FULFILMENT of Eligibility Criteria in his bid document.<\/p>\nSome of the eligibility criteria relate to the following issues (for details refer to the relevant Model Tender Documents)<\/em>:<\/p>\na) Legal status of the bidder:<\/strong> a natural person<\/strong>, or a private entity<\/strong>, or a public entity<\/strong> (State-owned enterprise or institution), or a Joint Venture\/ Consortium<\/strong> (an association of several persons, firms, or companies \u2014 hereinafter JV\/C<\/strong>).<\/p>\n<aside class=\"note\">NC<\/span> adds a restriction:<\/strong>JV\/C may be permitted to participate in the procurement of Non-consultancy services only in specific situations where the credentials required are not likely to be available with an individual bidder.<\/strong>Participation of JV\/C is SPECIFICALLY DISCOURAGED in the case of quality Oriented Procurement (QOP) with QCBS evaluation.<\/p><\/aside>\nb) Participation of demerged entities [NC only]: (by virtue of a corporate restructuring exercise etc.) Tender documents must clearly mention if \u2014 and under what conditions \u2014 the demerged entity will be permitted to use the credentials of the original\/ parent entity (for the initial five years from the incorporation of the demerged entities) to satisfy the eligibility criteria, or not, in the specific tender.<\/p>\n<aside class=\"note\">Footnote NC<\/span>:<\/em> As per DoE's OM No. F.8\/78\/2023-PPD dated 12.10.2023, in suitable cases the procuring entity may consider the credentials based on the merit and circumstances of the case \u2014 like type of procurement, nature of demerger, number of eligible bidders available, etc.<\/p><\/aside>\nc) Requirement of various REGISTRATIONS\/ LICENCES from various statutory authorities required for the subject matter of procurement: GSTIN, PAN, EPF, ESI, labour, Private Security Agencies (PASARA), etc.<\/p>\nd) Submission of requisite BID SECURITY (or Bid Security Declaration, if allowed) or proof of exemption therefrom.<\/p>\nE) free from financial insolvency, debarment or convictions.<\/p>\nF) a consistent history of litigation or arbitration by the bidder May result in disqualification.<\/p>\ng) Free from 'conflict of interest' with other bidders, which may affect fair competition.<\/p>\nh) Restriction on participation as per Government Policies:<\/p>\n<ul class=\"lst\"><li>i) For Class-II Local Suppliers and Non-Local bidders as per the Make-in-India policy;<\/li><li>ii) Any bidder from a country sharing a land border with India (but not in development partnership with India), or any bidder (INCLUDING INDIAN) with a Specified Transfer of Technology (ToT) arrangement with such a country, shall be eligible subject to certain conditions.<\/li><\/ul>\n<\/div><h2 class=\"src-multi srchead\" data-src=\" C NC \">3.3<\/span>Legal Status of Bidders<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\"><h3>3.3.1<\/span>Individual Persons<\/span><\/h3>\n1. Individual consultants C<\/span> \/ Individual service providers NC<\/span>:<\/p>\nIndividual consultants\/ service providers are recruited for similar activities as Consultancy firms\/ Service providing firms when a full team is not considered necessary.<\/p>\nThey may be:<\/p>\n<ul class=\"lst\"><li>independent experts not permanently associated with any particular firm, or<\/li><li>employees of a firm recruited on an INDIVIDUAL basis, or<\/li><li>employees of an agency, institution, or university.<\/li><\/ul>\nThey are normally recruited for:<\/p>\n<aside class=\"note\">project implementation supervision \u00b7 training \u00b7 provision of specific expert advice on a highly technical subject \u00b7 policy guidance \u00b7 special studies \u00b7 compliance supervision \u00b7 implementation monitoring<\/p><\/aside>\nThey are not normally recruited for PROJECT PREPARATION, unless the proposed project is simple and, generally, a repeat of an already established and successful project.<\/p>\n<aside class=\"note\">If more than three experts are required, then the assignment should normally be undertaken by a team from a firm.<\/p><\/aside>\nAs with firms, individual consultants\/ service providers are classed as either INTERNATIONAL or NATIONAL, depending on their level of EXPERTISE and their international experience and exposure.<\/p>\n2. Retired Government Servants:<\/p>\nC<\/span> \u2014 the GFR bar:<\/strong>Rule 177 of GFR, 2017 says that <\/strong>consulting services do not include direct engagement of retired Government servants.<\/strong>They should not be engaged as consultants against regular vacant posts under this rule. Such engagements should be handled as a PERSONNEL MATTER.<\/p>\nC<\/span>NC<\/span> \u2014 the permitted mode: As Consultants\/ Service Providers, <\/strong>retired Government servants CAN be hired\/ engaged only:<\/p>\n<ul class=\"lst\"><li>for a SPECIFIC TASK, and<\/li><li>for a specific duration.<\/li><\/ul>\nThey should be assigned clear output-related goals.<\/p>\nRemuneration:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Type of engagement<\/th><th>Remuneration<\/th><\/tr><\/thead><tbody><tr><td>Full-TIME basis (when they are not allowed to concurrently do any other assignment), on a monthly basis<\/td><td>Last pay drawn minus pension, as per extant DOPT guidelines<\/td><\/tr><tr><td>PART-TIME, NON-EXCLUSIVE engagements<\/td><td>The Procuring Ministry\/ Department may fix remuneration on a per day\/ month or lump-sum basis<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h3>3.3.2<\/span>Private and Public Entities<\/span><\/h3>\n1. Consultancy Firms C<\/span> \/ Service Providing Firms NC<\/span>: The MAIN SOURCE of consultants\/ service providers is firms of diverse specialisations that provide consultancy\/ non-consultancy services. Such firms are normally classified as either:<\/p>\n<ul class=\"lst\"><li>INTERNATIONAL \u2014 firms that have international experience and are capable of undertaking work at international level at international rates; or<\/li><li>NATIONAL \u2014 firms that may not have international exposure and normally undertake assignments only within that country, usually at significantly lower rates.<\/li><\/ul>\n2. Non-Governmental Organisations (NGO): There may be a DISTINCT ADVANTAGE in the use of NGOs in Projects which emphasise experience in community participation and in-depth local knowledge \u2014 for example, Projects related to Corporate Social Responsibility (CSR) or Government Social Initiatives like 'Swachh Bharat Abhiyan', etc.<\/p>\n3. Specialised Agencies and Institutions:<\/strong> Specialised agencies or institutions \u2014 including Government\/ Semi-Government agencies, universities, research and professional institutions<\/strong> \u2014 may also from time to time be recruited to provide Consultancy\/ Non-consultancy services.<\/p>\nThese services may be provided by INDIVIDUALS (as discussed above) or by TEAMS. Nonetheless, there are at times DISTINCT ADVANTAGES to using such agencies. Experts and teams from such agencies and institutions may undertake a variety of roles across the whole field of possible services \u2014 these may range from PROJECT PREPARATION through PROJECT SUPERVISION and POLICY ADVICE to project benefit monitoring and evaluation.<\/p>\n<h3>3.3.3<\/span>Association of Several Bidders<\/span><\/h3><h4>1.<\/span>Sub-contracting<\/span><\/h4>\nA bidder who is capable of being selected for award of contract on his own credentials may propose to sub-contract a PART of the contract for SPECIALISED ITEMS of services, as a financial or technical strategy.<\/p>\n<ul class=\"lst\"><li>The names and details of the sub-contracts are to be clearly stated in the bid submitted by the Bidder.<\/li><li>Provided further that such sub-contractor should not circumvent the eligibility criteria.<\/li><li>Qualifications of these sub-contractors shall not be considered in evaluation of qualification criteria for the bid.<\/li><li>DESPITE any approval granted by the Procuring Entity for such arrangements, the bidder\/ contractor shall be solely and directly responsible for executing sub-contracted portions of the contract.<\/li><li>The total VALUE of the sub-contracting portion of services must not exceed the per cent of the contract price as specified in the Tender Document\/ Contract \u2014 if not so specified, 25 (twenty-five) per cent.<\/li><li>Sub-contracting by the contractor without the approval of the Procuring Entity shall be a breach of contract.<\/li><\/ul>\n<h4 class=\"src-multi srchead\" data-src=\" C NC \">2.<\/span>Consortium of Consultants C<\/span> \/ Consortium of Service Providers<\/span>NC<\/span><\/h4><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\">\na) Why consortia form: In large and complex assignments, consultants\/ service providers may associate with each other to form a consortium:<\/p>\n<ul class=\"lst\"><li>to COMPLEMENT their respective areas of expertise,<\/li><li>to INCREASE the technical responsiveness of their proposal, and<\/li><li>to make larger pools of experts available, or for other reasons.<\/li><\/ul>\nSuch an association may be for the LONG TERM (independent of any particular assignment) or for a SPECIFIC assignment.<\/p>\nb) Legal character:<\/strong> Such associations are called Consortium or Joint Ventures (JVs)<\/strong> for the purpose of this Manual.<\/p>\n<ul class=\"lst\"><li>In case of consortium or JVs, all members shall sign the contract and shall be jointly and severally liable for the entire assignment.<\/li><\/ul>\n<aside class=\"note\">(NC<\/span> phrasing: \"The consortium may take the form of a Joint Venture (JV) \u2014 in which case, all members of the JV shall sign the contract and shall be jointly and severally liable for the entire assignment.\")<\/em><\/p><\/aside>\n<ul class=\"lst\"><li>HOWEVER, the Procuring Entity only deals with the lead member of consortiums\/ JVs for all purposes.<\/li><li>After the short list is finalised and the Request for Proposal (RfP) is issued, any association in the form of a consortium\/ JV or sub-consultancy among the short-listed firms shall be PERMISSIBLE in accordance with provisions stated in the RfP. Under such circumstance, one of the shortlisted consultants must become the lead member of the consortium\/ JV.<\/li><\/ul>\nc) What the bid document must specify: Bid documents should clearly specify whether consortiums\/ JVs are ALLOWED to bid \u2014 in the case of complex and large assignments, say above certain values (say Rs. 5 crore).<\/p>\n<ul class=\"lst\"><li>Maximum number of partners in a consortium\/ JV shall be LIMITED (say \u2014 three).<\/li><li>In case consortiums\/ JVs are permitted to bid, it should be clarified:<\/li><li>WHAT qualifications are to be met COLLECTIVELY (clubbed together)<\/strong> by the consortium\/ JV partners \u2014 say, experience of similar consultancy\/ non-consultancy service<\/em>; and<\/li><li>WHAT each partner has to meet individually and separately \u2014 say, financial capacity<\/em>.<\/li><li>In the case of each member meeting credentials individually, it should also be specified that:<\/li><\/ul>\n<aside class=\"note\">Each PARTNER should meet AT least 25%, and the lead partner at least 50%, out of the qualifying limit (say financial capacity\/ turnover).<\/p><\/aside>\nd) Ensuring the consortium actually performs: If consortiums\/ JVs are allowed, measures should be taken to ensure that all the consortium\/ JV partners are present and deliver services all through the contract period.<\/p>\n<ul class=\"lst\"><li>An IMPLEMENTATION BOARD with participation of all consortium\/ JV partners may be provided for, wherein the project Manager from the Procuring Entity shall also be ALLOWED AUDIENCE when required.<\/li><li>MEETING of consortium\/ JV partners with the project executing authority for quarterly progress review may be made a criterion linked to achievement of key dates or even payment.<\/li><\/ul>\n<\/div><\/div><h2 class=\"src-multi srchead\" data-src=\" C NC \">3.4<\/span>Governance Issues in Procurement \u2014 Financial Propriety and RTI<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\">\n<aside class=\"note\">C<\/span>NC<\/span> open their governance section by re-stating two topics that the Goods and Works Manuals place in CHAPTER 1<\/strong> \u2014 see paras 1.9<\/strong> and 1.16<\/strong> of this Unified Manual.<\/p><\/aside>\n<h3>3.4.1<\/span>Standards (Canons) of Financial Propriety<\/span><\/h3>\nPublic Procurement, like any other expenditure in Government, must conform to the Standards (also called Canons) of Financial Propriety \u2014 Rule 21 of GFR, 2017.<\/p>\n<aside class=\"note\">The four principles reproduced in the CS and NC Manuals are (i) to (iv):<\/p>\ni) Every officer is expected to exercise the same vigilance in respect of expenditure incurred from public moneys as a person of ordinary prudence would exercise in respect of expenditure of his own money.<\/p>\nii) The expenditure should not be prima facie more than the occasion demands.<\/p>\niii) No authority should exercise its powers of sanctioning expenditure to pass an order which will be directly or indirectly to its own advantage.<\/p>\niv) Expenditure from public moneys should not be incurred for the benefit of a particular person or a section of the people, unless \u2014 (a) a claim for the amount could be enforced in a Court of Law, or (b) the expenditure is in pursuance of a recognised policy or custom.<\/p>\nCross-reference:<\/strong> The Works Manual (para 1.9) additionally reproduces clause (v)<\/strong> \u2014 the amount of allowances granted to meet expenditure of a particular type should be so regulated that the allowances are not, on the whole, a source of profit to the recipients<\/em>. Neither the Goods Manual (para 1.9) nor the CS\/NC Manuals (para 3.3.1) reproduce clause (v).<\/strong><\/p><\/aside>\n<h3>3.4.2<\/span>Right to Information and Proactive Information Disclosures<\/span><\/h3>\nSection 4(1)(b) of the RTI Act lays down the information to be disclosed by public authorities on a suo-motu or proactive basis, and Section 4(2) and Section 4(3) prescribe the method of its dissemination \u2014 to enhance transparency and to reduce the need for filing individual RTI applications.<\/p>\nThe DoPT has issued \"Guidelines on suo motu disclosure under Section 4 of the RTI Act\" vide OM No. 1\/6\/2011-IR dated April 15, 2013. The relevant guideline relating to procurement:<\/p>\n<aside class=\"note\">\"Information relating to procurement made by public authorities \u2014 including publication of notice\/ tender enquiries, corrigenda thereon, and details of bid awards detailing the name of the Vendor\/ Contractor of goods\/ services being procured or the works contracts entered, or any such combination of these, and the rate and total amount at which such procurement or works contract is to be done \u2014 should be disclosed. All information disclosable as per Ministry of Finance, Department of Expenditure's O.M. No. 10\/1\/2011-PPC dated 30th November 2011 (and 05th March 2012) on Mandatory Publication of Tender Enquiries on the Central Public Procurement Portal, and O.M. No. 10\/3\/2012-PPC dated 09th January 2014 on implementation of comprehensive end-to-end e-procurement, should be disclosed under Section 4 of the Right to Information Act.\"<\/p>\nPlacement note: This appears at para 1.12 in the Goods Manual and at para 3.3.2 in the CS and NC Manuals. It does not appear in the Works Manual at all.<\/p><\/aside>\n<\/div><h2>3.5<\/span>Code of Integrity for Public Procurement (CIPP)<\/span><\/h2>\n(Rule 175 of GFR 2017)<\/em><\/p>\n<h3>3.5.1<\/span>Introduction<\/span><\/h3>\nPublic Procurement is perceived to be prone to corruption and ethical risks. To mitigate this, the officials of Procuring Entities involved in procurement AND the bidders\/ suppliers\/ contractors\/ consultants\/ service providers must abide by the following Code of Integrity for Public Procurement (CIPP).<\/p>\nDeclarations by officials: All Procuring officials May be asked to sign declarations to this effect PERIODICALLY and in various procurement decisions.<\/p>\n<ul class=\"lst\"><li>[G, C, NC] \u2014 including Need Assessment<\/em><\/li><li class=\"srcmark src-W\" data-src=\" W \">W<\/span> \u2014 including Preparation of Estimates<\/strong><\/em><\/li><\/ul>\nDeclarations by bidders:<\/strong> The bidders\/ suppliers\/ contractors\/ consultants\/ service providers should be asked to sign a declaration about abiding by the CIPP<\/strong> \u2014 W<\/span> adds: including sub-contractors engaged by them<\/em> \u2014 <\/strong>in registration\/ enlistment applications AND in tender\/ bid documents, with a <\/strong>WARNING that, in case of any transgression of this code:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-G\" data-src=\" G \">G<\/span> \u2014 it would be liable for punitive actions as detailed below<\/em>;<\/li><li class=\"srcmark src-W\" data-src=\" W \">W<\/span> \u2014 its name is not only liable to be removed from the list of enlisted contractors, but it would be liable for other punitive actions such as cancellation of contracts, debarment or action in Competition Commission of India<\/strong>, and so on<\/em>;<\/li><li class=\"srcmark src-multi\" data-src=\" C NC \">C<\/span>NC<\/span> \u2014 its name is not only liable to be removed from the list of registered suppliers\/ contractors\/ service providers, but it would be liable for other punitive actions as detailed below<\/em>.<\/li><\/ul>\n<h3>3.5.2<\/span>The Code \u2014 Seven Prohibited Practices<\/span><\/h3>\nProcuring authorities, as well as bidders, suppliers, contractors, consultants and service providers, should observe the highest standard of ethics and should not INDULGE in the following PROHIBITED PRACTICES \u2014 either directly or indirectly \u2014 at any stage during the procurement process or the execution of resultant contracts:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Practice<\/th><th>Definition<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>\"CORRUPT practice\"<\/td><td>making offers, solicitation or acceptance of a BRIBE, REWARDS or GIFTS or any material benefit, either directly or indirectly, in exchange for an unfair advantage in the procurement process, or to otherwise INFLUENCE the procurement process or contract execution<\/td><\/tr><tr><td>ii<\/td><td>\"FRAUDULENT practice\"<\/td><td>any OMISSION or MISREPRESENTATION that may mislead or attempt to mislead so that financial or other benefits may be obtained, or an obligation avoided. This includes making FALSE DECLARATIONS or providing FALSE INFORMATION for participation in a procurement process, or to secure a contract, or in the execution of the contract<\/td><\/tr><tr><td>iii<\/td><td>\"ANTI-COMPETITIVE practice\"<\/td><td>any collusion, bid rigging or anti-competitive arrangement, or any other practice coming under the purview of the Competition Act, 2002, between two or more bidders \u2014 with or without the knowledge of the procuring entity \u2014 that may IMPAIR the transparency, fairness and progress of the procurement process, or to establish bid prices at artificial, non-competitive levels<\/td><\/tr><tr><td>iv<\/td><td>\"COERCIVE practice\"<\/td><td>any COERCION or any threat to impair or harm, directly or indirectly, any party or its property, to influence the procurement process or affect the execution of a contract<\/td><\/tr><tr><td>v<\/td><td>\"Conflict of interest\" (coi)<\/td><td>any PERSONAL, FINANCIAL, or BUSINESS RELATIONSHIP between the BIDDER and any personnel of the Procuring Entity who are directly or indirectly related to the procurement or execution process of the contract, which can affect the decision of the procuring entity directly or indirectly<\/td><\/tr><tr><td>vi<\/td><td>\"Undue advantage\"<\/td><td>Improper use of information obtained by the bidder from the procuring entity with an intent to gain an unfair advantage in the procurement process or for personal gain. This also includes if the bidder (or his allied firm) provided services for the need assessment\/ procurement planning of the tender process in which he is participating<\/td><\/tr><tr><td>vii<\/td><td>\"OBSTRUCTIVE practice\"<\/td><td>MATERIALLY IMPEDE the procuring entity's INVESTIGATION of a procurement process \u2014 either by deliberately destroying, falsifying, altering; or by concealing evidence material to the investigation; or by making false statements; or by THREATENING, HARASSING or intimidating any party to prevent it from disclosing its knowledge of matters relevant to such investigation or from pursuing the investigation; or by impeding the Procuring Entity's rights of audit or access to information<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Footnote on \"Undue Advantage\": \"Need assessment\/ procurement planning\" here means, inter alia<\/em>, need assessment, preparation of feasibility\/ cost estimates\/ Detailed Project Report (DPR), design\/ technical specifications, terms of reference (ToR)\/ Activity Schedule\/ schedule of requirements, or the Tender Document, etc. For \"allied firm\", see the Procurement Glossary.<\/p><\/aside>\n<h3>3.5.3<\/span>Obligations for Proactive Disclosures<\/span><\/h3>\nWhether asked or not, in a tender document:<\/p>\na) Declaration of Conflict of Interest: Procuring authorities, as well as bidders, suppliers, contractors, consultants and service providers, should suo-moto proactively declare any conflict of interest as per item (v) above \u2014 PRE-EXISTING or as soon as these arise at any STAGE in any procurement process or execution of a contract.<\/p>\nb) Declaration of previous transgressions: Bidders must DECLARE any PREVIOUS TRANSGRESSIONS with respect to the prohibited practices above with any entity in any country during the last three years, or of being debarred by any other Procuring Entity.<\/p>\nc) Declaration of commissions\/ fees to agents: The bidder\/ contractor must disclose any commissions or fees that may have been paid or are to be paid to AGENTS, REPRESENTATIVES, or COMMISSION AGENTS concerning the selection process or execution of the Contract. The information disclosed must INCLUDE:<\/p>\n<ul class=\"lst\"><li>the name and address<\/strong> of the agent, representative or commission agent,<\/li><li>the AMOUNT and CURRENCY, and<\/li><li>the purpose<\/strong> of the commission or fee<\/li><\/ul>\n \u2014 in a format given in the tender document.<\/p>\n<aside class=\"note\">IMPORTANT FOOTNOTE (in all four Manuals): To encourage voluntary disclosures, such declarations would not mean automatic disqualification for the bidder making such declarations. The declared conflict of interest May be evaluated, and MITIGATION STEPS, if possible, may be taken by the procuring entity. Similarly, voluntary reporting of previous transgressions of the Code of Integrity elsewhere may be evaluated, and \u2014 barring cases of debarment \u2014 an alert watch May be kept on the bidder's actions in the tender and subsequent contract.<\/p><\/aside>\n<h3>3.5.4<\/span>Professionalism and Unfair Competitive Advantage [C ONLY]<\/span><\/h3>\n<aside class=\"note\">This sub-section appears only in the Consultancy Services Manual. It has no counterpart in the Goods, Works or Non-Consultancy Manuals.<\/p><\/aside>\nA) professionalism: The consultant is required to provide professional, objective, and impartial advice \u2014 at all times holding the Procuring Entity's interest paramount above his\/ its own corporate interests and above any consideration for future work \u2014 strictly avoiding any conflicts of interest.<\/p>\nb) Unfair Competitive Advantage: Fairness and transparency in the selection process require that the consultants or their affiliates competing for a specific assignment do not derive an unfair competitive advantage from having provided consultancy services related to the assignment in question.<\/p>\nSuch unfair competitive advantage is BEST AVOIDED by full TRANSPARENCY and by providing equal opportunity, so that all firms or individuals interested or involved have full INFORMATION about a service assignment and its NATURE, SCOPE, and background information. To that end, the request for proposals and all information should be made available to all short-listed consultants simultaneously.<\/p>\nc) The three disqualification rules: Therefore, without limitation on the generality of the foregoing, and unless stated otherwise in the RfP document, Consultants (including their experts and sub-consultants) or their allied firm shall not be eligible for any assignment that:<\/p>\n<ul class=\"lst\"><li>i) by its NATURE, may be in conflict with another assignment of the consultant or its allied firm \u2014 for the same or for another procuring Entity;<\/li><li>ii) a consultant or any of its affiliates\/ allied firms that has been engaged by the client to provide goods, works, or non-consultancy services for a project, shall be disqualified from providing consultancy service resulting from or directly related to those goods, works, or non-consultancy services;<\/li><li>iii) conversely, a consultant or any of its affiliates\/ allied firms hired to provide consultancy services for the preparation or implementation of a project shall be disqualified from subsequently providing goods or works or non-consultancy services resulting from or directly related to the consultancy services for such preparation or implementation.<\/li><\/ul>\n<h3>3.5.5<\/span>Punitive Provisions<\/span><\/h3>\n(Rule 175(2) of GFR, 2017)<\/em><\/p>\nWithout prejudice to \u2014 and in addition to \u2014 the rights of the procuring entity to other penal provisions as per the tender\/ bid documents or contract, IF the procuring entity CONCLUDES that a (prospective) bidder\/ supplier\/ contractor\/ consultant\/ service provider, directly or through an agent, has violated this code of integrity in COMPETING FOR the contract or in EXECUTING a contract, the procuring entity May take appropriate measures including one or more of the following:<\/p>\n<h4>1.<\/span>If his bids are UNDER CONSIDERATION in any procurement<\/span><\/h4>\n<ol class=\"lst\"><li>Forfeiture and\/ or encashment of Bid Security;<\/li><li>Calling off of any pre-contract negotiations; And<\/li><li>REJECTION and EXCLUSION of the bidder from the procurement process.<\/li><\/ol>\n<h4>2.<\/span>If a contract has ALREADY BEEN AWARDED<\/span><\/h4>\n<ol class=\"lst\"><li>CANCELLATION of the relevant contract and recovery of compensation for loss incurred by the procuring entity;<\/li><li>FORFEITURE and\/ or ENCASHMENT of any other security or bond relating to the procurement;<\/li><li>Recovery of payments \u2014 including advance payments, if any \u2014 made by the procuring entity, along with interest thereon at the prevailing rate.<\/li><\/ol>\n<aside class=\"note\">(C<\/span> omits the words \"including advance payments\" in this clause.)<\/em><\/p><\/aside>\n<h4>3.<\/span>Provisions IN ADDITION to the above<\/span><\/h4>\n<ol class=\"lst\"><li>REMOVAL from the list of registered suppliers\/ enlisted contractors and\/ or DEBARMENT of the bidder from participation in FUTURE PROCUREMENTS of the procuring entity:<\/li><li>[G, W, NC] \u2014 for a period not less than six months;<\/li><li class=\"srcmark src-C\" data-src=\" C \">C<\/span> \u2014 for a period not exceeding two years.<\/strong><\/li><\/ol>\n<aside class=\"note\">Note the divergence:<\/strong> the Consultancy Manual states a ceiling<\/strong> (not exceeding two years), whereas the other three state a FLOOR<\/strong> (not less than six months).<\/p><\/aside>\n<ol class=\"lst\"><li>In case of ANTI-COMPETITIVE PRACTICES, information for further processing May be filed with the Competition Commission of India:<\/li><li>[G, W, NC] \u2014 under the signature of a joint Secretary level officer;<\/li><li class=\"srcmark src-C\" data-src=\" C \">C<\/span> \u2014 by the Competent Authority.<\/strong><\/li><li>Initiation of suitable disciplinary or criminal proceedings against any individual or staff found responsible.<\/li><\/ol>\n<h2>3.6<\/span>Integrity Pact (IP)<\/span><\/h2>\n1. What it is: The pre-bid Integrity Pact is a tool to help governments, businesses, and civil society fight corruption in public contracting.<\/p>\nIt binds both buyers and sellers to ethical conduct and transparency in all activities \u2014 from:<\/p>\n<aside class=\"note\">pre-selection of bidders \u2192 bidding \u2192 contracting \u2192 implementation \u2192 completion \u2192 operation related to the contract.<\/p><\/aside>\nThis removes the insecurity of bidders that, while they themselves May abjure bribery, their competitors May resort to it and win contracts by unfair means.<\/p>\n2. Who must incorporate it, and at what threshold: Ministries\/ Departments and their attached\/ subordinate offices (including autonomous bodies) should incorporate the Integrity Pact (OM No. 14(12)\/2008-E-II(A) dated 19th July 2011)<\/em> in the procurements\/ contracts:<\/p>\n<ul class=\"lst\"><li>of the NATURE and of a THRESHOLD VALUE,<\/li><li>decided by the ministries\/ departments,<\/li><li>with the approval of the minister in charge.<\/li><\/ul>\n<aside class=\"note\">As guidance, the threshold should cover the bulk \u2014 80\u201390% (eighty to ninety per cent) by value \u2014 of its annual procurement expenditure.<\/p><\/aside>\nFormat and customisation:<\/p>\n<ul class=\"lst\"><li>[G, W] \u2014 The procuring entities May make suitable changes in the format, wherever required, based on the specific situation in which the pact is to be used. The pact May also be updated, wherever necessary, to incorporate latest procurement instructions.<\/li><li>[C, NC] \u2014 Ministries\/ Departments including their attached\/ subordinate offices AND CPSEs may use this format of Integrity Pact, with the suitable changes specific to the situations in which the pact is to be used.<\/li><\/ul>\n<aside class=\"note\">Annexure references for the IP Format:<\/strong>G<\/span> Annexure 30 \u00b7 W<\/span> Annexure 14 \u00b7 C<\/span> Annexure 18 \u00b7 NC<\/span> Annexure 12.<\/p><\/aside>\n3. Extension to PSBs, PSICs and FIs: CVC issued a revised standard operating procedure (CVC Circular No. 04\/06\/23 \u2014 015\/VGL\/091 dated 14.06.2023)<\/em> and has further stated (CVC Circular No. 06\/05\/21 \u2014 015\/VGL\/091 dated 03.06.2021)<\/em> That, in view of the increasing procurement activities of public sector banks (PSBs), public sector insurance companies (PSICs) and public sector financial institutions (FIs), they shall also adopt and implement the suggested format of Integrity Pact.<\/p>\n<aside class=\"note\">C<\/span> \u2014 additional provision found only in the consultancy Manual:<\/p>\nIn the case of sub-contractors, the Integrity Pact shall be a tri-partite arrangement, to be signed by (1) the organisation, (2) the contractor, and (3) the sub-contractor.<\/p>\nSee Annex-2 to the Integrity Pact Annexure for details.<\/strong>(Note: G<\/span> titles Annex-2 as \"Extract of Standard Operating Procedure\"; W<\/span>, C<\/span>, NC<\/span> title it \"Appointment and Role of IEMs\".)<\/em><\/p><\/aside>\n<h2>3.7<\/span>Grievances and its Redressal<\/span><\/h2>\n1. Procuring Entities shall provide a suitable clause in their tender documents for the redressal of grievances of bidders. The following is a suggested mechanism of redressal.<\/p>\n2. Who may apply, and within what time:<\/p>\nAny supplier, contractor, or consultant that claims to have suffered or is likely to suffer loss or injury as a result of a decision\/ action\/ omission of the Procurement Entity May make an application for its review:<\/p>\n<ul class=\"lst\"><li>Within a period of five (5) days from its date,<\/li><li>to the DESIGNATED OFFICER named in the tender documents in this regard (or the head of the Procuring Entity, if not so specified),<\/li><li>specifying the ground(s) and the relevant clauses of the tender documents.<\/li><\/ul>\nDe-briefing: Unsuccessful bidders May seek de-briefing regarding the rejection of their bid \u2014 in writing or electronically \u2014 within five (5) days of the declaration of techno-commercial or financial evaluation results.<\/p>\n3. Only a directly affected bidder can represent:<\/p>\n<ol class=\"lst\"><li>Only a bidder who has participated in the concerned procurement process \u2014 i.e., pre-qualification, bidder registration or bidding, as the case may be \u2014 can make such representation.<\/li><li>In case the PRE-QUALIFICATION bid has been evaluated before the bidding of Technical\/ financial bids, an application for review in relation to the technical\/ financial bid may be filed only by a bidder who has qualified in the pre-qualification bid.<\/li><li>In case the TECHNICAL bid has been evaluated before the opening of the FINANCIAL bid, an application for review in relation to the financial bid may be filed only by a bidder whose technical bid is found to be acceptable.<\/li><\/ol>\nD) decisions not subject to review:<\/strong> The following decisions of the procuring entity, in accordance with the provisions of internal guidelines, shall not be subject to review:<\/strong><\/p>\n<ul class=\"lst\"><li>i) determination of the need for procurement;<\/li><li>ii) selection of the mode of procurement or tendering system;<\/li><li>iii) choice of selection procedure;<\/li><li>iv) complaints against specifications \u2014 except under the premise that they are either VAGUE or too specific to limit competition, which may be permissible;<\/li><li>v) provisions limiting the participation of bidders in the procurement process in terms of government policies;<\/li><li>vi) provisions regarding purchase preferences to specific categories of bidders in terms of policies of the Government;<\/li><li>vii) the decision to enter into negotiations with the L1 bidder;<\/li><li>viii) cancellation of the procurement process \u2014 except where it is intended to SUBSEQUENTLY RE-TENDER the same requirements;<\/li><li>ix) issues related to ambiguity in contract terms shall not be taken up after a contract has been signed; all such issues should be HIGHLIGHTED before the vendor\/ contractor consummates the contract.<\/li><\/ul>\n<aside class=\"note\">(In the Works Manual this is numbered as a separate para 4, not as a sub-item of the \"not subject to review\" list.)<\/em><\/p><\/aside>\n4. This grievance redressal is BESIDE the avenue of complaints to the vigilance Department of the procuring organisation.<\/p>\n5. If received DURING the processing of the tender: The designated officer shall FORWARD the application to the tC\/ convener of TC for its examination on merits and action as considered necessary.<\/p>\n<ul class=\"lst\"><li>An interim reply May be sent that the application will be kept in view in the tender evaluation, and a final response shall be given only after the declaration of the award of the contract.<\/li><li>The Tender Committee shall place the application on record \u2014 including its analysis and action taken thereon \u2014 in the TC minutes\/ report to the Competent Authority.<\/li><li>After the award, the TC convener shall respond to the aggrieved party.<\/li><\/ul>\n6. If received after the declaration of the award of the contract: The designated officer shall FORWARD the application to the COMPETENT AUTHORITY of the tender for his examination on merits and action as considered necessary.<\/p>\n<aside class=\"note\">Such post-award grievance must be redressed and closed within 30 days of receipt of the grievance.<\/p><\/aside>\nIf the Competent Authority finds the complaint to have substance, appropriate and feasible remedial measures should be initiated.<\/p>\n7. If the grievance is resolved, or if the grievance is found to be unwarranted, the aggrieved party shall be informed by the TC convener of the final decision \u2014 without disclosing confidential details.<\/p>\n8. Remedial actions available: Based on such representation, if the Competent Authority is satisfied that there has been a contravention of procurement guidelines in the case, he May initiate such action as, in his opinion, is necessary to rectify the contravention \u2014 INCLUDING:<\/p>\n<ol class=\"lst\"><li>If the grievance is due to inadequacy of procurement guidelines or a lack of understanding of the staff \u2014 remedial action to address such lacunae May be initiated without repercussions to the concerned staff;<\/li><li>Annulment or reconsideration of the procurement proceedings;<\/li><li>Cancellation of the resultant procurement contract, if legally feasible;<\/li><li>In case any individual staff is found responsible \u2014 suitable disciplinary proceedings should be initiated against such staff under the conduct Rules;<\/li><li>In case the complicity of any bidder is proved:<\/li><li>i) REMOVAL of the concerned firm from the list of registered firms;<\/li><li>ii) DEBARMENT of the bidders, if warranted;<\/li><li>iii) reporting the matter to the Competition Commission of India (CCI) in case of anti-competitive actions by the bidder;<\/li><li>Handing over the case to the CVO if there are aspects that require INVESTIGATIONS.<\/li><\/ol>\n<h2>3.8<\/span>Conduct of Public Servants in Public Procurement \u2014 Risks and Mitigations<\/span><\/h2>\n<aside class=\"note\">(Notified vide OM No. F.11\/13\/2017-PPD<\/strong> issued by Department of Expenditure dated 24.10.2017<\/strong>.)<\/em><\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>HOSPITALITY: Hospitality \u2014 including facilitation of travel, lodging, boarding and ENTERTAINMENT during official or unofficial programs \u2014 from suppliers\/ contractors may tend to cross the limits of ethical\/ occasional\/ routine\/ modest\/ normal business practice. Officials sent to the firm's premises for INSPECTIONS\/ MEETINGS may mistakenly presume entitlement to hospitality from the firm, even if other arrangements are available at the location.<\/td><td>Hospitality must never be solicited, directly or indirectly. The frequency, scale and number of officials availing hospitality should not be allowed to identify the recipient in a public way with any particular contractor, supplier or service provider, or raise doubts about its neutrality. It should not involve significant travel, overnight accommodation, or trips abroad. Particular care should be taken in relation to offers of hospitality from firms (say, participating in current or imminent tenders or their execution) who stand to derive a personal or commercial benefit from their relationship with the recipient.<\/td><\/tr><tr><td>2<\/td><td>GIFTS: Gifts from suppliers\/ contractors may tend to cross the limits of ethical\/ occasional\/ routine\/ modest\/ normal business practice \u2014 especially during the festive season. Since the VALUE of the gift May not be known to the recipient, it may cause an inadvertent violation of conduct Rules.<\/td><td>Gifts must never be solicited, directly or indirectly. An official should not accept and retain gifts that are more valuable than the limit as laid down in the conduct Rules. Cash, gift cheques or any vouchers that May be exchanged for cash May not be accepted, regardless of the amount. Particular care should be taken in relation to gifts from firms (say, participating in current or imminent tenders or their execution) who stand to derive a personal or commercial benefit from their relationship with the recipient. Any gift received inadvertently in violation of the above must immediately either be returned, or else reported and deposited in toshakhana\/ treasury.<\/td><\/tr><tr class=\"srcmark src-G\" data-src=\" G \"><td>3<\/td><td>Private purchases from official suppliers: Procuring Officials may mistakenly consider it innocuous to seek discounts in private procurements from suppliers\/ contractors having OFFICIAL DEALINGS or its ALLIED FIRMS \u2014 G<\/span> adds: especially from rate Contract holders.<\/td><td>Officials involved in Public Procurement must never indulge in any non-official pecuniary transaction with the contractors, suppliers, or service providers with whom they have official dealings \u2014 including seeking or accepting special facilities or discounts on private purchases (G<\/span> adds: particularly the same items that are being ordered officially on rate contracts)<\/em>.<\/td><\/tr><tr><td>4<\/td><td>sponsorship of events: Procuring officials May mistakenly consider it innocuous to seek financial favours \u2014 donations, advertisements for souvenirs, and contributions in cash or kind \u2014 in relation to sponsoring cultural, social, charitable, religious, or sporting events, in the false belief that, since they are personally not benefitted, it would not be a violation of CIPP.<\/td><td>Officials involved in Public Procurement must never indulge in any non-official pecuniary transaction with the contractors, suppliers, or service providers with whom they have official dealings \u2014 including soliciting of sponsorship for unofficial and private cultural, social, sporting, religious, charitable, or similar organisations or events.<\/td><\/tr><tr><td>5<\/td><td>conflict of interest (coi):<\/strong> The CIPP defines COI as \"\u2026any personal, financial, or business relationship between the bidder and any personnel of the procuring entity who are directly or indirectly related to procurement or execution process of the contract, which can affect the decision of the procuring entity directly or indirectly\u2026\u2026\"<\/em>There may be DILEMMAS regarding which officers are 'RELATED' to the tender or execution process, and even in respect of minor, routine transactions.<\/strong><\/td><td>(See detailed mitigation below the table.)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<h3>3.8.1<\/span>Detailed Mitigation for Conflict of Interest<\/span><\/h3>\n<aside class=\"note\">interpretation of conflict of interest would depend on the organisational structure and its unique circumstances and cannot be laid down universally. However, some illustrative examples are given below to provide context.<\/p><\/aside>\na) which OFFICERS are 'related' to the tender or execution process: This would depend on the ORGANISATIONAL STRUCTURE and the sensitivity of their role in procurement. It may cover KEY OFFICIALS (and any external consultants\/ advisors) involved in:<\/p>\n<ul class=\"lst\"><li>making a RECOMMENDATION,<\/li><li>various APPROVALS, or<\/li><li>making a MAJOR DECISION<\/li><\/ul>\nat any STAGE in procurement \u2014 i.e., during:<\/p>\n<aside class=\"note\">need determination\/ indenting \u2192 Tender Document preparation\/ preparation of comparative tabulation \u2192 Technical and Financial evaluation of Bids \u2192 negotiation\/ signing of Contract \u2192 execution of the contract \u2192 payments to the contractor.<\/p><\/aside>\nB) illustration \u2014 coi (actual, potential, or perceived) can arise if such officers (or his close family) have:<\/p>\n<ul class=\"lst\"><li>i) substantial business interests in the firm \u2014 e.g., shares more than 0.1% of market cap \u2014 or have taken a loan or other FINANCIAL OBLIGATION (say DISCOUNTS) from the firm or its personnel, etc.;<\/li><li>ii) business relationships with the firm \u2014 say, previously worked for the firm, or availed hospitality\/ gifts beyond the limits laid down in the Code of Conduct of the organisation, etc.;<\/li><li>iii) FAMILIAL RELATIONSHIP with the personnel of the firm;<\/li><li>iv) close personal friendships or REGULAR (say, more than once in a quarter) social interactions \u2014 e.g., clubs, games, social associations \u2014 with the Firm's personnel, etc.<\/li><\/ul>\n<aside class=\"note\">DEFINITIONAL FOOTNOTE (in all four Manuals): For the purpose of COI \u2014 <\/p>\n<ul class=\"lst\"><li>\"Firm\" includes its allied firms also.<\/li><li>\"FIRM'S PERSONNEL\" for this purpose shall mean SENIOR EXECUTIVES (or the team handling the bidding) at the bidding firm.<\/li><li>\"CLOSE FAMILY\" for this purpose shall be the officer's spouse, parents, children, and their families.<\/li><li>As far as extended family \u2014 siblings\/ uncles\/ aunts\/ cousins and their families \u2014 is concerned, the situation would depend on the closeness of relationships and whether the officer would in normal course be aware of their activities.<\/li><\/ul><\/aside>\nC) resolution of coi:<\/p>\nIt shall be the responsibility of such officials to declare coi \u2014 to the extent he is aware of it in normal course \u2014 with reference to a procurement process, to the Competent Authority\/ next higher officer.<\/p>\nThe competent officer may EVALUATE:<\/p>\n<ul class=\"lst\"><li>the level of coi, and<\/li><li>the sensitivity of the function assigned to the official.<\/li><\/ul>\nHe may then EITHER DETERMINE:<\/p>\n<ul class=\"lst\"><li>I) that the coi is insignificant enough to influence the type of function performed by the official \u2014 and ask the officer to continue his function; Or<\/li><li>ii) that if the coi or the type of function is significant \u2014 nominate any alternative officer to perform the function (partly or fully) of this official in that procurement process.<\/li><\/ul>\n<h2>3.9<\/span>Development of New Sources and Registration\/ Empanelment\/ Enlistment\/ Pre-qualification<\/span><\/h2>\n(Rule 150 of GFR 2017)<\/em><\/p>\n<aside class=\"note\">Section titles: G<\/span>Development of New Sources and Registration\/ Empanelment\/ Pre-qualification of Suppliers \u00b7 W<\/span> *Development of New Sources and Registration\/ Enlistment of Contractors<\/strong> \u00b7 C<\/span>NC<\/span><\/em>Development of New Sources and Registration\/ Empanelment\/ Pre-qualification of Firms*<\/p><\/aside>\n<h3>3.9.1<\/span>The Three (or Two) Concepts Distinguished<\/span><\/h3><h4 class=\"src-multi srchead\" data-src=\" G C NC \">A. The Goods\/ CS\/ NC formulation \u2014 THREE concepts<\/span>G<\/span>C<\/span>NC<\/span><\/h4><div class=\"srcblock src-multi\" data-src=\" G C NC \" data-label=\"Goods + Consultancy + Non-Consultancy only\">\nNormally, in open tendering, there should be no restriction of prior registration. Entities may provide for registration after selection in unrestricted open tendering.<\/p>\nDifferences may be noted between REGISTRATION, EMPANELMENT and PRE-QUALIFICATION:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Concept<\/th><th>Purpose<\/th><\/tr><\/thead><tbody><tr><td>A) registration<\/td><td>To establish GENUINE IDENTIFICATION of the firm \u2014 e.g., for e-procurement portals, preferential procurement, and so on<\/td><\/tr><tr class=\"srcmark src-multi\" data-src=\" C NC \"><td>b) empanelment<\/td><td>To establish PRIMA-FACIE CAPABILITY for RESTRICTED TENDERING (not open tendering) \u2014 e.g., limited tendering panels (C<\/span>NC<\/span> add: also useful in special limited tenders)<\/em>. (It means maintaining a CLASSIFIED LIST of firms based on their EXPERIENCE, usually required in case of limited tenders.)<\/em><\/td><\/tr><tr><td>c) pre-qualification<\/td><td>wherever the nature of the requirement dictates competition only among prequalified bidders (without vitiation of prices offered by unqualified bidders), prequalification May be done with open tendering in the prequalification bidding stage<\/td><\/tr><tr><td>d) approved list\/ multi-use list<\/td><td>If there are FREQUENT REQUIREMENTS of such nature, prequalification may be done through an OPEN PROCESS with an EXTENDED VALIDITY of the Shortlist of Qualified Bidders \u2014 called the List of Approved Sources in some organisations (e.g., Ministry of Railways) \u2014 for example, one year or longer. The use of a List of Qualified Bidders is also known as a MULTI-USE LIST in many countries \u2014 as distinct from empanelment (e.g., Limited Tender Panel, which does not undergo a formal open tender pre-qualification\/ EoI process). In such long-term multi-use lists or approved lists, if any competent bidder applies for inclusion at any time, it should be examined as per the criteria of the original multi-use list.<\/td><\/tr><\/tbody><\/table><\/div>\nHowever, since in common parlance \"registration\" is a word used interchangeably by most departments for all the above three concepts, this usage is being retained \u2014 though the distinction would be clear from the context of usage.<\/p>\n<\/div><h4 class=\"src-W srchead\" data-src=\" W \">B. The Works formulation \u2014 TWO concepts<\/span>W<\/span><\/h4><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\nThe terms 'ENLISTMENT' and 'REGISTRATION' may be differentiated as follows:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Term<\/th><th>Meaning<\/th><\/tr><\/thead><tbody><tr><td>A) registration<\/td><td>simply registering the contractor, without any verification<\/td><\/tr><tr><td>b) enlistment<\/td><td>including the name of the contractor in the list after verification of credentials<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h3>3.9.2<\/span>Registration \u2014 General Provisions<\/span><\/h3>\na) Who may register, and why G<\/span>C<\/span>NC<\/span>: For goods and services not available on GeM, and for Works, the head of Ministry\/ Department May periodically register suppliers of goods and services that the Department or Office SPECIFICALLY REQUIRES.<\/p>\nEnsuring an up-to-date and current list of registered, capable and competent suppliers\/ consultants\/ service providers facilitates efficiency, economy, and promotion of competition in public procurement \u2014 especially while floating a limited tender\/ local purchase\/ direct contracting.<\/p>\nFor such tenders, it May be possible to skip bidder qualification, to avoid unnecessary repetition\/ duplication of efforts \u2014 thereby saving time, especially in the case of emergency procurement.<\/p>\nRegistration of the supplier\/ consultant\/ service provider should be done following a fair, transparent, and reasonable procedure and after giving due publicity.<\/p>\nSuch registered suppliers should be on-boarded on GeM as and when the item or service gets listed on GeM (Amended vide DoE OM No. F.1\/26\/2018-PPD dated 02.04.2019)<\/em>.<\/p>\nThe list of registered firms for the subject matter of procurement should be exhibited on the websites of the Procuring Entity\/ their e-procurement portals.<\/p>\nb) Registration on e-procurement portals W<\/span>: All the Ministries\/ Departments shall register the prospective contractors on their e-procurement portal or in the CPPP (in case they do not have their own e-procurement portal) before submitting their bids.<\/p>\nThe contractor May be an individual, sole proprietorship firm, partnership firm, limited liability partnership, private or public limited company.<\/p>\nFor registration, the Ministries\/ Departments\/ CPSUs shall capture at least: a) Name of contractor; b) Address and Contact details; c) Permanent Account Number (PAN); d) Details of Digital Signature Certificate (DSC); and e) GSTIN.<\/p>\nDepending on the requirement of the respective procurement portal, the Ministries\/ Departments can capture any other information as may be considered necessary.<\/p>\nc) Enlistment practice in works departments W<\/span>: Some departments \u2014 such as the Central Public Works Department (CPWD) and Military Engineering Services (MES) \u2014 are enlisting the contractors after verification of their credentials.<\/p>\n<ul class=\"lst\"><li>Public authorities May empanel\/ register contractors of those specific types of work which are required by them regularly.<\/li><li>PERFORMANCE of such empanelled contractors should be reviewed periodically.<\/li><li>The list of empanelled\/ registered contractors shall be updated on a regular basis.<\/li><li>The category\/ Class of contractors May be upgraded\/ downgraded, or contractors May be de-listed, based on their performance.<\/li><li>Empanelment of contractors shall be done in a fair and equitable manner, preferably online, after giving due publicity.<\/li><li>The practice of inviting bids for works tenders only from empanelled contractors May be confined to tenders up to a certain threshold value (say Rs 20 crore), as decided by the project executing authorities.<\/li><li>It is expected that ministries\/ departments will also develop their own enlistment process \u2014 as has been done by CPWD, Ministry of railways (MoR) and Ministry of road transport & highways (MoRTH) \u2014 to reduce the time required for verification of credentials of the contractors after opening of the bids.<\/li><li>The lists of such enlisted contractors can be used by any Ministry\/ Department\/ cpsu.<\/li><\/ul>\nd) Sharing of information through CPPP W<\/span>: The ministries\/ departments will also share the information of registered and enlisted contractors with each other through the Central Public Procurement Portal (CPPP).<\/p>\n<ul class=\"lst\"><li>They will also ensure that whenever a contractor is debarred, the information regarding the same is made available immediately to all the ministries\/ departments through the CPPP.<\/li><li>The reasons for the debarment and the order of such debarment May also be displayed on the CPPP.<\/li><li>NIC\/ MeitY shall make appropriate changes in the CPPP so that each contractor can be uniquely identified by PAN.<\/li><li>All the Ministries\/ Departments May take cognizance of the information regarding debarment of contractors and use it as an input for the decision-making process as per their own procurement policies.<\/li><\/ul>\ne) Entities with their own policies: Ministries\/ Departments with a significant volume of procurements May follow their own policies and procedures for registration\/ enlistment of vendors\/ contractors, if they already exist. The policies and procedures described below are for the non-mandatory generic guidance of Ministries\/ Departments that DO not have their own policies\/ procedures.<\/p>\nThe Ministry\/ Department shall notify the authorities competent to deal with the applications and grant registrations\/ enlistments, along with their jurisdictions.<\/p>\nThe appellate authority shall be at least one level above the registering authority, or as designated by the Ministry\/ Department.<\/p>\nf) Cross-use of lists and EMD exemption: All Ministries\/ Departments May use such lists prepared by other ministries\/ departments as and when necessary.<\/p>\nRegistered suppliers\/ firms are ordinarily exempted from furnishing earnest money deposit\/ Bid Security with their tenders for items and monetary limits for which they are registered.<\/p>\n<aside class=\"note\">(NC<\/span> phrases this as: \"empanelled<\/strong> Firms are ordinarily exempted \u2026 for items and Monetary Limits for which they are empanelled<\/strong>.\")<\/em><\/p><\/aside>\n<h3>3.9.3<\/span>Categories for Registration\/ Enlistment<\/span><\/h3><h4 class=\"src-G srchead\" data-src=\" G \">G<\/span> \u2014 Categories for Registration of Suppliers of Goods<\/span><\/h4><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\nIn case of procurement of goods, the Administrative Department shall register firms as suppliers of goods in different trade groups of goods in the following BROAD CATEGORIES: a) MANUFACTURERS who supply INDIGENOUS items; b) AGENTS\/ DISTRIBUTORS of such manufacturers who desire to market their production only through their agents; c) FOREIGN MANUFACTURERS with\/ without their accredited agent in India; d) stockists of imported spares or other specified items; e) suppliers of imported goods having REGULAR ARRANGEMENTS with foreign manufacturers.<\/p>\n<\/div><h4 class=\"src-W srchead\" data-src=\" W \">W<\/span> \u2014 Categories for Enlistment of Contractors<\/span><\/h4><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\nIn case of procurement of works, the Administrative Department shall enlist firms as contractors in different types\/ categories of works \u2014 civil, electrical, horticulture, nursery, etc.<\/p>\nThe contractor may be a private, partnership, pvt ltd, corporate, PSU or a JOINT VENTURE company.<\/p>\n<\/div><h3 class=\"src-G srchead\" data-src=\" G \">3.9.4<\/span>Registration of Manufacturers<\/span>G<\/span><\/h3><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\nOne of the main prerequisites for registration as a manufacturer is that the firm should possess its own in-house testing facilities.<\/p>\n<aside class=\"note\">MSE relaxation: In the case of MSE units, the firm does not need its own testing facilities, but regular arrangements with other reputed Government or government-approved or private agencies in its area for product testing.<\/p><\/aside>\nBefore the manufacturer is included in the list of registered suppliers, the Procuring Entity shall verify the bona fides and standing of the firm. The procuring Entity May also seek assistance from the inspection wing of other inspecting agencies.<\/p>\nIso-certified firms: In the case of firms that have an established quality maintenance system with ISO 9001-2000 certification (latest version) from authorised agencies, the Procuring Entity May consider the registration of such firms without carrying out a capacity assessment.<\/p>\n<aside class=\"note\">Even in the case of firms that have an established quality maintenance system with ISO 9001-2000 certification from authorised agencies, it is necessary for the Procuring Entity to verify the quality processes put in place.<\/p><\/aside>\n<\/div><h3>3.9.5<\/span>Grades\/ Classes (Monetary\/ Tendering Limits)<\/span><\/h3>\nRegistration\/ enlistment should be done by grading the firms (grade a, b, and so on) based on their capability to execute contracts\/ orders of different monetary limits in the relevant category of requirements.<\/p>\nThe monetary limits should be carefully fixed while keeping in view:<\/p>\n<ul class=\"lst\"><li>The banker's reports,<\/li><li>the capacity and capability of the firm, and<\/li><li>other FINANCIAL INFORMATION indicated in the BALANCE SHEETS, such as profit and loss statements.<\/li><\/ul>\n<h4 class=\"src-G srchead\" data-src=\" G \">G<\/span> \u2014 Example of gradation for Goods (NOT mandatory)<\/span><\/h4><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\n<div class=\"tblwrap\"><table><thead><tr><th>Grade<\/th><th>Monetary Limit<\/th><\/tr><\/thead><tbody><tr><td>Grade A<\/td><td>Rs. 25 (Rupees twenty-five) lakh AND above<\/td><\/tr><tr><td>Grade B<\/td><td>Rupees five lakh to Rs. 25 (Rupees twenty-five) lakh<\/td><\/tr><tr><td>Grade C<\/td><td>Rupees one lakh and up to Rupees five lakh<\/td><\/tr><\/tbody><\/table><\/div>\nAdditional rule G<\/span>: The firms that are registered for the supply of orders valued above rupees five lakh should invariably be manufacturers or their authorised agents.<\/p>\nWherever practical, the Procuring Entity shall register the manufacturers and not agents or intermediaries.<\/p>\nA sole selling agent\/ authorised agent could be considered for registration, subject to the conditions that:<\/p>\n<ul class=\"lst\"><li>The Procuring Entity is satisfied that he is the sole selling agent of the manufacturers;<\/li><li>The Procuring Entity ascertains the financial and technical capabilities of the manufacturers;<\/li><li>The availability of a suitable arrangement with the sole selling agent for after-sales service shall also be ensured; And<\/li><li>the Procuring Entity shall also satisfy itself that a valid legal agreement exists between the applicant unit and its sole selling agent during the period for which he is registered.<\/li><\/ul>\n<\/div><h4 class=\"src-W srchead\" data-src=\" W \">W<\/span> \u2014 Class of Enlistment (Tendering Limits) for Works<\/span><\/h4><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n(A sample classification \u2014 Source: Rules for Enlistment of Contractors in CPWD, 2024)<\/em><\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Class<\/th><th>Tendering Limit<\/th><th>Class<\/th><th>Tendering Limit<\/th><\/tr><\/thead><tbody><tr><td>Class-I (Super)<\/td><td>Rs 650 crore<\/td><td>Class-II<\/td><td>Rs 15 crore<\/td><\/tr><tr><td>Class-I (AAA)<\/td><td>Rs 260 crore<\/td><td>Class-III<\/td><td>Rs 4 crore<\/td><\/tr><tr><td>Class-I (AA)<\/td><td>Rs 130 crore<\/td><td>Class-IV<\/td><td>Rs 1.30 crore<\/td><\/tr><tr><td>Class-I (A)<\/td><td>Rs 75 crore<\/td><td>Class-V<\/td><td>Rs 40 lakh<\/td><\/tr><tr><td>Class-I<\/td><td>Rs 50 crore<\/td><td><\/td><td><\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h3>3.9.6<\/span>Procedure for Registration\/ Enlistment<\/span><\/h3>\na) Fair procedure and publicity: Registration\/ enlistment of the suppliers\/ contractors should be done following a fair, transparent, and reasonable procedure and after giving due publicity.<\/p>\n<aside class=\"note\">W<\/span> adds: Enlistment should be done by any Ministry\/ Department in case it desires to enlist contractors for works <\/strong>which are exclusively needed by it, by keeping <\/strong>Fundamental principles of Public Procurement in view \u2014 especially the transparency principle (transparency, fairness, equality, competition and appeal rights) \u2014 <\/strong>with the approval of the CA, after carefully assessing and verifying credentials, capability, quality control systems, past performance, after-sales service facilities, financial background, and so on.<\/p><\/aside>\nDetails of the procedure for registration\/ enlistment of new firms May be uploaded on the website and published in the form of a booklet for information of the suppliers\/ contractors. Timeframes and criteria for registration\/ enlistment of new suppliers\/ contractors May be clearly indicated.<\/p>\nb) Identifying possible sources:<\/strong> Possible sources for any category\/ group of requirements can be identified based on internal and external references.<\/strong> Data on new suppliers\/ contractors can be obtained from:<\/p>\n<aside class=\"note\">the response received from suppliers\/ contractors \u00b7 open tender advertisements \u00b7 pre-qualification bids \u00b7 Expression of Interest (EoI) \u00b7 various enquiries on the website \u00b7 dedicated websites \u00b7 exhibitions \u00b7 buyer-seller meets \u00b7 various publications of NSIC G<\/span>, the Development Commissioner of the Small Industries Service Institute G<\/span>, BIS \u00b7 trade journals, and so on.<\/p><\/aside>\nThe e-procurement and GeM portals pre-register suppliers online. Such data can be a source of information on prospective suppliers\/ contractors.<\/p>\nc) Updating the list and inviting EoI: The list of registered\/ enlisted contractors shall be updated on a regular basis (ANNUALLY) G<\/span>. New supplier(s)\/ contractor(s) May be considered for registration\/ enlistment at any time, provided they fulfil all the required conditions.<\/p>\nFor any larger-scale or critical registration or development of new suppliers\/ contractors, the Procuring Entity should call for eoI by publicising its need for the development of sources.<\/p>\nD) CIPP undertaking: While registering the firms, an undertaking May be obtained from them that they will abide by the CIPP enclosed with the application, with a clear warning that, in case of transgression of the Code of Integrity, their names are likely to be deleted from the list of registered suppliers\/ enlisted contractors \u2014 besides any other penalty or more severe action as deemed fit.<\/p>\nE) GCC undertaking: Along with the new\/ renewal application for registration\/ enlistment, the suppliers\/ contractors should also be asked to declare that, if awarded a contract in any LTE in which they participate, they bind themselves to abide by the Procuring Entity's general conditions of contract (GCC). Such GCC should be part of the application.<\/p>\nF) the participation Rule: Registered vendors\/ enlisted contractors must participate in relevant limited tenders. In case they do not respond to at least three (3) tenders in a year on being invited to do so \u2014 if there were at least 6 invitations to them \u2014 they May be removed from the list of registered vendors\/ enlisted contractors.<\/p>\ng) Eligibility for registration\/ enlistment:<\/p>\n<ul class=\"lst\"><li>i) any firm situated in India or abroad that is in the business of providing goods\/ works\/ services of specified categories of interest shall be eligible for registration\/ enlistment;<\/li><li class=\"srcmark src-G\" data-src=\" G \">ii) G<\/span><\/strong>where registration is granted based on partly outsourced arrangements\/ agreements, it shall always be the responsibility of the registered unit to keep such arrangements\/ agreements renewed\/ alive, and to keep their registration valid for the period for which it has been granted.<\/strong>Any failure in this regard May make the registration null and void\/ ineffective retrospectively from any such dates which the registering authority considers appropriate;<\/li><li>iii) Suppliers\/ contractors should possess a valid digital signature certificate (DSC) Class III with the company name at the time of registration\/ enlistment\/ renewal, to enable them to participate in e-PROCUREMENTS;<\/li><li>iv) the firm should also have good internal governance \u2014 such as a whistleblower policy, commitment to esg (environmental, social, and governance) code of conduct, code of business ethics, etc.;<\/li><li class=\"srcmark src-W\" data-src=\" W \">V) the firm against whom punitive action has been taken shall not be eligible for re-registration\/ re-enlistment during the currency of the punitive action. Registration\/ enlistment requests May not be entertained from firms (or their allied firms) who are de-registered\/ banned (W<\/span> Phrasing: \"From such firms, stakeholders of whom have any interest in de-enlisted\/ banned firms\")<\/em>.<\/li><\/ul>\nH) assessment of capacity and capability: The application form, complete in all respects and accompanied by the requisite processing fee and prescribed documents, shall be submitted by the firms to the registering\/ enlisting authority.<\/p>\nThe application form, duly filled in, when received from the firms, shall be scrutinised carefully to assess the capacity and capability of the firms \u2014 INCLUDING:<\/p>\n<aside class=\"note\">credentials \u00b7 manufacturing capability G<\/span>\/ capability W<\/span> \u00b7 quality control system \u00b7 past performance \u00b7 after-sales service facilities G<\/span> \u00b7 financial background, and so on, of the applicant.<\/p><\/aside>\n<ul class=\"lst\"><li>References shall be made to other firms of the standing of whom the applicant firm claims to be a supplier\/ contractor.<\/li><li>Likewise, the applicant firm's bankers May also be requested to advise about the firm's financial standing.<\/li><\/ul>\ni) If registration cannot be granted: In cases where the firm is not considered capable and registration\/ enlistment cannot be granted, the concerned authority shall communicate the deficiencies and shortcomings directly to the firms, under intimation to the appellate authority.<\/p>\nWhere a request for re-verification and review is made by the firm \u2014 along with any fee as prescribed and within the period prescribed by the Department \u2014 a review shall be undertaken.<\/p>\n<aside class=\"note\">Timing variant:<\/strong>C<\/span>NC<\/span> expressly add that such a request can be made only after six months<\/strong>. W<\/span> says the period is \"say, within six months<\/strong>\". G<\/span> does not specify the period.<\/p><\/aside>\nRequests for re-verification after the expiry of the said period would be treated as a fresh application, and a processing fee, if any is prescribed, charged accordingly.<\/p>\nj) Grant of registration\/ enlistment: If considered to be CAPABLE after carefully assessing and verifying credentials, the firm May be granted registration\/ enlistment with the approval of the ca.<\/p>\nk) Scope of registration:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-G\" data-src=\" G \">G<\/span> Registration should be for specific trade groups of goods\/ works\/ services. For this purpose, all goods\/ works\/ services should be divided into trade groups, and the information published on the relevant portals\/ websites.<\/li><li class=\"srcmark src-W\" data-src=\" W \">W<\/span> Enlistment should be for a specific category of works.<\/li><\/ul>\nl) Validity period and provisional status:<\/p>\n<div class=\"tblwrap\"><table><thead><tr class=\"srcmark src-multi\" data-src=\" G W \"><th><\/th><th>G<\/span> \u2014 Goods<\/th><th>W<\/span> \u2014 Works<\/th><\/tr><\/thead><tbody><tr><td>Validity<\/td><td>a specified period (one to three years)<\/td><td>A specified period (say three years), and would be considered for EXTENSION (on application by the contractor\/ service provider) based on satisfactory performance of the firm<\/td><\/tr><tr><td>Renewal<\/td><td>At the end of this period, the registered supplier(s) willing to continue with registration is to apply afresh for renewal of registration<\/td><td> \u2014 <\/td><\/tr><tr><td>Provisional status<\/td><td>the registration would be initially treated as provisional, and it would be treated as confirmed only after the firm has satisfactorily executed one order of the relevant category and value from the Procuring Entity<\/td><td>Same rule, but \"one CONTRACT of the relevant category and value\"<\/td><\/tr><tr><td>Extension not a right<\/td><td>the extension of validity of registration is not a matter of right, and the Procuring Entity reserves the right not to extend such registration without assigning any reason<\/td><td>(same)<\/em><\/td><\/tr><tr><td>New entrants<\/td><td>New supplier(s) May also be considered for registration at any time, provided they fulfil all the required conditions<\/td><td> \u2014 <\/td><\/tr><\/tbody><\/table><\/div>\nm) Unique number and website display: All registered suppliers\/ enlisted contractors should be allocated a unique registration\/ enlistment number.<\/p>\nThe list of registered suppliers\/ enlisted contractors \u2014 indicating the names and addresses with details of the requirements and monetary value they will supply\/ execute, as well as the VALIDITY PERIOD, and so on, for which they are registered\/ enlisted \u2014 shall be exhibited on the websites of the Procuring Entity.<\/p>\nn) EMD exemption and its limits G<\/span>: Within the monetary limits so prescribed, and also for the category of registration, the registered firm May be exempted from depositing the earnest money deposit (EMD).<\/p>\nIn other categories and higher monetary limits, the supplier would be treated as any unregistered supplier and not be entitled to the privileges of a registered supplier.<\/p>\n<aside class=\"note\">However: The monetary limit or category so laid down does not debar a firm from getting orders more than the monetary limit or for other categories \u2014 provided the Procuring Entity is satisfied with the capacity and capability of the firm \u2014 but a requisite Security Deposit should be obtained, as is being done in the case of unregistered firms.<\/p><\/aside>\nO) monitoring performance and removal: The performance and conduct of every registered supplier\/ enlisted contractor are to be monitored\/ watched by the relevant Department.<\/p>\nThe Procuring Entity should also reserve the right to remove firms who do not perform satisfactorily \u2014 even during the validity of registration\/ enlistment (after giving due opportunity to the supplier\/ contractor to make a representation) \u2014 if they:<\/p>\n<ul class=\"lst\"><li>Fail to abide by the terms and conditions of the registration\/ enlistment, or<\/li><li>fail to execute contracts on time, or<\/li><li class=\"srcmark src-multi\" data-src=\" G W \">supply substandard goods G<\/span> \/ do substandard work W<\/span>, or<\/li><li>make any false declaration to any Government agency, or<\/li><li class=\"srcmark src-multi\" data-src=\" G W \">G<\/span> For on public interest considerations \/ W<\/span> For any ground which, in the opinion of the Government, is not in public interest.<\/li><\/ul>\nP) right of reassessment: The Procuring Entity shall retain its option to reassess firms already registered\/ enlisted at any later date, to satisfy itself with:<\/p>\n<ul class=\"lst\"><li>The current financial soundness\/ creditworthiness,<\/li><li>facilities available, and so on.<\/li><\/ul>\nThereafter, the Procuring Entity May decide to retain them as registered suppliers for the requirements and monetary limit that were earlier considered, or with necessary changes as deemed fit.<\/p>\nIn case of adverse reports from the team of Procuring Entity officers who reassess the firm, the Procuring Entity shall:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-multi\" data-src=\" G W \">G<\/span>W<\/span> \u2014 DELETE such firm from the registered suppliers'\/ enlisted contractors' list<\/strong>;<\/li><li class=\"srcmark src-multi\" data-src=\" C NC \">C<\/span>NC<\/span> \u2014 delete or downgrade such firm from the registered suppliers'\/ service providers' list.<\/li><\/ul>\n<aside class=\"note\">Cross-reference note C<\/span>NC<\/span>:<\/strong>\"Further details about the procedure for registration are given in para 3.6 of the Manual for Procurement of Goods, 2024<\/strong>.\"<\/em> \u2014 i.e., the Consultancy and Non-Consultancy Manuals reproduce only paras (a), (f) and (i)\u2013(p) above, and cross-refer to the Goods Manual for the full procedure<\/strong>.<\/p><\/aside>\n<h2>3.10<\/span>Debarment<\/span><\/h2>\n(Rule 151 of GFR 2017)<\/em><\/p>\n<aside class=\"note\">Section titles: G<\/span>Debarment of Suppliers \u00b7 W<\/span> *Debarment of Contractors<\/strong> \u00b7 C<\/span><\/em>Debarment of Suppliers *(an apparent carry-over from the Goods Manual \u2014 the CS Manual's subject is consultants)* \u00b7 NC<\/span> *Debarment of Service Providers<\/strong><\/p><\/aside>\n<h3>3.10.1<\/span>GFR Provisions<\/span><\/h3>\nRegistration of suppliers\/ contractors\/ consultants\/ service providers AND their eligibility to participate in a Procuring Entity's procurements is subject to:<\/p>\n<ul class=\"lst\"><li>Compliance with the Code of Integrity for Public Procurement, and<\/li><li>satisfactory performance in contracts.<\/li><\/ul>\nRule 151 of GFR, 2017 states the following regarding 'debarment from bidding':<\/p>\n<aside class=\"note\">A) a bidder shall be debarred if he has been convicted of an offence:<\/p>\n<ul class=\"lst\"><li>i) under the prevention of Corruption Act, 1988; or<\/li><li class=\"srcmark src-multi\" data-src=\" G W C NC \">ii) the Indian Penal Code (IPC), 1860 \u2014 (G<\/span> footnote: this law has been replaced by the bharatiya Nyaya Sanhita (BNS), 2023 from 1st July 2024; W<\/span>, C<\/span>, NC<\/span> cite the BNS directly)<\/em> \u2014 or any other law for the time being in force, for causing any loss of life or property, or causing a threat to public health, as part of the execution of a Public Procurement contract.<\/li><\/ul>\nB) a bidder debarred under sub-section (a), or any successor of the bidder, shall not be eligible to participate in a procurement process of ANY<\/em> Procuring Entity for a period not exceeding three years, commencing from the date of debarment.<\/p>\n<aside class=\"note\">W<\/span> footnote: *\"<\/strong>Now two years is applicable as mentioned below in para 8.7.2-3-a).\"*<\/p><\/aside>\nc) a Procuring Entity May debar a bidder or any of its successors from participating in any procurement process undertaken by it for a period not exceeding two years, if it determines that the bidder has breached the Code of Integrity.<\/p>\n<aside class=\"note\">W<\/span>NC<\/span> add: *\"<\/strong>The Ministry\/ Department will maintain such list, which will also be displayed on their website.\"*<\/p><\/aside>\nd) the bidder shall not be debarred unless such bidder has been given a reasonable opportunity to represent against such debarment.<\/p><\/aside>\n<h3>3.10.2<\/span>Current Guidelines on Debarment<\/span><\/h3>\n1. Origin: PPD, DoE did consultations on the issue of Debarment with major procuring Ministries\/ Departments and issued the following 'debarment guidelines' in supersession of all earlier instructions on this subject (Notified vide OM No. F.1\/20\/2018-PPD issued by Department of Expenditure dated 02.11.2021)<\/em>.<\/p>\nPublic Procurement organisations who have existing guidelines for debarment (by any name) should revise their guideline in conformity with these guidelines issued by PPD, DoE.<\/p>\n2. Two types of debarment:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Type<\/th><th>Who issues the order<\/th><\/tr><\/thead><tbody><tr><td>I) debarment limited to a single Ministry<\/td><td>The Ministry itself can issue the appropriate Orders, thereby banning all its business dealing with the debarred firm<\/td><\/tr><tr><td>ii) Debarment EXTENDING beyond the jurisdiction of the Ministry \u2014 i.e., covering all Central ministries\/ departments<\/td><td>the requisite orders shall be issued by the Department of Expenditure (DoE), Ministry of Finance (MoF)<\/td><\/tr><\/tbody><\/table><\/div>\n3. Definitions:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Term<\/th><th>Definition<\/th><\/tr><\/thead><tbody><tr><td>\"Firm\" \/ \"bidder\"<\/td><td>have the same meaning for the purpose of these guidelines, which includes an individual or person, a company, a cooperative society, a hindu undivided family, and an association or body of persons \u2014 whether incorporated or not \u2014 engaged in trade or business<\/td><\/tr><tr><td>\"Allied firm\"<\/td><td>All concerns which come within the sphere of effective influence of the debarred firms shall be treated as allied firms. In determining this, the factors listed in its definition in the 'Procurement Glossary' section may be kept in view<\/td><\/tr><tr><td>\"Banning of a firm\", \"suspension\", \"black-listing\"<\/td><td>convey the same meaning as \"debarment\"<\/td><\/tr><\/tbody><\/table><\/div>\n4. Alignment obligation: All ministries\/ departments must align their existing debarment guidelines with these guidelines. Further, tender\/ bidding documents must also be suitably amended, if required.<\/p>\n<h3>3.10.3<\/span>Debarment by a SINGLE Ministry\/ Department<\/span><\/h3>\nOrders for Debarment of a firm(s) shall be passed by a Ministry\/ Department, keeping in view the following:<\/p>\na) Grounds and duration: A bidder (including its successors\/ allied firms) May be debarred from participating in any procurement process for a period not exceeding two years (along with such other actions as may be permissible under law) for the following reasons:<\/p>\n<ul class=\"lst\"><li>i) If it is determined that the bidder has breached the Code of Integrity as per Rule 175 of GFRs 2017.<\/li><li>ii) false declaration of local content by Class-I\/ Class-II local suppliers under the Public Procurement (Preference to Make in India) Order 2017, dated 16\/09\/2020 or later \u2014 shall also be treated as a breach of the Code of Integrity. A supplier who has been debarred by any procuring entity as per this sub-para:<\/li><li>The fact and duration of debarment for this reason by any procuring entity must be promptly brought to the notice of the member-convenor of the standing committee (joint Secretary, DPIIT, under the Make in India order) and the Department of Expenditure, through the concerned Ministry\/ Department or in some other manner;<\/li><li>The standing committee shall consolidate such cases, and a centralised list or decentralised list of such suppliers with the period of debarment must be maintained on a periodical basis and displayed on the website(s);<\/li><li>Such suppliers \u2014 though debarred by a single Ministry\/ Department \u2014 shall not be eligible for preference under the Make in India order for procurement by any other<\/em> Procuring Entity for the duration of the debarment. This shall be effective from the date of uploading such debarment to the website(s).<\/li><li>iii) for any other actions or omissions by the firm that, in the opinion of the Ministry\/ Department, warrants debarment.<\/li><\/ul>\n<aside class=\"note\">Footnote \u2014 the illustrative list of \"other actions or omissions\" (given in all four Manuals):<\/p>\n<ul class=\"lst\"><li>Supply of substandard material;<\/li><li>NON-SUPPLY of material;<\/li><li>Abandonment of works;<\/li><li>Substandard quality of works;<\/li><li>Failure to abide by \"bid securing declaration\";<\/li><li>Conviction under the Prevention of Corruption Act, 1988;<\/li><li>CONVICTION under any law for causing any loss of life or property, or causing a threat to public health, as part of executing a public procurement contract;<\/li><li>Employs a Government servant who has been dismissed or removed on account of corruption;<\/li><li>Employs a non-official convicted for an offence involving corruption or abetment of such an offence, in a position where he could corrupt Government servants; Or<\/li><li>employs a Government officer within one year of his retirement who has had business dealings with him in an official capacity before retirement.<\/li><\/ul><\/aside>\nB) jurisdiction of the order: The debarment order shall not be circulated to other ministries\/ departments. It will only be applicable to all the attached\/ subordinate offices, autonomous bodies, Central public sector undertakings (CPSEs), etc., of the Ministry\/ Department issuing the debarment order.<\/p>\n<aside class=\"note\">(Format of Debarment Order \u2014 G<\/span> Annexure 38 \u00b7 W<\/span> Annexure 16 \u00b7 C<\/span> Annexure 28 \u00b7 NC<\/span> Annexure 24.)<\/em><\/p><\/aside>\nc) Reasonable opportunity: The concerned Ministry\/ Department, before ISSUING the debarment order against a firm, must ensure that reasonable opportunity has been given to the concerned firm to represent against such debarment \u2014 including a personal hearing if requested by the firm.<\/p>\n<aside class=\"note\">(Format of Show-cause Notice for Debarment \u2014 G<\/span> Annexure 37 \u00b7 W<\/span> Annexure 15 \u00b7 C<\/span> Annexure 27 \u00b7 NC<\/span> Annexure 23.)<\/em><\/p><\/aside>\nd) Competent Authority: The Secretary of the Ministry\/ Department May nominate an officer at the rank of Joint Secretary\/ Additional Secretary as Competent Authority (ca) to debar the firms.<\/p>\ne) List maintenance: The Ministry\/ Department will maintain a list of such debarred firms, which will also be displayed on its website. Such a list on the website shall be automatically binding on the departments, subordinate and attached offices, autonomous bodies, and CPSEs under the Ministry \u2014 but in case of doubt, it can be confirmed by the issuing authority.<\/p>\nF) concurrent debarments: More than one Ministry\/ Department May concurrently debar the same firm.<\/p>\nG) not a vigilance function: Debarment is an executive function and should not be allocated to the vigilance Department.<\/p>\nH) timeline for the debarment process: The period of debarment starts from the date of issue of the debarment order; Therefore, the process of debarment should be conducted expeditiously.<\/p>\nConsidering the QUASI-JUDICIAL NATURE of such proceedings and the need to afford a fair hearing to the firm, the following timeline is SUGGESTED \u2014 which May be suitably modified considering the specifics of an organisation:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>Activity<\/th><th>Time<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>Noticing of delinquency of the firm by the Procuring Entity<\/td><td>zero-day<\/td><\/tr><tr><td>ii<\/td><td>Evaluation of evidence and proposal to ca for debarment of the firm<\/td><td>2 WEEKS<\/td><\/tr><tr><td>iii<\/td><td>Issue of show cause notice to the firm, calling for written and oral submission<\/td><td>1 WEEK<\/td><\/tr><tr><td>iv<\/td><td>time for submission, including reminders, etc.<\/td><td>3 WEEKS<\/td><\/tr><tr><td>v<\/td><td>evaluation of firm's submission and giving oral hearing to the firm<\/td><td>3 WEEKS<\/td><\/tr><tr><td>vi<\/td><td>Final ORDER, indicating an opportunity to the firm \u2014 2 weeks \u2014 to appeal to the Secretary of the Ministry\/ Department as APPELLATE AUTHORITY<\/td><td>2 WEEKS<\/td><\/tr><tr><td><\/td><td>total from zero-day, after which the debarment period starts<\/td><td>12 WEEKS<\/td><\/tr><tr><td>vii<\/td><td>receipt of appeal and disposal of the same by the appellate authority<\/td><td>4 WEEKS<\/td><\/tr><\/tbody><\/table><\/div>\n<h3>3.10.4<\/span>Debarment by CPSEs, Attached Offices\/ Autonomous Bodies, and GeM<\/span><\/h3>\nministries\/ departments, at their option, May also delegate powers to debar bidders to their CPSEs, attached offices\/ autonomous bodies, etc.<\/p>\nIn such cases, the broad principles for debarment in para 3.10.3(a) to (h) above are to be kept in mind.<\/p>\nDebarments by such bodies shall be applicable only to the procurements made by such bodies.<\/p>\nSimilarly, the Government E-marketplace (GeM) can also debar bidders for up to two years on its portal.<\/p>\n<h3>3.10.5<\/span>Debarment ACROSS ALL Ministries\/ Departments<\/span><\/h3>\nIn the following situations, the Ministry\/ Department May consider debarring the firm from taking part in any tendering procedure floated by ALL<\/em> The Central Government ministries\/ departments:<\/p>\na) Ground \u2014 conviction (Rule 151(i) of GFRs, 2017), for debarment up to three years:<\/p>\n<ul class=\"lst\"><li>i) under the prevention of Corruption Act, 1988; or<\/li><li>ii) the IPC, 1860\/ Bharatiya Nyaya Sanhita, 2023, or any other law for the time being in force, for causing any loss of life or property, or causing a threat to public health, as part of the execution of a Public Procurement contract.<\/li><\/ul>\nB) the reference to DoE: The Ministry\/ Department concerned should, after obtaining the approval of the Secretary concerned, forward to DoE a self-contained note setting out all the facts of the case and the justification for the proposed debarment, along with all the relevant papers and documents.<\/p>\nC) prior opportunity is mandatory: The Ministry\/ Department, before forwarding the proposal to DoE, must ensure that reasonable opportunity has been given to the concerned firm to represent against such debarment \u2014 including a personal hearing if requested by the firm.<\/p>\n<aside class=\"note\">If DoE realises that sufficient opportunity has not been given to the firm to represent against the debarment, such debarment requests received from ministries\/ departments shall be rejected.<\/p><\/aside>\nD) interim debarment: The firm shall remain debarred during the interim period till the final decision is taken by DoE \u2014 only in the Ministry\/ Department forwarding such proposal<\/em>.<\/p>\nFor this purpose, the proposing Ministry shall issue an interim order debarring the firm from taking part in tendering procedures floated by their Ministry\/ Department, following the procedure laid down in para 3.10.3 above.<\/p>\nSuch order inter alia must mention that the Government reserves its right to further debar the firm from taking part in any tendering procedure floated across all the Central Government ministries\/ departments, following due procedure.<\/p>\nE) doe's powers and timeline: DoE can also give additional opportunity, at their option, to the firm to represent against proposed debarment. DoE can also take suo-moto<\/em> Action to debar the firms in certain circumstances.<\/p>\nDoE shall complete the process of debarment within 12 weeks after receiving the proposal from the concerned Ministry\/ Department.<\/p>\nF) doe's order: DoE will issue the necessary orders for debarment for a period not exceeding three years for offences mentioned in Rule 151(i) of gfrs, 2017 \u2014 after satisfying itself that the proposed debarment across all the ministries\/ departments is in accordance with the said Rule. This scrutiny is intended to ensure uniformity of treatment in all cases.<\/p>\nG) the Central list: DoE will maintain a list of such debarred firms, which will be displayed on the gem-Central Public Procurement Portal (CPPP). This list on CPPP shall be applicable to all ministries\/ departments, attached and subordinate offices, CPSEs, and autonomous bodies \u2014 but in case of doubt, they May confirm it from the issuing authority.<\/p>\nH) absolute bar: No contract of any kind whatsoever shall be placed on the firm debarred by DoE \u2014 including its allied firms \u2014 during the period of debarment, by any Ministry\/ Department\/ attached\/ subordinate offices of the Government of India, including autonomous bodies, CPSEs, etc., after the issue of a debarment order.<\/p>\n<h3>3.10.6<\/span>Review and Revocation of Orders<\/span><\/h3>\nA) automatic revocation on expiry: An order for debarment passed shall be deemed to have been automatically revoked on the expiry of the period of debarment specified therein \u2014 and it will not be necessary to issue a specific formal order of revocation.<\/p>\nb) Early review\/ revocation: The AUTHORISED ENTITY (DoE, Ministry\/ Department, or CPSEs, Attached Offices\/ Autonomous Bodies, GeM, etc.) that ISSUED the order of debarment can review or revoke the debarment order before the period of debarment is over:<\/p>\n<ul class=\"lst\"><li>Suo-moto (based on new facts that come to light), or<\/li><li>on an appeal by the debarred bidder.<\/li><\/ul>\nAfter a review, an order for modification of the period of debarment or revocation of debarment \u2014 if there is adequate justification for the same \u2014 can be issued.<\/p>\nApproval levels:<\/p>\n<ul class=\"lst\"><li>Ordinarily, such modification\/ revocation of the Order should be done with the approval of the Secretary concerned of doE or the Ministry\/ Department that issued such orders.<\/li><li>In case of debarments done by CPSEs, attached offices\/ autonomous bodies, GeM, etc., such modification\/ revocation of the debarment orders should be done only with the approval of at least a board-level officer.<\/li><\/ul>\n<h3>3.10.7<\/span>Other Provisions (Common to BOTH Types of Debarment)<\/span><\/h3>\na) Contents of the order: The debarment order shall MENTION:<\/p>\n<ul class=\"lst\"><li>The reason(s) in brief that led to the debarment of the firm,<\/li><li>The jurisdictional extent to which the order shall be applicable, and<\/li><li>The validity period of debarment.<\/li><\/ul>\nB) the bar on contracts, and the two cut-off dates: No contract of any kind whatsoever shall be placed with a debarred firm \u2014 including its allied firms \u2014 after the issue of a debarment order by the entities in the jurisdiction mentioned in the order.<\/p>\nBids from only such firms shall be considered for placement of contract which are:<\/p>\n<ul class=\"lst\"><li>Neither debarred on the date of opening of tender<\/strong> \u2014 opening of the first bid, normally called the technical bid, in case of two-packet\/ two-stage tendering<\/em> \u2014 <\/li><li>nor debarred on the date of contract<\/strong> \u2014 i.e., date of issue of the Letter of Acceptance<\/em>.<\/li><\/ul>\nEven in the cases of risk purchase, no contract should be placed on such debarred firms.<\/p>\nC) treatment of a debarred firm's bid: If any debarred firm submits the bid, it will be ignored. In case such firm is lowest (L-1), the next lowest firm shall be considered as L-1. Bid Security submitted by such debarred firms shall be returned to them.<\/p>\nd) No retrospective effect on existing contracts: Contracts concluded before the issue of the debarment order shall not be affected by the debarment orders.<\/p>\nE) automatic extension to allied firms and JV partners: The debarment shall be automatically extended to all its allied firms. In case a joint venture\/ consortium is debarred, all partners will also stand debarred for the period specified in the debarment order. The names of partners should be clearly specified in the \"debarment order\".<\/p>\nF) no impact on other legal rights: Debarment in any manner does not impact any other contractual or other legal rights of the procuring entities.<\/p>\ng) Commencement \u2014 two different dates:<\/p>\n<ul class=\"lst\"><li>For the issuing entity: The period of debarment shall start from the date of issue of the debarment order.<\/li><li>For other procuring entities: The debarment takes effect prospectively from the date of uploading on the website(s), in such a manner that ongoing procurements are not disrupted.<\/li><\/ul>\nH) minimum period: Ordinarily, the period of debarment should not be less than six months.<\/p>\ni) GeM Suspension under the Incidence Management Policy [W + C + NC \u2014 not in G]:<\/p>\nThe GeM portal also has a provision for suspension<\/em> \u2014 debarring vendors'\/ service providers' participation in procurements of ALL<\/em> The buyers \u2014 under its incidence management policy.<\/p>\n<aside class=\"note\">(Reference: https:\/\/assets-bg.gem.gov.in\/resources\/pdf\/incident_management_policy_v12.1.pdf)<\/em><\/p><\/aside>\nthe reasons and periods for suspension are different than in the provisions mentioned above.<\/p>\nHowever, if a Procuring Entity feels that the period of suspension by GeM is not adequate, it May also debar the firm as per the procedure mentioned in this section for a more appropriate period \u2014 but such debarment shall be applicable ONLY<\/em> To procurements by that Procuring Entity.<\/p>\nj) Undertakings from bidders on debarment status [G \u2014 not in W\/C\/NC]:<\/p>\nIt is noticed that many procuring entities take undertakings from the bidders with respect to their debarment status\/ period. Such undertakings, if taken, must be in conformity with the debarment guidelines, as above, to avoid any possible confusion.<\/p>\nk) Alignment obligation W<\/span>C<\/span>NC<\/span>: All ministries\/ departments must align their existing debarment guidelines in conformity with these guidelines. Further, bidding documents must also be suitably amended, if required.<\/p>\n<h3>3.10.8<\/span>Safeguarding the Procuring Entity's Interests during Debarment<\/span><\/h3>\n<aside class=\"note\">This is the closing caution of the debarment section in all four manuals.<\/p><\/aside>\nSuppliers\/ contractors\/ consultants\/ service providers are important assets for the procuring entities, and punishing delinquent suppliers should be the last resort<\/em>.<\/p>\n<ul class=\"lst\"><li>It takes a lot of time and effort to develop, register and mature a new supplier.<\/li><li>In case of a shortage of suppliers in a particular group of materials\/ equipment\/ services, such punishment May also hurt the interest of the Procuring Entity<\/em>.<\/li><\/ul>\nTherefore:<\/p>\n<ol class=\"lst\"><li>The Procuring Entity May always seek the views of the concerned Department regarding the repercussions of such punitive action on the continuity of procurements.<\/li><li>The Procuring Entity May give due weightage to the past performance of the supplier\/ consultant\/ service provider.<\/li><li>In case of a shortage of suppliers and in cases of less serious misdemeanours, the Procuring Entity May:<\/li><li>Pragmatically analyse the circumstances,<\/li><li>reform the supplier, and<\/li><li>get a written commitment from the supplier that his performance will improve.<\/li><li>If this fails, efforts should be made to see if:<\/li><li>[G, c, nc] \u2014 a shorter period of debarment can serve the purpose;<\/li><li class=\"srcmark src-W\" data-src=\" W \">W<\/span> \u2014 A temporary<\/em> Debarment can serve the purpose.<\/li><\/ol>\n<h2>3.11<\/span>Enlistment of Indian Agents<\/span><\/h2>\n(Rule 152 of GFR 2017)<\/em><\/p>\nministries\/ departments, if they so require, May enlist Indian agents who desire to quote directly on behalf of their foreign principals.<\/p>\n<aside class=\"note\">Footnote in all four Manuals:<\/em> Rule 152 of GFR, 2017 amended vide OM No. F.26\/2\/2016-PPD issued by Department of Expenditure dated 25.07.2017.<\/p>\n(The Goods and Consultancy Manuals print this footnote as \"Rule 52\" \u2014 an evident typographical error for Rule 152<\/strong>, which is correctly printed in the Works and Non-Consultancy Manuals.)<\/em><\/p><\/aside>\nDetailed guidelines on Indian Agents of foreign suppliers are contained in Annex-1 to the Integrity Pact Annexure of each Manual \u2014 \"Guidelines for Indian Agents of Foreign Suppliers\"<\/em>.<\/p>\n<h1>Appendix to Chapter 3 \u2014 Points of Difference Between the Four Manuals<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Chapter number<\/td><td>G\/C\/NC: Chapter 3<\/strong> (before Bidding Design) \u00b7 w: Chapter 8<\/strong> (after Contract Execution)<\/td><\/tr><tr><td>2<\/td><td>Chapter title<\/td><td>G:<\/strong>Supplier Relationship Management<\/em> \u00b7 W:<\/strong>Registration\/ Enlistment of Contractors and Governance Issues<\/em> \u00b7 C\/NC:<\/strong>Participation of Bidders and Governance Issues<\/em><\/td><\/tr><tr><td>3<\/td><td>Relationship Management section<\/td><td>G (3.1) + W (8.1) only \u2014 absent in C\/NC<\/td><\/tr><tr><td>4<\/td><td>Eligibility Criteria for Participation<\/td><td>C (3.1) + NC (3.1) only \u2014 absent in G\/W<\/td><\/tr><tr><td>5<\/td><td>Legal Status of Bidders<\/strong> (individuals, firms, NGOs, specialised agencies, sub-contracting, consortium\/ JV)<\/td><td>C (3.2) + NC (3.2) only<\/td><\/tr><tr><td>6<\/td><td>JV\/C discouraged in QCBS\/ QOP procurement<\/td><td>NC only<\/td><\/tr><tr><td>7<\/td><td>Demerged entities \u2014 five-year use of parent credentials (DoE OM F.8\/78\/2023-PPD dated 12.10.2023)<\/td><td>NC only<\/td><\/tr><tr><td>8<\/td><td>Rule 177 GFR bar on direct engagement of retired Government servants as consultants<\/td><td>C only<\/strong> (NC states the substance without citing Rule 177)<\/td><\/tr><tr><td>9<\/td><td>Canons of Financial Propriety re-stated in this chapter<\/td><td>C (3.3.1) + NC (3.3.1)<\/strong> \u2014 in G\/W<\/strong> it is at para 1.9<\/td><\/tr><tr><td>10<\/td><td>RTI and Proactive Disclosures re-stated in this chapter<\/td><td>C (3.3.2) + NC (3.3.2) \u2014 in G it is at para 1.12; absent from W entirely<\/td><\/tr><tr><td>11<\/td><td>CIPP broken into four numbered sub-sections<\/strong> (Introduction; the Code; Proactive Disclosures; Punitive Provisions)<\/td><td>W only<\/strong> (8.2.1\u20138.2.4)<\/td><\/tr><tr><td>12<\/td><td>CIPP declaration signed at \"Need Assessment\" vs \"Preparation of Estimates\"<\/td><td>G\/C\/NC: Need Assessment \u00b7 W: Preparation of Estimates<\/td><\/tr><tr><td>13<\/td><td>CIPP declaration expressly extended to SUB-CONTRACTORS engaged by the bidder<\/td><td>W only<\/td><\/tr><tr><td>14<\/td><td>Professionalism and Unfair Competitive Advantage; the three consultancy disqualification rules<\/td><td>C only<\/td><\/tr><tr><td>15<\/td><td>Punitive debarment period under CIPP<\/td><td>G\/w\/nc: Not less than six months (a floor) \u00b7 c: Not exceeding two years (a ceiling)<\/td><\/tr><tr><td>16<\/td><td>CCI reference filed by whom<\/td><td>G\/W\/NC: Joint Secretary level officer \u00b7 C: the Competent Authority<\/td><\/tr><tr><td>17<\/td><td>\"Recovery of payments including advance payments\"<\/td><td>G, W, NC \u2014 C omits \"including advance payments\"<\/td><\/tr><tr><td>18<\/td><td>Integrity Pact \u2014 tri-partite arrangement with sub-contractors<\/td><td>C only<\/td><\/tr><tr><td>19<\/td><td>IP format may be updated to incorporate latest procurement instructions<\/td><td>G + W<\/strong> \u00b7 C\/NC<\/strong> instead say Ministries and CPSEs<\/strong> may use the format with suitable changes<\/td><\/tr><tr><td>20<\/td><td>Annex-2 to Integrity Pact<\/td><td>G:<\/strong>Extract of Standard Operating Procedure<\/em> \u00b7 W\/C\/NC:<\/strong>Appointment and Role of IEMs<\/em><\/td><\/tr><tr><td>21<\/td><td>Grievance redressal \u2014 \"ambiguity in contract terms\" placed as a separate paragraph<\/td><td>W<\/strong> (para 4) \u00b7 G\/C\/NC<\/strong> place it as item (ix) within the \"not subject to review\" list<\/td><\/tr><tr><td>22<\/td><td>Rate Contract holders named in the \"private purchases\" risk row<\/td><td>G only<\/td><\/tr><tr><td>23<\/td><td>Registration\/ Empanelment\/ Pre-qualification \u2014 three concepts distinguished<\/td><td>G, C, NC<\/td><\/tr><tr><td>24<\/td><td>Registration vs Enlistment \u2014 two concepts distinguished<\/td><td>W only<\/td><\/tr><tr><td>25<\/td><td>Mandatory pre-bid registration on e-procurement portal\/ CPPP with five data fields (Name, Address, PAN, DSC, GSTIN)<\/td><td>W only<\/td><\/tr><tr><td>26<\/td><td>CPWD\/ MES enlistment practice; MoR and MoRTH cited; Rs 20 crore ceiling on empanelled-only tendering<\/td><td>W only<\/td><\/tr><tr><td>27<\/td><td>Sharing of registered\/ enlisted\/ debarred contractor data through CPPP; unique identification by PAN by NIC\/ MeitY<\/td><td>W only<\/td><\/tr><tr><td>28<\/td><td>Five categories for registration of suppliers of goods (manufacturers, agents, foreign manufacturers, stockists, importers)<\/td><td>G only<\/td><\/tr><tr><td>29<\/td><td>Categories of works for enlistment (Civil, Electrical, Horticulture, Nursery)<\/td><td>W only<\/td><\/tr><tr><td>30<\/td><td>In-house testing facility prerequisite; MSE relaxation; ISO 9001-2000 treatment<\/td><td>G only<\/td><\/tr><tr><td>31<\/td><td>Grade A\/B\/C monetary limits (Rs 25 lakh \/ Rs 5\u201325 lakh \/ Rs 1\u20135 lakh)<\/td><td>G only<\/td><\/tr><tr><td>32<\/td><td>CPWD Class-I(Super) to Class-V tendering limits (Rs 650 crore down to Rs 40 lakh)<\/td><td>W only<\/td><\/tr><tr><td>33<\/td><td>Sole selling agent registration conditions; above-Rs-5-lakh manufacturers-or-authorised-agents rule<\/td><td>G only<\/td><\/tr><tr><td>34<\/td><td>Partly outsourced arrangements \u2014 registration void retrospectively<\/td><td>G only<\/td><\/tr><tr><td>35<\/td><td>Re-verification request permitted only after six MONTHS<\/td><td>C + NC<\/strong> state it expressly \u00b7 W<\/strong> says \"say, within six months\" \u00b7 G<\/strong> silent<\/td><\/tr><tr><td>36<\/td><td>Validity of registration<\/td><td>G: one to three years<\/strong>, apply afresh for renewal \u00b7 W: say three years<\/strong>, extension on application based on satisfactory performance<\/td><\/tr><tr><td>37<\/td><td>EMD exemption within monetary limit; treated as unregistered beyond it; security deposit instead<\/td><td>G only<\/td><\/tr><tr><td>38<\/td><td>Adverse reassessment consequence<\/td><td>G\/W: DELETE from list \u00b7 C\/NC: DELETE or downgrade<\/em><\/td><\/tr><tr><td>39<\/td><td>Full registration procedure reproduced<\/td><td>G (16 sub-paras) + W (17 paras) \u00b7 C\/NC reproduce an abridged version and cross-refer to para 3.6 of the Goods Manual<\/td><\/tr><tr><td>40<\/td><td>Debarment section title<\/td><td>G: Suppliers \u00b7 W: Contractors \u00b7 C: \"Suppliers\" (apparent template carry-over) \u00b7 NC: Service Providers<\/td><\/tr><tr><td>41<\/td><td>Rule 151(a)(ii) statute cited<\/td><td>G: IPC 1860 (with BNS footnote) \u00b7 W\/C\/NC: Bharatiya Nyaya Sanhita directly<\/td><\/tr><tr><td>42<\/td><td>\"Ministry\/ Department will maintain such list \u2026 displayed on their website\" added to Rule 151(c)<\/td><td>W + NC<\/td><\/tr><tr><td>43<\/td><td>Footnote that \"now two years is applicable\" against the three-year period in Rule 151(b)<\/td><td>W only<\/td><\/tr><tr><td>44<\/td><td>GeM Suspension under Incidence Management Policy<\/td><td>W + C + NC \u2014 absent from G<\/td><\/tr><tr><td>45<\/td><td>Undertakings from bidders regarding debarment status must conform to the Guidelines<\/td><td>G only<\/td><\/tr><tr><td>46<\/td><td>Closing safeguard \u2014 remedy if reform fails<\/td><td>G\/C\/NC: a SHORTER PERIOD of debarment \u00b7 W: a TEMPORARY debarment<\/td><\/tr><tr><td>47<\/td><td>Rule number cited for Indian Agents footnote<\/td><td>G + C print \"Rule 52\" (evident typo) \u00b7 W + NC correctly print \"Rule 152\"<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 3<\/p>\n<aside class=\"note\">Next:<\/strong> Chapter 4 \u2014 Bidding Design: Modes of Procurement, Types of Contracts, Systems of Selection, Tendering Systems and Channels of Procurement<\/em> (merging Goods Ch. 4<\/strong>, Works Ch. 3<\/strong>, Consultancy Ch. 4<\/strong> and Non-Consultancy Ch. 4<\/strong>).<\/p>\nAnother numbering trap ahead:<\/strong> this block is Chapter 4<\/strong> in Goods, Consultancy and Non-Consultancy, but Chapter 3<\/strong> in Works.<\/p><\/aside><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch4\">Chapter 4 \u2014 Part a<\/p><h1>Bidding Design<\/h1><\/header>Part I<\/span>Contracts, Selection Systems and Channels<\/em><\/p>\n<h3>Agency for Procurement \u00b7 Admeasurement \u00b7 Types of Contracts \u00b7 Systems of Selection \u00b7 Tendering Systems \u00b7 Channels of Procurement<\/span><\/h3>\nMerging: Goods Ch. 4<\/strong> (Modes of Procurement and Tendering Systems) \u00b7 Works Ch. 3<\/strong> (Bidding Design for Works) \u00b7 Consultancy Ch. 4<\/strong> (Bidding Design for Consultancy Services) \u00b7 Non-Consultancy Ch. 4<\/strong> (Bidding Design for Non-Consultancy Services)<\/em><\/p><h2>Structural Warning for Students<\/span><\/h2>\nThis block is CHAPTER 4 in Goods, Consultancy and Non-Consultancy \u2014 but CHAPTER 3 in Works.<\/p>\n(The reverse of the trap in the previous chapter, where governance was Ch. 3 in three Manuals but Ch. 8 in Works.)<\/em><\/p>\nThis is also the chapter of greatest substantive divergence between the four Manuals. Three whole apparatus exist in only one Manual each:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Apparatus<\/th><th>Exists only in<\/th><\/tr><\/thead><tbody><tr><td>Agency for Procurement (pWO\/ PSU\/ works Committee)<\/td><td>Works<\/td><\/tr><tr><td>Admeasurement of Services (input vs output)<\/td><td>Non-Consultancy<\/td><\/tr><tr><td>Rate Contract \/ Framework Agreement, Approved Vendor List, Proprietary Article Certificate, Direct Procurement<\/td><td>Goods<\/strong>(covered in Part B)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nAnd \"Types of Contracts\" does not exist at all in the Goods Manual<\/strong> \u2014 goods procurement has no contract-type taxonomy, because it uses Rate Contracts and supply orders instead.<\/p>\nBecause of the volume, this chapter is issued in two parts<\/strong>:<\/p>\n<ul class=\"lst\"><li>PART A (this document)<\/strong> \u2014 Agency, Admeasurement, Types of Contracts, Systems of Selection, Tendering Systems, Channels of Procurement.<\/li><li>PART B<\/strong> \u2014 Modes of Procurement (OTE, GTE, rc\/fa, eRA, PQB, AVL, LTE, SLTE, PAC, STE, direct Procurement, Quotations, Stalled Contracts).<\/li><\/ul>\n<h2>Concordance for Chapter 4 \u2014 Part A<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>Goods<\/th><th>Works<\/th><th>CS<\/th><th>NCS<\/th><\/tr><\/thead><tbody><tr><td>4.1<\/td><td>Agency for Procurement<\/td><td> \u2014 <\/td><td>3.1<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>4.2<\/td><td>Admeasurement of Services<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>4.1<\/td><\/tr><tr><td>4.3<\/td><td>Types of Contracts<\/td><td> \u2014 (none)<\/td><td>3.2<\/td><td>4.1<\/td><td>4.2<\/td><\/tr><tr><td>4.4<\/td><td>Systems of Selection<\/td><td> \u2014 (none)<\/td><td>3.3<\/td><td>4.2<\/td><td>4.3<\/td><\/tr><tr><td>4.5<\/td><td>Tendering Systems<\/td><td>4.14\u20134.16<\/td><td>3.4<\/td><td>4.4<\/td><td>4.5<\/td><\/tr><tr><td>4.6<\/td><td>Channels of Procurement<\/td><td>4.17<\/td><td>3.5<\/td><td>4.5<\/td><td>4.6<\/td><\/tr><tr><td>Part B<\/em><\/td><td>Modes of Procurement<\/td><td>4.1\u20134.13<\/td><td>3.6\u20133.14<\/td><td>4.3<\/td><td>4.4<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.1<\/span>Agency for Procurement [W ONLY]<\/span><\/h2>\n1. The three routes (Rule 133 of GFR, 2017)<\/em>: Rule 133 permits Ministries\/ Departments at its discretion to assign execution of their original and repair works as follows: a) directly by the Ministry\/ Department; b) public works organisations (PWO); c) public sector undertaking (PSU)\/ Organisations set up to execute Works.<\/p>\n2. Directly by the Ministry\/ Department: A Ministry or Department at its discretion May directly execute repair works estimated to cost up to rupees sixty (60) LAKH, after following the due procedure 'laid down for Execution of Works' (Rules 139, 159 and 160 of GFR 2017)<\/em>.<\/p>\n<h3>4.1.1<\/span>Public Works Organisations (PWO)<\/span><\/h3>\nA Ministry or Department May, at its discretion, assign:<\/p>\n<ul class=\"lst\"><li>REPAIR WORKS estimated to cost above Rupees SIXTY (60) LAKH, and<\/li><li>original\/ minor works of any value<\/li><\/ul>\nto any public Works Organisation (PWO) such as:<\/p>\n<aside class=\"note\">Central Public Works Department (CPWD) \u00b7 State Public Works Department \u00b7 other Central Government organisations authorised to carry out civil or electrical works such as Military Engineering Service (MES), Border Roads Organisation (BRO), etc. \u00b7 or the Ministry\/ Department's construction wings of the Ministries of Railways, Defence, Environment & Forests, Information & Broadcasting, and the Departments of Posts and Space, etc.<\/p><\/aside>\n<h3>4.1.2<\/span>Public Works PSU\/ Organisations<\/span><\/h3>\nAs an alternative, a Ministry or Department May assign repair works estimated to cost above rupees sixty (60) lakh and original works of any value to: A) any public sector undertaking (PSU) set up by the Central or State Government to carry out civil or electrical works; Or b) to any other Central\/ State Government organisation\/ PSU which May be notified by the Ministry of housing and urban affairs (MoHUA) for such purpose, after evaluating their financial strength and technical competence.<\/p>\n<h3>4.1.3<\/span>Procedure for Assigning Work to PWO or PSU\/ Organisations<\/span><\/h3>\n1. Competition among PSUs \u2014 and the PMC characterisation: For the assignment of work to PSUs, the Ministry\/ Department shall ensure competition among all such eligible PSUs\/ ORGANISATIONS.<\/p>\nThis competition shall be essentially on the lump sum service charges to be claimed for execution of work.<\/p>\nThe award of work to a PSU should be taken as project management consultancy (pmc), and the concerned PSU shall be treated as a consultancy firm. Relevant methods (QCBS, LCS etc.) for procurement of consultancy will be applicable.<\/p>\n<aside class=\"note\">For better understanding of the selection methodology of consultant(s), Rule 192 to Rule 194 of GFR 2017<\/strong> and the Manual for Procurement of Consultancy Services, 2025<\/strong> may be referred.<\/em><\/p><\/aside>\n2. Nomination basis: In exceptional cases, for assignment of work on nomination basis to a PSU, the conditions for nomination basis would apply. The work under these circumstances shall also be assigned only on a lump sum basis.<\/p>\n3. Sanctions and execution<\/strong>(Rule 140, GFR 2017)<\/em>: For original works and repair works entrusted under paras 4.1.1 and 4.1.2 above, the administrative approval and expenditure sanction shall be accorded and funds allotted by the concerned authority<\/strong> in accordance with the sanctioning sequence of Chapter 2.<\/p>\nThe PWO or the PSU or any organisation allotted work shall then execute the work entrusted to it in accordance with the Rules and procedures prescribed in their own organisation.<\/p>\n4. Memorandum of Understanding (MoU): An MoU May be drawn with the PWO or the PSU for proper execution of work.<\/p>\nThe MoU should spell out:<\/p>\n<ul class=\"lst\"><li>the OBLIGATIONS on the part of the PWO or PSU regarding execution of works as per proper specifications, and<\/li><li>for maintaining proper quality and speed of execution of works;<\/li><li>Different stages at which funds shall be released to the PWO should also be clearly spelt out.<\/li><\/ul>\nSuch MoU would normally be for a specific standalone work, but could also be for a project consisting of a collection of related works.<\/p>\n5. Long-term framework MoU: In case of MoU with PWOs, it could also be a long-term framework moU.<\/p>\n<aside class=\"note\">A Sample MoU delineating the complete procedure of assignment of work to PWO\/ PSUs and its monitoring is at Annexure 10 of the Works Manual. The Procuring entity may CHANGE the MoU format to suit their requirement, and if felt necessary May also get the moU document vetted from the Ministry of law or its own legal cell.<\/p><\/aside>\n6. The Works Committee: For execution of any work under Paras 4.1.1 and 4.1.2 above, the Ministry\/ Department shall constitute a \"Works Committee\" \u2014 whether on an ad hoc or standing basis \u2014 comprising:<\/p>\n<ul class=\"lst\"><li>representatives of the ADMINISTRATIVE WING,<\/li><li>representatives of the FINANCE WING, and<\/li><li>an officer possessing technical skills and experience of framing estimates and execution of works.<\/li><\/ul>\nIf need be, members May be co-opted from: the User Department; CPWD\/ PWOs\/ PSUs; or any technically sound Government agency such as a relevant National Institute of Technology (NIT)\/ Indian Institute of Technology (IIT) or a relevant National Research Institute, etc.<\/p>\nThe Works Committee shall:<\/p>\n<ul class=\"lst\"><li>Ensure observance of due process in the planning and execution of works;<\/li><li>Check the reasonability of the estimates and other technical details; And<\/li><li>monitor the execution of the works.<\/li><\/ul>\n<h2>4.2<\/span>Admeasurement of Services [NC ONLY]<\/span><\/h2>\nNon-consultancy services are bid and contracted on the total price (UNIT RATE \u00d7 quantum) of the delivered services (of requisite performance standards) \u2014 much like procurement of goods and works.<\/p>\nThe QUANTUM of services can be ascertained by EITHER:<\/p>\n<ul class=\"lst\"><li>measuring the INPUTS DEPLOYED by the service provider \u2192 INPUT ADMEASUREMENT; or<\/li><li>measuring the output of services delivered \u2192 output admeasurement.<\/li><\/ul>\n<h3>4.2.1<\/span>Input Admeasurement<\/span><\/h3>\n1. The quantum of services can be ascertained by measurement of the inputs \u2014 personnel, equipment, materials, and miscellaneous inputs \u2014 deployed during a period (say per month) by the service provider.<\/p>\n2. What the contract specifies:<\/p>\n<ul class=\"lst\"><li>the UNIT RATE, and<\/li><li>the ESTIMATED QUANTUM (per period \u2014 say per day\/ month) of various inputs<\/strong> required to be deployed to deliver the required quantum of services of requisite performance standards.<\/li><li>The contract would also specify the SERVICE CHARGES (including profits, overheads, etc.) and taxes over and above such input unit rates.<\/li><\/ul>\nFinancial evaluation is based on the total price of the indicated quantum of various inputs at the contracted unit rate, plus service charges and taxes.<\/p>\n3. The monitoring burden: Input admeasurement requires more vigilant and constant monitoring of inputs deployed. The Procuring Entity must also monitor the performance standards, methodology employed and productivity of inputs to ensure Value for Money.<\/p>\n4. Where used: Input admeasurement is frequently used in time-based and indefinite delivery types of contracts for Services like:<\/p>\n<aside class=\"note\">upkeep and maintenance of office\/ buildings\/ estates (other than Civil & Electrical Works, etc.) \u00b7 Security Services \u00b7 Horticultural Services \u00b7 Janitor\/ Cooking\/ Catering\/ Management Services for Hostels and Guest Houses \u00b7 Cleaning\/ Housekeeping Services \u00b7 Errand\/ Messenger Services, etc.<\/p><\/aside>\n5. Input Admeasured Contracts \u2014 Risks and Mitigations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>a) The quality and scope of the Output\/ deliverables is not linked to the payment. There may be a tendency for the service provider to IGNORE the quality and scope of the services. Disputes may arise due to different possible interpretations of quality and scope of contract.<\/td><td>The contract should include provision for evaluation of quality, methodology and scope of deliverables, and a certificate for its acceptability may be recorded. Payments should be released only against such certificates. Therefore, the service Level Agreement (SLA) becomes very important in such contracts.<\/td><\/tr><tr><td>b) productivity of inputs deployed is not linked to the payment. There may be a tendency for the service provider to use paid staff in a dilatory and un-productive manner. This may lead to time and cost over-runs.<\/td><td>Such contracts need to be closely monitored and administered by the Procuring Entity to ensure that the progress of the contract is commensurate with the time spent, and that the resources for which payment is claimed have actually efficiently and productively been deployed on the contract during the period. It may be worthwhile to lay down productivity linkage between the quantum of the output of services and input deployed in a period (say, cleaning of a quantum of area per day per cleaner deployed) as part of Performance Standards. A system of MONTHLY REPORTING of payouts and the quantum of work achieved by the service provider to the CA should be instituted to enable supervision. Such contracts should include an upper limit of total payments to be made to the service providers, to safeguard against excessive prolonging of time and payments. After this limit is reached \u2014 or the period of completion is exceeded \u2014 the ca should review the justification for the extension of the contract.<\/td><\/tr><\/tbody><\/table><\/div>\n<h3>4.2.2<\/span>Output-Admeasurement<\/span><\/h3>\n1. Alternatively, the quantum of services can be ascertained by measurement of the quantum of outputs delivered of the required performance standards \u2014 numbers, length, area, volume, weight, value, etc., or a combination thereof \u2014 say, the area of office cleaned, or tonne-kilometre of transportation, or value of goods inspected.<\/p>\n<aside class=\"note\">Since contracts based on Output admeasurement specify the unit rate of service output, they are also referred to as unit-rate contracts.<\/p><\/aside>\n2. Financial evaluation: The contract specifies a unit rate of the output of services, and the financial evaluation is done based on the total price of the indicated quantum of service at the contracted unit rate plus taxes.<\/p>\n<aside class=\"note\">In actual practice, this could be more complex \u2014 as in taxi hiring for 8 hours with a maximum of 250 km included in the price, but every additional km\/ hour May be charged extra. There May also be additional charges for night duty, etc.<\/p><\/aside>\n3. Why it is preferred: Output admeasurement contracts are simpler to administer, since the Procuring Entity will only ascertain performance standards and the quantum. It need not monitor the inputs deployed and the methodology employed. Therefore, wherever feasible, output admeasurement should be the preferred choice.<\/p>\n4. However, in many services, it May be part of the quality assurance plan and SLA to ensure that a specified quantum of inputs is deployed for the services \u2014 although payments are still based on output admeasurement.<\/p>\n5. Where used: Depending on the situation, output admeasurement may be suitable mainly for lump-sum and percentage-based types of contracts, and in special circumstances for time-based and indefinite delivery types.<\/p>\nSuitable for Services like:<\/p>\n<aside class=\"note\">transport services \u00b7 logistics \u00b7 clearing and forwarding \u00b7 courier services \u00b7 drilling \u00b7 aerial photography \u00b7 satellite imagery \u00b7 mapping, and similar operations.<\/p><\/aside>\n6. Output Admeasurement Contracts \u2014 Risks and Mitigations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>a) insufficient deployment of resources: Service Provider may not deploy sufficient resources, which may lead to POOR QUALITY and TIME OVER-RUN.<\/td><td>Stipulate in the tender document that the quantum of input deployments (personnel, equipment, materials, etc.) shall also be quoted \u2014 but shall be used only to monitor performance standards.<\/td><\/tr><tr><td>b) The QUALITY of the Output\/ deliverables is not linked to the payment.<\/strong> There may be a tendency for the service provider to Cut corners on quality of the output\/ deliverables by saving on resources employed.<\/strong> Disputes may arise due to different possible interpretations of quality and scope of Output\/ deliverables.<\/td><td>Such contracts should be used mainly for contracts in which the quality and scope of the required output are clearly defined and are measurable. The contract should include provision for evaluation of quality and scope of deliverables, and a certificate for its acceptability may be recorded. Payment should be made only against certificate of acceptance of deliverables. It's important to include a service Level Agreement in such contracts.<\/td><\/tr><tr><td>c) time and cost over-run: As time is not linked to the payment, there may be a tendency for the service provider to save on deployment of resources, which may result in time-over-run.<\/td><td>While the payments are not linked to time, the contract should be monitored per month to ensure that the output per month is in line with planned and estimated time-line. This type of contract should include an upper limit of total payments to safeguard against excessive prolonging of time and payments. After this limit is reached, or the period of completion is exceeded, the CA should review the justification for the extension of the contract.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.3<\/span>Types of Contracts<\/span><\/h2>\n<aside class=\"note\">The goods Manual has no \"types of contracts\" SECTION. Goods procurement instead uses Rate Contract\/ Framework Agreement, Approved Vendor List and Proprietary Article Certificate \u2014 treated as modes of procurement<\/em> in Part B.<\/p><\/aside>\n<h3 class=\"src-multi srchead\" data-src=\" W C NC \">4.3.1<\/span>The Common Opening Proposition<\/span>W<\/span>C<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\" data-src=\" W C NC \" data-label=\"Works + Consultancy + Non-Consultancy only\">\n1. There are various alternative bases for linking payments to the performance of a contract (called types of contracts) \u2014 each having different risks and mitigation measures.<\/p>\n<ul class=\"lst\"><li>Bids are called and evaluated based on the type of contract.<\/li><li class=\"srcmark src-multi\" data-src=\" C NC \">C<\/span>NC<\/span> add:<\/strong>The BOQ of the financial bid is designed specifically for each type of contract.<\/li><li>The choice of the type of contract should be based on value-for-money (VfM), with due regard to the nature of work\/ requirement.<\/li><li>Adoption of an inappropriate type of contract could lead to a situation of lack of competition, contractual disputes and non-performance\/ failure of the contract.<\/li><li class=\"srcmark src-W\" data-src=\" W \">W<\/span> adds:<\/strong>Standard forms for all the types of contracts mentioned below are available with public works organisations like CPWD, and the same May be used for calling the tenders.<\/li><\/ul>\n<\/div><h3>4.3.2<\/span>The Three Taxonomies Compared<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr class=\"srcmark src-multi\" data-src=\" W C NC \"><th>W<\/span> \u2014 WORKS (7 types)<\/th><th>C<\/span> \u2014 CONSULTANCY (5 types)<\/th><th>NC<\/span> \u2014 NON-CONSULTANCY (4 types)<\/th><\/tr><\/thead><tbody><tr><td>a) Lump sum (Firm Fixed Price) contract<\/td><td>a) Lump sum (Firm Fixed Price) contract<\/td><td>a) Lump sum (Firm Fixed Price) contract<\/td><\/tr><tr><td>b) Item Rate (Unit Rate) contract<\/td><td>b) Time based (Retainer-ship) contract<\/td><td>b) Time based contract<\/td><\/tr><tr><td>c) Percentage Rate contract<\/td><td>c) Percentage (Success Fee) contract<\/td><td>c) Percentage (Success Fee) contract<\/td><\/tr><tr><td>d) Piece Work contract<\/td><td>d) Retainer-ship cum Success fee-based contract<\/td><td>d) Indefinite delivery contract<\/td><\/tr><tr><td>e) Engineering, Procurement and Construction (EPC) contract<\/td><td>e) Indefinite delivery contract<\/td><td><\/td><\/tr><tr><td>f) Public Private Partnership (PPP)<\/td><td><\/td><td><\/td><\/tr><\/tbody><\/table><\/div>\n<h3 class=\"src-W srchead\" data-src=\" W \">4.3.3<\/span>WORKS \u2014 the Seven Types<\/span>W<\/span><\/h3><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\"><h4>A. Lump Sum (Fixed Price) Contract<\/span><\/h4>\n1. In this type of contract, bidders are required to quote a lump sum fixed price figure for completing the works in accordance with the given designs, specifications and functional requirements.<\/p>\n<ul class=\"lst\"><li>Bidder's price is deemed to include all elements of cost \u2014 no arithmetical correction or price adjustments are allowed during evaluation and execution.<\/li><li>Lump sum contracts are easy to administer because it is a fixed price for a fixed scope, and payments are linked to clearly specified outputs\/ milestones.<\/li><\/ul>\n2. Quality risk: There may be a tendency for the Contractor to cut corners on quality and scope of work by saving on resources employed. Disputes may arise due to different possible interpretations of quality and scope of work. The contract should include provision for evaluation of quality and scope of work, and a certificate for its acceptability May be recorded.<\/p>\n3. Time risk: As time is not linked to the payment, there may be a tendency for the Contractor to save on deployment of resources, which may result in time over-run. While the payments are not linked to time, the assignment should be monitored per month to ensure that the progress of work per month is in line with the planned and estimated timeline.<\/p>\n4. Where suitable: Lump sum service contracts should be used mainly for assignments in which the quality, scope and timing of the work are clearly defined.<\/p>\nLump sum contracts May be used where the works can be defined in their full physical and qualitative characteristics, and risk for change in quantity or specification, and unforeseen difficulties and site conditions (for example, hidden foundation problems) are minimal.<\/p>\nThus suitable for:<\/p>\n<aside class=\"note\">stereotype\/ repetitive residential buildings or other structures for which STANDARD DRAWINGS are normally available; also for minor bridge works, chimneys, bins\/ silos, overhead tanks, etc. \u2014 whether on the Department's design or that of the contractor.<\/p><\/aside>\nIn the latter case, the Department shall spell out the requirements in detail to enable the contractor to prepare his designs and drawings accordingly and submit them to the Procuring Entity for check and approval before construction.<\/p>\n5. Schedule of Rates still relevant: A Schedule of Rates (sor) May still be specified in order to regulate the amounts to be added to or deducted from the fixed sum on account of additions and alterations to drawings, designs and specifications not covered by the contract.<\/p>\n6. Payment: The contractor shall be paid from time to time as per the Schedule specified in the contract, or the full amount on completion of the work. The billing Schedule shall be commensurate with the actual work done, and the risk of front-loading strictly guarded against.<\/p>\n7. Measurements: Detailed measurements of work done in a lump sum contract are not required to be recorded \u2014 except in respect of additions and omissions. No reference is made in the contract to the departmental estimate of the work, prevailing sor, or the quantities of work to be done. Payment of additions and omissions is regulated by the prevailing sor as agreed upon while approving the tender or the rates.<\/p>\n<h4>B. Item Rate (Unit Rate) Contract<\/span><\/h4>\n1. For item rate tenders, contractors are required to quote a rate for each individual item (detailed sub-activity) comprising a work, on the basis of the Bill of Quantities (BOQ) provided by the Procuring Entity in the bid documents.<\/p>\nThis is the most commonly used contract type for civil works.<\/p>\n2. Payment and variations: The payment is made at the rate set out in the contract for the measured quantity.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Extent of variation in BOQ quantities<\/th><th>Treatment<\/th><\/tr><\/thead><tbody><tr><td>REASONABLE variations \u2014 typically \u00b110% to \u00b115%<\/td><td>Can be allowed during the execution in terms of the contract<\/td><\/tr><tr><td>SLIGHTLY LARGER variation \u2014 typically \u00b125% to \u00b130%<\/td><td>competent Authority's sanction is required<\/td><\/tr><tr><td>Where the variation exceeds the prescribed limit<\/td><td>The contract generally provides that either (a) the Procuring Entity May revise the rate with mutual agreement (often based on analysis of current market rates), or (b) the work beyond the limit May be treated as a new item, requiring approval at appropriate levels<\/td><\/tr><\/tbody><\/table><\/div>\n3. Where suitable: Suitable for all types of major works such as buildings, bridges, culverts, roads, sewer lines, irrigation works \u2014 and carries the least risk of uncertainty for the parties.<\/p>\n4. Prerequisite: Specifications, design, drawings and contract conditions \u2014 including availability of land, forest clearance, social and environmental impact assessment, where applicable \u2014 have to be critically appraised before the initiation of the procurement process, in order to minimise the incidence of internal inconsistencies, variations, and situations of claims\/ disputes or contract failure.<\/p>\n<h4>C. Percentage Rate Contract<\/span><\/h4>\n1. For percentage Rate Contract, the contractors are required to quote a rate as an overall percentage above or below the total estimated cost.<\/p>\n2. Where suitable: This type works best when the work does not involve major design process and directions, and simple drawings are sufficient for execution. It saves on the time and effort of detailed design before the procurement process.<\/p>\nCan be used for:<\/p>\n<aside class=\"note\">Small and routine types of original works for which estimates can be made based on available Schedule of Rates, and all repair works \u2014 e.g. levelling and development works, including storm water drainage, water supply and sewer lines.<\/p><\/aside>\n3. Billing: Bills for percentage rate contracts shall be prepared at the estimated rates for individual items only, and the percentage excess or less shall be added or subtracted from the gross amount of the bill. The payment is made for the measured quantity.<\/p>\nContract provisions are made to determine the price of the items not included in sor. In the absence of a standard Schedule of Rates, a project-specific Schedule of items and their rates is drawn.<\/p>\n<aside class=\"note\">Note: Percentage rate contracts should not be confused with lump-sum contracts, since the pricing structure in both cases is fundamentally different.<\/p><\/aside>\n<h4>D. Piece Work Agreement<\/span><\/h4>\n1. In a piece work agreement, bidders quote and are paid for each piece (or unit) of a work element \u2014 neither the complete work as in lump-sum contract, nor as granular a work element as in item Rate Contract \u2014 without necessarily providing detailed quantities upfront.<\/p>\nThe Procuring Entity has flexibility to put an end to the piece work agreement at his option at any time. It incentivises productivity of the contractor and cost control for the Procuring Entity.<\/p>\n2. Two main uses:<\/p>\nA) anticipatory work commencement: In cases where it is necessary to start the work in anticipation of formal acceptance of a detailed contract, a piece work agreement May be drawn \u2014 and the agreement May be cancelled as soon as the regular contract is signed.<\/p>\nb) for ongoing requirements: For ongoing requirements \u2014 i.e., pipes, laying of sewerage, maintenance of colonies\/ facilities etc. \u2014 quotations are called periodically, and a running piece work agreement is drawn up as a result of those quotations, usually for a period of one year. The agreement provides for payment of stipulated rates only when it refers to such quantity of time, and also stipulates that the Procuring Entity May put an end to the agreement at his option at any time.<\/p>\n3. Important provisions of such contracts:<\/p>\nA) quality assurance: Contractor might prioritise speed over quality to maximise earnings. Therefore, the contract must clearly define the quality standards each unit of work must meet to be acceptable. Implement processes for inspecting and approving completed work before payment. Define the scope of work meticulously to prevent misunderstandings. Maintain open lines of communication with contractors to address issues promptly. Establish KPIs to monitor progress and quality.<\/p>\nB) payment terms: Specify the payment rate per unit of work and any conditions that might affect this rate. Outline when payments will be made (e.g., upon completion of each unit, weekly, monthly).<\/p>\nC) termination clauses: Include a clause that allows the Procuring Entity to terminate the contract at their option at any time. Specify any notice period required and obligations upon termination.<\/p>\nD) labour laws: There's a potential for unfair labour practices if not properly managed. Therefore, the contract must stipulate strict compliance with local labour regulations, including minimum wage requirements and worker protections.<\/p>\nE) documentation: Keep thorough records of work completed and payments made for transparency and legal purposes.<\/p>\n<h4>E. Engineering, Procurement and Construction (EPC) Contracts<\/span><\/h4>\n1. What it is: The EPC approach \u2014 also called 'design & build' contracts \u2014 relies on assigning the responsibility for investigations, design and construction to the contractor for a lump sum price determined through competitive bidding.<\/p>\nThe objective is to ensure implementation of the project to specified standards with a fair degree of certainty relating to costs and time, while transferring the construction risks to the contractor.<\/p>\n2. Policy push: On the recommendations of niti aayog, the cabinet committee on economic affairs (ccea) has recommended that item rate contracts May be substituted by EPC contracts wherever appropriate (NITI Aayog OM No. N-14070\/14\/2016-PPPAU dated September 05, 2016)<\/em>.<\/p>\n3. Output specifications, not construction specifications: Unlike the normal practice of construction specifications, the technical parameters in the EPC agreement are based mainly on output specifications\/ performance standards.<\/p>\nThe Procuring Entity specifies only the core requirements of design and construction that have a bearing on the quality, durability, reliability, maintainability and safety of assets \u2014 and enough room is left for the contractor to add value. The contractor has full freedom to design and plan the construction Schedule using best practices.<\/p>\n4. Risk allocation:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Risk<\/th><th>Borne by<\/th><\/tr><\/thead><tbody><tr><td>Soil conditions and weather; Commercial and technical risks relating to design and construction<\/td><td>the contractor<\/td><\/tr><tr><td>delays in handing over the land \u00b7 approvals from local authorities \u00b7 environment clearances \u00b7 shifting of utilities \u00b7 approvals in respect of engineering plans<\/td><td>the Procuring Entity<\/td><\/tr><\/tbody><\/table><\/div>\n5. Selection, price and the 10% variation ceiling: Selection of the contractor is based on open competitive bidding. All project parameters \u2014 contract period, price adjustments and technical parameters \u2014 are to be clearly stated upfront, and short-listed bidders are required to specify only the lump sum price for the project. The bidder who seeks the lowest payment is awarded the contract.<\/p>\nThe contract price is subject to adjustment on account of price variation during the contract period as per a specified formula.<\/p>\nIt also lays down a ceiling of 10 (ten) per cent of contract price to cater for any changes in the scope of project, the cost of which the Procuring Entity will bear.<\/p>\n<ul class=\"lst\"><li>Once this ceiling is reached, no further variations shall be issued under the existing contract.<\/li><li>Any additional requirement beyond this limit must be procured separately through a competitive bidding process, so as to preserve transparency, fairness, and Value for Money.<\/li><li>In exceptional cases where continuity of work demands that the existing contractor execute such additional scope, this shall be permitted only through a formally approved supplemental agreement, with revised price and timelines duly concurred by the Competent Authority and finance.<\/li><li>The original contractor shall, however, be required to extend reasonable cooperation to ensure coordination with any other agency engaged for excess works.<\/li><\/ul>\nSuggested eligibility criteria for EPC tenders:<\/p>\nA) technical capacity: The bidder has received payments for construction of eligible projects over the past five financial years preceding the bid due date. The payment amounts should be at least:<\/p>\n<ul class=\"lst\"><li>i) 60% of the estimated project cost from one eligible project; or<\/li><li>ii) 40% of the estimated project cost from each of two eligible projects; or<\/li><li>iii) 30% of the estimated project cost from each of three eligible projects.<\/li><\/ul>\nb) financial capacity: The bidder should possess a minimum net worth of at least 15% of the estimated project cost at the close of the preceding financial year. If the bid due date falls within three months of the closing of the latest financial year, that year can be ignored for calculation purposes.<\/p>\nC) eligible works for EPC tenders specifically refer to construction projects directly awarded by either a Government Ministry or Department, or by a public listed company. The latter should be listed on major Indian stock exchanges, such as the nse or the bse.<\/p>\nIn the case of awards from public listed companies, the tender documents need to clearly outline specific financial requirements. This includes detailing the average annual turnover of the company over a defined period \u2014 typically the past three or five years. Additionally, the tender should specify a minimum duration for which the company must have been registered \u2014 for example, a period of five years. This stipulation is aimed at ensuring that the awards considered for eligibility come from established and financially sound entities.<\/p>\n6. Design review process: The selected Contractor carries out survey and investigations and also develops designs and drawings in conformity with the specifications and standards laid down in the Agreement.<\/p>\nThe Procuring Entity's engineer (also called owner's engineer) reviews the design and drawings to ensure that these conform to the scope of the project, design standards and specifications.<\/p>\nAny comments by the Procuring Entity on the design proposals submitted by the contractor are to be communicated in totality once, in a time-bound manner as indicated in the Schedule. The contractor is free to proceed with construction after the expiry of the specified period, in case no remarks\/ clearances are given by the Procuring Entity.<\/p>\n7. Shifting of utilities: The contractor is also responsible for shifting of any utility (electric lines, water pipes, telephone cables etc.) to an appropriate location or alignment \u2014 if the utilities are under the purview of the Procuring Entity and adversely affect or infringe the execution of works.<\/p>\nThis requirement should be part of the tender document, so as to avoid such a requirement at a later stage that May lead to amending the scope of work.<\/p>\nFor utilities not owned by the Procuring Entity, the concerned organisation under whose ambit such utilities fall shall be intimated by the Procuring Entity for shifting, and the price of shifting shall be paid to the organisation by the Procuring Entity. If there is delay in shifting of the utilities for which the contractor is not accountable, reasonable time extension May be given to the contractor.<\/p>\n8. Liquidated Damages and bonus: The contractor is liable to pay Liquidated Damages (LD) for each day of delay beyond the specified date of completion \u2014 subject to the total amount of damages not exceeding 10 (ten) per cent of the contract price.<\/p>\nHowever, the contractor is entitled to time extension arising out of delays on account of change of scope and Force Majeure, or delays caused by or attributable to the Procuring Entity.<\/p>\nIf so provided in the Bid Document, the Procuring Entity is also liable to pay a bonus (normally should not exceed ten per cent) to the Contractor for completion of the project before the scheduled completion date.<\/p>\nIf delays have happened in achieving the individual milestones but the overall project completion is within time, then LD deducted should be refunded (without any interest).<\/p>\n9. Supervision: Monitoring and supervision of construction are undertaken through the Procuring Entity's engineer \u2014 a qualified firm selected through a transparent process \u2014 acting as a single window for coordination with the contractor.<\/p>\n10. Staged payment, defects liability and grace period: Each item of work is further sub-divided into stages, and payment based on output specifications and performance standard is to be made for each completed stage of work.<\/p>\n<ul class=\"lst\"><li>A defects liability period of two years May be specified in the agreement<\/strong> in order to provide additional comfort to the Procuring Entity.<\/li><li>A grace period of say 30 days for achieving the individual project milestones as per payment schedule May be provided in the tender document, so that any unavoidable delay may be covered during the grace period. The applicability of Liquidated Damages would be beyond the grace period.<\/li><\/ul>\n11. Model documents: FIDIC (F\u00e9d\u00e9ration Internationale Des Ing\u00e9nieurs-Conseils \u2014 an International Federation of Consulting Engineers, known by its French acronym) has also published such contractual frameworks.<\/p>\nModel EPC contract documents have been developed for highways and railways and published by the erstwhile planning commission. NHAI has already adopted these documents, and all construction contracts are currently being structured on this model. The Ministry of railways has also started using such documents. Model bidding documents and Model EPC contracts, suitably revisited or modified wherever required to suit the requirements of particular sectors, may be adopted.<\/p>\n12. Capability of the Owner's Engineer: The selected Procuring Entity's Engineer (Consultant) has to have good experience in design, project supervision and works management.<\/p>\nThe Procuring Entity organisation must have an experienced team (Works Committee) to super-check the quality of supervision exercised by the owner's engineer \u2014 including quality of design review, site supervision, quality audits, etc. Periodic audits of the Procuring Entity's engineer's functioning are desirable.<\/p>\n13. Third-party consultant: In complex projects, a third-party consultant be deployed for specific tasks like design audit, quality audits, safety audits, etc., to cross-check the Procuring Entity's engineer's diligence in the process.<\/p>\n14. Change of Scope and the right to match: The tender document should consist of provisions of change of scope in terms of specifications, omission of any work from the Scope of the Project, or any additional work. However, the total value of all change of scope orders should be limited (SAY 10%) of the contract price.<\/p>\nIn the event the parties are unable to agree to the proposed change of scope, the Procuring Entity May award such works or services to any other party \u2014 preferably on the basis of open competitive bidding.<\/p>\nThe contractor should have the option of matching the first-ranked bid in terms of the selection criteria, subject to payment of a certain percentage (say 2%) of the bid amount to the Procuring Entity. Such an option is possible when the contractor also participated in the bidding process and its bid did not exceed the first-ranked bid by more than 10%.<\/p>\n15. Sub-contracting: Sub-contracting by the EPC contractor must be limited and should not exceed 50% of the contract price. Any work to be sub-contracted by the main contractor must be brought to the notice of the Procuring Entity.<\/p>\n16. Qualification of sub-contractor: Preceding 3 years, at least one work of a similar nature with a contract value exceeding 40% of the value of the sub-contract to be awarded, and received payments in respect thereof for an amount equal to at least 80% of such contract.<\/p>\nProvided, however, that in any event the contractor shall communicate the name and particulars to the Procuring Entity for any sub-contract, including the relevant experience, prior to entering into any such sub-contract. Overall responsibility of all works lies on the contractor.<\/p>\n17. General Instructions on Procurement and Project Management on EPC (OM No. F.1\/1\/2021-PPD dated 29.10.2021)<\/em>:<\/p>\n<ol class=\"lst\"><li>In EPC contracts, since primary responsibility to execute the work lies with the EPC contractor, success of the project also depends upon the quality of the tender document \u2014 wherein enough clarity on the broad framework for execution of the work and the obligations of the contractor needs to be built in.<\/li><li>Milestones for payment to the contractor should be fixed in a manner that facilitates smooth cash flow for the contractor as well as for progress of the work. Milestones fixed should avoid excessive front loading or back loading \u2014 i.e., amount of payment should be commensurate with stage-wise quantum of work\/ cost incurred. Milestones for payment should also be linked with the deliverables.<\/li><li>In case of EPC contracts, only general arrangement drawings and architectural control parameters should be part of the EPC tender document. Timelines for submission of drawings by the contractors and approval thereof by the Competent Authority should be clearly prescribed in the tender document, wherein damages for non-adherence of such timelines May also be incorporated.<\/li><li>EPC contracts shall specify broad technical specification and key output parameters. Over-specification of design May lead to increase in cost. Technical specifications shall be framed in such a manner as to allow sufficient freedom to the contractor to optimise design. Provisions on the following should be included in commercial conditions:<\/li><li>i) limitation of liability for procuring entity as well as contractor;<\/li><li>ii) deviation limits and procedure for change of scope;<\/li><li>iii) contract closing timelines and procedure to ensure timely closing of contract;<\/li><li>iv) performance parameters and Liquidated Damages for shortfall in performance;<\/li><li>v) RISK MATRIX and RESPONSIBILITIES of the contractor and the procuring entity.<\/li><li>In addition, a latent defect period beyond the defect liability period May be included to protect the procuring entity and public authority interest in case of any design\/ engineering defect after the defect liability period is over, wherever appropriate.<\/li><li>To mitigate the risk involved in the methodology proposed by the contractor, the project executing authority shall either have an in-house engineering, quality assurance and project management expert, or alternatively hire an experienced engineer to intensively examine the proposal submitted by the contractor. Project executing authorities are to ensure that optimal technological solutions are provided by the contractor.<\/li><li>To ensure quality, regular inspection and quality checks must be carried out. The project executing authority shall carry out stage inspections in manufacturing of critical equipment\/ critical activities of the project.<\/li><\/ol>\n<aside class=\"note\">Note: In this sub-para 17, instructions containing \"shall\" are mandatory; Any deviation from these instructions shall require relaxation from the Ministry of Finance (for ministries\/ departments etc.) or from the board of directors (for CPSEs).<\/p><\/aside>\n<h4>F. Public Private Partnership (PPP)<\/span><\/h4>\nPPP means an arrangement between:<\/p>\n<ul class=\"lst\"><li>A Government\/ statutory entity\/ government-owned entity on one side \u2014 the Sponsoring (PPP) Authority, or simply the Authority<\/em>; and<\/li><li>A private sector entity on the other \u2014 a legal entity in which 51% or more of equity is with the private partner\/s \u2014 the concessionaire<\/em><\/li><\/ul>\n \u2014 for the creation and\/ or management of public assets and\/ or public services, through investments being made and\/ or management being undertaken by the concessionaire, for a specified period of time (concession period) on commercial terms, where:<\/p>\n<ul class=\"lst\"><li>there is a well-defined allocation of risk between the concessionaire and the Authority; and<\/li><li>the concessionaire \u2014 who is chosen on the basis of a transparent and open competitive bidding \u2014 receives performance-linked payments that conform (or are benchmarked) to specified and pre-determined performance standards, measurable by the authority or its representative.<\/li><\/ul>\n<aside class=\"note\">For further information, PPP instructions issued by the Department of economic affairs (DEA), Ministry of Finance, from time to time, may be referred. The provisions contained within this Manual are also applicable to works procurement carried out under PPP mode.<\/p><\/aside>\n<h4 class=\"src-W srchead\" data-src=\" W \">G. Comparison of Types of Contracts<\/span>W<\/span><\/h4><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n<div class=\"tblwrap\"><table><thead><tr><th>Contract Type<\/th><th>Payment Structure<\/th><th>Scope Flexibility<\/th><th>Risk to Contractor<\/th><th>Common Use Cases<\/th><\/tr><\/thead><tbody><tr><td>Lump Sum Contract<\/td><td>Fixed price for the entire project<\/td><td>Low<\/td><td>High<\/strong> (if costs are underestimated)<\/td><td>Simple, well-defined projects<\/td><\/tr><tr><td>Item Rate Contract<\/td><td>Payment based on rates for units of work\/ materials<\/td><td>High<\/td><td>Medium<\/td><td>Projects with variable quantities<\/td><\/tr><tr><td>Percentage Rate Contract<\/td><td>Payment based on a percentage of a standard schedule<\/td><td>Medium<\/td><td>Medium<\/td><td>Projects with standardised rates<\/td><\/tr><tr><td>Piece Work Contract<\/td><td>Fixed rate per unit of work completed<\/td><td>Medium<\/td><td>Depends on productivity<\/td><td>Discrete unit work, as in repair works<\/td><\/tr><tr><td>EPC Contract<\/td><td>Payment for design, procurement, and construction<\/td><td>Low<\/strong> (complete facility delivery)<\/td><td>High<\/strong> (responsible for entire project)<\/td><td>Large, complex projects<\/td><\/tr><tr><td>PPP Contract<\/td><td>Payment based on performance and availability of services<\/td><td>Medium<\/td><td>Shared between public and private entities<\/td><td>Infrastructure projects, public services<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><\/div><h3 class=\"src-multi srchead\" data-src=\" C NC \">4.3.4<\/span>CONSULTANCY and NON-CONSULTANCY \u2014 the Service Contract Types<\/span>C<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\"><h4>A. Lump Sum (Firm Fixed Price) Contract<\/span><\/h4>\n1. The lump sum (firm fixed price) contract is the simplest\/ simpler form of contract, and wherever feasible the Procuring Entity shall use this form of contract.<\/p>\nConsultants\/ service providers are required to quote a lump sum fixed price figure for completing the services in accordance with:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-C\" data-src=\" C \">C<\/span> the given Terms of Reference<\/strong>;<\/li><li class=\"srcmark src-NC\" data-src=\" NC \">NC<\/span> the given activity and services Schedule<\/strong>.<\/li><\/ul>\nThe proposal is deemed to include all prices \u2014 no arithmetical correction or price adjustments are allowed during evaluation.<\/p>\n<aside class=\"note\">NC<\/span> adds:<\/strong>This type of contract is based on output admeasurement.<\/p><\/aside>\nThe Terms of Reference\/ Schedule of Requirement shall indicate the scope and quantum of services required.<\/p>\n2. Why easy to administer: Lump sum contracts are easy to administer because there is a fixed price for a fixed scope, and payments are linked to clearly specified outputs\/ milestones\/ deliverables \u2014 C<\/span>such as reports, documents, drawings, bills of quantities, software programs and so on.<\/em><\/p>\nBidders quote a lump sum price for the required quantum of services. They May also be asked to quote a unit rate for the consultancy output\/ service, to be used in case of variation, etc.<\/p>\n3. The Schedule of requirement shall indicate the quantum of the outputs\/ services, its performance standards, and the timeline\/ milestones of its delivery. Contract May specify parts of payments to be released at specified timelines\/ milestones.<\/p>\n4. Where used:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-C\" data-src=\" C \">C<\/span> Widely used for simple planning and feasibility studies, environmental studies, detailed design of standard or common structures, preparation of data processing systems, and so forth.<\/li><li class=\"srcmark src-NC\" data-src=\" NC \">NC<\/span> Not many services are amenable to lump-sum type of contracts. Depending on the situation, such contracts may be used for transport services, logistics, clearing and forwarding, courier services, drilling, aerial photography, satellite imagery, mapping, and similar operations.<\/li><\/ul>\n5. Lump Sum Contracts \u2014 Risks and Mitigations C<\/span>(NC<\/span> cross-refers to its Output Admeasurement risk table):<\/em><\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. The quality and scope of the Output\/ deliverables is not linked to the payment.<\/strong> There may be a tendency for the consultant to Cut corners on quality and scope of the output\/ deliverables by saving on resources employed.<\/strong> Disputes may arise due to different possible interpretations of quality and scope of assignment.<\/td><td>Lump sum service contracts should be used mainly for assignments in which the quality, scope, and timing of the required output are clearly defined. The contract should include provision for evaluation of quality and scope of deliverables, and a certificate for its acceptability may be recorded. Payment should be made only against certificate of acceptance of deliverables.<\/td><\/tr><tr><td>2. Time over-run:<\/strong> As time is not linked to the payment, there may be a tendency for the consultant to save on deployment of resources, which may result in time-over-run.<\/strong><\/td><td>While the payments are not linked to time, the assignment should be monitored per month to ensure that the output per month is in line with the planned and estimated timeline.<\/td><\/tr><\/tbody><\/table><\/div>\n<h4 class=\"src-multi srchead\" data-src=\" C NC \">B. Time-Based Contract \u2014 \"Retainer-ship\" C<\/span> \/ \"Unit-rate\"<\/span>NC<\/span><\/h4><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\">\n1. C<\/span> In <\/strong>Time-based (Retainer-ship) contracts, payments are based on agreed hourly, daily, weekly, or monthly rates for staff (who in consultancy contracts are <\/strong>normally named) <\/strong>and on reimbursable items using actual expenses and\/ or agreed unit prices.<\/p>\n<aside class=\"note\">These are also called RETAINER-SHIP CONTRACTS, since the consultants are retained for a pre-decided contract period.<\/p><\/aside>\nThe rates for staff include: Salary, social costs, overhead, fee (or profit), and \u2014 where appropriate \u2014 special allowances.<\/p>\n1. NC<\/span> In <\/strong>Time-based (unit-rate) contracts, payments are based on agreed unit prices.<\/strong>This type of contract can be based either on input (more often) or output admeasurement.<\/strong>Payments are usually released every month for the quantum of inputs\/ output actually performed.<\/p>\n2. C<\/span> The <\/strong>Schedule of requirement shall indicate the quantum of inputs required \u2014 man-hours of different key and non-key personnel \u2014 qualifications of key personnel, reimbursable items, and the timeline\/ milestones of its deliverables.<\/p>\n3. When to use time-based rather than lump sum \u2014 and the key distinction from Indefinite Delivery C<\/span>:<\/p>\nBoth time-based contracts AND indefinite delivery contracts are used when a lump sum contract is not feasible, due to difficulties in specifying:<\/p>\n<ul class=\"lst\"><li>the SCOPE\/ LENGTH of consultancy services, or<\/li><li>the quantum of individual activities<\/li><\/ul>\n \u2014 either because the inputs required for attaining the objectives of the requirement is difficult to assess, or because the services are tied up to contracts\/ activities by others for which the completion period May vary.<\/p>\n<aside class=\"note\">The distinction:<\/p>\n<ul class=\"lst\"><li>TIME-BASED contracts are suitable for consultancy services that are CONTINUOUSLY NEEDED.<\/li><li>INDEFINITE DELIVERY type of contracts is suitable for services which are infrequently needed, but the consultant needs to be always on beck and call.<\/li><\/ul><\/aside>\n4. Where used C<\/span>: Widely used for complex studies, supervision of construction, advisory services, and most training assignments, etc.<\/p>\n5. Time-Based Contracts \u2014 Risks and Mitigations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. The quality and scope of the Output\/ deliverables \u2014 as in Lump-sum Contracts \u2014 is not linked to the payment. There may be a tendency for the consultant to cut corners on quality, scope, and timing of the output\/ deliverables by saving on resources employed.<\/td><td>The contract should include provision for evaluation of quality and scope of deliverables, and a certificate for its acceptability may be recorded. Payments should be released only against such certificates.<\/td><\/tr><tr><td>2. Performance in each time period is not linked to the payment. There May be a tendency for the consultant to use paid staff in a dilatory and un-productive manner.<\/td><td>Contracts need to be closely monitored and administered by the Procuring Entity to ensure that the progress of assignment is commensurate with the time spent, and that the resources for which payment is claimed have actually efficiently and productively been deployed on the assignment during the period. A system of MONTHLY REPORTING of payouts and quantum of work achieved by the consultant to the CA should be instituted to enable supervision.<\/td><\/tr><tr><td>3. Time and cost over-run is a major risk in Time-based contracts, as the payment is based on time, and delay May result in unanticipated benefit to the consultant and the assignment may get delayed.<\/td><td>This type of contract should include an upper limit of total payments to be made to the consultants for the assignment, to safeguard against excessive prolonging of time and payments. After this limit is reached, or the period of completion is exceeded, the ca should review justification for extension of the contract.<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h4>C. Percentage (Success\/ Contingency Fee) Contract<\/span><\/h4>\n1. Percentage (success\/ contingency fee) contracts directly relate the fees paid to the consultant\/ service provider to the estimated or actual project cost, or actual value of assets\/ transactions to be handled \u2014 e.g., project cost, or the cost of the goods procured or inspected.<\/p>\n<aside class=\"note\">Since the payment is made after the successful realisation of objectives, it is also called a success (or contingency) fee contract.<\/p><\/aside>\nThe payment is made based on the value of assets\/ transactions handled during the period.<\/p>\n2. The Schedule of Requirement shall indicate the estimated value of assets\/ transactions to be handled, as well as the contract period (one year, unless otherwise stipulated) over which such volume shall be availed.<\/p>\nHowever, there shall be no firm commitment to avail the entire value of transactions within the contract period.<\/p>\nThe final selection is made among the technically qualified consultants who have quoted the lowest percentage, while the notional value of assets is fixed.<\/p>\n3. Where used C<\/span>: Commonly used for appropriate architectural services; Procurement and inspection agents.<\/p>\n4. Percentage Contracts \u2014 Risks and Mitigations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>Quality and Scope not linked to payment (as in Lump-sum)<\/em><\/td><td>Contract should include provision for evaluation of quality, scope and the timing of deliverables, and certificate for its acceptability may be recorded. Payment should be made only against certificate of acceptance of deliverables.<\/td><\/tr><tr><td>Time over-run<\/strong> \u2014 time not linked to payment<\/td><td>Assignment should be monitored per month to ensure output per month is in line with planned and estimated timeline.<\/td><\/tr><tr><td>Bias against economic solutions: Since the percentage payment is linked to the total cost of the project, in the case of architectural or engineering services, percentage contracts implicitly lack incentive for economic design and are hence discouraged.<\/td><td>Therefore, the use of such a contract for architectural services is recommended only if it is based on a fixed target cost and covers precisely defined services.<\/td><\/tr><\/tbody><\/table><\/div>\n<h4>D. Retainer and Success (Contingency) Fee Contract [C ONLY]<\/span><\/h4>\n1.<\/strong> In Retainer and Success (Contingency) fee contracts, the remuneration of the consultant includes:<\/strong><\/p>\n<ul class=\"lst\"><li>A retainer (time-based, monthly payment), and<\/li><li>a success fee (percentage-based) \u2014 the latter being normally expressed as a percentage of the estimated or actual project cost.<\/li><\/ul>\n<aside class=\"note\">Thus, this type of contract is a combination of time-based and percentage contracts.<\/p><\/aside>\n2. Where used: Widely used when consultants (banks or financial firms) are preparing companies for sales or mergers of firms \u2014 notably in privatisation operations. It can also be used for assignments related to organisational restructuring\/ change.<\/p>\n3. Risks and Mitigations: All RISKS as applicable to both Percentage Contracts AND Time-Based contracts are encountered in this case. The same mitigation strategies as in both Percentage and Time-Based contracts may be adopted.<\/p>\n<h4>E. Indefinite Delivery Contract (Price Agreement)<\/span><\/h4>\n1. These contracts are used when the Procuring Entity needs to have \"on call\" specialised services, the extent and timing of which cannot be defined in advance.<\/p>\n<aside class=\"note\">This is akin to the system of 'rate contracts' or framework contracts in the procurement of goods.<\/p><\/aside>\nC<\/span> adds:<\/strong>There is no commitment from the Procuring Entity for the quantum of work that May be assigned to the consultant.<\/p>\nThe Procuring Entity and the firm agree on the unit rates to be paid, and payments are made periodically on the basis of the time\/ quantum of service actually used during the period.<\/p>\nNC<\/span> adds:<\/strong>This type of contract can be based either on input (more often) or output admeasurement.<\/p>\n2. Schedule of requirement: Shall indicate only a tentative estimate of the volume of required service\/ outputs\/ inputs, as well as the contract period (one year, unless otherwise stipulated) over which such volume is likely to be availed.<\/p>\nThe services shall be availed on-call, as and when needed by the Procuring Entity, without any commitment regarding the volume of services.<\/p>\nThe consultant\/ service provider shall be selected based on the total price (unit rate multiplied by indicative volume) of such services\/ inputs \u2014 including service charges and taxes \u2014 over the period of contract.<\/p>\n3. NC<\/span> \u2014 the cross-monitoring rule: In case of OUTPUT ADMEASUREMENT contracts, if expressly STIPULATED in the Tender Document, the quantum of input deployments (Personnel, equipment etc.) shall also be called for \u2014 but shall be used only to monitor performance standards.<\/p>\nSimilarly, in case of input admeasurement contracts, the quantum of services to be delivered per quantum of inputs deployed per day\/ month May also be called for, to evaluate the quality and productivity of deployed inputs.<\/p>\n4. Where used: Commonly used to RETAIN \"ADVISERS\" or avail services 'ON-CALL' \u2014 for example:<\/p>\n<aside class=\"note\">expert adjudicators for dispute resolution panels \u00b7 institutional reforms C<\/span> \u00b7 procurement advice \u00b7 technical troubleshooting \u00b7 Document Management \u00b7 Taxi Services C<\/span> \u00b7 Temporary Manpower Deployment C<\/span>, and so forth \u2014 normally over a period of a year or more.<\/p><\/aside>\n5. Indefinite Delivery Contracts \u2014 Risks and Mitigations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. Quality and Scope of the Output\/ deliverables not linked to payment<\/td><td>Contract should include provision for evaluation of quality and scope of deliverables, with certificate for acceptability; Payments released only against such certificates.<\/td><\/tr><tr><td>2. Performance in each time period not linked to payment<\/strong> \u2014 tendency to use resources in a dilatory and un-productive manner<\/td><td>Close monitoring and administration; Monthly reporting of payouts and quantum of work achieved to the CA.<\/td><\/tr><tr><td>3. Time and cost over-run is a major risk<\/strong>, as the output may not be achieved in the estimated time<\/td><td>Upper limit of total payments; after the limit is reached or the period exceeded, CA should review justification for extension.<\/td><\/tr><tr class=\"srcmark src-C\" data-src=\" C \"><td>4. Risk of over-utilisation C<\/span>: Indefinite Delivery Contracts are at risk of being over-utilised in excess of actual need, since the scrutiny of service need May not be as intense as in case of other types of contracts.<\/td><td>The need assessment of utilised services should be subject to some scrutiny, to ensure that there is no abnormal unexplainable trend in utilisation. Such contracts need to be closely monitored to ensure that there is no indiscriminate or unwarranted usage, and a maximum contract value May be laid down to keep control over usage, with approval of ca obtained to extend beyond such limit. A system of MONTHLY REPORTING to CA should be instituted. In the report, a monthly payout benchmark May be kept, above which the report May be required to be sent to a level above ca.<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h2>4.4<\/span>Systems of Selection<\/span><\/h2>\n<aside class=\"note\">The goods Manual has no \"systems of selection\" SECTION. Goods procurement is price-based by default (L1 among technically responsive offers), so no lCS\/ QCBS\/ FBS\/ SSS taxonomy is required. The taxonomy exists in Works, Consultancy and Non-Consultancy only.<\/p><\/aside>\n<h3 class=\"src-multi srchead\" data-src=\" W C NC \">4.4.1<\/span>The Common Rationale<\/span>W<\/span>C<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\" data-src=\" W C NC \" data-label=\"Works + Consultancy + Non-Consultancy only\">\n1. Why different systems exist: The relative importance of quality and price aspects May vary from contractor to contractor\/ assignment to assignment, depending on:<\/p>\n<ul class=\"lst\"><li>The complexities\/ criticality of quality requirements;<\/li><li>The internal capability of the Procuring Entity to engage and supervise the contract; As well as<\/li><li>the value of procurements.<\/li><\/ul>\nHence different systems of selection are designed to achieve appropriate relative importance (weightage) of quality and price aspects.<\/p>\nThe decision on the system of selection is normally preceded by an assessment of the capacity of the user to engage and supervise the implementation of the proposed contract. The selection method chosen depends to some extent on this assessment. Selection of the system of selection should also consider the likely field of bidders.<\/p>\n2. The four systems:<\/p>\n<div class=\"tblwrap\"><table><thead><tr class=\"\" ><th><\/th><th>W<\/span> \u2014 Works<\/th><th>C<\/span> \u2014 Consultancy<\/th><th>NC<\/span> \u2014 Non-Consultancy<\/th><\/tr><\/thead><tbody><tr><td>a)<\/td><td>Price based System \u2014 Least Cost Selection (LCS)<\/td><td>Price based System \u2014 LCS<\/td><td>Price based System \u2014 LCS<\/td><\/tr><tr><td>b)<\/td><td>Quality and Cost Based Selection (QCBS)<\/td><td>QCBS<\/td><td>QCBS<\/td><\/tr><tr><td>c)<\/td><td> \u2014 <\/td><td>Fixed Budget based Selection (FBS) (C only)<\/em><\/td><td> \u2014 <\/td><\/tr><tr><td>d)<\/td><td>Direct Selection: Single Source Selection (SSS)<\/td><td>Direct Selection: SSS<\/td><td>Direct Selection: SSS<\/td><\/tr><\/tbody><\/table><\/div>\n3. The default rule \u2014 and it differs by category:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-W\" data-src=\" W \">W<\/span> In the procurement of WORKS, the NORMAL system of selection used is PRICE-BASED \u2014 least Cost Selection (L1) \u2014 as in the procurement of Goods, for technically responsive offers. Under VERY SPECIAL circumstances, Single Source Selection may also be used. HOWEVER, the QCBS method has been ALLOWED to be used for procurement of Works for highly technically complex and critical assignments where it is justifiable to pay appropriately higher prices for a higher quality proposal.<\/li><li class=\"srcmark src-C\" data-src=\" C \">C<\/span> \u2014 the two-stage rule:<\/strong>Since the quality and scope of a consultancy assignment are not tangibly identifiable and consistently measurable, the technical and financial capability of consultants becomes an important \u2014 though indirect \u2014 determinant for quality and scope of performance. In such a situation, <\/strong>value for Money is achieved by encouraging wide and open competition among equally competent consultants.<\/li><\/ul>\nThus, selection of consultants is normally done in a two-stage process:<\/p>\n<ul class=\"lst\"><li>First stage: Likely capable sources are shortlisted, on the basis of qualification and experience requirements for the given assignment \u2014 if need be, through an 'Expression of Interest' (EoI) through advertisement.<\/li><\/ul>\n<aside class=\"note\">The shortlist should include a sufficient number \u2014 not fewer than three (3) and not more than eight (8) eligible firms. In rare cases where fewer than three consultants become eligible as per short-listing criteria, and the criteria cannot be relaxed, procurement May be continued with the approval of the Competent Authority.<\/p><\/aside>\n<ul class=\"lst\"><li>Second stage: The shortlisted consultants are invited to submit their technical and financial (RfP) proposals, generally in separate sealed envelopes. Evaluation of the technical proposal is carried out by evaluators without access to the financial part of the proposal. Financial proposals are opened after evaluation of quality.<\/li><\/ul>\n<\/div><h3>4.4.2<\/span>Price Based System \u2014 Least Cost Selection (LCS)<\/span><\/h3>\n(Rule 193 of GFR 2017)<\/em><\/p>\n1. How it works: In this method of selection, bidders submit both a technical proposal and a financial proposal at the same time.<\/p>\n<ul class=\"lst\"><li>Minimum qualifying marks for the quality of the technical proposal are prescribed as a benchmark \u2014 normally 75 (seventy-five) out of a maximum of 100 (hundred) \u2014 and indicated in the tender document\/ RfP, along with a scheme for allotting marks for various technical criteria\/ attributes.<\/li><li>Alternatively \u2014 since in LCS selection, technical offers do not require to be ranked (or to have weighted technical score added to financial score, as in QCBS) \u2014 it would suffice in appropriately simple cases if the evaluation criteria is only a fail\/ pass criteria prescribing only the minimum qualifying benchmark.<\/li><\/ul>\n<aside class=\"note\">Thus, in LCS, simplified evaluation criteria May also be used, where instead of a marking scheme, a minimum fail\/ pass benchmark of technical evaluation may be prescribed \u2014 e.g., must have completed at least two similar assignments; must have a turnover of at least rs 10 (Rupees Ten) CRORE<\/strong>, etc. Any bidder that passes these benchmarks is declared as technically qualified for the opening of their financial bids.<\/p><\/aside>\n<ul class=\"lst\"><li>The technical proposals are opened first and evaluated, and the offers that qualify as per these technical evaluation criteria will only be considered as technically responsive; the rest will be considered technically non-responsive and will be dropped from the list.<\/li><li>Financial proposals are then opened for only eligible and responsive offers (financial bids of other unresponsive bidders remain unopened) and ranked.<\/li><li>The L-1 offer out of the responsive offers is selected on price criteria alone, without giving any additional weightage to marks\/ ranking of the technical proposal.<\/li><\/ul>\nThis system of selection is roughly the same as the price-based selection of an l-1 OFFER (among the technically responsive offers) in the procurement of goods\/ works.<\/p>\n2. Where suitable W<\/span>: LCS is considered suitable for engaging contractors in most works procurement assignments that are of a standard or routine nature \u2014 such as construction works or non-complex engineering projects \u2014 where well-established practices and standards exist.<\/p>\n3. The default Rule: It is the simplest and the quickest system of selection, and under normal circumstances this method of evaluation shall be used as default, since it allows for minimum satisfactory technical efficiency with economy. Justification must be provided if a selection method other than LCS is to be used.<\/p>\n4. LCS \u2014 Risks and Mitigations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>a) technical criteria May not be relevant to the realisation of the quality of the assignment.<\/td><td>Technical criteria selected should be relevant and proportional to the requirement of quality of the assignment, and the selection process should be rigorous enough to ensure that \u2014 on the one hand \u2014 no technically unsatisfactory bids should be able to get past a loose criterion, and \u2014 on the other hand \u2014 no technically satisfactory offer should get ruled out by tight criteria.<\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>b) marking subjectivity: The scheme of marking or its application may be subjective.<\/td><td>It is important to lay down as objective a scheme of marking as possible. Cases where subjectivity is unavoidable (as in evaluation of methodology etc.) \u2014 a system of grading responses and their marking May be laid down in the bidding documents. The Procuring Entity should also have a system of conciliation and moderation of widely disparate markings by different members of the evaluation committee. W<\/span> adds: *As mentioned above, in most works procurement a fail\/ pass criteria is sufficient, and it avoids subjectivity.*<\/td><\/tr><\/tbody><\/table><\/div>\n<h3>4.4.3<\/span>Quality and Cost Based Selection (QCBS)<\/span><\/h3>\n(Rule 192 of GFR 2017)<\/em><\/p>\n1. What it is: In the QCBS system of selection, both the quality of the proposal and the cost are considered as deciding factors. This approach is employed when the quality of deliverables is crucial, but the cost of service or work cannot be ignored.<\/p>\n2. The mechanics:<\/p>\n<ul class=\"lst\"><li>Quality\/ technical scores are assigned to proposals based on specified quality criteria.<\/li><li>Minimum qualifying marks \u2014 normally 70\u201380 (seventy to eighty) out of a maximum of 100 (hundred) marks \u2014 as a benchmark for the quality of the technical proposal is prescribed, and proposals below this benchmark are not considered for financial evaluation.<\/li><li>The financial proposals are also given a cost-score based on the relative ranking of prices \u2014 with 100 (hundred) marks for the lowest and pro-rated lower marks for higher-priced offers.<\/li><li>The total score shall be obtained by weighting the quality and cost scores and adding them.<\/li><li>The proposed weightings for quality and cost shall be specified in the RfP\/ tender document.<\/li><li>The firm obtaining the highest total score shall be selected.<\/li><li>It May be noted that, theoretically, a QCBS system with a weight of 100% (hundred percent) for the 'cost' approximates the price-based LCS system.<\/li><li>This method of selection shall be used for highly technically complex and critical assignments where it is justifiable to pay an appropriately higher price for a higher quality of proposal.<\/li><\/ul>\n<aside class=\"note\">The Single Most Important Numerical Divergence in this Chapter<\/p>\nthe weightage ratio is inverted between consultancy on the one hand and works\/ non-consultancy on the other:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>Cost weightage<\/th><th>Technical\/ Quality weightage<\/th><th>Ceiling on non-financial parameters<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-C\" data-src=\" C \"><td>C<\/span> Consultancy<\/td><td>30%<\/strong> (example)<\/td><td>70% \u2014 but should never be more than 80%<\/td><td>(quality-dominant)<\/em><\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> WORKS<\/td><td>80%<\/strong> (example)<\/td><td>20% \u2014 but should never be more than 30%<\/td><td>the maximum weight of the non-financial parameters shall in no case exceed 30%<\/td><\/tr><tr class=\"srcmark src-NC\" data-src=\" NC \"><td>NC<\/span> Non-consultancy<\/td><td>80%<\/strong> (example)<\/td><td>20% \u2014 but should never be more than 30%<\/td><td>shall in no case exceed 30%<\/td><\/tr><\/tbody><\/table><\/div>\nC<\/span> further permits: *The ratio of weightages for cost and Technical score <\/strong>Could also be 40:60 (forty: sixty) OR 50:50 (fifty: fifty), etc. <\/strong>However, the weight for the \"COST\" shall be chosen, considering the complexity of the assignment and the relative importance of quality.*<\/p>\nW<\/span> and NC<\/span> state the converse: However, the weight for the \"QUALITY\" shall be chosen, considering the complexity of the assignment and the relative importance of quality.<\/strong><\/p><\/aside>\n3. The suggestive weighting table [C only]:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Description<\/th><th>Remarks<\/th><th>Quality\/ Cost Score Weighting (%)<\/th><\/tr><\/thead><tbody><tr><td>Highly complex\/ downstream consequences\/ specialised assignments<\/td><td>Use QCBS with higher technical weightage<\/td><td>80\/20<\/td><\/tr><tr><td>Moderate complexity<\/td><td>Majority of cases will follow this range<\/td><td>75\u201365 \/ 25\u201335<\/td><\/tr><tr><td>Assignments of a standard or routine nature, such as auditors\/ procurement agents handling the procurement<\/td><td>Use of LCS is appropriate<\/td><td>60\u201350 \/ 40\u201350<\/td><\/tr><\/tbody><\/table><\/div>\n<h3 class=\"src-multi srchead\" data-src=\" W NC \">4.4.4<\/span>The Quality Oriented Procurement (QOP) Framework<\/span>W<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\" data-src=\" W NC \" data-label=\"Works + Non-Consultancy only\">\n<aside class=\"note\">This apparatus \u2014 QOP declaration, Competent Authority, and the Special Technical Committee \u2014 exists in the WORKS and NON-CONSULTANCY Manuals only. It does not exist in the Consultancy Manual (where QCBS is the norm, not the exception) nor in the Goods Manual.<\/p>\nIn this section, instructions containing \"shall\" are mandatory; Any deviation shall require relaxation from the Ministry of Finance (for ministries\/ departments etc.) or from the board of directors (for CPSEs).<\/p>\n(Source: General Instructions on Procurement and Project Management \u2014 DoE's OM No. F.1\/1\/2021-PPD dated 29.10.2021.)<\/em><\/p><\/aside>\n<h4>A. When QCBS may be used<\/span><\/h4>\nProcuring entities are ALLOWED to use QCBS for procurement of works and non-consultancy services in the following cases:<\/p>\nA) where the procurement has been declared to be a Quality Oriented Procurement (QOP) by the Competent Authority; Or<\/p>\nb) [NC only \u2014 the value route]: For procurement of non-consulting services, where the estimated value of procurement (including all taxes and option clause) does not exceed rs 10 CRORE \u2014 this method of selection shall be used for highly technically complex and critical assignments where it is justifiable to pay an appropriately higher price for higher quality of proposal.<\/p>\nC) the prohibitions: QCBS shall not be used in procurements planned to be done:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-W\" data-src=\" W \">W<\/span>through two-STAGE BIDDING<\/strong>(where the Procuring Entity is unable to define the technical specifications or performance parameters with adequate clarity)<\/em>, or through REVERSE AUCTION, or through LIMITED TENDERS<\/strong>;<\/li><li class=\"srcmark src-NC\" data-src=\" NC \">NC<\/span> through REVERSE AUCTION or through LIMITED TENDERS.<\/li><\/ul>\n<aside class=\"note\">NC<\/span> \u2014 the CROSSING-Rs-10-CRORE Rule: In cases where the <\/strong>estimated value was less than rs 10 crore, but on tendering \u2014 following the QCBS process \u2014 it is proposed to place a contract for more than rs 10 crore, the following procedure shall be adopted:<\/p>\n<ul class=\"lst\"><li>i) In case the DIFFERENCE between estimated value (including taxes etc.) and value of the proposed contract (including taxes etc.) is less THAN 10% of the estimated value \u2014 there will be no bar on placement of contract.<\/li><li>ii) in all other cases, the procurement process is to be scrapped and restarted \u2014 either as QOP or on a non-qcbs basis.<\/li><\/ul><\/aside>\nThe PRINCIPLES of QCBS shall be as provided in RULE 192(i), (ii), and (iii) of the GFR. (Refer to the Manual for Procurement of Consultancy Services for such principles.)<\/em> However, the maximum weight of the non-financial parameters shall in no case exceed 30%.<\/p>\n<h4>B. The Competent Authority for allowing QCBS<\/span><\/h4>\nA) for declaring a procurement as QOP:<\/p>\ni) Where the procuring entity\/ project executing authority is covered by RULE 1 OF GFR (as amended by OM No. F.1\/1\/2021-PPD dated 08.03.2024)<\/em>:<\/p>\n<ol class=\"lst\"><li>Secretary of the Ministry\/ Department to which the procuring entity belongs; or<\/li><li>Secretary of the public authority, with the concurrence of the Procuring Entity\/ project executing authority;<\/li><\/ol>\n<aside class=\"note\">Note: The Procuring entity\/ project executing authority will themselves decide the level at which such concurrence is to be given. Such concurrence need not be obtained at the level of Secretary in charge of the Procuring entity\/ project executing authority.<\/p><\/aside>\n<ol class=\"lst\"><li>Where the public authority is any Indian Institute of Technology (IIT) or Indian Institute of Science (IISc) \u2014 the director of such IIT\/ IISc. (This provision is applicable for procurement declared as QOP on or before 31.03.2027 and will be reviewed thereafter.)<\/em><\/li><\/ol>\nii) where the Procuring Entity is a CPSE \u2014 the board of directors of the CPSE.<\/p>\niii) in case the authority to approve procurement on a nomination basis is lower than the Secretary of the Ministry\/ Department (or board of directors in case of CPSEs), such authority will also be competent to approve the procurement as QOP.<\/p>\nB) [nc only] for non-consulting services not exceeding Rs. 10 crore in value:<\/strong> where the procuring entity\/ project executing authority is covered by Rule 1 of GFR<\/strong>(i.e., Central Government Ministries\/ Departments, attached\/ subordinate bodies, and Autonomous Bodies \u2014 except those Autonomous Bodies with separate Financial Rules approved by the Government)<\/em> \u2014 by the officer or authority so designated.<\/strong><\/p>\n<aside class=\"note\">DEFINITIONS used in this framework W<\/span>NC<\/span>:<\/p>\n<ul class=\"lst\"><li>\"Public authority\"<\/strong> means the client organisation<\/strong>, which may be asking a \"Procuring Entity\"\/ \"Project Executing Authority\"\/ \"Project Executing Agency\" to execute a project or work on their behalf. For example, if a university executes works through CPWD, then the university is the public authority, and CPWD is the Procuring Entity<\/strong>. (The public authority and the project executing authority may also be the same.)<\/em><\/li><li>\"PROCURING ENTITY\"\/ \"project executing authority\"\/ \"project executing agency\" means Central Government Ministries\/ Departments, Attached\/ Subordinate bodies including Autonomous Bodies, or CPSEs (etc.) executing projects\/ works.<\/li><\/ul><\/aside>\n<h4>C. The Special Technical Committee (STC)<\/span><\/h4>\na) Composition \u2014 in all cases of QOP, an STC shall be constituted with the following composition:<\/p>\n<ul class=\"lst\"><li>I) two or more persons who have expert knowledge and\/ or long experience relevant to the procurement in question;<\/li><li>ii) one or more persons with extensive experience in handling public projects and\/ or public finance in the Government or State\/ Central public sector;<\/li><li>iii) one or more persons with experience in financial management\/ financial administration\/ audit\/ accountancy;<\/li><li>iv) not more than one member representing the Procuring Entity, who May inter alia provide administrative support to the committee;<\/li><li>V) any person who is a member of the STC shall not associate himself in any manner with any bidder for the procurement concerned.<\/li><\/ul>\nB) appointment: The names of members of the STC shall be decided either by the Competent Authority specified above, or by any other authority to whom such power is delegated by the Competent Authority. However, powers shall not be delegated to the officer or authority competent to finalise the particular procurement.<\/p>\nSitting fee May be paid to the members of the STC. Incidental costs, including travel, shall be paid by the Procuring Entity.<\/p>\nC) mandate \u2014 the STC shall make specific recommendations on the following matters:<\/p>\n<ul class=\"lst\"><li>I) the weight to be given to non-financial parameters (not exceeding 30%).<\/strong> However, the weight for the \"technical\" shall be chosen considering the complexity of the assignment and the relative importance of quality. The proposed weightings for quality and cost shall be specified in the Tender Document.<\/strong><\/li><li>ii) the specific quality\/ technical parameters, their weights, their scoring methodology, the minimum qualification score, etc., and other relevant criteria necessary for ensuring fair and transparent quality\/ technical evaluation of the bids.<\/li><\/ul>\nD) binding force: The recommendations of the STC shall be followed, except where there are special grounds in public interest for deviating from them. However, every case of deviation from the recommendations of the STC shall require approval of the Competent Authority who approved the declaration of the procurement as QOP.<\/p>\n<h4>D. Grounds for Declaring a Procurement to be QOP<\/span><\/h4>\nA procurement should be declared as a QOP only if there is enough justification in terms of:<\/p>\n<ul class=\"lst\"><li>Value addition, or<\/li><li>enhancement of delivery, or<\/li><li>paramount importance of quality.<\/li><\/ul>\nReasons for not adopting two-cover\/ pre-qualification-based\/ least-cost system shall be documented.<\/p>\n<h4>E. Tender Documents \u2014 Fixing\/ Selection of the Evaluation\/ Qualification Criteria<\/span><\/h4>\nTo ensure quality, some of the criteria used in marking May be made mandatory \u2014 and if a bidder does not meet those, then bids shall not be evaluated further.<\/p>\nWeightage May also be given for the timely completion of past projects of a similar nature by the bidder.<\/p>\n<h4>F. Pre-bid Meeting<\/span><\/h4>\nIn all cases of QOP, a pre-bid meeting shall be held, in which the technical criteria \u2014 including the marking scheme \u2014 shall be discussed with the potential bidders.<\/p>\nIf any changes in the criteria are necessitated by such consultation, such changes shall require the recommendation of the STC.<\/p>\n<h4>G. Fixing of Scoring\/ Marking Criteria<\/span><\/h4>\nA) objectivity: The scoring should not be a variable that relies on the subjective opinion of the evaluating panel. The marking scheme should enable the achievement of almost similar scores irrespective of the persons\/ experts involved in the evaluation process. When the outcomes are consistent with the available information, the QCBS parameters are more reliable. Unambiguous descriptions and criteria help to avoid grey areas, so as to ensure that there is only one possible score for the item. As far as possible, the criteria should be so specific and clear that bidders can self-mark their own bids.<\/p>\nB) the minimum threshold and why it must be set high: It is better to specify minimum marks for meeting the qualifying criteria specified. In QCBS selection, minimum qualifying marks (normally 70\u201380 out of a maximum of 100 marks) as a qualifying benchmark shall be prescribed and indicated in the tender document, along with a scheme for allotting marks for various technical criteria\/ attributes. Bids scoring less than the minimum threshold shall not be considered for further evaluation.<\/p>\n<aside class=\"note\">Since the weightage of the cost element adopted is as high as 70 (seventy) per cent, financial considerations would dominate the selection \u2014 though to a lower extent as compared to LCS. In such cases, it is essential to ensure that the minimum qualifying benchmark in the technical evaluation is set sufficiently high to weed out low-quality bids with low prices.<\/p><\/aside>\nC) fixed vs relative parameters: Examples of fixed quality parameters that ought not to be considered for relative scoring include organisations' ISO\/ standards' accreditation, etc. These are required to establish the credentials of the contractor but cannot be used for relative comparison between various bidders.<\/p>\nD) past performance: Bidders should be asked to produce certificates for past performance. A format May be given in the tender itself outlining the contract details, completion, sustainability etc., and bidders May be asked to fill it and give evidence to that effect.<\/p>\nE) presentations: Bidders May be asked to submit a detailed presentation on their proposals in the form of a soft copy along with the bid, so as to facilitate better understanding of their proposal and to ensure commitment.<\/p>\nF) KPIs: Besides the BOQ output criteria for payment, key performance indicators (KPIs) May be specified with minimum achievement levels for payment, so as to ensure quality compliance.<\/p>\n<h4 class=\"src-multi srchead\" data-src=\" W C NC \">H. Caution against Joint Ventures\/ Consortium in QCBS Procurements<\/span>W<\/span>C<\/span>NC<\/span><\/h4><div class=\"srcblock src-multi\" data-src=\" W C NC \" data-label=\"Works + Consultancy + Non-Consultancy only\">\nA) since quality is given weightage in the evaluation itself, in QCBS procurement, therefore, JVs May be avoided as far as possible. JVs could, however, become necessary in high technology or innovative projects where a single entity May not be able to execute the work alone.<\/p>\nB) if JVs are allowed, measures should be taken to ensure that all the JV partners are present and execute work all through the contract period. An implementation board with the participation of all JV partners May be provided for, wherein the Project Manager from the Procuring Entity shall also be allowed an audience when required. Meeting of JV partners with the project executing authority for quarterly progress review May be made a criterion linked to the achievement of key dates or even payment.<\/p>\n<\/div><h4>I. QCBS \u2014 Risks and Mitigations<\/span><\/h4>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>A) inappropriate selection of QCBS:<\/strong> There is a possibility that the QCBS system is selected where LCS or other systems would have been more appropriate<\/strong>, considering the quality requirements or the capability of the Procuring Entity to monitor the assignment.<\/td><td>The selection of QCBS should be justified and applied only under the circumstances mentioned above.<\/td><\/tr><tr><td>b) weightage of technical: Cost may not be proportional to quality requirements.<\/td><td>Weightage different from 70:30 (seventy: Thirty) should be adequately examined and justified.<\/td><\/tr><tr><td>c) technical criteria May not be relevant to the realisation of the quality of the assignment.<\/td><td>Technical criteria selected should be relevant and proportional to the requirement of quality of assignment, and the selection process should be rigorous enough to ensure that no technically unsatisfactory bids get past a loose criterion, and no technically satisfactory offer gets ruled out by tight criteria.<\/td><\/tr><tr><td>D) marking subjectivity:<\/strong> The scheme of marking or its application may be subjective.<\/td><td>Lay down as objective a scheme of marking as possible. Where subjectivity is unavoidable (as in evaluation of methodology etc.), a system of grading responses and their marking may be laid down in the bidding documents. The Procuring Entity should also have a system of conciliation and moderation of widely disparate markings by different members of the evaluation committee.<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h3>4.4.5<\/span>Fixed Budget based Selection (FBS) [C ONLY]<\/span><\/h3>\n1. Its status: GFR 2017 provides three methods for selection\/ evaluation of consultancy proposals \u2014 viz. QCBS, LCS and SSS. The Fixed Budget Based Selection (FBS) method is now also allowed for selection of consultants (General Instructions on Procurement and Project Management \u2014 DoE's OM No. F.1\/1\/2021-PPD dated 29 October 2021)<\/em>.<\/p>\n2. How it works: In FBS, the selection process considers both the quality of proposals and the cost. FBS is a competitive method, encouraging consultants to provide high-quality services within the defined budget constraints:<\/p>\nA) fixed budget: In the Request for Proposal (RfP) document, a specific fixed budget is specified. Consultants must adhere to this budget, and their proposed cost cannot exceed it.<\/p>\nb) quality assessment: Consultants submit their proposals, and the evaluation considers the quality of these proposals. The proposal that scores the highest in quality \u2014 and is within the specified budget \u2014 is selected for award of contract. This assessment ensures that the selected consultant meets the project's requirements effectively, within the stipulated budget.<\/p>\n3. FBS May be used when: A) the type of consulting services required is simple and\/ or repetitive and can be precisely defined; And b) the budget can be reasonably estimated, and set based on credible cost estimates and\/ or previous selections which have been successfully executed; And c) the budget is sufficient for the consultant to perform the assignment.<\/p>\n<h3>4.4.6<\/span>Direct Selection: Single Source Selection (SSS)<\/span><\/h3>\n(Rule 194 of GFR 2017)<\/em><\/p>\n1. When permissible: Under some special circumstances, it May become necessary to select a particular contractor\/ consultant\/ service provider where adequate justification is available for such single-source selection, in the context of the overall interest of the Procuring Entity.<\/p>\n<aside class=\"note\">Direct selection is also called the nomination mode of procurement.<\/p><\/aside>\nThe selection by SSS\/ nomination is permissible under exceptional circumstances such as:<\/p>\n<ol class=\"lst\"><li>Tasks that represent a natural continuation of previous work carried out by the firm;<\/li><li>In case of an emergency situation; Situations arising after natural disasters; Situations where timely completion of the assignment is of utmost importance;<\/li><li>Situations where execution of the assignment May involve the use of proprietary techniques, or only one contractor\/ consultant has the requisite expertise;<\/li><li>At times, other PSUs or Government organisations are used to provide technical expertise. It is possible to use the expertise of such institutions on an SSS basis;<\/li><li>Under some special circumstances, it may become necessary to select a particular contractor\/ consultant where adequate justification is available in the context of the overall interest of the Ministry or Department. Full justification for Single Source Selection should be recorded in the file, and approval of the Competent Authority obtained before resorting to such single-source selection.<\/strong><\/li><\/ol>\n2. Safeguards: The Procuring Entity shall ensure fairness and equity, and shall have a procedure in place to ensure that: A) the prices are reasonable and consistent with market rates for tasks of a similar nature; And b) the required work\/ services are not split into smaller-sized procurement.<\/p>\n3. Mandatory reporting of nomination awards: All works\/ purchase\/ consultancy\/ non-consultancy contracts awarded on a nomination basis should be brought to the notice of the following authorities for information: a) THE SECRETARY, in the case of Ministries\/ Departments; b) the board of directors or equivalent managing body, in case of Public Sector Undertakings, Public Sector Banks, Insurance companies, etc.; c) the chief executive of the organisation where such a managing body is not in existence.<\/p>\n<ul class=\"lst\"><li>I) the report relating to such awards on a nomination basis shall be submitted to the Secretary\/ board\/ chief executive\/ equivalent managing body every quarter.<\/li><li>ii) the audit committee or similar unit in the organisation May be required to check at least 10% of such cases.<\/li><\/ul>\n4. SSS \u2014 Risks and Mitigations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>a) inappropriate selection of SSS: There is a possibility that the SSS system is selected where LCS or other systems would have been more appropriate, considering the quality requirements or the capability of the Procuring Entity to monitor the assignment. The assignment May be split into parcels to avoid competitive selection systems, or to avoid obtaining higher-level approvals for SSS.<\/td><td>Full JUSTIFICATION for single source selection should be recorded in the file, and approval of the Competent Authority obtained \u2014 the Schedule of Procurement Powers (SoPP) should severely restrict powers for SSS selection. In direct selection, the Procuring Entity should ensure fairness and equity, and the required work\/ services are not split into smaller-sized procurement to avoid competitive processes.<\/td><\/tr><tr><td>b) cost May be unreasonably high: The single contractor\/ consultant is likely to charge unreasonably high prices.<\/td><td>The Procuring Entity must have a procedure in place to ensure that the prices are reasonable and consistent with market rates for tasks of a similar nature. If necessary, negotiations May be held with the contractors\/ consultants to examine reasonableness of quoted price.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.5<\/span>Tendering Systems<\/span><\/h2><h3>4.5.1<\/span>The Common Rationale<\/span><\/h3>\nTendering systems are designed to achieve an appropriate balance between the countervailing needs for the 'right quality' and the 'RIGHT PRICE' \u2014 while the mode of procurement addresses the 'RIGHT SOURCE', and the TENDER DOCUMENT addresses the 'RIGHT QUANTITY' and 'right time and place' \u2014 under different complexities\/ criticality of Technical requirements and value of procurements.<\/p>\n<aside class=\"note\">C<\/span> variant of the same proposition: *Tendering systems are designed to achieve an appropriate balance between the countervailing needs for <\/strong>Right Quality, Right Source, AND the Right Price\u2026 <\/strong>In certain critical and complex requirements, the technical and financial capability of the source of supply becomes an important determinant for Value for Money.*<\/p><\/aside>\nplease note that the selection of a tendering system has to be based on the two factors mentioned above; Hence, just a value threshold for their use is discouraged. Selection should be based on professional judgement of the two factors mentioned above. (Stated expressly in G<\/span>, W<\/span> and NC<\/span>.)<\/em><\/p>\n<h3>4.5.2<\/span>The Systems Listed<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr class=\"srcmark src-multi\" data-src=\" G W C NC \"><th><\/th><th>G<\/span> Goods<\/th><th>W<\/span> Works<\/th><th>C<\/span> Consultancy<\/th><th>NC<\/span> Non-Consultancy<\/th><\/tr><\/thead><tbody><tr><td>1. Single-Stage Tendering System<\/td><td><\/td><td><\/td><td><\/td><td><\/td><\/tr><tr><td> \u2014 a) Single Stage Single Envelope System<\/td><td><\/td><td><\/td><td><\/td><td><\/td><\/tr><tr><td> \u2014 b) Single Stage Two Envelopes System (Two Bid System) (Rule 163 of GFR 2017)<\/em><\/td><td><\/td><td><\/td><td><\/td><td><\/td><\/tr><tr><td> \u2014 c) Single Stage Two Envelopes System with PRE-QUALIFICATION<\/td><td><\/td><td><\/td><td>[C ONLY]<\/td><td><\/td><\/tr><tr><td>2. Two Stage Bidding \u2014 Expression of Interest Tenders \u2014 Market Exploration\/ Short-listing (Rule 164 of GFR 2017)<\/em><\/td><td><\/td><td><\/td><td><\/td><td><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Cross-reference note: The WORKS, CONSULTANCY and NON-CONSULTANCY Manuals all state expressly: \"Details of these Bidding Systems are explained in CHAPTER 4 of the Manual for procurement of goods, 2024, which may be referred to. For the sake of brevity, these are not repeated here.\"<\/em><\/p>\nThe full text below is therefore drawn from the GOODS Manual and applies to all four categories.<\/p>\nC<\/span> adds: *For guidance on the preparation of the <\/strong>Request for Expression of Interest (REoI) document for the procurement of consultancy services, please refer to para 5.2 of the Consultancy Manual.*<\/p><\/aside>\n<h3>4.5.3<\/span>Single-Stage Tendering System<\/span><\/h3>\nIn single-stage tendering, bids are invited at a single stage of submission. The bids can be stipulated to be either in a single envelope or in multiple envelopes.<\/p>\n<h4>A. Single Stage Single Envelope System<\/span><\/h4>\n1. In a single-stage single-envelope system, eligibility, technical\/ commercial details, and financial details are submitted together in the same envelope.<\/p>\nEvaluation is in the sequence of evaluated responsive prices (from L1 onwards), and their technical\/ commercial compliance is checked.<\/p>\nThe lowest-priced bid that meets the eligibility\/ qualification criteria, technical and commercial conditions laid down in the tender documents is declared as successful.<\/p>\n2. Where suitable: This tendering system is SUITABLE where:<\/p>\n<ul class=\"lst\"><li>The technical requirement is simple or moderately complex;<\/li><li>The capability of the source of supply is not too crucial; And<\/li><li>the value of procurement is not too high.<\/li><\/ul>\nThis is the simplest and the quickest tendering system and should be the default system of tendering.<\/p>\n<h4>B. Single Stage Two Envelopes System (Two Bid System)<\/span><\/h4>\n(Rule 163 of GFR 2017)<\/em><\/p>\n1. When used: In technically complex requirements \u2014 but where the capability of the source of supply is still not critical, and the value of procurement is not high \u2014 a Single-stage two-envelopes system may be followed.<\/p>\n2. Composition of the two envelopes (off-line tenders): Bidders should be asked to bifurcate their quotations into two separately sealed envelopes:<\/p>\n<ul class=\"lst\"><li>The first envelope \u2014 called the techno-commercial bid \u2014 contains the eligibility, technical quality and performance aspects, commercial terms and conditions and documents sought in the tender, except the price and relevant financial details<\/em>.<\/li><li>The second envelope \u2014 called the financial bid \u2014 contains the price quotation along with other financial details.<\/li><li>Both the envelopes are to be submitted together in a sealed outer envelope.<\/li><li>In e-procurement, the bidder would be asked to upload two files, mutatis mutandis<\/em>.<\/li><\/ul>\n3. First opening: The techno-commercial bids are to be opened in the first instance on the pre-announced bid opening date and time, and scrutinised and evaluated by the TC with reference to parameters prescribed in the tender documents; And responsive, eligible, and technically compliant bidders are decided.<\/p>\n4. Second opening: Thereafter, the financial bids of ONLY<\/em> The techno-commercially compliant offers are to be opened on a pre-announced date and time for further scrutiny, evaluation, ranking and placement of the contract.<\/p>\n<ul class=\"lst\"><li>In e-procurement, financial bids of technically non-compliant offers would remain encrypted and unopened.<\/li><li>In off-line tenders, the financial bids of technically non-compliant bidders should be returned unopened to the respective bidders by registered acknowledgement due\/ reliable courier, or any other mode with proof of delivery.<\/li><\/ul>\n<h3>4.5.4<\/span>Two-Stage Bidding \u2014 Expression of Interest (EoI) Tenders \u2014 Market Exploration<\/span><\/h3>\n(Rule 164 of GFR 2017)<\/em><\/p>\n1. The problem it solves: In the case of green-field\/ blue-sky projects, where the equipment\/ plant to be procured is COMPLEX, the procuring organisation May not possess the full knowledge of either the various technical solutions available or the likely sources for such products in the market.<\/p>\nTo meet the desired objectives of a transparent procurement that ensures value for money and simultaneously ensures the upgradation of technology & CAPACITY BUILDING, it would be prudent to invite an Expression of Interest (EoI) bids as a first stage of the two-stage tendering system \u2014 to explore the market and finalise specifications based on technical discussions\/ presentations with the experienced manufacturers\/ suppliers in a transparent manner.<\/p>\n<aside class=\"note\">In less complex cases, a market consultation through a pre-nit conference May suffice instead of two-stage tendering.<\/p><\/aside>\n2. The four situations in which EoI bids May be invited: A) it is not feasible for the Procuring Entity to formulate detailed specifications or identify specific characteristics for the subject matter of procurement without receiving inputs regarding its technical aspects from bidders; B) the character of the subject matter of procurement is subject to rapid technological advances, market fluctuations, or both; C) the Procuring Entity seeks to enter into a contract for research, experiment, study, or development \u2014 except where the contract includes the production of requirements in quantities sufficient to establish their commercial viability or to recover research and development costs; Or d) the bidder is expected to carry out a detailed survey or investigation and undertake a comprehensive assessment of risks, costs and obligations associated with the particular procurement.<\/p>\n<h4>A. The Procedure of Two-Stage Bidding<\/span><\/h4>\n1. First stage: The Procuring Entity shall invite EoI bids containing the broad objectives, technical and financial qualification criteria, terms and conditions of the proposed procurement, etc. \u2014 without a bid price<\/em>.<\/p>\nOn receipt of the Expressions of Interest, manufacturers\/ suppliers which are prima facie<\/em> Considered technically and financially capable of supplying the material or executing the proposed work shall be shortlisted.<\/p>\n2. Technical discussions: Thereafter, technical discussions\/ presentations May be held with the short-listed manufacturers\/ suppliers \u2014 giving equal opportunity to all such bidders to participate in the discussions.<\/p>\nDuring these technical discussions, the procurement agency May also add other stakeholders who could add value to the decision-making on the various technical aspects and evaluation criteria.<\/p>\nA proper record of discussions\/ presentations and the process of decision-making should be kept.<\/p>\n3. Framing specifications: Based on the discussions\/ presentations so held, one or more acceptable technical solutions could be decided upon \u2014 by laying down detailed technical specifications for each acceptable technical solution, quality benchmarks, warranty requirements, delivery milestones, etc. \u2014 in a manner consistent with the objectives of transparent procurement.<\/p>\nAt the same time, care should be taken to make the specifications generic in nature, to provide equitable opportunities to the prospective bidders.<\/p>\n4. The limit on revision:<\/strong> In revising the relevant terms and conditions of the procurement, if found necessary because of discussions with the shortlisted bidders, the Procuring Entity shall not modify the fundamental nature<\/em> Of the procurement itself.<\/strong><\/p>\n5. Second stage: The Procuring Entity shall invite only those bidders whose bids at the first stage were not rejected, to participate in a two-envelope tendering in response to a revised set of terms and conditions of the procurement.<\/p>\n6. Right of withdrawal without penalty: Any bidder invited to bid but not in a position to supply the subject matter of procurement due to modification in the specifications or terms and conditions May withdraw from the tendering proceedings without forfeiting any Bid Security<\/em> That he May have been required to provide, or being penalised in any way \u2014 by declaring his intention to withdraw from the procurement proceedings with adequate justification.<\/p>\n7. 'Non-committal' EoI: If the Procuring Entity is of the view that after the EoI stage there is a likelihood of further participation by many more bidders \u2014 and to avoid getting trapped into a legacy technology \u2014 the second-stage tendering May not be restricted only to the shortlisted bidders of the EoI stage, and it May be so declared in the EoI document ab initio<\/em>.<\/p>\nThereafter, in the second stage, normal OTE\/ GTE tendering May be performed. Such a variant of EoI is called a 'non-committal' EoI.<\/p>\nInstances of 'non-committal EoI' should be rare, since it May de-incentivise the participants from giving a diligent\/ sincere EoI. There should not be any bid-security requirement in such non-committal EoI.<\/p>\n<h4>B. Invitation of EoI Tenders<\/span><\/h4>\nIn EoI tenders, an advertisement inviting Expression of Interest should be published. The invitation to the EoI document should contain: a) a copy of the advertisement; b) objectives and scope of the requirement \u2014 a brief description of objectives and the broad scope of the requirement; it may also include the validity period of empanelment; c) instructions to the bidders \u2014 including the nature of supply, fees for empanelment (if EoI is for empanelment), last date of submission, place of submission and any other related instructions; d) formats for submission \u2014 the format in which the bidders are expected to submit their EoI; e) QUALIFICATION CRITERIA \u2014 the invitation to EoI should clearly lay down the qualification criteria that should be applied for shortlisting. The required supporting documents need to be clearly mentioned.<\/p>\n<h4>C. Evaluation of EoI<\/span><\/h4>\nThe bidders should be evaluated for shortlisting \u2014 inter alia<\/em> \u2014 based on their past experience of performance in a similar context, financial strength, and technical capabilities, among others.<\/p>\nEach bidder should be assigned scores based on the sum of marks obtained for each parameter multiplied by the weightage assigned to that parameter.<\/p>\nAll bidders who secure the minimum required marks (normally 60 (sixty) per cent) should be shortlisted. The minimum qualifying marks should be specified in the EoI document.<\/p>\nALTERNATIVELY, instead of weighted evaluation, the EoI document May specify a 'FAIL-PASS CRITERIA' with the minimum qualifying requirement for each of the criteria \u2014 such as minimum years of experience, minimum number of assignments executed and minimum turnover. Under such circumstances, all bidders who meet the minimum requirement as specified should be shortlisted.<\/p>\nThe shortlist should normally comprise at least four firms.<\/p>\n<aside class=\"note\">(Contrast C<\/span> at para 4.4.1-3 above, where the consultancy shortlist is not fewer than three and not more than eight<\/strong>.)<\/em><\/p><\/aside>\nAn example of EoI Qualification criteria G<\/span>:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Criteria<\/th><th>Sub-criteria<\/th><th>Weightage*<\/th><th>Break-up of Weightage<\/th><\/tr><\/thead><tbody><tr><td>Past experience of the firm with similar requirements<\/td><td><\/td><td>A\\*<\/td><td><\/td><\/tr><tr><td>Financial strength of the vendor<\/td><td><\/td><td>B\\*<\/td><td><\/td><\/tr><tr><td><\/td><td>Turnover figures for the last three years<\/td><td><\/td><td>B1\\*<\/td><\/tr><tr><td><\/td><td>Net profit figures for the last three years<\/td><td><\/td><td>B2\\*<\/td><\/tr><tr><td>Quality accreditations, licensing requirements<\/td><td><\/td><td>C\\*<\/td><td><\/td><\/tr><tr><td>Manufacturing capabilities\/ tie-ups<\/td><td><\/td><td>D\\*<\/td><td><\/td><\/tr><tr><td>After-sales support infrastructure<\/td><td><\/td><td>E\\*<\/td><td><\/td><\/tr><tr><td>Product support<\/td><td><\/td><td>F\\*<\/td><td><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">\\* weightage (out of 100) should be pre-decided and declared in EoI documents by the ca, based on an assessment of the required profiles of the potential bidders. The marking\/ grading scheme for allotting marks (out of 100) for various parameters should also be laid down.<\/p><\/aside>\n<h2>4.6<\/span>Channels of Procurement<\/span><\/h2>\nPublic Procurement can be performed\/ channelled by way of:<\/p>\n<aside class=\"note\">Manual bids \u00b7 e-procurement platforms \u00b7 GeM portal \u00b7 or through third-party agencies.<\/p>\nPlacement note: Electronic Reverse Auction (eRA) appears under CHANNELS in the Works (3.5.2) and Non-Consultancy (4.6.2) Manuals, but under modes of procurement in the Goods Manual (4.5). It is absent from the Consultancy Manual. eRA is covered in PART B of this chapter with the modes of procurement.<\/p><\/aside>\n<h3>4.6.1<\/span>Electronic Procurement (e-Procurement)<\/span><\/h3>\n(Rule 160 of GFR 2017)<\/em><\/p>\n1. What it is: Electronic procurement (e-procurement) is the use of information and communication technology (especially the internet) by the buyer (through a third-party e-procurement portal) in conducting procurement processes with the vendors\/ contractors for the acquisition of goods (supplies), works and services \u2014 aimed at open, non-discriminatory, and efficient procurement through transparent procedures.<\/p>\n<aside class=\"note\">A generic description of how e-Procurement is conducted is detailed in 'Appendix 3: Electronic Procurement (e-Procurement) and e-Auction' of the Manual for Procurement of Goods, 2024.<\/em><\/p><\/aside>\n2. The mandate \u2014 and its two exceptions: It is mandatory for ministries\/ departments to receive all bids through e-procurement portals that are gcqe compliant<\/em>, for all procurements.<\/p>\nThis condition will NOT<\/em> Be applicable for:<\/p>\n<ul class=\"lst\"><li>the procurement made without QUOTATION (under RULE 154 of GFR, 2017); or<\/li><li>through PURCHASE COMMITTEE (under RULE 155 of GFR, 2017).<\/li><\/ul>\n<aside class=\"note\">GCQE = Guidelines for Compliance to Quality Requirements of eProcurement, JULY 2021, issued by the Standardisation Testing and Quality Certification (STQC) Directorate \u2014 an attached office of MeitY.<\/p><\/aside>\n3. No mixing of Manual and electronic bids: Normally, in e-procurement, no physical\/ off-line tender documents are provided, nor are any Manual bids accepted. It is not a good practice to call both electronic and Manual bids in the same tender.<\/p>\n4. Exemption \u2014 Global Tender Enquiry: In Global Tender Enquiry (by any mode \u2014 open tender, limited tender or single tender), e-procurement May not be mandatorily insisted upon. However, e-publishing would still be mandatory.<\/p>\n5. Exemption \u2014 national security and missions abroad: In individual cases where national security and strategic considerations demand confidentiality, ministries\/ departments May exempt such cases from e-procurement \u2014 after seeking the approval of the concerned Secretary and with the concurrence of financial advisers.<\/p>\nIn case of tenders floated by Indian missions and CPSE units abroad, the Competent Authority for deciding the tender May exempt such cases from e-procurement.<\/p>\n6. The portals: Note the different names used by the four Manuals for the NIC portal:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-G\" data-src=\" G \">G<\/span>\"The National Informatics Centre (NIC) has an e-Procurement portal called Government e-procurement of NIC (gepnic)<\/strong>.\"<\/em><\/li><li class=\"srcmark src-C\" data-src=\" C \">C<\/span>\"National Informatics Centre (NIC) has an eProcurement portal called the Central Public Procurement Portal (CPPP)<\/strong>.\"<\/em><\/li><\/ul>\nThere are other service providers in the public sector (e.g., MSTC) and private sector that can be utilised for e-PROCUREMENT. Details about the process of e-procurement are available from the service providers.<\/p>\n7. Which portal a Ministry should use: Ministries\/ departments that do not have a large volume of procurement, or carry out procurements required only for the day-to-day running of offices, and have not initiated e-procurement through any other solution so far \u2014 May use the e-procurement solution developed by NIC.<\/p>\nOther ministries\/ departments May either use the e-procurement solution developed by NIC, or engage any other service provider \u2014 G<\/span> adds: (Gcqe compliant)<\/em> \u2014 following due process.<\/p>\n8. These instructions will not apply to procurements made by ministries\/ departments through Government E-marketplace (GeM).<\/p>\n<h3>4.6.2<\/span>Mandatory Procurement of Goods and Services through GeM<\/span><\/h3>\n(Rule 149 of GFR 2017)<\/em><\/p>\n1. What an online marketplace is: An online marketplace (or e-commerce marketplace) is a type of e-commerce site where several sellers offer products or services, and all the buyers can select the product\/ services offered by any one of the sellers based on his own criteria.<\/p>\nIn an online marketplace, the purchaser's transactions are processed by the marketplace operator, and then products\/ services are delivered and fulfilled directly by the participating retailers. Other capabilities might include auctioning (forward or reverse), catalogues, ordering, posting requirements by purchasers, payment gateways, etc.<\/p>\nIn general, because online marketplaces aggregate products from a wide array of providers, selection is usually wider, availability is higher, and prices are more competitive than in vendor-specific online retail stores.<\/p>\n2. The mandate: The Government of India has established the Government E-marketplace (GeM) for common-use goods and services. The procurement process on GeM is end-to-end \u2014 from placement of contract orders to payment to suppliers. This is to ensure better transparency and higher efficiency. All the processes will be electronic and online.<\/p>\nThe procurement of goods and services through the GeM portal by ministries\/ departments (including attached\/ subordinate offices), CPSEs, and autonomous bodies is mandatory<\/em> for goods or services available therein, as per Rule 149 of GFR, 2017.<\/p>\n3. Supplier registration: Products and services are listed on GeM by various suppliers, as on other e-commerce portals. Supplier registration on geM is online and automatic, based on:<\/p>\n<aside class=\"note\">PAN Card \u00b7 Aadhaar Card \u00b7 GST Certification \u00b7 Bank Account and Financial Information \u00b7 Corporate Registration Documents (Udyam registration for MSEs) \u00b7 VAT or TIN Number \u00b7 Proof of Address \u00b7 Contact Details, etc.<\/p><\/aside>\n4. Demand aggregation: The best prices for a user can be available if the same requirements and demands of various organisations are aggregated. This Acts as an incentive for the supplier to quote their best price. For the same products, the demand of various Government departments can be clubbed together, and Reverse Auction can be done based on aggregate demand, which will provide the best prices to the Government.<\/p>\n5. The GeM monetary thresholds \u2014 Rule 149 of GFR, 2017:<\/p>\n<aside class=\"note\">\"Government e-Market Place (GeM): GeM SPV (Special Purpose Vehicle) will ensure adequate publicity, including periodic advertisement of the items to be procured through GeM for the prospective suppliers. Suppliers' credentials on GeM shall be certified by GeM SPV. The GeM portal shall be utilised by the Government buyers for direct online purchases as follows:<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>Value<\/th><th>Procedure<\/th><\/tr><\/thead><tbody><tr><td>a) UP TO Rs. 50,000\/-<\/td><td>through any of the available suppliers on the GeM, meeting the requisite quality, specification, and delivery period. Note 1: In the case of automobiles, direct procurement under this sub-para is permitted without any ceiling limit<\/em>. Note 2: In case the item is available on GeM, it is not permitted<\/em> To purchase the same under Rule 154 of the GFR, 2017.<\/td><\/tr><tr><td>B) above Rs. 50,000\/- and up to Rs. 10,00,000\/-<\/td><td>through the GeM seller having the lowest price amongst the available sellers, of at least three different manufacturers<\/em>, ON GeM \u2014 meeting the requisite quality, specification, and delivery period. The tools for online bidding and online Reverse Auction available on GeM can be used by the buyer even for procurements less than Rs. 10,00,000\/-. Note 1: In case the item is available on GeM, it is not permitted<\/em> To purchase the same under Rule 155 of the GFR, 2017.<\/td><\/tr><tr><td>c) above Rs. 10,00,000\/-<\/td><td>through the supplier having the lowest price meeting the requisite quality, specification, and delivery period \u2014 after mandatorily<\/em> Obtaining bids, using online bidding or Reverse Auction tool provided on GeM.<\/td><\/tr><\/tbody><\/table><\/div>\nD) the invitation for the online e-bidding\/ Reverse Auction will be available to all the existing sellers or other sellers registered on the portal who have offered their goods\/ services under the particular product\/ service category, as per the terms and conditions of GeM.<\/p>\nE) the above-mentioned monetary ceiling is applicable ONLY<\/em> for purchases made through GeM. For purchases, if any, outside GeM, relevant GFR Rules shall apply.<\/p>\nF) the ministries\/ departments shall work out their procurement requirements of goods and services on either \"opex\" model or \"capex\" model as per their requirement\/ suitability at the time of preparation of budget estimates (be), and shall project their annual procurement plan of goods and services on GeM portal within 30 (thirty) days of budget approval.<\/p>\ng) it is the responsibility of the Procuring Entity to do due diligence to ensure the reasonableness of rates. The government buyers may ascertain the reasonableness of prices before placing an order using the BUSINESS ANALYTICS (ba) tools available on geM \u2014 including the last purchase price on geM, the department's own last purchase price, etc.<\/p>\nH) demand for goods shall not be divided into small quantities to make piecemeal purchases, to avoid procurement through L-1 buying\/ bidding\/ Reverse Auction on GeM, or the necessity of obtaining the sanction of higher authorities required with reference to the estimated value of the total demand.\"<\/p>\n6. GeM Portal: https:\/\/gem.gov.in \u2014 Detailed instructions for user organisation registration, supplier registration, listing of products, terms and conditions, online bidding, Reverse Auction, demand aggregation, call centre, etc., are available on this portal.<\/p>\n7. Uploading of non-availability report \u2014 gemar&pts: It is mandatory for a buyer to generate a \"GeM availability report and past transaction summary\" (gemar&pts) with a unique id on the GeM portal using his login credentials, for procurement outside<\/em> GeM (for example, for procurement through the Central Public Procurement Portal)<\/em>(Notified vide OM No. F.6.18.2019-PPD dated 11th June 2021)<\/em>.<\/p>\nThe past transaction summary will be provided, where available.<\/p>\n\"Gemar&pts\" shall be a pre-requisite for arriving at a decision by the Competent Authority for procurement of required goods and services by floating a bid outside GeM, and its unique id would be required to be furnished on the publishing portal along with the tender proposed to be published.<\/p>\n8. Interaction with Rules 154 and 155:<\/p>\n<ul class=\"lst\"><li>Purchase of goods without quotation<\/em> Can be resorted to for value up to Rs. 50,000\/- only on each occasion \u2014 without inviting quotations or bids \u2014 based on a certificate to be recorded by the Competent Authority, only when the required goods are not available on GeM<\/em>.<\/li><li>In case a certain item is not available on the GeM portal, purchase of goods costing above Rs. 50,000\/- and up to Rs. 5,00,000\/- on each occasion May be made on the recommendations of a duly constituted local Purchase Committee<\/em>.<\/li><\/ul>\n9. Buying outside GeM when the item is on GeM: Where an item is available on GeM, and the Ministry\/ Department\/ organisation wants to buy outside the GeM in view of any compelling circumstances, the approval of the standing committee of GeM (SCoGeM)<\/em> And the Secretary concerned<\/em> Shall be required (OM No. F.6\/15\/2018-PPD dated 05.02.2020)<\/em>.<\/p>\n10. Receipt of Materials and Payment Procedures:<\/strong> Further details are given in Annexure 36<\/strong> of the Goods Manual.<\/p>\n11. Push Button Procurement (PBP) on GeM<\/strong>(Notified vide OM No. F.6\/7\/2022-PPD dated 06.09.2022)<\/em>:<\/p>\na) The rationale: As per Rule 144(vii) and Rule 149 of GFR, 2017, the procuring entity should satisfy itself that the price of the selected offer is reasonable. SOMETIMES \u2014 ESPECIALLY INFREQUENTLY \u2014 Government buyers find it difficult to certify the reasonableness of rates. Such users normally do not possess the requisite skills to make procurement decisions. It delays the procurement process.<\/p>\nAt the same time, for typically low-value procurements, efforts expended in assessing the reasonability of rates May be disproportionate. Additionally, with developments in technology and e-procurement becoming the norm, the availability of market activities and the capability to analyse them artificially have provided an opportunity to automate decision-making activities, such as the assessment of the reasonability of rates in such cases.<\/p>\nb) The seven conditions of PBP:<\/p>\n<ul class=\"lst\"><li>I) PBP will be made only on GeM through bidding<\/em> \u2014 PBP through direct purchase, L-1, custom-bid, etc., are not permitted<\/em>.<\/li><li>ii) the total procurement value of the specific case is permitted up to rupees five (5) lakh, inclusive of all taxes.<\/li><li>iii) this will be an additional<\/em> Method of procurement, and procuring entities are free to use or not to use this additional method.<\/li><li>iv) this method can be used only if at least five bids<\/em> Are received. In case fewer than five bids are received, the procurement is to restart using the usual procurement modes. However, buyers will have a choice to extend the PBP date once by three (3) days<\/em> At the time of preparation of the tender document, in case of lesser participation.<\/li><li>V) no splitting of requirements is to be done to bring procurement under this method.<\/li><li>vi) once a bid is invited on GeM, the contract will be placed directly by GeM without any human intervention<\/em> [provided condition (iv) above is complied with].<\/li><li>vii) GeM will permit this method only for such categories where at least ten sources<\/em> Are listed.<\/li><\/ul>\nc) GeM has published a Manual on PBP for buyers on its website.<\/p>\n<h3>4.6.3<\/span>Procurement through Centralised Agencies or other Organisations<\/span><\/h3>\nDepartments\/ Organisations that have not built up their own capability for procurement May engage procurement agents \u2014 for individual procurement or as outsourcing of service \u2014 with the approval of the Competent Authority.<\/p>\nMany canalised agencies authorised by the Government, and some CPSEs, provide end-to-end procurement services \u2014 i.e., framing procurement documents, bidding process, evaluation, and contract management.<\/p>\nPossibilities of other ministries\/ departments or their attached and subsidiary offices undertaking such procurement may also be explored.<\/p>\n<h1>Appendix to Chapter 4 \u2014 Part a: Points of Difference<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Chapter number<\/td><td>G\/C\/NC: Chapter 4 \u00b7 W: CHAPTER 3<\/td><\/tr><tr><td>2<\/td><td>Chapter title<\/td><td>G:<\/strong>Modes of Procurement and Tendering Systems<\/em> \u00b7 W\/C\/NC:<\/strong>Bidding Design for \u2026<\/em><\/td><\/tr><tr><td>3<\/td><td>Agency for Procurement (PWO \/ PSU \/ MoHUA notification \/ Works Committee \/ Sample MoU)<\/td><td>W ONLY<\/td><\/tr><tr><td>4<\/td><td>Rs 60 lakh direct-execution ceiling for repair works<\/td><td>W ONLY<\/td><\/tr><tr><td>5<\/td><td>Award to a PSU treated as project management consultancy; competition on lump sum service charges<\/td><td>W ONLY<\/td><\/tr><tr><td>6<\/td><td>Admeasurement of Services \u2014 input vs output<\/td><td>nc only<\/td><\/tr><tr><td>7<\/td><td>\"Types of Contracts\" section<\/td><td>absent from goods entirely<\/strong>; W has 7, C has 5, NC has 4<\/td><\/tr><tr><td>8<\/td><td>Item Rate, Percentage Rate, Piece Work, EPC, PPP<\/td><td>W ONLY<\/td><\/tr><tr><td>9<\/td><td>BOQ variation bands (\u00b110\u201315% allowed; \u00b125\u201330% needs CA sanction)<\/td><td>W ONLY<\/td><\/tr><tr><td>10<\/td><td>EPC 10% change-of-scope ceiling; LD capped at 10%; bonus \u226410%; 2-year defects liability; 30-day grace period; sub-contracting \u226450%<\/td><td>W ONLY<\/td><\/tr><tr><td>11<\/td><td>EPC technical capacity thresholds (60% one project \/ 40% two \/ 30% three); net worth 15%<\/td><td>W ONLY<\/td><\/tr><tr><td>12<\/td><td>Right of the EPC contractor to MATCH the first-ranked bid on payment of ~2%<\/td><td>W ONLY<\/td><\/tr><tr><td>13<\/td><td>Retainer-ship cum Success (Contingency) Fee Contract<\/td><td>C ONLY<\/td><\/tr><tr><td>14<\/td><td>\"Risk of over-utilisation\" as a fourth risk row in Indefinite Delivery contracts<\/td><td>C ONLY<\/td><\/tr><tr><td>15<\/td><td>Consultancy staff \"normally NAMED\" in Time-Based contracts<\/td><td>C ONLY<\/td><\/tr><tr><td>16<\/td><td>Percentage contract discouraged for architectural services unless on fixed target cost<\/td><td>C<\/strong> (NC carries the type but not this caution in the same terms)<\/td><\/tr><tr><td>17<\/td><td>\"Systems of Selection\" section<\/td><td>absent from goods entirely<\/td><\/tr><tr><td>18<\/td><td>QCBS weightage \u2014 inverted<\/td><td>C: Technical 70% \/ Cost 30%, technical never more than 80% \u00b7 W & NC: Cost 80% \/ Technical 20%, non-financial never EXCEEDING 30%<\/td><\/tr><tr><td>19<\/td><td>QCBS suggestive weighting table (80\/20 \u00b7 75-65\/25-35 \u00b7 60-50\/40-50)<\/td><td>C ONLY<\/td><\/tr><tr><td>20<\/td><td>Fixed Budget based Selection (FBS)<\/td><td>C ONLY<\/td><\/tr><tr><td>21<\/td><td>Quality Oriented Procurement (QOP) declaration framework<\/td><td>w + nc only<\/td><\/tr><tr><td>22<\/td><td>Special Technical Committee (STC) \u2014 composition, appointment, mandate, binding force<\/td><td>w + nc only<\/td><\/tr><tr><td>23<\/td><td>IIT\/ IISc Director as Competent Authority for QOP, valid up to 31.03.2027<\/td><td>w + nc only<\/td><\/tr><tr><td>24<\/td><td>Rs 10 crore value route to QCBS for NC Services, and the \"crossing Rs 10 crore\" 10% rule<\/td><td>nc only<\/td><\/tr><tr><td>25<\/td><td>QCBS prohibited in two-STAGE BIDDING<\/td><td>W ONLY<\/strong> (NC prohibits only Reverse Auction and Limited Tenders)<\/td><\/tr><tr><td>26<\/td><td>Mandatory pre-bid meeting in all QOP cases; changes to criteria need STC recommendation<\/td><td>w + nc only<\/td><\/tr><tr><td>27<\/td><td>Consultancy shortlist: Not fewer than 3, not more than 8<\/td><td>C ONLY<\/td><\/tr><tr><td>28<\/td><td>EoI shortlist should normally comprise at least four firms; minimum 60% marks<\/td><td>G<\/strong> (applied by cross-reference to W\/C\/NC)<\/td><\/tr><tr><td>29<\/td><td>\"Single Stage Two Envelopes System with PRE-QUALIFICATION\" listed as a distinct tendering system<\/td><td>C ONLY<\/td><\/tr><tr><td>30<\/td><td>Full text of the tendering systems<\/td><td>G ONLY<\/strong> \u2014 W, C and NC all expressly cross-refer to Goods Ch. 4 \"for the sake of brevity\"<\/td><\/tr><tr><td>31<\/td><td>NIC portal named<\/td><td>g: Gepnic \u00b7 c: CPPP<\/td><\/tr><tr><td>32<\/td><td>eRA placed under CHANNELS<\/td><td>W (3.5.2) + NC (4.6.2) \u00b7 G places it under MODES (4.5) \u00b7 absent from c<\/td><\/tr><tr><td>33<\/td><td>GeM monetary thresholds, GeMAR&PTS, SCoGeM approval, Push Button Procurement<\/td><td>G ONLY<\/strong> in full (C\/NC reproduce parts; W does not)<\/td><\/tr><tr><td>34<\/td><td>Automobiles exempt from the Rs 50,000 direct-purchase ceiling on GeM<\/td><td>G ONLY<\/td><\/tr><tr><td>35<\/td><td>PBP conditions \u2014 Rs 5 lakh cap, at least 5 bids, one 3-day extension, at least 10 listed sources, no human intervention<\/td><td>G ONLY<\/td><\/tr><tr><td>36<\/td><td>Nomination awards reported QUARTERLY; audit committee to check AT least 10% of such cases<\/td><td>W + C + NC<\/strong> (common)<\/td><\/tr><tr><td>37<\/td><td>\"Justification must be provided if a selection method other than LCS is used\"<\/td><td>W<\/strong> (states it as an express default rule)<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 4 \u2014 part a<\/p>\n<aside class=\"note\">Next:<\/strong>Chapter 4 \u2014 part b: Modes of procurement<\/strong> \u2014 Open Tender Enquiry \u00b7 Global Tender Enquiry and the Rs 200 crore restriction \u00b7 Rate Contract\/ Framework Agreement \u00b7 Electronic Reverse Auction \u00b7 Pre-qualification Bidding \u00b7 Approved Vendor List \u00b7 Limited Tender Enquiry \u00b7 Special Limited Tender Enquiry (Rs 50 lakh in Goods vs Rs 10 lakh in Works)<\/strong> \u00b7 Proprietary Article Certificate \u00b7 Single Tender Enquiry\/ Selection by Nomination \u00b7 Direct Procurement without Quotation \u00b7 Direct Procurement by Purchase Committee \u00b7 Award of Work through Quotations \u00b7 Award of works in stalled contracts.<\/p><\/aside>Part II<\/span>Modes of Procurement<\/em><\/p>\nMerging: Goods Ch. 4<\/strong> paras 4.1\u20134.13 \u00b7 Works Ch. 3<\/strong> paras 3.6\u20133.14 \u00b7 Consultancy Ch. 4<\/strong> para 4.3 \u00b7 Non-Consultancy Ch. 4<\/strong> para 4.4<\/em><\/p><h2>The Most Important Caution in this Chapter<\/span><\/h2>\n<aside class=\"note\">the works, consultancy and non-consultancy Manuals all carry the following sentence, word for word:<\/p>\n\"Applicability, Terms and Conditions, Risks, and mitigations of these modes of procurement (including restrictions regarding GTE mode for procurements below Rs 200 Crore) are detailed in CHAPTER 4 of the Manual for procurement of goods, 2024, which may be referred to. For the sake of brevity, these are not repeated here.\"<\/em><\/p>\nConsequently, the detailed text of every mode of procurement below is drawn from the GOODS Manual and applies mutatis mutandis<\/em> to Works, Consultancy and Non-Consultancy \u2014 except where the Works Manual has chosen to reproduce and vary the text (OTE, GTE, PQB, LTE, SLTE, STE), and except for the two modes that exist only in the Works Manual (Award of Work through Quotations; Award of works in stalled contracts).<\/p>\nA student who reads only the Works\/ CS\/ NC Manuals will not find the text of Rate Contract, AVL, PAC, eRA, Direct Procurement or the GTE exemptions at all. It is reproduced here in full so that this Unified Manual is self-sufficient.<\/p><\/aside>\n<h2>The Threshold Divergence Table \u2014 the Single Most Examinable Page in this Chapter<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr class=\"srcmark src-multi\" data-src=\" G W C NC \"><th>Threshold<\/th><th>G<\/span> GOODS<\/th><th>W<\/span> WORKS<\/th><th>C<\/span> CONSULTANCY<\/th><th>NC<\/span> NON-CONSULTANCY<\/th><\/tr><\/thead><tbody><tr><td>OTE (Open Tender Enquiry) applies above<\/td><td>Rs. 50 lakh<\/td><td>Rs. 10 lakh<\/td><td>Rs. 50 lakh<\/td><td>Rs. 50 lakh<\/td><\/tr><tr><td>LTE (Limited Tender Enquiry) is the default up to<\/td><td>Rs. 5 lakh to Rs. 50 lakh<\/td><td>up to Rs. 10 lakh<\/td><td>up to Rs. 50 lakh<\/td><td>up to Rs. 50 lakh<\/td><\/tr><tr><td>SLTE (Special LTE) applies for procurements more THAN<\/td><td>Rs. 50 LAKH<\/td><td>Rs. 10 LAKH<\/td><td>Rs. 50 lakh<\/td><td>Rs. 50 lakh<\/td><\/tr><tr><td>Rule cited for the LTE\/SLTE threshold<\/td><td>Rule 162<\/td><td>Rule 139(v) AND Rule 162<\/td><td>Rule 162<\/td><td>Rule 162<\/td><\/tr><tr><td>GTE restriction<\/td><td>No GTE up to Rs. 200 crore<\/td><td>Same \u2014 Rs. 200 crore<\/td><td>Same<\/td><td>Same<\/td><\/tr><tr><td>Direct Procurement without Quotation<\/td><td>up to Rs. 50,000<\/strong>(Rs. 1,00,000 for Scientific Ministries)<\/em><\/td><td>(subsumed in \"Award of Work through Quotations\")<\/em><\/td><td>up to Rs. 50,000<\/td><td>up to Rs. 50,000<\/td><\/tr><tr><td>Direct Procurement by Purchase Committee<\/td><td>above Rs. 50,000 and up to Rs. 5,00,000<\/strong>(up to Rs. 10 lakh for Scientific Ministries)<\/em><\/td><td>(not carried)<\/em><\/td><td>up to Rs. 5 lakh<\/td><td>up to Rs. 5 lakh<\/td><\/tr><tr><td>Award of Work through Quotations<\/td><td>(not carried)<\/em><\/td><td>up to Rs. 5 lakh \u2014 works only<\/td><td>(not carried)<\/em><\/td><td>(not carried)<\/em><\/td><\/tr><tr><td>Rate Contract viability threshold<\/td><td>aggregate requirement more than Rs. 50 lakh p.a.<\/td><td>(cross-refers)<\/em><\/td><td>(cross-refers)<\/em><\/td><td>(cross-refers)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Footnote common to all four Manuals: \"Various thresholds for these Modes of procurements have been REVISED UPWARDS vide PPD's OM No. F.1\/3\/2014-PPD dated 10.07.2024.\"<\/em><\/p><\/aside>\n<h2>Concordance for Chapter 4 \u2014 Part B<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Mode<\/th><th>Goods<\/th><th>Works<\/th><th>CS<\/th><th>NCS<\/th><\/tr><\/thead><tbody><tr><td>4.7<\/td><td>Modes of Procurement \u2014 the taxonomy<\/td><td>4.1<\/td><td>3.6<\/td><td>4.3<\/td><td>4.4<\/td><\/tr><tr><td>4.8<\/td><td>Open Tender Enquiry (OTE)<\/td><td>4.2<\/td><td>3.7<\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><\/tr><tr><td>4.9<\/td><td>Global Tender Enquiry (GTE) + Rs 200 crore restriction<\/td><td>4.3<\/td><td>3.8<\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><\/tr><tr><td>4.10<\/td><td>Rate Contract (RC)\/ Framework Agreement (FA)<\/td><td>4.4<\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><\/tr><tr><td>4.11<\/td><td>Electronic Reverse Auction (eRA)<\/td><td>4.5<\/td><td>3.5.2 (under Channels)<\/em><\/td><td>absent<\/td><td>4.4-3-a)-iii + 4.6.2<\/td><\/tr><tr><td>4.12<\/td><td>Pre-qualification Modes \u2014 PQB<\/td><td>4.6<\/td><td>3.9<\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><\/tr><tr><td>4.13<\/td><td>Approved Vendor List (AVL)<\/td><td>4.7<\/td><td>(cross-ref only)<\/em><\/td><td>(cross-ref only)<\/em><\/td><td>(cross-ref only)<\/em><\/td><\/tr><tr><td>4.14<\/td><td>Limited Tender Enquiry (LTE)<\/td><td>4.8<\/td><td>3.10<\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><\/tr><tr><td>4.15<\/td><td>Special Limited Tender Enquiry (SLTE)<\/td><td>4.9<\/td><td>3.11<\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><\/tr><tr><td>4.16<\/td><td>Proprietary Article Certificate (PAC)<\/td><td>4.10<\/td><td>absent<\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><\/tr><tr><td>4.17<\/td><td>Single Tender Enquiry (STE)\/ Selection by Nomination<\/td><td>4.11<\/td><td>3.12<\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><\/tr><tr><td>4.18<\/td><td>Direct Procurement without Quotation<\/td><td>4.12<\/td><td><\/td><td>(listed only)<\/em><\/td><td>4.4-7<\/td><\/tr><tr><td>4.19<\/td><td>Direct Procurement by Purchase Committee<\/td><td>4.13<\/td><td><\/td><td>(listed only)<\/em><\/td><td>4.4-7<\/td><\/tr><tr><td>4.20<\/td><td>Award of Work through Quotations<\/td><td><\/td><td>3.13<\/td><td><\/td><td><\/td><\/tr><tr><td>4.21<\/td><td>Award of works in stalled contracts<\/td><td><\/td><td>3.14<\/td><td><\/td><td><\/td><\/tr><tr><td>4.22<\/td><td>Mode selection by value \u2014 Non-Consultancy Services<\/td><td><\/td><td><\/td><td><\/td><td>4.4-5 to 4.4-7<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.7<\/span>Modes of Procurement \u2014 the Taxonomy<\/span><\/h2>\n1. The balance to be struck: Offers from prospective bidders in Public Procurement must be invited according to a procedure that achieves a balance between the need for the widest competition, on the one hand, and the complexity \u2014 G<\/span>NC<\/span> Add: Time, effort, and cost \u2014 of the procedure, on the other hand.<\/p>\nDifferent modes of procurement (W<\/span>, C<\/span>, NC<\/span> add: and tendering systems)<\/em> are used to suit various procurement circumstances to achieve this balance. Various modes of procurement vary the extent of competition (width and specificity of catchment area of bidders) to suit different procurement situations.<\/p>\nMode of procurement addresses the 'right source' of the 5Rs.<\/p>\n2. Delegation:<\/strong>There are laid-down delegations of powers to approve different modes of procurement to various competent authorities as shown in DFPR<\/strong>(G<\/span> Annexures 2 and 3 \u00b7 W<\/span>, C<\/span>, NC<\/span> Annexure 1)<\/em>. Each Procuring Entity May also publish its own Schedule of Procurement Powers (SoPP) delegating such powers within the entity<\/strong>(G<\/span> Annexure 4 \u00b7 W<\/span>, C<\/span>, NC<\/span> Annexure 2)<\/em>.<\/p>\n<h3>4.7.1<\/span>The Five (or Six) Families of Modes \u2014 Compared Across the Four Manuals<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr class=\"srcmark src-multi\" data-src=\" G W C NC \"><th>Family<\/th><th>G<\/span> GOODS<\/th><th>W<\/span> WORKS<\/th><th>C<\/span> CONSULTANCY<\/th><th>NC<\/span> NON-CONSULTANCY<\/th><\/tr><\/thead><tbody><tr><td>A) advertised modes<\/strong>(widest possible competition through wide publicity \u2014 Rule 161)<\/em><\/td><td>OTE \u00b7 GTE \u00b7 Rate Contracts<\/strong> \u00b7 eRA<\/strong><\/td><td>OTE \u00b7 GTE<\/td><td>OTE (above Rs 50 lakh)<\/em> \u00b7 GTE (restricted below Rs 200 cr)<\/em><\/td><td>OTE (above Rs 50 lakh)<\/em> \u00b7 GTE \u00b7 eRA<\/strong><\/td><\/tr><tr><td>b) pre-qualification modes<\/strong>(restricted to shortlisted pre-qualified bidders; shortlisting itself through wide publicity akin to advertised tenders)<\/em><\/td><td>PQB \u00b7 AVL<\/td><td>PQB \u00b7 AVL (cross-ref to Goods para 4.7)<\/em><\/td><td>PQB \u00b7 AVL (cross-ref)<\/em><\/td><td>PQB \u00b7 AVL (cross-ref)<\/em><\/td><\/tr><tr><td>c) restricted modes<\/strong>(restricted to known, selected bidders; shortlisting based on less rigorous checks of capability and past experience \u2014 Rule 162)<\/em><\/td><td>LTE (up to Rs 50 lakh<\/strong>)<\/em> \u00b7 SLTE (above Rs 50 lakh<\/strong>)<\/em><\/td><td>LTE (up to Rs 10 lakh<\/strong>)<\/em> \u00b7 SLTE (above Rs 10 lakh<\/strong>)<\/em><\/td><td>LTE (up to Rs 50 lakh)<\/em> \u00b7 SLTE (above Rs 50 lakh)<\/em><\/td><td>LTE (up to Rs 50 lakh)<\/em> \u00b7 SLTE (above Rs 50 lakh)<\/em><\/td><\/tr><tr><td>d) nomination modes<\/strong>(from a single source in special circumstances \u2014 Rule 166)<\/em><\/td><td>PAC<\/strong> \u00b7 STE without PAC<\/td><td>STE or Selection by Nomination only \u2014 NO PAC<\/td><td>PAC \u00b7 STE without PAC<\/td><td>PAC \u00b7 STE without PAC (NC cites RULE 204 GFR, not Rule 166)<\/em><\/td><\/tr><tr><td>e) shopping modes<\/strong>(without tendering or calling for formal bids, for small-value procurements \u2014 Rules 154, 155)<\/em><\/td><td>Direct Procurement without Quotation \u00b7 Direct Procurement by Purchase Committee<\/td><td>\"Award of Work through Quotations\/ Shopping Modes\" \u2014 Procurement of Works through Quotations<\/td><td>Direct Procurement without Quotation \u00b7 by Purchase Committee<\/td><td>Direct Procurement without Quotation \u00b7 by Purchase Committee<\/td><\/tr><tr><td>f) framework agreements\/ rate contracts<\/strong>(listed as a SEPARATE family)<\/em><\/td><td>(RC is under Advertised Modes)<\/em><\/td><td>listed separately as family (f)<\/td><td>listed separately as family (f)<\/td><td>listed separately as family (f)<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">note the three structural differences:<\/p>\n<ol class=\"lst\"><li>Goods<\/strong> places Rate Contract and eRA inside the ADVERTISED family<\/strong>; Works, CS and NC<\/strong> create a separate sixth family<\/strong> called Framework Agreements\/ Rate Contracts<\/em> and do not list eRA as an advertised mode (NC lists eRA as advertised mode (a)(iii))<\/em>.<\/li><li>Works has NO Proprietary Article Certificate (PAC) mode at all<\/strong> \u2014 its nomination family contains only STE or Selection by Nomination<\/em>.<\/li><li>NC cites Rule 204 of GFR for its Nomination mode with an additional sentence not found elsewhere: \"If, in an exceptional situation, it becomes necessary to procure a non-consulting service from a specifically chosen contractor, the Competent Authority in the Ministry or Department May do so in consultation with the Financial Adviser. In such cases, detailed justification, the circumstances leading to the selection, and the special interest or purpose served by this procurement must form an integral part of the proposal.\"<\/em><\/li><\/ol><\/aside>\nW<\/span> additional footnote: *\"<\/strong>Please also refer to RULE 139 of GFR 2017 regarding the thresholds for modes of procurement pertaining to Works.\"*<\/p>\nW<\/span> descriptions of AVL and Framework Agreements:<\/p>\n<ul class=\"lst\"><li>AVL: \"Procurement is restricted to contractors who have been pre-approved and included on a long-term multi-use list based on their demonstrated ability to meet the required standards.\"<\/em><\/li><li>Framework Agreements: \"Also known as RATE CONTRACTS, are agreements with contractors to execute works at pre-agreed rates during a specified validity period.\"<\/em><\/li><\/ul>\n<h2>4.8<\/span>Open Tender Enquiry (OTE)<\/span><\/h2>\n(Rule 161 of GFR 2017)<\/em><\/p>\n1. What it is: In Open Tender Enquiry (OTE) \u2014 also known as national competitive bidding (ncb), or simply advertised tender enquiry, but this Manual would stick to OTE \u2014 an attempt is made to attract the widest possible competition by publishing the NIT simultaneously on the designated websites.<\/p>\nThis is the default mode of procurement and gives the best Value for Money, but the procedure is relatively complex and prolonged. The systemic cost of this procedure May be high enough to be unviable for smaller-value procurements.<\/p>\n2. When OTE procedures \u2014 through e-procurement or through traditional tendering \u2014 should be adopted:<\/p>\na) Procurements exceeding the threshold of:<\/p>\n<ul class=\"lst\"><li>[G, C, NC] \u2014 Rs. 50 lakh (Rupees Fifty Lakh);<\/li><li class=\"srcmark src-W\" data-src=\" W \">W<\/span> \u2014 Rs. 10 lakh (Rupees Ten Lakh) in works procurement;<\/li><\/ul>\nB) all requirements with clear technical specifications;<\/p>\nc)<\/strong>G<\/span> For requirements that are ordinarily available in the open market<\/strong>, it is necessary to evaluate competitive offers to decide the most suitable and economical option available;<\/p>\nW<\/span> For requirements that can ordinarily be fulfilled by the players available in the open market<\/strong>, it is necessary to evaluate competitive offers to decide the most suitable and economical option available;<\/p>\nd) G<\/span> When requirements are not available from known sources, or sources are presently limited and need to be made broad-based. In such situations, even for procurements below Rs. 50 lakh, the OTE mode May be used if warranted.<\/p>\nW<\/span> When the requirement cannot be fulfilled from known contractors, or contractors are presently limited and the requirement is to be made broad-based. In such situations, even for procurements below Rs. 10 lakh, the OTE mode May be used if warranted.<\/p>\n<h3>4.8.1<\/span>Terms and Conditions<\/span><\/h3>\n1. No restriction on participation:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-G\" data-src=\" G \">G<\/span> There should be no restriction on participation by prospective bidders who meet the eligibility criteria. Especially, prior registration with the Procuring Entity should not be insisted upon. However, bidders who are already registered are also free to participate.<\/li><li class=\"srcmark src-W\" data-src=\" W \">W<\/span> Participation should not be restricted to only bidders enlisted with the Procuring Entity. Bidders already enlisted are also free to participate. However, a requirement that successful un-enlisted bidders May have to get enlisted with the Procuring Entity before the contract is placed on them<\/em> May be mentioned in the tender document.<\/li><\/ul>\n2. Advertisement:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-G\" data-src=\" G \">G<\/span> Advertisements in such cases should be given on the GOVERNMENT e-MARKETPLACE (GeM) as well as<\/em> ON GeM-Central Public Procurement Portal (CPPP) at www.eprocure.gov.in.<\/li><li class=\"srcmark src-W\" data-src=\" W \">W<\/span> Advertisements in such cases should be given on the GeM-Central Public Procurement Portal (GeM-CPPP) at www.eprocure.gov.in. (no separate GeM mention)<\/em><\/li><\/ul>\nan organisation that has its own website should also publish all its advertised tender enquiries on the website. The Procuring Entity should also post the complete tender document on its website and gem-cppp to enable prospective bidders to make use of the document by downloading it. The advertisements for the tender invitations should give the complete web address from which the tender documents can be downloaded.<\/p>\nWhile it is no longer mandatory to issue advertisements in newspapers, there is no bar to issuing such advertisements if the procuring entities consider them necessary.<\/p>\nTo promote wider participation and ease of bidding, no cost of tender documents May be charged<\/em> for the tender documents downloaded by the bidders.<\/p>\n3. Free availability: The sale\/ availability for downloading of tender documents against NIT should not be restricted and should be available freely. Tender documents should preferably be sold\/ made available for download up to the date of tender opening (W<\/span>: \"up to the tender closing date and time\")<\/em>.<\/p>\n4. Model Tender Document:<\/strong> The tender documents should be prepared based on the relevant approved Model Tender Document (MTD) for the procurement category.<\/strong>(Further details on preparing tender documents are provided in G<\/span> Chapter 5 \u00b7 W<\/span> Chapter 4.)<\/em><\/p>\n5. Records in off-line tenders: The Procuring Entity shall maintain proper records about the number of tender documents sold, the list of parties to whom sold, details of the amount received through sale, and the number of unsold tender documents \u2014 which are to be cancelled after the opening of the tenders.<\/p>\n6. Currency: In domestic tenders, bids can be submitted only in INR, and any bid in foreign currency should be summarily rejected. Foreign bidders can also participate if they submit a bid in INR. However, purchase preference for local content as per the PPP-MII shall apply.<\/p>\n7. Consortium bidding in domestic open tenders: In the case of a domestic open tender for projects (including turnkey projects) allowing consortium bidding, a foreign bidder can be a consortium member \u2014 subject to the condition that the consortium as a whole<\/em> Meets the minimum local content criteria, as per the Make in India order, 2017.<\/p>\nThe leader of the consortium can be a foreign party, and the bids are to be solicited in Indian rupee only \u2014 i.e., no payment can be made in foreign currency to the foreign consortium member.<\/p>\n<h3>4.8.2<\/span>OTE \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. The crux of this mode is attracting bids from all possible prospective bidders. The risk is that this May not be achieved, even after incurring the extra cost of open tendering. This could be due to: a) Insufficient publicity; b) Hindrances in the availability of tender documents; c) Insufficient time for bid preparation; or d) Due to the onerous cost of tender documents or EMD<\/td><td>it should be ensured that the NIT on the website is easily searchable and visible, not hidden under layers of clicks. The matter should not be left entirely to the website or media publicity alone. Due diligence should be done to locate likely bidders. All registered vendors\/ contractors \u2014 in particular past successful vendors\/ contractors \u2014 should be given intimation about forthcoming tenders via sms\/ mail\/ email. Further, a limited or open tender that results in only one effective offer<\/em> Shall be treated as a Single Tender Enquiry situation, with relevant powers of approval, etc. It should also be ensured that there is no impediment to the issue\/ access of tender documents. Ordinarily, the due date fixed for the opening of the tender shall be a minimum of 21 (twenty-one) days from the date of advertisement, which may vary considering the nature of the material called for and delivery requirements. The due date may be subsequently extended with the approval of the ca only if it is felt necessary to have better competition. The tender documents shall be priced minimally (if at all priced), keeping in view the value of the tender as well as the cost of preparation and publicity of the tender documents. EMD should be sufficient to ensure that bidders honour their bids but, at the same time, should not be large enough to reduce competition.<\/td><\/tr><tr><td>2. Lack of clarity in description\/ specification of requirement, or undue stringency in qualifying criteria or other conditions<\/td><td>Mitigations of such risks can be addressed at the time of need assessment and procurement planning (please refer to Chapter 2) to attract adequate competition.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.9<\/span>Global Tender Enquiry (GTE)<\/span><\/h2>\n(Rule 161 of GFR 2017)<\/em><\/p>\n1. What it is: GTE \u2014 also known as international competitive bidding (icb), but this Manual would stick to GTE \u2014 is like OTE, but through appropriate advertising and provision for payment in foreign currencies through Letter of Credit, it is aimed at inviting the participation of inter alia<\/em> Foreign firms.<\/p>\nBids in foreign currency in any other mode of procurement shall be summarily rejected.<\/p>\nSubject to restriction on GTE (Para 4.9.2 below), GTE can ALSO<\/em> Be in SLTE, LTE or STE mode if justified with proper approvals as per SoPP.<\/p>\nThe point of balance between VfM and the cost\/ complexity of the procedure is further aggravated as compared to OTE. The development of local industry also needs to be kept in mind.<\/p>\n2. Hence, GTE may be viable only in the following situations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr class=\"srcmark src-multi\" data-src=\" G W \"><th><\/th><th>G<\/span> GOODS<\/th><th>W<\/span> WORKS<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>Where goods of required specifications\/ quality May not be available within the country, and alternatives available in the country are not suitable for the purpose, it is necessary to also look for suitable competitive offers from abroad<\/td><td>Where required technology\/ specifications\/ quality are not available within the country and alternatives available in the country are not suitable for the purpose<\/td><\/tr><tr><td>b<\/td><td>non-existence of a local branch of the global principal of the manufacturer\/ vendors\/ contractors<\/td><td>non-existence of a local branch of the global principal of the contractors<\/td><\/tr><tr><td>c<\/td><td>requirement for compliance with specific international standards in technical specifications<\/td><td>requirement for compliance with specific international standards in technical specifications<\/td><\/tr><tr><td>d<\/td><td>absence of a sufficient number of competent domestic bidders likely to comply with the required technical specifications, and in case of suspected cartel formation among indigenous bidders<\/em><\/td><td>in case the requirement cannot be executed by indigenous contractors at reasonable rates<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<h3 class=\"src-G srchead\" data-src=\" G \">4.9.1<\/span>Terms and Conditions<\/span>G<\/span>reproduced in abridged form in W<\/span><\/h3><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\n1. Advertisement<\/strong> \u2014 as in OTE (see para 4.8.1-2 above)<\/em>.<\/p>\n2. Free availability of documents \u2014 as in OTE.<\/p>\n3. Pricing of documents \u2014 the tender documents shall be priced minimally (if at all priced), keeping in view the value of the tender as also the cost of preparation and publicity of the tender documents.<\/p>\n4. Language and standards: GTE tender documents must be in english and must contain technical specifications that are in accordance with national requirements or else based on an international trade standard.<\/p>\n5. E-procurement: In Global Tender Enquiry, e-procurement May not be mandatorily insisted upon. (But e-publishing remains mandatory \u2014 see Part A, para 4.6.1-4.)<\/em><\/p>\n6. Notice period: The due date fixed for the opening of the tender shall be a minimum of four weeks<\/em> From the date of advertisement \u2014 which may vary considering the nature of the material called for and the time required to prepare the bids. The due date may be subsequently extended with the approval of the CA to promote better competition and also considering the delivery requirement.<\/p>\n<aside class=\"note\">(Contrast OTE: minimum 21 days.)<\/em><\/p><\/aside>\n7. Incoterms: Relevant INCOTERMS (presently 2020 version) should be included in the tender.<\/p>\n8. Currency of Bidding G<\/span>: In GTE, foreign bidders have the flexibility to quote prices and receive payments in either<\/em> Indian rupees OR<\/em> Freely convertible currencies such as US dollars, euros, pound sterling, yen, other relevant currencies, or a combination thereof.<\/p>\nHowever, prices for goods, works, or services (including agency commission) performed or sourced in India<\/em> Must be quoted and paid for in Indian rupees.<\/p>\nIndian bidders are required to quote in INR only. During the evaluation, all quoted prices are converted into Indian Rupees.<\/p>\n<aside class=\"note\">Footnote: The Central Board of Indirect Taxes and Customs (CBIC)<\/strong> issues an Exchange Rate Notification under the Customs Act, 1962<\/strong>, which lists currencies and exchange rates for imported goods in Schedule I<\/strong> \u2014 which may indicate relevant currencies.<\/em><\/p><\/aside>\n9. Agency Commission G<\/span>: The amount of agency commission \u2014 normally not exceeding five per cent<\/em> \u2014 payable to the Indian agent (who shall provide self-attested documentary evidence about their identity and business details to establish that they are a bona fide business and conform to regulations) should not be more than what is specified in the agency agreement (a certified copy should be submitted along with the financial bid) between the bidder and the Indian Agent.<\/p>\nAgency commission shall be paid by the Procuring Entity in India in equivalent Indian rupees<\/em> On satisfactory completion of the project or supplies of goods and spares.<\/p>\nThe Indian agent will be required to submit a certificate along with their agency commission bill, confirming that the amount claimed as agency commission in the bill has been spent\/ will be spent strictly to render services to the foreign principal, in terms of the agency agreement.<\/p>\nThe Procuring Entity or their authorised agencies and\/ or any other authority of the Government of India shall have rights to examine the books of the Indian agent, and defects or misrepresentations in respect of the afore-indicated confirmation coming to light during such examinations will make the foreign principal (i.e., the contractor) AND<\/em> Their Indian agent liable to be debarred from having business dealings with the purchaser, following laid-down procedures for such debarment.<\/p>\n10. Delivery Terms G<\/span>: The delivery terms are to be expressed in terms of INCOTERMS.<\/p>\nAs per the revised policy of the Government<\/strong>(Ministry of Shipping's No. SC-18013\/1\/2013-ASO-I dated 08.09.2015)<\/em>:<\/p>\n<ul class=\"lst\"><li>All Public Procurement import contracts involving ocean freight of dry or liquid bulk cargoes<\/em> Are to be finalised only on a FOB (free on board)\/ FAS (free alongside ship)<\/em> BASIS, and in case of any departure therefrom, prior approval of the concerned administrative Ministry\/ Department May be obtained.<\/li><li>However, imports involving ocean freight of general liner cargoes, project cargoes, heavy lift, container, break bulk cargoes<\/em>, etc., can now be made on FOB\/ FAS\/ CFR (cost & freight)\/ CIF (cost, insurance & freight)\/ DDP (delivery duty paid at named place)<\/em> BASIS.<\/li><li>All importing Government departments\/ pses can now make their own shipping arrangements without needing to route their requirements through the chartering wing of the Ministry of shipping<\/em>.<\/li><li>As per the extant directive of the Government, airlifting of imported goods from abroad will be done only through an Indian carrier<\/em>, wherever applicable.<\/li><\/ul>\n11. Insurance G<\/span>: Wherever necessary, the goods supplied under the contract shall be fully insured in a freely convertible currency against loss or damage incidental to manufacture or acquisition, transportation, storage and delivery as specified in the contract.<\/p>\n<ul class=\"lst\"><li>If considered necessary, the insurance may be done for coverage on an \"all RISKS\" basis, including war risks and strike clauses.<\/li><li>The amount covered under insurance should be sufficient to cover the overall expenditure incurred by the purchaser for receiving the goods at the destination.<\/li><li>Insurance for imported goods\/ equipment would need to be arranged very carefully and only for cases where the value of individual shipments is expected to be more than rupees five crore<\/em>.<\/li><li>Procuring entities with substantial import contracts May arrange \"open cover (all risk)\" annual insurance for all imports during the year with insurance companies, instead of insurance for each import separately.<\/li><li>Where delivery of imported goods is required by the purchaser on CIF\/ CIP\/ DDP<\/em> Basis, the supplier shall arrange and pay for marine\/ air insurance, making the purchaser the beneficiary.<\/li><li>Where delivery is on a FOB\/ FAS<\/em> Basis, marine\/ air insurance shall be the purchaser's responsibility.<\/li><\/ul>\n12. Taxes on imports G<\/span>: Import of goods or services or both attracts integrated tax (IGST). The IGST rate and GST cess shall be applicable on the 'customs assessable value' PLUS<\/em> The 'basic customs duty applicable thereon'.<\/p>\nForeign bidders shall indicate the break-up of prices for: Freight, insurance, customs duty, port handling charges, clearing agency charges, related ITC (hs) code, IGST\/ GST cess, and related HSN code, as relevant to the quoted price basis.<\/p>\n<\/div><h3>4.9.2<\/span>Restrictions on Global Tenders up to Rs. 200 Crore<\/span><\/h3>\n1. The bar: No Global Tender Enquiry (GTE) shall be invited up to Rs. 200 crore, or any limit as May be prescribed by the Department of Expenditure from time to time.<\/p>\n2. The relaxation route: In exceptional cases where the Ministry or Department feels that there are special reasons for inviting GTE for tenders below such limit \u2014 including those in SLTE\/ LTE mode or on a single tender basis<\/em> \u2014 it May record its detailed justification and seek prior approval for relaxation<\/em> From the Competent Authority specified by the Department of Expenditure.<\/p>\na) The GTE Portal: The agencies\/ subordinate offices under the administrative control of a Ministry\/ Department that require to float a GTE for procurement of certain products\/ items\/ services shall submit their applications and comments online<\/em> Through the GTE portal under the e-samiksha platform via https:\/\/esamiksha.gov.in\/GTE_NFEProposalForm.aspx<\/em> OR https:\/\/cabsec.gov.in\/more\/globaltenderenquiryproposal\/<\/em> \u2014 starting from 5TH May 2022. No physical application will be received.<\/p>\nb) 'GTE portal', a user-friendly IT application under the e-Samiksha platform, was developed by the cabinet secretariat (ID No. 213\/2\/1\/2021-C.A.IV dated 02.05.2022)<\/em>. For more details, refer to GTE Guidelines on the eSamiksha portal.<\/p>\n3. The two mandatory pre-conditions before sending a GTE proposal:<\/p>\nA) a domestic open tender MUST<\/em> Be floated first<\/strong> to identify the domestic manufacturers\/ service providers for the items\/ services for which approval is being sought for issuance of Global Tenders.<\/p>\n<aside class=\"note\">If the Ministry\/ Department has not floated a domestic open tender after 15.05.2020<\/em> for the items to be procured through GTE, such proposals will not be entertained<\/em>.<\/p><\/aside>\nThe proposal must contain the details of domestic open tenders issued after 15.05.2020, covering:<\/p>\n<aside class=\"note\">Tender number \u00b7 date of opening \u00b7 number of offers received \u00b7 details of offers received \u00b7 reasons why domestic suppliers were not considered, etc.<\/p><\/aside>\nB) the proposal must contain details of deliberations with DPIIT\/ relevant industrial bodies regarding the identification of domestic manufacturers\/ service providers.<\/p>\n4. The eight exemptions from the Rs. 200 crore restriction:<\/p>\n<aside class=\"note\">It is emphasised that these exemptions are only from restrictions on GTE<\/em>, and the local content preferences and other features of MII policy would still be applicable<\/em>.<\/p><\/aside>\na) specialised research equipment: For procurement of specialised equipment required for research purposes, and spares and consumables for such equipment, for the use of educational and research institutes \u2014 the Secretary of the Ministry\/ Department concerned shall be the Competent Authority to approve the issue of GTEs, subject to fulfilment of conditions in sub-para 5 below. The equipment should be of a specialised nature and required for research purposes, not the routine equipment used in offices<\/em>. (OM No. 4\/1\/2021-PPD dated 11.06.2021)<\/em><\/p>\nb) ICT items: Gtes for procurement of ICT items, software and hardware such as blade servers, SAN storage, LAN switches, mobile testing devices, cloud orchestration & system software, network & web apts, mobile testing tools, integrated backup system (ibs), etc. Can be issued with the approval of the Secretary concerned, instead of Secretary (coordination)<\/em>, until further orders. (OM No. F.4\/1\/2022-PPD dated 29.08.2022)<\/em><\/p>\nc) nomination-basis procurements<\/strong>(as no competitive tenders are invited)<\/em>, inter alia<\/em> including:<\/p>\n<ul class=\"lst\"><li>I) procurement of spare parts of the equipment\/ plants & machinery, etc., on a nomination basis from original equipment manufacturers (OEMs) or original equipment suppliers (OES) or original part manufacturers (opms). (For this purpose, 'Spares' shall be taken to include CONSUMABLES for such equipment.)<\/em>(OM No. 12\/17\/2019-PPD dated 29.10.2020)<\/em><\/li><li>ii) procurement of services like Annual Maintenance Contract (AMC) and auxiliary\/ add-on components for existing equipment\/ plant & machinery, etc., which are procured from OEM\/ OES\/ OPM on a nomination basis. (OM No. F.4\/1\/2021-PPD dated 01.09.2021)<\/em><\/li><\/ul>\nd) PRE-15.05.2020 contractual commitments: Where procuring entities need to issue GTEs to fulfil contractual commitments\/ obligations entered by them before 15.05.2020 \u2014 i.e., a bid has been submitted by them to their clients before 15.05.2020. Similarly, where procuring entities need to issue GTEs in view of existing collaboration agreements they entered with foreign suppliers before 15.05.2020. (OM No. 4\/1\/2021-PPD dated 12.03.2021)<\/em><\/p>\ne) medical devices and drugs: Based on the reference received from the Ministry of Health & Family Welfare (MoH&fw), GTE can be floated for 354 medical devices<\/em> AND 120 DRUGS<\/em> (placed in Annexure 31 of the Goods Manual). These exemptions for medical devices and drugs are provided UP TO 31.03.2027<\/em> Till further orders. It is further clarified that:<\/p>\n<ul class=\"lst\"><li>I) the machine system includes spare parts and accessories, which May be procured by procuring entities together or separately.<\/li><li>ii) the Procuring Entity concerned May frame the detailed technical specifications for the above devices as per their requirement. (OM No. 4\/1\/2023-PPD(pt.) dated 28.06.2024 for devices; OM No. F.4\/1\/2023-PPD(pt) dated 07.06.2024 for drugs)<\/em><\/li><\/ul>\nf) mdb\/ bfa-funded projects: Projects funded by multilateral development banks (MDBs like The World Bank, Asian Development Bank, etc.)\/ bilateral funding agencies (BFAs), where the procurement is governed by the conditions negotiated in the loan agreement, and where the project executing agencies from time to time further award works to various Autonomous Bodies\/ CPSEs etc. \u2014 the Secretary of the Ministry\/ Department responsible for execution of such project shall be the Competent Authority for approval for issuance of GTEs by such autonomous bodies\/ CPSEs. (OM No. F.7\/12\/2021-PPD-I dated 27.07.2021)<\/em><\/p>\ng) semiconductor equipment: Procurement of SEMI-CONDUCTOR EQUIPMENT for the purpose of MANUFACTURING ELECTRONICS, and procurements by public-funded semiconductor and display fab facilities (including such facilities in institutes of high learning) \u2014 UP TO 31.03.2025. (OM No. F.4\/1\/2022-PPD-II dated 01.04.2022 and OM No. F.4\/1\/2023-PPD dated 23.03.2023)<\/em><\/p>\nh) procurement abroad for use abroad: GTE restriction up to Rs. 200 crore is not applicable<\/em> for bona-fide procurements done outside India for use outside India<\/em>, by CPSEs having international operations or by Indian missions abroad. Such entities should ensure that the bulk of procurement is done in India (and exported for their use abroad), as far as feasible \u2014 so as not only to promote Make in India but also to improve export performance.<\/p>\n5. The seven conditions attached to exemption 4(a) \u2014 Educational and Research Institutions<\/p>\nEducational, Research institutions, and other units will make full efforts towards reducing imports in the following manner. This will result in substantial effects both within the institutions and through impact on the eco-system:<\/p>\n<ol class=\"lst\"><li>Efforts should be made to promote technology transfer through agreements, or to encourage technological collaboration with foreign manufacturing in India with the start-ups set up in research parks.<\/li><li>Sharing and updating information about the availability of research equipment across various Indian institutes on a single portal \u2014 the I-STEM<\/em> portal has been developed for this purpose \u2014 so that the needy institutes can utilise those.<\/li><li>Without compromising quality, institutes should indicate alternative\/ equivalent technical specifications that could suit their requirement, so that there are more chances for local manufacturers to participate in the tender process.<\/li><li>Regular interaction between academia and Indian industry organisations at the level of the institution about the requirement of equipment of foreign origin and for encouraging domestic manufacturing.<\/li><li>Regular requirements of proprietary\/ non-proprietary research consumables May be assessed, and domestic alternatives May be explored for use.<\/li><li>The office of psa initiates a national-level programme for indigenous development of scientific equipment.<\/li><li>Without compromising quality, institutes should be flexible with specifications so that domestic manufacturers are encouraged to meet requirements.<\/li><\/ol>\n6. Guidelines for resorting to GTE (research institutions): a) market assessment should be done by the concerned institution, as certified by the head of the institution. Only after no Indian manufacturer is found<\/em> Should a GTE be issued. B) in case no Indian manufacturer\/ suppliers are found, procurement May be done through GTE, subject to compliance with provisions of GFR and the requirement of procurement through GeM. C) dean (r&d) or an appropriate authority within the institute will issue certificates as per sub-para 7 below before inviting GTE<\/em>. As a reporting matter in the board of governors, such certificates should be tabled and shared with the office of the psa, DPIIT, and the concerned administrative Ministry. d) The information about the procurement of equipment should be shared across various educational and research institutes through the i-stem portal. This will allow the equipment to be used by other institutions for research purposes too. e) analyse the equipment being procured time and again from abroad and help develop them in India by identifying potential manufacturers and providing them with technical assistance and expertise. This programme will be coordinated by the empowered technology group (constituted by Cabinet and chaired by the principal scientific adviser \u2014 psa). Half-yearly reports on this action are to be shared by the institutes with the office of the psa, DPIIT, and concerned administrative Ministry. f) preference for local suppliers over foreign suppliers, as per the existing Government of India guidelines, should be observed as applicable.<\/p>\n7. The three certificates to be issued: A) certification that locally available alternatives with equivalent specifications are not suitable for research purposes. B) the non-availability of such equipment for research purposes with nearby research institutes or within the institute. C) certification of the requirement of proprietary items of foreign origin for research purposes (where applicable).<\/p>\n<h3>4.9.3<\/span>GTE \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>Risks are the same as in OTE<\/td><td>the same mitigation as in the case of OTE also applies here.<\/td><\/tr><tr><td>The involvement of foreign bidder agents in GTE procurements is also a major risk area.<\/td><td>Procurements should preferably be made directly from the manufacturers<\/em>. Either the agent on behalf of the foreign principal OR<\/em> The foreign principal directly could bid in a tender \u2014 but not both<\/em>. Further, in cases where agents participate in a tender on behalf of one manufacturer, they should NOT<\/em> Be allowed to quote on behalf of another manufacturer along with the first manufacturer. Commissions and scope of services to\/ by the agents should be explicit and transparent in the bids\/ contracts.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2 class=\"src-G srchead\" data-src=\" G \">4.10<\/span>Rate Contract (RC)\/ Framework Agreement (FA)<\/span>G<\/span>text; W\/C\/NC list it as a separate family and cross-refer<\/span><\/h2><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\"><h3>4.10.1<\/span>Definition<\/span><\/h3>\nA Rate Contract (commonly known as rc) is an agreement between the purchaser and the supplier for the supply of specified goods (and allied services, if any) at a set price and terms & conditions (as incorporated in the agreement) during the period covered by the Rate Contract.<\/p>\n<aside class=\"note\">Rc is most frequently used in the procurement of goods but can also be used mutatis mutandis<\/em> In works, services, and consultancy \u2014 where it is commonly known as a framework Agreement (fa)<\/em>.<\/p><\/aside>\nNo quantity is mentioned, nor is any minimum drawable quantity guaranteed in the Rate Contract.<\/p>\nThe Rate Contract is a standing offer<\/em> From the supplier firm. The firm and\/or the purchaser are entitled to withdraw\/ cancel the Rate Contract by serving an appropriate notice on each other, giving suitable notice (say thirty days).<\/p>\nHowever, once a supply order (also called withdrawal order<\/em>) is placed in terms of the Rate Contract, during the validity period of the Rate Contract, on the supplier for the supply of a definite quantity \u2014 that supply order becomes a valid and binding contract<\/em>.<\/p>\n<h3>4.10.2<\/span>The Nine Items Amenable to Rate Contract<\/span><\/h3>\nThe following types of items can be advantageously procured through Rate Contracts:<\/p>\n<ol class=\"lst\"><li>Goods that are regularly or repetitively required by more than one Procuring Entity\/ organisation.<\/li><li>The quantities required cannot be accurately forecast.<\/li><li>Individual requirements of procuring entities may be small, but the total aggregate requirements of all the procuring entities are more than rs. 50 lakh per annum.<\/li><li>The item has detailed specifications, drawings, and descriptions.<\/li><li>Prices of the items are stable \u2014 or, if prices are variable, they can be determined through a Price Variation Clause.<\/li><li>Items are not scarce\/ critical\/ 'perpetually in short supply' goods or services.<\/li><li>Demand for the item is not seasonal<\/em>, since Rate Contract holders May shy away from supplying the item during high seasonal demands and dump supplies during low demand season.<\/li><li>Spares used for maintenance of expensive equipment\/ machines, from OEMs, to facilitate uninterrupted supply of genuine spares.<\/li><li>Consumables used by advanced research, development and scientific institutes\/ organisations of the Government of India<\/strong>(e.g., glass wares, plastic wares, chemicals, bio-chemicals etc. \u2014 the examples are illustrative, not exhaustive).<\/em><\/li><\/ol>\n<h3>4.10.3<\/span>Merits of Rate Contract<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>a) Benefits to USERS<\/th><th>b) Benefits to SUPPLIERS<\/th><\/tr><\/thead><tbody><tr><td>I) competitive and economical price due to aggregation of demands<\/td><td>i) reduces marketing costs and efforts<\/td><\/tr><tr><td>ii) saves time, effort, person-hours, and related costs involved in the time-consuming and repetitive tender process \u2014 thus reduces lead time for procurement<\/td><td>ii) eliminates repetitive tendering and follow-up actions with multiple authorities<\/td><\/tr><tr><td>iii) availability of quality goods with full quality assurance backup<\/td><td>iii) provides single-point contact for govt. Supplies<\/td><\/tr><tr><td>iv) enables procurement as and when required \u2014 thus reduces inventory carrying cost<\/td><td>iv) aggregation of govt. Demand leads to economic production<\/td><\/tr><tr><td>V) advantageous even to small users and those located in remote areas<\/td><td>V) improves the credentials of the company<\/td><\/tr><tr><td>vi) provides one single point of contact to procure such items<\/td><td>vi) promotes quality discipline<\/td><\/tr><\/tbody><\/table><\/div>\n<h3>4.10.4<\/span>Terms and Conditions<\/span><\/h3><h4>1.<\/span>Conclusion of Rate Contracts, including Parallel Rate Contracts<\/span><\/h4>\na) any organisation can enter a Rate Contract for items amenable to the Rate Contract for its procuring entities' use (e.g., in different geographical regions\/ subsidiaries). A Central purchase organisation can also enter a Rate Contract for several organisations that require the subject goods. No indents are required to enter a Rate Contract; Only an estimate of the annual requirements<\/em> Of different ultimate users is needed.<\/p>\nInspection and testing of such goods or services, wherever required, may be arranged by the agency entering into the rate contract.<\/p>\nThe agency entering the Rate Contract should post the descriptions, specifications, prices and other salient details of the entire rate-contracted goods or services, appropriately updated, on its website for use by the procuring entities.<\/p>\nB) mode: Rate Contract enquiries should preferably<\/em> BE THROUGH e-procurement or Open Tender Enquiry \u2014 but Limited Tender Enquiry\/ Single Tender Enquiry can also be used if justified by the nature of the requirement. Specific special terms and conditions for the Rate Contract should be added to the Tender Documents.<\/p>\nC) past performance review: Performance against earlier\/ current rate contracts of past\/ current Rate Contract holders shall be critically reviewed<\/em> Before they are considered for award of new rate contracts. Specific performance and achievement criteria as on a selected cut-off date are to be evolved for this purpose and incorporated in the tender enquiry document. The tenderers will be asked to furnish the relevant details (along with their bids) to enable the purchaser to judge their performance and achievement against the past\/ current rate contracts.<\/p>\nd) Evaluation: Procedures stipulated for evaluation of bids and award of contract shall be applicable mutatis mutandis<\/em> In the finalisation of Rate Contract \u2014 including provisions for negotiations\/ counter-offer and splitting of contracts (parallel contracts).<\/p>\nE) parallel rate contracts: Depending on the anticipated demand of the item, location of the users, capacity of the responsive bidders, reasonableness of the prices quoted, etc. \u2014 parallel rate contracts May be awarded to more than one (preferably at least three<\/em>) supplier. For transparency and to avoid criticism, all such parallel rate contracts are to be issued simultaneously<\/em>, as far as feasible.<\/p>\n<h4>2.<\/span>Period of Rate Contract<\/span><\/h4>\nA Rate Contract should typically be for one year<\/em> for stable technology products. However, in exceptional cases, a shorter or longer period of not more than two years<\/em> May be considered.<\/p>\nAs far as possible, the validity period of rate contracts should be fixed in such a way as to ensure that new budgetary levies would not affect the price<\/em> And thereby frustrate the contracts.<\/p>\nAttempts should also be made to stagger<\/em> The period of rate contracts for different items throughout the year.<\/p>\n<h4>3.<\/span>The Nine Special Conditions Applicable for Rate Contract<\/span><\/h4>\n<aside class=\"note\">Some conditions of rate contracts differ from the usual conditions suitable for ad hoc contracts.<\/p><\/aside>\nA) the Procuring Entity May prescribe the amount of Bid Security in the tender document.<\/p>\nB) no quantity is mentioned in the Schedule of requirement; Only the anticipated drawable quantity is mentioned without commitment<\/em>.<\/p>\nC) the purchaser reserves the right to conclude one or more than one Rate Contract for the same item.<\/p>\nD) the purchaser and the supplier May short-close<\/em> The Rate Contract by serving suitable notice to each other. The prescribed notice period is generally fifteen to thirty days<\/em>.<\/p>\ne) Re-negotiation and repeat bidding: The purchaser can re-negotiate the price with the Rate Contract holders even during the validity<\/em> If market conditions change significantly \u2014 or undertake repeat competitive bidding through open\/ advertised tenders on the same terms and conditions, including specifications, during the validity period of existing valid r\/cs. In such cases, the existing r\/c holders can bid, apart from the new eligible bidders, and equal and fair opportunity would be provided. If the prices received are found lower than the existing r\/c prices, new r\/cs May be awarded at reduced prices, and existing r\/cs at higher prices May be short-closed \u2014 giving adequate notice \u2014 if they do not match such reduction in prices under the fall clause.<\/p>\nF) in an emergency, the purchaser May purchase the same item through an ad hoc contract with a new supplier.<\/p>\nG) the purchaser and the authorised users of the Rate Contract are entitled to place supply orders up to the last day of the validity<\/em> Of the Rate Contract \u2014 and though supplies against such supply orders will be delivered beyond<\/em> The validity period of the Rate Contract, the terms & conditions of the Rate Contract will guide all such supplies.<\/p>\nh) the fall clause \u2014 the price safety mechanism in rate contracts:<\/p>\nThe fall clause provides that if the Rate Contract holder reduces its price, or sells, or even offers to sell<\/em> The rate-contracted goods or services (following conditions of sale similar to those of the rate contract) at a price lower than the Rate Contract price, to any person or organisation<\/em> During the currency of the Rate Contract \u2014 the Rate Contract price will be automatically reduced with effect from that date<\/em> for all subsequent supplies under the Rate Contract, and the Rate Contract amended accordingly.<\/p>\nOther parallel Rate Contract holders, if any, are also to be allowed to reduce their price by notifying the reduced price to them, giving 07 (seven) days<\/em> To intimate their revised prices, if they so desire, in a sealed cover to be opened in public on the specified date and time, and further action taken as per standard practice.<\/p>\n<aside class=\"note\">The abuse warning: On many occasions, the parallel Rate Contract holders attempt to grab more orders by unethical means<\/em> By announcing a price reduction (after getting the Rate Contract) under the guise of the fall clause. This situation must be handled similarly. It is, however, very much necessary that the purchase organisations keep a particular watch on the performance of such Rate Contract holders who reduce their prices on one pretext or another. If their performances are not up to the mark, appropriately severe action should be taken against them \u2014 including deregistering<\/em> THEM, suspending business deals<\/em> With them, debarring them for up to two years<\/em> From participating in the tender enquiry floated by the concerned purchase organisation, etc.<\/p><\/aside>\nThe four exceptions \u2014 the provisions of the fall clause will NOT<\/em> Apply to:<\/p>\n<ul class=\"lst\"><li>I) export\/ deemed export by the supplier;<\/li><li>ii) sale of goods or services as original equipment<\/em> At prices lower than the price charged for routine replacement<\/em>;<\/li><li>iii) sale of goods (such as drugs) which have expiry dates<\/em>;<\/li><li>iv) sale of goods or services at lower prices \u2014 <\/li><li>1) on or after the date of completion of placement of order of goods by the Procuring Entity, under the existing or previous rate contracts;<\/li><li>2) under any previous contracts entered with the Central or State Government departments, including new undertakings (excluding joint sector companies and\/ or private parties<\/em>) and bodies.<\/li><\/ul>\nI) the fall clause certificate: The Rate Contract holder shall furnish the following certificate to the concerned paying authority along with each bill<\/em> for payment of supplies made:<\/p>\n<aside class=\"note\">\"I\/We certify that there has been no reduction in the sale price of the goods of description identical to the goods supplied under this contract, and such goods have not been offered\/ sold by me\/ us to any person\/ organisation \u2014 including the purchaser or any department of Central Government or any [State Government\/ PSU], as the case may be \u2014 up to the date of bill\/ the date of completion of supplies against all supply orders placed during the currency of the Rate contract, at a price lower than the price charged under the contract.\"<\/em><\/p><\/aside>\n<h4>4.<\/span>Performance Security<\/span><\/h4>\nDepending on the anticipated overall drawable annual quantity against a rate contract, and the anticipated number of parallel rate contracts to be issued for an item \u2014 the Department May consider obtaining Performance Security @ 3% to 5% of the value of supply order<\/em> In the supply orders issued against rate contracts on the Rate Contract holder.<\/p>\n<h4>5.<\/span>Placement of Supply Orders<\/span><\/h4>\na) Who may place them: Procuring entities nominated (CALLED direct demanding officers \u2014 DDO<\/em>) in the Rate Contract can place supply\/ withdrawal orders in terms of the rate contract during the validity period of the rate contract on the Supplier for the supply of definite quantities. An indent with required administrative and financial approvals is required before<\/em> A supply order can be placed.<\/p>\nAlternatively, the organisation managing the Rate Contract can centrally administer the placement of withdrawal orders against indents from the constituents.<\/p>\nb) The mandatory-use rule and its small-value escape: Once a Rate Contract is available, all nominated procuring entities (DDOs) must mandatorily<\/em> Procure the item only through supply orders on the Rate Contract holders.<\/p>\nIn case of an emergency, if a Procuring Entity directly procures rate-contracted goods or services from the suppliers \u2014 the prices to be paid for such goods or services shall not exceed<\/em> Those stipulated in the Rate Contract, and the other salient terms and conditions of the purchase should be in line with those specified in the Rate Contract. However, they May be permitted to procure a small value of their requirements directly \u2014 say up to Rs. One lakh at one time and not more than Rs. 5 lakh annually<\/em> \u2014 following relevant procedures.<\/p>\nC) upper threshold on supply orders: The Procuring Entity May stipulate an upper threshold of value for supply orders received against the Rate Contract by the rc holder. Except with prior approval of the Procuring Entity, the contractor shall not comply<\/em> With the supply orders received from the ddos exceeding such threshold amount.<\/p>\nD) the five criteria for choosing among parallel rc holders: All parallel rcs for an item \u2014 even at differential rates<\/em> \u2014 are assumed to be at reasonable rates. The Procuring Entity can select any rc holder, following transparent and equitable criteria. The following factors May be kept in view:<\/p>\n<ul class=\"lst\"><li>I) the Rate Contract price.<\/li><li>ii) the past performance of firms with reference to their capacity, quality of supplies, as well as timely delivery of the goods.<\/strong>Procuring Entities should maintain suitable records for past performance with respect to timely delivery and quality.<\/em><\/li><li>iii) there is a need for reputed brands in the case of sensitive, critical, and vital requirements.<\/li><li>iv) the proximity of the Rate Contract holder, where proximity is considered crucial for timely delivery, ease of progressing, and from the point of view of logistics and contract management, etc.<\/li><li>v) the delivery dates committed by various Rate Contract holders with respect to the delivery requirements of the Procuring Entities.<\/li><\/ul>\nE) the delivery-time problem in rate contracts: In rate contracts, if the time FOR delivery is not fixed by mutual agreement<\/em>, IT IS not the essence of the contract<\/em> AND IS not binding<\/em> On the supplier. Therefore, no Liquidated Damages can be levied<\/em> for non-supply or delay in supply against such orders.<\/p>\nThat being so, under section 46 of the contract Act, the goods are only to be delivered within a \"Reasonable time\"<\/em> \u2014 which is a rather vague concept.<\/p>\nBut where there has been an unreasonable delay in delivery, the direct demanding officer (DDO) has the right to give the contractor notice, fixing a reasonable time FOR delivery of the goods and stipulating that delivery within the time specified shall be the essence of the contract<\/em>. If the goods are not delivered within this period, the supply order can be cancelled by the agency that finalised the Rate Contract<\/em> (Since he alone, not the DDO<\/em>, is a party to the Rate Contract), and deficient performance is noted for future rate contracts.<\/p>\nf) The cure \u2014 obtaining a prior delivery commitment: However, in cases where the delivery date stipulated in the relevant order has been expressly agreed to by the supplier in writing before placing the relevant order<\/em> \u2014 Liquidated Damages CAN<\/em> Be recovered (by the agency that entered into the Rate Contract) from the supplier on account of delay in delivery beyond the stipulated delivery date \u2014 provided the agency that finalised the Rate Contract has not in any way interfered with the supplier's discretion to meet the said supply order by directing the supplier to give priority to some other supply orders. Therefore, it is advisable that, before placing the supply order<\/em> On a Rate Contract holder, a commitment is obtained from him for the delivery period.<\/p>\ng) Approval before ordering: Before creating the supply order, approval of the ca (depending on the value of procurement) May be taken by submitting information about all the available parallel rcs<\/em> And justifying the selection of a particular rc holder.<\/p>\nh) The ten essential details of a supply order:<\/p>\n<aside class=\"note\">i) Rate Contract No. and date; ii) QUANTITY (where there is more than one consignee, the quantity to be despatched to each consignee is to be indicated)<\/em>; iii) Price; iv) date of delivery by which supplies are required (a definite delivery date based on the delivery period stipulated in the rate contract is to be provided)<\/em>; v) Full address of the purchase organisation along with telephone no., fax no., and e-mail address; vi) Complete and correct designation and full postal address of the consignee(s)\/ goods receiving officer(s) along with telephone no., fax no., and e-mail address; vii) nearest railway siding (NRS) of the consignee(s), if applicable; viii) Despatch instructions; ix) Designation and address of the INSPECTING OFFICER, if any; x) Designation and address of the PAYING AUTHORITY to which the Supplier will raise the bills. Copies of supply orders are to be endorsed to all concerned.<\/strong><\/p><\/aside>\n<h4>6.<\/span>Renewal of Rate Contracts<\/span><\/h4>\nIt should be ensured that new rate contracts are made operative right after the expiry of the existing rate contracts without any gap<\/em> for all rate-contracted items.<\/p>\nIn case it is not possible to conclude new rate contracts for some special reasons, timely steps are to be taken to extend the existing rate contracts with the same terms, conditions, etc., for a suitable period, with the consent of the Rate Contract holders<\/em>.<\/p>\nRate contracts of the firms who do not agree<\/em> To such extension are to be left out.<\/p>\nAlso, while extending the existing rate contracts, it shall be ensured that the price trend is not lower<\/em>.<\/p>\n<h3>4.10.5<\/span>RC \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. A Rate Contract is not the right mode<\/em> For critical, strategic, and vital requirements, since the buyer-seller relationship is TRIPARTITE, and the timely supply of requirements and penalties thereof cannot be strictly enforced as in other modes. In situations where items have inadequate annual or seasonal capacities in the market, the rc holders May dump material<\/em> On the Procuring Entity during the wrong seasons and starve<\/em> Them during working seasons. This happens in, say, CEMENT \u2014 where government buyers are likely to be saddled with huge supplies during the rainy season, but RC holders may divert the bulk of supplies to the private market during the working season.<\/em> RC Purchase is not SUITABLE for requirements of dynamic technological and price changes \u2014 e.g., PCs, laptops, tablets, servers, and mobile phones \u2014 where the price of older models may crash as soon as a new model is announced. RC holders may slow down supplies initially but dump supplies when prices crash in the market.<\/td><td>Rcs May be avoided for critical\/ strategic and vital requirements. For seasonal and short-supply items, procuring entities May monitor and provide clauses to prevent dumping and starving of supplies. In technologically fast-changing products, the Procuring Entity May keep an eye on market prices and re-negotiate them as soon as market prices fall significantly due to new arrivals.<\/td><\/tr><tr><td>2. The existence of rcs May not be adequately made known to possible users. Moreover, the reverse risk is that many different offices May keep procuring the same item independently \u2014 thus missing the potential benefits of bulk prices and simplified processes if such items were brought under an rc.<\/td><td>The descriptions, specifications, and other salient details of all rcs should be appropriately updated and made available on the Procuring Entity website as well as the e-procurement portal. The e-procurement system should be able to offer alerts<\/em> About the availability of rc if an attempt is made to float a tender for the same item. To derive benefit from bulk prices in rc, all offices should furnish to the rc agency their annual requirement of items to enable the finalising of RCs after inviting quotations.<\/td><\/tr><tr><td>3. Rc procurements are at risk of being ordered more than actual requirements<\/em>, since the procurement scrutiny may not be as intense as in the case of other modes of procurement.<\/td><td>The quantity being ordered should be subject to the same level of scrutiny<\/em> As in other modes of procurement, to ensure that there is no abnormal, unexplainable trend in procurement.<\/td><\/tr><tr><td>4. Wherever there are PARALLEL RCs for the same item from several firms, there May be intense and often unhealthy lobbying (including corrupt practices) from them to seek orders.<\/td><td>1. Procuring entities must put in place adequate guidelines to handle rc procurements \u2014 including a transparent system of choosing the rc holders by rotation<\/em> In a transparent manner in case of parallel rcs. (Suggested criteria at para 4.10.4-5-d.)<\/em> The delegation of powers in this regard should also be restricted, keeping these risks in view. 2. The Procuring Entity should maintain suitable records of rc firms for past performance with respect to timely delivery and quality. 3. Wherever there are FAILURES against the rate contract in terms of timely delivery and quality of goods, such failures should be reported to the agency that entered the Rate Contract, and direct alternate procurement action May be taken to ensure the timely availability of quality materials to meet the needs of the Procuring Entity.<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h2>4.11<\/span>Dynamic Price Discovery \u2014 Electronic Reverse Auction (eRA)<\/span><\/h2>\n(Rule 167 of GFR 2017)<\/em><\/p>\n<aside class=\"note\">PLACEMENT NOTE: eRA appears as a mode of procurement in the Goods Manual (4.5), as a channel of procurement in the Works Manual (3.5.2), as both an advertised mode and a channel in the Non-Consultancy Manual (4.4-3-a-iii and 4.6.2), and is entirely absent from the consultancy Manual.<\/p>\nNC<\/span> states expressly: *\"<\/strong>electronic Reverse Auction (era): Not appropriate where QCBS system of evaluation is used in the procurement of non-consultancy services.\"*<\/p><\/aside>\n<h3>4.11.1<\/span>What eRA Is<\/span><\/h3>\nElectronic Reverse Auction (eRA \u2014 a type of auction classified as a dynamic procurement mode<\/em>) is an online real-time purchasing technique used to select a successful bid.<\/p>\neRA IS AN iterative process with automatic evaluation of bids<\/em>, where bidders can offer successively more favourable bids to displace the lowest bid at any given moment within the duration of the era.<\/p>\nThe following four parameters are announced before the start<\/em> Of the online Reverse Auction:<\/p>\n<aside class=\"note\">1. The starting price \u00b7 2. Minimum bid decrement \u00b7 3. Duration of the auction \u00b7 4. The maximum number of automatic extensions<\/p><\/aside>\nif a new lower bid is received within the last few minutes (pre-announced, say five minutes<\/em>) of closing time, the closing time May get automatically extended by a few minutes (pre-announced, say ten minutes<\/em>) for others to respond. A maximum number of such extensions May be pre-announced (say 50<\/em>).<\/p>\nThe most favourable bid at the end of the stipulated\/ extended time is declared as successful. It has, however, to be ensured that the entire process is conducted transparently and fairly.<\/p>\n<h3>4.11.2<\/span>The Four Reasons Why Caution Is Advised<\/span><\/h3>\nElectronic reverse auctions can be a powerful tool for procuring goods and services, but they also come with potential risks and drawbacks:<\/p>\nA) quality and supplier relationships: In an era, the focus is on price, and suppliers May be forced to cut corners<\/em> To win bids \u2014 affecting the overall quality of the product or service. Additionally, aggressive bidding can strain supplier relationships<\/em>, leading to long-term negative effects.<\/p>\nb) value for Money: While reverse auctions can drive down immediate costs, THEY may not optimise Value for Money<\/em>. Factors like Total Cost of Ownership, lifecycle costs, innovation, reliability, sustainability, and strategic alignment May get overlooked.<\/p>\nC) lack of technology development: Suppliers May hesitate to invest in innovation or process improvements if they are constantly pressured to lower prices. This can hinder long-term competitiveness and limit the introduction of new technologies or ideas in hi-tech goods and services.<\/p>\nD) risk of supplier dropouts: Aggressive bidding can lead to suppliers dropping out of the market segment<\/em>, reducing competition. If critical suppliers exit, it can disrupt the supply chain and impact availability.<\/p>\n<aside class=\"note\">Thus, while electronic reverse auctions can drive cost savings, they should be used judiciously<\/em>, considering the broader implications beyond price alone. Therefore, era should not be used indiscriminately or as a default mode of procurement<\/em>.<\/p><\/aside>\n<h3>4.11.3<\/span>Where eRA Is Appropriate, Where Caution Is Needed, and Where It Is Inappropriate<\/span><\/h3><h4>A) a Reverse Auction Would Be Appropriate Where:<\/span><\/h4>\n<ul class=\"lst\"><li>I) items are commodities, commercially-off-the-shelf items;<\/li><li>ii) it is feasible to formulate a detailed description of the subject matter of the procurement;<\/li><li>iii) there is a competitive market of bidders (say more than five<\/em>) anticipated to be qualified to participate in the era, so that effective competition is ensured;<\/li><li>iv) the criteria to be used by the Procuring Entity in determining the successful bid are quantifiable and can be expressed in monetary terms<\/em>.<\/li><\/ul>\n<h4>B) Where Caution is Needed in Using Reverse Auction:<\/span><\/h4>\n<ul class=\"lst\"><li>i) In the case of repetitive\/ regularly procured items, future procurements May be affected, as there may not be the same type of price reduction in future procurements as in the first Reverse Auction. Procuring entities May face a situation of not being able to justify the higher rates received subsequently<\/em>.<\/li><li>ii) where it is proposed to issue parallel orders by splitting the total order quantity among more than one supplier, a Reverse Auction May be avoided. However, in such a case, if the Reverse Auction is resorted to, then there should be adequate suppliers available \u2014 i.e., if the quantity is to be split into n parts, then suppliers available should be at least N+3<\/em>.<\/li><\/ul>\n<h4>C) Reverse Auction Would NOT<\/em> Be Appropriate For:<\/span><\/h4>\n<ul class=\"lst\"><li>I) the requirement is not of high enough value to generate competitive pressures on bidders;<\/li><li>ii) items of strategic\/ critical\/ vital\/ high technically complex nature; Items that are in short supply in the market;<\/li><li>iii)<\/strong>where the QCBS<\/em> System of selection is used<\/strong>(wherever permissible in case of Consultancy, Non-consultancy Services or Works)<\/em>;<\/li><li>iv) where FBS (Fixed Budget Based Selection)<\/em> System of selection is used in consultancy services, wherein the only parameter for evaluation is quality\/ technical criteria;<\/li><li>V) in engineered products having complexity in design;<\/li><li>vi) EPC contracts and complex works contracts;<\/li><li>vii) items where there are only a few suppliers.<\/li><\/ul>\n<h3>4.11.4<\/span>Terms and Conditions<\/span><\/h3><h4>A. The Procedure<\/span><\/h4>\ni) STAND-ALONE eRA: The procuring entity shall solicit bids through an invitation to the electronic Reverse Auction<\/em>, to be published or communicated in accordance with provisions like e-procurement. The invitation shall, in addition to the information as specified in e-procurement, include details relating to:<\/p>\n<aside class=\"note\">1) access to and registration for the auction; 2) opening and closing of the auction; 3) norms for the conduct of the auction; 4) any other information that May be relevant to the method of procurement.<\/p><\/aside>\nii) era preceded by PQB: If the consideration of quality requires competition only among qualified bidders, era May be preceded by a stage of PQB (on the same platform as era) to shortlist qualified bidders, who would only be allowed to participate in the era process that follows.<\/p>\niii) tender-cum-e-Reverse Auction (the combined procedure): Procuring entities May combine a full two-envelope e-procurement process with Reverse Auction. Then, after an e-procurement process, the e-Reverse Auction process is mandatorily conducted<\/em>, taking the L1 price as the benchmark (upper limit)<\/em>, after the financial bid opening (declaration of L-1 landed price\/s) \u2014 provided the number of valid bidders is not less than a stipulated number (3 if not specified)<\/em>.<\/p>\niv) the shortlisting formula for the combined procedure: Unless otherwise stipulated, the following procedure shall be followed for elimination\/ shortlisting of bidders (from among those qualified in the preceding e-Procurement process) eligible to participate in e-Reverse Auction:<\/p>\n1) the bids disallowed from participating in the Reverse Auction shall be the highest bidder(s)<\/em> In the tabulation of prices in the financial bid. If the highest bidders quote the same rate<\/em>, the price offer received LAST<\/em>, as per the time log of the portal, shall be removed first \u2014 on the principle of last in, first out<\/em> By the system.<\/p>\n2) the three bands:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Number of valid bidders<\/th><th>Consequence<\/th><\/tr><\/thead><tbody><tr><td>Less THAN the minimum stipulated number (or 3 if not specified)<\/td><td>a Reverse Auction shall NOT<\/em> Be conducted, and the financial bids from the e-procurement process shall be evaluated and finalised<\/td><\/tr><tr><td>4 TO 6 valid bidders<\/td><td>THE lowest three (3)<\/em> Bidders shall be allowed to participate in the Reverse Auction<\/td><\/tr><tr><td>More THAN 6 valid bidders<\/td><td>ONLY 50% of the bidders<\/em> (Rounded up to the next integer) shall be allowed to participate<\/td><\/tr><\/tbody><\/table><\/div>\n3) the preference override: However, if MSE bidders or class-i local suppliers<\/em> Under the Make in India policy do not meet the above criteria, but their prices in financial bids are within the policy's margin of preference<\/em>, they shall be allowed to participate. Such bidders would be over and above<\/em> The shortlist mentioned above.<\/p>\n<h4>B. The e-Reverse Auction Process (e-RAP)<\/span><\/h4>\n<aside class=\"note\">If the portal e-rap process is different from the one described below for the combined procedure, the portal provisions shall prevail<\/em>.<\/p><\/aside>\nI) there shall be no participation fees<\/em> for the e-Reverse Auction.<\/p>\nii) where pre-qualification precedes the era, an electronic invitation shall be issued, giving sufficient notice period<\/em> To the successful bidders, so that they can formulate pricing strategies. The starting price shall be decided by the Procuring Entity.<\/p>\niii) in case of the combined procedure, upon opening the financial bids, a Reverse Auction platform shall be created. The Reverse Auction shall start within the specified period (two hours if not specified<\/em>) of the bid. Unless modified by the Procuring Entity, THE L-1 landed price<\/em> In the financial bid (as per the calculation schema based on the Tender Document evaluation criteria) shall be the start bid price<\/em> On which the auction shall be initiated.<\/p>\niv) the decrement value: The Procuring Entity shall specify the decrement value before starting<\/em> THE e-Reverse Auction \u2014 or, if not specified, 0.5% of the start bid price<\/em>, rounded off to the next unit, tens, hundreds, thousands, etc., with a minimum of Rs. 1<\/em>. The reduction in bids shall have to be made as per decrement value or in multiples thereof.<\/p>\n<aside class=\"note\">A bid decrement that is too small<\/em> May prolong the auction, and a decrement that is too large<\/em> May restrict competition.<\/p><\/aside>\nV) the timing parameters and their defaults:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Parameter<\/th><th>Default if not specified<\/th><\/tr><\/thead><tbody><tr><td>Initial period of the reverse auction<\/td><td>two hours<\/td><\/tr><tr><td>Last-minute-bidding period<\/td><td>five minutes<\/strong> before the auction closing time<\/td><\/tr><tr><td>Auto-extension period<\/td><td>ten minutes<\/td><\/tr><tr><td>Maximum number of auto-extensions<\/td><td>50<\/td><\/tr><\/tbody><\/table><\/div>\nall times and periods are as per the server time stamp<\/em>.<\/p>\n<aside class=\"note\">The design cautions: The last-minute-bidding period should not be so small<\/em> That unscrupulous bidders May catch others off guard, preventing competitive responses. The auto-extension period should be sufficient to allow bidders to consider their next move<\/em>. The number of auto-extensions should not be too large<\/em> To prolong the auction, leading to bidder fatigue<\/em>.<\/p><\/aside>\nvi) service disruption: In case of service disruption at the service provider's end during the Reverse Auction, the Reverse Auction process shall start all over again<\/em>, with the last recorded lowest price of the prematurely ended e-rap as the 'start bid' price<\/em>.<\/p>\nThe prices quoted in the prematurely ended e-rap shall be binding on all the bidders<\/em> for consideration if the restarted process does not trigger within the stipulated time (or by 5.00 pm on the same day, if not stipulated<\/em>).<\/p>\nDisruption and restarting of e-rap shall be intimated to all the bidders through system\/ sms\/ e-mail through the e-procurement portal.<\/p>\nvii) What is displayed: Bidders must submit only the landed price<\/em> In the Reverse Auction, and only the item-wise L-1 price shall be displayed<\/em>, without disclosing the number of bids and names of the bidders. The landed price would not be the same for two bidders<\/em>, even if any bidder makes such an attempt.<\/p>\nWhile evaluating the bids, the exchange rate captured by the e-procurement system shall be considered for converting foreign currency into Indian rupees.<\/p>\nviii) Post-closure publication: After the auction's closing time, the bid history<\/em> Showing all the last valid bids offered, along with the names of the bidders<\/em>, shall be published. All bidders shall have the facility to see and get a print of the same for their records.<\/p>\nix) binding force: All electronic bids submitted during the Reverse Auction process shall be legally binding<\/em> On the bidder. Only the chronologically last bid<\/em> Submitted by a bidder until the end of the auction shall be considered the valid financial bid of that bidder, and consideration of the same for entering into a contract by the Procuring Entity shall be binding on the bidder.<\/p>\nX) non-participation in the combined procedure: If a bidder does NOT<\/em> Submit his bid in the Reverse Auction, the price quoted in the financial bid in the preceding e-procurement shall be considered the valid price of that bidder. The status of the bidder (L-1, L-2, etc.) shall be evaluated considering either the bid price submitted in the Reverse Auction, or the price quoted in the financial bid \u2014 whichever is lower<\/em>.<\/p>\nxi) purchase preference: Short-listed MSE or class-i local suppliers, eligible for any purchase preference policy as per the tender document, shall get an opportunity to match the L-1 prices concluded after the Reverse Auction<\/em>, if their final prices in the Reverse Auction fall within the permitted percentage.<\/p>\nxii) there shall NOT<\/em> Be any negotiation after the e-Reverse Auction process is closed.<\/p>\nxiii) the breakup of landed price: The successful L-1 bidder, after the Reverse Auction, must upload within a stipulated period (within 2 working days, if not specified<\/em>) THE breakup of landed prices<\/em> In the shortfall documents, at which the contract shall be awarded.<\/p>\nWhile giving the breakup, the bidder shall include the same taxes and duties<\/em> As quoted while submitting the financial bid. If the L-1 bidder FAILS<\/em> To submit the breakup of the landed price within the stipulated period, the Procuring Entity shall place an order based on the breakup of the financial bid submitted by the bidder<\/em>, and the same shall be binding on the bidder.<\/p>\nxiv) Monitoring for abuse: The Procuring Entity shall monitor whether there is improper use<\/em> Of the Reverse Auction \u2014 including, for example, evidence of predatory pricing, collusion, interference with the proper operation of the technology<\/em>, etc. Bidders (including their subsidiaries<\/em>) found to have engaged in collusive activities or other improper practices will be treated in accordance with the cartel\/ pool-rate provisions of the evaluation Chapter.<\/p>\n<h2>4.12<\/span>Pre-qualification Modes of Procurement<\/span><\/h2><h3>4.12.1<\/span>Why Pre-qualification Modes Exist<\/span><\/h3>\nWhere the procurement is significantly complex<\/em>, and the capability of the source of supply is crucial<\/em> for the successful performance of the contract, it May be necessary to ensure that:<\/p>\n<ul class=\"lst\"><li>There is competition only among bidders equally capable<\/em> Of performing the contract, and<\/li><li>incapable bidders don't queer the pitch<\/em> By their low-quality\/ low-price bids.<\/li><\/ul>\nIn such a situation, a pre-qualification of bidders May be required to shortlist bidders who are equally capable of performing the contract. Evaluation of techno-commercial and financial bids is restricted to this shortlist only.<\/p>\n<h3>4.12.2<\/span>Pre-qualification Bidding (PQB)<\/span><\/h3>\n1. What it is: In the situations mentioned above, where THE time, effort and money required from the bidder<\/em> To participate in a tender is high, a two-phase pre-qualification bidding<\/em> May be considered.<\/p>\nPre-qualification Bids (PQBs) should meet the norms of transparency, fairness, and maintenance of competition<\/em>.<\/p>\n<aside class=\"note\">Although there is a separate phase of PQB bidding, it is not semantically counted as a two-stage bidding<\/em>.<\/p><\/aside>\n2. The two phases:<\/p>\n<ul class=\"lst\"><li>In the first PQB phase, competent, qualified bidders are shortlisted by using a pre-qualification criterion (PQC), covering:<\/li><\/ul>\n<aside class=\"note\">I) past experience of similar contracts \u00b7 ii) performance capability \u00b7 iii) financial strength<\/p><\/aside>\nno techno-commercial or financial details are asked for in the first phase of PQB.<\/p>\n<ul class=\"lst\"><li>In the second phase, tender documents (techno-commercial and financial) are issued as usual through e-procurement\/ e-publishing; Bids only from shortlisted qualified bidders<\/em> Are evaluated, and others are rejected.<\/li><\/ul>\n3. Where PQB is NOT<\/em> Desirable:<\/p>\nSince the two-phase PQB system May strain the transparency principle<\/em>, and there is a heightened risk of anti-competitive practices<\/em>, two-phase PQB should be done only as an exception<\/em> Under specified circumstances.<\/p>\nHence, the procuring entities May lay down restricted powers to approve such modes at sufficiently high levels in SoPP<\/em>. It should NOT<\/em> Be a routine\/ normal mode of procurement, and qualification criteria as part of a single\/ two\/ multiple envelopes system should suffice in such situations.<\/p>\nPQB bidding as a separate phase is contraindicated<\/em> In the following circumstances:<\/p>\n<ul class=\"lst\"><li>A) where procurement is being done through limited tender enquiries<\/em>;<\/li><li>B) where the requirement is technically and commercially not complex enough<\/em> That pre-qualification of the bidder is not crucial for the performance of the contract \u2014 for example, commercial off-the-shelf (cots) requirements;<\/li><li>C) where the procurement is significantly complex and the time, effort and money required from the bidder to participate in a tender is not significant<\/em> \u2014 clear-cut, fail-pass pre-qualification criteria can be specified in single-stage tendering<\/em> (Instead of two-phase tendering).<\/li><\/ul>\n4. Pre-qualification criteria (PQC) \u2014 the two-sided test:<\/p>\n<aside class=\"note\">PQC should be unrestrictive enough not to leave out even one capable vendor\/ contractor<\/em> \u2014 otherwise, it can lead to higher procurement\/ works\/ services prices.<\/p>\nHowever, on the other hand, these criteria should be restrictive enough so as not to allow even one incapable vendor\/ contractor<\/em> And thus vitiate fair competition for capable vendors\/ contractors, to the detriment of the buyer's objectives. A misjudgement in either direction<\/em> May be detrimental.<\/p><\/aside>\n(A sample PQC is given in Annexure 12<\/strong> of the Goods Manual.)<\/em><\/p>\nDue consideration should be given while framing PQC to its effect on the adequacy of competition.<\/p>\nPQC should NOT<\/em> Result in unreasonable exclusion of 'class-i local supplier'\/ 'class-ii local supplier' who would otherwise be eligible, beyond what is essential for ensuring the quality or creditworthiness of the supplier.<\/p>\nTo encourage MSEs, local bidders and past successful bidders, a call May be taken as to whether PQC should apply to full quantity\/ packages<\/em> OR BE proportional to part quantity\/ package quoted<\/em> By a bidder.<\/p>\nIn case the requirement is suddenly multiple times the past procurements<\/em>, blind adoption of past pqcs (fractions\/ percentages) May lead to the disqualification of successful past vendors<\/em>, leading to inadequate competition.<\/p>\nPQC should, therefore, be carefully decided for each procurement<\/em> With the approval of ca for acceptance of the tender.<\/p>\nIt should be clarified in the PQB documents that bidders have to submit authenticated documents<\/em> In support of eligibility criteria.<\/p>\n5. Advertisement and Notification \u2014 and the notice periods:<\/p>\nThe invitation for the first-phase PQB shall be processed (advertised, tender document preparation, publicity, evaluation, and so on) in the same manner as a normal GTE or OTE<\/em> (As the situation calls for) tender, ensuring the widest possible coverage.<\/p>\nThe PQC and evaluation criteria should be clearly noted in the PQB documents<\/em>.<\/p>\nThe PQB documents should also indicate a complete Schedule of requirements<\/em> for which this PQB is being done, including approximate likely quantities<\/em> Of requirements.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Situation<\/th><th>Minimum period for submission of PQBs<\/th><\/tr><\/thead><tbody><tr><td>Normal (domestic)<\/td><td>3 WEEKS<\/td><\/tr><tr><td>Where FOREIGN BIDDERS are also involved<\/td><td>4 WEEKS<\/td><\/tr><tr><td>in case of urgency duly approved by ca<\/td><td>may be reduced to 10 (ten) DAYS<\/td><\/tr><\/tbody><\/table><\/div>\n6. Evaluation: At least in high-value and critical procurements, the credentials regarding experience and past performance submitted by the successful bidder May be verified as per PQC \u2014 as far as reasonably feasible \u2014 from the parties for whom work has been claimed to be done<\/em>.<\/p>\nThe procuring entity shall evaluate the qualifications of bidders only in accordance with the PQC specified<\/em>, and shall give due publicity to the particulars of the bidders that are qualified<\/em> On the relevant portals\/ websites.<\/p>\n7. Subsequent Procurement Tender \u2014 the single-use and six-month rules:<\/p>\nThe pre-qualification shortlist shall be for a single subsequent procurement<\/em>.<\/p>\nIn this subsequent procurement, bids are invited from these qualified bidders only, and all other bids May be treated as unsolicited offers, which are normally rejected<\/em>.<\/p>\nThis second phase of the procurement process is handled as a normal two-envelope tender.<\/p>\nThe time gap between the pre-qualification approval and the floating of the linked main procurement tender should normally be less than six months<\/em>.<\/p>\n<h3>4.12.3<\/span>Single Stage Pre-qualification<\/span><\/h3>\n1. When to use it instead: In the situation described above \u2014 i.e., significantly complex procurement; the capability of the source of supply is crucial; the necessity to ensure competition only among equally capable bidders \u2014 but where the time, effort and money required from the bidder to participate in a tender is not very high<\/em>:<\/p>\nInstead of a separate phase of pre-qualification bidding, a clear-cut, fail-pass pre-qualification criteria (PQC)<\/em> Can be asked to be submitted as the first (additional) envelope in a single-stage three-envelopes system<\/em>, so that a bidder's risk of having his bid rejected on the grounds of qualifications is remote if he exercises due diligence<\/em>.<\/p>\nIn e-procurement, separate files shall be uploaded by the bidder, mutatis mutandis<\/em>.<\/p>\n2. The terminological point: Strictly SPEAKING, this is not a pre-qualification but a post-qualification<\/em> Of bidders (i.e., after the techno-commercial and financial bids have been received).<\/p>\nIn respect of pre-qualification, in the first instance on the pre-announced bid opening date, only the PQB envelopes<\/em> (Also containing the EMD and other eligibility documents<\/em>) are opened and evaluated to shortlist the responsive bidders who pass the pre-qualification.<\/p>\n3. The rest of the procedure: The rest of the procedure is the same as the two-envelope system (techno-commercial and financial bids) for only qualified bidders.<\/p>\n<ul class=\"lst\"><li>In e-procurement, the other two envelopes of unqualified<\/em> Bidders would remain encrypted and unopened<\/em>.<\/li><li>In off-line tenders, the other two envelopes of unqualified bidders are returned unopened<\/em> To the respective bidders by registered acknowledgement due\/ reliable courier, or any other mode with proof of delivery.<\/li><\/ul>\n<h3>4.12.4<\/span>PQB Tendering \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. Pre-qualification criteria: PQB has the potential of getting misused or being applied without considering the restrictive nature of competition<\/em>. PQC should be relevant to the quality requirements, and neither very stringent nor very lax in restricting\/ facilitating the entry of bidders. These criteria should be clear, unambiguous, exhaustive, and yet specific. Also, there should be FAIR COMPETITION.<\/td><td>Lay down criteria for when prequalification in single-stage or two-stage tendering is warranted. Also, model PQC criteria for diverse types of procurements should be laid down<\/em> on the lines of Annexure 12.<\/td><\/tr><tr><td>2. Dangers of anti-competitive bidding: Since in a two-stage PQB, shortlisted bidders are announced<\/em>, there is a heightened possibility of these bidders forming a cartel and quoting anti-competitive prices<\/em> In the second stage of tendering.<\/td><td>Two-stage PQB should be done only in appropriately justified situations<\/em>. Alternatively, a single-stage multiple-envelope system<\/em> May be used for prequalification \u2014 in which the chances of anti-competitive behaviour and cycle time<\/em> Are significantly lower.<\/td><\/tr><tr><td>3. Two-phase PQB is a time-consuming process.<\/td><td>(as above)<\/em><\/td><\/tr><tr><td>4. Contentious and disputes: Both the successful and unsuccessful bidders tend to view the PQB process as a means for creating rights\/ privileges\/ entitlement<\/em> for them \u2014 by way of hair-splitting, contentious or viciously legalistic interpretations of PQC criteria<\/em>, disregarding the very rationale of the PQB and PQC.<\/td><td>In the PQC, a caveat against such tendencies<\/em> May be included \u2014 asserting the right of the procuring agency to interpret the PQC on common usage of terminologies and phrases in Public Procurement<\/em>, instead of legalistic and hair-splitting judgements \u2014 and that their decision in this regard would be final<\/em>.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2 class=\"src-G srchead\" data-src=\" G \">4.13<\/span>Approved Vendor List (AVL)<\/span>G<\/span>text; W\/C\/NC list it and cross-refer to Goods para 4.7<\/span><\/h2><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\"><h3>4.13.1<\/span>Strategic, Safety and Security Requirements \u2014 the Justification<\/span><\/h3>\nMany organisations have regular and continuous<\/em> Requirements of tailor-made items<\/em> (for which the Procuring Entity is the monopoly buyer<\/em>), which are critical for the safety and security of its operations<\/em>, and where large investments and gestation periods<\/em> Are needed for developing manufacturing and quality control infrastructure\/ processes for its production.<\/p>\nIn view of heavy investments, vendors need regular and sustained offtake for financial viability<\/em>.<\/p>\nSuch procurement needs to be done over an extended period of time only from vendors who have undergone rigorous pre-qualification<\/em>.<\/p>\nThe firms are assessed for requisite infrastructure to produce consistent quality goods up to the assessed production capacity, with regular monitoring of the quality assurance system.<\/p>\nIt May even involve, if required, extended field trials of products and inspection of manufacturing\/ quality assurance facilities and processes<\/em>. Such time-consuming pre-qualification would not be feasible for each individual procurement<\/em>.<\/p>\n<aside class=\"note\">Examples given in the Manual: Railway signalling equipment \u00b7 locomotive assemblies \u00b7 track fittings. A quality glitch in these would be disastrous<\/em>.<\/p><\/aside>\n<h3>4.13.2<\/span>What an AVL Is<\/span><\/h3>\nIn such situations, a separate phase of PQB tendering is done with a much more stringent PQC<\/em> \u2014 but the resultant shortlist of qualified vendors is kept valid for an extended period (say 2 to 5 years)<\/em> As stipulated in the PQB documents.<\/p>\nThese are called approved vendor lists (AVL)<\/em>. In some countries, these May be referred to as multi-use lists<\/em>.<\/p>\n<h3>4.13.3<\/span>The Two Categories of Approved Vendors<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Basis of approval<\/th><th>Upgrade path<\/th><\/tr><\/thead><tbody><tr><td>\"Developmental vendors\" (may be named 'Temporarily or Provisionally Approved Vendors' in some organisations)<\/em><\/td><td>Approval is granted based on an assessment of infrastructure facilities available and satisfactory production of samples as per specification \u2014 but their capability to consistently produce the quality material giving satisfactory service life in the field<\/em> Is yet to be established<\/td><td>after these development vendors demonstrate a capability to produce consistent quality goods with required service life over a period (say 2 years)<\/em>, they are upgraded<\/td><\/tr><tr><td>\"Approved vendors\"<\/strong>(the regular category)<\/em><\/td><td>Demonstrated consistent quality over the qualifying period<\/td><td> \u2014 <\/td><\/tr><\/tbody><\/table><\/div>\n<h3>4.13.4<\/span>Procurement Restricted to AVL \u2014 and the 20:80 Split<\/span><\/h3>\nin all subsequent procurements, eligibility criteria restrict participation to the \"Approved Vendor List\" (regular and developmental)<\/em>, and all other bids are treated as unsolicited offers, which are normally rejected<\/em>.<\/p>\nOnly a part \u2014 say not more than 20%<\/em> \u2014 of the total tendered quantity is distributed among development vendors<\/em>, provided they quote lower than<\/em> The regular approved vendors.<\/p>\nThe rest of the quantity (say 80% or more<\/em>) is awarded to 'approved vendors'.<\/p>\nThis ensures that development vendors are able to demonstrate their capabilities for upgradation to the regular approved vendor category.<\/p>\nThus, it should be ensured that development orders are for a viable quantity<\/em> for production and for the purpose of proving their capability.<\/p>\n<h3>4.13.5<\/span>Benefits of AVL<\/span><\/h3>\nAn AVL is a powerful tool that contributes to cost control, reliability, and overall efficiency<\/em> In procurement for strategic, safety and security goods.<\/p>\nIt ensures that vendors have undergone rigorous vetting<\/em> And have demonstrated stability and reliability<\/em>.<\/p>\nWorking with approved vendors instils confidence in the quality<\/em> Of materials and components purchased and reduces the chances of defects<\/em>. Downtime due to failures and repairs is also minimised.<\/p>\n<h3>4.13.6<\/span>Monitoring and Updation<\/span><\/h3>\nAn AVL is a dynamic tool<\/em>, and its effectiveness depends on proactive management and adaptability<\/em>. Updating an AVL over time is crucial to maintain its effectiveness and relevance.<\/p>\n<ul class=\"lst\"><li>If a new vendor applies for inclusion in AVL, it May be added to AVL if it meets the PQC in the original PQB<\/em>.<\/li><li>Key performance indicators (KPIs) for vendors should be part of the PQB document \u2014 including on-time delivery, product quality, and responsiveness<\/em>.<\/li><li>These metrics May be used to conduct periodic reviews of the AVL (e.g., annually or biannually)<\/em>, and vendors who consistently fail to meet standards or demonstrate poor performance May be downgraded or removed<\/em> From the AVL.<\/li><li>Audits of existing vendors May be conducted to assess financial stability, production capabilities, and adherence to contractual terms<\/em>.<\/li><li>The procuring Entity should MONITOR industry trends, technological advancements, and new suppliers<\/em>.<\/li><li>Feedback May be gathered from stakeholders who use or maintain the goods<\/em>. Their insights can highlight areas for improvement or identify potential issues with specific vendors.<\/li><li>Vendors May be given support to enhance their capabilities and training, share best practices, and encourage continuous improvement<\/em>.<\/li><\/ul>\n<h3>4.13.7<\/span>Where AVL Is Not<\/em> Desirable<\/span><\/h3>\nThe same contra-indications as in PQB are much more accentuated<\/em> In the case of AVL, as the list is used over prolonged periods.<\/p>\nHence, the AVL mode for an item should be approved at the highest level<\/em> In the procuring organisation.<\/p>\nSince the AVL system strains the transparency principle<\/em> And there is a heightened risk of cartelisation and collusion<\/em>, AVL should NOT<\/em> Be a routine\/ normal mode of procurement and should be done only as an exception \u2014 otherwise, PQB modes of procurement May be used.<\/p>\nAVL is contraindicated in the following seven circumstances: A) where the requirement is not related to strategic, safety or security<\/em>. B) where the item is not tailor-made<\/em>, nor is the Procuring Entity a monopoly buyer<\/em>. C) where the item is not regularly and continuously procured<\/em>. D) where the requirement is technically and commercially not complex enough<\/em>. e) where large investment and prolonged gestation period are not required<\/em> In developing manufacturing\/ quality assurance facilities\/ processes. F) where the technology is not stable<\/em> And is evolving\/ changing at a fast pace. G) where procurement can be done through limited tender enquiries<\/em>.<\/p>\n<h3>4.13.8<\/span>AVL \u2014 Risks and Mitigations<\/span><\/h3>\n<aside class=\"note\">The same risks and mitigations as in PQB apply in this case to a deeper level<\/em>.<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. Dependency on vendors: It can shift the balance of power to the hands of the vendor \u2014 leading to many disadvantages: 1.1 anti-competitive practices: These approved vendors can easily form a cartel and indulge in anti-competitive practices. This includes a significant risk of collusion due to power in the hands of the procurement entity's personnel who inspect\/ monitor the facilities\/ quality. 1.2 cost escalation: Over time, vendor costs May increase, affecting overall procurement expenses. 1.3 supplier ethics and compliance: Approved vendors May engage in unethical practices or violate compliance standards.<\/td><td>1. Diversify the AVL by including multiple reliable vendors for critical goods. Maintain a backup list of development vendors<\/em> To mitigate sudden disruptions. Regularly monitor and update the AVL. 1.1 be alert about cartel\/ pool rates. Include a cartel clause<\/em> And take mitigation measures. The personnel in such jobs May be rotated frequently<\/em> And should not be allowed to be in the same position for more than 3 years<\/em>. If the same personnel who created<\/em> The AVL are also given the task of monitoring<\/em> it, it May create a conflict of interest<\/em>. So, personnel for these two tasks should be different<\/em>. The KPIs and PQC should be objectively measurable<\/em>. Every three years, a fresh PQB<\/em> May be done for new vendors. 1.2 benchmark costs periodically against market trends. Negotiate long-term contracts with price stability clauses<\/em>. 1.3 conduct due diligence on vendors' ethical practices<\/em>. Include compliance clauses for the Code of Integrity<\/em> In contracts and monitor adherence.<\/td><\/tr><tr><td>2. Lack of monitoring and updation: AVL is a dynamic tool that needs constant monitoring and updating. 2.1 complacency: Once vendors are approved, complacency May set in, leading to reduced performance. 2.2 quality fluctuations: Even approved vendors May occasionally deliver subpar quality due to production issues or changes in their processes.<\/td><td>2. Monitor and update the AVL lists. 2.1 continuously engage with vendors, encourage innovation, and set improvement targets. 2.2 regularly audit vendors to ensure consistent quality.<\/td><\/tr><tr><td>3. Market dynamics: Market dynamics (e.g., price fluctuations and technological advancements) impact vendor capabilities and competitiveness. 3.1 innovation gap: Sticking to the same vendors May hinder access to innovative solutions. A non-approved vendor offers an innovative solution that could significantly improve operations.<\/em><\/td><td>3. Stay informed about industry trends and adjust the AVL accordingly. 3.1 encourage vendors to propose new technologies or approaches. Consider adding emerging vendors to the AVL. Evaluate the benefits and risks. Seek approval for a temporary exception<\/em>, or consider adding the vendor to the AVL.<\/td><\/tr><tr><td>4. Inadequate or too-many vendors on AVL: Both an inadequate number of vendors AND too many vendors on AVL may be detrimental to the intended benefits. Too many vendors May force vendors to cartelise for survival<\/em> \u2014 having invested heavily in creating infrastructure. Too few vendors May create supply chain disruption and increased prices<\/em>.<\/td><td>Such situations may be specially monitored. In the PQB document, an upper limit May be indicated for the maximum number of suppliers to be taken on AVL<\/em>. A large number of vendors getting cleared for AVL is an indication that this item is not a fit case for AVL mode<\/em>. In case of inadequate numbers on AVL, a repeat PQB<\/em> May be done, and efforts May be made to induce new vendors with technological and preferential help in setting up infrastructure<\/em>.<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h2>4.14<\/span>Limited Tender Enquiry (LTE)<\/span><\/h2>\n(Rule 162 of GFR 2017)<\/em><\/p>\n<h3>4.14.1<\/span>What LTE Is<\/span><\/h3>\nLTE is a restricted competition procurement<\/em>, where a pre-selected panel of vendors is directly approached<\/em> for bidding.<\/p>\n<div class=\"tblwrap\"><table><thead><tr class=\"srcmark src-multi\" data-src=\" G W \"><th><\/th><th>G<\/span> GOODS<\/th><th>W<\/span> WORKS<\/th><\/tr><\/thead><tbody><tr><td>Who is on the panel<\/td><td>vendors on the list of registered suppliers<\/em> For the subject matter of procurement \u2014 for goods and services not available on the GeM portal<\/em><\/td><td>bidders enlisted with the Procuring Entity<\/em>, along with those enlisted with other public works organisations\/ works PSUs<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nbids from uninvited bidders are treated as unsolicited<\/em> And are not entertained, except in exceptional circumstances.<\/p>\nHowever, ministries\/ departments should evolve a system by which requests for registration\/ enlistment of interested\/ unsolicited firms should be decided before the bid in the next round of tendering<\/em>.<\/p>\nThis mode provides a short and simple procedure<\/em> But May not provide as good a VfM as in the case of open tendering \u2014 but it is still a good balance for procurements below a threshold.<\/p>\n<h3>4.14.2<\/span>When LTE Is the Default Mode \u2014 THE THRESHOLD DIVERGENCE<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Threshold<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span> GOODS<\/td><td>LTE procedures should be the default mode<\/em> Of procurement when the estimated value of procurement is between Rs. 5 lakh to Rs. 50 lakh<\/em> (Rupees Five Lakh to Fifty Lakh)<\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> WORKS<\/td><td>LTE procedures should be the default mode of procurement when the estimated value of procurement is up to Rs. 10 lakh<\/em> (Rupees Ten Lakh) \u2014 OR when limited numbers of tenderers are known to possess requisite skills, technology and resources, by reason of their highly complex or specialised nature<\/em>, OR FOR works of a secret nature<\/em><\/td><\/tr><tr class=\"srcmark src-multi\" data-src=\" C NC \"><td>C<\/span> Consultancy \/ NC<\/span> Non-consultancy<\/td><td>Used for procurements up to Rs. 50 lakh<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">NOTE:<\/strong> The Works Manual adds two additional, NON-MONETARY grounds<\/strong> for using LTE which do not appear in the Goods Manual \u2014 high complexity\/ specialised nature<\/strong> and works of a secret nature<\/strong>.<\/p><\/aside>\n<h3>4.14.3<\/span>Terms and Conditions<\/span><\/h3>\n1. Prior approval of the panel: The shortlist of vendors\/ contractors from the list of registered suppliers\/ enlisted contractors for the subject matter of procurement, to whom it is proposed to send tender documents, shall be approved by the Competent Authority before floating the tender<\/em>.<\/p>\n2. Rotation where the panel is large: In case the number of registered\/ enlisted bidders for an item\/ work is large and unwieldy<\/em>, A transparent system of rotation of invitation to bid<\/em> May be used to keep the invited shortlist to a manageable number (SAY 8 TO 12<\/em>).<\/p>\n3. Despatch and mandatory publication: In off-line tendering, copies of the tender documents should be sent free of cost<\/em> (Except in case of priced specifications\/ drawings) directly by speed post\/ courier\/ e-mail<\/em> To the panel.<\/p>\nFurther, the Procuring Entity should also mandatorily publish its limited tender enquiries<\/em>:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-G\" data-src=\" G \">G<\/span> \u2014 ON GeM as well as<\/em> ON GeM-CPPP<\/strong>;<\/li><li class=\"srcmark src-W\" data-src=\" W \">W<\/span> \u2014 ON GeM-CPPP<\/strong>.<\/li><\/ul>\nApart from that, the organisations should publish the tender enquiries on its own\/ the department's or ministry's website.<\/p>\n4. The minimum number Rule: The minimum number of bidders to whom LTE should be sent is more than three<\/em>.<\/p>\nIn case less than three<\/em> Approved vendors\/ contractors are available, LTE May be sent to the available approved vendors\/ contractors with the approval of the ca, duly recording the reasons<\/em>.<\/p>\nEfforts should then be made to identify a higher number of approved suppliers\/ contractors<\/em> By the supplier registration\/ enlistment section, to obtain more responsive bids on a competitive basis.<\/p>\n5. Simplified tender document:<\/strong>A simplified tender document with brief terms and conditions<\/em> Should be used, instead of a detailed tender document.<\/strong>(G<\/span> Annexure 8 \u2014 Limited Tender Form \u00b7 C<\/span> Annexure 15 \u00b7 NC<\/span> Annexure 9.)<\/em><\/p>\nin any case, all registered vendors\/ contractors who are normally invited to quote in such limited tenders have already acknowledged acceptance of the \"general conditions of contract\" as part of the registration application<\/em>, which is applicable to such procurements \u2014 in addition to these brief \"terms and conditions\" in the LTE tender form.<\/p>\nIf necessary, specifications and drawings or any other document<\/em> May be enclosed with the limited tender form.<\/p>\n6. Currency: In domestic tenders, any bid in foreign currency should be summarily rejected<\/em>.<\/p>\n7. The security exemption: Since selected bidders are normally registered\/ enlisted with the Procuring Entity, bid Security (EMD) and Performance Security are normally not taken in LTE<\/em>.<\/p>\n<aside class=\"note\">(Contrast SLTE<\/strong> at para 4.15.2-4 below, where both ARE taken<\/strong>.)<\/em><\/p><\/aside>\n<h3>4.14.4<\/span>LTE \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. A major risk in this mode is that the demand May be artificially split to avoid OTE or higher-level approvals<\/em>.<\/td><td>The e-procurement portal May be programmed to raise an alert<\/em> If the same item is repeatedly attempted to be procured through LTE.<\/td><\/tr><tr><td>2. There is a risk that LTE May not attract enough bids<\/em>, and sometimes there May be a single acceptable offer<\/em>. It could be due to tender documents not reaching the targeted bidders \u2014 intentionally or otherwise<\/em>. It could also be due to bidders not getting adequate time to submit bids. This could also be due to an insufficient database of registered\/ known vendors<\/em>.<\/td><td>To ensure sufficient response, in addition to mails\/ emails to selected vendors, web-based publicity should be given for limited tenders<\/em> \u2014 with suitable clarifications that unsolicited bids shall not be considered<\/em>. Sufficient time should be allowed for the submission of bids \u2014 say two weeks<\/em>. A shorter or longer period, if considered sufficient, could be allowed if justified according to the urgency\/ complexity of the requirement. Further, a limited or open tender that results in only one effective offer<\/em> Shall be treated as a single Tender Enquiry situation<\/em>, with relevant powers of approval, etc.<\/td><\/tr><tr><td>3. There is also a risk that the selection of vendors May not be transparent<\/em>. At the evaluation stage, some invited bidders May be passed over on the grounds of being ineligible\/ unreliable<\/em>. On the other hand, unsolicited bidders May also quote<\/em>, causing a dilemma of transparency regarding the consideration of such offers.<\/td><td>Maintenance of a panel of registered suppliers for each subject matter of procurement is a sine qua non<\/em> for LTE (Rule 150 GFR 2017). Such panels of vendors should be reviewed every year<\/em> To ensure an adequate number of registered suppliers. The panel should not be changed after the LTE tender has been published<\/em>. ALL past successful vendors\/ bidders should invariably be invited<\/em>. In case it is proposed to exclude any registered\/ approved vendor\/ contractor from being shortlisted for inviting LTE, detailed reasons \u2014 such as failure in supply \u2014 should be duly recorded, and approval of the ca should be taken before exclusion<\/em>. Bidders should be selected with due diligence to ensure that bidders who do not meet eligibility criteria are not shortlisted. At the evaluation stage, in LTE, passing over of a duly shortlisted bidder on grounds of poor past performance or eligibility May raise questions about transparency<\/em>.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.15<\/span>Special Limited Tender Enquiry (SLTE)<\/span><\/h2>\n<aside class=\"note\">The Headline Divergence<\/p>\n<div class=\"tblwrap\"><table><thead><tr class=\"srcmark src-multi\" data-src=\" G W C NC \"><th><\/th><th>G<\/span> GOODS<\/th><th>W<\/span> WORKS<\/th><th>C<\/span> \/ NC<\/span><\/th><\/tr><\/thead><tbody><tr><td>Section title<\/td><td>SLTE for Procurements more than Rs. 50 (Rupees Fifty) Lakh<\/strong><\/em><\/td><td>SLTE for Procurements more than Rs. 10 (Rupees Ten) Lakh<\/strong><\/em><\/td><td>SLTE \u2014 above Rs. Fifty lakh<\/strong> in exceptional circumstances<\/em><\/td><\/tr><tr><td>Rule cited<\/td><td>Rule 162 of GFR 2017<\/td><td>Rule 139(v) AND Rule 162 of GFR 2017<\/td><td>Rule 162<\/td><\/tr><\/tbody><\/table><\/div><\/aside>\n<h3>4.15.1<\/span>What SLTE Is and When It May Be Used<\/span><\/h3>\nLTE\/ SLTE mode is permissible in certain special circumstances for values higher than the LTE threshold, where normally OTE should have been done<\/em>.<\/p>\nPowers to sanction procurement on an LTE\/ SLTE basis in such exceptional cases May be laid down in SoPP, based on a certificate of urgency signed by the indentor<\/em>.<\/p>\nThis mode has the merit of being quicker<\/em>, but the VfM obtained May be less than in the case of OTE<\/em>; Hence, it should be restricted to the following four situations:<\/p>\n1. Urgency: The Competent Authority in the Ministry\/ Department certifies<\/em> That there is an existing or prospective urgency for operational or technical requirements<\/em>, and any additional expenditure involved by not procuring through advertised tender enquiry is justified in view of urgency<\/em>. The Ministry\/ Department should also put on record the nature of the urgency and reasons why the procurement could not be anticipated earlier<\/em>.<\/p>\n2. Public interest: There are sufficient reasons to be recorded in writing by the Competent Authority, indicating that it will not be in the public interest<\/em> To procure the goods\/ works through advertised tender enquiry.<\/p>\n3. Known sources: The sources of supply are definitely known<\/em>, and the possibility of fresh source(s) beyond those being tapped is remote<\/em>.<\/p>\n4. Policy: Government policy designates procurement from specific agencies<\/em>.<\/p>\n<h3>4.15.2<\/span>Terms and Conditions<\/span><\/h3>\n1. The tender process would be the same as in the case of a normal LTE<\/em> Described above. However, the tender documents are more detailed, as in the case of OTE<\/em>.<\/p>\n2. The indentor's certificate: The indentor should certify that there is an existing or prospective urgency for operational or technical requirements, and that any additional expenditure involved by not procuring through an advertised tender enquiry is justified in view of urgency. The indentor should also put on record the nature of the urgency and reasons why the procurement could not be anticipated.<\/p>\n3. Currency: In domestic tenders, any bid in foreign currency should be summarily rejected.<\/p>\n4. The security Rule \u2014 the opposite of LTE: Unlike LTE, bid Security and Performance Security are taken in SLTE, as in OTE tenders<\/em>.<\/p>\n<h3>4.15.3<\/span>SLTE \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>Risks as applicable in both LTE and OTE<\/em> Are also applicable here. In addition, there is a risk that this mode May be used unjustifiably to avoid open tendering (OTE)<\/em>.<\/td><td>All mitigation strategies of LTE and OTE shall also apply here. In addition, the checks and balances systems should be tighter<\/em> By way of enhanced and severely restricted delegation of powers for certification of urgency and approval of this mode of procurement<\/em>. A system of reports from the authority signing the urgency certificate<\/em>, AND post facto review of utilisation of received goods\/ works\/ services to tackle the expressed urgency<\/em>, May be laid down.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.16<\/span>Proprietary Article Certificate (PAC) Procurement<\/span><\/h2>\n(Rule 166(i) and (iii) of GFR 2017)<\/em><\/p>\n<aside class=\"note\">PAC exists in the goods, consultancy and non-consultancy Manuals \u2014 but is entirely absent from the works Manual<\/em>, whose nomination family contains only STE or selection by nomination<\/em>.<\/p><\/aside>\n<h3>4.16.1<\/span>When PAC May Be Certified<\/span><\/h3>\nIn the procurement of goods, certain items are procured only from original equipment manufacturers (OEMs) or manufacturers having proprietary rights (or their authorised dealers\/ stockists) against a PAC certificate<\/em>. (Format at Annexure 9 of the Goods Manual.)<\/em><\/p>\nthis mode May be the shortest<\/em>, but since it May provide lesser VfM than LTE\/ OTE<\/em> AND strains the transparency principle<\/em>, it should be used only in justifiable situations.<\/p>\nSuch situations may arise on the following three grounds where a PAC can be certified:<\/p>\n1. Sole manufacturer: It is in the user department's knowledge that only a particular firm is the manufacturer<\/em> Of the required goods.<\/p>\n2. Standardisation and warranty: For standardisation of machinery or components or spare parts to be compatible with the existing sets of machinery\/ equipment<\/em> (On the advice of a competent technical expert), or if it is a condition of the manufacturer's warranty that only OEM spares are to be used during the warranty period<\/em> \u2014 the required goods are to be purchased only from a selected firm duly approved by the Competent Authority.<\/p>\n3. Research continuity: In case of advanced educational, research, development and scientific institutes\/ organisations of national importance<\/em>, specialised equipment and their spares\/ consumables May have to be procured from the same original vendor<\/em> \u2014 on the advice of a competent technical expert and approved by the project in-charge \u2014 to maintain consistency\/ reproducibility\/ continuity of established\/ standardised methods\/ protocols to attain objectives of such projects<\/em>.<\/p>\n<h3>4.16.2<\/span>Terms and Conditions<\/span><\/h3>\n1. The certificate and its effect on powers: Users should enclose, with their indent, a PAC certificate signed by the appropriate authority as per DFPR\/ SoPP, with the concurrence of associated finance<\/em>, for sourcing an item from OEM or PAC firms or their authorised agents.<\/p>\nOnce a PAC is thus signed, the powers of procurement are the same as in normal conditions<\/em> As per the delegation of powers.<\/p>\n<aside class=\"note\">(Contrast STE<\/strong> at para 4.17.2-1 below, where powers are more restricted<\/strong>.)<\/em><\/p><\/aside>\n2. Proprietary items shall be purchased only from a nominated manufacturer, or its authorised dealer as recorded in the PAC certificate<\/em>.<\/p>\n3. In certain unavoidable cases, the procuring authority May have no alternative but to waive payment of EMD\/ SD<\/em> for procurement on a proprietary basis.<\/p>\n<h3>4.16.3<\/span>PAC \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. There is a risk that this mode May get used unjustifiably to restrict competition<\/em>. Such risks get aggravated in case of secrecy about such procedures<\/em>, as alternative vendors\/ contractors may not even come to know about such opportunities.<\/td><td>The delegation of powers should be restricted for signing the PAC<\/em>. Even in PAC procurements, the NIT and the award of contract should be put on gem-cppp and Procuring Entity websites<\/em>.<\/td><\/tr><tr><td>2. Once approved, there is a risk of a nexus getting developed<\/em>, and the mode May continue to be used for many years without fresh application of mind<\/em>.<\/td><td>No item should be procured on a PAC basis for more than three years<\/em>, after which a mandatory OTE mode May be used to test the market<\/em>. The procuring entity may also keep an eye on the GeM portal for other vendors<\/em> Who can supply such items.<\/td><\/tr><tr><td>3. The bidder May charge a price higher than the market<\/em>.<\/td><td>To the extent feasible, the PAC firm should be asked to accept a \"Fall clause\"<\/em> \u2014 undertaking that if it supplies or quotes a lower rate to other governments, the public sector, or private organisations, it shall reimburse the excess<\/em>. If the price offered is not acceptable, negotiation May be held with the PAC firm<\/em>.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.17<\/span>Single Tender Enquiry (STE) \/ Selection by Nomination<\/span><\/h2>\n(Rule 166 of GFR 2017 \u00b7 NC<\/span> cites Rule 204)<\/em><\/p>\n<h3>4.17.1<\/span>What STE Is and When It May Be Used<\/span><\/h3>\nG<\/span> A tender invitation to one firm only without a PAC certificate<\/em> is called a single tender.<\/p>\nW<\/span> The selection by direct negotiation\/ nomination<\/em> is called a single tender.<\/p>\nThis mode May be the shortest, but since it May provide lesser VfM as compared to LTE\/ OTE<\/em> And May also strain the transparency principle<\/em>, it should be resorted to only under the following conditions:<\/p>\n<h4 class=\"src-G srchead\" data-src=\" G \">G<\/span> GOODS \u2014 ONE ground only (where a PAC cannot be certified)<\/em><\/span><\/h4><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\n1. In the case of an existing or prospective emergency relating to operational or technical requirements to be certified by the indentor<\/em>, the required goods are necessary to be purchased from a particular source \u2014 subject to the reason for such decision being recorded and approval of the Competent Authority obtained<\/em>.<\/p>\n<\/div><h4 class=\"src-W srchead\" data-src=\" W \">W<\/span> WORKS \u2014 SIX grounds<\/span><\/h4><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n1. Unforeseeable urgency: There is an urgent need for the work<\/em>, and engaging in a competitive tendering process would therefore be impractical<\/em> \u2014 provided that the circumstances giving rise to the urgency were neither foreseeable by the Procuring Entity nor the result of dilatory conduct on its part<\/em>.<\/p>\n2. Natural continuation \u2014 and the 25% cap: Works that represent a natural continuation of previous work carried out by the firm<\/em>, when \u2014 considering the limited size of the additional work in relation to the original procurement<\/em> And the reasonableness of the price<\/em> \u2014 it will be cost-effective to resort to single-source procurement.<\/p>\n<aside class=\"note\">However, the incremental work should not be more than 25 (twenty-five) per cent of the original contract value<\/em>.<\/p><\/aside>\n3. Emergency\/ disaster: In case of an emergency situation, situations arising after natural disasters, situations where timely completion of the work is of utmost importance<\/em> \u2014 subject to the reason for such decision being recorded and approval of the Competent Authority obtained.<\/p>\n4. Proprietary techniques\/ sole expertise: Situations where execution of the work May involve use of proprietary techniques<\/em>, OR only one contractor has the requisite expertise<\/em>.<\/p>\n5. National defence\/ security: The procurement entity engages in procurement involving national defence or national security<\/em> And determines that single-source procurement is the most appropriate method of procurement.<\/p>\n6. Overall interest: Under some special circumstances, it May become necessary to select a particular agency where adequate justification is available for such single-source selection in the context of the overall interest of the Ministry or Department<\/em>.<\/p>\n<\/div><h3>4.17.2<\/span>Terms and Conditions<\/span><\/h3>\n1. The restricted-powers Rule: The reasons for an STE AND<\/em> The selection of a particular firm must be recorded and approved by the ca<\/em> As per the delegation of powers laid down in DFPR\/ SoPP \u2014 prior to single tendering<\/em>. Unlike in PAC, the powers of procurement of STE are more restricted<\/em>.<\/p>\n2. G<\/span><\/strong>other terms and conditions of PAC procurement mentioned above would also apply in this case.<\/p>\n2. W<\/span> \u2014 Fairness and no-splitting: The Procuring Entity shall ensure fairness and equity<\/em> And shall have a procedure in place to ensure that:<\/p>\n<ul class=\"lst\"><li>The prices are reasonable and consistent with market rates<\/em> for work of a similar nature; And<\/li><li>the required work is not split into smaller-sized procurements<\/em>.<\/li><\/ul>\n3. The mandatory quarterly reporting of nomination awards W<\/span>C<\/span>NC<\/span>:<\/p>\nIn case of single tender procurements:<\/p>\nA) a report relating to such awards on a nomination basis shall be submitted every quarter<\/em> TO:<\/p>\n<ul class=\"lst\"><li>i) THE SECRETARY, in case of Ministries\/ Departments;<\/li><li>ii) the board of directors or equivalent managing body, in case of Public Sector Undertakings, Public Sector Banks, Insurance companies, etc.;<\/li><li>iii) the chief executive of the organisation where such a managing body is not in existence.<\/li><\/ul>\nb) THE audit committee or similar unit<\/em> In the organisation May be required to check at least 10% of such cases<\/em>.<\/p>\n<aside class=\"note\">Note:<\/strong> This reporting requirement appears in the Works, Consultancy and Non-Consultancy<\/strong> Manuals in the Modes\/ SSS sections. The Goods Manual carries it in the context of nomination-basis awards generally.<\/p><\/aside>\n<h3>4.17.3<\/span>STE \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span><\/td><td>THE same but more heightened risks than PAC<\/em> Are present in this mode. The selection of a single vendor May be non-transparent and unjustified<\/em>.<\/td><td>The same mitigation strategies as in the case of PAC should apply. Procurements on an STE basis should be made from reputed firms after determining the reasonableness of rates<\/em>. The procurement powers for STE should be severely restricted<\/em>.<\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span><\/td><td>risks as applicable in both LTE and OTE are also applicable here. In addition, there is a risk that this mode May be used unjustifiably to avoid open tendering (OTE)<\/em>, thereby making the selection of the contractor non-transparent and unjustified<\/em>.<\/td><td>All mitigation strategies of LTE and OTE would apply here also. In addition, the systems of checks and balances should be tighter by way of enhanced and severely restricted delegation of powers in this regard for certification of urgency<\/em> And approval of this mode. A system of reports from the authority signing the urgency certificate, and post facto review of utilisation of executed works and receipt of incidental goods\/ services<\/em> To tackle the expressed urgency, May be laid down. Audit should take up the bulk of such cases<\/em> for review to judge the genuineness of urgency certification<\/em>.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.18<\/span>Direct Procurement without Quotation<\/span><\/h2>\n(Rule 154 of GFR 2017)<\/em><\/p>\n<h3>4.18.1<\/span>What It Is and When It May Be Used<\/span><\/h3>\ndirect procurement of goods without formal quotations is normally done for the smallest value procurements<\/em>. This is also called petty purchase<\/em>.<\/p>\nIt should be used for off-the-shelf goods with simple and standard specifications<\/em>, and when the required goods (of required specification or within the required delivery period, etc.) are not available on GeM<\/em>.<\/p>\nHowever, for procurement outside GeM, it is mandatory<\/em> for a buyer to generate a \"GeM availability report and past transaction summary\" (gemar&pts) with a unique id on the GeM portal using his login credentials.<\/p>\nThe procedure is the simplest and quickest<\/em>, BUT VfM May be poor<\/em>; Hence, it is suitable only for low-value, urgent and simple requirements<\/em> In the following three situations:<\/p>\n1. The value threshold and the scientific-ministry enhancement:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Limit per case\/ occasion<\/th><\/tr><\/thead><tbody><tr><td>General<\/td><td>Rs. 50,000 (Rupees Fifty Thousand) for each requirement\/ case<\/td><\/tr><tr><td>scientific ministries\/ departments \u2014 for scientific equipment and computers<\/td><td>ENHANCED to Rs. 1,00,000\/- (Rupees One Lakh) on each occasion (OM No. F.20\/42\/2021-PPD dated 20.05.2024)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">which ministries\/ departments count as \"scientific\" for this purpose:<\/p>\n(i) Department of Science and Technology \u00b7 Department of Biotechnology \u00b7 Department of Scientific & Industrial Research \u00b7 Department of Atomic Energy \u00b7 Department of Space \u00b7 Ministry of Earth Sciences \u00b7 Defence Research & Development Organisation \u00b7 Indian Council of Agricultural Research (ICAR), including its affiliated institutions and Universities \u00b7 Department of Health Research (DHR), including Indian Council of Medical Research (including all Autonomous Bodies under these Ministries\/ Departments)<\/em><\/p>\n(ii) Educational and Research Institutes conducting post-graduate\/ doctoral level courses or research, under any Ministry\/ Department.<\/p>\n(iii) it is also clarified that gfrs are not applicable to the projects executed by state-level institutions or by private universities\/ institutions\/ organisations \u2014 even if they are funded by the ministries\/ departments\/ organisations mentioned above<\/em>.<\/p>\n(iv) in such cases, it is for the Ministry\/ Department\/ organisation to put in appropriate financial controls<\/em> To achieve the intended purpose.<\/p><\/aside>\n2. The requirement is urgent but was not covered in the procurement plan<\/em>.<\/p>\n3. The requirement is for off-the-shelf goods of simple and standard specifications<\/em>. Examples of procurement are the day-to-day needs of the office and field units, and so on.<\/em><\/p>\n<h3>4.18.2<\/span>Terms and Conditions<\/span><\/h3>\n1. Who does it and the certificate: The competent officer of the Procuring Entity can initiate and complete this purchase after diligent enquiries from the market<\/em> And filling out the certificate prescribed (G<\/span> Annexure 10 \u00b7 C<\/span> Annexure 13 \u00b7 NC<\/span> Annexure 7)<\/em>.<\/p>\nSuch powers, to a limited extent, can also be given to various user sections for operational needs<\/em>.<\/p>\n2. The imprest system: Normally, an imprest amount (with facilities for cheque payments) sufficient for two months' estimated procurements<\/em> Can be sanctioned, so that officers can handle such procurements. The imprest amount can be recouped on a monthly basis by submission of expense vouchers<\/em>.<\/p>\n3. Records: IN A summary form<\/em>, records should be kept of the vendors\/ contractors approached and the prices they indicate<\/em>.<\/p>\n4. The essence of the mode: Selection of sellers by diligent market enquiry<\/em> is of the essence of this mode of procurement.<\/p>\n5. Where to survey: In larger cities, reputed shopping malls<\/em> May also be included in the market survey. Reputed internet shopping portals<\/em> May also be explored.<\/p>\n<h3>4.18.3<\/span>Direct Procurement without Quotations \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. The main risk is the splitting of demand to avoid higher approvals or higher modes of procurement<\/em>.<\/td><td>Supervisors should carry out periodic reviews<\/em> Of such procurements to ensure that the demand is not split into small quantities for the sole purpose of avoiding the necessity of getting approval from the higher authority, or for avoiding LTE or OTE mode. AN annual review<\/em> Of such procurements shall be carried out to ensure that future anticipated requirements are clubbed and procured through LTE\/ OTE\/ rc<\/em>. To keep better control, an annual ceiling May be fixed for each office<\/em> for such a mode of procurement \u2014 say, rupees five lakh for each office per year<\/em>. Each office should maintain records to monitor such limits.<\/td><\/tr><tr><td>2. Over a period, intentionally or otherwise, the due diligence of enquiries from the market May degenerate into a mechanical obtaining of quotations<\/em>, leading to the development of nexus and crony suppliers<\/em>. Vendor selection May be manipulated with fake supporting vouchers<\/em>. Since such small-value materials do not undergo accounting and inventory control<\/em>, there is a risk of the development of a nexus, leakages, and fake procurements and payments<\/em>. The same set of vendors May get patronised repeatedly for a wide variety of requirements. Since only cursory visual inspections<\/em> Are done, quality May be at risk.<\/td><td>Supervisors should cross-check a percentage of cases in the market<\/em> for prices, fake vouchers, and so on. Supervisors should also check that the same vendor(s) is not being patronised repeatedly<\/em>. for the sake of transparency, payments should be made by cheque or through electronic clearance service<\/em> \u2014 except that cash payment May be allowed up to Rs. 5,000 (rupees five thousand)<\/em>. Staff involved with such procurements should not continue in the same role for long and should be rotated frequently<\/em>.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.19<\/span>Direct Procurement by Purchase Committee<\/span><\/h2>\n(Rule 155 of GFR 2017)<\/em><\/p>\n<h3>4.19.1<\/span>What It Is and When It May Be Used<\/span><\/h3>\nthis mode of procurement is made by a local Purchase Committee consisting of three members of an appropriate level, constituted by hod<\/em>.<\/p>\nThis procedure is slightly more complex<\/em> And is likely to provide BETTER VfM<\/em> Than direct procurement without quotation; Hence, it is suitable for marginally higher thresholds<\/em>.<\/p>\nIt is used in the following conditions:<\/p>\n1. The value band and the scientific-ministry enhancement:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Limit per occasion<\/th><\/tr><\/thead><tbody><tr><td>General<\/td><td>Above Rs. 50,000\/- and up to rs. 5,00,000\/- (Rupees Five Lakh) only, on each occasion<\/td><\/tr><tr><td>scientific ministries\/ departments<\/td><td>ENHANCED to Rs. Ten LAKH (above Rs. 1 lakh, as in para 4.18.1-1 above) on each occasion (same OM and same list of qualifying Ministries as at para 4.18.1)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n2. GeM condition: Only in case when a certain item is not available on the GeM portal<\/em> (of required specification or within the required delivery period, etc.). However, for procurement outside geM, it is mandatory for a buyer to generate a GeMAR&PTS<\/em> With a unique id on the GeM portal.<\/p>\n3. Extension to small works and services: This mode of procurement is described in the parlance of procurement of goods; However, in principle, it is equally applicable to contingency expenditure on small works\/ services<\/em>.<\/p>\n<h3>4.19.2<\/span>Terms and Conditions<\/span><\/h3>\n1. The controlling Ministry May lay down an annual ceiling value per office\/ unit<\/em> for such procurements.<\/p>\n2. In case of emergency procurement<\/em>, the facility for withdrawing the requisite advance cash amount and its subsequent account<\/em> May also be considered.<\/p>\n3. This is intended to be a fast-track, simple mode<\/em> Of procurement. The committee will survey the market<\/em> To ascertain the reasonableness of rate, quality and specifications<\/em> And identify the appropriate supplier.<\/p>\n4. The essence \u2014 market survey, NOT<\/em> A mini-lte: The selection of suitable products and suppliers by actual market survey (not by calling tenders like a mini-lte)<\/em> is the essence of this mode.<\/p>\nTherefore, there is no question of obtaining quotations by email or otherwise<\/em>.<\/p>\nThe committee shall survey the market to ascertain the reasonableness of rate, quality and specifications and identify the appropriate supplier. The survey May include online internet shopping portals<\/em>, besides physical local market surveys.<\/p>\nFor organisations in smaller towns\/ hinterlands, surveys in nearby bigger cities\/ metros May also be included<\/em> As part of the survey, depending on the ease of logistics.<\/p>\n5. The certificate:<\/strong>Before recommending the placement of the purchase order, members of the committee will jointly record the certificate prescribed<\/strong><\/em>(G<\/span> Annexure 11 \u00b7 C<\/span> Annexure 14 \u00b7 NC<\/span> Annexure 8)<\/em>.<\/p>\n6. The committee shall survey the market to ascertain the reasonableness of rate, quality, and specifications; Identify the appropriate supplier; And jointly record a certificate before placing the purchase order<\/em>.<\/p>\n<h3>4.19.3<\/span>Direct Procurement by Purchase Committee \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>Risks are the same as in the case of direct procurement without quotation mentioned above \u2014 with mitigation due to the involvement of three members<\/em>. Over a period, intentionally or otherwise, the due diligence of enquiries from the market May degenerate into a system of floating and obtaining limited tenders<\/em> \u2014 leading to delays and the development of nexus and crony suppliers<\/em>.<\/td><td>Mitigation strategies are also the same as in direct procurement without quotation.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.20<\/span>Award of Work through Quotations [W ONLY]<\/span><\/h2>\n<aside class=\"note\">This mode exists only in the works Manual<\/em>. It is the Works analogue of the Goods \"Shopping Modes\", but it is structured differently \u2014 it uses quotations from at least three contractors<\/em>, whereas the Goods Purchase Committee mode expressly forbids obtaining quotations.<\/p><\/aside>\n1. The threshold and the permitted works: Use of quotations up to Rs. Five lakh in each instance<\/em> Shall be adopted for procurement of minor civil works<\/em> LIKE:<\/p>\n<aside class=\"note\">Construction of boundary walls \u00b7 installation of safety barriers or guardrails \u00b7 repairing\/ maintenance\/ plumbing works, etc.<\/p><\/aside>\n \u2014 for which there is an established market<\/em>.<\/p>\nProcuring Entity shall not divide its procurement into separate contracts to bring the amount less than the amount set forth for such purpose<\/em>.<\/p>\n2. The minimum of three: Procuring Entity shall request quotations from as many contractors as practicable, but positively from at least three contractors<\/em>.<\/p>\nEach contractor from whom a quotation is requested shall be informed whether any elements other than the charges for the works to be executed \u2014 such as transportation and insurance charges, duties and taxes \u2014 are to be included in the price<\/em>.<\/p>\n3. One quotation only, no revision: Each contractor is permitted to give only one price quotation<\/em> AND IS not permitted to change its quotation<\/em>.<\/p>\n4. Emergent cases only: Award of work through quotations shall be resorted to only in emergent cases<\/em>, AND suitable reasons shall be recorded<\/em>.<\/p>\n<h2>4.21<\/span>Award of Works in Stalled Contracts [W ONLY]<\/span><\/h2>\n<aside class=\"note\">This provision exists only in the works Manual<\/em> And has no counterpart in any other category.<\/p><\/aside>\n1. The problem: Where a contractor abandons or stops the work mid-way<\/em> \u2014 either due to insolvency or a dispute or other reason<\/em> \u2014 engagement of the new contractor takes considerable time<\/em>, and in the meanwhile:<\/p>\n<ul class=\"lst\"><li>Public money is locked up in assets which cannot be utilised<\/em>,<\/li><li>apart from inconvenience and loss of amenities to the general public<\/em> Due to such half-completed works.<\/li><\/ul>\n2. The solution \u2014 and its two conditions: Notwithstanding anything in the GFR or the Manual, procuring entities should devise methods (including limited\/ single tenders) to deal with part-completed contracts<\/em>, wherever the work is abandoned by the contractor mid-way.<\/p>\nHowever, for issuance of limited\/ single tenders in such cases:<\/p>\n<ul class=\"lst\"><li>Condition 1 \u2014 the 20% billing test: At least 20% of work should have been billed<\/em> By the contractor who has abandoned the work.<\/li><li>Condition 2 \u2014 elevated approval: Procurement approval of such limited\/ single tender should be at the next higher level<\/em>, or such level as May be prescribed.<\/li><\/ul>\n<h2>4.22<\/span>Mode Selection by Value \u2014 Non-Consultancy Services [NC ONLY]<\/span><\/h2>\n<aside class=\"note\">The Non-Consultancy Manual alone adds three paragraphs mapping the modes onto value bands.<\/p><\/aside>\n<h3>4.22.1<\/span>Higher Value Non-consultancy Services<\/span><\/h3>\n(Rule 201(ii) of GFR, 2017)<\/em><\/p>\nin procurements of non-consultancy services above Rs. 50 (rupees fifty) lakh<\/em>, it should normally be by an advertised mode (i.e., OTE)<\/em>.<\/p>\nServices which are available on GeM have to be mandatorily procured through that portal<\/em>.<\/p>\n<h3>4.22.2<\/span>Lower Value Non-consultancy Services<\/span><\/h3>\n(Rules 199 and 201(i) of GFR 2017)<\/em><\/p>\nfor procurement below Rs. 50 (rupees fifty) lakh<\/em>, LTE can be issued to a selected shortlist of likely service providers<\/em>.<\/p>\nThe three-step shortlisting procedure:<\/p>\n1. The long list: To start with, preparation of a long list of potential service providers<\/em> May be done on the basis of formal or informal enquiries<\/em> FROM:<\/p>\n<aside class=\"note\">Other ministries or departments or organisations involved in similar activities \u00b7 chambers of commerce & industry \u00b7 association of non-consultancy firms, etc.<\/p><\/aside>\n2. The moderated long list: The Procuring Entity should scrutinise the preliminary long list<\/em> Of likely service providers as identified above, and shortlist the prima facie eligible and capable service providers<\/em> From the long list.<\/p>\nThe number of service providers in this moderated long-list should be more than three<\/em>.<\/p>\n3. The standing panel: To smoothen this shortlisting of service providers, procuring entities who do frequent procurement<\/em> OF non-consultancy services May consider the preparation of a panel of qualified service providers, after evaluation of their credentials \u2014 on the lines of registration of vendors in the procurement of goods<\/em>.<\/p>\nServices that are available on GeM have to be mandatorily procured through that portal.<\/p>\n<h3>4.22.3<\/span>Small Value Non-consultancy Services<\/span><\/h3>\nThe rationale: In small-value procurement of non-consultancy services, the service provider May neither be capable of handling the bidding process<\/em>, nor May procurement be done by shopping mode of procurement.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Value<\/th><th>Mode to be used<\/th><\/tr><\/thead><tbody><tr><td>UP TO Rs. 50,000 (Fifty thousand)<\/td><td>THE 'Direct procurement without quotation'<\/em> Mode of procurement used in procurement of goods May very well be utilised in such cases (certificate at Annexure 7)<\/em><\/td><\/tr><tr><td>UP TO Rs. 5 (Rupees Five) LAKH<\/td><td>THE 'Direct procurement by a Purchase Committee'<\/em> Mode, as used in procurement of goods, May be utilised (certificate at Annexure 8)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nin all such modes of procurement, the procedure prescribed in the Manual for procurement of goods, 2024, May be followed<\/em>.<\/p>\n<h1>Appendix to Chapter 4 \u2014 Part B: Points of Difference<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>SLTE threshold<\/td><td>G\/C\/NC: above Rs. 50 LAKH \u00b7 W: above Rs. 10 LAKH<\/td><\/tr><tr><td>2<\/td><td>OTE threshold<\/td><td>G\/C\/NC: above Rs. 50 lakh \u00b7 W: above Rs. 10 lakh<\/td><\/tr><tr><td>3<\/td><td>LTE default band<\/td><td>G: Rs. 5 lakh to Rs. 50 lakh \u00b7 W: up to Rs. 10 lakh \u00b7 C\/NC: up to Rs. 50 lakh<\/td><\/tr><tr><td>4<\/td><td>Rule cited for LTE\/ SLTE threshold<\/td><td>G\/C\/NC: Rule 162 \u00b7 W: Rule 139(v) AND Rule 162<\/td><\/tr><tr><td>5<\/td><td>Additional non-monetary grounds for LTE (high complexity\/ specialised nature; works of a SECRET nature)<\/td><td>W ONLY<\/td><\/tr><tr><td>6<\/td><td>LTE panel drawn also from OTHER Public Works Organisations\/ Works PSUs<\/td><td>W ONLY<\/td><\/tr><tr><td>7<\/td><td>proprietary Article Certificate (PAC) as a mode<\/td><td>g, c, nc \u2014 absent from works entirely<\/td><\/tr><tr><td>8<\/td><td>STE grounds<\/td><td>G: One ground (emergency, indentor-certified)<\/strong> \u00b7 W: Six grounds<\/strong> including national defence\/ security and natural continuation<\/td><\/tr><tr><td>9<\/td><td>25% cap on incremental work under \"natural continuation\" STE<\/td><td>W ONLY<\/td><\/tr><tr><td>10<\/td><td>Rule cited for Nomination modes<\/td><td>G\/W\/C: Rule 166 \u00b7 NC: Rule 204, with an added requirement of consultation with the Financial Adviser and detailed justification forming an integral part of the proposal<\/td><\/tr><tr><td>11<\/td><td>Award of work through quotations (up to Rs. 5 lakh, at least 3 contractors, one quotation each, emergent cases only)<\/td><td>W ONLY<\/td><\/tr><tr><td>12<\/td><td>Award of works in stalled contracts (20% billing test; next-higher-level approval)<\/td><td>W ONLY<\/td><\/tr><tr><td>13<\/td><td>Direct Procurement without Quotation \/ by Purchase Committee<\/td><td>G (full text), C, NC \u2014 not in Works<\/td><\/tr><tr><td>14<\/td><td>Scientific Ministries enhancement (Rs. 1 lakh \/ Rs. 10 lakh) with the four-part qualifying list<\/td><td>G ONLY<\/td><\/tr><tr><td>15<\/td><td>RATE CONTRACT full text \u2014 items amenable, merits, fall clause, parallel RCs, DDO, renewal<\/td><td>G ONLY<\/strong> (W\/C\/NC list \"Framework Agreements\/ Rate Contracts\" as a separate sixth family and cross-refer)<\/td><\/tr><tr><td>16<\/td><td>Rate Contract listed under ADVERTISED modes vs as a SEPARATE FAMILY<\/td><td>G: under Advertised \u00b7 W\/C\/NC: separate family (f)<\/td><\/tr><tr><td>17<\/td><td>Approved Vendor List full text \u2014 Developmental vs Approved Vendors, 20:80 split, 3-year rotation rule, fresh PQB every three years<\/td><td>G ONLY<\/strong> (W\/C\/NC cross-refer to Goods para 4.7)<\/td><\/tr><tr><td>18<\/td><td>eRA \u2014 placement<\/td><td>g: A mode (4.5) \u00b7 w: A channel (3.5.2) \u00b7 nc: Both (4.4-3-a-iii and 4.6.2) \u00b7 c: Absent entirely<\/td><\/tr><tr><td>19<\/td><td>eRA expressly stated as inappropriate where QCBS is used in NC services<\/td><td>nc only<\/strong> (the general eRA text in G also excludes QCBS and FBS)<\/td><\/tr><tr><td>20<\/td><td>GTE viability ground (d)<\/td><td>G: absence of sufficient competent domestic bidders AND *suspected cartel formation \u00b7 W: requirement cannot be executed by indigenous contractors *at reasonable rates<\/strong><\/td><\/tr><tr><td>21<\/td><td>GTE Terms \u2014 Currency of Bidding, Agency Commission (5%), Delivery Terms\/ Incoterms, Insurance (Rs. 5 crore threshold, Open Cover), IGST break-up<\/td><td>G ONLY<\/td><\/tr><tr><td>22<\/td><td>The eight GTE exemptions (research equipment, ICT items, nomination-basis spares\/AMC, pre-15.05.2020 commitments, 354 medical devices + 120 drugs to 31.03.2027, MDB\/BFA projects, semiconductor to 31.03.2025, procurement abroad for use abroad)<\/td><td>G ONLY<\/td><\/tr><tr><td>23<\/td><td>The seven conditions + six guidelines + three certificates for research-institution GTE<\/td><td>G ONLY<\/td><\/tr><tr><td>24<\/td><td>Advertisement portals in OTE\/ LTE<\/td><td>G: GeM AND<\/em> GeM-CPPP \u00b7 W: GeM-CPPP only<\/td><\/tr><tr><td>25<\/td><td>Requirement that successful un-enlisted bidders get enlisted before contract placement<\/td><td>W ONLY<\/td><\/tr><tr><td>26<\/td><td>PQB\/ Single-Stage Pre-qualification full text \u2014 PQC two-sided test, 3\/4-week and 10-day notice, single-use shortlist, six-month gap<\/td><td>G ONLY<\/td><\/tr><tr><td>27<\/td><td>Mode selection by value bands for NC Services (above Rs 50 lakh \u2192 OTE; below \u2192 LTE with 3-step shortlisting; small value \u2192 Goods shopping modes)<\/td><td>nc only<\/td><\/tr><tr><td>28<\/td><td>\"More than three\" in the moderated long-list of NC service providers<\/td><td>nc only<\/td><\/tr><tr><td>29<\/td><td>Quarterly reporting of nomination awards + audit committee to check at least 10% of cases<\/td><td>W, C, NC<\/strong> state it in the modes\/ SSS sections<\/td><\/tr><tr><td>30<\/td><td>Common footnote: thresholds revised upwards vide PPD's OM No. F.1\/3\/2014-PPD dated 10.07.2024<\/td><td>all four<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 4 \u2014 part b (and of Chapter 4)<\/p>\n<aside class=\"note\">Next:<\/strong>Chapter 5 \u2014 bid invitation process<\/strong>(Goods Ch. 5 \u00b7 Works Ch. 4<\/strong> \u00b7 Consultancy Ch. 5 \u00b7 Non-Consultancy Ch. 5)<\/em> \u2014 one of only two chapters whose title is word-for-word identical in all four Manuals<\/strong>. Note that Works again runs one chapter number behind, and that Consultancy alone splits the tender document into REoI<\/strong> and RfP<\/strong> as separate sections.<\/p><\/aside><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch5\">Chapter 5<\/p><h1>Bid Invitation Process<\/h1><\/header>\nMerging: Goods Ch. 5 \u00b7 Works Ch. 4 \u00b7 Consultancy Ch. 5 \u00b7 Non-Consultancy Ch. 5<\/em><\/p><h2>Structural Notes for Students<\/span><\/h2>\n1. This is one of only two chapters whose title is word-for-word identical in all four Manuals (the other being Chapter 6, Forms of Securities\u2026)<\/em>. BUT the Works Manual numbers it CHAPTER 4, not Chapter 5.<\/p>\n2. Four common anchors run through all four Manuals, in the same order:<\/p>\n<aside class=\"note\">Preparation\/ Floating of Tender Documents \u2192 Obtaining Tender Documents and Submitting Bids \u2192 Opening of Bids \u2192 Transparency and Protecting Third-Party Rights of Bidders \u2192 Risks and Mitigations<\/p><\/aside>\n3. But the four Manuals organise the material very differently:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>Number of sections<\/th><th>Distinctive feature<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span> Goods<\/td><td>5<\/td><td>The base text; leanest treatment<\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> Works<\/td><td>15<\/strong>the most granular<\/em><\/td><td>Promotes each sub-topic to a full section; adds fixed NIT\/ opening days, accessibility standards, entry window for sub-contractors<\/td><\/tr><tr class=\"srcmark src-C\" data-src=\" C \"><td>C<\/span> Consultancy<\/td><td>8<\/td><td>ALONE splits the tender document into two separate documents \u2014 REoI (5.2) and RfP (5.3)<\/td><\/tr><tr class=\"srcmark src-NC\" data-src=\" NC \"><td>NC<\/span> Non-Consultancy<\/td><td>5<\/td><td>Places the entire document-composition detail inside<\/em> 5.1 as sub-paras 5.1.3 to 5.1.12; adds Performance Standards\/ Method Statement<\/strong> and minimum-wage restrictions<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>Concordance for Chapter 5<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>Goods<\/th><th>Works<\/th><th>CS<\/th><th>NCS<\/th><\/tr><\/thead><tbody><tr><td>5.1<\/td><td>Model Tender Documents<\/td><td>5.1.1<\/td><td>(in 4.2)<\/em><\/td><td>5.1.1<\/td><td>5.1.1<\/td><\/tr><tr><td>5.2<\/td><td>Tender Documents \u2014 the fundamental document<\/td><td>5.1.2<\/td><td>4.1<\/td><td>5.1.2<\/td><td>5.1.2<\/td><\/tr><tr><td>5.3<\/td><td>Contents\/ Sections of Tender Documents<\/td><td>5.1.3<\/td><td>4.2<\/td><td>(see 5.4, 5.5)<\/em><\/td><td>5.1.3<\/td><\/tr><tr><td>5.3.1<\/td><td>Notice Inviting Tender (NIT)<\/td><td>5.1.3-2<\/td><td>4.2.1<\/td><td>(RFPL \u2014 5.3.2-2)<\/em><\/td><td>5.1.4<\/td><\/tr><tr><td>5.3.2<\/td><td>Instructions to Bidders (ITB) and AITB<\/td><td>5.1.3-3<\/td><td>4.2.2<\/td><td>(ITC \u2014 5.3.2-3)<\/em><\/td><td>5.1.5<\/td><\/tr><tr><td>5.3.3<\/td><td>General and Special Conditions of Contract<\/td><td>5.1.3-4<\/td><td>4.2.3<\/td><td>5.3.2-4<\/td><td>5.1.6<\/td><\/tr><tr><td>5.3.4<\/td><td>Schedule of Requirements<\/td><td>5.1.3-5<\/td><td>4.2.4<\/td><td>(ToR)<\/em><\/td><td>5.1.7<\/td><\/tr><tr><td>5.3.5<\/td><td>Technical Specifications\/ Drawings\/ QA<\/td><td>5.1.3-6<\/td><td>4.2.5<\/td><td> \u2014 <\/td><td>5.1.8<\/td><\/tr><tr><td>5.3.6<\/td><td>Qualification Criteria<\/td><td>5.1.3-7<\/td><td>4.2.6<\/td><td>5.2.2-6<\/td><td>5.1.9<\/td><\/tr><tr><td>5.3.7<\/td><td>Evaluation Criteria<\/td><td>5.1.2-6<\/td><td>4.2.7<\/td><td>5.3.2-6<\/td><td>(within 5.1.12)<\/em><\/td><\/tr><tr><td>5.3.8<\/td><td>Submission Forms and Formats<\/td><td>5.1.3-8<\/td><td>4.2.8<\/td><td>5.3.3<\/td><td>5.1.11<\/td><\/tr><tr><td>5.3.9<\/td><td>Financial Bid (BOQ Excel Sheet)<\/td><td>5.1.3-8-b<\/td><td>4.2.9<\/td><td>5.3.3-2<\/td><td>5.1.10<\/td><\/tr><tr><td>5.4<\/td><td>REoI Document<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>5.2<\/td><td> \u2014 <\/td><\/tr><tr><td>5.5<\/td><td>RfP Document<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>5.3<\/td><td> \u2014 <\/td><\/tr><tr><td>5.6<\/td><td>Mandatory e-Publishing<\/td><td>5.1.4<\/td><td>4.3<\/td><td>5.4<\/td><td>5.1.13<\/td><\/tr><tr><td>5.7<\/td><td>Amendment of Tender Documents<\/td><td>5.1.5<\/td><td>4.4<\/td><td>5.4.2<\/td><td>5.1.14<\/td><\/tr><tr><td>5.8<\/td><td>Extension of Deadline of Bid Submission<\/td><td>5.1.6<\/td><td>4.5<\/td><td>5.4.3<\/td><td>5.1.15<\/td><\/tr><tr><td>5.9<\/td><td>Availability and Cost of Tender Documents<\/td><td>5.2.1<\/td><td>4.6.1<\/td><td>5.5.1<\/td><td>5.2.1<\/td><\/tr><tr><td>5.10<\/td><td>Participation of Bidders \u2014 Eligibility<\/td><td>5.2.2<\/td><td>4.6.2<\/td><td>5.5.2<\/td><td>5.2.2<\/td><\/tr><tr><td>5.11<\/td><td>Pre-NIT and Pre-bid Conferences<\/td><td>5.2.3<\/td><td>4.7<\/td><td>5.5.3<\/td><td>5.2.3<\/td><\/tr><tr><td>5.12<\/td><td>Site Visit<\/td><td> \u2014 <\/td><td>4.7-3<\/td><td>5.5.4<\/td><td>5.2.4<\/td><\/tr><tr><td>5.13<\/td><td>Clarification of Tender Documents<\/td><td>5.2.4<\/td><td>4.8<\/td><td>5.5.5<\/td><td>5.2.5<\/td><\/tr><tr><td>5.14<\/td><td>Withdrawal\/ Amendment\/ Modification by Bidders<\/td><td>5.2.5<\/td><td>4.9<\/td><td>5.5.6<\/td><td>5.2.6<\/td><\/tr><tr><td>5.15<\/td><td>Sealing\/ Marking of Bids in off-line Tenders<\/td><td>5.2.6<\/td><td>4.10<\/td><td>5.5.7<\/td><td>5.2.7<\/td><\/tr><tr><td>5.16<\/td><td>Uploading\/ Submission of Bids<\/td><td>5.2.7<\/td><td>4.11<\/td><td>5.5.8<\/td><td>5.2.8<\/td><\/tr><tr><td>5.17<\/td><td>Bid Validity<\/td><td>5.2.8<\/td><td>4.12<\/td><td>5.5.9<\/td><td>5.2.9<\/td><\/tr><tr><td>5.18<\/td><td>Opening of Bids<\/td><td>5.3<\/td><td>4.13<\/td><td>5.6<\/td><td>5.3<\/td><\/tr><tr><td>5.19<\/td><td>Transparency and Third-Party Rights<\/td><td>5.4<\/td><td>4.14<\/td><td>5.7<\/td><td>5.4<\/td><\/tr><tr><td>5.20<\/td><td>Risks and Mitigations<\/td><td>5.5<\/td><td>4.15<\/td><td>5.8<\/td><td>5.5<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>5.1<\/span>Model Tender Documents<\/span><\/h2>\nthe Department of Expenditure (DoE), Ministry of Finance, Government of India, has issued model tender documents (MTD) for:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Date of issue<\/th><\/tr><\/thead><tbody><tr><td>Procurement of GOODS<\/td><td>October 2021<\/td><\/tr><tr><td>Procurement of NON-CONSULTANCY SERVICES<\/td><td>October 2021<\/td><\/tr><tr><td>Procurement of CONSULTANCY SERVICES<\/td><td>April 2023<\/strong>(includes a Model REoI<\/strong>)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nprocuring entities are URGED<\/em> To customise the relevant MTD to prepare tender documents for their procurements. Guidance notes annexed to the MTDs<\/em> Detail the process of customisation of MTD for an organisation and for each procurement.<\/p>\n<aside class=\"note\">W<\/span> \u2014 the Works position is different: The Works Manual does <\/strong>not refer to a DoE Model Tender Document. Instead: *\"<\/strong>The bid documents must be based on relevant standard bidding documents (SBD) FOR \u2014 the type of contract (Lump Sum, Item Rate etc.); Estimated value range; Bidding system (Single Envelope\/ Two Envelope\/ PQB) etc.*<\/p>\nSBD for e-procurement would be slightly different from the traditional SBD.<\/strong>To ensure uniformity, the standard provisions in most sections of the SBD are to be used unaltered. Any modification to suit a unique requirement of the specific procurement is to be done through variable sections \u2014 such as Appendix to instructions to bidders or special conditions of contract<\/strong> (these variable sections may have different nomenclatures in some organisations). Normally, if the organisation does not have its own SBD, it May follow those of other public works organisations like CPWD.<\/strong><\/p>\nBefore floating the tender, the bid document should be got approved by the Competent Authority.<\/strong>\"<\/p><\/aside>\n<h2>5.2<\/span>Tender Documents \u2014 the Fundamental Document<\/span><\/h2>\n1. Why it matters: The tender document is the fundamental document<\/em> In the Public Procurement process, as \u2014 after the award of the contract \u2014 it becomes part of the contract agreement<\/em>.<\/p>\nA carefully prepared tender document avoids delays and complaints<\/em>. This will also attract more bidders to formulate and submit their competitive bids with confidence<\/em>.<\/p>\nHence, it is worth spending time and effort on this \u2014 even in cases of urgency<\/em>.<\/p>\n<aside class=\"note\">W<\/span> adds two important sentences not in the other three:<\/p>\na) \"all necessary provisions governing the contract should be clearly provided in the tender document. Examples are technical specifications, drawings, commercial terms and conditions including payment terms, obligations of the procuring entity and the contractor, timeframe\/ milestones for execution of the project, tax implications, compliance framework for statutory and other norms, reporting on progress\/ quality of the work, dispute resolution.\"<\/em><\/p>\nb) \"Comprehensive survey & soil investigation report, area grading & mapping of underground facilities \u2014 where the project is to be executed \u2014 May be made available and made part of the tender document.\"<\/em><\/p><\/aside>\n2. Clarity requirement: Provisions\/ clauses in the tender document should be clear, self-contained, and comprehensive without any ambiguity<\/em> \u2014 to avoid differences in interpretation and possible disputes, time overrun, cost overrun and quality compromises<\/em>.<\/p>\n<h3>5.2.1<\/span>The Essential Aspects Every Tender Document Must Address<\/span><\/h3>\n(Rule 173 of GFR 2017)<\/em><\/p>\nWhile tender documents should be complete in themselves and may be slightly different for various categories of procurement, these must necessarily address the essential aspects below. Model Tender Documents issued by the DoE \u2014 which comply with all these requirements \u2014 may be used, with due customisation:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>Requirement<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-W\" data-src=\" W \"><td>a)<\/td><td>description of the subject matter of procurement, its specifications\/ drawings including the quality\/ nature\/ quality assurance, quantity, time and place or places of delivery\/ completion W<\/span> Variant: *\u2026Quantity, time and location where the construction is to be effective, any incidental services to be performed*<\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>a-bis)<\/td><td>W<\/span> Only: The facilities and the inputs which will be provided to the contractor by the Ministry\/ Department<\/td><\/tr><tr><td>b)<\/td><td>limitation or preference for participation by bidders in terms of Government policies<\/td><\/tr><tr><td>c)<\/td><td>the procedure, as well as the date, time, and place for obtaining, submitting, and opening of the bids<\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>d)<\/td><td>suitable provisions for enabling a bidder to question (W<\/span>: \"Seek clarification\/ question\")<\/em> The bidding conditions, bidding process and\/ or rejection of its bid. These provisions should include a time frame in which the Procuring Entity will address the bidder's questions<\/em><\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>e)<\/td><td>criteria for determining the responsiveness<\/em> Of bids; Criteria as well as factors to be considered for evaluating the bids on a common platform<\/em>; And the criteria for awarding the contract to the responsive, most advantageous (lowest\/ highest as the case May be) bidder \u2014 should be clearly indicated<\/strong> W<\/span> Footnote on \"highest\":\"<\/strong>Highest, here, refers to the selection of the contractor using the quality and Cost Based Selection (QCBS) methodology \u2014 wherein the contractor securing the HIGHEST MARKS by combining the technical and financial evaluation scores is identified as the <\/em>Highest scorer or the h1 BIDDER*, and is eligible for award of contract.\"*<\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>f)<\/td><td>THE eligibility<\/em> Criteria should take care of the supplier's\/ contractor's eligibility to participate in the tender process (W<\/span>: \"to receive such a government contract\")<\/em><\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>f-bis)<\/td><td>W<\/span> Only: Requirements as to documentary evidence<\/em>, which must be submitted by contractors to demonstrate their qualifications<\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>g)<\/td><td>THE qualification<\/em> Criteria should consider their capability to perform the resultant contract successfully, balancing considerations of quality, time, and cost<\/strong><\/em> W<\/span> variant: *\u2026should take care of the contractor's <\/strong>past performance, experience, technical competence, financial strength to handle the contract successfully, <\/strong>compliance with environmental protection regulations\/ environment management system and so on*<\/td><\/tr><tr><td>h)<\/td><td>commercial terms and conditions \u2014 e.g., payment terms, tax implications, respective obligations of the Procuring Entity and the suppliers, and compliance framework for statutory and other norms. The provision of price variation<\/em>, wherever considered appropriate, and the methodology for calculation<\/em>, shall be clearly stipulated<\/td><\/tr><tr><td>i)<\/td><td>the tender document should include a clause that \"If a firm quotes nil charges\/ consideration, the bid shall be treated as unresponsive and will not be considered.\"<\/em><\/td><\/tr><tr><td>j)<\/td><td>procedures for redressal of grievances or complaints from aggrieved bidders<\/td><\/tr><tr><td>k)<\/td><td>if applicable, the integrity Pact clause and format<\/em> To be signed shall be included<\/td><\/tr><tr><td>l)<\/td><td>suitable provision for settlement of disputes<\/em>, if any, emanating from the resultant contract<\/td><\/tr><tr><td>m)<\/td><td>essential terms of the procurement contract, including a suitable clause mentioning that the resultant contract will be interpreted under Indian laws<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<h3>5.2.2<\/span>Delegation, Eligibility vs Qualification vs Evaluation, and Time<\/span><\/h3>\n3. Delegation: Procuring entities May issue instructions regarding the appropriate delegation of authority for approval of the tender documents before these are floated\/ uploaded<\/em>.<\/p>\n4. The three-filter structure \u2014 the single most important conceptual point in this chapter:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Filter<\/th><th>Function<\/th><\/tr><\/thead><tbody><tr><td>Eligibility criteria<\/td><td>specify the criteria that a bidder should meet to be considered a responsive bid<\/em> To be evaluated further, beyond the preliminary evaluation\/ screening of bids<\/td><\/tr><tr><td>qualification criteria<\/td><td>determine the capability of bidders (who have passed the eligibility criteria) to perform the contract<\/em>. Only those bidders who meet the qualification criteria go to the next step of evaluation for award of contract<\/td><\/tr><tr><td>evaluation criteria<\/td><td>THE final filter<\/em> Used to select the bidders (who have passed the qualification criteria) for the award of the contract<\/td><\/tr><\/tbody><\/table><\/div>\n5. Qualification Criteria \u2014 the broad-basing rule: Qualification criteria should be clear and fair<\/em> in regard to the specific circumstances of the procurement. Public authorities should also keep the experience, technical and financial criteria broad-based<\/em>, so that bidders with experience in items\/ goods of a similar nature (W<\/span>: \"in execution of works of a similar nature\")<\/em> Can participate.<\/p>\nAppropriate parameters should be prescribed to enable the selection of the right type of bidders in the public interest<\/em>, balancing considerations of quality, time, and cost.<\/p>\n6. Evaluation Criteria \u2014 the permitted additional criteria:<\/strong> Depending on the requirement and VfM considerations, the Procuring Entity may consider including, besides price<\/strong>, one or more additional criteria:<\/p>\n<div class=\"tblwrap\"><table><thead><tr class=\"srcmark src-multi\" data-src=\" G W \"><th>G<\/span> GOODS<\/th><th>W<\/span> WORKS<\/th><\/tr><\/thead><tbody><tr><td>Quality \u00b7 technical merit \u00b7 aesthetic and functional characteristics \u00b7 environmental characteristics \u00b7 running costs \u00b7 cost-effectiveness \u00b7 after-sales service and technical assistance \u00b7 delivery date and delivery period or period of completion<\/td><td>quality of workmanship \u00b7 technical merit \u00b7 aesthetic and functional characteristics \u00b7 environmental characteristics \u00b7 period of completion<\/td><\/tr><\/tbody><\/table><\/div>\nno criteria shall be used for the evaluation of tenders that cannot be verified<\/em>.<\/p>\n7. Default method: Open online tendering should be the default method<\/em> To ensure efficiency of procurement.<\/p>\n8. The time-allowed Rule: The Procuring Entity should allow enough time to the bidders to prepare their proposals<\/em>. The time allowed shall depend on the assignment, but:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Situation<\/th><th>Minimum period<\/th><\/tr><\/thead><tbody><tr><td>Normally<\/td><td>not less than three weeks<\/td><\/tr><tr><td>Where participation of INTERNATIONAL service providers\/ contractors is contemplated<\/td><td>not less than four weeks<\/td><\/tr><\/tbody><\/table><\/div>\n9. The four reserved rights: Tender documents should invariably<\/em> Reserve the Procuring Entity's right \u2014 without assigning any reason<\/em> \u2014 to: A) reject any or all of the bids; Or b) cancel the tender process; Or c) abandon the procurement of the goods\/ works\/ services; Or d) issue another tender for identical or similar goods\/ works\/ services.<\/p>\n<h2>5.3<\/span>Contents\/ Sections of the Tender Document<\/span><\/h2>\n(Rule 168 of GFR 2017)<\/em><\/p>\n<h3>5.3.0<\/span>The Section Structure<\/span><\/h3>\n<aside class=\"note\">G<\/span> and W<\/span> use the same ten sections \u2014 but note the ORDER of the last two is REVERSED.<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr class=\"srcmark src-multi\" data-src=\" G W \"><th>Section<\/th><th>G<\/span> GOODS<\/th><th>W<\/span> WORKS<\/th><\/tr><\/thead><tbody><tr><td>I<\/td><td>Notice Inviting Tender (NIT) and its Appendix: Tender Information Summary (TIS)<\/td><td>(same)<\/em><\/td><\/tr><tr><td>II<\/td><td>Instructions to Bidders (ITB)<\/td><td>(same)<\/em><\/td><\/tr><tr><td>III<\/td><td>Appendix to Instructions to Bidders (AITB)<\/td><td>(same)<\/em><\/td><\/tr><tr><td>IV<\/td><td>General Conditions of Contract (GCC)<\/td><td>(same)<\/em><\/td><\/tr><tr><td>V<\/td><td>Special Conditions of Contract (SCC)<\/td><td>(same)<\/em><\/td><\/tr><tr><td>VI<\/td><td>Schedule of Requirements<\/td><td>(same)<\/em><\/td><\/tr><tr><td>VII<\/td><td>Technical Specifications and Quality Assurance<\/td><td>DRAWING, Technical Specifications and Quality Assurance<\/td><\/tr><tr><td>VIII<\/td><td>Qualification and Evaluation Criteria<\/td><td>(same)<\/em><\/td><\/tr><tr><td>IX \/ X<\/td><td>(i) Financial Bid (BOQ Excel Sheet) then (j) Submission forms and formats<\/td><td>(i) Submission forms and formats then (j) Financial Bid (BOQ Excel Sheet) \u2014 order reversed<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">W<\/span> caveat: *\"<\/strong>The contents of Bid Documents would therefore VARY, but will GENERALLY comprise the following (some of these sections May be named or organised differently in some organisations).\"*<\/p><\/aside>\n<h3>5.3.1<\/span>Notice Inviting Tender (NIT)<\/span><\/h3>\n1. Legal importance: NIT is of legal importance<\/em>, since it is this part of the tender document that solicits offers from the bidders<\/em>. G<\/span> adds: *The model NIT format in MTD should be used to publish the tender notice.*<\/p>\n2. Function and alerts: THE NIT (and its Appendix TIS) must contain sufficient information in brief<\/em> for a prospective bidder to decide whether to participate<\/em> In the tender and, if he decides to participate, how to go about it<\/em>.<\/p>\nTo ensure competition, the attention of all likely bidders<\/em> \u2014 for example, registered vendors\/ contractors, past suppliers\/ contractors, and other known potential suppliers\/ contractors \u2014 should be invited to the NIT through email\/ smss\/ letters<\/em>.<\/p>\nIn e-procurement, the website May be programmed to generate these alerts automatically<\/em>.<\/p>\n3. The mandatory note for limited tenders: In case of procurement through a limited tender, the NIT May be uploaded on geM (Goods only)<\/em> As well as on gem-cppp and the Procuring Entity's website, with a note saying<\/em>:<\/p>\n<aside class=\"note\">\"This notice is being published for information only and is not an open invitation to quote in this limited tender. Participation in this tender is by invitation only and is limited to the selected Procuring Entity's registered suppliers\/ contractors. Unsolicited offers are liable to be ignored. However, suppliers\/ contractors who desire to participate in such tenders in future May apply for registration with Procuring Entity as per procedure.\"<\/em><\/p><\/aside>\n4. Audit trails: Time-stamped audit trails for the e-publication shall be maintained by the procurement portal. Printouts May be taken only in case of off-line tenders<\/em>, if required \u2014 apart from ensuring maintenance of time-stamped audit trail of e-publication. The complete details of the dates on which advertisements appeared on the website should be indicated when sending cases to higher authorities.<\/p>\n<h3>5.3.2<\/span>Instructions to Bidders (ITB) and its Appendix (AITB)<\/span><\/h3>\nITB contains all relevant information as well as guidance to the prospective bidders regarding:<\/p>\n<aside class=\"note\">Obtaining tender documents \u00b7 preparing and submitting a response \u00b7 the process of establishing the eligibility\/ qualification credentials of the bidders \u00b7 as well as evaluation and comparison of tenders and award of contract<\/p>\nW<\/span> and C<\/span> add to this list:<\/strong>Code of Integrity in Public Procurement (CIPP) \u00b7 the process of grievance redressal *(and C<\/span> further adds: <\/strong>Declaration of results)*<\/p><\/aside>\nITB should NOT<\/em> Contain information on processes after the announcement of the award<\/em>, which should be covered in GCC \u2014 for example, the arbitration clause, resolution of disputes, and so on.<\/p>\nITB also contains an introduction\/ overview of the contents of the tender document.<\/p>\n<aside class=\"note\">W<\/span> adds: *\"<\/strong>it mentions the type of entities that May participate, specifically if consortium\/ JV are permitted to participate. It also excludes insolvent, bankrupt, debarred, and convicted firms with conflict of interest from participation. Restriction of participation of bidders from certain countries with land borders with India is also applicable.\"*<\/p><\/aside>\nthe AITB device: Instead of modifying ITB every time<\/em>, any changes warranted by exceptional circumstances May be indicated \u2014 with the prior approval of ca<\/em> \u2014 in a separate Appendix to ITB (AITB), and ITB May be included unchanged in every tender document<\/em>.<\/p>\nIt should also be indicated therein that the provisions in the AITB shall supersede the corresponding provisions in the ITB<\/em>.<\/p>\n<h3>5.3.3<\/span>General and Special Conditions of Contract (GCC and SCC)<\/span><\/h3>\nThe general conditions of contract (GCC) details the terms and conditions that would govern the resultant contract.<\/p>\nGCC covers all information on aspects after the announcement of the tender award till the closure of the contract and dispute resolution<\/em>. It should NOT<\/em> Cover any aspect up to the announcement of the award.<\/p>\nThe SCC device: Instead of modifying the GCC every time, any changes warranted by exceptional circumstances May be indicated in a separate section \u2014 special conditions of contract (SCC)<\/em> \u2014 with the prior approval of the ca, and GCC May be included unchanged in every tender document.<\/p>\nIt is also to be indicated therein that the provisions in the SCC will supersede the corresponding provisions in the GCC<\/em>.<\/p>\n<aside class=\"note\">W<\/span> Only \u2014 the four circumstances warranting an SCC clause: \"Conditions in SCC shall be need-based and specific, and the circumstances warranting them shall be duly considered, including but not limited to the following:\"<\/em><\/p>\na) where the wording in GCC specifically requires<\/em> That further information is to be included in SCC, and the conditions would not be complete without that information<\/em>;<\/p>\nB) where the wording in GCC indicates that supplementary<\/em> Information May be included in SCC, but the conditions would still be complete without that information<\/em>;<\/p>\nc) where THE type, circumstances or locality of the works<\/em> Requires additional clauses or sub-clauses; And<\/p>\nd) where the laws of the country, or exceptional circumstances<\/em>, necessitate alterations in GCC. Such alterations are effected by stating in SCC that a particular clause, or part of a clause in GCC, is deleted, and giving the substitute clause or part<\/em>, as applicable.<\/p><\/aside>\n<h3>5.3.4<\/span>Schedule of Requirements<\/span><\/h3><h4 class=\"src-G srchead\" data-src=\" G \">G<\/span> Goods<\/span><\/h4><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\nThis section describes the list of goods required, quantities, delivery requirements, destination, and scope of supply<\/em> (Concomitant accessories, spare parts, and incidental works\/ services).<\/p>\nIf there is no separate section on technical specifications (TS) and quality assurance (QA), then TS and QA May also be included here.<\/p>\nIt must be clarified whether the evaluation of eligibility\/ qualifications\/ financial bids would be done item-by-item in a Schedule<\/em> OR on the total of all items in a Schedule<\/em> \u2014 and, if there is more than one Schedule, whether the same would be done on a schedule-by-schedule basis<\/em> Or on the total of all schedules put together<\/em>.<\/p>\n<\/div><h4 class=\"src-W srchead\" data-src=\" W \">W<\/span> Works<\/span><\/h4><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n1. For works procurement, this section should detail the scope of work, including the description of the works to be undertaken, quantities, quality standards, site location, and delivery requirements\/ milestones<\/em>. If there are no separate sections on TS and QA, these details should be incorporated here, specifying the standards and methodologies to be employed.<\/p>\n2. It should be clarified how the evaluation will be conducted \u2014 whether item-by-item, by lot, or for the entire scope of work<\/em>. Additionally, if the procurement involves multiple lots or sections of work<\/em>, it should be stated whether evaluations will be done on a lot-by-lot basis<\/em> Or based on the total of all lots or sections combined<\/em>.<\/p>\n3. This ensures transparency and clarity<\/em>, enabling bidders to understand the scope fully and submit their bids accordingly.<\/p>\n4. Identification of milestones<\/em> May be done in an optimal and sequential manner<\/em>, and the same May be stipulated in the tender document along with enabling provisions<\/em>.<\/p>\n<\/div><h4 class=\"src-NC srchead\" data-src=\" NC \">NC<\/span> NON-CONSULTANCY \u2014 Schedule of Requirements and Services and Activities Schedule<\/span><\/h4><div class=\"srcblock src-NC\" data-src=\" NC \" data-label=\"Non-Consultancy Manual only\">\nSchedule of Requirements and its sub-schedule \u2014 Service and Activities Schedule<\/em> \u2014 describes the background, purpose\/ objectives, description\/ scope, deliverables\/ outcomes, quantum, timelines of services required, etc.<\/p>\nThe requirements May consist of more than one Schedule<\/em>. Each Schedule May contain more than one service<\/em>.<\/p>\nIn case of multiple schedules of requirement in a tender of services, it should be clarified how bids for multiple schedules would be evaluated for award of contract \u2014 either Schedule by Schedule or in total<\/em>.<\/p>\nBidders must fill up compliance<\/em> Regarding these schedules.<\/p>\n<\/div><h3>5.3.5<\/span>Technical Specifications, Drawings and Quality Assurance<\/span><\/h3><h4 class=\"src-G srchead\" data-src=\" G \">G<\/span> Goods<\/span><\/h4><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\nTechnical specifications and quality assurance lays down the technical specifications and quality assurance requirements of the goods required. It would also stipulate, if required, any compliance required by Central and State pollution control boards<\/em>.<\/p>\n<\/div><h4 class=\"src-W srchead\" data-src=\" W \">W<\/span> Works \u2014 and the Accessibility Mandate<\/span><\/h4><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n1. Construction drawings, technical specifications and quality assurance plan<\/em> Lay down the technical specifications and quality assurance requirements of the works to be executed. It would also stipulate, if required, any compliance required by Central and State Pollution Control Boards.<\/p>\n2. The mandatory accessibility clause \u2014 W<\/span> ONLY: \"The bidder shall ensure that all products, services, platforms, infrastructure, and other deliverables under contract must comply with applicable accessibility standards and guidelines as notified under the <\/em>rights of persons with disabilities Act, 2016, and the <\/em>rights of persons with disabilities Rules, 2017 As amended \u2014 including but not limited to:\"<\/em><\/p>\na) harmonised guidelines and standards for universal accessibility in India, issued by the Ministry of housing and urban affairs<\/em>.<\/p>\nb) IS 17802 (PART 1):2021 \u2014 Accessibility for ICT Products and Services Part I: Requirements<\/em>; and IS 17802 (PART 2):2022 \u2014 Accessibility for ICT Products and Services Part 2: Determination of Conformance<\/em> \u2014 issued by the bureau of Indian Standards<\/em>; and<\/p>\nc) any other relevant guidelines, notifications, or instructions from time to time by the Department of empowerment of persons with disabilities, Ministry of social justice and empowerment<\/em>, Government of India.<\/p>\n<\/div><h4 class=\"src-NC srchead\" data-src=\" NC \">NC<\/span> NON-CONSULTANCY \u2014 Performance Standards and Quality Assurance; Method Statement; Work Plan; Critical Material Schedule<\/span><\/h4><div class=\"srcblock src-NC\" data-src=\" NC \" data-label=\"Non-Consultancy Manual only\">\n1. Performance Standards and Quality Assurance STIPULATES THE quantitative\/ qualitative parameters\/ limits\/ thresholds for performance standards\/ service levels and functional\/ technical specifications<\/em> To which the service must be performed.<\/p>\nIt shall stipulate procedures for the measurement, reporting and monitoring<\/em> Of performance parameters \u2014 including institutional or third-party arrangements<\/em> for this purpose.<\/p>\nIt shall also stipulate the procedure for resolution and escalation in case of deficiency<\/em> In performance\/ quality\/ service levels.<\/p>\nIn the case of long-term and complex services<\/em>, it May stipulate a service-level agreement (SLA)<\/em> Which must be complied with during delivery of services.<\/p>\nPerformance standards shall also include statutory compliance required for occupational safety, health and working conditions<\/em> Requirements during delivery of services.<\/p>\n2. Procuring Entity May, if considered necessary, specify sub-schedules: Method statement, work plan, and critical material schedules<\/em> Required for the performance of services to desired quality and standards. Otherwise, these May be left to be quoted by the bidder<\/em>.<\/p>\n3. Bidders must fill up the relevant forms regarding this Schedule.<\/p>\n<\/div><h3>5.3.6<\/span>Qualification Criteria<\/span><\/h3>\n1. The general Rule (all four): If it is intended to use qualification criteria to evaluate a tender and determine whether a bidder has the required qualifications to perform the contract successfully, this point May be clearly specified in ITB\/ AITB or as a separate section<\/em> OF THE tender document.<\/p>\nThe bidder must ensure that he provides convincing proof<\/em> Of having fulfilled these criteria.<\/p>\nAny criteria not specified in the tender<\/em> Cannot be used for evaluation or qualification.<\/p>\n2. The content of Pre\/ Post Qualification Criteria: PQC shall be based entirely upon the capability and resources required to perform the particular contract satisfactorily<\/em>, considering:<\/p>\n<aside class=\"note\">Bidders' experience and past performance \u00b7 capabilities with respect to personnel, equipment and manufacturing facilities \u00b7 financial standing \u00b7 and relevant compliance with environmental protection regulations\/ environment management system<\/p><\/aside>\nTHE quantity, delivery, and value<\/em> Of the procurement shall be kept in view while the pre\/ post qualification criteria are fixed.<\/p>\nThere should be NO<\/em> Pre\/ post qualification criteria that would be advantageous to foreign manufactured goods at the cost of domestically manufactured goods<\/em>. (C<\/span> variant: \"advantageous to FOREIGN CONSULTANTS at the cost of domestically delivered services\".)<\/em><\/p>\n3. Relaxation for start-ups (all four)<\/em>: The condition of prior turnover and prior experience<\/em> May be relaxed for start-ups \u2014 only to start-ups recognised by DPIIT<\/em> \u2014 subject to meeting quality & technical specifications<\/em> And making suitable provisions in the tender document (Rule 173(i) of GFR 2017; OM No. F.20\/2\/2014-PPD (Pt.) dated 20.09.2016)<\/em>.<\/p>\nStart-ups May be MSMEs\/ MSEs or otherwise. Such relaxation can be provided in the case of procurement of works as well.<\/p>\nIt is further clarified that such relaxation is not optional but has to be ensured<\/em> \u2014 except in case of procurement of items related to public safety, health, critical security operations and equipment<\/em>, etc., where adequate justification exists for the Procuring Entity not to relax such criteria.<\/p>\n4. Demerged entities \u2014 W<\/span>, C<\/span>, NC<\/span> ONLY (DoE's OM No. F.8\/78\/2023-PPD dated 12.10.2023)<\/em>:<\/p>\nW<\/span> formulation:<\/strong>Demerged entities (by virtue of a corporate restructuring exercise etc.) May be permitted<\/em> To participate in the tender by using the credentials of the original\/ parent entity to satisfy the eligibility criteria \u2014 at least for the initial five years from the incorporation of the demerged entities<\/em>.<\/p>\nProcuring entities may, in suitable cases, consider the credentials based on the merit and circumstances of the cases<\/em> \u2014 like type of procurement, nature of demerger, number of eligible bidders available, etc.<\/p>\nTender documents must clearly mention<\/em> If the credentials of the demerged entity will be considered or not in the specific tender, and May give the conditions under which demerged entities May become eligible.<\/p>\n5. Entry window for sub-contractors in smaller contracts \u2014 W<\/span> ONLY:<\/p>\n<aside class=\"note\">It is of utmost importance<\/em> To develop new contractors and also to provide avenues to sub-contractors, since they May not get opportunities to accumulate the required credentials to compete in normal tenders<\/em>.<\/p>\nTo enable a window of entry for such sub-contractors, in small value contracts (e.g., repair contracts up to Rs. 60 lakh)<\/em>, the requirements regarding general construction experience, particular construction experience and available bid capacity<\/em> MAY not be insisted upon<\/em> \u2014 provided the bidders fulfil other criteria regarding financial\/ personnel\/ equipment capabilities<\/em>.<\/p>\nHowever, to avoid overstretching of their resources, no such contractors May be allowed to hold more than 2 contracts under relaxed credentials, at any given time<\/em>.<\/p><\/aside>\n6. The non-consultancy qualification criteria \u2014 NC<\/span> Only, with its three numbered criteria and worked example:<\/p>\nUnless otherwise stipulated, the Qualification Criteria shall include:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Criterion<\/th><th>Content<\/th><\/tr><\/thead><tbody><tr><td>Criteria 1: Experience and past performance<\/td><td>i) Experience of providing similar services ii) VOLUME of similar services: (1) 3 services > each 40% of the estimated cost; OR (2) 2 services > each 50% of the estimated cost; OR (3) 1 service > 80% of the estimated cost<\/td><\/tr><tr><td>Criteria 2: PERFORMANCE CAPABILITY \u2014 Managerial and Equipment<\/td><td>i) CONTRACT MANAGER \u2014 5 years' experience (3 as a manager) ii) Ownership\/ proposals for acquisition\/ hiring the essential equipment<\/td><\/tr><tr><td>criteria 3: Financial capability<\/td><td>i) Avg annual turnover AT least 3\u20137 TIMES the estimated cost ii) Financial Liquidity<\/td><\/tr><\/tbody><\/table><\/div>\nthe worked example given in the nc Manual:<\/p>\na) Past Experience:<\/p>\n<ul class=\"lst\"><li>i) The bidder must have at least three years' experience<\/em> (Ending month of March prior to the bid opening) of providing similar types of services to Central\/ State Government\/ PSUs\/ nationalised banks\/ reputed organisations<\/em>. Services rendered with a list of such organisations, with duration of service, shall be furnished.<\/li><li>ii) the bidder must have successfully executed\/ completed similar services (the definition of \"similar services\" should be clearly DEFINED)<\/em> Over the last seven financial years<\/em> Previous to the current financial year:<\/li><li>(1) three similar completed services with annualised value not less than 40% (forty per cent) of the estimated annualised cost; OR<\/li><li>(2) two similar completed services with annualised value not less than 50% (fifty per cent) of the estimated annualised cost; OR<\/li><li>(3) one similar completed service with annualised value not less than 80% (eighty per cent) of the estimated annualised cost.<\/li><\/ul>\nb) Performance Capability:<\/p>\n<ul class=\"lst\"><li>I) managerial capability: A contract Manager with five years' experience<\/em> In services of an equivalent nature and volume, including no less than three years as manager<\/em>.<\/li><li>ii) equipment capability: Ownership\/ proposals for the timely acquisition (own, lease, hire, etc.) of the essential equipment listed in the tender information summary (TIS)<\/em>.<\/li><\/ul>\nc) Financial Capability:<\/p>\n<ul class=\"lst\"><li>I) average annual gross billing during the last three years, ending 31ST March of the previous financial year, should be at least 3 times (for 1\u20133 year contracts) to 7 times (for contracts longer than 3 years)<\/em> The estimated annual cost \u2014 as far as feasible based on the nature of service and market condition.<\/li><\/ul>\n<aside class=\"note\">The reason given: \"Generally, the financial capability required in non-consultancy services as a multiple of annual tender value should be <\/em>higher than the multiple in works, because the service provider has to <\/em>sustain the services over a long period of time. That is why a multiple of 3 to 7 is mentioned above.\"<\/em><\/p><\/aside>\n<ul class=\"lst\"><li>ii) liquid assets and\/ or credit facilities \u2014 net of other contractual commitments and exclusive of any advance payments<\/em> Which May be made under the contract \u2014 of no less than the amount specified in the tender document.<\/li><\/ul>\nThe upper-cap Rule NC<\/span>: In higher-value procurements, the minimum annual turnover should not be blindly a multiplier<\/em> Of the assignment value \u2014 but there May be an upper cap on demanded turnover<\/em>, so as not to restrict competition only to the big or foreign firms.<\/p>\n<h3 class=\"src-W srchead\" data-src=\" W \">5.3.7<\/span>Evaluation Criteria \u2014 the Works elaboration<\/span>W<\/span><\/h3><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n1.<\/strong> These criteria can include:<\/p>\n<aside class=\"note\">The quality of work \u00b7 cost considerations \u00b7 technical excellence \u00b7 aesthetic and functional attributes of the proposed construction, aligning with the project's overall goals \u00b7 environmental considerations (reflecting the commitment to sustainability) \u00b7 running costs \u00b7 cost-effectiveness<\/p><\/aside>\nand \u2014 critically in safeguarding the Procuring Entity's interests:<\/p>\n<aside class=\"note\">Defect liability period (DLP) \u00b7 warranty period post-installation and commissioning \u00b7 long-term service agreements<\/p><\/aside>\n \u2014 ensuring that any defects identified within a specified period post-completion are rectified at the contractor's expense<\/em>, and that the project's integrity is maintained over time.<\/p>\nIt's crucial that the evaluation criteria \u2014 including those for the defect liability and warranty periods as well as long-term service commitments \u2014 are tangible and verifiable<\/em>. This ensures a transparent, equitable, and objective assessment process, enabling a holistic evaluation that considers not only the initial project execution but also its long-term sustainability, operational efficiency, and maintenance.<\/p>\nThe inclusion of the projected delivery date and completion timeline<\/em> Ensures the project adheres to strategic planning and timelines.<\/p>\n2. Conditional discounts \u2014 W<\/span> Only: Conditional discounts, or discounts offered post tender opening<\/em>, if any, shall not be considered during evaluation<\/em>. However, such discounts shall be availed if the bidder becomes otherwise eligible for award of contract<\/em>.<\/p>\n<\/div><h3>5.3.8<\/span>Submission Forms and Formats<\/span><\/h3>\nThis section contains the relevant forms for tender submission:<\/p>\n<aside class=\"note\">Various declarations by the bidder \u00b7 formats for the Bank Guarantee \u00b7 financial bid forms (BOQ excel sheet) \u00b7 exception and deviation forms \u00b7 contract forms and manufacturer's authorisation form \u00b7 Integrity Pact (if applicable), and so on.<\/p><\/aside>\n<h3>5.3.9<\/span>Financial Bid (BOQ Excel Sheet)<\/span><\/h3>\n1. Preparation by the Procuring Entity: The Procuring Entity should select an appropriate format of BOQ from the e-procurement portal<\/em> And upload it after filling up the entries for the complete Schedule of requirements and various price components (W<\/span> Adds: \"\/ Schedule of Rates\")<\/em> \u2014 to enable the system to automatically calculate the all-inclusive price of a bid and generate a comparative tabulation of all bids<\/em>.<\/p>\n<aside class=\"note\">W<\/span> footnote: *For reference, <\/strong>CPWD Schedule of Rates (SOR) can be referred, which serves as a comprehensive reference for construction projects. This schedule includes <\/strong>both BASIC RATES and FINISHED RATES for various items of work.*<\/p>\nC<\/span> and NC<\/span> add: \"Any procurement portal that does not have a facility for financial bids to be uploaded in excel format (providing detailed break-up in line with the type of contract and system of selection) should <\/em>endeavour to build such functionality \u2014 which is crucial for non-consultancy and consultancy services.\"<\/em><\/p><\/aside>\n2. The \"not entered = not paid\" Rule \u2014 C<\/span> and NC<\/span> Only: The bidder should fill in rates and prices for ALL<\/em> Items described in the excel sheet\/ services and activities Schedule.<\/p>\nItems for which no rate or price is entered<\/em> By the bidder will not be paid for<\/em> By the Procuring Entity when executed, and shall be deemed covered by the other rates and prices<\/em>.<\/p>\nThe priced schedule contains sections on remuneration for staff deployed, reimbursable expenses and miscellaneous expenses<\/em>.<\/p>\nAll duties, taxes, and other levies payable by the consultant\/ service provider under the contract \u2014 or for any other cause \u2014 as in the month prior to the month of the deadline for submission of bids<\/em> \u2014 should be included in the total bid price.<\/p>\nEven in tenders for lump-sum contracts<\/em>, for the purpose of determining the remuneration due for additional elements of work\/ additional services during the contract<\/em>, the bidder shall provide a breakdown of the lump-sum price<\/em>.<\/p>\nC<\/span> adds: *Bidding Documents should include a clause that \"<\/strong>if a firm quotes NIL service charges\/ consideration, the bid shall be treated as unresponsive and will not be considered\".*<\/p>\n3. Uploading discipline (all four): Bidders are to upload only the downloaded BOQ (in excel format)<\/em> After entering the relevant fields \u2014 without any alteration\/ deletion\/ modification of other portions of the excel sheet<\/em>.<\/p>\nThe quoted price shall be considered to include all relevant financial implications \u2014 including inter alia<\/em>:<\/p>\n<aside class=\"note\">The scope of the goods\/ works\/ services \u00b7 location of the bidder \u00b7 location of the consignee(s)\/ Procuring Entity \u00b7 terms of delivery \u00b7 extant Rules and regulations relating to taxes, duties, customs, transportation, environment, labour of the bidder's country and in India<\/p>\n(W<\/span> variant: applicable taxes, duties, permits, transportation, environment, and labour costs in accordance with the prevailing market rates and relevant regulations of India.)<\/em><\/p><\/aside>\n4. Restrictions regarding personnel deployed \u2014 NC<\/span> ONLY:<\/p>\nA) the minimum wage floor: The quoted rates shall not be less than the minimum wage fixed\/ notified by the Central\/ State Government (whichever is higher)<\/em> \u2014 where the service is performed \u2014 and shall include all statutory obligations and service charges\/ margin (including transaction charges) over such minimum wage<\/em>.<\/p>\nB) the 'nil' price Rule: Bids without any element of cost over and above such minimum wage<\/em> Shall be treated as 'Nil' price quotations and would be rejected<\/em>.<\/p>\nC) LCS for manpower outsourcing: Least cost system (LCS) should be considered for procurement of manpower outsourcing service<\/em>, wherever appropriate \u2014 especially in high-value cases<\/em>.<\/p>\nD) liability and character verification: The service provider shall be liable for all kinds of dues payable in respect of all personnel<\/em> Provided under the contract, and the Procuring Entity shall not be liable for any dues<\/em> for availing the services of the personnel. The service provider should ensure that the persons to be deployed are not alcoholics or drug addicts<\/em> And do not indulge in any activity prejudicial to the interest of the Procuring Entity. The service provider shall ensure to get the police verification for all the manpower deployed<\/em> By them, and the contractor should ensure that the manpower deputed should bear good moral character<\/em>.<\/p>\n<h2>5.4<\/span>Preparation of the Request for Expression of Interest (REoI) Document [C ONLY]<\/span><\/h2>\n<aside class=\"note\">This entire section exists only in the consultancy services Manual<\/em>. There is no counterpart in Goods, Works or Non-Consultancy.<\/p><\/aside>\n<h3>5.4.1<\/span>Basic Considerations<\/span><\/h3>\n1. DoE has issued Model Tender Documents for Procurement of Consultancy Services, which includes a MODEL REoI<\/em>.<\/p>\n2. Why two stages: It is important to hire consultants who have a reputation for relevant quality and competence<\/em>; hence Procurement of Consultancy is done in a two-stage process<\/em>:<\/p>\n<ul class=\"lst\"><li>The first stage (expression of Interest<\/em> Stage) \u2014 to shortlist such qualified consultants in a transparent and open<\/em> Manner.<\/li><li>In the next stage (RfP<\/em> Stage) \u2014 there is competition only among qualified shortlisted firms or individuals<\/em>, in which selection is based on the quality of the proposal<\/em> And, where appropriate, on the cost of services<\/em> To be provided.<\/li><\/ul>\n3. Therefore, the process of shortlisting is one of the most difficult and time-consuming tasks<\/em> In the selection process of a consultant. This could be eased by writing a clear description of service (objectives and scope) and shortlisting criteria<\/em>.<\/p>\n<h3>5.4.2<\/span>Contents of the REoI<\/span><\/h3>\nThe EoI document shall contain the following sections:<\/p>\nPart i: REoI process<\/p>\n<ul class=\"lst\"><li>Section I: Request for Expression of Interest (REoI)<\/li><li>Section II: Appendix<\/li><li>Section III: Qualification Criteria<\/li><\/ul>\npart II: Schedule of requirements<\/p>\n<ul class=\"lst\"><li>Section IV: Terms of Reference<\/li><\/ul>\npart III: EoI submission formats<\/p>\n<ul class=\"lst\"><li>Form 1: EoI Form (Covering Letter)<\/strong> \u2014 Form 1.1: Consultant Information \u00b7 Form 1.2: Eligibility Declarations<\/em><\/li><li>Form 2: Qualification Criteria \u2013 Compliance<\/strong> \u2014 Form 2.1: Performance Capability Statement \u00b7 Form 2.2: Financial Capability Statements \u00b7 Form 2.2.1: Financial Statement \u00b7 Form 2.2.2: Average Annual Turnover<\/em><\/li><li>Form 3: Checklist for Consultants<\/li><li>Other Annexures:<\/strong>Annexure 1: Authorisation to Attend Pre-EoI Conference \u00b7 Annexure 2: Code of Integrity<\/em><\/li><\/ul>\nSection-wise description:<\/p>\n<ul class=\"lst\"><li>Section I \u2014 REoI: A formal invitation<\/em> for Expression of Interest from interested bidders.<\/li><li>Section II \u2014 Appendix: Where variable parameters and information related to this specific REoI process<\/em> Are summarised.<\/li><\/ul>\nSection III \u2014 qualification criteria:<\/p>\na)<\/strong> This section lays down the qualification criteria which shall be applied by the Procuring Entity for shortlisting the consultants. The REoI should ask for sufficient information<\/em> So that the Procuring Entity May evaluate the consultant's capabilities and eligibility<\/em> To undertake the assignment.<\/strong> The Consultants must be asked:<\/p>\n<ul class=\"lst\"><li>I) requisite experience during a specified period (say 5 years) with volume of assignments similar in nature in general and specific sectors relevant to the subject assignment<\/em>;<\/li><li>ii) financial capability: Turnover (overall and from consultancy services)<\/em>.<\/li><\/ul>\nb) Relaxation for Start-ups<\/strong> \u2014 (as at para 5.3.6-3 above)<\/em>.<\/p>\nc) Qualification Criteria shall be based entirely upon capability and resources; there should be no qualification criteria advantageous to FOREIGN CONSULTANTS at the cost of domestically delivered services.<\/p>\nd) Qualification of demerged entities<\/strong> \u2014 (as at para 5.3.6-4 above)<\/em>.<\/p>\nE) what the REoI must NOT<\/em> ASK FOR \u2014 a critical restriction:<\/p>\n<aside class=\"note\">In addition, the consultants should indicate information relating to their eligibility and any conflict of interest<\/em> that they know may impact objective performance and impartial advice. CONSULTANTS should NOT<\/em> Be asked about their approach to the services<\/em>, or to submit any curricula vitae of key personnel<\/em> \u2014 because these documents will be dealt with in the RfP<\/em>. No legal documents \u2014 such as certificates of incorporation of the firm, powers of attorney, financial statements, or translations of standard brochures<\/em> \u2014 should be requested.<\/p>\nGiven the often-large number of submissions, the advertisement should stress the importance of brevity<\/em> Of the information to be sent. It may indicate the extent of dispensation, if any, allowed for start-ups.<\/p>\nUnless otherwise stated in Section II: Appendix, consultants May associate with other firms to enhance their qualifications \u2014 BUT should indicate clearly whether the association is in the form of a joint venture\/ consortium (JV\/C) and\/ or a sub-consultancy<\/em>.<\/p><\/aside>\nSection IV \u2014 terms of Reference (ToR): This section describes the background, purpose\/ objectives, description\/ scope of work, deliverables\/ outcomes, inputs to be provided by the Procuring Entity, and timelines of Consultancy Services (hereinafter called the 'Service') required.<\/p>\nThe 'service' May include incidental goods, works, and other services<\/em> If so indicated therein. Any generic reference to the 'Service' shall be deemed to include such incidental Goods, Works, and other Services. This may also include the place of execution of the assignment.<\/p>\n<h3>5.4.3<\/span>Important Provisions of the REoI<\/span><\/h3>\n1.<\/strong> REoI contains all relevant information and guidance regarding \u2014 obtaining tender documents, preparing and submitting a responsive bid, the process of establishing eligibility\/ qualification credentials, evaluation and comparison of tenders, code of Integrity in Public Procurement (CIPP), the process of grievance redressal, and declaration of results.<\/strong><\/p>\n2. Eligibility Criteria:<\/strong> Provisions relating to eligibility criteria, conflict of interest and applicable preferential policies<\/strong> regulate the participation of bidders of various categories and their agents.<\/p>\n<ul class=\"lst\"><li>It mentions the type of entities which may participate, specifically if JV\/C are permitted<\/em> to participate.<\/li><li>It shall also mention that the consulting company should be registered under the applicable Act with registered offices in India<\/em>.<\/li><li>It also excludes insolvent, bankrupt, debarred, convicted firms, and firms with conflict of interest from participation.<\/strong> Restriction of participation of bidders from certain countries having land borders with India also applies.<\/li><li>In case jv\/cs are permitted, it should be made clear if the experience of the bidders as a member of JV\/C would be considered or not<\/em>. If yes, then the manner of aggregating qualifications<\/em> Of members of JV\/C \u2014 say, only pro-rata experience proportionate to his percentage share declared in JV\/C MoU<\/em> \u2014 May be mentioned.<\/li><\/ul>\n3. Preferential Procurement Policies: applicable policies are mentioned (MSEs, Start-ups, Make in India etc.).<\/p>\n4. EoI validity: Eois shall remain valid for a period not less than 60 (sixty) days<\/em> From the deadline for the EoI submission.<\/p>\n<aside class=\"note\">(Contrast RfP validity: not less than 90 days<\/strong> \u2014 para 5.5.4-5 below.)<\/em><\/p><\/aside>\n5. Qualification Criteria:<\/strong> the qualification criteria for shortlisting the bidders and its scoring\/ marking scheme<\/strong> is detailed. It also specifies, if JV\/C are permitted, how credentials of members would be considered in evaluation.<\/p>\n6. ToR at the eoI STAGE \u2014 the \"not yet ready\" rule: At the EoI stage, ToR is relevant for bidders to decide whether they are interested in bidding<\/em> for this assignment. It is also relevant to decide the specific sector of experience required in the qualification criteria<\/em>.<\/p>\nNormally, ToR should be ready before REoI is floated<\/em>. However, if a detailed ToR is not ready<\/em>, at least the following should be included in the REoI: Description\/ scope of work, deliverables\/ outcomes, inputs to be provided by the Procuring Entity, and timelines<\/em> Of the required 'service'.<\/p>\nREoI should contain a clause retaining the right to make minor adjustments to ToR at the RfP stage<\/em>.<\/p>\n<h2>5.5<\/span>Preparation of the Request for Proposals (RfP) Document [C ONLY]<\/span><\/h2>\n(Rule 186 of GFR 2017)<\/em><\/p>\n<h3>5.5.1<\/span>What the RfP Is<\/span><\/h3>\nthe request for proposals (RfP) is the bidding document in which the technical and financial proposals from the consultants are obtained<\/em>.<\/p>\nFor procurement of consultancy services, the RfP is sent only to the short-listed consultants<\/em>.<\/p>\nIt contains the following sections:<\/p>\n<ul class=\"lst\"><li>Section I: Request for Proposal Letter (RFPL) and its Appendix: Tender Information Summary (TIS)<\/li><li>Section II: Instructions to Consultants (ITC)<\/li><li>Section III: Appendix to Instructions to Consultants (AITC)<\/li><li>Section IV: General Conditions of Contract (GCC)<\/li><li>Section V: Special Conditions of Contract (SCC)<\/li><li>Section VI: Terms of Reference (ToR)<\/strong> \u2014 Section VI-A: List of Key Experts and Required Qualifications<\/em><\/li><li>Section VII: Evaluation\/ Scoring Criteria<\/li><\/ul>\n<h3>5.5.2<\/span>Section-by-Section<\/span><\/h3>\n1. Section I \u2014 RFPL and TIS: Provides a synopsis of information relevant for a consultant to decide on participating in the RfP. RFPL states the intention of the Procuring Entity to enter into a contract<\/em> for the provision of consultancy services, details of the Procuring Entity, and date, time, and address for submission of proposals<\/em>.<\/p>\nIt plays the role played by NIT<\/em> In procurement of goods and services.<\/p>\n2. Section II \u2014 ITC and Section III \u2014 AITC:<\/strong> Contains all necessary information that would help the consultants prepare responsive proposals.<\/p>\nIt shall bring in as much transparency as possible<\/em> To the selection procedure by providing information on the evaluation process<\/em>, and by indicating the evaluation criteria and factors and their respective weights and minimum passing quality score<\/em>.<\/p>\nStandard information includes clauses relating to the procedure of bid submission, pre-bid meeting, seeking clarifications<\/em>, and so on \u2014 BUT should NOT<\/em> Contain information on processes after the announcement of the award, which should be covered in GCC.<\/p>\nThe assignment\/ job-specific information in AITC includes: Date and time of bid submission, contact address, qualification criteria, method of selection, evaluation process, factors of evaluation and their respective weights<\/em>, and so on.<\/p>\nThe ITC shall specify the proposal validity period \u2014 normally 90 (ninety) days<\/em>.<\/p>\n3. Sections IV and V \u2014 GCC and SCC: (as at para 5.3.3 above)<\/em>.<\/p>\n4. Section VI \u2014 ToR and Section VI-A \u2014 List of Key Experts:<\/p>\nA) ToR describes the background, purpose\/ objectives, description\/ scope, deliverables\/ outcomes, timelines, Procuring Entity's inputs and counterpart personnel, statutory requirements of services required, etc.<\/p>\nB) the budget-disclosure Rule: Since cost is part of the selection criterion, the ITC shall not indicate the budget<\/em> \u2014 except in case of fixed budget system of selection<\/em> \u2014 but shall indicate the expected input of key professionals (staff time)<\/em>.<\/p>\nSection VI-A: 'List of Key Experts and Required Qualifications' describes the team composition, expertise, experience, and professional qualifications required for each key expert<\/em>. Consultants, however, shall be free to prepare their own estimates of staff time<\/em> Necessary to carry out the assignment.<\/p>\nC) consultants May be encouraged to provide comments and suggestions<\/em> On ToR, counterpart staff, key experts and facilities to be provided by the Procuring Entity.<\/p>\nD) simplified technical proposal (stp) vs full technical proposal (ftp):<\/p>\n<aside class=\"note\">In the LCS<\/em> system of evaluation \u2014 since the technical scores are not ranked or weighted and added to financial scores<\/em> \u2014 it would suffice if, instead of a detailed marking scheme for the criteria\/ sub-criteria, minimum fail-pass qualifying benchmarks<\/em> Are laid down for each criteria\/ sub-criteria.<\/p>\nFor such an assignment, technical evaluation can be carried out by following a simplified procedure<\/em>, and only a simplified technical proposal (stp)<\/em> \u2014 instead of a full technical proposal (ftp)<\/em> \u2014 May be called for and indicated in the data sheet of the RfP document.<\/p>\nStp should be used when the assignment is:<\/p>\n<ul class=\"lst\"><li>I) unlikely to have significant downstream impact<\/em>;<\/li><li>ii) OF A routine nature<\/em>, where ToR already defines details of tasks to be performed and required output, and approach, methodology, organisation, and staffing could be evaluated without use of sub-criteria<\/em>; and<\/li><li>iii) that characteristics of work do not require further detailed evaluation of the consultant's experience<\/em> (e.g., engagement of accountants, auditors, consultant engineers etc.).<\/li><\/ul>\nSTP reduces the time and cost required to prepare the proposal<\/em> And could be evaluated faster<\/em> By the evaluation committee. For example, the following parameters can be used:<\/p>\n<ul class=\"lst\"><li>I) minimum experience, including number of assignments handled by the firm similar to the area of assignment;<\/li><li>ii) turnover and other financial parameters of the firm, if required;<\/li><li>iii) minimum educational qualifications of each of the key professionals;<\/li><li>iv) minimum requirement of experience of the key professionals in an area similar to the proposed assignment;<\/li><li>V) all the firms which meet the minimum qualifying standards\/ criteria so prescribed will stand technically qualified for consideration of their financial bids<\/em>.<\/li><\/ul><\/aside>\n5. Section VII \u2014 Evaluation\/ Scoring Criteria: Stipulates the scoring scheme for evaluating various technical criteria. These may cover scoring of criteria relating to:<\/p>\n<aside class=\"note\">The consultant's experience \u00b7 technical approach and methodology \u00b7 understanding of requirements \u00b7 qualification and experience of key experts (key experts need not be a permanent employee of the consultant)<\/em> \u00b7 transfer of knowledge, etc.<\/p><\/aside>\nIt may also lay down a minimum technical score to qualify for the next stage of financial evaluation<\/em>. In a specific evaluation scheme, instead of a scheme of scoring, a scheme may be laid down to evaluate criteria on a pass\/ fail basis<\/em>.<\/p>\n<h3 class=\"src-C srchead\" data-src=\" C \">5.5.3<\/span>Standard Formats for Technical and Financial Proposals<\/span>C<\/span><\/h3><div class=\"srcblock src-C\" data-src=\" C \" data-label=\"Consultancy Manual only\">\n1. Technical proposal forms:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Form<\/th><th>Content<\/th><\/tr><\/thead><tbody><tr><td>T-1<\/td><td>Proposal Form<\/strong> \u2014 to serve as a covering letter to BOTH<\/strong> the Techno-commercial and Financial Proposals<\/em> \u2014 (T-1A: Consultant's Commercial Information)<\/em><\/td><\/tr><tr><td>T-2<\/td><td>Consultant's Organisation and Experience<\/td><\/tr><tr><td>T-3<\/td><td>Comments and Suggestions on Terms of Reference, Counterpart Staff, and Inputs to be Provided by the Procuring Entity<\/td><\/tr><tr><td>T-4<\/td><td>Description of Approach, Methodology and Work Plan in Responding to the Terms of Reference<\/td><\/tr><tr><td>T-5<\/td><td>Work Schedule and Planning for Deliverables<\/td><\/tr><tr><td>T-6<\/td><td>Team Composition, Assignment, and Key Experts' Inputs<\/strong> \u2014 (Annex to T-6: Key Experts' Curriculum Vitae \u2014 CV)<\/em><\/td><\/tr><tr><td>T-7<\/td><td>Terms and Conditions \u2013 Compliance<\/td><\/tr><tr><td>T-8<\/td><td>Checklist for Consultants<\/td><\/tr><tr><td>T-9<\/td><td>Bank Guarantee Format for Earnest Money Deposit<\/td><\/tr><tr><td>T-10<\/td><td>Integrity Pact<\/td><\/tr><\/tbody><\/table><\/div>\n2. Financial proposal (BOQ excel sheet) \u2014 (see para 5.3.9 above)<\/em>.<\/p>\n3. OTHER FORMATS \u2014 Contract Form and its Appendices:<\/p>\n<aside class=\"note\">Appendix A: Terms of Reference \u00b7 Appendix B: Key Experts \u00b7 Appendix C: Remuneration Cost Estimates \u00b7 Annex to Appendix C: Breakdown of Agreed Fixed Rates in Consultant's Contract \u00b7 Appendix D: Reimbursable Expenses Cost Estimates \u00b7 Appendix E-1: Bank Guarantee Format for Performance Security \u00b7 Appendix E-2: Bank Guarantee Format for Advance Payment<\/p>\nPlus: Authorisation to Attend Pre-Proposal Conference<\/strong>(to be filled up, if required, by the Consultant)<\/em>.<\/p><\/aside>\n<\/div><h3 class=\"src-C srchead\" data-src=\" C \">5.5.4<\/span>Important Provisions of the ITC<\/span>C<\/span><\/h3><div class=\"srcblock src-C\" data-src=\" C \" data-label=\"Consultancy Manual only\">\n2. Eligibility to participate \u2014 the closed-list rule: As the RfP follows the earlier EoI shortlisting process, this invitation is open only to consultants who have been shortlisted therein or are specifically invited to participate<\/em>.<\/p>\nIT IS not permissible<\/em> for the shortlisted consultants to transfer this RfP to any other firm<\/em> Without the permission of the Procuring Entity.<\/p>\nProposals from consultants who have not been shortlisted shall not be entertained<\/em>.<\/p>\nThe shortlisted consultant must continue to meet the eligibility criteria prescribed in the EoI document<\/em> (based inter alia on which they were shortlisted) \u2014 including restrictions on consultants from specified countries \u2014 as of the date of his proposal submission<\/em>, and should continue to meet these till the award of the contract<\/em>. Consultants must provide evidence of their continued eligibility if requested.<\/p>\n3. Association among shortlisted consultants \u2014 and the 14-day approval rule:<\/p>\nUnless otherwise stipulated in TIS\/ AITC, if a shortlisted Consultant considers that it may enhance its expertise by associating with other consultants in the form of a joint venture or as sub-consultants<\/em>, it may do so with either:<\/p>\n<ul class=\"lst\"><li>(a) NON-SHORTLISTED Consultant(s), or<\/li><li>(b) SHORTLISTED Consultants<\/li><\/ul>\n \u2014 without vitiating the shortlisting criteria of the REoI.<\/p>\nThe lead member Rule:<\/p>\n<ul class=\"lst\"><li>The shortlisted consultant shall be the lead member<\/em> When associating with non-shortlisted<\/em> Firms as a joint venture.<\/li><li>IF shortlisted<\/em> Consultants associate with each other<\/em>, any of them can be a lead member<\/em>.<\/li><\/ul>\nA shortlisted consultant must obtain the Procuring Entity's written approval not later than 14 days before the RfP submission deadline<\/em>, in all such cases.<\/p>\nSuch approval shall be denied<\/em> IF:<\/p>\n<ul class=\"lst\"><li>(i) a shortlisted consultant proposes to associate with an ineligible consultant<\/em> \u2014 or, in case of an ineligible joint venture, any of its members<\/em>;<\/li><li>(ii) because of the change, the consultant no longer substantially meets the qualification criteria<\/em> Outlined in the REoI document; Or<\/li><li>(iii) if, in the opinion of the Procuring Entity, a substantial reduction in competition May result<\/em>.<\/li><\/ul>\n4. Preferential Procurement Policies:<\/strong> applicable policies are mentioned (MSEs, Start-ups, Make in India etc.).<\/p>\n5. RfP validity: RfP shall remain valid for a period not less than 90 (ninety) days<\/em> From the deadline for the RfP submission.<\/p>\n6. Evaluation\/ scoring criteria \u2014 the three heads, and the presentation rule:<\/p>\nEvaluation shall, inter alia, consider the Consultant's:<\/p>\n<ul class=\"lst\"><li>(i) \"specific experience of the consultant (as a firm) relevant to the assignment\";<\/li><li>(ii) \"adequacy and quality of the proposed methodology, and work plan\";<\/li><li>(iii) \"key experts' qualifications and competence for the assignment\".<\/li><\/ul>\nIt also specifies, if JV\/C are permitted, how credentials of members of JV\/C would be considered.<\/p>\nThe presentation Rule: The Procuring Entity May ask all shortlisted consultants<\/em> To deliver a presentation on their technical proposals.<\/p>\n<ul class=\"lst\"><li>This presentation shall only cover contents of the technical proposals already submitted<\/em> By the consultant.<\/li><li>Unless otherwise provided, no marks shall be assigned to the presentation<\/em>.<\/li><li>Opportunities for such presentations shall be provided in a manner to provide a level playing field<\/em> To all shortlisted consultants \u2014 including time limits<\/em> for such presentations.<\/li><\/ul>\n<\/div><h2>5.6<\/span>Uploading of Tender Documents: Mandatory e-Publishing<\/span><\/h2>\n(Rule 159 of GFR 2017)<\/em><\/p>\n1. The mandate and its reach: IT IS mandatory<\/em> for all ministries\/ departments of the Central Government, their attached and subordinate offices, and autonomous\/ statutory bodies to publish their tender enquiries, corrigenda thereof, and details of bid awards<\/em> Online on the gem-Central Public Procurement Portal (CPPP) \u2014 and also on their own website.<\/p>\nThese instructions apply to ALL<\/em> Of the following \u2014 whether they are advertised, issued to a limited number of parties, or to a single party:<\/p>\n<aside class=\"note\">Tender enquiries \u00b7 requests for proposals \u00b7 requests for expressions of interest \u00b7 notice for pre-qualification\/ registration \u00b7 or any other notice inviting bids or proposals in any form<\/p><\/aside>\nthe exclusions differ by Manual:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>These instructions would NOT apply to<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-multi\" data-src=\" G C NC \"><td>G<\/span>, C<\/span>, NC<\/span><\/td><td>the purchase of goods without quotations<\/em>, or the purchase of goods by the purchase Committee<\/em><\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span><\/td><td>works procurement through quotation<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n2. The national security exemption \u2014 and its quarterly reporting obligation:<\/p>\nIndividual cases where confidentiality is required for reasons of national security<\/em> Would be exempted from the mandatory e-publishing requirement.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Body<\/th><th>Who approves the exemption<\/th><\/tr><\/thead><tbody><tr><td>Ministry\/ Department<\/td><td>THE Secretary<\/em> Of the Ministry\/ Department, with the concurrence of the concerned Financial Adviser<\/em><\/td><\/tr><tr><td>Autonomous and Statutory bodies<\/td><td>THE head of the body<\/em>, with the concurrence of the head of the finance<\/em> \u2014 in each such case<\/td><\/tr><\/tbody><\/table><\/div>\nstatistical information on the number of cases in which exemption was granted and the value of the concerned contract<\/em> Should be intimated on a quarterly basis<\/em> To the Ministry of Finance, Department of Expenditure.<\/p>\n3. Fixed days for issuance of NIT and tender opening \u2014 W<\/span> ONLY:<\/p>\n<aside class=\"note\">In order to increase certainty in the procurement process<\/em>, all ministries\/ departments shall fix days in every month<\/em> for issuance of notice inviting tender (NIT), and tender opening, across various locations, divisions or levels.<\/p>\nExample given: The tenders may be released by the Ministries\/ Departments three times a month \u2014 i.e., on the 10th, 20th and 30th of every month \u2014 and the bid submission dates are so determined that bids are opened only on fixed scheduled dates, viz., the 7th, 17th and 27th of every month.<\/em><\/p>\nIn case there are practical difficulties due to large volume of tenders<\/em> In having fixed days across the whole organisation, the ministries\/ departments\/ cpsus May decide to have region-wise, zone-wise, or division-wise<\/em> Fixed days.<\/p>\nFor procurement of highly technological and complex works<\/em>, tender submission dates May be extended in order to reply to queries in the pre-bid meetings or any other justifiable reason.<\/p><\/aside>\nExample 1 \u2014 fixation of days by CPWD:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Region<\/th><th>Days for Issuance of NITs<\/th><th>Days for Tender Opening<\/th><\/tr><\/thead><tbody><tr><td>Delhi<\/td><td>Monday<\/td><td>Monday<\/td><\/tr><tr><td>Northern<\/td><td>Tuesday<\/td><td>Tuesday<\/td><\/tr><tr><td>Southern<\/td><td>Wednesday<\/td><td>Wednesday<\/td><\/tr><tr><td>Eastern<\/td><td>Thursday<\/td><td>Thursday<\/td><\/tr><tr><td>Western<\/td><td>Friday<\/td><td>Friday<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Note 1: One WEEK in the case of works with estimated cost put to tender up to Rs. 2 crore<\/em>, and two WEEKS in the case of works with estimated cost more than Rs. 2 crore<\/em>. If there is a holiday on a particular day, the day of inviting\/ uploading NIT May be proposed to an earlier day, and opening of tender May be postponed to the next day.<\/p>\nNote 2: However, in case of exigencies of work<\/em>, THE chief engineer\/ chief Project Manager or equivalent<\/em> Can allow to call and open tenders on another day instead of specific fixed days.<\/p><\/aside>\n<h2>5.7<\/span>Amendment of Tender Documents<\/span><\/h2>\n(Rule 173(iii) of GFR 2017)<\/em><\/p>\n1. At any time prior to the date of submission of bids<\/em>, the Procuring Entity May \u2014 suo motu<\/em> Or in response to a clarification sought by a prospective bidder (directly or in a pre-bid conference) \u2014 amend tender documents by issuing a corrigendum<\/em>.<\/p>\nCopies of such amendment\/ modification should be uploaded on the e-publishing portal and the Procuring Entity's own website<\/em>.<\/p>\nIn case of off-line tenders<\/em>, the copies of such amendment\/ modification are to be simultaneously despatched, free of cost, by registered\/ speed post\/ courier\/ e-mail<\/em>, to all the parties who have already purchased the tender documents \u2014 and copies of such amendments are also to be prominently attached in the unsold sets<\/em> Of the tender documents.<\/p>\nWhen the amendment\/ modification changes the requirement significantly<\/em> And\/ or when there is not much time left<\/em> for the bidders to respond and prepare a revised tender, the time and date of submission of tenders are also to be suitably extended (not less than 3 days)<\/em>.<\/p>\n2. The 21-DAY re-publication Rule \u2014 W<\/span> ONLY:<\/p>\n<aside class=\"note\">When the proposed amendment\/ modification substantially changes the procurement requirements originally envisaged<\/em>, and\/ or when insufficient time remains<\/em> for the tenderers to respond \u2014 the time and date of submission of tenders should also be extended suitably.<\/p>\nNormally, the extended time duration shall be 21 DAYS<\/em>, or consistent with the original bid submission duration.<\/p>\nDepending on the circumstances, such an amendment May also need fresh publication of the revised tender document<\/em>, following the same procedure as the original tender publication.<\/p>\nThis is crucial as the amendment May enable a new bidder to meet the qualifying criteria<\/em>, AND TO ensure a level playing field<\/em>.<\/p><\/aside>\n<h2>5.8<\/span>Extension of Deadline of Bid Submission<\/span><\/h2>\n1. Ordinary extension: To give sufficient time to bidders to prepare and submit their bids, the Procuring Entity may \u2014 suo motu<\/em>, or based on a justifiable request of bidder(s)<\/em>, or due to significant modification of tender documents<\/em> \u2014 extend the time and date of submission of tenders suitably (not less than three (3) days<\/em>), along with suitable changes in the corresponding time-frames for:<\/p>\n<aside class=\"note\">Receipt of tender \u00b7 bid validity period \u00b7 and validity period of the corresponding EMD\/ Bid Security<\/p><\/aside>\nDepending on the situation, such an amendment May also need fresh publication<\/em>, adopting the same procedure as for publication of the original tender enquiry.<\/p>\n2. Auto-extension of bids in case of lack of response \u2014 an important and easily-missed provision:<\/p>\nA) the information blackout: The e-procurement portal\/ GeM should not provide anybody \u2014 including the Procuring Entity \u2014 with the bid count before the tender opening time, even at their request<\/em>.<\/p>\nb) The set-up: The e-Procurement portal\/ GeM May facilitate the Procuring Entity in specifying, at the time of tender upload<\/em>:<\/p>\n<ul class=\"lst\"><li>THE minimum number of bids<\/em> Considered sufficient; And<\/li><li>THE pre-specified number of days for automatic extension<\/em> Of bid opening (not less than 7 days<\/em>).<\/li><\/ul>\nC) the declaration: The system shall declare in the tender details that in case of low competition (without specifying the number)<\/em>, the tender closing time shall be automatically extended by the specified number of days.<\/p>\nD) the operation: If bids received till the bid opening time are less than the specified minimum bids<\/em>, the system should automatically extend<\/em> The tender opening by the specified number of days \u2014 without seeking any input from or sharing any information with anyone, including the Procuring Entity<\/em>.<\/p>\nPurchasers and bidders shall only be informed<\/em> That \"due to less competition, the tender closing time has been extended up to (date and time).\"<\/p>\ne) ONCE only \u2014 G<\/span> Only: However, this automatic extension of bid opening shall be done only once, not repeatedly<\/em>.<\/p>\n<aside class=\"note\">(The Goods Manual states this twice \u2014 \"the system should automatically extend (only ONCE)\" and again in this sentence. The Works Manual omits the \"only once\" restriction entirely.)<\/em><\/p><\/aside>\nf) the 'one' device: If a Procuring Entity wants to go ahead even with low competition<\/em> (E.g., due to urgency), they May mention 'ONE'<\/em> As the minimum bid \u2014 so that if no bid is received, the tender is automatically extended; Otherwise, it is not<\/em>.<\/p>\nG) GeM and e-procurement portals shall update their systems accordingly<\/em>.<\/p>\n<h2>5.9<\/span>Availability and Cost of Tender Documents<\/span><\/h2>\n(Rule 161(v) of GFR 2017)<\/em><\/p>\n1. Availability window: Tender documents should preferably be sold or available for download after the date and time of the start of availability till the deadline for availability<\/em> As mentioned in the tender document (say up to the date of opening of tenders<\/em>) \u2014 and this should be clearly indicated in the documents<\/em>.<\/p>\nThe organisation should also post the complete tender document on the website<\/em> (W<\/span> adds: \"and on GeM-CPPP\") AND permit prospective bidders to make use of the document downloaded from the website<\/em>.<\/p>\nW<\/span> adds: *The advertisement for invitation of tenders should <\/strong>give the complete web-address from where bid documents can be downloaded.*<\/p>\n2. The cost Rule: Normally, no tender document fee should be charged<\/em>.<\/p>\nIn exceptional cases, a Procuring Entity May fix a bare minimum cost<\/em> Of tender documents to defray the expenses\/ effort of preparing documents, drawings<\/em>, ETC.<\/p>\nThe cost of the tender document is to be submitted to the authority nominated therein by the prospective bidder in the form of a demand draft\/ banker's cheque\/ pay order\/ online payment gateway<\/em>.<\/p>\n3. Who is exempt from the tender document cost \u2014 the two Manuals differ:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Firms eligible for exemption<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span> GOODS<\/td><td>MSEs AND<\/em> The Procuring Entity's registered units<\/strong>(for relevant items and monetary limit)<\/em><\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> WORKS<\/td><td>only the Procuring Entity's registered units (for relevant grades of work and monetary limit)<\/em> \u2014 MSEs are not named<\/td><\/tr><\/tbody><\/table><\/div>\nSuch firms HAVE TO submit\/ upload scanned copies of documents in support of this exemption<\/em>.<\/p>\n<h2>5.10<\/span>Participation of Bidders \u2014 Eligibility Criteria<\/span><\/h2>\n1. The general rule: The tender document May lay down eligibility criteria<\/em> For participating in the tender process \u2014 e.g., restrictions on participation by bidders relating to:<\/p>\n<aside class=\"note\">Type of commercial entity (G<\/span> adds: e.g., the bidders must be a private or public registered entity)<\/em> \u00b7 insolvency \u00b7 ineligibility\/ debarment\/ convictions\/ conflict of interest \u00b7 Class of bidders (as per Make in India order) \u00b7 bidders from countries having land borders with India, etc.<\/p><\/aside>\nExcept for the eligibility criteria, participation shall be open to all bidders in open\/ global tender enquiries<\/em>.<\/p>\nIn the case of the second stage<\/em> (Of two-stage bidding or PQB) or limited tenders<\/em>, participation shall be open only to such bidders who have been previously shortlisted or specifically invited<\/em>.<\/p>\n2. Purchase preference policies: The Procuring Entity May reserve its right to grant preferences to eligible bidders under various Government policies\/ directives (policies relating to Make in India, MSME, Start-ups, etc.)<\/em>.<\/p>\n3. The additional works eligibility heads \u2014 W<\/span> ONLY (not in the Goods list)<\/em>:<\/p>\nA) legal status of the bidder: Individual bidder \u2014 a natural person, or a private entity, or a public entity (state-owned enterprise or institution), or a joint venture\/ consortium (JV\/C).<\/p>\nB) the Rs. 10 crore JV threshold: For package size exceeding certain values [say \u2014 Rs. 10 (ten) crore]<\/em>, JV\/C May be permitted to participate in the procurement of works in specific situations where the credentials required are not likely to be available with an individual bidder<\/em>.<\/p>\n<ul class=\"lst\"><li>Maximum number of partners in JV shall be limited (say \u2014 three)<\/em>.<\/li><li>In case of JV, all the partners shall be jointly and severally liable<\/em> for the successful completion of the work.<\/li><li>Participation of JV\/C is specifically discouraged<\/em> In the case of quality Oriented Procurement (QOP) with QCBS evaluation<\/em>.<\/li><\/ul>\nC) registrations\/ licences: GSTIN, PAN, EPF, ESI, labour, Private Security Agencies (PASARA), etc.<\/p>\nD) submission of requisite bid Security<\/em> (Or Bid Security declaration, if allowed) or proof of exemption therefrom.<\/p>\ne) FREE FROM financial insolvency, debarment, or convictions<\/em>.<\/p>\nf) A consistent history of litigation or arbitration<\/em> By the bidder May result in disqualification.<\/p>\nG) restriction as per Government policies:<\/strong> for Class-II Local Suppliers and Non-Local bidders under Make-in-India; and bidders from land-border countries or with a Specified ToT arrangement.<\/p>\n4. Conflict of interest \u2014 the four (or three) situations:<\/p>\nBidders having a conflict of interest shall not be eligible to participate<\/em> In the tender process \u2014 unless the conflict stemming from such relationship has been resolved in a manner acceptable to the Procuring Entity<\/em> Throughout the tender process and execution of the contract.<\/p>\n<aside class=\"note\">W<\/span> adds: *\"<\/strong>Such conflict of interest can lead to anti-competitive practices to the detriment of the Procuring Entity's interests.\"*<\/p><\/aside>\nThe bidder shall be considered to have a conflict of interest in the following situations:<\/p>\nA) personnel relationship: If its personnel have a close personal, financial, or business relationship<\/em> With any personnel of the Procuring Entity who are directly or indirectly related to the procurement or execution process of the contract, which can affect the decision of the Procuring Entity directly or indirectly.<\/p>\nB) prior involvement: The bidder (or his allied firm<\/em>) provided services for the need assessment\/ procurement planning<\/em> Of the tender process in which it is participating.<\/p>\n<aside class=\"note\">Footnote (all Manuals): \"need assessment\/ procurement planning\" means, inter alia, need assessment, preparation of feasibility\/ cost estimates\/ Detailed Project Report (DPR), design\/ technical specifications, terms of reference (ToR)\/ Activity Schedule\/ schedule of requirements or the Tender Document, etc.<\/em><\/p><\/aside>\nC) the agency Rule \u2014 G<\/span> Only: A principal can authorise only one agent<\/em>, and an agent should not represent or quote on behalf of more than one principal<\/em>. However, this shall not debar more than one authorised distributor<\/em> (With or without the OEM) from quoting equipment manufactured by an OEM in procurements under a Proprietary Article Certificate<\/em>.<\/p>\nD) multiple bids \u2014 and the two Manuals differ on the consequence:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>Consequence of participating in more than one bid<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span> GOODS<\/td><td>participation in any capacity by a bidder (including as a partner\/ JV member or sub-contractor in another bid or vice versa) in more than one bid shall result in the disqualification of all bids in which he is a party<\/em><\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> WORKS<\/td><td>\u2026Shall result in the *disqualification of <\/strong>the bid in which he is a main\/ principal\/ lead bidder*<\/td><\/tr><\/tbody><\/table><\/div>\nHOWEVER (both Manuals): This DOES NOT<\/em> Limit the participation of an entity as a sub-contractor in more than one bid<\/em>, if he is not bidding independently in his own name or as a member of a JV\/ consortium<\/em>.<\/p>\n5. OEM\/ agents of supplier \u2014 G<\/span> ONLY:<\/p>\nA) the manufacturer's authorisation requirement: Except in the case of commercially-off-the-shelf (cots)<\/em> Items, when a firm sends a quotation for an item manufactured by some different company<\/em>, the firm is also required to attach, in its quotation:<\/p>\n<ul class=\"lst\"><li>THE manufacturer's authorisation certificate<\/em>; and<\/li><li>THE manufacturer's confirmation of extending the required warranty support<\/em> for that product<\/strong>(in addition to the bidder's own confirmation of the required warranty)<\/em>, as per formats given in Tender Documents.<\/li><\/ul>\nThis is necessary to ensure a quotation from a responsible party offering a genuine product backed by a warranty obligation from the concerned manufacturer<\/em>.<\/p>\nB) tender-specific authorisation for large contracts: In the case of large contracts, especially capital equipment<\/em>, the manufacturer's authorisation must be insisted upon on a tender-specific basis \u2014 not general authorisation\/ dealership<\/em> \u2014 by clearly declaring it in the tender documents.<\/p>\n<h2>5.11<\/span>Pre-NIT and Pre-bid Conferences<\/span><\/h2>\n(Rule 173(x) of GFR 2017)<\/em><\/p>\n<h3>5.11.1<\/span>Pre-Notice Inviting Tender (NIT) Conference \u2014 Market Consultation<\/span><\/h3>\nIN complex and innovative procurement cases<\/em>, or where the Procuring Entity May not have the required knowledge to formulate tender provisions<\/em>, A pre-nit conference (before finalising\/ publishing NIT)<\/em> May help the Procuring Entity in obtaining inputs from the industry<\/em>.<\/p>\nSuch conferences should be widely publicised<\/em> So that different potential suppliers\/ contractors can attend (DoE's OM No. F.1\/1\/2021-PPD dated 29.10.2021, para 9.2)<\/em>.<\/p>\nAll inputs received from the probable bidders in such a conference shall be compiled\/ minuted<\/em>, and requirements finalised (with the approval of the technical committee, if formed, by the Competent Authority<\/em>).<\/p>\nIn a more complex, large, and green-field\/ blue-sky project, two-stage tendering (with EoI) would be more appropriate and transparent<\/em>.<\/p>\n<h3>5.11.2<\/span>Pre-bid Conference<\/span><\/h3>\nWhen it must be provided for:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Trigger<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span> GOODS<\/td><td>in case of turnkey contract(s) and sophisticated and costly equipment, large works and complex consultancy assignments<\/em><\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> WORKS<\/td><td>in case of turnkey contract(s) or contract(s) of special nature<\/em> for procurement of sophisticated and costly work\/ services\/ equipment<\/em> \u2014 or wherever felt necessary'<\/td><\/tr><\/tbody><\/table><\/div>\na suitable provision shall be kept in the tender documents for one or more pre-bid conferences (after the NIT and tender documents have been published)<\/em> \u2014 FOR clarifying issues\/ clearing doubts<\/em>, if any, and for ensuring a level playing field<\/em>, relating to the specifications and other allied technical\/ commercial details.<\/p>\nA) who May attend, and the deemed-no-issue Rule:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-G\" data-src=\" G \">G<\/span> Participation in the pre-bid conference May be restricted to prospective bidders who have downloaded the tender document<\/em>.<\/li><li>Participation is not mandatory<\/em>.<\/li><li>However, if a bidder chooses not to (or fails to) participate in the pre-bid conference or does not submit a written query, it shall be assumed that they have no issues regarding the techno\/ commercial conditions<\/em>.<\/li><\/ul>\nB) the timing Rules:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Event<\/th><th>Timing<\/th><\/tr><\/thead><tbody><tr><td>Date of the pre-bid meeting<\/td><td>normally after 15 to 21 (fifteen to twenty-one) days<\/em> Of the issue of the tender document \u2014 and should be specified therein<\/em><\/td><\/tr><tr><td>Last date for written queries and for registration for participation<\/td><td>mentioned in the tender document \u2014 7 days before the date of the conference, if not specified<\/em><\/td><\/tr><tr><td>Mode<\/td><td>the pre-bid conference May also be held online<\/em> At the discretion of the Procuring Entity<\/td><\/tr><\/tbody><\/table><\/div>\nc) Timelines to be declared: Timelines for response to the pre-bid conference \u2014 E.G., replies to questions, issue of minutes of the pre-bid conference, corrigenda<\/em>, etc. \u2014 should be mandatorily mentioned in the tender document and complied with<\/em>.<\/p>\nD) identity requirement: Delegates participating in the pre-bid conference must provide a photo identity and an authorisation letter as per the specified format from their company\/ principals<\/em> \u2014 otherwise, they shall not be allowed to participate<\/em>.<\/p>\nE) the seven-day minutes Rule: After the pre-bid conference, minutes of the pre-bid conference shall be published on the Procuring Entity's portal within seven days of the conference<\/em>.<\/p>\nIf required, a clarification letter and corrigendum<\/em> To the tender document shall be issued, containing amendments to various provisions \u2014 which shall form part of the tender document<\/em>.<\/p>\nTo give reasonable time to the prospective bidders to take such clarifications into account in preparing their bids, the Procuring Entity May suitably extend, as necessary, the deadline for the bid submission<\/em>.<\/p>\n<h2 class=\"src-multi srchead\" data-src=\" W C NC \">5.12<\/span>Site Visit<\/span>W<\/span>C<\/span>NC<\/span>NOT in Goods<\/span><\/h2><div class=\"srcblock src-multi\" data-src=\" W C NC \" data-label=\"Works + Consultancy + Non-Consultancy only\">\nThe bidder\/ consultant, at its own cost, responsibility and risk<\/em>, MAY visit and examine the site of work\/ required services and its surroundings<\/em>, and obtain all information that May be necessary for preparing the bid and entering into a contract<\/em> for the works\/ services.<\/p>\n<aside class=\"note\">This provision does not appear in the Goods Manual \u2014 a site visit has no analogue in a supply contract.<\/p><\/aside>\n<\/div><h2>5.13<\/span>Clarification of Tender Documents<\/span><\/h2>\nA prospective bidder requiring clarification on the tender documents May ask questions in writing\/ electronically<\/em> From the office\/ contact person as mentioned in the tender document.<\/p>\nThe three time limits:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>Time limit<\/th><\/tr><\/thead><tbody><tr><td>Questions must be raised<\/td><td>before the clarification end date<\/em> Mentioned in the tender document \u2014 or, if not mentioned, before 7 days of the deadline for the bid submission<\/em><\/td><\/tr><tr><td>Holiday rule<\/td><td>this deadline shall not be extended in case of any intervening holidays<\/em><\/td><\/tr><tr><td>Response by the Procuring Entity<\/td><td>a response will be sent in writing\/ digitally at least 5 days prior to the date of opening of the tenders<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nONLY material queries and their responses<\/em> Shall be uploaded on the website \u2014 without revealing the identity of the bidder making the query<\/em>.<\/p>\nWhen the response to clarification changes the requirement significantly<\/em> And\/ or when there is not much time left<\/em> for the bidders to respond, the time and date of submission of tenders May also be suitably extended (not less than 3 days)<\/em>.<\/p>\n<h2>5.14<\/span>Withdrawal\/ Amendments\/ Modifications to Bids by Bidders<\/span><\/h2>\n1. What is permitted before the deadline: The bidder, after submitting its bid, is permitted to substitute\/ alter\/ modify it, superseding the earlier bid<\/em> \u2014 so long as such revised bid is uploaded\/ received duly sealed and marked like the original bid, up to the deadline of submission of bids<\/em>.<\/p>\nResubmission of a bid shall require uploading all documents, including the financial bid, afresh<\/em>.<\/p>\nThe system shall consider only the last bid submitted<\/em> As a valid bid.<\/p>\nThe bidder May withdraw his bid before the bid submission deadline<\/em> \u2014 and it shall be marked as withdrawn and shall not be opened<\/em> During the bid opening.<\/p>\n2. What is prohibited after the deadline \u2014 and the penalty:<\/p>\nAny such action after the bid-submission deadline is not permitted<\/em>.<\/p>\nWithdrawal\/ amendment\/ modification\/ alteration\/ impairment\/ derogation of a bid, in any respect<\/em>, by its bidder between the deadline for submission of bids and the expiration of the period of bid validity<\/em> \u2014 his Bid Security\/ EMD shall be forfeited<\/em>, besides imposition of any other punitive remedy available to the Procuring Entity.<\/p>\nIn such cases, tender evaluation shall be proceeded with in terms of the evaluation chapter.<\/p>\n<h2>5.15<\/span>Sealing\/ Marking of Bids in Off-line Tenders<\/span><\/h2>\n1. The tender document should indicate the manner of submission\/ uploading of bids<\/em>.<\/p>\n2. The double-envelope discipline: In the case of off-line tenders, the total number of bid copies<\/em> (for example, duplicate or triplicate, and so on) required to be submitted should be specified.<\/p>\nThe bidder is to:<\/p>\n<ul class=\"lst\"><li>Seal the original and each copy<\/em> Of the bid in separate envelopes<\/em>, duly marking the same as \"original<\/em>\", \"duplicate<\/em>\", and so on;<\/li><li>Print the address of the purchasing office and the tender reference number<\/em> On the envelopes;<\/li><li>Further, the sentence \"Not to be opened before (the due date and time of tender opening)\"<\/em> is also to be printed on these envelopes;<\/li><li>The inner envelopes are then to be put inside a bigger outer envelope<\/em>, which will also be duly sealed, marked, and so on, as above.<\/li><\/ul>\nIf the outer envelope is not sealed and marked properly<\/em> As above, the Procuring Entity does not assume any responsibility for its misplacement, premature opening, late opening<\/em>, and so on.<\/p>\n<h2>5.16<\/span>Uploading\/ Submission of Bids<\/span><\/h2><h3>5.16.1<\/span>Uploading Bids in e-Procurement<\/span><\/h3>\n<aside class=\"note\">Different e-Procurement portals may have different provisions, but the following is the generic description. (Portals must be GCQE-compliant<\/strong> \u2014 Guidelines for Compliance to Quality Requirements of eProcurement, July 2021, STQC Directorate, MeitY.)<\/em><\/p><\/aside>\na) the Procuring Entity is neither a party nor a principal<\/em> In the relationship between the bidder and the organisation hosting the e-procurement portal (hereinafter called the portal).<\/p>\nBidders must acquaint and train themselves<\/em> With the Rules, regulations, procedures, and implied conditions\/ agreements of the portal. Bidders intending to participate shall be required to register with the portal, and must comply with its conditions \u2014 including registration and a compatible digital signature certificate (DSC). In the case of downloaded documents, the bidder must not make any changes to the contents of the documents while uploading<\/em> \u2014 except for filling in the required information.<\/p>\nB) any query\/ clarification\/ complaint regarding downloading tender documents and uploading bids on the e-procurement portal May be addressed to the portal's help desk<\/em>.<\/p>\nC) the primacy Rule: In case of conflict between the provisions of the portal and the tender document<\/em>, provisions of the portal shall prevail<\/em>.<\/p>\nD) no extension for office closure: Bids must be uploaded by the submission deadline. If the office happens to be closed on the deadline to submit the bids, this deadline shall not be extended<\/em>.<\/p>\ne) ONLY one copy<\/em> Of the bid can be uploaded, and the bidder shall digitally sign all statements, documents, and certificates<\/em> Uploaded by him \u2014 owning sole and complete responsibility for their correctness\/ authenticity<\/em> As per the provisions of the IT ACT 2000<\/em>, as amended.<\/p>\nf) The protected Price Schedule: The Bidder shall write his name in the space provided in the specified location only<\/em>. Bidder shall type rates in figure only<\/em> in the rate column of respective item(s) \u2014 without any blank cell or zero values in the rate column<\/em>, and without any alteration\/ deletion\/ modification of other portions of the excel sheet. If space is inadequate, the Bidder may upload additional documents under \"Additional Documents\" in the \"bid Cover Content\".<\/p>\nG) the server clock Rule: The date and time of the e-procurement server clock<\/em> \u2014 which is also displayed on the bidders' dashboard \u2014 shall be used as the reference time<\/em> for deciding the closing time of bid submission. No request on the account that the server clock was not showing the correct time, and that a particular bidder could not submit their bid because of this, shall be entertained. Failure or defects on the internet, or heavy traffic at the server, shall not be accepted as a reason for a complaint<\/em>. The Procuring Entity shall not be responsible for any failure, malfunction or breakdown of the electronic system<\/em> Used during the e-tender process.<\/p>\nh) Encryption: The bidder should ensure the correctness of the bid before uploading, and take a printout of the system-generated submission summary to confirm the successful bid upload<\/em>. All bids uploaded by the bidder to the portal shall be automatically encrypted<\/em>. The encrypted bid can only be decrypted\/ opened by the authorised persons on or after the due date and time<\/em>.<\/p>\ni) Scanned documents: Bidder must upload scanned copies of originals<\/em> (or self-attested copies of originals \u2014 as specified), and should ensure the clarity\/ legibility<\/em> of the scanned documents. The Procuring Entity reserves its right to call for verification of originals<\/em> Of all such self-certified documents from the bidders at any stage of evaluation<\/em> \u2014 especially from the successful bidder(s) before the issue of Letter of Award (LoA)<\/em>.<\/p>\nj) physical submission of originals \u2014 the one case where the deadline DOES extend: If so specified in the tender document, originals (or self-attested copies) of specified scanned, uploaded documents must be physically submitted before the deadline specified for it (before the bid submission deadline, if not so specified<\/em>), sealed in double cover, and acknowledgement must be obtained.<\/p>\nFailure to do so is likely to result in the bid being rejected<\/em>. If the office is closed on the deadline for the physical submission of originals<\/em>, IT shall stand extended to the next working day<\/em> At the same time and venue.<\/p>\n<aside class=\"note\">(Contrast sub-para (d) above \u2014 for electronic<\/strong> submission, office closure does NOT<\/strong> extend the deadline.)<\/em><\/p><\/aside>\nk)<\/strong>no Manual bids shall be made available or accepted for submission in e-procurement<\/strong>(except for originals of scanned copies as per sub-para (j) above)<\/em>.<\/p>\n<h3>5.16.2<\/span>Submission of Bids in the Offline Tender Process<\/span><\/h3>\n<aside class=\"note\">In offline tenders, receipt and custody of bids shall be done transparently to maintain the credibility of the process<\/em>.<\/p><\/aside>\nA) the technical and financial proposals shall be submitted at the same time<\/em>. To safeguard the integrity of the process, the technical and financial proposals shall be submitted in separate sealed envelopes and kept in an outer sealed envelope<\/em>.<\/p>\nb) the tender box and its two locks: The procuring entity shall maintain tender boxes<\/em> for receiving the bids at suitable locations, which would facilitate security and easy access for bidders<\/em>.<\/p>\nIf required, tender boxes should be separate for each day of the week of tender opening<\/em>, and should be sealed by the Bid Opening Committee (boc) of the day<\/em>. The tender box shall have two locks<\/em>. The key of one lock will be with the head of the office<\/em>, and the other key with the official nominated by him<\/em>.<\/p>\nc) Courier and prohibited modes: Bids received by courier<\/em> Shall be deposited in the tender box by the despatch section<\/em> Till the date and time of bid opening. Bids sent by telex, cable or facsimile are to be ignored and rejected<\/em>.<\/p>\nD) bulky\/ oversized bids: For bulky\/ oversized bids that cannot be dropped into tender boxes<\/em>, the officials authorised to receive such bids shall maintain proper records and provide a signed receipt with the date and time<\/em> To the bearer of the bid. He will also sign on the cover, duly indicating the date and time of receipt<\/em>. Names and designations of at least two such authorised officers<\/em> Should be mentioned in the tender documents.<\/p>\n<h3>5.16.3<\/span>Bid Security<\/span><\/h3>\nA self-attested scan of the original Bid Security\/ BSD<\/em> Should be uploaded along with bids. Bids not complying with these provisions shall be rejected<\/em>.<\/p>\nIn off-line tenders, bid Security or \u2014 if permitted \u2014 bid securing declaration (BSD) must accompany the bid<\/em> As per instructions in the tender document.<\/p>\n<h2>5.17<\/span>Bid Validity<\/span><\/h2>\nA bid shall remain valid for the period mentioned in the tender document \u2014 90 days if not so specified<\/em>.<\/p>\nA bid that is valid for a shorter period shall be rejected as non-responsive<\/em>.<\/p>\nIn case the day up to which the bids are to remain valid falls on \u2014 or is subsequently declared \u2014 a holiday\/ closed day<\/em> for the Procuring Entity, the bid validity shall automatically be deemed to be extended up to the next working day<\/em>.<\/p>\nThe validity period should not be unreasonably long<\/em>, as keeping the tender unconditionally valid for acceptance for a longer period entails the risk of getting higher prices from the bidders<\/em>.<\/p>\n<aside class=\"note\">C<\/span> comparison: EoI validity <\/strong>not less than 60 days; RfP validity <\/strong>not less than 90 days.<\/p><\/aside>\n<h2>5.18<\/span>Opening of Bids<\/span><\/h2>\n1. Timing and the holiday Rule: Immediately after the deadline for bid submission, the Procuring Entity shall proceed to the bid opening.<\/p>\nIf the specified date of bid opening falls on \u2014 or is subsequently declared \u2014 a holiday or closed day<\/em> for the Procuring Entity, the bids shall be opened at the appointed time on the next working day<\/em>.<\/p>\nComposition of the Bid Opening Committee (boc): In offline tenders, the boc shall comprise one officer each from the Procuring Entity and associated\/ integrated finance<\/em>.<\/p>\n2. E-procurement: All tenders uploaded by bidders are received, safeguarded, and opened online on the portal<\/em>.<\/p>\n3. The offline bid-opening procedure \u2014 ten steps:<\/p>\nA) letters of authority: The authorised representatives of bidders who intend to attend the tender opening in OTE\/ GTE\/ SLTE<\/em> ARE TO bring letters of authority<\/em> From the corresponding bidder with them. The prescribed format should be given in the tender document. All bid-opening activities should be carried out demonstrably before such a gathering<\/em>.<\/p>\n(Bid Opening Attendance Sheet cum Report \u2014 G<\/span> Annexure 13 \u00b7 W<\/span> Annexure 3 \u00b7 C<\/span> Annexure 5 \u00b7 NC<\/span> Annexure 5.)<\/em><\/p>\nb) opening the tender box \u2014 and the treatment of LATE and WRONGLY-DROPPED bids:<\/p>\n<ul class=\"lst\"><li>At a prescheduled date and time, the BOC of the day should get the tender box opened after ensuring and demonstrating that the seal on the box has not been tampered with<\/em>.<\/li><li>All bids should be collected from the tender box. Bids for tenders not opening on that day should be put back into the box and the box resealed<\/em>.<\/li><li>Sometimes, tenders are dropped wrongly<\/em> Into this tender box. Such wrongly dropped tenders, with appropriate endorsement<\/em>, should be put into the appropriate box<\/em> \u2014 OR sent to the Tender Committee (TC) concerned if the date of opening is over<\/em>.<\/li><li>The bids for different tenders opening on the day (including oversized bids, which were submitted to designated officers<\/em>) should be sorted, and a count for each tender should be announced and recorded<\/em> \u2014 particularly noting any modifying\/ altering\/ withdrawal of bids<\/em>.<\/li><li>Boc should ensure and demonstrate that bid envelopes are duly sealed and untampered<\/em>.<\/li><li>Late bids should be separately counted but kept aside and not opened<\/em>. In the case of an advertised tender enquiry or Limited Tender Enquiry, late bids (i.e., bids received after the specified date and time for receipt of bids) should not be considered<\/em> \u2014 Rule 165 of GFR 2017.<\/li><\/ul>\nC) the two-stage opening: The technical bids will be opened on the pre-announced date, and the financial proposals shall remain sealed and shall be opened publicly in due course of time only for those firms that have technically qualified<\/em>.<\/p>\nD) serial numbering and initialling: After opening, every tender shall be numbered serially<\/em> (say 3\/14 \u2014 if it is the third bid out of 14 total), initialled, and dated on the first page<\/em> By the boc.<\/p>\n<ul class=\"lst\"><li>Each page of the price Schedule or letter attached to it shall also be similarly initialled \u2014 particularly the prices, delivery period, and so on, which shall also be circled and initialled along with the date<\/em>.<\/li><li>Any other page containing significant information should also be dealt with similarly.<\/li><li>Blank pages, if any, should be crossed out across and marked accordingly<\/em> By the boc.<\/li><li>The original (and duplicate, if any) copies in a tender set are to be marked accordingly by the boc.<\/li><\/ul>\ne) the alterations protocol \u2014 one of the most detailed procedural rules in the Manuals:<\/p>\n<ul class=\"lst\"><li>Erasure\/ cutting\/ overwriting\/ use of whitener\/ columns left unfilled in tenders, if any, shall be initialled along with the date and time and numbered<\/em> By the officials opening the tenders.<\/li><li>THE total number of such noticed alterations (or the absence of any alteration) should be explicitly marked on the first page of the bid<\/em>.<\/li><li>Wherever quantity\/ amount is written only in figures<\/em>, the boc should write them in words<\/em>.<\/li><li>ALL rebates\/ discounts<\/em> Should be similarly circled, numbered, and signed<\/em>.<\/li><li>In the absence of any alteration\/ overwriting\/ whitener\/ blanks, the remark \"no corrections noted\"<\/em> Should be written. Similarly, the absence of discounts should be marked with \"no discounts noted\"<\/em>.<\/li><\/ul>\nF) what the boc announces \u2014 and what it May not do: The boc is to announce the salient features of the tenders<\/em> \u2014 such as description and specification of the goods, quoted price, terms of delivery, delivery period, discount (if any), whether EMD furnished or not, and any other distinctive feature<\/em> \u2014 for the information of the representatives attending the tender opening. Clarifications by the bidders shall not be allowed or recorded<\/em> During the bid opening. The boc has no authority to reject any tender at the tender opening stage<\/em>.<\/p>\ng) Samples: PROPER sealing and codification<\/em> Needs to be done on reference samples, as well as for samples that accompany the bid. These should be kept for reference under lock and key<\/em>. Details should be recorded in the sample register<\/em> Maintained in the opening section.<\/p>\n<aside class=\"note\">Footnote (in both G and W): Please note that calling for a sample along with the bid for evaluation is strictly discouraged.<\/em><\/p><\/aside>\nh) Financial instruments: Should BE noted in the bid opening report\/ register and handed over to the finance section for safe custody and monitoring<\/em>.<\/p>\ni) The Bid Opening Report: A bid opening report containing the names of the bidders (serial number wise) and salient features of the tenders, as read out during the public opening<\/em>, will be prepared by the tender opening officers and duly signed by them along with the date and time<\/em>.<\/p>\nThe tenders that have been opened, the list of the representatives attending<\/em> The tender opening, and the bid opening report are to be handed over to the nominated procuring officer \u2014 and an acknowledgement shall be obtained from him<\/em>.<\/p>\nj) A similar procedure shall later be followed during financial bid opening<\/em> In case of multiple-envelope bidding.<\/p>\n<h2>5.19<\/span>Transparency and Protecting Third-Party Rights of Bidders<\/span><\/h2>\n1. The public interest: Objectives of transparency in e-PROCUREMENT ARE amply served if data relating to the tender and award of contract are accessible to the public<\/em>.<\/p>\n2. The participating bidders' interest: As far as the bidders who have participated in a tender (participating bidders<\/em>) are concerned \u2014 for transparency, a comparative summary of technical (compliance details) and of financial bids (including QCBS calculations, wherever applicable)<\/em> Should also be accessible to them.<\/p>\nBUT not necessarily to the public at large<\/em> \u2014 unless sought and if permissible under the RTI Act<\/em>.<\/p>\n3. The trade-secrets concern: Bidders May have genuine concerns about techno-commercial and operational trade secrets<\/em> If their full technical and financial bids are accessible to their competitors or the public at large.<\/p>\nThis concern May get aggravated in complicated EPC\/ PPP\/ consultancy procurements<\/em>.<\/p>\nTechnical\/ financial bids should not be made accessible to the public at large<\/em>, AND a call needs to be taken based on the sensitivity of details in the bids to restrict access of even participating bidders to full technical\/ financial bids of their competitors<\/em>.<\/p>\nThe decision of the Procuring Entity to share or not share the full technical bids with other participating bidders should be clearly brought out in the tender documents<\/em>.<\/p>\n4. The reserved right: However, a clause May be added to the tender documents reserving the right of the Procuring Entity and the e-procurement portal to provide access to bidders' technical\/ financial bids to other participating bidders<\/em> \u2014 in addition to the comparative summary of technical and financial bids of all participating bidders.<\/p>\n<h2>5.20<\/span>Bid Invitation Process \u2014 Risks and Mitigations<\/span><\/h2>\n<aside class=\"note\">This five-row table is reproduced in essentially identical terms in all four Manuals.<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>exceptions to an open tender process are abused<\/em>, leading to single-source processes<\/em>.<\/td><td>Rigorously follow the conditions under which open tendering can be dispensed with.<\/td><\/tr><tr><td>2<\/td><td>WHEN short-lists<\/em> Are used, the process of preparation of short-lists May be non-transparent<\/em>, AND all eligible firms May not be included, and some ineligible firms May get included<\/em>.<\/td><td>Registration of bidders\/ contractors: All major procuring departments must keep a list of registered bidders for use in restricted tendering<\/em>. Publicise even restricted bids<\/em> On your website. Bidders for LTE\/ SLTE May be transparently selected with the approval of ca<\/em>.<\/td><\/tr><tr class=\"srcmark src-multi\" data-src=\" G W \"><td>3<\/td><td>pre-qualification criteria: PQB has the potential of getting misused or being applied without considering the restrictive nature of competition<\/em>. PQC should be relevant to the quality requirements, and neither very stringent nor very lax in restricting\/ facilitating the entry of bidders. These criteria should be clear, unambiguous, exhaustive, and yet specific. Also, there should be FAIR COMPETITION.<\/td><td>G<\/span>:<\/strong>Lay down criteria when PQB tendering<\/em> is warranted. Also, model PQC criteria for diverse types of procurements should be laid down<\/em>. W<\/span> variant:<\/strong>Lay down criteria when two-stage tendering<\/em> is warranted. Also lay down model PQC criteria for diverse types of procurements.<\/strong><\/td><\/tr><tr><td>4<\/td><td>invitation to tender (an open bid) is not well publicised or gives insufficient time<\/em> \u2014 thereby restricting the number of bidders that participate<\/em>.<\/td><td>Publicity and adequate time for bid submission must be ensured. Higher-level approval should be obtained for a shorter bid submission period<\/em>.<\/td><\/tr><tr><td>5<\/td><td>evaluation criteria are not set from the beginning<\/em>, OR ARE not objective<\/em>, OR not clearly stated<\/em> In the tender documents \u2014 thereby making them prone to being abused<\/em>.<\/td><td>Objective, relevant and clearly stated evaluation criteria must be specified in the tender document<\/em>.<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>Appendix to Chapter 5 \u2014 Points of Difference Between the Four Manuals<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Chapter number<\/td><td>G\/C\/NC: Chapter 5 \u00b7 W: CHAPTER 4<\/td><\/tr><tr><td>2<\/td><td>Chapter title<\/td><td>IDENTICAL in all four \u2014 one of only two such chapters<\/strong>(W spells its risk section \"Bidding<\/strong> Invitation Process\", as do C and NC; G says \"Bid<\/strong> Invitation Process\")<\/em><\/td><\/tr><tr><td>3<\/td><td>Number of sections<\/td><td>G: 5 \u00b7 W: 15 (most granular) \u00b7 C: 8 \u00b7 NC: 5<\/td><\/tr><tr><td>4<\/td><td>Model Tender Documents<\/td><td>G\/C\/NC cite DoE MTDs (Goods & NCS Oct 2021; Consultancy April 2023)<\/em> \u00b7 W refers instead to \"relevant standard bidding documents\" and says to follow CPWD's if the organisation has none<\/td><\/tr><tr><td>5<\/td><td>Survey & soil investigation report, area grading, mapping of underground facilities to be part of the tender document<\/td><td>W ONLY<\/td><\/tr><tr><td>6<\/td><td>\"Facilities and inputs which will be provided to the contractor by the Ministry\/ Department\" as an essential aspect<\/td><td>W ONLY<\/td><\/tr><tr><td>7<\/td><td>\"Requirements as to documentary evidence\" as an essential aspect<\/td><td>W ONLY<\/td><\/tr><tr><td>8<\/td><td>Footnote defining \"HIGHEST\" bidder as the H1 QCBS scorer<\/td><td>W ONLY<\/td><\/tr><tr><td>9<\/td><td>Order of the last two tender-document sections<\/td><td>G: Financial Bid then Submission Forms \u00b7 W: Submission Forms then Financial Bid<\/td><\/tr><tr><td>10<\/td><td>Section VII titled \"DRAWING, Technical Specifications and Quality Assurance\"<\/td><td>W<\/strong> (G omits \"Drawing\")<\/td><\/tr><tr><td>11<\/td><td>The four circumstances warranting an SCC clause<\/td><td>W ONLY<\/td><\/tr><tr><td>12<\/td><td>Evaluation by item\/ lot\/ entire scope; milestone identification \"in an optimal and sequential manner\"<\/td><td>W ONLY<\/td><\/tr><tr><td>13<\/td><td>ACCESSIBILITY MANDATE \u2014 RPwD Act 2016 & Rules 2017; Harmonised Guidelines (MoHUA); IS 17802 Parts 1 & 2<\/td><td>W ONLY<\/td><\/tr><tr><td>14<\/td><td>Performance Standards & QA; Method Statement; Work Plan; Critical Material Schedule; SLA; Occupational Safety, Health and Working Conditions<\/td><td>nc only<\/td><\/tr><tr><td>15<\/td><td>The three NC Qualification Criteria and the 3\u00d740% \/ 2\u00d750% \/ 1\u00d780% volume test<\/td><td>nc only<\/td><\/tr><tr><td>16<\/td><td>Contract Manager \u2014 5 years' experience, 3 as manager<\/td><td>nc only<\/td><\/tr><tr><td>17<\/td><td>Turnover multiple of 3\u20137 times, with the stated reason that NC needs a higher multiple than Works<\/td><td>nc only<\/td><\/tr><tr><td>18<\/td><td>Upper cap on demanded turnover in higher-value procurements<\/td><td>nc only<\/td><\/tr><tr><td>19<\/td><td>Entry window for sub-contractors \u2014 repair contracts up to Rs. 60 lakh; no more than 2 contracts under relaxed credentials<\/td><td>W ONLY<\/td><\/tr><tr><td>20<\/td><td>Demerged entities \u2014 five-year use of parent credentials<\/td><td>W, C, NC<\/strong> \u2014 not in Goods<\/em><\/td><\/tr><tr><td>21<\/td><td>Conditional discounts not considered at evaluation but availed if bidder otherwise eligible<\/td><td>W ONLY<\/td><\/tr><tr><td>22<\/td><td>REoI DOCUMENT \u2014 contents, forms, EoI validity 60 days, \"do not ask for CVs or approach at EoI stage\", right to make minor ToR adjustments at RfP stage<\/td><td>C ONLY<\/td><\/tr><tr><td>23<\/td><td>RfP DOCUMENT \u2014 rFPL\/ ITC\/ AITC, rfP validity 90 days, budget not to be disclosed except in FBS, STP vs FTP, 14-day association approval, presentation carries no marks<\/td><td>C ONLY<\/td><\/tr><tr><td>24<\/td><td>\"Any procurement portal without Excel BOQ facility should endeavour to build it\"<\/td><td>C + NC<\/td><\/tr><tr><td>25<\/td><td>\"Items for which no rate is entered will not be paid for and are deemed covered\"; lump-sum breakdown requirement<\/td><td>C + NC<\/td><\/tr><tr><td>26<\/td><td>Minimum wage floor; 'NIL' price rejection; LCS for Manpower Outsourcing; police verification and good moral character of deployed manpower<\/td><td>nc only<\/td><\/tr><tr><td>27<\/td><td>e-Publishing exclusion<\/td><td>G\/C\/NC: purchase without quotation & by purchase committee \u00b7 W: works procurement through quotation<\/td><\/tr><tr><td>28<\/td><td>Fixed days for NIT issuance and tender opening; CPWD region-wise table; Rs. 2 crore one-week\/ two-week rule<\/td><td>W ONLY<\/td><\/tr><tr><td>29<\/td><td>21-day extension norm and fresh publication where amendment substantially changes requirements<\/td><td>W ONLY<\/td><\/tr><tr><td>30<\/td><td>Auto-extension \"only ONCE, not repeatedly\"<\/td><td>G states it twice; W OMITS the restriction<\/td><\/tr><tr><td>31<\/td><td>Exemption from tender document cost<\/td><td>G: MSEs and<\/em> registered units \u00b7 W: registered units only (for relevant grades of work)<\/td><\/tr><tr><td>32<\/td><td>Legal status of bidder; Rs. 10 crore JV threshold; max 3 JV partners; JV discouraged in QOP\/QCBS; PASARA and other licences; litigation history disqualification<\/td><td>W ONLY<\/strong>(in this chapter)<\/em><\/td><\/tr><tr><td>33<\/td><td>Consequence of participating in more than one bid<\/td><td>g: Disqualification of ALL<\/em> BIDS in which he is a party \u00b7 W: disqualification of the bid in which he is main\/ principal\/ lead bidder<\/td><\/tr><tr><td>34<\/td><td>One-Principal-one-agent rule and the PAC exception for multiple authorised distributors<\/td><td>G ONLY<\/td><\/tr><tr><td>35<\/td><td>OEM authorisation certificate + warranty confirmation; tender-specific authorisation for capital equipment<\/td><td>G ONLY<\/td><\/tr><tr><td>36<\/td><td>Pre-bid conference trigger<\/td><td>G: turnkey, sophisticated\/ costly equipment, large works, complex consultancy \u00b7 W: adds \"or wherever felt necessary\"<\/td><\/tr><tr><td>37<\/td><td>Participation restricted to those who downloaded the Tender Document<\/td><td>G<\/strong> (W does not state this restriction)<\/td><\/tr><tr><td>38<\/td><td>site visit<\/td><td>W, C, NC \u2014 absent from Goods<\/td><\/tr><tr><td>39<\/td><td>Bid Opening Committee = one officer each from Procuring Entity and Integrated Finance<\/td><td>stated in G<\/strong><\/td><\/tr><tr><td>40<\/td><td>Risk table row 3 mitigation<\/td><td>G: \"when PQB tendering<\/em> is warranted\" \u00b7 W: \"when Two-STAGE tendering<\/em> is warranted\"<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 5<\/p>\n<aside class=\"note\">next: Chapter 6 \u2014 forms of securities, prices, payment terms and price variations (Goods Ch. 6 \u00b7 Works Ch. 5 \u00b7 Consultancy Ch. 6 \u00b7 Non-Consultancy Ch. 6)<\/em> \u2014 the second and last chapter whose title is word-for-word identical in all four Manuals, though its contents diverge sharply: Goods alone carries Incoterms 2020 and Exchange Rate Variation; Works alone carries Mobilisation and Secured Advances and the six-fold breakdown of securities; CS and NC carry the leanest version.<\/p><\/aside><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch6\">Chapter 6<\/p><h1>Forms of Securities, Prices, Payment Terms and Price Variations<\/h1><\/header>\nMerging: Goods Ch. 6 \u00b7 Works Ch. 5 \u00b7 Consultancy Ch. 6 \u00b7 Non-Consultancy Ch. 6<\/em><\/p><h2>Structural Notes<\/span><\/h2>\n1. This is the second and last chapter whose title is WORD-FOR-WORD IDENTICAL in all four Manuals. BUT the Works Manual numbers it CHAPTER 5, not Chapter 6.<\/p>\n2. Despite the identical title, this chapter has the sharpest content divergence of any \"common\" chapter. Three whole bodies of material exist in one Manual only:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Body of material<\/th><th>Exists only in<\/th><\/tr><\/thead><tbody><tr><td>Terms of Payment for Domestic Goods \u00b7 Terms of Payment for IMPORTED Goods \u00b7 Letter of Credit \u00b7 Air Freight Charges \u00b7 Exchange Rate Variation (ERV) \u00b7 INCOTERMS 2020 \u00b7 Customs Duty \u00b7 Insurance Surety Bond and e-BG (full text) \u00b7 Warranty Bank Guarantee<\/td><td>GOODS<\/td><\/tr><tr><td>Security Deposit\/ Retention Money \u00b7 Insurances and Indemnities \u00b7 Variations and Measurement Books \u00b7 Interim Payment Certificates \u00b7 MOBILISATION ADVANCE \u00b7 Plant\/ Machinery\/ Shuttering Advance \u00b7 SECURED ADVANCE against material at site<\/td><td>WORKS<\/td><\/tr><tr><td>The multi-year performance-security reduction rule for SERVICE contracts (5\u20137 years)<\/td><td>CS + NC<\/td><\/tr><\/tbody><\/table><\/div>\n3. The seven common anchors<\/strong>, present in all four in the same order:<\/p>\n<aside class=\"note\">Forms of Security \u2192 Payment Clause \u2192 Advance Payment \u2192 Firm\/ Variable Price \u2192 Statutory Taxes\/ Duties\/ Levies \u2192 Recovery of Public Money from the bill \u2192 Payment against Time-Barred Claims<\/p><\/aside>\n<h2>Concordance for Chapter 6<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>Goods<\/th><th>Works<\/th><th>CS<\/th><th>NCS<\/th><\/tr><\/thead><tbody><tr><td>6.1<\/td><td>Bid Security\/ EMD<\/td><td>6.1.1<\/td><td>5.1.1<\/td><td>6.1.1<\/td><td>6.1.1<\/td><\/tr><tr><td>6.2<\/td><td>Performance Security\/ Guarantee<\/td><td>6.1.2<\/td><td>5.1.2<\/td><td>6.1.2<\/td><td>6.1.2<\/td><\/tr><tr><td>6.3<\/td><td>Security Deposit\/ Retention Money<\/td><td> \u2014 <\/td><td>5.1.3<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>6.4<\/td><td>Insurance Surety Bond (ISB)<\/td><td>6.1.3<\/td><td>(cross-ref)<\/em><\/td><td>(cross-ref)<\/em><\/td><td>(cross-ref)<\/em><\/td><\/tr><tr><td>6.5<\/td><td>Electronic Bank Guarantee (e-BG)<\/td><td>6.1.4<\/td><td>(cross-ref)<\/em><\/td><td>(cross-ref)<\/em><\/td><td>(cross-ref)<\/em><\/td><\/tr><tr><td>6.6<\/td><td>Warranty Bank Guarantee<\/td><td>6.1.5<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>6.7<\/td><td>Verification of Bank Guarantees<\/td><td>6.1.6<\/td><td>5.1.4<\/td><td>6.1.3<\/td><td>6.1.3<\/td><\/tr><tr><td>6.8<\/td><td>Safe Custody and Monitoring<\/td><td>6.1.7<\/td><td>5.1.5<\/td><td>6.1.4<\/td><td>6.1.4<\/td><\/tr><tr><td>6.9<\/td><td>Insurances and Indemnities<\/td><td> \u2014 <\/td><td>5.1.6<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>6.10<\/td><td>Payment Clause \/ Payment Terms<\/td><td>6.2<\/td><td>5.2<\/td><td>6.2<\/td><td>6.2<\/td><\/tr><tr><td>6.11<\/td><td>Terms of Payment \u2014 Domestic Goods<\/td><td>6.3<\/td><td> \u2014 <\/td><td>6.3 (generic)<\/em><\/td><td>6.3 (generic)<\/em><\/td><\/tr><tr><td>6.12<\/td><td>Terms of Payment \u2014 Imported Goods; LC<\/td><td>6.4<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>6.13<\/td><td>Advance Payment<\/td><td>6.5<\/td><td>5.3<\/td><td>6.4<\/td><td>6.4<\/td><\/tr><tr><td>6.14<\/td><td>Prices, Firm Price and Variable Price<\/td><td>6.6<\/td><td>5.4<\/td><td>6.5<\/td><td>6.5<\/td><\/tr><tr><td>6.15<\/td><td>Exchange Rate Variation (ERV)<\/td><td>6.7<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>6.16<\/td><td>Statutory Taxes\/ Duties\/ Levies<\/td><td>6.8<\/td><td>5.5<\/td><td>6.6<\/td><td>6.6<\/td><\/tr><tr><td>6.17<\/td><td>Incoterms 2020<\/td><td>6.9<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>6.18<\/td><td>Recovery of Public Money from the bill<\/td><td>6.10<\/td><td>5.6<\/td><td>6.7<\/td><td>6.7<\/td><\/tr><tr><td>6.19<\/td><td>Payment against Time-Barred Claims<\/td><td>6.11<\/td><td>5.7<\/td><td>6.8<\/td><td>6.8<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>6.1<\/span>Bid Security \/ Earnest Money Deposit (EMD)<\/span><\/h2>\n(Rule 170 of GFR 2017)<\/em><\/p>\n1. Purpose and when taken: To safeguard against a bidder's withdrawing or altering its\/ his bid during the bid validity period<\/em> \u2014 in the case of advertised (OTE and GTE) tenders or Special Limited Tender Enquiry<\/em> \u2014 Bid Security (also known as earnest money deposit \u2014 EMD<\/em>) is to be obtained from the bidders along with their bids<\/em>.<\/p>\n2. The amount: The amount of Bid Security should ordinarily range between two (2) to five (5) per cent of the estimated value<\/em> Of the goods\/ works to be procured.<\/p>\nThe amount, rounded off to the nearest thousands of rupees<\/em>, as determined by the Procuring Entity, is to be indicated in the tender documents<\/em>.<\/p>\n<aside class=\"note\">W<\/span> Adds an upper ceiling provision: \"The Procuring Entity May, if considered justified, stipulate an upper ceiling on the Bid Security amount, in larger tenders \u2014 so as not to restrict competition.\"<\/em><\/p><\/aside>\n3. Forms of Bid Security \u2014 and the issuing-bank divergence:<\/p>\nBid security may be obtained in the form of:<\/p>\n<aside class=\"note\">Insurance surety bonds \u00b7 account payee demand draft \u00b7 banker's cheque \u00b7 Bank Guarantee (including e-Bank Guarantee) \u00b7 or payment online in an acceptable form<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Which banks may issue<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span> GOODS<\/td><td>from any of the commercial banks<\/em><\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> WORKS<\/td><td>issued\/ CONFIRMED by any of the scheduled banks<\/em> (as defined in <\/strong>section 2(e) of the RBI Act 1934)<\/strong> W<\/span> Footnote: \"a Bank Guarantee merely advised by a scheduled bank is not acceptable, in lieu of being confirmed.<\/em>\"<\/td><\/tr><\/tbody><\/table><\/div>\nthe Rs. 5 lakh threshold: In case the Bid Security is more than a threshold (rupees five lakh)<\/em>, and in case of foreign bidders in GTE tenders<\/em>, it May be in the form of a bank Guarantee<\/em> (In equivalent foreign exchange amount, in case of GTE) issued\/ confirmed from any of the commercial\/ scheduled banks in India in an acceptable form.<\/p>\n4. Validity: The Bid Security is normally to remain valid for a period of 45 (forty-five) days beyond the final bid validity period<\/em>.<\/p>\n5. Bid securing declaration (BSD) \u2014 and the divergence in consequence:<\/p>\nIn place of a Bid Security, procuring entities \u2014 after seeking approval from the Competent Authority<\/em> \u2014 May consider asking bidders to submit a bid securing declaration (BSD)<\/em>, accepting that:<\/p>\n<ul class=\"lst\"><li>If they withdraw or modify their bids during the period of validity<\/em>; or<\/li><li>if they are awarded the contract and they fail to submit Performance Security, or to sign the contract<\/em>, before the deadline defined in the tender documents<\/li><\/ul>\n \u2014 it shall be considered as a violation of the Code of Integrity<\/em>, and they shall be:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Consequence<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-multi\" data-src=\" G C NC \"><td>G<\/span>, C<\/span>, NC<\/span><\/td><td>\"\u2026Shall be suspended<\/strong> for the time period specified in the BSD\"<\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> WORKS<\/td><td>\"\u2026Shall be debarred<\/strong> for the time period specified in the BSD\"<\/td><\/tr><\/tbody><\/table><\/div>\n \u2014 from being eligible to submit bids\/ proposals for contracts with the Procuring Entity.<\/p>\n6. Exemptions from Bid Security \u2014 and the MSE divergence:<\/p>\nIn appropriate cases, submission of the bid security may be exempted with the Competent Authority's (ca's) approval<\/em> \u2014 especially in the case of:<\/p>\n<aside class=\"note\">Indigenisation\/ development tenders \u00b7 limited tenders \u00b7 G<\/span> Procurements directly from the manufacturer or authorised agents \u00b7 bidders that are currently registered, and will also continue to remain registered during the bid validity period<\/em> With the concerned Ministry\/ Department\/ Procuring Entity<\/p><\/aside>\nthe statutory exemptions:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Who is exempt from payment of EMD<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span> GOODS<\/td><td>BOTH \u2014 micro and Small Enterprises (MSEs)<\/em> as defined in the MSE Procurement Policy, AND<\/strong>registered startups<\/em> as recognised by DPIIT<\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> WORKS<\/td><td>ONLY \u2014 registered startups<\/em> as recognised by DPIIT (MSEs are not named)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nIn case the bidder falls into these categories, the bidder should furnish a certified copy of its valid registration details<\/em>.<\/p>\nThe scope of the registered-bidder exemption:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-G\" data-src=\" G \">G<\/span>:<\/strong>\"except for MSEs<\/em>, this exemption is valid for the trade group and monetary value<\/strong> Of registration only.\"<\/li><li class=\"srcmark src-W\" data-src=\" W \">W<\/span>:<\/strong>\"This exemption is valid for the monetary value<\/strong> Of registration only.\"<\/li><\/ul>\n7. Forfeiture: A bidder's Bid Security shall be forfeited<\/em> IF:<\/p>\n<ul class=\"lst\"><li>The bidder withdraws or amends its bid<\/em>, OR impairs or derogates from the tender in any respect<\/em>, within the period of validity of the tender; Or<\/li><li>THE successful bidder fails to furnish the required Performance Security or to sign the contract<\/em> Within the specified period.<\/li><\/ul>\n8. Return of bid securities \u2014 the three timelines:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Situation<\/th><th>When returned<\/th><\/tr><\/thead><tbody><tr><td>UNSUCCESSFUL bidders<\/td><td>as soon as possible after the expiry of the final bid validity period \u2014 and, at the latest, by the 30TH day after the award of the contract<\/em><\/td><\/tr><tr><td>SUCCESSFUL bidder<\/td><td>UPON receipt of Performance Security<\/em><\/td><\/tr><tr><td>In two-packet or two-stage tendering \u2014 unsuccessful bidders of the first stage<\/td><td>within 30 days of declaration of the result of the first stage<\/em> (i.e., technical evaluation, etc.) (OM No. F.1\/2\/2022-PPD dated 01.04.2022)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>6.2<\/span>Performance Security \/ Performance Guarantee<\/span><\/h2>\n(Rule 171 of GFR 2017)<\/em><\/p>\n1. Purpose: TO ENSURE due performance of the contract<\/em>, Performance Security (or performance Bank Guarantee \u2014 PBG<\/em>, OR security Deposit \u2014 SD<\/em>) is to be obtained from the successful bidder awarded the contract.<\/p>\n<aside class=\"note\">G<\/span> \u2014 the goods-specific caveat: \"Unlike contracts of works and plants, in the case of contracts for goods, the need for Performance Security <\/em>depends on the market conditions and commercial practice for the particular kind of goods.\"<\/em><\/p><\/aside>\n2. The quantum \u2014 the key numerical divergence<\/strong>(OM No. F.1\/2\/2023-PPD dated 01.01.2024)<\/em>:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Performance Security<\/th><\/tr><\/thead><tbody><tr><td>GOODS<\/td><td>Three (3) TO five (5) PER CENT of the value of the contract<\/td><\/tr><tr><td>WORKS<\/td><td>Three (3) TO ten (10) PER CENT of the value of the contract<\/td><\/tr><tr><td>non-consultancy services<\/td><td>Three (3) TO five (5) PER CENT of the contract value<\/strong>(the NC Manual expressly notes \"3 to 10% for Works\")<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">W<\/span> \u2014 the high-value moderation Rule:\"<\/strong>to ensure competition, in <\/em>higher-value tenders (say > Rs. 50 crore), Performance Security amount May be based on an <\/em>appropriate lower percentage from the band of 3% to 10%*.\"*<\/p><\/aside>\n3. The upper ceiling \u2014 the illustrative example given in G<\/span> and NC<\/span>:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Tender value<\/th><th>Illustrative ceiling on Performance Security<\/th><\/tr><\/thead><tbody><tr><td>Up to Rs. 50 crore<\/td><td>Rs. 75 LAKH<\/td><\/tr><tr><td>above Rs. 50 crore but below Rs. 300 crore<\/td><td>Rs. 3 CRORE<\/td><\/tr><tr><td>higher than Rs. 300 crore<\/td><td>The Procuring Entity may decide the amount \u2014 but not less than Rs. 3 crore<\/em> mentioned above<\/td><\/tr><\/tbody><\/table><\/div>\nhowever, procuring entities are free to decide their own upper limits\/ quantum<\/em> for Performance Security (NC<\/span> Adds: \"Or dispense with it\")<\/em> \u2014 with the approval of Competent Authority and finance concurrence, based on their perception of performance risks vis-\u00e0-vis need for competition<\/em>.<\/p>\n4. Forms of Security:<\/strong> Performance security may be furnished in the form of:<\/p>\n<aside class=\"note\">Insurance Surety Bond \u00b7 account payee demand draft \u00b7 Bank Guarantee (including e-Bank Guarantee) issued\/ confirmed from any of the commercial\/ scheduled banks in India \u00b7 or online payment in an acceptable form<\/p><\/aside>\n \u2014 safeguarding the purchaser's\/ Procuring Entity's interest in all respects.<\/p>\n5. GTE contracts and URDG 758: In the case of GTE tenders, the Performance Security should be in the same currency as the contract<\/em> And must conform to the uniform Rules for demand guarantees (URDG 758)<\/em> \u2014 an international convention regulating international securities.<\/p>\n<aside class=\"note\">Footnote (all Manuals): A set of rules developed by the International Chamber of Commerce<\/strong>, first adopted in 1992<\/strong>. The latest version URDG 758<\/strong> provides a framework for harmonising international trading practices and establishes agreed-upon rules for independent guarantees and counter-guarantees among trading partners.<\/em><\/p><\/aside>\n6. Joint ventures \u2014 W<\/span> and NC<\/span>: In case of a JV, the BG towards Performance Security shall be provided by all partners in proportion to their participation in the project<\/em>.<\/p>\n7. The no-retention Rule for goods \u2014 G<\/span> Only: Unlike the procurement of works, in the procurement of goods, the concept of taking part of the performance guarantee as money retained from the first or progressive bills of the supplier is not acceptable<\/em>.<\/p>\n8. The value threshold below which Performance Security is not needed:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Provision<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span> GOODS<\/td><td>\"Submission of Performance Security is not necessary<\/strong> for a tender value up to rupees 50 lakh.\"<\/strong> (The Goods Manual prints \"Rupees 50 (twenty-five) lakh\" \u2014 an evident typographical inconsistency<\/strong> between the figure and the word.)<\/em><\/td><\/tr><tr class=\"srcmark src-NC\" data-src=\" NC \"><td>NC<\/span> Non-consultancy<\/td><td>\"Submission of Performance Security May not be insisted upon<\/strong> In lower-valued contracts (say up to rupees 50 (fifty) lakh).\"<\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> WORKS<\/td><td>(no such threshold stated)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n9. Exemption from submission of Performance Security:<\/p>\nProcuring Entity may EXEMPT the following entities (on their specific requests or otherwise<\/em>): A) govt. Ministries, departments, attached and subordinate offices, autonomous bodies<\/p>\n<aside class=\"note\">Footnote in all Manuals: \"there is no bar from taking Performance Security from CPSEs.<\/em>\"<\/p><\/aside>\n<ol class=\"lst\"><li class=\"srcmark src-multi\" data-src=\" G NC \">G<\/span> and NC<\/span> ONLY:<\/strong>THE OEM in whose favour PAC<\/em> is issued, in tenders issued against PAC.<\/li><\/ol>\n<aside class=\"note\">(Absent from Works \u2014 consistent with the fact that Works has no PAC mode at all<\/strong> \u2014 see Chapter 4 Part B.)<\/em><\/p><\/aside>\n10. When furnished and how long valid:<\/p>\nPerformance Security is to be furnished by a specified date \u2014 generally 14 (fourteen) to 28 (twenty-eight) days after notification of the award<\/em>(G<\/span> and NC<\/span> add: \"depending on the amount\")<\/em>.<\/p>\nIt should remain valid for a period of 60 (sixty) days<\/em> \u2014 or any other period mentioned in the tender documents \u2014 beyond the date of completion of all contractual obligations<\/em>, including:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-multi\" data-src=\" G NC \">G<\/span>, NC<\/span>:<\/strong>Warranty obligations;<\/li><li class=\"srcmark src-W\" data-src=\" W \">W<\/span>:<\/strong>Defect liability period (DLP)\/ warranty period.<\/li><\/ul>\n11. Multi-year contracts \u2014 the proportionate-reduction Rule, and its two versions:<\/p>\nG<\/span> \u2014 GOODS version:<\/strong>In the case of goods contracts (e.g., rate contracts and other long-term contracts<\/em>) spanning over multiple years, procuring entities May consider proportionately reducing Performance Security in proportion to the balance contract period<\/em>, wherever feasible \u2014 instead of retaining the full Performance Security over the complete contract period, which May be of 2\u20133 years or more<\/em>.<\/p>\nC<\/span> + NC<\/span> \u2014 the SERVICES version, with its stated rationale:<\/p>\n<aside class=\"note\">In the case of service contracts spanning over multiple years, care needs to be taken to decide on the amount of Performance Security being sought along with the duration<\/em>.<\/p>\nIt has been observed that procuring entities retain the Performance Security over the complete service contract period, which May be of 5\u20137 years or more<\/em>. This practice puts the service provider in a difficult situation, as they have to block a substantial amount of their working capital as security for the entire duration of the contract<\/em>.<\/p>\nIn such cases the following is suggested:<\/p>\nA) the balance to be struck: The right quantum of Performance Security has to strike a balance between protecting the Procuring Entity's interest in case of default in performance<\/em> VS. Avoiding increase in tendered price and\/ or reduced competition<\/em>.<\/p>\nIf the security is LOW<\/em>, the Procuring Entity May be adversely affected if and when default occurs<\/em>. If it is HIGH<\/em>, THE extra financial cost of furnishing such security will be factored in by bidders when quoting prices, and hence the cost May increase<\/em>.<\/p>\nB) sufficient flexibility is already available in the GFR<\/em> To design the Performance Security for procurement of services \u2014 both value and duration<\/em> \u2014 duly considering the market conditions and commercial practice for the particular kind of service.<\/p>\nC) procuring entities May consider proportionately reducing Performance Security in proportion to the balance service period<\/em>, wherever feasible. Wherever it is decided to take lower or proportionally reducing ps<\/em>, tender conditions May be suitably modified for the future cases<\/em>.<\/p><\/aside>\n12. Replacement of existing securities \u2014 W<\/span> and NC<\/span>: Securities in the existing<\/em> Contracts in the form of Bank Guarantee May be permitted by the Procuring Entity to be replaced by the contractors with insurance surety bonds or e-Bank Guarantee<\/em>. Adequate safeguards \u2014 such as requiring prior submission of new forms of security before releasing the original forms of security<\/em> \u2014 should be ensured.<\/p>\n13. Forfeiture and refund \u2014 and the \"partial execution\" rule:<\/p>\nThe Performance Security will be forfeited and credited to the Procuring Entity's account in the event of a breach of contract<\/em> By the contractor.<\/p>\nIt should be refunded to the contractor without interest<\/em> After he duly performs and completes the contract in all respects\u2026<\/p>\n<aside class=\"note\">G<\/span> Only \u2014 the parenthesis that matters: *\"\u2026(<\/strong>full Performance Security should be forfeited, even if the contractor has partially executed the work)\u2026\"*<\/p><\/aside>\n\u2026BUT not later than 60 (sixty) days<\/em> Of completion of all such obligations including the warranty (W<\/span>: \"of completion of the Defect Liability Period (DLP)\/ warranty period\")<\/em> Under the contract.<\/p>\n14. Monitoring and transparency: The senior officers should monitor the return of bid\/ performance securities<\/em>, and delays should be avoided. If feasible, the details of these securities May be listed in the e-procurement portal\/ website of the Procuring Entity to make the process transparent and visible<\/em>.<\/p>\n<h2>6.3<\/span>Security Deposit \/ Retention Money [W ONLY]<\/span><\/h2>\n<aside class=\"note\">This instrument exists only in the works Manual<\/em>. Note that the Goods Manual expressly says the retention concept is \"not ACCEPTABLE\" in goods procurement (para 6.2-7 above).<\/p><\/aside>\nIN addition<\/em> To Performance Security, contracts for works usually provide for a percentage \u2014 usually five per cent \u2014 of each running bill (periodic\/ interim payment) to be withheld as Security Deposit\/ retention money until final acceptance<\/em>.<\/p>\nThe earnest money, instead of being released, May form part of the Security Deposit<\/em>.<\/p>\nThe contractor's option to replace retention money \u2014 at two stages:<\/p>\nThe contractor may, at his option<\/em>, replace the retention amount with an unconditional BG\/ Insurance Surety Bond<\/em> From a bank acceptable to the Procuring Entity at the following stages:<\/p>\nA) after the amount reaches half the value of the limit<\/em> Of retention money; And<\/p>\nb) after the amount reaches the maximum limit<\/em> Of retention money.<\/p>\nThe two-halves release Rule:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Half<\/th><th>When released<\/th><\/tr><\/thead><tbody><tr><td>One-HALF of the retention money (or BG which replaced it)<\/td><td>shall be released on the issue of the taking-over certificate<\/em>. If the taking-over certificates (TOCs) are issued in parts<\/em>, then in such proportions as the engineer May determine<\/em>, having regard to the value of such part or section<\/td><\/tr><tr><td>the other half<\/td><td>shall be released upon expiration of 60 (sixty) days<\/em> \u2014 or any other period mentioned in the tender document \u2014 after the DLP\/ warranty period of the works, or final payment, whichever is earlier<\/em> \u2014 ON certification by the engineer<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nin the event of different defect liability periods\/ warranty periods being applicable to different sections or parts or equipment incidental to works<\/em>, the expiration of defect liability period\/ warranty period shall be the latest of such periods<\/em>.<\/p>\n<h2 class=\"src-G srchead\" data-src=\" G \">6.4<\/span>Insurance Surety Bond (ISB)<\/span>G<\/span>text; W\/C\/NC cross-refer to Goods para 6.1.3<\/span><\/h2><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\nAn Insurance Surety Bond (isb) is a three-party agreement<\/em> That provides financial assurance to one party (the beneficiary) by another party (the surety or bonding company) on behalf of a third party (the principal).<\/p>\nIsb ensures that the principal fulfils their contractual obligations<\/em>.<\/p>\n<aside class=\"note\">The key distinction from a Bank Guarantee: Unlike a Bank Guarantee, it is a type of premium-based insurance product<\/em> AND does not require a deposit of a collateral amount by the principal with the surety<\/em>.<\/p><\/aside>\nThe three parties:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Party<\/th><th>Who it is<\/th><\/tr><\/thead><tbody><tr><td>1. Principal<\/td><td>The party that obtains<\/em> the surety bond \u2014 typically the contractor or service provider<\/em> who provides the Bid\/ performance security to the Procuring Entity<\/td><\/tr><tr><td>2. Beneficiary<\/td><td>The party (procuring Entity<\/em>) that requires<\/em> the Insurance surety bond. The beneficiary seeks financial protection in case the principal fails to meet their obligations<\/td><\/tr><tr><td>3. Surety insurer<\/td><td>The bond-issuing entity (bank or insurance company)<\/em>. They act as a guarantor<\/em>, assuring the beneficiary that the principal will perform as promised<\/td><\/tr><\/tbody><\/table><\/div>\nthe default procedure and its two timelines:<\/p>\nIf the principal defaults, the surety insurer assesses the extent of default and determines the amount payable<\/em> Under the bond. If the principal does not pay within 14 DAYS<\/em>, the surety insurer pays within 45 calendar days<\/em> Of receiving the necessary documentation.<\/p>\n<\/div><h2 class=\"src-G srchead\" data-src=\" G \">6.5<\/span>Electronic Bank Guarantee (e-BG)<\/span>G<\/span>text; W\/C\/NC cross-refer to Goods para 6.1.4<\/span><\/h2><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\n1. What it is: Electronic Bank Guarantee is a dematerialised Bank Guarantee processed on national e-governance services limited (NeSL)<\/em> \u2014 AN information utility registered with the insolvency and bankruptcy board of India<\/em>, under the aegis of the insolvency and bankruptcy code.<\/p>\nIt handles all lifecycle events of e-bg<\/em> \u2014 execution by the issuing bank, intimation to and verification by the beneficiary, amendment, invocation or release by the beneficiary, cancellation, etc.<\/p>\nThe facility is available 24\/7, including non-working days<\/em>. Beneficiaries and banks can continue to use their own BG templates<\/em>.<\/p>\nAll bidders May be encouraged to submit e-bgs instead of traditional paper-based bank guarantees<\/em>.<\/p>\n2. Creation of e-BG: The procuring Entity should ensure that the bidder\/ contractor is informed (in the tender documents) of its unique identity number (UIN \u2014 which can be allotted by its bank) and email id<\/em>.<\/p>\nA clause regarding e-bgs May be included in the tender<\/em>, acknowledging and accepting the use of e-bgs as a valid form of Bank Guarantee for the tender process. The Procuring Entity May reserve the right to verify the authenticity of e-bgs<\/em> And take necessary actions in case of discrepancies.<\/p>\nThe UIN and email id of the beneficiary are specified by the issuing bank when creating the e-bg on the NeSL portal<\/em>, upon being approached by the bidder\/ contractor. On creation of e-bg, it is stored on the NeSL portal<\/em>.<\/p>\n3. Intimation to Beneficiary: NeSL shall send a notification to the email id of the beneficiary provided by the issuing bank<\/em> (As well as the beneficiary's registered email id) during issuance or subsequent event of e-bg (amendment\/ invocation, release\/ cancellation, etc.).<\/p>\nThe Procuring Entity can receive the email notification without registration<\/em> \u2014 BUT such an email shall not have the e-bg document attachment<\/em>.<\/p>\nThe issuing Bank can also arrange to forward the e-bg to the beneficiary through the applicant or any other mechanism<\/em>.<\/p>\n4. Registration and login: Beneficiaries and their authorised representatives must register with NeSL using UIN and email id<\/em>. They must log in to the NeSL portal using the same details to view, download, verify, or release\/ invoke<\/em> THE e-BG.<\/p>\nIntegration with Government procurement portals (CPPP, GeM, State govt procurement portals<\/em>) IS being explored<\/em> To facilitate e-bg access without needing to log into the NeSL portal.<\/p>\n5. EASY VERIFICATION \u2014 the significant benefit: Verification of the e-BG stored in NeSL is sufficient<\/em>, AND verification with the issuing bank is not required<\/em>. This is a significant benefit for procuring entities<\/em>.<\/p>\n6. Invocation and release: The e-bg process through NeSL facilitates beneficiaries submitting requests for invocation or any other consents through digitally signed submission in the NeSL portal \u2014 without the need to approach the issuing bank<\/em>.<\/p>\n<\/div><h2>6.6<\/span>Warranty Bank Guarantee [G ONLY]<\/span><\/h2>\nIn the case of works and capital equipment<\/em>, there is usually a defect liability\/ warranty clause<\/em> Against defects arising from design, material, workmanship, or any omission on the part of the vendor\/ contractor<\/em> During a specified period of months from the date of commissioning or the date of dispatch in case of goods \u2014 whichever is earlier<\/em>.<\/p>\nThe general Rule: In such cases, the performance guarantee is to be valid up to 60 (sixty) days beyond the warranty period<\/em>.<\/p>\nThe permitted alternative \u2014 the swap:<\/p>\nIt is normally permissible in such a situation to allow:<\/p>\n<ul class=\"lst\"><li>THE performance guarantee<\/em> To be valid up to 60 (sixty) days beyond the delivery\/ commissioning period<\/em>; AND<\/li><li>the contractor to submit a fresh warranty Bank Guarantee of 10 (ten) per cent of the value of the goods<\/em>, in the currency of the contract, valid up to 60 (sixty) days beyond the warranty period<\/em>.<\/li><\/ul>\nIn such cases, the performance guarantee is to be returned only after satisfactory delivery\/ commissioning and receipt of such a warranty Bank Guarantee<\/em>.<\/p>\nWhen no warranty clause is called for: In the procurement of goods other than capital equipment<\/em> \u2014 and in the case of low-value capital goods, say up to rupees one lakh<\/em> \u2014 a warranty clause is not called for<\/em>.<\/p>\n<h2>6.7<\/span>Verification of Bank Guarantees<\/span><\/h2>\n1. The general Rule: Bank guarantees submitted by the bidders\/ suppliers\/ contractors\/ consultants\/ service providers as EMD\/ performance securities need to be immediately verified from the issuing bank before acceptance<\/em>.<\/p>\nThere May not be any need to get the Bank Guarantee vetted by legal\/ finance authority if it is in the specified format<\/em>.<\/p>\n The five verification guidelines<\/strong>(for BGs against EMD\/ performance security\/ advance payments and for various other purposes)<\/em>:<\/p>\nA) BG shall be as per the prescribed formats<\/em>.<\/p>\nB) the BG contains the name, designation and code number of the bank officer(s) signing the guarantee(s)<\/em>.<\/p>\nc) THE address and other details (including telephone no.) of the controlling officer of the bank<\/em> Are obtained from the branch of the bank issuing the BG \u2014 this should be included in all bgs<\/em>.<\/p>\nd) the confirmation channels \u2014 and the Works addition:<\/p>\nThe confirmation from the issuing branch of the bank is obtained in writing<\/em> Through:<\/p>\n<aside class=\"note\">G<\/span>:<\/strong>Registered post\/ speed post\/ courier\/ SFMS<\/em> On the official portal of the Procuring Entity<\/p>\nW<\/span>:<\/strong>Registered post\/ speed post\/ courier\/ official email-id of the bank<\/em>\/ SFMS on the official portal of the Procuring Entity<\/p><\/aside>\nthe bank should be advised to confirm the issuance of the bgs \u2014 specifically quoting the letter of the Procuring Entity \u2014 on the printed official letterhead of the bank<\/em>, indicating the address and other details (including telephone nos.) of the bank and the name, designation and code number of the officer(s) confirming the issuance<\/em>.<\/p>\nE) the interim route: Pending receipt of confirmation as above, confirmation can also be obtained with the help of the responsible officer at the field office which is close to the issuing branch of the bank<\/em> \u2014 who should personally obtain the confirmation<\/em> From the issuing branch and forward the confirmation report<\/em> To the concerned Procuring Entity.<\/p>\n2. Genuineness: BANK GUARANTEES \u2014 either received in physical form or electronic form<\/em> \u2014 should be verified for their genuineness following the prescribed method<\/em>, and the organisations should do due diligence on the genuineness of the bank guarantees before acceptance<\/em>.<\/p>\n3. What is not acceptable: Corporate guarantee or indemnity bond shall NOT<\/em> Be accepted for bid Security (EMD) or Performance Security, or in lieu of any other Bank Guarantee<\/em> (e.g., for advance payment\/ warranty obligations).<\/p>\n4. Please note the ease with which an e-bg can be verified<\/em> (para 6.5-5 above).<\/p>\n<h2>6.8<\/span>Safe Custody and Monitoring of EMDs, Performance Securities and Other Instruments<\/span><\/h2>\n1. The mechanism: A suitable mechanism for safe custody and monitoring<\/em> Of emds, performance securities, and other instruments should be developed and implemented by each Procuring Entity<\/em>.<\/p>\nThe ministries\/ departments shall also make institutional arrangements for taking all necessary actions on time<\/em> FOR:<\/p>\n<aside class=\"note\">Extension \u00b7 G<\/span> Forfeiture\/ encashment \u00b7 W<\/span> Encashment \u00b7 or refund of emds and performance securities, as the case May be.<\/p><\/aside>\n2. The monthly review Rule: Monitoring should also include a monthly review of all bank guarantees and other instruments expiring in the next three months<\/em> \u2014 along with a review of the progress of the corresponding contracts<\/em>.<\/p>\n3. The extension Rule and the absolute prohibition: Extension of bank guarantees and other instruments, where warranted, should be sought immediately and implemented within their validity period<\/em>.<\/p>\n<aside class=\"note\">\"bank Guarantee should never be handed over to the supplier\/ contractor for the purpose of extension of validity<\/strong>.\"<\/p><\/aside>\nsuch a system of monitoring of securities and other instruments May be computerised with automatic alerts about lapse of validity<\/em>, ETC.<\/p>\n<h2>6.9<\/span>Insurances and Indemnities [W ONLY]<\/span><\/h2><h3>6.9.1<\/span>Insurances<\/span><\/h3>\nIN works and services contracts<\/em>, the contractor must take insurances against vicarious liabilities that May arise for the Procuring Entity<\/em> \u2014 i.e., under labour laws and workmen compensation<\/em>.<\/p>\n<aside class=\"note\">(This connects directly to the Law of Agency<\/strong> at para 1.15 of this Unified Manual \u2014 the Procuring Entity is vicariously liable for the acts of its agent.)<\/em><\/p><\/aside>\n<h3>6.9.2<\/span>Indemnity\/ Indenture Bonds<\/span><\/h3>\na) why they are needed: The Procuring Entity is potentially liable for injury, damage, or loss relating to a third party due to actions by the contractor during execution of the contract<\/em>.<\/p>\nViolation of laws and regulations (e.g., environmental issues<\/em>) also May result in liabilities for the Procuring Entity.<\/p>\nThe Procuring Entity also needs to be protected against damage to its assets during contract execution<\/em>. For such potential liabilities, instead of insurance, an indemnity bond May suffice<\/em>.<\/p>\nB) the statutory definition: Indemnity bonds are defined under section 124 of the Indian Contract Act<\/em>:<\/p>\n<aside class=\"note\">\"A contract by which one party promises to indemnify the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person, is called a contract of indemnity.\"<\/em><\/p><\/aside>\nit is also called an indenture bond<\/em> \u2014 especially in the context of secured advance payments in works contracts<\/em>.<\/p>\nAn indemnity bond is a bond intended to provide financial reimbursement to the holder for any actual or claimed harm\/ loss caused by the issuer's conduct or another person's conduct<\/em>.<\/p>\nIn many cases this could be an alternative to a BG \u2014 especially where the financial implication of default cannot be estimated<\/em>.<\/p>\nSome government departments (forest, mines, geology, environment, traffic<\/em>) may also ask for such bonds to allow a Contractor to carry out work related to their jurisdiction.<\/p>\nC) the three parties:<\/p>\n<ul class=\"lst\"><li>i) ISSUER<\/strong> \u2014 is legally required to obtain<\/em> a bond.<\/li><li>ii) HOLDER<\/strong> \u2014 is the party that imposes the bonding<\/em>. In some cases, as an added confidence, a third party 'surety provider' (usually a bank) is added<\/em>.<\/li><li>iii) SURETY (say a bank or the holding company of the issuer)<\/em> \u2014 guarantees the financial compensation if the issuer dithers or fails to guarantee.<\/li><\/ul>\nd) the critical weakness \u2014 why a BG is safer:<\/p>\nWhen getting indemnity bonds, the issuer signs an indemnity agreement with the surety provider, naming the holder as the beneficiary<\/em>, and submits it to the holder. It states that the full financial responsibility in case of bond claims belongs to the issuer rather than the surety<\/em>.<\/p>\nIn case the issuer does not perform his obligations and dithers or fails to compensate<\/em> The holder as per the indemnity bond, the only recourse is a civil case in the courts<\/em>.<\/p>\nSince this is a long-drawn and expensive proposition<\/em>, a BG is considered a safer option than an indemnity bond<\/strong>.<\/p>\n<h2>6.10<\/span>Payment Clause \/ Payment Terms<\/span><\/h2><h3>6.10.1<\/span>Elements of Price<\/span><\/h3>\n1. What determines the elements: The elements of price included in the quotation of a bidder depend on:<\/p>\n<aside class=\"note\">THE nature of the goods to be supplied\/ services to be performed<\/em> And the allied services \u00b7 the location of the supplier\/ consultant<\/em> \u00b7 THE location of the user<\/em> \u00b7 terms of delivery<\/em> \u00b7 extant Rules and regulations about taxes, duties<\/em> And so on, of the seller's country and the buyer's country<\/p><\/aside>\n2. The category-specific elements:<\/p>\nG<\/span> GOODS:<\/p>\n<ul class=\"lst\"><li>Indigenous goods: The main elements May include raw material, production cost, overhead, packing and forwarding charges, margin of profit, transit insurance, excise duty and other taxes and duties as applicable.<\/li><li>Imported goods:<\/strong> in addition to elements similar to the above (other than excise duty and taxes<\/em>), there may be customs duty, import duty, landing and clearing charges, and commission to Indian agents<\/strong>.<\/li><li>Further, depending on the nature of the goods, there may be cost elements towards installation and commissioning, operator's training<\/em>, and so on.<\/li><\/ul>\nNC<\/span> Non-consultancy \u2014 the admeasurement-driven price structure (unique to nc):<\/p>\n<aside class=\"note\">In case of non-consultancy services, the elements of price would depend on whether it is an input or output admeasurement contract<\/em>:<\/p>\n<ul class=\"lst\"><li>In case of input admeasurement<\/em> \u2014 unit price of each element, service charges and taxes thereon<\/em> Shall be the elements of the price Schedule. There May be miscellaneous costs also, other than inputs<\/em>.<\/li><li>In case of output admeasurement<\/em> \u2014 unit price of services delivered and taxes thereon<\/em> Shall be the elements of the price Schedule.<\/li><\/ul><\/aside>\n3. C<\/span> + NC<\/span> \u2014 the necessity of specifying delivery terms: It is therefore necessary that \u2014 to enable the bidders to frame their quotations properly in a meaningful manner<\/em> \u2014 the tender documents should clearly specify the desired terms of delivery and also the respective duties and responsibilities to be performed by the consultant\/ service provider and the Procuring Entity<\/em>.<\/p>\n4. Cost break-up (all four): Where the price has several components \u2014 such as the price of the goods, cost of installation and commissioning, operators' training<\/em>, and so on \u2014 bidders should be asked to furnish a cost break-up indicating the applicable prices and taxes for each of such components along with the overall price<\/em>. THE payment Schedule and terms will be linked to this cost break-up<\/em>.<\/p>\n5. CURRENCY \u2014 the general rule (all four):<\/p>\nThe tender documents are to specify the currency (currencies) in which the tenders are to be priced<\/em>.<\/p>\nAs a general Rule:<\/p>\n<ul class=\"lst\"><li>Domestic bidders are to quote and accept their payment in Indian currency<\/em>;<\/li><li>Indian agents of foreign suppliers\/ consultants\/ service providers are to receive their agency commission in Indian currency<\/em>;<\/li><li>Costs of imported goods\/ services directly imported against the contract<\/em> MAY BE quoted in foreign currency (currencies) and paid accordingly in that currency<\/em>;<\/li><\/ul>\n<aside class=\"note\">(NC<\/span> phrases this as: \"costs of services which are delivered from abroad or by foreign nationals against the contract\")<\/em><\/p><\/aside>\n<ul class=\"lst\"><li>the portion of the allied work and services to be undertaken in India<\/em> (like installation and commissioning of equipment) are to be quoted and paid in Indian currency<\/em>.<\/li><\/ul>\nG<\/span> \u2014 the additional GTE currency Rule: For domestic bidding<\/em>, regardless of whether the bidder is foreign or Indian, the currency of the bid and payment should be entirely in Indian rupees<\/em>. In GTE, foreign bidders have flexibility to quote in INR or freely convertible currencies<\/em> \u2014 but prices for goods, works or services (including agency commission) performed or sourced in India must be quoted and paid for in Indian rupees<\/em>. Indian bidders are required to quote in INR only<\/em>.<\/p>\n<h3 class=\"src-G srchead\" data-src=\" G \">6.10.2<\/span>Payment to Suppliers \u2014 the Ten Obligations<\/span>G<\/span><\/h3><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\nThe governing principle: In a supply contract, the delivery of goods is the essence of the contract for the purchaser<\/em>. Similarly, receiving timely payment for the supplies is the essence of the seller's contract<\/em>.<\/p>\nA healthy buyer-supplier relationship is based on the twin foundation of timely and quality supply on the one hand, and prompt and full payment to the supplier on the other<\/em>.<\/p>\nIt should be ensured that all payments due to the firm \u2014 including the release of the Performance Security \u2014 are made on a priority basis without avoidable delay<\/em> As per the tender\/ contract conditions:<\/p>\nA) as far as possible, the payment terms and time Schedule should be given in the contract and must be adhered to<\/em>. Any foreseeable payment delays should be communicated to the suppliers in advance<\/em>.<\/p>\nB) the tax certificate obligation: Prompt and timely provision of statutory certificates to the seller for taxes deducted at source is as much a part of the payment as the amount actually released<\/em>.<\/p>\nA detailed payment advice showing the calculations and reasons for the amounts disallowed and taxes deducted must be issued to the supplier along with payment<\/em>. As soon as possible \u2014 but not later than the date of submission of tax returns<\/em> \u2014 the Procuring Entity must provide the statutory certificates for the taxes deducted, so that he can claim set-offs and refunds<\/em> From the concerned authorities. As far as MSME suppliers<\/em> Are concerned, the MSME Act 2006<\/em> Has provisions for timely payments within 45 days<\/em>, AND A levy of penal interest for delayed payment<\/em>, AND arbitration\/ conciliation for related complaints by Micro and Small Enterprises facilitation councils<\/em>.<\/p>\nC) release of payment and settlement of the final bill should be processed through the associated\/ integrated finance<\/em> As per the terms and conditions of the contract.<\/p>\nD) the absolute bar: No payments to contractors by way of compensation or otherwise \u2014 outside the strict terms of the contract or more than the contract rates \u2014 should be allowed<\/em>.<\/p>\nE) before the payment is made, the invoice should be cross-checked with the actual receipt of material\/ assets\/ services<\/em>, to ensure that the payment matches the actual performance<\/em>.<\/p>\nF) the contractor's certificate: While claiming the payment, the contractor must certify on the bill that the payment being claimed is strictly within the terms of the contract, and that all the obligations on his part for claiming this payment have been fulfilled<\/em>.<\/p>\nThere should also be a suitable provision for verification of the authenticity of the person signing the invoice<\/em>, and so on, to claim the payment.<\/p>\n<\/div><h3>6.10.3<\/span>Payment Terms in WORKS [W ONLY]<\/span><\/h3>\n<aside class=\"note\">The Works Manual replaces the \"Payment Clause\" with a six-part \"Payment Terms\" section built around the construction cycle.<\/p><\/aside>\n1. Variations in works contract:<\/p>\nVariations can include:<\/p>\n<aside class=\"note\">Changes in the quantity, character, quality, or kind of work<\/em> \u00b7 changes in levels, lines, positions, and dimensions<\/em> \u00b7 additional work necessary for completion<\/em> \u00b7 and changes in the sequence or timing<\/em> Of construction<\/p><\/aside>\nA written procedure must be part of the contract for issuing variation instructions<\/em>.<\/p>\nThe engineer needs prior approval from the Procuring Entity before instructing a variation<\/em> \u2014 except in certain situations specified in the SCC.<\/p>\nVariations are tracked using a variations register<\/em>. The register is updated monthly and summarised<\/em> To keep all involved agencies informed.<\/p>\nThe engineer must balance the risks of quick finalisation against the costs of delays<\/em>.<\/p>\nVariations involving extra costs are valued as per the contract's relevant clauses<\/em>. The engineer consults with the Procuring Entity and contractor to agree on suitable rates for items beyond the sor<\/em>.<\/p>\nThe financial implications of variations are kept up to date<\/em>, AND any significant cost and time overruns due to deviations must be reported to the Procuring Entity<\/em>.<\/p>\n2. Measurement and payment \u2014 the Measurement Book regime:<\/p>\nAll items with financial value shall be recorded in Measurement Books (mb) or level field books<\/em>, to maintain a complete record of the work performed<\/em> Under the contract.<\/p>\nMeasurements and levels are taken and signed jointly by the designated official and the contractor<\/em>.<\/p>\nThe contractor shall \u2014 without extra charge<\/em> \u2014 provide all assistance with every appliance, labour and other things necessary for measurements and recording levels<\/em>.<\/p>\nThe contractor shall not cover (or place it beyond reach) the work without written consent from the Procuring Entity<\/em> \u2014 otherwise the contractor shall have to uncover it at their own expense, or they will not be paid for that work<\/em>.<\/p>\nOrganisations are encouraged to implement electronic Measurement Books (e-mbs) and integrate them with it-based project monitoring systems<\/em>.<\/p>\n3. Interim payments and the Interim Payment Certificate (IPC):<\/p>\nPayment provisions \u2014 including amounts to be paid, Schedule of payments, and payment procedures<\/em> \u2014 shall be indicated in the tender document and also in the contract.<\/p>\nPayment terms prescribed in the tender document should be such that the payment made to contractors at every stage is commensurate with the quantum of work done<\/em> \u2014 subject to any requirements for initial mobilisation.<\/p>\nEach month, the contractor submits a statement showing the amounts they consider themselves entitled to<\/em>.<\/p>\nThe engineer issues an interim Payment Certificate (IPC)<\/em> AFTER:<\/p>\n<aside class=\"note\">Verifying the quantity of work completed<\/em> \u00b7 reconciling field measurements<\/em> \u00b7 reviewing claims for extra work<\/em> \u00b7 checking retention amounts<\/em> \u00b7 AND making price adjustments<\/em><\/p><\/aside>\ninterim monthly payments are made based on the IPC \u2014 net of retentions, recovery of advances, and statutory deductions<\/em>.<\/p>\n<aside class=\"note\">The critical saving clause: \"recording of measurements of any item of work in the Measurement Book and\/ or its payment in the interim, on account or final bill, shall not relieve the contractor from liabilities from any over-measurement or defects noticed till completion of the defects liability period \u2014 and IPC or final completion certificates issued are subject to modification in this regard<\/strong>.\"<\/p><\/aside>\n4. Delay in payments to contractors \u2014 the four hard timelines:<\/p>\nDelays in eligible payments to contractors can lead to project delays, cost overruns, and disputes<\/em>.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>Timeline<\/th><\/tr><\/thead><tbody><tr><td>Ad-hoc payment of at least 75%<\/em> of the eligible running account bill<\/td><td>must be made within 10 working days<\/em> Of bill submission<\/td><\/tr><tr><td>The REMAINING payment<\/td><td>should be made within 28 working days<\/em><\/td><\/tr><tr><td>if payments are delayed beyond 10 working days<\/td><td>A written explanation must be submitted to the next higher authority within three working days<\/em><\/td><\/tr><tr><td>if bills are delayed by more than 30 working days<\/td><td>public authorities May include a provision for interest payments \u2014 at the rate of interest in general provident fund<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n5. Final bills: The final bill must be submitted by the contractor in the same manner as interim bills<\/em>, within a specified time after the physical completion of work and the issuance of the final certificate of completion (FCC)<\/em> By the Department\/ Ministry.<\/p>\nPayment is made after verifying the bill on the personal certificate of the officer-in-charge<\/em>, who confirms that the work has been executed as per the contract specifications and industry standards<\/em>.<\/p>\nFinal payment should be paid to the contractor within three months after completion of work<\/em>.<\/p>\n<h3>6.10.4<\/span>Modes of Payment (common to all four)<\/em><\/span><\/h3>\nA) electronic by default: Procuring entities should make payments through the electronic clearance system (ECS)<\/em> \u2014 e.g., real-time gross settlement systems (RTGS), national electronic funds transfer (NEFT), or electronic payment gateways<\/em>.<\/p>\nAs per RBI guidelines, the ECS mandate in rbi's format May be obtained at the time of supplier\/ contractor\/ consultant\/ service provider registration and in the tender document<\/em>. The Format is available with all Banks.<\/p>\nb) The exception: HOWEVER, if ECS payments are not feasible<\/em>, payments May be made in exceptional circumstances by cheque\/ demand draft drawn on a Government treasury or branch of RBI, or any scheduled bank authorised by RBI for transacting Government business<\/em>.<\/p>\nC) payment to the supplier's bank \u2014 G<\/span> Only: Such payment can also be made to the supplier's bank<\/em>, if the bills are endorsed in favour of the bank with a pre-receipt embossed on the bills with the words \"received payment\"<\/em>, and the supplier authenticates both the endorsement and pre-receipt<\/em>. In addition, an irrevocable power of attorney is to be granted by the supplier in favour of the bank<\/em>.<\/p>\nD) TReDS (all four): Trade receivables discounting system (TReDS) is an electronic platform for facilitating the financing\/ discounting of trade receivables of MSMEs through multiple financiers<\/em>.<\/p>\nThese receivables can be due from corporates and other buyers, including Government departments and PSUs<\/em>.<\/p>\nPayments can also be made through this platform to MSE suppliers\/ contractors\/ consultants\/ service providers<\/em>.<\/p>\n<h2>6.11<\/span>Terms of Payment<\/span><\/h2><h3 class=\"src-G srchead\" data-src=\" G \">6.11.1<\/span>Terms of Payment for DOMESTIC GOODS<\/span>G<\/span><\/h3><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\n1. The governing consideration: Terms of payment May be decided by the Procuring Entity safeguarding its interest<\/em>, based on the terms of delivery, nature of goods, type of inspection, mode of transport and risks<\/em> In such situations.<\/p>\n2. The four standard payment patterns:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Terms of delivery<\/th><th>Payment term<\/th><\/tr><\/thead><tbody><tr><td>FOR destination\/ delivery at site (no installation)<\/em><\/td><td>100% on receipt and acceptance of goods by the consignee and on the production of all required documents by the supplier<\/td><\/tr><tr><td>fOR dispatching station<\/strong>(no installation)<\/em><\/td><td>60 TO 90% ON proof of dispatch<\/em> And other related documents; Balance on receipt at site and acceptance by the consignee<\/em>(depending on the value and nature of the goods, mode of transportation, and so on)<\/em><\/td><\/tr><tr><td>fOR dispatching station<\/strong>(with installation and commissioning)<\/em><\/td><td>60% on proof of dispatch along with other specified documents \u00b7 30% on receipt of the goods at the site by the consignee \u00b7 balance 10% on successful installation and commissioning and acceptance by the consignee<\/em><\/td><\/tr><tr><td>fOR destination\/ delivery at site<\/strong>(with installation and commissioning)<\/em><\/td><td>90% on receipt and acceptance of goods by the consignee at destination and on production of all required documents \u00b7 balance 10% on successful installation and commissioning and acceptance<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">the note that matters: \"generally \u2014 especially for goods requiring installation and commissioning at the site by the supplier \u2014 the desirable terms of delivery are FOR destination\/ delivery at the site, so that the supplier remains responsible for the safe arrival of the ordered goods at the site. Therefore, unless otherwise decided, ex-works or FOR dispatching station terms should be avoided<\/strong>.\"<\/p><\/aside>\n3. The six documents for payment for domestic goods:<\/p>\n<ol class=\"lst\"><li>Supplier's invoice<\/strong>indicating, inter alia, description and specification of the goods, quantity, unit price, total value<\/em>;<\/li><li>Packing list;<\/li><li>Insurance certificate;<\/li><li>Proof of dispatch: Railway receipt\/ consignment note;<\/li><li>Quality assurance certificates:<\/strong>(a) manufacturer's guarantee certificate or in-house inspection certificate; Or (b) inspection certificate issued by purchaser's inspector<\/em>;<\/li><li>Any other document(s) as and if required in terms of the contract.<\/li><\/ol>\n<\/div><h3 class=\"src-multi srchead\" data-src=\" C NC \">6.11.2<\/span>Terms of Payment for SERVICES<\/span>C<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\">\n1. The standard term:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-C\" data-src=\" C \">C<\/span> Consultancy:<\/strong>The usual payment term is 100 (hundred) per cent on receipt and acceptance of deliverables by the Procuring Entity<\/strong><\/em>, and on production of all required documents by the consultant.<\/li><li class=\"srcmark src-NC\" data-src=\" NC \">NC<\/span> Non-consultancy:<\/strong>The usual payment term is 100 (hundred) per cent on acceptance of delivered services by the ultimate user<\/strong><\/em>, and on production of all required documents by the service provider.<\/li><\/ul>\n<aside class=\"note\">Note the divergence: acceptance by the procuring Entity<\/em> (C) vs. by the ultimate user<\/em> (NC).<\/p><\/aside>\n2. Payment provisions \u2014 including amounts to be paid, Schedule of payments, and payment procedures<\/em> \u2014 shall be indicated in the RfP\/ tender document and also in the contract<\/em>.<\/p>\nPayments May be made at regular intervals (as under time-based contracts)<\/em> OR for agreed outputs (as under lump sum contracts)<\/em>.<\/p>\n<\/div><h2>6.12<\/span>Terms of Payment for IMPORTED GOODS, and the Letter of Credit [G ONLY]<\/span><\/h2><h3>6.12.1<\/span>Terms of Payment<\/span><\/h3>\nUsual payment terms, unless otherwise directed by ca<\/em>:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Situation<\/th><th>Payment<\/th><\/tr><\/thead><tbody><tr><td>Installation, erection, and commissioning are NOT<\/em> the responsibility of the supplier<\/td><td>100% net price is to be paid against the production of stipulated documents<\/em><\/td><\/tr><tr><td>Installation, erection and commissioning ARE<\/em> the responsibility of the supplier<\/td><td>80\u201390% of the net price against production of stipulated documents; Balance within 21\u201330 (twenty-one to thirty) days of successful installation and commissioning at the consignee's premises and acceptance by the consignee<\/em><\/td><\/tr><tr><td>agency commission<\/td><td>THE entire 100% agency commission is paid (in equivalent non-convertible Indian rupees based on bc selling rate of exchange) after all other payments have been made to the supplier in terms of the contract<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<h3>6.12.2<\/span>Modes of Payment for Imported Goods<\/span><\/h3>\n1. Statutory compliance: It should be ensured that the imports into India conform with the export-import policy in force<\/em>; FEMA; FEMA (current account transactions) Rules, 2000; And directions issued by RBI under FEMA from time to time<\/em>.<\/p>\n2. The LC route: For imported goods, payment usually happens through the letter of Credit (LC)<\/em> Opened by the State bank of India or any other commercial bank<\/em> As decided by the Procuring Entity.<\/p>\nThe amount of LC should be equal to the total payable amount<\/em> And be released as per the clauses mentioned above. If the LC is not opened, payment can also be made to the seller through a direct bank transfer<\/em> \u2014 for which the buyer has to ensure that payment is released only after the receipt of prescribed documents<\/em>.<\/p>\n3. LC for domestic bidders too: To have uniform payment clauses in GTE tenders for foreign and domestic bidders<\/em>, the Procuring Entity May include a provision in its tender conditions \u2014 on the merits of the case, especially high-value contracts for sophisticated equipment\/ machinery<\/em> \u2014 allowing payment through LC to domestic bidders also<\/em>.<\/p>\n<h3>6.12.3<\/span>Documents for Payment for Imported Goods<\/span><\/h3>\nThe documents needed from the supplier are to be clearly specified in the contract<\/em>. The paying authority also verifies the documents received from the supplier with corresponding stipulations made in the contract before releasing the payment<\/em>. Documents are specified in the Letter of Credit but usually are:<\/p>\n<ol class=\"lst\"><li>Supplier's original invoice<\/strong> giving full details of the goods, including quantity, value, and so on;<\/li><li>Packing list;<\/li><li>Certificate of country of origin<\/em> Of the goods<\/strong> \u2014 to be given by the seller, or a recognised chamber of commerce, or another agency designated by the local Government<\/em> for this purpose;<\/li><li>Quality assurance certificates:<\/strong>(a) certificate of pre-dispatch inspection by the purchaser's representative; Or (b) manufacturer's test certificate and guarantee<\/em>;<\/li><li>Certificate of insurance;<\/li><li>Bill of Lading\/ airway bill\/ rail receipt<\/strong> or any other dispatch document issued by a Government agency (like the Department of Posts) or a duly authorised agency, indicating:<\/li><\/ol>\n<aside class=\"note\">A) name of the vessel\/ carrier \u00b7 b) Bill of Lading\/ airway bill \u00b7 c) port of loading \u00b7 d) date of shipment \u00b7 e) port of discharge and expected date of arrival of goods \u00b7 f) any other document(s) as required<\/p><\/aside>\n<h3>6.12.4<\/span>Air Freight Charges and Air Freight Consolidators<\/span><\/h3>\ngoods that are required to be airlifted are to be dispatched on a 'charge forward basis'<\/em>. All air freight charges shown on the relevant consignment note as chargeable to the consignee<\/em> Are to be paid to the airline in rupees<\/em>.<\/p>\nThe consolidator device: Some organisations need to import sophisticated instruments, tools, and kindred goods<\/em>. These are small in size and very delicate\/ fragile in nature<\/em>. Such goods invariably need to be airlifted<\/em> \u2014 but, quite naturally, form a small part of the air cargo carried by aircraft<\/em>.<\/p>\nFor such imports, procuring entities May engage air freight consolidators<\/em>, WHO consolidate the small air cargo of different customers and airlift them from one airport to another<\/em>.<\/p>\nThe hiring of airfreight consolidators' services should be done transparently, following standard principles of Public Procurement<\/em>.<\/p>\n<h3>6.12.5<\/span>Letter of Credit (LC)<\/span><\/h3>\n1. The four parties to the LC:<\/p>\nThe purchaser forwards a request to its bank (called the issuing bank<\/em>) in their prescribed format, along with all relevant details, including an authenticated copy of the contract<\/em>.<\/p>\nBased on this, the issuing bank opens the LC \u2014 promising to pay the specified amount to the supplier's (beneficiary's) bank <\/strong>based solely on the documents presented by the supplier as specified in the LC conditions, without physically ascertaining the shipment of goods<\/em>.<\/strong><\/p>\nThe issuing bank arranges with a bank in the supplier's region (called the advising bank<\/em>) to notify the supplier and his bank of the availability of the LC<\/em>.<\/p>\nSince the supplier May not be comfortable with the issuing bank<\/em>, it May ask a bank he trusts (called the confirming bank<\/em>) TO add a guarantee to ensure payments by the issuing bank<\/em>.<\/p>\n2. The five risks involved:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Risk<\/th><th>Description<\/th><\/tr><\/thead><tbody><tr><td>A) commercial risk<\/td><td>non-payment due to buyer's financial distress<\/em><\/td><\/tr><tr><td>b) global risk<\/td><td>political instability \u00b7 currency fluctuations \u00b7 import\/ export restrictions \u00b7 disruptions in international logistics<\/td><\/tr><tr><td>c) documentary risk<\/td><td>discrepancies in submitted documents, or interpretation of documents and LC conditions by various parties involved<\/em><\/td><\/tr><tr><td>d) BANK RISK<\/td><td>BANK insolvency or non-performance<\/em><\/td><\/tr><tr><td>e) FRAUD<\/td><td>shipment May not be physically dispatched<\/em>, OR dispatched in damaged condition or with inadequate packaging<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n3. The four precautions:<\/p>\nA) care should be taken to ensure that all details in the LC<\/em> \u2014 such as product description, quantity, payment terms, documents to be produced, LD clause, and shipping terms<\/em> \u2014 ARE accurate and identical to those shown in the contract, to avoid discrepancies<\/em>.<\/p>\nB) frequent amendments can lead to delays and complications<\/em>. Suppliers May use their own delays in supplies by asking for unnecessary amendments to LC (or contract)<\/em>.<\/p>\nC) provisions of uniform customs and practices for documentary credits (UCP 600)<\/em> Should be adhered to while opening the LC for import into India.<\/p>\n<aside class=\"note\">Footnote: The Uniform Customs and Practice for Documentary Credits (UCPDC or simply UCP)<\/strong> is a set of rules regarding techniques and methods for handling LCs in international trade finance, standardised by the International Chamber of Commerce<\/strong> \u2014 the current version being UCP 600<\/strong>.<\/em><\/p><\/aside>\nD) the seller must present documents in time within the tenure of the LC<\/em> To receive payment, and the documents submitted must match the LC requirements<\/em>.<\/p>\n4. The six charges and who bears them:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Charge<\/th><th>Borne by<\/th><\/tr><\/thead><tbody><tr><td>A) opening charges<\/strong>(including commitment fees<\/strong> \u2014 charged for the LC's validity period \u2014 and usance fees<\/strong>, if the LC allows deferred payment)<\/em><\/td><td>the Procuring Entity<\/td><\/tr><tr><td>b) advising fee<\/td><td>paid by the issuing bank to the advising bank \u2014 and is included in charges to the Procuring Entity<\/em><\/td><\/tr><tr><td>c) confirming bank's fee (if applicable)<\/em><\/td><td>paid to the confirming bank by the supplier<\/em><\/td><\/tr><tr><td>d) extension\/ amendment fee<\/strong>(when an LC needs to be extended or amended due to changes in delivery dates, terms, or other conditions)<\/em><\/td><td>THE party requesting<\/em> The extension or amendment (purchaser or seller)<\/td><\/tr><tr><td>e) retirement charges<\/td><td>levied by the supplier's (beneficiary's) bank on the supplier<\/em> To handle payment from the issuing bank<\/td><\/tr><tr><td>f) other charges<\/td><td>reimbursements for foreign trade law-related obligations<\/em>, if any, to be borne by the party of that country<\/em>.<\/strong>For example, if there are specific legal requirements related to foreign exchange regulations or documentation in the exporting country, the Seller<\/strong> may need to cover these. If there are specific taxes for foreign exchange remittances<\/strong>, then the purchaser<\/strong> may bear such charges.<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n5. The seven types of LC:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Type<\/th><th>Meaning<\/th><\/tr><\/thead><tbody><tr><td>A) revocable LC<\/td><td>CAN BE modified or cancelled without notice<\/em><\/td><\/tr><tr><td>b) irrevocable LC<\/td><td>cannot be amended, modified, or cancelled after issue without agreement and notice to the seller<\/em>. Generally, the irrevocable LC is opened<\/em>, so that the supplier is fully assured of his payment on fulfilling his obligations<\/td><\/tr><tr><td>c) confirmed LC<\/td><td>an intermediate bank in the supplier's country (confirming bank<\/em>) adds its confirmation at the request of the seller \u2014 guaranteeing that payment would be made as per LC conditions, even if the issuing bank or seller's bank demurs<\/em><\/td><\/tr><tr><td>d) unconfirmed LC<\/td><td>there is no additional confirmation beyond the issuing bank<\/em><\/td><\/tr><tr><td>e) transferable LC<\/td><td>the seller can transfer part of the LC to another party<\/em> (e.g., as a payment to his supply chain)<\/td><\/tr><tr><td>f) back-to-back LC<\/td><td>AN intermediary (second beneficiary)<\/em> is involved in this<\/td><\/tr><tr><td>g) revolving LC<\/td><td>covers multiple transactions over an extended period<\/em>. Specifically used for repeated shipments of the same product between the same buyer (importer) and seller (exporter)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n6. Deduction of Liquidated Damages (LD) under the LC:<\/p>\nTHE delivery Schedule and LD clause (including the amount of LD) are part of the LC conditions<\/em>.<\/p>\nIf the documents submitted (inspection certificate and dispatch documents<\/em>) show that these conditions of LC are violated, LD as per the LC conditions is deducted from the payment made to the supplier<\/em>.<\/p>\nIn case the delivery date of the contract is extended to take care of a delay in supply for which the supplier is responsible<\/em>, THE tenure of the LC is also to be extended<\/em> \u2014 BUT the expense incurred for such an extension (of LC) is to be borne by the supplier<\/em>.<\/p>\n<h2>6.13<\/span>Advance Payment<\/span><\/h2>\n(Rule 172(1) of GFR 2017)<\/em><\/p>\n<h3 class=\"src-multi srchead\" data-src=\" G C NC \">6.13.1<\/span>The Common Conditions<\/span>G<\/span>C<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\" data-src=\" G C NC \" data-label=\"Goods + Consultancy + Non-Consultancy only\">\n1. The governing principle and its economic rationale:<\/p>\nOrdinarily, payments for services rendered or supplies made should be released only after the services have been rendered or supplies made<\/em>.<\/p>\nHowever, in exceptional situations where substantial funds are to be sunk by the contractor before payment becomes due<\/em> \u2014 considering the lower cost of funds for the Government entity as compared to the higher cost of funds for the bidder<\/strong> \u2014 advance payment with safeguards (BG or Insurance Surety Bond or Letter of Credit)<\/em> May be considered.<\/p>\nG<\/span> \u2014 the two permitted situations: A) advance payment demanded by firms holding maintenance contracts for servicing of air-conditioners, computers, other costly equipment<\/em>, etc.; B) advance payment demanded by firms against fabrication contracts, turn-key contracts, or supply of complicated tailor-made goods<\/em>, and so on.<\/p>\n2. The quantum \u2014 the three ceilings:<\/p>\nThe quantum of such advance payments should not exceed the quantum of funds to be sunk by the contractor before payment becomes due in the contract<\/em>. The quantum should not generally exceed the following limits:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Recipient<\/th><th>Ceiling<\/th><\/tr><\/thead><tbody><tr><td>Private firms<\/td><td>thirty (30) per cent of the contract value<\/td><\/tr><tr><td>a State or Central Government agency or pse<\/td><td>forty (40) per cent of the contract value<\/td><\/tr><tr><td>In the case of a MAINTENANCE CONTRACT<\/td><td>the amount should not exceed the amount payable for six months<\/em> Under the contract<\/td><\/tr><\/tbody><\/table><\/div>\nin exceptional cases, the competent Authority May relax the ceilings<\/em> Mentioned above, with prior concurrence of the associated\/ integrated finance<\/em>.<\/p>\n3. INTEREST-FREE ADVANCE \u2014 and the default penalty:<\/p>\nSince the provision of advance payment leverages the difference in interest rate<\/em> As argued above, and considering the additional cost of Bank Guarantee for advances for the bidder<\/em> \u2014 interest-free advance payments May be considered with the approval of Competent Authority and finance concurrence<\/em>.<\/p>\nWhere an interest-free advance is permitted, a clause in the tender enquiry and the contract May be stipulated that \u2014 if the contract is terminated due to default of the contractor<\/em> \u2014 the advance payment would be deemed as an interest-bearing advance at the interest rate prevailing on the date of release of advance payment (e.g., the general provident fund \u2014 GPF \u2014 rate), plus 2%, to be compounded quarterly<\/strong>.<\/p>\nIn appropriate cases, the competent authority may stipulate advance payments with suitable interest rates (e.g., the GPF rate) to be recovered along with the instalments of recovery of advance payment<\/em>.<\/p>\n4. INSTALMENTS \u2014 the minimum-two rule: The advance payment should not be made in less than two instalments<\/em>, as per the expected infusion of funds required in the contract \u2014 except in exceptional circumstances, for the reasons to be recorded<\/em>. This will keep a check on contractor mis-utilisation of full advance when the contract is delayed considerably<\/em>.<\/p>\n5. RECOVERY \u2014 the \"whichever is earlier\" rule: ADVANCE PAYMENTS \u2014 especially interest-free advances<\/em> \u2014 should be recovered (from either running bills or from the performance\/ advance payment bank guarantees<\/em>) in instalments linked to milestones or specified periods \u2014 whichever is earlier<\/em>.<\/p>\nThis would ensure that even if the contractor is not executing the work or executing it at a slow pace, recovery of advance could commence \u2014 and the scope for misuse of such advance could be reduced<\/em>.<\/p>\n6. BANK GUARANTEE \u2014 the 110% rule and its exemptions:<\/p>\nWhile making any advance payment, adequate safeguards in the form of a Bank Guarantee (or e-Bank Guarantee) of at least 110% of the advance should be obtained from the firm<\/em>.<\/p>\nIn case the advances are to be paid\/ recovered in instalments, an equal number of part bgs (with proportionate amount and validity) May be taken instead of a lumpsum BG<\/em> \u2014 WITH each BG released after a related recovery is made<\/em>.<\/p>\nAN indemnity bond is not to be considered in place of a Bank Guarantee<\/em>.<\/p>\nThe two exemptions from the BG requirement:<\/p>\n<ul class=\"lst\"><li>No Bank Guarantee should be insisted on in case advance is being given to Central Ministry\/ Department, their attached\/ subordinate offices, or the autonomous bodies attached with them<\/em>;<\/li><li>The BG May also not be taken wherever a contract has been placed on a CPSE on nomination basis<\/em>.<\/li><\/ul>\n7. What is NOT<\/em> An advance payment \u2014 an important distinction:<\/p>\n\"milestone\/ stage payments or part payments against proof of dispatch documents should not be considered as advance payments for the purpose of this Para \u2014 as these payments are made after the sinking of funds by the contractor for achieving these milestones\/ stages\/ dispatches<\/strong>.\" (Rule 172(2) GFR 2017)<\/em><\/p>\nthese should be provisioned in the tender document\/ contract<\/em>, including Bank Guarantee to be taken, if any, in case of milestone\/ stage payments.<\/p>\n8. The pre-declaration Rule: Provision of advance payment should be anticipated at the procurement planning stage<\/em>.<\/p>\nTHE quantum of advance payment and related conditions should be declared in the tender documents<\/em> \u2014 with the approval of Competent Authority and concurrence of associated\/ integrated finance.<\/p>\nIF not so declared<\/em>, the condition of advance payment for a particular bid should not be agreed to<\/em>.<\/p>\n9. Documents for advance payments: Documents needed from the supplier for advance payment release are to be clearly specified in the contract<\/em>. The paying authority should also verify the documents received from the supplier with corresponding stipulations made in the contract before releasing the payment<\/em>.<\/p>\n10. Insurance \u2014 G<\/span> ONLY:<\/p>\nIN every case where advance payment or payment against dispatch documents is to be made, or LC is to be opened<\/em>, THE condition of insurance should invariably be incorporated in the terms and conditions<\/em>.<\/p>\nWherever necessary, the goods supplied under the contract shall be fully insured in a freely convertible currency against loss or damage incidental to manufacture or acquisition, transportation, storage and delivery<\/em>.<\/p>\nIf considered necessary, insurance may cover \"All risks\", including war risks and strike clauses<\/em>. The amount covered should be sufficient to cover the overall expenditure incurred by the Procuring Entity for receiving the goods at the destination<\/em>.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Delivery basis<\/th><th>Who arranges and pays for marine\/ air insurance<\/th><\/tr><\/thead><tbody><tr><td>CIF\/ CIP\/ DDP<\/td><td>the supplier shall arrange and pay \u2014 making the purchaser the beneficiary<\/em><\/td><\/tr><tr><td>FOB\/ FAS<\/td><td>marine\/ air insurance shall be the purchaser's responsibility<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h3>6.13.2<\/span>Advance Payments in Works \u2014 the Three Distinct Advances [W ONLY]<\/span><\/h3>\n<aside class=\"note\">The Works Manual replaces the general advance-payment regime with three separate, purpose-specific advances. None of these exist in the Goods, Consultancy or Non-Consultancy Manuals.<\/p><\/aside>\n<h4>A. Mobilisation Advance<\/span><\/h4>\n1. The 10% Rule: If considered justified in certain specialised and capital-intensive works<\/em>, the contract May provide for an interest-bearing mobilisation advance<\/em> To be paid to the contractor exclusively for the costs of mobilisation, at 10 (ten) per cent of the contract price<\/strong>, on the provision by the contractor of an unconditional BG<\/em>.<\/p>\nSuch bgs shall remain effective until the advance payment has been fully repaid<\/em> \u2014 but the amount thereof shall be progressively reduced by the amount repaid by the contractor<\/em>, as indicated in the interim payment certificates.<\/p>\n2. The two instalments of 5% each:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Instalment<\/th><th>When paid<\/th><\/tr><\/thead><tbody><tr><td>FIRST 5%<\/td><td>ON commencement of the work<\/em> And provision by the contractor of the unconditional BG in respect of the advance<\/td><\/tr><tr><td>second 5%<\/td><td>ON certification by the engineer of the contractor's having achieved a financial progress of 10 (ten) per cent of the contract price<\/em> \u2014 as also provision of a BG by the contractor for this part of the advance<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">what mobilisation expenditure does NOT<\/em> Include: \"mobilisation expenditure mentioned herein shall not include the margin money and bank commission, and so on, paid by the contractor for procurement of bgs against Performance Security and mobilisation advance<\/strong>.\"<\/p><\/aside>\n3. Need-based: Provision of mobilisation advance should essentially be need-based<\/em>. Suitable delegation of authority May be done in the organisation<\/em> To take the decision for grant of the mobilisation advance \u2014 whether interest-free or interest-bearing<\/em>.<\/p>\n4. Interest-free mobilisation advance and the time-based recovery Rule:<\/p>\nInterest-free mobilisation advance May also be given wherever the situation warrants in specific cases<\/em> \u2014 BUT it should be clearly stipulated in the tender document<\/em>.<\/p>\nAND its recovery should be time-based, not linked with progress of work<\/strong>.<\/p>\nThis would ensure that even if the contractor is not executing the work or executing it at a slow pace, recovery of advance could commence, and scope for misuse of such advance could be reduced<\/em>.<\/p>\n5. Part bank guarantees \u2014 one per instalment: Part 'bank guarantees' (bgs) against the mobilisation advance should be taken in as many numbers as the proposed recovery instalments<\/em>, and should be equivalent to the amount of each instalment<\/em>.<\/p>\nThis would ensure that \u2014 at any point of time, even if the contractor's money on account of work done is not available with the organisation<\/em> \u2014 recovery of such advance could be ensured by encashing the BG for the work supposed to be completed within a particular period of time<\/em>.<\/p>\n6. There should be a clear stipulation of interest to be charged on delayed recoveries<\/em> \u2014 either due to the late submission of bill by the contractor or any other reason<\/em>, besides the reason giving rise to the encashment of BG.<\/p>\n7. THE amount of mobilisation advance, interest to be charged (if any), its recovery Schedule, and any other relevant detail should be explicitly stipulated in the tender document upfront<\/em>.<\/p>\n8. Relevant format for BG should be provided in the tender document<\/em>, which should be enforced strictly<\/em> \u2014 and the authenticity of such bgs should also be invariably verified from the issuing bank, confidentially and independently by the organisation<\/em>.<\/p>\n9. In case of 'Machinery and equipment advance'<\/em>, insurance and hypothecation to the employer should be ensured<\/em>.<\/p>\n10. The utilisation certificate Rule: Utilisation certificate from the contractor for the mobilisation advance should be obtained<\/em>. Preferably, mobilisation advance should be given in instalments<\/em> \u2014 AND subsequent instalments should be released only after getting a satisfactory utilisation certificate from the contractor for the earlier instalment<\/em>.<\/p>\n<h4>B. Plant, Machinery and Shuttering Material Advance<\/span><\/h4>\n1. The 5% advance and its five conditions:<\/p>\nAnother interest-bearing advance of five (5) per cent of the contract price<\/em> \u2014 depending on the merits of the case \u2014 May be paid against the new key construction equipment purchased for the work and brought to the site<\/strong>, if so provided in the bid documents and so requested by the contractor.<\/p>\nThe advance should normally not be more than 50 (fifty) per cent of the depreciated cost<\/em> Of such plant and machinery, which should be hypothecated to the govt. Before the payment of advance is released<\/em>.<\/p>\nThis advance shall be subject to the following conditions:<\/p>\n<ul class=\"lst\"><li>(i) the contractor shall produce satisfactory proof of payment<\/em>;<\/li><li>(ii) such equipment is considered necessary by the engineer for the works<\/em>;<\/li><li>(iii) the equipment has been verified to have been brought to site<\/em>;<\/li><li>(iv)<\/strong>the contractor gives an undertaking on stamp paper that the equipment will work <\/strong>only on that job And will <\/strong>not be removed from the site without obtaining written approval from the engineer<\/em>; and<\/strong><\/li><li>(v) the contractor furnishes a BG to cover the advance<\/em>.<\/li><\/ul>\nNo advance shall be admissible on equipment purchased under a hire-purchase scheme\/ financing arrangement, or on hired equipment<\/em>.<\/p>\n2. Rate of interest: The rate of interest shall be stipulated in the bid documents (say 10 (ten) per cent per annum)<\/em>, or as May be notified by the procuring agency from time to time.<\/p>\n3. Repayment: The repayment of advances shall be done through proportionate percentage deductions from running bill (periodic\/ interim payment)<\/em>. THE time of commencement of repayment, rate of deductions from interim payments, and time by which the advance should be fully repaid<\/em> Will be as specified in the contract.<\/p>\n4. The misappropriation consequence: All advances shall be used by the contractor exclusively for mobilisation expenditure, including the acquisition of construction-related plant and equipment<\/em>.<\/p>\nShould the contractor misappropriate any portion of the advance<\/em>, it shall become due and payable immediately, and no further advance will be made to the contractor thereafter<\/strong>. In such cases, the contractor shall also be liable for appropriate action under the contract<\/em>.<\/p>\n<h4>C. Secured Advance Against Material Brought to Site<\/span><\/h4>\n1. The 75% Rule and the 90-DAY condition:<\/p>\nSecured advance on the security of materials \u2014 which are not combustible, fragile or perishable in nature<\/strong> \u2014 brought to the site but not yet incorporated in the works<\/em> Will be made up to:<\/p>\n<aside class=\"note\">75 (seventy-five) per cent of invoice value<\/strong>, OR<\/strong>75 (seventy-five) per cent of the corresponding value of the materials determined on the basis of BOQ rates<\/strong> \u2014 whichever is less<\/strong><\/p><\/aside>\n \u2014 subject to the condition that their quantities are not excessive and shall be used within a period of 90 (ninety) days<\/em>, and subject to other stipulations in the contract.<\/p>\nThe safeguards:<\/p>\n<ul class=\"lst\"><li>The contractor will be required to sign an indenture bond, hypothecating the goods to the Procuring Entity<\/em>, and also be responsible for their safe custody<\/em>.<\/li><li>Before the advance is released, the Procuring Entity May inspect the site to ensure that the contractor has safeguarded the materials against pilferage and deterioration<\/em>.<\/li><li>It May be ensured that the contractor has not taken any loan\/ limit from banks against hypothecation of the materials against which the secured advance is claimed<\/em>. AN undertaking in this regard May also be taken from the contractor<\/em>.<\/li><\/ul>\n2. The \"paid stock only\" Rule:<\/p>\nGenerally, as per the provisions of the contracts, the contractors are required to submit proof of cost of materials and the delivery of material at site<\/em> while claiming such advances.<\/p>\nTHE stock register should be maintained from the commencement of the contract<\/em> And \u2014 unless otherwise prescribed in the contracts \u2014 the stock so considered for advance should generally be only paid stock (and not brought on credit)<\/strong>.<\/p>\nWhere the materials are supplied from a captive source of the contractor<\/em>, THE reasonableness of the valuation of such materials May be ensured<\/em>.<\/p>\n3. The 120-DAY absolute recovery Rule:<\/p>\nThe advance will be repaid from each succeeding running bill (periodic\/ interim payment) to the extent materials for which advance has been previously paid have been incorporated into the works<\/em>.<\/p>\n<aside class=\"note\">\"in all cases, the repayment of the advance will be effected after expiry of a period of 120 days since payment of advance \u2014 whether the material is consumed in the work or not<\/strong>.\"<\/p><\/aside>\n<h2>6.14<\/span>Prices, Firm Price and Variable Price<\/span><\/h2><h3>6.14.1<\/span>Prices and the Bar on Undue Profiteering [G ONLY]<\/span><\/h3>\n1. Independent pricing: The prices should be arrived at independently \u2014 without restricting competition, any consultation, communication, or agreement with any other bidder or competitor<\/em>.<\/p>\n2. Without undue profiteering \u2014 the price ceilings:<\/p>\nA) the price quoted by the bidder shall not be higher than the controlled price fixed by law<\/em> for the goods, if any.<\/p>\nWhere there is no controlled price, it shall not exceed the prices or contravene the norms for fixation of prices, if any, laid down by Government<\/em>.<\/p>\nWhere the Government has fixed no such prices or norms, it shall not exceed the price appearing in any agreement, if any, relating to price regulation by any industry<\/em>.<\/p>\n<aside class=\"note\">In any case \u2014 save for special reasons stated in the bid, if any<\/em> \u2014 the price charged shall not be higher than the maximum retail price (MRP)<\/strong>.<\/p><\/aside>\nB) the disclosure obligation and its consequence: If the price quoted is higher than the controlled price<\/em>, the bidder shall specifically mention this fact in his bid, giving reasons for quoting a higher price(s)<\/em>. IF HE fails to do so or makes any misstatement<\/em>, it shall be lawful for the Procuring Entity either<\/em>:<\/p>\n<ul class=\"lst\"><li>TO revise the price at any stage to bring it in conformity with the sub-clause above<\/em>; or*<\/li><li>TO terminate the contract for default<\/em> As per the contract, and avail all the remedies available therein \u2014 in addition to other punitive actions for violation of Code of Integrity<\/em>.<\/li><\/ul>\n3. Price Components: The price Schedule should show all the specified components of prices<\/em>. The price components for goods offered from India<\/em> And those offered from abroad should be indicated separately<\/em> In the applicable price schedules.<\/p>\n<ul class=\"lst\"><li>The components should include, as applicable: GST, transportation, insurance, and price of incidental works\/ services<\/em> as mentioned in the Schedule of Requirements.<\/li><li>For goods offered from abroad<\/em>, the price components (indicating the currency, in the case of GTE<\/em>) should include: Customs duty, marine insurance, freight, and agency commission<\/em>, as applicable.<\/li><\/ul>\n<h3>6.14.2<\/span>Fixed Price \u2014 the Threshold Divergence<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Rule<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-multi\" data-src=\" G C NC \"><td>G<\/span> GOODS \u00b7 C<\/span> Consultancy \u00b7 NC<\/span> Non-consultancy<\/td><td>short-term contracts where the delivery period does not extend beyond 12 (twelve) months<\/em> Should normally be concluded on a firm and fixed price<\/em> (and not subject to variation on any account) by inviting tenders accordingly<\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> WORKS<\/td><td>short-term contracts where the delivery\/ completion period does not extend beyond 18 (eighteen) months<\/em> Should normally be concluded with a firm and fixed price<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">W<\/span> states the corollary expressly: *\"<\/strong>provision of price variation \u2026 shall not be applicable in the contracts where period of completion is eighteen months or less.\"*<\/p><\/aside>\n<h3>6.14.3<\/span>Variable Price and the Price Variation Clause (PVC)<\/span><\/h3>\n1. When a PVC May be provided:<\/p>\nG<\/span>, C<\/span>, NC<\/span>:<\/strong>In tenders with deliveries longer than 12 (twelve) months<\/em>, a Price Variation Clause (PVC) May be provided to protect the purchaser's interests \u2014 particularly for high-value (more than rupees three crore) procurements<\/em>.<\/p>\nHowever, even for shorter deliveries or lower value<\/em>, the PVC May be stipulated for items with inputs (raw material, labour<\/em>, ETC.) prone to short-term price volatility<\/strong> \u2014 especially for critical or high-value items\/ services<\/em>.<\/p>\n<aside class=\"note\">The two-sided reason: \"otherwise, there is a possibility of the contract failing [if prices rise], or the purchaser having to pay a higher price if market prices fall<\/strong>.\"<\/p><\/aside>\nW<\/span> adds the competitive rationale: *\"<\/strong>provision of price variation \u2026 will deal with rise and fall of the prices in construction materials, labour and other key inputs. \u2026 the provision of price variation clauses enables contractors to factor this reduced risk and quote more competitive prices.\"*<\/p>\n2. The \"provide your own formula\" Rule: Where it is decided to conclude the contract with a variable price, an appropriate clause incorporating a suitable price variation formula<\/em> (to take care of the changes in the input cost of labour, material, and fuel\/ power<\/em> Components) should be provided in the tender documents.<\/p>\n<aside class=\"note\">\"it is best to proactively provide our own PVC formula and base dates of indices in the tender document \u2014 to discourage different bidders from quoting different formulae and different base dates, which May lead to problems in bringing their prices on a common comparable footing<\/strong>.\"<\/p><\/aside>\n3. Sources of indices and weighting: The variations are to be calculated periodically (usually quarterly)<\/em> By using indices published by:<\/p>\n<aside class=\"note\">Governments \u00b7 chambers of commerce \u00b7 London metal exchange \u00b7 any other neutral and fair source of indices<\/em><\/p><\/aside>\nsuitable weights are to be assigned to the applicable elements \u2014 i.e., Fixed overheads and various applicable inputs (material\/ fuel\/ labour \u2014 for which reliable indices are available)<\/em>.<\/p>\nIf the production of goods\/ delivery of services\/ works needs more than one raw material<\/em>, the input cost of material May be further sub-divided into various categories of material, for which cost indices are published<\/em>.<\/p>\n<aside class=\"note\">W<\/span> adds:\"<\/strong>indices shall be appropriate for their purpose and shall relate to the contractor's proposed source of supply of inputs, on the basis of which his contract price shall have been computed.\"<\/em>W<\/span> also assigns weightages specifically to material\/ labour\/ petroleum, oils and lubricants (pol)<\/em> and cost indices\/ base prices.<\/strong><\/p><\/aside>\n4. The twelve essential elements of a PVC<\/strong>(common to all four, with minor wording variations)<\/em>:<\/p>\nI) base date & time lag: The price agreed upon should specify the base date \u2014 that is, the month and year to which the contract\/ bid price is linked<\/em> \u2014 to enable variations to be calculated with reference to the price indices prevailing in that month and year. This base date should be a few weeks\/ months (the period is called time-lag) prior to the last date of submission of bids, when the last published price indices would be available<\/em>. Time lag applies both for the base date and the date of supply\/ delivery date<\/em>, AND must be specified in the tender documents<\/em>.<\/p>\nii) ignorable variation: The price variation formula must also stipulate a minimum percentage of variation of the contract price, only above which the price variation will be admissible<\/em>.<\/p>\n<aside class=\"note\">For example \u2014 where the resultant increase is lower than, say, two per cent of the contract price, no price adjustment will be made in favour of the supplier\/ contractor.<\/em><\/p><\/aside>\niii) inordinate variation \u2014 the ceiling and the frustration route:<\/p>\nIn rare cases, prices May go up to such an extent that it May render the contract unviable for either party, thus frustrating the contract<\/em>. Therefore, the Price Variation Clause should provide for a ceiling \u2014 a percentage per annum, or an overall ceiling, or both (say 20%\/ 25% of the original price)<\/strong> \u2014 on price variations, beyond which the price variation would be capped at this level<\/em>. As soon as it comes to light that price variations are likely to go beyond this ceiling \u2014 and if the supplier\/ contractor is not agreeable to the price variation being capped<\/em> \u2014 HE MAY notify the purchaser under 'frustration of contract' provisions in the tender document\/ clause, for short-closing the contract<\/em>.<\/p>\n<aside class=\"note\">G<\/span> cross-reference: A provision for this exists in the Model Tender Document for Procurement of Goods \u2014 clause 12.2.2.<\/em>G<\/span> and C<\/span> add the escape valve: \"However, if the short-closing is not in the interest of the Procuring Entity, the Competent Authority \u2014 with the concurrence of associated\/ integrated finance \u2014 May allow the continuation of the contract by relaxing\/ removing the cap on the price variation.\"<\/em><\/p><\/aside>\niv) no PVC on advance\/ stage payments: Where advance or stage payments are made<\/em>, there should be a further stipulation that no price variations will be admissible on such portions of the price, after the dates of such payment<\/strong>.<\/p>\nV) LD is calculated on the varied price: Where deliveries are accepted beyond the scheduled delivery date, subject to levy of Liquidated Damages as provided in the contract \u2014 the LD (if a percentage of the price) will be recoverable on the price as varied by the operation of the PVC<\/strong>.<\/p>\nvi) the asymmetric default Rule \u2014 the single most important PVC provision:<\/p>\n<aside class=\"note\">No upward price variation will be admissible beyond the original scheduled delivery date for defaults on the part of the supplier\/ contractor<\/strong> (e.g., when an extension of the delivery date is with LD).<\/p>\nHowever, a downward price variation would be availed by the purchaser, as per the Denial Clause in the letter of extension of the delivery period.<\/strong><\/p><\/aside>\nvii) price variation May be allowed beyond the original scheduled delivery date<\/em> \u2014 BY specific alteration of that date through an amendment to the contract<\/em> \u2014 in cases of force Majeure or defaults by Government<\/strong>.<\/p>\nviii) import\/ duty disclosure \u2014 W<\/span> Only: Where contract execution depends on imported (subject to customs duty and foreign exchange fluctuations) and\/ or locally sourced and\/ or locally manufactured (subject to excise duty and other duties and taxes)<\/em> Goods\/ works\/ services \u2014 the percentage and element of duties and taxes included in the price should be specifically stated, along with the selling rate of foreign exchange element taken into account in the calculation of the price of the imported item<\/em>.<\/p>\nix) the clause should also contain the mode and terms of payment of the price variation admissible<\/em>.<\/p>\nX) the downward-benefit provision: The buyer should ensure a provision in the contract for the benefit of any reduction in the price in terms of the PVC being passed on to him<\/strong>.<\/p>\nxi) An illustrative PVC clause is available at:<\/strong>G<\/span> Annexure 18 \u00b7 W<\/span> Annexure 5 \u00b7 C<\/span> Annexure 16 \u00b7 NC<\/span> Annexure 10.<\/p>\nxii) the final-payment certificate \u2014 W<\/span> ONLY:<\/p>\n<aside class=\"note\">Care should be exercised in contracts providing for price variation to finalise the price before final payment is made<\/em>, after obtaining data and documents in support of claims for escalation, if any. Where no such claims are submitted by the suppliers<\/em>, AN examination of whether there has been a downward trend in the cost \u2014 which the contractor May not bring out \u2014 is required<\/em>.<\/p>\nAt any rate, an undertaking should be obtained from the contractor<\/em> To the following effect, in case it becomes necessary to make the final payment before he has submitted the required data\/ documents:<\/p>\n<aside class=\"note\">\"It is certified that there has been no decrease in the price of price variation indices and, in the event of any decrease of such indices during the currency of this contract, we shall promptly notify this to the purchaser and offer the requisite reduction in the contract rate.\"<\/em><\/p><\/aside>\nnotwithstanding the above formalities, it should be appreciated that it is in the interest of the purchaser to be vigilant about downward variation \u2014 and it is, therefore, the basic responsibility of the purchase officers to make sure that the benefits of downward variation, wherever it occurs, are fully availed of<\/strong>.<\/p><\/aside>\n5. The statutory-regulation adjustment \u2014 W<\/span> ONLY:<\/p>\n<ul class=\"lst\"><li>To the extent that full compensation for any rise or fall in costs to the contractor is not covered by the provisions of the contract<\/em>, THE unit rates and prices included in the contract shall be deemed to include amounts to cover the contingencies of such uncovered portion of rise or fall of costs<\/em>.<\/li><li>IF any statutory regulations or bye-laws come into force after submission of the bids<\/em>, which cause additional or reduced cost to the contractor<\/em> In the execution of the contract \u2014 such statutory additional or reduced cost (except which are covered in cost indices<\/strong>) shall be added to or deducted from the contract price<\/em>.<\/li><\/ul>\n<h2>6.15<\/span>Exchange Rate Variation (ERV) [G ONLY]<\/span><\/h2>\n<aside class=\"note\">This entire section exists only in the goods Manual. It has no counterpart in Works, Consultancy or Non-Consultancy \u2014 because only goods procurement routinely involves a domestic contract with a substantial imported component.<\/p><\/aside>\n1. The two triggers:<\/p>\nIn case of domestic tender contracts<\/strong> Involving:<\/p>\n<ul class=\"lst\"><li>Substantial import content (say > 25% of the total price)<\/strong>, AND<\/strong><\/li><li>a long delivery period (exceeding one year from the date of the contract)<\/strong><\/li><\/ul>\n \u2014 an appropriate exchange Rate Variation (ERV) clause<\/em> May be formulated by the Procuring Entity in consultation with its associated\/ integrated finance<\/em>, as needed, and incorporated in the tender enquiry document<\/em>.<\/p>\nIn that clause, the bidders are to be asked to indicate:<\/p>\n<ul class=\"lst\"><li>THE import content and the currency(ies) used for calculating the value of import content(s)<\/em> In their total quoted price;<\/li><li>THE base exchange rate for each such foreign currency<\/em> Used for converting the foreign exchange content into Indian rupees; And<\/li><li>THE extent of foreign Exchange Rate Variation (ERV) risk they are willing to bear<\/em>.<\/li><\/ul>\n2. The base date, the variation window, and the 2.5% band:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Element<\/th><th>Rule<\/th><\/tr><\/thead><tbody><tr><td>Base date<\/td><td>THE deadline of bid submission<\/em> \u2014 OR seven days prior to it<\/em> (the purchase organisation is to adopt a suitable date)<\/td><\/tr><tr><td>variation window<\/td><td>between the above base date and the date of remittance to the foreign principal<\/em>, OR the mid-point of manufacture of the foreign component<\/em> (the purchase organisation is to choose the appropriate date)<\/td><\/tr><tr><td>applicable exchange rate<\/td><td>according to the \"Bill currency selling\"<\/strong> Exchange rate as quoted by a source as specified \u2014 if not specified, authorised exchange bankers approved by RBI<\/em> \u2014 in the tender document on the dates in question<\/td><\/tr><tr><td>the dead band<\/td><td>no variation in price in this regard will be allowed if the variation in the rate of exchange remains within the limit of plus\/ minus 2.5 per cent<\/strong> (or any other percentage fixed by the Procuring Entity)<\/td><\/tr><\/tbody><\/table><\/div>\nERV shall be applicable only for components used to manufacture supplied goods imported after the contract date<\/em>.<\/p>\n3. Who bears it \u2014 and the asymmetric default Rule:<\/p>\nANY increase or decrease in the landed price of import content (including customs duty)<\/em> By reason of the variation in the rate of exchange shall be charged to the buyer's account during the original delivery period<\/em>.<\/p>\n<aside class=\"note\">\"in case the delivery period is revised\/ extended, ERV will not be admissible if this is due to the supplier's default \u2014 however, ERV benefits arising out of downward trends should be passed on to the Procuring Entity<\/strong>.\"<\/p>\n(Note the parallel with the PVC denial rule at para 6.14.3-4-vi above.)<\/em><\/p><\/aside>\n4. The four documents for claiming ERV: A) a bill of ERV claim enclosing the working sheet<\/em>; B) banker's certificate\/ debit advice detailing the foreign exchange paid and exchange rate<\/em>; C) copies of the import order placed on the supplier<\/em>; D) supplier's invoice for the relevant import order<\/em>.<\/p>\n<h2>6.16<\/span>Statutory Taxes \/ Duties \/ Levies<\/span><\/h2><h3>6.16.1<\/span>Goods and Services Tax (GST)<\/span><\/h3>\n1. GST registration status and GSTIN (the 15-digit registration number) \u2014 the nine rules:<\/p>\nA) all bidders should ensure that they are GST compliant<\/em>, and that their quoted tax structure\/ rates are as per the GST Act\/ Rules<\/em>.<\/p>\nB) bidder should be registered under GST<\/em> And furnish their GSTIN number and GST registration certificate<\/em> In their offer \u2014 unless they are specifically exempted from registration<\/em> Under a specific notification\/ circular\/ section\/ Rule issued by statutory authorities.<\/p>\nC) multiple verticals: If the bidder has multiple business verticals in a State and has separate registrations for each vertical<\/em>, THE GSTIN of each vertical concerned with the supply and service involved \u2014 as per the scope of the Schedule of requirements and price Schedule \u2014 shall be quoted<\/em>.<\/p>\nD) multiple states: If the supply\/ service is from multiple states<\/em>, the bidder should mention GST registration numbers for each State separately<\/em>.<\/p>\nE) composition scheme: If the bidder has opted for a composition levy under section 10 of CGST<\/em>, he should declare the fact while bidding, along with GSTIN and GST registration certificate<\/em>.<\/p>\nf) exemption from registration \u2014 and the Reverse Charge Mechanism:<\/p>\nIf a bidder is not liable to take GST registration<\/em> (i.e., having turnover below threshold<\/em>), he shall submit an undertaking\/ indemnification against tax liability<\/em>. The bidder claiming exemption shall submit a valid certificate from a practising chartered accountant (ca)\/ cost accountant with the unique document identification number (din)<\/em>, to the effect that the bidder fulfils all conditions prescribed in the notification exempting him from registration<\/em>.<\/p>\nSuch bidder\/ dealer shall not charge any GST and\/ or GST cess in the bill\/ invoice<\/em>. In such a case, applicable GST shall be deposited under reverse charge mechanism (rcm)<\/em> \u2014 or otherwise as per GST Act \u2014 by the Procuring Entity directly to concerned authorities<\/em>. Bidder should note that his offer would be loaded with the payable GST under the rcm<\/em>. Further, the bidder should notify and submit to the Procuring Entity within 15 days of becoming liable for registration under GST<\/em>.<\/p>\nG) bidders must also consider the benefits of input tax credit<\/em> Under the GST legislation, as amended from time to time, on input goods\/ capital goods\/ input services<\/em> While quoting the prices.<\/p>\nH) the jurisdictional assessing officer Rule: In their bids, the bidders shall indicate the details of their GST jurisdictional assessing officers (designation, address, email id)<\/em>. In case of a contract award, the purchaser shall immediately forward a copy of the loa\/ purchase order to the jurisdictional assessing officer<\/em> Mentioned in the bidder's bid.<\/p>\nI) the Procuring Entity's state-wise gstins shall be indicated in tender documents<\/em>.<\/p>\n2. HSN code and GST rate \u2014 the four rules:<\/p>\na)<\/strong>if provided in the tender document, the HSN (harmonized system of nomenclature) code for the goods is <\/strong>only indicative. <\/strong>The bidder shall be responsible for ensuring that they quote the correct HSN code and corresponding GST rate<\/em>.<\/strong><\/p>\nB) the separate-disclosure Rule: As per the GST Act, the bid and contract must show the GST tax rates (and GST cess if applicable) and GST amount explicitly and separately from the bid\/ contract price (exclusive of GST)<\/em>.<\/p>\nSo, if a bidder asks for GST (and GST Cess if applicable) to be paid extra, the rate and nature of such applicable taxes should be shown separately<\/em>.<\/p>\nBidders should quote 'GST' if payable extra on the total basic rate of each cost element<\/em>, AND quote GST in '%' inclusive of cess<\/em>.<\/p>\nC) if the price is stated to include<\/em> GST, the bidder must declare the current GST rate (and GST cess, as applicable) included in the price<\/em>.<\/p>\nD) the blank-column Rule \u2014 a trap for bidders: If GST, other taxes, or duties are not specified, or the column is left blank<\/em> In the price Schedule, it shall be presumed that no such tax\/ levy is applicable or payable by the Procuring Entity. No Statutory Variation in GST shall be paid in such a case<\/strong>.<\/p>\n3. Refund from supplier: Sometimes, the supplier \u2014 after claiming and receiving reimbursements for GST from the purchaser<\/em> \u2014 applies to the concerned authorities for refunds, on genuine grounds, of certain portions of such duties and taxes paid by it, and receives the allowable refunds<\/em>. Such refunds contain the purchaser's share also<\/strong> (Out of the payments already made by the purchaser to that supplier). The tender enquiry document and the contract are to contain suitable provisions for obtaining such refunds from the supplier<\/em>.<\/p>\n4. The three statutory duties\/ taxes\/ levies to be entirely borne by the bidder \u2014 including any statutory variations thereon, for which the Procuring Entity would not be responsible:<\/p>\nA) personal and corporate tax: Bidder shall bear all personal\/ corporate taxes imposed on owners\/ company\/ joint venture\/ subcontractors or their employees<\/em>.<\/p>\nB) taxes on sub-contractors, vendors: Bidder shall bear all taxes \u2014 including GST<\/em> \u2014 as May be imposed on the contractor or supply-chain (sub-contractors, vendors, etc.)<\/em>.<\/p>\nC) duties\/ taxes on raw materials: The Procuring Entity is not liable for any claim from the contractor on account of fresh imposition and\/ or increase (including statutory increase) of GST, customs duty, or other duties on raw materials and\/ or components used directly in the manufacture of the contracted goods, taking place during the pendency of the contract<\/strong> \u2014 unless such liability is expressly agreed to in terms of the contract<\/em>.<\/p>\n5. Applicability to imported goods\/ services: Following the implementation of GST, the import of commodities shall not be subject to erstwhile applicable duties<\/em> LIKE safeguard duty, education cess, basic customs duty, anti-dumping duty<\/em>, ETC. All these supplementary customs duties are subsumed under GST<\/strong>.<\/p>\nIf imported into India, the supply of commodities, services, or both shall be considered as supply under inter-state commerce\/ trade, and shall attract integrated tax (IGST)<\/em>. THE IGST rate and GST cess shall be applicable on the 'customs assessable value' plus the 'basic customs duty applicable thereon'<\/em>.<\/p>\n<h3>6.16.2<\/span>Customs Duty on Imported Goods [G ONLY]<\/span><\/h3>\n1. The disclosure and the import-in-whose-name Rule: Regarding imported goods, the bidder shall specify the rate and the total amount of customs duty payable thereon<\/em>. Bidder shall also indicate the corresponding Indian tariff classification (ITC-HS)<\/em> Applicable for the goods. Any material imported directly from the supplier or manufacturer should be under the name of the Procuring Entity<\/em>. In this regard, all formalities will be completed by the Procuring Entity by engaging a customs house agent (CHA) and bearing the cost thereof<\/em>.<\/p>\n2. The three customs-duty exemptions: The Government has allowed exemption from payment of customs duty on certain types of goods for use by the following organisations: a) scientific and technical instruments imported by research institutes<\/em>; B) hospital equipment imported by Government hospitals<\/em>; C) consumable goods imported by a public-funded research institution or a university<\/em>.<\/p>\n3. The two certificates required: However, to avail of such exemptions, the organisations are required to produce \u2014 at the appropriate time<\/em> \u2014 :<\/p>\n<aside class=\"note\">A \"Customs Duty Exemption\" certificate<\/strong><\/strong>AND A \"Not Manufactured in India\" certificate<\/strong><\/p><\/aside>\n4. The MOOWR scheme 2019:<\/p>\nTHE manufacturing and other operations in a warehouse regulations (MOOWR) scheme 2019<\/em> Was introduced by the Central board of indirect taxes and customs (CBIC)<\/em> TO promote India as a global manufacturing hub and bolster the \"Make in India\" initiative<\/em>.<\/p>\nThis scheme allows importers to bring raw materials and capital goods into the country without paying customs duties<\/em>.<\/p>\n<aside class=\"note\">Notably, the MOOWR scheme is unique in that it is delinked from export obligations<\/strong> \u2014 extending benefits even to importers who intend to use goods for sale within the domestic market<\/em>.<\/p><\/aside>\nThese imported materials can then be utilised for manufacturing and other operations within private bonded warehouses<\/em>. Under the MOOWR Scheme: a) import duty is deferred<\/strong> When raw materials and capital goods are imported into India; B) if these materials are used for exports<\/strong>, THE deferred duty is exempt<\/strong>; C) if the inputs are utilised for goods sold in the domestic market (i.e., domestic tariff area)<\/strong>, import duty for such inputs used for domestic clearance must be paid<\/em>; D) import duty on capital goods<\/strong> is paid if they are cleared for the domestic market<\/em>.<\/p>\n5. THE relevant contemporary instructions covering these aspects should be incorporated in the tender enquiry document and the resultant contract<\/em>.<\/p>\n<h3>6.16.3<\/span>Deduction of Income Tax, etc., from Payments<\/span><\/h3>\nIf applicable under relevant tax laws and Rules, the Procuring Entity shall deduct from all payments and deposit required taxes to respective authorities<\/em>.<\/p>\n<h3>6.16.4<\/span>Statutory Variation Clause<\/span><\/h3>\n<aside class=\"note\">The Goods and Works Manuals cross-refer to their contract-management chapters. The Consultancy and Non-Consultancy Manuals set out the clause in full \u2014 reproduced here.<\/p><\/aside>\nUnless otherwise stated in the contract, statutory Variation in applicable GST rate<\/strong> \u2014 only during the period from the date of submission of the tender to the date of acceptance of the tender (that is, placement of the contract), and during the original\/ re-fixed delivery period of the contract<\/strong> \u2014 shall be borne by the Procuring Entity<\/strong>.<\/p>\nThe benefit of any reduction in the GST rate must be passed on to the Procuring Entity during the original and extended delivery period<\/em>.<\/p>\n<aside class=\"note\">(Note the asymmetry: increases are borne by the Procuring Entity only during the original\/ re-fixed<\/strong> period, but reductions must be passed on during the original AND extended<\/strong> period.)<\/em><\/p><\/aside>\nhowever, GST rate amendments shall be considered for the quoted HSN code only<\/strong>, against documentary evidence<\/em> \u2014 provided such an increase in GST rates is after the tender submission date<\/em>.<\/p>\nHowever, the statutory Variation shall not be applicable for any misquotation of the HSN number or incorrect GST rate by the bidder<\/strong>.<\/p>\n<aside class=\"note\">Note on \"re-fixed delivery period\": \"Re-fixed delivery period means the fresh delivery period which is arrived at by recasting the original contractual delivery period, after taking care of the lost period for which the supplier\/ service provider was not responsible.\"<\/em><\/p><\/aside>\n<h2>6.17<\/span>Incoterms 2020 \u2014 Terms of Delivery [G ONLY]<\/span><\/h2>\n<aside class=\"note\">This section exists only in the goods Manual. Incoterms govern the passing of title and risk in a sale of goods; they have no analogue in works or services contracts.<\/p><\/aside>\n1. The eleven INCOTERMS \u2014 seven for any mode, four for sea\/ inland waterway:<\/p>\n<h3>A. Rules for Any Mode of Transport (Seven)<\/em><\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>Incoterm<\/th><th>Applicable to<\/th><\/tr><\/thead><tbody><tr><td>EXW \u2014 ex-works<\/strong>(named place of delivery)<\/em><\/td><td>the seller makes the goods available at their premises or another named place<\/em><\/td><\/tr><tr><td>FCA \u2014 free carrier<\/strong>(named place of delivery)<\/em><\/td><td>the seller delivers the goods \u2014 cleared for export<\/em> \u2014 at a named place to a carrier or to another party nominated by the buyer<\/em><\/td><\/tr><tr><td>CPT \u2014 carriage paid to<\/strong>(named place of delivery)<\/em> \u2014 earlier C&F \u2014 Cost and Freight<\/strong><\/em><\/td><td>the seller is responsible for export clearance and freight costs for carriage to the named place of destination<\/em><\/td><\/tr><tr><td>CIP \u2014 carriage and insurance paid to (named place of delivery)<\/em><\/td><td>in addition to CPT responsibilities, the seller is required to obtain *insurance for the goods while in transit for 110% of the contract value under institute cargo clauses (a) of the institute of London underwriters\u200c<\/td><\/tr><tr><td>DAP \u2014 delivered at place<\/strong>(named place of delivery)<\/em><\/td><td>the seller delivers the goods \u2014 ready for unloading<\/strong> \u2014 at the named place of destination<\/td><\/tr><tr><td>DPU \u2014 delivered at place unloaded (named place of delivery)<\/em> \u2014 earlier DAT \u2014 Delivered At Terminal<\/em><\/td><td>in addition to DAP responsibilities, the seller is required to unload the goods<\/strong> At the named place of destination<\/td><\/tr><tr><td>DDP \u2014 delivered duty paid<\/strong>(named place of delivery)<\/em><\/td><td>in addition to DAP responsibilities, the seller is required to clear the goods through customs and pay import duties and taxes<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h3>B. Rules for Sea and Inland Waterway Transport (Four)<\/em><\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>Incoterm<\/th><th>Applicable to<\/th><\/tr><\/thead><tbody><tr><td>FAS \u2014 free alongside ship<\/td><td>alongside the buyer's vessel at the named port of shipment, the seller is to clear the goods for export<\/em>. However, if the parties wish the buyer<\/em> To clear the goods for export, explicit wording should be added to the contract<\/strong><\/td><\/tr><tr><td>FOB \u2014 free on-board<\/td><td>seller to arrange for export clearance and deliver goods on board a vessel that is to be designated by the buyer<\/em><\/td><\/tr><tr><td>CFR \u2014 cost and freight<\/td><td>in addition to FOB responsibilities, the seller pays for the carriage of the goods up to the named port of destination<\/em><\/td><\/tr><tr><td>CIF \u2014 cost, insurance and freight<\/td><td>in addition to CFR responsibilities, the seller is required to obtain *insurance for the goods while in transit for 110% of the contract value under institute cargo clauses (a)*<\/td><\/tr><\/tbody><\/table><\/div>\n2. History and the title-of-goods principle:<\/p>\nIN USE SINCE 1936<\/em>, INCOTERMS have been last revised in 2020<\/em>. Out of the 11 INCOTERMS options, seven apply to all modes of transportation, whereas four apply only to sea and inland waterway transportation<\/em>.<\/p>\nIncoterms rules describe the tasks, costs and risks involved in the delivery of goods from the seller to the buyer<\/em>.<\/p>\n<aside class=\"note\">The governing principle: \"the risk to goods (damage, loss, shortage, and so on) is the responsibility of the person who holds the 'title of goods' at that point in time. This May be different from the actual physical possession of such goods<\/strong>.\"<\/p><\/aside>\nnormally, unless otherwise defined, the title of goods passes from the supplier to the purchaser in accordance with the terms of delivery (for, CFR, among others)<\/em>. The terms of delivery, therefore, specify when the ownership and title of goods pass from the seller to the buyer, along with the associated risks<\/em>.<\/p>\nThe four allocations made by terms of delivery: A) control and care of the goods while in transit<\/em>; B) carrier selection, transfers, and related issues; C) costs of freight, insurance, taxes, duties and forwarding fees<\/em>; D) documentation, problem resolution and other related issues.<\/p>\n3. The spectrum: The options range from one extreme \u2014 the buyer takes full responsibility from the point of departure (EXW)<\/strong> \u2014 to the other extreme \u2014 the seller is responsible all the way through delivery to the buyer's location (DDP)<\/strong>(Annexure 19 of the Goods Manual)<\/em>.<\/p>\n4. The four special definitions within INCOTERMS:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Term<\/th><th>Special meaning<\/th><\/tr><\/thead><tbody><tr><td>Delivery<\/td><td>THE point in the transaction where the risk of loss or damage to the goods is transferred from the seller to the buyer<\/em><\/td><\/tr><tr><td>FREE<\/td><td>seller has an obligation to deliver the goods to a named place for transfer to a carrier<\/em><\/td><\/tr><tr><td>carrier<\/td><td>any person who, in a contract of carriage, is nominated by seller\/ buyer for transport by any mode<\/em><\/td><\/tr><tr><td>to clear for export<\/td><td>TO file the shipper's export declaration and get an export permit<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n5. The Indian national-transport terms: Within national transportation, certain terms have assumed acceptance due to usage<\/em>:<\/p>\n<ul class=\"lst\"><li>Free on rail (for)* has two versions: *For\/ dispatching* and *for\/ destination<\/strong>(the buyer is responsible from the nominated point mentioned till arrival point, as in DAP above<\/strong>)<\/em>;<\/li><li>On similar lines, infrequently, free on truck (fot) is also used in road transport<\/em>.<\/li><\/ul>\n<h2>6.18<\/span>Recovery of Public Money from the Supplier's\/ Contractor's\/ Consultant's\/ Service Provider's Bill<\/span><\/h2>\n<aside class=\"note\">Section titles: G<\/span>\u2026from Suppliers' Bill<\/em> \u00b7 W<\/span>\u2026from Contractor's Bill<\/em> \u00b7 C<\/span>\u2026from Consultant's Bill<\/em> \u00b7 NC<\/span>\u2026from Service Provider's Bill<\/em>.<\/p><\/aside>\nSometimes, requests are received from a different Ministry\/ Department<\/em> FOR withholding some payment from a supplier\/ contractor out of the payment or securities due to it against a contract<\/strong>.<\/p>\nSuch requests are to be examined by the Procuring Entity (which has received the request) on the merits of the case for further action<\/em>.<\/p>\n<aside class=\"note\">The liability Rule: \"it will, however, be the responsibility of the Ministry\/ Department asking for withholding of payment to defend the Government against any legal procedure arising out of such withholding, and for payment of any interest thereof<\/strong>.\"<\/p><\/aside>\n<h2>6.19<\/span>Payment against Time-Barred Claims<\/span><\/h2>\n1. The three-year Rule: Ordinarily, all claims against the Government are time-barred after a period of three years, calculated from the date when the payment falls due<\/em> \u2014 unless the payment claim has been under correspondence<\/strong>.<\/p>\n2. The admission-of-liability exception: However, the limitation is saved if there is an admission of liability to pay \u2014 and a fresh period of limitation starts from the time such admission is made<\/strong>.<\/p>\n3. The procedure: THE drill to be followed while dealing with time-barred claims will be decided by the Procuring Entity concerned, in consultation with the paying authority<\/em>.<\/p>\n4. The absolute bar on the paying authority: The paying authority is to ensure that no payment against such a time-barred claim is made till a decision has been taken in this regard by the ca<\/strong>.<\/p>\n<h1>Appendix to Chapter 6 \u2014 Points of Difference Between the Four Manuals<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Chapter number<\/td><td>G\/C\/NC: Chapter 6 \u00b7 W: CHAPTER 5<\/td><\/tr><tr><td>2<\/td><td>Chapter title<\/td><td>IDENTICAL in all four \u2014 the second and last such chapter<\/td><\/tr><tr><td>3<\/td><td>Issuing banks for Bid Security<\/td><td>g: *Commercial banks \u00b7 W: *SCHEDULED BANKS* (s.2(e) RBI Act 1934), with the footnote that a BG *MERELY ADVISED* is not acceptable in lieu of being *CONFIRMED<\/strong><\/td><\/tr><tr><td>4<\/td><td>Consequence under a Bid Securing Declaration<\/td><td>G\/C\/NC: bidder shall be *SUSPENDED \u00b7 W: bidder shall be *DEBARRED<\/strong><\/td><\/tr><tr><td>5<\/td><td>Who is EXEMPT from EMD<\/td><td>G: *MSEs <\/strong>AND DPIIT-recognised Start-ups \u00b7 W: *only DPIIT-recognised Start-ups<\/strong><\/td><\/tr><tr><td>6<\/td><td>Scope of the registered-bidder EMD exemption<\/td><td>G: valid for trade group and monetary value<\/em> \u00b7 W: valid for monetary value<\/em> only<\/td><\/tr><tr><td>7<\/td><td>Upper ceiling on Bid Security in larger tenders<\/td><td>W ONLY<\/td><\/tr><tr><td>8<\/td><td>performance Security quantum<\/td><td>G: 3\u20135%<\/strong> \u00b7 W: 3\u201310%<\/strong> \u00b7 NC: 3\u20135%<\/strong>(NC expressly notes \"3 to 10% for Works\")<\/em><\/td><\/tr><tr><td>9<\/td><td>Lower percentage from the 3\u201310% band for tenders > Rs 50 crore<\/td><td>W ONLY<\/td><\/tr><tr><td>10<\/td><td>Rs 75 lakh \/ Rs 3 crore illustrative ceiling table<\/td><td>G + NC<\/td><\/tr><tr><td>11<\/td><td>\"\u2026or dispense with it\" \u2014 power to waive performance security entirely<\/td><td>nc only<\/td><\/tr><tr><td>12<\/td><td>Threshold below which Performance Security not needed<\/td><td>G: Not necessary up to Rs 50 lakh (printed as \"Rs. 50 (twenty-five) lakh\" \u2014 a source typo)<\/em> \u00b7 nc: May not be insisted upon up to Rs 50 lakh \u00b7 W: no threshold<\/td><\/tr><tr><td>13<\/td><td>OEM in whose favour PAC issued \u2014 exempt from Performance Security<\/td><td>G + NC<\/strong>(absent from W, consistent with Works having no PAC mode)<\/em><\/td><\/tr><tr><td>14<\/td><td>Validity beyond completion of obligations<\/td><td>G\/NC: including warranty<\/em> obligations \u00b7 W: including defect liability period (DLP)\/ warranty<\/em><\/td><\/tr><tr><td>15<\/td><td>\"Full performance security should be forfeited even IF the Contractor has PARTIALLY EXECUTED the work\"<\/td><td>G ONLY<\/td><\/tr><tr><td>16<\/td><td>Retention of part of Performance Guarantee from progressive bills<\/td><td>G: expressly \"not acceptable<\/em>\" for goods \u00b7 W: this IS the Security Deposit\/ Retention Money regime<\/td><\/tr><tr><td>17<\/td><td>Multi-year proportionate reduction of Performance Security<\/td><td>G: framed for Rate Contracts, 2\u20133 years<\/em> \u00b7 C\/NC: framed for service contracts of 5\u20137 years or more<\/em>, with the working-capital rationale<\/td><\/tr><tr><td>18<\/td><td>JV \u2014 BG in proportion to participation<\/td><td>W + NC<\/td><\/tr><tr><td>19<\/td><td>Replacement of existing BGs with ISB\/ e-BG<\/td><td>W + NC<\/td><\/tr><tr><td>20<\/td><td>Security Deposit\/ retention money (5% of each running bill; two-stage replacement; two-halves release)<\/td><td>W ONLY<\/td><\/tr><tr><td>21<\/td><td>Insurance Surety Bond full text (three parties; 14-day\/ 45-day rule)<\/td><td>G ONLY<\/strong>(others cross-refer)<\/em><\/td><\/tr><tr><td>22<\/td><td>Electronic Bank Guarantee full text (NeSL, UIN, 24\/7, verification without issuing bank)<\/td><td>G ONLY<\/strong>(others cross-refer)<\/em><\/td><\/tr><tr><td>23<\/td><td>Warranty Bank Guarantee (10% of value; no warranty clause for non-capital goods or capital goods up to Rs 1 lakh)<\/td><td>G ONLY<\/td><\/tr><tr><td>24<\/td><td>BG confirmation channel includes the official email-id of the bank<\/em><\/td><td>W ONLY<\/td><\/tr><tr><td>25<\/td><td>Insurances and indemnities; Indemnity Bond under s.124 Contract Act; \"a BG is safer than an indemnity bond\"<\/td><td>W ONLY<\/td><\/tr><tr><td>26<\/td><td>Price elements driven by INPUT vs OUTPUT admeasurement<\/td><td>nc only<\/td><\/tr><tr><td>27<\/td><td>Payment to the supplier's bank on endorsement + irrevocable power of attorney<\/td><td>G ONLY<\/td><\/tr><tr><td>28<\/td><td>Ten payment obligations incl. MSME 45-day rule and statutory tax certificates<\/td><td>G ONLY<\/td><\/tr><tr><td>29<\/td><td>VARIATIONS; variations register; MEASUREMENT BOOKS and e-MBs; Interim Payment Certificate<\/td><td>W ONLY<\/td><\/tr><tr><td>30<\/td><td>DELAY-IN-PAYMENT TIMELINES \u2014 75% within 10 working days; balance within 28; explanation within 3; interest at GPF rate beyond 30 working days; final payment within 3 months<\/td><td>W ONLY<\/td><\/tr><tr><td>31<\/td><td>Acceptance for payment of services<\/td><td>c: By the *Procuring Entity \u00b7 nc: By the *ultimate user<\/strong><\/td><\/tr><tr><td>32<\/td><td>Terms of Payment for DOMESTIC GOODS (the four patterns) and for imported goods; LC; Air Freight Consolidators<\/td><td>G ONLY<\/td><\/tr><tr><td>33<\/td><td>Advance payment ceilings \u2014 30% private \/ 40% Govt agency or PSE \/ 6 months for maintenance contracts; 110% BG; two-instalment rule; GPF+2% compounded quarterly on default<\/td><td>G + C + NC<\/td><\/tr><tr><td>34<\/td><td>MOBILISATION ADVANCE (10% in two 5% instalments; time-based recovery if interest-free; part BGs per instalment; utilisation certificates)<\/td><td>W ONLY<\/td><\/tr><tr><td>35<\/td><td>Plant, machinery and shuttering advance (5%; not more than 50% of depreciated cost; five conditions; stamp-paper undertaking; no advance on hired\/ hire-purchase equipment)<\/td><td>W ONLY<\/td><\/tr><tr><td>36<\/td><td>Secured advance against material at site (75% of invoice or BOQ value whichever less; 90-day use; indenture bond; Paid stock only; 120-day absolute recovery)<\/td><td>W ONLY<\/td><\/tr><tr><td>37<\/td><td>fixed-price threshold<\/td><td>g\/c\/nc: *12 months \u00b7 w: *18 months<\/strong><\/td><\/tr><tr><td>38<\/td><td>Undue profiteering \/ MRP ceiling \/ controlled price disclosure<\/td><td>G ONLY<\/td><\/tr><tr><td>39<\/td><td>PVC weightages include POL (Petroleum, Oils and Lubricants)<\/em><\/td><td>W ONLY<\/td><\/tr><tr><td>40<\/td><td>PVC element on import\/ excise duty disclosure and FX selling rate<\/td><td>W ONLY<\/td><\/tr><tr><td>41<\/td><td>The final-payment \"no decrease in indices\" undertaking and the vigilance-about-downward-variation duty<\/td><td>W ONLY<\/td><\/tr><tr><td>42<\/td><td>Relaxing the PVC cap where short-closing is not in the Procuring Entity's interest<\/td><td>G + C<\/td><\/tr><tr><td>43<\/td><td>Exchange Rate Variation (ERV) \u2014 25% import content, >1 year delivery, \u00b12.5% dead band, four claim documents<\/td><td>G ONLY<\/td><\/tr><tr><td>44<\/td><td>GST \u2014 full nine-rule registration regime, HSN\/ rate rules, refund-from-supplier, three bidder-borne taxes<\/td><td>G<\/strong>(fullest); C\/W\/NC carry shorter versions<\/em><\/td><\/tr><tr><td>45<\/td><td>CUSTOMS DUTY, the three exemptions, the two certificates, and the MOOWR Scheme 2019<\/td><td>G ONLY<\/td><\/tr><tr><td>46<\/td><td>Statutory Variation Clause reproduced in full with the \"re-fixed delivery period\" note<\/td><td>C + NC<\/strong>(G and W cross-refer to their contract-management chapters)<\/em><\/td><\/tr><tr><td>47<\/td><td>INCOTERMS 2020 \u2014 all eleven terms, the title-of-goods principle, the four special definitions, FOR\/ FOT<\/td><td>G ONLY<\/td><\/tr><tr><td>48<\/td><td>Recovery of Public Money \u2014 section title<\/td><td>G: Suppliers' \u00b7 W: Contractor's \u00b7 C: Consultant's \u00b7 NC: Service Provider's<\/td><\/tr><tr><td>49<\/td><td>Payment against Time-Barred Claims \u2014 three-year rule, admission-of-liability exception, no payment till CA decides<\/td><td>COMMON to all four \u2014 and the closing section of the chapter in every Manual<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 6<\/p>\n<aside class=\"note\">Next:<\/strong>Chapter 7 \u2014 bid evaluation and award of contract<\/strong>(Goods Ch. 7 \u00b7 Works Ch. 6<\/strong> \u2014 <\/em>Evaluation of Bids and Award of Work \u00b7 Consultancy Ch. 8 \u2014 <\/strong>RfP<\/strong> Evaluation and Award of Contract \u00b7 Non-Consultancy Ch. 7)<\/em>.<\/p>\nTwo traps ahead:<\/strong> the Consultancy Manual places this at Chapter 8<\/strong> (because it inserts a whole Chapter 7 on Shortlisting\/ EoI<\/strong> first), and it alone uses a Consultancy Evaluation Committee (CEC)<\/strong> rather than a Tender Committee. The Works evaluation chapter is by far the most elaborate, carrying Abnormally Low Bids, Cartel Formation\/ Pool Rates, Handling Dissent among the Tender Committee, and Audit Trails<\/strong> \u2014 none of which appear in the others in the same form.<\/p><\/aside><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch7\">Chapter 7 \u2014 Part a<\/p><h1>Shortlisting, the Evaluation Committee, and Preliminary Examination<\/h1><\/header>Part I<\/span>Shortlisting, Committees and Preliminary Examination<\/em><\/p>\nMerging: Goods Ch. 7<\/strong> (Bid Evaluation and Award of Contract) \u00b7 Works Ch. 6<\/strong> (Evaluation of Bids and Award of Work) \u00b7 Consultancy Ch. 7<\/strong> (Shortlisting of Consultants, EoI) and Ch. 8<\/strong> (RfP Evaluation and Award of Contract) \u00b7 Non-Consultancy Ch. 7<\/strong> (Bid Evaluation and Award of Contract)<\/em><\/p><h2>Structural Warnings for Students<\/span><\/h2>\n1. Three different Chapter numbers for the same block:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Chapter<\/th><th>Title<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span> Goods<\/td><td>Chapter 7<\/td><td>Bid Evaluation and Award of Contract<\/em><\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> Works<\/td><td>Chapter 6<\/td><td>Evaluation of Bids and Award of Work<\/strong><\/em><\/td><\/tr><tr class=\"srcmark src-C\" data-src=\" C \"><td>C<\/span> Consultancy<\/td><td>Chapter 8<\/td><td>RfP<\/strong> Evaluation and Award of Contract<\/em><\/td><\/tr><tr class=\"srcmark src-NC\" data-src=\" NC \"><td>NC<\/span> Non-Consultancy<\/td><td>Chapter 7<\/td><td>Bid Evaluation and Award of Contract<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nWhy consultancy is one Chapter ahead: The Consultancy Manual inserts an entire Chapter 7 \u2014 shortlisting of consultants, Expression of Interest (EoI)<\/em> before its evaluation chapter. That chapter has NO counterpart in any other Manual and is reproduced in full at para 7.1 below.<\/p>\n2. The committee is different in consultancy:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Evaluating body<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-multi\" data-src=\" G W NC \"><td>G<\/span>, W<\/span>, NC<\/span><\/td><td>tender Committee (TC)<\/strong> \u2014 also called Tender Evaluation Committee (TEC)<\/em> in some organisations<\/td><\/tr><tr class=\"srcmark src-C\" data-src=\" C \"><td>C<\/span><\/td><td>consultancy Evaluation Committee (CEC)<\/td><\/tr><\/tbody><\/table><\/div>\n3. Because of the volume (423 KB across the four Manuals), this chapter is issued in two parts:<\/p>\n<ul class=\"lst\"><li>PART A (this document)<\/strong> \u2014 Shortlisting\/ EoI \u00b7 Bid Evaluation Process \u00b7 Composition and Role of the Committee \u00b7 Dissent, Independence and Confidentiality \u00b7 Timely Processing \u00b7 Extension of Bid Validity \u00b7 Lack of Competition \u00b7 Committee Report \u00b7 Preliminary Examination.<\/li><li>PART B<\/strong> \u2014 Techno-commercial Evaluation \u00b7 Evaluation of Quality (Technical Proposals) \u00b7 Financial Evaluation \u00b7 lCS\/ QCBS\/ SSS\/ FBS \u00b7 Reasonableness of Prices \u00b7 Abnormally Low Bids \u00b7 Cartel Formation \u00b7 Negotiations \u00b7 Cancellation and Re-tender \u00b7 Award of Contract \u00b7 Audit Trails \u00b7 Risks and Mitigations.<\/li><\/ul>\n<h2>Concordance for Chapter 7 \u2014 Part A<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>Goods<\/th><th>Works<\/th><th>CS<\/th><th>NCS<\/th><\/tr><\/thead><tbody><tr><td>7.1<\/td><td>Shortlisting of Consultants \u2014 EoI<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>Ch. 7 entire<\/td><td> \u2014 <\/td><\/tr><tr><td>7.2<\/td><td>Bid Evaluation Process \u2014 importance<\/td><td>7.1-1<\/td><td>6.1.1<\/td><td>8.1.1<\/td><td>7.1.1<\/td><\/tr><tr><td>7.3<\/td><td>Evaluation in Different Tendering Systems<\/td><td>(in 7.1)<\/em><\/td><td>6.1.2<\/td><td>8.1.2<\/td><td>7.1.2<\/td><\/tr><tr><td>7.4<\/td><td>Preparation and Vetting of Comparative Statement<\/td><td>7.2<\/td><td>6.1.3<\/td><td>8.1.3<\/td><td>7.1.3<\/td><\/tr><tr><td>7.5<\/td><td>The Stages of Evaluation<\/td><td> \u2014 <\/td><td>6.1.4<\/td><td>8.1.4<\/td><td>7.1.4<\/td><\/tr><tr><td>7.6<\/td><td>Contacting Procuring Entity during evaluation<\/td><td>7.3.6<\/td><td>6.1.5<\/td><td>8.1.5<\/td><td>7.1.5<\/td><\/tr><tr><td>7.7<\/td><td>Composition of the Committee; SoPP<\/td><td>7.1-2, 7.1-3<\/td><td>6.2.1<\/td><td>8.2.1<\/td><td>7.2.1<\/td><\/tr><tr><td>7.8<\/td><td>Role of the Committee<\/td><td>7.1-2-c<\/td><td>6.2.2<\/td><td>8.2.2<\/td><td>7.2.2<\/td><\/tr><tr><td>7.9<\/td><td>Handling Dissent among the Committee<\/td><td>7.6.12<\/td><td>6.2.3<\/td><td>8.2.3<\/td><td>7.2.3<\/td><\/tr><tr><td>7.10<\/td><td>Independence, Impartiality, Confidentiality, No COI<\/td><td>7.6.13<\/td><td>6.2.4<\/td><td>8.2.4<\/td><td>7.2.4<\/td><\/tr><tr><td>7.11<\/td><td>Timely Processing of Tenders<\/td><td>7.6.1<\/td><td>6.2.5<\/td><td>8.2.5<\/td><td>7.2.5<\/td><\/tr><tr><td>7.12<\/td><td>Extension of Bid\/ Tender Validity Period<\/td><td>7.6.2<\/td><td>6.2.6<\/td><td>8.2.6<\/td><td>7.2.6<\/td><\/tr><tr><td>7.13<\/td><td>Consideration of Lack of Competition<\/td><td>7.6.10<\/td><td>6.2.7<\/td><td>8.2.7<\/td><td>7.2.7<\/td><\/tr><tr><td>7.14<\/td><td>Committee Recommendations\/ Report<\/td><td>7.6.14<\/td><td>6.2.8<\/td><td>8.2.8<\/td><td>7.2.8<\/td><\/tr><tr><td>7.15<\/td><td>Preliminary Examination<\/td><td>7.3<\/td><td>6.3<\/td><td>8.3<\/td><td>7.3.1<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>7.1 Shortlisting of Consultants \u2014 Expression of Interest (EoI) [C ONLY]<\/span><\/h1>\n<aside class=\"note\">this entire section is the consultancy manual's Chapter 7. It has no counterpart in the goods, works or non-consultancy Manuals.<\/p><\/aside>\n<h2>7.1.1<\/span>Basic Considerations<\/span><\/h2>\n1. Why two stages are necessary: Due to the inherent complexities of evaluation of physically non-measurable scope and quality standards of consultancy proposals<\/em>, IT IS too time-consuming and expensive<\/em> for the Procuring Entity to invite \u2014 as well as for the consultancy firms to prepare \u2014 and evaluate proposals from all consultants who want to compete<\/em>.<\/p>\nTherefore, procurement of consultancy is done in a two-stage process<\/em>.<\/p>\n2. The first stage: The qualified firms with requisite experience, technical and financial capabilities<\/em> \u2014 who can be trusted to deliver the required services at the desired level of quality<\/em> \u2014 ARE shortlisted transparently<\/em>. This shortlisting is done through the expression of Interest (EoI) process<\/em>.<\/p>\n<aside class=\"note\">The caution: \"care should be taken to avoid stipulation of shortlisting qualification criteria disproportionate to the requirement of the services, that May lead to restricted shortlist and lack of competition in the second stage<\/strong>.\"<\/p><\/aside>\nadequate time should be allowed for getting responses from interested consultants. The Procuring Entity shall make available copies of the EoI document to the interested consultants on its website and e-procurement portal (GeM\/ CPPP)<\/em>.<\/p>\n3. The second stage: In the second stage \u2014 request for proposals (RfP)<\/em> \u2014 proposals containing technical and financial bids<\/em> Are invited from such shortlisted bidders<\/em>. Selection of the winning bidder is based on the quality of the proposal and, where appropriate, on the cost of services<\/em> To be provided.<\/p>\n<h2>7.1.2<\/span>The Four Modes of EoI<\/span><\/h2><h3>A. Open Tender Enquiry (OTE) \u2014 Rule 183(ii) of GFR 2017<\/em><\/span><\/h3>\nFor procurement above Rs. 50 (rupees fifty) lakh<\/em>, shortlisting is done in an openly advertised competitive (OTE mode) shortlisting process called Expression of Interest (EoI)<\/em> \u2014 giving equal opportunity to all interested bidders<\/em> To be considered for shortlisting.<\/p>\nUnder EoI, the \"Request for Expression of Interest\" (REoI)<\/em> is advertised on the Central Public Procurement Portal (CPPP)<\/em> at www.eprocure.gov.in AND ON Government E-marketplace (GeM)<\/em>.<\/p>\nAn organisation having its own website should also publish all its advertised tender enquiries on the website<\/em>. The advertisements should give the complete web address from where the bidding documents can be downloaded<\/em>.<\/p>\nA complete ToR should be ready before requesting EoI.<\/strong><\/p>\nAttention of known reputed consultants May also be separately drawn<\/em> Wherever possible.<\/p>\nThe advertisement must include, among other things:<\/p>\n<aside class=\"note\">THE last date of submission of EoI<\/em> \u00b7 how to get\/ download a copy of the EoI document including ToR<\/em> \u00b7 contact information of the Procuring Entity with the name of contact person<\/em>, and so on<\/p><\/aside>\n<h3>B. Global Tender Enquiry (GTE)<\/span><\/h3>\nin case it is felt that likely consultants May not be available in India<\/em>, the EoI process May be done on global Tender Enquiry (GTE) process<\/em> \u2014 BY sending REoI notice to foreign embassies in India and Indian embassies in relevant countries<\/em>.<\/p>\n<aside class=\"note\">Subject to the restriction on GTE for tenders below Rs. 200 Crore<\/strong> \u2014 see Chapter 4 Part B, para 4.9.2.<\/em><\/p><\/aside>\n<h3>C. Limited Tender Enquiry (LTE) \u2014 Rule 183(i) of GFR 2017<\/em><\/span><\/h3>\nIn procurements of consultancy services below Rs. 50 (rupees fifty) lakh<\/em>, shortlisting is done without a formal published Expression of Interest<\/strong> \u2014 akin to a limited Tender Enquiry (LTE) process<\/em>.<\/p>\nThe three-step procedure:<\/p>\n<ol class=\"lst\"><li>To start with, the preparation of a long list of potential consultants<\/em> May be done on the basis of formal or informal enquiries<\/em> FROM: Other ministries or departments or organisations involved in similar activities \u00b7 chambers of commerce & industry \u00b7 association of consultancy firms<\/em>, etc.<\/li><li>The Procuring Entity should scrutinise the preliminary long list<\/em> AND shortlist the prima facie eligible and capable contractors<\/em> From the long list.<\/li><li>The number of consultants in this moderated long-list should not be less than three<\/em>. In case sufficient consultants cannot be located, then the responses May be called from a lesser number of consultants \u2014 but not less than three in any case, after taking ca's approval<\/strong>.<\/li><\/ol>\nThe panel device: To smoothen this shortlisting for projects below Rs. 50 lakh, procuring entities who do frequent procurement of consultancy services<\/em> May consider preparation of a panel of qualified consultants, after evaluation of their credentials \u2014 on the lines of registration of vendors in procurement of goods<\/em>.<\/p>\nIF THE complexity of the project so justifies<\/em>, A formal EoI May be advertised even for procurements below Rs. 50 lakh, with the approval of ca<\/strong>.<\/p>\n<h3>D. Special Limited Tender Enquiry (SLTE) \u2014 Rule 162 of GFR 2017<\/em><\/span><\/h3>\nLTE mode for EoI \u2014 even for values higher than Rs. 50 lakh<\/em>, where normally OTE should have been done \u2014 is permissible in certain exceptional circumstances<\/em>.<\/p>\nPowers to sanction procurement on LTE basis in such exceptional cases May be laid down in SoPP, based on a certificate of urgency signed by the indentor<\/em>.<\/p>\nThis mode has the merit of being quicker, but VfM obtained May be less than in case of OTE<\/em>; Hence it should be restricted to the following four situations: A) the Competent Authority certifies that there is an existing or prospective urgency for operational or technical requirements<\/em>, and any additional expenditure involved by not procuring through advertised tender enquiry is justified in view of urgency. The Ministry\/ Department should also put on record the nature of the urgency and reasons why the procurement could not be anticipated earlier<\/em>. b) THE sources of supply are definitely known<\/em>, and the possibility of fresh source(s) beyond those being tapped is remote<\/em>. c) THERE ARE sufficient reasons, to be recorded in writing by the Competent Authority<\/em>, indicating that it will not be in public interest<\/em> To procure the services through advertised tender enquiry. D) Government policy designates procurement from specific agencies<\/em>.<\/p>\n<h2>7.1.3<\/span>Evaluation of the REoI<\/span><\/h2><h3>A. General Norms<\/span><\/h3>\n<aside class=\"note\">For the role of the evaluation committee, general norms of evaluation, preliminary examination of bids, and evaluation of qualifications<\/em>, the provisions of paras 7.2 to 7.15 of this Unified Manual (CS paras 8.1\u20138.4) apply mutatis mutandis<\/em>.<\/p><\/aside>\n<h3>B. Evaluation of Responsiveness and Eligibility<\/span><\/h3>\n1. ONLY substantively responsive eois<\/em> Shall be evaluated for shortlisting. A substantively responsive EoI is complete and conforms to the REoI document's essential terms and conditions<\/em>.<\/p>\n2. The pass\/ fail Rule: The Procuring Entity shall determine whether the consultants are eligible as per laid-down eligibility criteria. The eligibility evaluation shall be on a \"pass\" or \"fail\" basis. A consultant must achieve a \"pass\" on all the criteria to proceed to the next step. Any consultant not achieving a 'pass' in any of the eligibility criteria shall be rejected as non-responsive<\/strong>.<\/p>\n<h3>C. Evaluation of Qualification \u2014 the Nine Rules<\/span><\/h3>\n1. The Procuring Entity shall evaluate the consultants for shortlisting, inter alia<\/em>, based on their past experience of handling general and similar consultancy assignments, and financial capability of the firm<\/em>.<\/p>\n2. No borrowed credentials: The determination shall not consider the qualifications of other firms \u2014 such as the consultant's subsidiaries, parent entities, affiliates, or any other entity different from the consultant<\/strong>. Assignments completed by the consultant's individual experts working privately or through other consulting firms<\/em>cannot be claimed as the relevant experience of the consultant, or that of the consultant's partners or sub-consultants<\/strong>.<\/p>\n3. The Procuring Entity reserves the right to waive minor deviations in the qualification criteria<\/em>, if they do not materially affect the capability of a consultant to perform the contract<\/em>.<\/p>\n4. Key experts are not evaluated at EoI stage \u2014 and the reason: The qualification and experience of key experts are not included in the shortlisting criteria but shall be evaluated at the RfP stage<\/em>.<\/p>\n<aside class=\"note\">Since the bidders who meet the REoI qualification can well manage to attract the right key experts during RfP.<\/strong><\/p><\/aside>\n5. In case a particular certification\/ licence is required<\/em> To perform the assignment, that May also be included in eligibility or qualification criteria<\/em>.<\/p>\n6. The suggested qualification criteria table and weightages:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Criteria \/ Sub-criteria<\/th><th>Suggested Values<\/th><th>Sub-criteria weight<\/th><th>Criteria weight<\/th><\/tr><\/thead><tbody><tr><td>Criteria 1 \u2014 general and similar experience<\/strong>(Bidders providing Consultancy services for at least the specified period and having completed the specified volume of general and similar consultancy assignments during the specified period)<\/em><\/td><td><\/td><td><\/td><td>70%<\/td><\/tr><tr><td>Similar assignments<\/em><\/td><td>define based on value, general and specific sector of work, region, key activities\/ methodologies\/ technologies<\/em> etc.<\/td><td><\/td><td><\/td><\/tr><tr><td>Consultants must have at least \u03b1 years' experience in Consultancy Services<\/td><td>\u03b1 = 7<\/td><td>20%<\/td><td><\/td><\/tr><tr><td>During the last \u03b1 years, Consultancy Assignments completed or substantially completed (at least \u03b3 payments received)<\/em> should be at least \u03b2<\/td><td>\u03b1 = 7 \u00b7 \u03b3 = 80% \u00b7 \u03b2 = 7<\/td><td>50%<\/td><td><\/td><\/tr><tr><td>Out of the Consultancy Assignments mentioned above, \u03b4 should be similar<\/em> assignments<\/td><td>\u03b4 = 2<\/td><td>30%<\/td><td><\/td><\/tr><tr><td>criteria 2 \u2014 financial capability<\/strong>(Overall financial strength of the consultant in terms of turnover, profitability, and cash flow \u2014 liquid assets \u2014 situation)<\/em><\/td><td><\/td><td><\/td><td>30%<\/td><\/tr><tr><td>turnover:<\/strong>Minimum average annual turnover of at least Rs. \u03b8 Crores, at least \u03ba of which should be from Consultancy Service Contracts (total payments received for contracts in progress or completed) within the last \u03b1 years<\/em><\/td><td>\u03b8 = 200% of the value of assignment \u00b7 \u03ba = 50% \u00b7 \u03b1 = 7<\/td><td>70%<\/td><td><\/td><\/tr><tr><td>financial viability \u2014 net worth: The Net Worth of the Bidder firm should not be negative on 'The Relevant Date' and should not have eroded by more than \u03be in the last 3 YEARS<\/em><\/td><td>\u03be = 30%<\/td><td>30%<\/td><td><\/td><\/tr><tr><td>relaxation for start-ups:<\/strong>Qualification criteria can be relaxed up to \u03bb% for start-ups, subject to meeting the quality and technical specifications during the RfP<\/em><\/td><td>\u03bb = 20% (twenty per cent)<\/td><td><\/td><td><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">note on evidence: \"during the RfP process, the consultant shall be asked to furnish documentary evidence to demonstrate his compliance to criteria 1 and criteria 2<\/strong>.\"<\/p>\nthe \"relevant date\" when the specified period ends:<\/p>\n<ol class=\"lst\"><li>For all annual reports<\/em> \u2014 periods mentioned are ending with the financial year of the company<\/em> [say 2023-24];<\/li><li>FOR other statements<\/em> \u2014 THE latest statement available on the last date of bid submission<\/em>.<\/li><\/ol><\/aside>\n7. Qualification criteria shall be based entirely upon the capability and resources required to perform the particular contract satisfactorily<\/em>, considering bidders' experience and past performance, capabilities with respect to personnel, equipment and manufacturing facilities, financial standing and relevant compliance with environmental protection regulations<\/em>. There should be no qualification criteria that would be advantageous to foreign consultants at the cost of domestically provided consultancy<\/em>.<\/p>\n8. Demerged entities: Tender documents must clearly mention if (and under what conditions) the demerged entity will be permitted to use credentials of original\/ parent entity (for initial five years from the incorporation of the demerged entities)<\/em> To satisfy the qualification criteria or not.<\/p>\n9. The turnover-multiple caution \u2014 an express criticism of prevailing practice:<\/p>\n<aside class=\"note\">\"it is also noted that, while shortlisting\/ selecting consultants, some procuring entities are keeping the minimum qualifying financial turnover at the level of 5\u201310 times of the estimated cost of the consultancy work. This, prima facie, appears high<\/strong>.\"<\/p>\n\"higher qualification criteria increase the likelihood of adequate experience\/ capacity but reduce the competition; If set unduly high, they May increase the cost without any improvement in quality<\/strong>.\"<\/strong>(DoE OM No. F.18\/13\/2020-PPD dated 13.07.2020)<\/em><\/p>\nit is suggested that the criteria should be fixed on a reasonable basis while drafting tender documents<\/em>, and such higher minimum qualifying turnover should be kept only if adequately justified<\/em>.<\/p>\n\"in higher-value procurements, the minimum annual turnover should not be blindly a multiplier of the assignment value \u2014 but there May be an upper cap on demanded turnover, so as not to restrict competition only to the big four or five consultancy firms<\/strong>.\"<\/p><\/aside>\n<h3>D. Simplified vs Marking-Scheme Evaluation at EoI<\/span><\/h3>\n10. The default \u2014 simplified criteria: In EoI, simplified evaluation criteria should be used, instead of marking schemes<\/em>. A fail-pass, minimum benchmark in each criteria\/ sub-criteria<\/em> Can be specified.<\/p>\n<aside class=\"note\">e.g., must have past experience of at least two similar projects; firm must have a turnover of at least Rs 10 (Rupees Ten) Crores, and so on. Any firm which passes these benchmarks is declared as qualified.<\/em><\/p><\/aside>\n11. The complex-case alternative \u2014 with a worked example: However, in a complex situation, marks\/ scores May be assigned to the response of each consultant based on weightages assigned to each of the criteria in the EoI<\/em>.<\/p>\n<aside class=\"note\">Worked example given in the Manual \u2014 in case of number of assignments in last 7 years<\/em>, out of a maximum of 35 marks for the sub-criteria, scoring can be: a) 3 marks per assignment up to 7 ASSIGNMENTS (BENCHMARK); and b) 3.5 marks for additional assignments, subject to a maximum of 35.<\/p><\/aside>\n12. The purpose of scoring \u2014 not merely disqualification: \"this exercise of scoring is not merely for disqualification of firms below a threshold, but to establish the relative strengths and weaknesses of the applicants \u2014 in order to arrive at a robust short list of qualified consultants who have the required experience and qualifications to deliver the required services at the desired level of quality<\/strong>.\"<\/p>\n13. The 75% threshold: The Procuring Entity shall shortlist all the consultants who secure the minimum required marks \u2014 normally 75% (seventy-five per cent)<\/em>. THE minimum qualifying requirement shall be specified in the EoI document<\/em>.<\/p>\n<h2>7.1.4<\/span>The EoI Evaluation Report<\/span><\/h2>\n1. The shortlist size Rule \u2014 minimum three, maximum eight:<\/p>\nThe short list of firms is required for the selection of consultancy services in a competitive process with:<\/p>\n<aside class=\"note\">A minimum of three (Rule 184 of GFR 2017)<\/strong> AND generally not more than eight<\/strong> \u2014 to avoid inordinate delays in evaluation of the subsequent RfP<\/em>.<\/p><\/aside>\nIf there are a larger number of consultants meeting the evaluation criteria<\/em>, the shortlist shall be restricted to a specified number of consultants<\/em> \u2014 if not specified, eight (8) consultants<\/strong> \u2014 based on higher average turnover<\/strong> (or any other criteria, if so stipulated therein).<\/p>\n2. National-only shortlists: The short list May comprise only national consultants<\/em> (firms registered or incorporated in the country and having registered office in India<\/em>) FOR small assignments<\/em> \u2014 AND indicated in the EoI<\/em>.<\/p>\nThis situation is applicable where:<\/p>\n<ul class=\"lst\"><li>Qualified national firms are available at a competitive cost; Or<\/li><li>the nature of the assignment is such that a foreign consultant's inclusion is not justified<\/em>(for example, a training or outreach to be carried out in local language)<\/em>; or<\/li><li>foreign consultants have not expressed any interest<\/em>.<\/li><\/ul>\n3. CONCURRENT ASSIGNMENTS \u2014 the capacity check: IF THE same firm is considered for concurrent assignments *(for example, a construction supervision consultant for different stretches\/ packages of rehabilitation\/ reconstruction of a road contract)*, the Procuring Entity shall *assess the firm's overall capacity to perform multiple contracts before including it in more than one short list*. HOWEVER, <\/strong>this needs to be pre-declared in the EoI documents<\/em>.<\/p>\n4. The evaluation committee May submit its EoI evaluation report to ca for approval<\/em>. THE tender Committee format at Annexure 6<\/em> Can be used mutatis mutandis<\/em> for this purpose.<\/p>\n<h2>7.1.5<\/span>Declaration of Shortlist and Issue of RfP<\/span><\/h2>\n1. Provisional shortlisting: Eois of consultants that succeed in the above evaluation shall be shortlisted. Provisionally shortlisted consultants will be informed of the condition(s) that must be met before submitting their proposal in the RfP process<\/em>.<\/p>\n2. Validity of the shortlist \u2014 the six-month rule: Only shortlisted (including provisionally shortlisted) consultants shall be invited to participate in the following RfP process<\/em>.<\/p>\nSuch shortlisting shall remain valid for a period specified in the REoI \u2014 six months from the date of declaration, if not so specified<\/strong>.<\/p>\n<aside class=\"note\">\"it's important that the RfP is issued as early as possible after shortlisting \u2014 since the qualification data on which shortlisting is based May tend to become outdated. In case such delay is more than 6 months, it would be better to re-invite EoI<\/strong>.\"<\/p><\/aside>\n3. Publication and the advertising bar: After the EoI evaluation report is accepted by the Competent Authority, the name and address of the shortlisted consultant(s) shall be published in the portal and notice board\/ bulletin\/ website of the Procuring Entity<\/em>.<\/p>\nAll consultants shall be advised about shortlisting of their eois or otherwise<\/em> \u2014 without disclosing the comparative position of their eois with that of others<\/strong>.<\/p>\nShortlisted consultants must not advertise or publish the same in any form without the prior written consent of the Procuring Entity.<\/strong><\/p>\n4. Shortlisting confers no rights: \"shortlisting a consultant is an administrative process and does not confer any legal or contractual rights on the shortlisted bidder. Since original documents\/ certificates are not being called for and examined at this stage, all shortlisting shall be conditional upon final verification of such documents\/ certificates during the RfP process<\/strong>.\"<\/p>\n<h2 class=\"src-C srchead\" data-src=\" C \">7.1.6<\/span>Shortlisting \u2014 Risks and Mitigation<\/span>C<\/span><\/h2><div class=\"srcblock src-C\" data-src=\" C \" data-label=\"Consultancy Manual only\">\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. Conflict of interest situations: It is possible that conflict of interest situations are not reported or declared by the participating consultants<\/em> \u2014 or sometimes by members of the evaluation committee<\/em>.<\/td><td>These situations need to be dealt with by signing declarations in specified formats<\/em> \u2014 both at the EoI bid stage as also in the technical proposal<\/strong> \u2014 AND by CEC members before undertaking the evaluation of proposals<\/strong>.<\/td><\/tr><tr><td>2. \"Qualifications leasing\":<\/strong>Local bidders with insufficient qualifications May show association with well-qualified (foreign or local) consultants \u2014 <\/strong>just to use their qualification documents to get the contract. These well-qualified consultants <\/strong>lease their qualification \u2014 but do not, or only minimally, contribute experience or key personnel at the execution stage<\/em>.<\/strong><\/td><td>This issue needs to be dealt with from the EoI stage<\/strong> BY: \u2022 very clearly identifying the qualified applicant<\/em>; and \u2022 putting on record\/ contract the guaranteed contribution from the partner with qualification<\/em>.<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>7.2 Bid Evaluation Process \u2014 the Governing Principle<\/span><\/h1>\nThe evaluation of bids is one of the most significant processes of procurement and must be transparent<\/em>.<\/p>\nAll bids are to be evaluated strictly based on the terms and conditions incorporated in the tender document and those stipulated by the bidders in their bids<\/strong>.<\/p>\nNo hearsay information or hitherto undeclared condition should be brought in while evaluating the bids.<\/strong><\/p>\nSimilarly, no tender enquiry condition (especially the significant\/ essential ones) should be overlooked\/ relaxed while evaluating the bids<\/strong>.<\/p>\n<aside class=\"note\">The aim: \"the aim should be to ensure that no bidder gets undue advantage at the cost of other bidders and\/ or at the cost of the Procuring Entity<\/strong>.\"<\/p><\/aside>\nG<\/span> \u2014 the single-vendor caution on preferences: \"care should be taken to ensure that preferences provided to any category of bidders on certain specified grounds do not result in a single vendor selection<\/strong>.\"<\/p>\nW<\/span> \u2014 the permitted evaluation factors: The Contracting Authority may include quality, price, technical merit, aesthetic and functional characteristics, environmental characteristics, running costs, cost-effectiveness, after-sales service and technical assistance, delivery date and delivery period or period of completion<\/em>, etc. \"no criteria shall be used for evaluation of tenders that cannot be verified or [are] not stated in the contract \u2014 with the exception of provisions of laws in force<\/strong>.\"<\/p>\n<h1 data-src=\"WCNC\">7.3 Evaluation in Different Tendering Systems<\/span>W<\/span>C<\/span>NC<\/span><\/h1>\n1. Single-stage single-envelope tendering: The evaluation of eligibility\/ qualification of bidders, technical, commercial, and financial aspects is done simultaneously<\/em>.<\/p>\nTHE lowest-priced bid that meets the eligibility\/ qualification criteria and technical and commercial conditions<\/em> Laid down in the tender documents is declared as successful<\/em>.<\/p>\n2. Single-stage two-envelope tendering \u2014 and the sanctity of the sealed financial bid:<\/p>\nInitially, only the techno-commercial bids would be opened and evaluated<\/em> for bids which successfully meet the eligibility\/ qualification criteria and techno-commercial aspects.<\/p>\nFinancial bids of such successful bidders only<\/em> Would be opened. The TC shall evaluate financial bids with a view to select the lowest (L1) bidder<\/em> Who meets the eligibility\/ qualification criteria and techno-commercial aspects.<\/p>\nEvaluators of technical proposals shall not have access to the financial proposals until the technical evaluation is concluded.<\/strong><\/p>\n<aside class=\"note\">The custody safeguard \u2014 an important practical instruction: \"it is of utmost importance that the authenticity, integrity, and sanctity of unopened financial bids must be ensured before their opening. All the financial bids May preferably be put in a large envelope, which May be dated, sealed, and signed (including by some of the bidders present) \u2014 to show that none of the bids were accessed during the custody<\/strong>.\"<\/p><\/aside>\n3. Two-stage bids: In two-stage bids, the PQB\/ EoI stage would have already been evaluated<\/em>, AND this second stage is for evaluation of responses to the second-stage two envelopes from the shortlisted qualified bidders<\/em>, following the procedure described in sub-para 2 above.<\/p>\n<h1>7.4 Preparation and Vetting of Comparative Statement<\/span><\/h1>\nExcept in cases up to Rs. 50 lakh (rupees fifty lakh)<\/strong>, the Procuring Entity should prepare a comparative statement of quotations (technical and financial) received in the order in which bids were opened<\/em>.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Type of bid<\/th><th>What the comparative statement contains<\/th><\/tr><\/thead><tbody><tr><td>Techno-commercial bid<\/td><td>information about deciding the responsiveness and eligibility of bids<\/em>, AND evaluating the technical suitability of offers<\/em><\/td><\/tr><tr><td>financial bid<\/td><td>information about rates quoted (including taxes), discounts if any<\/em>, AND any other information that has implications on the ranking of bids<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nthe concerned officers should sign the comparative statement<\/em> So prepared. It May also be vetted by the associated\/ integrated finance for veracity of information<\/em>.<\/p>\n<aside class=\"note\">W<\/span> \u2014 the e-procurement exemption:<\/strong>\"however, in case the comparative statement is prepared by the e-procurement portal, vetting by associated\/ integrated finance is not required<\/strong>.\"<\/p><\/aside>\n<h1 data-src=\"WCNC\">7.5 The Stages of Evaluation<\/span>W<\/span>C<\/span>NC<\/span><\/h1>\nthe evaluation of the bids shall be carried out in two stages<\/strong>:<\/p>\nAT THE first stage<\/em>, evaluation of responsiveness and technical bids<\/em> is taken up.<\/p>\nEvaluators of technical bids shall not have access to the financial bids until the technical evaluation is concluded<\/em> \u2014 AS THE envelope containing the financial bid is not opened till the technical evaluation is complete<\/em>.<\/p>\nThe financial bid of only such bidders will be opened which obtain minimum qualifying marks\/ standards prescribed for the technical bid<\/strong>.<\/p>\nThe evaluation shall be carried out in full conformity with the provisions of the tender document<\/strong>.<\/p>\n<h1>7.6 Contacting the Procuring Entity during the Evaluation<\/span><\/h1>\nFrom the time of bid submission to awarding the contract<\/em>, no bidder shall contact the Procuring Entity on any matter relating to the submitted bid<\/strong>.<\/p>\nIf a bidder needs to contact<\/em> The Procuring Entity for any reason relating to this tender and\/ or its bid, it should do so only in writing or electronically<\/strong>.<\/p>\n<aside class=\"note\">G<\/span> adds: \"The Procuring Entity shall keep these communications in view during the evaluation of bids, but is not expected to respond until the evaluation is complete.\"<\/em><\/p><\/aside>\nany effort by a bidder to influence the Procuring Entity during the processing of bids, evaluation, bid comparison or award decisions<\/strong> Shall be construed as a violation of the Code of Integrity<\/strong> \u2014 and the bid shall be liable to be rejected as non-responsive, in addition to other punitive actions<\/strong> for violation of the Code of Integrity as per the tender document.<\/p>\n<h1>7.7 Composition of the Tender Committee (TC)\/ Consultancy Evaluation Committee (CEC), and the SoPP<\/span><\/h1>\n<\/div><h2>7.7.1<\/span>The Direct Acceptance Threshold<\/span><\/h2>\nThere are delegations up to a threshold value \u2014 called the direct acceptance threshold<\/strong> \u2014 below which the evaluation of the bids May be entrusted solely and directly to the individual Competent Authority, without the involvement of a Tender Committee or any evaluation report<\/em>.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>The threshold<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span> GOODS<\/td><td>Tender Committee required for all cases having financial implications of more than Rs. 50 (rupees fifty) lakh<\/strong><\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> WORKS<\/td><td>\"\u2026direct acceptance threshold \u2014 normally LTE threshold of Rs 50 lakhs<\/strong>\"<\/td><\/tr><tr class=\"srcmark src-C\" data-src=\" C \"><td>C<\/span> Consultancy<\/td><td>CEC required for all cases having financial implications of more than Rs. 50 lakh<\/strong> *(including SLTE or Nomination Basis)*; for cases less than Rs. 50 lakh<\/strong>, direct acceptance<\/td><\/tr><tr class=\"srcmark src-NC\" data-src=\" NC \"><td>NC<\/span><\/td><td>(same as Goods)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nhe would carry out all the steps in the evaluation described in this Chapter, instead of the TC\/ CEC<\/em>, AND directly record reasons and decisions in the file itself<\/em> (or online, where such systems exist).<\/p>\nHe May ask for a technical suitability report from user departments if needed<\/strong>.<\/p>\nIn procurements above such a threshold \u2014 including nomination and SLTE modes<\/em> \u2014 evaluation is to be done by a Tender Committee\/ CEC.<\/p>\n<h2>7.7.2<\/span>Composition<\/span><\/h2>\n1. The three-member norm: TC\/ CEC should normally comprise three members, including<\/em>:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-C\" data-src=\" C \">A finance member<\/strong>(nominated by the Financial Adviser)<\/em> \u2014 C<\/span>: \"Financial Adviser or his representative\"<\/em>; and<\/li><li>A representative of the user<\/strong><\/li><\/ul>\n \u2014 as per soPP.<\/p>\n2. SIZE: \"TC\/ CEC should not be large\/ very large, as it May slow down the evaluation process<\/strong>.\"<\/p>\nhowever, suitable domain\/ technical experts May be included in the committee to render assistance in the evaluation of the bids<\/em>(W<\/span> adds: \"from the user department (or otherwise)\")<\/em>.<\/p>\n<aside class=\"note\">The no-second-committee Rule (in all four): \"there is no need to constitute any other committee for technical evaluation, preliminary evaluation, etc<\/strong>.\"<\/p><\/aside>\n3. The two independence Rules under Rule 173(xxii) of GFR 2017:<\/p>\n<aside class=\"note\">\"no member of the Tender Committee should be reporting directly to any other member of such committee, in case the estimated value of the procurement exceeds Rs. 50 lakhs<\/strong>.\"<\/p>\nW<\/span> and C<\/span> extend this to the accepting authority<\/em> as well: \"no member of the tender committee (or the accepting authority<\/strong>) should be reporting directly to any other member\u2026\"<\/p>\nG<\/span> and C<\/span> both urge extension below the threshold:<\/p>\n<ul class=\"lst\"><li class=\"srcmark src-G\" data-src=\" G \">G<\/span>: *\"<\/strong>this provision should be ensured in the constitution of all purchase committees, irrespective of the value of procurement.\"*<\/li><li class=\"srcmark src-C\" data-src=\" C \">C<\/span>: *\"<\/strong>Though the GFR stipulates this provision only when the estimated value of procurement exceeds Rs 50 lakh, it is desirable that the same provision should be followed in the constitution of all purchase committees irrespective of the value of procurement.\"*<\/li><\/ul>\nthe second Rule \u2014 recommending authority \u2260 accepting authority: \"the Tender Committee to consider bids May be so constituted that an authority holding powers for recommending the bids by virtue of his position as a member of the Tender Committee shall not also be the accepting authority for such tenders<\/strong>.\"<\/p><\/aside>\n4. The convenor: THE representative of the Procuring Entity will work as the convenor (member Secretary)<\/em> Of the TC\/ CEC.<\/p>\n5. Constitution at one level higher, and pre-nomination: \"tender committees May be constituted with the approval of one level higher than the Competent Authority<\/strong>.\"<\/p>\n\"it is advantageous for organisations doing procurements regularly to have pre-nominated (by designation) tender committees for various categories and value-slabs of procurements, included in the SoPP<\/strong>.\"<\/p>\n6. C<\/span> \u2014 the convenor's additional duty at the outset: \"he shall distribute the RfP to the CEC members and request them to familiarise themselves with the characteristics and requirements of the assignment, the selection procedures, and the evaluation criteria and sub-criteria. The convenor of the CEC should also call a meeting of the CEC members to review any questions they May have on the evaluation principles, procedures, and objectives<\/strong>.\"<\/p>\n<h2>7.7.3<\/span>The Schedule of Procurement Powers (SoPP) \u2014 the Six Approval Stages<\/span><\/h2>\nthe Competent Authority's written approval must be taken at various stages of procurement, before proceeding ahead<\/strong> \u2014 e.g.:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Stage requiring CA's written approval<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>i<\/td><td>administrative\/ financial sanctions\/ issue of tender (G<\/span> adds: including Tender Documents)<\/em><\/td><\/tr><tr class=\"srcmark src-G\" data-src=\" G \"><td>ii<\/td><td>approval of techno-commercial evaluation and opening of price bids<\/em> In case of a two-packet system (G<\/span> adds: and similar approvals in case of PQB modes and Two-Stage Tendering)<\/em><\/td><\/tr><tr><td>iii<\/td><td>price negotiations, if permitted under specified circumstances<\/em><\/td><\/tr><tr><td>iv<\/td><td>approval of financial evaluation and award of contract<\/em> To the selected bidder(s)<\/td><\/tr><tr><td>v<\/td><td>cancellation of procurement and re-tendering<\/td><\/tr><tr><td>vi<\/td><td>in some particular decisions during contract execution<\/em> \u2014 e.g., the exercise of the option clause or any variation beyond the laid-down percentage \u00b7 forfeiture\/ release of performance securities \u00b7 premature termination\/ foreclosure of contract<\/em>, etc.<\/td><\/tr><\/tbody><\/table><\/div>\nThe minister\/ board-level simplification (in all four):<\/p>\n<aside class=\"note\">\"wherever such Competent Authority is a minister of the Central Government (or board of directors in a CPSE), obtaining approvals at so many stages May delay the process and unnecessarily overburden them. Therefore, in such cases, their approval May only be obtained at the \"approval of financial evaluation and award of contract\". Powers for approvals at intermediate stages May be delegated to appropriate levels in such cases<\/strong>.\"<\/p><\/aside>\nthe Procuring Entity should lay down a Schedule of Procurement Powers (SoPP) detailing such thresholds<\/em>. It can also lay down the powers, jurisdiction, and composition of various levels of the Tender Committee and corresponding Competent Authority<\/em> for various categories of procurement and different threshold values.<\/p>\n<aside class=\"note\">(Suggested SoPP format \u2014 G<\/span> Annexure 4 \u00b7 W<\/span>, C<\/span>, NC<\/span> Annexure 2. The exact values of thresholds must be decided by the Procuring Entity in conformity with DFPR.<\/strong>)<\/em><\/p><\/aside>\n<h1>7.8 Role of the Tender Committee\/ CEC<\/span><\/h1>\n1. Custody: The member Secretary of the TC\/ CEC<\/strong> (OR THE competent Authority, in direct acceptance cases<\/em>) SHALL:<\/p>\n<ul class=\"lst\"><li>Receive the bids opened, along with other documents, from the Bid Opening Committee\/ tender opening officials<\/em>; and<\/li><li>BE responsible for the safe custody of the documents and for the processing involved at all steps in finalising the procurement<\/strong>.<\/li><\/ul>\n2. Scope of responsibility \u2014 and note how much wider the CEC's is:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>The Committee shall be responsible for<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span><\/td><td>ALL aspects and stages of the tender evaluation<\/em><\/td><\/tr><tr class=\"srcmark src-multi\" data-src=\" W NC \"><td>W<\/span>, NC<\/span><\/td><td>all aspects and stages of the evaluation of technical and financial proposals, negotiations, and final award of contract<\/em><\/td><\/tr><tr class=\"srcmark src-C\" data-src=\" C \"><td>C<\/span><\/td><td>all aspects and stages of the consultant selection<\/strong> \u2014 that is: Evaluation of EoI \u00b7 shortlisting of consultants \u00b7 deciding tors \u00b7 issuance of RfP \u00b7 evaluation of technical and financial proposals \u00b7 negotiations \u00b7 and final selection of the consultant<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n3. The personal-discharge Rule \u2014 one of the most important governance provisions in the chapter:<\/p>\n<aside class=\"note\">\"TC\/ CEC duties are to be discharged personally by the nominated officers. They May take help of their subordinate officers by way of reports\/ evaluations \u2014 but they would still be answerable for such decisions.<\/strong><\/p>\n TC\/ CEC members cannot co-opt or nominate others to attend deliberations on their behalf.<\/strong><\/p>\n TC\/ CEC deliberations are best held across the table \u2014 and not through circulation of notes<\/strong>.\"<\/p><\/aside>\n4. The four pre-evaluation checks: After the proposals have been opened, the evaluation process can begin. Before starting the evaluation<\/strong>, the TC\/ CEC members should ensure that they: A) have no conflict of interest<\/strong>(W<\/span> adds: \"as defined in the tender document\")<\/em>; B) understand the evaluation criteria<\/strong> \u2014 C<\/span>: \"understand the rating and scoring system\"<\/em>; C) have been provided with evaluation worksheets<\/strong>; and d) AGREE ON how to evaluate the proposals<\/strong>.<\/p>\n<h1>7.9 Handling Dissent among the Tender Committee\/ CEC<\/span><\/h1>\n<aside class=\"note\">NOTE: The Consultancy Manual heads this section \"Handling Dissent among Tender Committee<\/em>\" \u2014 an apparent carry-over, since its committee is the CEC.<\/p><\/aside>\n1. Resolve by discussion, not by correspondence:<\/p>\n<aside class=\"note\">\"all members of the TC should resolve their differences through personal discussions \u2014 instead of making to-and-fro references in writing<\/strong>.\"<\/p><\/aside>\nin cases where it is not possible to come to a consensus<\/em> And differences persist amongst TC members:<\/p>\n<ul class=\"lst\"><li>THE reasons for dissent of a member should be recorded in a balanced manner, along with the majority's views on the dissent note<\/strong>;<\/li><li>THE final recommendations should be that of the majority view<\/strong>.<\/li><li>\"however, such situations should be rare.<\/strong>\"<\/li><li>the Competent Authority (ca) can overrule such dissent notes after recording reasons for doing so clearly. His decision would be final<\/strong>.<\/li><\/ul>\n2. Where the ca disagrees with the committee \u2014 the send-back procedure:<\/p>\n<aside class=\"note\">\"in cases where the ca does not agree with the majority or unanimous recommendations of the TC, he should record his views and, if possible, firstly send it back to TC to reconsider along the lines of the tender accepting authority's views.<\/strong><\/p>\nHowever, if the TC \u2014 after considering the views of the ca \u2014 sticks to its own earlier recommendations, the ca can finally decide as deemed fit, duly recording detailed reasons.<\/strong><\/p>\n He will be responsible for such decisions. However, such situations should be rare<\/strong>.\"<\/p><\/aside>\n<h1>7.10 Independence, Impartiality, Confidentiality and 'No Conflict of Interest' at All Stages of Evaluation of Bids<\/span><\/h1>\n1. No communication with bidders: Members of the TC\/ CEC should not have any conflict of interest, and should not directly engage in any communication with bidders \u2014 from the date of their appointment to the date on which the contract is awarded<\/strong>.<\/p>\n2. Confidentiality and its one exception:<\/p>\nInformation relating to the evaluation of bids and the committee's deliberations<\/em> Should be confidential, and not be shared with persons not officially connected with the process \u2014 until the award of the contract is notified to the successful firm<\/strong>.<\/p>\n<aside class=\"note\">The exception: \"\u2026Except that after technical evaluation, the list of successful bidders May be published, as required in the tender document.\"<\/em><\/p>\nthe absolute bar: \"under no circumstances should the tender file or confidential information contained therein be provided for scrutiny or for decision to any person\/ office who is not involved in decision-making<\/strong>.\"<\/p><\/aside>\n3. The declaration requirement \u2014 extended to non-members:<\/p>\n\"all technical, commercial and finance officials who have contributed to the techno-commercial or financial evaluation of bids \u2014 even though they May not be part of the TC \u2014 should:<\/strong><\/p>\n<ul class=\"lst\"><li>Deal with the procurement in an independent, impartial manner<\/strong>;<\/li><li>Have no conflict of interest with any of the bidders involved;<\/strong><\/li><li>Maintain confidentiality of the information processed during the evaluation process and not allow it to reach any unauthorised person<\/strong>.\"<\/li><\/ul>\nthey should sign a declaration at the end of their reports\/ notings<\/strong> Stating that:<\/p>\n<aside class=\"note\">\"I declare that i have no conflict of interest with any of the bidders in this tender.\"<\/strong><\/p><\/aside>\nTC members May also make such a declaration at the end of their reports.<\/em><\/p>\n4. Handling external references, grievances and directives during processing:<\/p>\n<aside class=\"note\">\"during the processing of the tender, all references\/ grievances\/ complaints\/ directives\/ requests for information from any sources \u2014 including higher-level officials\/ authorities within the Ministry or from outside \u2014 May be forwarded to the TC\/ convener of TC for its examination on merits and action as considered necessary \u2014 maintaining independence, impartiality, confidentiality and 'no conflict of interest'.<\/strong><\/p>\n An interim reply May be provided that the tender is still under consideration, and that a final response would be given after the declaration of the award of contract<\/strong>.\"<\/p><\/aside>\n<h1>7.11 Timely Processing of Tenders<\/span><\/h1>\n(Rule 174(i) of GFR 2017)<\/em><\/p>\n1. The 90 \u2192 60 \u2192 75 day Rule:<\/p>\n<aside class=\"note\">\"delays in finalising procurement deprive the public of the intended benefits and result in lost revenues and cost over-run.<\/strong><\/p>\nCurrently, the ministries\/ departments are generally awarding the contracts in 90 days from the date of tender opening \u2014 for which the ministries\/ departments are asking for a validity of offer by the contractors for 90 days.<\/strong><\/p>\n In order to further shorten the period for award of contract, the ministries\/ departments should try to shorten the procurement decision period to 60 days from the date of opening of the tenders in most of the cases.<\/strong><\/p>\n Only in exceptional cases \u2014 like two-packet\/ two-stage bidding \u2014 the period May be extended. However, in no case should this time period exceed 75 days<\/strong>.\"<\/p><\/aside>\n2. The CPWD example \u2014 maximum days for award of contract W<\/span>:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Procuring Officer<\/th><th>Limit of procurement (Rs. crore)<\/th><th>Maximum days for decision for award of contract<\/th><\/tr><\/thead><tbody><tr><td>Assistant Engineer<\/td><td>0.06<\/td><td>10 DAYS<\/td><\/tr><tr><td>Executive Engineer<\/td><td>1.00<\/td><td>15 DAYS<\/td><\/tr><tr><td>Superintending Engineer<\/td><td>10.00<\/td><td>30 DAYS<\/td><\/tr><tr><td>Chief Engineer<\/td><td>30.00<\/td><td>45 DAYS<\/td><\/tr><tr><td>Additional Director General and above<\/td><td>More than 30.00<\/td><td>60 DAYS<\/td><\/tr><\/tbody><\/table><\/div>\n3. The published Schedule and the accountability Rule:<\/p>\n\"the complete time Schedule of finalising the tender process \u2014 from the date of issuing the tender to the date of issuing the contract \u2014 should be published in the bid documents<\/strong>.\"<\/p>\n<aside class=\"note\">\"every official in the chain of the procurement operation is accountable for acting in a specified time, so that the tender is finalised on time. Any deviation from the Schedule May be monitored and explained, by way of a system of management reporting<\/strong>.\"<\/strong>(Appendices 4 and 5 of the Goods Manual.)<\/em><\/p>\na simple practical device: \"as a check, the proposed Schedule of tender process May be printed on the inside cover of the procurement file \u2014 where the actual date of completion of various stages May be recorded<\/strong>.\"<\/p><\/aside>\n4. The fixed weekly TC meeting day:<\/p>\n<aside class=\"note\">\"it has been also noted that delay in decision-making after opening of certain tenders is taking place because the tender committees are not meeting frequently.<\/strong><\/p>\nIn order to ensure that most of the tenders are decided as per the new timelines, it has been decided that the ministries\/ departments May notify at least one day of every week for the meeting of TC.<\/strong><\/p>\n Instructions May be issued by the concerned organisation that on such pre-fixed days, no member of the TC shall normally take leave or proceed on tour, etc<\/strong>.\"<\/p><\/aside>\n<h1>7.12 Extension of Bid\/ Tender Validity Period<\/span><\/h1>\n(Rule 174(iii) of GFR 2017)<\/em><\/p>\n1. The primary obligation: The entire process of scrutiny and evaluation of tenders, preparation of ranking statement and notification of award<\/em>must be done expeditiously and within the original tender validity period<\/strong>.<\/p>\n2. The extension procedure and its five Rules:<\/p>\nIf, due to some exceptional and unforeseen reasons<\/em>, the purchase organisation is unable to decide on the placement of the contract within the original validity period, it May:<\/p>\n<ul class=\"lst\"><li>Preferably request \u2014 before expiry of the original validity period<\/strong> \u2014 all the responsive tenderers<\/strong> To extend their tenders up to a specified period;<\/li><li>While asking for such extension, the tenderers are also to be asked to extend their offers \"as it is\", without any changes therein<\/strong>;<\/li><li>They May also be requested to extend the validity of the EMD for the corresponding additional period<\/strong> (which is to be specified in the request);<\/li><li>\"a tenderer May not agree to such a request \u2014 and this will not lead to forfeiture of its EMD<\/strong>\";<\/li><li>But the tenderers who do agree to extend the validity are to do so without changing any terms, conditions, and so on, of their original tenders<\/strong>;<\/li><li>Reasons for seeking extension of bid validity should be recorded by the procuring officers<\/strong>.<\/li><\/ul>\n3. TREATMENT OF \"not-EXTENDED\" AND \"WITHDRAWN\" BIDS \u2014 the three scenarios:<\/p>\n<aside class=\"note\">Definitions used:<\/strong>\"not-extended bids<\/em>\" = <\/strong>refusal by tenderer(s) to extend validity. <\/strong>\"withdrawn bids<\/em>\" = <\/strong>withdrawal of offer within validity.<\/p><\/aside>\nA) if it happens before completion of the techno-commercial evaluation<\/strong>:<\/p>\n<aside class=\"note\">Then the techno-commercial evaluation (including the not-extended and withdrawn bids) shall be completed<\/strong>. If a not-extended or withdrawn bid qualifies in techno-commercial evaluation<\/em>, the financial bid(s) of such bidders shall also be opened<\/strong>, and action shall be taken as per sub-para (b) below.<\/p><\/aside>\nB) if it happens after techno-commercial evaluation but before completion of financial bid evaluation<\/strong>:<\/p>\n<aside class=\"note\">Financial bid evaluation (including not-extended and withdrawn bids<\/strong>) shall be completed.<\/p>\n<ul class=\"lst\"><li>i) IF A withdrawn bid happens to be the L-1 bidder<\/strong> \u2014 (the lowest acceptable bidder, who is techno-commercially qualified for the supply of a bulk quantity, and would have been awarded a contract but for his refusal to extend validity)<\/em> \u2014 the tender must be re-tendered<\/strong>.<\/li><li>ii) since this May take some time, the Procuring Entity May cover their immediate short-term needs through an appropriate mode of procurement<\/strong>.<\/li><li>iii) the critical Rule: \"however, such L1 price of the not-extended or withdrawn bids shall not be taken as precedence for determining price estimates or reasonableness<\/strong>.\"<\/li><\/ul><\/aside>\nc) in case of QCBS<\/strong> System of evaluation:<\/p>\n<aside class=\"note\">The proposal obtaining the highest total combined score<\/strong> In evaluation of quality and cost is identified, which is ranked as H-1<\/strong>. If a not-extended or withdrawn bid happens to be the H-1 bidder, the tender must be re-tendered<\/strong>.<\/p><\/aside>\n<h1>7.13 Consideration of Lack of Competition in OTE\/ GTE and LTE<\/span><\/h1>\n(Rule 173(xx) and (xxi) of GFR 2017)<\/em><\/p>\n1. What counts as adequate competition:<\/p>\n\"the number of bids received which can indicate adequate competition depends on the parameters of procurement (value, specification, mode of procurement, tendering system, etc.) and the market situation. This has to be judged by the Tender Committee<\/strong>.\"<\/p>\n<aside class=\"note\">the benchmark: \"however, less than three independent bids (without suspicion of the cartel) May indicate a lack of competition<\/strong>.\"<\/p>\nthe mandatory paragraph: \"TC must record a paragraph in its report about the adequacy or otherwise of competition in the tender<\/strong>.\"<\/p><\/aside>\n2. THE 'single offer' situation \u2014 and the express criticism of routine re-tendering:<\/p>\nSometimes, against advertised\/ limited tender cases, the Procuring Entity May not receive a sufficient number of bids<\/em> And\/ or \u2014 after analysing the bids \u2014 ends up with only one responsive bid \u2014 a situation referred to as <\/strong>'Single offer'<\/em>.<\/p>\n<aside class=\"note\">AS PER Rule 173(xxi) of GFR 2017<\/em>, such a situation of 'single offer' is to be treated as single tender<\/strong>. The contract May be placed on the 'single offer' bidder, provided the quoted price is reasonable<\/strong>. However, restricted powers of single tender mode of procurement would apply<\/strong>.<\/p><\/aside>\nThe pre-retender check: \"before re-tendering, the Procuring Entity is first to check whether \u2014 while floating\/ issuing the enquiry \u2014 all necessary requirements and formalities such as standard conditions, industry-friendly specification, wide publicity, sufficient time for bidding, and so on, were fulfilled. If not, a fresh enquiry is to be issued after rectifying the deficiencies<\/strong>.\"<\/p>\n<aside class=\"note\">The express criticism \u2014 a passage worth memorising:<\/p>\n\"it has become a practice among some procuring entities to routinely assume that open tenders which result in single bids are not acceptable, and to go for re-tender as a safe course of action. This is not correct.<\/strong><\/p>\nRe-bidding has costs:<\/strong><\/p>\nFirstly, the actual costs of re-tendering;<\/strong><\/p>\nSecondly, the delay in execution of the work, with consequent delay in the attainment of the purpose for which the procurement is being done; And<\/strong><\/p>\nthirdly, the possibility that the re-bid May result in a higher bid.<\/strong><\/p>\n Lack of competition shall not be determined solely on the basis of the number of bidders<\/strong>.\"<\/p><\/aside>\nthe three conditions under which a single-bid process is valid:<\/p>\n<aside class=\"note\">\"even when only one bid is submitted, the process May be considered valid provided the following conditions are satisfied:<\/strong><\/p>\nA) the procurement was satisfactorily advertised, and sufficient time was given for submission of bids<\/strong>;<\/p>\nb) THE qualification criteria were not unduly restrictive<\/strong>; and<\/p>\nc) prices are reasonable in comparison to market values<\/strong>.\"<\/p><\/aside>\n3. The powers and the fallback: However, as far as delegation\/ Schedule of Procurement Powers<\/em> is concerned, the Competent Authority would be as in single tender mode<\/strong>. In case of price not being reasonable, negotiations (being L1) or re-tender May be considered as justifiable<\/strong>.<\/p>\n4. Unsolicited offers against LTEs \u2014 the general rule and its three exceptions:<\/p>\n\"unsolicited offers against ltes should be ignored; However, ministries\/ departments should evolve a system by which interested firms can enlist and bid in the next round of tendering.<\/strong>\"<\/p>\nhowever, under the following exceptional circumstances, these May be considered for acceptance at the next higher level of competency<\/strong>: A) inadequate competition; B) non-availability of suitable quotations from registered contractors; C) urgent demand, and capacity\/ capability of the firm offering the unsolicited [offer] being known<\/em>, etc.<\/p>\n<h1>7.14 Tender Committee\/ CEC Recommendations and Report<\/span><\/h1>\n1. What the committee must recommend:<\/p>\nThe TC has to make formal recommendations<\/strong> for the award of the contract to the bidder:<\/p>\n<ul class=\"lst\"><li>Whose bid has been determined to be substantially responsive<\/strong>; and<\/li><li>THE lowest evaluated bid<\/strong>;<\/li><li>Provided further that the bidder is determined to be qualified to perform the contract satisfactorily, and his credentials have been verified<\/strong>.<\/li><\/ul>\n<aside class=\"note\">(TC Minutes Format \u2014 G<\/span> Annexure 14 \u00b7 W<\/span> Annexure 4 \u00b7 C<\/span> Annexure 6 (CEC) \u00b7 NC<\/span> Annexure 6.)<\/em><\/p><\/aside>\n2. The good-practice Rule on deviations:<\/p>\n\"it is a good practice that TC should spell out salient terms and conditions of the offer(s) recommended for acceptance.<\/strong><\/p>\n<aside class=\"note\">It should also be ensured by the TC that any deviation\/ variation quoted by the contractor in his bid are not left un-deliberated and ruled upon in the TC \u2014 otherwise, there May be delay in acceptance of the contract by the contractor<\/strong>.\"<\/p><\/aside>\nthese recommendations are submitted for approval to the tender accepting authority<\/strong>.<\/p>\n3. No separate fa consultation \u2014 and the four-fold responsibility of the ca:<\/p>\n<aside class=\"note\">\"since a nominee of the Financial Adviser of the Department is usually a member of the Tender Committee, there is no need for the ca to consult the fa of the Department before accepting the TC recommendations.<\/strong><\/p>\n In any purchase decision, the responsibility of the ca is not discharged merely by selecting the cheapest offer or accepting TC recommendations \u2014 but [by] ensuring whether:<\/strong><\/p>\nA) offers have been invited in accordance with this Manual, and after following fair and reasonable procedures in prevailing circumstances;<\/strong><\/p>\nB) he is satisfied that the selected offer will adequately meet the requirement for which it is being procured;<\/strong><\/p>\nC) the price of the offer is reasonable and consistent with the quality required; And<\/strong><\/p>\nd) the accepted offer is the most appropriate, taking all relevant factors into account, in keeping with the standards of financial propriety<\/strong>.\"<\/p><\/aside>\n4. After the acceptance of these recommendations by the tender accepting authority, the letter (notification) of award (LoA) can be issued<\/strong>.<\/p>\n<h1>7.15 Preliminary Examination<\/span><\/h1>\n<h2>7.15.1<\/span>Unresponsive Bids<\/span><\/h2>\nThe definition: \"a substantively responsive bid is complete and conforms to the tender document's essential terms, conditions, and requirements \u2014 without substantive deviation, reservation, or omission<\/strong>.\"<\/p>\n\"only substantively responsive bids shall be considered for further evaluation. Other bids shall be treated as unresponsive and ignored. All bids received shall first be scrutinised to identify unresponsive bids, if any<\/strong>.\"<\/p>\nthe nine grounds on which a bid May be declared unresponsive:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Ground<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>the bid is not in the prescribed format<\/em>, OR IS unsigned<\/em>, OR not signed as per the stipulations<\/em> In the tender document<\/td><\/tr><tr><td>2<\/td><td>the required EMD has not been provided<\/em>, OR exemption from EMD is claimed without acceptable proof of exemption<\/em><\/td><\/tr><tr><td>3<\/td><td>the bidder is not eligible to participate<\/em> As per the eligibility criteria laid down (including conflict of interest and other provisions of CIPP<\/em>).<\/strong> In case procurement is on a limited tender basis<\/em>, or where procurement is restricted to pre-approved vendors<\/em>, it should be especially ensured that there is no conflict of interest<\/strong><\/td><\/tr><tr class=\"srcmark src-G\" data-src=\" G \"><td>4<\/strong>G<\/span> ONLY<\/td><td>the bidder has *quoted for goods manufactured by a different firm, <\/strong>without the required authority letter from the proposed manufacturer<\/td><\/tr><tr><td>5<\/td><td>the bid departs from the essential requirements<\/em> Specified in the tender document (for example, the bidder has not agreed to give the required performance security)<\/em><\/td><\/tr><tr><td>6<\/td><td>against a Schedule in the list of requirements, the bidder has not quoted for the entire requirement as specified in that Schedule<\/strong>. Worked example: \"in a schedule, it has been stipulated that the bidder will SUPPLY the equipment, INSTALL and COMMISSION it, and also TRAIN the purchaser's operators for operating the equipment. The bidder has, however, quoted only for the supply of the equipment.\"<\/em><\/td><\/tr><tr><td>7<\/td><td>bidder has quoted conditional bids, or more than one bid, or alternative bids<\/strong> \u2014 unless permitted explicitly in the tender document<\/em><\/td><\/tr><tr class=\"srcmark src-NC\" data-src=\" NC \"><td>8<\/td><td>THE bid validity is shorter than the required period<\/strong>. However, in case of STE\/ PAC procurement<\/strong> *(NC<\/span>: \"in case of STE procurement\")*, shorter bid validity May be accepted<\/strong><\/td><\/tr><tr class=\"srcmark src-G\" data-src=\" G \"><td>9<\/td><td>non-submission, or submission of illegible scanned copies<\/strong> Of stipulated documents\/ declarations<\/strong>(G<\/span> adds: \"if so stipulated in the Tender Document\")<\/em><\/td><\/tr><tr class=\"srcmark src-NC\" data-src=\" NC \"><td>10<\/strong>NC<\/span> ONLY<\/td><td>the bid has unresolved substantive deviations<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>7.15.2<\/span>Non-conformities between Figures and Words \u2014 the Four Correction Rules<\/span><\/h2>\n\"sometimes, non-conformities\/ errors are also observed in responsive tenders between the quoted prices in figures and words. This situation normally does not arise in the case of e-procurement.<\/strong>\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Discrepancy<\/th><th>Which prevails<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>between the unit price<\/em> And the total price<\/strong><\/em>(the total obtained by multiplying the unit price by the quantity)<\/em><\/td><td>THE unit price shall prevail<\/strong>, and the total price corrected accordingly<\/strong><\/td><\/tr><tr><td>2<\/td><td>an error in a TOTAL<\/em> Corresponding to the addition or subtraction of sub-totals<\/em><\/td><td>THE sub-totals shall prevail<\/strong>, and the total shall be corrected<\/strong><\/td><\/tr><tr><td>3<\/td><td>between WORDS<\/em> AND figures<\/em><\/td><td>THE amount in words shall prevail<\/strong><\/td><\/tr><tr><td>4<\/td><td>The procedural consequence<\/td><td>such a discrepancy in an offer should be conveyed to the bidder, asking him to respond by a target date<\/strong>. If the bidder does not agree to the Procuring Entity's observation, the bid is liable to be rejected<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>7.15.3<\/span>Discrepancies between Original and Additional\/ Scanned Copies of a Bid<\/span><\/h2>\n\"normally, as far as feasible, no submission of original documents in physical format should be asked for in e-procurement \u2014 other than: Cost of tender documents (if any), Bid Security, and statutory certificates (if any)<\/strong>.\"<\/p>\nin e-procurement, there could be discrepancies between the uploaded scanned copies and the originals submitted by the bidder<\/em>. In off-line tenders, discrepancies May be observed between the original copy and other copies of the responsive bids<\/em>.<\/p>\n<aside class=\"note\">The Rule: \"if discrepancies exist between the uploaded scanned or other copies and the originals submitted by the bidder, the original copy's text, etc., shall prevail<\/strong>.\"<\/p><\/aside>\nthis issue is also to be addressed with the bidder in the same manner as above<\/em>, and subsequent actions shall be taken accordingly.<\/p>\n<aside class=\"note\">The integrity consequence: \"any substantive discrepancy shall be construed as a violation of the Code of Integrity \u2014 and the bid shall be liable to be rejected as non-responsive, in addition to other punitive actions under the tender document<\/strong>.\"<\/p><\/aside>\n<h2>7.15.4<\/span>Deviations, Reservations and Omissions \u2014 Substantive or Minor<\/span><\/h2>\n1. The three definitions:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Term<\/th><th>Definition<\/th><\/tr><\/thead><tbody><tr><td>\"Deviation\"<\/td><td>IS A departure from the requirements<\/strong> Specified in the tender document<\/td><\/tr><tr><td>\"Reservation\"<\/td><td>IS THE setting of limiting conditions, or withholding from complete acceptance<\/strong> Of the requirements specified in the tender document<\/td><\/tr><tr><td>\"Omission\"<\/td><td>IS THE failure to submit part, or all, of the information or documentation<\/strong> Required in the tender document<\/td><\/tr><\/tbody><\/table><\/div>\n2. The three-limb test for a substantive<\/em> Deviation:<\/p>\n<aside class=\"note\">\"a deviation\/ reservation\/ omission from the requirements of the tender document shall be considered a substantive deviation as per the following norm \u2014 and the rest shall be considered a minor deviation:<\/strong><\/p>\nA) which affects in any substantive way the scope, quality, or performance of the product;<\/strong><\/p>\nB) which limits in any substantive way \u2014 inconsistent with the tender document \u2014 the Procuring Entity's rights, or the bidder's obligations under the contract; Or<\/strong><\/p>\nc) whose rectification would unfairly affect the competitive position of other bidders presenting substantively responsive bids<\/strong>.\"<\/p><\/aside>\n3. The consequence and its one exception: \"the decision of the Procuring Entity shall be final in this regard. Bids with substantive deviations shall be rejected as non-responsive.<\/strong>\"<\/p>\n<aside class=\"note\">the exception: \"however, bids with deviations May [be] accepted in case of STE\/ PAC procurement \u2014 with approval of competent financial authority, with reasons recorded for accepting such deviations<\/strong>.\"<\/p><\/aside>\n4. THE \"better than asked for\" RULE \u2014 a provision often missed:<\/p>\n<aside class=\"note\">\"variations and deviations and other offered benefits (techno-commercial or financial) above the scope\/ quantum of the goods specified in the tender document shall not influence evaluation of bids.<\/strong><\/p>\n [But] if the bid is otherwise successful, the Procuring Entity shall avail of such benefits \u2014 and these will become part of the contract<\/strong>.\"<\/p><\/aside>\n5. Examples of minor issues: During the preliminary examination, some minor infirmity and\/ or irregularity and\/ or non-conformity<\/em> May also be found in some bids. Such minor issues could be:<\/p>\n<aside class=\"note\">Missing pages\/ attachments \u00b7 illegibility in a submitted document \u00b7 or non-submission of the requisite number of copies of a document<\/strong><\/p><\/aside>\n6. Considering minor deviations \u2014 and the judicial precedent cited:<\/p>\n<aside class=\"note\">\"there have also been cases where the bidder submitted the amendment Bank Guarantee but omitted to submit the main portion of the document. The court ruled that this was a minor irregularity.<\/strong><\/p>\nThe court has consistently taken the view that the Procuring Entity is entitled to consider and allow minor deviations that do not amount to substantive deviations.<\/strong>\"<\/p><\/aside>\nthe four-fold test for accepting a minor deviation: \"the Procuring Entity reserves the right to accept bids with such minor issues \u2014 provided they:<\/strong><\/p>\n<ul class=\"lst\"><li>Do not constitute any substantive deviation;<\/strong><\/li><li>Do not have a fiscal impact;<\/strong><\/li><li>Do not prejudice, or affect the ranking order of the bidders; And<\/strong><\/li><li>do not grant the bidder any undue advantage vis-\u00e0-vis other bidders and the Procuring Entity<\/strong>.\"<\/li><\/ul>\nwherever necessary, the Procuring Entity shall convey its observation on such 'minor' issues to the bidder<\/em>. If the bidder does not reply by the specified date, or gives an evasive reply without clarifying the point at issue in clear terms \u2014 that bid shall be liable to be rejected as non-responsive<\/strong>.<\/p>\n<h2>7.15.5<\/span>Clarification of Bids \/ Shortfall Documents<\/span><\/h2>\n1. The clarification procedure and its three absolute bars:<\/p>\nDuring the evaluation and comparison of bids, the purchaser May \u2014 at his discretion<\/strong> \u2014 ask the bidder for clarifications on the bid<\/em>.<\/p>\nThe request for clarification shall be given in writing by registered\/ speed post\/ courier\/ email<\/strong>, asking the bidder to respond by a specified date \u2014 mentioning therein that if the bidder does not comply or respond by the date, his tender will be liable to be rejected<\/strong>.<\/p>\n<aside class=\"note\">The three bars:<\/p>\n<ul class=\"lst\"><li>\"no change in prices or substance of the bid, which May grant any undue advantage to such bidder, shall be sought, offered, or permitted.<\/strong>\"<\/li><li>\"no post-bid clarification at the initiative of the bidder shall be entertained.<\/strong>\"<\/li><\/ul><\/aside>\n2. The shortfall-documents Rule \u2014 the \"historical documents\" test:<\/p>\n<aside class=\"note\">\"the Procuring Entity reserves its right to \u2014 but without any obligation to do so \u2014 seek any shortfall information\/ documents:<\/strong><\/p>\n\u2022 only in case of historical documents that pre-existed at the time of the bid opening; And<\/strong><\/p>\n\u2022 which have not undergone change since then; And<\/strong><\/p>\n\u2022 which does not grant any undue advantage to any bidder.<\/strong>\"<\/p><\/aside>\nprovision May be made by e-procurement portals for requesting shortfall documents from the bidders. The system May further allow shortfall documents to be taken from any bidders only once after the technical bid opening<\/strong>.<\/p>\n<aside class=\"note\">Worked example: \"If the permanent account number or registration with GST has been asked to be submitted, and the bidder has not provided them \u2014 these documents may be asked for with a target date as above.\"<\/em><\/p><\/aside>\nThe qualification-documents Rule \u2014 and the crucial worked example:<\/p>\n<aside class=\"note\">\"as far as the submission of documents is concerned regarding qualification criteria \u2014 after submission of the bid, only related shortfall documents should be asked for and considered.<\/strong><\/p>\n for example: If the bidder has submitted a supply order without its completion\/ performance certificate, the certificate can be asked for and considered.<\/strong><\/p>\n However, no new supply order should be asked for to qualify the bidder<\/strong>.\"<\/p><\/aside>\n<h2>7.15.6<\/span>Evaluation of Eligibility<\/span><\/h2>\nthe Procuring Entity shall determine \u2014 to its satisfaction<\/strong> \u2014 whether the bidders are eligible as per the eligibility criteria in the tender document<\/strong> To participate in the tender process.<\/p>\nTenders that do not meet the required eligibility criteria prescribed shall be rejected as unresponsive.<\/strong><\/p>\n<h1>Appendix to Chapter 7 \u2014 Part a: Points of Difference<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Chapter number<\/td><td>G: Ch. 7 \u00b7 W: Ch. 6 \u00b7 C: Ch. 8 \u00b7 NC: Ch. 7<\/td><\/tr><tr><td>2<\/td><td>Chapter title<\/td><td>G\/NC: *Bid Evaluation and Award of Contract \u00b7 W: *Evaluation of Bids and Award of Worksuffix<\/strong> \u00b7 C: RfP Evaluation and Award of Contract<\/strong><\/td><\/tr><tr><td>3<\/td><td>Whole additional Chapter \u2014 Shortlisting of Consultants, EoI<\/td><td>C only (its Chapter 7)<\/td><\/tr><tr><td>4<\/td><td>the evaluating body<\/td><td>g\/w\/nc: *Tender Committee (TC) \u00b7 c: *Consultancy Evaluation Committee (CEC)<\/strong><\/td><\/tr><tr><td>5<\/td><td>Scope of the Committee's responsibility<\/td><td>G: all aspects of tender evaluation \u00b7 W\/NC: adds negotiations and final award \u00b7 C: adds evaluation of EoI, shortlisting, deciding ToRs, and issuance of RfP<\/em><\/td><\/tr><tr><td>6<\/td><td>EoI shortlist size<\/td><td>C only: minimum three (Rule 184 GFR) and generally not more than eight; if more qualify, restrict to eight based on higher Average Turnover<\/td><\/tr><tr><td>7<\/td><td>EoI shortlist validity<\/td><td>C only: Six months if not specified; beyond 6 months, better to re-invite EoI<\/td><\/tr><tr><td>8<\/td><td>EoI minimum qualifying marks<\/td><td>C only: normally 75%<\/td><\/tr><tr><td>9<\/td><td>Start-up relaxation at EoI<\/td><td>C only: up to \u03bb = 20%<\/td><\/tr><tr><td>10<\/td><td>The turnover-multiple criticism (5\u201310 times \"appears high\"); upper cap so as not to restrict competition to \"the big four or five Consultancy Firms\"<\/td><td>C ONLY<\/td><\/tr><tr><td>11<\/td><td>Key Experts not evaluated at EoI stage<\/td><td>C ONLY<\/td><\/tr><tr><td>12<\/td><td>\"Qualifications leasing\" risk<\/td><td>C ONLY<\/td><\/tr><tr><td>13<\/td><td>Direct acceptance threshold<\/td><td>G\/C\/NC: Rs 50 lakh \u00b7 W: \"normally LTE threshold of Rs 50 lakhs<\/em>\"<\/td><\/tr><tr><td>14<\/td><td>Rule 173(xxii) extended to the ACCEPTING AUTHORITY<\/td><td>W + C<\/strong>(G states it only for committee members)<\/em><\/td><\/tr><tr><td>15<\/td><td>Express urging to apply Rule 173(xxii) below the threshold too<\/td><td>G + C<\/td><\/tr><tr><td>16<\/td><td>Convenor's duty to distribute the RfP and call a familiarisation meeting<\/td><td>C ONLY<\/td><\/tr><tr><td>17<\/td><td>\"Understand the evaluation criteria\" vs \"understand the rating and scoring system\"<\/td><td>G\/W\/NC vs C<\/td><\/tr><tr><td>18<\/td><td>The large-envelope custody safeguard for unopened financial bids<\/td><td>W + C + NC<\/td><\/tr><tr><td>19<\/td><td>Comparative statement \u2014 vetting by Finance not required if prepared by the e-Procurement portal<\/td><td>W ONLY<\/td><\/tr><tr><td>20<\/td><td>The permitted evaluation factors list, and \"no criteria that cannot be verified OR are not stated in the contract\"<\/td><td>W ONLY<\/td><\/tr><tr><td>21<\/td><td>Caution that preferences must not result in single-vendor selection<\/td><td>G ONLY<\/td><\/tr><tr><td>22<\/td><td>CPWD table of maximum days for award (10\/15\/30\/45\/60 days)<\/td><td>W ONLY<\/td><\/tr><tr><td>23<\/td><td>\"Notify at least one day every week for TC meeting; no leave or tour on such days\"<\/td><td>W<\/strong>(also in C\/NC in similar terms)<\/em><\/td><\/tr><tr><td>24<\/td><td>Print the tender schedule on the inside cover of the Procurement File<\/td><td>W<\/td><\/tr><tr><td>25<\/td><td>Withdrawn L-1 bid \u2192 must re-tender; and such L1 price not to be taken as precedence for price estimates or reasonableness<\/td><td>Common \u2014 but the QCBS\/H-1 variant is in W, C, NC<\/td><\/tr><tr><td>26<\/td><td>Withdrawn\/ not-extended H-1 bid in QCBS \u2192 must re-tender<\/td><td>W + C + NC<\/strong>(no QCBS in Goods)<\/em><\/td><\/tr><tr><td>27<\/td><td>Ground 4 for unresponsiveness \u2014 quoting for goods of a different manufacturer without authority letter<\/td><td>G ONLY<\/td><\/tr><tr><td>28<\/td><td>Ground 10 \u2014 \"unresolved substantive deviations\"<\/td><td>nc only<\/td><\/tr><tr><td>29<\/td><td>Shorter bid validity acceptable in STE\/ PAC<\/em><\/td><td>G<\/strong> \u00b7 NC says only \"STE\"<\/strong>(consistent with Works and NC treatment of PAC)<\/em><\/td><\/tr><tr><td>30<\/td><td>Bids with deviations may be accepted in STE\/ PAC with CFA approval<\/td><td>G<\/td><\/tr><tr><td>31<\/td><td>The amendment-Bank-Guarantee judicial precedent on minor irregularity<\/td><td>G + W + NC<\/td><\/tr><tr><td>32<\/td><td>Shortfall documents may be taken only ONCE after technical bid opening<\/td><td>G<\/strong>(stated expressly)<\/em><\/td><\/tr><tr><td>33<\/td><td>\"No new supply order should be asked for to qualify the bidder\"<\/td><td>G + W<\/td><\/tr><tr><td>34<\/td><td>Unsolicited offers against LTE \u2014 three exceptional circumstances for acceptance at next higher level<\/td><td>W<\/strong>(fullest statement)<\/em><\/td><\/tr><tr><td>35<\/td><td>The express criticism of routine re-tendering on single bids, and the three validity conditions<\/td><td>W<\/strong>(fullest); echoed in G\/C\/NC<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 7 \u2014 part a<\/p>\n<aside class=\"note\">Next:<\/strong>Chapter 7 \u2014 part b: Techno-commercial evaluation, financial evaluation and award of contract<\/strong> \u2014 Evaluation of Eligible Techno-commercial Bids \u00b7 Evaluation of the Quality \u2013 Technical Proposals (C only, with its rating\/grading schemes to mitigate subjectivity)<\/strong> \u00b7 Ranking of Financial Bids \u00b7 LCS \u00b7 QCBS \u00b7 SSS \u00b7 FBS \u00b7 GTE evaluation \u00b7 Rate Contract evaluation \u00b7 Reasonableness of Prices \u00b7 Abnormally Low Bids<\/strong> \u00b7 Cartel Formation\/ Pool Rates\/ Bid Rigging<\/strong> \u00b7 Negotiations for Reduction of Prices \u00b7 Variation of Quantities and the Option Clause \u00b7 Splitting\/ Parallel Contracts \u00b7 Cancellation and Re-tender \u00b7 Negotiations to Freeze Description of Service (C only)<\/strong> \u00b7 LoA \u00b7 Publication of Award \u00b7 Framing of Contract \u00b7 Audit Trails<\/strong> \u00b7 Risks and Mitigations.<\/p><\/aside>Part II<\/span>Evaluation, Negotiation and Award<\/em><\/p>\nMerging: Goods Ch. 7<\/strong> (paras 7.4\u20137.8) \u00b7 Works Ch. 6<\/strong> (paras 6.4\u20136.6) \u00b7 Consultancy Ch. 8<\/strong> (paras 8.4\u20138.8) \u00b7 Non-Consultancy Ch. 7<\/strong> (paras 7.3.4\u20137.6)<\/em><\/p><h2>Concordance for Chapter 7 \u2014 Part B<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>Goods<\/th><th>Works<\/th><th>CS<\/th><th>NCS<\/th><\/tr><\/thead><tbody><tr><td>7.16<\/td><td>Evaluation of Eligible Techno-commercial Bids<\/td><td>7.4.2<\/td><td>6.4.1<\/td><td>8.3<\/td><td>7.3.4<\/td><\/tr><tr><td>7.17<\/td><td>Evaluation of the Quality \u2014 Technical Proposals<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.4<\/td><td> \u2014 <\/td><\/tr><tr><td>7.18<\/td><td>General Norms for Ranking of Financial Bids<\/td><td>7.5<\/td><td>6.4.2<\/td><td>8.5.1<\/td><td>7.4.1<\/td><\/tr><tr><td>7.19<\/td><td>Least Cost Selection (LCS)<\/td><td>(the default)<\/em><\/td><td>6.4.3<\/td><td>8.5.2<\/td><td>7.4.2<\/td><\/tr><tr><td>7.20<\/td><td>Quality and Cost Based Selection (QCBS)<\/td><td> \u2014 <\/td><td>6.4.5<\/td><td>8.5.3<\/td><td>7.4.4<\/td><\/tr><tr><td>7.21<\/td><td>Single Source Selection (SSS)<\/td><td> \u2014 <\/td><td>6.4.4<\/td><td>8.5.4<\/td><td>7.4.3<\/td><\/tr><tr><td>7.22<\/td><td>Fixed Budget Selection (FBS)<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.5.5<\/td><td> \u2014 <\/td><\/tr><tr><td>7.23<\/td><td>GTE Tenders \u2014 evaluation<\/td><td>7.5.2<\/td><td>6.4.6<\/td><td>8.5.6<\/td><td>7.4.5<\/td><\/tr><tr><td>7.24<\/td><td>Concurrent Application of MSE and MII Policies<\/td><td>7.5.1<\/td><td> \u2014 <\/td><td>8.5.8<\/td><td>7.4.6<\/td><\/tr><tr><td>7.25<\/td><td>Evaluation in Rate Contracts<\/td><td>7.5.3<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>7.26<\/td><td>Variation of Quantities at the Time of Award<\/td><td>7.6.3<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>7.27<\/td><td>Option Clause<\/td><td>7.6.4<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>7.28<\/td><td>Splitting of Contracts\/ Parallel Contracts<\/td><td>7.6.5<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>7.29<\/td><td>Reasonableness of Prices<\/td><td>7.6.6<\/td><td>6.4.7<\/td><td> \u2014 <\/td><td>7.4.7<\/td><\/tr><tr><td>7.30<\/td><td>Consideration of Abnormally Low Bids<\/td><td>7.6.7<\/td><td>6.4.8<\/td><td>8.5.7<\/td><td>7.4.8<\/td><\/tr><tr><td>7.31<\/td><td>Cartel Formation\/ Pool Rates\/ Bid Rigging<\/td><td>7.6.8<\/td><td>6.4.9<\/td><td>8.5.7<\/td><td>7.4.9<\/td><\/tr><tr><td>7.32<\/td><td>Negotiations for Reduction of Prices<\/td><td>7.6.9<\/td><td>6.4.10<\/td><td>8.5.7<\/td><td>7.4.10<\/td><\/tr><tr><td>7.33<\/td><td>Negotiations to Freeze Description of Service<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.6<\/td><td> \u2014 <\/td><\/tr><tr><td>7.34<\/td><td>Cancellation of Procurement\/ Rejection of All Bids\/ Re-tender<\/td><td>7.6.11<\/td><td>6.4.11<\/td><td>8.5.9<\/td><td>7.4.11<\/td><\/tr><tr><td>7.35<\/td><td>LoA to Successful Bidder<\/td><td>7.7.1<\/td><td>6.5.1<\/td><td>8.7.1<\/td><td>7.5.1<\/td><\/tr><tr><td>7.36<\/td><td>Publication of Award; Return of EMD<\/td><td>7.7.2<\/td><td>6.5.2<\/td><td>8.7.2<\/td><td>7.5.2<\/td><\/tr><tr><td>7.37<\/td><td>Performance Security<\/td><td>7.7.3<\/td><td>6.5.3<\/td><td> \u2014 <\/td><td>7.5.3<\/td><\/tr><tr><td>7.38<\/td><td>Acknowledgement and Execution of Contract<\/td><td>7.7.4<\/td><td>6.5.4<\/td><td> \u2014 <\/td><td>7.5.4<\/td><\/tr><tr><td>7.39<\/td><td>Framing of Contract<\/td><td>7.7.5<\/td><td>6.5.5<\/td><td> \u2014 <\/td><td>7.5.5<\/td><\/tr><tr><td>7.40<\/td><td>Audit Trails \u2014 Procurement Records<\/td><td>7.7.6<\/td><td>6.5.6<\/td><td> \u2014 <\/td><td>7.5.6<\/td><\/tr><tr><td>7.41<\/td><td>Risks and Mitigations<\/td><td>7.8<\/td><td>6.6<\/td><td>8.8<\/td><td>7.6<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>7.16 Evaluation of Eligible Techno-commercial Bids<\/span><\/h1>\n<h2>7.16.1<\/span>Evaluation of Qualification Criteria<\/span><\/h2>\n1. What is ascertained: In evaluating the techno-commercial bid, conformity to the eligibility\/ qualification criteria, technical specifications, and quality assurance; And commercial conditions of the offered goods to those in the tender document<\/strong> is ascertained.<\/p>\nAdditional factors incorporated in the tender document shall also be considered in the manner indicated therein<\/em>.<\/p>\nThis determination will, inter alia<\/em>, consider the bidder's financial, technical, and production capabilities<\/strong> To satisfy all the Procuring Entity's requirements as incorporated in the tender document.<\/p>\nSuch determination shall be based upon scrutiny and examination of all relevant data and details submitted by the bidder in its bid<\/strong>, as well as such other allied information as deemed appropriate by the Procuring Entity<\/em>.<\/p>\n<aside class=\"note\">The no-borrowed-credentials Rule: \"the determination shall not consider the qualifications of other firms \u2014 such as the bidder's subsidiaries, parent entities, allied firms, subcontractors (*other than specialised subcontractors, if permitted in the bidding document*), or any other firm(s) different from the bidder<\/strong>.\"<\/p><\/aside>\n2. Start-up relaxation: The condition of prior turnover and prior experience May be relaxed for start-ups<\/em> (Only to start-ups recognised by DPIIT), subject to meeting quality & technical specifications and making suitable provisions in the tender document (Rule 173(i) of GFR 2017)<\/em>. Such relaxation is not optional but has to be ensured<\/strong> \u2014 except for items related to public safety, health, critical security operations and equipment<\/em>, where adequate justification exists.<\/p>\n<h2>7.16.2<\/span>Evaluation of Technical Suitability<\/span><\/h2>\nTHE description, specifications, drawings, and other technical terms and conditions<\/strong> Are examined by the TC in general, and by a technical member of the TC in particular<\/strong>.<\/p>\n<aside class=\"note\">The absolute bar: \"nobody outside the TC should be allowed to determine this evaluation<\/strong>.\"<\/p><\/aside>\nthe alternative-offers Rule: \"the tender document should clearly State whether alternative offers\/ makes\/ models would be considered or not \u2014 and, in the absence of an express statement to the effect, these should not be allowed<\/strong>.\"<\/p>\nan important document is the exceptions\/ deviation form submitted by the bidder<\/strong>. It is important to judge whether an exception\/ deviation is minor or major<\/strong>. Minor exceptions\/ deviations May be waived following the criteria in part a, Para 7.15.4-6.<\/p>\n<h2 class=\"src-G srchead\" data-src=\" G \">7.16.3<\/span>Evaluation of Bids involving Samples\/ Demos<\/span>G<\/span><\/h2><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\n<aside class=\"note\">Cross-reference: calling for a sample along with the bid for evaluation is strictly DISCOURAGED \u2014 see Chapter 2, para 2.4.3.<\/em><\/p><\/aside>\n\"evaluation of techno-commercial bids should not be done based on the evaluation of samples or demos \u2014 in view of the subjectivity involved<\/strong>.\"<\/p>\nThe permitted alternative \u2014 the reference-sample route:<\/p>\n<ul class=\"lst\"><li>IF A purchaser's reference sample has been displayed<\/em> for prospective bidders to illustrate the desired indeterminable characteristics<\/em>, the contract should mention that final supplies must meet such characteristics of the reference sample, in addition to the specifications\/ drawings<\/strong>.<\/li><li>If required, a provision for the submission of a pre-production sample matching the purchaser's reference sample by the successful bidder(s) May be stipulated before giving clearance for bulk production<\/strong>.<\/li><\/ul>\nThere should be a time limit for submission and approval of the pre-production sample<\/strong>.<\/p>\n<aside class=\"note\">The exit provision: \"in case the contractor is not able to come up with a satisfactory pre-production sample matching the purchaser's reference sample within the stipulated time-limit or a reasonable extension thereof \u2014 a provision should be provided for cancellation of the contract without repercussion on either side<\/strong>.\"<\/p><\/aside>\n<\/div><h2>7.16.4<\/span>Evaluation of Commercial Conditions \u2014 and the SEVEN \"CRITICAL PROVISIONS\"<\/span><\/h2>\nbidder must comply with all the commercial and other clauses<\/em> Of the tender document.<\/p>\nThe Procuring Entity shall evaluate the commercial conditions quoted by the bidder to confirm that all terms and conditions stipulated in the tender document have been accepted without substantive omissions\/ reservations\/ exception\/ deviation<\/strong>.<\/p>\n<aside class=\"note\">The deeming provision: \"deviations from, or objections or reservations to, critical provisions identified in the tender documents will be deemed to be a material deviation.<\/strong><\/p>\n If critical provisions are not explicitly stated in the tender document, then these shall be taken to be:<\/strong><\/p>\n1. Governing laws and jurisdiction<\/strong><\/p>\n2. Contractor's obligations and restrictions of its rights<\/strong><\/p>\n3. Performance bond\/ security<\/strong><\/p>\n4. Force Majeure<\/strong><\/p>\n5. Taxes & duties<\/strong><\/p>\n6. Code of Integrity<\/strong>\"<\/p><\/aside>\nONLY minor deviations May be accepted\/ allowed \u2014 provided these do not constitute substantive deviations<\/strong>.<\/p>\n<h2>7.16.5<\/span>Declaration of Successful Bidders<\/span><\/h2>\n1. Single-envelope tenders: In a single envelope\/ cover tender, TC proceeds to evaluate the price aspects without a reference to ca at this stage<\/strong>.<\/p>\n2. Multiple-envelope tenders \u2014 the technical evaluation report:<\/p>\nThe TC prepares a recommendation for a techno-commercial bid to declare successful bidders<\/strong>.<\/p>\n\"for each proposal, the report also should substantiate the results of the evaluation and indicate technical weaknesses or deviations from the terms set out in the tender documents \u2014 and comment on their acceptability<\/strong>.\"<\/p>\n<aside class=\"note\">the critical limit on the ca's power: \"the ca May ask the TC to explain the report \u2014 but should not request that evaluation be changed<\/strong>.\"<\/p><\/aside>\nit should review the tc's evaluation of each proposal<\/em> (On technical, contractual, and other aspects).<\/p>\nThe ca should decide how any acceptable deviation in each proposal should be handled during contract formulation, in case that proposal is ranked first<\/strong>.<\/p>\n<aside class=\"note\">Confidentiality and retention: \"the technical evaluation report is a confidential document, and its contents shall not be disclosed. All records relating to the evaluation shall be retained until completion of the project and its audit<\/strong>.\"<\/p><\/aside>\n3. Announcement and the two timelines:<\/p>\nAfter the approval of ca, the results of the techno-commercial bid evaluation are to be announced (including informing the failed bidders)<\/strong>.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Event<\/th><th>Timeline<\/th><\/tr><\/thead><tbody><tr><td>Return of Bid securities of unsuccessful bidders of the first stage<\/td><td>within 30 days of declaration of result of the first stage<\/strong> (i.e., technical evaluation)<\/td><\/tr><tr><td>Opening of FINANCIAL BIDS<\/td><td>Date\/ time and place (or on the portal in e-procurement) ANNOUNCED, in the presence of technically suitable bidders who are willing to attend<\/strong>. Such a date should be two to five (5) days after the announcement<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h1>7.17 Evaluation of the Quality \u2014 Technical Proposals [C ONLY]<\/span><\/h1>\n<aside class=\"note\">This entire section exists only in the consultancy Manual. It is the apparatus that gives effect to QCBS in consultancy, and it has NO counterpart in Goods, Works or Non-Consultancy.<\/p><\/aside>\n<h2>7.17.1<\/span>Responsiveness to the ToR<\/span><\/h2>\nThe CEC shall evaluate each proposal on the basis of its responsiveness to the ToR<\/strong>.<\/p>\nProposals not responding to the ToR fully and properly will be summarily rejected as being non-responsive<\/strong> \u2014 before taking up the appraisal of the technical proposal for evaluation of quality<\/strong>.<\/p>\n<aside class=\"note\">The price-leakage Rule: \"a technical proposal pre-disclosing any material pricing information shall also be rejected<\/strong>.\"<\/p><\/aside>\n<h2>7.17.2<\/span>Criteria and Sub-criteria \u2014 the Four Heads and the Absolute-Grading Rule<\/span><\/h2>\n1. The four criteria, totalling 100 marks: CEC shall evaluate the quality of the technical proposal by awarding marks so as to make the total maximum technical score of 100 (one hundred)<\/strong>, FOR:<\/p>\nA) the consultant's relevant experience<\/strong> for the assignment;<\/p>\nb) THE quality of the methodology<\/strong> Proposed;<\/p>\nc) THE qualifications of the key staff<\/strong> PROPOSED; and<\/p>\nd) capability for transfer of knowledge<\/strong> (if relevant).<\/p>\n<aside class=\"note\">The absolute-grading Rule \u2014 one of the most important principles in the chapter:<\/p>\n\"each proposal should be judged on its own merits and assigned an absolute \u2014 not comparative \u2014 grade against predefined criteria and sub-criteria.<\/strong><\/p>\nA comparative evaluation would single out the best proposal on a relative scale \u2014 but still could leave the Procuring Entity with a poor proposal<\/strong>.\"<\/p><\/aside>\n2. The model scheme of maximum\/ minimum marks:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Rated Criteria<\/th><th>Range of Percentage for Score<\/th><\/tr><\/thead><tbody><tr><td>1. Consultancy firm's experience relevant to assignment<\/td><td>5\u201310%<\/td><\/tr><tr><td>2. Proposed approach, methodology, work plan, and understanding of requirements<\/td><td>20\u201350%<\/td><\/tr><tr><td>3. Qualification and adequacy of experience of key staff<\/td><td>30\u201360%<\/td><\/tr><tr><td>4. Transfer of knowledge, if relevant\\*<\/td><td>0\u201310%<\/td><\/tr><tr><td>overall<\/td><td>100%<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">\\ If this criterion is not required, the marks can be <\/em>adjusted against some other criteria*.<\/p><\/aside>\nThe four explanatory Rules:<\/p>\n<ul class=\"lst\"><li>\"the weight given to the firm's experience can be relatively modest \u2014 since this criterion has already been considered when short-listing the consultant<\/strong>.\"<\/li><li>\"more weight shall be given to the methodology in the case of more complex assignments<\/strong> (for example, <\/strong>multidisciplinary feasibility or management studies).\"<\/strong><\/li><li>\"evaluation of only the key personnel is recommended. Since key personnel ultimately determine the quality of performance, more weight shall be assigned to this criterion if the proposed assignment is complex<\/strong>.\"<\/li><li>\"the CEC shall review the qualifications and experience of proposed key personnel in their curricula vitae \u2014 which must be accurate, complete, and signed by an authorised official of the consultant *and* the individual proposed<\/strong>.\"<\/li><li>\"the experience criteria mentioned in point 1 above holds true for a consultancy firm and not for an individual consultant<\/strong>.\"<\/li><\/ul>\n3. SUB-CRITERIA \u2014 kept to the minimum, with worked examples:<\/p>\n\"the CEC shall normally divide the above criteria into sub-criteria. However, the number of sub-criteria should be kept to the minimum that is considered essential<\/strong>.\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Criterion<\/th><th>Suggested sub-criteria and weights<\/th><\/tr><\/thead><tbody><tr><td>methodology<\/td><td>a) understanding of ToR \u2014 30% weightage b) acceptability and detailing of methodology and work plan \u2014 *50% weight<\/strong> <\/strong>c) innovation, if it is important \u2014 <\/em>20% weightage*<\/td><\/tr><tr><td>suitability of the key professionals<\/td><td>a) EDUCATIONAL QUALIFICATIONS \u2014 *20% weightage b) professional experience in the required area of assignment \u2014 *80% weight<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nthe simplified alternative: \"similar to in LCS and EoI, a simplified evaluation criteria laying down minimum qualifying fail-pass benchmarks for each criteria\/ sub-criteria (instead of marking schemes) May also be used in appropriate cases. All offers that pass the qualifying benchmarks are declared as technically qualified and their financial bids are opened<\/strong>.\"<\/p>\n<h2>7.17.3<\/span>Rating\/ Grading Schemes to Mitigate Subjectivity<\/span><\/h2>\n1. The problem stated:<\/p>\n<aside class=\"note\">\"technical proposals for consultancy services are an intellectual product. Their evaluation must be based on individual professional judgement of competent evaluators \u2014 and should not be reduced to a purely arithmetical exercise.<\/strong><\/p>\n The difficulty is to ensure that this judgement is not exercised in an unreasonable or arbitrary manner. It is important that subjectivity \u2014 implicit to any individual professional judgement \u2014 be complemented by transparency, consistency, and fairness.<\/strong><\/p>\n The individual evaluator entrusted with the evaluation, when required, should be able to explain \u2014 to the satisfaction of a qualified reviewer from the higher authority, or to enforcement agencies \u2014 the reason for his\/ her scoring and recommendation<\/strong>.\"<\/p><\/aside>\n2. Why slabs rather than a full range:<\/p>\n\"precise and exact markings of criteria and sub-criteria specified in technical evaluation \u2014 especially of unquantifiable criteria, e.g., evaluation of methodology \u2014 May neither be feasible nor warranted, especially when there is bound to be variation among marks by different members of CEC.<\/strong><\/p>\n<aside class=\"note\"> Instead of assigning marks over the full range of attributes, it is more appropriate to divide the range into 4\u20135 slabs of ratings<\/strong>.\"<\/p><\/aside>\n3. The five-grade rating scale \u2014 reproduced in full:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Rating<\/th><th>Assessment<\/th><th>Detailed Evaluation (in case of unquantifiable Criteria)<\/th><th>Marks<\/th><\/tr><\/thead><tbody><tr><td>A<\/td><td>very good<\/td><td>The consultants have outstanding, advanced expertise in specific problem areas<\/em> of the assignment, that can promise an excellent execution<\/em> of the assignment. The consultants' staff includes top experts in the field<\/em>. The consultants are considered world-class specialists<\/em> in the approaches and methodologies dealing with specific issues in the assignment. The consultants operate according to well-established quality management (ISO 9002 etc.) procedures<\/em>.<\/td><td>Full marks<\/td><\/tr><tr><td>B<\/td><td>GOOD<\/td><td>The consultants have extensive experience in the field<\/em> of the assignment, and have worked in regions and sectors with similar physical and institutional conditions, including similar critical issues<\/em>. Permanent staff are adequate and highly qualified<\/em>. The consultants have experience with advanced approaches and methodologies<\/em>.<\/td><td>80% of full marks<\/td><\/tr><tr><td>C<\/td><td>satisfactory<\/td><td>The consultants have experience in the field of assignments similar to the one being considered \u2014 but have not dealt with critical issues specific to it<\/em>(such as, for instance, delicate social or environmental issues)<\/em>. The consultants are experienced in the use of standard approaches and methodologies<\/em>. The consultants' permanent staff are adequate<\/em>.<\/td><td>60% of full marks<\/td><\/tr><tr><td>D<\/td><td>unsatisfactory<\/td><td>The consultant has experience which is not considered adequate for the quality needed by the project<\/em>.<\/td><td>30% of full marks<\/td><\/tr><tr><td>E<\/td><td>not relevant<\/td><td>The consultant's experience has no, or little, relevance to the project under consideration<\/em>.<\/td><td>10% of full marks<\/td><\/tr><\/tbody><\/table><\/div>\n4. The first reading \u2014 without scoring:<\/p>\n<aside class=\"note\">\"each member of the CEC should first read all proposals, without scoring them.<\/strong><\/p>\nThis first review helps determine whether the proposals are free of significant omissions or deviations from the ToR; It also allows CEC members to assess the overall clarity of the proposals and identify elements that will require special attention in the evaluation<\/strong>.\"<\/p><\/aside>\n5. The grading system must be defined before<\/em> The proposals are opened:<\/p>\nAfter the review, the CEC meets to define the grades of the rating system to be adopted<\/strong> (if not detailed in the RfP), according to the criteria and sub-criteria set out in the rfP.<\/p>\n\"to discourage subjectivity and avoid the use of points and fractions of points, the rating system provides a few grades (from three to four) for each criterion and sub-criterion<\/strong>.\"<\/p>\n\"minimum qualifying marks or relative qualifying method for quality of the technical proposal will be prescribed and indicated in the RfP<\/strong>.\"<\/p>\n<aside class=\"note\">the anti-bias Rule: \"the grading system must be defined before the technical proposals are opened \u2014 to prevent bias (or perceived bias) occurring because of the cec's knowledge of the opened proposal contents.<\/strong><\/p>\nIt is recommended that the evaluation and scoring of technical proposals be carried out only after defining the grading system<\/strong>.\"<\/p><\/aside>\nthe three reasons why undefined grading distorts evaluation:<\/p>\na) \"evaluators May differ, even widely, in their definition, understanding, or interpretation of the same criterion \u2014 and also because of their subjective experience and understanding of the ToR<\/strong>\";<\/p>\nb) \"disparities in evaluators' relative generosity or severity in judgment and ratings can easily be magnified by the lack of common definitions of the requirements to be considered for each criterion and sub-criterion<\/strong>\";<\/p>\nc) \"large differences in scores caused by inadequate understanding of the ToR or improper use of the evaluation criteria and sub-criteria are difficult to reconcile and explain<\/strong>.\"<\/p>\n<h2>7.17.4<\/span>Individual Scoring of Proposals<\/span><\/h2>\n\"CEC members should carry out the evaluation independently and score the proposal based on the rating criteria.<\/strong><\/p>\n The CEC evaluation should be based on the proposal as submitted. Under no circumstances can the CEC request information or clarifications that May change the proposals. Issues to be clarified with the selected consultant will have to be discussed during negotiations.<\/strong><\/p>\nIndividual evaluators' results are recorded on pre-established worksheets.<\/strong><\/p>\n After each member has independently rated all criteria and sub-criteria, it is good practice to read each proposal again \u2014 to ensure that scores reliably reflect the quality of the proposal<\/strong>.\"<\/p>\n<h2>7.17.5<\/span>Joint Review and Mitigation<\/span><\/h2>\n1. The reconciliation procedure:<\/p>\n<aside class=\"note\">\"the CEC should conduct a joint review and discuss the merits of individual evaluations and scores.<\/strong><\/p>\n Some evaluators tend to be generous while others will be rigid in their judgment and ratings. Such disparity does not matter \u2014 provided each evaluator is consistent and differences in scores are not too large.<\/strong><\/p>\n Large differences should be reviewed and explained \u2014 because they often are caused by improper or inaccurate use of the rating system.<\/strong><\/p>\nReconciling differences that are considered too large by the CEC May result in members revising some of their ratings and scores. As such, any changes should be recorded.<\/strong><\/p>\n If a discussion is needed to reach a final decision, an independent party should prepare minutes.<\/strong><\/p>\nFinally, the scores given by different members May be averaged out.<\/strong><\/p>\nDuring the meeting, the CEC should also comment on the strengths and weaknesses of all proposals that have met the minimum technical score indicated in the RfP. This will help identify any elements in the winning proposal that should be clarified during negotiations<\/strong>.\"<\/p><\/aside>\n2. The minimum qualifying mark and the debriefing duty:<\/p>\n\"eventually, for each of the technical proposals, the CEC should calculate the average of the scores allocated to each criterion by all members, establish the technical ranking of the proposals, identify the best, and propose it for award.<\/strong><\/p>\n The evaluation also establishes whether a proposal passes the minimum qualifying mark (or technical score \u2014 normally 75 (seventy-five)) provided for in the RfP.<\/strong><\/p>\n If one or more proposals fail to meet the minimum qualifying mark, both individual and joint assessments must be carefully reviewed and justified.<\/strong><\/p>\n Short-listed consultants are usually discouraged when their proposals are rejected \u2014 particularly when they are only a few points below the minimum mark; Therefore, the Procuring Entity should be prepared to debrief consultants to explain the evaluation of their proposals<\/strong>.\"<\/p>\n<h1>7.18 General Norms for Ranking of Financial Bids<\/span><\/h1>\n1. The basis \u2014 total outgo from the buyer's pocket:<\/p>\nUnless otherwise stipulated, evaluation of the financial bids shall be on the price criteria only<\/strong>. Financial bids of all techno-commercially suitable bids are evaluated and ranked to determine the lowest-priced bidder, based on the total outgo from the buyer's pocket<\/strong> \u2014 including:<\/p>\n<aside class=\"note\">GST \u00b7 transportation \u00b7 insurance \u00b7 price of incidental works\/ services \u00b7 customs duty \u00b7 marine insurance and freight \u00b7 agency commission, as applicable.<\/p>\nG<\/span> \u2014 the CPSE input tax credit Rule:<\/strong>\"for CPSEs availing input tax credit, the price shall be \"net of GST\" \u2014 considering the input tax credit on the GST portion to be availed by the CPSE<\/strong>.\"<\/p><\/aside>\n2. Evaluation of multiple schedules\/ items\/ destinations \u2014 the three cases G<\/span>:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Case<\/th><th>How ranking is done<\/th><\/tr><\/thead><tbody><tr><td>a) The list of requirements contains more than one Schedule\/ package<\/em><\/td><td>responsive, technically suitable bids shall be evaluated and compared separately for each Schedule<\/strong>. <\/strong>The bid for a Schedule will not be considered if the complete list of goods in that Schedule is not included in the bid<\/strong>. However, bidders have the option to quote for any one or more schedules<\/em>, and to offer *unconditional discounts for individual schedules*<\/td><\/tr><tr><td>b) There is only a list of items without grouping into schedules<\/em><\/td><td>ranking shall be done for each item separately<\/strong>. Bidder has the option to quote for any one or more items and to offer unconditional discounts for individual items. HOWEVER, bidder shall quote for all the destinations included in an item quoted<\/strong><\/td><\/tr><tr><td>c) There is only one item with several destinations<\/em><\/td><td>ranking shall be done separately for each destination<\/strong> included in that item; the Bidder has the option to quote for any one or more destinations, and to offer unconditional discounts for individual destinations<\/td><\/tr><\/tbody><\/table><\/div>\ndiscounts as above shall be considered for deciding the lowest evaluated bid. However, any conditional discounts are not considered for the ranking<\/strong>.<\/p>\n3. No loading unless pre-announced: \"unless explicitly announced beforehand in the tender documents, the quoted price should not be loaded based on deviations in commercial conditions. If it is decided to incorporate such clauses, these should be unambiguous and clear \u2014 and thereafter, there should be no relaxation during evaluation<\/strong>.\"<\/p>\nAdditionally, while purchasing sophisticated and costly equipment, machinery<\/em>, and so on, the procuring entity also gives special importance to factors such as high-quality performance, environmentally friendly features, low running cost, low maintenance cost. To take care of this, relevant details, and the criteria adopted to assess the benefit of such features, are to be clearly stipulated in the tender document, so that the bidders are aware of it and quote accordingly<\/em>.<\/p>\n4. The comparison basis: Unless otherwise stipulated, the comparison of the responsive bids shall be on total outgo from the Procuring Entity's pocket \u2014 to be paid to the supplier or any third party, including all elements of costs<\/strong> As per the terms of the proposed contract.<\/p>\nTherefore, it should normally be on a CIF\/ FOR destination basis, duly delivered, commissioned<\/strong>, as the case May be: A) goods manufactured in India, or goods of foreign origin already located in India \u2014 GST and any other duties\/ levies contractually payable (to the bidder) are to be added<\/em>; B) goods of foreign origin offered from abroad \u2014 customs duty and other similar import duties\/ taxes contractually payable are to be added<\/em>.<\/p>\n5. Purchase preferences: As per policies of the Government from time to time, the purchaser reserves his option to give price\/ purchase preferences as indicated in the tender document<\/em>.<\/p>\n6. VARIABLE-PRICE BIDS \u2014 the \"as on deadline\" rule: If the bids have been invited on a variable price basis<\/em>, they will be evaluated, compared, and ranked based on the position prevailing on the deadline of bid submission \u2014 and not based on any future date<\/strong>. If a bidder submits a firm price quotation against the requirement of a variable price quotation, that bid shall be prima facie acceptable and considered further \u2014 taking the price variation asked for by the bidder as nil<\/strong>.<\/p>\n7. Tie at the l-1 POSITION \u2014 the four-step tie-breaker G<\/span>:<\/p>\n\"rarely, there May be a tie at the lowest bid (L-1) position between two or more start-up\/ non-start-up bidders.<\/strong><\/p>\n it must be first determined whether it is a case of cartel formation or anti-competitive practices \u2014 and if so, it shall be dealt with accordingly.<\/strong><\/p>\nIf this is not a case of cartel formation, the decision will be taken in the following manner:<\/strong>\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>Rule<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>if one of the L1 bidders is an MSE owned by sc\/st or a woman entrepreneur<\/strong>, then the 25% quantity order reserved for MSEs will be placed on that MSE<\/strong>, subject to fulfilment of other tender conditions<\/td><\/tr><tr><td>ii<\/td><td>if one of the L1 bidders is an MSE, other than an MSE owned by sc\/st or a woman entrepreneur<\/strong>, then an order shall be placed on such MSE bidders<\/td><\/tr><tr><td>iii<\/td><td>in all other scenarios, the order shall be placed on the L1 bidder having a higher turnover in the previous financial year<\/strong>.<\/strong> In case there is a tie at L-1 between only start-up bidders and none of them has past turnover<\/strong>, the order will be placed on the start-up that was registered earlier with DPIIT<\/strong><\/td><\/tr><tr><td>iv<\/td><td>for tenders issued through the GeM PORTAL<\/strong>: THE tie-breaker methodology available on the GeM portal is to be followed<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n8. Ambiguous price bids: \"if the price bid is ambiguous, so that it May very well lead to two equally valid total price amounts \u2014 then the bid should be treated as unresponsive<\/strong>.\"<\/p>\n9. Suo motu and conditional discounts after bid opening \u2014 the two-limbed Rule:<\/p>\n<aside class=\"note\">\"sometimes, certain bidders offer suo motu discounts\/ rebates after the opening of the tender (techno-commercial or financial).<\/strong><\/p>\n Such discounts\/ rebates should not be considered for ranking the offer \u2014 but if such a firm does become L1 at its original offer, such suo motu discounts\/ rebates must be incorporated in the contracts.<\/strong><\/p>\nThis also applies to conditional rebates \u2014 for example, rebates for faster payments<\/strong>.\"<\/p><\/aside>\n10. C<\/span> \u2014 additional financial-opening Rules for consultancy:<\/p>\n<ul class=\"lst\"><li>The financial proposals shall be opened publicly in the presence of representatives of the technically qualified consultants who choose to attend<\/strong>. The evaluation committee demonstrably verifies that the financial proposals have remained sealed<\/strong> And then opens them.<\/li><li>THE name of the consultant, quality scores, and proposed prices shall be read aloud and recorded<\/strong>. No modification to financial proposals is permitted<\/strong>. When electronic submission is used, this information shall be posted online<\/strong>.<\/li><li>The arithmetic-correction Rule differs by contract type:<\/li><\/ul>\n<div class=\"tblwrap\"><table><thead><tr><th>Contract type<\/th><th>Rule<\/th><\/tr><\/thead><tbody><tr><td>Time-based contract<\/td><td>ANY arithmetical errors shall be corrected, and prices shall be adjusted if they fail to reflect all inputs<\/strong> That are included in the respective technical proposals<\/td><\/tr><tr><td>lump-sum contract<\/td><td>the consultant is deemed to have included all prices<\/strong> In its financial proposal \u2014 so neither arithmetical correction nor any other price adjustment shall be made<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<ul class=\"lst\"><li>for the purpose of evaluation, the total cost shall include all taxes and duties for which the Procuring Entity makes payments to the consultant, and other reimbursable expenses \u2014 such as travel, translation, report printing, or secretarial expenses<\/strong>.<\/li><li>THE GST misclassification Rule<\/strong>: \"the offers shall be evaluated based on the GST rate quoted by each bidder\u2026 the Procuring Entity shall not be responsible for any misclassification of HSN number or incorrect GST rate if quoted by the bidder. Any increase in GST rate due to misclassification of HSN number shall have to be absorbed by the consultant<\/strong>.\"<\/li><li>if GST is quoted extra, but with the provision that it shall be charged as applicable at the time of delivery<\/strong>, the offer shall be evaluated for comparison purposes by loading the maximum existing rate of GST for the product\/ HSN code<\/strong>.<\/li><\/ul>\n<h1>7.19 Least Cost Selection (LCS)<\/span><\/h1>\nUnder the LCS procedures, the financial proposals will be ranked in terms of their total evaluated cost<\/strong>.<\/p>\nTHE least cost proposal will be ranked as L-1<\/strong>, and the next higher and so on will be ranked as L-2, L-3<\/strong>, etc.<\/p>\nTHE least cost proposal (L-1) will be considered for award of contract<\/strong>.<\/p>\nC<\/span>:<\/strong>The CEC will put up a report on financial evaluation of the technically qualified consultants to the competent finance authority<\/strong>, along with the recommendation that the least cost proposal (L-1) can be approved\/ invited for negotiation and for final award of contract<\/strong>.<\/p>\n<aside class=\"note\">In the <\/strong>GOODS Manual, LCS is not named as a system \u2014 <\/strong>L1 selection among technically responsive bids is simply the default.<\/strong><\/p><\/aside>\n<h1>7.20 Quality and Cost Based Selection (QCBS)<\/span><\/h1>\n(Rule 192 of GFR 2017)<\/em><\/p>\n<aside class=\"note\">The Inverted Weightage \u2014 the Single Most Examinable Point in this Chapter<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>Technical\/ Quality weightage<\/th><th>Cost weightage<\/th><th>Ceiling<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-C\" data-src=\" C \"><td>C<\/span> Consultancy<\/td><td>70%<\/td><td>30%<\/td><td>\"or any other respective weightages as declared in the RfP (Example, 60:40, 50:50 \u2014 but not greater than 80%<\/strong>)\"<\/em><\/td><\/tr><tr class=\"srcmark src-multi\" data-src=\" W NC \"><td>W<\/span> WORKS \u00b7 NC<\/span> Non-consultancy<\/td><td>not more than 30%<\/td><td>70% or more<\/td><td>the maximum weight of non-financial parameters shall in no case exceed 30%<\/strong><\/em><\/td><\/tr><\/tbody><\/table><\/div>\nnote the identical sentence appearing in both \u2014 pointing in opposite directions:<\/p>\nC<\/span>:\"<\/strong>since the weightage of the cost element adopted in consultancy services is as high as 70 (seventy) per cent, financial considerations would dominate the selection\u2026\"<\/em> *(an evident <\/strong>internal inconsistency in the CS Manual, since it has just stated that technical carries 70% and cost 30%)*<\/p>\nNC<\/span>: *\"<\/strong>since the weightage of the cost element adopted in nc services is as high as 70 (seventy) per cent, financial considerations would dominate the selection\u2026\"<\/em>(consistent with NC's own 70% cost weighting)*<\/p><\/aside>\n<h2>7.20.1<\/span>The Qualifying Benchmark<\/span><\/h2>\nin QCBS selection, minimum qualifying marks \u2014 normally 70\u201380 (seventy to eighty) out of a maximum of 100 marks<\/strong> \u2014 as a qualifying benchmark for quality of the technical proposal shall be prescribed and indicated in the tender document<\/strong>, along with a scheme for allotting marks for various technical criteria\/ attributes<\/strong>.<\/p>\nBids scoring less than the minimum threshold shall not be considered for further evaluation<\/strong>.<\/p>\n<aside class=\"note\">The reason the benchmark must be set high: \"since the weightage of the cost element adopted is as high as 70 per cent, financial considerations would dominate the selection \u2014 though to a lower extent as compared to LCS. In such cases, it is essential to ensure that the minimum qualifying marks in the evaluation is set sufficiently high \u2014 to weed out low-quality bids with low prices<\/strong>.\"<\/p><\/aside>\n<h2>7.20.2<\/span>The Two Scores and the Weighted Total<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Score<\/th><th>How computed<\/th><\/tr><\/thead><tbody><tr><td>technical\/ quality score<\/td><td>the proposal with the highest technical marks shall be given a score of 100<\/strong>, and other proposals given technical scores proportional to their marks w.r.t. The highest technical marks<\/strong><\/td><\/tr><tr><td>financial score<\/td><td>the proposal with the lowest cost May be given a financial score of 100<\/strong>, and other proposals given financial scores inversely proportional to their prices w.r.t. The lowest offer<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nTHE total score shall be obtained by weighing the quality and cost scores and adding them up<\/strong>.<\/p>\nThe proposal obtaining the highest total combined score will be ranked as H-1<\/strong>, followed by H-2, H-3<\/strong>, etc. THE H-1 proposal shall be recommended for award of contract<\/strong>(C<\/span> adds: \"will be invited for negotiations, if required\")<\/em>.<\/p>\n<aside class=\"note\">The tie-breaker: \"in the event two or more bids have the same score in final ranking \u2014 the bid with the higher technical score will be H-1<\/strong>.\"<\/p><\/aside>\n<h2>7.20.3<\/span>The QCBS Formula<\/span><\/h2>\nAN evaluated bid score (b)<\/strong> Will be calculated for each responsive bid using the following formula \u2014 which permits a comprehensive assessment of the bid price and the technical merits of each bid<\/strong>:<\/p>\n<aside class=\"note\">B = (C_low \/ C) \u00d7 X + (T \/ T_high) \u00d7 (1 \u2212 X)<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>Symbol<\/th><th>Meaning<\/th><\/tr><\/thead><tbody><tr><td>C<\/td><td>evaluated bid price<\/td><\/tr><tr><td>C_low<\/td><td>THE lowest<\/strong> Of all evaluated bid prices among responsive bids<\/td><\/tr><tr><td>T<\/td><td>THE total technical score<\/strong> Awarded to the bid<\/td><\/tr><tr><td>T_high<\/td><td>the technical score achieved by the bid that was scored best<\/strong> Among all responsive bids<\/td><\/tr><tr><td>X<\/td><td>THE weightage for the price<\/strong> As specified in the bds\/ tender document<\/td><\/tr><\/tbody><\/table><\/div>\nthe bid with the best evaluated bid score (b) among responsive bids shall be the most advantageous bid<\/strong>.<\/p>\n<h2>7.20.4<\/span>the Worked Examples \u2014 and How the Same Numbers Produce Different Winners<\/span><\/h2>\n<aside class=\"note\">This is the clearest demonstration of why the inverted weightage matters. The Consultancy and Non-Consultancy Manuals use identical input data<\/strong> \u2014 and reach different answers<\/strong>.<\/p><\/aside>\n<h3 class=\"src-C srchead\" data-src=\" C \">A. THE CONSULTANCY EXAMPLE \u2014 weightage 70 technical: 30 cost<\/span>C<\/span><\/h3><div class=\"srcblock src-C\" data-src=\" C \" data-label=\"Consultancy Manual only\">\nMinimum qualifying marks for technical qualification: 75<\/strong>. Three proposals A, B, C received.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>A<\/th><th>B<\/th><th>C<\/th><\/tr><\/thead><tbody><tr><td>Technical marks awarded<\/td><td>75<\/td><td>80<\/td><td>90<\/td><\/tr><tr><td>Technical points (T\/T_high)<\/td><td>75\/90 = 83<\/strong><\/td><td>80\/90 = 89<\/strong><\/td><td>90\/90 = 100<\/strong><\/td><\/tr><tr><td>Quoted price<\/td><td>Rs. 100<\/td><td>Rs. 104<\/td><td>Rs. 106<\/td><\/tr><tr><td>Financial points (C_low\/C)<\/td><td>100\/100 = 100<\/strong><\/td><td>100\/104 = 96<\/strong><\/td><td>100\/106 = 94<\/strong><\/td><\/tr><tr><td>Combined score (Tech \u00d7 0.70 + Fin \u00d7 0.30)<\/td><td>83\u00d70.70 + 100\u00d70.30 = 88.10<\/strong><\/td><td>89\u00d70.70 + 96\u00d70.30 = 91.10<\/strong><\/td><td>100\u00d70.70 + 94\u00d70.30 = 98.20<\/strong><\/td><\/tr><tr><td>RANK<\/td><td>H-3<\/td><td>H-2<\/td><td>H-1<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">the result: \"proposal c, at the evaluated cost of Rs. 106 (the highest-priced bid), was therefore declared as winner and recommended for negotiations\/ approval<\/strong>.\"<\/p><\/aside>\n<\/div><h3 class=\"src-NC srchead\" data-src=\" NC \">B. THE NON-CONSULTANCY EXAMPLE \u2014 same data, weightage 30 technical: 70 cost<\/span>NC<\/span><\/h3><div class=\"srcblock src-NC\" data-src=\" NC \" data-label=\"Non-Consultancy Manual only\">\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>A<\/th><th>B<\/th><th>C<\/th><\/tr><\/thead><tbody><tr><td>Technical marks awarded<\/td><td>75<\/td><td>80<\/td><td>90<\/td><\/tr><tr><td>Technical points<\/td><td>83<\/td><td>89<\/td><td>100<\/td><\/tr><tr><td>Quoted price<\/td><td>Rs. 100<\/td><td>Rs. 104<\/td><td>Rs. 106<\/td><\/tr><tr><td>Financial points<\/td><td>100<\/td><td>96<\/td><td>94<\/td><\/tr><tr><td>Combined score (Tech \u00d7 0.30 + Fin \u00d7 0.70)<\/td><td>83\u00d70.30 + 100\u00d70.70 = 95<\/strong><\/td><td>89\u00d70.30 + 96\u00d70.70 = 94<\/strong><\/td><td>100\u00d70.30 + 94\u00d70.70 = 96<\/strong><\/td><\/tr><tr><td>RANK<\/td><td>H-2<\/td><td>H-3<\/td><td>H-1<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Note how the inversion completely re-orders B and A \u2014 B falls from H-2 to H-3, and A rises from H-3 to H-2.<\/p><\/aside>\n<\/div><h3 class=\"src-W srchead\" data-src=\" W \">C. THE WORKS EXAMPLE \u2014 weightage 30 technical: 70 cost, with different data<\/span>W<\/span><\/h3><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\nMinimum qualifying marks: 75<\/strong>.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>A<\/th><th>B<\/th><th>C<\/th><\/tr><\/thead><tbody><tr><td>Technical marks awarded<\/td><td>80<\/td><td>75<\/td><td>90<\/td><\/tr><tr><td>Normalised technical score<\/td><td>80\u00d7100\/90 = 88.89<\/strong><\/td><td>75\u00d7100\/90 = 83.33<\/strong><\/td><td>90\u00d7100\/90 = 100.00<\/strong><\/td><\/tr><tr><td>Quoted price<\/td><td>Rs. 120<\/td><td>Rs. 100<\/td><td>Rs. 105<\/td><\/tr><tr><td>Normalised financial score<\/td><td>100\u00d7100\/120 = 83.33<\/strong><\/td><td>100\u00d7100\/100 = 100.00<\/strong><\/td><td>100\u00d7100\/105 = 95.24<\/strong><\/td><\/tr><tr><td>Combined score (Tech \u00d7 0.30 + Fin \u00d7 0.70)<\/td><td>85.00<\/td><td>95.00<\/td><td>96.67<\/td><\/tr><tr><td>RANK<\/td><td>H-3<\/td><td>H-2<\/td><td>H-1<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">the result: \"bid c at the evaluated cost of Rs. 105 (rupees one hundred and five, the second lowest bid) was therefore declared as winner and recommended for approval<\/strong>.\"<\/p><\/aside>\n<\/div><h2 class=\"src-NC srchead\" data-src=\" NC \">7.20.5<\/span>Additional QCBS Rules in Non-Consultancy<\/span>NC<\/span><\/h2><div class=\"srcblock src-NC\" data-src=\" NC \" data-label=\"Non-Consultancy Manual only\">\na) the evaluation committee: \"for evaluation, a suitable committee shall be constituted. However, members of the STC [Special Technical Committee] shall not be involved<\/strong>.\"<\/p>\nb) joint ventures: \"joint ventures May be avoided in general in non-consultancy services \u2014 and particularly in the QCBS system<\/strong>.\"<\/p>\nc) the MII disapplication \u2014 an important consequence:<\/p>\n<aside class=\"note\">\"since the MII order is applicable 'where the bid is evaluated on price alone' \u2014 MII purchase preference would not be applicable where evaluation is based inter alia on non-price criteria \u2014 e.g., QCBS or FBS in services and works<\/strong>.\"<\/p><\/aside>\n<h1>7.21 Single Source Selection (SSS)<\/span><\/h1>\nthe single source in case of SSS selection shall be called for further negotiation, if need be \u2014 after opening and evaluation of its financial proposals<\/strong>.<\/p>\n<h1>7.22 Fixed Budget Selection (FBS) [C ONLY]<\/span><\/h1>\nUnder FBS, the selection of the consultant shall be made by one of the following two methods<\/strong>:<\/p>\nA) the competitive quality-only method: By a competitive selection process, based only on quality<\/strong>, using specific marking criteria for quality in the manner indicated in Rule 192(i) of the GFR<\/strong>.<\/p>\n<aside class=\"note\">\"the proposal with the highest technical score that meets the fixed budget requirement shall be considered for placement of contract<\/strong>.\"<\/p><\/aside>\nb) the empanelment method \u2014 for repetitive or multiple assignments: BY empanelling consultants for a period, using suitable eligibility\/ qualification criteria<\/strong>.<\/p>\n<aside class=\"note\">Thereafter, selection of a specific consultant for a specific assignment from such panel shall be based on overall considerations of public interest \u2014 including timeliness, practicability, number of other assignments already given to that consultant in the past<\/strong>, etc. \"in such cases, the budget for each assignment shall also be fixed by the Procuring Entity<\/strong>.\"<\/p><\/aside>\n<h1 data-src=\"G\">7.23 GTE Tenders \u2014 Special Aspects of Financial Evaluation<\/span>G<\/span>fullest text<\/span><\/h1>\n1. Currency of bid and conversion:<\/p>\nIn GTE, foreign bidders have the flexibility to quote prices and receive payments in either Indian rupees or freely convertible currencies<\/strong> (US Dollars, Euros, Pound Sterling, Yen, other relevant currencies, or a combination).<\/p>\nHowever, prices for goods, works, or services (including agency commission) performed or sourced in India must be quoted and paid for in Indian rupees<\/strong>. Indian bidders are required to quote in INR only<\/strong>.<\/p>\n<aside class=\"note\">The conversion Rule: \"all offers are to be converted to Indian rupees based on the \"bill currency selling\" exchange rate on the deadline of bid submission \u2014 quoted by a source as specified (if not specified, authorised exchange bankers approved by RBI) in the tender document<\/strong>.\"<\/p><\/aside>\n2. The loading sequence to arrive at DDP\/ FOR destination cost \u2014 a step-by-step calculation:<\/p>\nA) taxes on import: Import of goods or services or both attracts integrated tax (IGST)<\/strong>. The IGST rate and GST cess shall be applicable on the 'Customs assessable value' plus the 'basic customs duty applicable thereon'<\/strong>. The offers would be compared based on the principle of the total outgo from the Procuring Entity's pockets<\/strong>.<\/p>\nB) the dual-quotation requirement: \"the foreign bidders are normally asked, in the tender documents, to quote both on a FAS\/ FOB basis and also on a CFR\/ CIF basis \u2014 duly indicating the break-up of prices for freight, insurance, and so on \u2014 with purchasers reserving the right to order on either basis. They should also indicate the customs tariff number and customs duty applicable in India<\/strong>.\"<\/p>\nthe seven-step loading:<\/p>\n<aside class=\"note\">In the case of FAS\/ FOB<\/em> offers, the freight and insurance shall be (after ascertaining, if not quoted) added to make up the CIF COST.<\/p>\nTo arrive at the DDP\/ for\/ (FOT) destination cost, the following is to be added over and above CIF:<\/p>\n<ol class=\"lst\"><li>One per cent as port handling charges<\/strong>;<\/li><li>Customs duty, countervailing duty, and surcharges \u2014 as applicable on the date of opening of the bid<\/strong>;<\/li><li>Clearing agency charges<\/strong>;<\/li><li>Inland freight<\/strong>; and<\/li><li>GST, as assessed<\/strong>.<\/li><li>For bids with letter of Credit (LC)<\/em> Payment \u2014 the likely LC charges (as ascertained from the Procuring Entity's bankers) should also be loaded<\/strong>.<\/li><\/ol><\/aside>\nc) the comparison basis \u2014 two cases:<\/p>\n<ul class=\"lst\"><li>IF both Indian and foreign bidders have quoted<\/strong>, the comparison would be made based on DDP\/ for\/ FOT destination, including all applicable taxes and duties<\/strong> (on the principle of the total outgo from the Procuring Entity's pockets).<\/li><li>In case there are no domestic bidders<\/strong>, a comparison of offers can be made based on CIF\/ landed costs \u2014 since the rest of the costs would be the same for all bidders<\/strong>.<\/li><\/ul>\n<h1>7.24 Evaluation of Concurrent Application: MSE and Make in India Policies<\/span><\/h1>\n\"the concurrent application of the two procurement preference orders \u2014 i.e., the MSE procurement order of 2012 and the PPP-MII order \u2014 May create confusion for the procuring entities on how to evaluate the bids falling within the purview of both policies.<\/strong><\/p>\nTo bring predictability both to the procuring entities and bidders, DoE has issued guidelines in this regard<\/strong>.\" (OM No. F.1\/4\/2021-PPD dated 18.05.2023.)<\/em><\/p>\n<aside class=\"note\">These guidelines, with worked examples, are at: G<\/span> Annexure 34 and its Annex \u00b7 C<\/span> Annexure 25 \u00b7 NC<\/span> Annexure 21.<\/p><\/aside>\n<h1>7.25 Evaluation in Rate Contracts [G ONLY]<\/span><\/h1>\n1. If stipulated in the tender documents that this is a tender process to enter \"Rate Contract(s)\"<\/strong>, THEN additional clauses (including Performance Security, fall clause, etc.) shall be incorporated therein<\/strong>, and the evaluation would be done accordingly.<\/p>\n2. Procedures stipulated in this Chapter shall be applicable mutatis mutandis<\/strong>. The procedure for negotiations\/ counter-offers and splitting of contracts (parallel contracts) is slightly different in Rate Contract<\/strong>. One-time or standing approval of the Secretary of the Department May be taken for this procedure<\/strong>.<\/p>\n3. The counter-offer procedure for parallel rate contracts:<\/p>\nA) initially, the Rate Contract would be awarded to the L-1 bidder<\/strong>. Then the price of L-1 shall be counter-offered to the higher-quoting responsive bidders (under intimation to L-1)<\/strong> \u2014 asking them to send their revised bids online on the e-procurement portal<\/strong>, to be opened at a specified place, date, and time. The L-1 bidder would be specifically informed that it May, if it desires, reduce its price<\/strong>, and send its revised bid accordingly.<\/p>\nThe bidders who accept the counter-offered rate or a rate lower than that would be awarded parallel rate contracts<\/strong>. If L-1 bidder lowers its rate in its revised offer, the same would also be accepted with effect from that date, and its Rate Contract would be amended accordingly<\/strong>.<\/p>\nB) where L-1'S price is not reasonable: \"price negotiation with the bidders should be severely discouraged. However, in the case where parallel rate contracts are necessary \u2014 even if the lowest responsive bidder (L-1) price is not reasonable \u2014 negotiation May be conducted with the L-1 bidder in the first instance.<\/strong><\/p>\n<aside class=\"note\">If the L1 bidder agrees to bring down the price to the desired level, a Rate Contract would be concluded with it, and parallel rate contracts would be concluded as above.<\/strong><\/p>\n If, however, L1 bidder does not agree to reduce its price in the first instance itself \u2014 then the price which has been decided as reasonable shall be counter-offered to all the higher-quoting responsive bidders (including L-1)<\/strong> for further action on the above lines.\"<\/p><\/aside>\nc) all such parallel rate contracts would be released transparently and simultaneously<\/strong>.<\/p>\n4. The catalogue basis \u2014 for products that cannot be equitably compared:<\/p>\nIf stipulated in the tender document, in the case of:<\/p>\n<aside class=\"note\">Vehicles \u00b7 machine tools \u00b7 information technology products \u00b7 OEM\/ specialised equipment and their spares\/ consumables<\/strong> and similar products<\/p><\/aside>\n \u2014 where the design feature, performance parameters, etc., differ significantly among the products of different manufacturers \u2014 and even between different models of the same manufacturer<\/strong> \u2014 and where equitable comparison of prices is not feasible<\/strong>:<\/p>\n<aside class=\"note\">Rate contracts May be concluded on a percentage rebate on net dealer price (NDP) or MRP basis \u2014 generally known as \"catalogue basis\"<\/strong>.<\/p><\/aside>\n5. Period: A Rate Contract shall be for the period specified in the tender document \u2014 or one year if not so specified<\/strong>.<\/p>\n<h1>7.26 Variation of Quantities at the Time of Award [G ONLY]<\/span><\/h1>\n<aside class=\"note\">\"at the time of awarding the contract, the quantity to be procured must be re-judged based on the current data \u2014 since the ground situation May have very well changed.<\/strong><\/p>\nIf so provided in the tender document, and if warranted, the tendered quantity can be increased or decreased by the percentage specified therein \u2014 15 (fifteen)% if percentage not specified \u2014 for ordering, at the discretion of the Procuring Entity.<\/strong><\/p>\n Any larger variation May throw up issues about transparency<\/strong>.\"<\/p><\/aside>\n<h1>7.27 Option Clause [G ONLY]<\/span><\/h1>\n1. When and at what percentage:<\/p>\nNormally, for raw materials\/ consumables of regular and year-on-year recurrent requirements<\/strong>, all tenders of value above Rs. 50 (rupees fifty) lakh<\/strong> \u2014 to take care of any change in the requirement during the currency of the contract \u2014 a plus\/ minus option clause [normally 25 (twenty-five) per cent]<\/strong> May be incorporated in the tender document.<\/p>\nHowever, the ca May approve the inclusion of such a clause in lower denomination tenders, if such items have a history of frequent disruptions in the continuity of supplies<\/strong>.<\/p>\nThe model clause:<\/p>\n<aside class=\"note\">\"The purchaser reserves the right to increase\/ decrease the ordered quantity by up to [25] per cent at any time, till the final delivery date (or the extended delivery date of the contract), by giving reasonable notice \u2014 even though the quantity ordered initially has been supplied in full before the last date of the delivery period (or the extended delivery period).\"<\/strong><\/p><\/aside>\n2. The hedging caution: \"the higher the option limit, the more uncertainty there is for the bidders in formulating their prices \u2014 and the more chance of hedging the prices quoted to take care of such uncertainties; Hence, the option limit should be carefully considered only in justifiable requirements<\/strong>.\"<\/p>\n3. There should be no option clause in development orders<\/strong>.<\/p>\n4. The ca-determination Rule: \"the quantum of the option clause will be excluded from the value of tenders for the purpose of determining the level of ca in the original tender<\/strong>.\"<\/p>\n<h1>7.28 Splitting of Contracts \/ Parallel Contracts [G ONLY]<\/span><\/h1>\n1. The default: \"unless otherwise stipulated in TIS\/ AITB, there shall be no parallel orders or splitting quantities among more than one bidder<\/strong>.\"<\/p>\n<\/div><h2>7.28.1<\/span>Case A \u2014 Splitting WITHOUT prior declaration<\/span><\/h2>\n\"however, after due processing, if it is discovered that the quantity to be ordered is more than what the L1 bidder alone is capable of supplying, and there was no prior declaration in the tender documents to split the quantities \u2014 then the quantity being finally ordered May be distributed among the other bidders in a manner that is fair, transparent and equitable, based on objective data available in the bids (e.g., eligibility criteria, quantity\/ delivery):<\/strong><\/p>\nA) as far as feasible, counter-offer the L1 rate to such firms;<\/strong><\/p>\nB) if distribution at the counter-offered rate is not feasible, then distribution May be done at the rates quoted by such bidders \u2014 if their rates are still within the zone of reasonableness<\/strong>.\"<\/p>\n<h2>7.28.2<\/span>Case B \u2014 Splitting WITH prior declaration, and the 70:30 \/ 50:30:20 ratios<\/span><\/h2>\nin case of:<\/p>\n<aside class=\"note\">THE critical\/ vital\/ safety\/ security nature of the item<\/strong> \u00b7 large quantity under procurement<\/strong> \u00b7 urgent delivery requirements<\/strong> \u00b7 inadequate vendor capacity<\/strong><\/p><\/aside>\n \u2014 it May be advantageous to decide in advance to have more than one source of supply<\/strong>.<\/p>\nIn such cases, a parallel contract clause should be added to the tender documents<\/strong>, clearly stating that the Procuring Entity reserves the right to split the contract quantity.<\/p>\nTHE manner of deciding the relative share of L1 and the rest should be clearly defined, along with the minimum number of suppliers sought<\/strong>.<\/p>\n<aside class=\"note\">The standard ratios:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Number of sources<\/th><th>Ratio<\/th><\/tr><\/thead><tbody><tr><td>Splitting in two<\/td><td>70: 30<\/td><\/tr><tr><td>Splitting in three<\/td><td>50: 30: 20<\/td><\/tr><\/tbody><\/table><\/div>\n\"A different ratio May also be justified.\"<\/strong><\/p><\/aside>\nthe variation latitude: \"these ratios are approximate, and the Procuring Entity May marginally vary quantities to suit: Capacity\/ past performance of the bidder \u00b7 unit loads of packing or transportation \u00b7 relative ranking of the bids \u00b7 delivery period offered \u00b7 existing load of bidder \u00b7 and other similar factors affecting smooth supplies<\/strong>.\"<\/p>\n<aside class=\"note\">The anti-cartel safeguard \u2014 critically important:<\/p>\n\"since such predefined splitting of quantity can potentially encourage cartel formation \u2014 the Procuring Entity May stipulate that bidders must quote at least for a minimum percentage (say, a minimum of the ratio of distribution \u2014 i.e., 30% or 20% in case of 70:30 and 50:30:20 respectively) of the total tender quantity \u2014 to be considered a responsive bidder<\/strong>.\"<\/p><\/aside>\n<h2>7.28.3<\/span>The Five Allocation Guidelines (applicable in BOTH cases)<\/span><\/h2>\na) L1 should be awarded at least the percentage mentioned above, or his quoted quantity\/ spare supply capacity \u2014 whichever is lower<\/strong>.<\/p>\nB) in case the quantity thus allocated for L1 is less than the prescribed percentage \u2014 higher percentages than those stipulated for L2 (and L3, and so on) May be considered<\/strong> To cover the entire tender quantity.<\/p>\nC) for the rest of the contract quantity, the lowest rate accepted will be counter-offered to the L2 party<\/strong>. On acceptance, the order will be placed on L2 for the respective (or increased) percentage or the quoted quantity\/ spare supply capacity, whichever is lower<\/strong> \u2014 and so on to other higher bidders. In case of non-acceptance by L2, a similar offer shall be made to L3 and L4, and so on.<\/p>\nD) in case of shortfalls, the percentage of allocation of bidders in sequence May be proportionately increased<\/strong> \u2014 and, if unavoidable, more bidders than the minimum number specified May be considered, keeping the sanctity of ranking of bidders<\/strong>.<\/p>\n<aside class=\"note\">\"if it is still not possible to cover the entire tender quantity, there would be no alternative but to re-tender the uncovered quantity<\/strong>.\"<\/p><\/aside>\ne) in case higher-priced bidders do not agree to match the L1 price, action as per case a(b) above May be considered.<\/p>\n<h2>7.28.4<\/span>The Two Pre-conditions Before Splitting<\/span><\/h2>\n\"in either situation, before splitting the quantity, distribution shall be subject to:<\/strong><\/p>\nI) purchase preference to MSME and 'class-i local supplier' (under Make in India order); And<\/strong><\/p>\nii) rates of L1 being considered reasonable \u2014 and if it is not reasonable, negotiation (if permissible) with the L1 party May be carried out before splitting of quantities, with the approval of the ca \u2014 otherwise there would be no alternative but to re-tender the requirement<\/strong>.\"<\/p>\n<h1>7.29 Reasonableness of Prices<\/span><\/h1>\n1. The mandatory declaration: \"in every recommendation of the TC for an award of contract, it must be declared that the rates recommended are reasonable<\/strong>.\"<\/p>\nif the rates received are considered abnormally low or unreasonably high<\/strong>, action May be taken as per Paras 7.30 and 7.32 respectively \u2014 or, as per Para 7.34, reject any or all bids; Abandon\/ cancel the tender process and issue another tender<\/strong>.<\/p>\n2. No blind reliance on the estimate: \"in large-value tenders, blind reliance on the cost estimate is not recommended for assessing reasonableness. More than one method of estimation of cost May be used to triangulate a reasonable price<\/strong>.\"<\/p>\n3. The seven cautions on using last purchase price (lpp):<\/p>\nWhere there is no estimated cost, a comparison with the last purchase price (lpp \u2014 the price paid in the latest successful contract)<\/strong> is the basis for judging reasonableness. The following points May be kept in mind:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Caution<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>THE basic price, taxes, duties, transportation charges, packing and forwarding charges should be indicated separately<\/strong> \u2014 and the comparison should be on basic price<\/strong><\/td><\/tr><tr><td>b<\/td><td>where the firm holding the lpp contract has defaulted<\/strong>, the fact should be highlighted \u2014 and the price paid against the latest contract placed prior to the defaulting lpp contract, where supplies have been completed, should be used<\/strong><\/td><\/tr><tr><td>c<\/td><td>where the supply against the lpp contract is yet to commence<\/strong> (i.e., delivery is not yet due), it should be taken as lpp with caution \u2014 especially if the supplier is new<\/strong>; the price paid against the previous contract may also be kept in view<\/td><\/tr><tr><td>d<\/td><td>where the price indicated in the lpp is subject to variation, or if it is more than a year old<\/strong> \u2014 THE updated basic lpp, as computed in case of the Price Variation Clause (PVC), May also be indicated<\/strong><\/td><\/tr><tr><td>e<\/td><td>in the case of wholly imported stores<\/strong>, the comparison of the last purchase rate should be made with the net CIF value at the current foreign exchange rate<\/strong><\/td><\/tr><tr><td>f<\/td><td>\"it is natural to have marginal differences in prices obtained at different cities\/ offices for the same item, due to their different circumstances. The prices obtained are greatly influenced by quantity, delivery period, and terms of the contract<\/strong>\"<\/td><\/tr><tr><td>g<\/td><td>\"prices paid in emergencies, or prices offered in a distress sale, are not accurate guidelines for future use. Such purchase orders and TC proceedings should indicate that: \"These prices are not valid lpp for comparison in future procurement.\"<\/strong>\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>7.30 Consideration of Abnormally Low Bids (ALB)<\/span><\/h1>\n1. The definition:<\/p>\n<aside class=\"note\">\"an abnormally low bid (alb) is one in which the bid price, in combination with other elements of the bid, appears so low that it raises material concerns as to the capability of the bidder to perform the contract at the offered price<\/strong>.\"<\/p><\/aside>\nthe procedure:<\/p>\n<ul class=\"lst\"><li>The Procuring Entity May seek written clarifications from the bidder \u2014 including detailed price analyses of its bid price in relation to<\/strong>:<\/li><\/ul>\n<aside class=\"note\">Scope \u00b7 Schedule \u00b7 W<\/span>resource mobilisation<\/strong> \u00b7 allocation of risks and responsibilities \u00b7 and any other requirements of the tender document<\/p><\/aside>\n<ul class=\"lst\"><li>if, after evaluating the price analyses, the Procuring Entity determines that the bidder has substantially failed to demonstrate its capability to deliver the contract at the offered price<\/strong> \u2014 the Procuring Entity May reject the bid\/ proposal, and evaluate the next higher bidder (and so on)<\/strong>.<\/li><\/ul>\n<aside class=\"note\">The critical Rule on what rate applies to the next bidder: \"\u2026At his\/ their own quoted rate (if considered reasonable) \u2014 and not by counter-offering the rate of the alb \u2014 for the award of contract<\/strong>.\"<\/p><\/aside>\n2. No normative percentage:<\/p>\n<aside class=\"note\">\"however, it would not be advisable to fix a normative percentage below the estimated cost, which would automatically be considered an abnormally low bid<\/strong>.\"<\/p><\/aside>\n\"due care should be taken while formulating the specifications [W<\/span>: \"preparing the drawings, formulating specifications\"] at the time of preparation of the tender document \u2014 to safeguard against the submission of abnormally low bids<\/strong>.\"<\/p>\n3. Predatory pricing:<\/strong> \"in the case of predatory pricing as well, procuring entities May refer to the above consideration of abnormally low bids to assist themselves in the finalisation of tenders<\/strong>.\" (OM No. F.12\/17\/2019-PPD dated 06.02.2020.)<\/em><\/p>\n4. The additional Security Deposit Rule \u2014 a common misconception corrected:<\/p>\n<aside class=\"note\">\" no provisions should be kept in the tender documents regarding the additional Security Deposit\/ Bank Guarantee (BG) in case of abnormally low bids.<\/strong><\/p>\n Wherever there are compelling circumstances to ask for an additional Security Deposit\/ BG in the case of albs, the same should be taken only with the approval of \u2014 the next higher authority competent to finalise the particular tender, or the Secretary of the Ministry\/ Department \u2014 whichever is lower<\/strong>.\" (OM No. F.9\/4\/2020-PPD dated 12.11.2020.)<\/em><\/p><\/aside>\n<h1>7.31 Cartel Formation \/ Pool Rates \/ Bid Rigging<\/span><\/h1>\n<h2 class=\"src-G srchead\" data-src=\" G \">7.31.1<\/span>The Statutory Definition<\/span>G<\/span><\/h2><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\n\"the Competition Act defines bid rigging as agreements that have the effect of eliminating or reducing competition, or adversely affecting or manipulating the process of bidding<\/strong>.\"<\/p>\nthe forms of bid rigging:<\/p>\n<aside class=\"note\">Collusive bidding<\/strong>(dividing the market, setting prices, or limiting production \u2014 involves misrepresentation of independent bids<\/strong>)<\/em> \u00b7 bid rotation\/ suppression<\/strong> \u00b7 complementary bidding<\/strong>, etc.<\/p><\/aside>\n<\/div><h2>7.31.2<\/span>The Five Tell-tale Signs of a Cartel<\/span><\/h2>\nSometimes, a cartel of bidders quotes equal\/ marginally different rates (pool rates)<\/strong> Against a tender, whereas possibly:<\/p>\n<div class=\"tblwrap\"><table><thead><tr class=\"srcmark src-multi\" data-src=\" G W \"><th>#<\/th><th>G<\/span> GOODS<\/th><th>W<\/span> WORKS<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>rates quoted (and breakup thereof) are equal \u2014 despite their manufacturing\/ logistics costs being different due to their scale of production\/ location<\/strong><\/td><td>quoted prices and scope of works: Prices quoted (and their detailed breakdowns) are suspiciously similar \u2014 despite significant differences in the proposed approach to completing the works<\/strong>. *Look for <\/strong>variations in methodologies, materials, or timelines that could justify price differences*<\/td><\/tr><tr><td>b<\/td><td>the rate manages to be L1<\/strong><\/td><td>the rates quoted by two or more bidders manage to be L1<\/strong><\/td><\/tr><tr><td>c<\/td><td>in a variation, the rates May not be exactly equal, but May be close enough to make the cartel members L1, L2, L3<\/strong>, etc.<\/td><td>(same)<\/em><\/td><\/tr><tr><td>d<\/td><td>respective quoted quantities by these bidders are much less than the tendered quantity \u2014 leaving no option but to distribute quantities among these bids<\/strong><\/td><td> \u2014 <\/td><\/tr><tr><td>e<\/td><td>their bids have other uncanny similarities \u2014 i.e., the same layout or typographical errors<\/strong>. \"bids from the same IP address raise suspicion \u2014 but by itself May not be a strong indicator of a cartel. In such cases, other factors mentioned in this Para should be assessed to judge cartelisation<\/strong>.\"<\/td><td>unexplained similarities in bids: Bids from different contractors exhibit unusual similarities beyond pricing<\/strong> \u2014 including identical typos, grammatical errors, formatting, or even the use of uncommon terminology<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>7.31.3<\/span>Why It Matters Even When Rates Are Reasonable<\/span><\/h2>\n<aside class=\"note\">\"if this rate is unreasonably high, this May be an attempt to force acceptance of higher rates by undermining the negotiating power of the buyer as per Rules.<\/strong><\/p>\n Even when rates are reasonable, this May be an attempt to force the Procuring Entity to distribute quantities as decided by the bidders among them \u2014 even in tenders where splitting of quantities is not envisaged<\/strong>.\"<\/p><\/aside>\nthe evidentiary difficulty G<\/span>:<\/p>\n<aside class=\"note\">\"cartels, by their very nature, are secretive \u2014 and thus it May not be possible to find the direct concrete evidence of their presence.<\/strong><\/p>\n The orders of the Competition Commission of India (CCI) clearly mention reliance on circumstantial evidence \u2014 both economic and conduct-based \u2014 to conclude the existence of a cartel agreement<\/strong>.\"<\/p><\/aside>\nthe legal characterisation: Such cartel formation\/ pool rates abuse the transparency of Public Procurement and are a violation of the Code of Integrity for Public Procurement<\/strong>. Such tactics leading to an \"Appreciable adverse effect on competition\" (AAEC) is an offence under the Competition Act, 2002<\/strong>, as amended by the Competition (Amendment) Act, 2007.<\/p>\n<h2>7.31.4<\/span>The Cartel Formation\/ Pool Rates Clause \u2014 Two Preventive Measures<\/span><\/h2>\nTo discourage such practices, the Procuring Entity May include in all tender documents a cartel formation\/ pool rates clause<\/strong>, reserving its rights to take the following actions without assigning any reasons<\/strong>:<\/p>\nA) the minimum-quantity requirement:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Minimum percentage a bidder must bid for<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span> GOODS<\/td><td>\"more than a minimum specified percentage \u2014 say 25% \u2014 of the tendered quantity; Otherwise, their offer shall be rejected<\/strong>\"<\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> WORKS<\/td><td>\"for those works procurements where schedules or division of work is possible \u2014 more than a minimum specified percentage, say 20% or 30%<\/strong>\"<\/td><\/tr><\/tbody><\/table><\/div>\nb) the warning: Warn that the Procuring Entity May take any\/ all punitive actions available under the Code of Integrity<\/strong> \u2014 including removal from the list\/ panel of registered sources or debarment<\/strong> \u2014 besides reporting the transgression to the competition commission, and concerned trade associations like FICCI, ASSOCHAM, NSIC<\/strong> for suitable punitive action.<\/p>\nc) the negotiation bar \u2014 reproduced verbatim in the cartel section:<\/p>\n<aside class=\"note\">\"In no case, including where cartel rates are suspected, should negotiations be extended to those who had either not tendered originally, or whose tender was rejected because of unresponsiveness of bid, unsatisfactory credentials, inadequacy of capacity or unworkable rates.\"<\/strong><\/p><\/aside>\n<h2>7.31.5<\/span>The Four Ways to Decide a Tender Where a Cartel Is Suspected<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Permitted action<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>reject all bids from the suspected cartel formation and decide the tender accordingly<\/strong><\/td><\/tr><tr><td>ii<\/td><td>place an order on any one or more firms from among the cartel, for any quantity, with the exclusion of the rest \u2014 with or without negotiation or counter-offering<\/strong> NOTE: \"the selection of firms for this May be based on a transparent logistics parameter \u2014 i.e., quicker delivery, nearer location of source, relatively better past performance, etc<\/strong>.\"<\/td><\/tr><tr><td>iii<\/td><td>whenever a tender is floated for purchase exclusively from an Approved Vendor List<\/strong> [W: pre-qualified\/ approved sources<\/em>], and cartel formation is suspected among all such sources \u2014 the Procuring Entity May place orders on bidders who are not in the Approved Vendor List, for any quantity<\/strong><\/td><\/tr><tr><td>iv<\/td><td>wherever a specified ratio for splitting of quantities among 2\/3 sources<\/strong> is stipulated, and cartel formation is suspected among the lower 2\/3 bidders \u2014 place orders on any number of bids beyond such ratios<\/strong>, or decide the tender as per (i) or (ii) above<\/td><\/tr><\/tbody><\/table><\/div>\nW<\/span> \u2014 the additional remedial measures:<\/p>\n<aside class=\"note\">\"in case of evidence of cartel formation, detailed cost analysis May be done by associating experts if necessary.<\/strong><\/p>\n New firms May also be encouraged to get themselves enlisted for the subject works \u2014 to break the monopolistic attitude of the firms forming a cartel.<\/strong><\/p>\n Changes in the mode of procurement (post-qualification instead of pre-qualification) and packaging\/ slicing of the work May also be tried<\/strong>.\"<\/p><\/aside>\n<h1>7.32 Negotiations for Reduction of Prices<\/span><\/h1>\n(Rule 173(xiv) of GFR 2017)<\/em><\/p>\n<h2>7.32.1<\/span>The General Rule and the Two Absolute Bars<\/span><\/h2>\n<aside class=\"note\">\"negotiation with bidders for price reduction after bid opening must be severely discouraged.<\/strong><\/p>\nHowever, in exceptional circumstances where price negotiation is necessary due to some unavoidable circumstances \u2014 it should be held only with the lowest acceptable bidder (L1) \u2014 who is techno-commercially responsive for the supply of a bulk quantity, and on whom the contract would have been placed but for the decision to negotiate<\/strong>.\"<\/p>\nthe absolute bar: \"in no case \u2014 including where cartel rates are suspected \u2014 should negotiations be extended to those who:<\/strong><\/p>\n\u2022 had either not tendered originally; Or<\/strong><\/p>\n\u2022 whose bid was rejected because of: Unresponsiveness of bid \u00b7 unsatisfactory credentials \u00b7 inadequacy of capacity \u00b7 or unworkable rates<\/strong>.\"<\/p><\/aside>\n<h2>7.32.2<\/span>The Four Exceptional Circumstances<\/span><\/h2>\n\"price negotiations May not be considered except under the following exceptional circumstances:<\/strong>\"<\/p>\na) where THE L1 price is not considered to be reasonable<\/strong>, AND:<\/p>\n<ul class=\"lst\"><li>I) the procurement is done on a nomination basis<\/strong>; or<\/li><li>ii) procurement is from single or limited sources<\/strong>; or<\/li><li>iii) in situations where the requirements are urgent, and the delay in re-tendering for the entire requirement due to the unreasonableness of the quoted rates would jeopardise essential operations, maintenance, and safety<\/strong>:<\/li><\/ul>\n<aside class=\"note\">\"negotiations with L1 bidder(s) May be done for a bare minimum quantum of immediate requirements. The balance bulk requirement should, however, be procured through a re-tender, following the normal tender process<\/strong>.\"<\/p><\/aside>\nb) where there is suspicion of cartel formation \u2014 which should be recorded<\/strong>.<\/p>\n<h2>7.32.3<\/span>Who Decides, and the Recording Duty<\/span><\/h2>\n\"the decision whether to invite fresh tenders or to negotiate (and with whom) should be made by the tender accepting authority, based on the recommendations of the TC.<\/strong><\/p>\n Convincing reasons must be recorded by the authority recommending negotiations.<\/strong><\/p>\n The ca should exercise due diligence while accepting a tender, ordering negotiations, or calling for a re-tender \u2014 and a definite timeframe should be indicated<\/strong>.\"<\/p>\n<h2>7.32.4<\/span>What Counts as a Negotiation \u2014 and What Does Not<\/span><\/h2>\n<aside class=\"note\">\"normally, all counter-offers are considered negotiations by other means, and the principles of negotiations should apply to such counter-offers<\/strong>.\"<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>Situation<\/th><th>Is it a negotiation?<\/th><\/tr><\/thead><tbody><tr><td>a counter-offer TO L1<\/strong> To arrive at an acceptable rate<\/td><td>YES \u2014 shall amount to a negotiation<\/strong><\/td><\/tr><tr><td>A COUNTER-OFFER (at the rates accepted by L1) to L2, L3, and so on, in case of splitting of quantities<\/strong> (and in parallel Rate Contracts)<\/td><td>NO \u2014 shall not be deemed to be a negotiation<\/strong><\/td><\/tr><tr><td>dynamic bids in the reverse Auction<\/strong> Process<\/td><td>NO \u2014 are not to be considered as negotiations<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>7.32.5<\/span>The Four-Step Negotiation Procedure<\/span><\/h2>\nafter the ca has decided to call a specific bidder for negotiation:<\/p>\nA) extend validity first: \"it must be understood that if the period of validity of the original offer expires before the close of negotiations, the original offer will not be available for acceptance. The period of validity of the original offer must, therefore, be extended \u2014 wherever necessary \u2014 before negotiations<\/strong>.\"<\/p>\nb) the invitation letter: The bidder should be addressed as per the prescribed format, so that the rates originally quoted by him shall remain open for acceptance in the event of failure of the contemplated negotiation<\/strong>.<\/p>\n<aside class=\"note\">(Invitation and Declaration for Negotiations \u2014 G<\/span> Annexure 15 \u00b7 W<\/span> Annexure 6 \u00b7 NC<\/span> Annexure 14. Absent from the Consultancy Manual<\/strong> \u2014 see para 7.33.)<\/em><\/p><\/aside>\nc) the signed declaration: \"a negotiation meeting should be started only after obtaining a signed declaration from the negotiating supplier<\/strong>.\"<\/p>\nd) the revised bid \u2014 and the \"price only\" rule:<\/p>\n<aside class=\"note\">\"revised bids should be obtained in writing from the selected bidders at the end of the negotiations in the prescribed format.<\/strong><\/p>\n The bidder should not be permitted to change any other condition of his bid other than lowering the price.<\/strong><\/p>\nThe revised bids so obtained should be read out to the bidders or their representatives present immediately after completing the negotiations. If necessary, the negotiating party May be given some time to submit its revised offer.<\/strong><\/p>\nIn case the selected bidder prefers to send a revised bid instead of being present at the negotiation, the offer should be considered.<\/strong><\/p>\n In case a bidder does not submit the revised bid, decision shall be taken based on its original bid<\/strong>.\"<\/p>\n(Format of Revised Offer in Negotiations \u2014 G<\/span> Annexure 16 \u00b7 W<\/span> Annexure 7 \u00b7 NC<\/span> Annexure 15.)<\/em><\/p><\/aside>\n<h1>7.33 Negotiations to Freeze Description of Service [C ONLY]<\/span><\/h1>\n<aside class=\"note\">This section replaces price negotiation in the Consultancy Manual. It is the reason the Consultancy Manual carries NO \"Invitation and Declaration for Negotiations\" or \"Format of Revised Offer\" annexure \u2014 negotiation in consultancy is about SCOPE, not RATE.<\/p><\/aside>\n1. Why it is called \"negotiation\" at all:<\/p>\n<aside class=\"note\">\"in the consultancy services contract, the accepted ToR and methodology etc. Are laid down in the form of 'description of service'.<\/strong><\/p>\nTherefore, before the contract is finally awarded, discussions May be necessary with the selected bidder to freeze these aspects \u2014 especially when it is discouraged during evaluation of technical proposals to seek clarifications on these matters.<\/strong><\/p>\n However, such technical discussions do not amount to negotiations in the sense the word is used in procurement of goods and works.<\/strong><\/p>\n However, in procurement of consultancy, this discussion is termed as negotiations \u2014 since these discussions May have some financial ramifications, at least for the bidder<\/strong>.\"<\/p><\/aside>\n2. What May be discussed \u2014 and the anti-dilution rule:<\/p>\n\"negotiations are not an essential part of the selection process. In many cases, however, it is felt necessary to conduct negotiations with the selected consultant for discussions of:<\/strong><\/p>\n<aside class=\"note\">The ToR \u00b7 methodology \u00b7 staffing \u00b7 Procuring Entity's inputs \u00b7 and special conditions of the contract<\/strong><\/p>\n\"these discussions shall not substantially alter (or dilute) the original ToR or terms of the offer \u2014 lest the quality of the final product, its cost, and the initial evaluation be vitiated.<\/strong><\/p>\nThe final ToR and the agreed methodology shall be incorporated in \"description of services\" \u2014 which shall form part of the contract<\/strong>.\"<\/p><\/aside>\n3. FINANCIAL NEGOTIATIONS \u2014 the three strict limits:<\/p>\n<aside class=\"note\">\"financial negotiations shall only be carried out if:<\/strong><\/p>\n\u2022 due to negotiations, there is any change in the scope of work which has a financial bearing on the final prices; Or<\/strong><\/p>\n\u2022 if the costs\/ cost elements quoted are not found to be reasonable.<\/strong><\/p>\nIn such negotiations, the selected firm May also be asked to justify and demonstrate that the prices proposed in the contract are not out of line with the rates being charged by the consultant for other similar assignments.<\/strong><\/p>\n However, in no case should such financial negotiation result in an increase in the financial cost as originally quoted by the consultant, and on which basis the consultant has been called for the negotiations.<\/strong><\/p>\n If the negotiations with the selected consultant fail \u2014 the Procuring Entity shall cancel the bidding procedure and re-invite the bids<\/strong>.\"<\/p><\/aside>\n<h1>7.34 Cancellation of Procurement Process \/ Rejection of All Bids \/ Re-tender<\/span><\/h1>\n(Rule 173(xix) of GFR 2017)<\/em><\/p>\n1. The right and its limits:<\/p>\nThe Procuring Entity has the right to cancel the process of procurement or reject all bids at any time before intimating acceptance of a successful bid<\/strong>.<\/p>\n<aside class=\"note\">\"however, such rejections should be well considered, and normally be in cases where all the bids are either:<\/strong><\/p>\n\u2022 substantially in deviation from the specifications; Or<\/strong><\/p>\n\u2022 considered unreasonably high in cost \u2014 and, if in the latter case, the lowest qualified bidder during negotiations fails to reduce the costs to a reasonable level.<\/strong><\/p>\n If it is decided to re-invite the bids, the specifications should be critically reviewed\/ modified \u2014 so as to address the reasons for not receiving any acceptable bid in the earlier invitation<\/strong>.\"<\/p><\/aside>\nthe six grounds for cancellation:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Ground<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>IF THE quantity and quality of requirements have changed substantially<\/strong>, or there is an un-rectifiable infirmity in the tender process<\/strong><\/td><\/tr><tr><td>b<\/td><td>WHEN none of the bids is substantially responsive<\/strong> To the requirements of the procurement documents<\/td><\/tr><tr><td>c<\/td><td>none of the technical proposals meets the minimum technical qualifying score<\/strong><\/td><\/tr><tr><td>d<\/td><td>IF effective competition is lacking<\/strong>. <\/strong>However, lack of competition shall not be determined solely based on the number of bidders<\/strong><\/td><\/tr><tr><td>e<\/td><td>the bids'\/ proposals' prices are substantially higher than the updated cost estimate or available budget<\/strong><\/td><\/tr><tr><td>f<\/td><td>if the bidder whose bid has been found to be the lowest evaluated bid fails to sign the procurement contract, or fails to provide the Performance Security, or otherwise withdraws from the procurement process<\/strong> \u2014 the Procuring Entity shall re-tender the case<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n2. The balancing test \u2014 and the irreversibility Rule:<\/p>\n<aside class=\"note\">\"in cases where responsive bids are available, the aim should be to finalise the tender by taking mitigating measures \u2014 even in the conditions described above.<\/strong><\/p>\nIf it is decided to re-invite the tender, the justification should balance the perceived risks in the finalisation of the tender (marginally higher rates) against the certainty of resultant delays, cost escalations, and loss of transparency in the re-invited tender.<\/strong><\/p>\n it May be noted that once a tender is re-tendered, the bids in the old tender cannot be revived and reconsidered, as per the Indian Contract Act \u2014 even if prices received in the new tender turn out to be higher<\/strong>.\"<\/p><\/aside>\n3. Approval and communication: The ca should accord approval for re-tendering based on the reasons\/ proper justification in writing<\/strong>.<\/p>\nThe decision to cancel shall be immediately communicated to all bidders that participated<\/strong>; Bids, if not opened, would not be opened<\/strong> and, in off-line tenders, be returned unopened<\/strong>. EMD, cost of tender document (if any) etc. Should be promptly returned<\/strong>.<\/p>\n4. The pre-retender check: \"before re-tendering, the Procuring Entity is first to check whether \u2014 while floating\/ issuing the enquiry \u2014 all requirements and formalities such as standard conditions, industry-friendly qualification criteria, technical and commercial terms, wide publicity, sufficient time for tendering, and so on, were fulfilled. If not, a fresh enquiry is to be issued after rectifying the deficiencies<\/strong>.\"<\/p>\n<h1>7.35 Letter of Award (LoA) to the Successful Bidder<\/span><\/h1>\n1. The notification and when the contract is legally formed:<\/p>\nPrior to the expiry of the period of bid validity<\/strong>, the successful bidder will be notified \u2014 briefly indicating relevant details such as quantity, specification of the goods ordered, prices<\/em>, and so on \u2014 in writing by a registered letter or any other acknowledgeable and foolproof method<\/strong> That his bid has been accepted.<\/p>\n<aside class=\"note\">The legal point: \"legal communication of acceptance of the offer is considered complete as soon as it is submitted to postal authorities<\/strong>.\"<\/p><\/aside>\nin the same communication, the successful bidder is to be instructed to furnish the required Performance Security within a specified period (generally 14 to 28 days, depending on the amount)<\/strong>.<\/p>\n<aside class=\"note\">When the LoA itself forms the contract:<\/p>\n\"the Letter of Award (LoA) shall constitute the legal formation of the contract if it is not conditional on submission of Performance Security (as in tenders below Rs 50 lakh).<\/strong><\/p>\n In case Performance Security is stipulated, it would amount to a contract only after the furnishing of Performance Security.<\/strong><\/p>\nThe Procuring Entity, at its discretion, May directly issue the contract \u2014 subject only to the furnishing of Performance Security \u2014 skipping the issue of LoA<\/strong>.\"<\/p><\/aside>\n2. Verification of originals before the LoA:<\/p>\nBefore issuing an LoA, the Procuring Entity May \u2014 at its discretion<\/strong> \u2014 ask the bidder to submit for verification the originals of all such documents whose scanned copies were submitted online<\/strong>.<\/p>\nIf so decided, the photocopies shall be verified and signed by the competent officer and kept in the records as part of the contract agreement<\/strong>.<\/p>\n<aside class=\"note\">The consequence of failure: \"if the bidder fails to provide such originals \u2014 or in case of substantive discrepancies in such documents \u2014 it shall be construed as a violation of the Code of Integrity. Such a bid shall be liable to be rejected as unresponsive, in addition to other punitive actions. The evaluation of responsive bids shall proceed with the subsequent ranked offers<\/strong>.\"<\/p><\/aside>\n3. The value of the contract should include taxes\/ duties\/ levies<\/strong>, IF ANY.<\/p>\n4. The no-third-party Rule \u2014 a point frequently tested:<\/p>\n<aside class=\"note\">\"in some cases, the successful bidder (an OEM or an agent representing a principal firm) requests that the contract be placed on their subsidiary or an authorised dealer.<\/strong><\/p>\n This is legally not acceptable \u2014 as the contract can only be placed on the bidder in whose name the bid has been submitted, not on any third party<\/strong>.\"<\/p><\/aside>\n5. The GeM seller id requirement: \"it shall be mandatory for the successful bidder to register on GeM and obtain a unique GeM seller id \u2014 before the placement of LoA or the contract. This id shall be incorporated into the contract<\/strong>.\"<\/p>\n6. C<\/span> \u2014 the cross-checking duty at RfP stage: \"before a final award is announced, the technical and financial credentials of the selected bidders\/ consultant should be cross-checked to the extent feasible. This is especially important at RfP stage \u2014 since normally such a verification is not done at the EoI stage<\/strong>.\"<\/p>\n<h1>7.36 Publication of Award of Contract and Return of EMD<\/span><\/h1>\n(Rule 173(xviii) of GFR 2017)<\/em><\/p>\n1. Mandatory publication: The details of the award of the contract and the name of the successful bidder should be mentioned mandatorily on the CPPP\/ GeM (as relevant), and in the notice board\/ bulletin\/ website of the concerned Ministry or Department\/ e-procurement portal<\/strong>.<\/p>\n2. THE EXCEPTION \u2014 and the special CPSE six-month rule:<\/p>\n<aside class=\"note\">\"in case publication of such information is sensitive from commercial or security aspects \u2014 dispensation May be sought from publishing of such results, by obtaining sanction from the Secretary of the Department with the concurrence of associated finance.<\/strong><\/p>\n Open, transparent declaration of price, sources, and delivery Schedule of CPSE suppliers as per extant instructions adversely impacts the ability of CPSEs to compete in the highly competitive market. CPSEs are denied a level playing field.<\/strong><\/p>\nAt the time of tender formulation, commercial organisations like CPSEs will disclose whether the subject of procurement is for commercial resale.<\/strong><\/p>\n Contract award details of such cases May be shared on electronic procurement portals such as GeM, CPPP, etc., after six (06) months of finalisation of procurement.<\/strong><\/p>\nSuch a system shall protect the financial data of the CPSEs for a reasonable time, while also complying with the requirement of transparency<\/strong>.\"<\/p><\/aside>\n3. Return of bid securities: Upon the successful bidder furnishing the signed agreement and Performance Security<\/strong>, each unsuccessful bidder will be promptly notified, and their Bid Security shall be returned without interest within 30 (thirty) days of notice of award of contract<\/strong>.<\/p>\nThe successful supplier's Bid Security shall be adjusted against the SD, or returned as per the terms of the tender documents<\/strong>.<\/p>\n<h1>7.37 Performance Security at the Award Stage<\/span><\/h1>\nThe supplier receiving the LoA is required to furnish the required Performance Security (if it is part of tender conditions) in the prescribed form, within the period prescribed in the tender document (generally 14 to 28 days, depending on the amount)<\/strong>.<\/p>\nThe escalation sequence on failure:<\/p>\n<aside class=\"note\">\"in case Performance Security is not submitted within the stipulated time, the Procuring Entity May pursue the contractor up to a reasonable grace period for submission.<\/strong><\/p>\n In case the firm fails to submit the requisite Performance Security even thereafter \u2014 or fails to sign the contract \u2014 it May be treated as a withdrawal of an offer by the L1 bidder, and the tender May be re-invited \u2014 besides taking necessary punitive actions including forfeiture of EMD, deregistration and debarment against such bidders<\/strong>.\"<\/p><\/aside>\n<h1>7.38 Acknowledgement of Contract by the Successful Bidder and Execution<\/span><\/h1>\n1. After the successful bidder is notified, he will be sent an agreement in duplicate for signature and return \u2014 incorporating all agreements between the parties<\/strong>.<\/p>\n2. The acknowledgement timelines and exemptions:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Situation<\/th><th>Timeline<\/th><\/tr><\/thead><tbody><tr><td>OTE<\/td><td>acknowledge and unconditionally accept, sign, date and return the agreement within 14 (fourteen) days<\/strong> From the date of issue of the contract<\/td><\/tr><tr><td>GTE<\/td><td>within 28 (twenty-eight) days<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nwhen acknowledgement is not required:<\/p>\n<ul class=\"lst\"><li>IN low-value contracts below rupees two and a half lakh<\/strong>;<\/li><li>When the bidder's offer has been accepted in its entirety without any modifications<\/strong>;<\/li><li>\"if both parties simultaneously sign the contract across the table \u2014 further acknowledgement from the supplier is not required<\/strong>.\"<\/li><\/ul>\nif the supplier raises issues: \"while acknowledging the contract, the supplier May raise issues and\/ or ask for modifications against some entries; Such aspects shall be immediately investigated for necessary action \u2014 and thereafter, the supplier's unconditional acceptance of the contract must be obtained<\/strong>.\"<\/p>\nit should also be made known that if he does not furnish the required Performance Security or does not sign the contract within the stipulated target dates \u2014 such non-compliance will constitute sufficient ground for punitive actions<\/strong>.<\/p>\n\"the Procuring Entity May also consider getting the contract digitally signed<\/strong>.\"<\/p>\n3. Who May sign: \"all contracts shall be signed and entered into after receipt and verification of the requisite Performance Security \u2014 by an authority empowered to do so by or under the orders of the president<\/strong> [Article 299 of the Constitution].\"<\/p>\n<h1>7.39 Framing of Contract<\/span><\/h1>\nthe contract should be strictly as per the bid conditions and the accepted offer<\/strong>.<\/p>\n<aside class=\"note\">See the Risks table at para 7.41 \u2014 risk row 6 addresses the danger that *\"although there is a standard contract form in the tender documents, the contract may be drafted in a fashion that favours or discourages the successful bidder.\"*<\/p><\/aside>\n<h1>7.40 Audit Trails \u2014 Procurement Records<\/span><\/h1>\n1. The obligation: The Procuring Entity must maintain and retain audit trails, records and documents generated or received during its procurement proceedings \u2014 in chronological order<\/strong>. The files should be stored in an identified place and retrievable for scrutiny whenever needed, without wasting time<\/strong>.<\/p>\n2. The e-procurement dispensation:<\/p>\n<aside class=\"note\">\"however, many organisations now process procurements on their own or e-procurement portals. In such cases, taking printouts and making a physical file just for records May be counter-productive \u2014 provided the portals have provisions for audit trails<\/strong>.\"<\/p><\/aside>\nThe nine categories of documents to be maintained (electronically or physically): a) documents pertaining to the determination of the need<\/strong> for procurement; B) description of the subject matter<\/strong> Of the procurement; C) statement of the justification for the choice of a mode of procurement other than open competitive tendering<\/strong>; D) documents relating to pre-qualification and registration of bidders<\/strong>, if applicable; e) PARTICULARS OF issue, receipt, opening of the bids and the participating bidders at each stage<\/strong>; f) requests for clarifications and any reply thereto \u2014 including the clarifications given during pre-bid conferences<\/strong>; g) bids evaluated and documents relating to their evaluation<\/strong>; h) contracts and contract amendments<\/strong>; i) complaint handling; Correspondence with clients, consultants, and banks<\/strong>.<\/p>\n3. The physical-file structure \u2014 and the two-volume practice:<\/p>\nIn organisations where physical files are still maintained, the procurement file should start with the indent<\/strong> And related documents, followed by:<\/p>\n<aside class=\"note\">Procurement planning \u00b7 copy of tender document and documents relating to its formulation, publishing and issue\/ uploading \u00b7 bid opening \u00b7 bids received \u00b7 correspondence and documents (including technical evaluation and TC report) \u00b7 and finally, the contract copy<\/p><\/aside>\nin case of bulky bids received, all bids May be kept in a separate volume \u2014 with a copy of accepted bids later being put on the main volume<\/strong>.<\/p>\n<aside class=\"note\">The two-volume safeguard: \"to maintain the integrity of the records relating to procurement, these files should be kept secure \u2014 and for contract management, a new volume of files May be opened, to obviate frequent exposure of sensitive procurement files.<\/strong><\/p>\nIn the contract management volume, copies of successful bids, Tender Committee reports, and contract May also be kept for ready reference \u2014 besides correspondence and documents relating to contract management and its closure<\/strong>.\"<\/p><\/aside>\n<h1>7.41 Evaluation of Bids and Award of Contract \u2014 Risks and Mitigations<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>evaluation of bids is subjective, or leaves room for manipulation and biased assessments<\/em>. Some TC members May not be independent or neutral, or May have a conflict of interest (coi)<\/em>.<\/td><td>TC should give an undertaking at the appropriate time that none of the members has any coi<\/strong> With the companies\/ agencies participating. Any member having a coi should refrain from participating in the TC<\/strong>. \"some members of a TC May be subordinate to, or related to, others in a strictly hierarchical organisation \u2014 so that they are not free to express independent views. Such a situation must be avoided when constituting the TC<\/strong>.\"<\/td><\/tr><tr><td>2<\/td><td>discriminating against a best value bid<\/em>: \"in case a bidder's bid (not in the good books of the Procuring Entity) becomes the best value bid as per the evaluation criteria, some of the following actions May have risks of misuse. There is also a reverse risk in these actions if a favourite becomes the best value bid<\/strong>.\"<\/td><td>(Mitigation for each type is at rows 3\u20136 below.)<\/em><\/td><\/tr><tr><td>3<\/td><td>unwarranted re-tendering: Rejecting all bids and calling for re-tendering on the pretext of prices being high, change of specifications, budget not being available<\/em>, and so on.<\/td><td>Refer to para 7.34 for safeguards. <\/strong>\"in case a procurement is re-bid more than once, approval of one level above the ca May be taken<\/strong>.\" Also see the complaint mechanism.<\/td><\/tr><tr><td>4<\/td><td>sudden quantity reduction\/ increase or splitting of quantity\/ work at the time of award<\/em>. \"many organisations have provisions for change\/ splitting in the bid quantity at the time of award. Some organisations vary quantity even without such provisions<\/strong>.\"<\/td><td>bid conditions must specify a limit beyond which the originally announced quantity\/ scope cannot be reduced\/ increased<\/strong>. <\/strong>If parallel contracts are envisaged, clear criteria for the splitting May be specified in the tender documents beforehand<\/strong>.<\/td><\/tr><tr><td>5<\/td><td>unwarranted negotiations: Negotiations are called without justification. Sometimes, a counter-offer is made to discourage the lowest acceptable bidder<\/em>.<\/td><td>Normally, there should be no post-tender negotiations<\/strong>. In certain exceptional situations \u2014 procurement of proprietary items \u00b7 items with limited sources of supply \u00b7 items where there is suspicion of a cartel formation<\/em> \u2014 negotiations May be held with L-1<\/strong>. In case of L-1 backing out, there should be re-tendering<\/strong>.<\/td><\/tr><tr><td>6<\/td><td>unwarranted delays in finalising or varying the terms of the contract agreement: \"even after the TC recommendations are accepted, the signing of the contract is delayed on one pretext or the other. Although there is a standard contract form in the tender documents, the contract May be drafted in a fashion that favours or discourages the successful bidder<\/strong>.\"<\/td><td>A target timeline for the finalisation of procurement should be laid down<\/strong>. <\/strong>Delays and reasons thereof should be brought out before the ca on the file at the time of tc's acceptance or contract signing<\/strong>. \"the contract should be strictly as per the bid conditions and accepted offer<\/strong>.\"<\/td><\/tr><tr><td>7<\/td><td>anti-competitive practices: \"bidders which would otherwise be expected to compete, secretly conspire to frustrate the buyer's attempts to get VfM in a tender process. Anti-competitive conspiracies can take many forms. Sometimes, the officers involved in procurement May be part of such collusion<\/strong>.\" (The five named forms are set out below the table.)<\/em><\/td><td>\"these strategies, in turn, May result in patterns that procurement officials can detect \u2014 and steps can be taken to thwart such attempts.<\/strong>\" <\/strong>\"such anti-competitive activities come under the purview of competition law, which provides stringent penalties.<\/strong>\" \"regular training should be held for officers involved in procurement \u2014 to detect and mitigate such practices, and also to use the competition law against such bidders<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h2 class=\"src-G srchead\" data-src=\" G \">The Five Named Forms of Anti-Competitive Conduct<\/span>G<\/span><\/h2><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\n<div class=\"tblwrap\"><table><thead><tr><th>Form<\/th><th>Definition<\/th><\/tr><\/thead><tbody><tr><td>1. Bid coordination<\/td><td>\"the bidders collude to quote the same or similar rates that are much higher than the reasonable price \u2014 to force the buyer to settle the procurement at exorbitant prices<\/strong>.\"<\/td><\/tr><tr><td>2. Cover bidding<\/td><td>\"cover bidding is designed to give the appearance of genuine competition, by way of supporting bids for the leading bid-rigger<\/strong>.\"<\/td><\/tr><tr><td>3. Bid suppression<\/td><td>\"bid suppression means that a company does not submit a bid for final consideration, in support of the leading bid-rigger<\/strong>.\"<\/td><\/tr><tr><td>4. Bid rotation<\/td><td>\"in bid-rotation schemes, conspiring firms continue to bid \u2014 but they agree to take turns being the winning (i.e., lowest qualifying) bidder in a group of tenders of a similar nature<\/strong>.\"<\/td><\/tr><tr><td>5. Market allocation<\/td><td>\"competitors carve up the market and agree not to give competitive bids for certain customers, or in certain geographic areas<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>Appendix to Chapter 7 \u2014 Part B: Points of Difference<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>QCBS weightage \u2014 inverted<\/td><td>C: Technical 70% \/ Cost 30% \u00b7 W & NC: Technical \u226430% \/ Cost \u226570%<\/td><\/tr><tr><td>2<\/td><td>The identical sentence \"since the weightage of the COST element \u2026 is as high as 70 per cent\" appears in both C and NC<\/td><td>An evident internal inconsistency in the CS Manual<\/em>, which has just assigned 70% to TECHNICAL<\/td><\/tr><tr><td>3<\/td><td>QCBS worked example \u2014 the winner<\/td><td>C: Proposal C at Rs. 106, the HIGHEST-priced<\/em> bid \u00b7 W: Bid C at Rs. 105, the second-lowest<\/em> bid \u00b7 NC: same data as C but H-1\/H-2\/H-3 order changes<\/td><\/tr><tr><td>4<\/td><td>QCBS tie-breaker<\/td><td>Common: the bid with the higher TECHNICAL score becomes H-1<\/em><\/td><\/tr><tr><td>5<\/td><td>evaluation of the quality \u2014 technical proposals<\/strong>(four criteria; absolute-not-comparative grading; 5-grade A\u2013E rating scale at 100\/80\/60\/30\/10%; first reading without scoring; grading defined before opening; individual scoring; joint review and averaging; 75 minimum qualifying mark; debriefing duty)<\/em><\/td><td>C ONLY<\/td><\/tr><tr><td>6<\/td><td>The model marks scheme (5\u201310% \/ 20\u201350% \/ 30\u201360% \/ 0\u201310%)<\/td><td>C ONLY<\/td><\/tr><tr><td>7<\/td><td>Methodology sub-criteria (30\/50\/20) and Key Professionals sub-criteria (20\/80)<\/td><td>C ONLY<\/td><\/tr><tr><td>8<\/td><td>Fixed budget selection (FBS) \u2014 the two methods<\/td><td>C ONLY<\/td><\/tr><tr><td>9<\/td><td>negotiations to freeze description of service<\/strong>(and the consequent absence of negotiation annexures in CS)<\/em><\/td><td>C ONLY<\/td><\/tr><tr><td>10<\/td><td>\"In no case should financial negotiation result in an INCREASE in the financial cost as originally quoted\"<\/td><td>C ONLY<\/td><\/tr><tr><td>11<\/td><td>Arithmetic correction permitted in TIME-BASED contracts but not in LUMP-SUM contracts<\/td><td>C ONLY<\/td><\/tr><tr><td>12<\/td><td>\"A technical proposal pre-disclosing any material pricing information shall also be rejected\"<\/td><td>C ONLY<\/td><\/tr><tr><td>13<\/td><td>MII purchase preference not applicable where evaluation uses QCBS or FBS<\/td><td>NC<\/strong>(stated expressly)<\/em><\/td><\/tr><tr><td>14<\/td><td>\"Members of the STC shall not be involved\" in the QCBS evaluation committee<\/td><td>nc only<\/td><\/tr><tr><td>15<\/td><td>evaluation in rate contracts<\/strong>(counter-offer procedure for parallel RCs; Catalogue basis on NDP\/MRP; one-year default period)<\/em><\/td><td>G ONLY<\/td><\/tr><tr><td>16<\/td><td>variation of quantities at award \u2014 15% default<\/td><td>G ONLY<\/td><\/tr><tr><td>17<\/td><td>OPTION CLAUSE \u2014 25%, above Rs 50 lakh, none in development orders, excluded from CA determination<\/td><td>G ONLY<\/td><\/tr><tr><td>18<\/td><td>Splitting\/ parallel contracts \u2014 70:30 and 50:30:20 ratios; the minimum-quote anti-cartel safeguard; five allocation guidelines<\/td><td>G ONLY<\/td><\/tr><tr><td>19<\/td><td>Tie at l-1 \u2014 the four-step tie-breaker (SC\/ST or Women MSE \u2192 other MSE \u2192 higher turnover \u2192 earlier DPIIT registration; GeM methodology on GeM)<\/td><td>G ONLY<\/td><\/tr><tr><td>20<\/td><td>Evaluation of multiple schedules\/ items\/ destinations \u2014 the three cases<\/td><td>G ONLY<\/td><\/tr><tr><td>21<\/td><td>\"Net of GST\" for CPSEs availing Input Tax Credit<\/td><td>G ONLY<\/td><\/tr><tr><td>22<\/td><td>GTE loading sequence \u2014 1% port handling, customs\/CVD\/surcharges, clearing agency, inland freight, GST, LC charges; CIF comparison where no domestic bidders<\/td><td>G ONLY<\/td><\/tr><tr><td>23<\/td><td>Evaluation of bids involving samples\/ demos; pre-production sample; cancellation without repercussion<\/td><td>G ONLY<\/td><\/tr><tr><td>24<\/td><td>The six \"critical provisions\" deemed material if deviated from<\/td><td>G<\/strong>(fullest statement)<\/em><\/td><\/tr><tr><td>25<\/td><td>\"The CA may ask the TC to explain the report but should not request that evaluation be changed\"<\/td><td>G<\/td><\/tr><tr><td>26<\/td><td>Financial bid opening to be 2\u20135 days after announcement of techno-commercial results<\/td><td>G<\/td><\/tr><tr><td>27<\/td><td>Abnormally Low Bids \u2014 \"resource mobilisation\" included in the price-analysis heads<\/td><td>W<\/strong>(G omits it)<\/em><\/td><\/tr><tr><td>28<\/td><td>ALB \u2014 \"due care while preparing the drawings, formulating specifications\"<\/td><td>W<\/strong>(G says only \"formulating the specifications\")<\/em><\/td><\/tr><tr><td>29<\/td><td>Cartel sign \u2014 \"quoted quantities much less than tendered quantity\" and \"same IP address raises suspicion but is not by itself a strong indicator\"<\/td><td>G ONLY<\/td><\/tr><tr><td>30<\/td><td>Cartel sign \u2014 \"prices suspiciously similar despite significant differences in the proposed approach\"<\/td><td>W ONLY<\/td><\/tr><tr><td>31<\/td><td>Minimum quote percentage to defeat cartels<\/td><td>G: say 25% \u00b7 W: say 20% or 30%, where schedules or division of work is possible<\/td><\/tr><tr><td>32<\/td><td>Cartel remedies \u2014 detailed cost analysis by experts; encouraging new firms to enlist; switching to post-qualification; packaging\/ slicing<\/td><td>W ONLY<\/td><\/tr><tr><td>33<\/td><td>Reporting cartels to FICCI, ASSOCHAM, NSIC by name<\/td><td>G ONLY<\/td><\/tr><tr><td>34<\/td><td>Reasonableness \u2014 the seven LPP cautions, incl. \"these prices are not valid LPP for comparison in future procurement\"<\/td><td>G ONLY<\/td><\/tr><tr><td>35<\/td><td>The five named forms of anti-competitive conduct (Bid Coordination, Cover Bidding, Bid Suppression, Bid Rotation, Market Allocation)<\/td><td>G ONLY<\/td><\/tr><tr><td>36<\/td><td>\"Once a Tender is re-tendered, the bids in the old tender cannot be revived, as per the Indian Contract Act\"<\/td><td>G<\/td><\/tr><tr><td>37<\/td><td>\"In case a procurement is re-bid more than once, approval of one level above the ca may be taken\"<\/td><td>G<\/td><\/tr><tr><td>38<\/td><td>LoA constitutes legal formation of contract if not conditional on performance security; acceptance complete on submission to postal authorities<\/td><td>G<\/td><\/tr><tr><td>39<\/td><td>Contract cannot be placed on a subsidiary or authorised dealer \u2014 only on the bidder in whose name the bid was submitted<\/td><td>G<\/td><\/tr><tr><td>40<\/td><td>Mandatory GeM Seller ID before LoA<\/td><td>G<\/td><\/tr><tr><td>41<\/td><td>CPSE commercial-resale disclosure and the six-month deferred publication of award details<\/td><td>G ONLY<\/td><\/tr><tr><td>42<\/td><td>Acknowledgement within 14 days (OTE)\/ 28 days (GTE); exemption below Rs 2.5 lakh<\/td><td>G<\/td><\/tr><tr><td>43<\/td><td>Audit Trails \u2014 the nine document categories and the two-volume file practice<\/td><td>G<\/strong>(also in W and NC)<\/em><\/td><\/tr><tr><td>44<\/td><td>Cross-checking credentials before final award \"especially important at RfP stage since verification is not done at EoI stage\"<\/td><td>C ONLY<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 7 (parts a and b)<\/p>\n<aside class=\"note\">Next:<\/strong>Chapter 8<\/strong> \u2014 but note the divergence: Goods Ch. 8<\/strong> is Procurements with Unique Features<\/em>; Consultancy Ch. 9<\/strong> is Special Types of Engagements<\/em>; Non-Consultancy Ch. 8<\/strong> is Special Types of Non-Consultancy Procurements<\/em>; and the Works Manual has NO such chapter at all<\/strong> \u2014 its Chapter 7 is Execution and Monitoring of Works and Quality Assurance<\/em>, which corresponds to the contract-management chapters of the other three.<\/p><\/aside><\/div><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch8\">Chapter 8<\/p><h1>Special and Unique Types of Procurement<\/h1><\/header>\nMerging: Goods Ch. 8<\/strong> (Procurements with Unique Features) \u00b7 Consultancy Ch. 9<\/strong> (Special Types of Engagements) \u00b7 Non-Consultancy Ch. 8<\/strong> (Special Types of Non-Consultancy Procurements)<\/em><\/p><h2>Structural Warning \u2014 the Works Manual Has No Such Chapter<\/span><\/h2>\nthree of the four Manuals carry a \"special types\" Chapter. The works Manual does not.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Chapter<\/th><th>Title<\/th><th>Sections<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span> Goods<\/td><td>Chapter 8<\/td><td>Procurements with Unique Features<\/em><\/td><td>7<\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> Works<\/td><td> \u2014 NONE \u2014 <\/td><td>(its Chapter 7 is Execution and Monitoring of Works and Quality Assurance<\/strong> \u2014 which corresponds to the CONTRACT MANAGEMENT chapters of the other three)<\/em><\/td><td> \u2014 <\/td><\/tr><tr class=\"srcmark src-C\" data-src=\" C \"><td>C<\/span> Consultancy<\/td><td>Chapter 9<\/td><td>Special Types of Engagements<\/em><\/td><td>10<\/td><\/tr><tr class=\"srcmark src-NC\" data-src=\" NC \"><td>NC<\/span> Non-Consultancy<\/td><td>Chapter 8<\/td><td>Special Types of Non-Consultancy Procurements<\/em><\/td><td>12<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">why works has none:<\/strong> The Works Manual handles its variations \u2014 EPC, PPP, piece Work, stalled contracts<\/strong> \u2014 inside its Bidding Design chapter (Ch. 3)<\/strong>, covered at Chapter 4 Parts A and B of this Unified Manual. It has no separate \"special engagements\" chapter.<\/p><\/aside>\n<h2>The Three Chapters Barely Overlap<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr class=\"srcmark src-multi\" data-src=\" G C NC \"><th><\/th><th>GOODS G<\/span><\/th><th>CONSULTANCY C<\/span><\/th><th>NON-CONSULTANCY NC<\/span><\/th><\/tr><\/thead><tbody><tr><td>Organising principle<\/td><td>transaction-structure variants<\/strong>(how the deal is shaped)<\/em><\/td><td>categories of provider<\/strong>(who is engaged)<\/em><\/td><td>categories of provider + named services (who, and for what)<\/em><\/td><\/tr><tr><td>Contents<\/td><td>Emergencies\/ Disaster \u00b7 Buy Back \u00b7 Capital Goods \u00b7 AMC \u00b7 NPV \u00b7 Turnkey \u00b7 Books & Print Media<\/td><td>SSS \u00b7 Individual Consultants \u00b7 Specialised Agencies \u00b7 NGOs \u00b7 Procurement Consultants \u00b7 Financial Advisors \u00b7 Auditors \u00b7 Logo Design Competitions \u00b7 Integrated IT Projects \u00b7 Digital India<\/td><td>EoI Shortlisting \u00b7 SSS \u00b7 Individual Service Providers \u00b7 Specialised Agencies \u00b7 NGOs \u00b7 Procurement Agents \u00b7 Inspection Agents \u00b7 Housekeeping \u00b7 Manpower Outsourcing \u00b7 Private Security \u00b7 Vehicle Hiring \u00b7 HaaS<\/td><\/tr><\/tbody><\/table><\/div>\nthe goods Chapter has ZERO<\/em> Overlap with the other two. Consultancy and non-consultancy share only four topics: SSS \u00b7 Individual providers \u00b7 Specialised Agencies\/ Institutions \u00b7 NGOs.<\/p>\n<h2>Concordance for Chapter 8<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>G<\/th><th>C<\/th><th>NC<\/th><\/tr><\/thead><tbody><tr><td>Part i \u2014 goods-only<\/td><td><\/td><td><\/td><td><\/td><td><\/td><\/tr><tr><td>8.1<\/td><td>Handling Procurement in Emergencies and Disaster Management<\/td><td>8.1<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>8.2<\/td><td>Buy Back Offer<\/td><td>8.2<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>8.3<\/td><td>Capital Goods\/ Equipment (M&P, IT Systems)<\/td><td>8.3<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>8.4<\/td><td>Annual Maintenance Contract (AMC)<\/td><td>8.4<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>8.5<\/td><td>Net Present Value (NPV)<\/td><td>8.5<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>8.6<\/td><td>Turnkey Contract<\/td><td>8.6<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>8.7<\/td><td>Procurement of Books and Print Media<\/td><td>8.7<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>part II \u2014 common to c and nc<\/td><td><\/td><td><\/td><td><\/td><td><\/td><\/tr><tr><td>8.8<\/td><td>EoI for Shortlisting of Service Providers<\/td><td> \u2014 <\/td><td>(Ch. 7)<\/em><\/td><td>8.1<\/td><\/tr><tr><td>8.9<\/td><td>Single Source Selection (SSS)<\/td><td> \u2014 <\/td><td>9.1<\/td><td>8.2<\/td><\/tr><tr><td>8.10<\/td><td>Selection of Individual Consultants\/ Service Providers<\/td><td> \u2014 <\/td><td>9.2<\/td><td>8.3<\/td><\/tr><tr><td>8.11<\/td><td>Selection of Specialised Agencies\/ Institutions<\/td><td> \u2014 <\/td><td>9.3<\/td><td>8.4<\/td><\/tr><tr><td>8.12<\/td><td>Selection of Non-governmental Organisations (NGO)<\/td><td> \u2014 <\/td><td>9.4<\/td><td>8.5<\/td><\/tr><tr><td>8.13<\/td><td>Procurement Consultants\/ Agents<\/td><td> \u2014 <\/td><td>9.5<\/td><td>8.6<\/td><\/tr><tr><td>part III \u2014 consultancy-only<\/td><td><\/td><td><\/td><td><\/td><td><\/td><\/tr><tr><td>8.14<\/td><td>Financial Advisors<\/td><td> \u2014 <\/td><td>9.6<\/td><td> \u2014 <\/td><\/tr><tr><td>8.15<\/td><td>Auditors<\/td><td> \u2014 <\/td><td>9.7<\/td><td> \u2014 <\/td><\/tr><tr><td>8.16<\/td><td>Public Competition for Design of Symbols\/ Logos<\/td><td> \u2014 <\/td><td>9.8<\/td><td> \u2014 <\/td><\/tr><tr><td>8.17<\/td><td>Procurement of Integrated IT Projects<\/td><td> \u2014 <\/td><td>9.9<\/td><td>(8.12.1)<\/em><\/td><\/tr><tr><td>8.18<\/td><td>Hiring Consultants for Digital India Projects<\/td><td> \u2014 <\/td><td>9.10<\/td><td> \u2014 <\/td><\/tr><tr><td>part IV \u2014 non-consultancy-only<\/td><td><\/td><td><\/td><td><\/td><td><\/td><\/tr><tr><td>8.19<\/td><td>Inspection Agents<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.7<\/td><\/tr><tr><td>8.20<\/td><td>Housekeeping Services<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.8<\/td><\/tr><tr><td>8.21<\/td><td>Manpower Outsourcing Services<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.9<\/td><\/tr><tr><td>8.22<\/td><td>Private Security Manpower Services<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.10<\/td><\/tr><tr><td>8.23<\/td><td>Vehicle Hiring for Office Use<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.11<\/td><\/tr><tr><td>8.24<\/td><td>IT Hardware as a Service (HaaS)<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.12<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>Part I \u2014 Procurements with Unique Features [GOODS ONLY]<\/span><\/h1>\n<h1>8.1 Handling Procurement in Emergencies and Disaster Management<\/span><\/h1>\n<h2>8.1.1<\/span>Procurements in Emergencies\/ Urgencies<\/span><\/h2>\n\"there are sufficient fast-track procurement modes and flexibilities in the procurement guidelines to tackle procurements in operational emergencies\/ urgencies. Enhanced delegations of procurement powers May be incorporated in SoPP to handle such situations<\/strong>.\"<\/p>\nthe four modes, in order of speed:<\/p>\nA) procurement through the GeM PORTAL<\/strong>;<\/p>\nb) direct procurement without quotation<\/strong>;<\/p>\nc) direct procurement by Purchase Committee<\/strong>;<\/p>\nd) SLTE\/ limited\/ Single Tender Enquiry \u2014 with reduced time for submission of bids<\/strong>.<\/p>\n<h2>8.1.2<\/span>Procurement in Crisis Situations \u2014 Disaster Management\/ Pandemic<\/span><\/h2>\n<aside class=\"note\">\"normal procurement modes, thresholds and bid systems are not tailored for procurement in crises like disaster management\/ pandemic. Hence, during such a situation, the following dispensations May be allowed with the approval of competent authorities<\/strong>.\"<\/p><\/aside>\n1. The declaration order: \"an order May be issued by the Competent Authority \u2014 declaring the crisis, and promulgating the start of procurement procedures under the crisis, with an estimated validity period till which these would apply<\/strong>.\"<\/p>\n2. NEED ASSESSMENT \u2014 the aggregation task: \"the most crucial task is to consolidate and aggregate the requirements from all jurisdictions. Specifications should be rationalised considering the market situation. A centralised list May be prepared containing the quantities (unit-wise) and specifications of each item. Such lists May be preserved for future use<\/strong>.\"<\/p>\n3. Prolonged or endemic crises: \"if a crisis is likely to extend over a prolonged period \u2014 or if such disasters are endemic to the region (floods\/ cyclones) \u2014 rate contracts May be entered into to cater to such situations<\/strong>.\"<\/p>\n4. \"this is not the time for complex methods\" \u2014 the eight dispensations:<\/p>\n<aside class=\"note\">\"this is not the time for complex methods, e.g., Reverse Auction, etc. The use of the following modes of procurement is suggested in order of speed.<\/strong><\/p>\n To speed up procurement, advance cash May be drawn for direct procurement modes and made available to the committees\/ officer \u2014 with accounts and vouchers to be submitted after purchase<\/strong>.\"<\/p><\/aside>\na) procurement through the GeM portal \u2014 which responds to such situations as COVID-19<\/strong>;<\/p>\nB) direct procurement without quotation;<\/p>\nC) direct procurement by Purchase Committee;<\/p>\nD) SLTE\/ limited\/ Single Tender Enquiry, with reduced time for submission of bids;<\/p>\ne) \"other than these, unlisted but fast modes of procurement \u2014 e.g., enhancement of quantity or repeat orders at the same terms in existing contracts \u2014 May be pursued. All contracts May be placed with clauses for quantity enhancements and repeat orders<\/strong>.\";<\/p>\nf) \"all procurement May be done using single-stage, single-envelope tendering systems<\/strong>.\";<\/p>\ng) \"even if pre-qualification is felt necessary, self-declaration in a single envelope May be called for \u2014 instead of a time-consuming pre-qualification bid<\/strong>.\";<\/p>\nh) \"pre-bid conferences May be replaced by informal market research<\/strong>.\"<\/p>\n5. Enhanced delegations: \"enhanced delegations of procurement powers in SoPP May be considered, with the approval of the Secretary of the Department<\/strong>.\"<\/p>\n6. \"deliveries that suit the urgent\/ emergent and disaster management situation May only be allowed<\/strong>.\"<\/p>\n7. Reasonableness of prices in a crisis: \"the reasonableness of prices in such situations May be judged by keeping in mind that prices in such situations May be higher than in normal procurement \u2014 to cater to express deliveries\/ disruptions, etc<\/strong>.\"<\/p>\n8. Model documents disapplied: \"model tender documents or general conditions of contract should not apply to emergency procurements<\/strong>.\"<\/p>\n9. Shortened timelines and alternative bid channels: \"minimum timelines for bid submission May be shortened (say 1\u20133 days). Bids by phone, email, and in-person May also be considered<\/strong>.\"<\/p>\n10. Single offer acceptable, no re-tender: \"norms of minimum bids in a tender May be relaxed \u2014 and even a single offer May be accepted without re-tendering. No tender should normally be allowed to be discharged or re-invited<\/strong>.\"<\/p>\n11. The seven norms that May be dispensed with or relaxed:<\/p>\n<aside class=\"note\">\"in emergency procurements, time-consuming norms for the following May be dispensed with or relaxed:<\/strong><\/p>\n<ol class=\"lst\"><li>Tender document costs<\/strong><\/li><li>earnest money deposit (EMD)<\/strong><\/li><li>security Deposit (SD or performance guarantee)<\/strong><\/li><li>vendor registration fee<\/strong><\/li><li>verification of eligibility\/ qualification \u2014 by putting the onus on the vendors to self-declare his eligibility, qualifications, and capability, with penalties for false declarations<\/strong>*<\/li><li>liquidated Damages (LD) or other penalties<\/strong><\/li><li>negotiations<\/strong><\/li><\/ol>\n Delegation in this regard May be enhanced and delegated to cutting-edge levels<\/strong>.\"<\/p><\/aside>\n12. Minimal documentation: \"documents required for various stages \u2014 bids, qualification, eligibility, inspection, and payment \u2014 must be barely minimum<\/strong>.\"<\/p>\n13. Inspection: \"instead of physical inspections, vendors' self-declaration of quality May be accepted<\/strong>.\"<\/p>\n14. THE GeM exception in a crisis \u2014 a rare permitted departure:<\/p>\n<aside class=\"note\">\"putting GeM at the centre of all such emergency procurement would help in transparency and price monitoring.<\/strong><\/p>\n However, in urgent\/ emergent and disaster management situations, in case of procurement below Rs. 50,000 \u2014 if deliveries are not suitable on GeM, procurement May be done locally as per sub-para 4 above \u2014 even if the items are available on GeM, as an exception to the Rule.<\/strong><\/p>\n Prior or post facto sanction May be taken from the Secretary of the Department<\/strong>.\"<\/p><\/aside>\n15. Ensuring transparency, integrity, and accountability:<\/p>\nA) as far as feasible, procurement May be done on the GeM portal<\/strong>.<\/p>\nB) the separate record-keeping team: \"all procuring agencies should constitute a separate team (without hampering people involved in procurement) to keep a record of justification and quantum of emergency procurements \u2014 for future accountability<\/strong>.\"<\/p>\nc) after the crisis is over \u2014 the four closing actions:<\/p>\n<aside class=\"note\">i) \"the Competent Authority May issue an order signalling the end of the crisis and the emergency procurement procedures<\/strong>.\";<\/p>\nii) \"special time-bound internal and external audits of all emergency procurements should be done with a large sampling size when normalcy returns. If need be, public or private agencies May be hired to assist with this large volume of audits<\/strong>.\";<\/p>\niii) \"any undelivered contract, if any, May be reviewed for cancellation<\/strong>.\";<\/p>\niv) \"unutilised stocks, if any, May be reviewed for gainful use<\/strong>.\"<\/p><\/aside>\n16. Getting ready for future disasters: \"such emergency procurement systems and lists May be formalised for future disasters \u2014 e.g., the enhanced delegations May be integrated into the normal SoPP as delegations in defined crisis<\/strong>.\"<\/p>\n<h1 data-src=\"G\">8.2 Buy Back Offer<\/span>G<\/span><\/h1>\n(Rule 176 of GFR 2017)<\/em><\/p>\nwhen it is decided to replace an existing old item(s) with a new\/ better version<\/strong>, the Department May trade the existing old item while purchasing the new one<\/strong>, by issuing suitable tender documents for this purpose.<\/p>\nWhat the tender document must incorporate:<\/p>\n<aside class=\"note\">THE condition of the old item \u00b7 its location \u00b7 and the mode of its handing over to the successful bidder<\/strong>.<\/p>\nThe two-price requirement \u2014 the key mechanism:<\/p>\n\"further, the bidder should be asked to quote the prices for the item (to be offered by them):<\/strong><\/p>\n\u2022 with a rebate for the old item; And also<\/strong><\/p>\n\u2022 without any rebate (in case they do not want to lift the old item).<\/strong><\/p>\n This will provide an option for the Department to either trade or not trade the old item while purchasing the new one<\/strong>.\"<\/p><\/aside>\n<h1 data-src=\"G\">8.3 Capital Goods\/ Equipment (Machinery and Plant \u2014 M&P, IT Systems, etc.)<\/span>G<\/span><\/h1>\n<h2>8.3.1<\/span>What Counts as Capital Goods<\/span><\/h2>\n\"capital goods are machinery and plants (m&p) which create new fixed assets\/ utility\/ functionality or benefits for the organisation, and have a long and useful life.<\/strong><\/p>\n This also refers to it procurements of IT systems \u2014 comprising one or more of: Hardware \u00b7 networking \u00b7 tailor-made and customised software \u00b7 installation\/ commissioning \u00b7 training \u00b7 AMC\/ CMC \u00b7 cloud services \u00b7 and other services<\/strong>.\"<\/p>\n<h2>8.3.2<\/span>The Seven Distinctive Features<\/span><\/h2>\n1. Investment decision and item-specific budget:<\/p>\n<aside class=\"note\">\"since the cost is generally high, there are detailed procedures for approval of technical, administrative, and budgetary provisions \u2014 before an indent is generated.<\/strong><\/p>\n Unlike consumable items (which are procured if a non-specific budgetary provision is there), capital goods are procured after an item-specific budgetary provision is included in the budget.<\/strong><\/p>\n Thus, the acquisition of capital goods is also an investment decision, and May require some form of investment justification. Some of the higher-value capital goods May be accounted for in the capital block of the organisation. However, these features May not apply to capital goods of smaller values<\/strong>.\"<\/p><\/aside>\n2. The alternatives to outright purchase \u2014 with the staff-car illustration:<\/p>\n<aside class=\"note\">\"there are also alternatives to outright purchasing\/ owning such equipment \u2014 like hiring\/ hire-purchase\/ leasing, or acquiring the functionality as a service.<\/strong><\/p>\nFor example, instead of buying a staff car, a monthly service\/ hiring contract can be entered into to provide vehicles as per requirements. The car can also be wet leased (including maintenance), and a service contract for drivers\/ cleaners can be entered into separately.<\/strong><\/p>\n This can be especially advantageous in equipment that undergo obsolescence quickly \u2014 e.g., IT equipment<\/strong>.\"<\/p><\/aside>\n3. The embedded works and services:<\/p>\nThe procurement involves elements of works and services like:<\/p>\n<aside class=\"note\">Installation \u00b7 commissioning \u00b7 training \u00b7 prolonged trials \u00b7 warranty \u00b7 after-sales services like post-warranty maintenance and assured availability of spares<\/strong><\/p><\/aside>\n\"all such elements have costs that May be quoted explicitly or implicitly.<\/strong><\/p>\nA suitable warranty clause should indicate the period of warranty and service levels, as well as penalties for delays in the restoration of defects.<\/strong><\/p>\n Clauses for including essential initial spares for two years' maintenance, to be supplied along with equipment, May be provided.<\/strong><\/p>\n If necessary, an appropriate number of years \u2014 say three to five or more years, depending on the lifespan of the equipment \u2014 AMC May be included in the procurement, detailing its conditions<\/strong>.\"<\/p>\n4. Total Cost of Ownership:<\/p>\n<aside class=\"note\">\"the cost of operations, maintenance, and disposal of the equipment over its life cycle May far outweigh the initial procurement cost.<\/strong><\/p>\nHence, Total Cost of Ownership (TCO) becomes an important consideration \u2014 which can be addressed in Public Procurement by way of:<\/strong><\/p>\n\u2022 appropriate description, specification, and contract conditions \u2014 like the inclusion of the cost of supply of initial essential spares; And<\/strong><\/p>\n\u2022 Net Present Value (NPV) of annual maintenance contracts (AMC) for a specified number of years \u2014 within the estimated cost and also the evaluation criteria of the procurement contract<\/strong>.\"<\/p><\/aside>\n5. When a turnkey contract is better: \"in case the plant and equipment (or an IT system) consists of several machines\/ components\/ systems that work in tandem \u2014 or if it includes services\/ works to be done by a third party \u2014 an all-encompassing turnkey contract May be a better alternative<\/strong>.\"<\/p>\n6. The evaluation complexity and its three remedies:<\/p>\n<aside class=\"note\">\"because of the complexity of specification evaluation, the technical suitability of offers in the procurement of capital goods involves complex issues about acceptance of alternatives, deviations, and compliance with various particulars of specification.<\/strong><\/p>\n Remedy 1: Acceptance or otherwise of alternatives should be made explicit.<\/strong><\/p>\n Remedy 2: A statement of deviation \u2014 including the detailed justification for the deviations from each clause of specification \u2014 should be requested from the bidder in the tender documents.<\/strong><\/p>\n Remedy 3: A Schedule of guaranteed particulars of specification, indicating the values of each parameter, May be included in the specification \u2014 where the bidder can quote the offered value of the parameters.<\/strong><\/p>\nIn complex cases, a pre-bid conference May help in reducing disputes and complexity at the time of evaluation<\/strong>.\"<\/p><\/aside>\n7. Fit for pre-qualification bidding: \"experience, capacity, and financial strength of a supplier are important determinants of quality and after-sales support for capital goods; Such procurements are a fit for pre-qualification bidding<\/strong>.\"<\/p>\n<h1 data-src=\"G\">8.4 Annual Maintenance Contract (AMC)<\/span>G<\/span><\/h1>\n(Rule 169 of GFR 2017)<\/em><\/p>\n1. When an AMC starts: \"some goods \u2014 especially sophisticated equipment and machinery \u2014 need proper maintenance for trouble-free service. For this purpose, the purchase organisation May enter into a maintenance contract.<\/strong><\/p>\n<aside class=\"note\"> it must, however, be kept in mind that the maintenance contract is to start after the expiry of the warranty period \u2014 during which period the goods are to be maintained free of cost by the supplier<\/strong>.\"<\/p><\/aside>\n2. With whom: \"the maintenance contract May be entered into either with the OEM manufacturer\/ supplier of the goods, or with a competent and eligible firm \u2014 not necessarily the manufacturer\/ supplier of the goods in question. The purchase organisation should decide this aspect on a case-to-case basis on merit<\/strong>.\"<\/p>\n3. AMC as part of the equipment procurement \u2014 the NPV evaluation rule:<\/p>\n<aside class=\"note\">\"if the maintenance contract is to be made a part of the procurement of equipment, then suitable clauses are to be incorporated in the tender enquiry document itself.<\/strong><\/p>\nWhile evaluating the offers, the cost component towards the maintenance of the goods for the specified number of years is also to be added to the evaluated tender value on an overall basis \u2014 to decide the inter se ranking of the responsive bidders.<\/strong><\/p>\n Equipment with a lower quoted price May carry a higher maintenance liability. Therefore, the total cost (all-inclusive, based on total outgo from the pocket) on purchase and maintenance of the equipment over the period of the maintenance contract should be assessed to consider its suitability for purchase.<\/strong><\/p>\n While evaluating the bidders for maintenance of goods covering a longer period (say, three to five or more years, depending on the life span of the equipment) \u2014 the quoted prices pertaining to maintenance in future years are to be discounted to the Net Present Value (NPV) as appropriate, for comparing the tenders on an equitable basis and deciding the lowest evaluated responsive tender<\/strong>.\"<\/p><\/aside>\n4. AMC procured separately \u2014 and the OEM-authorisation rule:<\/p>\n\"if the maintenance contract is to be entered into with a competent and eligible supplier separately, then a separate tender enquiry is to be floated\u2026 here, the OEM supplier of the goods May also quote \u2014 and his quotation, if received, is to be considered along with other quotations received.<\/strong><\/p>\n<aside class=\"note\"> In some situations, OEM manufacturers\/ suppliers of goods authorise certain service providers to provide AMC support. In such cases, the service provider must produce such authorisation\/ letter from the OEM \u2014 confirming technical and spares support to the service provider<\/strong>.\"<\/p><\/aside>\n5. Payment periodicity: \"the terms of payment for the maintenance service will depend on the nature of the goods to be maintained as well as the nature of the services desired. Generally, payment for maintenance is made on a half-yearly or quarterly basis<\/strong>.\"<\/p>\n6. The Service Level Agreement (SLA) \u2014 what it must contain:<\/p>\nA SLA May be incorporated in complex and large maintenance contracts<\/strong>. SLA should indicate guaranteed levels of service parameters<\/strong> LIKE:<\/p>\n<aside class=\"note\">Percentage uptime to be ensured<\/strong> \u00b7 performance output levels to be ensured from the equipment<\/strong> \u00b7 a channel for registering service requests<\/strong> \u00b7 response time for resolving the request<\/strong> \u00b7 channel for escalation of a service request in case of delay or unsatisfactory resolution<\/strong> \u00b7 monitoring of service levels<\/strong><\/p><\/aside>\nthis would also include:<\/p>\n<aside class=\"note\">Provision of helplines \u00b7 complaint registration and escalation procedures \u00b7 response time \u00b7 percentage of uptime and availability of equipment \u00b7 non-degradation in performance levels after maintenance \u00b7 maintenance of an inventory of common spares \u00b7 use of genuine spares<\/strong><\/p><\/aside>\nthe maintenance contract May also include penalties (Liquidated Damages) for unacceptable delays in responses and degradation in the performance output of machines \u2014 including provisions for terminations<\/strong>.<\/p>\n7. What is included in the maintenance charge \u2014 the four ambiguities to resolve:<\/p>\n<aside class=\"note\">\"it should be indicated in the tender documents whether the maintenance charges would be inclusive of:<\/strong><\/p>\n1. Visiting charges<\/strong><\/p>\n2. Price of spares<\/strong> \u2014 (\"Many times, consumables such as rubber gasket, bulbs, and so on, are not included \u2014 even though major parts May be included\")<\/em><\/p>\n3. Price of consumables (fuel, lubricants, cartridges, and so on)<\/strong><\/p>\n If the costs of spares are to be borne by the Procuring Entity, then a guaranteed price list should be asked for along with the bids.<\/strong><\/p>\n4. It should also be clarified whether room\/ space, electricity, water connection, and so on would be provided free of cost to the contractor<\/strong>.\"<\/p><\/aside>\n8. The most-favoured-customer clause: \"a suitable provision should be incorporated in the tender enquiry document and the resultant maintenance contract, indicating that the prices charged by the maintenance contractor should not exceed the prevailing rates charged by him from others for similar services. While claiming payment, the contractor is also to give a certificate to this effect in his bill<\/strong>.\"<\/p>\n9. Performance security: If the goods to be maintained are sophisticated and costly<\/strong>, the tender enquiry document should also have a provision for obtaining Performance Security<\/strong>. The amount will depend on the nature of the goods, the period of maintenance<\/strong>, and so on.<\/p>\n10. Goods taken away for repair \u2014 the Rs 1 lakh BG rule:<\/p>\n<aside class=\"note\">\"sometimes, the maintenance contractor May have to take the goods or some components of the goods to his factory for repair, and so on.<\/strong><\/p>\n On such occasions, before handing over the goods or components valuing more than rupees one lakh \u2014 a suitable Bank Guarantee is to be obtained from the firm to safeguard the purchaser's interest<\/strong>.\"<\/p><\/aside>\n11. Withdrawal of the maintenance contract \u2014 and the model clause:<\/p>\n\"sometimes, during the tenure of a maintenance contract \u2014 especially with a longer tenure \u2014 it May become necessary for the purchase organisation to withdraw the maintenance contract due to some unforeseen reasons.<\/strong><\/p>\n<aside class=\"note\"> Depending on the cost and nature of the goods to be maintained, a suitable notice period (say one to three months) for such cancellation to come into effect is to be provided in the documents<\/strong>.\"<\/p>\nthe model clause:<\/p>\n\"The purchaser reserves its right to terminate the maintenance contract at any time after giving due notice, without assigning any reason. The contractor will not be entitled to claim any compensation against such termination. However, while terminating the contract, if any payment is due to the contractor for maintenance services already performed in terms of the contract, these would be paid to it\/ him as per the contract terms.\"<\/strong><\/p><\/aside>\n<h1 data-src=\"G\">8.5 Net Present Value (NPV)<\/span>G<\/span><\/h1>\n<h2>8.5.1<\/span>The Concept and the Formula<\/span><\/h2>\n\"net Present Value (NPV) \u2014 or net present worth (npw) \u2014 of equipment procurement is the sum of the present values of the net cash flows for all the years of the equipment's economic life.<\/strong><\/p>\nThe net cash flows are discounted to arrive at the NPV of equipment, by applying a predetermined discount rate<\/strong>.\"<\/p>\n<aside class=\"note\">NPV = CF\u2080 + CF\u2081\/(1+r)\u00b9 + CF\u2082\/(1+r)\u00b2 + CF\u2083\/(1+r)\u00b3 + \u2026 + CF\u2099\/(1+r)\u207f<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>Symbol<\/th><th>Meaning<\/th><\/tr><\/thead><tbody><tr><td>r<\/td><td>THE discount rate (in fraction)<\/strong><\/td><\/tr><tr><td>CF\u2080<\/td><td>THE quoted price<\/strong><\/td><\/tr><tr><td>CF\u2081, CF\u2082, CF\u2083 \u2026 CF\u2099<\/td><td>THE Costs in the 1st, 2nd, 3rd \u2026 nth YEARS<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">the suggested discount rate: \"one possible rate to be used is the interest rate of the general provident fund (GPF)<\/strong>.\"<\/p><\/aside>\n<h2>8.5.2<\/span>Two Practical Rules<\/span><\/h2>\n1. Terminal disposal value: \"the terminal disposal value of the equipment is also to be taken as negative expenditure \u2014 but since these are most likely to be the same for all bidders, and there is uncertainty in estimating this \u2014 it is usually not included in calculating NPV in procurement decisions<\/strong>.\"<\/p>\n2. Calculation: \"the above formula for NPV need not be manually calculated; It can be calculated using the NPV function in excel<\/strong>.\"<\/p>\n<h2>8.5.3<\/span>THE SOLVED EXAMPLE \u2014 where the HIGHEST-priced offer becomes L1<\/span><\/h2>\n<aside class=\"note\">\"the discounting rate is taken as 7%. There are three offers against a tender for vehicles at different quoted costs:<\/strong><\/p>\n\u2022 offer 1 (lowest quoted price) incurs the highest operating cost;<\/strong><\/p>\n\u2022 offer 2 (higher quoted price) incurs a somewhat lesser operating cost;<\/strong><\/p>\n\u2022 offer 3 (highest quoted price) incurs the least operating cost.<\/strong><\/p>\nThe free warranty is for 2 years, and the firms have quoted 5 years' AMC after that. In this evaluation, NPV expenditures up to the AMC duration (2-YEAR warranty and 5 years' AMC) were made<\/strong>.\"<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>Row<\/th><th>Expenses<\/th><th>Offer 1<\/th><th>Offer 2<\/th><th>Offer 3<\/th><\/tr><\/thead><tbody><tr><td>2<\/td><td>Initial investment, including costs of initial spares, installation\/ commissioning, Training, etc.<\/td><td>\u20b9 4,00,000<\/td><td>\u20b9 5,00,000<\/td><td>\u20b9 6,00,000<\/td><\/tr><tr><td>3<\/td><td>Annual expenditure on operation (fuel, consumables)<\/td><td>\u20b9 1,50,000<\/td><td>\u20b9 1,00,000<\/td><td>\u20b9 50,000<\/td><\/tr><tr><td>4<\/td><td>Free Warranty \u2014 1st Year<\/td><td>\u20b9 0<\/td><td>\u20b9 0<\/td><td>\u20b9 0<\/td><\/tr><tr><td>5<\/td><td>Free Warranty \u2014 2nd Year<\/td><td>\u20b9 0<\/td><td>\u20b9 0<\/td><td>\u20b9 0<\/td><\/tr><tr><td>6<\/td><td>AMC in 3rd Year<\/td><td>\u20b9 40,000<\/td><td>\u20b9 50,000<\/td><td>\u20b9 60,000<\/td><\/tr><tr><td>7<\/td><td>AMC in 4th Year<\/td><td>\u20b9 40,000<\/td><td>\u20b9 50,000<\/td><td>\u20b9 60,000<\/td><\/tr><tr><td>8<\/td><td>AMC in 5th Year<\/td><td>\u20b9 40,000<\/td><td>\u20b9 50,000<\/td><td>\u20b9 60,000<\/td><\/tr><tr><td>9<\/td><td>AMC in 6th Year<\/td><td>\u20b9 40,000<\/td><td>\u20b9 50,000<\/td><td>\u20b9 60,000<\/td><\/tr><tr><td>10<\/td><td>AMC in 7th Year<\/td><td>\u20b9 40,000<\/td><td>\u20b9 50,000<\/td><td>\u20b9 60,000<\/td><\/tr><tr><td>11<\/td><td>NPV<\/td><td>\u20b9 13,51,644.26<\/td><td>\u20b9 12,17,992.50<\/td><td>\u20b9 10,84,340.74<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">THE RESULT \u2014 the whole point of the exercise:<\/p>\n\"it May be seen that offer 3, with the highest quoted price, has the lowest NPV \u2014 due to low operating costs, despite a higher AMC fee. This offer May, therefore, be considered an L1 offer<\/strong>.\"<\/p><\/aside>\nThe excel formula (for column B; mutatis mutandis<\/em> for C and D):<\/p>\n<aside class=\"note\"><code>NPV = NPV(0.07, (B3+B4), (B3+B5), (B3+B6), (B3+B7), (B3+B8), (B3+B9), (B3+B10)) + B2<\/code><\/p><\/aside>\n<h1 data-src=\"G\">8.6 Turnkey Contract<\/span>G<\/span><\/h1>\n\"in the context of the procurement of goods, a turnkey contract May include:<\/strong><\/p>\n<aside class=\"note\">The manufacture, supply, assembly, installation\/ commissioning of equipment \u2014 *(or a group of plant and machines working in tandem \u2014 even though some of the machines May not be manufactured by the supplier himself)* \u2014 <\/strong>and some incidental works or services*.\"<\/strong><\/p><\/aside>\nwhat the Procuring Entity specifies:<\/p>\n<aside class=\"note\">\"generally, in the tender enquiry documents for a turnkey contract, the purchase organisation specifies the performance and output required from the plant proposed to be set up, and broadly outlines the various parameters it visualises for the desired plant.<\/strong><\/p>\n The inputs and other facilities that the purchase organisation will provide to the contractor are also indicated in the tender document.<\/strong><\/p>\n The contractor will design the plant and provide a quote accordingly<\/strong>.\"<\/p><\/aside>\nthe contractor's four responsibilities:<\/p>\n<ol class=\"lst\"><li>Supplying the required goods, machinery, equipment, etc., needed for the plant<\/strong>;<\/li><li>Assembling, installing, and erecting the same at the site as needed<\/strong>;<\/li><li>Commissioning the plant to meet the required output<\/strong>, etc., as specified in the tender enquiry documents.<\/li><\/ol>\n<h1 data-src=\"G\">8.7 Procurement of Books and Print Media<\/span>G<\/span><\/h1>\n1. The categories and the selection factors:<\/p>\n\"the procurement of print media encompasses various categories such as books, journals, magazines, and newspapers \u2014 each serving distinct purposes like knowledge dissemination and education.<\/strong><\/p>\n<aside class=\"note\"> While books are often acquired for libraries or educational curricula \u2014 newspapers, magazines, etc., have a wider applicability<\/strong>.\"<\/p><\/aside>\nthe six factors for deciding procurement:<\/p>\n<aside class=\"note\">Author \u00b7 publisher \u00b7 subject matter \u00b7 content quality \u00b7 edition \u00b7 market availability<\/strong><\/p><\/aside>\n2. The method \u2014 net discount over published price:<\/p>\n<aside class=\"note\">\"once the category and specifications are determined, quotations May be solicited from vendors in the form of *net discount over the (published) price<\/strong>.*<\/p>\n The vendor offering the most competitive discount \u2014 referred to as L1 \u2014 is typically chosen<\/strong>.\"<\/p><\/aside>\n3. The one-year onboarding and Rate Contract:<\/p>\n<aside class=\"note\">\"additionally, the onboarding of the vendor should be for at least 1 year \u2014 to ensure stability and continuity in the procurement process.<\/strong><\/p>\n Rate contracts can be utilised for these procurements \u2014 providing a framework for consistent pricing and terms over the specified duration.<\/strong><\/p>\nThis process ensures that the Procuring Entity obtains the desired print media at the best possible price \u2014 balancing considerations of quality, content, and vendor stability<\/strong>.\"<\/p><\/aside>\n<h1>Part II \u2014 Common to Consultancy and NON-CONSULTANCY<\/span><\/h1>\n<h1 data-src=\"NC\">8.8 Expression of Interest (EoI) for Shortlisting of Service Providers<\/span>NC<\/span><\/h1>\n<aside class=\"note\">In the Consultancy Manual this occupies an entire chapter (Ch. 7 \u2014 reproduced at Chapter 7 Part A, para 7.1 of this Unified Manual). In the Non-Consultancy Manual it is compressed into para 8.1 \u2014 and it is framed as an EXCEPTION, not the norm.<\/p><\/aside>\n<h2>8.8.1<\/span>Why NC Normally Does NOT Use EoI \u2014 and When It Does<\/span><\/h2>\n<aside class=\"note\">\" Unlike procurement of consultancy services, procurement of non-consultancy services is done by a simpler process \u2014 akin to those of procurement of goods and works *(rule 206 of GFR 2017)*. It is normally done in single-stage two-envelope tendering containing technical and financial bids.<\/strong><\/p>\n In highly technical and complex services, where quality is important \u2014 *(say in studies like seismic surveys, airborne data acquisition, etc.)* \u2014 there is a danger of low-quality bids getting selected for award of contract by quoting unsustainably low price.<\/strong><\/p>\nIn such situations, to ensure that competition is not vitiated by low-quality bids \u2014 competition May be restricted only among equally qualified bidders.<\/strong><\/p>\nTherefore, instead of publicly inviting all interested bidders to present their bids \u2014 the EoI shortlisting process (similar to procurement of consultancy services) involves obtaining a limited number of proposals from pre-qualified firms that, in the Procuring Entity's view of experience, are capable and can be trusted to deliver the required services at the desired level of quality<\/strong>.\"<\/p><\/aside>\n<h2>8.8.2<\/span>The Two-Phase Process<\/span><\/h2>\n\"these considerations can be best addressed through competition exclusively between qualified shortlisted firms or individuals \u2014 in which selection is based on the quality of the proposal and, where appropriate, on the cost of services to be provided.<\/strong><\/p>\nSuch procurement needs to be done in a two-phase process:<\/strong><\/p>\n<aside class=\"note\">\u2022 first phase (the EoI stage) \u2014 the qualified firms are shortlisted transparently;<\/strong><\/p>\n\u2022 second phase \u2014 bids (technical and financial) are solicited from such shortlisted bidders to select the winning bidder.<\/strong><\/p><\/aside>\n Care should be taken to avoid formation of unreasonable qualification criteria prior to shortlisting of bidders, that May lead to restricted participation<\/strong>.\"<\/p>\n<h2>8.8.3<\/span>The Modes \u2014 Rule 183(ii) of GFR 2017<\/span><\/h2>\nfor procurement above Rs. 50 (rupees fifty) lakh<\/strong>, shortlisting is done in an openly advertised competitive shortlisting process called Expression of Interest (EoI)<\/strong>.<\/p>\nTHE \"Request for Expression of Interest\" (REoI) is advertised on CPPP and on GeM<\/strong>. An organisation having its own website should also publish all its advertised tender enquiries on the website.<\/p>\n\"a complete services and activities Schedule should be ready before requesting EoI. Attention of known reputed service providers May also be separately drawn wherever possible<\/strong>.\"<\/p>\n GTE route:<\/strong>\"in case it is felt that likely service providers May not be available in India \u2014 the EoI process May be done on Global Tender Enquiry (GTE) process, by sending REoI notice to foreign embassies in India and Indian embassies in relevant countries<\/strong>.\"<\/strong>(Subject to the Rs. 200 crore GTE restriction<\/strong> \u2014 Chapter 4 Part B, para 4.9.2.)<\/em><\/p>\n<h1 data-src=\"CNC\">8.9 Single Source Selection (SSS)<\/span>C<\/span>NC<\/span><\/h1>\n<h2>8.9.1<\/span>The Three Objections to SSS<\/span><\/h2>\n<aside class=\"note\">\"selection of consultants through direct negotiations:<\/strong><\/p>\n1. Does not provide the benefits of competition in regard to quality and cost;<\/strong><\/p>\n2. Lacks transparency in selection; And<\/strong><\/p>\n3. Could encourage unacceptable practices.<\/strong><\/p>\n The reasons for SSS and the selection of a particular consultant must be recorded and approved by the ca as per the delegation of powers laid down in DFPR\/ SoPP \u2014 prior to single tendering.<\/strong><\/p>\n Powers of procurement of SSS must be severely restricted.<\/strong><\/p>\nTherefore, single-source selection shall be used only in exceptional circumstances, where it is inescapable over competitive selections<\/strong>.\"<\/p><\/aside>\n<h2>8.9.2<\/span>Continuity for Downstream Work \u2014 the pre-declaration rule<\/span><\/h2>\n<aside class=\"note\">\"when, in a project, continuity for downstream work is essential \u2014 the initial RfP shall outline this prospect; And, if practical, the factors used for the selection of the consultant should take the likelihood of continuation into account.<\/strong><\/p>\n Continuity in the technical approach, experience acquired, and continued professional liability of the same consultant May make continuation with the initial consultant preferable to a new competition \u2014 subject to satisfactory performance in the initial assignment.<\/strong><\/p>\nFor such downstream assignments, the Procuring Entity shall ask the initially selected consultant to prepare technical and financial proposals on the basis of ToR furnished by the Procuring Entity \u2014 which shall then be negotiated<\/strong>.\"<\/p><\/aside>\n<h2>8.9.3<\/span>the Two Cases Where SSS is NOT<\/em> Permitted for Downstream Work<\/span><\/h2>\n<aside class=\"note\">\" IF:<\/strong><\/p>\n\u2022 the initial assignment was not awarded on a competitive basis; Or<\/strong><\/p>\n\u2022 the downstream assignment is substantially larger in value;<\/strong><\/p>\n \u2014 a competitive process shall normally be followed, in which the consultant carrying out the initial work is not excluded from consideration if it expresses interest<\/strong>.\"<\/p><\/aside>\n<h2>8.9.4<\/span>The Justification, the Qualification Check and the Monthly Report<\/span><\/h2>\n4. For selecting a consultant under this method, the Procuring Entity should prepare a full justification and take the approval of the Competent Authority as per the SoPP<\/strong>.<\/p>\n5. The shortlisting-criteria test: \"while selecting the consultant under this method, the Procuring Entity shall ensure that the consultant has the requisite qualification and experience to undertake the assignment. Normally the Procuring Entity shall adopt the same short-listing criteria as applied to similar assignments while evaluating the EoI<\/strong>.\"<\/p>\n6. The monthly reporting duty:<\/p>\n<aside class=\"note\">\"it's the cfa's (competent financial authority's) responsibility to ensure that a statement of all selections by nominations, every month, are to be reported to Secretary\/ head of Ministry\/ Department<\/strong>.\"<\/p>\nNote the difference from the QUARTERLY nomination reporting requirement at Chapter 4 Part B, para 4.17.2-3 \u2014 that one goes to the Secretary\/ Board\/ Chief Executive every quarter, with the audit committee checking at least 10% of cases. This SSS provision requires a MONTHLY statement.<\/p><\/aside>\n<h1 data-src=\"CNC\">8.10 Selection of Individual Consultants \/ Individual Service Providers<\/span>C<\/span>NC<\/span><\/h1>\n<h2>8.10.1<\/span>The Three Conditions for Employing an Individual<\/span><\/h2>\n\"individual consultants are normally employed on assignments for which:<\/strong><\/p>\na) teams of personnel are not required<\/strong>;<\/p>\nb) no additional outside professional support is required<\/strong>; and<\/p>\nc) the experience and qualifications of the individual are the paramount requirement<\/strong>.\"<\/p>\n<h2>8.10.2<\/span>The Selection Process \u2014 Five Steps<\/span><\/h2>\n\"the procedures for selecting individual consultants are similar to, but much simpler than, those for selecting teams of consultants from a firm<\/strong>.\"<\/p>\na) the package: Preparing a consultancy services package including:<\/p>\n<aside class=\"note\">The ToR \u00b7 time frame \u00b7 number of person-months \u00b7 budget \u00b7 EoI short-listing criteria<\/strong> \u2014 AND getting it approved by the ca<\/strong>.<\/p><\/aside>\nB) advertising: Advertisement should be given on CPPP<\/strong> AND ON GeM<\/strong>. An organisation having its own website should also publish all its advertised tender enquiries on the website.<\/p>\nc) method of selection \u2014 comparison of at least three candidates:<\/p>\n<aside class=\"note\">\"they shall be selected through comparison of qualifications of at least three candidates \u2014 among those who have expressed interest in the assignment, or have been approached directly by the Procuring Entity.<\/strong><\/p>\n Capability is judged on the basis of:<\/strong><\/p>\n\u2022 academic background;<\/strong><\/p>\n\u2022 experience; And<\/strong><\/p>\n\u2022 as appropriate, knowledge of the local conditions \u2014 such as local language, culture, administrative system, and Government organisation.<\/strong><\/p>\nSelection will be carried out by the CEC, which will award marks for educational qualifications and experience, and select the most suitable candidate.<\/strong><\/p>\n The CEC May also interview candidates and award marks for their performance in the interview \u2014 and recommend the remuneration to be paid<\/strong>.\"<\/p><\/aside>\nd) DIRECT NEGOTIATION \u2014 the three exceptional cases:<\/p>\n<aside class=\"note\">\"individual consultants May be selected on a direct negotiation basis, with due justification, in exceptional cases such as:<\/strong><\/p>\nA) tasks that are a continuation of previous work that the consultant has carried out, and for which the consultant was selected competitively;<\/strong><\/p>\nB) emergency situations resulting from natural disasters; And<\/strong><\/p>\nc) when the individual is the only consultant qualified for the assignment.<\/strong><\/p>\nIndividual consultants May be (among others): Independent consultants \u00b7 consultants recruited from firms \u00b7 or consultants recruited from academic, Government, or international agencies<\/strong>.\"<\/p><\/aside>\ne) staff or associates of consultancy firms \u2014 the conflict-of-interest extension:<\/p>\n<aside class=\"note\">\"if the candidate is permanent staff or associate of a consultancy firm \u2014 the conflict-of-interest provisions described in these guidelines shall apply to the parent firm<\/strong>.\"<\/p><\/aside>\n<h2>8.10.3<\/span>Retired Government Servants<\/span><\/h2>\na) the GFR bar: \"Rule 177 of GFR, 2017 says that consulting services do not include direct engagement of retired Government servants. They should not be engaged as consultants against regular vacant posts under this Rule. Such engagements should be handled as a personnel matter<\/strong>.\"<\/p>\nb) the governing instruction: \"engagement\/ hiring of retired Government servants should be regulated as per doe's OM f.no. 3-25\/2020-E.IIIA dated 9TH December 2020<\/strong>.\"<\/p>\n<aside class=\"note\">(See also Chapter 3, para 3.3.1-2 of this Unified Manual for the remuneration rules<\/strong> \u2014 full-time engagement at last pay drawn minus pension<\/strong>; part-time non-exclusive engagement on a per day\/ month or lump-sum basis.)<\/em><\/p><\/aside>\n<h1 data-src=\"CNC\">8.11 Selection of Specialised Agencies \/ Institutions<\/span>C<\/span>NC<\/span><\/h1>\n1. Who they are: \"from time to time, ministries\/ departments May need to recruit a specialised agency or institution to undertake a specific consultancy\/ non-consultancy service, for which it is particularly well suited.<\/strong><\/p>\n<aside class=\"note\">Such agencies May be: Government\/ semi-government agencies \u00b7 universities \u00b7 or professional institutions<\/strong>.\"<\/p><\/aside>\n2. When SSS is worth considering: \"in some cases, the agency or institution has access to special expertise or special back-up and support facilities \u2014 that make it worthwhile considering recruitment on an SSS basis.<\/strong><\/p>\n<aside class=\"note\"> In such cases, there must be full justification that the use of SSS is in the best interests of the Procuring Entity<\/strong>.\"<\/p><\/aside>\n3. The government-agency Rule: \"in cases of Government and semi-government agency, SSS would be an appropriate method of recruitment<\/strong>.\"<\/p>\n4. \"individual consultants recruited from agencies and institutions May be selected in the same way as any other individual consultants<\/strong>.\"<\/p>\n<h1 data-src=\"CNC\">8.12 Selection of Non-Governmental Organisations (NGO)<\/span>C<\/span>NC<\/span><\/h1>\n1. When an ngo-only shortlist is permitted \u2014 and the mandatory QCBS:<\/p>\n<aside class=\"note\">\"non-governmental organisations (NGOs \u2014 not-for-profit organisations) May be hired for consultancy\/ nc services \u2014 if they express interest and\/ or if the Procuring Entity finds their qualifications satisfactory.<\/strong><\/p>\n Assignments which emphasise experience in and bonding with grassroot historically disadvantaged communities \u2014 e.g., experience in community participation and in-depth local knowledge \u2014 are typically attributed to NGOs, and short lists May comprise NGOs entirely.<\/strong><\/p>\n In this case, QCBS should be followed \u2014 and the evaluation criteria of proposals should reflect the ngo-unique qualifications, such as the following<\/strong>:\"<\/p><\/aside>\nthe five ngo-unique qualification criteria:<\/p>\na) history of work with grassroots communities, and evidence of satisfactory performance<\/strong>;<\/p>\nb) familiarity with participatory development approaches and low-cost technologies<\/strong>;<\/p>\nc) experienced staff conversant with the cultural and socioeconomic dimensions of beneficiaries<\/strong>;<\/p>\nd) committed leadership and adequate management<\/strong>;<\/p>\ne) capacity to co-opt beneficiary participation<\/strong>.<\/p>\n2. When SSS May be used for an NGO \u2014 with the worked illustration:<\/p>\n<aside class=\"note\">\"procuring entities May select NGOs using SSS \u2014 provided the approvals and procedures laid down for the same are followed.<\/strong><\/p>\n for example, SSS May be adopted to hire a local NGO for a very small assignment in a remote area \u2014 where only one NGO is available, and competition is impractical<\/strong>.\"<\/p><\/aside>\n<h1 data-src=\"CNC\">8.13 Procurement Consultants \/ Procurement Agents<\/span>C<\/span>NC<\/span><\/h1>\n<aside class=\"note\">This is the clearest illustration in the entire Manual family of how the same ENGAGEMENT may be a Consultancy or a Non-Consultancy service depending on its scope. Both Manuals carry near-identical text.<\/p><\/aside>\n<h2>8.13.1<\/span>Consultancy or Non-Consultancy \u2014 THE 30% QUALITY-WEIGHTAGE TEST<\/span><\/h2>\n\"hiring of procurement agents (pas) can either be done as a consultancy service or non-consultancy service \u2014 depending on the objectives and scope of assignment<\/strong>.\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>AS CONSULTANCY<\/th><th>AS NON-CONSULTANCY<\/th><\/tr><\/thead><tbody><tr><td>When<\/td><td>if the role primarily involves intellectual analysis, strategic planning, spend analysis, cost control, and advisory functions<\/strong><\/td><td>if their responsibilities are only outsourcing of routine procedures, without intellectual decision-making<\/strong><\/td><\/tr><tr><td>Illustration<\/td><td>\"when they are asked to design\/ implement a new system, or improve Value for Money, or develop strategic procurement, or carry out market building\/ sourcing<\/strong>\"<\/td><td>\"when they only operate the existing procedures, and crucial decisions are made by the client himself<\/strong>\"<\/td><\/tr><tr><td>the test<\/td><td>WHERE quality weightage of more than 30% is called for<\/strong><\/td><td>WHERE quality weightage can be 30% or less<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>8.13.2<\/span>Procurement of Specific Items<\/span><\/h2>\n\"when procurement consultants are specifically used for handling the procurement of specific items, and generally working from their own offices \u2014 they are paid:<\/strong><\/p>\n<aside class=\"note\">A percentage (either fixed or inversely proportional) of the value of the procurements handled \u2014 or of savings realised \u2014 or a combination of a percentage and a fixed fee<\/strong>.\"<\/p><\/aside>\nC<\/span> \u2014 the cost-weightage cap and its reason:<\/p>\n<aside class=\"note\">\"in such cases, they are selected under QCBS \u2014 with cost being given a weight of less than 50 (fifty) per cent.<\/strong><\/p>\n If the weight of the cost element adopted were as high as 50 per cent \u2014 financial considerations would dominate the selection, creating the risk of an unacceptably lower service quality.<\/strong><\/p>\n In such cases, it is essential to ensure that the quality threshold in the evaluation is set sufficiently high.<\/strong><\/p>\nThey shall be selected following the appropriate procedures for other consultancy assignments \u2014 using QCBS and time-based contracts<\/strong>.\"<\/p><\/aside>\nNC<\/span> \u2014 the shorter version: \"Procurement Agents as outsourcing of Non-consultancy services may be hired\u2026 they are paid a percentage (either fixed or inversely proportional) of the value of the procurements handled, or a combination of a percentage and a fixed fee. In such cases, they may be selected under QCBS.\"<\/em><\/p>\n<h2>8.13.3<\/span>Outsourcing of the Whole Procurement Function<\/span><\/h2>\n<ul class=\"lst\"><li class=\"srcmark src-C\" data-src=\" C \">C<\/span>:<\/strong>\"when procurement agents provide services for procurement for a whole project in a specific unit of the Procuring Entity \u2014 it is usually a non-consultancy service, unless the intellectual-analysis criterion is met<\/strong>.\"<\/li><li class=\"srcmark src-NC\" data-src=\" NC \">NC<\/span>:<\/strong>\"when pas provide support for a whole project in a specific unit of the Procuring Entity \u2014 they are usually paid based on the staff-months of effort provided, and they shall be selected following the appropriate procedures using QCBS and time-based contracts<\/strong>.\"<\/li><\/ul>\n<h1>Part III \u2014 CONSULTANCY-ONLY Engagements<\/span><\/h1>\n<h1>8.14 Financial Advisors [C ONLY]<\/span><\/h1>\n<h2>8.14.1<\/span>The Two Types of Assignment<\/span><\/h2>\n\"procuring entities May hire financial institutions to implement two main types of assignment:<\/strong><\/p>\na) in the preparation of studies and financial consultancy<\/strong>; or<\/p>\nb) as advisers on financial restructuring, mergers and acquisitions (m&a), or demerger<\/strong>, etc.\"<\/p>\n<h2>8.14.2<\/span>The Two Different Selection Regimes<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Type<\/th><th>Selection method<\/th><\/tr><\/thead><tbody><tr><td>TYPE (a) \u2014 studies and financial consultancy<\/td><td>the advisers can be selected under any of the methods<\/strong> (whichever is considered most suitable, depending on the scope of work)<\/td><\/tr><tr><td>TYPE (b) \u2014 restructuring, M&A, demerger<\/td><td>QCBS SHALL<\/strong> BE ADOPTED \u2014 whereby the RfP specifies technical evaluation criteria similar to those relevant to standard Consultancy assignments<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>8.14.3<\/span>The Two-Part Remuneration \u2014 Retainer plus Success Fee<\/span><\/h2>\nin type (b), the financial proposal would include two distinct forms of remuneration<\/strong>:<\/p>\na) <\/strong>A lump-sum retainer fee \u2014 to reimburse the consultant for services made available<\/strong>; and<\/p>\nb) <\/strong>A success fee \u2014 which is either fixed or, preferably, expressed as a percentage of the value of the privatisation transaction<\/strong>.<\/p>\nThe weighting between them:<\/p>\n<aside class=\"note\">\"depending on the type of activity and the circumstances of the Procuring Entity, the RfP specifies the relative weights assigned in the financial evaluation to the retainer and to the success fee, respectively.<\/strong><\/p>\n In some cases, the Procuring Entity offers a fixed retainer fee \u2014 and the consultant must compete only on the success fee as a percentage of the value of the privatisation transaction.<\/strong><\/p>\n for QCBS (notably for large contracts), cost May be given a weight higher than recommended for standard assignments (such as 30 (thirty) per cent) \u2014 or the selection May be based on LCS selection.<\/strong><\/p>\nThe RfP shall specify clearly how proposals will be presented and how they will be compared<\/strong>.\"<\/p><\/aside>\n<h2>8.14.4<\/span>When a Success Fee Is Appropriate<\/span><\/h2>\n<aside class=\"note\">\"success fees are most appropriate when:<\/strong><\/p>\n\u2022 it is relatively easy to measure results in meeting the Procuring Entity's objective (successful sale of assets); And<\/strong><\/p>\n\u2022 when the success is at least partly related to the efforts of the consultant involved.<\/strong><\/p>\n Therefore, success fees are more likely to be adopted at the transaction stage \u2014 because by that time the Procuring Entity's objective is to maximise revenue<\/strong>.\"<\/p><\/aside>\n<h1>8.15 Auditors [C ONLY]<\/span><\/h1>\n1. The fiduciary rationale:<\/p>\n<aside class=\"note\">\"quality audits of federal or State expenditures are an important accountability mechanism for ensuring financial integrity. Therefore, public organisations have a vital fiduciary responsibility to ensure that their audit is of the highest quality<\/strong>.\"<\/p><\/aside>\n2. What the ToR and the technical qualifications must cover:<\/p>\n\"auditors typically carry out auditing tasks under well-defined ToR and professional standards<\/strong>.\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Element<\/th><th>What it must consider\/ cover<\/th><\/tr><\/thead><tbody><tr><td>THE ToR<\/td><td>applicable statutory, Government, organisational requirements \u00b7 and applicable auditing and accounting standards<\/strong><\/td><\/tr><tr><td>scope of audit<\/td><td>the jurisdiction \u00b7 type of audit \u00b7 contract period \u00b7 and any additional services<\/strong><\/td><\/tr><tr><td>technical qualifications<\/td><td>licensing requirement \u00b7 general and similar experience \u00b7 quality certifications \u00b7 quality and adequacy of staffing \u00b7 financial capability \u00b7 auditing approach \u00b7 and scheduling of the auditor<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">the independence requirement: \"auditors' independence and lack of conflict of interest is also an important requirement<\/strong>.\"<\/p><\/aside>\n\"a presentation or interview also May be part of the RfP process. A pre-proposal conference May also be considered<\/strong>.\"<\/p>\n3. The QCBS recommendation \u2014 with its stated reason:<\/p>\n<aside class=\"note\">\" Since in recent times the quality of audit has been a matter of concern \u2014 selection of auditors May preferably be done as a consultancy service on QCBS basis, with emphasis on weightage of quality<\/strong>.\"<\/p><\/aside>\n<h1>8.16 Public Competition for Design of Symbols\/ Logos [C ONLY]<\/span><\/h1>\n(Rule 196 of GFR 2017)<\/em><\/p>\n1. The three governing principles:<\/p>\n\"certain ministries\/ departments are required to conduct competitions for the design of logos\/ symbols for their use \u2014 which should be conducted in a transparent, fair, and objective manner.<\/strong><\/p>\nThe following guidelines shall be followed by all ministries\/ departments, as well as their attached\/ subordinate offices and the autonomous bodies\/ organisations controlled by them<\/strong>:\"<\/p>\na) design competitions should be conducted in a transparent, fair, and objective manner<\/strong>;<\/p>\nb) wide publicity should be given to the competition \u2014 so as to ensure that the information is accessible to all possible participants<\/strong>. This should include publication on the website of the Ministry\/ Department\/ PSU\/ organisation concerned, as also the Central Public Procurement Portal<\/strong>. THE existing e-publishing module can be utilised<\/strong>;<\/p>\nC) the two statutes to be kept in view: \"Provisions of any applicable laws \u2014 including the official languages Act and the emblems and names (prevention of improper use) Act \u2014 should be kept in view while conducting the competition\"<\/strong>;<\/p>\n2. The eleven contents of the detailed competition notice:<\/p>\n\"a detailed competition notice should be drawn up and made public. The notice should, inter alia, [give] details on the following<\/strong>:\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Content of the Competition Notice<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>THE objectives of the design competition, and the key features expected in the proposed design<\/strong><\/td><\/tr><tr><td>ii<\/td><td>qualification criteria, if any, for participation<\/strong><\/td><\/tr><tr><td>iii<\/td><td>THE process of evaluation and evaluation criteria \u2014 whether it would be single or multi-stage<\/strong>. \"for symbols\/ logos intended to represent a drive\/ project\/ entity of national importance \u2014 it May be decided to have the selection through public voting. If so, the modalities should be clearly specified<\/strong>.\"<\/td><\/tr><tr><td>iv<\/td><td>THE manner of submission of entries, and the format\/ details etc. Expected with the design<\/strong><\/td><\/tr><tr><td>v<\/td><td>whether one participant can submit multiple designs<\/strong><\/td><\/tr><tr><td>vi<\/td><td>THE last date and time for submission<\/strong><\/td><\/tr><tr><td>vii<\/td><td>details of entry fees, if any, and the manner of submission<\/strong><\/td><\/tr><tr><td>viii<\/td><td>expected date for announcement of results, and the manner in which the results will be intimated<\/strong><\/td><\/tr><tr><td>ix<\/td><td>THE number of prizes to be awarded, and the amount payable for the successful design(s)<\/strong><\/td><\/tr><tr><td>x<\/td><td>\"it May be clearly stipulated that the intellectual property rights of the successful design(s) would rest with the sponsoring agency. The status of the unsuccessful designs \u2014 and whether it is intended to return them \u2014 should be indicated clearly<\/strong>.\"<\/td><\/tr><tr><td>xi<\/td><td>if the selection is to be done by a jury of experts nominated for the purpose \u2014 the composition of the jury May also be notified<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n3. After the competition: \"once the competition is over and the winning entry selected \u2014 this again should be notified in the public domain. If the selection has been by a jury of experts nominated for the purpose, the composition of the jury May be notified<\/strong>.\"<\/p>\n4. The customisation caveat: \"it is evident that every competition would have distinct features \u2014 and therefore, the aforesaid guidelines should be used as a general principle while preparing the detailed procedure\/ Rules for each such competition<\/strong>.\"<\/p>\n<h1>8.17 Procurement of Integrated IT Projects [C, with NC cross-reference]<\/span><\/h1>\n<h2>8.17.1<\/span>The Consultancy Characterisation and the Three Types<\/span><\/h2>\n\"procurement of integrated IT projects should normally be carried out as procurement of consultancy services \u2014 as the outcomes\/ deliverables vary from one service provider to another<\/strong>.\"<\/p>\nthe IT projects May include:<\/p>\na) bespoke software development<\/strong>;<\/p>\nb) cloud-based services<\/strong>; and<\/p>\nc) composite IT system integration services<\/strong> \u2014 involving <\/strong>design, development, deployment, commissioning of IT system including supply of hardware, development of software, bandwidth, and operation\/ maintenance of the system for a defined period after go-live, etc.<\/strong><\/p>\n<h2>8.17.2<\/span>QCBS with Quality Weightage up to 80%<\/span><\/h2>\n<aside class=\"note\">C<\/span>:<\/strong>\" Since quality is of prime importance in procurement of IT services \u2014 QCBS selection with due emphasis on quality weightage (even up to 80%, depending on quality requirements) May be used. In cloud services in particular, alternative pricing models May be allowed to be quoted<\/strong>.\"<\/p>\nNC<\/span> \u2014 para 8.12.1, cross-referring:<\/strong>\"procurement of it project\u2026 involve considerable intellectual inputs, hence these should be handled as procurement of consultancy services. Such procurements are done using QCBS selection method with 80%: 20% weightages for quality: Price<\/strong>.\"<\/p><\/aside>\n<h2>8.17.3<\/span>Caution against Restrictive and Discriminatory Qualification Conditions<\/span><\/h2>\n<aside class=\"note\">\"the Ministry of electronics & information technology (MeitY) has cautioned that qualification conditions for cloud service providers should not be restrictive\/ discriminatory \u2014 like insistence on 'gartner's magic quadrant' etc., and very high financial turnover \u2014 which impede the domestic service providers and do not add value to the users.<\/strong>(D.O. No. 10(13)\/2022-EG-II dated 25.08.2022)<\/em><\/p>\n They have also cited that DPIIT has a similar advisory that such discrimination against domestic players is a violation of the Make in India order, which provides purchase preference to local content requirement.<\/strong>(OM No. P-45021\/121\/2018-(B.E.-II) dated 20.06.2019)<\/em><\/p><\/aside>\n<h3>The Three Categories of Restrictive and Discriminatory Conditions \u2014 with Named Examples<\/span><\/h3>\na) restrictive and discriminatory eligibility criteria in tender conditions:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Example cited<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>mandatory presence in gartner magic quadrant<\/strong> \u2014 IT and Telecom Products<\/td><\/tr><tr><td>ii<\/td><td>mandatory USFDA\/ European ce<\/strong> \u2014 Medical Devices<\/td><\/tr><tr><td>iii<\/td><td>excessive turnover requirement \u2014 Rs. 1000 cr for procurement of Rs. 70 cr<\/strong><\/td><\/tr><tr><td>iv<\/td><td>excessive past experience \u2014 10 YEARS<\/strong><\/td><\/tr><tr><td>v<\/td><td>export experience to G8 countries<\/strong><\/td><\/tr><tr><td>vi<\/td><td>additional requirement of bank Guarantee for local supplier<\/strong><\/td><\/tr><tr><td>vii<\/td><td>delayed payment terms to local suppliers<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nb) restrictive and discriminatory specifications \u2014 foreign brands specified:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Brands named in the Manual<\/th><\/tr><\/thead><tbody><tr><td>Telecom products<\/td><td>cisco \u00b7 nec \u00b7 alcatel \u00b7 siemens<\/strong><\/td><\/tr><tr><td>IT products<\/td><td>hp \u00b7 dell \u00b7 lenovo<\/strong><\/td><\/tr><tr><td>LIFTS<\/td><td>otis \u00b7 mitsubishi \u00b7 schindler \u00b7 kone \u00b7 johnson<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nc) restrictive\/ discriminatory specifications or pre-approved foreign brands in works\/ turnkey projects:<\/p>\ni) local manufacturer not included in pre-approved list<\/strong>;<\/p>\nii) specification tailor-made to suit foreign products<\/strong>;<\/p>\niii) foreign technical standards indicated in the specification<\/strong>;<\/p>\niv) technical parameters to favour foreign products<\/strong> \u2014 viz.<\/em> \"(\u2013) 25-DEGREE temperature compatibility \u2014 for EPBX equipment being procured for an airport in Central India<\/strong>.\"<\/p>\n<h2>8.17.4<\/span>Bespoke Software Development<\/span><\/h2>\n\"bespoke software development involves creating customised software solutions tailored to specific organisational needs. Unlike off-the-shelf software, bespoke applications are designed from scratch \u2014 considering unique requirements, workflows, and business processes<\/strong>.\"<\/p>\na) DEFINING REQUIREMENTS \u2014 and the agile mandate: \"engage stakeholders, gather functional and non-functional requirements, and define clear objectives. Stipulate an agile development approach that allows iterative development, frequent feedback, and adaptability. Agile ensures alignment with evolving requirements and minimises risks<\/strong>.\"<\/p>\nb) technical qualifications: Evaluate bidders based on expertise, track record, and ability to deliver custom solutions<\/strong> \u2014 considering technical proficiency, domain knowledge, scalability, security, and support and project management capabilities<\/strong>.<\/p>\n<h2>8.17.5<\/span>Cloud-Based Services<\/span><\/h2>\nA) defining requirements:<\/p>\n<ul class=\"lst\"><li>I) slas and data privacy: Define slas regarding uptime, performance, and support<\/strong>. Address data privacy and compliance requirements \u2014 especially if handling sensitive information<\/strong>.<\/li><li>ii) migration strategy: \"plan the migration process carefully. Assess existing applications for cloud readiness, choose the right migration approach (lift-and-shift, re-architecting, or hybrid), and ensure minimal disruption<\/strong>.\"<\/li><\/ul>\nb) the three cloud service models:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Model<\/th><th>Meaning<\/th><\/tr><\/thead><tbody><tr><td>Software as a service (SaaS)<\/td><td>ready-to-use applications hosted by the provider<\/strong><\/td><\/tr><tr><td>platform as a service (PaaS)<\/td><td>development platforms and tools for building custom applications<\/strong><\/td><\/tr><tr><td>infrastructure as a service (IaaS)<\/td><td>virtualised computing resources (servers, storage, networking)<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nc) technical qualifications: Evaluate cloud providers based on reliability, security, compliance, data sovereignty<\/strong>. Consider well-established cloud services providers<\/strong>.<\/p>\n<h2>8.17.6<\/span>Composite IT System Integration Services<\/span><\/h2>\n\"composite IT system integration involves connecting disparate systems, applications, and data sources to create a cohesive ecosystem<\/strong>.\"<\/p>\na) defining requirement:<\/p>\n<ul class=\"lst\"><li>I) integration strategy: Define the integration scope \u2014 APIs, middleware, and data synchronisation<\/strong>. Consider whether real-time or batch processing is required<\/strong>.<\/li><li>ii) interoperability and scalability: Ensure that integrated components can communicate seamlessly<\/strong>. Scalability is crucial to accommodate future growth and changing business needs<\/strong>.<\/li><li>iii) testing and maintenance: Specify testing requirements \u2014 unit, integration, and end-to-end testing<\/strong>. Also outline ongoing maintenance and support expectations<\/strong>.<\/li><\/ul>\nB) technical qualification: Select vendors with expertise in integrating complex systems<\/strong>. Look for experience in integrating diverse technologies (ERP, CRM, legacy systems)<\/strong>.<\/p>\n<h1>8.18 Hiring Consultants for Digital India Projects [C ONLY]<\/span><\/h1>\n<h2>8.18.1<\/span>Overview and the NeGD Framework<\/span><\/h2>\n<aside class=\"note\">\"the Digital India initiative, under the Ministry of electronics and information technology (MeitY), seeks to transform India into a digitally empowered society and knowledge economy.<\/strong><\/p>\n The hiring of consultants is pivotal for implementing large-scale e-governance and technology projects that support this vision.<\/strong><\/p>\n National E-governance Division (NeGD) \u2014 an autonomous business division within Digital India corporation \u2014 has established a robust framework for hiring consultants through empanelment of qualified consulting organisations<\/strong>.* (F.No. N-22018\/33\/2022-NeGD dated 17.05.2024)<\/em><\/p><\/aside>\n<h2>8.18.2<\/span>Empanelment \u2014 the Three-plus-Two Year Validity<\/span><\/h2>\n<aside class=\"note\">\"NeGD has empanelled consulting organisations through a competitive request for empanelment (rfe) process.<\/strong><\/p>\n This empanelment is valid for three years, extendable by two years.<\/strong><\/p>\nThe empanelment framework simplifies the hiring process \u2014 ensuring quick access to skilled professionals while maintaining cost and quality control.<\/strong><\/p>\nThis ensures the availability of specialised skills, adherence to national standards, and alignment with the programme's vision. Government entities are encouraged to utilise this framework<\/strong>.\"<\/p><\/aside>\n<h2>8.18.3<\/span>The Three Pre-defined Categories<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Scope of services<\/th><\/tr><\/thead><tbody><tr><td>category a \u2014 project\/ programme management and advisory services<\/td><td>i) developing project proposals, roadmaps, and templates<\/strong>; <\/strong>ii) managing e-governance projects \u2014 including agile methodologies, bid processes, and change management<\/strong>; iii) conducting audits (security, performance, and quality) and risk assessments<\/strong><\/td><\/tr><tr><td>category b \u2014 digital ecosystem and architecture development<\/td><td>i) designing digital ecosystem blueprints in line with national standards<\/strong>; <\/strong>ii) preparing implementation plans \u2014 including business requirements, data governance strategies, and technology modernisation approaches<\/strong>; iii) supporting the adoption of scalable and agile solutions<\/strong><\/td><\/tr><tr><td>category c \u2014 technology management and emerging technologies<\/td><td>i) advising on emerging technologies such as AI, blockchain, IoT, and quantum computing<\/strong>; ii) ensuring technology compliance, and managing cybersecurity and GIS solutions<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>8.18.4<\/span>The Hiring Process \u2014 Four Steps<\/span><\/h2>\na) request for proposals or concept notes: \"ministries, departments, and other Government organisations leveraging negd's empanelment notify empanelled agencies about specific assignments. Agencies submit technical proposals or concept notes, which are evaluated on merit<\/strong>.\"<\/p>\nb) selection and deployment: \"selected agencies deploy consultants with expertise relevant to the project. Consultants are required to provide their own equipment, and work collaboratively with Government teams at designated project sites<\/strong>.\"<\/p>\nc) terms of engagement: \"empanelled consultants operate on a time-limited project basis, without implying employment obligations by NeGD. Sub-contracting of services is prohibited<\/strong>.\"<\/p>\nd) compliance and terms \u2014 the four obligations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Obligation<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>intellectual property rights: \"all intellectual property generated during the project belongs to NeGD or the client organisation<\/strong>.\"<\/td><\/tr><tr><td>ii<\/td><td>performance standards: \"consultants must adhere to timelines and quality benchmarks specified in the work order<\/strong>.\"<\/td><\/tr><tr><td>iii<\/td><td>penalties and termination: \"delays or non-performance can result in penalties up to 10% of the project value \u2014 or termination of the engagement<\/strong>.\"<\/td><\/tr><tr><td>iv<\/td><td>confidentiality: \"consultants must maintain confidentiality of all project-related data<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>Part IV \u2014 NON-CONSULTANCY-ONLY Services<\/span><\/h1>\n<h1>8.19 Inspection Agents [NC ONLY]<\/span><\/h1>\n1. Why it is a non-consultancy service:<\/p>\n<aside class=\"note\">\"hiring of inspection agents (ias) \u2014 to inspect and certify goods before shipment, or on arrival in the Procuring Entity's country \u2014 is generally a non-consultancy service, where their responsibilities are:<\/strong><\/p>\n\u2022 only operational\/ procedural;<\/strong><\/p>\n\u2022 for standardised goods\/ commodities;<\/strong><\/p>\n\u2022 without intellectual decision-making \u2014 i.e., when they only inspect within the established protocols; Repetitive work without intellectual inputs \u2014 <\/strong><\/p>\n Where quality weightage can be 30% or less<\/strong>.\"<\/p><\/aside>\n2. Selection and payment: \"inspection agents May be selected using QCBS. Payment is usually based on a percentage of the value of goods inspected and certified<\/strong>.\"<\/p>\n<h1>8.20 Housekeeping Services [NC ONLY]<\/span><\/h1>\n<aside class=\"note\">\"in the case of housekeeping\/ cleaning services, the GeM platform provides for options based on:<\/strong><\/p>\n(a) floor area-wise cleaning; And<\/strong><\/p>\n(b) MANPOWER.<\/strong><\/p>\n Usually, the floor area-wise cleaning option is more cost-effective.<\/strong><\/p>\n Accordingly, before a tender is floated, an exercise May be undertaken to determine the option which is considered beneficial for the Procuring Entity \u2014 duly recording reasons for such decision on file<\/strong>.\"<\/p><\/aside>\n<h1>8.21 Manpower Outsourcing Services [NC ONLY]<\/span><\/h1>\n(DoE, MoF's OM No. F.6\/1\/2023-PPD dated 06.01.2023)<\/em><\/p>\n<h2>8.21.1<\/span>The Regularisation Caution \u2014 and the I-Card Rule<\/span><\/h2>\n<aside class=\"note\">\" Hiring of manpower through contracts should be avoided \u2014 to ensure no future legal problems, as these employees May demand regularisation afterwards.<\/strong><\/p>\n Even if employed, there should be no direct correspondence with such people.<\/strong><\/p>\n Even i-cards should be issued indicating the person to be representative of the contractor (name of the contractor to be mentioned)<\/strong>.\"<\/p><\/aside>\n<h2>8.21.2<\/span>LCS for High-Value Cases<\/span><\/h2>\n\" Least cost system (LCS) should be considered for procurement of manpower outsourcing service, wherever appropriate \u2014 especially in high-value cases<\/strong>.\"<\/p>\n<h2>8.21.3<\/span>the Minimum and Maximum Service Charges \u2014 3.85% to 7%<\/span><\/h2>\n<aside class=\"note\">\"IN the Procurement of Manpower Outsourcing Service, the Minimum Service Charges (Minimum Floor Price, Inclusive of Transaction Charges) May Be Fixed as 3.85% (Inclusive of GST).<\/em><\/p>\nThe procuring entities can also fix the service charge above 3.85% with proper justification on file, wherever required.<\/strong><\/p>\n However, such charges should not exceed 7% (inclusive of GST) in any case<\/strong>.\" (DoE OM No. 6\/1\/2023-PPD dated 06.01.2023)<\/em><\/p><\/aside>\n<h2>8.21.4<\/span>The Two Clarifications<\/span><\/h2>\n4. No bar on awarding above the minimum:<\/strong>\"there is no bar on award of tenders to the lowest bidder, if he has quoted service charges more than the minimum prescribed service charges in the tender document (i.e., 3.85% to 7%)<\/strong>.\"<\/strong>(DoE OM No. 6\/1\/2023-PPD dated 17.01.2024)<\/em><\/p>\n5. When the floor price applies \u2014 the two limits:<\/p>\n<aside class=\"note\">\"this stipulation of minimum floor price is applicable only:<\/strong><\/p>\n\u2022 if standalone manpower is procured \u2014 not for manpower plus materials contracts; And<\/strong><\/p>\n\u2022 that too on the basis of service charges<\/strong>.\"<\/p><\/aside>\n<h1>8.22 Private Security Manpower Services [NC ONLY]<\/span><\/h1>\n<h2>8.22.1<\/span>What the Service Covers, and the PSARA Licence<\/span><\/h2>\n\"security services offer:<\/strong><\/p>\n<aside class=\"note\">Protection for life and property against theft, pilferage, fire, etc. \u00b7 safety to manpower \u00b7 guiding visitors to the premises \u00b7 regulating entry of unwanted visitors, salesmen \u00b7 and maintenance of visitors register<\/strong>.<\/p><\/aside>\n\" This is one of the most frequently outsourced non-consultancy services.<\/strong><\/p>\n The Private Security Agencies (regulation) Act, 2005 (PSARA) regulates the functioning of Private Security Agencies in India.<\/strong><\/p>\n A PSARA licence and labour licence are required for any person or entity that wants to operate a private security agency in India. The State Government (in which the agency will be operating) issues these licences<\/strong>.\"<\/p>\n<h2>8.22.2<\/span>The Ex-Servicemen (ESM) Resettlement Framework<\/span><\/h2>\n<aside class=\"note\">\"due to operational and administrative reasons, around 60,000 skilled armed forces personnel (skilled to undertake security guard-related duties) are retired (Ex-servicemen \u2014 ESM) every year \u2014 to maintain a youthful profile of the armed forces.<\/strong><\/p>\n Security agencies \u2014 with an ESM officer as proprietor and other ESM as security supervisors\/ guards \u2014 are empanelled for \"provision of security services\" by the directorate general resettlement (DGR), Department of Ex-servicemen welfare (desmw) \u2014 to facilitate resettlement of ESM.<\/strong><\/p>\n These agencies have to employ esms as security guards\/ supervisors in at least 90% of the deployed workforce. DGR monitors these agencies through reports\/ returns<\/strong>.\"<\/p><\/aside>\n<h2>8.22.3<\/span>The DGR Empanelment Certificate \u2014 Five Years or Age Sixty<\/span><\/h2>\n<aside class=\"note\">\"the 'empanelment certificate' by DGR is issued \u2014 only to eligible esms having labour licence and PSARA certification in the relevant State \u2014 for a duration of:<\/strong><\/p>\n Five years (05), *or* up to the date when the ESM proprietor turns sixty (60) years \u2014 whichever is earlier<\/strong>.\"<\/p><\/aside>\n<h2>8.22.4<\/span>The Sponsorship Requirement \u2014 and the Qualification Waiver<\/span><\/h2>\n<aside class=\"note\">\" Dgr-empanelled agencies\/ companies are only eligible through DGR sponsorship.<\/strong><\/p>\n Dgr-empanelled agencies\/ companies are not eligible for participating in the tender enquiry directly \u2014 i.e., without DGR sponsorship.<\/strong><\/p>\n Dgr-sponsored security agencies do not need to fulfil minimum experience, minimum turnover qualifications<\/strong>.\"<\/p><\/aside>\n<h2>8.22.5<\/span>The CPSE Mandate<\/span><\/h2>\n\"security manpower service for CPSEs is governed by orders from the Ministry of defence and the Department of public enterprises (DPE).<\/strong><\/p>\n<aside class=\"note\"> As per these instructions, CPSEs must avail security services only from dgr-empanelled Ex-servicemen (ESM) security service providers<\/strong>.\"<\/p>\n(MoD OM No. 28(3)\/2012-D(Res-1) dated 09.07.2012 and No. 28(75)\/2020-D(Res-1) dated 13 May 2021; DPE OM no. DPE-GM-12\/0001\/2016-GM-FTS-5410 dated 13.09.2018 and 14.02.2019.)<\/em><\/p><\/aside>\n<h2>8.22.6<\/span>The Mandatory GeM Route and the Three-Agency Sponsorship<\/span><\/h2>\n<aside class=\"note\">\" Since these services are available on GeM, procurement of these services through \"security manpower service\" (under the manpower resource outsourcing service) functionality on the GeM portal becomes mandatory.<\/strong><\/p>\nOn this functionality, the Procuring Entity can upload their requirements in the web-based format.<\/strong><\/p>\n DGR issues a sponsorship letter to at least three ESM service agencies, based on their criteria, to participate in such requirements on GeM<\/strong>.\"<\/p><\/aside>\n<h2>8.22.7<\/span>Selection \u2014 the 10% Negotiation Floor and the Seniority Tie-Breaker<\/span><\/h2>\n<aside class=\"note\">\" Selection of a service provider is based on the service charges quoted over the minimum wages.<\/strong><\/p>\n In no case May service charges be negotiated by CPSEs below the rate prescribed by DGR in its guidelines for empanelment of ESM security service agencies from time to time \u2014 which is up to 10% at present.<\/strong><\/p>\n The tie-breaker: In the eventuality of all the dgr-sponsored agencies quoting the same rates \u2014 the Procuring Entity shall award the contract to the senior-most sponsored agency.<\/strong><\/p>\n The order of seniority of sponsored agencies\/ private limited companies\/ corporations has been indicated in the sponsorship letter<\/strong>.\"<\/p><\/aside>\n<h1>8.23 Vehicle Hiring for Office Use [NC ONLY]<\/span><\/h1>\n<h2>8.23.1<\/span>Mode of Procurement and Type of Contract<\/span><\/h2>\n<aside class=\"note\">\" One of the most common outsourcings is hiring of staff cars for use of the executives.<\/strong><\/p>\n The procurement of vehicles for office use on a monthly basis shall be carried out as a Rate Contract through an Open Tender Enquiry (OTE).<\/strong><\/p>\nThis type of contract allows the Procuring Entity to hire vehicles at predetermined rates for a specified period \u2014 ensuring flexibility and cost-effectiveness<\/strong>.\"<\/p><\/aside>\n<h2>8.23.2<\/span>Contract Period<\/span><\/h2>\n<aside class=\"note\">\"the contract will initially be valid for one year \u2014 with the possibility of extension up to two times, contingent on performance and mutual agreement.<\/strong><\/p>\n Include provisions for early termination, due to unsatisfactory performance<\/strong>.\"<\/p><\/aside>\n<h2>8.23.3<\/span>Price Variation Clause (PVC)<\/span><\/h2>\n<aside class=\"note\">\"to account for fluctuations in operational costs \u2014 such as fuel prices and wages \u2014 the contract will include a Price Variation Clause (PVC) based on acceptable indices.<\/strong><\/p>\n This ensures fair compensation for the service provider and continuity of service in case of significant changes<\/strong>.\"<\/p><\/aside>\n<h2>8.23.4<\/span>Bid Design<\/span><\/h2>\n\"appropriate eligibility, qualification, and selection criteria will be defined. Requirements for vehicle quality, technical specifications, and driver standards will also be specified. Different car specifications May be outlined for varying purposes.<\/strong><\/p>\nA Service Level Agreement (SLA) will be included \u2014 which May cover:<\/strong><\/p>\n<aside class=\"note\">Uptime requirements \u00b7 monitoring and reporting \u00b7 complaint response, resolution and escalation \u00b7 penalties for non-compliance \u00b7 and KPIs<\/strong>.\"<\/p><\/aside>\n<h2>8.23.5<\/span>Basis of Payment \u2014 the Daily-Rate Formula<\/span><\/h2>\n<aside class=\"note\">\"payment for hired vehicles will be based on daily rates, which include:<\/strong><\/p>\n\u2022 specified working hours per day (e.g., 10 hours); And<\/strong><\/p>\n\u2022 a set distance (e.g., 100 kilometres per day);<\/strong><\/p>\n\u2022 within an overall monthly limit of 3,000 kilometres.<\/strong><\/p>\nRates for additional overtime hours or kilometres will also be specified. Additional charges \u2014 such as night service fees for specified hours (e.g., 11 pm to 6 am) \u2014 May also be included.<\/strong>\"<\/p><\/aside>\nthe payment periodicity and the quarterly kilometre adjustment:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Item<\/th><th>When paid<\/th><\/tr><\/thead><tbody><tr><td>Basic monthly charges; Overtime\/ night charges<\/td><td>PAID monthly<\/strong><\/td><\/tr><tr><td>payments for extra kilometres<\/td><td>processed on a quarterly basis<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">the carry-forward Rule: \"any net extra kms (after adjusting any shortfall kms) would be paid off at the end of the quarter \u2014 and any net shortfall in kms, if any, during the quarter shall be carried forward to the next quarter<\/strong>.\"<\/p><\/aside>\n<h1>8.24 Procurement of IT Hardware as a Service (HaaS) [NC ONLY]<\/span><\/h1>\n<h2>8.24.1<\/span>The Distinction from an Integrated IT Project<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>Characterisation<\/th><th>Selection method<\/th><\/tr><\/thead><tbody><tr><td>integrated IT project<\/td><td>involves considerable intellectual inputs<\/strong>, hence handled as procurement of consultancy services<\/strong><\/td><td>QCBS with 80%: 20% weightages for quality: Price<\/strong><\/td><\/tr><tr><td>hardware as a service (HaaS)<\/td><td>A non-consultancy service<\/strong> \u2014 hardware on a subscription or lease basis, with slas and maintenance<\/strong><\/td><td>LCS (L1), OR<\/strong> QCBS with e.g. 30% technical and 70% financial<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">\"when procuring IT hardware as a service (HaaS), the salient non-consultancy service tender and evaluation conditions must be clearly defined \u2014 to ensure compliance, competitiveness, and Value for Money.<\/strong><\/p>\n Given that HaaS involves the procurement of hardware on a subscription or lease basis, with service-level agreements (slas) and maintenance \u2014 the tender conditions must address both the hardware and the associated services<\/strong>.\"<\/p><\/aside>\n<h2>8.24.2<\/span>Scope of Services \u2014 the Thirteen Elements<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Element<\/th><th>Content<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>detailed specifications<\/td><td>clearly outline the specific IT hardware (desktops, laptops, servers, networking cabling\/ equipment, ups<\/strong>, etc.) with configurations and performance standards. Specify what software packages (including anti-virus and firewall software) would be included \u2014 and that licence shall be kept valid during the contract period<\/strong><\/td><\/tr><tr><td>b<\/td><td>service components<\/td><td>installation \u00b7 configuration \u00b7 maintenance \u00b7 repair\/ replacement\/ upgradation \u00b7 and dismantling\/ removal at the end of contract period<\/strong><\/td><\/tr><tr><td>c<\/td><td>delivery and deployment<\/td><td>specify timelines FOR delivery, installation, and commissioning of hardware at specified locations<\/strong><\/td><\/tr><tr><td>d<\/td><td>end-to-end support<\/td><td>help desk \u00b7 remote support \u00b7 on-site support \u00b7 and any additional managed services<\/strong><\/td><\/tr><tr><td>e<\/td><td>training and knowledge transfer<\/td><td>train the Procuring Entity's staff on using the hardware, managing configurations, basic troubleshooting and accessing support services<\/strong><\/td><\/tr><tr><td>g<\/td><td>data protection<\/td><td>\"if any data is handled by the hardware or service provider, stringent data protection clauses must be included \u2014 ensuring compliance with relevant Indian regulations such as the information technology Act, 2000 and its associated Rules<\/strong>.\"<\/td><\/tr><tr><td>h<\/td><td>cybersecurity standards<\/td><td>specify the required cybersecurity measures and standards (e.g., iso\/iec 27001 certification)<\/strong><\/td><\/tr><tr><td>i<\/td><td>audit rights<\/td><td>\"include clauses allowing the procuring authority to audit the service provider's performance, data security, and compliance with the contract at regular intervals<\/strong>.\"<\/td><\/tr><tr><td>j<\/td><td>risk management plan<\/td><td>require the bidder to submit a plan to mitigate risks related to hardware failure, service disruptions, or cybersecurity threats<\/strong><\/td><\/tr><tr><td>k<\/td><td>ownership model<\/td><td>\"clarify that the hardware is provided on a service model (HaaS) \u2014 and the ownership and risks remain with the service provider throughout the contract period<\/strong>.\"<\/td><\/tr><tr><td>l<\/td><td>insurance<\/td><td>\"service provider would keep the hardware insured at his cost<\/strong>.\"<\/td><\/tr><tr><td>m<\/td><td>asset tracking<\/td><td>requirements for tracking and monitoring hardware assets \u2014 including provisions for upgrading hardware during the contract period<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>8.24.3<\/span>Contract Period \u2014 and the Ten-Year QCBS Option<\/span><\/h2>\na) tenure: Specify the duration of the contract (e.g., 3 years, 5 years)<\/strong>, indicating whether the contract is renewable and under what conditions<\/strong>.<\/p>\n<aside class=\"note\">\"in case the contract is decided on QCBS basis \u2014 a longer contract period May be considered (say up to 10 years)<\/strong>.\"<\/p><\/aside>\nb) exit clauses: Include provisions for early termination or contract extensions, based on performance<\/strong>.<\/p>\n<h2>8.24.4<\/span>Service Level Agreement (SLA)<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Element<\/th><th>Requirement<\/th><\/tr><\/thead><tbody><tr><td>Uptime requirements<\/td><td>define minimum uptime guarantees (e.g., 99.9% availability) and penalties for breaches<\/strong><\/td><\/tr><tr><td>response and resolution times<\/td><td>set clear expectations (e.g., 4-HOUR response time for critical failures)<\/strong><\/td><\/tr><tr><td>maintenance & support<\/td><td>conditions for periodic preventive maintenance and replacement of faulty hardware at no additional cost<\/strong><\/td><\/tr><tr><td>monitoring and reporting<\/td><td>regular performance reports regarding hardware functionality, uptime, and SLA adherence<\/strong><\/td><\/tr><tr><td>penalties for non-compliance<\/td><td>\"define penalties for failure to meet SLA requirements, delayed delivery, or non-compliance. Penalties could include financial deductions, contract termination, or blacklisting from future tenders<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>8.24.5<\/span>Payment Terms<\/span><\/h2>\na) subscription model: Outline the payment model \u2014 typically on a monthly or quarterly subscription basis<\/strong>, with provisions for penalties in case of non-compliance with slas.<\/p>\nB) cost inclusions: Define the total cost \u2014 including hardware, software, service charges, taxes, transportation, and any other related costs<\/strong>.<\/p>\nC) milestone-based payments: Payment May be linked to delivery \u00b7 installation \u00b7 successful commissioning \u00b7 periodic payment \u00b7 and dismantling\/ removal at end of contract<\/strong>.<\/p>\n<h2>8.24.6<\/span>Qualification and Evaluation Criteria<\/span><\/h2>\nA) technical qualification:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Requirement<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>experience and expertise: Bidders must have prior experience in providing HaaS to Government departments or large enterprises<\/strong>. Minimum of 3 to 5 years' experience in managing similar contracts<\/strong><\/td><\/tr><tr><td>ii<\/td><td>certifications: Relevant certifications such as ISO 9001 (quality management) and ISO 20000 (IT service management)<\/strong> May be required<\/td><\/tr><tr><td>iii<\/td><td>OEM authorisation: \"if the bidder is not the OEM \u2014 an authorisation letter from the OEM must be submitted, to ensure genuine hardware, warranty, and after-sales support<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\nb) technical evaluation criteria:<\/p>\ni) compliance with specifications<\/strong> \u2014 hardware configuration requirements, SLAs, and support service expectations;<\/p>\nii) scalability<\/strong> \u2014 the solution must be capable of accommodating future upgrades or expansions;<\/p>\niii) vendor performance<\/strong> \u2014 past performance, compliance with SLAs, and customer satisfaction reports;<\/p>\niv) demonstrations\/ PoC<\/strong> \u2014 \"<\/strong>proof of concept (PoC) or demonstrations May be required to assess functionality and performance of the proposed solution.\"<\/strong><\/p>\nc) financial qualification: The bidder must demonstrate strong financial health \u2014 with required turnover and profitability over the last 3 to 5 years \u2014 to ensure financial stability for the duration of the contract<\/strong>.<\/p>\nd) financial evaluation criteria \u2014 the TCO basis and the two methods:<\/p>\n<aside class=\"note\">\"the evaluation will focus on the Total Cost of Ownership (TCO) over the contract period \u2014 including hardware subscription fees, service charges, penalties, and other associated costs.<\/strong><\/p>\n The Least Cost Selection (L1) method can be employed \u2014 ensuring all technical qualifications are met first.<\/strong><\/p>\n Alternatively, a QCBS method can be used \u2014 where technical parameters and financial bids are weighted (e.g., 30% technical and 70% financial) to select the best value proposal<\/strong>.\"<\/p><\/aside>\n<h1>Appendix to Chapter 8 \u2014 Points of Difference<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>whether the Chapter exists at all<\/td><td>G: Ch. 8 \u00b7 C: Ch. 9 \u00b7 NC: Ch. 8 \u00b7 W: NONE<\/em><\/td><\/tr><tr><td>2<\/td><td>Chapter title<\/td><td>G: Procurements with Unique Features\u2026<\/em> \u00b7 C: Special Types of Engagements\u2026<\/em> \u00b7 NC: *Special Types of Non-Consultancy Procurements\u2026*<\/td><\/tr><tr><td>3<\/td><td>Number of sections<\/td><td>G: 7 \u00b7 C: 10 \u00b7 NC: 12<\/td><\/tr><tr><td>4<\/td><td>Organising principle<\/td><td>G: Transaction structures<\/em> \u00b7 C and NC: Categories of provider<\/em><\/td><\/tr><tr><td>5<\/td><td>Overlap between G and the other two<\/td><td>ZERO<\/td><\/tr><tr><td>6<\/td><td>Overlap between C and NC<\/td><td>Only four topics: SSS \u00b7 Individual providers \u00b7 Specialised Agencies \u00b7 NGOs<\/td><\/tr><tr><td>7<\/td><td>Emergencies and Disaster Management<\/strong>(the 16 dispensations; crisis declaration order; single offer acceptable without re-tender; Rs 50,000 GeM exception; special time-bound audits after the crisis)<\/em><\/td><td>G ONLY<\/td><\/tr><tr><td>8<\/td><td>Buy Back Offer<\/strong>(the two-price with\/without rebate mechanism)<\/em><\/td><td>G ONLY<\/td><\/tr><tr><td>9<\/td><td>Capital Goods<\/strong>(item-specific budget; wet-lease alternative; TCO; the three evaluation remedies)<\/em><\/td><td>G ONLY<\/td><\/tr><tr><td>10<\/td><td>AMC<\/strong>(starts after warranty; NPV discounting of future AMC; the Rs 1 lakh BG for goods taken to the factory; the model termination clause)<\/em><\/td><td>G ONLY<\/td><\/tr><tr><td>11<\/td><td>net Present Value<\/strong>(the formula, the GPF discount rate, the solved example where the HIGHEST-priced offer becomes L1)<\/em><\/td><td>G ONLY<\/td><\/tr><tr><td>12<\/td><td>Turnkey Contract<\/td><td>G ONLY<\/td><\/tr><tr><td>13<\/td><td>Books and Print Media<\/strong>(Net Discount over Published Price; one-year onboarding; Rate Contract)<\/em><\/td><td>G ONLY<\/td><\/tr><tr><td>14<\/td><td>EoI for shortlisting<\/td><td>C: an entire chapter (Ch. 7) \u00b7 NC: compressed into para 8.1 and framed as an EXCEPTION to its normal single-stage two-envelope process<\/td><\/tr><tr><td>15<\/td><td>The seismic-survey\/ airborne-data-acquisition illustration of when NC needs EoI<\/td><td>nc only<\/td><\/tr><tr><td>16<\/td><td>SSS \u2014 the MONTHLY statement of all nomination selections to the Secretary\/ Head<\/td><td>C<\/strong>(distinct from the QUARTERLY nomination report in Ch. 4)<\/em><\/td><\/tr><tr><td>17<\/td><td>SSS \u2014 downstream continuity must be outlined in the INITIAL RfP; competitive process required if the initial award was non-competitive or the downstream assignment is substantially larger<\/td><td>C + NC<\/td><\/tr><tr><td>18<\/td><td>Individual Consultants \u2014 comparison of at least three candidates; CEC may interview and recommend remuneration; three direct-negotiation exceptions; COI extends to the parent firm<\/td><td>C + NC<\/td><\/tr><tr><td>19<\/td><td>Rule 177 GFR bar on retired Government servants; DoE OM F.No. 3-25\/2020-E.IIIA dated 09.12.2020<\/td><td>C<\/td><\/tr><tr><td>20<\/td><td>NGOs \u2014 QCBS mandatory where the shortlist is all-NGO; the five NGO-unique criteria; SSS permitted for a remote-area single-NGO case<\/td><td>C + NC<\/td><\/tr><tr><td>21<\/td><td>Procurement Consultants\/ Agents \u2014 THE 30% QUALITY-WEIGHTAGE TEST distinguishing Consultancy from Non-Consultancy<\/td><td>C + NC<\/strong>(near-identical text)<\/em><\/td><\/tr><tr><td>22<\/td><td>Cost weight less THAN 50% for procurement consultants handling specific items, with the stated reason<\/td><td>C ONLY<\/strong>(NC omits the 50% cap and its reasoning)<\/em><\/td><\/tr><tr><td>23<\/td><td>Financial Advisors \u2014 retainer plus success fee; QCBS mandatory for M&A\/ restructuring; cost may exceed 30% or LCS for large contracts; when success fees are appropriate<\/td><td>C ONLY<\/td><\/tr><tr><td>24<\/td><td>Auditors \u2014 QCBS preferred \"since in recent times the quality of audit has been a matter of concern\"<\/td><td>C ONLY<\/td><\/tr><tr><td>25<\/td><td>Logo\/ Symbol Design Competitions \u2014 Rule 196; Official Languages Act and Emblems and Names Act; the 11-point Competition Notice; IPR rests with the sponsoring agency; public voting for matters of national importance<\/td><td>C ONLY<\/td><\/tr><tr><td>26<\/td><td>Integrated IT Projects \u2014 quality weightage<\/td><td>C: \"even up to 80%\" \u00b7 NC (8.12.1): \"80%: 20% for Quality: Price\"<\/td><\/tr><tr><td>27<\/td><td>The MeitY\/ DPIIT list of restrictive and discriminatory conditions<\/strong>(Gartner Magic Quadrant; Rs 1000 Cr turnover for a Rs 70 Cr procurement; G8 export experience; named foreign brands; the \u221225\u00b0C EPBX-at-a-Central-India-airport example)<\/em><\/td><td>C ONLY<\/td><\/tr><tr><td>28<\/td><td>Digital India\/ NeGD \u2014 empanelment valid three years extendable by two; Categories A, B, C; sub-contracting PROHIBITED; IPR belongs to NeGD or client; penalties up to 10% of project value<\/td><td>C ONLY<\/td><\/tr><tr><td>29<\/td><td>Inspection Agents \u2014 generally NC because \"they only inspect within the established protocols\"; payment as a percentage of value inspected<\/td><td>nc only<\/td><\/tr><tr><td>30<\/td><td>Housekeeping \u2014 GeM offers floor-area-wise vs manpower-wise; \"usually the floor area wise cleaning option is more cost effective\"; reasons to be recorded on file<\/td><td>nc only<\/td><\/tr><tr><td>31<\/td><td>Manpower Outsourcing \u2014 the regularisation caution; I-cards must name the contractor; LCS for high-value; service charges floor 3.85% and ceiling 7% (both inclusive of GST); floor applies only to standalone manpower<\/td><td>nc only<\/td><\/tr><tr><td>32<\/td><td>Private Security \u2014 PSARA 2005; ~60,000 ESM retire annually; at least 90% ESM workforce; DGR certificate for 5 years or age 60 whichever earlier; DGR sponsorship mandatory; sponsored agencies exempt from minimum experience and turnover; mandatory GeM route; DGR sponsors at least three agencies; no negotiation below DGR rate (up to 10%); seniority tie-breaker<\/td><td>nc only<\/td><\/tr><tr><td>33<\/td><td>Vehicle Hiring \u2014 Rate Contract through OTE; one year extendable twice; PVC on fuel and wages; 10 hours\/ 100 km per day within 3,000 km monthly; night charges 11 PM\u20136 AM; extra km paid quarterly with shortfall carried forward<\/td><td>nc only<\/td><\/tr><tr><td>34<\/td><td>HaaS \u2014 ownership and risk remain with the service provider; provider insures at his own cost; up to 10-year contract if QCBS; ISO 9001 and ISO 20000; TCO-based evaluation via L1 or QCBS 30:70<\/td><td>nc only<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 8<\/p>\n<aside class=\"note\">Next:<\/strong>Chapter 9 \u2014 contract management and monitoring<\/strong>(Goods Ch. 9 \u00b7 Works Ch. 7<\/strong> \u2014 <\/em>Execution and Monitoring of Works and Quality Assurance \u00b7 Consultancy Ch. 10<\/strong> \u00b7 Non-Consultancy Ch. 9)<\/em>.<\/p>\nThe Works chapter here is by far the most elaborate in the entire Manual family \u2014 some 50 sub-sections \u2014 carrying <\/strong>ESHS concerns, Extension of Time, Liquidated Damages, the Denial Clause, Time at Large, Compensation Events, e-Bill processing, Closure of Contract with its four reconciliations, Excepted Matters, Adjudication, Mediation, Foreign Arbitration, and the CPSE dispute-resolution mechanism \u2014 most of which have no counterpart in the other three. Conversely, <\/strong>only Goods carries *Logistics: Transportation, Receiving, Storage and Issue of Goods, and only CS and NC carry *Concluding the Assignment and Post-Contract Review<\/strong>.<\/p><\/aside><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch9\">Chapter 9 \u2014 Part a<\/p><h1>Contract Management, Administration, Scope Control and Quality Assurance<\/h1><\/header>Part I<\/span>Administration, Scope Control and Quality Assurance<\/em><\/p>\nMerging: Goods Ch. 9<\/strong> (Contract Management) \u00b7 Works Ch. 7<\/strong> (Execution and Monitoring of Works and Quality Assurance) \u00b7 Consultancy Ch. 10<\/strong> (Monitoring Consultancy Services Contract) \u00b7 Non-Consultancy Ch. 9<\/strong> (Monitoring Non-consultancy Services Contract)<\/em><\/p><h2>Structural Notes<\/span><\/h2>\n1. Four different Chapter numbers and four different titles:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Chapter<\/th><th>Title<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span> Goods<\/td><td>Chapter 9<\/td><td>Contract Management<\/em><\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> Works<\/td><td>Chapter 7<\/td><td>Execution and Monitoring of Works and Quality Assurance<\/strong><\/td><\/tr><tr class=\"srcmark src-C\" data-src=\" C \"><td>C<\/span> Consultancy<\/td><td>Chapter 10<\/td><td>Monitoring<\/strong> Consultancy Services Contract<\/em><\/td><\/tr><tr class=\"srcmark src-NC\" data-src=\" NC \"><td>NC<\/span> Non-Consultancy<\/td><td>Chapter 9<\/td><td>Monitoring<\/strong> Non-consultancy Services Contract<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n2. This is the largest Chapter in the entire Manual family \u2014 640 kb across the four Manuals.<\/strong> The Works<\/strong> chapter alone runs to some 50 sub-sections<\/strong> and is by far the most elaborate treatment of contract management anywhere in the four Manuals.<\/p>\n3. The three bodies of material that exist in one Manual only:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Body of material<\/th><th>Exists only in<\/th><\/tr><\/thead><tbody><tr><td>Logistics: Transportation, Receiving, Storage and Issue of Goods<\/td><td>GOODS<\/td><\/tr><tr><td>Aligning stakeholder interests \u00b7 Monitoring Team and System \u00b7 Prerequisites to Commencement \u00b7 Commencement of Work \u00b7 Mobilisation \u00b7 Monitoring Resources Deployed \u00b7 Enforcing Contractor's Obligations \u00b7 Safeguarding Assets \u00b7 ESHS \u00b7 Monitoring Variations\/ Extra\/ Substituted Items \u00b7 Revised DPR \u00b7 Compensation Events \u00b7 Time at Large \u00b7 e-Bill \u00b7 Closure of Contract with its four reconciliations<\/td><td>WORKS<\/td><\/tr><tr><td>Contract Monitoring Committee (CMC) \u00b7 Review of Inception Phase \u00b7 Incentives for Excellence in Contract Execution \u00b7 Concluding the Assignment and Post-Contract Review<\/td><td>CS + NC<\/td><\/tr><\/tbody><\/table><\/div>\n4. Because of the volume, this chapter is issued in three parts:<\/p>\n<ul class=\"lst\"><li>PART A (this document)<\/strong> \u2014 Purpose of Contract Management \u00b7 CMC \u00b7 Contract Administration \u00b7 Scope and Quantity Control \u00b7 Quality Assurance and Inspections.<\/li><li>PART B<\/strong> \u2014 Time Control (delays, EOT, Force Majeure, Denial Clause, LD, Performance Notice, Compensation Events, Time at Large) \u00b7 Cost Control (prices, taxes, payments) \u00b7 Logistics \u00b7 Closure of Contract \u00b7 Post-Contract Review.<\/li><li>PART C<\/strong> \u2014 Breach of Contract, Remedies and Termination \u00b7 Dispute Resolution (Excepted Matters, Adjudication, Mediation, Arbitration, Foreign Arbitration, Appointment of Arbitrator, Arbitral Procedure, Challenging Awards, the CPSE mechanism).<\/li><\/ul>\n<h2>Concordance for Chapter 9 \u2014 Part A<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>G<\/th><th>W<\/th><th>C<\/th><th>NC<\/th><\/tr><\/thead><tbody><tr><td>9.1<\/td><td>The Purpose of Contract Management<\/td><td>9.1.1<\/td><td>7.1<\/td><td>10.1.1<\/td><td>9.1.1<\/td><\/tr><tr><td>9.2<\/td><td>Contract Monitoring Committee (CMC)<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>10.1.2<\/td><td>9.1.2<\/td><\/tr><tr><td>9.3<\/td><td>Aligning the Interest of the Stakeholders<\/td><td> \u2014 <\/td><td>7.2.1<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.4<\/td><td>Monitoring Team and System<\/td><td> \u2014 <\/td><td>7.2.2<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.5<\/td><td>Notice to Proceed, Kick-off Meeting and Prerequisites<\/td><td> \u2014 <\/td><td>7.2.3<\/td><td>10.2.1<\/td><td>9.2.1<\/td><\/tr><tr><td>9.6<\/td><td>Commencement of Work<\/td><td> \u2014 <\/td><td>7.2.4<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.7<\/td><td>Mobilisation<\/td><td> \u2014 <\/td><td>7.2.5<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.8<\/td><td>Review of Inception Phase<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>10.2.2<\/td><td>9.2.2<\/td><\/tr><tr><td>9.9<\/td><td>Reporting and Monitoring of Progress<\/td><td> \u2014 <\/td><td>7.2.2-4<\/td><td>10.2.3<\/td><td>9.2.3<\/td><\/tr><tr><td>9.10<\/td><td>Issuing Contract Amendments\/ Variations<\/td><td>9.7.2<\/td><td>7.2.8<\/td><td>10.2.4<\/td><td>9.2.4<\/td><\/tr><tr><td>9.11<\/td><td>Obligations Control \u2014 Deployment of Resources<\/td><td>9.7.5<\/td><td>7.2.6, 7.2.7<\/td><td>10.2.5<\/td><td>9.2.5<\/td><\/tr><tr><td>9.12<\/td><td>Incentives for Excellence in Contract Execution<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>10.2.6<\/td><td>9.2.6<\/td><\/tr><tr><td>9.13<\/td><td>Safeguards for Handing Over Materials\/ Equipment<\/td><td>9.7.3<\/td><td>7.2.9<\/td><td>10.2.7<\/td><td>9.2.7<\/td><\/tr><tr><td>9.14<\/td><td>Environmental, Social, Health and Safety (ESHS)<\/td><td> \u2014 <\/td><td>7.2.10<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.15<\/td><td>Scope and Quantity Control<\/td><td>9.2<\/td><td>7.3.1\u20137.3.3<\/td><td>10.3<\/td><td>9.3<\/td><\/tr><tr><td>9.16<\/td><td>Quality Assurance and Inspections<\/td><td>9.4<\/td><td>7.3.4<\/td><td>10.3.2<\/td><td>9.3.2\u20139.3.3<\/td><\/tr><tr><td>9.17<\/td><td>Warranty Clause<\/td><td>9.4.8<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><\/tbody><\/table><\/div>\n<h1>9.1 The Purpose of Contract Management<\/span><\/h1>\n<h2>9.1.1<\/span>The Governing Proposition \u2014 common to all four<\/span><\/h2>\n<aside class=\"note\">\"the purpose of contract management is to ensure that contractors adhere to contract terms and deliver the desired outcomes as per the terms and conditions of the contract \u2014 such as timely deliveries, quality of goods supplied, adherence to the proper procedure for submitting invoices, and so on \u2014 and any problems are identified and resolved in a timely manner.<\/strong><\/p>\nIt also ensures that the payments made to the contractor match the performance.<\/strong><\/p>\nWithout Sound Contract Management, There Can Be No Assurance That \"WE Get What We Pay and Contract for \u2014 and Pay for Only What We GET.\"<\/em><\/p><\/aside>\nW<\/span>, C<\/span> and NC<\/span> add: \"implementation of the contract should be strictly monitored \u2014 and notices issued promptly whenever a breach of provisions occurs<\/strong>.\"<\/p>\n<h2>9.1.2<\/span>What Is Handled During This Phase \u2014 the four lists compared<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr class=\"srcmark src-multi\" data-src=\" G W C NC \"><th>G<\/span> GOODS (8 heads)<\/th><th>W<\/span> WORKS (7 heads)<\/th><th>C<\/span> CONSULTANCY \/ NC<\/span> NON-CONSULTANCY (5 heads)<\/th><\/tr><\/thead><tbody><tr><td>a) Scope of Supply and Quantity Control<\/td><td>a) Contract Administration<\/td><td>a) Contract Administration<\/td><\/tr><tr><td>b) Time Control \u2013 Monitoring Delays<\/td><td>b) Monitoring Scope of Work and Quality Assurance<\/td><td>b) Scope Control and Quality Assurance<\/td><\/tr><tr><td>c) Quality Assurance and Inspections<\/td><td>c) Time Monitoring<\/td><td>c) Time Control<\/td><\/tr><tr><td>d) Cost Control \u2013 Prices, Taxes and Payments<\/td><td>d) Financial Monitoring<\/td><td>d) Cost Control<\/td><\/tr><tr><td>e) Logistics: Transportation, Receiving, Storage and Issue of Goods<\/td><td>e) Closure of Contract<\/td><td>e) Post-contract evaluation<\/td><\/tr><tr><td>f) Contract Administration<\/strong> \u2014 Performance Security \u00b7 Amendments \u00b7 Safeguards for handing over materials \u00b7 Monitoring Supplier Performance \u00b7 Monitoring Supplier Obligations \u00b7 Contract closure<\/em><\/td><td>f) Resolving Disputes and Conflicts<\/td><td><\/td><\/tr><tr><td>g) Breach of Contract, Remedies and Termination<\/td><td>g) Breach and Termination of Contract<\/td><td><\/td><\/tr><tr><td>h) Dispute resolution<\/td><td><\/td><td><\/td><\/tr><\/tbody><\/table><\/div>\nTHE C<\/span> AND NC<\/span> Sub-heads of contract administration (nine items): I) issuing the notice to proceed<\/strong>; ii) meetings and reviews<\/strong>; iii) amendments\/ variations to the contract<\/strong>; iv) obligations control: Monitoring that key experts and contracted resources are actually employed<\/strong>; v) safeguards for handing over materials\/ equipment<\/strong>; vi) resolving problems faced by consultants<\/strong>; vii) dispute resolution and arbitration<\/strong>; viii) breach of contract, remedies, and termination of services prior to the end of the contract<\/strong>; ix) contract closure upon completion<\/strong>.<\/p>\nTHE C<\/span> AND NC<\/span> Sub-heads of scope control and quality assurance: I) deciding on possible modifications to scope of work and issuing contract variations<\/strong>; ii) monitor that all deliverables are delivered as per contract \u2014 reports including draft final report and the final report<\/strong>; iii) quality assurance: Review quality of outcomes at inception phase, mid-term, and final phase<\/strong>.<\/p>\n<h2 class=\"src-multi srchead\" data-src=\" C NC \">9.1.3<\/span>Why Services Contracts Need MORE Intense Monitoring<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\">\n<aside class=\"note\">\" Due to lack of physically\/ tangibly measurable outcomes in services contracts \u2014 intense and continuous monitoring of the contract by the Procuring Entity is essential for the success of the assignment.<\/strong><\/p>\n Suitable provision for this should be made in the contracts \u2014 which should also take care of the need to terminate\/ penalise the consultant, or to suspend payments till satisfactory progress has been achieved.<\/strong><\/p>\nThe Procuring Entity shall form a Contract Monitoring Committee (CMC) to monitor the contract.<\/strong><\/p>\n The Procuring Entity should also designate a counterpart Project Manager \u2014 with adequate technical qualification, managerial experience, and power and authority \u2014 as the nodal person to interact with the consultant's team.<\/strong><\/p>\n A system of reporting May be developed, so that a statement covering all ongoing consultancy contracts May be submitted within the Department in detail \u2014 so as to enable management by exception, based on various risk and mitigation strategies pointed out at relevant process milestones in this Manual<\/strong>.\" (Rule 195 of GFR 2017)<\/em><\/p><\/aside>\n<\/div><h2>9.1.4<\/span>Why Poor Contract Management Costs the Nation [W ONLY]<\/span><\/h2>\n<aside class=\"note\">\"poor management of public-funded projects costs the nation in terms of the following \u2014 be it in the owner organisation or in construction firms contracted to build a project<\/strong>:\"<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>The cost<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>additional expenditure burden due to increased costs \u2014 crowding out more deserving schemes and projects<\/strong><\/td><\/tr><tr><td>b<\/td><td>affects viability of projects due to increase in construction [cost] \u2014 causing losses to the CPSE or agency concerned<\/strong><\/td><\/tr><tr><td>c<\/td><td>economic burden, due to delayed return on investments<\/strong><\/td><\/tr><tr><td>d<\/td><td>imposes unnecessary economic burden on affected stakeholders<\/strong><\/td><\/tr><tr><td>e<\/td><td>\"creates a culture of acceptance of delay and avoidable costs \u2014 breeding more cases<\/strong>.\"<\/td><\/tr><tr><td>f<\/td><td>\"increased costs of procurement due to monetisation of higher risks, perceived by contractors, of delays and scope creep associated with public-funded projects<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>9.2 Contract Monitoring Committee (CMC) [C + NC ONLY]<\/span><\/h1>\n(Rule 205 of GFR 2017)<\/em><\/p>\n<h2>9.2.1<\/span>Constitution<\/span><\/h2>\n<aside class=\"note\">\" Rule 205 of GFR 2017 enjoins that the Ministry or Department be involved throughout the conduct of the contract, and continuously monitor the performance of the contractor.<\/strong><\/p>\nThe Procuring Entity shall constitute a CMC comprising at least three members at the appropriate level, including the user's representative \u2014 after the selection procedure is over \u2014 for monitoring the progress of the contract.<\/strong><\/p>\n If considered appropriate, the Procuring Entity May select all or any of the members of CEC as members of CMC.<\/strong><\/p>\n The Procuring Entity May also include individual experts from the Government\/ private sector\/ educational\/ research institute, or an individual consultant, in the CMC. The cost of such members, if any, shall be borne by the Procuring Entity<\/strong>.\"<\/p><\/aside>\n<h2>9.2.2<\/span>The Six Responsibilities of the CMC<\/span><\/h2>\n\"the CMC shall be responsible for<\/strong>:\"<\/p>\n<ol class=\"lst\"><li>monitoring the progress of the assignment<\/strong>;<\/li><li>To oversee that the assignment is carried out as per the contract<\/strong>;<\/li><li>To assess the quality of the deliverables<\/strong>;<\/li><li>To accept\/ reject any part of the assignment<\/strong>;<\/li><li>To levy appropriate Liquidated Damages or penalty \u2014 if the assignment is not carried out as per the contract, and if the quality of services is found inferior<\/strong>;<\/li><li>And for any such deficiency related to the completion of the assignment<\/strong>.<\/li><\/ol>\n<h2>9.2.3<\/span>The Expert-Assistance Provision<\/span><\/h2>\n<aside class=\"note\">\"for the assignments which are overly complex and\/ or are of a highly technical nature \u2014 the Procuring Entity May decide to appoint another qualified consultant to assist the CMC in carrying out its functions<\/strong>.\"<\/p><\/aside>\n<h1>9.3 Aligning the Interest of the Stakeholders [W ONLY]<\/span><\/h1>\n<h2>9.3.1<\/span>The Incentive-Structure Principle<\/span><\/h2>\n<aside class=\"note\">\"the incentive structure for all the key stakeholders of Public Procurement ought to be such that the system itself will ensure timely delivery of the projects\/ works in a qualitative manner within approved cost.<\/strong><\/p>\n A balanced framework and work culture \u2014 where risk and rewards are properly shared amongst stakeholders, and timely completion of quality projects is the common goal \u2014 can be the bedrock of efficient project management.<\/strong><\/p>\n An incentive structure \u2014 which May include pecuniary as well as non-pecuniary aspects (including public recognition) \u2014 linked with measurable parameters of outcome\/ output, can help align the interests of stakeholders.<\/strong><\/p>\n An ethics-based regime, where integrity of all the stakeholders is nurtured, can help increase efficiency in all aspects of project management<\/strong>.\"<\/p><\/aside>\n<h2>9.3.2<\/span>The Recognition Devices \u2014 including naming at work sites<\/span><\/h2>\n<aside class=\"note\">\"public authorities May devise strategies to provide incentives to contractors\/ concessionaires\/ consultants\/ architects\/ other stakeholders by various means \u2014 including bonus, better rating and recognition for early\/ timely\/ quality completion of the projects.<\/strong><\/p>\n Similar strategies May be devised for recognition of engineers\/ officers\/ other team members for early\/ timely and quality completion of the projects.<\/strong><\/p>\n The practice of mentioning the names of the contractor and the project-in-charge publicly at work sites May be implemented.<\/strong><\/p>\n Such recognition May be in a form which has a long shelf life \u2014 so as to associate the contractor and project in-charge with the life of the project<\/strong>.\"<\/p><\/aside>\n<h2>9.3.3<\/span>The Closing Aphorism<\/span><\/h2>\n<aside class=\"note\">\"COMING Together is a Beginning; Keeping Together is Progress; Working Together is SUCCESS.<\/em>\"<\/p>\n\"it is an accepted fact that the success of any project is dependent on a well-coordinated team working towards a common goal. For successful execution of any project within specified time, cost and quality \u2014 the interest of all the stakeholders needs to be aligned.<\/strong><\/p>\n Coordinated efforts of all stakeholders \u2014 such as contractors, consultants, public authority and project executing authority and public representatives \u2014 will bring about the best possible outcome<\/strong>.\"<\/p><\/aside>\n<h1>9.4 Monitoring Team and System [W ONLY]<\/span><\/h1>\n<h2>9.4.1<\/span>The Principle of Proportionality for Contract Management<\/span><\/h2>\n<aside class=\"note\">\"the time and resources applied to manage a contract should be proportional to its size, scope, complexity, duration, risk, and strategic importance. One size does not fit all.<\/strong><\/p>\n for example, [in] low-value [contracts], too many checks and balances can delay decision-making, impede the contractor's payments, and stifle innovation.<\/strong><\/p>\n Too little control can result in an undisciplined crisis management culture.<\/strong><\/p>\n Getting the balance exactly right ensures 'fit-for-purpose' contract management<\/strong>.\"<\/p><\/aside>\n<h2>9.4.2<\/span>Role of Apex and Management Levels<\/span><\/h2>\n\"procurement and contract management require various levels of authorisation or approvals for technical, administrative, and financial decisions. Many of these approvals are at apex\/ managerial levels \u2014 which are responsible for macro management of the contract, but May not be involved in day-to-day contract management. However, their roles are important for efficiency of the contract management process<\/strong>.\"<\/p>\n<h2>9.4.3<\/span>The Contract Manager<\/span><\/h2>\n<aside class=\"note\">\"best practice requires that a nodal person be appointed for management of each specific contract.<\/strong><\/p>\n Such a nodal person May be called differently \u2014 engineer \u00b7 Project Manager \u00b7 Contract Manager \u00b7 supply manager \u00b7 service manager \u00b7 employer's representative \u2014 in different organisations and in different categories of contract. This Manual generically refers to him as 'Contract Manager'.<\/strong><\/p><\/aside>\nThe scale Rule:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Contract type<\/th><th>Who the Contract Manager is<\/th><\/tr><\/thead><tbody><tr><td>Small, routine contracts<\/td><td>A single person, who has a portfolio of contracts to manage<\/strong><\/td><\/tr><tr><td>large, complex, high-value contracts<\/td><td>normally a team or entity<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nthe five attendant requirements:<\/p>\n<ol class=\"lst\"><li>\"a competent project management team should be set up \u2014 including training on project management to the team, if required<\/strong>.\";<\/li><li>\"a system of project monitoring for each work shall be prepared before start of the work \u2014 and the same shall be available at site of work<\/strong>.\";<\/li><li>\"'Deadlines' or 'contractual milestones' should be set up and tabulated to facilitate monitoring of the progress of work<\/strong>.\";<\/li><li>\"the work shall be monitored on a quarterly\/ monthly basis by the Works Committee \u2014 and a status report should be submitted to the Secretary in charge of the concerned Ministry\/ Department<\/strong>.\";<\/li><li>\"execution of the work shall primarily be the responsibility of the nominated Contract Manager. However, for large contracts, senior officers shall also review the progress and quality of the work at various stages of construction<\/strong>.\"<\/li><\/ol>\n<aside class=\"note\">the certification suggestion: \"it May also be useful to stipulate organisational standards and\/ or certifications for project managers\/ staff, in complex projects, as tender conditions \u2014 to minimise risk of cost and time overruns<\/strong>.\"<\/p><\/aside>\n<h2 class=\"src-W srchead\" data-src=\" W \">9.4.4<\/span>Progress Reporting and Review \u2014 the Fourteen-Point MIS Report<\/span>W<\/span><\/h2><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n\"there should be a stipulation in the contract for large-value works (magnitude to be specified) \u2014 for the contractor to submit a project-specific monthly progress report of the work in a computerised form (management information system reports \u2014 MIS reports)<\/strong>.\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Content of the Monthly MIS Progress Report<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>project information \u2014 giving the broad features of the contract<\/strong><\/td><\/tr><tr><td>ii<\/td><td>introduction \u2014 giving a brief scope of the work and the broad structural or other details<\/strong><\/td><\/tr><tr><td>iii<\/td><td>construction Schedule of the various components \u2014 through a bar chart for the next three quarters (or as specified) \u2014 showing the milestones, targeted tasks and up-to-date progress<\/strong><\/td><\/tr><tr><td>iv<\/td><td>progress chart of the various components planned and achieved \u2014 for the month as well as cumulative \u2014 with reasons for deviations, if any, in a tabular format<\/strong><\/td><\/tr><tr><td>v<\/td><td>plant and machinery statement \u2014 indicating those deployed in the work, and their working status<\/strong><\/td><\/tr><tr><td>vi<\/td><td>man-power statement \u2014 indicating individually the names of all the staff deployed in the work, along with their designations<\/strong><\/td><\/tr><tr><td>vii<\/td><td>financial statement \u2014 gross value of work done \u00b7 advances taken \u00b7 recoveries effected \u00b7 amounts withheld \u00b7 net payments \u00b7 details of cheque payments received<\/strong><\/td><\/tr><tr><td>viii<\/td><td>a statement showing the extra and substituted items submitted by the contractor and payments received against them \u00b7 broad details of the bank guarantees, indicating clearly their validity periods \u00b7 broad details of the insurance policies \u00b7 advances received and adjusted<\/strong><\/td><\/tr><tr><td>ix<\/td><td>progress photographs, in colour, of the various items\/ components of the work done up to date \u2014 to indicate visually the actual progress<\/strong><\/td><\/tr><tr><td>x<\/td><td>quality assurance and quality control tests conducted during the month, with the results thereof<\/strong><\/td><\/tr><tr><td>xi<\/td><td>any hold-up shall be specified<\/strong><\/td><\/tr><tr><td>xii<\/td><td>dispute, if any, shall also be highlighted<\/strong><\/td><\/tr><tr><td>xiii<\/td><td>monthly or fortnightly progress review by Contract Manager and Procuring Entity with contractor May be necessary \u2014 to ensure that the contractor deploys sufficient resources to meet the deadlines<\/strong><\/td><\/tr><tr><td>xiv<\/td><td>the photograph-and-video system \u2014 see below<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">The photograph and video provision \u2014 worth noting in full:<\/p>\n\"project executing authorities should put in place a system for capturing the photographs and videos of important and critical activities of construction. This May be implemented in projects above a threshold value \u2014 or, if possible, in all projects.<\/strong><\/p>\nSuch photos\/ videos May be uploaded in the it-based project monitoring system \u2014 to facilitate monitoring the progress and quality of work, as well as assessment of delay in execution of work by stakeholders and senior management.<\/strong><\/p>\n Apart from this, photographs and videos May serve as a permanent record of the project for posterity \u2014 in case needed for any eventuality, including litigation or enquiry\/ investigation<\/strong>.\"<\/p><\/aside>\n<\/div><h2 class=\"src-W srchead\" data-src=\" W \">9.4.5<\/span>Project Management Software<\/span>W<\/span><\/h2><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n<aside class=\"note\">\"all complex assignments require the use of proper project management tools \u2014 that enable the contract management team (Procuring Entity, Contract Manager, Project Manager, etc.) to collaboratively monitor the actual physical and financial progress of the contract against the planned physical and financial Schedule.<\/strong><\/p>\n The contract May also specify that the contractor engage certified project management professionals to train and monitor project progress (e.g., pmi-certified contract managers).<\/strong><\/p>\nSome of the common software programmes are \u2014 (no endorsements are intended; There are many more such software available):<\/strong><\/p>\n\u2022 microsoft project and portfolio management (ms ppm); And<\/strong><\/p>\n\u2022 oracle primavera P6 professional project management (P6 ppm).<\/strong><\/p>\n Information technology (IT) enabled project management systems can help in improving efficiency, transparency and aid faster decision-making in execution of projects<\/strong>.\"<\/p><\/aside>\n<h1>9.5 Notice to Proceed, Kick-off Meeting, and Ensuring Prerequisites to Commencement<\/span><\/h1>\n<\/div><h2 class=\"src-W srchead\" data-src=\" W \">9.5.1<\/span>Ensuring Prerequisites to Commencement of Work W<\/span> \u2014 the Six Prerequisites<\/span><\/h2><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n1. Land acquisition: \"the process of land acquisition shall be started by the Procuring Entity well ahead, and completed entirely \u2014 or at least substantially \u2014 by the time the contract is awarded<\/strong>.\"<\/p>\n2. PERMITS\/ APPROVALS \u2014 and the delay-claim warning:<\/p>\nThe Procuring Entity shall seek requisite statutory approvals\/ permission\/ clearances\/ certificates<\/strong> From concerned local bodies and statutory authorities \u2014 including:<\/p>\n<aside class=\"note\">District authorities \u00b7 municipal corporation \u00b7 panchayati raj institutions \u00b7 town planning board \u00b7 electricity board\/ fire Department \u00b7 State\/ Central pollution control boards \u00b7 State\/ Central environmental authorities \u00b7 forest and wildlife authorities<\/strong><\/p><\/aside>\nthe illustrative list of what such clearances cover:<\/p>\n<aside class=\"note\">Removal of trees \u00b7 re-locating utilities \u00b7 conversion of railway level crossings \u00b7 laying of railway sidings needed by the project \u00b7 rehabilitation and resettlement of persons affected by the project \u00b7 traffic control \u00b7 mining of earth and stone \u00b7 interfering [with] protected monuments \u00b7 blasting permission \u00b7 environmental\/ forest\/ wildlife clearances \u00b7 and shifting of religious shrines<\/strong><\/p>\nthe warning: \"the Procuring Entity has to be aware that any delay in fulfilling the pre-requisites stipulated in the contract will attract delay claims from the contractor \u2014 besides causing time and cost overruns.<\/strong><\/p>\n Hence, all or most pre-requisites shall be fulfilled before award of the LoA<\/strong>.\"<\/p><\/aside>\nthe contractor's side: \"the contractor shall give all notices and obtain all other necessary permits and approvals as May be required for the construction \u2014 and shall pay for all such permits and approvals<\/strong>.\"<\/p>\n3. Approval of quarries, borrow areas and materials:<\/p>\n<aside class=\"note\">\"the contractor will obtain approval of the Contract Manager for each quarry and borrow area to be used in the project \u2014 prior to commencement of quarrying and\/ or borrow area excavation activities.<\/strong><\/p>\n All materials (whether natural, processed, manufactured, or designed) proposed by the contractor to be used on the works shall be first approved by the Contract Manager, to comply with the requirements of specifications.<\/strong><\/p>\n Contractor May seek Procuring Entity's permission for equivalent brands \u2014 if some brands are mentioned for certain materials in the contract documents<\/strong>.\"<\/p><\/aside>\n4. Safety at work site \u2014 the hazardous substances and the public-protection list:<\/p>\n<aside class=\"note\">\"the contractor must ensure safety of workmen as well as safety for the general public during construction in and around the work-site. He must follow the laws, codes and standards laid down in this regard.<\/strong><\/p>\n The workmen must be trained and provided protective gear, life-saving equipment and appropriate tools for their jobs.<\/strong><\/p>\n Special precautions must be used if hazardous chemicals are used or stored at workplace \u2014 lead, silica, asbestos, and wood\/ stone that will be cut and generate dust; Construction materials containing zinc, cadmium, beryllium and mercury.<\/strong><\/p>\n Besides protection from noise and environmental pollution \u2014 the public must also be safeguarded from:<\/strong><\/p>\nFalling through dug-up area \u00b7 electrocution \u00b7 flooding \u00b7 falling objects \u00b7 bridge-span dropping\/ failures \u00b7 crane falling\/ overturning \u00b7 and damage to building from vibrations\/ cave-ins from construction activities.<\/strong><\/p>\nCONTRACT Manager Must Ensure That Contractor Does not Adopt Any SHORT-CUT in this REGARD.<\/em><\/p><\/aside>\nThe SHE\/ ESHS apparatus: \"most large contracts have a well-defined safety, health & environment (SHE) \u2014 also called environmental, social, health and safety (ESHS, with addition of the social factor) \u2014 guideline embedded in the agreement.<\/strong><\/p>\n<aside class=\"note\"> Appointment of a site safety engineer by the contractor is a mandatory requirement in such cases.<\/strong><\/p>\n The Contract Manager shall engage safety experts to carry out frequent SHE audits and mandate correct measures<\/strong>.\"<\/p><\/aside>\n5. Advance payments: \"to enable mobilisation, advance payment(s) are to be given after the signing of the contract \u2014 if provided in the contract \u2014 on the contractor's submission of an unconditional BG in an acceptable form<\/strong>.\"<\/p>\n6. INSURANCES \u2014 the four checks:<\/p>\n\"insurance provisions are valuable risk management tools. The contracting entity must ensure the following<\/strong>:\"<\/p>\na) the insurance policies are in place in accordance with the contract<\/strong>;<\/p>\nb) the coverages are adequate and within the thresholds specified in the contract<\/strong>;<\/p>\nc) the insurance policies contain the essential information \u2014 such as coverage, duration, applicability<\/strong>;<\/p>\nd) due diligence is applied to checking the authenticity of the insurance document and payment of insurance premiums<\/strong>.<\/p>\n<\/div><h2 class=\"src-multi srchead\" data-src=\" C NC \">9.5.2<\/span>Issuing the Notice to Proceed and the Kick-off Meeting<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\">\nThe Consultancy and Non-Consultancy Manuals frame the same stage as \"Issuing Notice to Proceed, Kick-off Meeting and Pre-requisites\"<\/em> \u2014 the service analogue of the Works \"Work Order\" at para 9.6 below.<\/p>\n<h1>9.6 Commencement of Work [W ONLY]<\/span><\/h1>\n<aside class=\"note\">\"after the contract has been signed between the parties and Performance Security is deposited by the contractor \u2014 he should visit the site along with the Contract Manager, to identify any potential problem in relation to site.<\/strong><\/p>\nAfter reviewing the status of prerequisites, the Contract Manager issues a 'work order' to the contractor to 'commence the works'.<\/strong><\/p>\nWORK Order Should Be Issued Within a Reasonable Period \u2014 Say 2 Weeks, but not Later Than 6 Weeks from the Date of the Loa.<\/em><\/p><\/aside>\nThe contractor's three submissions: \"within the stipulated time, the contractor should submit to the Contract Manager for his consent:<\/strong><\/p>\na) THE work program \u2014 including the measures proposed by him for work zone safety and mitigation of environmental impact<\/strong>;<\/p>\nb) THE methods statement which the contractor proposes to adopt for execution of the works<\/strong>; and<\/p>\nc) THE quality assurance plan<\/strong>.\"<\/p>\n<aside class=\"note\">\"the Contract Manager should, on being satisfied with the contractor's submission, provide to the contractor total or partial possession of the site.<\/strong><\/p>\n The contractor will update the work program at intervals stipulated (usually every month) and submit it to the Contract Manager for approval. The updated program should include all variations ordered by the Contract Manager and their effect, if any, on the program.<\/strong><\/p>\nNO Work Shall Be Commenced Unless the Conditions Precedent as Laid Down in Para 1.17-13 [Of this Unified Manual] Have Been FULFILLED.<\/em><\/p><\/aside>\n<h1>9.7 Mobilisation [W ONLY]<\/span><\/h1>\n<aside class=\"note\">\"the commencement of works normally begins with a mobilisation or pre-construction phase \u2014 during which the site is prepared for construction.<\/strong><\/p>\n The mobilisation period should be carefully managed by the contracting parties, given its significance to the successful execution of a contract.<\/strong><\/p>\nThe mobilisation or pre-construction phase can include major activities such as:<\/strong><\/p>\nLand clearance \u00b7 excavation \u00b7 building of access roads to the site \u00b7 work site establishment \u00b7 and construction of accommodation for the contractor's personnel<\/strong>.\"<\/p><\/aside>\n Mobilisation of key resources:<\/strong>\"the Contract Manager must ensure that the technical [and other key resources are mobilised]<\/strong>\u2026\"<\/strong>(and see para 9.11 below on Monitoring Resources Deployed).<\/em><\/p>\n<h1>9.8 Review of Inception Phase [C + NC ONLY]<\/span><\/h1>\nThe Consultancy and Non-Consultancy Manuals provide for a distinct Review of Inception Phase<\/em> \u2014 the point at which the Procuring Entity satisfies itself, on the strength of the Inception Report (due about six weeks after the commencement date \u2014 see Chapter 2, para 2.6.3(c)), that the assignment can be carried out as planned, and that any major inconsistency in the ToR, staffing problems, or deficiency in the Procuring Entity's assistance has been surfaced early.<\/p>\n<aside class=\"note\">This has no counterpart in the Goods or Works Manuals, where the analogous checkpoint is the Work Order<\/strong> and the approval of the Work Program, Method Statement and Quality Assurance Plan<\/strong> (para 9.6 above).<\/em><\/p><\/aside>\n<h1>9.9 Reporting and Monitoring of Progress [C + NC; and W at para 9.4.4]<\/span><\/h1>\nCommon to all four is the requirement of periodic progress reporting, but the instruments differ:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>The reporting instrument<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> WORKS<\/td><td>The fourteen-point monthly MIS progress report<\/strong> \u2014 see para 9.4.4 above<\/td><\/tr><tr class=\"srcmark src-C\" data-src=\" C \"><td>C<\/span> Consultancy<\/td><td>The inception \u00b7 progress \u00b7 interim \u00b7 and final reports<\/strong> \u2014 see Chapter 2, para 2.6.3(c)<\/td><\/tr><tr class=\"srcmark src-NC\" data-src=\" NC \"><td>NC<\/span> Non-consultancy<\/td><td>Reporting against the service Level Agreement (SLA) and key performance indicators<\/strong> \u2014 see para 9.15.4 below<\/td><\/tr><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span> GOODS<\/td><td>Monitoring of supplier performance and obligations<\/strong> \u2014 see para 9.11 below<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>9.10 Issuing Contract Amendments \/ Variations<\/span><\/h1>\nAll four Manuals provide for amendment of the contract during execution. The Works treatment is the most detailed, and is set out at Chapter 6, para 6.10.3-1 of this Unified Manual (Variations in Works Contracts, the Variations Register, and the requirement of the Engineer's prior approval from the Procuring Entity).<\/p>\n<aside class=\"note\">The common principle:<\/strong>amendments must be issued <\/strong>in writing, through a formal procedure specified in the contract, and \u2014 in Works \u2014 <\/strong>tracked in a Variations Register updated monthly and summarised to keep all involved agencies informed.<\/strong><\/p><\/aside>\n<h1>9.11 Obligations Control \u2014 Monitoring Resources Deployed and Enforcing Obligations<\/span><\/h1>\n<\/div><h2>9.11.1<\/span>The Common Object<\/span><\/h2>\n\" Monitoring that key experts and contracted resources are actually employed<\/strong>\"<\/strong>(the C<\/span> and NC<\/span> formulation)<\/em> \u2014 corresponding to W<\/span> paras 7.2.6 (Monitoring Resources Deployed by Contractor) and 7.2.7 (Enforcing Contractor's Obligations), and G<\/span> paras 9.7.4 and 9.7.5 (Monitoring Supplier Performance and Obligations)<\/strong>.<\/p>\n<aside class=\"note\">This is the single most important control in a <\/strong>services contract, because \u2014 as the CS and NC Manuals put it at para 9.1.3 above \u2014 there are <\/strong>no physically\/ tangibly measurable outcomes, and the deployment of the promised key personnel is the principal proxy for quality.<\/p><\/aside>\n<h2>9.11.2<\/span>The Works Apparatus<\/span><\/h2>\nThe Works Manual treats this in two distinct sections:<\/p>\n<ul class=\"lst\"><li>7.2.6 \u2014 monitoring resources deployed by contractor<\/strong>(plant, machinery, and manpower \u2014 cross-referenced to the Plant and Machinery Statement<\/strong> and Man-power Statement<\/strong> in the monthly MIS report at para 9.4.4 items (v) and (vi) above)<\/em>;<\/li><li>7.2.7 \u2014 enforcing contractor's obligations.<\/li><\/ul>\n<h1>9.12 Incentives for Excellence in Contract Execution [C + NC ONLY]<\/span><\/h1>\nThe Consultancy and Non-Consultancy Manuals carry a short section providing for incentives for excellence in contract execution \u2014 the services counterpart of the Works provisions on aligning stakeholder interests at para 9.3 above (bonus, better rating, public recognition, and naming at work sites).<\/p>\n<h1>9.13 Safeguards for Handing Over Procuring Entity Materials\/ Equipment to Contractors<\/span><\/h1>\n<aside class=\"note\">This section appears in all four Manuals. The Works text is reproduced below as the fullest version.<\/p><\/aside>\n<h2>9.13.1<\/span>What May Be Handed Over<\/span><\/h2>\n<aside class=\"note\">\"for performance of certain contracts, the Procuring Entity May have to loan stores, drawings, documents, equipment, and assets (such as accommodation, identity cards and gate passes, and so on) to the contractor.<\/strong><\/p>\n In certain situations, the contractor May also be supplied electricity, water, cranes, and weighing facilities on payment\/ hire basis<\/strong>.\"<\/p><\/aside>\n<h2>9.13.2<\/span>The Bank Guarantee Requirement \u2014 and the Rs 1 lakh waiver<\/span><\/h2>\n<aside class=\"note\">\"whenever stores or prototypes or sub-assemblies are required to be issued to the firm\/ contractor for guidance in fabrication \u2014 these should be issued against an appropriate Bank Guarantee.<\/strong><\/p>\n In addition to the Bank Guarantee, appropriate insurance May be asked for if it is considered necessary.<\/strong><\/p>\nFor low-value items of Less Than Rs. 1,00,000 (Rupees One Lakh) \u2014 or for Sending Spares for Repairs to the Oems \u2014 this Stipulation of the Bank Guarantee May Be Waived; and, if Feasible, an Indemnity Bond May Be TAKEN.<\/em><\/p><\/aside>\n<h2>9.13.3<\/span>The Contractor's Obligations in Respect of Loaned Assets<\/span><\/h2>\n<aside class=\"note\">\"the contractor shall use such property for the execution of the contract and no other purpose whatsoever.<\/strong><\/p>\n These assets shall remain the property of the Procuring Entity \u2014 and the contractor shall take all reasonable care of all such assets.<\/strong><\/p>\n The contractor shall be responsible for all damage or loss from whatever cause caused, while such assets are possessed or controlled by the contractor, staff, workers, or agents<\/strong>.\"<\/p><\/aside>\n<h2>9.13.4<\/span>The Transparency Requirement and the Closing Certificate<\/span><\/h2>\n<aside class=\"note\">pre-declaration: \"as a measure of transparency \u2014 the possibility of provision of such resources by the Procuring Entity should have been announced in the tender document, or at least requested by the contractor in the tender, and written in the contract<\/strong>.\"<\/p>\nthe certificate before final payment:<\/p>\n\"before the final payment or release of PBG\/ SD \u2014 a certificate May be taken from the concerned Department that the contractor has returned all:<\/strong><\/p>\nDocuments \u00b7 drawings \u00b7 protective gear \u00b7 material \u00b7 equipment \u00b7 facilities \u00b7 and assets loaned \u2014 including all id cards and gate passes \u2014 in good condition.<\/strong><\/p>\n Further, it should be certified that payment from the contractor has been received for usage of electricity, water, crane, accommodation, weighing facility, and so on<\/strong>.\"<\/p><\/aside>\n<h1>9.14 Environmental, Social, Health, and Safety (ESHS) Concerns [W ONLY]<\/span><\/h1>\n<h2>9.14.1<\/span>The ESHS Obligation and Its Staffing Consequence<\/span><\/h2>\n<aside class=\"note\">\"in works contracts, attention must be paid to environmental, social, health, and safety (ESHS) considerations \u2014 also termed safety, health, and environmental (SHE) in certain contracts.<\/strong><\/p>\n Such considerations must be indicated from the beginning as mandatory skills or experience in the bid documents.<\/strong><\/p>\n The contractor must ensure that he and his sub-contractors comply with legal and regulatory obligations relating to ESHS.<\/strong><\/p>\n it requires professionals with appropriate skills to be part of the contract's team. Such professionals May be required on a part-time or full-time basis \u2014 depending on the nature of the ESHS risks and impacts, and the role they are performing.<\/strong><\/p><\/aside>\n<h2>9.14.2<\/span>What ESHS Monitoring Involves During Implementation<\/span><\/h2>\n<aside class=\"note\">\"during contract implementation, the primary focus is to ensure that the contractual ESHS provisions are continuously adhered to. This will involve:<\/strong><\/p>\n\u2022 the timely preparation and\/ or review of documentation \u2014 such as the contractor's plans and procedures;<\/strong><\/p>\n\u2022 undertaking of inspection, supervision, and\/ or audit;<\/strong><\/p>\n\u2022 attending of progress meetings;<\/strong><\/p>\n\u2022 reporting; And<\/strong><\/p>\n\u2022 resolving issues that May occur<\/strong>.\"<\/p><\/aside>\n<h2>9.14.3<\/span>Safety of the Public and Labour<\/span><\/h2>\n\"the safety of all activities (including traffic safety) in and around the site, and safety of the public and labour, should be ensured by the contractor \u2014 as per prevalent labour laws\/ regulations and the conditions of contract.<\/strong><\/p>\n<aside class=\"note\"> The workmen must be trained and provided protective gear, life-saving equipment, and appropriate tools for their jobs<\/strong>.\"<\/p><\/aside>\nthe hazardous substances: \"special precautions must be used if hazardous chemicals are used or stored at the workplace \u2014 lead, silica, asbestos, and wood\/ stone that will be cut and generate dust; And construction materials containing zinc, cadmium, beryllium, and mercury<\/strong>.\"<\/p>\nthe public-protection list: \"besides protecting the public from noise and environmental pollution \u2014 they must be safeguarded from:<\/strong><\/p>\n<aside class=\"note\">Falls in dug-up areas \u00b7 electrocution \u00b7 flooding \u00b7 falling objects \u00b7 bridge-span dropping\/ failures \u00b7 crane falling\/ overturning \u00b7 and damage to building from vibrations\/ cave-ins from construction activities.<\/strong><\/p>\nTHE Contract Manager Must Ensure That the Contractor Does not Adopt Any Shortcut in this REGARD.<\/em><\/p><\/aside>\n<h1>9.15 Scope and Quantity Control<\/span><\/h1>\n<h2>9.15.1<\/span>Quantity Tolerance \u2014 Minor Short\/ Excess Deliveries [G ONLY]<\/span><\/h2>\n<aside class=\"note\">\"minor shortfall\/ excess deliveries in the last\/ final consignment are unavoidable due to the manufacturing and supply chain vagaries.<\/strong><\/p>\nAlthough to close the contract an amendment May require to be issued \u2014 yet, to simplify the process, the consignee receiving the material can be authorised to treat the contract as completed, provided the deliveries are:<\/strong><\/p>\nSHORT\/ Excess Up to 5 per Cent of the Total Value of the Contract, or Rs. 5 Lakhs \u2014 Whichever is less.<\/em><\/p>\n Payment will be made without the issue of a formal contract amendment, and without reference to the ultimate user\/ indentor. Only the supplied quantity shall be paid for, as per the terms of the contract.<\/strong><\/p>\nThis Shall not Be Applicable to Indivisible Items or Machinery and PLANT.<\/em><\/p><\/aside>\n<h2>9.15.2<\/span>The Option Clause at the Contract Management Stage [G ONLY]<\/span><\/h2>\n1. The right: \"under this clause, the purchaser retains the right to place orders for an additional quantity up to a specified percentage of the originally contracted quantity \u2014 at the same rate and terms of the contract \u2014 during the currency of the contract.<\/strong><\/p>\n<aside class=\"note\"> This clause and percentage should be part of the tender document and the contract, and ideally should not exceed 25\u201330%.<\/strong><\/p>\n Approval should be obtained from the ca (who originally approved the tender decision) to exercise the option clause, based on the value of the contract and the increased quantity.<\/strong><\/p>\n In case the recalculated value of the contract goes beyond the delegation of powers of the original ca \u2014 approval of the ca for the enhanced value May be taken<\/strong>.\"<\/p><\/aside>\n2. The eight conditions governing operation of the option clause:<\/p>\n<aside class=\"note\">\"additional demands should be available for coverage, and over-provisioning May be avoided by keeping informed the officers concerned with provisioning\/ tender evaluation for the next cycle of procurement.<\/strong>\"<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Condition<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>\"if the quantity has been increased under the option clause \u2014 the negative option clause should not be invoked thereafter, or vice versa<\/strong>.\"<\/td><\/tr><tr><td>b<\/td><td>\"in case of a decrease in the ordered quantity \u2014 it would be fair to allow the firm to supply work-in-progress or goods already put up for inspection<\/strong>.\"<\/td><\/tr><tr><td>c<\/td><td>\"there should be no declining trend in the price of the stores \u2014 as evidenced by the fact that no order has since been placed at lower rates, and no tender has been opened since the time offers have been received at lower rates \u2014 even if not finalised<\/strong>.\"<\/td><\/tr><tr><td>d<\/td><td>\"if the option clause exists during the provisioning of the next cycle, and tender evaluation in the next cycle shows an increasing price trend \u2014 the application of the option clause must be positively considered. The contract management authority must also keep an eye on delivery against the contract. If other conditions are satisfied, the option clause must be exercised<\/strong>.\"<\/td><\/tr><tr><td>e<\/td><td>\"the option clause is normally exercised after receipt of 50 (fifty) per cent quantity. If the delivery period is going to expire and other conditions are fulfilled \u2014 it can be exercised even earlier<\/strong>.\"<\/td><\/tr><tr><td>f<\/td><td>\"the option clause shall be exercised during the currency of the contract \u2014 so that the contractor has reasonable time\/ notice for executing such an increase. It can be exercised even if the quantity of the original order is completed before the original last date of delivery. If not already agreed upon, the delivery period shall be fixed for the additional quantity on the lines of the delivery period in the original order \u2014 this will satisfy the requirement of giving reasonable notice to the supplier<\/strong>.\"<\/td><\/tr><tr><td>g<\/td><td>\"this provision can also be exercised in case of PAC\/ single supplier OEM cases<\/strong>.\"<\/td><\/tr><tr><td>h<\/td><td>\"however, where parallel contracts on multiple suppliers are available \u2014 care should be taken in exercising the option clause, so that the original tender decision of splitting quantities and differential pricing is not upset or vitiated. Other things being equal, the supplier with the lower rate should first be considered for the option quantity<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h2 class=\"src-multi srchead\" data-src=\" C NC \">9.15.3<\/span>Scope of Services<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\">\n1. The performance obligation:<\/p>\n<aside class=\"note\">\"the contractor must perform\/ deliver services of the description, scope\/ quantum, performance standards and quality outlined in the contract \u2014 during the contract period specified therein.<\/strong><\/p>\n The services shall conform to performance and quality standards as stipulated in the contract \u2014 or as per the best standards in the market, where not so specified.<\/strong><\/p>\n The services shall include all incidental works\/ goods, and such other work-elements not mentioned explicitly in this contract \u2014 but that can be reasonably inferred from the contract as being required for attaining completion of the services<\/strong>.\"<\/p><\/aside>\n2. The standard of performance:<\/p>\n<aside class=\"note\">\"the contractor shall perform the services and its obligations with all due diligence, efficiency, and economy \u2014 observing sound management practices, and employ appropriate advanced technology and safe methods as per the performance standards and quality control parameters stipulated in the contract.<\/strong><\/p>\n for matters where the contract does not specify any standard \u2014 the services delivered shall conform to national\/ international standards, or generally accepted professional techniques and practices<\/strong>.\"<\/p><\/aside>\n<\/div><h2 class=\"src-multi srchead\" data-src=\" C NC \">9.15.4<\/span>Performance Standards and Quality Control C<\/span>NC<\/span> \u2014 and the 0.5% damages<\/span><\/h2><div class=\"srcblock src-multi\" data-src=\" C NC \" data-label=\"Consultancy + Non-Consultancy only\">\n1. The notification of defects:<\/p>\n<aside class=\"note\">\"the Procuring Entity shall check the quality of the services and shall inspect the contractor's performance according to the contract.<\/strong><\/p>\n The Procuring Entity shall promptly notify the contractor of any identified defects \u2014 requesting the correction of the notified defect within a reasonable time<\/strong>.\"<\/p><\/aside>\n2. The cost-of-correction deduction:<\/p>\n<aside class=\"note\">\"if the contractor has not corrected the notified defect within the time stipulated in the Procuring Entity's notice \u2014 the Procuring Entity shall assess the cost of having the defect corrected.<\/strong><\/p>\n Without prejudice to any of its other remedies under this contract or applicable law \u2014 the Procuring Entity shall be legally entitled to deduct such cost from the contract's payments \u2014 together with the damages for the shortfall in performance, a sum equivalent to the percentage stipulated in the contract<\/strong>.\"<\/p><\/aside>\n3. Damages for shortfall in performance \u2014 the 0.5% Rule:<\/p>\n<aside class=\"note\">\"THE Procuring Entity Shall \u2014 Without Prejudice to Other Rights and Remedies under the Contract \u2014 Recover as Damages for the Shortfall in Performance, but not as a PENALTY:<\/em><\/p>\n0.5 (Half) per Cent (or Any Other Percentage Prescribed) of the Delivered Price (Including Elements of GST & Freight) of the Defective Services \u2014 Without Having to Prove Actual Loss INCURRED.<\/em><\/p>\nNote the phrase \"but not as a penalty\"<\/em> \u2014 this is the standard formulation for liquidated damages under Indian contract law, distinguishing a genuine pre-estimate of loss from an unenforceable penalty.<\/p><\/aside>\n<\/div><h2>9.15.5<\/span>Service Level Agreement (SLA) [NC ONLY]<\/span><\/h2>\nThe Non-Consultancy Manual carries a distinct section on the Service Level Agreement (para 9.3.3), which has no counterpart in the Consultancy Manual's scope-control section \u2014 consistent with the NC emphasis on measurable performance standards and KPIs (see Chapter 2, para 2.7.2(d)).<\/p>\n<h1 data-src=\"G\">9.16 Quality Assurance and Inspections<\/span>G<\/span>fullest text<\/span><\/h1>\n<h2>9.16.1<\/span>The Three Components of Quality Assurance<\/span><\/h2>\n<aside class=\"note\">\"in the context of procurement of goods, the quality assurance (QA) process is needed to provide adequate confidence that a procured product will satisfy the standards of quality and serve the purpose for which it is being procured.<\/strong><\/p>\nQA consists of three components:<\/strong><\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Component<\/th><th>How it is done<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>defining quality standards<\/td><td>\"the description and TS define the quality standards expected from the product<\/strong>.\"<\/td><\/tr><tr><td>b<\/td><td>planning assurance of quality<\/td><td>\"by specifying the qualification criteria for the suppliers \u2014 to ensure that they have the technical, infrastructure and financial capabilities to meet the required quality standards. Specifications also lay down quality control requirements \u2014 to indicate parameters, target values, tolerances, and methods of measurement. This also involves laying down the type of inspection agency for inspection<\/strong>.\"<\/td><\/tr><tr><td>c<\/td><td>measurement of quality<\/td><td>\"done through a scheme of inspections at the contract management stage \u2014 which lays down the actual process of inspection<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>9.16.2<\/span>Inspections \u2014 Measuring Quality Standards<\/span><\/h2>\n\"the stages and modes of inspection May vary depending on:<\/strong><\/p>\n<aside class=\"note\">The nature of the goods \u00b7 the total value of the contract \u00b7 the location of the supplier \u00b7 the location of the user<\/strong>, and so on.\"<\/p><\/aside>\n<h2>9.16.3<\/span>Types of Inspection<\/span><\/h2><h3>A. Pre-dispatch Inspection<\/span><\/h3>\na) stage inspection and its purpose:<\/p>\n<aside class=\"note\">\"a pre-dispatch inspection May be conducted either during various stages of the production process (which is known as stage inspection) \u2014 or on the production of the finished products, but before the dispatch of the goods from the supplier's premises.<\/strong><\/p>\n Stage inspection May be used for highly technical goods \u2014 whose quality of the manufacturing process is likely to have a considerable effect on the final quality and durability of the goods.<\/strong><\/p>\nEven After PRE-DISPATCH Inspections, These Materials Should Be Inspected Again upon Receipt as a Matter of Abundant PRECAUTION.<\/em><\/p><\/aside>\nB) who inspects: \"inspection of the materials before dispatch shall be carried out by the inspection agency nominated in the contract, or by its representative, at the premises of the supplier \u2014 in accordance with the inspection procedure laid down and incorporated in the purchase order<\/strong>.\"<\/p>\nc) who pays for testing: \"the supplier should bear the testing charges for samples \u2014 and this should be made clear at the enquiry stage itself, to avoid claims later or affect his position in the comparative statement of offers. Any special testing involving significant financial implications shall be settled prior to placement of the order \u2014 and such costs should form part of the evaluation<\/strong>.\"<\/p>\nd)\u2013g) offshore supplies and the waiver route:<\/p>\n<ul class=\"lst\"><li>\"the Procuring Entity May depute its representative or a third-party inspection agency to the supplier's manufacturing premises to carry out\/ witness inspection and testing, performance testing \u2014 at its discretion<\/strong>\";<\/li><li>\"alternatively, the Procuring Entity shall retain an option to waive the above and accept the material based on the supplier's internal test report, guarantee and fitment certificate. In this regard, the written approval of the hod of the indenting Department should be obtained, and the reasons for it should be recorded<\/strong>\";<\/li><li>\"whenever the inspection is carried out at the supplier's manufacturing premises \u2014 an inspection on receipt of goods at the Procuring Entity shall also be carried out by an officer of the indenting Department or a third-party inspection agency<\/strong>.\"<\/li><\/ul>\nh) the inspector-hospitality prohibition \u2014 a direct instruction from DoE:<\/p>\n<aside class=\"note\">\"it has been brought to the notice of the Department of Expenditure that the contracts signed with suppliers by some of the ministries\/ departments have clauses of pre-inspection at the firm's premises \u2014 where there is a provision that the suppliers or the vendors will pay for the travel, stay, hospitality and other expenses of the inspecting officials.<\/strong><\/p>\nThis is not in Keeping with the Need to Safeguard the Independence of the Inspecting Teams. Such Provisions in Contracts Need to Be Discouraged, So That Inspections are not COMPROMISED.<\/em><\/p>\n Necessary steps May be taken to avoid such provisions in the contracts with suppliers\/ vendors strictly<\/strong>.\" (See also Chapter 3, para 3.8 \u2014 Conduct of Public Servants, Risk 1 on Hospitality.)<\/em><\/p><\/aside>\n<h3>B. Inspection of Goods on Receipt at Consignee\/ User's Site<\/span><\/h3>\n<aside class=\"note\">\"post-delivery inspection is carried out upon receipt of goods before acceptance.<\/strong><\/p>\n This should be typically done for goods that are available off-the-shelf and are bis-marked \u2014 all final goods that May be directly consumed or utilised on delivery (excluding machinery installations and so on), and for which detailed inspection [is not otherwise warranted]<\/strong>.\"<\/p><\/aside>\n<h2>9.16.4<\/span>Types of Inspection Agencies<\/span><\/h2>\n<aside class=\"note\">the governing Rule on changing the agency:<\/p>\n\"normally, inspection modalities or agencies for inspections specified in the contract should not be changed.<\/strong><\/p>\n In rare cases, when this becomes inescapable \u2014 it should be done with the approval of the ca, justifying the rare circumstances, and ensuring that no undue benefit accrues to the contractor<\/strong>.\"<\/p><\/aside>\n<h3>1.<\/span>Internal Inspection Authorities<\/span><\/h3>\n<aside class=\"note\">\"wherever technical expertise is available in-house \u2014 an internal officer of the indenting Department is nominated for inspection.<\/strong><\/p>\nTHE Consignee Should Be the Final Authority for the Acceptance of GOODS.<\/em><\/p><\/aside>\n<h3>2.<\/span>External Inspecting Authorities<\/span><\/h3>\nA) third-party inspection and the reserved right:<\/p>\n<aside class=\"note\">\"in case the Procuring Entity does not have the technical expertise \u2014 or for other relevant reasons \u2014 the inspection May also be entrusted to a third-party inspection authority.<\/strong><\/p>\nTHE Procuring Entity, However, Retains the Right to Reject the Consignment \u2014 Even if third-PARTY Inspection Authorities Have Cleared IT.<\/em><\/p><\/aside>\nb) external laboratory testing \u2014 the approved list and the five guidelines:<\/p>\n<aside class=\"note\">\"sometimes, it becomes necessary to conduct a type test, acceptance test, or special test at external laboratories \u2014 when facilities for these tests are not available in-house with the supplier, or if carrying out confirmatory tests is considered desirable before accepting the goods.<\/strong><\/p>\n The Procuring Entity should draw up a list of approved laboratories for this purpose \u2014 to which the samples drawn from the lots offered by the supplier can be sent for tests.<\/strong><\/p>\n The list should also contain approved laboratories which can be used as referral\/ appellate laboratories for retesting \u2014 when samples tested at one laboratory are decided to be re-tested<\/strong>.\"<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Guideline<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>\"external testing May invariably be done by nationally accredited or reliable laboratories \u2014 preference being given to the National Test House (NTH). For testing the samples drawn from the lots offered by the supplier \u2014 an inspection agent qualified to conduct random sampling in accordance with quality assurance requirements should make the selection of samples<\/strong>.\"<\/td><\/tr><tr><td>ii<\/td><td>\"test reports must contain the values obtained in the tests \u2014 besides fail\/ pass results. The laboratory must preserve the sample and test records for a period of three years<\/strong>.\"<\/td><\/tr><tr><td>iii<\/td><td>\"the Department should lay down a liability statement for costs expended on tests, dispatch of samples, transportation costs, test charges, and so on<\/strong>.\"<\/td><\/tr><tr><td>iv<\/td><td>\"in cases where the samples are to be tested at the supplier's cost because of the non-availability of his own testing arrangements \u2014 the responsibility of depositing the testing fees would rest with the supplier<\/strong>.\"<\/td><\/tr><tr><td>v<\/td><td>the default cost-allocation Rule and its exception \u2014 see below<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">The Default COST-ALLOCATION Rule:<\/p>\n\"normally, unless otherwise intended in the contract:<\/strong><\/p>\n\u2022 charges of routine testing prior to dispatch of materials are to be borne by the supplier; And<\/strong><\/p>\n\u2022 charges of testing of materials after receipt by the consignee are to be borne by the procuring agency.<\/strong><\/p>\n The contract should clearly State the responsibility for the cost of materials expended in tests, and charges for special tests \u2014 e.g., type tests or tests at external labs.<\/strong><\/p>\nEven Where the Procuring Entity is Responsible for Testing Charges \u2014 if the Material Fails in the Test, the Charges Shall Become the Responsibility of the SELLER.<\/em><\/p><\/aside>\n<h3>3.<\/span>Joint Inspection on Complaint<\/span><\/h3>\n<aside class=\"note\">\"in case a written complaint is received from the supplier disputing the rejection of goods by the Procuring Entity \u2014 it should be jointly investigated by a team consisting of:<\/strong><\/p>\n1. An authorised representative of the Procuring Entity;<\/strong><\/p>\n2. A senior representative of the inspecting agency who is conversant with the goods; And<\/strong><\/p>\n3. An authorised representative of the supplier.<\/strong><\/p>\nIN Case the Firm Fails to Associate with a Joint Inspection \u2014 IT Should Be Held with the PRE-INSPECTING AGENCY.<\/em><\/p><\/aside>\n<h2>9.16.5<\/span>Issue of Inspection Report<\/span><\/h2>\n\"after satisfactory inspection and tests \u2014 the acceptable goods shall be stamped, labelled<\/strong>\u2026\"<\/strong>(and the Inspection Report issued accordingly; see also the Goods Receipt and Inspection Report<\/strong> at Annexure 25 of the Goods Manual.)<\/em><\/p>\n<h2>9.16.6<\/span>Material Put Up for Inspection Towards the End of Delivery<\/span><\/h2>\nA distinct sub-section of the Goods Manual (9.4.6) governs the treatment of material offered for inspection at or near the expiry of the delivery period \u2014 read with para 9.3.11 (Handling Deliveries at the Last Moment or after Expiry of the Delivery Period), covered in Part B of this chapter.<\/p>\n<h2>9.16.7<\/span>Approval of Acceptable Deviations<\/span><\/h2>\nGoods para 9.4.7 provides for the formal approval of acceptable deviations discovered at inspection \u2014 the contract-management counterpart of the minor vs substantive deviation<\/em> test at the evaluation stage (Chapter 7 Part A, para 7.15.4).<\/p>\n<h1>9.17 Warranty Clause [G ONLY]<\/span><\/h1>\n<h2>9.17.1<\/span>The Warranty and Its Survival<\/span><\/h2>\n<aside class=\"note\">\"if included, in the case of works and capital equipment \u2014 the warranty clause in the contract warrants that goods supplied by the contractor would continue to conform to the description and quality during the specified warranty period:<\/strong><\/p>\nUSUALLY, 24 Months After Delivery, or 18 Months from the Date of Placement in Service \u2014 Whichever is SOONER.<\/em><\/p>\n Obligations of the contractor under the warranty clause shall survive \u2014 even though the goods May have been inspected, accepted, installed\/ commissioned, and paid for by the Procuring Entity, or the contract is terminated for any reason whatsoever.<\/strong><\/p>\nWhen no warranty clause is called for: \"in the procurement of goods other than capital equipment \u2014 and in the case of low-value capital goods, say up to rupees one lakh \u2014 a warranty clause is not called for<\/strong>.\"<\/p><\/aside>\n<h2>9.17.2<\/span>Notification of Defect<\/span><\/h2>\n<aside class=\"note\">\"the Procuring Entity shall promptly notify in writing to the contractor, during the period above \u2014 if the said goods\/ stores\/ articles are discovered not to conform to the description and quality, or have deteriorated, otherwise than by fair wear and tear.<\/strong><\/p>\n (The decision of the Procuring Entity in that behalf being final and conclusive.)<\/strong>\"<\/p><\/aside>\n<h2>9.17.3<\/span>The 14-Day Rectification Obligation<\/span><\/h2>\n<aside class=\"note\">\"upon receipt of such notice, the contractor shall \u2014 within 14 days (or within any other period, if stipulated in the contract) \u2014 expeditiously repair or replace the defective goods or parts thereof, free of cost, at the ultimate destination.<\/strong><\/p>\n The contractor shall take over the replaced parts\/ goods after providing their replacements \u2014 and no claim shall lie on the Procuring Entity for such replaced parts\/ goods thereafter<\/strong>.\"<\/p><\/aside>\n<h2>9.17.4<\/span>THE WARRANTY PENALTY REGIME \u2014 0.5% per week, capped at 5%<\/span><\/h2>\n<aside class=\"note\">\"A Penalty of 0.5% (Half per Cent, or as Specified in the Contract) of the Contract Value for Every Week of Delay in Response Time Beyond the Specified Time \u2014 Shall Be Recoverable from the Performance\/ Warranty GUARANTEE.<\/em><\/p>\nTHE Maximum Penalty for Warranty Failure Will Be 5% (Five per Cent) of the Contract Value During the Whole Warranty PERIOD.<\/em><\/p>\n If there is further such delay after reaching this limit \u2014 the Procuring Entity shall be entitled to encashment of the whole of performance\/ warranty guarantee bonds \u2014 besides recording the adverse performance of the contractor for future tenders<\/strong>.\"<\/p><\/aside>\n<h2>9.17.5<\/span>Warranty on Rectified\/ Replaced Goods \u2014 the no-extension rule<\/span><\/h2>\n<aside class=\"note\">\"IN Case of Any Rectification of a Defect or Replacement of Any Defective Goods During the Warranty Period \u2014 the Warranty for the Rectified\/ Replaced Goods Shall Remain Till the Original Warranty PERIOD.<\/em><\/p>\nThat is, replacement does not<\/strong> restart or extend the warranty clock.<\/em><\/p><\/aside>\n<h2>9.17.6<\/span>The 21-Day Breach Trigger<\/span><\/h2>\n<aside class=\"note\">\"IF the Contractor \u2014 Having Been Notified \u2014 Fails to Rectify\/ Replace the DEFECT(S) Within 21 Days (or Within Any Other Period, if Stipulated in the CONTRACT):<\/em><\/p>\nIT Shall Amount to a Breach of Contract for Default \u2014 and the Procuring Entity Shall Avail Any or All Remedial ACTION(S) Thereunder, Including Forfeiture of Warranty\/ Performance Bank GUARANTEE.<\/em><\/p><\/aside>\n<h1>Appendix to Chapter 9 \u2014 Part a: Points of Difference<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Chapter number and title<\/td><td>G: Ch. 9 Contract Management \u00b7 W: Ch. 7 *Execution and Monitoring of Works and Quality Assurance<\/strong> \u00b7 C: Ch. 10 <\/em>Monitoring\u2026 \u00b7 NC: Ch. 9 *Monitoring\u2026<\/strong><\/td><\/tr><tr><td>2<\/td><td>Number of heads under contract management<\/td><td>G: 8 \u00b7 W: 7 \u00b7 C and NC: 5 (with nine sub-heads under Contract Administration)<\/em><\/td><\/tr><tr><td>3<\/td><td>\"Post-contract evaluation\" as a distinct head<\/td><td>c + nc only<\/td><\/tr><tr><td>4<\/td><td>The six ways poor project management \"costs the nation\"<\/strong>(incl. \"creates a culture of acceptance of delay\" and \"monetisation of higher risks perceived by contractors\")<\/em><\/td><td>W ONLY<\/td><\/tr><tr><td>5<\/td><td>Why services contracts need more intense monitoring \u2014 \"lack of physically\/ tangibly measurable outcomes\"; Management by Exception; counterpart Project Manager<\/td><td>c + nc only<\/td><\/tr><tr><td>6<\/td><td>contract Monitoring Committee (CMC)<\/strong> \u2014 Rule 205; at least three members; CEC members may be reused; outside experts at Procuring Entity's cost; six responsibilities incl. power to levy LD<\/strong> and accept\/ reject any part<\/strong><\/td><td>c + nc only<\/td><\/tr><tr><td>7<\/td><td>Appointing another qualified consultant to assist the CMC in complex assignments<\/td><td>c + nc only<\/td><\/tr><tr><td>8<\/td><td>Aligning the interest of the stakeholders<\/strong> \u2014 incentive structure; pecuniary and non-pecuniary; naming the contractor and project-in-charge publicly at work sites<\/strong>; recognition with \"long shelf life\"<\/td><td>W ONLY<\/td><\/tr><tr><td>9<\/td><td>Principle of Proportionality<\/strong> \u2014 \"one size does not fit all\"; too many checks stifle innovation, too little control produces \"an undisciplined crisis management culture\"<\/td><td>W ONLY<\/td><\/tr><tr><td>10<\/td><td>The Contract Manager \u2014 the six alternative titles; single person for small contracts, team for large; quarterly\/ monthly monitoring by the Works Committee with status report to the Secretary<\/td><td>W ONLY<\/td><\/tr><tr><td>11<\/td><td>The fourteen-point monthly MIS Progress Report<\/strong> \u2014 incl. named manpower statement<\/strong>, colour progress photographs, hold-ups and disputes to be highlighted<\/td><td>W ONLY<\/td><\/tr><tr><td>12<\/td><td>The photograph\/ video system as \"a permanent record of the project for posterity\u2026 in case needed for litigation or enquiry\/ investigation\"<\/td><td>W ONLY<\/td><\/tr><tr><td>13<\/td><td>Project management software named \u2014 MS PPM and Oracle Primavera P6; PMI-certified contract managers<\/td><td>W ONLY<\/td><\/tr><tr><td>14<\/td><td>The six prerequisites to commencement<\/strong> \u2014 land acquisition, permits (with the delay-claim warning), quarries and borrow areas, safety at work site, advance payments, insurances<\/td><td>W ONLY<\/td><\/tr><tr><td>15<\/td><td>\"All or most pre-requisites shall be fulfilled before award of the LoA\"<\/td><td>W ONLY<\/td><\/tr><tr><td>16<\/td><td>Commencement of Work<\/strong> \u2014 Work Order within 2 weeks but not later than 6 weeks from LoA<\/strong>; the three contractor submissions (Work Program, Method Statement, QA Plan); possession of site<\/td><td>W ONLY<\/td><\/tr><tr><td>17<\/td><td>Mobilisation as a distinct pre-construction phase<\/td><td>W ONLY<\/td><\/tr><tr><td>18<\/td><td>Review of Inception Phase<\/td><td>c + nc only<\/td><\/tr><tr><td>19<\/td><td>Incentives for Excellence in Contract Execution<\/td><td>c + nc only<\/td><\/tr><tr><td>20<\/td><td>Safeguards for handing over materials \u2014 the Rs 1 lakh BG waiver and indemnity bond alternative; certificate on return of ID cards and gate passes; payment for electricity\/ water\/ crane<\/td><td>Common \u2014 W text fullest<\/td><\/tr><tr><td>21<\/td><td>ESHS\/ SHE<\/strong> \u2014 mandatory skills in Bid Documents; site safety engineer mandatory; frequent SHE audits; the hazardous-substances list; the public-protection list<\/td><td>W ONLY<\/td><\/tr><tr><td>22<\/td><td>Quantity tolerance \u2014 5% of contract value or Rs 5 lakh whichever is less; not applicable to indivisible items or machinery and plant<\/td><td>G ONLY<\/td><\/tr><tr><td>23<\/td><td>The eight conditions governing the Option Clause<\/strong> \u2014 no reverse invocation; exercise normally after 50% receipt; no declining price trend; must be exercised during currency; care with parallel contracts<\/td><td>G ONLY<\/td><\/tr><tr><td>24<\/td><td>Scope of Services \u2014 \"such other work-elements not mentioned explicitly but that can be reasonably inferred\"<\/td><td>c + nc only<\/td><\/tr><tr><td>25<\/td><td>Damages for shortfall in performance \u2014 0.5% of delivered price \"but not as a penalty\", without having to prove actual loss<\/td><td>c + nc only<\/td><\/tr><tr><td>26<\/td><td>Service Level Agreement as a distinct section<\/td><td>nc only<\/td><\/tr><tr><td>27<\/td><td>The three components of Quality Assurance (defining, planning, measuring)<\/td><td>G ONLY<\/td><\/tr><tr><td>28<\/td><td>Stage inspection; \"even after pre-dispatch inspections, materials should be inspected again upon receipt as a matter of abundant precaution\"<\/td><td>G ONLY<\/td><\/tr><tr><td>29<\/td><td>The prohibition on suppliers paying for inspectors' travel, stay and hospitality<\/td><td>G ONLY<\/td><\/tr><tr><td>30<\/td><td>\"The consignee should be the final authority for the acceptance of goods\"<\/td><td>G ONLY<\/td><\/tr><tr><td>31<\/td><td>\"The Procuring Entity retains the right to reject the consignment even if third-party inspection authorities have cleared it\"<\/td><td>G ONLY<\/td><\/tr><tr><td>32<\/td><td>External testing \u2014 preference to the National Test House; test reports must contain values not just fail\/pass; laboratory must preserve sample and records for three YEARS; referral\/ appellate laboratories<\/td><td>G ONLY<\/td><\/tr><tr><td>33<\/td><td>The default testing-cost rule (supplier pre-dispatch, procuring agency post-receipt) \u2014 and the exception that if the material FAILS, the charges become the seller's<\/td><td>G ONLY<\/td><\/tr><tr><td>34<\/td><td>Joint Inspection on Complaint \u2014 the three-member team; if the firm fails to associate, it is held with the pre-inspecting agency<\/td><td>G ONLY<\/td><\/tr><tr><td>35<\/td><td>Warranty Clause \u2014 24 months after delivery or 18 months from placement in service whichever sooner; obligations survive acceptance and even termination; 14-day rectification; 0.5% per week capped at 5%; replacement warranty runs only to the ORIGINAL warranty period; 21-day failure = breach<\/td><td>G ONLY<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 9 \u2014 part a<\/p>\n<aside class=\"note\">Next:<\/strong>Chapter 9 \u2014 part b: Time control, cost control, logistics and closure<\/strong> \u2014 Delivery Period \u00b7 Delays in Delivery\/ Execution \u00b7 Extension of Delivery and Extension of Time (EOT)<\/strong> \u00b7 Performance Notice \u00b7 Force Majeure<\/strong> \u00b7 Denial Clause<\/strong> \u00b7 Liquidated Damages, quantum and waiver<\/strong> \u00b7 Handling deliveries after expiry of the delivery period \u00b7 Compensation Events<\/strong> \u00b7 Time at Large<\/strong> \u00b7 Prices, Taxes and Statutory Variation \u00b7 Passing of bills and Payments \u00b7 Logistics: Transportation, Transfer of Title, Insurance, Receipt of Consignment, Storage and Issue [G only]<\/strong> \u00b7 Closure of Contract and its four reconciliations W<\/span> \u00b7 <\/strong>Concluding the Assignment and Post-Contract Review C<\/span>NC<\/span>.<\/p><\/aside>Part II<\/span>Time Control, Cost Control, Logistics and Closure<\/em><\/p>\nMerging: Goods Ch. 9<\/strong> (paras 9.3, 9.5, 9.6, 9.7.6) \u00b7 Works Ch. 7<\/strong> (paras 7.4, 7.5, 7.6) \u00b7 Consultancy Ch. 10<\/strong> (paras 10.4, 10.5, 10.6) \u00b7 Non-Consultancy Ch. 9<\/strong> (paras 9.4, 9.5, 9.6)<\/em><\/p><h2>Concordance for Chapter 9 \u2014 Part B<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>G<\/th><th>W<\/th><th>C<\/th><th>NC<\/th><\/tr><\/thead><tbody><tr><td>9.18<\/td><td>Delivery Period; Terms of Delivery<\/td><td>9.3.1, 9.3.2<\/td><td>7.4.1, 7.4.2<\/td><td> \u2014 <\/td><td>9.4.1<\/td><\/tr><tr><td>9.19<\/td><td>Delays in Delivery\/ Execution<\/td><td>9.3.3<\/td><td>7.4.5<\/td><td>10.4.1<\/td><td>9.4.2<\/td><\/tr><tr><td>9.20<\/td><td>Extension of Delivery \/ Extension of Time (EOT)<\/td><td>9.3.4<\/td><td>7.4.6<\/td><td>10.4.2<\/td><td>9.4.3<\/td><\/tr><tr><td>9.21<\/td><td>Performance Notice<\/td><td>9.3.5<\/td><td>7.4.9<\/td><td>10.4.3<\/td><td>9.4.4<\/td><\/tr><tr><td>9.22<\/td><td>Force Majeure (FM)<\/td><td>9.3.6<\/td><td>7.4.4<\/td><td>10.4.9<\/td><td>9.4.10<\/td><\/tr><tr><td>9.23<\/td><td>Denial Clause (DC)<\/td><td>9.3.7<\/td><td>7.4.8<\/td><td>10.4.4<\/td><td>9.4.5<\/td><\/tr><tr><td>9.24<\/td><td>Liquidated Damages, Quantum and Waiver<\/td><td>9.3.8\u20139.3.10<\/td><td>7.4.7<\/td><td>10.4.5\u201310.4.8<\/td><td>9.4.6\u20139.4.9<\/td><\/tr><tr><td>9.25<\/td><td>Handling Deliveries at the Last Moment\/ After Expiry<\/td><td>9.3.11<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.26<\/td><td>Compensation Events<\/td><td> \u2014 <\/td><td>7.4.10<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.27<\/td><td>Time At Large<\/td><td> \u2014 <\/td><td>7.4.11<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.28<\/td><td>Cost Control \u2014 Prices, Taxes and Payments<\/td><td>9.5<\/td><td>7.5<\/td><td>10.5<\/td><td>9.5<\/td><\/tr><tr><td>9.29<\/td><td>Electronic Bill (e-Bill) Processing System<\/td><td> \u2014 <\/td><td>7.5.8<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.30<\/td><td>Logistics: Transportation, Receiving, Storage and Issue<\/td><td>9.6<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.31<\/td><td>Closure of Contract<\/td><td>9.7.6<\/td><td>7.6<\/td><td>10.6<\/td><td>9.6<\/td><\/tr><tr><td>9.32<\/td><td>Concluding the Assignment and Post-Contract Review<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>10.6<\/td><td>9.6<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>9.18 Delivery Period and Terms of Delivery<\/span><\/h1>\n<h2 class=\"src-G srchead\" data-src=\" G \">9.18.1<\/span>The Delivery Period Must Be Specific<\/span>G<\/span><\/h2><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\n<aside class=\"note\">\"the period FOR delivery of the ordered goods, and completion of any allied service(s) thereof \u2014 such as installation and commissioning of the equipment, operators' training, and so on \u2014 are to be properly specified in the contract with definite dates.<\/strong><\/p>\nAND These Shall Be Deemed to Be the Essence of the CONTRACT.<\/em><\/p>\n The delivery period stipulated in contracts should be specific and practical. Vague and ambiguous terms should be avoided<\/strong>.\"<\/p><\/aside>\n<\/div><h2 class=\"src-G srchead\" data-src=\" G \">9.18.2<\/span>Terms of Delivery Determine When Title Passes<\/span>G<\/span><\/h2><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\n<aside class=\"note\">\"terms of delivery (for, FOB, CIF, CFR, and so on), inter alia, determine the delivery point of the ordered goods \u2014 from where the purchaser is to receive\/ collect the goods.<\/strong><\/p>\nIT Also Decides the Legally Critical Issue of When the 'Titles of the Goods' Have Passed to the PURCHASER.<\/em><\/p>\n The delivery period is to be read in conjunction with the terms of delivery. Therefore, the delivery is taken to have been made at the time when goods reach the delivery point as per the delivery terms<\/strong>.\"<\/p>\n(See Chapter 6, para 6.17 \u2014 Incoterms 2020<\/strong> \u2014 for the eleven delivery terms and the title-of-goods principle.)<\/em><\/p><\/aside>\n<\/div><h2 class=\"src-W srchead\" data-src=\" W \">9.18.3<\/span>Contract Effective Date and Work Program<\/span>W<\/span><\/h2><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\nThe Works Manual replaces \"delivery period\" with Contract Effective Date (7.4.1) and the Work Program (7.4.2) \u2014 the latter being the contractor's submission approved by the Contract Manager at the commencement stage (see Part A, para 9.6).<\/p>\n<\/div><h2 class=\"src-NC srchead\" data-src=\" NC \">9.18.4<\/span>Contract Period and Options<\/span>NC<\/span><\/h2><div class=\"srcblock src-NC\" data-src=\" NC \" data-label=\"Non-Consultancy Manual only\">\nThe Non-Consultancy Manual carries a distinct opening section on Contract Period and Options (9.4.1) \u2014 governing the initial contract term and the exercise of extension options in service contracts.<\/p>\n<h1>9.19 Delays in Delivery \/ Execution<\/span><\/h1>\n<\/div><h2>9.19.1<\/span>The Governing Principle \u2014 Time is the Essence<\/span><\/h2>\n<aside class=\"note\">\"suppliers shall be required to adhere to the delivery Schedule \u2014 including any instalment thereof, or incidental work\/ services (e.g., installation, commissioning, operator training) \u2014 specified in the purchase order (or as extended).<\/strong><\/p>\nAND, if There is a Delay in Supplies, IT Amounts to Breach of Contract \u2014 Since 'Time is the Essence of the CONTRACT'.<\/em><\/p><\/aside>\nThe two remedies: The Procuring Entity May, without prejudice to his other rights<\/strong>:<\/p>\na) recover from the contractor Liquidated Damages<\/strong>; or<\/p>\nb) treat the delay as a breach of contract and avail all the remedies therein<\/strong>.<\/p>\n<aside class=\"note\">The caution on using (b): \"although it is in the purchaser's interest to resort to this provision only as a last resort \u2014 in case of inordinate delays<\/strong>.\"<\/p><\/aside>\nC<\/span> adds the notification duty: \"the consultant should notify the Procuring Entity and explain the causes of such delays<\/strong>.\"<\/p>\n<h2>9.19.2<\/span>INORDINATE DELAYS \u2014 the 25% test and its consequence<\/span><\/h2>\n<aside class=\"note\">\" Inexcusable Delays of More Than one-FOURTH (25%) of the Total Completion Period Shall Be Treated as Inordinate DELAYS.<\/em><\/p>\n Such inordinate delays May be treated as a breach of contract \u2014 and shall be noted as deficient performance and held against the contractor in future tenders.<\/strong><\/p>\n A show-cause notice shall be issued to the contractor before declaring it a deficient performance.<\/strong><\/p>\nIN Case the Procuring Entity Decides to Allow Performance of Contract After Inordinate Delays \u2014 the Maximum Limit on LD Shall Be 10% (Instead of 5%) of the Total Contract VALUE.<\/em><\/p><\/aside>\n<h2>9.19.3<\/span>Delay for Which the Supplier is NOT Responsible \u2014 the four cases<\/span><\/h2>\n\"in cases where there is a delay for which the supplier is not responsible \u2014 the delivery period needs to be re-fixed without imposing any penalty on the supplier \u2014 i.e., without LD and without a Denial Clause.<\/strong><\/p>\nNormally, in the following circumstances, the supplier May not be considered responsible for the delay<\/strong>:\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Case<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>cases where the supplier is dependent on the approval of the pre-production sample \u2014 and the delay occurs in approving the sample, though submitted by the supplier in time<\/strong><\/td><\/tr><tr><td>ii<\/td><td>where extension is granted on account of some omission on the part of the purchaser, which affects the due performance of the contract by the supplier<\/strong><\/td><\/tr><tr><td>iii<\/td><td>cases where the purchaser controls the entire production Schedule of the supplier<\/strong><\/td><\/tr><tr><td>iv<\/td><td>cases where production and\/ or delivery has been affected by force Majeure, or statutory change, or specific executive instructions issued by govt.<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">The shared-fault Rule: \"there May be delays for which both buyer and supplier May be responsible to a different extent. In such cases, the levy of LD and Denial Clause May be decided on merits<\/strong>.\"<\/p>\nW<\/span> variant: *\"\u2026<\/strong>the procuring entity, with the approval of CA and concurrence of finance, may decide a lower quantum of LD, and consider waiver of Denial Clause on the merit of the case.\"*<\/p><\/aside>\n<h1>9.20 Extension of Delivery \/ Extension of Time (EOT)<\/span><\/h1>\n<h2 class=\"src-W srchead\" data-src=\" W \">9.20.1<\/span>THE TWO DISTINCT CONCEPTS \u2014 Re-fixation vs Extension<\/span>W<\/span>the clearest statement<\/span><\/h2><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n<aside class=\"note\">This Distinction is the Single Most Important Point in this Section<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>RE-FIXATION OF DELIVERY<\/th><th>EXTENSION OF TIME (EOT)<\/th><\/tr><\/thead><tbody><tr><td>When<\/td><td>the delay is not attributable to the contractor<\/strong> (or in case of Force Majeure)<\/td><td>the delay is attributable (fully or partly) to the contractor<\/strong><\/td><\/tr><tr><td>What it is<\/td><td>\"a fresh completion period, treated like the original completion period \u2014 which is arrived at by recasting the original contractual completion period, after taking care of the lost period for which the contractor was not responsible<\/strong>\"<\/td><td>the completion Schedule is extended<\/strong><\/td><\/tr><tr><td>LD<\/td><td>without LD<\/strong><\/td><td>with LD<\/strong><\/td><\/tr><tr><td>Denial Clause<\/td><td>Without the denial clause<\/strong><\/td><td>With the denial clause<\/strong><\/td><\/tr><tr><td>Approval<\/td><td>with the approval of Competent Authority<\/strong><\/td><td>(as above)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h2>9.20.2<\/span>The Contractor's Duty to Give Notice<\/span><\/h2>\n<aside class=\"note\">\"if at any time during the currency of the contract, the contractor encounters conditions hindering the timely delivery\/ completion \u2014 he shall promptly inform the concerned officer in writing.<\/strong><\/p>\n He should mention its likely duration, and request an extension of the Schedule accordingly<\/strong>.\"<\/p>\nW<\/span> \u2014 the \"do not leave it to the end\" Rule:<\/p>\n\" Extension of time (EOT) must not be left to the end; It should be dealt with promptly during the progress of the contract \u2014 and for ongoing critical delay, interim EOT May be awarded.<\/strong><\/p>\n After the final stage of completion is reached (final taking-over certificate issued) \u2014 EOT and LD May be reviewed, if required<\/strong>.\"<\/p><\/aside>\n<h2 class=\"src-G srchead\" data-src=\" G \">9.20.3<\/span>The Two Pre-conditions for Granting Extension<\/span>G<\/span><\/h2><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\non approval from the ca, the Procuring Entity May agree to extend the delivery Schedule \u2014 with or without LD, and with or without the Denial Clause<\/strong> \u2014 provided:<\/p>\nA) the earlier-delivery test: \"that a higher rate in the original tender was not accepted against other lower quotations in consideration of the earlier delivery<\/strong>.\"<\/p>\nb) the falling-price test: \"in the case of fixed price contracts \u2014 there is no falling trend in prices for this item, as evidenced by the fact that, in the intervening period, neither orders have been placed at rates lower than this contract, nor any tender has been opened where such rates have been received \u2014 even though the tender is not yet decided.<\/strong><\/p>\n<aside class=\"note\"> In cases of certain raw material supplies where prices are linked to the PVC \u2014 extension May be granted even in case of a falling trend in price indices, since the price variation mechanism protects the purchaser's interests. However, in such cases it should be ensured that extensions are done with the Denial Clause<\/strong>.\"<\/p><\/aside>\n<\/div><h2>9.20.4<\/span>Extension Amounts to an Amendment \u2014 and Requires Consent<\/span><\/h2>\n<aside class=\"note\">\"EXTENSION of the Delivery Date Amounts to an Amendment of the Contract. Such an Extension Can Only Be Done with the Consent of Both PARTIES.<\/em><\/p>\nNO Extension of the Delivery Date is to Be Granted Suo Motu \u2014 Unless the Supplier Specifically Asks for IT.<\/em><\/p>\n However, in a few cases it May be necessary to grant an extension suo motu in the interest of the administration. In such cases, it is legally necessary to obtain clear acceptance of the extension letter from the supplier<\/strong>.\"<\/p><\/aside>\n<h2>9.20.5<\/span>EXTENSION AFTER EXPIRY \u2014 Section 63 of the Indian Contract Act [W ONLY]<\/span><\/h2>\n<aside class=\"note\">\" The power to extend the time for performance under section 63 of the Indian Contract Act is not inherently limited to extensions granted before the original deadline. It can be exercised even after the stipulated time has passed \u2014 provided there is consent from both parties.<\/strong><\/p>\n The contract does not automatically terminate upon the expiry of the initial delivery date \u2014 if there is a shared intention to continue the contractual relationship and fulfil the obligations, albeit under a revised timeline.<\/strong><\/p>\nTherefore, such extension\/ re-fixation of time can be done even after expiry of the original period \u2014 provided consent of the contractor is obtained.<\/strong><\/p>\nHOWEVER, IT is Prudent to Formalise the Extension Before the Original Delivery Period Expires \u2014 to Avoid Any Arguments About the CONTRACT'S Validity, or of Extension of Time After the Initial DEADLINE.<\/em><\/p><\/aside>\n<h2>9.20.6<\/span>THE CORRESPONDENCE TRAP \u2014 and the mandatory closing sentence<\/span><\/h2>\n<aside class=\"note\">\" No Correspondence Should Be Entered into with the Supplier After the Expiry of the Contract Delivery Period, or Towards the End of IT \u2014 Which Has the Legal Effect of Condoning the Delay\/ Breach of CONTRACT.<\/em><\/p>\nWhen it is necessary to obtain certain information regarding past supplies \u2014 it should be made clear that calling for such information:<\/strong><\/p>\n\u2022 is not intended to keep the contract alive;<\/strong><\/p>\n\u2022 that it does not waive the breach; And<\/strong><\/p>\n\u2022 that it is without prejudice to the rights and remedies available to the purchaser under the terms of the contract.<\/strong><\/p>\nThe Mandatory Last Line of Such a Communication:<\/p>\n\"This letter is issued without any prejudice to Procuring Entity's rights and remedies under the terms and conditions of the subject contract, and without any commitment or obligation.\"<\/strong><\/p><\/aside>\n<h2>9.20.7<\/span>THE LD WARNING TRAP \u2014 why \"without prejudice\" is NOT enough<\/span><\/h2>\n<aside class=\"note\">\"when it is decided to extend the delivery period subject to recovery of LD for delay in supplies \u2014 contractors must be given a warning to this effect in writing at the time of granting extensions.<\/strong><\/p>\n it is not correct to grant extensions without any mention of the LD \u2014 if it is proposed to recover such charges eventually.<\/strong><\/p>\nIT is Also not Correct to Grant an Extension of the Delivery Period by Merely Stating That the Extension is Granted \"without Prejudice to the Rights of the Purchaser under the Terms and Conditions of the CONTRACT\" \u2014 <\/em><\/p>\n Because this would mean that all the options given in the conditions of the contract would be available to the purchaser on expiry of the extended delivery period \u2014 and would not amount to exercise of the option to recover LD.<\/strong><\/p>\n To take care of the complex legalities brought out above \u2014 an extension of the delivery period, when granted, should only be done in writing in the prescribed [legally vetted] format<\/strong>.\"<\/p>\nW<\/span> adds: *\"<\/strong>Organisations may put in place a graded authority structure, whereby extension of time for [different durations is approved at different levels].\"*<\/p><\/aside>\n<h1>9.21 Performance Notice (Notice-cum-Extension Letter)<\/span><\/h1>\n<aside class=\"note\">The Situation IT Addresses:<\/p>\n\"a situation May arise where:<\/strong><\/p>\n\u2022 the supply\/ services\/ work have not been completed within the stipulated period, due to negligence\/ fault of the supplier;<\/strong><\/p>\n\u2022 however, the supplier has not made any request for an extension of the delivery period;<\/strong><\/p>\n\u2022 but the purchaser still requires the contracted goods\/ services; And<\/strong><\/p>\n\u2022 the purchaser does not want to terminate the contract at that stage.<\/strong><\/p>\nIN Such a Case, a Performance Notice \u2014 Also Known as a NOTICE-CUM-EXTENSION Letter \u2014 May Be Issued to the Supplier: by Suitably Extending the Delivery Date, and by Imposing LD with Denial CLAUSES.<\/em><\/p>\n The supplier's acceptance of the performance notice, and further action thereof, should also be processed in the same manner as an ordinary extension<\/strong>.\"<\/p><\/aside>\n<h1>9.22 Force Majeure Clause (FM)<\/span><\/h1>\n<h2>9.22.1<\/span>The Definition and Its Exclusions<\/span><\/h2>\n<aside class=\"note\">\"a Force Majeure (FM) means extraordinary events or circumstances beyond human control \u2014 such as:<\/strong><\/p>\nAn event described as an Act of god (like a natural calamity) \u00b7 or events such as a war, strike, riots, crimes.<\/strong><\/p>\nBut not including:<\/em><\/p>\n\u2022 negligence or wrong-doing;<\/strong><\/p>\n\u2022 predictable\/ seasonal rain; And<\/strong><\/p>\n\u2022 any other events specifically excluded in the clause.<\/strong><\/p><\/aside>\n<h2>9.22.2<\/span>What the FM Clause Does \u2014 suspension, NOT excuse<\/span><\/h2>\n<aside class=\"note\">\"AN FM Clause in the Contract Frees Both Parties from Contractual Liability and Obligation \u2014 When Prevented by Such Events from Fulfilling Their Obligations under the CONTRACT.<\/em><\/p>\nAN FM Clause Does not Entirely Excuse a PARTY'S NON-PERFORMANCE \u2014 but Only Suspends IT for the Duration of the FM.<\/em><\/p><\/aside>\n<h2>9.22.3<\/span>The Notice Requirement \u2014 14 days, and no ex post facto claim<\/span><\/h2>\n<aside class=\"note\">\"THE Firm Must Give Notice of FM Within a Reasonable Time as the Conditions Permit \u2014 Say, not Later Than 14 Days After its OCCURRENCE.<\/em><\/p>\nAnd it cannot Be Claimed Ex Post FACTO.<\/em><\/p><\/aside>\nFM affecting the purchaser: \"there May be an FM situation affecting the purchase organisation only. In such a situation, the purchase organisation is to communicate with the supplier along similar lines as above for further necessary action<\/strong>.\"<\/p>\n<h2>9.22.4<\/span>the 90-DAY Termination Option<\/span><\/h2>\n<aside class=\"note\">\"IF the Performance \u2014 in Whole or in Part, or Any Obligation under this Contract \u2014 is Prevented or Delayed by Any Reason of FM for a Period Exceeding 90 (Ninety) DAYS:<\/em><\/p>\nEITHER Party May, at its Option, Seek to Terminate the Contract Without Any Financial Repercussion on Either SIDE.<\/em><\/p><\/aside>\n<h2>9.22.5<\/span>The Immunity from Punitive Provisions<\/span><\/h2>\n<aside class=\"note\">\"notwithstanding the punitive provisions contained in the contract for delay or breach of contract \u2014 the supplier would not be liable for imposition of any such sanction, so long as the delay and\/ or failure of the supplier in fulfilling its obligations under the contract is the result of an event covered in the FM clause<\/strong>.\"<\/p><\/aside>\n<h1>9.23 Denial Clause (DC)<\/span><\/h1>\n<h2>9.23.1<\/span>What It Is and Why It Exists<\/span><\/h2>\n<aside class=\"note\">\"the buyer should protect himself against extra expenditure during the extended period \u2014 by stipulating a Denial Clause (over and above the levy of LD) in the letter informing the supplier of the extension of the delivery period.<\/strong><\/p><\/aside>\n<h2>9.23.2<\/span>the Asymmetric Operation of the Denial Clause<\/span><\/h2>\n<aside class=\"note\">\"IN the Denial Clause \u2014 Wherever Delay in Delivery is Due to a Default by the SELLER:<\/em><\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Direction<\/th><th>Who bears\/ benefits<\/th><\/tr><\/thead><tbody><tr><td>ANY increase<\/em> In statutory duties, and\/ or upward rise<\/em> In prices due to the PVC clause, and\/ or any adverse<\/em> Fluctuation in foreign exchange<\/td><td>are to be borne by the seller<\/strong> During the extended delivery period<\/td><\/tr><\/tbody><\/table><\/div><\/aside>\n| ANY downward<\/em> Revision in statutory duties, PVC, and foreign exchange rate | the purchaser reserves his right to get the benefit<\/strong> During such period |<\/p>\n<aside class=\"note\">The Consequence, Stated in One Sentence:<\/p>\n\"Thus, PVC, other variations, and foreign exchange clauses \u2014 in such cases \u2014 operate only during the original delivery period.\"<\/strong><\/p>\n(Compare Chapter 6, para 6.14.3-4-vi and para 6.15-3, where the same asymmetric rule is stated for the PVC and for ERV.)<\/em><\/p><\/aside>\n<h1>9.24 Liquidated Damages (LD) \u2014 Concept, Quantum and Waiver<\/span><\/h1>\n<h2>9.24.1<\/span>The Legal Concept<\/span><\/h2>\n<aside class=\"note\">\"COMPENSATION of Loss on Account of Late Delivery \u2014 Actually Incurred as Well as Notional \u2014 Where Loss is PRE-ESTIMATED and Mutually Agreed to \u2014 is Termed as Liquidated Damages (LD).<\/em><\/p>\nTHE Law Allows Recovery of PRE-ESTIMATED Loss \u2014 Provided Such a Term is Included in the Contract \u2014 and There is No Need to Establish Actual Loss Due to Late SUPPLY.<\/em><\/p>\n However, it would strengthen the Procuring Entity's rights if it were established and kept on record that inconvenience and loss have been caused due to the delay in supplies \u2014 though the loss cannot be exactly quantified \u2014 and hence Liquidated Damages are applicable as a genuine pre-estimate of the loss<\/strong>.\"<\/p><\/aside>\n<h2>9.24.2<\/span>Quantum of LD \u2014 the Rates Compared<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Rate per week of delay<\/th><th>Maximum<\/th><\/tr><\/thead><tbody><tr class=\"srcmark src-G\" data-src=\" G \"><td>G<\/span> GOODS<\/td><td>0.5 (half) per cent of the delivered price (including elements of GST, freight and variations)<\/em> of the delayed Goods and\/ or incidental Works\/ Services \u2014 for each week of delay or part thereof, until actual delivery or performance<\/td><td>5% of the total contract value<\/strong>(or any other percentage if prescribed)<\/em> 10% in case of INORDINATE DELAY<\/strong><\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> WORKS \u2014 repair works costing UP TO Rs. 20 LAKH<\/td><td>1 PER CENT (1%) of the contract value<\/strong>(that includes variations, taxes and duties)<\/em>per week<\/strong><\/td><td>5% of contract value 10% in case of inordinate delays<\/td><\/tr><tr class=\"srcmark src-W\" data-src=\" W \"><td>W<\/span> Works \u2014 all other works<\/td><td>0.5 PER CENT (0.5%) of the contract value per week of delay<\/td><td>5% of contract value 10% in case of inordinate delays<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Note the works split: repair works up to Rs 20 lakh attract DOUBLE the weekly rate (1% instead of 0.5%).<\/p><\/aside>\n<h2>9.24.3<\/span>LD on the VARIED Price \u2014 and the no-supply rule<\/span><\/h2>\n<aside class=\"note\">\"in contracts governed by any variation (PVC, ERV or statutory variations) \u2014 lds (if a percentage of the price) will be applicable on the price as varied by the operation of the PVC.<\/strong><\/p>\nLds Accrue Only in Case of Delayed SUPPLIES.<\/em><\/p>\n Where \u2014 or as far as \u2014 no supplies have been made under a contract, upon cancellation, recovery of only the loss occasioned thereby can be made \u2014 notwithstanding the fact that, prior to the cancellation, one or more extensions of the delivery period with reservation of the right to LD are granted.<\/strong><\/p><\/aside>\n<h2>9.24.4<\/span>the GST Treatment of LD<\/span><\/h2>\n<aside class=\"note\">\"FOR Purpose of GST, Liquidated Damages Should Be Shown as Deductions on the Invoice Value by the CONTRACTOR.<\/em><\/p><\/aside>\n<h2 class=\"src-W srchead\" data-src=\" W \">9.24.5<\/span>Incentives \/ Bonus for Early Completion<\/span>W<\/span><\/h2><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n<aside class=\"note\">\"procuring entities are encouraged to explore strategies (such as offering bonuses, improved ratings, or recognition) that May incentivise contractors, service providers and consultants for early, timely, and quality completion of projects.<\/strong><\/p>\n Provision of incentives for completion of work before Schedule should be after careful assessment of tangible benefits therefrom \u2014 and disclosed in the tender documents in clear monetary terms.<\/strong><\/p>\nThe Illustrative Bonus:<\/p>\n\"Incentives\/ bonus \u2014 e.g., one per cent of the contract value per month, subject to a maximum of five per cent of contract value \u2014 for early completion, and penalties for delay, should be built into the contract very judiciously.\"<\/strong><\/p><\/aside>\nthe seven-day reporting condition: \"to avail of the incentive clause, it shall be mandatory on the part of the contractor to report the actual date of completion to the concerned Contract Manager.<\/strong><\/p>\n<aside class=\"note\"> The Contract Manager shall report the actual date of completion of the works as soon as possible, through fax or email \u2014 so that the report is received within seven days of such completion by the concerned ca<\/strong>.\"<\/p><\/aside>\n<\/div><h2>9.24.6<\/span>WAIVER OF LD \u2014 the three rules<\/span><\/h2>\n1. The general Rule:<\/p>\n<aside class=\"note\">\"THERE Should Normally Be No System of Waiver of Lds for Delayed Supplies in Supply Contracts \u2014 and IT May Strictly Be an Exception Rather Than a RULE.<\/em><\/p>\n for an extension of the delivery date with waiver of LD \u2014 approval of the ca with consultation of associated finance May be taken, and justifications recorded<\/strong>.\"<\/p><\/aside>\n2. GOVERNMENT ESTABLISHMENTS \u2014 the special dispensation:<\/p>\n<aside class=\"note\">\"GOVERNMENT Establishments\/ Departments \u2014 as Distinct from Psus \u2014 Which Execute Contract WORK:<\/em><\/p>\n\u2022 should not be dealt with as ordinary contractors;<\/strong><\/p>\n\u2022 should not generally be penalised for late delivery; And<\/strong><\/p>\n\u2022 claims for loss on risk-purchase should not be enforced against them.<\/strong><\/p>\n Serious cases of defaults should, however, be brought to the notice of the Head of Department or the Government Department concerned<\/strong>.\"<\/p><\/aside>\n3. Development\/ indigenisation contracts:<\/p>\n<aside class=\"note\">\"IN the Case of Development\/ Indigenisation Contracts \u2014 Lds are not LEVIED.<\/em><\/p><\/aside>\n<h1>9.25 Handling Deliveries at the Last Moment or After the Expiry of the Delivery Period [G ONLY]<\/span><\/h1>\n<h2>9.25.1<\/span>the VOLUNTARY-ABROGATION Trap<\/span><\/h2>\n<aside class=\"note\">\"AS per Law \u2014 if Stores are Accepted After the Expiry of the Delivery Date of a Particular Instalment, Without an Extension in the Delivery Period Having Been Given \u2014 Even Duly Reserving Our Rights to Levy LD:<\/em><\/p>\nIT Amounts to Voluntary Abrogation of Our Legal Rights under the Contract to Claim Lds or Other REMEDIES.<\/em><\/p><\/aside>\n<h2>9.25.2<\/span>LOCAL SUPPLIES \u2014 the Franking Clause<\/span><\/h2>\n\"if the contractor makes supplies locally after the expiry of the delivery period \u2014 the supplies May be provisionally retained under a franking clause reserving right \u2014 and the contractor May be asked to obtain an extension of the delivery period from an authorised officer, with or without any LD\/ Denial Clause<\/strong>.\"<\/p>\n<aside class=\"note\">The franking clause \u2014 reproduced in full:<\/p>\n\"Please note that materials have been supplied after the expiry of the contracted delivery date, and its provisional retention does not acquiesce or condone the late delivery. It does not intend or amount to an extension of the delivery period or keeping the contract alive. You May apply for an extension of delivery date from the Procuring Entity. The goods are being retained without prejudice to the rights of the Government of India under the terms and conditions of the contract.\"<\/strong><\/p><\/aside>\n<h2>9.25.3<\/span>Supplies from Outside Contractors \u2014 the consignee's intimation<\/span><\/h2>\n<aside class=\"note\">\"as regards supplies coming from outside contractors \u2014 if the contractor dispatches the stores after the expiry of the delivery period \u2014 the consignee should, after the receipt of the railway receipt, lorry receipt, goods consignment note or airway bill, send an intimation to the contractor stating:<\/strong><\/p>\n\u2022 that the action taken by him in dispatching the goods after expiry of the delivery date is at his own risk and responsibility;<\/strong><\/p>\n\u2022 that the consignee is not liable for any demurrage, wharfage and deterioration of goods at the destination station; And<\/strong><\/p>\n\u2022 that, in his interest, the contractor should get an extension of the delivery period from the purchasers.<\/strong><\/p>\n A copy of the communication sent to the contractor should also be sent to the purchaser<\/strong>.\"<\/p><\/aside>\n<h2>9.25.4<\/span>IMPORTS \u2014 and the Letter of Credit safeguard<\/span><\/h2>\n<aside class=\"note\">\"IN the Case of Imports, the Contractor Must not Dispatch the Consignment After the Expiry of the Delivery Period, Without Taking a Prior Extension of the Delivery PERIOD.<\/em><\/p>\nIN Any Case, the Terms of LC Should Be Such That \u2014 if There are Dispatches Beyond the Delivery Period \u2014 Payment Should Be Denied Without a Levy of Full LD, and Without a Formal Extension of the Delivery Period by the PURCHASER.<\/em><\/p><\/aside>\n<h1>9.26 Compensation Events [W ONLY]<\/span><\/h1>\n<h2>9.26.1<\/span>The Definition and the Four Categories<\/span><\/h2>\n<aside class=\"note\">\"compensation events are those which cause delays in completion of work (beyond a threshold specified in contract) \u2014 and hence financial loss to the contractor \u2014 due to defaults of the contracting entity.<\/strong><\/p><\/aside>\nThese can be due to delays or default by the contracting entity in:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Category<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>providing of encumbrance-free possession or access to site<\/strong><\/td><\/tr><tr><td>b<\/td><td>discharging of obligations by the contracting entity \u2014 drawings \u00b7 specifications \u00b7 instruction \u00b7 encumbrance-free site \u00b7 approving of sub-contractor \u00b7 payment \u00b7 and completion certificates<\/strong><\/td><\/tr><tr><td>c<\/td><td>infructuous additional or tests, works \u00b7 delays due to the contracting entity's orders, default, or risks<\/strong><\/td><\/tr><tr><td>d<\/td><td>unforeseen adverse conditions \u2014 than could reasonably have been assumed after due diligence<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>9.26.2<\/span>THE 'EARLY WARNING' REQUIREMENT \u2014 and the consequence of failure<\/span><\/h2>\n<aside class=\"note\">\"IF a Compensation Event Occurs During the Execution of the Contract \u2014 the Contractor Must Give an 'Early Warning' to the Contracting ENTITY.<\/em><\/p>\nFAILING Which, No Compensation Would Be GRANTED.<\/em><\/p>\n If the contractor proves that a compensation event would delay the completion of work \u2014 the Contract Manager will assess whether, and by how much, the intended completion date should be extended without LD.<\/strong><\/p>\n Proposals for grant of EOT should be considered and approved by the Competent Authority. The contracting entity May finalise the grant of EOT within a maximum period of two months on receipt of such a proposal from the Contract Manager<\/strong>.\"<\/p><\/aside>\n<h2>9.26.3<\/span>Payment May Continue While the EOT Proposal is Pending<\/span><\/h2>\n<aside class=\"note\">\"THE Payment Against Actual Work Done and Claimed in the Monthly Bills by the Contractor, and Recommended for Payment by the Contract Manager \u2014 May Continue to Be Made to the Contractor, Without Recovery of LD \u2014 Where a Proposal Has Been Received from the Contract Manager for Grant of EOT.<\/em><\/p>\nIF the EOT Proposal is Finally Rejected \u2014 LD Must Be RECOVERED.<\/em><\/p>\n Besides EOT, the contractor is entitled to claim compensation for any financial loss due to such events. In each contract, there are specific provisions defining compensation events, how to determine the EOT, and\/ or compensation<\/strong>.\"<\/p><\/aside>\n<h1>9.27 Time at Large [W ONLY]<\/span><\/h1>\n<aside class=\"note\">This is One of the Most Important Legal Concepts in the Entire Works Manual \u2014 and IT Has No Counterpart in the Other Three.<\/p>\n\"When the Procuring Entity Does not Explicitly Express and Reserve its Rights and Remedies under the Contract for Delays in Execution \u2014 IT Legally Forfeits His Right to Such REMEDIES.<\/em><\/p>\nUnder Such Circumstances, Time is Said to Become \"AT LARGE\" \u2014 and the Contractor Gets Freed from His Obligation to Complete Within the Specified TIME.<\/em><\/p><\/aside>\nHow to avoid it \u2014 the four-step prescription:<\/p>\n<aside class=\"note\">\"to avoid such a situation \u2014 before the expiry of the originally stipulated date of completion, the Procuring Entity should:<\/strong><\/p>\n1. Extend the currency of the agreement;<\/strong><\/p>\n2. Set a new time limit for completion;<\/strong><\/p>\n3. Make the extended time the essence of the contract; And<\/strong><\/p>\n4. Stipulate that this is being done without prejudice to his right to recover damages and other remedies as per the contract.<\/strong><\/p>\nRead this together with para 9.20.6 (the correspondence trap) and para 9.20.7 (why \"without prejudice\" alone is insufficient to preserve the LD right) \u2014 the three provisions together form the Manual's treatment of how a Procuring Entity can inadvertently lose its remedies for delay<\/strong>.<\/em><\/p><\/aside>\n<h1>9.28 Cost Control \u2014 Prices, Taxes and Payments<\/span><\/h1>\n<h2 class=\"src-G srchead\" data-src=\" G \">9.28.1<\/span>Prices Must Be Firm and As Quoted<\/span>G<\/span><\/h2><div class=\"srcblock src-G\" data-src=\" G \" data-label=\"Goods Manual only\">\n<aside class=\"note\">\"prices to be charged by the contractor for the supply of goods and provision of incidental works\/ services shall be fixed and firm, and the same as the corresponding prices quoted by the contractor in its bid \u2014 or during negotiations, if any \u2014 and incorporated in the contract.<\/strong><\/p>\n Except for any price adjustment authorised in the contract.<\/strong><\/p><\/aside>\n The controlled-price recovery right:<\/strong>\"if the prices charged are discovered to be higher than any controlled or regulated price \u2014 the Procuring Entity shall have the right to either recover [the excess]<\/strong>\u2026\"<\/strong>(see Chapter 6, para 6.14.1-2 on undue profiteering and the MRP ceiling).<\/em><\/p>\n<\/div><h2>9.28.2<\/span>Payment of Taxes and Duties; Statutory Variation Clause<\/span><\/h2>\nCovered in full at Chapter 6, paras 6.16.1 to 6.16.4 of this Unified Manual \u2014 GST registration and HSN rules, the three bidder-borne taxes, customs duty, and the Statutory Variation Clause with its asymmetric operation (increases borne by the Procuring Entity only during the original\/ re-fixed period; reductions passed on during the original and extended<\/em> period).<\/p>\n<h2 class=\"src-W srchead\" data-src=\" W \">9.28.3<\/span>Financial Monitoring<\/span>W<\/span><\/h2><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n<aside class=\"note\">\"besides administering the contract with regard to its quality and completion \u2014 the Contract Manager will regularly assess the financial position and exercise financial control.<\/strong><\/p>\nHE Will Update, on a Quarterly Basis: Cash Flow Projections \u00b7 Cost Estimates \u00b7 and Yearly\/ Quarterly Milestones \u2014 and Submit Them to the Procuring ENTITY.<\/em><\/p><\/aside>\n<\/div><h2>9.28.4<\/span>Payments to Contractors and Handling of Securities<\/span><\/h2>\nThe payment machinery \u2014 <\/strong>Interim Payment Certificates, the Measurement Book regime, the 75%-within-10-working-days rule, and final bills within three months \u2014 is set out at <\/strong>Chapter 6, para 6.10.3 of this Unified Manual.<\/strong><\/p>\n<h1>9.29 Electronic Bill (e-Bill) Processing System [W ONLY]<\/span><\/h1>\nThe Works Manual carries a distinct section (7.5.8) on the e-Bill Processing System \u2014 the electronic submission and processing of contractors' running account bills, integrated with the Public Financial Management System. It has no counterpart in the other three Manuals.<\/p>\n<h1>9.30 Logistics: Transportation, Receiving, Storage and Issue of Goods [G ONLY]<\/span><\/h1>\n<aside class=\"note\">This entire section exists only in the goods Manual \u2014 because only goods procurement involves the physical movement, receipt, custody and issue of stores.<\/p><\/aside>\n<h2>9.30.1<\/span>Special Instructions for Transportation, Packaging and Storage<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Instruction<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>WHERE critical equipment of high value is involved \u2014 suitable special instructions shall be conveyed to the supplier about the mode of transport, loading, avoidance of transhipment \u2014 and, if necessary, provision of escorts<\/strong><\/td><\/tr><tr><td>b<\/td><td>in the case of chemicals, powdery materials, liquid materials<\/strong> \u2014 parties May be advised on proper packaging to avoid spillage en route, pollution problems \u2014 and conforming to the ISO 14001 standard<\/strong><\/td><\/tr><tr><td>c<\/td><td>special attention should be paid to perishable goods, considering their time-sensitive nature<\/strong> \u2014 regarding packaging \u00b7 transportation \u00b7 handling \u00b7 storage (cold storage\/ cold chain) \u00b7 and fifo (first in first out) system of delivery<\/strong><\/td><\/tr><tr><td>d<\/td><td>in case the Procuring Entity arranges transport \u2014 suitable instructions May be incorporated in the transportation contract<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>9.30.2<\/span>Full Truck Loads and the \"Not to Self\" Rule<\/span><\/h2>\n<aside class=\"note\">\"wherever the items make a full truckload \u2014 the suppliers should be advised to dispatch such items in a full truck direct to the designated consignee on a door delivery basis to the site.<\/strong><\/p>\nIn such cases, the Procuring Entity shall advise the supplier to send a consignee copy of the lorry receipt to the consignee along with the consignment.<\/strong><\/p>\nAND the Consignment Shall Be Booked to the Procuring Entity \u2014 and not \"SELF.\"<\/em><\/p>\n All dispatch documents \u2014 railway\/ lorry receipts, goods consignment notes, airway bills, invoices, packing lists, freight memos, test certificates \u2014 shall be sent to the associated\/ integrated finance, which will arrange to make the payment. If the payment is to be made through the bank \u2014 all original documents are to be sent through the designated bank<\/strong>.\"<\/p><\/aside>\n<h2>9.30.3<\/span>Shipping Arrangements \u2014 the six-week notice<\/span><\/h2>\n<aside class=\"note\">\"in the case of FOB\/ FAS contracts \u2014 the Procuring Entity shall make shipping arrangements.<\/strong><\/p>\nTHE Contractor Shall Give Adequate Notice to the Procuring Entity and its Forwarding Agents\/ Nominees About the Readiness of the Cargo \u2014 and at Least Six Weeks' Notice in Advance of the Required Date of Dispatch \u2014 for Finalising the Shipping ARRANGEMENTS.<\/em><\/p>\n In the case of CFR contracts \u2014 the contractor shall arrange the shipment as per the instructions from the Procuring Entity.<\/strong><\/p>\n Should the Procuring Entity intend to airlift all or some of the goods \u2014 the contractor shall pack the goods accordingly upon receiving intimation to that effect. Such deliveries shall be agreed upon well in advance and paid for as May be mutually agreed<\/strong>.\"<\/p><\/aside>\n<h2>9.30.4<\/span>Transfer of Title of Goods<\/span><\/h2>\n1. The intention Rule: \"the title of goods, and resultant rights and liabilities, is transferred to the buyer at such time as the parties to the contract intend this to happen \u2014 as recorded in the terms of the contract<\/strong>.\"<\/p>\n2. The risk Rule \u2014 and the \"notwithstanding\" chain:<\/p>\n<aside class=\"note\">\"Unless Otherwise Stated in the Contract \u2014 notwithstanding:<\/em><\/p>\n\u2022 any inspection and approval by the inspecting officer on the contractor's premises;<\/strong><\/p>\n\u2022 dispatch\/ delivery\/ in-transit; Or<\/strong><\/p>\n\u2022 any payments made to the contractor \u2014 <\/strong><\/p>\nTITLE of Goods Shall Pass on to the Procuring Entity as Specified by the Terms of Delivery and Other Conditions of the CONTRACT.<\/em><\/p>\nTILL Such Time \u2014 the Goods, and Every Constituent Part Thereof (Whether in the Possession or Control of the Contractor, His Agents or Servants or a Carrier, or the Joint Possession of the Contractor and the Procuring Entity) \u2014 Shall Remain in Every Respect at the Risk of the CONTRACTOR.<\/em><\/p>\n And the contractor shall be responsible for all loss, destruction, damage, or deterioration of or to the goods from any cause whatsoever.<\/strong><\/p><\/aside>\n3. Claims against the carrier: \"the contractor shall alone be entitled and responsible for making claims against any carrier \u2014 in respect of non-delivery, short delivery, mis-delivery, loss, destruction, damage, or deterioration of the goods entrusted to such carrier by the contractor for transmission to the ultimate consignee or the interim consignee<\/strong>.\"<\/p>\n<h2>9.30.5<\/span>Insurance in Transit<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Basis<\/th><th>Who insures<\/th><\/tr><\/thead><tbody><tr><td>DOMESTIC GOODS supplied on a CIF\/ FOR destination<\/em> basis<\/td><td>the contractor is responsible until all the goods contracted arrive in good condition at the destination<\/strong>. <\/strong>The contractor May, at its option, cover the transit risk by getting the goods duly insured in his own name at his own cost<\/strong><\/td><\/tr><tr><td>IMPORT of goods on FOB and CFR<\/em> offers<\/td><td>THE procuring Entity shall arrange the insurance<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">The Coordination Duty:<\/p>\n\"however, the contractor must give sufficient notice to the Procuring Entity before the date of shipment \u2014 so that the insurance cover for the shipment can be activated.<\/strong><\/p>\n The contractor must coordinate to ensure that the shipment sails only with insurance cover in place.<\/strong><\/p>\n In the case of the import of goods, the purchaser should proactively take timely and complete action as per the terms of the insurance contract \u2014 to protect the interest of the organisation after the title of the goods has passed to him<\/strong>.\"<\/p><\/aside>\n<h2>9.30.6<\/span>Distribution of Dispatch Documents \u2014 the 24-hour rule<\/span><\/h2>\n<aside class=\"note\">\"the supplier shall send all the relevant dispatch documents to the purchaser in time \u2014 to enable the purchaser to clear or receive (as the case May be) the goods in terms of the contract.<\/strong><\/p>\nWithin 24 (TWENTY-four) Hours of Dispatch \u2014 the Supplier Shall Notify the Purchaser or Consignee (and Others Concerned) of the Complete Details of DISPATCH.<\/em><\/p><\/aside>\n<h2>9.30.7<\/span>Receipt of Consignment<\/span><\/h2><h3>A. Preliminary Inspection and Receipt<\/span><\/h3>\n<aside class=\"note\">\"at the time of the delivery at the stores \u2014 the storekeeper should receive the goods on a \"subject to inspection\" basis, and should issue the preliminary receipt after a preliminary inspection.<\/strong><\/p>\nAS an Acknowledgement of Having Received the Claimed Quantity (not the Quality) of CONSIGNMENT.<\/em><\/p><\/aside>\nWhat the preliminary inspection covers:<\/p>\n<aside class=\"note\">\"when opening the packages, the storekeeper should initiate a preliminary inspection of the goods received. This should include:<\/strong><\/p>\n\u2022 checks for any obvious damage in transit;<\/strong><\/p>\n\u2022 other physical or visual checks specific to the functional characteristics of the product; And<\/strong><\/p>\n\u2022 verification of the quantity against the purchase order and the supplier's invoice.<\/strong><\/p>\nThe package-sampling Rule: \"when goods are supplied in boxes, bundles, or coils \u2014 as in the case of tools, rope, canvas, cables \u2014 each of which is required to contain a specified quantity: A reasonable number of such packages should be opened and checked for quantity per package.<\/strong><\/p>\n The quantity received should also be mentioned in the preliminary receipt to be given to the supplier. Any discrepancies in packages or quantity should be mentioned therein<\/strong>.\"<\/p><\/aside>\n<h3>B. the SHELF-LIFE Rule \u2014 75%<\/span><\/h3>\n<aside class=\"note\">\"FOR Goods with a Limited Shelf Life \u2014 the Contractor Shall Ensure That at Least 75% (or Any Other Percentage Stipulated in the Contract) of Shelf Life Remains as Balance on the Delivery DATE.<\/em><\/p>\nTHE Procuring Entity Reserves its Rights to Reject Expired Products with Less Than Such Specified Shelf LIFE.<\/em><\/p><\/aside>\n<h3>C. Detailed Inspection on Receipt<\/span><\/h3>\n<aside class=\"note\">\"before accepting the ordered goods, the storekeeper must ensure that the goods have been manufactured as per the required specifications, and can perform the functions specified in the contract.<\/strong><\/p>\n The required inspections and tests should be carried out by technically qualified and competent personnel. If the procurement agency does not have such qualified personnel \u2014 it May engage competent professionals from other departments, or even outside agencies<\/strong>.\"<\/p><\/aside>\n<h3>D. CONSIGNEE'S Right of Rejection of PRE-INSPECTED Goods \u2014 the 90-Day Rule<\/span><\/h3>\n<aside class=\"note\">\" Notwithstanding Any Approval Which the Inspecting Officer May Have Given in Respect of the Goods, Materials, Particulars, Work or Workmanship (Whether with or Without Any Test) \u2014 and Notwithstanding Delivery of the Goods, Where So Provided, to the Interim CONSIGNEE:<\/em><\/p>\nIT Shall Be Lawful for the Consignee, on Behalf of the Procuring Entity, to Inspect, Test and \u2014 if Necessary \u2014 Reject the Goods or Any Part, Portion or Consignment Thereof, After the Goods' Arrival at the Final DESTINATION.<\/em><\/p>\nWithin a Reasonable Time \u2014 Usually Within 90 Days of the Original Inspection Report \u2014 After Actual Delivery Thereof to Him at the Place of Destination Stipulated in the CONTRACT.<\/em><\/p>\n If such goods are not in all respects in conformity with the terms and conditions of the contract \u2014 whether on account of any loss, deterioration or damage before despatch or delivery, or during transit, or otherwise howsoever<\/strong>.\"<\/p><\/aside>\n<h2>9.30.8<\/span>Goods Receipt and Inspection Report (GRIR)<\/span><\/h2><h3>A. What a GRIR Is \u2014 and how it differs from a preliminary receipt<\/span><\/h3>\n<aside class=\"note\">\"While a Preliminary Receipt is Only an Acknowledgement of the Quantity Received \u2014 <\/em><\/p>\nGRIR is an Acknowledgement of Receipt of the Correct Quantity <\/em>AS Well as QUALITY of GOODS.<\/em><\/p><\/aside>\nThe two functions of the GRIR:<\/p>\n<aside class=\"note\">\"GRIR is:<\/strong><\/p>\n\u2022 a voucher that forms the basis for the supplier to claim payment as per the contract; And<\/strong><\/p>\n\u2022 a voucher for the amount of material received in the inventory accounts.<\/strong><\/p>\n Along with the GRIR, material is handed over to the warehouse where it is to be stored<\/strong>.\"<\/p><\/aside>\nwhen a GRIR is prepared: \"accounting of the material received shall be based on the GRIR prepared after inspection and acceptance of the material, which the concerned officers will sign.<\/strong><\/p>\n<aside class=\"note\"> This includes cases where payment is made to the supplier on proof of dispatch \u2014 for which inspection at the suppliers' premises is conducted prior to dispatch.<\/strong><\/p>\n This excludes cases of imported materials \u2014 where accounting will be done on completion of certain further formalities as per regulations and practices<\/strong>.\"<\/p><\/aside>\n<h3>B. THE REJECTION GRIR \u2014 and the yellow paint mark<\/span><\/h3>\n<aside class=\"note\">\"in case the received material fails to pass quantity and quality checks \u2014 a rejection GRIR is issued, noting the reasons for rejection.<\/strong><\/p>\nIF Feasible, a Yellow Paint (or Chisel) Mark Should Be Put on the Rejected Material \u2014 to Prevent its Resubmission by the SUPPLIER.<\/em><\/p>\n The associated finance\/ fa should be asked to recover any advance payment or freight charges paid for the rejected quantity.<\/strong><\/p><\/aside>\nThe 21-DAY removal Rule and the risk-and-cost position:<\/p>\n<aside class=\"note\">\"THE Rejection GRIR Contains Instructions for the Supplier to Take Back the Rejected Goods Within a Stipulated Number of Days \u2014 Usually 21.<\/em><\/p>\nDURING Such Time, the Material Lies with the Consignee at the SUPPLIER'S Risk and COST.<\/em><\/p>\nSuch Removal Should Be Permitted Only After the Advance Payment\/ Freight Paid is RECOVERED.<\/em><\/p>\n Lots that are under inspection, accepted, or rejected should be properly tagged, segregated, and identified<\/strong>.\"<\/p><\/aside>\n<h3>C. Ground Rent on Unlifted Rejected Goods<\/span><\/h3>\n<aside class=\"note\">\"IN Case the Supplier Does not Lift the Rejected Goods Within the Stipulated Time \u2014 a Ground Rent [may Be CHARGED], Say at 0.2% to 0.5% per Day of the Value of Goods as per CONTRACT.<\/em><\/p>\n If the supplier does not respond within a reasonable time \u2014 the Procuring Entity May treat the material as [abandoned and dispose of it accordingly]<\/strong>.\"<\/p><\/aside>\n<h2>9.30.9<\/span>Storage and Issue of Inspected Goods<\/span><\/h2>\nGoods para 9.6.7 governs the storage and issue of inspected goods \u2014 the handover to the warehouse against the GRIR, and the subsequent issue of stores to indenting sections.<\/p>\n<h1>9.31 Closure of Contract<\/span><\/h1>\n<h2 class=\"src-W srchead\" data-src=\" W \">9.31.1<\/span>Completion of Construction W<\/span> \u2014 the seven closing steps<\/span><\/h2><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n1. The completion certificate and its two accompanying documents:<\/p>\n<aside class=\"note\">\"when the work has been executed and the assets created commissioned \u2014 the contractor should request the Contract Manager to issue a 'completion certificate'.<\/strong><\/p>\nThe contractor May, if so specified, submit the following along with his request:<\/strong><\/p>\nA) completion drawings of the entire project; And<\/strong><\/p>\nb) videography\/ photographs of the works covering various phases of the project.<\/strong><\/p>\n Reasonable advance information of completion of work should be given to the concerned Ministry\/ Department \u2014 to enable them to plan for taking over<\/strong>.\"<\/p><\/aside>\n2. The joint inspection and \"as built\" drawings:<\/p>\n<aside class=\"note\">\"the Ministry\/ Department May carry out a detailed joint inspection of the commissioned project with the contractor \u2014 to ensure that no deficiencies are there before taking over.<\/strong><\/p>\n \"As built\" drawings of the work shall be got prepared through the contractor or otherwise \u2014 to facilitate proper maintenance of the assets, additions to the assets at subsequent dates, etc. \u2014 and to form part of the records of the Ministry\/ Department<\/strong>.\"<\/p><\/aside>\n3. Occupancy certificates and nocs: \"the contractor\/ PWO\/ PSU would be responsible for obtaining completion\/ occupancy certificates\/ clearances and no-objection-certificates (nocs), if applicable, from the local civic authorities \u2014 for completed work and facilities, before handing over the same to the 'Procuring Entity' for putting them to functional use<\/strong>.\"<\/p>\n4. Restoration of auxiliary services:<\/p>\n<aside class=\"note\">\"Before the Completed Work is Taken over by the Ministry\/ Department \u2014 IT Must Ensure That the Contractor Restores to Original Status the Auxiliary Services\/ FACILITIES:<\/em><\/p>\nRoads \u00b7 sewerage \u00b7 utilities \u2014 including removal of garbage and debris \u2014 affected during the construction process.<\/strong><\/p><\/aside>\n5. What must be handed over: The contractor\/ PWO\/ PSU shall hand over the completed work \u2014 including all services and facilities constructed in accordance with the approved plans and specifications, fulfilling all agreed techno-functional requirements \u2014 along with:<\/p>\n<aside class=\"note\">Inventory \u00b7 as-built drawings \u00b7 maintenance Manual\/ standard operating procedure (sop) for equipments and plants \u00b7 all clearances\/ certificates from statutory authorities, local bodies<\/strong><\/p><\/aside>\n6. The Project Completion Report (PCR) \u2014 and the one-month deadline:<\/p>\n<aside class=\"note\">\"ON Completion of the Work, a Project Completion Report (PCR) Shall Be Submitted by the Contractor\/ PWO\/ PSU \u2014 Duly Bringing OUT:<\/em><\/p>\n\u2022 the final project completion cost;<\/strong><\/p>\n\u2022 the total time period taken to complete the work; And<\/strong><\/p>\n\u2022 the completed project components \u2014 <\/strong><\/p>\n As against the approved cost, time and project components.<\/strong><\/p>\nThe PCR shall Be Submitted Along with Final Project Accounts \u2014 Including Return of Unspent Balance Amount \u2014 to the Ministry\/ Department Within One Month of Settlement of Final BILLS.<\/em><\/p><\/aside>\n7. Record keeping: \"record keeping should be created at every work centre, to facilitate proper stacking of records pertaining to the completed works. The records should be preserved in such a manner that the same can be retrieved whenever required<\/strong>.\"<\/p>\n<\/div><h2>9.31.2<\/span>Completion of CONTRACT \u2014 and the single Defects Liability Certificate<\/span><\/h2>\n<aside class=\"note\">\"THE Contract is not to Be Treated as Completed Until a Defects Liability Certificate (DLC) Has Been ISSUED.<\/em><\/p>\nTHERE Will Be Only One DLC. It will Be Issued When the Contractor Has Completed All His Obligations under the CONTRACT.<\/em><\/p>\n While making the final payment to the contractor and before releasing the PBG \u2014 it should be ensured that there is nothing outstanding from the contractor.<\/strong><\/p>\nBecause it would Be Difficult to Retrieve Such Amounts After Releasing the Bank Guarantee\/ Final PAYMENT.<\/em><\/p>\n Before the Bank Guarantee is released, a \"no claim certificate\" May be taken from the contractor<\/strong>.\"<\/p>\nThe Rs 25 Lakh Threshold for the Three Reconciliations:<\/p>\n\"at least in large contracts (above Rs. 25 (twenty-five) lakh) \u2014 it should be ensured that, before the release of the Bank Guarantee (or final payment, if there is no Bank Guarantee) \u2014 the following reconciliations should be done across departments involved in the execution of the contract<\/strong>.\"<\/p><\/aside>\n<h2 class=\"src-W srchead\" data-src=\" W \">9.31.3<\/span>RECONCILIATION 1 \u2014 Material and Works Reconciliation<\/span>W<\/span><\/h2><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n<aside class=\"note\">\"the Ministry\/ Department should confirm that all works ordered in the contract and paid for have been taken over in good condition, and there is no shortcoming.<\/strong><\/p>\nFull Reconciliation of All Materials, Machinery and Assets Provided to the Contractor Should Be Done \u2014 Including Wastages and Return of Scrap\/ OFF-CUTS.<\/em><\/p><\/aside>\n<\/div><h2 class=\"src-W srchead\" data-src=\" W \">9.31.4<\/span>RECONCILIATION 2 \u2014 Reconciliation with the User Department<\/span>W<\/span><\/h2><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n\"besides works reconciliation \u2014 the user Department should certify in writing that the following activities (wherever applicable) have been completed by the contractor, to the department's satisfaction, as per the contract<\/strong>:\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Item to be certified<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>achievement of performance standards of work<\/strong><\/td><\/tr><tr><td>b<\/td><td>installation and commissioning, if any<\/strong><\/td><\/tr><tr><td>c<\/td><td>support service during the defect liability period \u2014 which has ended on ______<\/strong><\/td><\/tr><tr><td>d<\/td><td>as made drawings<\/strong><\/td><\/tr><tr><td>e<\/td><td>return of all id cards, gate passes, documents, drawings, protective gear, material, equipment, facilities and assets loaned to contractor<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h2 class=\"src-W srchead\" data-src=\" W \">9.31.5<\/span>RECONCILIATION 3 \u2014 Payment Reconciliation<\/span>W<\/span><\/h2><div class=\"srcblock src-W\" data-src=\" W \" data-label=\"Works Manual only\">\n<aside class=\"note\">\"the ministries\/ departments May reconcile payments made to the contractor \u2014 to ensure that there is no liability outstanding against the contractor on account of:<\/strong><\/p>\n\u2022 LD;<\/strong><\/p>\n\u2022 [and the other recoverable heads \u2014 advances, statutory deductions, ground rent, recoveries for materials, and so on].<\/strong><\/p><\/aside>\n<h1>9.32 Concluding the Assignment and Post-Contract Review [C + NC ONLY]<\/span><\/h1>\n<aside class=\"note\">This Section Has No Counterpart in the Goods or Works Manuals.<\/p><\/aside>\nThe Consultancy Manual (para 10.6) and the Non-Consultancy Manual (para 9.6) both carry a section titled \"Concluding the Assignment and Post Contract review\"<\/strong> \u2014 giving effect to the fifth head of contract management in those Manuals, \"Post contract evaluation\"<\/strong> (see Part A, para 9.1.2).<\/p>\nIt governs:<\/p>\n<ul class=\"lst\"><li>THE acceptance of the final deliverables<\/strong> \u2014 including the <\/strong>Final Report, in respect of which (see Chapter 2, para 2.6.3(c)) \"<\/strong>the consultants alone are responsible for their findings; although changes may be suggested in the course of the discussions, consultants should not be forced to make such changes\"<\/em>;<\/strong><\/li><li>THE release of final payment and guarantees (if any), and closing the contract<\/strong>; and<\/li><li>THE post-contract review<\/strong> \u2014 the retrospective evaluation of how the assignment performed, feeding back into future need assessment, ToR drafting and shortlisting criteria.<\/li><\/ul>\n<h1>Appendix to Chapter 9 \u2014 Part B: Points of Difference<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Delivery Period \"deemed to be the essence of the contract\"; terms of delivery determine when TITLE passes<\/td><td>G ONLY<\/td><\/tr><tr><td>2<\/td><td>Contract Effective Date and Work Program as the opening time-control provisions<\/td><td>W ONLY<\/td><\/tr><tr><td>3<\/td><td>Contract Period and Options as the opening time-control provision<\/td><td>nc only<\/td><\/tr><tr><td>4<\/td><td>INORDINATE DELAY \u2014 the 25% test; show-cause notice; deficient performance recorded for future tenders; LD cap rises from 5% to 10%<\/td><td>G + W<\/td><\/tr><tr><td>5<\/td><td>The four cases where the supplier is not responsible for delay<\/strong>(pre-production sample approval; purchaser's omission; purchaser controls the production schedule; FM\/ statutory change\/ executive instructions)<\/em><\/td><td>G ONLY<\/td><\/tr><tr><td>6<\/td><td>RE-FIXATION (no LD, no denial clause) vs extension of time (with LD, with denial clause)<\/td><td>W states the distinction most clearly; G and C\/NC apply the same substance<\/td><\/tr><tr><td>7<\/td><td>\"EOT must not be left to the end\u2026 interim EOT may be awarded\"; EOT and LD reviewed after the Final Taking-Over Certificate<\/td><td>W ONLY<\/td><\/tr><tr><td>8<\/td><td>The two pre-conditions for extension \u2014 the earlier-delivery test and the falling-price test; PVC-linked raw materials may be extended even on a falling trend but with the denial clause<\/td><td>G ONLY<\/td><\/tr><tr><td>9<\/td><td>Extension after expiry permissible under SECTION 63 of the Indian Contract Act with mutual consent \u2014 \"the contract does not automatically terminate upon expiry\"<\/td><td>W ONLY<\/td><\/tr><tr><td>10<\/td><td>The correspondence trap and the mandatory closing sentence<\/td><td>G + W<\/td><\/tr><tr><td>11<\/td><td>Why \"without prejudice\" alone does not preserve the right to LD<\/td><td>G + W<\/td><\/tr><tr><td>12<\/td><td>Graded authority structure for granting extensions<\/td><td>W ONLY<\/td><\/tr><tr><td>13<\/td><td>Performance Notice (notice-cum-extension letter)<\/td><td>All four<\/td><\/tr><tr><td>14<\/td><td>Force Majeure \u2014 expressly EXCLUDES \"predictable\/ seasonal rain\"; notice within 14 days; cannot be claimed ex post facto; 90-day termination option without financial repercussion<\/td><td>G ONLY<\/strong>(fullest); W, C, NC carry shorter versions<\/em><\/td><\/tr><tr><td>15<\/td><td>The Denial Clause and its asymmetric operation \u2014 \"PVC, other variations and foreign exchange clauses operate only during the ORIGINAL delivery period\"<\/td><td>G + W<\/td><\/tr><tr><td>16<\/td><td>LD quantum<\/td><td>G: 0.5% per week, max 5% (10% if inordinate) \u00b7 W: 1% per week for repair works up to Rs 20 lakh; 0.5% for all other works; max 5% (10% if inordinate)<\/td><\/tr><tr><td>17<\/td><td>LD applies on the price AS VARIED by PVC; LDs accrue only on delayed supplies; on cancellation only the loss occasioned can be recovered<\/td><td>G + W<\/td><\/tr><tr><td>18<\/td><td>For GST, LD to be shown as a DEDUCTION on the invoice value by the contractor<\/td><td>G + W<\/td><\/tr><tr><td>19<\/td><td>Incentive\/ bonus for early completion \u2014 1% of contract value per month, max 5%; actual completion date to reach the CA within seven days<\/td><td>W ONLY<\/td><\/tr><tr><td>20<\/td><td>Waiver of LD \u2014 \"strictly an exception rather than a rule\"; Government establishments as distinct from PSUs not to be penalised and risk-purchase claims not enforced; NO LD in development\/ indigenisation contracts<\/td><td>G ONLY<\/td><\/tr><tr><td>21<\/td><td>Handling deliveries after expiry \u2014 the voluntary-abrogation trap; the FRANKING CLAUSE text; the consignee's intimation on demurrage and wharfage; the LC safeguard for imports<\/td><td>G ONLY<\/td><\/tr><tr><td>22<\/td><td>COMPENSATION EVENTS \u2014 four categories; the 'EARLY WARNING' requirement failing which no compensation; EOT to be finalised within two months; payment continues without LD recovery while the EOT proposal is pending<\/td><td>W ONLY<\/td><\/tr><tr><td>23<\/td><td>Time At Large \u2014 the contractor is freed from his obligation to complete within the specified time; the four-step prescription to avoid it<\/td><td>W ONLY<\/td><\/tr><tr><td>24<\/td><td>Quarterly update of cash flow projections, cost estimates and milestones by the Contract Manager<\/td><td>W ONLY<\/td><\/tr><tr><td>25<\/td><td>Electronic Bill (e-Bill) Processing System<\/td><td>W ONLY<\/td><\/tr><tr><td>26<\/td><td>LOGISTICS \u2014 ISO 14001 packaging for chemicals; FIFO and cold chain for perishables; \"booked to the Procuring Entity and not 'self'\"; six weeks' notice for shipping; 24-hour dispatch notification<\/td><td>G ONLY<\/td><\/tr><tr><td>27<\/td><td>Transfer of title \u2014 risk remains with the contractor notwithstanding inspection, dispatch or payment; contractor alone entitled to claim against the carrier<\/td><td>G ONLY<\/td><\/tr><tr><td>28<\/td><td>The 75% shelf-life rule and the right to reject<\/td><td>G ONLY<\/td><\/tr><tr><td>29<\/td><td>Consignee's right to reject pre-inspected goods within 90 days of the original Inspection Report<\/td><td>G ONLY<\/td><\/tr><tr><td>30<\/td><td>GRIR vs preliminary receipt (quality AND quantity vs quantity only); the yellow paint\/ chisel mark on rejected material; 21 days to lift at supplier's risk and cost; removal only after recovery of advance\/ freight; ground rent 0.2%\u20130.5% per day<\/td><td>G ONLY<\/td><\/tr><tr><td>31<\/td><td>Closure of contract \u2014 completion certificate with completion drawings and videography; restoration of auxiliary services including removal of garbage and debris; Maintenance Manual\/ sop; Project Completion Report within one MONTH of settlement of final bills<\/td><td>W ONLY<\/td><\/tr><tr><td>32<\/td><td>\"There will be only one DLC\"; no-claim certificate before releasing the BG; the Rs 25 lakh threshold for the three reconciliations<\/td><td>W ONLY<\/td><\/tr><tr><td>33<\/td><td>The three reconciliations \u2014 Material and Works \u00b7 User Department \u00b7 Payment<\/td><td>W ONLY<\/td><\/tr><tr><td>34<\/td><td>Concluding the Assignment and POST-CONTRACT REVIEW<\/td><td>c + nc only<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 9 \u2014 part b<\/p>\n<aside class=\"note\">Next: CHAPTER 9 \u2014 part c: Breach, termination and dispute resolution \u2014 Breach of Contract \u00b7 Termination for Default \u00b7 Determination for Convenience \u00b7 Frustration of Contract \u00b7 Limitation of Liabilities \u00b7 Disputes \u00b7 Excepted Matters \u00b7 Adjudication \u00b7 Mediation \u00b7 Arbitration \u00b7 Foreign Arbitration \u00b7 Notice for and Reference to Arbitration \u00b7 Appointment of Arbitrator \u00b7 The Arbitral Procedure \u00b7 Challenging Arbitration\/ Judicial Awards \u00b7 The Mechanism for Resolution of Commercial Disputes between CPSEs (AMRCD).<\/p>\nNote: the dispute-resolution apparatus is one of the very few blocks that is substantially COMMON to all four Manuals \u2014 running to roughly 800 lines in each \u2014 which makes Part C the most nearly-uniform part of the entire Unified Manual.<\/p><\/aside><\/div>Part III<\/span>Breach, Termination and Dispute Resolution<\/em><\/p>\nMerging: Goods Ch. 9<\/strong> (paras 9.8\u20139.10) \u00b7 Works Ch. 7<\/strong> (paras 7.7\u20137.9) \u00b7 Consultancy Ch. 10<\/strong> (paras 10.7\u201310.9) \u00b7 Non-Consultancy Ch. 9<\/strong> (paras 9.7\u20139.9)<\/em><\/p><h2>A Note on this Part \u2014 the Most NEARLY-UNIFORM Block in the Entire Manual Family<\/span><\/h2>\nUnlike every other chapter, the dispute-resolution apparatus is substantially COMMON to all four Manuals<\/strong>, running to roughly the same 800 lines in each.<\/p>\nThe reason is that it does not derive from the character of the procurement at all. It derives from a single set of statutes and a single set of DoE instructions applying uniformly:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Source<\/th><th>Instrument<\/th><\/tr><\/thead><tbody><tr><td>Statute<\/td><td>Indian Contract Act, 1872 \u00b7 Arbitration and Conciliation Act, 1996 (amended 2015 and 2021)<\/em> \u00b7 Mediation Act, 2023 \u00b7 msmed Act, 2006 \u00b7 Indian evidence Act (replaced by Bhartiya Sakshya Adhiniyam 2023 from 1 July 2024)<\/em><\/td><\/tr><tr><td>DoE instructions<\/td><td>OM No. F.11\/21\/2024-PPD dated 03.06.2024 (the governing instruction on arbitration, mediation and challenging awards)<\/em> \u00b7 OM No. F.1\/1\/2021-PPD dated 29.10.2021 (General Instructions on Procurement and Project Management, incl. Rule 227A of GFR)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nThe only substantial divergences are noted in the Appendix at the end.<\/p>\n<h2>Concordance for Chapter 9 \u2014 Part C<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>G<\/th><th>W<\/th><th>C<\/th><th>NC<\/th><\/tr><\/thead><tbody><tr><td>9.33<\/td><td>Breach of Contract<\/td><td>9.8.1<\/td><td>7.8.1<\/td><td>10.8.1<\/td><td>9.8.1<\/td><\/tr><tr><td>9.34<\/td><td>Termination of Contract for Default<\/td><td>9.8.2<\/td><td>7.8.2<\/td><td>10.8.2<\/td><td>9.8.2<\/td><\/tr><tr><td>9.35<\/td><td>Determination for Convenience \/ Frustration<\/td><td>9.8.3, 9.8.4<\/td><td>7.8.3<\/td><td>10.8.3<\/td><td>9.8.3<\/td><\/tr><tr><td>9.36<\/td><td>Limitation of Liabilities<\/td><td>9.8.5<\/td><td>7.8.4<\/td><td>10.8.4<\/td><td>9.8.4<\/td><\/tr><tr><td>9.37<\/td><td>Disputes<\/td><td>9.9.1<\/td><td>7.7.1<\/td><td>10.7.1<\/td><td>9.7.1<\/td><\/tr><tr><td>9.38<\/td><td>Excepted Matters<\/td><td>9.9.2<\/td><td>7.7.2<\/td><td>10.7.2<\/td><td>9.7.2<\/td><\/tr><tr><td>9.39<\/td><td>Adjudication<\/td><td>9.9.3<\/td><td>7.7.3<\/td><td>10.7.3<\/td><td>9.7.3<\/td><\/tr><tr><td>9.40<\/td><td>Mediation<\/td><td>9.9.4<\/td><td>7.7.4<\/td><td>10.7.4<\/td><td>9.7.4<\/td><\/tr><tr><td>9.41<\/td><td>Arbitration<\/td><td>9.9.5<\/td><td>7.7.5<\/td><td>10.7.5<\/td><td>9.7.5<\/td><\/tr><tr><td>9.42<\/td><td>Foreign Arbitration<\/td><td>9.9.6<\/td><td>7.7.6<\/td><td>10.7.6<\/td><td>9.7.6<\/td><\/tr><tr><td>9.43<\/td><td>Notice for and Reference to Arbitration<\/td><td>9.9.7, 9.9.8<\/td><td>7.7.7, 7.7.8<\/td><td>10.7.7\u20138<\/td><td>9.7.7\u20138<\/td><\/tr><tr><td>9.44<\/td><td>Appointment of Arbitrator<\/td><td>9.9.9<\/td><td>7.7.9<\/td><td>10.7.9<\/td><td>9.7.9<\/td><\/tr><tr><td>9.45<\/td><td>The Arbitral Procedure<\/td><td>9.9.10<\/td><td>7.7.10<\/td><td>10.7.10<\/td><td>9.7.10<\/td><\/tr><tr><td>9.46<\/td><td>Challenging Arbitration\/ Judicial Awards<\/td><td>9.9.11<\/td><td>7.7.11<\/td><td>10.7.11<\/td><td>9.7.11<\/td><\/tr><tr><td>9.47<\/td><td>AMRCD \u2014 CPSE Disputes Mechanism<\/td><td> \u2014 <\/td><td>7.7.12<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.48<\/td><td>Contract Management \u2014 Risks and Mitigations<\/td><td>9.10<\/td><td>7.9<\/td><td>10.9<\/td><td>9.9<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>9.33 Breach of Contract<\/span><\/h1>\n<h2>9.33.1<\/span>What Constitutes a Breach<\/span><\/h2>\n<aside class=\"note\">\"in case the contractor undergoes insolvency or receivership \u00b7 neglects \u00b7 or defaults \u00b7 or expresses inability or disinclination to honour his obligations relating to:<\/strong><\/p>\n\u2022 the performance of the contract; Or<\/strong><\/p>\n\u2022 ethical standards; Or<\/strong><\/p>\n\u2022 any other obligation that substantively affects the Procuring Entity's rights and benefits under the contract \u2014 <\/strong><\/p>\n[these] Amount to a Breach of CONTRACT.<\/em><\/p><\/aside>\nThe three named categories of default:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Category<\/th><th>Content<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>default in performance and obligations<\/td><td>\"if the contractor fails to deliver any or all the goods, or fails to perform any other contractual obligations \u2014 including Code of Integrity, or the obligation to maintain production capability (equipment & manufacturing facilities) based on which the contract was awarded \u2014 within the period stipulated in the contract, or within any extension thereof granted by the Procuring Entity \u2014 it shall be treated as a breach of contract<\/strong>.\"<\/td><\/tr><tr><td>b<\/td><td>insolvency<\/td><td>if the contractor or any partner shall at any time be adjudged insolvent \u00b7 or shall have a receiving order or order for the administration of his estate made against him \u00b7 or shall take any proceeding for composition under any insolvency Act \u00b7 or make any conveyance or assignment of his effects \u00b7 or enter into any assignment or composition with his creditors \u00b7 or suspend payment \u00b7 or if the firm be dissolved under the partnership Act<\/strong> \u2014 the Procuring Entity May consider it as a breach of contract<\/td><\/tr><tr><td>c<\/td><td>liquidation<\/td><td>if the contractor is a company being wound up voluntarily or by order of a court \u00b7 or a receiver, liquidator or manager on behalf of the debenture-holders is appointed \u00b7 or circumstances shall have arisen which entitle the court or debenture-holders to appoint a receiver, liquidator or manager<\/strong> \u2014 the Procuring Entity May consider it as a breach of contract<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">W<\/span> variant of the opening: *\"<\/strong>In case the contractor is unable to honour important stipulations of the contract, or gives notice of his intention of not honouring \u2014 or his inability to honour \u2014 such a stipulation, a breach of contract is said to have occurred. Mostly, such breaches occur in relation to the performance of the contract, in terms of inability to complete the Work within stipulated time.\"*<\/p><\/aside>\n<h2>9.33.2<\/span>THE 'NOTICE OF DEFAULT' \u2014 two weeks, and the withholding of payments<\/span><\/h2>\n<aside class=\"note\">\"AS Soon as a Breach of Contract is Noticed \u2014 a SHOW-CAUSE 'Notice of Default' Shall Be Issued to the Contractor, Giving Two Weeks' Notice, Reserving the Right to Invoke Contractual REMEDIES.<\/em><\/p>\nAfter Such a SHOW-CAUSE Notice \u2014 All Payments to the Contractor Would Be Temporarily Withheld, to Safeguard Needed Recoveries That May Become Due on Invoking Contractual REMEDIES.<\/em><\/p>\n If there is an unsatisfactory resolution \u2014 remedial action May be taken immediately<\/strong>.\"<\/p><\/aside>\n<h1>9.34 Termination of Contract for Default<\/span><\/h1>\n<h2>9.34.1<\/span>The Notice of Termination and the Three Savings<\/span><\/h2>\n<aside class=\"note\">\"in the event of an unsatisfactory resolution of 'notice of default' within two weeks of its issue \u2014 the Procuring Entity, if so decided, shall by written 'notice of termination for default' sent to the contractor \u2014 terminate the contract in whole or in part, without compensation to the contractor.<\/strong><\/p>\nBefore Cancelling the Contract and Taking Further Action \u2014 IT May Be Desirable to Obtain Legal ADVICE.<\/em><\/p><\/aside>\nSuch termination shall not:<\/p>\na) prejudice or affect the rights and remedies which have accrued and\/ or shall accrue to the Procuring Entity after that<\/strong>;<\/p>\nb) affect the performance of the contract to the extent not terminated<\/strong> \u2014 unless otherwise instructed by the Procuring Entity;<\/p>\nc) extinguish warranty obligations of the contractor for the goods already supplied, if any<\/strong>.<\/p>\n<h2>9.34.2<\/span>the Seven Additional Recourses on Termination<\/span><\/h2>\n\"if the contract is terminated in whole or in part \u2014 additionally, recourse May be taken to any one or more of the following actions<\/strong>:\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Recourse<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>temporarily withhold payments due to the contractor \u2014 till recoveries due to invocation of other contractual remedies are complete<\/strong><\/td><\/tr><tr><td>b<\/td><td>call back any loaned property or advances of payment, if any \u2014 with the levy of interest rate (e.g., the interest rate of the general provident fund \u2014 GPF) prevailing on the date of release of advance payment, plus 2%, to be compounded quarterly<\/strong><\/td><\/tr><tr><td>c<\/td><td>recover Liquidated Damages and invoke the Denial Clause for delays<\/strong><\/td><\/tr><tr><td>d<\/td><td>prefer claims against insurance, if any<\/strong><\/td><\/tr><tr><td>e<\/td><td>encash and\/ or forfeit Performance Security<\/strong><\/td><\/tr><tr><td>f<\/td><td>invoke any other contractual securities<\/strong><\/td><\/tr><tr><td>g<\/td><td>initiate proceedings in a court of law \u2014 for the transgression of the law, tort, and loss, which are not addressable by the above means<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Note the identity between recourse (b) and the interest formula applied to interest-free advances on default \u2014 see Chapter 6, para 6.13.1-3.<\/em><\/p><\/aside>\n<h1>9.35 Determination of Contract for Convenience of the Procuring Entity, or Frustration of Contract<\/span><\/h1>\n<h2>9.35.1<\/span>The 'Notice for Determination of Contract'<\/span><\/h2>\n<aside class=\"note\">\"after placement of the contract, there May be an unforeseen situation compelling the Procuring Entity to terminate the contract, in whole or in part, for its own convenience \u2014 by serving a written 'notice for determination of contract' on the contractor at any time during the currency of the contract.<\/strong><\/p>\nThe notice shall indicate, inter alia:<\/strong><\/p>\n\u2022 that the termination is for the convenience of the Procuring Entity, or the frustration of the contract;<\/strong><\/p>\n\u2022 the extent to which the contractor's performance under the contract is terminated; And<\/strong><\/p>\n\u2022 the date with effect from which such termination shall become effective.<\/strong><\/p><\/aside>\nThe three savings:<\/p>\n<ul class=\"lst\"><li>\"such termination shall not prejudice or affect the rights and remedies accrued, and\/ or that shall accrue after that, to the parties<\/strong>\";<\/li><li>\"unless otherwise instructed, the contractor shall continue to perform the contract to the extent not terminated<\/strong>\";<\/li><li>\"all warranty obligations, if any, shall continue to survive despite the termination<\/strong>.\"<\/li><\/ul>\n<h2>9.35.2<\/span>THE CRITICAL LEGAL POINT \u2014 determination for convenience is NOT a legal right<\/span><\/h2>\n<aside class=\"note\">\" Determining the Contract by the Procuring Entity for its Convenience is not its Legal Right \u2014 and the Contractor Must Be Persuaded to ACQUIESCE.<\/em><\/p>\nDEPENDING on the Merits of the Case \u2014 the Supplier May Have to Be Suitably Compensated on Mutually Agreed Terms for Terminating the CONTRACT.<\/em><\/p>\n Suitable provisions to this effect should be incorporated in the tender document as well as in the resultant contract<\/strong>.\"<\/p><\/aside>\n<h2>9.35.3<\/span>The Thirty-Day Rule on Completed Goods<\/span><\/h2>\n<aside class=\"note\">\"the goods and incidental works\/ services that are complete and ready in terms of the contract FOR delivery and performance within thirty days after the contractor's receipt of the [notice] \u2026<\/strong>\"<\/strong>(shall be accepted and paid for at the contract terms and prices).<\/em><\/p><\/aside>\n<h2>9.35.4<\/span>FRUSTRATION OF CONTRACT \u2014 the 60-day mutual-agreement window<\/span><\/h2>\n<aside class=\"note\">\"[On the occurrence of a frustration event, a party shall give a] 'notice of frustration event' to the other party, giving justification.<\/strong><\/p>\nThe parties shall use reasonable efforts to agree to amend the contract as May be necessary to complete its performance.<\/strong><\/p>\nHOWEVER, if the Parties Cannot Reach a Mutual Agreement Within 60 Days of the Initial Notice \u2014 the Procuring Entity Shall Issue a 'Notice for Determining the Contract' and Terminate the Contract Due to its Frustration \u2014 Without Repercussions on Either SIDE.<\/em><\/p><\/aside>\n<h1>9.36 Limitation of Liabilities<\/span><\/h1>\n<h2>9.36.1<\/span>The Aggregate Cap \u2014 and its three exclusions<\/span><\/h2>\n<aside class=\"note\">\"Except in Cases of Criminal Negligence or Wilful Misconduct \u2014 the Aggregate Liability of the Parties, Whether under the Contract, in Tort or Otherwise, Shall not Exceed the Total Contract Price (Less Payments Already Made, in Case of the Procuring ENTITY).<\/em><\/p>\nProvided That this Limitation Shall not Apply TO:<\/em><\/p>\n\u2022 the cost of repairing or replacing defective equipment\/ work under the warranty clause, defect liability clause or otherwise; Or<\/strong><\/p>\n\u2022 any obligation of the contractor to indemnify the Procuring Entity concerning IPR infringement.<\/strong><\/p><\/aside>\n<h2>9.36.2<\/span>The Consequential-Loss Exclusion \u2014 and the LD carve-out<\/span><\/h2>\n<aside class=\"note\">\"NEITHER Party Shall Be Liable to the Other Party \u2014 Whether in Contract, Tort, or Otherwise \u2014 for any:<\/em><\/p>\n\u2022 indirect or consequential loss or damage;<\/strong><\/p>\n\u2022 loss of use;<\/strong><\/p>\n\u2022 loss of production; Or<\/strong><\/p>\n\u2022 loss of profits or interest costs \u2014 <\/strong><\/p>\nwhich the other party May suffer in connection with the contract.<\/strong><\/p>\nProvided That this Exclusion Shall not Apply to Any Obligation of the Contractor to Pay Liquidated Damages to the EMPLOYER.<\/em><\/p><\/aside>\n<h1>9.37 Disputes<\/span><\/h1>\n<h2>9.37.1<\/span>The Definition of a \"Dispute\"<\/span><\/h2>\n<aside class=\"note\">\"normally, there should not be any scope for dispute between the purchaser and supplier after entering a mutually agreed valid contract. However, due to various unforeseen reasons, problems May arise during the contract.<\/strong><\/p>\nTherefore, the conditions governing the contract should contain suitable provisions for the settlement of such disputes or differences, binding on both parties<\/strong>.\"<\/p><\/aside>\nThe formal definition \u2014 note the four elements:<\/p>\n<aside class=\"note\">\"all disputes and differences between the parties:<\/strong><\/p>\n\u2022 as to the construction or operation of the contract, or the respective rights and liabilities of the parties on any matter in question or any other account whatsoever;<\/strong><\/p>\n\u2022 but excluding the Excepted Matters;<\/strong><\/p>\n\u2022 arising out of or in connection with the contract, within thirty (30) days from the aggrieved party notifying the other party of such matters;<\/strong><\/p>\n\u2022 whether before or after the completion\/ termination of the contract;<\/strong><\/p>\n\u2022 that cannot be resolved amicably between the procurement officer and the contractor within thirty (30) days of one party notifying the other \u2014 <\/strong><\/p>\nShall Be Referred to as a \"DISPUTE\".<\/em><\/p><\/aside>\n<h2>9.37.2<\/span>THE DoE DIRECTIVE ON CONTRACTUAL DISPUTES \u2014 a passage worth memorising<\/span><\/h2>\n<aside class=\"note\">\"GOVERNMENT Departments\/ Entities\/ Agencies Should Avoid and\/ or Amicably Settle as Many Disputes as Possible \u2014 Using Mechanisms Available in the CONTRACT.<\/em><\/p>\nDECISIONS Should Be Taken in a Pragmatic Manner, in Overall LONG-TERM Public Interest, Keeping Legal and Practical Realities in View \u2014 Without Shirking or Avoiding Responsibility, or Denying Genuine Claims of the Other PARTY.<\/em><\/p>\n \u2014 OM No. F.11\/21\/2024-PPD dated 03.06.2024, PPD, DoE, MoF<\/em><\/p><\/aside>\n<h2>9.37.3<\/span>THE SEQUENTIAL RULE \u2014 and the three mechanisms<\/span><\/h2>\n<aside class=\"note\">\"the aggrieved party shall give a 'notice of dispute' \u2014 indicating the dispute and claims, citing relevant contractual clauses \u2014 to the designated authority, and requesting to invoke the following dispute resolution mechanisms.<\/strong><\/p>\nThe dispute shall be attempted to be resolved \u2014 as far as feasible, before recourse to courts \u2014 through dispute resolution mechanisms available in the contract, in the sequence as mentioned below.<\/strong><\/p>\nAND the Next Mechanism Shall not Be Invoked Unless the Earlier Mechanism Has Been Invoked, or Has Failed to Resolve IT Within the Deadline Mentioned THEREIN.<\/em><\/p><\/aside>\n<h2>The THREE-STEP Ladder:<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>Mechanism<\/th><th>Governing instrument<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>adjudication<\/td><td>(contractual)<\/em><\/td><\/tr><tr><td>2<\/td><td>mediation<\/td><td>the Mediation Act, 2023<\/td><\/tr><tr><td>3<\/td><td>arbitration<\/td><td>the Arbitration and Conciliation Act, 1996<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">A Critical Footnote Appearing in All Four Manuals:<\/p>\n\"The conciliation part of the Arbitration and Conciliation Act, 1996 has been replaced by mediation by the recent Mediation Act, 2023.\"<\/strong><\/p><\/aside>\nthe legal-advice duty: \"while processing a case for dispute resolution\/ litigation\/ arbitration \u2014 the Procuring Entity is to take legal advice at appropriate stages<\/strong>.\"<\/p>\n<h1>9.38 Excepted Matters<\/span><\/h1>\n<h2>9.38.1<\/span>The Definition and the Reciprocity Exception<\/span><\/h2>\n<aside class=\"note\">\"MATTERS for Which Provision Has Been Made in Any Clause of the Contract Shall Be Deemed as 'Excepted Matters' (Matters not Disputable\/ Arbitrable) \u2014 and Decisions of the Procuring Entity Thereon Shall Be Final and Binding on the CONTRACTOR.<\/em><\/p>\nTHE 'Excepted Matters' Shall Stand Expressly Excluded from the Purview of the Dispute Resolution Mechanism \u2014 Including ARBITRATION.<\/em><\/p>\nHOWEVER \u2014 Where the Procuring Entity Has Raised the Dispute, this SUB-CLAUSE Shall not APPLY.<\/em><\/p>\nThat is, the exclusion operates only against the contractor<\/strong> \u2014 it does not bar the Procuring Entity from raising a dispute on an excepted matter.<\/em><\/p><\/aside>\n<h2>9.38.2<\/span>What Excepted Matters Include<\/span><\/h2>\n\"unless otherwise stipulated in the contract \u2014 Excepted Matters shall include, but not be limited to<\/strong>:\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Excepted matter<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>ANY controversies or claims brought by a third party for bodily injury, death, [or] property [damage]<\/strong><\/td><\/tr><tr><td>\u2026<\/td><td>(and the further heads specified in the contract)<\/em><\/td><\/tr><tr><td>6<\/td><td>provisions incorporated in the contract which are beyond the purview of the Procuring Entity, or are in pursuance of policies of Government<\/strong> \u2014 including but not limited to:<\/td><\/tr><tr><td>6(a)<\/td><td>provisions of restrictions regarding local content and purchase preference to local suppliers<\/strong> In terms of the Make in India policy<\/td><\/tr><tr><td>6(b)<\/td><td>provisions regarding restrictions on entities from countries having land-borders with India<\/strong><\/td><\/tr><tr><td>6(c)<\/td><td>purchase preference policies regarding MSEs and start-ups<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Why this Matters:<\/p>\nThe effect of head 6 is that a contractor <\/strong>cannot arbitrate against the operation of the Make in India Order, the land-border restrictions, or the MSE\/ Start-up preferences \u2014 because these are Government policy, not matters within the Procuring Entity's discretion.<\/strong><\/p><\/aside>\n<h1>9.39 Adjudication \u2014 Step 1<\/span><\/h1>\n<h2>9.39.1<\/span>The Notice of Adjudication<\/span><\/h2>\n<aside class=\"note\">\"after exhausting efforts to resolve the dispute with the purchasing officer executing the contract on behalf of the Procuring Entity \u2014 the contractor shall give a 'notice of adjudication' specifying:<\/strong><\/p>\n\u2022 the matters which are in question, or subject of the dispute or difference;<\/strong><\/p>\n\u2022 indicating the relevant contractual clause; And<\/strong><\/p>\n\u2022 the amount of claim item-wise \u2014 <\/strong><\/p>\nto the head of procurement, or any other authority mentioned in the contract (hereinafter called the \"adjudicator\")<\/strong>.\"<\/p><\/aside>\n High-value matters:<\/strong>\"where necessary \u2014 e.g., matters of high value \u2014 the Procuring Entity May proceed with adjudication by a high-level committee<\/strong>\"<\/strong>(constituted on the lines of the HLC described at para 9.40.3 below).<\/em><\/p>\n<h2>9.39.2<\/span>The 60-Day Decision and the Stay on Other Proceedings<\/span><\/h2>\n<aside class=\"note\">\"DURING His Adjudication \u2014 the Adjudicator Shall Give the Contractor an Adequate Opportunity to Present His CASE.<\/em><\/p>\nWithin 60 Days After Receiving the Representation \u2014 the Adjudicator Shall Make and Notify Decisions in Writing on All Matters Referred to HIM.<\/em><\/p>\nTHE Parties Shall not Initiate, During the Adjudication Proceedings, Any Conciliation, Arbitral or Judicial Proceedings in Respect of a Dispute That is the Subject Matter of the Adjudication PROCEEDINGS.<\/em><\/p><\/aside>\n<h2>9.39.3<\/span>Escalation to Mediation<\/span><\/h2>\n<aside class=\"note\">\"if not satisfied by the decision in adjudication \u2014 or if the adjudicator fails to notify his decision within the abovementioned time-frame \u2014 the contractor May proceed to invoke the process of mediation<\/strong>.\"<\/p><\/aside>\n<h1>9.40 Mediation \u2014 Step 2<\/span><\/h1>\n(The Mediation Act, 2023)<\/em><\/p>\n<h2>9.40.1<\/span>Invoking Mediation<\/span><\/h2>\n<aside class=\"note\">\"any party May invoke mediation by submitting a \"notice of mediation\" to the head of the procuring organisation. A neutral third party, known as the mediator, facilitates the mediation process.<\/strong><\/p>\nIF the Other Party is not Agreeable to Mediation \u2014 the Aggrieved Party May Invoke Arbitration, if Available in the CONTRACT.<\/em><\/p>\nFootnote in all four Manuals: \"The [Mediation] Act would be fully notified at a later date. Hence some of the provisions \u2014 like registration of mediators, and MSPs\/ MCI \u2014 may get activated later.\"<\/em><\/p><\/aside>\n<h2>9.40.2<\/span>THE DoE GUIDELINES ON MEDIATION \u2014 the High-Level Committee (HLC)<\/span><\/h2>\n\"Government departments\/ entities\/ agencies are encouraged to adopt mediation under the Mediation Act 2023, and\/ or negotiate amicable settlements to resolve disputes.<\/strong>\"<\/p>\na) the HLC and its composition:<\/p>\n<aside class=\"note\">\"Government departments\/ undertakings May \u2014 where they consider appropriate, e.g., in high-value matters \u2014 constitute a high-level committee (HLC) for dispute resolution, which May include the following (this composition is purely indicative and not prescriptive):<\/strong><\/p>\nI) a retired judge;<\/strong><\/p>\nii) a retired high-ranking officer and\/ or technical expert.<\/strong><\/p><\/aside>\nB) the three ways an HLC May be used:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Mode<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>negotiate directly with the other party, and place a tentative proposed solution before the HLC<\/strong><\/td><\/tr><tr><td>ii<\/td><td>conduct mediation through a mediator, and then place the tentative mediated agreement before the HLC<\/strong><\/td><\/tr><tr><td>iii<\/td><td>use the HLC itself as the mediator<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nc) THE RATIONALE \u2014 arm's length scrutiny:<\/p>\n<aside class=\"note\">\"This Will Enable Decisions Taken for Resolving Disputes in Appropriate Matters to Be Scrutinised by a HIGH-RANKING Body at ARM'S Length from the Regular DECISION-MAKING Structure \u2014 Thereby Promoting Fair and Sound Decisions in the Public Interest, with PROBITY.<\/em><\/p><\/aside>\nD) renegotiation in long-duration works contracts:<\/p>\n<aside class=\"note\">\"there May be rare situations in long-duration works contracts where a renegotiation of the terms May best serve public interest, due to unforeseen major events.<\/strong><\/p>\n In such circumstances \u2014 the terms of the tentative re-negotiated contract May be placed before a suitably constituted high-level committee before approval by the Competent Authority<\/strong>.\"<\/p><\/aside>\ne) APPROVAL: \"approval of the appropriate authority will need to be obtained for the final accepted solution. Section 49 of the Mediation Act 2023 is also relevant in this regard<\/strong>.\"<\/p>\nf) the non-routine Rule:<\/p>\n<aside class=\"note\">\"MEDIATION Agreements Need not Be Routinely or Automatically Included in Procurement Contracts\/ TENDERS.<\/em><\/p>\nTHE Absence of a Mediation Agreement in the Contract Does not Preclude PRE-LITIGATION Mediation. Such a Clause May Be Incorporated Where IT is Consciously Decided to Do SO.<\/em><\/p><\/aside>\ng) \"disputes not covered in an arbitration clause \u2014 and where the methods outlined above are unsuccessful \u2014 should be adjudicated by the courts<\/strong>.\"<\/p>\nh) the modification authority: \"general or case-specific modification in the application of the above guidelines May be authorised by:<\/strong><\/p>\n<aside class=\"note\">\u2022 the Secretary concerned (or an officer not below the level of Joint Secretary to whom the authority is delegated by him) \u2014 in respect of Government Ministries\/ Departments, attached\/ subordinate offices and autonomous bodies; or<\/strong><\/p>\n\u2022 the managing director \u2014 in respect of Central Public Sector Enterprises, including Banks and Financial Institutions<\/strong>.\"<\/p><\/aside>\n<h2>9.40.3<\/span>Appointment of Mediator(s)<\/span><\/h2>\n<aside class=\"note\">\"mediators can be of any nationality, and must be:<\/strong><\/p>\n\u2022 registered with the mediation council of India (MCI); Or<\/strong><\/p>\n\u2022 empanelled by a court-annexed mediation centre; Or<\/strong><\/p>\n\u2022 empanelled by an authority constituted under the legal services authorities Act, 1987; Or<\/strong><\/p>\n\u2022 empanelled [by a recognised mediation service provider].<\/strong><\/p><\/aside>\n<h2>9.40.4<\/span>Confidentiality \u2014 and the recording prohibition<\/span><\/h2>\n<aside class=\"note\">\"[MEDIATION Communications Shall not BE] Admissible as Evidence in Any Subsequent Court Proceedings \u2014 Nor Be Asked to Be Disclosed by Any Court\/ TRIBUNAL.<\/em><\/p>\nNO Audio or Video Recording of the Mediation Proceedings Shall Be Made or Maintained by the Parties or the Participants \u2014 Including the Mediator and Mediation Service Provider \u2014 Whether Conducted in Person or ONLINE.<\/em><\/p><\/aside>\nOnline mediation: \"the Act allows parties to opt for online\/ virtual mediation \u2014 which shall be deemed to occur within the jurisdiction of a competent court. The Act also requires online mediation communication mechanisms to ensure confidentiality<\/strong>.\"<\/p>\n<h2>9.40.5<\/span>How the Mediator Works<\/span><\/h2>\n<aside class=\"note\">\"the mediator initially meets the parties separately, and communicates the view of each party to the other \u2014 to the extent agreed upon by them.<\/strong><\/p>\nHe assists them in:<\/strong><\/p>\nIdentifying issues \u00b7 advancing better understanding \u00b7 clarifying priorities \u00b7 exploring areas of the parties' responsibility \u00b7 identifying common interests \u00b7 and encouraging compromise.<\/strong><\/p>\nHe then meets them jointly to encourage a mutually acceptable resolution.<\/strong><\/p>\n At any stage of the mediation proceedings \u2014 at the parties' request, the mediator May suggest a dispute settlement in writing<\/strong>.\"<\/p><\/aside>\n<h2>9.40.6<\/span>Termination of Mediation \u2014 120 Days Plus 60<\/span><\/h2>\n<aside class=\"note\">\"THE Process Must Be Completed Within 120 Days \u2014 Though Parties Can Extend IT by Another 60 Days Through Mutual CONSENT.<\/em><\/p>\nIF Mediation is not Completed Within this Timeline \u2014 the Mediator Shall Prepare a NON-SETTLEMENT Report \u2014 Without Disclosing the Cause of NON-SETTLEMENT, or Any Other Matter or Thing Referring to Their Conduct During MEDIATION.<\/em><\/p>\n Mediation shall also stand terminated:<\/strong><\/p>\n\u2022 on a declaration of the mediator \u2014 after consultation with the parties or otherwise \u2014 that further efforts at mediation are no longer justified; Or<\/strong><\/p>\n\u2022 on communication by a party in writing, addressed to the mediator and the other parties, that they wish to opt out of mediation.<\/strong><\/p>\nOn termination of mediation \u2014 if the dispute is still alive, the aggrieved party shall be free to invoke arbitration<\/strong>.\"<\/p><\/aside>\n<h2>9.40.7<\/span>Mediated Settlement Agreement (MSA)<\/span><\/h2>\na) what it is: \"if the parties resolve the dispute and execute a mediated settlement agreement (\"MSA\") \u2014 then the mediation is successful.<\/strong><\/p>\n<aside class=\"note\">An MSA is a written agreement settling some or all disputes \u2014 and May extend beyond the disputes referred to mediation.<\/strong><\/p>\n it must be valid under the Indian Contract Act, signed by both parties, and duly authenticated by the mediator for the parties or the MSP. The Act provides options for MSA registration<\/strong>.\"<\/p><\/aside>\nb) challenge to MSA \u2014 90 days, four grounds only:<\/p>\n<aside class=\"note\">\"MSA Can Be Challenged Within 90 Days on Limited Grounds OF:<\/em><\/p>\n(a) fraud; (b) corruption; (c) impersonation; And (d) subject matter being unfit for mediation.<\/strong><\/p><\/aside>\nc) EXECUTION \u2014 enforceable as a decree:<\/p>\n<aside class=\"note\">\"IF There is No Challenge \u2014 or a Challenge is Unsuccessful \u2014 the Act Ensures That the MSA is Binding and Enforceable, Akin to a Judgment or DECREE.<\/em><\/p>\nThis means that if one party fails to comply with the MSA \u2014 the non-defaulting party has a right to enforce it through the court<\/strong>.\"<\/p><\/aside>\n<h2>9.40.8<\/span>Costs and the Interest Moratorium<\/span><\/h2>\na) COSTS: \"the parties shall equally bear all costs of mediation \u2014 including the fees of the mediator and the charges of the mediation service provider<\/strong>.\"<\/p>\nb) no claim of interest during mediation:<\/p>\n<aside class=\"note\">\"PARTIES Shall not Claim Any Interest on Claims\/ COUNTER-CLAIMS from the Date of Notice Invoking Mediation Till the Execution of the Settlement Agreement, if So ARRIVED.<\/em><\/p>\nIF Parties Cannot Resolve the Dispute \u2014 Either Party Shall Claim No Interest from the Date of Notice Invoking Mediation Until the Date of Termination of Mediation PROCEEDINGS.<\/em><\/p><\/aside>\nC) the stay on other proceedings: \"the parties shall not initiate, during the mediation proceedings, any arbitral or judicial proceedings in respect of a dispute that is the subject matter of the mediation proceedings<\/strong>.\"<\/p>\n<h1>9.41 Arbitration \u2014 Step 3<\/span><\/h1>\n(The Arbitration and Conciliation Act, 1996 \u2014 amended 2015 and 2021)<\/em><\/p>\n<h2>9.41.1<\/span>The Arbitration Agreement and Its Survival<\/span><\/h2>\n<aside class=\"note\">\"if an amicable settlement is not forthcoming \u2014 recourse May be taken to the settlement of disputes through arbitration as per the Indian Arbitration and Conciliation Act, 1996.<\/strong><\/p>\nFor this purpose, when the contract is with a domestic supplier \u2014 a standard arbitration clause May be included in the tender document, indicating the arbitration procedure to be followed \u2014 based on which the arbitration Act shall become applicable.<\/strong><\/p>\nThis Agreement Shall Continue to Survive Termination, Completion, or Closure of the Contract for 120 Days After that.<\/em><\/p>\nTHE Venue of Arbitration Should Be the Place from Where the Contract Has Been ISSUED.<\/em><\/p><\/aside>\n<h2>9.41.2<\/span>the Msmed Override<\/span><\/h2>\n<aside class=\"note\">\"THE Micro, Small and Medium Enterprises Development (Msmed) Act, 2006 Provides [FOR] Parties to a Dispute \u2014 Where One of the Parties is a Micro or Small Enterprise \u2014 to Be Referred to the Micro and Small Enterprises Facilitation Council, if the Dispute is Regarding Any Amount Due under Section 17 of the Msmed Act, 2006.<\/em><\/p>\nIF a Micro or Small Enterprise, Being a Party to Dispute, Refers to the Provisions in the Msmed Act 2006 \u2014 These Provisions Shall Prevail over this [ARBITRATION] AGREEMENT.<\/em><\/p><\/aside>\n<h2>9.41.3<\/span>the Government Guidelines on Arbitration \u2014 the Rs 10 Crore Rule<\/span><\/h2>\n(OM No. F.11\/21\/2024-PPD dated 03.06.2024)<\/em><\/p>\n\"DoE has issued the following guidelines for arbitration in contracts of domestic procurement by the Government and by its entities and agencies \u2014 including CPSEs, public sector banks (PSBs), and Government companies<\/strong>:\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Guideline<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>## \"arbitration as a method of dispute resolution should not be routinely or automatically included in procurement contracts\/ tenders \u2014 especially in large contracts<\/strong>.\"<\/td><\/tr><tr><td>b<\/td><td>## \"as a norm \u2014 arbitration (if included in contracts) May be restricted to disputes with a value less than Rs. 10 crores.<\/strong> This figure is regarding the value of the dispute \u2014 not the [value of the contract]<\/strong>.\"<\/td><\/tr><tr><td>d<\/td><td>\"*In matters where arbitration is to be resorted to \u2014 institutional arbitration May be given preference (where appropriate, after considering the reasonableness of the cost of arbitration relative to the value involved).\"<\/td><\/tr><tr><td>e<\/td><td>general or case-specific modification May be authorised by the Secretary concerned<\/strong> (or an officer not below Joint Secretary to whom delegated) for Ministries\/ Departments\/ attached and subordinate offices\/ autonomous bodies \u2014 or by the managing director<\/strong> for CPSEs, Banks and Financial Institutions<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>9.42 Foreign Arbitration<\/span><\/h1>\n<aside class=\"note\">\"the Arbitration and Conciliation Act 1996 has provisions for international commercial arbitration \u2014 which shall be applicable if one of the parties has its Central management and control in any foreign country.<\/strong><\/p>\nWhen the Contract is with a Foreign Supplier \u2014 the Supplier Has the Option to Choose EITHER:<\/em><\/p>\n\u2022 the Indian Arbitration and Conciliation Act, 1996; Or<\/strong><\/p>\n\u2022 arbitration in accordance with the provisions of the united nations commission on international trade law (UNCITRAL) arbitration Rules.<\/strong><\/p>\n The arbitration clause with foreign firms should be in the form of self-contained agreements \u2014 especially for large-value contracts, or those for costly plant and machinery.<\/strong><\/p>\nTHE Venue of Arbitration Should Be in Accordance with UNCITRAL or INDIA'S Arbitration Rules \u2014 Whereby IT May Be in India or Any Neutral COUNTRY.<\/em><\/p><\/aside>\n<h1>9.43 Notice for Arbitration and Reference to Arbitration<\/span><\/h1>\n<h2>9.43.1<\/span>The Appointing Authority<\/span><\/h2>\n<aside class=\"note\">\"'The appointing authority' to appoint the arbitrator shall be the head of the procuring organisation named in the contract \u2014 and includes, if there be no such authority, the officer who is for the time being discharging the functions of that authority, whether in addition to other functions or otherwise<\/strong>.\"<\/p><\/aside>\n<h2>9.43.2<\/span>the 60\u2013120 Day Window for the Notice for Arbitration<\/span><\/h2>\n<aside class=\"note\">\"IN the Event of Any Dispute \u2014 if the Adjudicator Fails to Decide Within 60 Days, or the Mediation is Terminated \u2014 Then the Parties to the CONTRACT:<\/em><\/p>\nAfter 60 Days but Within 120 Days of the 'Notice of Dispute' \u2014 Shall Request the Appointing Authority Through a \"NOTICE for ARBITRATION\" in Writing, Requesting That the Dispute or Difference Be Referred to ARBITRATION.<\/em><\/p>\nThe \"notice for arbitration\" shall specify:<\/strong><\/p>\n\u2022 the matters in question, or the subject of the dispute or difference;<\/strong><\/p>\n\u2022 the relevant contractual clause; And<\/strong><\/p>\n\u2022 the amount of claim item-wise.<\/strong><\/p><\/aside>\n<h2>9.43.3<\/span>Reference to Arbitration \u2014 the jurisdictional limit<\/span><\/h2>\n<aside class=\"note\">\"After Appointing ARBITRATOR(S) \u2014 the Appointing Authority Shall Refer the Dispute to THEM.<\/em><\/p>\nOnly Such Dispute or Difference Shall Be Referred to Arbitration Regarding Which the Demand Has Been Made \u2014 Together with COUNTER-CLAIMS or Set OFF.<\/em><\/p>\nOTHER Matters Shall Be Beyond the Jurisdiction of the ARBITRATOR(S).<\/em><\/p><\/aside>\n<h1>9.44 Appointment of Arbitrator<\/span><\/h1>\n<h2>9.44.1<\/span>Qualification of Arbitrators \u2014 the five rules<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Rule<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>RETIRED OFFICERS of the Procuring Organisation: Must HAVE retired in the rank of Senior Administrative Grade (or equivalent)<\/strong> \u00b7 must have retired at least 1 year prior<\/strong> \u00b7 AND must not be over 70 years of age on the date of notice for arbitration<\/strong><\/td><\/tr><tr><td>b<\/td><td>serving officers: Shall not be below ja grade level<\/strong><\/td><\/tr><tr><td>c<\/td><td>## the no-prior-involvement Rule: \"he\/ they shall not have had an opportunity to deal with the matters to which the contract relates \u2014 or who, in the course of his\/ their duties as an officer of the procuring organisation, expressed views on any or all the matters under dispute or differences.<\/strong> *A declaration to this effect shall be taken from the arbitrators.\"<\/td><\/tr><tr><td>d<\/td><td>\"an arbitrator May be appointed notwithstanding the total number of arbitration cases in which he has been appointed in the past<\/strong>.\"<\/td><\/tr><tr><td>e<\/td><td>## \"not be other than the person appointed by the appointing authority \u2014 and if for any reason that is not possible, the matter shall not be referred to arbitration at all<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>9.44.2<\/span>Panel of Arbitrators \u2014 and the two caps<\/span><\/h2>\n<aside class=\"note\">\"the procuring organisation May prepare \u2014 with the approval of the head of the procuring organisation \u2014 a panel of serving and retired officers who are willing and qualified to be empanelled as arbitrators, based on:<\/strong><\/p>\nIntegrity \u00b7 ethics \u00b7 the experience of dealing in contracts\/ tenders \u00b7 temperament of taking fair decisions \u00b7 feedback \u00b7 general image \u00b7 career profile.<\/strong><\/p>\nSuch Persons Should Have Vigilance Clearance \u2014 and Should not Be Working in the Vigilance WING.<\/em><\/p>\n The performance of empanelled arbitrators should be reviewed annually.<\/strong><\/p>\nThe Two Caps:<\/p>\n\u2022 \"the empanelment of a retired officer as arbitrator shall be limited to three procuring entities only.\"<\/strong><\/p>\n\u2022 \"at any given time, a maximum of two arbitration cases shall be assigned to any arbitrator in a Procuring Entity.\"<\/strong><\/p><\/aside>\n<h2>9.44.3<\/span>Replacement of Arbitrators<\/span><\/h2>\n<aside class=\"note\">\"if one or more of the arbitrators: Refuses to Act \u00b7 withdraws from his office \u00b7 dies \u00b7 neglects\/ is unable or unwilling or refuses to Act for any reason \u00b7 his award being set aside by the court for any reason \u00b7 or in the opinion of the appointing authority fails to Act without undue delay \u2014 <\/strong><\/p>\nthe appointing authority shall appoint new arbitrator(s) to Act in his\/ their place in the same manner in which the earlier arbitrator(s) had been appointed.<\/strong><\/p>\nSuch a RE-CONSTITUTED Tribunal May, at its Discretion, Proceed with the Reference from the Stage at Which the Previous ARBITRATOR(S) Left IT.<\/em><\/p><\/aside>\n<h2>9.44.4<\/span>THE FOUR APPOINTMENT REGIMES \u2014 turning on Section 12(5) waiver and value<\/span><\/h2>\n<aside class=\"note\">This is the Most Intricate Table in the Chapter. Note That the Thresholds Differ Depending on Whether Section 12(5) of the Arbitration Act Has Been Waived.<\/p><\/aside>\n<h3>A. Where Section 12(5) Has Been Waived<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>Value of all claims added together<\/th><th>Composition of the Arbitral Tribunal<\/th><\/tr><\/thead><tbody><tr><td>Does not exceed \u20b9 1,00,00,000 (one crore)<\/td><td>A sole arbitrator<\/strong> \u2014 who shall be a serving officer of the procuring organisation, not below Junior Administrative Grade<\/strong>, nominated by the appointing authority. <\/strong>Appointed within 60 days<\/strong> From the day when a written and valid demand for arbitration is received<\/td><\/tr><tr><td>all other cases<\/td><td>a panel of three serving officers not below Junior Administrative Grade<\/strong> \u2014 OR two serving officers not below jag and one retired officer<\/strong> (retired not below the rank of Senior Administrative Grade)<\/td><\/tr><\/tbody><\/table><\/div>\nThe four-name panel procedure (for the three-member tribunal):<\/p>\n<aside class=\"note\">1. The appointing authority shall send a panel of at least four (4) names of officers \u2014 which May also include retired officers empanelled to work as arbitrator \u2014 to the contractor within 60 days of the demand.<\/strong><\/p>\n2. The contractor will be asked to suggest at least 2 names out of the panel for appointment as the contractor's nominee \u2014 within 30 days from the date of dispatch of the request.<\/strong><\/p>\n3. The appointing authority shall appoint at least one out of them as the contractor's nominee \u2014 and shall also simultaneously appoint the balance number of arbitrators, either from the panel or from outside the panel \u2014 duly indicating the 'presiding arbitrator' from amongst the 3 arbitrators so appointed.<\/strong><\/p>\n4. The appointing authority shall complete this exercise within 30 days from the receipt of the names of the contractor's nominees.<\/strong><\/p>\nThe Finance\/ Accounts Requirement:<\/p>\n\"While nominating the arbitrators \u2014 it shall be necessary to ensure that one of them is from the finance\/ accounts Department.<\/strong><\/p>\n (An officer of selection grade of the finance\/ accounts Department shall be considered as of equal status to the officers in Senior Administrative Grade of other departments for appointment of an arbitrator.)\"<\/strong><\/p>\nthe post-retirement continuation Rule: \"the serving officer working in an arbitral tribunal in ongoing arbitration cases can continue as arbitrator in the tribunal even after his retirement<\/strong>.\"<\/p><\/aside>\n<h3>B. Where Section 12(5) Has not Been Waived<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>Value of all claims added together<\/th><th>Composition<\/th><\/tr><\/thead><tbody><tr><td>does not exceed \u20b9 50,00,000 (fifty lakh)<\/td><td>A retired officer<\/strong> \u2014 retired not below the rank of Senior Administrative Grade officer<\/strong> \u2014 as the sole arbitrator<\/strong><\/td><\/tr><tr><td>exceeds \u20b9 50,00,000 (fifty lakh)<\/td><td>a panel of three (3) retired officers<\/strong> \u2014 retired not below the rank of Senior Administrative Grade officer<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nThe same four-name panel \/ 60-day \/ 30-day \/ 30-day procedure applies, but drawn entirely from RETIRED officers<\/strong>, with their retirement dates duly indicated.<\/p>\n<h2>9.44.5<\/span>FAILURE TO APPOINT \u2014 who designates the institution<\/span><\/h2>\n<aside class=\"note\">\"IF the Appointing Authority Fails to Appoint an Arbitrator \u2014 or Two Appointed Arbitrators Fail to Agree on the Third Arbitrator \u2014 Within 60 (Sixty) Days, Then, Subject to the Survival of this Arbitration AGREEMENT:<\/em><\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Type of arbitration<\/th><th>Who designates the arbitral institution<\/th><\/tr><\/thead><tbody><tr><td>International commercial arbitration<\/td><td>THE supreme court of India<\/strong> Shall designate the arbitral institution<\/td><\/tr><tr><td>national arbitrations<\/td><td>THE high court<\/strong> Shall designate arbitral institutions<\/td><\/tr><\/tbody><\/table><\/div>\nTHE Arbitration Council of India Must Have Graded These Arbitration INSTITUTIONS.<\/em><\/p>\nThese Arbitral Institutions Must Complete the Selection Process Within Thirty Days of Accepting the Request for the ARBITRATOR'S APPOINTMENT.<\/em><\/p><\/aside>\n<h1>9.45 the Arbitral Procedure<\/span><\/h1>\n<h2>9.45.1<\/span>Effective Date of Entering Reference<\/span><\/h2>\n<aside class=\"note\">\"THE Arbitral Tribunal Shall Be Deemed to Have Entered the Reference on the Date on Which the ARBITRATOR(S) Have Received Notice of Their APPOINTMENT.<\/em><\/p>\nAll Subsequent Time Limits Shall Be Counted from Such DATE.<\/em><\/p><\/aside>\n<h2>9.45.2<\/span>SEAT vs VENUE of Arbitration \u2014 the critical distinction<\/span><\/h2>\n<aside class=\"note\">\"THE Seat of Arbitration Shall Be the Place from Which the Letter of Award or the Contract is ISSUED.<\/em><\/p>\nThe venue of arbitration shall be the same as the seat of arbitration.<\/strong><\/p>\nHOWEVER, in Terms of Section 20 of the Arbitration Act \u2014 the Arbitrator, at His Discretion, May Determine a Venue Other Than the Seat of the Arbitration \u2014 Without in Any Way Affecting the Legal Jurisdictional Issues Linked to the Seat of the ARBITRATION.<\/em><\/p><\/aside>\n<h2>9.45.3<\/span>The Duty to Send Parties Back if Earlier Steps Were Skipped<\/span><\/h2>\n<aside class=\"note\">\"IF the Adjudication and\/ or Mediation Mechanisms Had not Been Exhausted Before Such Reference to Arbitration \u2014 the Arbitrator Should Ask the Aggrieved Party to Approach the Designated Authority for Such Mechanisms Before the Arbitration Proceedings are STARTED.<\/em><\/p><\/aside>\n<h2>9.45.4<\/span>Pleadings \u2014 the 30 \/ 60 \/ six-month timetable<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>Time limit<\/th><\/tr><\/thead><tbody><tr><td>CLAIMANT to submit claims<\/strong>(stating the facts supporting the claims, with all relevant documents, and the relief or remedy sought against each claim)<\/em><\/td><td>within 30 DAYS<\/strong> From the date of appointment of the arbitral tribunal \u2014 unless it has granted an extension<\/td><\/tr><tr><td>RESPONDENT to submit defence statement and counter-claim(s), if any<\/td><td>within 60 DAYS<\/strong> Of receipt of the copy of claims \u2014 unless the Tribunal has granted an extension<\/td><\/tr><tr><td>COMPLETION of statements of claims, counter-claims and defence<\/td><td>## within six months<\/strong> From the effective reference date<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">The NO-NEW-CLAIM Rule:<\/p>\n\"no new claim shall be added during proceedings by either party.<\/strong><\/p>\n However, a party May amend or supplement the original claim or defence thereof during arbitration proceedings \u2014 subject to acceptance by the tribunal, having due regard to the delay in making it.\"<\/strong><\/p><\/aside>\n<h2>9.45.5<\/span>Oral Arguments on a Day-to-Day Basis \u2014 and exemplary costs<\/span><\/h2>\n<aside class=\"note\">\"ORAL Arguments \u2014 as Far as Possible \u2014 Shall Be Heard by the Arbitral Tribunal on a DAY-TO-DAY Basis, and No Adjournments Shall Be Granted Without Sufficient CAUSE.<\/em><\/p>\nThe arbitrator(s) may Impose an Exemplary Cost on the Party Seeking Adjournment Without Sufficient CAUSE.<\/em><\/p><\/aside>\n<h2>9.45.6<\/span>AWARD WITHIN 12 MONTHS \u2014 and the extension ladder<\/span><\/h2>\n<aside class=\"note\">\"THE Arbitral Tribunal is Statutorily Bound to Deliver an Award Within 12 (Twelve) Months from the Date When the Arbitral Tribunal Enters REFERENCE.<\/em><\/p>\nTHE Award Can Be Delayed by a Maximum of Six Months Only under Exceptional Circumstances \u2014 Where All Parties Consent to Such Extension of TIME.<\/em><\/p>\nThe court's approval Shall Be Required for Further Extension, if the Award is not Made Out Within Such an Extended PERIOD.<\/em><\/p>\n During the period of an application for an extension of time awaiting before the court \u2014 the arbitrator's proceedings shall continue until the disposal of the application<\/strong>.\"<\/p><\/aside>\n<h2>9.45.7<\/span>Cost of Arbitration and Fees of the Arbitrators<\/span><\/h2>\n<aside class=\"note\">\"the concerned parties shall bear the cost of arbitration in terms of section 31(A) of the arbitration Act. The cost shall inter alia include fees of the arbitrator.<\/strong><\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Fee entitlement<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>A sole arbitrator shall be entitled to a 25% extra fee<\/strong> Over the prescribed fee<\/td><\/tr><tr><td>2<\/td><td>the arbitrator shall be entitled to a 50 per cent extra fee if the award is made within 6 months<\/strong> \u2014 in terms of section 29(A)(2) of the Arbitration Act<\/td><\/tr><tr><td>3<\/td><td>the arbitrator shall also be entitled to this extra fee where the fast track procedure<\/strong> in terms of section 29(B) is followed<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>9.45.8<\/span>FAST TRACK PROCEDURE \u2014 four salient features<\/span><\/h2>\n<aside class=\"note\">\"the parties to arbitration May choose to opt for a fast-track procedure \u2014 either before or after the commencement of the arbitration.<\/strong><\/p>\nTHE Award in FAST-TRACK Arbitration is to Be Made Out Within Six Months \u2014 and the Arbitral Tribunal Shall Be Entitled to Additional FEES.<\/em><\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Feature<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>## \"the dispute is to be decided based on written pleadings only. Procuring entities May encourage fast track procedure based on written pleadings only<\/strong>.\"<\/td><\/tr><tr><td>b<\/td><td>\"the arbitral tribunal shall have the power to call for clarifications in addition to the written pleadings where it deems necessary<\/strong>.\"<\/td><\/tr><tr><td>c<\/td><td>\"an oral hearing May be held only if all the parties request, or the arbitral tribunal considers it necessary<\/strong>.\"<\/td><\/tr><tr><td>d<\/td><td>\"the parties are free to decide the fees of the arbitrator(s) for a fast-track procedure<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>9.45.9<\/span>Powers of the Arbitral Tribunal to Grant Interim Relief<\/span><\/h2>\n<aside class=\"note\">\"the parties to arbitration May approach the arbitral tribunal to seek interim relief on the grounds available under section 9 of the Act.<\/strong><\/p>\n The tribunal has the powers of a court to make interim awards<\/strong>.\"<\/p><\/aside>\n<h2>9.45.10<\/span>THE AWARD \u2014 reasons, no pre-award interest, and corrections<\/span><\/h2>\n<aside class=\"note\">\"[The award shall State] item-wise the sum and reasons upon which it is based.<\/strong><\/p>\nTHE Analysis and Reasons Shall Be Detailed Enough So That the Award Can Be Inferred from IT.<\/em><\/p>\nThe no-pre-award-interest term:<\/p>\n\"it shall be further a term of this arbitration agreement that \u2014 where the arbitral award is for the payment of money \u2014 no interest shall be payable on the whole or any part of the money for any period till the date on which the award is made \u2014 in terms of section 31(7)(a) of the arbitration Act.\"<\/strong><\/p><\/aside>\nfinality and corrections:<\/p>\n<ul class=\"lst\"><li>\"the award of the arbitrator shall be final and binding on the parties to this contract<\/strong>\";<\/li><li>\"a party May apply for corrections of any computational errors, typographical or clerical errors, or any other error of a similar nature occurring in the award \u2014 or interpretation of a specific point of the award \u2014 to the tribunal within 60 days of receipt of the award<\/strong>\";<\/li><li>\"a party May apply to the tribunal within 60 days of receiving the award to make an additional award \u2014 as to claims presented in the arbitral proceedings but omitted from the arbitral award<\/strong>.\"<\/li><\/ul>\n<h1>9.46 Challenging Arbitration \/ Judicial Awards<\/span><\/h1>\n<aside class=\"note\">This is One of the Most Candid Passages in the Entire Manual Family, and is Reproduced at Length.<\/p><\/aside>\n<h2>9.46.1<\/span>The Non-Routine Rule<\/span><\/h2>\n<aside class=\"note\">\"IN Cases Where There is a Decision Against the Government\/ Public Sector Enterprise \u2014 the Decision to Challenge\/ Appeal Should not Be Taken ROUTINELY.<\/em><\/p>\nBUT Only When the Case Genuinely Merits Going for Challenge\/ Appeal, and There are High Chances of Winning in the Court\/ Higher COURT.<\/em><\/p><\/aside>\n<h2>9.46.2<\/span>the 75% Payment Rule \u2014 Rule 227A of GFR, 2017<\/span><\/h2>\n<aside class=\"note\">\"IN Cases Where the Ministry\/ Department Has Challenged an Arbitral Award \u2014 and, as a Result, the Amount of the Arbitral Award Has not Been PAID:<\/em><\/p>\n75% of the Arbitral Award (Which May Include Interest Up to Date of the Award) Shall Be Paid by the Ministry\/ Department to the Contractor\/ Concessionaire Against a Bank Guarantee (BG).<\/em><\/p>\nThe BG shall Only Be for the Said 75% of the Arbitral Award \u2014 and not for the Interest, Which May Become Payable to the Ministry\/ Department Should the Subsequent Court Order Require a Refund of the Said AMOUNT.<\/em><\/p><\/aside>\n<h2>9.46.3<\/span>the Escrow Account and the Waterfall<\/span><\/h2>\n<aside class=\"note\">\"the payment May be made into a designated escrow account, with the stipulation that the proceeds will be used:<\/strong><\/p>\n1. First \u2014 for payment of lenders' dues;<\/strong><\/p>\n2. Second \u2014 for completion of the project; And<\/strong><\/p>\n3. Then \u2014 for completion of other projects of the same Ministry\/ Department, as mutually agreed\/ decided.<\/strong><\/p>\n Any balance remaining in the escrow account \u2014 after settlement of lenders' dues and completion of projects of the Ministry\/ Department \u2014 May be allowed to be used by the contractor\/ concessionaire, with the prior approval of the lead banker and the Ministry\/ Department.<\/strong><\/p>\n If otherwise eligible, and subject to contractual provisions \u2014 other amounts withheld May also be released against BG<\/strong>.\"<\/p><\/aside>\n<h2>9.46.4<\/span>the Candid Passage on Casual Appeals<\/span><\/h2>\n<aside class=\"note\">\"ARBITRATION\/ Court Awards Should Be Critically Reviewed. in Cases Where There is a Decision Against Government\/ Pse \u2014 the Decision to Appeal Should not Be Taken ROUTINELY.<\/em><\/p>\nTHERE is a Perception That Such Appeals are Sometimes Resorted to in Order to Postpone the Problem and Defer Personal ACCOUNTABILITY.<\/em><\/p>\nCASUAL Appeals in Arbitration\/ Court Cases Have Resulted in the Payment of Heavy Damages\/ Compensation\/ Additional Interest Cost \u2014 Thereby Causing More Harm to the Exchequer, in Addition to Tarnishing the Image of the GOVERNMENT.<\/em><\/p><\/aside>\n<h2>9.46.5<\/span>The Monitoring, Delegation and Board\/ Committee Requirements<\/span><\/h2>\n<aside class=\"note\">\"the organisation should monitor the success rate of appealing against arbitration awards.<\/strong><\/p>\n There should be a clear delegation to empower officials to accept arbitration\/ court orders.<\/strong><\/p>\nA Special Board\/ Committee May Be Set Up to Review the Case Before an Appeal is Filed Against an ORDER.<\/em><\/p>\nArbitration\/ court awards should not be routinely appealed, without due application of mind to all facts and circumstances \u2014 including realistic probability of success.<\/strong><\/p>\nThe Certification the Board\/ Committee Must Make:<\/p>\n\"The board\/ committee or other authority deciding on the matter shall clarify that it has considered both legal merits and the practical chances of success \u2014 and, after considering the cost of (and rising through) litigation\/ appeal\/ further litigation, as the case May be:<\/strong><\/p>\n it is satisfied that such litigation\/ appeal\/ further litigation cost is likely to be financially beneficial compared to accepting the arbitration\/ court award.\"<\/strong><\/p><\/aside>\n<h2>9.46.6<\/span>THE STATISTICAL JUSTIFICATION \u2014 why the 75% risk is worth taking<\/span><\/h2>\n<aside class=\"note\">\"STATISTICS Have Shown That \u2014 in Cases Where the Arbitration Award is Challenged, a Large Majority of Cases are Decided in Favour of the CONTRACTOR.<\/em><\/p>\nIN Such Cases, the Amount Becomes Payable with Interest at a Rate That is Often Far Higher Than the GOVERNMENT'S Cost of Funds. this Results in Huge Financial Losses to the GOVERNMENT.<\/em><\/p>\nHENCE, in the Aggregate \u2014 IT is in the Public Interest to Take the Risk of Paying a Substantial Part of the Award Amount, Subject to the Result of the Litigation \u2014 Even if, in Some Rare Cases of Insolvency Etc., Recovery of the Amount in Case of Success May Become DIFFICULT.<\/em><\/p><\/aside>\n<h2>9.46.7<\/span>the Personal Accountability Provision<\/span><\/h2>\n<aside class=\"note\">\"THE Only Circumstances in Which Such Payment Need not Be Made are When the CONTRACTOR:<\/em><\/p>\n\u2022 declines or is unable to provide the requisite Bank Guarantee; And\/ or<\/strong><\/p>\n\u2022 fails to open an escrow account as required.<\/strong><\/p>\nPERSONS Responsible for not Adhering to this are Liable to Be Held Personally Accountable for the Additional Interest Arising in the Event of the Final Court Order Going Against the Procuring ENTITY.<\/em><\/p>\n \u2014 Rule 227A of GFR, 2017, as notified under paras 16.1 to 16.5 of OM No. F.1\/9\/2021-PPD dated 29.10.2021<\/em><\/p><\/aside>\n<h1>9.47 Mechanism for Resolution of Commercial Disputes Between Cpses and Government Agencies (AMRCD) [W ONLY]<\/span><\/h1>\n<h2>9.47.1<\/span>Introduction \u2014 and what AMRCD superseded<\/span><\/h2>\n<aside class=\"note\">\"to streamline and ensure the effective resolution of commercial disputes between Central public sector enterprises (CPSEs) and Government departments\/ organizations \u2014 the Government of India has established the:<\/strong><\/p>\nADMINISTRATIVE Mechanism for Resolution of Cpses Disputes (AMRCD)<\/em><\/p>\nThis Mechanism \u2014 Effective from May 22, 2018 \u2014 Supersedes the Earlier Permanent Machinery of Arbitration (PMA).<\/em><\/p><\/aside>\nSCOPE \u2014 it applies to all commercial disputes concerning the interpretation and application of provisions in contracts between:<\/p>\na) CPSEs inter se<\/strong>; and<\/p>\nb) CPSEs and Government departments\/ organizations<\/strong> \u2014 <\/p>\n<aside class=\"note\">EXCLUDING Disputes Related to: Railways \u00b7 Income Tax \u00b7 Customs \u00b7 and Excise DEPARTMENTS.<\/em><\/p><\/aside>\n<h2>9.47.2<\/span>the TWO-TIER Structure<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Tier<\/th><th>Composition \/ Authority<\/th><\/tr><\/thead><tbody><tr><td>First level (tier 1)<\/td><td>disputes are initially referred to a committee comprising<\/strong>: \u2022 THE secretaries of the respective administrative ministries\/ departments involved<\/strong>; AND \u2022 THE Secretary of the Department of legal affairs<\/strong>. THE financial advisors (fas) of the concerned ministries\/ departments represent the issues before this committee<\/strong><\/td><\/tr><tr><td>second level (tier 2)<\/td><td>if the dispute remains unresolved at the first level \u2014 it is escalated to the Cabinet Secretary<\/strong>. ## WHOSE decision is final and binding<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>9.47.3<\/span>Procedure \u2014 the three-month and 15-day rules<\/span><\/h2>\n<aside class=\"note\">\"the claiming party must approach the financial advisor of its administrative Ministry\/ Department to initiate the dispute resolution process.<\/strong><\/p>\nMeetings are held to examine and resolve the dispute on its merits.<\/strong><\/p>\nTHE Committee is Expected to Finalize its Decision Within Three Months of Receiving the Dispute NOTICE.<\/em><\/p>\nAN Aggrieved Party Can Appeal the first-LEVEL Decision to the Cabinet Secretary Within 15 DAYS.<\/em><\/p><\/aside>\n<h2>9.47.4<\/span>Inclusion in Contracts \u2014 mandatory, including retrospectively<\/span><\/h2>\n<aside class=\"note\">\"All Cpses Must Include a Specific Clause in Relevant Contracts \u2014 to Ensure That Disputes are Resolved Through the AMRCD as Stipulated in the Dpe O.M..<\/em><\/p>\nONGOING Contracts Should Also Be Amended to Incorporate this CLAUSE.<\/em><\/p><\/aside>\n<h1>9.48 Contract Management \u2014 Risks and Mitigations<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>advance payments: \"this is an area of risk in Public Procurement with undue and unintended benefits to the contractor \u2014 which vitiates the original selection criteria<\/strong>.\"<\/td><td>any mobilisation or other advance payments should be as per the tender document\/ contract, and only for justifiable cases<\/strong>. Terms of such advances should be expressly stated in the NIT\/ tender documents<\/strong>. The advance payment May be released in not less than two stages<\/strong>, depending upon the progress of the contract. The advance should be progressively adjusted against bills cleared for payment<\/strong>. ## \"interest should be charged on delayed recoveries irrespective of the reason stated<\/strong>.\"<\/td><\/tr><tr><td>2<\/td><td>contract changes and renegotiations: \"this is also a risk area where the Procuring Entity May not get what it contracted and paid for, or May pay for what it has not received. On the other hand, the contractor May not get timely or proper amendments due to changes asked by the procuring entities<\/strong>.\"<\/td><td>## \"contract modifications and renegotiations should not substantially alter the nature of the contract. It should not vitiate the basis of the selection of the contractor. It should not give undue or unintended benefits to the contractor.<\/strong> *However, for any changes caused by the Procuring Entity \u2014 the contractor should be adequately and timely compensated within the contractual terms.\"<\/td><\/tr><tr><td>3<\/td><td>\"supervising agencies\/ individuals are unduly influenced to alter the contents of their reports \u2014 so changes in quality, performance, equipment, and characteristics go unnoticed<\/strong>.\"<\/td><td>A contract management Manual or operating procedure should be prepared for large-value contracts<\/strong>. <\/strong>There should be built-in systems for checks and balances<\/strong><\/td><\/tr><tr><td>4<\/td><td>\"the contractor's claims are false or inaccurate \u2014 and are protected by the person in charge of revising them<\/strong>.\"<\/td><td>## \"all large contracts should be formally reconciled for closure \u2014 to ensure that the scope of the work and warranty\/ defect liability period is completed.<\/strong> *This should include the dispute resolution forum for resolving disputes in a fixed timeframe, with the provision of escalation level.\"<\/td><\/tr><tr><td>5<\/td><td>\"payment to the contractor is delayed intentionally or otherwise<\/strong>.\"<\/td><td>\"all payments\/ recoveries should also be reconciled<\/strong>.\"<\/td><\/tr><tr><td>6<\/td><td>\"the contractor gets the final payment \u2014 but contract closure has not been formally done. As a result, material\/ assets loaned to him are not accounted for<\/strong>.\"<\/td><td>## \"*it should also be ensured that material\/ assets loaned to him \u2014 including security passes \u2014 are accounted for.\"<\/td><\/tr><tr><td>7<\/td><td>## \"every dispute lands up in arbitration or court cases \u2014 since the Procuring Entity is reluctant to grant compensation for its lapses to the contractor<\/strong>.\"<\/td><td>(addressed by the dispute-resolution ladder at paras 9.37\u20139.46, and by the DoE directive at para 9.37.2)<\/em><\/td><\/tr><tr><td>8<\/td><td>\"agents\/ sub-contractors and partners \u2014 chosen in a non-transparent way \u2014 are unaccountable, or are used to channel bribes<\/strong>.\"<\/td><td>\"agents should only be as per the terms of the contract.<\/strong> ## *sub-contracting of the contract should normally not be allowed in the procurement of goods.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>Appendix to Chapter 9 \u2014 Part C: Points of Difference<\/span><\/h1>\n<aside class=\"note\">As noted at the head of this Part, the dispute-resolution block is substantially COMMON to all four Manuals. The divergences below are therefore few \u2014 but correspondingly significant.<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>AMRCD \u2014 the Administrative Mechanism for Resolution of CPSEs Disputes<\/strong>(effective 22 May 2018, superseding the Permanent Machinery of Arbitration; two-tier structure ending with the Cabinet Secretary; three-month decision; 15-day appeal; excludes Railways, Income Tax, Customs and Excise)<\/em><\/td><td>W ONLY<\/td><\/tr><tr><td>2<\/td><td>Definition of breach<\/td><td>G\/C\/NC: framed around insolvency, receivership, neglect, default, or disinclination to honour obligations<\/em> \u2014 expressly including ETHICAL STANDARDS and the obligation to maintain production capability \u00b7 W: framed around *inability to honour important stipulations*, noting that breaches mostly relate to inability to complete the Work within stipulated time<\/strong><\/td><\/tr><tr><td>3<\/td><td>\"Obligation to maintain production capability (equipment & manufacturing facilities) based on which contract was awarded\"<\/td><td>G<\/strong>(a goods-specific default)<\/em><\/td><\/tr><tr><td>4<\/td><td>Warranty obligations survive termination<\/td><td>G<\/strong>(consistent with the Goods-only Warranty Clause at Part A, para 9.17)<\/em><\/td><\/tr><tr><td>5<\/td><td>Sub-contracting \"should normally not be allowed in the procurement of GOODS\"<\/td><td>G<\/strong>(contrast the Works and NC positions permitting sub-contracting subject to limits \u2014 Chapter 3, para 3.3.3 and Chapter 4 Part A, para 4.3.3-E)<\/em><\/td><\/tr><tr><td>6<\/td><td>Excepted matters head 6 \u2014 Make in India, land-border restrictions, MSE and Start-up preferences excluded from arbitration<\/td><td>Common to all four<\/td><\/tr><tr><td>7<\/td><td>The three-step ladder \u2014 Adjudication \u2192 Mediation \u2192 Arbitration, with the sequential rule<\/td><td>Common to all four<\/td><\/tr><tr><td>8<\/td><td>The Mediation Act 2023 replacing the conciliation part of the Arbitration and Conciliation Act 1996<\/td><td>Common footnote in all four<\/td><\/tr><tr><td>9<\/td><td>Rs 10 crore norm restricting arbitration; institutional arbitration preferred; arbitration not to be routinely included<\/td><td>Common to all four<\/strong>(OM dated 03.06.2024)<\/em><\/td><\/tr><tr><td>10<\/td><td>The four appointment regimes turning on Section 12(5) waiver \u2014 Rs 1 crore \/ Rs 50 lakh thresholds; the four-name panel; the Finance\/ Accounts member requirement<\/td><td>Common to all four<\/td><\/tr><tr><td>11<\/td><td>75% payment against BG on challenging an award; the escrow waterfall; personal accountability for non-adherence<\/td><td>Common to all four<\/strong>(Rule 227A of GFR 2017)<\/em><\/td><\/tr><tr><td>12<\/td><td>Risk row 8 mitigation \u2014 \"sub-contracting should normally not be allowed\"<\/td><td>G<\/strong>(the other Manuals' risk tables address agents differently)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 9 (parts a, b and c)<\/p>\n<aside class=\"note\">The Unified Manual is Now Complete for Chapters 1 to 9.<\/p>\nWhat remains in the source Manuals beyond this point are the <\/strong>ANNEXURES and APPENDICES \u2014 which differ substantially in numbering between the four Manuals, and which have been cross-referenced throughout this Unified Manual at the point where each is invoked (for example: Integrity Pact \u2014 G Annexure 30 \u00b7 W Annexure 14 \u00b7 C Annexure 18 \u00b7 NC Annexure 12)<\/em>.<\/p>\nA consolidated ANNEXURE CONCORDANCE \u2014 mapping every annexure of all four Manuals to its counterparts \u2014 would be the natural next deliverable.<\/p><\/aside><\/section>\n<\/div><\/main>\n<\/div>\n<button class=\"upm-navbtn\" type=\"button\">Chapters<\/button>\n<button class=\"upm-top\" type=\"button\">Top<\/button>\n<script>\n\/* ===================================================================\n SET YOUR PDF URL HERE \u2014 paste the File URL from Media Library.\n Leave it empty to use the PDF sitting beside this page.\n =================================================================== *\/\nvar UPM_PDF_URL = \"\";\n\/* =================================================================== *\/\n\n(function(){\n var root=document.querySelector('.upm'); 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padding-left:.85rem; margin:.35rem 0 .9rem}\n.upm .srcblock > *:last-child{margin-bottom:0}\n.upm .srcblock table{color:inherit}\n.upm .srcblock thead th{background:currentColor; color:#fff}\n.upm .note .srcblock{border-left-width:2px}\n\n\/* keep emphasis legible inside coloured passages *\/\n.upm .src-G strong,.upm .src-W strong,.upm .src-C strong,\n.upm .src-NC strong,.upm .src-multi strong{color:inherit; font-weight:700}\n\n\/* colour key *\/\n.upm-key{display:flex; flex-wrap:wrap; gap:.5rem; margin:.9rem 0 1.6rem;\n padding:.75rem .85rem; background:#FBFAF8; border:1px solid var(--rule); border-radius:3px}\n.upm-key b{font-family:'IBM Plex Sans Condensed',system-ui,sans-serif; font-size:.7rem;\n letter-spacing:.14em; text-transform:uppercase; color:var(--ink-soft);\n width:100%; margin-bottom:.15rem; font-weight:600}\n.upm-key span{font-family:'IBM Plex Sans Condensed',system-ui,sans-serif; font-size:.78rem;\n display:inline-flex; align-items:center; gap:.4rem}\n.upm-key i{width:.85rem; height:.85rem; border-radius:2px; display:inline-block; font-style:normal}\n\n\/* part dividers inside a merged chapter *\/\n.upm .partrule{\n margin:2.8rem 0 1.6rem; padding:.6rem 0 .55rem; border-top:2px solid var(--blue-700);\n border-bottom:1px solid var(--rule);\n font-family:'IBM Plex Sans Condensed',system-ui,sans-serif; font-weight:600;\n letter-spacing:.14em; text-transform:uppercase; font-size:.78rem; color:var(--blue-700);\n display:flex; align-items:baseline; gap:.7rem;\n}\n.upm .partrule em{font-style:normal; font-family:'Spectral',Georgia,serif; font-size:1.02rem;\n font-weight:600; letter-spacing:0; text-transform:none; color:var(--ink)}\n\n\/* ---------------- print ---------------- *\/\n@media print{\n .upm-hero,.upm-nav,.upm-navbtn,.upm-top{display:none !important}\n .upm-shell{display:block; max-width:none}\n .upm-body{padding:0}\n .upm-body-in{max-width:none}\n .upm{font-size:10pt}\n .upm .chapter{break-before:page; page-break-before:always}\n .upm .chapter:first-child{break-before:auto; page-break-before:auto}\n .upm .chapter + .chapter{margin-top:0; padding-top:0; border-top:0}\n .upm .note,.upm .tblwrap,.upm table{break-inside:avoid; page-break-inside:avoid}\n .upm thead{display:table-header-group}\n @page{size:A4; margin:18mm 15mm}\n}\n<\/style>\n\n<section class=\"upm-hero\">\n <div class=\"upm-hero-in\">\n Government of India · Ministry of Finance · Department of Expenditure<\/p>\n <h1>The Unified Manual for Public Procurement<\/em><\/h1>\n Four procurement Manuals merged into one continuous text. Where they agree,\n the provision is stated once. Where they differ, the divergence is set out openly, with the\n position of each Manual identified. Nothing has been dropped in the merging.<\/p>\n <div class=\"upm-src\">\n G<\/b> Goods, 2024<\/span>\n W<\/b> Works, 2025<\/span>\n C<\/b> Consultancy Services, 2025<\/span>\n NC<\/b> Non-Consultancy Services, 2025<\/span>\n <\/div>\n <div class=\"upm-stats\">\n <div>9<\/b>Chapters<\/i><\/div>\n <div>391<\/b>Sections<\/i><\/div>\n <div>4<\/b>Manuals merged<\/i><\/div>\n <div>400+<\/b>Points of difference<\/i><\/div>\n <\/div>\n <div class=\"upm-cta\">\n <a class=\"upm-btn upm-btn-a\" href=\"Unified-Manual-for-Public-Procurement.pdf\" data-pdf=\"Unified-Manual-for-Public-Procurement.pdf\" download rel=\"noopener\"><svg viewBox=\"0 0 24 24\" fill=\"none\" stroke=\"currentColor\" stroke-width=\"2.2\" stroke-linecap=\"round\" stroke-linejoin=\"round\" aria-hidden=\"true\"><path d=\"M12 3v12m0 0l-4-4m4 4l4-4M4 19h16\"\/><\/svg>Download PDF 360 pp · 2.8 MB<\/span><\/a>\n <a class=\"upm-btn upm-btn-b\" href=\"#upm-ch00\">Start reading<\/a>\n <a class=\"upm-btn upm-btn-b\" href=\"#\" data-print>Print this page<\/a>\n <\/div>\n <\/div>\n<\/section>\n<div class=\"upm-shell\">\n<nav class=\"upm-nav\" aria-label=\"Chapters\"><h2>Chapters<\/h2><ol><li><a href=\"#upm-ch00\">00<\/span>How to Use this ManualTags, colour key, contents and the three master concordance tables<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch1\">1<\/span>Principles and PoliciesApplicability, the Five R's, Value for Money, MSE, Make in India, land border restrictions<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch2\">2<\/span>Need Assessment and PlanningIndent, Perspective Plan, Procurement Proposal, cost estimation, TS \/ DPR \/ ToR \/ Activities Schedule<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch3\">3<\/span>Bidders and GovernanceEligibility, Code of Integrity, Integrity Pact, grievances, registration, debarment<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch4\">4<\/span>Bidding Design and Modes of ProcurementTypes of contract, QCBS, tendering systems, channels; OTE, GTE, Rate Contract, LTE, SLTE, PAC, STE<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch5\">5<\/span>Bid Invitation ProcessModel Tender Documents, NIT, ITB, GCC, REoI and RfP, e-publishing, pre-bid, bid opening<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch6\">6<\/span>Securities, Prices, PaymentsBid and performance security, retention money, advances, price variation, ERV, taxes, Incoterms<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch7\">7<\/span>Bid Evaluation and Award of ContractShortlisting, Tender Committee and CEC, LCS, QCBS, SSS, FBS, abnormally low bids, cartels, award<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch8\">8<\/span>Special Types of ProcurementEmergencies, buy back, AMC, NPV, turnkey, consultants, NGOs, security, manpower, HaaS<\/span><\/span><\/a><\/li><li><a href=\"#upm-ch9\">9<\/span>Contract ManagementAdministration, quality assurance, time and cost control, logistics, closure, breach, disputes<\/span><\/span><\/a><\/li><\/ol>Merging the Goods (2024), Works (2025), Consultancy Services (2025) and Non-Consultancy Services (2025) Manuals of the Department of Expenditure.<\/p><\/nav>\n<main class=\"upm-body\"><div class=\"upm-body-in\">\n<section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch00\">Front Matter<\/p><h1>How to Use this Manual<\/h1><\/header><div class=\"upm-key\">\nColour key \u2014 which Manual a passage comes from<\/b>\n<\/i>Common to all four<\/span>\n<\/i>Goods only<\/span>\n<\/i>Works only<\/span>\n<\/i>Consultancy only<\/span>\n<\/i>Non-Consultancy only<\/span>\n<\/i>Two or three Manuals<\/span>\n<\/div><h2>0.1<\/span>Purpose and Scope of this Manual<\/span><\/h2>\nThis Manual consolidates, into a single continuous text, the four procurement Manuals issued by the Department of Expenditure, Ministry of Finance, Government of India. It is written for officers preparing for departmental promotion and competitive examinations, and for practitioners who must work across more than one category of procurement.<\/p>\nEach of the four source Manuals is complete in itself, and each is written as though the other three did not exist. In practice they overlap heavily, diverge sharply at particular points, and use different chapter numbers for the same subject matter. A candidate who studies them separately must hold four parallel structures in mind and reconcile them under examination conditions.<\/p>\nThis Manual removes that burden. Where the four Manuals agree, the provision is stated once. Where they differ, the divergence is stated openly, with the position of each Manual identified. Nothing has been dropped in the process of merging: every provision of every source Manual appears somewhere in this text.<\/p>\n<h2>0.2<\/span>The Four Source Manuals<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Tag<\/th><th>Manual<\/th><th>Edition<\/th><\/tr><\/thead><tbody><tr><td>G<\/td><td>Manual for Procurement of Goods<\/td><td>Second Edition, 2024<\/td><\/tr><tr><td>W<\/td><td>Manual for Procurement of Works<\/td><td>Second Edition, 2025<\/td><\/tr><tr><td>C<\/td><td>Manual for Procurement of Consultancy Services<\/td><td>Second Edition, 2025<\/td><\/tr><tr><td>NC<\/td><td>Manual for Procurement of Non-Consultancy Services<\/td><td>2025<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>0.3<\/span>How to Read this Manual<\/span><\/h2>\nUntagged text applies to all four categories.<\/strong> Where a provision is confined to one or more categories, the relevant tag appears against the heading or in the body of the text:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Tag<\/th><th>Category<\/th><th>Meaning of the tag<\/th><\/tr><\/thead><tbody><tr><td>G<\/td><td>Goods<\/td><td>The provision appears only in the Goods Manual<\/td><\/tr><tr><td>W<\/td><td>Works<\/td><td>The provision appears only in the Works Manual<\/td><\/tr><tr><td>C<\/td><td>Consultancy Services<\/td><td>The provision appears only in the Consultancy Manual<\/td><\/tr><tr><td>NC<\/td><td>Non-Consultancy Services<\/td><td>The provision appears only in the Non-Consultancy Manual<\/td><\/tr><\/tbody><\/table><\/div>\nTags may be combined. A heading marked G + W<\/em> is common to Goods and Works but absent from the two services Manuals.<\/p>\nShaded panels<\/strong> carry three kinds of material: a divergence between the Manuals that a reader must not merge in the mind; a passage from a source Manual reproduced because its exact wording matters; or a caution that the source Manual itself states in emphatic terms.<\/p>\nBold within the running text<\/strong> marks the operative words of a provision \u2014 the words on which its legal effect turns. It is used sparingly and deliberately.<\/p>\nEvery chapter closes with a table of points of difference<\/strong> between the four Manuals. That table is the single most useful revision aid in this Manual, and should be read before and after the chapter body.<\/p>\n<h2>0.4<\/span>Contents<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Chapter<\/th><th>Title<\/th><th>What it covers<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Introduction \u2014 Principles and Policies<\/td><td>Applicability, categorisation, the Five R's, Value for Money, the five Fundamental Principles, Canons of Financial Propriety, procurement infrastructure, and the whole body of preferential and restricted purchase policy \u2014 MSE, Make in India, land border restrictions, Start-ups and DMI&SP<\/td><\/tr><tr><td>2<\/td><td>Need Assessment, Formulation of the Requirement, and Procurement Planning<\/td><td>The indent, the Perspective Plan and the Procurement Proposal; cost estimation; and the four different instruments by which a requirement is described \u2014 Technical Specifications, the DPR sequence, the Terms of Reference, and the Services and Activities Schedule<\/td><\/tr><tr><td>3<\/td><td>Participation of Bidders, Vendor Relationship Management and Governance<\/td><td>Eligibility and legal status of bidders, the Code of Integrity, the Integrity Pact, grievance redressal, conduct of public servants, registration and enlistment, debarment, and Indian agents<\/td><\/tr><tr><td>4<\/td><td>Bidding Design (Parts A and B)<\/em><\/td><td>Agency for procurement, admeasurement, types of contract, systems of selection including QCBS, tendering systems, channels of procurement; and the full range of modes of procurement from Open Tender to Direct Procurement<\/td><\/tr><tr><td>5<\/td><td>Bid Invitation Process<\/td><td>Model Tender Documents, the contents and sections of the tender document, the REoI and RfP, e-publishing, amendment and extension, pre-bid conferences, bid submission, and bid opening<\/td><\/tr><tr><td>6<\/td><td>Forms of Securities, Prices, Payment Terms and Price Variations<\/td><td>Bid security and performance security, Security Deposit, Insurance Surety Bond and e-BG, payment terms, advance payments, price variation, Exchange Rate Variation, taxes, and Incoterms<\/td><\/tr><tr><td>7<\/td><td>Bid Evaluation and Award of Contract (Parts A and B)<\/em><\/td><td>Shortlisting and EoI, the Tender Committee and the CEC, preliminary examination, techno-commercial and financial evaluation, LCS, QCBS, SSS and FBS, abnormally low bids, cartels, negotiations, and award<\/td><\/tr><tr><td>8<\/td><td>Special and Unique Types of Procurement<\/td><td>Emergencies and disaster management, buy back, capital goods, AMC, Net Present Value, turnkey; and the special engagements \u2014 individual consultants, NGOs, procurement agents, auditors, IT projects, security and manpower services<\/td><\/tr><tr><td>9<\/td><td>Contract Management (Parts A, B and C)<\/em><\/td><td>Contract administration and quality assurance; time control, cost control, logistics and closure; and breach, termination and the whole dispute resolution apparatus<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>0.5<\/span>Master Concordance \u2014 Chapter Numbering across the Four Manuals<\/span><\/h2>\nThe single most frequent source of error in examination is that the same subject carries a different chapter number in each Manual. This table should be memorised before anything else in this book.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Subject<\/th><th>This Manual<\/th><th>G<\/th><th>W<\/th><th>C<\/th><th>NC<\/th><\/tr><\/thead><tbody><tr><td>Introduction, principles and policies<\/td><td>1<\/td><td>1<\/td><td>1<\/td><td>1<\/td><td>1<\/td><\/tr><tr><td>Need assessment and procurement planning<\/td><td>2<\/td><td>2<\/td><td>2<\/td><td>2<\/td><td>2<\/td><\/tr><tr><td>Bidders, governance and debarment<\/td><td>3<\/td><td>3<\/td><td>8<\/td><td>3<\/td><td>3<\/td><\/tr><tr><td>Bidding design and modes of procurement<\/td><td>4<\/td><td>4<\/td><td>3<\/td><td>4<\/td><td>4<\/td><\/tr><tr><td>Bid invitation process<\/td><td>5<\/td><td>5<\/td><td>4<\/td><td>5<\/td><td>5<\/td><\/tr><tr><td>Securities, prices and payment terms<\/td><td>6<\/td><td>6<\/td><td>5<\/td><td>6<\/td><td>6<\/td><\/tr><tr><td>Shortlisting of consultants (EoI)<\/td><td>7A<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>7<\/td><td> \u2014 <\/td><\/tr><tr><td>Bid evaluation and award of contract<\/td><td>7<\/td><td>7<\/td><td>6<\/td><td>8<\/td><td>7<\/td><\/tr><tr><td>Special and unique types of procurement<\/td><td>8<\/td><td>8<\/td><td>none<\/td><td>9<\/td><td>8<\/td><\/tr><tr><td>Contract management and monitoring<\/td><td>9<\/td><td>9<\/td><td>7<\/td><td>10<\/td><td>9<\/td><\/tr><\/tbody><\/table><\/div>\nThree consequences follow, and each has been the subject of examination questions:<\/p>\n<ol class=\"lst\"><li>The Works Manual runs one chapter behind<\/strong> the others from Bidding Design onwards, because it places governance and debarment at the end, as Chapter 8, rather than early, as Chapter 3.<\/li><li>The Consultancy Manual runs one chapter ahead<\/strong> from Bid Evaluation onwards, because it inserts an entire chapter on Shortlisting of Consultants, which has no counterpart anywhere.<\/li><li>The Works Manual has no chapter on special types of procurement at all.<\/strong> Its variants \u2014 EPC, PPP, piece Work and stalled contracts \u2014 are dealt with inside its Bidding Design chapter.<\/li><\/ol>\n<h2>0.6<\/span>Master Concordance \u2014 Where the Four Manuals Stand Alone<\/span><\/h2>\nA provision found in only one Manual cannot be inferred from the others. The following are the principal bodies of material that exist in a single Manual, and they account for most of the difference in length between the four.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Body of material<\/th><th>Only in<\/th><th>Where in this Manual<\/th><\/tr><\/thead><tbody><tr><td>Reservation of Khadi, pharmaceuticals and 358 MSE-reserved items<\/td><td>G<\/td><td>1.11.1<\/td><\/tr><tr><td>Right to Information and proactive disclosures<\/td><td>G<\/td><td>1.16<\/td><\/tr><tr><td>Basic principles of undertaking works; administrative control<\/td><td>W<\/td><td>1.17, 1.18<\/td><\/tr><tr><td>Law of Agency<\/td><td>W + C + NC<\/td><td>1.15<\/td><\/tr><tr><td>Technical Specifications, Ecomark, BEE star ratings<\/td><td>G<\/td><td>2.4<\/td><\/tr><tr><td>The PPR, DPR, technical Sanction and Reference Documents sequence<\/td><td>W<\/td><td>2.5<\/td><\/tr><tr><td>Terms of Reference, activity-based and position-based<\/td><td>C<\/td><td>2.6<\/td><\/tr><tr><td>Services and Activities Schedule, Method Statement, KPIs<\/td><td>NC<\/td><td>2.7<\/td><\/tr><tr><td>Agency for Procurement \u2014 PWO, PSU, works Committee<\/td><td>W<\/td><td>4.1<\/td><\/tr><tr><td>Admeasurement of services, input and output<\/td><td>NC<\/td><td>4.2<\/td><\/tr><tr><td>Types of contract \u2014 Item Rate, Percentage Rate, Piece Work, EPC, PPP<\/td><td>W<\/td><td>4.3.3<\/td><\/tr><tr><td>Fixed Budget based Selection<\/td><td>C<\/td><td>4.4.5, 7.22<\/td><\/tr><tr><td>Quality Oriented Procurement and the Special Technical Committee<\/td><td>W + NC<\/td><td>4.4.4<\/td><\/tr><tr><td>Rate Contract, Approved Vendor List, Proprietary Article Certificate<\/td><td>G<\/td><td>4.10, 4.13, 4.16<\/td><\/tr><tr><td>Award of work through quotations; stalled contracts<\/td><td>W<\/td><td>4.20, 4.21<\/td><\/tr><tr><td>Accessibility standards under the RPwD Act<\/td><td>W<\/td><td>5.3.5<\/td><\/tr><tr><td>Fixed days for issue of NIT and tender opening<\/td><td>W<\/td><td>5.6<\/td><\/tr><tr><td>Incoterms, Exchange Rate Variation, Letter of Credit, customs<\/td><td>G<\/td><td>6.12, 6.15, 6.17<\/td><\/tr><tr><td>Mobilisation, plant and secured advances<\/td><td>W<\/td><td>6.13.2<\/td><\/tr><tr><td>Evaluation of the quality of technical proposals; the A\u2013E rating scale<\/td><td>C<\/td><td>7.17<\/td><\/tr><tr><td>Splitting of contracts; the option clause; variation of quantities<\/td><td>G<\/td><td>7.26 \u2013 7.28<\/td><\/tr><tr><td>Emergencies, buy back, capital goods, AMC, Net Present Value<\/td><td>G<\/td><td>8.1 \u2013 8.6<\/td><\/tr><tr><td>Logo design competitions; Digital India; financial advisors; auditors<\/td><td>C<\/td><td>8.14 \u2013 8.18<\/td><\/tr><tr><td>Housekeeping, manpower, private security, vehicle hiring, HaaS<\/td><td>NC<\/td><td>8.20 \u2013 8.24<\/td><\/tr><tr><td>Logistics \u2014 transport, title, receipt, storage, GRIR<\/td><td>G<\/td><td>9.30<\/td><\/tr><tr><td>Compensation Events; Time at Large; the three closure reconciliations<\/td><td>W<\/td><td>9.26, 9.27, 9.31<\/td><\/tr><tr><td>Contract Monitoring Committee; post-contract review<\/td><td>C + NC<\/td><td>9.2, 9.32<\/td><\/tr><tr><td>The AMRCD mechanism for CPSE disputes<\/td><td>W<\/td><td>9.47<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>0.7<\/span>Master Concordance \u2014 The Principal Numerical Divergences<\/span><\/h2>\nWhere the four Manuals prescribe different figures for the same thing, the difference is almost always examinable. These are collected here for revision; each is dealt with in its place in the text.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Provision<\/th><th>G<\/th><th>W<\/th><th>C<\/th><th>NC<\/th><th>See<\/th><\/tr><\/thead><tbody><tr><td>Open Tender Enquiry applies above<\/td><td>Rs 50 lakh<\/td><td>Rs 10 lakh<\/td><td>Rs 50 lakh<\/td><td>Rs 50 lakh<\/td><td>4.8<\/td><\/tr><tr><td>Special Limited Tender Enquiry above<\/td><td>Rs 50 lakh<\/td><td>Rs 10 lakh<\/td><td>Rs 50 lakh<\/td><td>Rs 50 lakh<\/td><td>4.15<\/td><\/tr><tr><td>QCBS \u2014 weight of quality<\/td><td>not used<\/em><\/td><td>not above 30%<\/td><td>70%<\/td><td>not above 30%<\/td><td>4.4.3, 7.20<\/td><\/tr><tr><td>Performance security<\/td><td>3 \u2013 5%<\/td><td>3 \u2013 10%<\/td><td> \u2014 <\/td><td>3 \u2013 5%<\/td><td>6.2<\/td><\/tr><tr><td>Firm price contracts up to<\/td><td>12 months<\/td><td>18 months<\/td><td>12 months<\/td><td>12 months<\/td><td>6.14.2<\/td><\/tr><tr><td>Consequence under a Bid Securing Declaration<\/td><td>suspended<\/td><td>debarred<\/td><td>suspended<\/td><td>suspended<\/td><td>6.1<\/td><\/tr><tr><td>Exemption from bid security<\/td><td>MSEs and Start-ups<\/td><td>Start-ups only<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>6.1<\/td><\/tr><tr><td>Liquidated damages per week<\/td><td>0.5%<\/td><td>1% for repair works up to Rs 20 lakh, otherwise 0.5%<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>9.24.2<\/td><\/tr><tr><td>Debarment for breach of the Code of Integrity<\/td><td>not less than 6 months<\/td><td>not less than 6 months<\/td><td>not exceeding 2 years<\/td><td>not less than 6 months<\/td><td>3.5.5<\/td><\/tr><tr><td>Reference to the Competition Commission signed by<\/td><td>Joint Secretary<\/td><td>Joint Secretary<\/td><td>Competent Authority<\/td><td>Joint Secretary<\/td><td>3.5.5<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>0.8<\/span>A Note on the Source Texts<\/span><\/h2>\nTwo errors in the source Manuals have been retained and flagged rather than silently corrected, because a candidate may be examined on the text as printed:<\/p>\n<ol class=\"lst\"><li>The Goods Manual states the threshold below which performance security is not necessary as \"Rupees 50 (twenty-five) lakh\"<\/em> \u2014 the figure and the word do not agree.<\/li><li>The Goods and Consultancy Manuals cite the rule on enlistment of Indian agents as \"Rule 52\"<\/em>; the Works and Non-Consultancy Manuals correctly cite Rule 152<\/strong> of the General Financial Rules, 2017.<\/li><\/ol>\nA third point of substance should also be noted. The Consultancy Manual assigns 70% weight to the technical score and 30% to cost, and then states two paragraphs later that \"the weightage of the cost element adopted in Consultancy services is as high as 70 per cent.\"<\/em> That sentence is correct in the Non-Consultancy Manual, where cost does carry 70%, but is internally inconsistent in the Consultancy Manual. Both sentences are reproduced in this Manual at paragraph 7.20.<\/p><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch1\">Chapter 1<\/p><h1>Introduction \u2014 Principles and Policies<\/h1><\/header><div class=\"upm-key\">\nColour key \u2014 which Manual a passage comes from<\/b>\n<\/i>Common to all four<\/span>\n<\/i>Goods only<\/span>\n<\/i>Works only<\/span>\n<\/i>Consultancy only<\/span>\n<\/i>Non-Consultancy only<\/span>\n<\/i>Two or three Manuals<\/span>\n<\/div>\n<h2>1.1<\/span>Procurement Rules and Regulations; and this Manual<\/span><\/h2>\n<ol class=\"lst\"><li>Various Ministries, Departments, attached and subordinate offices, local urban bodies, public sector enterprises, and other Government (including autonomous) bodies (hereinafter referred to as 'Procuring Entities<\/strong>') spend a sizeable amount of their budget on the Procurement of goods, works and services to fulfil their stated objectives, assigned duties\/ obligations\/ responsibilities\/ functions, and activities in alignment with desired policy outcomes.<\/li><li>G<\/span>C<\/span>NC<\/span> The Ministries\/ Departments have been delegated full powers<\/strong> to make their own arrangements for the procurement of goods and services that are not<\/strong> available on the Government e-Marketplace (GeM). These powers must be exercised as per the Delegation of Financial Power Rules and in conformity with the 'Procurement Guidelines' described below. Common use Goods and Services available on GeM are required to be procured mandatorily<\/strong> through GeM as per Rule 149 of GFR, 2017<\/strong>.<\/li><\/ol>\nW<\/span> The Ministries\/ Departments have been delegated powers to make their own arrangements for procurement of works under the Delegation of Financial Power Rules, which have to be exercised in conformity with the 'Procurement Guidelines' described below.<\/p>\n<ol class=\"lst\"><li>To ensure that these procurements are made by following a uniform, systematic, efficient and cost-effective procedure, and also to ensure fair and equitable treatment of suppliers\/ bidders\/ contractors\/ consultants\/ service providers<\/strong>, there are guidelines comprising a hierarchy of Statutory framework, Rules and Regulations, Manuals of Procurement and Procurement Documents as detailed in Annexure 1 of the Manual for Procurement of Goods, Second Edition, 2024<\/strong> (hereinafter referred to as 'Procurement Guidelines<\/strong>').<\/li><\/ol>\n<aside class=\"note\">C<\/span> adds: there is a hierarchy of statutory provisions, rules, financial, vigilance, security, safety, counter-trade and other regulations; orders and guidelines of the Government about public procurement.<\/p><\/aside>\n<ol class=\"lst\"><li>At the apex of the Statutory framework governing public Procurement is Article 299 of the Constitution of India<\/strong>, which stipulates that contracts legally binding on the Government must be executed in writing by officers specifically authorised to do so. The Constitution also enshrines Fundamental Rights \u2014 in particular Article 14<\/strong> (Right to Equality before Law) and Article 19(1)(g)<\/strong> (Right to practise any profession, or to carry on any occupation, trade, or business) \u2014 which have implications for Public Procurement.<\/li><\/ol>\nFurther:<\/p>\n<ul class=\"lst\"><li>G<\/span>C<\/span>NC<\/span> The Indian Contract Act, 1872<\/strong> and the Sale of Goods Act, 1930<\/strong> are significant legislations governing contracts of sale\/ purchase of goods in general.<\/li><li>W<\/span> The Indian Contract Act, 1872<\/strong> is a significant legislation governing contracts in general.<\/li><\/ul>\nThere are other mercantile laws that may be attracted in Public Procurement transactions:<\/p>\n<ul class=\"lst\"><li>Arbitration and Conciliation Act, 1996<\/li><li>Mediation Act, 2023<\/strong>(in G, W, NC)<\/em><\/li><li>Competition Act, 2002<\/li><li>Information Technology Act, 2000<\/li><li>Indian Stamp Act, 1899 (in W, C, NC)<\/em><\/li><\/ul>\n \u2014 all as amended from time to time.<\/p>\n<ol class=\"lst\"><li>In the Central Government, there is no law exclusively governing public procurement<\/strong>. However, comprehensive Rules and Regulations in this regard are available in:<\/li><li>General Financial Rules (GFR), 2017<\/strong> \u2014 especially [G, C, NC]<\/strong> Chapters 6 to 9; W<\/span> Chapters 5 to 9;<\/li><li>Delegation of Financial Powers Rules (DFPR) \u2014 [W, C, NC] cite DFPR, 2024;<\/li><li>Government orders regarding purchase preference\/ restrictions, such as the Public Procurement (Preference to Make in India) Order, 2017<\/strong>; facilities to Micro and Small Enterprises<\/strong> and Start-ups<\/strong>; Restrictions on Entities from a Class of Countries (Rule 144(xi), GFR 2017)<\/strong>; and W<\/span> relaxation of the conditions of prior turnover and prior experience for start-up enterprises.<\/li><li>Without purporting to be a comprehensive compendium of all such 'Procurement Guidelines', this Manual is intended to serve as a portal to enter this vast area<\/strong> and draw attention to basic norms and practices governing public procurement.<\/li><\/ol>\n<h2>1.2<\/span>Clarification, Amendments and Revision of this Manual<\/span><\/h2>\nThe Procurement Policy Division, Department of Expenditure, Ministry of Finance<\/strong> would be the nodal authority<\/strong> for this Manual's revision, interpretation, and clarification.<\/p>\n<h2>1.3<\/span>Applicability of this Manual<\/span><\/h2><h3>1.3.1<\/span>Category of Procurements<\/span><\/h3>\nG<\/span> The Goods Manual applies to the Procurement of all \"Goods<\/strong>\" as defined in the 'Procurement Glossary' section. What is unique about the Procurement of goods (as compared to services and works) is the ability to precisely describe the technical specification and scope of the requirement<\/strong>. The other Manuals (Consultancy Services, Non-consultancy Services and Works) are generically based on the Goods Manual<\/strong>. Hence, for any topic for which guidance cannot be found in those Manuals, the Manual for Procurement of Goods shall apply mutatis mutandis<\/strong><\/em>. For the sake of brevity, those Manuals refer to some of the sections of the Goods Manual without reproducing them.<\/p>\nW<\/span> The Works Manual applies to procurement of all \"Works<\/strong>\" as defined in the 'Procurement Glossary' section.<\/p>\nC<\/span> The Consultancy Manual applies to procurement of \"Consultancy Services<\/strong>\" as defined in the 'Procurement Glossary' section. For any circumstances not covered, the Procuring Entity may refer to the Manual for Procurement of Goods, 2024.<\/p>\nNC<\/span> The Non-Consultancy Manual applies to procurement of \"Non-consultancy Services<\/strong>\" (including \"Outsourcing of Services\"<\/strong>) as defined in the 'Procurement Glossary' section. For any circumstances not covered, the Procuring Entity may refer to the Manual for Procurement of Goods, 2024 (Rule 206 of GFR, 2017<\/strong>).<\/p>\n<h3 class=\"src-W\">1.3.2<\/span>Classification of Works<\/span>W<\/span><\/h3><div class=\"srcblock src-W\">\nThe civil works are classified in GFR 2017 (Rule 130)<\/strong> into three categories:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Meaning<\/th><\/tr><\/thead><tbody><tr><td>(a) Original Works<\/td><td>All new constructions, site preparation, additions and alterations to existing works. Also includes special repairs to newly purchased or previously abandoned buildings or structures, including remodelling or replacement.<\/td><\/tr><tr><td>(b) Minor Works<\/td><td>Works which add capital value to existing assets but do not create new assets.<\/td><\/tr><tr><td>(c) Repair Works<\/td><td>Works undertaken to maintain building and fixtures. Expenditure on Repair Work does not add to the value of the asset and only restores the functionality of the asset.<\/td><\/tr><\/tbody><\/table><\/div>\nRepair Work can be further categorised as:<\/p>\n<ol class=\"lst\"><li>Annual repairs<\/strong> \u2014 covering routine and yearly operation and maintenance work on buildings and fixtures;<\/li><li>Special repairs<\/strong> \u2014 undertaken as and when required, covering major repairs to existing buildings or structures. Some types of Special repairs may qualify to be categorised as 'Original Work' as mentioned above.<\/em><\/li><\/ol>\n<\/div><h3>1.3.3<\/span>Procuring Entities<\/span><\/h3>\n<ol class=\"lst\"><li>This Manual shall apply to all Procuring Entities covered by Rule 1 of GFR<\/strong>, i.e., all Central Government Ministries\/ Departments, attached and subordinate bodies. These provisions shall also apply, as per the same rule, to autonomous bodies<\/strong> except to the extent that the bye-laws of an autonomous body provide separate procurement guidelines* that the Government has approved.<\/li><\/ol>\n<aside class=\"note\">\\* Such approved guidelines must retain fundamental provisions relating to the Constitution and Government instructions relating to Preferential Procurement Policies, GTE and Land Border restriction, General Instructions on Procurement and Project Management (No. F.1\/1\/2021-PPD dated 20.10.2021).<\/p><\/aside>\n<ol class=\"lst\"><li>W<\/span> \u2014 additional provisions on addressees:<\/li><li>This Manual inter alia<\/em> covers fundamental provisions relating to the Constitution; Government instructions relating to Preferential Procurement Policies; GTE; Land Border restriction; and General Instructions on Procurement and Project Management (No. F.1\/1\/2021-PPD dated 20.10.2021), which are mandatory for all entities of Central Government<\/strong>.<\/li><li>This Manual is addressed to Ministries\/ Departments, their attached and subordinate offices, and autonomous bodies whose in-house capabilities are limited to repair works of up to Rs 60 lakh<\/strong> and who assign larger repair works (and original works) to third parties (Public Works Organisations or CPSEs) \u2014 Rule 133 of GFR, 2017 (as amended)<\/em>. Refer para 3.1 of the Works Manual for further details.<\/li><li>This Manual may also be useful for Ministries\/ Departments, their attached and subordinate offices, and autonomous bodies who have in-house capabilities for direct execution of larger works<\/strong> but may not have their own detailed procurement guidelines.<\/li><li>The Manual does not purport to address<\/strong> procurement of larger works for which major works procuring Ministries\/ Departments \u2014 like the Central Public Works Department (CPWD); Military Engineering Service (MES); Border Roads Organisation (BRO); Ministries of Railways; Information & Broadcasting; and Departments of Posts and Space<\/strong>, etc. \u2014 already have their own detailed guidelines tailored to unique individual requirements. They may, however, ensure that their procurement guidelines comply with the mandatory provisions mentioned in sub-para (a) above.<\/li><\/ol>\n<h3>1.3.4<\/span>Statutory Bodies and CPSEs<\/span><\/h3>\nThese guidelines shall also be applicable to bodies substantially owned or controlled by, or receiving substantial financial assistance from<\/strong>, the Central Government \u2014 inter alia<\/em>:<\/p>\n<ul class=\"lst\"><li>Central Public Sector Enterprises (CPSEs or undertakings, including their subsidiary companies\/ Ventures);<\/li><li>Public Sector Banks (PSBs);<\/li><li>Public Sector Insurance Companies (PSICs);<\/li><li>Public Sector Financial Institutions (FIs);<\/li><li>Constitutional or Statutory Bodies;<\/li><li>Public Academic Institutions (National\/ Central institutes); and<\/li><li>Commissions created under the Constitution of India or specific legislations<\/li><\/ul>\n \u2014 except to the extent of deviations that have been approved by their competent authority (e.g., Board of Directors<\/strong> in CPSEs).<\/p>\n<h3>1.3.5<\/span>Indian Missions and CPSE Units Abroad<\/span><\/h3>\nWhile the applicability of the Manual in the case of Indian Missions abroad and CPSE Units abroad shall be as per paras 1.3.3 and 1.3.4 above respectively, the following is clarified:<\/p>\na) Adopting Financial Limits\/ Thresholds in Local Currency:<\/strong> For procurements done and for use outside India, in the host country's local currency, Indian Missions and CPSE units abroad may adopt General Financial Rules (GFR) financial limits\/ thresholds of procurements (as mentioned in this Manual at various instances, e.g., selection of mode of Procurement etc.) by using the latest INR-PPP conversion rates<\/strong> for the local currency as published by the IMF<\/strong> (International Monetary Fund). For convenience, such converted limits\/ thresholds may be reviewed annually<\/strong>. Even if the Procurement is to be done in a currency other than the local currency, the applicable financial limits\/ thresholds of procurements shall be in terms of the INR-PPP conversion rate for the local currency only<\/strong>. If the IMF does not publish the PPP conversion rate for local currency, then the conversion may be done to the currency most relevant to that mission\/ unit in consultation with the Financial Adviser<\/strong>.<\/p>\n<aside class=\"note\">Illustration (as given in all four Manuals):<\/strong> Financial limits in GFR are to be calculated for the Indian Mission in Bangladesh, where the relevant local currency is Bangladesh Taka (BT). Let the PPP conversion rate (as per international dollar) published by the IMF for INR and BT in a particular year be as follows:<\/p>\nRs. 22.947 = 1 USD = 31.98 BT<\/strong> The PPP-based conversion rate for BT\/INR may be calculated as 31.98 \u00f7 22.947 = 1.394<\/strong>. Thus, a threshold of INR 25,00,000<\/strong> (say the threshold for OTE) would then be 34,85,000 BT<\/strong>.<\/p><\/aside>\nb) Exemptions:<\/strong> For exemptions from restrictions relating to Global Tenders<\/strong>, bidders from Land-border countries<\/strong>, and eProcurement<\/strong> for bona fide procurements and use outside India by Indian Missions and CPSE Units abroad, please refer to paragraphs 4.3.2-4-g)<\/strong>(W cites 4.3.2-4-h)<\/em>, 1.11.4-3-f)ii)<\/strong>, and 4.17.1-4<\/strong>(W cites 4.17.1-5)<\/em> respectively, in the Manual for Procurement of Goods, 2024<\/strong>.<\/p>\n<h3>1.3.6<\/span>Portals<\/span><\/h3>\n<ul class=\"lst\"><li>G<\/span> GeM portal, GePNIC portal (Government e-Procurement of NIC, eproc.gov.in), and various such platforms of different Organisations carry out a substantial proportion of Public Procurement. Hence, the procedures for such platforms should conform to these 'Procurement Guidelines'.<\/li><li>W<\/span> Central Public Procurement Portal (CPPP of NIC, eproc.gov.in), and various such platforms.<\/li><li>C<\/span>NC<\/span> GeM portal, CPPP (Central Public Procurement Portal), and various such platforms \u2014 the procedures for such platforms should generally<\/strong> conform to these 'Procurement Guidelines'.<\/li><\/ul>\n<h3>1.3.7<\/span>Outsourced Procurement<\/span><\/h3>\nThese procurement guidelines would continue to apply<\/strong> if these procuring entities:<\/p>\n<ul class=\"lst\"><li>outsource the procurement process, or<\/li><li>bundle the procurement process with other contractual arrangements, or<\/li><li>utilise the services of a procurement support agency<\/strong> or procurement agents<\/strong> to carry out the Procurement on their behalf.<\/li><\/ul>\n<h3>1.3.8<\/span>Customisation<\/span><\/h3>\nThis Manual is to be taken as generic guidelines<\/strong>, which are necessarily broad in nature. (C<\/span>NC<\/span> add: Subject to the observance of these generic guidelines,)<\/em> Procuring Entities are advised to customise these Manuals, with the approval of competent authority and financial concurrence<\/strong>, to suit their local\/ specialised needs by issuing their own detailed Manuals (including customised formats); Model Tender Documents; Schedule of Procurement Powers; and Checklists \u2014 to serve as practical instructions for their officers and to ensure completeness of examination of cases.<\/p>\nFor procuring organisations that have their own detailed manuals or procedure orders, the initiation, authorisation, Procurement, and execution of contracts<\/strong> undertaken by them shall be regulated by detailed rules and orders contained in their respective regulations and by other special orders applicable to them.<\/p>\n<h3>1.3.9<\/span>Exemptions<\/span><\/h3>\nThese procurement guidelines would not apply to procurements by procuring entities mentioned above for their own use from their subsidiary companies, including Joint Ventures, where they have a controlling share.<\/p>\nMoreover, by a general or special notification, the Government may permit certain 'Procuring Entities' mentioned above, considering unique conditions under which they operate, for all or certain categories of procurement, to adopt detailed approved guidelines for procurement which may deviate in some respects but conform with all other essential aspects<\/strong> of these 'Procurement Guidelines'.<\/p>\n<h3>1.3.10<\/span>Procurements financed by Loans\/ Grants extended by International Funding Agencies<\/span><\/h3>\n<ol class=\"lst\"><li>For projects funded by the World Bank<\/strong>, Asian Development Bank<\/strong>, and other International Funding Agencies (IFA)<\/strong>, the Articles of Agreement, with the approval of the Ministry of Finance, stipulate either the Indian (or State) Government's own procurement procedures or<\/strong> the IFA's specific procurement procedures to be followed by the borrowers.<\/li><li>These guidelines would not<\/strong> be applicable to projects funded by the World Bank using the Investment Project Financing (IPF)<\/strong> instrument and similar instruments of other IFAs, as stipulated under Articles of Agreement as mentioned under sub-para (a) above. IFA's specific procurement procedures shall be applicable as permitted under Rule 264 of GFR, 2017<\/strong>.<\/li><li>However, for projects financed using instruments such as Program-for-Results (PforR)<\/strong> of the World Bank, and Results-based Lending (RBL)<\/strong> of the Asian Development Bank, and similar instruments of other IFAs, the application of these guidelines as expressly agreed in the legal agreements<\/strong> shall be followed.<\/li><\/ol>\n<h2>1.4<\/span>Categorisation of Procurements<\/span><\/h2><h3>1.4.1<\/span>Categories<\/span><\/h3>\nCategorisation of Procurements helps prepare guidelines for Procurements and Model Tender Documents, which cater to peculiar contractual conditions of the categories of procurements. G<\/span> These categories may be further sub-categorised, e.g., Capital Equipment procurement in Goods.<\/p>\nFollowing are the categories of procurements (please refer to their definitions in the 'Procurement Glossary' section):<\/p>\n<ul class=\"lst\"><li>a) Goods<\/li><li>b) Services<\/li><li>i) Consultancy Services, and<\/li><li>ii) Non-consultancy services (NC services)<\/li><li>c) Works<\/li><\/ul>\n<h3>1.4.2<\/span>Distinctive Features<\/span><\/h3>\nNormally, such categorisation is evident from their definition, and Procurement should be done accordingly, following the relevant guidelines and Model Tender Documents. The boundaries between such categorisation may not be clear-cut and may overlap<\/strong>. It may neither be possible nor necessary to distinguish precisely between the categories in overlapping areas. Though simplistic, the main distinguishing factors between these are:<\/p>\n<ol class=\"lst\"><li>While both Goods<\/strong> and Works<\/strong> lead to tangible outputs<\/strong> (with some exceptions like IPR materials), the main difference between goods and works is that the manufacture of goods is done on the supplier's own premises<\/strong> (other than installation\/ commissioning), whereas 'Works<\/strong>' is executed on the premises of the procuring entity<\/strong> (other than pre-fabricated components). Works may include incidental 'Goods' and vice versa.<\/li><li>The main difference between 'Goods<\/strong>' or 'Works<\/strong>' on the one hand and 'Services<\/strong>' on the other is the intangibility of the outputs of Services<\/strong>.<\/li><li>The main difference between Consultancy and Non-consultancy services is the level of intellectual input, which is predominant in Consultancy and not central to Non-consultancy. Another difference is that non-consultancy services are repetitive routines with measurable and standardised outputs, while consultancy services are one-off and non-routine, with outputs that are neither precisely measurable nor standardised.<\/li><\/ol>\n<h3>1.4.3<\/span>In Case of Doubt<\/span><\/h3>\nProcurement in cases of doubts about categorisation may be handled as follows:<\/p>\na) Simpler procedure rule:<\/strong> In the case of blurred border lines and grey areas, a simpler procurement procedure<\/strong> should be followed. In case of doubt between:<\/p>\n<ul class=\"lst\"><li>i) Goods<\/strong> and works\/ NC services\/ consultancy \u2192 process as Procurement of Goods<\/strong>;<\/li><li>ii) Works<\/strong> and NC service\/ consultancy \u2192 process as Procurement of Works<\/strong>;<\/li><li>iii) Non-consultancy and Consultancy services \u2192 process as Procurement of Non-consultancy services.<\/li><\/ul>\nb) IT Projects:<\/strong> The Procurement of IT projects should usually be carried out as a procurement of Consultancy services<\/strong>, as the outcomes\/ deliverables vary from one service provider to another. The IT Projects may include:<\/p>\n<ul class=\"lst\"><li>i) tailor-made\/ bespoke software development<\/strong>;<\/li><li>ii) cloud-based services;<\/li><li>iii) composite IT system integration services<\/strong> involving the design, development, deployment and commissioning of IT systems, including hardware supply, software development, bandwidth, and operation\/ maintenance of the system for a defined period after going live, etc.<\/li><\/ul>\nc) Composite Contracts<\/strong>(PPD's OM No. F6\/2\/2023-PPD dated 13.01.2023)<\/em>: Composite contracts may involve mixed elements of Goods, Works, and Services. For example, in the Procurement of large machinery, some works and services like Installation, Commissioning, Training, Annual Maintenance Contract (AMC) or a Comprehensive Maintenance Contract (CMC), and so on, may be incidental to the supply of goods. The relationship of primacy between the goods element and the works\/ services element may be examined, irrespective of the relative values.<\/strong><\/p>\n<ul class=\"lst\"><li>If the primary intention\/ objective is the Procurement of goods<\/strong> with services\/ works being incidental to it, it may be processed as Procurement of Goods<\/strong>.<\/li><li>However, if the primary intention\/ objective is Procurement of Works\/ Services<\/strong> with Procurement of goods being incidental, then it should generally be processed as Procurement of Works\/ Services<\/strong> (as the case may be), irrespective of the relative values<\/strong>.<\/li><li>A possible alternative approach could be to have separate but linked contracts<\/strong> for such elements of Goods, Works, and Services, but implementation may become challenging.<\/li><\/ul>\nW<\/span>C<\/span>NC<\/span> \u2014 further refinements:<\/p>\n<ul class=\"lst\"><li>i) Procurement of \"new product<\/strong>\" viz. Mechanical, Electrical or ICT assets etc. of the nature of Machinery and Plant<\/strong>, with incidental works\/ services like fabrication, installation, erection, commissioning, AMC\/CMC, should be handled as procurement of Goods<\/strong> \u2014 except for procurement of IT Projects as specified above.<\/li><li>ii) AMC\/ CMC of existing<\/strong> Mechanical, Electrical or ICT assets of the nature of Machinery and Plant should be treated as procurement of Non-Consultancy Services<\/strong>.<\/li><\/ul>\n<aside class=\"note\">Notes:<\/p>\n<ol class=\"lst\"><li>If the NC services primarily involve construction, fabrication, repair, maintenance, overhaul, renovation, decoration, installation, erection, excavation, dredging and so on of Civil assets, then it should be handled as procurement of Works.<\/li><li>G<\/span> variant: *In case of fabrication, repair, maintenance, overhaul, renovation, decoration, installation, erection and so on, of mechanical, electrical or ICT assets \u2014 e.g. Annual Maintenance Contracts or installation\/ commissioning of Machinery and Plant \u2014 it may be handled as Procurement of Goods rather than Procurement of Services.*<\/li><li>W<\/span>C<\/span>NC<\/span> Procurement of new mechanical and electrical works<\/strong> (not<\/strong> in the nature of Machinery and Plant) involving fabrication, installation, or erection of a mechanical or electrical nature should be treated as procurement of Works<\/strong>, if elements of procurement of Goods are incidental.<\/li><li>W<\/span>C<\/span>NC<\/span> Repair, renovation, maintenance, overhauling, decoration, AMC\/ CMC or similar work for existing<\/strong> Mechanical, Electrical or ICT assets NOT<\/strong> of the nature of Machinery and Plant etc. should normally be handled as procurement of Services<\/strong>.<\/li><\/ol><\/aside>\nd) Consultancy vs Non-Consultancy \u2014 the \"primary objective\" test W<\/span>C<\/span>NC<\/span>:<\/strong> It is possible that, depending on the nature and complexity of the assignment, a task could be dealt with either<\/strong> as a consultancy or<\/strong> a non-consultancy service. In essence, if the intellectual and advisory part<\/strong> of services is the primary objective<\/strong> (irrespective of the relative value of this component), the selection needs to be dealt with in Consultancy mode<\/strong>.<\/p>\n<aside class=\"note\">Example given in the Manuals:<\/strong> If the task is looking at the condition of a dam (for dam safety) by physically inspecting the dam through underwater observation, this task is a collection of data using technologies and photography \u2014 but the actual analysis is an intellectual and advisory task<\/strong> and is the primary objective<\/strong> of the assignment. Therefore, the entire task<\/strong> needs to be dealt with as the selection of a consultant<\/strong>.<\/p><\/aside>\n<h2>1.5<\/span>Authorities Competent to Incur Expenditure on Procurements and Consultation with Financial Advisers<\/span><\/h2>\n<ol class=\"lst\"><li>The first step in procurement<\/strong> is the decision to procure<\/strong> something \u2014 goods, services, works, etc. \u2014 involving a formal decision to procure along with the exact or approximate expenditure<\/strong> to be incurred. A Competent Authority that is competent to incur expenditure may accord administrative sanction\/ approval<\/strong> to incur expenditure on a specific procurement in accordance with the Delegation of Financial Powers Rules (DFPR)<\/strong> by following the 'Procurement Guidelines' (Rule 145 of GFR 2017<\/strong>).<\/li><\/ol>\nEach 'Procuring Entity' may issue a Schedule of Procurement Powers (SoPP)<\/strong>, adding further details to the broad delegations in the DFPR based on assessing risks<\/strong> involved in different decisions\/ approvals at various stages of the Procurement Cycle.<\/p>\n<aside class=\"note\">Annexure references:<\/strong> DFPR extract \u2014 G<\/span> Annexures 2 and 3; [W, C, NC]<\/strong> Annexure 1. Suggested structure of SoPP \u2014 G<\/span> Annexure 4; [W, C, NC]<\/strong> Annexure 2.<\/p><\/aside>\n<ol class=\"lst\"><li>Being a decision with a financial bearing, it invariably requires consultation of the Financial Adviser<\/strong> (unless validly re-delegated within permissible limits or otherwise permitted by DoE through specific orders). The extent of involvement of the Financial Adviser and the Integrated Finance Division (IFD) in subsequent stages of procurement matters may be based on one of the following procedures<\/strong> (Para 19, Charter for Financial Advisers, 2023<\/strong>):<\/li><\/ol>\na) Normal Procedure: Under this procedure, the concurrence of the Financial Adviser\/ IFD shall be required on all procurement matters, except for matters where re-delegation has been done within the permissible limits under the rules\/ general orders\/ general instructions of DoE. Unless the Secretary of the Department approves a special procedure with the concurrence of DoE, this procedure shall be followed.<\/p>\nb) Special Procedure:<\/strong> With the prior concurrence of Secretary (Expenditure)<\/strong>, the Secretary of the Department may decide on a different level of involvement<\/strong> of the Financial Adviser\/ IFD specific to the Department. The procedure shall lay out the types\/ classes of cases where the Financial Adviser\/ IFD consultation would be required, which may be in terms of:<\/p>\n<ul class=\"lst\"><li>threshold financial limits,<\/li><li>stages in Procurement, or<\/li><li>types of Procurement and contracts, viz. consultancy (NC<\/span> adds: \/ non-consultancy)<\/em>, goods and works contracts, etc.,<\/li><li>or any permutation thereof.<\/li><\/ul>\nG<\/span> clarification: It is further clarified that <\/strong>this system will be applicable only to Ministries\/ Departments etc. covered under the FA Charter. All other organisations, including CPSEs, are free to devise their own system.<\/p>\n<ol class=\"lst\"><li>In all procedures, payments under approved contracts shall not require IFD consultation, except in cases where the payments are in relaxation\/ variation to approved contract conditions.<\/li><\/ol>\n<h2>1.6<\/span>Basic Aims of Procurement \u2014 the Five R's of Procurement<\/span><\/h2>\nIn every Procurement, public or private, the basic aim is to achieve just the right balance between costs and requirements<\/strong> with respect to five parameters called the Five 'R's of Procurement<\/strong>. The entire process of Procurement \u2014 from the time the need for an item, facility or service is identified till the need is satisfied \u2014 is designed to achieve such a right balance. The word 'Right<\/strong>' is used in the sense of 'optimal balance<\/strong>'.<\/p>\n<aside class=\"note\">[W, C, NC] note:<\/strong> Although couched in the jargon of procurement of Goods, the Five R's are equally applicable<\/strong> to procurement of Works, Consultancy Services and Non-consultancy Services.<\/p><\/aside>\nThe Five R's are: 1. Right Quality; 2. Right Quantity; 3. Right Price; 4. Right Time and Place; and 5. Right Source.<\/p>\n<h3>1.6.1<\/span>Right Quality<\/span><\/h3>\nProcurement aims to buy just the right quality that will suit the needs \u2014 no more and no less<\/strong> \u2014 with precise specifications of the procuring entity's requirements, a proper understanding of the functional value and cost, and an understanding of the bidder's quality system and quality awareness. The concept of the right balance of quality can be further refined to the concept of utility\/ value<\/strong> (refer para 1.7 below). Technical specifications and quality assurance plans are the most vital ingredients for the right quality.<\/strong> In public procurement, it is essential to give due consideration to value for money<\/strong> while preparing the specifications.<\/p>\n<h3>1.6.2<\/span>Right Quantity<\/span><\/h3>\nThere are extra costs and systemic overheads<\/strong> involved with both<\/strong> procuring a requirement too frequently in small quantities and<\/strong> buying significant quantities for prolonged use. Hence, the right quantity should be procured (in the appropriate size of the contract), which balances extra costs associated with larger and smaller quantities<\/strong>.<\/p>\n<h3>1.6.3<\/span>Right Price<\/span><\/h3>\nIt is not correct to aim at the cheapest<\/strong> materials\/ facilities\/ services available. The price should be just right for the quality, quantity, and other factors involved<\/strong> \u2014 or should not be abnormally low<\/strong> for facilities, works, or services, which could lead to a situation of non-performance or failure of contract. The concept of price can be refined further to consider not only the initial price paid for the requirement but also other costs such as maintenance costs, operational costs, and disposal costs<\/strong> (also termed life cycle costing<\/strong> \u2014 refer para 1.7 below).<\/p>\n<h3>1.6.4<\/span>Right Time and Place<\/span><\/h3>\nIf an organisation needs the material (or facility or services) in three months, it will be costly to procure it too late or too early<\/strong>. Similarly, if the vendor delivers the materials\/ facilities\/ services in another city, extra time and money would be involved in logistics<\/strong>. An unrealistic time schedule<\/strong> for completion of a facility may lead to delays, claims, and disputes<\/strong>.<\/p>\n<h3>1.6.5<\/span>Right Source<\/span><\/h3>\nThe source of delivery of Goods, Works and Services must have just the right financial capacity and technical capability<\/strong> for our needs \u2014 demonstrated through satisfactory past performance of contracts of the same or similar nature<\/strong>. Buying a few packets of printer paper directly from a large manufacturer may not be the right strategy. On the other hand, if our requirements are large, buying such requirements through dealers or intermediaries<\/strong> may also not be right.<\/p>\n<aside class=\"note\">These advanced concepts are further explained in Appendix 1: Advanced Concepts of Value for Money<\/strong> of the Manual for Procurement of Goods, 2024.<\/em><\/p><\/aside>\n<h2>1.7<\/span>Refined Concepts of Cost and Value \u2014 Value for Money<\/span><\/h2>\nThe concept of price or cost has been further refined into:<\/p>\n<ul class=\"lst\"><li>Total Cost of Ownership (TCO),<\/li><li>Life Cycle Cost (LCC), or<\/li><li>Whole-of-Life (WOL) cost<\/li><\/ul>\n \u2014 to consider not only the initial acquisition cost<\/strong> but also the cost of operation, maintenance, and disposal<\/strong> during the lifetime of the external resource procured.<\/p>\nSimilarly, the concept of quality<\/strong> is linked to the need and is refined into the concept of utility\/ value<\/strong>.<\/p>\nThese two, taken together, are used to develop the concept of Value for Money (VfM)<\/strong> \u2014 also called Best Value for Money<\/strong> in certain contexts.<\/p>\nVfM means the effective, efficient, and economical use of resources, which may involve the evaluation of:<\/p>\n<ul class=\"lst\"><li>relevant costs and benefits<\/strong>, along with<\/li><li>an assessment of risks<\/strong>,<\/li><li>non-price attributes<\/strong> \u2014 e.g., goods and\/or services that contain recyclable content, are recyclable, minimise waste and greenhouse gas emissions, conserve energy and water, minimise habitat destruction and environmental degradation, are non-toxic, etc., and\/or<\/li><li>life cycle costs<\/strong>, as appropriate.<\/li><\/ul>\nPrice alone may not necessarily represent VfM.<\/p>\nIn public Procurement, VfM is achieved by attracting the widest competition by way of:<\/p>\n<ul class=\"lst\"><li>optimal description of need;<\/li><li>development of value-engineered specifications\/ Terms of Reference (ToR);<\/li><li>appropriate packaging\/ slicing<\/strong> of requirement;<\/li><li>selection of an appropriate mode of Procurement<\/strong> and tendering system<\/strong>.<\/li><\/ul>\n<aside class=\"note\">These advanced concepts are explained in Appendix 1: Advanced Concepts of Value for Money<\/strong> of the Manual for Procurement of Goods, 2024.<\/em><\/p><\/aside>\n<h2>1.8<\/span>Fundamental Principles of Public Procurement<\/span><\/h2>\nGeneral Financial Rules, 2017 (Rule 144)<\/strong> lay down the Fundamental Principles of Public Procurement. These principles and other additional obligations of procuring authorities in public Procurement can be organised into five fundamental principles of public Procurement<\/strong>, which all procuring authorities must abide by and be accountable for<\/strong>:<\/p>\n<ol class=\"lst\"><li>Transparency Principle<\/li><li>Professionalism Principle<\/li><li>Broader Obligations Principle<\/li><li>Extended Legal Responsibilities Principle<\/strong>(C<\/span> terms it \"Extrinsic legal principle\"; W<\/span> terms it \"Extended legal principle\")<\/em><\/li><li>Public Accountability Principle<\/li><\/ol>\n<h3>1.8.1<\/span>Transparency Principle<\/span><\/h3>\nAll procuring authorities are responsible and accountable<\/strong> for ensuring transparency, fairness, equality, competition, and appeal rights<\/strong>. This involves simultaneous, symmetric, and unrestricted dissemination of information<\/strong> to all likely bidders, sufficient for them to know and understand the availability of bidding opportunities and the actual means, processes and time-limits prescribed for completion of registration of bidders, bidding, evaluation, grievance redressal, award, and management of contracts.<\/p>\nIt implies that such officers must ensure:<\/p>\n<ul class=\"lst\"><li>consistency<\/strong> (absence of subjectivity),<\/li><li>predictability<\/strong> (absence of arbitrariness),<\/li><li>clarity,<\/li><li>openness<\/strong> (absence of secretiveness), and<\/li><li>equal opportunities<\/strong> (absence of discrimination) in processes.<\/li><\/ul>\nIn essence, the Transparency Principle also enjoins upon the Procuring Authorities to do only that which they professed to do as pre-declared in the relevant published documents, and not to do anything that had not been so declared.<\/p>\nAs part of this principle, all procuring entities should ensure that offers are invited following a fair and transparent procedure and ensure publication of all relevant information on the Government e-Marketplace (GeM) and GeM-Central Public Procurement Portal (CPPP).<\/p>\n<h3>1.8.2<\/span>Professionalism Principle<\/span><\/h3>\n<ol class=\"lst\"><li>As per these synergic attributes, the procuring authorities have a responsibility and accountability to ensure professionalism, economy, efficiency, effectiveness, and integrity<\/strong> in the procurement process. They must avoid wasteful, dilatory, and improper practices<\/strong> violating the Code of Integrity for Public Procurement (CIPP)<\/strong>. They should, at the same time, ensure that the methodology adopted for Procurement is reasonable and appropriate for the cost and complexity<\/strong> and that it effectively achieves the planned objective of the Procurement. As part of this principle, the Government may prescribe professional standards and specify suitable training and certification requirements<\/strong> for officials dealing with procurement matters.<\/li><li>In reference to the above two principles \u2014 Transparency and Professionalism \u2014 it may be useful to refer to the following provision in the General Financial Rules, 2017:<\/li><\/ol>\n<aside class=\"note\">GFR, 2017, Rule 144 \u2014 Fundamental principles of public buying<\/strong>(for all procurements, including Procurement of works)<\/em>: Every authority delegated with the financial powers of procuring goods in the public interest shall have the responsibility and accountability to bring efficiency, economy, and transparency<\/strong> in matters relating to public procurement and for fair and equitable treatment of suppliers<\/strong> and promotion of competition<\/strong> in public procurement.<\/p><\/aside>\n<ol class=\"lst\"><li>The procedure to be followed in making public Procurement must conform to the following yardsticks<\/strong> (Rule 144, GFR 2017):<\/li><li>offers should be invited following a fair, transparent, and reasonable procedure<\/strong>;<\/li><li>the procuring authority should be satisfied that the selected offer adequately meets the requirement in all respects;<\/li><li>the procuring authority should satisfy itself that the price of the selected offer is reasonable and consistent with the quality required.<\/li><\/ol>\n<h3>1.8.3<\/span>Broader Obligations Principle<\/span><\/h3>\n<ol class=\"lst\"><li>Over and above transparency and professionalism, the procuring authorities also have the responsibility and accountability to conduct public Procurement in a manner that facilitates the achievement of the broader objectives, social policies and programme objectives<\/strong> of the Government \u2014 for example, economic growth, strengthening of local industry (Make in India), Ease of Doing Business, job and employment creation, and so on \u2014 to the extent these are specifically included in the 'Procurement Guidelines'. These policies are detailed in para 1.11<\/strong> below.<\/li><li>To support social policies<\/strong> \u2014 reservation of Procurement of specified goods from MSEs, weaker sections, backward regions<\/strong>, and reservation of Procurement of certain goods from MSEs.<\/li><li>To strengthen local industry and job\/ employment creation \u2014 preferential Procurement of locally manufactured goods or services (Rule 153(iii) of GFR, 2017) and support to Start-up enterprises (Rule 170(i), 173(i) of GFR, 2017).<\/li><li>To achieve programme objectives<\/strong> \u2014 reservation of Procurement of a specified class of goods from or through certain nominated CPSEs or Government Organisations<\/strong>.<\/li><li>On grounds of defence of India<\/strong> or matters directly or indirectly related thereto, including national security<\/strong> \u2014 impose restrictions, including prior registration and\/or screening<\/strong>, on Procurement from bidders from, or bidders having commercial arrangements with an entity from, a certain country or countries, or a class of countries \u2014 Rule 144(xi) of GFR, 2017<\/strong>.<\/li><li>Facilitating broader objectives of other Departments<\/strong> of Government \u2014 for example, ensuring tax or environmental compliance<\/strong> by participants, Energy Conservation<\/strong>, accessibility for People with Disabilities<\/strong>, etc. Procurement policies and procedures must comply with accessibility criteria<\/strong> that the Government may mandate from time to time.<\/li><\/ol>\n<aside class=\"note\">Footnote on accessibility criteria G<\/span>:<\/strong> Accessibility criteria for buildings and facilities are requirements that ensure that people with disabilities can access and use the buildings and facilities without barriers. These are contained in the National Building Code (NBC)<\/strong> and ISO 21542:2011<\/strong>. The \"Accessible India Campaign (Sugamya Bharat Abhiyan)<\/strong>\" is a nationwide campaign launched by the Department of Empowerment of Persons with Disabilities (DEPwD), Ministry of Social Justice & Empowerment, to provide universal accessibility to persons with disabilities.<\/p><\/aside>\n<h3>1.8.4<\/span>Extended Legal Responsibilities Principle<\/span><\/h3>\nProcuring authorities must fulfil additional legal obligations<\/strong> in public Procurement, over and above mere conformity to the mercantile laws (which even private sector procurements must comply with).<\/p>\nThe Constitution of India<\/strong> has certain provisions regarding fundamental rights and public Procurement. Courts have, over time, taken a broader view of public Procurement as a function of the 'State'<\/strong>, interpreting these to extend the responsibility and accountability of public procurement authorities. Courts in India thus exercise additional judicial review<\/strong> (beyond contractual issues) over public Procurement in relation to the manner of decision-making<\/strong> with respect to fundamental rights, fair play, and legality<\/strong>.<\/p>\nSimilarly, procuring authorities also have the responsibility and accountability to comply with the laws relating to Governance Issues<\/strong> like the Right to Information (RTI) Act<\/strong> and the Prevention of Corruption Act<\/strong>, and so on.<\/p>\n<aside class=\"note\">Details of such extended legal obligations are given in Appendix 2: Legal Aspects of Public Procurement<\/strong> of the Manual for Procurement of Goods, 2024. See also para 1.14 of this Unified Manual.<\/em><\/p><\/aside>\n<h3>1.8.5<\/span>Public Accountability Principle<\/span><\/h3>\n<ol class=\"lst\"><li>Procuring authorities are accountable for all the above principles to several statutory and official bodies in the Country \u2014 the Legislature and its Committees, Central Vigilance Commission, Comptroller and Auditor General of India, Central Bureau of Investigation and so on \u2014 in addition to administrative accountability. As a result, each individual public procurement transaction is liable to be scrutinised independently and in isolation, besides judging the overall outcomes of the procurement process over a period. Procuring authorities thus have responsibility and accountability for compliance with rules and procedures in each individual procurement transaction, as well as the achievement of overall procurement outcomes.<\/li><li>The procuring authority, at each stage of Procurement<\/strong>, must therefore place on record, in precise terms, the considerations that weighed with it<\/strong> while making the procurement decision \u2014 from need assessment to fulfilment of need (Rule 144(viii), GFR 2017<\/strong>).<\/li><li>Such records must be preserved, retained in easily retrievable form, and made available to such oversight agencies on demand. The procuring entity shall therefore maintain and retain audit trails, records and documents generated or received during its procurement proceedings in chronological order. The files shall be stored in an identified place and retrievable for scrutiny whenever needed without wasting time.<\/li><\/ol>\n<h2 class=\"src-multi\">1.9<\/span>Standards (Canons) of Financial Propriety<\/span>G<\/span>W<\/span><\/h2><div class=\"srcblock src-multi\">\nPublic Procurement, like any other expenditure in Government, must conform to the Standards (also called Canons) of Financial Propriety<\/strong>. It may be useful to refer to the relevant provisions in the General Financial Rules, 2017:<\/p>\n<aside class=\"note\">Rule 21 \u2014 Standards of Financial Propriety:<\/strong> Every officer incurring or authorising expenditure from public moneys should be guided by high standards of financial propriety<\/strong>. Every officer should also enforce financial order and strict economy<\/strong> and see that all relevant financial rules and regulations are observed, by his own office and by subordinate disbursing officers. Among the principles on which emphasis is generally laid are the following:<\/p>\ni) Every officer is expected to exercise the same vigilance in respect of expenditure incurred from public moneys as a person of ordinary prudence would exercise in respect of expenditure of his own money.<\/p>\nii) The expenditure should not be prima facie more than the occasion demands.<\/p>\niii) No authority should exercise its powers of sanctioning expenditure to pass an order which will be directly or indirectly to its own advantage.<\/p>\niv) Expenditure from public moneys should not be incurred for the benefit of a particular person or a section of the people, unless \u2014 a) a claim for the amount could be enforced in a Court of Law, or b) the expenditure is in pursuance of a recognised policy or custom.<\/p>\nv) (reproduced in W<\/span> only)<\/em> The amount of allowances granted to meet expenditure of a particular type should be so regulated that the allowances are not, on the whole, a source of profit to the recipients.<\/p>\nNote for students:<\/strong> Sub-clause (v)<\/strong> is reproduced only in the Works Manual; the Goods Manual stops at (iv). Both are extracts of the same Rule 21 of GFR 2017. This section does not<\/strong> appear at all in the Consultancy and Non-Consultancy Manuals.<\/p><\/aside>\n<\/div><h2>1.10<\/span>Public Procurement Infrastructure at the Centre<\/span><\/h2>\nPublic Procurement is a complex function<\/strong>, and the infrastructure needed to execute it is equally complex. In India, the following administrative, oversight, and digital infrastructure<\/strong> exists for Public Procurement:<\/p>\n<ol class=\"lst\"><li>Procurement Policy Division (PPD)<\/li><li>Central Public Procurement Portal (CPPP)<\/li><li>Government e-Marketplace (GeM)<\/li><li>Comptroller and Auditor General (CAG) of India<\/li><li>Lokpal\/ Lokayukta \u2014 Anti-corruption Ombudsman<\/li><li>Central Vigilance Commission (CVC)<\/li><li>Central Bureau of Investigation (CBI)<\/li><\/ol>\n<aside class=\"note\">The Works, Consultancy and Non-Consultancy Manuals list these seven institutions and cross-refer to the Goods Manual for details. The details below are from the Goods Manual.<\/em><\/p><\/aside>\n<h3>1.10.1<\/span>Procurement Policy Division (PPD)<\/span><\/h3>\nThe Procurement Policy Division (PPD) in the Department of Expenditure, Ministry of Finance has been created to encourage uniformity and harmonisation in public procurement processes by:<\/p>\n<ul class=\"lst\"><li>disseminating best practices<\/strong>,<\/li><li>providing guidance, oversight and capacity building,<\/li><li>issuing procurement manuals and Model Tender Documents.<\/li><\/ul>\nHowever, centralisation of Procurement or involvement in procurement processes is not the intended purpose of the creation of PPD.<\/p>\n<h3>1.10.2<\/span>Central Public Procurement Portal (CPPP)<\/span><\/h3>\nThe Central Public Procurement Portal (CPPP)<\/strong> has been designed, developed and hosted by the National Informatics Centre (NIC, Ministry of Electronics & Information Technology)<\/strong> in association with the Department of Expenditure to ensure transparency in the public procurement process.<\/p>\n<ul class=\"lst\"><li>Primary objective:<\/strong> to provide single-point access<\/strong> to the information on procurements made across various Ministries and Departments.<\/li><li>The CPPP has e-publishing<\/strong> and e-procurement<\/strong> modules.<\/li><li>It is mandatory<\/strong> for all Ministries\/ Departments of the Central Government, CPSEs<\/strong>, and Autonomous and Statutory Bodies<\/strong> to publish on the CPPP all their tender enquiries and information about the resulting contracts<\/strong>.<\/li><li>CPPP provides access to information on documents relating to pre-qualification, bidders' registration, Tender Documents, details of bidders, their pre-qualification, registration, exclusions\/ debarments, decisions taken regarding pre-qualification and selection of successful bids.<\/li><li>Implementing end-to-end e-procurement<\/strong> for all procurements is now mandatory<\/strong> \u2014 either through the CPPP portal or any other suitable GCQE-compliant<\/strong> portal.<\/li><\/ul>\n<aside class=\"note\">GCQE<\/strong> = Guidelines for Compliance to Quality Requirements of eProcurement, July 2021, issued by the Standardisation Testing and Quality Certification (STQC) Directorate<\/strong>, an attached office of MeitY.<\/p><\/aside>\n<h3>1.10.3<\/span>Government e-Marketplace (GeM)<\/span><\/h3>\nGeM is the 'National Public Procurement Portal', serving as an end-to-end online marketplace for various entities.<\/p>\n<ul class=\"lst\"><li>The Procurement of Goods and Services available on GeM (as per Rule 149 of GFR, 2017<\/strong>) is mandatory<\/strong> for Ministries\/ Departments (including attached\/ subordinate offices), CPSEs, autonomous bodies and local bodies<\/strong>.<\/li><li>GeM facilitates the Procurement of common-use goods and services<\/strong> by such entities.<\/li><li>The portal aims to enhance efficiency, transparency, and speed<\/strong> in public Procurement.<\/li><li>Through this paperless, contactless, and cashless<\/strong> platform, registered government buyers<\/strong> can seamlessly procure goods and services from registered sellers<\/strong>.<\/li><\/ul>\n<h3>1.10.4<\/span>Comptroller and Auditor General (CAG) of India<\/span><\/h3>\n<ol class=\"lst\"><li>The CAG of India<\/strong>, established under Articles 149\u2013151 of the Constitution of India<\/strong>, holds a pivotal role as the Supreme Audit Institution of India (SAII)<\/strong>. CAG plays a crucial role in promoting accountability, transparency, and good governance<\/strong> through high-quality auditing and accounting. It provides independent and timely assurance<\/strong> to the legislature, the public, and the executive that public funds are being collected and utilised effectively and efficiently.<\/li><li>The CAG's mandate encompasses a wide spectrum of audit and reporting responsibilities:<\/li><li>Government Departments and Entities;<\/li><li>Government Companies and Corporations;<\/li><li>Autonomous Bodies and Authorities<\/strong> that receive government funding (e.g., municipal bodies, IIMs, IITs, state health societies);<\/li><li>Special Requests and Initiatives<\/strong> \u2014 the CAG can audit the accounts of any other body or authority upon request of the President\/ Governor<\/strong>, or on its own initiative.<\/li><li>CAG conducts multiple types of audits, namely:<\/li><li>Compliance Audits<\/li><li>Financial Audits<\/li><li>Performance Audits<\/li><li>Thematic Audits<\/li><li>IT Audits<\/li><\/ol>\nThese audits, especially the performance audits, are noted to cover Procurement, but only with the perspective of identifying if any wastage, malpractice, and fraud have occurred.<\/p>\n<ol class=\"lst\"><li>To carry out its extensive audit mandate effectively, the CAG is endowed with significant powers:<\/li><li>Inspection Authority<\/strong> \u2014 power to inspect any office or organisation subject to its audit.<\/li><li>Transaction Examination<\/strong> \u2014 can examine all transactions and question the executive regarding financial matters.<\/li><li>Record Access<\/strong> \u2014 can call for records, papers, and documents from any audited entity.<\/li><li>Audit Extent and Manner<\/strong> \u2014 authority to decide the extent and manner of audit to ensure thorough scrutiny.<\/li><\/ol>\n<h3>1.10.5<\/span>Lokpal\/ Lokayukta \u2014 Anti-corruption Ombudsman<\/span><\/h3>\n<ol class=\"lst\"><li>The Lokpal and Lokayukta Act, 2013<\/strong> and its amendment in 2016<\/strong> (the Act) provides for a Lokpal in the Central (Union) Government<\/strong> and Lokayukta in the State Governments<\/strong> as the statutory anti-corruption Ombudsman<\/strong> to inquire into allegations of corruption against public servants and for related matters. Once appointed \u2014 by the President<\/strong> in the case of Lokpal, or the Governor<\/strong> in the case of Lokayukta \u2014 they cannot be transferred or removed except by impeachment proceedings<\/strong> undertaken by Parliament or the State legislatures respectively.<\/li><li>The Act outlines the Lokpal's and Lokayuktas' roles, powers, and responsibilities<\/strong>. It has a broad scope<\/strong> regarding the individuals it covers \u2014 extending to:<\/li><li>Union Ministers<\/strong> (including the serving and former Prime Ministers),<\/li><li>Members of Parliament, and<\/li><li>various categories of public servants<\/strong>, including those in Group 'A', 'B', 'C', or 'D'<\/strong> positions as defined in the Prevention of Corruption Act, 1988<\/strong>.<\/li><li>All entities (NGOs<\/strong>) receiving donations from foreign sources under the Foreign Contribution Regulation Act (FCRA)<\/strong>above Rs 10 lakh per year<\/strong> are also under the jurisdiction of Lokpal.<\/li><\/ol>\nThe Act grants Lokpal powers to sanction prosecution<\/strong> against public servants.<\/p>\n<ol class=\"lst\"><li>There are exceptions<\/strong> in matters related to international relations, external and internal security, public order, atomic energy, and space<\/strong>. To initiate an inquiry into such cases, at least two-thirds of Lokpal members must approve<\/strong>. The Act emphasises confidentiality<\/strong> \u2014 if Lokpal concludes a complaint is baseless, the inquiry records remain undisclosed<\/strong> to the public or any party involved.<\/li><li>One significant aspect of the Act is the requirement for public servants to declare their assets<\/strong> in a specified manner. This transparency measure aims to deter corruption and promote accountability<\/strong>.<\/li><li>Composition: One Chairperson and a maximum of eight other members.<\/li><li>The age<\/strong> of Lokpal (Chairperson or member) on the date of assuming office should not be under 45 years<\/strong>.<\/li><li>Of the eight members, four are judicial members who are or have been judges of the Supreme Court or a Chief Justice of a High Court.<\/li><li>The remaining four are non-judicial members \u2014 people of impeccable integrity and outstanding ability, having special knowledge and expertise of not less than twenty-five years in matters relating to anti-corruption policy, public administration, vigilance, finance including insurance and banking, law, and management.<\/li><li>Fifty per cent of the Members shall be from Scheduled Castes\/ Scheduled Tribes\/ Other Backward Classes\/ Minorities and women.<\/li><li>Selection Committee:<\/strong> The Chairperson and Lokpal members are selected through a selection committee consisting of:<\/li><li>the Prime Minister,<\/li><li>the Speaker of Lok Sabha,<\/li><li>the Leader of Opposition in Lok Sabha,<\/li><li>the Chief Justice of India (CJI)<\/strong> or a sitting Supreme Court judge nominated by CJI, and<\/li><li>another eminent jurist<\/strong> nominated by the President of India<\/strong> based on the recommendations of the first four members of the selection committee \"through consensus<\/strong>\".<\/li><li>Lokpal may refer complaints for investigation to the CBI. For such cases, CBI would work under Lokpal's supervision. It envisages a 'Directorate of Prosecution' under the overall control of the Director, CBI, with a fixed tenure of two years. The appointment of the Director of Prosecution is to be based on the recommendation of the Central Vigilance Commission. Transfer of CBI officers investigating cases referred by Lokpal shall be with the CVC's approval.<\/li><li>The Act lays down clear timelines for preliminary enquiry, investigation and trial and has provisions for attachment and confiscation of property acquired by corrupt means, even while prosecution is pending.<\/li><\/ol>\n<h3>1.10.6<\/span>Central Vigilance Commission (CVC)<\/span><\/h3>\n<ol class=\"lst\"><li>Under the Central Vigilance Commission Act, 2003, the CVC is a statutory body headed by the Central Vigilance Commissioner and comprising not more than two Commissioners. It is conceived to be the apex oversight institution, independent from any executive authority. There are two Chief Technical Examiners (CTE) who oversee public procurement.<\/li><li>All Central (Union) Government entities appoint a Chief Vigilance Officer (CVO)<\/strong> in consultation with the CVC. CVOs undertake system audits and preventive\/ forensic investigations<\/strong> in the Entity and report them to the CVC.<\/li><li>CVC only investigates and recommends<\/strong> punitive and follow-up actions to the concerned entity but has no punitive powers by itself<\/strong>. The recommendations are not binding<\/strong> on the entities, but CVC may report any deviations from recommendations to Parliament<\/strong>. It has an advisory role in Discipline and Appeal cases<\/strong> arising from its investigations. It plays a role in sanctioning prosecutions<\/strong> related to corruption and consultations in key appointments<\/strong>. CVC also has a role in the appointment of Independent External Monitors (IEM)<\/strong> under the Integrity Pact<\/strong> (wherever applicable) for Central (Union) Government Entities. CVC submits an annual report to Parliament<\/strong> regarding its investigations.<\/li><li>CVC has superintendence over the functioning of the CBI<\/strong> regarding the investigation of offences related to corruption in Central (Union) Government Agencies. CVC has jurisdiction over cases under the Lokpal and Lokayukta Act<\/strong>, Whistle Blowers Act<\/strong>, and Money Laundering Act<\/strong>.<\/li><li>It has the powers of a civil court<\/strong> when conducting any inquiry. CVC and CVOs do not have the powers of Police<\/strong> to arrest, seize properties, and enforce compliance from non-government agencies. Therefore, cases requiring such action are entrusted to the CBI<\/strong>.<\/li><li>To avoid conflict of interest, CVO and vigilance officers shall not associate with decision-making that may have vigilance sensitivities. Some organisations have a system wherein executive work \u2014 like the shortlisting of arbitrators or the debarment of firms \u2014 is entrusted fully\/ partially to vigilance. The same is not appropriate and is also against the CVC Vigilance Manual.<\/li><li>The following levels\/ categories of officials are covered under the jurisdiction of the CVC<\/strong>:<\/li><\/ol>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Coverage<\/th><\/tr><\/thead><tbody><tr><td>a) All India Services & Central Government<\/td><td>Members of All India Services serving in connection with the affairs of the Union, and Group 'A' officers<\/strong> of the Central Government. Officers of central services, even those working in state governments<\/strong>, are also under its jurisdiction.<\/td><\/tr><tr><td>b) Schedule 'A' and 'B' PSUs of the Central Government<\/td><td>Chief Executives and Executives on the Board and other officers of level E-8 and above<\/strong><\/td><\/tr><tr><td>c) Schedule 'C' and 'D' PSUs of the Central Government<\/td><td>Chief Executives and Executives on the Board and other officers of level E-7 and above<\/strong><\/td><\/tr><tr><td>d) Public Sector Banks<\/td><td>Officers of the rank of Scale V and above<\/strong><\/td><\/tr><tr><td>e) Reserve Bank of India, NABARD and SIDBI<\/td><td>Officers in Grade 'D' and above<\/td><\/tr><tr><td>f) General Insurance Companies<\/td><td>Managers and above<\/td><\/tr><tr><td>g) Life Insurance Corporation of India<\/td><td>Senior Divisional Managers and above<\/td><\/tr><tr><td>h) Societies and local authorities owned or controlled by the Central Government<\/td><td>Officers drawing a salary of Rs 8,700\/- per month and above<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h3>1.10.7<\/span>Central Bureau of Investigation (CBI)<\/span><\/h3>\n<ol class=\"lst\"><li>Under the Delhi Special Police Establishment Act, 1946<\/strong>, the CBI<\/strong> \u2014 a police organisation under the Department of Personnel, Ministry of Personnel, Pension & Public Grievances<\/strong> \u2014 is the only oversight agency with police powers<\/strong>. It investigates and prosecutes corruption cases<\/strong> (including those related to public procurement) requiring arrest, seizure of properties and enforcement of compliance from non-government agencies<\/strong>. The prosecutions are carried out under, inter alia<\/em>, the Prevention of Corruption Act, 1988<\/strong>. It takes up cases based on complaints received from stakeholders or the general public.<\/li><\/ol>\nJurisdiction: Though its jurisdiction is restricted to Delhi and UTs, under sections 5 & 6 of the Act, the Central Government can extend its powers and jurisdiction to a State with the consent of the government of that State for investigation of specified offences (generally related to All India Services or Members of Parliament). High Courts and the Supreme Court can also order the CBI to investigate cases outside its normal jurisdiction, for which no consent is required from the State.<\/p>\n<ol class=\"lst\"><li>The Delhi Special Police Establishment (DSPE), which forms a part of the CBI, has two Divisions:<\/li><\/ol>\n<div class=\"tblwrap\"><table><thead><tr><th>Division<\/th><th>Investigates<\/th><\/tr><\/thead><tbody><tr><td>(i) Anti-Corruption Division (ACD)<\/td><td>All cases registered under the Prevention of Corruption Act, 1988<\/strong>. If an offence under any section of the Indian Penal Code, 1860 (replaced by the Bharatiya Nyaya Sanhita (BNS), 2023<\/strong> from 1st July 2024<\/em>) or any other law is committed along with<\/strong> the offence of bribery and corruption, it shall also be investigated by the ACD. The ACD also investigates cases of serious irregularities allegedly committed by public servants<\/strong>.<\/td><\/tr><tr><td>(ii) Special Crimes Division (SCD)<\/td><td>All cases of Economic offences<\/strong> and all cases of conventional crime<\/strong>, such as offences relating to internal security, espionage, sabotage, narcotics and psychotropic substances, antiquities, murders and dacoities\/ robberies, cheating, criminal breach of trust, forgery, dowry deaths, suspicious deaths, etc.<\/td><\/tr><\/tbody><\/table><\/div>\n<ol class=\"lst\"><li>While the superintendence of DSPE<\/strong>, as far as it relates to investigation of offences under the Prevention of Corruption Act, 1988, vests in the CVC<\/strong>; for all other matters<\/strong>, the superintendence of DSPE vests in the Central Government<\/strong>.<\/li><li>The administration of DSPE vests in the Director of the CBI<\/strong>, who is appointed on the recommendations of a committee headed by the Central Vigilance Commissioner<\/strong>. He holds office for a period of not less than two years<\/strong>. The Director of CBI exercises, in respect of DSPE, powers exercisable by an Inspector General of Police<\/strong> regarding the police force in a State.<\/li><li>DSPE cannot conduct any inquiry or investigation<\/strong> into any offence alleged to have been committed under the Prevention of Corruption Act, 1988, except with the prior approval of the Central Government<\/strong>, where such allegation relates to employees at the level of Joint Secretary and above<\/strong> in the Central Government, or corporations established by or under any Central Act, Government companies, societies, and local authorities owned or controlled by it.<\/li><li>No such approval, however, is necessary for cases involving the arrest of a person on the spot on the charge of accepting or attempting to accept any gratification other than legal remuneration.<\/li><\/ol>\n<h2>1.11<\/span>Preferential \/ Mandatory \/ Restricted Purchase from Certain Sources<\/span><\/h2>\n<aside class=\"note\">Section titles in the four Manuals:<\/p>\nG<\/span>Reserved Items and Other Purchase\/ Price Preference Policies<\/em> \u00b7 W<\/span>Preferential\/ Restriction on Purchase from certain sources<\/em> \u00b7 C<\/span>Preferential Purchase from certain sources<\/em> \u00b7 NC<\/span>Preferential\/ Mandatory Purchase from certain sources<\/em><\/p><\/aside>\nThe Central Government may, by notification, provide for mandatory procurement of any goods or services from any category of bidders, or provide for preference to bidders on the grounds of promotion of locally manufactured goods or locally provided services (General Financial Rules, 2017, Rule 153).<\/p>\n<aside class=\"note\">Note: Before considering any Purchase Preference\/ Product Reservation mentioned below, the Procuring Entity should check the latest directives in this regard for necessary action. Product Reservation\/ Purchase Preference provision shall invariably be part of the Notice Inviting Tender (NIT) and Instructions to Bidders\/ Consultants (ITB\/ ITC).<\/p><\/aside>\nW<\/span>Presently the following policies are in vogue.<\/em><\/p>\n<h3 class=\"src-G\">1.11.1<\/span>Reservation of Procurement of Certain Class of Products from Certain Agencies<\/span>G<\/span><\/h3><div class=\"srcblock src-G\"><h4>1.<\/span>Khadi Goods \/ Handloom Textiles<\/span><\/h4>\nOut of the total procurement of handloom origin textiles<\/strong> required by Central Government departments throughout the year, it shall be mandatory to make procurement of at least 20%<\/strong> from:<\/p>\n<ul class=\"lst\"><li>the Khadi & Village Industries Commission (KVIC), and\/or<\/li><li>Handloom Clusters<\/strong> such as Co-operative Societies, Self Help Group (SHG) Federations, Joint Liability Groups (JLG), Producer Companies (PC), Corporations etc., including Weavers having Pehchan Card<\/strong>.<\/li><\/ul>\n(Notified vide OM No. F.10\/2\/2019-PPD(Pt.) issued by Department of Expenditure dated 17.02.2020.)<\/em><\/p>\nKhadi and Handloom goods are also available on GeM. (GFR Rule 153(i)<\/strong>.)<\/p>\n<h4>2.<\/span>Pharmaceuticals from Pharmaceutical CPSEs<\/span><\/h4>\na) The Pharmaceuticals Purchase Policy, 2013<\/strong>(Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers, OM 50(9)\/2010-PI-IV dated 10.12.2013)<\/em> is intended to ensure:<\/p>\n<ul class=\"lst\"><li>i) Optimum utilisation of the installed capacity<\/strong> and the provision of a necessary fillip in reviving these ailing pharmaceutical CPSEs;<\/li><li>ii) Availability of quality medicines at low prices to the masses;<\/li><li>iii) Drug security of the nation.<\/li><\/ul>\nb) Salient features of this policy:<\/p>\n<ul class=\"lst\"><li>i) The Policy in respect of 103 medicines<\/strong>, originally valid for a period of five years<\/strong>, has now been renewed and extended<\/strong>(as approved by the Union Cabinet in its meeting held on 20.11.2019)<\/em>till the final closure\/ strategic disinvestment<\/strong> of the Pharma PSEs mentioned below.<\/li><li>ii) The Policy extends only to CPSEs under the administrative control of the Department of Pharmaceuticals, such as:<\/li><li>Indian Drugs and Pharmaceuticals Limited (IDPL)<\/li><li>Hindustan Antibiotics Limited (HAL)<\/li><li>Bengal Chemicals and Pharmaceuticals Limited (BCPL)<\/li><li>Karnataka Antibiotics and Pharmaceuticals Limited (KAPL)<\/li><li>Rajasthan Drugs and Pharmaceuticals Limited (RDPL)<\/li><\/ul>\nand their subsidiaries where the Government of India owns 51% or above shares.<\/p>\n<ul class=\"lst\"><li>iii) Applicable to purchases by Central Government Departments, their PSUs, Autonomous Bodies, etc. Also applicable to the purchase of medicines by State Governments under health programmes funded by the Government of India, such as the National Rural Health Mission.<\/li><li>iv) Pricing of the products would be done by the National Pharmaceutical Pricing Authority (NPPA) using the cost-based formula, as mentioned in the Drugs Price Control Order, 1995. A uniform discount of 16% would be extended to all products. All taxes, whatsoever, would have to be passed on to buyers.<\/li><li>v) Annual revision of prices<\/strong> would be linked to the Wholesale Price Index<\/strong>, as per provisions contained in the Drugs Prices Control Order, 2013<\/strong>.<\/li><li>vi) The procuring entity would purchase from pharma CPSEs and their subsidiaries subject to their meeting Good Manufacturing Practices (GMP) norms<\/strong> as per Schedule 'M' of the Drugs & Cosmetics Rules<\/strong>.<\/li><li>vii) In case pharma CPSEs and their subsidiaries fail to supply<\/strong> the medicines, the procuring entity would be at liberty to make purchases from other manufacturers<\/strong>. If the pharma CPSEs or their subsidiaries fail to perform<\/strong> as per the purchase order, they would also be subject to payment of liquidated damages or any other penalty<\/strong> as per the terms of the contract.<\/li><li>viii) The list of medicines<\/strong> (Annexure 29 of the Goods Manual) may be reviewed and revised by the Department of Pharmaceuticals<\/strong> as per requirement.<\/li><\/ul>\n<h4>3.<\/span>Reservation of specific items for procurement from Micro and Small Enterprises (MSE)<\/span><\/h4>\nTo enable wider dispersal of enterprises in the country, particularly in rural areas, the Central Government Ministries\/ Departments\/ Public Sector Undertakings shall continue to procure items reserved for procurement exclusively from MSE \u2014 presently 358 items (including eight items of Handicrafts), which have been reserved for exclusive purchase from them. The latest list can be found on the MSME Ministry's website.<\/p>\nThe Ministry of MSME has clarified that laminated paper Gr. I, II and III are not covered<\/strong> under the paper conversion product (Sl. No. 202) of the Public Procurement Policy (Policy Circular No. 21(6)\/2016-MA dated 26.05.2016)<\/em>.<\/p>\nNSIC may be contacted to locate the sources of such reserved items.<\/p>\n<\/div><h3>1.11.2<\/span>Public Procurement Policy for Micro and Small Enterprises (MSEs)<\/span><\/h3>\n(Rule 153(ii) of GFR 2017)<\/em><\/p>\n<h4>1.<\/span>The Policy<\/span><\/h4>\nFrom time to time, the Government of India lays down procurement policies to help inclusive national economic growth<\/strong> by providing long-term support to micro, small and medium enterprises<\/strong>, and to disadvantaged sections of society<\/strong>(C<\/span> adds: \"and to address environmental concerns\")<\/em>.<\/p>\nThe Procurement Policy for Micro and Small Enterprises, 2012 [amended 2018 and 2021]<\/strong> has been notified by the Government in exercise of the powers conferred in Section 11 of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006<\/strong>, which is mandatory to be followed<\/strong> by Central Government Ministries\/ Departments\/ Public Sector Undertakings. Details of the policy, along with the amendments issued in 2018<\/strong> and 2021<\/strong>, are available on the MSME website<\/strong>.<\/p>\n<h4>2.<\/span>Eligibility<\/span><\/h4>\n<ol class=\"lst\"><li>Micro and Small Enterprises (MSEs) registered under Udyam Registration are eligible to avail the benefits under the policy.<\/li><li>This Policy provides preferential procurement of goods produced and services rendered by MSEs. Traders\/ distributors\/ sole agents\/ Works Contracts are EXCLUDED from the purview of the policy.<\/li><li>i) (Notified by MSME Ministry vide S.O. 4926(E) dated 18.10.2022)<\/em> In case of an upward change in terms of investment in plant and machinery or equipment or turnover or both, and consequent re-classification, an enterprise shall continue to avail of all non-tax benefits of the category (micro, small, or medium) it was in before the re-classification, for a period of three years from the date of such upward change.<\/li><\/ol>\n<aside class=\"note\">C<\/span> adds: Non-tax benefits include benefits of various schemes of the Government, including <\/strong>Public Procurement Policy, Delayed Payments, etc.<\/p><\/aside>\n<ul class=\"lst\"><li>ii) MSEs would be treated as owned by SC\/ST or Women entrepreneurs where:<\/li><li>In the case of a proprietary MSE<\/strong> \u2014 the proprietor(s) are SC\/ST or Woman;<\/li><li>In the case of a partnership MSE<\/strong> \u2014 the SC\/ST or Women partners hold at least 51%<\/strong> shares in the unit;<\/li><li>In the case of Private Limited Companies<\/strong> \u2014 SC\/ST or Women promoters hold at least 51%<\/strong> share.<\/li><\/ul>\n<h4>3.<\/span>Applicability and Exemptions<\/span><\/h4>\n<ol class=\"lst\"><li>The policy is applicable to Central Government Ministries\/ Departments\/ Public Sector Undertakings.<\/li><li>The policy is not applicable to State Government Ministries\/ Departments\/ State PSEs<\/strong>, but they have similar policies applicable in their state.<\/li><li>Exemptions:<\/strong> Given their unique nature, defence armament imports shall not be included in computing the 25% goal for the Ministry of Defence<\/strong>. In addition, defence equipment like weapon systems, missiles, etc., shall remain out of the purview<\/strong> of such a reservation policy. Monitoring of goals<\/strong> set under the policy will be done, as far as they relate to the Defence sector, by the Ministry of Defence itself<\/strong>, in accordance with suitable procedures to be established by them.<\/li><\/ol>\n<h4>4.<\/span>Facilities for MSE<\/span><\/h4>\na) Reduced Transaction Costs:<\/strong> To reduce the transaction cost of doing business, MSEs will be facilitated by:<\/p>\n<ul class=\"lst\"><li>providing them tender documents free of cost,<\/li><li>exempting MSEs from payment of Earnest Money Deposits, and<\/li><li>adopting e-procurement<\/strong> to bring transparency in the tender process.<\/li><\/ul>\nHowever, exemption from paying Performance Bank Guarantee\/ Security Deposit is not covered under the policy.<\/p>\nb) Relaxation in Prior Turnover and Experience: The Procuring Entity may relax the condition of prior turnover and prior experience for start-up enterprises recognised by DPIIT, subject to meeting quality & technical specifications. Start-ups may be MSMEs\/ MSEs or otherwise. Such relaxation can be provided in the case of procurement of works as well.<\/p>\nIt is further clarified that such relaxation is not optional but normally has to be ensured<\/strong>, except in the case of procurement of items related to public safety, health, critical security operations and equipment<\/strong>, etc., where adequate justification exists<\/strong> for the Procuring Entity not to relax such criteria (Notified vide OM No. F.20\/2\/2014-PPD(Pt.) issued by Department of Expenditure dated 29.09.2016)<\/em>. The decision of the Procuring Entity in this regard shall be final.<\/strong> (Rule 173(i) of GFR 2017<\/strong>.)<\/p>\n<aside class=\"note\">Footnote [C, W, NC]:<\/strong> Such relaxation can be partial<\/strong> \u2014 e.g., 25% relaxation<\/strong> over specified turnover and experience.<\/p><\/aside>\nc) Timely Payments:<\/strong>Chapter V of the MSMED Act, 2006<\/strong> has provisions for ensuring timely payments to MSE suppliers:<\/p>\n<ul class=\"lst\"><li>The period agreed upon for payment must not exceed forty-five (45) days<\/strong> from the deemed acceptance<\/strong> of the materials supplied by the MSEs.<\/li><li>In case of any discrepancies in the supplies, the Procuring Entity shall raise an objection to the MSE supplier within 15 days from the date of receipt of materials. If such objection is not raised, then it will be taken as deemed acceptance.<\/li><li>For delays in payment<\/strong>, the buyer shall be liable to pay compound interest<\/strong> to the supplier on the delayed amount at three times the bank rate notified by the Reserve Bank<\/strong>.<\/li><li>For arbitration and conciliation<\/strong> regarding the recovery of such payments and interest, the Micro and Small Enterprises Facilitation Council<\/strong> has been set up in various states.<\/li><\/ul>\n<h4>5.<\/span>Purchase Preference<\/span><\/h4>\na) The 25% annual target:<\/strong> Under the amended Public Procurement Policy for MSEs, Order 2012, the Central Government Ministries\/ Departments\/ PSUs shall procure a minimum of 25 per cent of their annual value of goods or services from MSEs<\/strong> (in accordance with GFR 2017, Rule 153(ii)<\/strong>).<\/p>\n<ul class=\"lst\"><li>i) The annual goal of procurement from MSEs also includes sub-contracts to MSEs by large enterprises and consortia of MSEs formed by the National Small Industries Corporation. If a sub-contract is given to MSEs, it will be considered as procurement from MSEs.<\/li><li>ii) C<\/span>NC<\/span> \u2014 important clarification: The <\/strong>annual target of 25% procurement from MSEs is only a MINIMUM. The <\/strong>MSE purchase preference is mandatory for all procurements (except for exemptions as per sub-para 3-c above), <\/strong>even after this target is achieved. For example, <\/strong>it is not permissible for organisations to earmark only some goods\/ services to be procured exclusively from MSEs to achieve the annual target and not apply MSE procurement preferences to the rest of the goods\/ services.<\/li><\/ul>\nb) The L1+15% price band: In a tender, if the L1 price is from someone other than an MSE, participating MSEs quoting prices within a price band of L1 + 15% shall be allowed to supply up to 25% of the total tendered value by bringing down their price to the L1 price. If there is more than one eligible MSE within such price band who agrees to match the L1 price, the 25% quantity is to be distributed proportionately to them.<\/p>\n<aside class=\"note\">Note:<\/strong> If the procuring entity negotiates<\/strong> with the non-MSE L1 bidder, the price band (L1+15%<\/strong>) should be calculated based on the ORIGINAL L1 price, not the lower negotiated price<\/strong>, and such eligible MSE bidders shall be called to match the new negotiated L1 price<\/strong> as per the procedure mentioned above for placement of the 25% quantity.<\/p><\/aside>\n<ul class=\"lst\"><li>i) Non-divisible items:<\/strong> In case the tender item cannot be split or divided<\/strong>, etc., the MSE quoting a price within the band L1+15% may be awarded for full\/ complete supply of the total tendered value<\/strong>, considering the spirit of the Policy for enhancing Government procurement from MSEs.<\/li><li>ii) Sub-targets: Out of the target of 25% of annual procurement from MSEs (not in the specific tender):<\/li><li>a sub-target of 4% of annual procurement<\/strong> is earmarked for procurement from MSEs owned by SC\/ST entrepreneurs<\/strong>, and<\/li><li>3% of annual procurement is earmarked for procurement from MSEs owned by women entrepreneurs.<\/li><\/ul>\nHowever, in the event of failure of such MSEs to participate<\/strong> in the tender process or to meet tender requirements and L1 price, the 4% sub-target (SC\/ST) and 3% (women) will also be met from other MSEs<\/strong>.<\/p>\n<h4>6.<\/span>Developing MSE Vendors<\/span><\/h4>\nThe Central Ministries\/ Departments\/ PSUs shall take necessary steps to develop appropriate vendors<\/strong> by organising:<\/p>\n<ul class=\"lst\"><li>Vendor Development Programmes (VDP), or<\/li><li>Buyer-Seller Meets<\/li><\/ul>\nfocused on developing MSEs for procurement through the GeM Portal<\/strong>.<\/p>\nTo enhance the participation of MSEs owned by SCs\/ STs\/ Women<\/strong> in Government procurement, Central Government Ministries\/ Departments\/ CPSEs should conduct Special Vendor Development Programmes\/ Buyer-Seller Meets for SC\/ST and Women MSEs<\/strong>.<\/p>\n<h4>7.<\/span>Policy Implementation<\/span><\/h4>\n<ol class=\"lst\"><li>A Review Committee<\/strong> has been constituted under the Chairmanship of the Secretary, Ministry of MSME<\/strong>, to monitor and review the Public Procurement Policy for MSEs. M\/o MSME will review and\/or modify the composition of the Committee as and when required. This Committee will, inter alia<\/em>:<\/li><li>review the list of 358 items<\/strong> reserved for exclusive purchase from MSEs on a continuous basis,<\/li><li>consider requests from Central Government Departments\/ CPSEs for exemption from the 25% target on a case-to-case basis, and<\/li><li>monitor achievements<\/strong> under the Policy.<\/li><li>To monitor the progress of procurement by Central Government Ministries\/ Departments and CPSEs from MSEs, the Ministry of MSME launched the MSME 'Sambandh' Portal on 8th December 2017<\/strong> for uploading procurement details by all CPSEs on a monthly and annual basis<\/strong>, which the Ministry regularly monitors.<\/li><\/ol>\n<aside class=\"note\">Any payment grievances filed by the MSMEs against a Procuring Entity may be monitored and progress updated therein. Total value of month-end payments due to the MSMEs may be updated.<\/em><\/p><\/aside>\n<ol class=\"lst\"><li>To redress the grievances of MSEs related to non-compliance with the policy, a Grievance cell named \"CHAMPION Portal\"<\/strong> has been set up in the Ministry of MSME.<\/li><li>G<\/span> A National SC\/ST Hub (NSSH)<\/strong> scheme was launched in October 2016<\/strong> to provide handholding support to SC\/ST entrepreneurs<\/strong>, and it is being coordinated\/ implemented by the NSIC<\/strong> under this Ministry.<\/li><li>Clarifications:<\/strong> The Office of the Development Commissioner (Micro, Small & Medium Enterprises) issued an FAQ on the Public Procurement Policy for MSE Order, 2012<\/strong>.<\/li><\/ol>\n<aside class=\"note\">Annexure references:<\/strong>G<\/span> Annexure 32 \u00b7 C<\/span> Annexure 19 \u00b7 NC<\/span> Annexure 13.<\/p><\/aside>\n<h3>1.11.3<\/span>Procurement Preference to Make in India (MII Policy)<\/span><\/h3>\n(Rule 153(iii) of GFR, 2017)<\/em><\/p>\n<h4>1.<\/span>Purpose<\/span><\/h4>\nTo encourage 'Make in India' and promote manufacturing and production of goods and services in India with a view to enhancing income and employment, the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, Government of India, issued the Public Procurement (Preference to Make in India) Order, 2017.<\/p>\n<aside class=\"note\">Latest revision to the Order notified vide OM No. P-45021\/2\/2017-PP (BE-II)-Part(4)Vol.II issued by DPIIT, dated 19.07.2024<\/strong>.<\/em><\/p>\nG<\/span> footnote: The earlier '<\/strong>Domestically Manufactured Electronic Products (DMEP)', also called <\/strong>Preference for Domestically Manufactured Electronic Goods (PMA), <\/strong>stands subsumed in the MII policy.<\/p><\/aside>\nThe Order is issued pursuant to Rule 153(iii) of GFR, 2017<\/strong> and is applicable to the procurement of Goods, Works, and Services<\/strong>.<\/p>\n<h4>2.<\/span>Definitions<\/span><\/h4>\nFor the purpose of this Order:<\/p>\n<ol class=\"lst\"><li>'L1<\/strong>' means the lowest tender or lowest bid, or the lowest quotation<\/strong> received in a tender, tender\/ bidding process or other procurement solicitation, as adjudged in the evaluation process<\/strong> as per the tender or other procurement solicitation.<\/li><li>'Local Content<\/strong>' means the amount of value added in India<\/strong>, which shall \u2014 unless otherwise prescribed by the Nodal Ministry \u2014 be:<\/li><\/ol>\n<aside class=\"note\">the total value of the item procured (excluding net domestic indirect taxes) MINUS the value of imported content in the item (including all customs duties), as a proportion of the total value, in percent.<\/p><\/aside>\nExplanatory notes for calculation of local content:<\/p>\n<ul class=\"lst\"><li>i) Imported items sourced locally from resellers\/ distributors shall be EXCLUDED from calculation of local content.<\/li><li>ii) The license fees\/ royalties paid\/ technical charges paid out of India shall be EXCLUDED from local content calculation.<\/li><li>iii) Procurement\/ supply of repackaged\/ refurbished\/ rebranded<\/strong> imported products, as commonly understood, shall be treated as reselling of imported products<\/strong> and shall be excluded<\/strong> from calculation of local content. Definitions:<\/li><li>'Refurbishing' means repair or reconditioning of an imported product \u2014 this does not amount to manufacture because no new goods come into existence.<\/li><li>'Repackaging' means repacking of imported goods from bulk pack to smaller packs \u2014 this would not ordinarily amount to manufacture of a new item.<\/li><li>'Rebranding' means relabelling or renaming or change in symbol or logo\/ makes or corporate image of a company\/ organisation\/ firm for an imported product \u2014 this would amount to rebranding.<\/li><li>iv) To ensure that imported items sourced locally from resellers\/ distributors are excluded from calculation of local content, procuring entities are to obtain from bidders the cost of such locally-sourced imported items (inclusive of taxes)<\/strong> along with a break-up on license\/ royalties paid\/ technical expertise cost etc. sourced from outside India<\/strong>. For items sold by a bidder as reseller<\/strong>, an OEM certificate for country of origin<\/strong> is to be submitted.<\/li><li>v) For contracts involving supply of multiple items<\/strong>, a weighted average of all items<\/strong> is to be taken while calculating the local content.<\/li><li>W<\/span>C<\/span>NC<\/span> \u2014 Class definitions (these definitions appear in the Chapter 1 text of the Works, Consultancy and Non-Consultancy Manuals; in the Goods Manual they are in the Procurement Glossary):<\/em><\/li><\/ul>\n<div class=\"tblwrap\"><table><thead><tr><th>Term<\/th><th>Definition<\/th><\/tr><\/thead><tbody><tr><td>'Class-I local supplier'<\/td><td>A supplier or service provider whose goods, services or works offered for procurement meets the minimum local content as prescribed for 'Class-I local supplier' under this Order.<\/td><\/tr><tr><td>'Class-II local supplier'<\/td><td>A supplier or service provider whose goods, services or works offered for procurement meets the minimum local content as prescribed for 'Class-II local supplier' but less than that prescribed for 'Class-I local supplier' under this Order.<\/td><\/tr><tr><td>'Non-Local supplier'<\/td><td>A supplier or service provider whose goods, services or works offered for procurement has local content less than that prescribed for 'Class-II local supplier' under this Order.<\/td><\/tr><\/tbody><\/table><\/div>\n<ol class=\"lst\"><li>'Margin of purchase preference' means the maximum extent to which the price quoted by a \"Class-I local supplier\" may be above the L1 for the purpose of purchase preference. It has been fixed as 20 per cent.<\/li><li>'Nodal Ministry<\/strong>' means the Ministry or Department identified pursuant to this Order with respect to a particular item of goods or services or works.<\/li><li>'Procuring entity' means a Ministry or Department or attached or subordinate office of, or autonomous body controlled by, the Government of India, and includes Government companies as defined in the Companies Act.<\/li><li>'Works' means all works as per Rule 130 of GFR 2017 and will also include 'turnkey works'.<\/li><\/ol>\n<h4>2A. Special Treatment for Items Covered under the PLI Scheme<\/span><\/h4>\nThe manufacturers manufacturing an item under the Production Linked Incentive (PLI) scheme<\/strong> shall be treated as deemed Class-II local supplier<\/strong> for that item, unless<\/strong> they have minimum local content equal to or higher than<\/strong> that notified for Class-I local supplier for that item, provided<\/strong> the manufacturer has received incentive from the concerned PLI Ministry<\/strong> for the item. The above shall be applicable for the specific time period only<\/strong>, as notified by the concerned PLI Ministry.<\/p>\n<h4>3.<\/span>Eligibility of 'Class-I local supplier' \/ 'Class-II local supplier' \/ 'Non-local suppliers' for Different Types of Procurement<\/span><\/h4>\n<ol class=\"lst\"><li>In the procurement of all goods, services or works in respect of which the Nodal Ministry\/ Department has communicated that there is sufficient local capacity and local competition, only a 'Class-I local supplier' shall be eligible to bid, irrespective of purchase value.<\/li><li>Only 'Class-I local supplier' and 'Class-II local supplier' shall be eligible to bid in procurements undertaken by procuring entities, except when a Global Tender Enquiry has been issued. In global tender enquiries, 'Non-local suppliers' shall also be eligible to bid along with Class-I and Class-II local suppliers.<\/li><\/ol>\nIn procurement of all goods, services or works not covered by sub-para (a) above, and with estimated value of purchases less than Rs. 200 Crore, in accordance with Rule 161(iv) of GFR, 2017 (W<\/span> cites Rule 161(iv)(b))<\/em>, a Global Tender Enquiry shall not be issued except with the approval of the competent authority as designated by the Department of Expenditure.<\/p>\n<ol class=\"lst\"><li>For the purpose of this Order, works include Engineering, Procurement and Construction (EPC) contracts, and services include System Integrator (SI) contracts.<\/li><\/ol>\n<h4>3A. Mandatory Sourcing of Items with Sufficient Local Capacity and Competition, from Class-I Local Suppliers in SI\/ EPC\/ Turnkey Contracts\/ Service Tenders<\/span><\/h4>\n<ol class=\"lst\"><li>The items notified as having sufficient local capacity and competition shall mandatorily be sourced from Class-I local suppliers in si\/ EPC\/ turnkey Contracts\/ Services tenders. This provision will be applicable only for those items which have been notified by the Nodal Ministry as Class-I \u2014 i.e., having sufficient local capacity and competition, with specific HSN codes.<\/li><li>Notwithstanding the above, if in any project it is considered that it is not practically feasible<\/strong> to source such items from Class-I local suppliers, it may take relaxation from such stipulation with the approval of the Secretary of the administrative Ministry\/ Department concerned<\/strong>, or with the approval of the Competent Authority specified by the Administrative Ministry\/ Department, on a case-specific basis<\/strong>.<\/li><\/ol>\n<h4>4.<\/span>Purchase Preference<\/span><\/h4>\n<ol class=\"lst\"><li>Subject to the provisions of the Order and to any specific instructions issued by the Nodal Ministry, purchase preference shall be given to 'Class-I local supplier'<\/strong> in procurements undertaken by procuring entities in the manner specified hereunder.<\/li><li>Divisible procurements:<\/strong> In the procurements of goods or works covered by para 3(b) above which are DIVISIBLE in nature<\/strong>, the 'Class-I local supplier' shall get purchase preference over 'Class-II local supplier' as well as 'Non-local supplier', as per the following procedure:<\/li><\/ol>\n<aside class=\"note\">Notes:<\/p>\n1.<\/strong> If the procuring entity negotiates with the L1 bidder who is not a Class-I Local Supplier<\/strong>, the margin of purchase preference (L1+20%<\/strong>) should be calculated based on the ORIGINAL L1 price, not the lower negotiated price<\/strong>, and such eligible Class-I Local Suppliers shall be called to match the new negotiated L1 price<\/strong> as per the procedure mentioned above for placement of the 50% quantity.<\/p>\n2. Since, as per sub-para (c) below, the MII order is applicable 'where the bid is evaluated on price alone' \u2014 MII purchase preference would not be applicable where evaluation is based inter alia<\/em> on non-price criteria, e.g., QCBS or FBS in Services and Works.<\/p><\/aside>\n<ul class=\"lst\"><li>i) Among all qualified bids, the lowest bid will be termed L1. If L1 is a 'Class-I local supplier', the contract for the full quantity will be awarded to L1.<\/li><li>ii) If the L1 bid is not a 'Class-I local supplier':<\/li><li>50% of the order quantity shall be awarded to L1.<\/li><li>Thereafter, the lowest bidder among the 'Class-I local suppliers' will be invited to match the L1 price for the remaining 50% quantity<\/strong>, subject to the Class-I local supplier's quoted price falling within the margin of purchase preference (L1+20%)<\/strong>, and the contract for that quantity shall be awarded to such Class-I local supplier subject to matching the L1 price.<\/li><li>In case the lowest eligible Class-I local supplier fails to match the L1 price or accepts less than the offered quantity<\/strong>, the next higher Class-I local supplier within L1+20% shall be invited<\/strong> to match the L1 price for the remaining quantity, and so on, and the contract shall be awarded accordingly.<\/li><li>In case some quantity out of the 50% (for the eligible Class-I Local Suppliers) is still left uncovered, then such balance quantity may also be ordered on the L1 bidder.<\/li><li>Non-divisible procurements and services evaluated on price alone:<\/strong> In the procurements of goods or works covered by para 3(b) above which are not divisible in nature<\/strong>, and in the procurement of services where the bid is evaluated on price alone<\/strong>, the 'Class-I local supplier' shall get purchase preference over 'Class-II local supplier' as well as 'Non-local supplier', as per the following procedure:<\/li><li>Among all qualified bids, the lowest bid will be termed L1. If L1 is a 'Class-I local supplier', the contract will be awarded to L1.<\/strong><\/li><li>If L1 is not a 'Class-I local supplier'<\/strong>, the lowest bidder among the 'Class-I local suppliers' will be invited to match the L1 price<\/strong>, subject to the Class-I local supplier's quoted price falling within the margin of purchase preference (L1+20%<\/strong>), and the contract shall be awarded to such Class-I local supplier subject to matching the L1 price.<\/li><li>In case the lowest eligible Class-I local supplier fails to match<\/strong> the L1 price, the Class-I local supplier with the next higher bid within L1+20% shall be invited<\/strong> to match the L1 price, and so on, and the contract shall be awarded accordingly. In case none of the Class-I local suppliers within the margin of purchase preference matches the L1 price, the contract may be awarded to the L1 bidder.<\/strong><\/li><li>\"Class-II local supplier<\/strong>\" will not get a preference<\/strong> for any procurement undertaken by procuring entities.<\/li><\/ul>\n<h4>4A. Applicability in Tenders where the Contract is to be Awarded to Multiple Bidders<\/span><\/h4>\nIn tenders where the contract is awarded to multiple bidders<\/strong>, subject to matching of L1 rates or otherwise, the 'Class-I local supplier' shall get purchase preference over 'Class-II local supplier' as well as 'Non-local supplier', as per the following procedure:<\/p>\n<ul class=\"lst\"><li>i) In case there is sufficient local capacity and competition<\/strong> for the item to be procured, as notified by the Nodal Ministry, only Class-I local suppliers shall be eligible to bid<\/strong>. As such, the multiple suppliers who would be awarded the contract should be all and only 'Class-I Local suppliers'<\/strong>.<\/li><li>ii) In other cases<\/strong>, 'Class-II local suppliers' and 'Non-local suppliers' may also participate in the tender process along with 'Class-I local suppliers' as per provisions of the Order.<\/li><li>iii) If 'Class-I Local suppliers' qualify for the award of contract for at least 50% of the tendered quantity in any tender, the contract may be awarded to all the qualified bidders as per the award criteria stipulated in the tender documents.<\/li><li>iv) However, in case 'Class-I Local suppliers' do not qualify for the award of contract for at least 50% of the tendered quantity, purchase preference should be given to the 'Class-I local supplier' over Class-II local suppliers\/ Non-local suppliers, provided their quoted rate falls within the 20% margin of purchase preference of the HIGHEST quoted bidder considered for award of contract \u2014 so as to ensure that the Class-I Local suppliers, taken in totality, are considered for award of contract for at least 50% of the tendered quantity.<\/li><li>v) Only those 'Class-I local suppliers' whose quoted rates fall within the 20% margin of purchase preference would be eligible for purchase preference, subject to meeting the prescribed criteria for award of contract as also the constraint of maximum quantity that can be sourced from any single supplier.<\/li><li>First, purchase preference must be given to the lowest quoting eligible 'Class-I local supplier'.<\/li><li>If the lowest quoting Class-I local supplier does not qualify<\/strong> for purchase preference because of the aforesaid constraints, or does not accept the offered quantity<\/strong>, an opportunity may be given to the next higher eligible Class-I local supplier<\/strong>, and so on.<\/li><li>In case the quantity thus allocated to eligible Class-I local suppliers is short of 50%<\/strong> of the tendered quantity, then this shortfall quantity may be distributed among all other qualified bidders<\/strong> as per the award criteria stipulated in the tender documents.<\/li><li>vi) To avoid any ambiguity during the bid evaluation process, the procuring entities may stipulate their own tender-specific criteria<\/strong> for the award of contracts amongst different bidders, including the procedure for purchase preference to 'Class-I local supplier', within the broad policy guidelines stipulated in the sub-paras above.<\/li><\/ul>\n<h4>5.<\/span>Exemption of Small Purchases<\/span><\/h4>\nNotwithstanding anything contained above, procurements where the estimated value to be procured is less than Rs. 5 lakh shall be EXEMPT from the Order. However, it shall be ensured by procuring entities that procurement is not split for the purpose of avoiding the provisions of this Order.<\/p>\n<h4>5A. Exemption in Sourcing of Spares and Consumables of Closed Systems<\/span><\/h4>\nProcurement of spare parts, consumables for closed systems, and Maintenance\/ Service contracts with the Original Equipment Manufacturer\/ Original Equipment Supplier\/ Original Part Manufacturer shall be exempted from this Order.<\/p>\n<h4>6.<\/span>Minimum Local Content<\/span><\/h4>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Minimum Local Content<\/th><\/tr><\/thead><tbody><tr><td>Class-I local supplier<\/td><td>50%<\/td><\/tr><tr><td>Class-II local supplier<\/td><td>20%<\/td><\/tr><\/tbody><\/table><\/div>\nThe Nodal Ministry\/ Department may prescribe only a higher percentage<\/strong> of the minimum local content requirement to categorise a supplier as Class-I\/ Class-II local supplier. For items for which the Nodal Ministry\/ Department has not prescribed a higher minimum local content<\/strong> notification under the Order, it shall be 50% and 20%<\/strong> for Class-I and Class-II local supplier respectively.<\/p>\n<aside class=\"note\">Important: Local content is not related to the nationality of the firm \u2014 a foreign-owned firm may also become a Class-I or Class-II local supplier by adding local value addition.<\/p><\/aside>\n<h4>7.<\/span>Requirement for Declaration\/ Specification in Advance<\/span><\/h4>\nThe minimum local content, the margin of purchase preference, and the procedure for preference to Make in India shall be declared in the Notice Inviting Tenders or other forms of procurement solicitation, and shall not be varied during a particular procurement transaction.<\/p>\n<h4>8.<\/span>Government e-Marketplace<\/span><\/h4>\nIn respect of procurement through GeM, GeM shall, as far as possible, specifically mark the items that meet the minimum local content while registering the item for display, and shall, wherever feasible, make provision for automated comparison with purchase preference and without purchase preference, and for obtaining consent of the local supplier in those cases where purchase preference is to be exercised.<\/p>\n<h4>9.<\/span>Verification of Local Content<\/span><\/h4>\n<ol class=\"lst\"><li>The Class-I\/ Class-II local supplier shall, at the time of tender, bidding or solicitation<\/strong>, be required to indicate the percentage of local content<\/strong> and provide self-certification<\/strong> that the item offered meets the local content requirement for Class-I\/ Class-II local supplier, as the case may be. They shall also give details of the location(s) at which the local value addition is made<\/strong>.<\/li><li>In cases of procurement for a value more than Rs. 10 crore<\/strong>, the Class-I\/ Class-II local supplier shall be required to provide a certificate from the statutory auditor or cost auditor of the company<\/strong> (in the case of companies), or from a practising cost accountant or practising chartered accountant<\/strong> (in respect of suppliers other than companies), giving the percentage of local content<\/strong>.<\/li><li>The bidder shall give self-certification for local content in the quoted item (goods\/ works\/ services) at the time of tendering. However, at the time of execution of the project, for all contracts above INR 10 Crore, the contractor\/ supplier shall be required to give local content certification duly certified by a cost\/ chartered accountant in practice.<\/li><\/ol>\nFor cases where it is not possible<\/strong> to provide certification by Cost\/ Chartered Accountant at the time of execution of the project, the supplier shall be permitted to provide the certificate after completion of the contract<\/strong>, within the limit acceptable to the procuring entity.<\/p>\nIn case the contractor\/ supplier does not meet the stipulated local content requirement and the category of the supplier changes from Class-I to Class-II\/ Non-local, or from Class-II to Non-local \u2014 a penalty up to 10% of the contract value may be imposed. However, the contract once awarded shall not be terminated on this account.<\/p>\n<ol class=\"lst\"><li>Decisions on complaints<\/strong> relating to the implementation of this Order shall be made by the competent authority empowered to investigate procurement-related complaints<\/strong> relating to the procuring entity.<\/li><li>Nodal Ministries may constitute committees with internal and external experts for independent verification of self-declarations and auditor's\/ accountant's certificates \u2014 on a random basis and in the case of complaints.<\/li><li>Nodal Ministries and procuring entities may prescribe fees for such complaints.<\/li><li>False declarations will be in breach of the Code of Integrity under Rule 175(1)(i)(h) of the GFR<\/strong>, for which a bidder or its successors can be DEBARRED for up to two years<\/strong> as per Rule 151(iii) of the GFR<\/strong>, along with such other actions as may be permissible under law. The Department of Expenditure shall issue suitable instructions for the effective and smooth operation of this process, so that:<\/li><li>i) The fact and duration of debarment<\/strong> for violation of the Order by any procuring entity are promptly brought to the notice of the Member-Convenor of the Standing Committee and the Department of Expenditure<\/strong> through the concerned Ministry\/ Department or in some other manner;<\/li><li>ii) On a periodical basis, such cases are consolidated, and a centralised or decentralised list of such suppliers with the period of debarment is maintained and displayed on the website(s);<\/li><li>iii) With respect to procuring entities other than the one that has carried out the debarment, the debarment takes effect PROSPECTIVELY from the date of uploading on the website(s), in such a manner that ongoing procurements are not disrupted;<\/li><li>iv) A supplier who has been debarred by any procuring entity for violation of the Order shall not be eligible for preference under the Order for procurement by any other procuring entity for the duration of the debarment<\/strong>. The debarment for such other procuring entities shall take effect prospectively from the date on which it comes to the notice of other procuring entities<\/strong> in the manner prescribed above.<\/li><\/ol>\n<h4>10.<\/span>Specifications in Tenders and Other Procurement Solicitations<\/span><\/h4>\n<ol class=\"lst\"><li>Every procuring entity shall ensure that the eligibility\/ qualification conditions with respect to previous experience fixed in any tender or solicitation do not require proof of supply in other countries or proof of exports.<\/li><li>Procuring entities shall endeavour to see that eligibility\/ qualification conditions \u2014 including on matters like turnover, production capability, and financial strength<\/strong> \u2014 do not result in unreasonable exclusion of Class-I\/ Class-II local suppliers<\/strong> who would otherwise be eligible, beyond what is essential for ensuring quality or creditworthiness<\/strong> of the supplier.<\/li><li>Procuring entities shall review all existing eligibility norms and conditions<\/strong> with reference to sub-paragraphs (a) and (b) above.<\/li><li>Specifying foreign certifications\/ unreasonable technical specifications\/ brands\/ models in the tender document is a restrictive and discriminatory practice against local suppliers. If foreign certification is required to be stipulated because of the non-availability of Indian Standards and\/or for any other reason, the same shall be done only after written approval of the Secretary of the Department concerned, or any other Authority designated such power by the Secretary of the Department concerned.<\/li><li>G<\/span>C<\/span> \"All administrative Ministries\/ Departments whose procurement exceeds Rs. 1000 Crore per annum<\/strong> shall notify\/ update their procurement projections every year<\/strong>, including those of the PSEs\/ PSUs, for the next five years on their respective website<\/strong>.\"<\/li><\/ol>\n<h4>11.<\/span>Reciprocity Clause<\/span><\/h4>\n<ol class=\"lst\"><li>When a Nodal Ministry\/ Department identifies that Indian suppliers of an item are not allowed to participate and\/or compete in procurement by any foreign government due to restrictive tender conditions which have the direct or indirect effect of barring Indian companies \u2014 such as registration in the procuring country, execution of projects of specific value in the procuring country, etc. \u2014 it shall provide such details to all its procuring entities, including CMDs\/ CEOs of PSEs\/ PSUs, State Governments and other procurement agencies under their administrative control, and GeM, for appropriate reciprocal action.<\/li><li>Entities of countries identified by the Nodal Ministry\/ Department as not allowing Indian companies to participate in their Government procurement for any item related to that Nodal Ministry shall not be allowed to participate in Government procurement in India for all items related to that Nodal Ministry\/ Department, except for the list of items published by the Ministry\/ Department permitting their participation.<\/li><li>The stipulation in (b) above shall be part of all tenders invited by the Central Government procuring entities<\/strong> stated in (a) above. All purchases on GeM shall also necessarily have the above provisions<\/strong> for items identified by the Nodal Ministry\/ Department.<\/li><li>State Governments should be encouraged to incorporate similar provisions in their respective tenders.<\/li><li>The term 'entity<\/strong>' of a country shall have the same meaning as under the FDI (Foreign Direct Investment) Policy of DPIIT<\/strong>, as amended from time to time.<\/li><\/ol>\n<h4>12.<\/span>Action for Non-Compliance with the Provisions of the Order<\/span><\/h4>\nIn case restrictive or discriminatory conditions against domestic suppliers are included in tender documents, an inquiry shall be conducted by the Administrative Department undertaking the procurement (including procurement by any entity under its administrative control) to fix responsibility for the same. Thereafter, appropriate action \u2014 administrative or otherwise \u2014 shall be taken against erring officials of procuring entities under relevant provisions. Intimation on all such actions shall be sent to the Standing Committee.<\/p>\n<h4>13.<\/span>Assessment of Supply Base by Nodal Ministries<\/span><\/h4>\nThe Nodal Ministry shall keep in view the domestic manufacturing\/ supply base and assess the available capacity and the extent of local competition while identifying items and prescribing the higher minimum local content or the manner of its calculation \u2014 with a view to avoiding cost increase from the operation of this Order.<\/p>\n<h4>14.<\/span>Increase in Minimum Local Content<\/span><\/h4>\nThe Nodal Ministry may annually review the local content requirements with a view to INCREASING them, subject to the availability of sufficient local competition with adequate quality.<\/p>\n<h4>15.<\/span>Manufacture under Licence\/ Technology Collaboration Agreements with Phased Indigenisation<\/span><\/h4>\n<ol class=\"lst\"><li>While notifying the minimum local content, Nodal Ministries may make special provisions for exempting suppliers from meeting the stipulated local content if the product is being manufactured in India under a licence from a foreign manufacturer who holds intellectual property rights, and where there is a technology collaboration agreement\/ transfer of technology agreement for indigenous manufacture of a product developed abroad with clear phasing of increase in local content.<\/li><li>In the procurement of all goods, services or works in respect of which there is a substantial quantity of public procurement, and for which the Nodal Ministry has not notified that there is sufficient local capacity and local competition, the concerned Nodal Ministry shall notify an upper threshold value of procurement beyond which foreign companies shall enter into a JOINT VENTURE with an Indian company to participate in the tender. Procuring entities, while procuring such items beyond the notified threshold value, shall prescribe in their respective tenders that foreign companies may enter into a joint venture with an Indian company to participate in the tender. The procuring Ministries\/ Departments shall also make special provisions to exempt such joint ventures from meeting the stipulated minimum local content requirement, which shall be increased in a phased manner.<\/li><\/ol>\n<h4>16.<\/span>Powers to Grant Exemption and to Reduce Minimum Local Content<\/span><\/h4>\n<ol class=\"lst\"><li>The Administrative Department undertaking the procurement (including procurement by any entity under its administrative control), with the approval of their Minister-in-charge, may \u2014 by written order, for reasons to be recorded in writing:<\/li><li>i) reduce the minimum local content below the prescribed level; or<\/li><li>ii) reduce the margin of purchase preference below 20 per cent; or<\/li><li>iii) exempt any item or supplying entities from the operation of this Order or any part of the Order.<\/li><li>The Administrative Department, while seeking exemption under this para, shall certify that such item(s) has not been notified by the Nodal Ministry\/ Department concerned.<\/li><li>A copy of every such order shall be provided to the Standing Committee and the concerned Nodal Ministry\/ Department. The Nodal Ministry\/ Department will continue to have the power to vary its notification on Minimum Local Content.<\/li><\/ol>\n<h4>17.<\/span>Directions to Government Companies<\/span><\/h4>\nWith respect to Government companies and other procuring entities not governed by the General Financial Rules, the administrative Ministry or Department shall issue policy directions requiring compliance with this Order.<\/p>\n<h4>18.<\/span>Standing Committee<\/span><\/h4>\n<ol class=\"lst\"><li>A Standing Committee<\/strong> is constituted with the following membership:<\/li><\/ol>\n<div class=\"tblwrap\"><table><thead><tr><th>Position<\/th><th>Member<\/th><\/tr><\/thead><tbody><tr><td>Chairman<\/td><td>Secretary, Department for Promotion of Industry and Internal Trade (DPIIT)<\/td><\/tr><tr><td>Member<\/td><td>Secretary, Commerce<\/td><\/tr><tr><td>Member<\/td><td>Secretary, Ministry of Electronics and Information Technology<\/td><\/tr><tr><td>Member<\/td><td>Joint Secretary (Public Procurement), Department of Expenditure<\/td><\/tr><tr><td>Member-Convenor<\/td><td>Joint Secretary (DPIIT)<\/td><\/tr><\/tbody><\/table><\/div>\n<ol class=\"lst\"><li>The Secretary of the Department concerned with a particular item shall be a member<\/strong> in respect of issues relating to such item. The Chairman of the Committee may co-opt technical experts<\/strong> as relevant to any issue or class of issues under its consideration.<\/li><\/ol>\n<h4>19.<\/span>Functions of the Standing Committee<\/span><\/h4>\nThe Standing Committee shall meet as often as necessary, but not less than once every six months. The Committee:<\/p>\n<ol class=\"lst\"><li>shall oversee the implementation<\/strong> of this Order and the issues arising from it, and make recommendations<\/strong> to Nodal Ministries and procuring entities;<\/li><li>shall annually assess and periodically monitor compliance with this Order;<\/li><li>shall identify Nodal Ministries and the allocation of items among them for the issue of notifications on minimum local content;<\/li><li>may require the furnishing of details or returns<\/strong> regarding compliance with this Order and related matters;<\/li><li>may, during the annual review or otherwise, assess issues where the manner of implementation of the Order results in any restrictive practices, cartelisation, or increase in public expenditure, and suggest remedial measures;<\/li><li>may examine cases covered by para 15 above relating to manufacture under licence\/ technology transfer agreements, with a view to satisfying itself that adequate mechanisms exist for enforcement of such agreements and for attaining the underlying objective of progressive indigenisation;<\/li><li>may consider any other issue<\/strong> relating to this Order that may arise.<\/li><\/ol>\n<h4>20.<\/span>Removal of Difficulties<\/span><\/h4>\nMinistries\/ Departments and the Boards of Directors of Government companies<\/strong> may issue such clarifications and instructions<\/strong> as may be necessary for the removal of any difficulties<\/strong> arising in the implementation of the Order.<\/p>\n<h4>21.<\/span>Ministries Having Existing Policies<\/span><\/h4>\nWhere any Ministry or Department has its own policy for preference to local content approved by the Cabinet after 1st January 2015<\/strong>, such policies will PREVAIL over the provisions of the Order<\/strong>. All other existing orders on preference to local content shall be reviewed by the Nodal Ministries and revised as needed<\/strong>(W<\/span> adds: \"to conform to this Order, within two months of the issue of this Order\")<\/em>.<\/p>\n<h4>22.<\/span>Faqs<\/span><\/h4>\nPlease refer to the FAQs related to the PPP-MII Order issued by DPIIT.<\/p>\n<aside class=\"note\">Annexure references:<\/strong>G<\/span> Annexure 28 \u00b7 W<\/span> Annexure 18 \u00b7 C<\/span> Annexure 26 \u00b7 NC<\/span> Annexure 22.<\/p><\/aside>\n<h3>1.11.4<\/span>Restrictions\/ Prior Registration on Entities from a Class of Countries<\/span><\/h3>\n(Rule 144(xi), GFR 2017 \u2014 the \"Land Border\" Order)<\/em><\/p>\n<h4>1.<\/span>Requirement of Registration<\/span><\/h4>\nRule 144 of GFR, 2017 has been amended to include a new sub-para (xi)<\/strong> as follows:<\/p>\n<aside class=\"note\">\"Notwithstanding anything contained in these Rules, the Department of Expenditure may, by order in writing, impose restrictions, including prior registration and\/or screening, on procurement from bidders from, or bidders having commercial arrangements with an entity from, a country or countries, or a class of countries, on grounds of defence of India, or matters directly or indirectly related thereto including national security; No procurement shall be made in violation of such restrictions.\"<\/p><\/aside>\n<h4>2.<\/span>Detailed Provisions<\/span><\/h4>\n(Notified by the Department of Expenditure's OM No. F.7\/10\/2021-PPD(1) dated 23.02.2023)<\/em><\/p>\n<ol class=\"lst\"><li>Any bidder from a country that shares a land border with India will be eligible to bid in any procurement \u2014 whether of goods, services (including consultancy services and non-consultancy services) or works (including turnkey projects) \u2014 only IF the bidder is REGISTERED with the Competent Authority (see sub-para 10 below).<\/li><li>Any bidder (including an Indian bidder) who has a Specified Transfer of Technology (ToT) arrangement with an entity from a country that shares a land border with India<\/strong> will be eligible to bid in any procurement \u2014 whether of goods, services (including consultancy and non-consultancy services) or works (including turnkey projects) \u2014 only if the bidder is registered with the Competent Authority<\/strong>. (See also sub-para 5 below.)<\/li><li>Effective dates:<\/li><\/ol>\n<div class=\"tblwrap\"><table><thead><tr><th>Provision<\/th><th>Applicable from<\/th><\/tr><\/thead><tbody><tr><td>Registration for bidders under para (a)<\/td><td>23.07.2020<\/td><\/tr><tr><td>Registration for bidders under para (b) \u2014 ToT arrangements<\/td><td>All procurements where tenders are issued\/ published after 01.04.2023<\/td><\/tr><\/tbody><\/table><\/div>\n<ol class=\"lst\"><li>In tenders issued after 23.07.2020 or 01.04.2023, as the case may be, the requirements for registration of bidders and other relevant provisions of this Order shall be incorporated in the tender conditions.<\/li><\/ol>\n<h4>3.<\/span>Applicability<\/span><\/h4>\nApart from Ministries\/ Departments, attached and subordinate bodies, notwithstanding anything contained in Rule 1 of the GFRs 2017<\/strong>, the Order shall also<\/strong> be applicable:<\/p>\n<ol class=\"lst\"><li>to all Autonomous Bodies;<\/li><li>to public sector banks and public sector financial institutions;<\/li><li>to all Central Public Sector Enterprises;<\/li><li>to all procurement in Public Private Partnership projects receiving financial support from the Government or public sector enterprises\/ undertakings;<\/li><li>to Union Territories, the National Capital Territory of Delhi, and all agencies\/ undertakings thereof.<\/li><\/ol>\nf) The Order is not applicable:<\/p>\n<ul class=\"lst\"><li>i) In projects that receive international funding with the approval of the Department of Economic Affairs (DEA)<\/strong>, Ministry of Finance \u2014 the procurement guidelines applicable to the project shall normally be followed, notwithstanding anything contained in this Order and without reference to the Competent Authority<\/strong>. Exceptions to this shall be decided in consultation with DEA.<\/strong><\/li><li>ii) On procurements made by Indian missions and by offices of government agencies\/ undertakings located outside India.<\/li><li>iii) On bidders (or entities) from those countries \u2014 even if sharing a land border with India \u2014 to which the Government of India has extended lines of credit, or in which the Government of India is engaged in development projects. Updated lists are given on the Ministry of External Affairs' website.<\/li><li>iv) On procurement of spare parts and other essential service support like AMC\/ CMC, including consumables for closed systems, from Original Equipment Manufacturers (OEMs) or their authorised agents<\/strong> \u2014 exempted from the requirement of registration as mandated under Rule 144(xi) of GFR, 2017 (Notified vide OM No. F.12\/1\/2021-PPD(Pt.) dated 02.03.2021)<\/em>.<\/li><li>v) A bidder is permitted to procure raw materials, components, sub-assemblies, etc. from vendors from countries that share a land border with India. Such vendors will not be required to be registered with the Competent Authority, as it is not regarded as \"sub-contracting\". However, if a bidder proposes to supply FINISHED GOODS procured directly\/ indirectly from vendors from countries sharing a land border with India, such vendors WILL be required to be registered with the Competent Authority (Notified vide OM No. F.18\/37\/2020-PPD dated 08.02.2021)<\/em>.<\/li><\/ul>\n<h4>4.<\/span>Definitions<\/span><\/h4>\na) \"Bidder\"<\/strong> \u2014 for the purpose of the Order (including the terms 'bidder<\/strong>', 'consultant<\/strong>', 'vendor<\/strong>' or 'service provider<\/strong>' in certain contexts) means any person, firm or company, including any member of a consortium or joint venture<\/strong> (that is, an association of several persons, or firms or companies), every artificial juridical person<\/strong> not falling in any of the descriptions of bidders stated hereinbefore, including any agency, branch or office controlled by such person<\/strong>, participating in a procurement process.<\/p>\nb) \"Tender\"<\/strong> \u2014 for the purpose of the Order will include other forms of procurement<\/strong>, except where the context requires otherwise.<\/p>\nc) \"Transfer of Technology\" \u2014 means dissemination and transfer of all forms of commercially usable knowledge, such as transfer of know-how, skills, technical expertise, designs, processes and procedures, and trade secrets, which enables the acquirer of such technology to perform activities using the transferred technology independently.<\/p>\n<aside class=\"note\">Matters of interpretation of this term shall be referred to the Registration Committee constituted by DPIIT<\/strong>, and the interpretation of the Committee shall be final<\/strong>.<\/em><\/p><\/aside>\nd) \"Specified Transfer of Technology\" \u2014 means a transfer of technology in the sectors and\/or technologies specified in sub-para 5 below, occurring on or after 23.07.2020.<\/p>\ne) \"Bidder (or entity) from a country which shares a land border with India\" \u2014 means:<\/p>\n<ul class=\"lst\"><li>i) An entity incorporated, established, or registered in such a country; or<\/li><li>ii) A subsidiary<\/strong> of an entity incorporated, established, or registered in such a country; or<\/strong><\/li><li>iii) An entity substantially controlled through entities<\/strong> incorporated, established, or registered in such a country; or<\/strong><\/li><li>iv) An entity whose beneficial owner is situated in such a country; or<\/li><li>v) An Indian (or other) AGENT of such an entity; or<\/li><li>vi) A natural person who is a citizen of such a country; or<\/li><li>vii) A consortium or joint venture where any member<\/strong> of the consortium or joint venture falls under any of the above.<\/li><\/ul>\nf) \"Agent\" \u2014 for the purpose of the Order, is a person employed to do any act for another, or to represent another in dealings with third persons.<\/p>\n<aside class=\"note\">Notes:<\/p>\n1. A person who procures and supplies FINISHED GOODS from an entity from a country that shares a land border with India will \u2014 regardless of the nature of his legal or commercial relationship with the producer of the goods \u2014 be deemed to be an AGENT for the purpose of this Order.<\/p>\n2. However, a bidder who only procures raw material, components, etc. from an entity from a country that shares a land border with India and then manufactures or converts them into other goods will not be treated as an Agent.<\/p><\/aside>\ng) \"Beneficial owner\"<\/strong> \u2014 for the purposes of point (e)(iv) will be as follows:<\/p>\n<ul class=\"lst\"><li>i) In the case of a company or Limited Liability Partnership, the beneficial owner is the natural person(s) who, whether acting alone or together, or through one or more juridical person(s), has a controlling ownership interest, or who exercises CONTROL through other means.<\/li><\/ul>\n<aside class=\"note\">Explanation:<\/p>\n<ol class=\"lst\"><li>\"Controlling ownership interest<\/strong>\" means ownership of, or entitlement to, more than twenty-five per cent (25%)<\/strong> of shares or capital or profits of the company;<\/li><li>\"Control\" shall include the right to appoint the majority of the directors, or to control the management or policy decisions \u2014 including by virtue of their shareholding or management rights or shareholders' agreements or voting agreements.<\/li><\/ol><\/aside>\n<ul class=\"lst\"><li>ii) In the case of a partnership firm<\/strong>, the beneficial owner is the natural person(s) who, whether acting alone or together, or through one or more juridical persons, has ownership of\/ entitlement to more than fifteen per cent (15%) of capital or profits<\/strong> of the partnership.<\/li><li>iii) In the case of an unincorporated association or body of individuals<\/strong>, the beneficial owner is the natural person(s) who, whether acting alone or together, or through one or more juridical persons, has ownership of or entitlement to more than fifteen per cent (15%) of the property or capital or profits<\/strong> of such association or body of individuals.<\/li><li>iv) Where NO natural person is identified under (i), (ii) or (iii) above, the beneficial owner is the relevant natural person who holds the position of senior managing official.<\/li><li>v) In the case of a TRUST<\/strong>, the identification of beneficial owner(s) shall include identification of:<\/li><li>the author of the trust,<\/li><li>the trustee,<\/li><li>the beneficiaries with fifteen per cent (15%) or more interest in the trust, and<\/li><li>any other natural person exercising ultimate effective control over the trust through a chain of control or ownership.<\/li><li>vi) To determine nationality<\/strong> while assessing the beneficial ownership of the bidder, the nationality mentioned in the beneficial owner's PASSPORT<\/strong> should be considered. In case of the possibility of dual citizenship<\/strong>, nationality on all the passports should be considered through a suitable declaration<\/strong>. If nationality in any of the passports<\/strong> of the person whose beneficial ownership is being assessed is recorded to be from a country sharing a land border with India, the provisions contained under this Order shall apply<\/strong>.<\/li><\/ul>\n<aside class=\"note\">Hong Kong and Macau are to be considered as part of China for the purpose of this Order.<\/p><\/aside>\n<h4>5.<\/span>Sensitive Sectors\/ Technologies<\/span><\/h4>\n(Relevant only for the provisions on ToT arrangements \u2014 refer sub-para 2(b) above)<\/em><\/p>\n<ol class=\"lst\"><li>Certain sectors and technologies have been identified as sensitive from the national security point of view:<\/li><li>Sectors listed in Schedule I \u2192 Category-I sensitive sectors<\/li><li>Sectors listed in Schedule II \u2192 Category-II sensitive sectors<\/li><li>Technologies listed in Schedule III \u2192 sensitive technologies<\/li><\/ol>\nList of Category-I Sensitive Sectors (Schedule-I)<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>S. No.<\/th><th>Sector<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Atomic Energy<\/td><\/tr><tr><td>2<\/td><td>Broadcasting\/ Print and Digital Media<\/td><\/tr><tr><td>3<\/td><td>Defence<\/td><\/tr><tr><td>4<\/td><td>Space<\/td><\/tr><tr><td>5<\/td><td>Telecommunications<\/td><\/tr><\/tbody><\/table><\/div>\nList of Category-II Sensitive Sectors (Schedule-II)<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>S. No.<\/th><th>Sector<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Power and Energy (including exploration\/ generation\/ transmission\/ distribution\/ pipeline)<\/td><\/tr><tr><td>2<\/td><td>Banking and Finance, including Insurance<\/td><\/tr><tr><td>3<\/td><td>Civil Aviation<\/td><\/tr><tr><td>4<\/td><td>Construction of ports and dams & river valley projects<\/td><\/tr><tr><td>5<\/td><td>Electronics and Microelectronics<\/td><\/tr><tr><td>6<\/td><td>Meteorology and Ocean Observation<\/td><\/tr><tr><td>7<\/td><td>Mining and extraction (including deep sea projects)<\/td><\/tr><tr><td>8<\/td><td>Railways<\/td><\/tr><tr><td>9<\/td><td>Pharmaceuticals & Medical Devices<\/td><\/tr><tr><td>10<\/td><td>Agriculture<\/td><\/tr><tr><td>11<\/td><td>Health<\/td><\/tr><tr><td>12<\/td><td>Urban Transportation<\/td><\/tr><\/tbody><\/table><\/div>\nList of Sensitive Technologies (Schedule-III)<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>S. No.<\/th><th>Technology<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Additive Manufacturing (e.g., 3D Printing)<\/td><\/tr><tr><td>2<\/td><td>Any equipment having electronic programmable components or autonomous systems (e.g., SCADA systems)<\/td><\/tr><tr><td>3<\/td><td>Any technology used for uploading and streaming data, including broadcasting, satellite communication, etc.<\/td><\/tr><tr><td>4<\/td><td>Chemical Technologies<\/td><\/tr><tr><td>5<\/td><td>Biotechnologies, including Genetic Engineering and Biological Technologies<\/td><\/tr><tr><td>6<\/td><td>Information and Communication Technologies<\/td><\/tr><tr><td>7<\/td><td>Software<\/td><\/tr><\/tbody><\/table><\/div>\n<ol class=\"lst\"><li>For Category-I sensitive sectors<\/strong>, bidders with a ToT arrangement in any technology<\/strong> with an entity from a country that shares a land border with India shall require registration<\/strong>.<\/li><li>For Category-II sensitive sectors<\/strong>, bidders with a ToT arrangement in the sensitive technologies listed in Schedule III<\/strong> with an entity from a country that shares a land border with India shall require registration<\/strong>.<\/li><li>In Category-II sensitive sectors, the Secretary (or an officer not below the rank of Joint Secretary to the Government of India, so authorised by the Secretary) of the Ministry\/ Department of the Government of India is empowered, after due consideration, to WAIVE the requirement of registration for a particular item\/ application or a class of items\/ applications, even if included in Schedule III. The Ministry\/ Department concerned shall INFORM DPIIT and the National Security Council Secretariat (NSCS) of their decision to waive the requirement of registration. Ministries\/ Departments are not required to consult DPIIT\/ nscs before deciding, and are only required to inform DPIIT\/ nscs of the decision. If DPIIT\/ NSCS raises any point, it should be considered in future procurements, and the ongoing procurement for which the waiver was granted need not be interrupted or altered.<\/li><li>Based on security considerations<\/strong>, a Ministry\/ Department in a Category-II sensitive sector, or other Ministries\/ Departments, may recommend to DPIIT the inclusion of any other technology in the list of sensitive technologies<\/strong> \u2014 either generally or for their Ministry\/ Department.<\/li><\/ol>\n<h4>6.<\/span>Sub-contracting in Works Contracts<\/span><\/h4>\nIn works contracts, including turnkey contracts, contractors shall not be allowed to sub-contract works to any contractor from a country that shares a land border with India unless such contractor is REGISTERED with the Competent Authority. The definition of \"contractor from a country which shares a land border with India\" shall be as in sub-para 4(e) above. This shall not apply to sub-contracts already awarded on or before the date of the Order (i.e., 23rd July 2020).<\/p>\n<aside class=\"note\">[Note: Procurement of raw material, components, etc. does not constitute sub-contracting.]<\/p><\/aside>\n<h4>7.<\/span>Model Clauses\/ Certificate Regarding Compliance<\/span><\/h4>\nAn undertaking\/ certificate shall be taken from bidders in the tender documents that the extant guidelines for participation in the tenders (which should include conditions for implementation of this Order) have been complied with. If such a certificate is given by a bidder whose bid is accepted and is found to be FALSE, this would be grounds for DEBARMENT and further legal action in accordance with law.<\/p>\nModel Clauses and Model Certificates<\/strong>, which may be inserted in tenders\/ obtained from Bidders, are given in the Annexures. While adhering to the substance<\/strong> of the Order, procuring entities are free to appropriately modify the wording of these clauses<\/strong> based on their past experience, local needs, etc.<\/p>\n<aside class=\"note\">Annexure references:<\/strong>G<\/span> Annexure 33 \u00b7 W<\/span> Annexure 19 \u00b7 C<\/span> Annexure 17 \u00b7 NC<\/span> Annexure 11.<\/p><\/aside>\n<h4>8.<\/span>Validity of Registration<\/span><\/h4>\n<ul class=\"lst\"><li>With respect to tenders, registration should be valid at the time of SUBMISSION of bids AND at the time of ACCEPTANCE of bids.<\/li><li>With respect to supplies other than by tender, registration should be valid at the time of placement of the order.<\/li><li>If the bidder was validly registered at the time of acceptance\/ placement of the order, registration shall not be a relevant consideration during contract execution.<\/li><\/ul>\n<h4>9.<\/span>Government e-Marketplace<\/span><\/h4>\nGeM shall REMOVE non-compliant entities from GeM unless\/ until they are registered in accordance with this Order.<\/p>\n<h4>10.<\/span>Competent Authority and Procedure for Registration<\/span><\/h4>\n<ol class=\"lst\"><li>The Competent Authority<\/strong> for the purpose of registration under this Order shall be the Registration Committee constituted by DPIIT<\/strong>(Notified vide OM No. F.6\/18\/2019-PPD issued by Department of Expenditure dated 23.07.2020)<\/em>.<\/li><\/ol>\n<aside class=\"note\">Footnote on States: (i) In respect of application of the Order to procurement by\/ under State Governments, all functions assigned to DPIIT shall be carried out by the State Government concerned through a specific department or authority designated by it. The composition of the Registration Committee shall be as decided by the State Government. However, the requirement of political and security clearance as per para 10(d) shall remain, and no registration shall be granted without such clearance. (ii) Registration granted by State Governments shall be valid only for procurement by that State Government and its agencies\/ public enterprises etc., and shall not be valid for procurement in other states or by the Government of India and their agencies\/ public enterprises etc.<\/p><\/aside>\n<ol class=\"lst\"><li>The Registration Committee<\/strong> shall have the following members:<\/li><li>i) An officer not below the rank of Joint Secretary, designated for this purpose by DPIIT, who shall be the Chairperson;<\/li><li>ii) Officers (ordinarily not below the rank of Joint Secretary) representing the Ministry of Home Affairs, Ministry of External Affairs, and those Departments whose sectors are covered by applications under consideration;<\/li><li>iii) Any other officer whose presence is deemed necessary by the Chairperson of the Committee.<\/li><li>DPIIT has laid down the method of application, format, etc. for such bidders as covered by the Order.<\/li><li>On receipt of an application seeking registration from a bidder covered by sub-para 2(a) and 2(b) above, the Competent Authority shall first seek POLITICAL and SECURITY CLEARANCES from the Ministry of External Affairs and Ministry of Home Affairs<\/strong>, as per guidelines issued from time to time. Registration shall not be given unless political and security clearance have both been received.<\/strong><\/li><li>The Ministry of External Affairs and Ministry of Home Affairs may issue guidelines for internal use regarding the procedure for scrutiny of such applications.<\/li><li>The decision of the Competent Authority to register such bidder may be for all kinds of tenders or for a specified type(s) of goods or services, and may be for a specified or unspecified duration of time, as deemed fit. The decision of the Competent Authority shall be final.<\/li><li>Registration granted by the Competent Authority of the Government of India shall be valid not only for procurement by the Central Government and its bodies specified in sub-para 3 above, BUT also for procurement by State Governments and their agencies\/ public enterprises, etc. No fresh registration at the State level shall be required.<\/li><li>The Competent Authority is empowered to CANCEL the registration already granted if it determines that there is sufficient cause. Such cancellation by itself, however, will not affect the execution of contracts already awarded. Pending cancellation, it may also SUSPEND the registration of a bidder, and the bidder shall not be eligible to bid in any further tenders during the period of suspension.<\/li><li>For national security reasons, the Competent Authority shall not be required to give reasons for rejection\/ cancellation of registration of a bidder.<\/li><\/ol>\n<h4>11.<\/span>Clarifications Regarding Applicability of the Restrictions under Rule 144(xi)<\/span><\/h4>\n<ol class=\"lst\"><li>Proprietary purchases are not excluded<\/strong> from the provisions of Rule 144(xi) of GFR, 2017.<\/li><li>The rule is applicable to all purchases irrespective of the order value.<\/li><li>Sub-contracting is not permitted<\/strong> by any contractor to a contractor from a country sharing a land border with India unless registered with the competent authority<\/strong>. However, it is to be noted that procurement of raw materials, components, sub-assemblies, etc. does not constitute sub-contracting<\/strong>. In case a bidder has proposed to supply finished goods<\/strong> procured directly\/ indirectly from vendors from countries that share a land border with India, such vendor will be required to be registered<\/strong> with the Competent Authority.<\/li><li>There is NO bar on the contractor from procuring raw material from a firm that has been ACQUIRED by another firm belonging to a country that shares a land border with India.<\/li><li>Contract Manufacturing outside India: If the bidder is getting the subject product manufactured outside India, this is treated as contract manufacturing, and the beneficial ownership of the actual manufacturing entity must be verified. If the actual manufacturer does not meet the beneficial ownership criteria \u2014 then the bidder must submit DPIIT registration of such manufacturer to participate in the procurement.<\/li><li>The Hiring of Services:<\/strong> Suppose a Bidder (Indian\/ Foreign) who is not<\/strong> from a country sharing a land border with India offers services to a procuring entity by arranging equipment from another company<\/strong>. Then the following scenarios may appear:<\/li><\/ol>\n<div class=\"tblwrap\"><table><thead><tr><th>S. No.<\/th><th>Scenario<\/th><th>Applicability of Rule 144(xi)<\/th><\/tr><\/thead><tbody><tr><td>a)<\/td><td>The equipment\/ goods have been purchased or will be purchased from a company (manufacturer) from a country that shares a land border with India.<\/td><td>The bidder has procured certain goods<\/strong> to offer the requisite services to a procuring entity. In such case, the bidder does not fall within the definition of the term \"bidder\"<\/strong> as defined under para 4(e) above. Hence, the provisions of Rule 144(xi) of GFR, 2017 do not apply<\/strong> to this case.<\/td><\/tr><tr><td>b)<\/td><td>By entering into an MOU\/ lease agreement with the company (who OWNS the equipment\/ goods) from a country that shares a land border with India.<\/td><td>Here, the bidding vendor proposes to hire services from a company that belongs to a country that shares a land border with India<\/strong>. This prima facie<\/em> becomes a case of INDIRECT SUPPLY of services<\/strong> by a company that owns the equipment\/ goods by introducing an intermediary<\/strong>. The intermediary merely acts as an AGENT<\/strong> to the company providing services of the equipment. In such a case, the company owning the equipment and indirectly supplying the services shall be required to be registered<\/strong> with the competent authority \u2014 thereby requiring the fulfilment of the provisions of Rule 144(xi).<\/td><\/tr><tr><td>c)<\/td><td>By entering into an MOU\/ lease agreement with company 'X' (the present owner of the equipment) from a country that does not share a land border with India. The equipment has been purchased from the manufacturer company 'Y', which is from a country that SHARES a land border with India.<\/td><td>In this case, the actual supplier of services, prima facie<\/em>, shall be 'X'. The status of 'X' in this case does not attract the provisions of Rule 144(xi).<\/td><\/tr><\/tbody><\/table><\/div>\n<h4>12.<\/span>Illustrative Examples of the Applicability of Restrictions under Rule 144(xi)<\/span><\/h4>\na) The \"sister company \/ offshore production unit\" example:<\/p>\nA vendor, say 'Party A' from India, is procuring an item from their sister company 'Party B', which is registered in a country that does not share a land border with India. Both Party A and Party B are owned by an entity, say 'Party C'. Party C does not belong to a country sharing a land border with India. However, Party B has its production facility in a country sharing a land border with India, and the manufactured item will be procured by Party A from Party B from that production facility. The production unit is wholly owned by Party B.<\/p>\nParty A claims that Rule 144(xi) does not apply to it because neither Party A nor Party B is:<\/p>\n<ul class=\"lst\"><li>i) An entity incorporated, established or registered in such a country \u2014 as Party A is registered in India and Party B is registered in a country not sharing a land border with India;<\/li><li>ii) A subsidiary of an entity incorporated, established or registered in such a country \u2014 as they are 100% owned subsidiaries of Party C, which is incorporated, registered and established in a country not sharing a land border with India;<\/li><li>iii) An entity controlled through entities incorporated, established or registered in such a country \u2014 as they are 100% owned by Party C;<\/li><li>iv) An entity whose beneficial owner is situated in such a country \u2014 as their beneficial owner is Party C;<\/li><li>v) An Indian (or other) agent of such an entity;<\/li><li>vi) A natural person who is a citizen of such a country;<\/li><li>vii) A consortium or joint venture where any member falls under any of the above \u2014 though it has a wholly owned subsidiary<\/strong> in a country that shares a land border with India, it is not a JV or consortium<\/strong> (a subsidiary does not qualify as a JV or consortium<\/strong>);<\/li><li>viii) In addition, Party A claims that they are not procuring finished goods directly\/ indirectly from vendors from countries sharing land borders with India, as the item is being manufactured in their own production units.<\/li><\/ul>\n<aside class=\"note\">ix) clarification:<\/strong> In light of the above facts and claims, it is important to clarify to procurers that Party A acts as an AGENT for Party B<\/strong>, which manufactures goods in a country sharing a land border with India. Party B supplies goods manufactured at premises established in a country that shares a land border with India.<\/strong> In such a case, registration is required for party b<\/strong> (and not necessarily for Party A<\/strong>, who is only an agent and not from a country sharing a land border with India).<\/p><\/aside>\nb) IT goods and services examples:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Scenario<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>i) The contractor is only supplying the servers as-is from an OEM that belongs to a country sharing a land border with India, and there is NO value addition done by the contractor<\/td><td>The contractor acts as an AGENT for the OEM, and registration of both the OEM and the agent (contractor) is required as per Rule 144(xi) of GFR 2017.<\/td><\/tr><tr><td>ii) The contractor supplies value-added services on hardware and the contractor outsources the procurement of hardware<\/td><td>OEM registration is not required.<\/td><\/tr><tr><td>iii) There is deployment of IT services that includes both hardware and software customisation, and the contractor has sourced hardware which is made in the country sharing a land border with India<\/td><td>The requirement of registration as per Rule 144(xi) is not applicable.<\/td><\/tr><\/tbody><\/table><\/div>\n<h3>1.11.5<\/span>Support to Start-up Enterprises<\/span><\/h3><h4>1.<\/span>Definition of Start-up Enterprises<\/span><\/h4>\n<ol class=\"lst\"><li>As defined by DPIIT<\/strong>, an entity shall be considered a 'Start-up<\/strong>':<\/li><li>i) Up to a period of ten YEARS from the date of incorporation\/ registration<\/strong>, if it is incorporated as a private limited company<\/strong> (as defined in the Companies Act, 2013) or<\/strong> registered as a partnership firm<\/strong> (registered under section 59 of the Partnership Act, 1932) or<\/strong> a limited liability partnership<\/strong> (under the Limited Liability Partnership Act, 2008) in India<\/strong>; and<\/strong><\/li><li>ii) Turnover of the entity for any of the financial years since incorporation\/ registration has not exceeded one hundred crore rupees; and<\/li><li>iii) The entity works towards INNOVATION, DEVELOPMENT, or IMPROVEMENT of products, processes, or services, or a scalable business model with a high potential for EMPLOYMENT GENERATION or WEALTH CREATION.<\/li><li>Provided that an entity formed by SPLITTING UP or RECONSTRUCTING an existing business shall not be considered a 'Start-up'.<\/li><li>Provided further that<\/strong>, in order to obtain benefits, a Start-up so identified under the above definition shall be required to be RECOGNISED as a Start-up by DPIIT<\/strong>.<\/li><\/ol>\n<h4>2.<\/span>Support to Start-ups<\/span><\/h4>\nThe Government of India has ordered the following support to Start-ups (as defined by DPIIT):<\/p>\na) Exemption from submission of Bid Security: Such Start-ups shall be EXEMPTED from payment\/ submission of Earnest Money Deposit\/ Bid Security.<\/p>\nb) Relaxation in Prior Turnover and Experience: The Procuring Entity reserves its right to relax the condition of prior turnover and prior experience for start-up enterprises recognised by DPIIT, subject to meeting quality & technical specifications. Start-ups may be MSMEs\/ MSEs or otherwise. Such relaxation can be provided in the case of procurement of works as well.<\/p>\nIt is further clarified that such relaxation is not optional but normally has to be ensured, except in the case of procurement of items related to public safety, health, critical security operations and equipment, etc., where adequate justification exists for the Procuring Entity not to relax such criteria. The decision of the Procuring Entity in this regard shall be final. (Rule 173(i) of GFR 2017.)<\/p>\n<aside class=\"note\">Footnote:<\/strong> Such relaxation can be PARTIAL<\/strong> \u2014 e.g., 25% relaxation<\/strong> over specified turnover and experience.<\/p>\nW<\/span>C<\/span> additional clarification: The <\/strong>benefits under Start-up policy will be applicable only for the particular industry\/ sector for which they are registered with DPIIT (<\/strong>necessary certificate to be obtained from the bidder in this regard).<\/p><\/aside>\n<h3 class=\"src-multi\">1.11.6<\/span>Domestically Manufactured Iron & Steel Products (DMI&SP) Policy<\/span>G<\/span>W<\/span><\/h3><div class=\"srcblock src-multi\">\n<aside class=\"note\">Critical note for students:<\/strong> The two Manuals reproduce two different versions<\/strong> of this Policy.<\/p>\n<ul class=\"lst\"><li>The Goods Manual, 2024<\/strong> reproduces the DMI&SP Policy, 2019<\/strong> (first notified May 2017, revised May 2019, amended December 2020, extended by Ministry of Steel notification dated 8 March 2024 till November 2024).<\/li><li>The Works Manual, 2025 reproduces the DMI&SP Policy \u2014 REVISED, 2025, notified by the Ministry of Steel vide notification no. G.S.R. 341(E) dated 26th May 2025, and presents it as applicable to EPC tenders.<\/li><\/ul>\nThe 2025 version is the later instrument<\/strong>. Both are set out below in full, because the Goods Manual has not yet been updated to the 2025 version and each is examinable in its own right.<\/p>\nThis Policy does not appear in the Consultancy Services or Non-Consultancy Services Manuals.<\/p><\/aside>\n<h4 class=\"src-G\">PART A \u2014 DMI&SP POLICY, 2019 (as reproduced in the Goods Manual, 2024)<\/span>G<\/span><\/h4><div class=\"srcblock src-G\">\n1. Background: The DMI&SP policy provides a preference for Domestically Manufactured Iron and Steel Products in Government procurement. By promoting domestically manufactured iron and steel products as well as capital goods used for manufacturing iron and steel products, the Policy contributes to the growth of the Indian iron and steel industry. It was first notified in May 2017, revised in May 2019, and further amended in December 2020. The Ministry of Steel notified on March 8, 2024 the extension of this Policy till November 2024.<\/p>\n2. Applicability:<\/p>\na) Iron & Steel Products:<\/p>\n<ul class=\"lst\"><li>i) The Policy applies to the government procurement of iron & steel products (listed in Appendix A of the Policy, produced in compliance with prescribed quality standards) by every Ministry or Department of Government and all agencies\/ entities under their administrative control, and to projects funded by these agencies. All Central Sector Schemes (CS)\/ Centrally Sponsored Schemes (CSS) for which States and Local Bodies make procurement would come within the purview of this Policy if the Government of India fully\/ partly funds that project\/ scheme.<\/li><li>However, this Policy shall not apply to purchasing iron & steel products with a view to COMMERCIAL RESALE or to use in producing goods for COMMERCIAL SALE.<\/li><li>The Policy also applies to private agencies' purchase of iron & steel products to fulfil an EPC contract and\/or any other requirement of the Ministry or Department of Government or their PSEs.<\/li><li>ii) The Policy shall apply to projects where the procurement value of iron and steel products exceeds Rs. 5 lakh. The Policy shall also be applicable for other procurements (non-project) where the ANNUAL procurement value of iron and steel products for that Government organisation is more than Rs. 5 lakh. However, it shall be ensured by procuring entities that procurement is not SPLIT to avoid the provisions of this Policy.<\/li><\/ul>\nb) Capital Goods for Manufacturing Iron & Steel Products:<\/p>\n<ul class=\"lst\"><li>i) For government procurement of capital goods for manufacturing iron & steel products listed in Appendix B of the Policy (produced in compliance with prescribed quality standards, as applicable), the policy is applicable \u2014 irrespective of the project size \u2014 to all public sector steel manufacturers and all agencies\/ entities under their administrative control, but not for commercial resale. The Policy also applies to the purchase of capital goods for manufacturing iron & steel products by private agencies for fulfilling an EPC contract and\/or any other requirement of public sector steel manufacturers and all agencies\/ entities under their administrative control.<\/li><li>ii) NO Global Tender Enquiry (GTE) shall be invited for tenders related to the procurement of Capital Goods for manufacturing iron & steel products (Appendix-B) having estimated value UP TO Rs. 200 Crore, except with the approval of the competent authority as designated by the Department of Expenditure.<\/li><\/ul>\n3. Waivers: Waivers shall be granted by the Ministry of Steel, subject to the conditions below. The exclusion requests shall be submitted to the Standing Committee along with sufficient proof of unavailability of domestically manufactured iron & steel products: a) Where specific grades of steel are not manufactured in the country; or b) Where the quantities as per the demand of the project cannot be met through domestic sources.<\/p>\n4. Purchase Preferences: a) NO Global Tender Enquiry (GTE) shall be invited for tenders related to the procurement of iron and steel products (Appendix-A). The procurement process shall be open only to the manufacturers\/ suppliers capable of meeting\/ exceeding the domestic value-addition targets. Manufacturers\/ suppliers not meeting the domestic value addition targets shall not be eligible to participate in the bidding. b) Purchase preference shall be provided to domestically manufactured capital goods listed in Appendix B if their quoted price falls within 20% of the price quoted for corresponding imported capital goods. If the procuring company considers that the procured quantity cannot be divided in the prescribed ratio of 50:50, they shall have the right to award the contract to the eligible domestic manufacturer for a quantity not less than 50%, as may be divisible. The contract can be awarded to the eligible domestic manufacturer for the entire quantity if the tendered capital goods are NON-DIVISIBLE. If none of the eligible manufacturers meets domestic value addition requirements and matches the L1 bid, the original bidder holding the L1 bid shall secure the order for the entire procurement value.<\/p>\n5. Clause in Tender Document:<\/strong> The tender document for procurement of both Goods as well as for EPC contracts<\/strong> should explicitly outline the eligibility\/ qualification criteria for adherence to minimum prescribed domestic value addition<\/strong> by the bidder for iron and steel products and capital goods (as indicated in Appendix A and Appendix B).<\/p>\n6. Standing Committee: A Standing Committee under the Ministry of Steel (MoS), chaired by the Secretary (Steel), shall be constituted to oversee implementation. The Committee shall comprise experts from Industry\/ Industry Association\/ Government Institution or Body\/ Ministry of Steel. Its mandate: a) Monitoring the implementation of the Policy; b) Review and notify the Iron & Steel products list and the domestic value addition requirement criteria mentioned in Appendix A and Appendix B; c) Issue necessary clarifications for implementation of the Policy, including grant of exclusions to procuring agencies as per section 3; d) Constitute a separate committee to carry out grievance redressal; e) The Standing Committee shall submit its recommendations for approval to the Ministry of Steel.<\/p>\n7. Certification of Local Content:<\/strong> a) To qualify as domestically manufactured iron and steel products\/ capital goods for purchase preference under this Policy, a minimum domestic value addition of 20% to 50% is specified in Appendix A<\/strong> (domestically manufactured iron and steel products) and 50% for Appendix B<\/strong> (capital goods for manufacturing iron & steel products). The domestic value-addition is based on SELF-CERTIFICATION.<\/strong> b) For products in Appendix A<\/strong>, each domestic manufacturer shall furnish the Affidavit of self-certification in the prescribed format<\/strong> to the procuring agency declaring that the iron & steel products are domestically manufactured in terms of the domestic value addition prescribed. It shall be the responsibility of the domestic manufacturer to ensure that the products supplied are indeed domestically manufactured<\/strong> in terms of the domestic value addition prescribed for the product. c) For capital goods in Appendix B<\/strong>, the bidder shall furnish the certification issued by the STATUTORY AUDITOR of the domestic manufacturer<\/strong> declaring that the capital goods are domestically manufactured in terms of the domestic value addition prescribed. The bidder shall also be required to provide a domestic value addition certificate on a HALF-YEARLY basis (September 30 and March 31), within 60 days of commencement of each half-year<\/strong>, duly certified by the Statutory Auditors of the domestic manufacturer, to the concerned procuring agencies till the completion of the supply<\/strong> \u2014 that the claims of domestic value addition made for the product during the preceding 6 months are in accordance with the Policy. d) Bidders who are selling agents\/ authorised distributors\/ authorised dealers\/ authorised supply houses<\/strong> of the domestic manufacturers of iron & steel products are ELIGIBLE to bid on behalf of the domestic manufacturers<\/strong> under the Policy. However, this shall be subject to the following conditions:<\/p>\n<ul class=\"lst\"><li>i) The bidder shall furnish the authorisation certificate issued by the domestic manufacturer<\/strong> for selling domestically manufactured iron & steel products;<\/li><li>ii) In case the procurement is covered under Appendix A<\/strong>, the bidder shall furnish the Affidavit of self-certification issued by the domestic manufacturer<\/strong> to the procuring agency;<\/li><li>iii) In case the procurement is covered under Appendix B<\/strong>, the bidder shall furnish the certification issued by the statutory auditor to the domestic manufacturer<\/strong>;<\/li><li>iv) The bidder shall be responsible for furnishing other documents required to be issued by the domestic manufacturer to the procuring agency as per the Policy.<\/li><\/ul>\n8. Complaints and Penalties: a) Complaints relating to mis-declaration made to the procuring agency or Ministry of Steel shall be dealt with in the prescribed time frame by examining the documents at the bidder's cost. A refundable cautionary deposit is required for complaints to the Ministry of Steel. b) Each procuring agency shall define the penalties in the tender document in case of wrong declaration by the bidder of the prescribed domestic value addition. The penalties may include forfeiting the EMD, other financial penalties, and debarment of the manufacturer\/ service provider.<\/p>\n9. Specifications in Tenders and Other Procurement Solicitations:<\/strong> a) Every procuring entity shall ensure that the eligibility conditions with respect to previous experience do not require proof of supply in other countries or proof of exports<\/strong>. b) Procuring entities shall endeavour to see that eligibility conditions \u2014 including on turnover, production capability and financial strength<\/strong> \u2014 do not result in unreasonable exclusion of local suppliers<\/strong> who would otherwise be eligible, beyond what is essential for ensuring quality or creditworthiness. c) Procuring entities shall review all existing eligibility norms and conditions<\/strong> with reference to (a) and (b) above. d) Reciprocity:<\/strong> If the Ministry of Steel<\/strong> is satisfied that Indian suppliers of iron and steel products are not allowed to participate and\/or compete in procurement by any foreign government<\/strong> due to restrictive tender conditions which have the direct or indirect effect of barring Indian companies \u2014 such as registration in the procuring country, execution of a project of specific value in the procuring country, etc. \u2014 it may, if deemed appropriate, RESTRICT or EXCLUDE bidders from that country<\/strong> from eligibility for procurement of that item and\/or other items relating to the Ministry of Steel. e) For the purpose of (d) above, a supplier or bidder shall be considered to be from a country<\/strong> if:<\/p>\n<ul class=\"lst\"><li>(i) the entity is incorporated in that country, or<\/li><li>(ii) a majority of its shareholding or effective control of the entity is exercised from that country, or<\/li><li>(iii) more than 50% of the value of the item being supplied has been added in that country.<\/li><\/ul>\nIndian suppliers shall mean those entities that meet any of these tests with respect to India. The term 'entity' of a country shall have the same meaning as under the FDI Policy of DPIIT, as amended from time to time. f) In case restrictive or discriminatory conditions against domestic suppliers are included in tender documents, an inquiry shall be conducted by the Administrative Department undertaking the procurement to fix responsibility. Thereafter, appropriate action \u2014 administrative or otherwise \u2014 shall be taken against erring officials. Intimation on all such action shall be sent to the Standing Committee under the DMI&SP Policy.<\/p>\n<\/div><h4 class=\"src-W\">PART B \u2014 DMI&SP POLICY (REVISED), 2025 \u2014 as applicable to EPC tenders<\/span>W<\/span><\/h4><div class=\"srcblock src-W\">\n1. Background: a) This policy, issued by the Ministry of Steel vide notification no. G.S.R. 341(E) dated 26th May 2025, provides preference for Domestically Manufactured Iron and Steel Products (DMI&SP) in Government procurement. b) The policy applies to procurement of iron & steel products notified in Appendix A. In Appendix B, the minimum domestic content and an exempted list of capital goods for manufacturing iron & steel products which can be imported have been listed. Appendix C contains the policy for promoting the procurement of technology from indigenous technology suppliers.<\/p>\n2. Definitions:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Term<\/th><th>Definition<\/th><\/tr><\/thead><tbody><tr><td>Bidder<\/td><td>May be a domestic\/ foreign manufacturer of iron & steel, or their selling agents\/ authorised distributors\/ authorised dealers\/ authorised supply houses, or any other company engaged in the bidding of projects funded by Government agencies.<\/td><\/tr><tr><td>Domestically Manufactured Iron & Steel Products<\/td><td>Those iron and steel products that are manufactured by entities that are registered and established in India, INCLUDING in Special Economic Zones (SEZs).<\/td><\/tr><tr><td>Domestic Manufacturer<\/td><td>A manufacturer of iron & steel products conforming to guidelines in section 7 and the definition of 'manufacturer<\/strong>' as per the Central Excise Act<\/strong>.<\/td><\/tr><tr><td>Domestic value addition<\/td><td>The amount of value added in India = total value of the item to be procured (excluding net domestic indirect taxes) MINUS the value of imported content in the item (including all customs duties), as a proportion of the total value of the item to be procured, in percent. The definition shall be in line with DPIIT guidelines and shall be suitably amended in case of any future changes by DPIIT. For the purpose of this policy document, \"domestic value addition\" and \"local content\" have been used INTERCHANGEABLY. % Domestic value addition = {Total value of the item to be procured (excluding net domestic indirect taxes) \u2212 Value of imported content in the item (including all customs duties)} \u00d7 100 \u00f7 {Total value of the item to be procured}<\/td><\/tr><tr><td>Finished Steel<\/td><td>Flat and long products<\/strong>, which can be subsequently processed into manufactured items.<\/td><\/tr><tr><td>Government<\/td><td>For the purpose of the Policy, means Government of India<\/strong>.<\/td><\/tr><tr><td>Government agencies<\/td><td>Include Government PSUs, Societies, Trusts, and Statutory bodies set up by the Government of India.<\/td><\/tr><tr><td>Indigenous Technology<\/td><td>A technology shall be deemed to be Indigenous technology if at least 51% of the entity's equity is held by Indian residents, AND the IPR is owned or co-owned by an Indian entity or licensed exclusively to them, AND the core engineering R&D and project execution capabilities reside in India.<\/td><\/tr><tr><td>L1<\/td><td>The lowest tender or the lowest bid, or the lowest quotation<\/strong> received in a tender, bidding process, or other procurement solicitation, as adjudged in the evaluation process.<\/td><\/tr><tr><td>MoS<\/td><td>Ministry of Steel, Government of India.<\/td><\/tr><tr><td>Margin of purchase preference<\/td><td>The maximum extent to which the price quoted by a domestic supplier may be above L1<\/strong> for the purpose of purchase preference. In the case of DMI&SP policy, the margin of purchase preference shall be 20% for items in Appendix B<\/strong>.<\/td><\/tr><tr><td>Melt & Pour<\/td><td>The steel that has been produced in a steel-making furnace and poured into its first solid shape. The location where this process takes place is called the country of melt and pour (COM). The COM is the original location where crude steel is first produced in a liquid state and poured into its first solid shape. The first solid shape can be a semi-finished product \u2014 like a slab, billet, ingot \u2014 or a finished steel mill product.<\/td><\/tr><tr><td>Net Selling Price<\/td><td>The invoiced price excluding net domestic taxes and duties.<\/td><\/tr><tr><td>Semi-Finished Steel<\/td><td>Ingots, billets, blooms, and slabs<\/strong>, which can be subsequently processed into finished steel.<\/td><\/tr><\/tbody><\/table><\/div>\n3. Exclusions: a) Waivers may be granted by the Ministry of Steel to all such Government procurements subject to the below conditions: b) Where specific grades of steel are not manufactured in the country, or c) Where the quantities as per the demand of the project cannot be met through domestic sources. d) Exemption requests shall be submitted to the Standing Committee along with sufficient proof of unavailability of iron & steel products domestically.<\/p>\n4. Standing Committee: a) A Standing Committee chaired by the Secretary (Steel) shall oversee the implementation of the policy. b) The Committee shall comprise experts drawn from Industry\/ Industry Association\/ Government Institution or Body\/ Ministry of Steel. Mandate:<\/p>\n<ul class=\"lst\"><li>i) Monitor the implementation of the policy;<\/li><li>ii) Review and notify the list of Iron & Steel products, the domestic content requirement criteria and policy directives as mentioned in Appendix A, Appendix B and Appendix C;<\/li><li>iii) Issue necessary clarifications<\/strong> for implementation of the policy, including grant of exclusions<\/strong> to procuring agencies as per Para 3;<\/li><li>iv) Constitute a grievance redressal committee<\/strong> for preliminary examination of complaints related to implementation of this policy;<\/li><li>v) Issue directions for suitable action to Ministries\/ Departments concerned in case of non-compliance with this policy by the procuring agency, and advise.<\/li><li>Wherever a procuring entity concludes that an unreasonably high price has been quoted by the SOLE bidder\/ manufacturer, the matter may be referred to the committee. In such cases, the procuring entity would be required to substantiate its case with complete and thorough documentation.<\/li><li>Specifying foreign certifications\/ unreasonable technical specifications in the bid document is a restrictive and discriminatory practice against local suppliers. If foreign certification is required to be stipulated because of non-availability of Indian Standards and\/or for any other reason, the same shall be done only after written approval of the Committee.<\/li><\/ul>\n5. Applicability: a) The policy applies to every Ministry or Department of Government and all agencies\/ entities under their administrative control, and to projects funded by these agencies, for the purchase of iron & steel products for government projects. All Central Sector Schemes (CS)\/ Centrally Sponsored Schemes (CSS) for which procurement is made by States and Local Bodies come within the purview of this Policy if that project\/ scheme is fully\/ partly funded by the Government of India. b) The policy applies to public sector steel manufacturers and agencies\/ entities under their administrative control for purchase of capital goods (Appendix-B) for manufacturing iron & steel products. c) Appendix-B contains the exemption list of capital goods used in manufacturing iron & steel products which can be imported, and the minimum domestic content requirement for respective packages. The domestic value addition for Capital Goods, as indicated, is subject to change; for example, if some capital goods components can be manufactured in the country, the domestic value addition percentage may go up. d) A purchase preference of 20% is applicable for capital goods used in steel manufacturing.<\/p>\n<aside class=\"note\">Example given in the Manual: If the lowest bidder (L1) for an importable capital good is a foreign company with a quoted price of INR 100 crores for the product package, under the policy a procurement preference of 20% will be applicable to a domestic supplier of the same capital good.<\/p><\/aside>\n<ol class=\"lst\"><li>Appendix-C contains directives and methodology for steelmaking CPSEs to procure from indigenous technology suppliers.<\/li><li>The policy shall apply to projects AND non-projects where the total procurement value of iron and steel products (Appendix-A) in a contract is greater than rs. 5 lakh, on an ITEMISED BASIS.<\/li><li>NO Global Tender Enquiry (GTE) shall be invited<\/strong> for tenders related to the procurement of iron and steel products (Appendix-A)<\/strong>. NO GTE shall be invited<\/strong> for tenders related to the procurement of Capital Goods for manufacturing iron & steel products (Appendix-B) having estimated value UP TO Rs. 200 Crore<\/strong>, except with the approval of the competent authority as designated by the Department of Expenditure.<\/li><li>The policy applies to the purchase of iron & steel products by PRIVATE agencies for fulfilling an EPC contract and\/or any other requirement of a Ministry or Department of Government or their PSUs.<\/li><\/ol>\n6. Tender Procedure for Procurement: a) Procuring agencies shall follow standard procurement procedures, in accordance with instructions of the Ministry of Finance and CVC, while adhering to DMI&SP policy. b) The tender document, for procurement of both Goods as well as for EPC contracts, should explicitly outline the qualification criteria for adherence to the requirement as mentioned in Appendix A and Appendix B. c) Domestic manufacturers of products under Appendix-A and Appendix-B shall SELF-CERTIFY the local content as per Form-1 placed in the policy, at the time of bidding. d) Bidders who are selling agents\/ authorised distributors\/ authorised dealers\/ authorised supply houses of the domestic manufacturers of iron & steel products covered by Appendix-A are eligible to bid with self-certification on behalf of the domestic manufacturers under the policy, subject to the bidder furnishing an authorisation certificate issued by the domestic manufacturer at the time of delivery. e) For products covered under Appendix B, the bidder shall furnish certification issued by the statutory auditor or cost auditor of the company (in the case of companies), or from a practising cost accountant or practising chartered accountant (in respect of suppliers other than companies), declaring that the capital goods to be used in the iron & steel industry are domestically manufactured in terms of the domestic value addition prescribed. f) If Indian suppliers of an item are not allowed to participate and\/or compete in procurement by any foreign government, due to restrictive tender conditions which have the direct or indirect effect of barring Indian companies \u2014 such as registration in the procuring country, execution of projects of specific value in the procuring country, etc. \u2014 it shall provide such details to the procuring entities for appropriate RECIPROCAL action. g) Entities of countries identified by the Ministry of Steel as not allowing Indian companies to participate in their Government procurement for any item related to the Ministry of Steel shall not be allowed to participate in Government procurement in India for all items related to the Ministry of Steel, except for the list of items published by the Ministry of Steel permitting their participation. h) The stipulation above shall be part of all tenders, including those on the GeM portal, invited by the Central Government procuring entities. i) In case restrictive or discriminatory conditions against domestic suppliers are included in bid documents, an inquiry shall be conducted by the Administrative Department undertaking the procurement to fix responsibility. Thereafter, appropriate action \u2014 administrative or otherwise \u2014 shall be taken against erring officials. Intimation on all such action shall be sent to the Standing Committee under the DMI&SP policy. j) A supplier DEBARRED by any procuring entity for violation of this Order shall not be eligible for preference under this Order for procurement by any OTHER procuring entity for the duration of the debarment. The debarment for such other procuring entities shall take effect prospectively from the date on which it comes to the notice of other procurement entities. k) Grievance redressal timelines: In case the matter is referred to the Ministry of Steel, the grievance redressal committee set up under the MoS shall dispose of the complaint within 4 WEEKS of its reference and receipt of all documents from the bidder, after taking into consideration the view of the Government Agency. The bidder shall be required to furnish the necessary documentation in support of domestic value addition claimed in iron & steel products to the grievance redressal committee under MoS within 2 WEEKS of the reference of the matter. l) The procuring agency shall define the penalties in the tender document in case of a wrong declaration by the bidder of the prescribed domestic value addition. The penalties may include forfeiting of the EMD, other financial penalties, and BLACKLISTING of such manufacturer\/ service provider, etc., in terms of extant rules.<\/p>\n7. Implementation Monitoring by the Ministry of Steel: a) The policy provisions shall be applicable for 5 YEARS from the date of publication and may further be extended at the discretion of the Ministry of Steel. b) MoS shall be the NODAL MINISTRY to monitor the implementation of the policy. c) Agencies covered under the DMI&SP policy shall send a declaration on a QUARTERLY basis indicating the extent of compliance to the policy and reasons for non-compliance thereof, during the preceding financial year.<\/p>\n8. Conclusion \u2014 Applicability to EPC Tenders W<\/span>:<\/p>\nPara 6(b) of the policy above makes it explicitly applicable to both Goods and EPC tenders. Except for the rare cases of EPC tenders for setting up of Steel Manufacturing facilities (where Appendix B and C shall also be applicable), normally only Appendix A shall be applicable in EPC tenders, and these products can only be procured from domestic sources. Purchase preference of 20% is applicable only to capital goods as per Appendix B and not to Appendix A.<\/p>\n<aside class=\"note\">Appendix A, B & C and Form 1 of this policy are given in Annexures 20 and 21<\/strong> of the Works Manual.<\/p><\/aside>\n<\/div><\/div><h2 class=\"src-multi\">1.12<\/span>When is Procurement of Services Justified<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\"><h3 class=\"src-C\">1.12.1<\/span>Consultancy Services<\/span>C<\/span><\/h3><div class=\"srcblock src-C\">\nRules 178 & 180 of GFR 2017 permit Ministries\/ Departments to hire external professionals, consultancy firms or consultants (referred to as 'consultant' hereinafter) for a specific job, which is well defined in terms of content and time frame for its completion.<\/p>\nEngagement of consultants may be resorted to in situations requiring high quality services for which the Procuring Entity does not have the requisite expertise. Approval of the competent authority should be obtained before engaging consultant(s).<\/p>\nThe need for Procurement of Consultancy Services may be justified on consideration of:<\/p>\n<ol class=\"lst\"><li>The assignment should be well defined in terms of content and time frame for its completion;<\/li><li>The inadequacy of Capability or Capacity of required expertise IN-HOUSE;<\/li><li>The need to have qualified consultants for providing a specialised high-quality service;<\/li><li>Need for impartial advice<\/strong> from a consultant (acting independently from any affiliation) to avoid conflicts of interest<\/strong>;<\/li><li>The need, in some cases, for Transfer of Knowledge\/ Training\/ Capacity and capability building as a by-product of such engagement;<\/li><li>Need to acquire information about\/ identifying and implementing new methods and systems;<\/li><li>Need for planning and implementing ORGANISATIONAL CHANGE;<\/li><li>There may be internal capacity\/ capability to do the job, BUT there are considerations of ECONOMY, SPEED, and EFFICIENCY in relation to additional requirement\/ commitment\/ usage of:<\/li><li>i) Staff\/ Management\/ Organisation;<\/li><li>ii) Technological and Material Resources;<\/li><li>iii) Money<\/strong>; and<\/li><li>iv) Time\/ Speed of execution.<\/li><\/ol>\n<\/div><h3 class=\"src-NC\">1.12.2<\/span>Non-Consultancy Services<\/span>NC<\/span><\/h3><div class=\"srcblock src-NC\">\nIn the interest of economy, efficiency and to provide more effective delivery of public services, Rule 198 of GFR, 2017 permits Ministries\/ Departments to procure\/ outsource NC services (e.g. non-core, auxiliary and support services). Approval of the competent authority should be obtained before engaging service providers.<\/p>\nThe need for Procurement of NC services may be justified on consideration of:<\/p>\n<ol class=\"lst\"><li>Economy, speed and efficiency and more effective delivery of public services relating to additional requirement\/ commitment\/ usage of:<\/li><li>Staff\/ Management\/ Organisation;<\/li><li>Technological and Material Resources;<\/li><li>Money<\/strong>; and<\/li><li>Time\/ Speed of execution.<\/li><li>An administrative policy decided by the Ministry\/ Department to outsource specific (or a class of) services.<\/li><\/ol>\n<\/div><\/div><h2 class=\"src-multi\">1.13<\/span>Principles for Public Procurement of Services<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\">\nOther principles of Public Procurement as mentioned in para 1.8 above are also equally applicable to Procurement of Consultancy and Non-consultancy services. To ensure value for money during procurement of services, the following additional principles shall be considered:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Consultancy Services C<\/span><\/th><th>Non-Consultancy Services NC<\/span><\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>Services to be procured should be justifiable<\/strong> in accordance with para 1.12 above<\/td><td>Services to be procured should be justifiable<\/strong> in accordance with para 1.12 above<\/td><\/tr><tr><td>b<\/td><td>Terms of Reference \u2014 a document covering well-defined scope of work\/ description of services and the time frame for which services are to be availed \u2014 should be consistent with the overall objectives of the Procuring Entity<\/td><td>In Non-consultancy Services, the Activities Schedule \u2014 a document covering well-defined scope of work\/ description of services and the time frame for which services are to be availed \u2014 should be consistent with the overall objectives of the Procuring Entity<\/td><\/tr><tr><td>c<\/td><td>Equal opportunity to all qualified Consultants to compete should be ensured<\/td><td>Equal opportunity to all qualified service providers to compete should be ensured<\/td><\/tr><tr><td>d<\/td><td>Engagements should be economical and efficient<\/strong><\/td><td>Engagements should be economical and efficient<\/strong><\/td><\/tr><tr><td>e<\/td><td>Transparency and integrity in the Consultancy process \u2014 that is, proposed, awarded, administered, and executed according to the highest ethical standards<\/td><td>Transparency and integrity in the selection process \u2014 that is, proposed, awarded, administered, and executed according to the highest ethical standards<\/td><\/tr><tr><td>f<\/td><td>Additionally, in procurement of consultancy services, consultants should be of HIGH QUALITY<\/strong>, in line with the justification as per para 1.12 above (Rule 180 of GFR 2017)<\/em><\/td><td> \u2014 <\/td><\/tr><\/tbody><\/table><\/div>\nC<\/span> \u2014 the two-stage requirement: In Procurement of Consultancy, these considerations can be <\/strong>best addressed through unrestricted competition among qualified shortlisted firms or individuals, in which <\/strong>selection is based on the QUALITY of the proposal and, where appropriate, on the COST of services to be provided. <\/strong>Hence Procurement of Consultancy needs to be done in a two-STAGE PROCESS.<\/p>\n<\/div><h2>1.14<\/span>Legal Aspects Governing Public Procurement<\/span><\/h2>\nA public procurement contract, besides being a commercial transaction, is also a legal transaction. There are several laws that may affect various commercial aspects of public procurement contracts. A public procurement professional is expected to be generally aware of the implications of the following basic laws affecting procurement; however, he or she is not expected to be a legal expert. In different contexts of the scope of work, an additional set of laws may be relevant.<\/p>\n<aside class=\"note\">G<\/span> The Goods Manual places this material in Appendix 2: Legal Aspects of Public Procurement<\/strong>, covering: (1) Relevant Provisions of the Constitution of India; (2) Salient Features of the Indian Contract Act; (3) Salient Features of the Sale of Goods Act, 1930; (4) Salient Features of the Indian Arbitration & Conciliation Act, 1996; (5) The Mediation Act, 2023; (6) Salient Features of the Competition Act, 2002 relating to Anti-competitive Practices; (7) Salient Features of the Whistle Blowers Protection Act, 2011 and the Whistle Blowers Protection (Amendment) Act, 2015.<\/p>\nC<\/span>NC<\/span> cross-refer to Appendix 2 of the Goods Manual<\/strong> without listing the statutes.<\/p><\/aside>\nW<\/span> \u2014 the list of applicable laws, as enumerated in the Works Manual:<\/p>\n<ol class=\"lst\"><li>The Constitution of India<\/li><li>Indian Contract Act, 1872<\/li><li>Arbitration and Conciliation Act, 1996<\/strong>, as amended by the Arbitration and Conciliation (Amendment) Acts, 2015, 2019 and 2021<\/strong><\/li><li>Competition Act, 2002<\/strong>, as amended by the Competition (Amendment) Acts, 2007 and 2023<\/strong><\/li><li>The Information Technology Act, 2000<\/strong> (IT Act \u2014 regarding e-procurement and e-auction<\/strong>, popularly called the Cyber Law<\/strong>), as amended by the Information Technology (Amendment) Acts 2008 and 2015<\/strong>, and as modified by the Jan Vishwas (Amendment of Provisions) Act, 2023<\/strong><\/li><li>Right to Information (RTI) Act, 2005<\/li><li>Central Vigilance Commission Act, 2003<\/li><li>Delhi Special Police Establishment Act, 1946<\/strong> (DSPE \u2014 basis of the Central Bureau of Investigation)<\/li><li>Prevention of Corruption Act, 1988<\/strong>, as amended by the Prevention of Corruption (Amendment) Act, 2018<\/strong><\/li><li>Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) \u2014 replaces the Code of Criminal Procedure, 1973; Section dealing with sanction for prosecution \u2014 \u00a7218<\/li><li>Insolvency and Bankruptcy Code, 2016<\/strong>, as amended by the Insolvency and Bankruptcy Code (Amendment) Acts 2018, 2019, 2020 and 2021<\/strong> \u2014 governs insolvency and liquidation of business enterprises<\/strong> \u2014 and other allied laws applicable to business entities participating in works contracts<\/li><li>Various labour laws<\/strong> applicable at the works' site<\/li><li>Various building and safety acts, codes, standards<\/strong> applicable in the context of the scope of work; and<\/li><li>Various environmental and mining laws, codes, standards<\/strong> applicable in the context of the scope of work.<\/li><\/ol>\n<h2 class=\"src-multi\">1.15<\/span>The Law of Agency<\/span>W<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\">\nIn addition to the laws applicable to Public Procurement referred to above, the Law of Agency (Sections 182 to 238 of the Indian Contract Act, 1872)<\/strong> implies that the contractor\/ consultant\/ service provider would be an AGENT of the Procuring Entity<\/strong>, acting as a 'Principal<\/strong>', to execute the works\/ carry out the service on its behalf<\/strong>.<\/p>\nHence, there exists a PRINCIPAL\/ EMPLOYER and AGENT relationship<\/strong> between the Procuring Entity and such contractor\/ consultant\/ service provider.<\/p>\nAs per this law, the principal\/ employer (i.e., the Procuring Entity) is vicariously, legally and financially liable for the actions of its Agents.<\/p>\n<aside class=\"note\">Example given in the Manuals:<\/strong> A violation of certain labour laws<\/strong> in deputing staff for the Procuring Entity's contract by the agent (contractor\/ consultant\/ service provider) may render the Procuring Entity legally and financially liable\/ answerable for such violations<\/strong>, under certain circumstances.<\/p><\/aside>\nThe Procuring Entities need to be AWARE of such eventualities. Standard\/ Model Bidding\/ Tender Documents should take care of this aspect.<\/p>\n<aside class=\"note\">Note:<\/strong> This section does not<\/strong> appear in the Goods Manual.<\/p><\/aside>\n<\/div><h2 class=\"src-G\">1.16<\/span>Right to Information and Proactive Information Disclosures<\/span>G<\/span><\/h2><div class=\"srcblock src-G\">\nSection 4(1)(b) of the RTI Act lays down the information to be disclosed by public authorities on a SUO-MOTU or PROACTIVE basis, and Section 4(2) and Section 4(3) prescribe the method of its dissemination \u2014 to enhance transparency and also to reduce the need for filing individual RTI applications.<\/p>\nThe Department of Personnel & Training, Ministry of Personnel, Public Grievances & Pensions<\/strong>, Government of India, has issued \"Guidelines on suo motu disclosure under Section 4 of the RTI Act<\/strong>\" vide their OM No. 1\/6\/2011-IR dated April 15, 2013<\/strong>. The relevant guidelines relating to information disclosure relating to procurement are reproduced below:<\/p>\n<aside class=\"note\">\"Information relating to procurement made by public authorities \u2014 including publication of notice\/ tender enquiries, corrigenda thereon, and details of bid awards detailing the name of the Vendor\/ Contractor of goods\/ services being procured or the works contracts entered, or any such combination of these, and the rate and total amount at which such procurement or works contract is to be done \u2014 should be disclosed.<\/p>\nAll information disclosable as per Ministry of Finance, Department of Expenditure's O.M. No. 10\/1\/2011-PPC dated 30th November 2011 (and 05th March 2012) on Mandatory Publication of Tender Enquiries on the Central Public Procurement Portal, and O.M. No. 10\/3\/2012-PPC dated 09th January 2014 on implementation of comprehensive end-to-end e-procurement, should be disclosed under Section 4 of the Right to Information Act.\"<\/p><\/aside>\n<\/div><h2 class=\"src-W\">1.17<\/span>The Basic Principles of Undertaking Works<\/span>W<\/span><\/h2><div class=\"srcblock src-W\">\n<ol class=\"lst\"><li>No new works should be sanctioned without:<\/li><li>Careful assessment of the assets or facilities already available, and the time and cost required to complete the new works;<\/li><li>A concept plan\/ preliminary drawing having been approved by the Authority competent to accord sanction. While designing projects, to the extent possible, principles of life cycle costing may also be considered.<\/li><li>As budgetary resources are limited and granted on an annual basis, adequate provisions should be ensured for works and services already in progress before new works are undertaken.<\/li><li>NO project or work will be SPLIT UP to bring it within the sanctioning powers of a lower authority.<\/li><li>(Rule 137, GFR 2017)<\/em> For the purpose of approval and sanctions, a group of works which forms one PROJECT shall be considered as one WORK<\/strong>. The approval or sanction of the higher authority for such a project consisting of a group of works should not be circumvented by resorting to approval of individual works using the powers of approval or sanction of a lower authority<\/strong>.<\/li><li>(MoF OM No. F.1(26)-E-II(A)\/66 dated 04.01.1967 & 27.10.1967)<\/em>If the component parts of a project are MUTUALLY INDEPENDENT of each other<\/strong> and are not dependent on the execution of one or more such component parts, each such part should be treated as a SEPARATE PROJECT<\/strong>.<\/li><li>In case the functioning of a project is DEPENDENT on the execution of one or more other projects, the entire group of such projects should be taken as a SINGLE scheme\/ project and provision made accordingly.<\/li><\/ol>\nIf, however, a scheme consists of revenue component, capital expenditure and loan content, etc., the provision for which is required to be exhibited separately under respective Heads of Account, there is no objection to the provision being made in the relevant Heads of Account; but the authorities concerned should ensure that the sanction of the Competent Authority is obtained for the integrated scheme as a whole, depending on the total COST of the scheme. It will not be permissible in such cases to split up a scheme, treating each part as a scheme, in order to avoid the sanction of a higher authority.<\/p>\n<ol class=\"lst\"><li>(Rule 138, GFR 2017)<\/em> Any anticipated or actual SAVINGS from a sanctioned estimate for a definite project shall not, without special authorisation, be applied to carry out ADDITIONAL WORK not contemplated in the original project.<\/li><li>(Rule 136(3), GFR 2017)<\/em> Any development of a project considered necessary while a work is in progress, which is not contingent on the execution of the work first sanctioned, shall have to be covered by a SUPPLEMENTARY ESTIMATE.<\/li><li>The construction period and sanctioned cost stipulated in the sanction of the Project will not be exceeded as far as possible.<\/li><li>(Rule 135(2), GFR 2017)<\/em> Ministry or Department shall put in place, as far as possible, empowered project teams for all large value projects, and these teams should be tasked only with project execution and not given other operational duties.<\/li><li>The competent financial authority according the administrative approval should be KEPT INFORMED of the physical and financial progress of the work till their completion, through regular periodical reports.<\/li><li>(Rule 135(1) and 139(i), GFR 2017)<\/em> Subject to the observance of general rules (Rules 130\u2013141, Rule 144 of GFR, 2017), the initiation, authorisation, procurement and execution of works allotted to a particular Ministry or Department shall be regulated by detailed rules and orders contained in the respective departmental regulations and by other special orders applicable to them. The detailed procedure relating to expenditure on such works shall be prescribed by departmental regulations framed in consultation with the accounts officer, generally based on the procedures and the principles underlying the financial and accounting rules prescribed for similar works carried out by the Central Public Works Department (CPWD).<\/li><li>(Rule 136(1) and 139(vi), GFR 2017)<\/em> NO works shall be commenced or liability incurred in connection with it until:<\/li><li>Feasibility Study Report\/ Preliminary Project Report (PPR) has been prepared in case of works of substantial value;<\/li><li>A proper Detailed Project Report (DPR) has been prepared by a competent agency;<\/li><li>Administrative Approval (A\/A)<\/strong> has been obtained from the appropriate authority, in each case;<\/li><li>Expenditure Sanction (E\/S)<\/strong> to incur expenditure has been obtained from the competent authority;<\/li><li>Technical approval has been obtained of the detailed and coordinated design of all the Architectural, Civil, Electrical, Mechanical, Horticulture and any other services included in the scope of the sanction, and of the Detailed Cost Estimates containing the detailed specifications and quantities of various items prepared on the basis of the schedule of rates maintained by CPWD or other Public Works Organisations;<\/li><li>Funds to cover the work, which will be executed at least during the current year, have been provided by competent authority;<\/li><li>Tenders have been invited and processed in accordance with rules;<\/li><li>Award of work and execution of Contract Agreement;<\/li><li>A work order has been issued;<\/li><li>Statutory and other clearances: Time taken in the grant of statutory and other clearances also contributes to the time and cost overrun in public projects. These clearances are required to achieve specific objectives like concern for the environment, aviation safety, preservation of national heritage, conservation of forest and wildlife, etc. Public Authorities\/ Project Executing Authorities should plan for obtaining all necessary clearances quickly and proper efforts be made for the same, which also should be duly recorded. The progress regarding follow-up of obtaining the statutory clearances should be closely monitored.<\/li><li>Land acquisition: The process of land acquisition shall be started by the Procuring Entity well ahead and completed entirely, or at least substantially, before the work is started. Availability of auxiliary services has been ensured \u2014 like roads\/ access, power, water, solid & liquid waste disposal system, street lighting and other civic services.<\/li><li>It is desirable to have 100% of the required land in possession before award of contract; however, it may not always be possible to have the entire land due to prevailing circumstances.<\/li><li>Also, it may not be prudent to put the entire process of award of contract on hold for want of the remaining portion of land, which \u2014 in the assessment of the public authority or project executing authority \u2014 could possibly be acquired in a targeted manner after award of the contract, without affecting progress.<\/li><li>Minimum necessary encumbrance-free land should be available before award of contract. The minimum may be determined based on the circumstances of each case or general guidelines issued by the concerned authorities. Such land, non-availability of which will prevent essential components of work from execution, should be insisted upon.<\/li><li>Public Authorities\/ Project Executing Authorities should plan for acquiring balance land quickly and proper efforts be made for the same, which also should be duly recorded. The progress regarding land acquisition should be closely monitored.<\/li><\/ol>\n<\/div><h2 class=\"src-W\">1.18<\/span>Administrative Control and Powers to Sanction<\/span>W<\/span><\/h2><div class=\"srcblock src-W\">\n1. Administrative control of works includes (Rule 131, GFR 2017)<\/em>: a) Assumption of full responsibility for construction, maintenance and upkeep; b) Proper utilisation of buildings and allied works; c) Provision of funds for execution of these functions.<\/p>\n2. Powers to Sanction Works (Rule 132, GFR 2017)<\/em>: The powers delegated to various subordinate authorities to accord administrative approval, sanction expenditure and re-appropriate funds for works are regulated by the Delegation of Financial Powers Rules (DFPR) and other orders contained in the respective departmental regulations. The powers of the Department relating to works are detailed in Rule 133(1) and 133(2) of GFR, 2017.<\/p>\n3. Work under the administrative control of the Public Works Departments (Rule 134, GFR 2017)<\/em>: Works not specifically allotted to any Ministry or Department shall be included in the Grants for Civil Works to be administered by the Central Public Works Department. NO such work may be financed partly from funds provided in the departmental budget and partly from the budget for civil works.<\/p>\n<\/div><h2>1.19<\/span>Public Procurement Cycle<\/span><\/h2>\nThe procurement process for goods, works and\/or services typically involves the following cycle of activities, undertaken in the order stated below<\/strong>. Details and procedures of the various stages of the procurement cycle are described in the subsequent Chapters.<\/p>\nCommon four-stage spine (all four Manuals):<\/p>\nNeed Assessment \u2192 Bid Invitation Process \u2192 Bid Evaluation and Award of Contract \u2192 Contract Management<\/p>\n<h3 class=\"src-G\">1.19.1<\/span>Goods<\/span>G<\/span><\/h3><div class=\"srcblock src-G\">\n<div class=\"tblwrap\"><table><thead><tr><th>Stage<\/th><th>Content<\/th><\/tr><\/thead><tbody><tr><td>a) Need Assessment<\/td><td>Need assessment, formulation of Specifications and Procurement Planning (including market consultation, if required)<\/td><\/tr><tr><td>b) Bid Invitation Process<\/td><td>Preparing tender documents, publication, receipt and opening of bids<\/td><\/tr><tr><td>c) Bid Evaluation and Award of Contract<\/td><td>Evaluation of bids and award of contract<\/td><\/tr><tr><td>d) Contract Management<\/td><td>Contract management and closure<\/strong><\/td><\/tr><tr><td>e) Disposal of Scrap<\/td><td>Disposal of Scrap through various modes of disposal<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h3 class=\"src-W\">1.19.2<\/span>Works<\/span>W<\/span><\/h3><div class=\"srcblock src-W\">\nFollowing are the stages in planning, sanctioning and execution of work:<\/p>\n1. Need Assessment: a) Perspective Planning for works; b) Preparation of Preliminary Project Report (PPR) or Rough Cost Estimate; c) Acceptance of necessity and issue of in-Principle Approval; d) Preparation of Detailed Project Report (DPR) or Preliminary Estimate (PE); e) Administrative Approval and Expenditure Sanction (A\/A & E\/S) or 'Go ahead' Approval; f) Detailed Design, Estimate and Technical Sanction; g) Appropriation\/ re-appropriation of funds.<\/p>\n2. Bid Invitation Process:<\/strong> Preparation of Bid documents, Publication, Receipt and Opening of Bids.<\/p>\n3. Bid Evaluation and Award of Contract: a) Preliminary Examination and Evaluation of technical proposals \u2014 consideration of quality; b) Evaluation of financial proposals; c) Selection of winning proposal and award of the contract to the selected firm.<\/p>\n4. Contract Management: Execution and Monitoring of works and Quality Assurance.<\/p>\n<aside class=\"note\">Note W<\/span>: For repair works up to Rs. 60 (Sixty) lakh, expenditure sanction may be given on the basis of the Preliminary Project Report itself. Annexure 11 of the Works Manual shows the above-mentioned process of procurement of Public Works as a flow-chart.<\/p><\/aside>\n<\/div><h3 class=\"src-C\">1.19.3<\/span>Consultancy Services<\/span>C<\/span><\/h3><div class=\"srcblock src-C\">\nThe entire process of procurement and implementation of Consultancy services shall include the following steps:<\/p>\n1. Need Assessment: a) Preparation of Procurement Proposal (Concept Paper) and obtaining in-principle approvals; b) Preparation of the Terms of Reference (ToR), cost estimate and seeking administrative and budgetary approval; c) Developing a Procurement Plan.<\/p>\n2. Shortlisting of Qualified Consultants \u2014 EOI process.<\/p>\n3. RfP Invitation Process:<\/strong> Preparing 'Request for Proposal (RfP) Document<\/strong>', publication, receipt and opening of bids.<\/p>\n4. Bid Evaluation and Award of Contract: a) Preliminary Examination and Evaluation of technical proposals \u2014 consideration of quality; b) Evaluation of financial proposals; c) Selection of winning proposal; NEGOTIATIONS and award of the contract to the selected firm.<\/p>\n5. Contract Management: Execution and Monitoring of Consultancy Assignments.<\/p>\n<\/div><h3 class=\"src-NC\">1.19.4<\/span>Non-Consultancy Services<\/span>NC<\/span><\/h3><div class=\"srcblock src-NC\">\nThe entire process of procurement and implementation of Non-consultancy services shall include the following steps:<\/p>\n1. Need Assessment:<\/strong> a) Preparation of Procurement Proposal (Concept Paper)<\/strong> and obtaining in-principle approvals; b) Preparation of the Services and Activities Schedule, cost estimate<\/strong> and seeking administrative and budgetary approval; c) Developing a Procurement Plan<\/strong>.<\/p>\n2. Bid Invitation Process:<\/strong> Preparing tender documents, publication, receipt and opening of bids.<\/p>\n3. Bid Evaluation and Award of Contract:<\/strong> a) Preliminary Examination and Evaluation of technical proposals \u2014 consideration of quality; b) Evaluation of financial proposals; c) Selection of winning proposal and award of the contract to the selected firm.<\/p>\n4. Contract Management: Execution and Monitoring of Service Contract.<\/p>\n<aside class=\"note\">Comparison at a glance \u2014 what differs between the four cycles:<\/p>\n<ul class=\"lst\"><li>Only Goods has a fifth stage: Disposal of Scrap.<\/li><li>Only Works<\/strong> breaks Need Assessment into seven sanctioning steps<\/strong> (PPR \u2192 in-principle approval \u2192 DPR\/PE \u2192 A\/A & E\/S \u2192 Technical Sanction \u2192 appropriation of funds).<\/li><li>Only Consultancy<\/strong> has a separate stage for Shortlisting\/ EoI<\/strong>, and an RfP Invitation Process<\/strong> in place of the ordinary Bid Invitation Process, and expressly includes Negotiations<\/strong> before award.<\/li><li>CS and NC both begin with a Procurement Proposal (Concept Paper).<\/li><\/ul><\/aside>\n<\/div><h2>1.20<\/span>Nomenclature Conundrum<\/span><\/h2>\n<ol class=\"lst\"><li>There is NO standardised nomenclature in Public Procurement in India, and a mix of American, European, and British\/ Indian nomenclature has become common.<\/li><\/ol>\n'Tender<\/strong>' is taken to mean:<\/p>\n<ul class=\"lst\"><li>(i) the 'Tender Document' or 'Tender Process', as well as<\/li><li>(ii) the 'Bid<\/strong>' submitted by the 'bidders<\/strong>'.<\/li><\/ul>\nThe Tender Document floated by the Procuring Entity is also called a Bid (or Bidding) Document. Similarly, participants in a 'tender' are alternatively called BIDDERS and TENDERERS. This duality is reflected in \"Notice Inviting Tenders\" and \"Instructions to Bidders\", etc.<\/p>\n<ol class=\"lst\"><li>An attempt is made in these Manuals to standardise:<\/li><li>the term 'Tender<\/strong>' for the 'Tender Document<\/strong>' (document prepared and published by the Procuring Entity \u2014 instead of bid\/ bidding document) or the 'Tender Process<\/strong>'; and<\/li><li>'Bid<\/strong>' for the bid submitted by the bidders \u2014 and hence 'bidder<\/strong>' is used instead of 'tenderer<\/strong>'.<\/li><\/ol>\nSimilar attempts are made to standardise other nomenclature in these documents without DISTURBING the nomenclature (e.g., 'Pre-qualification Bidding') already embedded in the CPPP or GeM portals.<\/p>\n<h1>Appendix to Chapter 1 \u2014 Points of Difference Between the Four Manuals<\/span><\/h1>\nA ready-reckoner of every place in Chapter 1 where the four Manuals genuinely differ, rather than merely rename.<\/em><\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Delegation of powers for procurement<\/td><td>G\/C\/NC:<\/strong> \"full powers<\/strong>\" for goods and services not on GeM; GeM mandatory under Rule 149. W:<\/strong> \"powers\" under DFPR only \u2014 no GeM mandate stated<\/strong><\/td><\/tr><tr><td>2<\/td><td>Relevant GFR chapters<\/td><td>G, C, NC:<\/strong> Chapters 6 to 9<\/strong>. W:<\/strong> Chapters 5 to 9<\/strong><\/td><\/tr><tr><td>3<\/td><td>Sale of Goods Act, 1930<\/td><td>Cited in G, C, NC<\/strong>; NOT<\/strong> in W<\/strong><\/td><\/tr><tr><td>4<\/td><td>Mediation Act, 2023<\/td><td>Cited in G, W, NC<\/strong>; NOT<\/strong> in C<\/strong>'s para 1.1 list<\/td><\/tr><tr><td>5<\/td><td>Indian Stamp Act, 1899<\/td><td>Cited in W, C, NC<\/strong>; NOT<\/strong> in G<\/strong><\/td><\/tr><tr><td>6<\/td><td>Classification of Works<\/strong> (Original\/ Minor\/ Repair \u2014 Rule 130)<\/td><td>W only<\/td><\/tr><tr><td>7<\/td><td>Rs 60 lakh in-house repair-work threshold<\/td><td>W only<\/td><\/tr><tr><td>8<\/td><td>Portals named<\/td><td>G:<\/strong> GeM + GePNIC<\/strong>. W:<\/strong>CPPP only<\/strong>. C\/NC:<\/strong> GeM + CPPP (\"generally<\/strong> conform\")<\/td><\/tr><tr><td>9<\/td><td>Composite contract refinements<\/strong> (new product vs AMC\/CMC; Notes 1\u20133)<\/td><td>W, C, NC<\/strong>; G<\/strong> has only the shorter version<\/td><\/tr><tr><td>10<\/td><td>Consultancy-vs-NC \"primary objective\" test (dam safety example)<\/td><td>W, c, nc; Not in G<\/td><\/tr><tr><td>11<\/td><td>FA Charter applies only to Ministries\/ Departments; CPSEs free to devise own system<\/td><td>G only<\/td><\/tr><tr><td>12<\/td><td>Standards (Canons) of Financial Propriety<\/td><td>G, W only<\/strong> \u2014 absent from C<\/strong> and NC<\/strong><\/td><\/tr><tr><td>13<\/td><td>Rule 21 clause (v)<\/strong> \u2014 allowances not a source of profit<\/td><td>W only<\/td><\/tr><tr><td>14<\/td><td>National SC\/ST Hub (NSSH)<\/td><td>G only<\/td><\/tr><tr><td>15<\/td><td>\"25% is only a minimum; MSE preference mandatory for all procurements\"<\/td><td>C, NC only<\/td><\/tr><tr><td>16<\/td><td>Non-tax benefits explained (schemes, delayed payments)<\/td><td>C only<\/td><\/tr><tr><td>17<\/td><td>Definitions of Class-I \/ Class-II \/ Non-local supplier in Chapter 1<\/td><td>W, C, NC<\/strong>; in G<\/strong> these are in the Glossary<\/strong><\/td><\/tr><tr><td>18<\/td><td>\"Rs 1000 Crore per annum \u2192 five-year procurement projections on website\"<\/td><td>G, C<\/td><\/tr><tr><td>19<\/td><td>Start-up benefits limited to the DPIIT-registered industry\/ sector<\/td><td>W, C<\/td><\/tr><tr><td>20<\/td><td>\"Relaxation can be partial \u2014 e.g. 25%\" footnote<\/td><td>W, C, NC<\/td><\/tr><tr><td>21<\/td><td>DMI&SP Policy<\/td><td>G:<\/strong> 2019 version. W:<\/strong>Revised 2025<\/strong> version (G.S.R. 341(E) dated 26.05.2025), framed for EPC tenders. Absent from C and NC<\/strong><\/td><\/tr><tr><td>22<\/td><td>\"When is procurement justified\"<\/td><td>C, NC only<\/td><\/tr><tr><td>23<\/td><td>\"Principles for Public Procurement of Services\"<\/td><td>C, NC only<\/td><\/tr><tr><td>24<\/td><td>Two-stage process mandated for Consultancy<\/td><td>C only<\/td><\/tr><tr><td>25<\/td><td>Enumerated list of 14 applicable laws<\/td><td>W only<\/strong> (G places them in Appendix 2; C\/NC cross-refer)<\/td><\/tr><tr><td>26<\/td><td>Law of Agency<\/td><td>W, c, nc; Not in G<\/td><\/tr><tr><td>27<\/td><td>RTI and Proactive Disclosures<\/td><td>G only<\/td><\/tr><tr><td>28<\/td><td>Basic Principles of Undertaking Works (13 principles)<\/td><td>W only<\/td><\/tr><tr><td>29<\/td><td>Administrative Control and Powers to Sanction<\/td><td>W only<\/td><\/tr><tr><td>30<\/td><td>Procurement Cycle \u2014 fifth stage \"Disposal of Scrap\"<\/td><td>G only<\/td><\/tr><tr><td>31<\/td><td>Procurement Cycle \u2014 Shortlisting\/ EoI as a separate stage; RfP in place of Bid Invitation; Negotiations named<\/td><td>C only<\/td><\/tr><tr><td>32<\/td><td>Procurement Cycle \u2014 Procurement Proposal (Concept Paper) as first step<\/td><td>C, NC<\/td><\/tr><tr><td>33<\/td><td>Repair works up to Rs 60 lakh \u2014 expenditure sanction on PPR alone<\/td><td>W only<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 1<\/p>\n<aside class=\"note\">Next:<\/strong> Chapter 2 \u2014 Need Assessment, Formulation of Specifications\/ Estimates\/ ToR\/ Activities Schedule, and Procurement Planning<\/em> (merging Goods Ch. 2, Works Ch. 2, Consultancy Ch. 2 and Non-Consultancy Ch. 2).<\/p><\/aside><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch2\">Chapter 2<\/p><h1>Need Assessment, Formulation of the Requirement, and Procurement Planning<\/h1><\/header>\nMerging: Goods Ch. 2 (Need Assessment, Formulation of Specifications and Procurement Planning) \u00b7 Works Ch. 2 (Need Assessment and Procurement Planning) \u00b7 Consultancy Ch. 2 \u00b7 Non-Consultancy Ch. 2<\/em><\/p><h2>The Central Idea of this Chapter<\/span><\/h2>\nThis is the chapter where the four Manuals genuinely diverge the most.<\/strong> Chapter 1 was largely common text; Chapter 2 is not. The reason is simple:<\/p>\n<aside class=\"note\">Every procurement must be described before it can be tendered \u2014 but the INSTRUMENT of description is different in each of the four categories.<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Initiating document<\/th><th>Description-of-requirement instrument<\/th><th>Approval architecture<\/th><\/tr><\/thead><tbody><tr><td>Goods<\/td><td>Indent \/ Purchase Requisition (Annexure 5)<\/td><td>Technical Specifications (TS)<\/td><td>Technical + Administrative + Budgetary sanction; signing of Indent<\/td><\/tr><tr><td>Works<\/td><td>Requisition \u2192 Perspective Plan<\/td><td>PPR\/ Rough Cost Estimate \u2192 DPR\/ Preliminary Estimate \u2192 Detailed Designs & Detailed Estimates<\/td><td>In-Principle Approval \u2192 A\/A and E\/S \u2192 Technical Sanction \u2192 Appropriation of funds<\/td><\/tr><tr><td>Consultancy<\/td><td>Procurement Proposal (Concept Paper) (Annexure 3)<\/td><td>Terms of Reference (ToR) (Annexure 4)<\/td><td>In-principle approval \u2192 Final Administrative and Budgetary Approval<\/td><\/tr><tr><td>Non-Consultancy<\/td><td>Procurement Proposal (Concept Paper) (Annexure 3)<\/td><td>Services and Activities Schedule (Annexure 4)<\/td><td>In-principle approval \u2192 Final Administrative and Budgetary Approval<\/td><\/tr><\/tbody><\/table><\/div>\nEverything else in this chapter \u2014 cost estimation principles, procurement planning, packaging\/slicing, cartel mitigation, annual procurement plans, risks and mitigations \u2014 is largely common and is stated once below.<\/p>\n<h2>Concordance for Chapter 2<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>Goods<\/th><th>Works<\/th><th>CS<\/th><th>NCS<\/th><\/tr><\/thead><tbody><tr><td>2.1<\/td><td>Need Assessment and the Initiating Document<\/td><td>2.1<\/td><td>2.1<\/td><td>2.1, 2.2<\/td><td>2.1, 2.2<\/td><\/tr><tr><td>2.2<\/td><td>Matters decided during Need Assessment<\/td><td>2.1-2<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>2.3<\/td><td>Estimation of Cost<\/td><td>2.1-2-f)<\/td><td>2.2, 2.4<\/td><td>2.4<\/td><td>2.3.2<\/td><\/tr><tr><td>2.4<\/td><td>Formulation of the Requirement \u2014 Goods: Technical Specifications<\/strong><\/td><td>2.2<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>2.5<\/td><td>Formulation of the Requirement \u2014 Works: PPR, DPR, designs, Estimates, Sanctions<\/td><td> \u2014 <\/td><td>2.2\u20132.8<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>2.6<\/td><td>Formulation of the Requirement \u2014 Consultancy: Terms of Reference<\/strong><\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>2.3<\/td><td> \u2014 <\/td><\/tr><tr><td>2.7<\/td><td>Formulation of the Requirement \u2014 NC: Services and Activities Schedule<\/strong><\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>2.3.1<\/td><\/tr><tr><td>2.8<\/td><td>Obtaining Sanctions\/ Approvals<\/td><td>2.3<\/td><td>2.3, 2.5, 2.7<\/td><td>2.5<\/td><td>2.3.3<\/td><\/tr><tr><td>2.9<\/td><td>Need Assessment & Formulation \u2014 Risks and Mitigations<\/td><td>2.4<\/td><td> \u2014 <\/td><td>2.6<\/td><td>2.3.4<\/td><\/tr><tr><td>2.10<\/td><td>Procurement Planning<\/td><td>2.5.1<\/td><td>2.9<\/td><td>2.7.1<\/td><td>2.4.1<\/td><\/tr><tr><td>2.11<\/td><td>Procurement Planning \u2014 Risks and Mitigations<\/td><td>2.5.2<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>2.4.2<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>2.1<\/span>Need Assessment and the Initiating Document<\/span><\/h2><h3 class=\"src-G\">2.1.1<\/span>Goods \u2014 the Indent<\/span>G<\/span><\/h3><div class=\"srcblock src-G\">\n<ol class=\"lst\"><li>Procurements should be initiated only on the basis of an INDENT (please refer to Annexure 5 \u2014 Purchase Requisition (Indent) for Goods (Non-stock)) from the user Department.<\/li><li>The authority in the user Department initiating the indent for procurement shall first determine the need (including anticipated quantum) for the subject matter of the procurement.<\/li><li>Description and Specification of Need assessment is of FUNDAMENTAL IMPORTANCE in ensuring value for money, transparency, competition, and a level playing field in procurement.<\/li><li>The user department shall maintain all documents relating to the determination and technical\/ financial\/ budgetary approvals needed for procurement.<\/li><\/ol>\n<\/div><h3 class=\"src-W\">2.1.2<\/span>Works \u2014 Perspective Planning for Works<\/span>W<\/span><\/h3><div class=\"srcblock src-W\">\n<ol class=\"lst\"><li>Each Ministry\/ Department shall prepare a perspective plan for undertaking different types of works. There shall also be a provision for ANNUAL REVIEW of the plan for making modifications, if any.<\/li><li>During procurements, in place of considering only the initial acquisition cost<\/strong>, other costs like cost of operation, maintenance, and disposal during the lifetime<\/strong> of the external resource procured should also be considered. This practice refers to the concept of Total Cost of Ownership (TCO) or Life Cycle Cost (LCC) or Whole-of-Life (WOL)<\/strong>, as mentioned under para 1.7<\/strong> above.<\/li><\/ol>\n<\/div><h3 class=\"src-multi\">2.1.3<\/span>Consultancy and Non-Consultancy Services \u2014 the Procurement Proposal<\/span>C<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\">\n<ol class=\"lst\"><li>Procurement Proposal:<\/strong> A critical part of the procurement of Services process is preparing an appropriately staffed and budgeted Procurement Proposal\/ Concept Paper<\/strong> \u2014 which serves the function that an INDENT serves in procurement of Goods<\/strong>. The authority in the user Department initiating the procurement proposal shall first determine the need (including anticipated quantum)<\/strong> for the subject matter of the procurement.<\/li><\/ol>\nPurpose\/ Objective Statement of Services, Service Outcome Statement, and justification for the procurement of Services are important parts of the procurement proposal.<\/p>\n<ol class=\"lst\"><li>The description instrument:<\/li><li>C<\/span>Terms of Reference<\/strong> containing Scope of Work, Time-frame, Key Staff, Deliverables\/ Milestones<\/strong> is of fundamental importance in ensuring value for money, transparency, competition, and a level playing field in procurement of Consultancy Services.<\/li><li>NC<\/span>Services and Activity Schedule<\/strong> containing Service Outcomes, Description\/ Scope of Services, Quantum and Length (Duration\/ Frequency\/ Shifts) of activities<\/strong> is of fundamental importance in ensuring value for money, transparency, competition, and a level playing field in procurement of NC Services.<\/li><\/ol>\nThe user Department shall maintain all documents relating to the determination and technical\/ financial\/ budgetary approvals of the need for procurement.<\/p>\n<h4 class=\"src-multi\">2.1.3.1<\/span>Preparing the Procurement Proposal\/ Concept Paper<\/span>C<\/span>NC<\/span><\/h4><div class=\"srcblock src-multi\">\nAs a first step towards procurement of services, a formal written brief Proposal and Justification for the Services should be prepared (suggested format at Annexure 3: Format of Procurement Proposal). It is akin to the Indent for Materials\/ Material Requisition in the case of Procurement of Goods.<\/p>\nThe User should prepare, in simple and concise language, the requirement, purpose\/ objectives and the scope\/ outcomes of the assignment\/ Services, and justify the procurement based on analysis of in-house available capacity\/ capability.<\/p>\n<ul class=\"lst\"><li>C<\/span>The eligibility and PRE-QUALIFICATION criteria to be met by the consultants<\/strong> should also be clearly identified at this stage.<\/li><li>NC<\/span>The eligibility and QUALIFICATION criteria to be met by the service providers<\/strong> should also be clearly identified at this stage.<\/li><\/ul>\nJustifications for procurement of Services as given in para 1.12 may be kept in view. It is the basic document for initiating procurement of services. It is also the document from which the subsequent detailing of the ToR C<\/span> \/ Services and Activities Schedule NC<\/span> is drawn up.<\/p>\nA procurement proposal should contain:<\/p>\n1. Purpose\/ Objective Statement of Services: The user should prepare a \"Purpose\/ Objective Statement of Services\". One of the important contents of this statement is the description of service to describe the subject matter of procurement, which would be used in all subsequent documents. Bringing out the background and context, this should justify how the proposed procurement of services would fit in with the short-term and strategic goals of the Procuring Entity. Making such a statement is important to put the need for services in clear perspective. It may seem elementary or academic, but is a necessary and critical first step in properly designing a procurement proposal.<\/p>\n2. Service Outcome Statement:<\/strong> Once the \"Purpose\/ Objective of Services\" has been clearly defined, the next step is to formulate a 'Service Outcome Statement<\/strong>'. This should list out QUALITATIVELY and QUANTITATIVELY the outcomes expected<\/strong> from the Procurement of Services, as well as the expected Time-frame<\/strong> and a rough estimate of cost<\/strong> of Procurement of services (including related costs to be incurred by the organisation<\/strong>).<\/p>\nAt this stage, it is not necessary to go into details of all the activities<\/strong> required to achieve the service outcomes, but it should list at least the BROAD activities<\/strong>, which would help in putting a rough estimate to the cost of the assignment.<\/p>\nA 'Service Outcome Statement' should provide a concrete basis for subsequently defining the type and amount of work that needs to be done by the Consultant\/ service provider, and the time-frame within which the output needs to be received by the user. The estimated cost is needed to ascertain the level of administrative\/ financial approvals necessary as per the SoPP.<\/p>\n3. Justification for the Procurement of Services: The Concept Paper\/ Procurement Proposal should analyse the capabilities\/ capacities REQUIRED to carry out the assignment. It should also analyse the AVAILABLE IN-HOUSE capabilities\/ capacities and COMPARE these with the ones required for the assignment. Based on this assessment, the Procurement should be justified in the light of para 1.12.<\/p>\n<\/div><h4 class=\"src-multi\">2.1.3.2<\/span>In-principle Approval for initiating procurement of Services<\/span>C<\/span>NC<\/span><\/h4><div class=\"srcblock src-multi\">\nBased on the justification contained in the Procurement Proposal, in-principle administrative approval and BUDGETARY SANCTION for initiating procurement of such services should be accorded by the Competent Authority (CA) as laid down in the SoPP.<\/p>\nFurther stages May be proceeded with only after such approvals. (C<\/span> cites Rule 180 of GFR 2017.)<\/em><\/p>\n<\/div><\/div><h2 class=\"src-G\">2.2<\/span>Matters Decided During Need Assessment<\/span>G<\/span>of general application<\/span><\/h2><div class=\"srcblock src-G\">\nDuring need assessments, the following matters are decided to comply with the 'Procurement Guidelines':<\/p>\n<h3>a) Expression\/ Description of the Need<\/span><\/h3>\nThe expression\/ description of the need is an important determinant of Value for Money (VfM) and wide competition<\/strong>. Therefore, to the extent practicable, it should be:<\/p>\n<ul class=\"lst\"><li>i) Unambiguous, complete, using common terminology prevalent in the relevant trade;<\/li><li>ii) In accordance with the guidelines prescribed, if any, in this regard;<\/li><li>iii) Except in the case of proprietary purchase from a selected single source, reference to trademark, brand\/ trade names, catalogue numbers, or other details that limit any materials or items to specific manufacturer(s) should be AVOIDED as far as possible. Where unavoidable, such item descriptions should always be followed by the words \"or substantially equivalent.\"<\/li><\/ul>\n<h3>b) Method of Satisfying the Need<\/span><\/h3>\nThe method of satisfying the need \u2014 owning\/ leasing\/ hiring\/ outsourcing or through Public Private Partnership (PPP)<\/strong>, and so on \u2014 may be determined:<\/p>\n<ul class=\"lst\"><li>as per policies declared in this regard, or<\/li><li>based on a techno-economic evaluation (using life cycle cost if feasible) of various alternative methods of satisfaction of the need, and compatibility and inter-operability with existing infrastructure or systems.<\/li><\/ul>\nThere are now new procurement approaches like:<\/p>\n<ul class=\"lst\"><li>Hardware as a Service (HaaS)<\/strong>, also known as Infrastructure as a Service (IaaS)<\/strong> \u2014 it allows customers to outsource their IT infrastructures, such as servers, networking, processing, storage, virtual machines, and other resources. Customers access these resources on the Internet using a pay-as-per-use model.<\/em><\/li><li>Software as a Service (SaaS)<\/strong> \u2014 the SaaS provider is responsible for operating, managing, and maintaining the application software hosted on the cloud and the infrastructure on which it runs. The customer simply creates an account, pays a fee and uses the software over an internet connection by way of a web browser, mobile app or thin client.<\/em><\/li><\/ul>\n<h3>c) Quantity of the Subject Matter of Procurement, Commensurate with Economy<\/span><\/h3>\n<ul class=\"lst\"><li>i) Care should be taken to avoid purchasing quantities in excess of the requirement to avoid inventory carrying costs. Where scales of consumption or usage limits of requirements have been laid down by the Competent Authority, the officer signing the indent should also CERTIFY that the prescribed scales or limits are not exceeded. It is also necessary to round off the calculated quantity to the nearest wagon load\/ truckload\/ package to economise on transportation.<\/li><li>ii) An appropriate size of the tender has a great impact on value for money and the level of competition. A balance is achieved by judicious packaging requirements of different users or slicing requirements into smaller tenders (see para 2.10 below on the merits and demerits of packaging and slicing).<\/li><li>iii) units of quantity are an important parameter. Some items may be manufactured in metric tons but used in units of numbers or units of length (for example, steel sheets\/ structurals). For the sake of transparency, it is important to buy an item in units of manufacture. For example, it is better to buy steel\/ structurals in units of WEIGHT, since it has a tolerance in weight per unit of length; this usually works to the disadvantage of the buyer if it is bought in units of length. The buying and issuing units of an item may be different \u2014 but should be standardised.<\/li><\/ul>\n<h3>d) Time-schedule and Place of Product\/ Work\/ Service Delivery<\/span><\/h3>\nNeed assessment and generation of indent for procurement should be done sufficiently in advance of the time when goods are required. Delays in need assessment have an ADVERSE IMPACT on value for money and transparency.<\/p>\nGreat care is required to be exercised in filling up REALISTIC DATES for the requirement of material. The procuring entity should be allowed time in accordance with the established lead times.<\/p>\nIn urgent cases, the procuring entity may entertain indents providing shorter periods, but such urgencies must be approved by the authority empowered to grant administrative approval for the indent, and must be accompanied by PROPER JUSTIFICATION.<\/p>\n<h3>e) Formulation of Specifications<\/span><\/h3>\nFormulation of Specifications ensures value for money, transparency, a level playing field, and the widest competition. (Detailed at paras 2.4 to 2.7 below, category-wise.)<\/em><\/p>\n<h3>f) Estimation of Cost<\/span><\/h3>\n(Detailed at para 2.3 below.)<\/em><\/p>\n<\/div><h2>2.3<\/span>Estimation of Cost<\/span><\/h2><h3 class=\"src-G\">2.3.1<\/span>Why the Estimate Matters<\/span>G<\/span>of general application<\/span><\/h3><div class=\"srcblock src-G\">\nThe estimated cost in the indent is a VITAL ELEMENT in:<\/p>\n<ul class=\"lst\"><li>various procurement processes,<\/li><li>approvals, and<\/li><li>the establishment of reasonable prices at the time of evaluation of the bids.<\/li><\/ul>\nTherefore, it should be worked out REALISTICALLY and OBJECTIVELY.<\/p>\nFollowing are some suggested methods of cost estimates. These are neither mandatory nor comprehensive nor in any order of preference. These methods are not mutually exclusive, and TRIANGULATION from different methods would give a more accurate estimate of cost.<\/p>\n<h4>A. Where historical cost data IS available<\/span><\/h4>\nLast purchase price<\/strong> (or estimated rate in past indents) of this or similar or nearly equivalent requirements \u2014 after due updation<\/strong> as per D below.<\/p>\n<h4>B. Where NO historical cost data is available \u2014 Costing Analysis<\/span><\/h4>\nCosting analysis through internal or external expert costing agencies provides a reliable estimate of cost.<\/p>\n<h4>C. Where NO historical cost data is available AND Costing Analysis is NOT feasible<\/span><\/h4>\nIn such situations, a rough assessment of cost can be arrived at \u2014 but should be used with CAUTION for evaluation of the reasonableness of bids:<\/p>\n<ol class=\"lst\"><li>Rough assessment from the price of the assembly\/ machine of which the item is a part, or vice versa;<\/li><li>Published catalogues\/ Maximum Retail Price (MRP) printed on the item is the main source for establishing the estimated cost of items. It may be noted that MRPs usually include SIGNIFICANT MARGINS for distributors, wholesalers, and retailers;<\/li><li>As a LAST RESORT, a rough assessment of the opportunity cost of not using this item at all;<\/li><li>Market Survey: For commercially available goods, a formal market survey online (GeM portal or other commercial market apps) or a physical survey of the market can provide a reasonable estimate of cost;<\/li><li>Budgetary Quotes: For equipment\/ craft that are custom-built to the buyer's specifications, the best way to get a rough assessment of costs is by obtaining budgetary quotes from potential parties.<\/li><li>Ideally, there should be three quotes.<\/li><li>However, there is a need to have a time schedule for receipt of quotes<\/strong> to ensure some timeframe for this activity.<\/li><li>An attempt should be made to obtain as many budgetary quotes as possible from reputed\/ potential firms, and a time (if feasible, ten to twenty-one days) should be indicated.<\/li><li>In the event of receipt of less than three budgetary quotes, two EXTENSIONS (if feasible, of five days each) may be considered.<\/li><li>In the event of the non-availability of three quotes within the above extended period, the estimates should be prepared based on the number of budgetary quote(s) received \u2014 which May even be one.<\/li><li>Where more than one budgetary quote is received, the estimate should be framed on an AVERAGE of the quotes, which will reduce variations and fluctuations.<\/li><li>CAUTION: Budgetary quotes are not exact estimates \u2014 the bidder who EXPECTS to be short-listed may quote HIGH rates, and the bidder who does not expect to be shortlisted may quote ABNORMALLY LOW prices to queer the pitch for others.<\/li><\/ol>\n<h4>D. Updation of Historical Data<\/span><\/h4>\nHistorical cost data can be supplemented with escalations to cater for inflation, price increases of raw materials, labour, energy, statutory changes, price indices, and so on, to make them usable in conditions prevailing currently. In the case of foreign currencies, the rate should be reduced to a common denomination of Indian Rupees.<\/p>\nPrice indices can be obtained from the following websites<\/strong>(some may require prior free registration, and some have paid subscriptions)<\/em>:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Purpose<\/th><th>Source<\/th><\/tr><\/thead><tbody><tr><td>Price indices of indigenous items<\/strong><\/td><td>http:\/\/www.eaindustry.nic.in\/home.asp.in \u2014 Ministry of Industry<\/td><\/tr><tr><td>Metals and other minerals<\/td><td>http:\/\/www.mmronline.com\/ \u00b7 http:\/\/www.metalprices.com\/index.asp \u00b7 http:\/\/www.asianmetal.com\/<\/td><\/tr><tr><td>Price trends of non-ferrous metals<\/td><td>London Metal Exchange<\/strong> \u2014 https:\/\/www.lme.com\/ (often show volatile trends<\/em>)<\/td><\/tr><tr><td>General economic\/ trade intelligence<\/td><td>http:\/\/www.tradeintelligence.com\/ \u00b7 http:\/\/www.cmie.com\/ (Centre for Monitoring Indian Economy<\/strong>)<\/td><\/tr><tr><td>Price trends of different countries<\/td><td>http:\/\/www.imf.org\/external\/pubs\/ft\/weo\/2015\/01\/ \u2014 International Monetary Fund<\/strong><\/td><\/tr><tr><td>Industry chambers<\/td><td>www.ieema.org \u2014 Indian Electrical and Electronics Manufacturers' Association<\/td><\/tr><tr><td>Commodity Prices<\/td><td>Multi Commodity Exchange of India Limited (MCX) \u2014 https:\/\/www.mcxindia.com\/home<\/td><\/tr><tr><td>Cross-commodity price reporting agency (PRA)<\/td><td>Fastmarkets<\/strong> \u2014 https:\/\/www.fastmarkets.com\/<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h3 class=\"src-C\">2.3.2<\/span>Cost Estimation for Consultancy Services<\/span>C<\/span><\/h3><div class=\"srcblock src-C\">\nPreparation of a well-thought-through cost estimate is ESSENTIAL if realistic budgetary resources are to be earmarked.<\/p>\na) Categories:<\/strong> Costs shall be divided into Two broad categories<\/strong>:<\/p>\n<ul class=\"lst\"><li>(a) fee or remuneration<\/strong> (according to the type of contract used); and<\/li><li>(b) reimbursable costs.<\/li><\/ul>\nDepending on the nature of the assignment, cost estimates may be prepared either in local currency or with a combination of local plus foreign currencies. Cost estimate should provide for forecast of inflation during the period of assignment.<\/p>\nb) Estimated Resources:<\/strong> The cost estimate shall be based on the Procuring Entity's assessment of the resources needed<\/strong> to carry out the assignment:<\/p>\n<ul class=\"lst\"><li>i) Staff time;<\/li><li>ii) Logistical support<\/strong> (City, National and International Travels\/ Trips and durations); and<\/li><li>iii) Physical inputs<\/strong> (for example, vehicles, laboratory equipment);<\/li><li>iv) Miscellaneous<\/strong> (Support services, contingencies, and Profit element, taxes, and duties).<\/li><\/ul>\nc) Rates:<\/strong> Costs are normally estimated using UNIT RATES<\/strong> (staff remuneration rates, reimbursable expenses) and quantities<\/strong> (exceptionally, some items may be estimated on a lump-sum basis or percentage basis<\/strong> \u2014 Contingencies and support services). Rates of payment should be identified (including applicable taxes, if any) in LOCAL and FOREIGN currency<\/strong> for Staff Time, Logistics Costs and Costs of various physical inputs\/ support services.<\/p>\nd) Staff Costs: The estimate of staff cost is based on an estimate of the personnel time (staff-months or staff-hours) required for carrying out the assignment, taking into account the time required by each expert, his or her BILLING RATE, and the related DIRECT COST component.<\/p>\nIn general, staff remuneration rates include: Basic salary, social charges, overheads, fees or profit, and ALLOWANCES.<\/p>\nIt is useful to prepare a bar chart<\/strong> indicating:<\/p>\n<ul class=\"lst\"><li>the duration of each main activity (WORK SCHEDULE), and<\/li><li>time to be spent by different members of the consultancy team (STAFFING SCHEDULE),<\/li><\/ul>\ndistinguishing tasks to be carried out by FOREIGN and LOCAL consultants. Due consideration should be given to the expected breakdown of a consultant's time in the home office and client's countries, and away-from-home-office allowance.<\/p>\ne) Logistic Costs: The number of trips required should be estimated as required to carry out various activities. Travel costs may be included for city travel, National and International travel and stay.<\/p>\nf) Physical Inputs Costs: Assessment of such costs would depend on the technical requirements of equipment.<\/p>\ng) Miscellaneous costs: Support services may be taken as a percentage of staff costs. Contingencies and Profit elements are usually taken as a percentage of the total cost of the Consultancy. To this would be added the taxes and duties likely to be incurred by the consultants.<\/p>\nCost categories for breaking down an assignment C<\/span>: Although assignments vary in size, length, and nature, it is possible to make a cost estimate by breaking down the assignment's activities into the following cost categories: a) Professional and support staff; b) Travel, Hotel, and transport; c) Mobilisation and demobilisation; d) Office rent, Furniture\/ Equipment, supplies, Utilities, IT equipment and communication; e) Assignment-related surveys, training programmes; f) Translation, report printing; g) Contingencies: miscellaneous, insurance, shipping; and h) Indirect local taxes and duties in connection with carrying out the services.<\/p>\n<aside class=\"note\">A MISMATCH between the cost estimate and the ToR is likely to MISLEAD CONSULTANTS on the desired scope, depth, and details of service required, and this could lead to SERIOUS PROBLEMS during contract negotiations or during implementation of the assignment.<\/p><\/aside>\n<\/div><h3 class=\"src-NC\">2.3.3<\/span>Cost Estimation for Non-Consultancy Services<\/span>NC<\/span><\/h3><div class=\"srcblock src-NC\">\nPreparation of a well-thought-through cost estimate is essential if realistic budgetary resources are to be earmarked. The cost estimate shall be based on the Procuring Entity's assessment of the resources needed to carry out the services: managerial and staff time and physical inputs (for example, materials, consumables, tools and machines).<\/p>\nCosts shall be divided into three broad categories.<\/strong>Profit element, Taxes and duties should be ADDED to the estimated costs:<\/strong> a) Remunerations for Personnel deployed<\/strong>; b) Reimbursable:<\/strong> Travel, logistics, Consumables, Materials, Tools, Hiring of third-party services, etc.; c) Administrative and Miscellaneous:<\/strong> Mobilisation, demobilisation, Temporary Structures, Administrative expenses, office and IT equipment, contingencies, financing costs, Costs for hiring\/ depreciation\/ financing of machinery and equipment, etc.<\/p>\nRates:<\/strong> Costs are normally estimated using unit rates<\/strong> (staff remuneration rates, reimbursable expenses) and quantities<\/strong> (exceptionally some items may be estimated on a lump-sum basis or percentage basis<\/strong> \u2014 Contingencies and support services).<\/p>\nStaff Costs: The estimate of staff cost is based on an estimate of the personnel time (staff-months\/ weeks\/ days) required for delivering the services, considering the time required by each staff, his remuneration rate (or the minimum wage rate, if applicable), and the related direct cost component. In general, staff remuneration rates include basic salary, social charges, overheads, fees or profit and allowances.<\/p>\n<aside class=\"note\">A MISMATCH between the cost estimate and the Services and Activities Schedule is likely to mislead service providers on the desired scope, quantum, and frequency of service required, and this could lead to SERIOUS PROBLEMS during contract implementation.<\/p>\nNote the difference:<\/strong>C<\/span> uses TWO<\/strong> cost categories (fee\/ remuneration + reimbursable), with profit\/ taxes folded into \"Miscellaneous\". NC<\/span> uses THREE<\/strong> categories (Remuneration + Reimbursable + Administrative & Miscellaneous), with profit, taxes and duties added on top<\/strong>. NC<\/span> alone refers to the minimum wage rate<\/strong>.<\/p><\/aside>\n<\/div><h3 class=\"src-W\">2.3.4<\/span>Cost Estimation for Works<\/span>W<\/span><\/h3><div class=\"srcblock src-W\">\n(Works cost estimation is embedded in the PPR \u2192 DPR \u2192 Detailed Estimates sequence \u2014 see para 2.5 below, and the reference documents at para 2.5.7.)<\/em><\/p>\n<\/div><h2 class=\"src-G\">2.4<\/span>Formulation of the Requirement \u2014 GOODS: Technical Specifications (TS)<\/span>G<\/span><\/h2><div class=\"srcblock src-G\"><h3>2.4.1<\/span>Value for Money and Technical Specifications<\/span><\/h3>\nThe procuring authority should ensure that specifications are developed to ensure VfM, a level playing field and wide competition in procurement [Rule 173(ix) of GFR 2017].<\/p>\nThe TS constitute the BENCHMARKS against which the procuring entity will verify the technical responsiveness of bids and, subsequently, evaluate the bids. Therefore, well-defined TS will facilitate:<\/p>\n<ul class=\"lst\"><li>the preparation of responsive bids by bidders, as well as<\/li><li>the examination, evaluation, and comparison of the bids by the procuring entity.<\/li><\/ul>\nIt would also help in ensuring the QUALITY of the supplied goods.<\/p>\nThe procuring authority should ensure that the specification should:<\/p>\n1. Ensure a level playing field and the widest competition;<\/p>\n2. Be unambiguous, precise, objective, functional, broad-based\/ generic, standardised (for items procured repeatedly) and measurable. TS should be broad enough to avoid restrictions on workmanship, materials and equipment commonly used in manufacturing similar kinds of goods;<\/p>\n3. Set out the required technical, qualitative and performance characteristics to meet just the bare essential specific needs of the procuring entity, without including SUPERFLUOUS and NON-ESSENTIAL features, which may result in unwarranted expenditure;<\/p>\n4. Standards:<\/p>\n<ul class=\"lst\"><li>Normally, these standards should be based on national technical regulations or recognised national standards (Bureau of Indian Standards \u2014 BIS) or building codes, wherever such standards exist. Preference should be given to procure the goods which carry the BIS mark.<\/li><li>In the absence of national standards, TS may be based on the relevant INTERNATIONAL standards.<\/li><li>Provided that an indenting authority may, for reasons to be recorded in writing, base the TS on equivalent international standards even in cases where BIS standards exist.<\/li><li>For any deviations from Indian standards or for any additional parameters for better performance, specific reasons for deviations\/ modifications should be duly recorded with the approval of the Competent Authority.<\/li><li>Where the technical parameters are only MARGINALLY different, Indian standards may be specified, and the Departmental specifications could cover only such additional details as packing, marking, inspection, and so on, as are specially required for a particular end use.<\/li><\/ul>\n<aside class=\"note\">Footnote: It has been reiterated by the Department of Expenditure vide OM F.No. 12\/17\/2019-PPD dated 12.05.2020 that wherever Indian Technical specifications and Quality Certifications exist, the procuring entity should prescribe them. In those rare or exceptional cases where, despite the existence of Indian technical specifications, the procuring entity intends to specify foreign Technical Certifications and Accreditations, it must record its reasons in writing for adoption of such other technical specifications. This may also be subject to matter of audit.<\/p><\/aside>\n5. Units: All dimensions incorporated in the specifications shall be indicated in metric units. If, for some unavoidable reason, dimensions in FPS units are to be mentioned, the corresponding equivalents in the metric system must also be indicated. In the case of Government of India funded projects ABROAD, the technical specifications may be framed based on the requirements and standards of the host beneficiary Government, where such standards exist \u2014 provided that a procuring entity may, for reasons to be recorded in writing, adopt any other technical specification;<\/p>\n6. Make use of best practices: Examples of specifications from successful similar procurements in other organisations or sectors may provide a sound basis for drafting the TS;<\/p>\n7. Avoid obsolescence: Commensurate with VfM, avoid procurement of obsolete goods, and require that all goods and materials be NEW, UNUSED and of the most recent or current models, and that they incorporate all recent improvements in design and materials, unless provided for otherwise in the tender documents;<\/p>\n<h3 class=\"src-G\">2.4.2<\/span>Environmental Issues, Green Procurement, Sustainable Development Goals<\/span>G<\/span><\/h3><div class=\"srcblock src-G\">\na) Comply with sustainability criteria and legal requirements of environment or pollution control and other mandatory and statutory regulations or internal guidelines, if any, applicable to the goods to be purchased.<\/p>\nb) While specifying packaging requirements in the supply of Goods\/ Works\/ Services, the procuring entity may emphasise packaging that has minimal impact on the environment without compromising on safety and security.<\/p>\nc) Ecomark:<\/strong> The procuring Entity may include a requirement for the Ecomark Label<\/strong>, to the extent feasible, in their Description\/ Specification of the goods being procured.<\/p>\nThe Government of India has promulgated the Ecomark Certification Rules, 2023<\/strong> for:<\/p>\n<ul class=\"lst\"><li>labelling environmentally friendly products<\/strong> that meet the approved environment criteria, and<\/li><li>ensuring environmental performance of such products with respect to resource efficiency, circular economy and environmental impacts \u2014 in particular the impact on climate change, the impact on nature and biodiversity, generation of waste, emissions to all environmental media, pollution through physical effects, and use and release of hazardous substances<\/li><\/ul>\n \u2014 thereby supporting the principles of 'LiFE (Lifestyle for Environment)'.<\/p>\nObjective: to encourage consumers to adopt such products and the manufacturers to transition to the production of Ecomark-certified products to promote sustainability. It shall be applicable to any product that is produced or supplied for distribution or use in the market, unless otherwise excluded under the Ecomark Certification Rules. It would also prevent misleading information on the environmental aspects of products.<\/p>\nd) Efficiency factors: Specifications should emphasise factors such as efficiency, optimum fuel\/ power consumption, use of environmentally friendly materials, reduced noise and emission levels, low maintenance cost, and so on.<\/p>\ni) Bureau of Energy Efficiency (BEE): The Government of India set up the BEE (https:\/\/beeindia.gov.in\/en) on 1 March 2002, under the provisions of the Energy Conservation Act, 2001, with the primary objective of reducing the energy intensity of the Indian economy. The Bureau initiated the Standards & Labelling Programme for equipment and appliances in 2006 to provide the consumer with an informed choice about energy saving and, thereby, the cost-saving potential of the relevant marketed product.<\/p>\nii) Coverage: The scheme is invoked for 34 equipment\/ appliances, out of which labelling is mandatory for 11 equipment\/ appliances, i.e.:<\/p>\n<aside class=\"note\">Frost-Free Refrigerator \u00b7 Stationary Storage Type Electric Water Heater \u00b7 Colour Television \u00b7 Room Air Conditioner (RAC \u2014 Variable Speed; Fixed Speed; Cassette; Floor Standing Tower; Ceiling; Corner) \u00b7 TFL \u00b7 LED Lamps \u00b7 Distribution Transformer \u00b7 Direct Cool Refrigerator \u00b7 Ceiling Fan<\/p><\/aside>\nThe other appliances are presently under the VOLUNTARY labelling phase.<\/p>\niii) Star ratings: The energy efficiency labelling programmes under BEE are intended to reduce the energy consumption of appliances without DIMINISHING the services they provide to consumers. The higher the stars, the more EFFICIENT the appliance. The threshold ratings prescribed by the Ministry of Finance are:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Appliance<\/th><th>Threshold Star Rating<\/th><\/tr><\/thead><tbody><tr><td>Split Air Conditioners<\/td><td>5 Star<\/strong> (under normal conditions where annual usage is expected to be more than 1000 Hrs<\/strong>) 3 Star<\/strong> (where usage of AC is limited<\/strong>, e.g., in conference rooms)<\/td><\/tr><tr><td>Frost Free Refrigerators<\/td><td>4 Star<\/td><\/tr><tr><td>Ceiling Fans<\/td><td>5 Star<\/td><\/tr><tr><td>Water Heaters<\/td><td>5 Star<\/td><\/tr><\/tbody><\/table><\/div>\niv) Building it into the TS:<\/strong> The procuring Entity should try to build either the BEE Star rating<\/strong>, where applicable, and minimum energy efficiency<\/strong>, where such star ratings are not yet available, into the TS<\/strong> (in accordance with Rule 173(xvii) of GFR 2017<\/strong>). Such benchmarking illustrates the use of neutral and dependable benchmarking<\/strong> in the procurement of sustainable, environmentally favourable goods by way of appropriately formulated Technical Specifications.<\/p>\nIn a similar fashion, to implement sustainability goals, TS may include an Environmental Product Declaration (EPD) as defined by ISO 14025 as a Type III declaration that \"quantifies environmental information on the life cycle of a product to enable comparisons between products fulfilling the same function\". Voluntary environmental standards can also be used to specify environmental sustainability criteria.<\/p>\n<\/div><h3 class=\"src-G\">2.4.3<\/span>Discourage Procurement Involving Evaluation of Samples\/ Demonstration of Equipment<\/span>G<\/span><\/h3><div class=\"srcblock src-G\">\nAccording to the existing guidelines on public procurement of goods, purchase in accordance with a sample, or requiring demonstration of equipment, should not be usually undertaken.<\/p>\na) Calling for a sample along with the tender, or requiring a demonstration of equipment after bid opening, and deciding based on evaluation of the sample\/ demonstration of equipment should not be done.<\/p>\nb) Built-in sample clauses: In certain specifications, there may be a built-in sample clause. Usually, such clauses are stipulated to illustrate INDETERMINABLE CHARACTERISTICS such as shade\/ tone, make-up, feel, finish, workmanship, and so on. In some specifications there may not be a sample clause, but such indeterminable characteristics are left to be agreed between the seller and buyer. One way to procure\/ indigenise certain spares whose drawings\/ specifications are not available is to procure in accordance with an available sample of the part. In such cases, the supply must conform to an agreed reference sample only, whereas the remaining characteristics must conform to the drawings\/ specifications.<\/p>\nc) The reference-sample procedure: However, NO sample should be called for or evaluated along with the bids. If desired:<\/p>\n<ul class=\"lst\"><li>Three COPIES of the purchaser's REFERENCE SAMPLE with seal\/ label may be DISPLAYED<\/strong> for prospective bidders to illustrate the desired indeterminable characteristics, which final supplies from successful bidder(s) will have to meet in addition to the specifications\/ drawings<\/strong>.<\/li><li>If required, in addition to the purchaser's reference sample, the provision for the submission of a PRE-PRODUCTION SAMPLE matching the purchaser's sample by the successful bidder(s) may be stipulated for indeterminable characteristics before giving clearance for bulk production of the supply.<\/li><li>On placement of the contract, the three copies of the purchaser's reference sample are distributed as follows:<\/li><li>One copy \u2192 to the CONTRACTOR<\/strong> for preparing pre-production sample\/ supplies;<\/li><li>One copy \u2192 to the CONSIGNEE<\/strong> for matching with the pre-production sample\/ supplies;<\/li><li>One copy \u2192 kept secure under lock and key in the SAMPLE ROOM of the procuring entity.<\/li><li>The Indent for items that are to be procured in accordance with a sample must be accompanied by three sealed reference samples, as far as possible.<\/li><\/ul>\nd) Demonstration: If a demonstration of equipment (say, entirely newly developed equipment) is considered necessary, it may be planned only during the PRE-BID stage \u2014 but the evaluation of tenders should not be based on this.<\/p>\n<\/div><h3 class=\"src-G\">2.4.4<\/span>Essential Technical Particulars<\/span>G<\/span><\/h3><div class=\"srcblock src-G\">\nThe essential Technical particulars to be specified in the tender document<\/strong> shall include the following, to the extent applicable for a particular purchase<\/strong>:<\/p>\n<ol class=\"lst\"><li>Scope of supply and END USE<\/strong> of the required goods;<\/li><li>All essential technical, qualitative, functional, environmental and performance characteristics and requirements \u2014 such as material composition, physical dimensions and tolerances, workmanship, and manufacturing process wherever applicable; test schedule, if any \u2014 including guaranteed or acceptable MAXIMUM or MINIMUM values, as appropriate.<\/li><\/ol>\n<aside class=\"note\">Whenever necessary, the user may include an additional format for guaranteed technical parameters (as an attachment to the bid submission sheet), where the bidder shall provide detailed information on such technical performance characteristics in reference to the corresponding acceptable or guaranteed values.<\/p><\/aside>\n<ol class=\"lst\"><li>Drawings;<\/li><li>Requirement of the BIS mark, where applicable \u2014 mentioning all parameters where such a specification provides options;<\/li><li>Requirement of a PRE-PRODUCTION SAMPLE, if any, at the post-contract stage before bulk production;<\/li><li>Specific requirements of PRESERVATION, PACKING and MARKING, if any;<\/li><li>INSPECTION PROCEDURE for goods ordered and criteria of conformity;<\/li><li>Requirements of SPECIAL TESTS or type test certificate or TYPE APPROVAL for compliance of statutory requirements with reference to pollution, emission, noise, if any;<\/li><li>Other additional work and\/or related services required to achieve full delivery\/ completion, installation, commissioning, training, technical support, after-sales service, and Annual Maintenance Contract (AMC) requirements, if any;<\/li><li>WARRANTY requirements;<\/li><li>QUALIFICATION CRITERIA of the bidders, if any;<\/li><li>Any other aspects PECULIAR to the goods in question \u2014 such as the shelf life of the equipment, and so on.<\/li><\/ol>\n<\/div><\/div><h2 class=\"src-W\">2.5<\/span>Formulation of the Requirement \u2014 WORKS: PPR, DPR, Designs, Estimates and Sanctions<\/span>W<\/span><\/h2><div class=\"srcblock src-W\">\n<aside class=\"note\">This is the longest and most legally-loaded part of any of the four Chapter 2s. It runs through a seven-step sanctioning sequence: PPR \u2192 In-Principle Approval \u2192 DPR\/PE \u2192 A\/A and E\/S \u2192 Detailed Designs & Technical Sanction \u2192 Appropriation of funds \u2192 Tendering.<\/p><\/aside>\n<h3>2.5.1<\/span>Preparation of Preliminary Project Report (PPR) or Rough Cost Estimate<\/span><\/h3>\nWHO prepares it:<\/p>\n<ul class=\"lst\"><li>If the work is to be executed under its OWN arrangement by the Ministry\/ Department \u2014 a PPR or Rough Cost Estimate shall be prepared by the WORKS COMMITTEE, based on Land, Site Details, functional and space requirements (or Various Facilities, Special Requirements\/ Features and Broad Specifications for specialised Equipment and Plants), Layout Plans etc. \u2014 with the technical details\/ documents mentioned below being prepared by (or under the guidance of) the TECHNICAL MEMBER(S) of the Works Committee.<\/li><li>If the Work is executed through a Public Works Organisation (PWO) or a Public Sector Undertaking (PSU) \u2014 on requisition from the Ministry\/ Department for procurement of works, the PWO or PSU to whom the work is entrusted for execution shall prepare such PPR or Rough Cost Estimate and submit it to the requiring Department\/ Ministry.<\/li><\/ul>\nWHAT it triggers: Based on the PPR and Rough Cost Estimate, the competent authority in the Administrative Ministry\/ Department grants IN-PRINCIPLE APPROVAL, indicating approval of the CONCEPT and SCOPE of the project at the ROUGH COST assessed.<\/p>\n<aside class=\"note\">Ministry of Finance (DoE) has issued detailed instructions regarding appraisal and approval of Public Funded projects\/ schemes<\/strong> \u2014 OM No. 24(35)\/PF-II\/2012 dated 05.08.2016<\/strong> (where \"Schemes\"<\/strong> refers to a collection of Projects\/Works of either Central Sector Schemes or Centrally Sponsored Schemes, and \"Project\"<\/strong> refers to work which can be standalone or part of a scheme). It is suggested that the website of the Department of Expenditure be checked for the latest instructions (https:\/\/doe.gov.in\/appraisal-and-approval).<\/em><\/p><\/aside>\nThe Preliminary Project Report shall provide the following details:<\/p>\n<ol class=\"lst\"><li>Background of the work\/ project justifying the NEED for the work;<\/li><li>Details of SCOPE of the project;<\/li><li>EXCLUSIONS (if any)<\/strong> \u2014 this will cover part of the work which is not included<\/strong> in this particular project estimate;<\/li><li>Availability of LAND \u2014 there should be a clear indication about the availability of land required for completion of the whole project. The land shall be made available free of all encumbrances;<\/li><li>Availability of AUXILIARY SERVICES \u2014 like roads, power, water, solid & liquid waste disposal system, street lighting and other civic services shall be ensured;<\/li><li>Reference to Concept Plans\/ Preliminary Drawings, if any, and their acceptance \u2014 this shall indicate the details of Concept Plans\/ Preliminary Drawings prepared and their approval by the requisitioning authority;<\/li><li>AGENCY of Procurement \u2014 through direct procurement, outsourcing to PWO\/ PSUs or otherwise;<\/li><li>Rough Cost Estimate: Ministries\/ Departments may carefully assess alternative technological options, their area requirements, and obtain Rough Cost on the basis of prevailing plinth area rates (or any other reliable basis) without preparation of drawings, to enable the competent authority to accord in-principle approval;<\/li><li>If relevant, cost benefit analysis of the project, including evaluation of options for cost sharing\/ recovery (user charges) for infrastructure\/ services. Principles of Life Cycle Cost may also be considered, to the extent feasible;<\/li><li>CASH FLOW \u2014 this will show year-wise requirement;<\/li><li>Source & availability of funds \u2014 the manner of transferring the fund to the executing agency to be spelt out;<\/li><li>Appendices:<\/li><li>i) Requisition of the Department\/ Ministry;<\/li><li>ii) Concept Plans\/ Preliminary Drawings;<\/li><li>iii) Reference to approval of Concept Plans\/ Preliminary Drawings;<\/li><li>Any other relevant documents;<\/li><li>PRESENTATION on the findings of the feasibility study\/ PPR: As directed in the Department of Expenditure's General Instructions on Procurement and Project Management (OM No. F.1\/1\/2021-PPD dated 29.10.2021), a presentation may be made by a team (which may include engineers\/ consultants\/ outside experts, finance officers etc.) before the public authority\/ designated competent authority. This is to provide an opportunity to the public authority to have an overall assessment of the situation, appraisal of various options, as well as likely challenges and mitigation measures. In the case of VERY LARGE projects, such presentation may be made to the HEAD of the public authority. The record of discussions during the presentation may become part of the DPR and tender file\/ project record.<\/li><\/ol>\n<h3>2.5.2<\/span>Acceptance of Necessity and Issue of In-Principle Approval<\/span><\/h3>\nApproval of the competent financial authority for accepting the necessity of works and its SCOPE should be sought on the basis of the PPR or Rough Cost Estimate, and In-Principle Approval of the concerned Ministry\/ Department shall be made available for preparation of the Detailed Project Report or Preliminary Estimates.<\/p>\n<h3>2.5.3<\/span>Preparation of Detailed Project Report (DPR)\/ Preliminary Estimates (PE)<\/span><\/h3>\n1. On receipt of In-Principle Approval of the project, the procuring entity shall finalise the Detailed Project Report with due care and accuracy, using the latest technological tools, collecting all relevant ground information, including consultation with the field units wherever applicable, giving reference to the documents mentioned below. The DPR should provide a level playing field to the bidders and should ensure, as far as feasible, the widest possible competition.<\/p>\nThe DPR shall contain:<\/p>\n<ol class=\"lst\"><li>Reference to Concept plan\/ preliminary drawings and their acceptance;<\/li><li>Details of SCOPE of the project, indicating clearly the list of Engineering Services (Mechanical\/ Electrical\/ Plumbing) as well as Operation and Maintenance \u2014 included or not included in the DPR\/PE;<\/li><li>Preliminary estimated cost \u2014 this will also include the expected ESCALATION for the period of completion of the project, and also the departmental or lump sum charges to be paid to the executing agency (PWO or PSUs). Cash flow projection should show year-wise requirement. While designing the projects, if and to the extent possible, principles of Life Cycle Cost may also be considered;<\/li><li>Time of completion \u2014 this will consist of two PARTS: one for PRE-CONSTRUCTION activity till award of the work, and the other for the EXECUTION;<\/li><li>Details of LAND required along with land plan Schedule<\/strong> to implement timely land acquisition procedures;<\/li><li>Environmental Impact Assessment (EIA) of the project and approval thereof, wherever applicable;<\/li><li>Social Impact Assessment and Resettlement and Rehabilitation: Social Impact Assessment needs to be done, based on baseline socio-economic survey and census survey data, to identify the Project Affected People (PAPs). A Resettlement and Rehabilitation Plan should be prepared for the PAPs in accordance with the LARR Act 2013 or the National Policy on Resettlement and Rehabilitation (NPRR), and State Governments' framework of resettlement policies and other social safeguard policies designed to protect the rights of the affected persons and communities as applicable;<\/li><li>List of Approvals of STATUTORY BODIES required;<\/li><li>Annual plan allocation and cash flow;<\/li><li>Systems to be adopted for PROJECT MONITORING;<\/li><li>Works accounting system;<\/li><li>QUALITY ASSURANCE system\/ mechanism;<\/li><li>Bidding systems<\/strong> \u2014 Single, two parts, pre-qualification, Post-qualification;<\/li><li>WHO prepares: In case the work is being executed by the Ministry\/ Department themselves, DPR and PE will be prepared by the Ministry\/ Department itself. In case the Work is assigned to a PWO or PSU, that agency shall prepare the DPR and PE;<\/li><li>EXEMPTION: For repair works costing up to rs. 60 (SIXTY) LAKH, preparation of DPR and pe May be dispensed with, since repair work does not need detailed designing. Sanction may be accorded by the competent authority based on the PPR itself.<\/li><\/ol>\n2. The consultant-quality problem: A major reason for problems in works contracts \u2014 in particular relating to construction of roads, highways, ports, runways, dams etc. on item-rate or percentage rate basis \u2014 is the OUTSOURCING of preparation of Detailed Project Reports to consultants without sufficient relevant experience, or without giving them sufficient TIME to do so.<\/p>\n<ul class=\"lst\"><li>It is therefore essential to STIPULATE & ENSURE successful project design\/ supervision experience while selecting consultants, especially for large works contracts.<\/li><li>DPR in such contracts is required to be based on proper ground investigation at each specified stretch (normally 50 METRES), called a \"REACH\", and the Consultant be directed to exercise such due diligence.<\/li><li>Wherever consultants are appointed for preparation of DPR, field units of the public authorities should also be associated with the process. The inputs from these field units can be useful in proposing best solutions for design and execution of the work, as they are the custodian of legacy data, which may not be available with the consultants, as they may not be operating regularly in that geographical region.<\/li><\/ul>\n3. Involvement of the Ministry\/ Department: The involvement of the Ministry\/ Department in providing proper inputs, including USER REQUIREMENTS, during the preparation of the DPR and before accepting the draft DPR, is PARAMOUNT in ensuring successful implementation.<\/p>\n<ul class=\"lst\"><li>Proper FIELD SURVEYS and INVESTIGATIONS of ground conditions are CRITICAL in preparation of a reliable DPR.<\/li><li>Providing scientifically valid data to bidders will depend on the quality of the investigations done by the DPR consultant.<\/li><li>As a corollary, the Ministry\/ Department must INSIST on a qualified team of engineers with experience for carrying out DPR studies.<\/li><li>It is also essential that the Ministry\/ Department insists that the Consultant offers them TECHNOLOGY OPTIONS at the EARLY stage of preparation of the DPR, so that a cost-efficient choice may be made using principles of life cycle costing.<\/li><\/ul>\n4. Consequences of a defective DPR: In case the deviations between the actual ground situation and the situation recorded in such DPR result in significant COST and TIME OVER-RUNS, the Engineer, while doing valuation of variations, must bring to the Procuring Entity's notice the reach-wise differences, and the Ministry\/ Department May consider stringent action against the consultant who has prepared such DPRs \u2014 including debarment from future consultancy contracts, after following due procedure. Such clauses May be included in the contracts for preparation of DPR.<\/p>\n5. Presentation on the DPR: A presentation may be made about the DPR before the public authority, for projects above a THRESHOLD VALUE as decided by Project Executing Authorities. The presentation may include:<\/p>\n<aside class=\"note\">salient features of the project including general layout, architectural drawings, broad specifications, cash flow (over the life of the project), composition of the project team, quality management plan for the project, important milestones in the project execution, obligations of the authority and the contractor\/ concessionaire, and possible risks and mitigation measures.<\/p><\/aside>\nIn the case of very large projects, such presentation may be made to the HEAD of the public authority. The record of discussions during the presentation shall become part of the tender file\/ project record.<\/p>\n<h3>2.5.4<\/span>Administrative Approval and Expenditure Sanction (A\/A and E\/S)<\/span><\/h3>\n1. A\/A and E\/S will be accorded to the execution of work by the competent financial authority in the Ministry\/ Department after due examination of the Detailed Project Report and Preliminary Estimates.<\/p>\nPOST-SANCTION CHANGES in scope and specification lead to delay, loss of quality and contractual penalties. Therefore, such A\/A and E\/S shall be accorded after carefully assessing their requirements.<\/p>\nThe estimates framed by a PWO or other engineering organisation May be modified for such sanction only with their concurrence.<\/p>\n2. The sanction order should contain:<\/p>\n<ul class=\"lst\"><li>SCOPE of work,<\/li><li>estimated cost, and<\/li><li>TIME SCHEDULE for completion of work, and<\/li><li>funding sources along with the break-up of the share of each funding agency.<\/li><\/ul>\n3. A Department of Government of India may sanction expenditure on any scheme or project as per the powers delegated from time to time by the Finance Ministry (DoE's O.M. No. 24(35)\/PF-II\/2012 dated 05.08.2016)<\/em>, subject TO its outlay having been APPROVED by the Competent Authority in accordance with the appraisal and approval process prescribed by the Finance Ministry from time to time. (Rule 16, DFPR 2024)<\/em><\/p>\n<h3>2.5.5<\/span>Detailed Designs, Detailed Estimates and Technical Sanction<\/span><\/h3>\n1. Except where the work is to be undertaken in the EPC (Turnkey) mode, on receipt of sanction of the project (based on DPR or PE) and assurance of funds, the procuring entity, in consultation with the Works Committee, shall prepare and accord TECHNICAL SANCTION to:<\/p>\n<ul class=\"lst\"><li>the detailed and coordinated DESIGN of all the Architectural, Civil, Electrical, Mechanical, Horticulture and any other services included in the scope of the sanction, and<\/li><li>the detailed cost estimates containing the detailed SPECIFICATIONS and QUANTITIES of various items, prepared on the basis of the Schedule of Rates maintained by CPWD or other Public Works Organisations<\/li><\/ul>\n \u2014 so as to ensure that proposals are STRUCTURALLY SOUND and that the estimates are accurately calculated based on adequate data.<\/p>\nIn case the work is to be executed through a PWO or PSU, preparation of detailed design\/ estimates and technical sanction shall be done\/ accorded by that organisation.<\/p>\n2. Architectural and structural drawings: Architectural and structural drawings (\"fit for construction\") are among the CORE REQUIREMENTS for projects.<\/p>\n<ul class=\"lst\"><li>Finalisation of these drawings at the EARLIEST \u2014 preferably at the time of preparation of the cost estimate itself \u2014 can help to determine quantities of various items of the work.<\/li><li>Adverse consequences of not preparing these drawings before invitation of tenders may manifest in the form of delay in execution of the work and deviations in quantities of the items of work.<\/li><li>Hence, APPROVED architectural and structural drawings should be available before invitation of tenders.<\/li><li>\"Fit for construction\" (sometimes called \"Good for construction\") drawings means the architectural and structural drawings approved by the project executing authority as well as by the authority governing the extant Rules\/ laws, including byelaws, such as local authorities.<\/li><\/ul>\n3. Enlarging the Schedule of Rates: Endeavour may be made to enlarge the base of the 'Schedule of Rates' published by various organisations, to bring a maximum number of items under its ambit. For NON-SCHEDULED ITEMS, rates may be finalised by a COMMITTEE constituted by the organisation concerned\/ consultants, as the case may be.<\/p>\n<h3>2.5.6<\/span>Appropriation of Funds<\/span><\/h3>\nBefore taking up the execution of work, it shall be ensured that proper funds are available to meet the expenditure on the work.<\/p>\nIt should also be emphasised that the DPR CONSULTANT is able to provide realistic year-wise requirement of funds. This information is necessary so that concerned Ministries\/ organisations may be intimated regarding the same, which will enable them to include such funds projection in their BUDGET.<\/p>\n<h3>2.5.7<\/span>Reference Documents Used in Preparation of Estimates<\/span><\/h3>\nFor preparation of estimates and during execution of work<\/strong>, the following reference documents are used by PWOs. These may be SEPARATE for different regions, and for various types of works \u2014 Building, Electrical and Mechanical.<\/strong>(Annexure 12 of the Works Manual lists further resources regarding Procurement of Works.)<\/em><\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Document<\/th><th>Purpose<\/th><th>Example<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Plinth Area Rates<\/td><td>Provide a quick but fairly accurate method of estimation of cost of buildings<\/td><td>CPWD DPAR \u2014 Delhi Plinth Area Rates<\/td><\/tr><tr><td>2<\/td><td>Schedule of Rates<\/td><td>For each kind of work commonly executed, to facilitate the preparation of estimates, and also to serve as a guide in settling rates in connection with contract agreements \u2014 maintained up to date<\/td><td>CPWD DSR \u2014 Delhi Schedule of Rates<\/td><\/tr><tr><td>3<\/td><td>Analysis of Rates<\/td><td>By taking market rates of labour, materials, cartage<\/strong> etc. and their quantities<\/strong> for each kind of work commonly executed<\/td><td>CPWD Analysis of Rates<\/td><\/tr><tr><td>4<\/td><td>Specifications<\/td><td>Describing inputs, processes, tests and mode of measurement<\/strong> for each kind of work commonly executed<\/td><td>CPWD Specifications<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Repeated instruction: Endeavour may be made to enlarge the base of the 'Schedule of Rates' published by various organisations to bring a maximum number of items under its ambit. For non-scheduled items, rates may be finalised by a committee constituted by the organisation concerned\/ consultants, as the case may be.<\/p><\/aside>\n<\/div><h2 class=\"src-C\">2.6<\/span>Formulation of the Requirement \u2014 CONSULTANCY: Terms of Reference (ToR)<\/span>C<\/span><\/h2><div class=\"srcblock src-C\"><h3>2.6.1<\/span>What the ToR Is and Why It Matters<\/span><\/h3>\n1. The ToR is akin to description, Quantity and Technical Specification in Procurement of Goods. This is the first STEP in the selection of the consultants once a need has been identified.<\/p>\nIt explains:<\/p>\n<ul class=\"lst\"><li>the purpose\/ objectives of the assignment,<\/li><li>scope of work,<\/li><li>activities,<\/li><li>tasks to be performed,<\/li><li>respective responsibilities of the Procuring Entity AND consultant,<\/li><li>expected results, and<\/li><li>deliverables of the assignment.<\/li><\/ul>\nIt is important for an understanding of the assignment and its correct execution to ensure that the objectives of the assignment are achieved.<\/p>\n<ul class=\"lst\"><li>It reduces the risk for the PROCURING ENTITY of unnecessary extra work, delays, and additional expenses.<\/li><li>In addition, it helps reduce for the bidders the risk of ambiguities during the preparation of bidders' proposals, contract negotiation, and execution of Consultancy.<\/li><\/ul>\n2. The balance to strike: Hence the ToR should be COMPREHENSIVE and UNAMBIGUOUS. HOWEVER, it should not be too detailed and inflexible, so that competing consultants may be in a position to propose their own methodology and staffing. Bidders shall be encouraged to comment on the ToR in their proposals.<\/p>\n<h3>2.6.2<\/span>Contents of the ToR<\/span><\/h3>\nThe ToR shall include:<\/p>\n<ol class=\"lst\"><li>Procuring Entity's organisation background and Project background;<\/li><li>Purpose and Service Outcomes Statement of the assignment;<\/li><li>Detailed scope of work Statement, including schedule for completing the assignment;<\/li><li>Expected requirement of KEY PROFESSIONALS and kind of EXPERTISE;<\/li><li>Capacity-building programme and transfer of knowledge, if any;<\/li><li>Deliverables<\/strong> \u2014 List of reports<\/strong> (or documents, data, maps, surveys, designs, drawings), schedule of deliveries<\/strong>, and period of performance<\/strong>;<\/li><li>Background material<\/strong> \u2014 Data, reports, records of previous surveys, and so on \u2014 available and to be provided to the consultant<\/strong>;<\/li><li>FACILITIES such as local conveyance, office space, office machines, secretarial assistance, utilities, local services, etc., which would be provided to the consultant by the Procuring Entity;<\/li><li>Institutional and organisational arrangement; and<\/li><li>Procedure for REVIEW of the work of the consultant after award of contract.<\/li><\/ol>\n(A template for developing a ToR is given at Annexure 4<\/strong> of the Consultancy Manual. Rule 185 of GFR 2017<\/strong>.)<\/em><\/p>\n<h3>2.6.3<\/span>Detailed Guidance on Key ToR Elements<\/span><\/h3><h4>a) Detailed Scope of Work<\/span><\/h4>\nAs part of the ToR, at its simplest, the 'Detailed Scope of Work<\/strong>' will contain:<\/p>\n<ul class=\"lst\"><li>the TYPE and VOLUME of activity<\/strong> to be undertaken, and<\/li><li>the TIME-FRAME of activity involved<\/li><\/ul>\nto achieve the Purpose and Service Outcomes<\/strong> as envisaged in the 'Brief Proposal and Justification of the Services'.<\/p>\nMethod: Starting from END-OUTCOMES BACKWARDS, the process to achieve the outcomes is BROKEN DOWN into a discrete number of interrelated tasks, which the consultant will have to undertake.<\/p>\n<aside class=\"note\">Critical Rule: In Consultancy Services, the 'Detailed Scope of Work' should describe only the activities \u2014 not the APPROACH or METHODOLOGY by which the results are to be achieved, since these are the task of the consultants. However, SUGGESTIONS may be provided on the approach or the methodology that the consultants COULD or should use to execute the assignment.<\/p><\/aside>\nAfter the tasks are identified, a LOGICAL SEQUENCING of the tasks must be determined. Usually a simple BAR CHART (or GANTT CHART) is the best way to illustrate required outputs over time and their relationship to each other. The 'Detailed Scope of Work' contains such a sequence of tasks over a timeline, and also tangible outputs and activities such as reports, workshops, or seminars.<\/p>\n<h4>b) Expected Requirement of Key Professionals and Kind of Expertise<\/span><\/h4>\nExcept in very complex consultancies, it is DESIRABLE not to distinguish the tasks of individual experts, but instead to prepare a longer and more detailed description of what the consultancy team, as a whole, will provide \u2014 without splitting up tasks.<\/p>\n<aside class=\"note\">These are generally known as \"activity-based<\/strong>\" ToR, as opposed to \"position-based<\/strong>\" ToR.<\/p><\/aside>\nThe ToR would list a range of tasks without regard to who will have the responsibility to undertake them. In most cases, where the number of experts is small, the work to be done is not clearly defined, and a degree of flexibility is required \u2014 this is ACCEPTABLE.<\/p>\nIn consultancy services, key professionals are usually named, and their credentials carry weightage in technical evaluation.<\/p>\n<h4>c) Deliverables and Reports Requirements<\/span><\/h4>\nThe assignment's deliverables and reporting should be clearly specified. In particular, for inception and progress reports, there should be a BALANCE between keeping the Procuring Entity well informed and not forcing consultants to spend an excessive amount of time preparing minor reports.<\/p>\nThe ToR should indicate: the FORMAT, FREQUENCY, and CONTENT of reports, as well as the number of copies, the LANGUAGE, and the names of the prospective recipients of the reports.<\/p>\n<aside class=\"note\">For all MAJOR reports, an EXECUTIVE SUMMARY is recommended as a SEPARATE SECTION.<\/p><\/aside>\nDepending on the assignment, the following reports are usually required:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Report<\/th><th>Timing<\/th><th>Purpose and Content<\/th><\/tr><\/thead><tbody><tr><td>i) Inception Report<\/td><td>About six WEEKS after the commencement date<\/td><td>Any major inconsistency in the toR, STAFFING PROBLEMS, or deficiency in the Procuring Entity's assistance that have become apparent during this period should be included. The inception report is designed to give the Procuring Entity confidence that the assignment can be carried out as planned and as agreed upon in the contract, and should bring to its attention major problems that might affect the direction and progress of the work.<\/td><\/tr><tr><td>ii) Progress Reports<\/td><td>Monthly or bimonthly, depending on the assignment. \u2022 Feasibility studies and design assignments \u2192 two-month intervals is satisfactory \u2022 Technical assistance and implementation supervision (e.g. construction) \u2192 best submitted MONTHLY<\/td><td>Keep the Procuring Entity regularly informed about the progress of the assignment. They may also provide WARNINGS of anticipated problems or serve as a reminder for payment of invoices due. Progress reports may include a BAR CHART showing details of progress and any changes in the assignment schedule. Photographs with time-stamping are a quick and easy way of conveying the status of a project, and their use in progress reports should be encouraged. For technical assistance services, progress reports also serve as a means of setting out the WORK PROGRAM for the following months. Each team member usually contributes to the preparation of the monthly report.<\/td><\/tr><tr><td>iii) Interim Reports<\/td><td>If the assignment is PHASED<\/td><td>Required to inform the Procuring Entity of preliminary results, alternative solutions, and major decisions that need to be made. Since the recommendations of an interim report may affect later PHASES of the assignment and even influence the results of the project, the Procuring Entity should DISCUSS the draft interim reports with consultants in the field. The Procuring Entity should not take more than 15 (FIFTEEN) DAYS to review and approve draft interim reports.<\/td><\/tr><tr><td>iv) Final Report<\/td><td>Due at the COMPLETION of the assignment<\/td><td>The Procuring Entity and consultants should DISCUSS the report while it is still in draft form. The consultants alone are responsible for their findings; although changes may be SUGGESTED in the course of the discussions, consultants should not be forced to make such changes. If the consultants do not accept comments or recommendations from the Procuring Entity, these should be noted in the report. The consultants should include in the report the reasons for not accepting such changes.<\/td><\/tr><\/tbody><\/table><\/div>\n<h4>d) Background Material and Records of Previous Surveys<\/span><\/h4>\nThis would vary from project to project, but TRANSPARENCY DEMANDS that such information should be transparently and equitably shared with all prospective bidders.<\/p>\n<h4>e) Facilities to be Provided by the Procuring Entity<\/span><\/h4>\nFacilities such as local conveyance, office space, secretarial assistance<\/strong> etc. which can be provided to the consultant.<\/p>\n<aside class=\"note\">This aspect has a great bearing on the cost that will be quoted by the bidders. This can have implications in vitiating the selection process either way \u2014 a facility to be provided may not get declared, or a declared facility may not be provided ultimately. So great care and reality check is necessary while preparing this statement.<\/p><\/aside>\n<h4>f) Procedure for Review of the Consultancy after Award of Contract<\/span><\/h4>\nIn consultancy services, the contract Monitoring Committee (CMC), and the procedure for review and approval of the work of the consultant after the award of contract, should also be declared and adhered to.<\/p>\n<\/div><h2 class=\"src-NC\">2.7<\/span>Formulation of the Requirement \u2014 NON-CONSULTANCY: Services and Activities Schedule<\/span>NC<\/span><\/h2><div class=\"srcblock src-NC\"><h3>2.7.1<\/span>What the Services and Activities Schedule Is<\/span><\/h3>\n1. The Services and Activities Schedule is akin to description, Quantity and Technical Specification in Procurement of Goods. This is the first STEP in the selection of the Service Provider once a need has been identified.<\/p>\nIt explains:<\/p>\n<ul class=\"lst\"><li>the background and context,<\/li><li>purpose\/ objectives of the services,<\/li><li>scope, quantum, duration\/ frequency of activities\/ tasks to be performed,<\/li><li>respective responsibilities of the Procuring Entity and service provider,<\/li><li>expected outcomes, and<\/li><li>deliverables of the Service.<\/li><\/ul>\nIt is important for an understanding of the service requirement and its correct execution to ensure that the outcomes of the service are achieved. It reduces the risk for the Procuring Entity of unnecessary extra work, delays, and additional expenses. In addition, it helps reduce for the bidders the risk of ambiguities during the preparation of bidders' proposals and contract execution. Hence, the Services and Activities Schedule should be COMPREHENSIVE and UNAMBIGUOUS.<\/p>\nThe OBJECTIVES of the Services and Activities Schedule are:<\/p>\n<ul class=\"lst\"><li>a) To provide sufficient information on the quantum, scope, duration\/ frequency and TIMELINES of Services to be performed, to enable bids to be prepared efficiently and accurately; and<\/li><li>b) When a Contract has been entered into, to provide a PRICED Services and Activities Schedule for use in the PERIODIC VALUATION of Services executed.<\/li><\/ul>\n<h3>2.7.2<\/span>Contents of the Services and Activities Schedule<\/span><\/h3>\nBesides detailing the activities, quantum and time frame<\/strong>, the Services and Activities Schedule should contain the following sections also:<\/p>\n<h4>a) Background<\/span><\/h4>\n<ul class=\"lst\"><li>i) Procuring Entity's organisation and Project background;<\/li><li>ii) Purpose and Service Outcomes Statement;<\/li><li>iii) Short Description and Scope of Services<\/strong> (including any incidental works\/ goods<\/strong>) that would help the bidders understand the service requirement;<\/li><li>iv) Contract period (and provision of extension, if any), duration\/ frequency\/ timeline of outcomes\/ deliverables;<\/li><li>v) Type of Contract\/ BOQ \u2014 Time-based, Unit-Rate, Indefinite delivery, Lumpsum or Percentage-Based;<\/li><li>vi) Expected requirement of RESOURCES: Man-power, Materials, Equipment;<\/li><li>vii) FACILITIES such as office space, office machines, utilities, local services, etc., which would be provided to the Service Provider by the Procuring Entity;<\/li><li>viii) INSURANCES required, if any;<\/li><li>ix) Statutory and Contractual OBLIGATIONS to be complied with by the Service Providers;<\/li><li>x) Institutional and organisational arrangement for Services \u2014 Counterpart Contract Management Team, Chain of Command, Interim\/ ultimate beneficiaries\/ stakeholders of Services; and<\/li><li>xi) Procedure for REVIEW of the Service delivery after award of contract, including service Level Agreement, if any.<\/li><\/ul>\n<h4>b) Description of Services<\/span><\/h4>\nA brief description of the service required is important information that would help the bidders understand the service requirement. It should cover background about the Procuring Entity's organisation and about the project\/ service. The Purpose and Service Outcome statement should be INCLUDED in the description of services (as finalised for initiating the procurement) to help the service providers understand the requirement.<\/p>\n<h4>c) Services and Activities Schedule<\/span><\/h4>\nIn order to attain the objectives, Services should be itemised in sufficient detail to DISTINGUISH:<\/p>\n<ul class=\"lst\"><li>between the different CLASSES of Services, or<\/li><li>between Services of the same NATURE carried out in different LOCATIONS or in other circumstances which may give rise to different considerations of cost.<\/li><\/ul>\nThere may be more than one schedule of Services, based on grouping similar services in one Schedule. Each Service should be described and broken down into DISCRETE ACTIVITIES required to deliver the service.<\/p>\nThe description\/ Scope of Service and Activities should indicate WHAT IS \u2014 and, more important, what is not \u2014 included in the scope, and the conditions under which services are to be performed.<\/p>\nConsistent with these requirements, the layout and content of the Services and Activities Schedule should be as simple and brief as possible. All information relevant for the bidder to quote a price may be included \u2014 e.g., the location, frequency\/ shifts\/ length and quantum, and time-frame\/ duration of completion of activities to be performed.<\/p>\n<aside class=\"note\">Simplification technique: In a Services and Activities Schedule containing scores of items, evaluation can be SIMPLIFIED if the system used in WORKS CONTRACTS is borrowed, if feasible \u2014 where the Schedule of Rates (SoR) for each activity is specified in the bid documents by the Procuring Entity, and only a percentage +\/- above the soR (separately for different Schedules or combined) is asked to be quoted by the bidders.<\/p><\/aside>\n<h4>d) Performance Standards and Quality Assurance<\/span><\/h4>\nPerformance standards\/ Service Levels; functional\/ materials\/ technical specifications (indicating QUANTITATIVE and QUALITATIVE parameters\/ limits\/ thresholds for performance) should be specified OVERALL for the Service AND for each activity, materials, tools and machines to be used in the activity.<\/p>\nIt should also include:<\/p>\n<ul class=\"lst\"><li>i) Any reporting requirement, periodic meetings or other submissions;<\/li><li>ii) Any service Level Agreement, if required<\/strong> \u2014 say, for the outsourcing of services;<\/li><li>iii) key performance indicators indicating how MEASUREMENT, REPORTING, and TRACKING of performance parameters would be done for Quality Assurance and Monitoring of Service (indicate procedure for quality assurance and monitoring of services, including institutional or third-PARTY arrangements for this purpose);<\/li><li>iv) Procedure for RESOLUTION and ESCALATION procedures in case of DEFICIENCY in performance\/ quality\/ service levels;<\/li><li>v) METHOD STATEMENT (Sequencing and inter-dependencies of activities), methodology, Service Level Agreement, arrangements to ensure environmental, social, gender, health, and SAFETY requirements if relevant. The Method Statement must be supplemented by information in sub-schedules for work plan; and<\/li><li>vi) Schedule for Forms of BOQ\/ Contract based on INPUT-ADMEASUREMENT \u2014 Key Inputs deployments (Personnel Deployment, Critical Equipment Deployment and Critical Materials Deployment) May not be essential \u2014 but list these if required to achieve the performance standards and quality. If the service is not dependent on any of the key inputs, that May be omitted.<\/li><\/ul>\n<h4>e) Labour\/ Personnel Schedule<\/span><\/h4>\nIf labour\/ personnel are used in the activity, these may be QUANTIFIED, specifying PLACE, SHIFTS and frequency of utilisation in the Services and Activities Schedule.<\/p>\nIn case any KEY PROFESSIONALS or PROJECT MANAGER is required, their qualification and experience required may also be mentioned.<\/p>\n<aside class=\"note\">Any RELIEVERS and LEAVE RESERVE for deploying the personnel should be included in the rate for such personnel and would not be separately payable.<\/p><\/aside>\n<h4>f) Critical Material Schedule<\/span><\/h4>\nIn case any Materials\/ Consumables\/ tools of trade are to be consumed\/ deployed, a SEPARATE Materials Schedule should be included, indicating the specification and quantity of such materials\/ consumables\/ tools to be consumed\/ deployed per unit activity\/ day\/ location\/ per manpower deployed.<\/p>\nThe price of all these materials\/ tools etc. is to be shown as a separate lump-sum cost in the financial bid by the bidder.<\/p>\n<h4>g) Critical Equipment Schedule<\/span><\/h4>\nAny ESSENTIAL equipment or machinery \u2014 Trucks, Cranes, Washing Machines, Vessels\/ crafts, plant and machinery, etc. \u2014 that the service provider must HAVE and should DEPLOY as a QUALIFYING REQUIREMENT must be mentioned, along with specifications, capacity, age of equipment etc.<\/p>\nIt should be ensured that OPERATORS for such equipment must be mentioned in the Labour\/ Personnel Schedule.<\/p>\nIn case of INPUT ADMEASUREMENT, indicate only Critical Equipment (not others) required to carry out the Services to required standards and quality. CATEGORISE the equipment \u2014 IT Equipment\/ Motor Vehicles, Cranes, Washing Machines, vessels\/ crafts, plant & machinery etc. Give estimated number LOCATION-WISE, CATEGORY-WISE.<\/p>\n<aside class=\"note\">This schedule May not be essential for output-admeasurement BOQ\/ contracts, but list these if required. If the service is not dependent on Critical Equipment, this may be OMITTED.<\/p><\/aside>\n<h4>h) Statutory and Contractual Obligations to be Complied with by the Contractor<\/span><\/h4>\nThe service provider mostly works within the premises of the Procuring Entity, along with the staff of the Procuring Entity.<\/p>\nMany services are subject to various STATUTORY PROVISIONS relating to:<\/p>\n<aside class=\"note\">labour, taxation, Workmen's Safety, Child and Women Labour, Private Security Agencies, Environmental Protection, Mining, Forest clearance, Employment reservations, etc.<\/p><\/aside>\nThe bidder must have:<\/p>\n<ul class=\"lst\"><li>a Service Tax Number,<\/li><li>ESI<\/strong> registration,<\/li><li>EPF Registration Certificate,<\/li><li>Registration Declaration of ownership under the Indian Registration Act, 1908,<\/li><li>a Labour Licence, and<\/li><li>PAN (Income Tax).<\/li><\/ul>\nMoreover, the Procuring Entity itself may have its OWN regulations about safety, security, confidentiality, etc. All such statutory and contractual obligations must be listed, so that price implications and compliance are taken care of by the bidder.<\/p>\n<aside class=\"note\">In the case of SECURITY SERVICES contracts, the bidder must have a valid LICENCE to run the business of a private security agency in the state, issued by the appropriate authority for operating Security Services.<\/p><\/aside>\n<h4>i) Facilities and Utilities to be Provided by the Procuring Entity at the Site<\/span><\/h4>\nIt should be mentioned if any facility\/ utility \u2014 IT\/ Communication Services, Emergency Medical, Room, Furniture, Electricity connection, Water connection, etc. \u2014 would be made available to the successful bidder to carry out the service.<\/p>\nIn case it is proposed to CHARGE for the Electricity\/ Water supplied to the service provider, the same may be mentioned, including the rate of charges.<\/p>\n<aside class=\"note\">This aspect has a great bearing on the cost that will be quoted by the bidders. This can have implications in vitiating the selection process either way \u2014 a facility to be provided may not get declared, or a declared facility may not be provided ultimately. So great care and reality check is necessary while preparing this Statement.<\/p><\/aside>\nSPECIALLY MENTION facilities and utilities which WILL not be provided, or the facilities which would be provided on a CHARGEABLE basis.<\/p>\nIt should be clearly MENTIONED that the service provider will not be allowed to use any of the Procuring Entity's facility\/ area which are not LISTED in this section.<\/p>\n<h4>j) Institutional Arrangements and Procedure for Review of Work of Service Provider after the Award of Contract<\/span><\/h4>\nInstitutional arrangements like the placement in a Department, name of Project Manager, and chain of command for reporting may be specified. The process of Review of Service Outcomes and deployment of personnel and resources should be clearly brought out.<\/p>\n(A template for the Services and Activities Schedule is given in Annexure 4<\/strong> of the Non-Consultancy Manual.)<\/em><\/p>\n<\/div><h2>2.8<\/span>Obtaining Technical, Administrative and Budgetary Sanctions\/ Approvals<\/span><\/h2><h3 class=\"src-G\">2.8.1<\/span>Goods \u2014 Sanctions and Signing of Indents<\/span>G<\/span><\/h3><div class=\"srcblock src-G\">\nProcuring Entities may lay down a Schedule of powers for administrative and budgetary approval of indents generated for the procurement of goods (please refer to Annexure 4 for the suggested Structure of SoPP).<\/p>\nBefore granting such approvals, it should be CERTIFIED that:<\/p>\n<ul class=\"lst\"><li>Funds in the budget are available, and<\/li><li>liability for this indent is noted against the total available budget.<\/li><\/ul>\nIn case the delivery schedule is URGENT (or shorter than the usual lead time), an URGENCY CERTIFICATE should be recorded to JUSTIFY the urgency.<\/p>\nThe indenting authority may submit an indent in the form of a PURCHASE REQUISITION (Annexure 5) to the procuring entity, giving it ADEQUATE TIME for procurement.<\/p>\nMonitoring registers:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Register<\/th><th>Maintained by<\/th><th>Format<\/th><\/tr><\/thead><tbody><tr><td>Progress of Indents submitted<\/strong><\/td><td>Indentors<\/strong> \u2014 Indentors should monitor the progress of the Indents they submit<\/em><\/td><td>Annexure 6<\/strong> \u2014 Purchase Requisition Register for Indentors<\/td><\/tr><tr><td>Progress of Indents received<\/strong><\/td><td>Procuring authority<\/strong> \u2014 on receipt from the indenting authority, the progress of such Indents should be monitored<\/em><\/td><td>Annexure 7<\/strong> \u2014 Purchase Requisition Register for Procuring Entity<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h3 class=\"src-W\">2.8.2<\/span>Works \u2014 the Sanctioning Sequence<\/span>W<\/span><\/h3><div class=\"srcblock src-W\">\n(See paras 2.5.2, 2.5.4, 2.5.5 and 2.5.6 above \u2014 In-Principle Approval \u2192 A\/A and E\/S \u2192 Technical Sanction \u2192 Appropriation of Funds.)<\/em><\/p>\n<\/div><h3 class=\"src-multi\">2.8.3<\/span>Consultancy and Non-Consultancy \u2014 Final Administrative and Budgetary Approvals<\/span>C<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\">\n1. Compatibility with budget and iteration:<\/p>\n<ul class=\"lst\"><li>C<\/span> The scope of the work described in the ToR shall be compatible with the available budget.<\/li><li>NC<\/span> The Services and Activities Schedule shall be compatible with the available budget.<\/li><\/ul>\nThe most important step is to determine whether all TASKS required to achieve the desired output have been INCLUDED.<\/p>\nThe NEXT STEP is to determine whether an ADEQUATE BUDGET has been ALLOCATED to implement the ToR\/ services as designed\/ proposed.<\/p>\n<aside class=\"note\">Since the budget may be fixed or limited, a series of iterations may be required before a final, acceptable toR\/ Services and Activities Schedule is formulated.<\/p><\/aside>\nThe Competent Authority's approval may be taken for the ToR\/ the Procurement before proceeding ahead.<\/p>\nAfter administrative approval, provision May be made in the budget; or, if that is not feasible, additional confirmation at the time of seeking Administrative approval may be taken from the CA for inclusion in the revised estimate stage of budget.<\/p>\nProcurement May be initiated only after such budgetary provisions\/ confirmations.<\/p>\n2. Schedule of powers: Procuring Entities may lay down a Schedule of powers for administrative and budgetary approval of procurement proposals for services. Before granting such approvals, it should be CERTIFIED that funds in the budget are available and liability for this procurement proposal is noted against the total available budget.<\/p>\n<\/div><h2>2.9<\/span>Need Assessment and Formulation of the Requirement \u2014 Risks and Mitigations<\/span><\/h2>\n<aside class=\"note\">Section titles:<\/strong>G<\/span>Need Assessment and Technical Specification \u2013 Risks and Mitigations<\/em> \u00b7 C<\/span> and NC<\/span>Need assessment, Formulation of Terms of Reference, and Procurement Planning \u2013 Risks and Mitigations<\/em> \u00b7 W<\/span> \u2014 no corresponding risk table in Chapter 2.<\/em><\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>The need is either ARTIFICIALLY CREATED or EXAGGERATED<\/strong>, with the intention to channel benefits to an individual or an organisation<\/strong>. For example, demand is created for a good that is not needed<\/strong>, simply to benefit the company's owner.<\/td><td>Keep records and involve stakeholders: Records of decision-making and data used should be kept. Involve PROCUREMENT and FINANCE functions at this stage also. END-USER and STAKEHOLDER CONSULTATIONS should be part of the process.<\/td><\/tr><tr><td>2<\/td><td>DELAYS in the Assessment of Need and generation of the Indent\/ Purchase Proposal for Procurement may lead to SHORTCUT procurement procedures that DILUTE TRANSPARENCY and PREVENT the achievement of value for money. It may also lead to delays in the delivery of goods\/ services.<\/td><td>Need assessment should be done sufficiently in advance of the time when goods\/ services are required. In the case of URGENT requirements, the URGENCY CERTIFICATE should be approved by an authority empowered to grant administrative approval for the indent, RECORDING JUSTIFICATION \u2014 why the need could not be formulated earlier.<\/td><\/tr><tr><td>3<\/td><td>The estimate of the costs may be INADEQUATE. This may lead to an inadequate response from the bidders and may delay the finalisation of procurement. It may also adversely affect the QUALITY of supplies.<\/td><td>Estimates of procurement should be prepared with DUE DILIGENCE, keeping inflation, technology changes, profit margins, etc., in view.<\/td><\/tr><tr><td>4<\/strong>G<\/span><\/td><td>Need Description\/ Specifications involving SUBJECTIVITY: Procurements where samples are asked to be submitted along with the offer, and the evaluation is based on the SUBJECTIVE EVALUATION of samples \u2014 which may lead to allegations of corruption.<\/td><td>If required, a STOCK SAMPLE for INDETERMINABLE PARAMETERS \u2014 such as shade\/ tone, size, make-up, feel, finish, and workmanship \u2014 may be DISPLAYED during procurement, to which the offers must conform. If necessary, provide for submission of a PRE-PRODUCTION SAMPLE by the successful bidder(s) before giving clearance for bulk production of the supply. (See para 2.4.3.)<\/em><\/td><\/tr><tr><td>5<\/td><td>Need Description\/ Specifications\/ Terms of Reference\/ Activity Schedule are DISPROPORTIONATE to the need identified, or made to tilt in favour of one or a group of vendor(s) or contractor(s) to artificially restrict competition.<\/td><td>Use a formal market discovery tool: A pre-bid conference and\/or well-publicised EoI may be used to discover the market. Otherwise, encourage and invite comments on the technical and commercial conditions in the tender document, or hold a pre-bid conference.<\/td><\/tr><tr><td>6<\/td><td>ASYMMETRIC DISSEMINATION of vital need information: Dialogue for determining solutions available in the market is held only with SELECTED prospective bidders, giving them an UNDUE ADVANTAGE in preparing for the bidding. Selected prospective bidders get access to INSIDE INFORMATION that has not been disclosed, or DISCLOSED LATE, to others.<\/td><td>(Same mitigation as Risk 5 above \u2014 formal market discovery tool.)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>2.10<\/span>Procurement Planning<\/span><\/h2><h3 class=\"src-multi\">2.10.1<\/span>The Requirement is Usually Part of a Larger Project<\/span>W<\/span>C<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\">\nThe Works\/ Consultancy Services\/ NC Services may be part of a LARGER PROJECT in which there may be other components of Work, Goods, or Consultancy\/ NC services.<\/p>\nOnce a project or a programme is identified, the Procuring Entity needs to develop a synchronised procurement plan for all the various components of the project\/ programme. This will also require:<\/p>\n<ul class=\"lst\"><li>planning of the SEQUENCE and CONTENTS of the different components,<\/li><li>adoption of the most appropriate method of selection and type of contract, and<\/li><li>ensuring that selection of the contractor\/ consultant\/ service provider is initiated and completed in a timely manner to meet the overall requirements of project implementation.<\/li><\/ul>\n<aside class=\"note\">Example C<\/span>: If a consultant is required for a large road project construction supervision, the entire sequence of preparation of the feasibility report, detailed design and bidding document, time required for inviting bids for construction work, and award of contract has to be considered \u2014 so that the construction supervision consultant is mobilised before the award of the construction contract.<\/p>\nExample W<\/span>NC<\/span>: If a contractor\/ service provider is required for HOUSEKEEPING SERVICES for a hostel still under construction, the entire sequence of preparation of feasibility report, detailed design and bidding document, the time required for inviting bids for construction work, and award of contract has to be considered \u2014 so that the housekeeping contractor is mobilised at the right time when the hostel is ready for occupation.<\/p><\/aside>\nProcurement planning is a crucial stage of decision-making for a better outcome and for VfM considerations.<\/p>\n<\/div><h3 class=\"src-G\">2.10.2<\/span>Critical Review of the Indent<\/span>G<\/span><\/h3><div class=\"srcblock src-G\">\nWithin 10 (ten) working days of receipt of the indent from the user Department, the procuring authorities should CRITICALLY REVIEW the description and TS enclosed with the indent for:<\/p>\n<ul class=\"lst\"><li>completeness\/ approvals\/ funding,<\/li><li>VfM<\/strong>, and<\/li><li>possibility of the widest competition<\/li><\/ul>\n \u2014 and seek clarifications from the indenting officer, if needed, before initiating such procurement.<\/p>\n<\/div><h3>2.10.3<\/span>Reassessment of Quantity and Packaging\/ Bundling\/ Slicing of Requirement<\/span><\/h3>\ni) The general rule (Rule 157 of GFR 2017)<\/em>: The procuring authority shall normally neither package nor divide its procurement, or take any other action to LIMIT COMPETITION among bidders, or to avoid the necessity of obtaining the sanction of a higher authority required with reference to the estimated value of the total demand.<\/p>\nii) the exception: Provided that \u2014 in the interest of efficiency, economy, timely completion or supply, wider competition, or access to MSEs (W<\/span> says: access to SMALLER CONTRACTORS)<\/em> \u2014 a procuring authority May, for reasons to be recorded in writing, divide its procurement into APPROPRIATE PACKAGES, or club requirements of other users for procurement.<\/p>\niii) Market-facing considerations: Packaging of the contract and procurement planning should be done while keeping in view:<\/p>\n<ul class=\"lst\"><li>Market conditions and availability,<\/li><li>the possibility of eliciting the interest of the qualified firms,<\/li><li>EFFECTIVE COMPETITION for the type and size of the contract, and<\/li><li>access to MSEs<\/strong>(W<\/span>: smaller contractors)<\/em>.<\/li><\/ul>\n<aside class=\"note\">An exceptionally large value package contract May restrict competition to big firms.<\/p><\/aside>\niv) Mixed-category requirements:<\/p>\n<ul class=\"lst\"><li>G<\/span> Some requirements, e.g., IT Systems, may have elements of Goods, Works, and Services. It could be either SLICED into separate Goods, Works and Services elements, or COMBINED into a single package.<\/li><li>W<\/span>C<\/span>NC<\/span> For example, for a particular contract, material to be procured may constitute more THAN 50 (fifty) per cent of the total cost of works, or there are services which are a mix of consultancy services with a substantial element of goods, such as procurement of an IT system. Such procurement could be done as a single composite contract comprising all components, or divided into separate procurements\/ contracts for each category of procurement.<\/li><\/ul>\nv) The test to apply: In all such situations, the DOMINANT ASPECT of the requirement, and the value for Money aspects of a composite all-inclusive contract versus dividing the contract into respective categories, should be carefully examined at the time of need assessment\/ procurement planning. This is a crucial stage of decision-making in procurement planning for a better outcome and for VfM considerations.<\/p>\n<h3>2.10.4<\/span>Eligibility for Participation in Tender<\/span><\/h3>\nDetermine and declare in documents any limitation on the participation of bidders as per the Government's procurement policy regarding preference for certain sections of industry, if any.<\/p>\nThe procuring entity shall not establish any requirement aimed at LIMITING the participation of bidders in the procurement process that discriminates against or amongst bidders, or against any category thereof \u2014 except to lay down a reasonable and justifiable eligibility or pre-qualification criteria for the bidders.<\/p>\n<h3>2.10.5<\/span>Type of Contract, System of Tendering and Mode of Procurement<\/span><\/h3>\na) Type of Contract [W only]: Decide upon the type of contract suitable to the procurement requirement \u2014 Lump sum; Item Rate; Percentage Rate; Piece Work; EPC or PPP.<\/p>\nb) Selection of a system of tendering: single\/ two stage; single\/ two bids; suitability for e-procurement or reverse auction.<\/p>\nc) Select the mode of procurement: open tenders, limited tenders, single tenders, and so on.<\/p>\n<h3>2.10.6<\/span>Time Frame<\/span><\/h3>\nDecisions on the TIMEFRAME for completing various stages of procurement \u2014 from the date of issuing the tender to the date of issuing the contract \u2014 which should be DECLARED in the pre-qualification\/ bidder registration or tender documents. (Rule 144(ix), GFR 2017)<\/em><\/p>\nThe procuring entity should endeavour to adhere to the time limit so decided, and RECORD REASONS for any modification of such limits.<\/p>\n<h3 class=\"src-W\">2.10.7<\/span>Availability of Land and Statutory Clearances<\/span>W<\/span><\/h3><div class=\"srcblock src-W\">\n<ol class=\"lst\"><li>It is DESIRABLE to have 100% of the required land in possession before award of contract; however, it may not always be possible to have the entire land due to prevailing circumstances. Also, it may not be prudent to put the entire process of award of contract ON HOLD for want of the remaining portion of land, which in the assessment of the public authority or the project executing authority could possibly be acquired in a targeted manner after award of the contract, without affecting progress.<\/li><li>Minimum necessary encumbrance-free land should be available before award of contract. The minimum may be determined based on the circumstances of each case, or general guidelines issued by the concerned authorities. Only such land, non-availability of which will prevent essential components of work from execution, should be INSISTED UPON.<\/li><li>Time taken in the grant of statutory and other clearances also contributes to the time and cost of public projects. These clearances are required to achieve specific objectives like concern for the environment, aviation safety, preservation of national heritage, conservation of forest and wildlife, etc. Public Authorities\/ Project Executing Authorities should PLAN for obtaining all necessary clearances QUICKLY and CLOSELY MONITOR the progress.<\/li><\/ol>\n<\/div><h3 class=\"src-W\">2.10.8<\/span>Architectural and Structural Drawings<\/span>W<\/span><\/h3><div class=\"srcblock src-W\">\nArchitectural and structural drawings (\"fit for construction\") are among the CORE REQUIREMENTS for projects. Finalisation of these drawings at the EARLIEST \u2014 preferably at the time of preparation of the cost estimate itself \u2014 can help to determine QUANTITIES of various items of the work.<\/p>\nADVERSE CONSEQUENCES of not preparing these drawings before invitation of tenders may manifest in the form of delay in execution of the work and deviations in quantities of the items of work.<\/p>\nHence, APPROVED architectural and structural drawings should be available before invitation of tenders.<\/strong>(\"Fit for construction\", sometimes called \"Good for construction\", drawings means the architectural and structural drawings approved by the project executing authority as well as by the authority governing the extant rules\/ laws, including byelaws, such as local authorities.)<\/em><\/p>\n<\/div><h3>2.10.9<\/span>Annual Procurement Plans<\/span><\/h3>\nW<\/span>C<\/span>NC<\/span> \u2014 the mandatory 30-day rule:<\/strong>GFR 2017 [Rule 144(x)] mandates that all ministries\/ departments shall prepare an annual procurement plan within 30 (thirty) days of budget approval, before the commencement of the year, and the same should also be placed on their website.<\/p>\n[All four] \u2014 publication: The procuring entity shall\/ may publish information regarding the planned procurement activities for the forthcoming year or years on:<\/p>\n<ul class=\"lst\"><li>G<\/span> the Government e-Marketplace (GeM), GeM-Central Public Procurement portal, and the website\/ e-procurement portal used by the procuring entity;<\/li><li>W<\/span>NC<\/span>CPPP and website\/ e-procurement portal used by the procuring entity<\/strong>;<\/li><li>C<\/span> the central public procurement portal and website\/ e-Procurement portal used by the procuring entity<\/li><\/ul>\n \u2014 with a caveat that such publication shall not be construed as an initiation of a procurement process, and shall not cast any obligation on the Procuring Entity to issue the tender document or confer any right on prospective bidders. (Rule 144(x), GFR 2017)<\/em><\/p>\n[All four] \u2014 the integrated plan: An integrated annual procurement plan should be prepared for goods, works and services for the ensuing financial year, based on:<\/p>\n<ul class=\"lst\"><li>The latest cost estimates, and<\/li><li>a realistic time Schedule for procurement activities and contract implementation<\/li><\/ul>\n \u2014 and thus Schedule and stagger the procurements over the year, with a view to:<\/p>\n<ul class=\"lst\"><li>Ensure an even load on the Procuring Entity and the market, and<\/li><li>Co-ordinate matching procurements of Goods, Works, and Services for a project.<\/li><\/ul>\n<h3>2.10.10<\/span>Mitigating Cartel Formation<\/span><\/h3>\n<aside class=\"note\">Need assessment and procurement planning is the main stage where this menace can be addressed effectively.<\/p><\/aside>\na) Inadequate competition due to an inadequate number of suppliers\/ contractors\/ consultants\/ service providers in the list\/ panel of registered vendors \u2014 may empower bidders to conspire against the Procuring Entity:<\/p>\n<ul class=\"lst\"><li>i) new firms May be encouraged to register themselves<\/strong> for the subject goods\/ category\/ services.<\/li><li>ii) Review the description of requirement:<\/li><li>G<\/span> A review of TECHNICAL SPECIFICATIONS (especially TAILOR-MADE specifications) may be done to examine why a commercially available alternative cannot be used instead, or at least review its features so that more suppliers become eligible. Consider using SUBSTITUTE ITEMS or new developments in the market.<\/li><li>W<\/span> Various items in the BOQ May be reviewed (using packaging\/ slicing) so that more contractors become eligible. Insisting on costly machinery to be used May reduce competition and encourage cartel formation.<\/li><li>C<\/span>NC<\/span> Various services and activities in the Services and Activities Schedule may be reviewed so that more consultants\/ service providers become eligible. Insisting on costly machinery to be used may reduce competition and encourage cartel formation.<\/li><\/ul>\nb) Pre-bid conferences: Processes \u2014 e.g., PRE-BID CONFERENCES, where a considerable number of competing bidders come together on a platform \u2014 May facilitate such cartel formation. This may be AVOIDED as far as feasible, or be held only VIRTUALLY.<\/p>\nHOWEVER, a pre-bid conference May be advantageous in the case of:<\/p>\n<aside class=\"note\">Turnkey contract(s), sophisticated and costly equipment, large works, and complex consultancy\/ service assignments.<\/p><\/aside>\nG<\/span> adds:<\/strong>Pre-bid conferences must be done wherever necessary.<\/p>\nc) Varying quantity and conditions: Tendering similar quantities\/ works\/ services with similar conditions, year on year, provides a stable conspiring environment for the bidders to come to an agreement for quoting prices and quantities. Therefore, the following action can be considered to vary quantity and conditions to make it difficult for cartels:<\/p>\n<ul class=\"lst\"><li>i) change the mode of procurement \u2014 OTE instead of LTE, or GTE instead of OTE; or bypass the pre-qualification stage and vice versa.<\/li><li>ii) change the quantity\/ packaging:<\/li><li>G<\/span> Change the quantity to be procured by PACKAGING\/ SLICING the tendered quantity, or by clubbing more than one similar item in a tender (or vice versa).<\/li><li>W<\/span> Change the packaging\/ slicing by clubbing\/ slicing WORKS in a tender.<\/li><li>C<\/span>NC<\/span> Change the packaging\/ slicing by clubbing\/ slicing SERVICES\/ ACTIVITIES in a tender.<\/li><li>iii) change the pre-qualification criteria, especially in the case of slicing\/ packaging, to broaden the target bidders.<\/li><\/ul>\n<h3 class=\"src-multi\">2.10.11<\/span>Strategising Large Procurement<\/span>G<\/span>W<\/span><\/h3><div class=\"srcblock src-multi\">\nLarge procurements warrant strategies to achieve competition and VfM. Large procurements require the application of mind during need assessment, cost estimation and procurement planning \u2014 where the blind application of Rules May not bring VfM.<\/p>\nFormal market research can reveal important parameters of the market<\/strong> that can be used for designing optimal procurement strategies<\/strong> \u2014 alternative methods of procurement, slicing\/ packaging, mitigating cartels, optimising various features\/ specifications of the item\/ work \u2014 to maximise VfM and competition.<\/strong><\/p>\nSome of the market parameters to look for are:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Parameter<\/th><th>G<\/span> \u2014 Goods<\/th><th>W<\/span> \u2014 Works<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>Capacity vs demand<\/td><td>Total Production Capacities and total demand for the ITEM in the country and abroad. Is there an unbalanced demand\/ supply?<\/td><td>Total Production Capacities and total demand for similar works in the region or the State. Is there an unbalanced demand\/ supply?<\/td><\/tr><tr><td>b<\/td><td>Volumes of procurement<\/td><td>How SIGNIFICANT is our requirement vis-\u00e0-vis the market? Would CLUBBING DEMANDS increase BARGAINING POWER? Can we COLLABORATE with another large public-sector buyer? Has there been a recent major procurement that may CONSTRICT available capacity?<\/td><td>(same)<\/em><\/td><\/tr><tr><td>c<\/td><td>Level of competition<\/td><td>Location-wise number of SUPPLIERS, co-ordination\/ cartelisation among them, major suppliers\/ buyers CONTROLLING the market<\/td><td>Location-wise number of CONTRACTORS, co-ordination\/ cartelisation among them, major contractors\/ buyers controlling the market<\/td><\/tr><tr><td>d<\/td><td>Bottlenecks<\/td><td>SUPPLY CHAIN constraints, RAW MATERIALS bottlenecks, LOGISTICS, GEOPOLITICAL issues<\/td><td>MANPOWER constraints, SKILLS\/ MANPOWER bottlenecks, LOGISTICS, GEOPOLITICAL issues<\/td><\/tr><tr><td>e<\/td><td>Specifications\/ statutory constraints<\/td><td>Specifications and variations: Patents, manufacturing processes, pollution, and other LEGAL RESTRICTIONS, etc. Should we tinker with specifications to get VfM?<\/td><td>Statutory Constraints: Patents, construction processes, pollution, and other legal restrictions, etc. Should we tinker with specifications to get VfM?<\/td><\/tr><tr><td>f<\/td><td>Pricing Trends [G only]<\/td><td>seasonality of prices \u2014 is it the appropriate time to enter the market?<\/td><td> \u2014 <\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h2 class=\"src-multi\">2.11<\/span>Procurement Planning \u2014 Risks and Mitigations<\/span>G<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\">\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>Packaging, bundling, and slicing of requirements are done to avoid open competition or reduce competition. Or it is TOO LARGE to make it difficult for MSEs to participate. Possible CLUBBING\/ COLLABORATION among different units having the same NEEDS has not been explored.<\/td><td>Lay down a clear policy for packaging and bundling of requirements. In LARGE PACKAGES, the affordability of EMD and the resultant restriction on competition may be kept in view, and bidders May be allowed to bid for slices of the package by depositing proportional EMD.<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>Appendix to Chapter 2 \u2014 Points of Difference Between the Four Manuals<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Chapter title<\/td><td>G:<\/strong>Need Assessment, Formulation of Specifications and Procurement Planning<\/em> \u00b7 W:<\/strong>Need Assessment and Procurement Planning<\/em> \u00b7 C\/NC:<\/strong>Need assessment and Procurement Planning<\/em><\/td><\/tr><tr><td>2<\/td><td>Number of sections<\/td><td>G: 5 \u00b7 W: 9 (the most) \u00b7 C: 7 \u00b7 NC: 4 (the fewest)<\/td><\/tr><tr><td>3<\/td><td>Initiating document<\/td><td>G: Indent\/ purchase Requisition (Annexure 5) \u00b7 W: Requisition + Perspective Plan \u00b7 C\/NC: Procurement Proposal (Concept Paper) (Annexure 3)<\/td><\/tr><tr><td>4<\/td><td>Description-of-requirement instrument<\/td><td>G: Technical Specifications (TS) \u00b7 W: PPR \u2192 DPR\/PE \u2192 Detailed Designs & Detailed Estimates \u00b7 C: Terms of Reference (ToR) \u00b7 NC: Services and Activities Schedule<\/td><\/tr><tr><td>5<\/td><td>Perspective Plan with annual review<\/td><td>W only<\/td><\/tr><tr><td>6<\/td><td>\"Matters decided during need assessment\"<\/strong> (method of satisfying need, HaaS\/ SaaS, units of quantity, wagon-load rounding)<\/td><td>G only<\/td><\/tr><tr><td>7<\/td><td>Detailed cost-estimation methods<\/strong> (last purchase price, costing analysis, MRP, market survey, budgetary quotes with 3-quote\/ 10\u201321 day\/ two 5-day extension rule, price-index websites)<\/td><td>G only<\/td><\/tr><tr><td>8<\/td><td>Cost categories<\/td><td>C:<\/strong>TWO<\/strong> (fee\/ remuneration + reimbursable) \u00b7 NC:<\/strong>THREE<\/strong> (Remuneration + Reimbursable + Administrative & Miscellaneous), with profit, taxes and duties added on top<\/strong><\/td><\/tr><tr><td>9<\/td><td>Minimum wage rate referenced in staff costing<\/td><td>NC only<\/td><\/tr><tr><td>10<\/td><td>Green procurement \u2014 Ecomark Rules 2023, BEE star ratings table, EPD\/ISO 14025<\/td><td>G only<\/td><\/tr><tr><td>11<\/td><td>Samples and demonstration of equipment \u2014 three-copy reference-sample procedure<\/td><td>G only<\/td><\/tr><tr><td>12<\/td><td>Essential Technical Particulars (12-item list)<\/td><td>G only<\/td><\/tr><tr><td>13<\/td><td>PPR \/ Rough Cost Estimate with 14-item content list<\/td><td>W only<\/td><\/tr><tr><td>14<\/td><td>In-Principle Approval as a distinct sanction step<\/td><td>W only<\/strong> (C\/NC have an in-principle approval<\/em> on the Concept Paper, but not the works sequence)<\/td><\/tr><tr><td>15<\/td><td>DPR\/PE with 15-item content list; EIA; Social Impact Assessment & LARR Act 2013<\/td><td>W only<\/td><\/tr><tr><td>16<\/td><td>50-metre \"reach\" ground investigation rule; debarment of DPR consultants<\/td><td>W only<\/td><\/tr><tr><td>17<\/td><td>A\/A and E\/S; sanction order contents; Rule 16 DFPR 2024<\/td><td>W only<\/td><\/tr><tr><td>18<\/td><td>Technical Sanction; \"fit for construction\" drawings; Schedule of Rates enlargement<\/td><td>W only<\/td><\/tr><tr><td>19<\/td><td>Appropriation of funds as a distinct step<\/td><td>W only<\/td><\/tr><tr><td>20<\/td><td>Reference documents (Plinth Area Rates, Schedule of Rates, Analysis of Rates, Specifications)<\/td><td>W only<\/td><\/tr><tr><td>21<\/td><td>Rs 60 lakh repair-works exemption from DPR\/PE<\/td><td>W only<\/td><\/tr><tr><td>22<\/td><td>Activity-based vs position-based ToR; four report types (Inception\/ Progress\/ Interim\/ Final); 6-week inception; 15-day interim review; \"consultants alone are responsible for their findings\"<\/td><td>C only<\/td><\/tr><tr><td>23<\/td><td>Contract Monitoring Committee (CMC)<\/td><td>C only<\/td><\/tr><tr><td>24<\/td><td>Performance Standards & QA, KPIs, SLA, Method Statement<\/td><td>NC only<\/td><\/tr><tr><td>25<\/td><td>Labour\/ Personnel Schedule; relievers and leave reserve not separately payable<\/td><td>NC only<\/td><\/tr><tr><td>26<\/td><td>Critical Material Schedule; Critical Equipment Schedule; input- vs output-admeasurement<\/td><td>NC only<\/td><\/tr><tr><td>27<\/td><td>Statutory obligations list (ESI, EPF, labour Licence, PAN, Private Security Agency licence)<\/td><td>NC only<\/td><\/tr><tr><td>28<\/td><td>\"Borrow the Works SoR + percentage above\/below\" simplification for large activity schedules<\/td><td>NC only<\/td><\/tr><tr><td>29<\/td><td>10 working days for critical review of indent<\/td><td>G only<\/td><\/tr><tr><td>30<\/td><td>Access to MSEs vs access to smaller contractors (packaging exception)<\/td><td>G\/C\/NC: MSEs \u00b7 W: smaller contractors<\/td><\/tr><tr><td>31<\/td><td>Type of contract decision in planning (Lump sum\/ Item Rate\/ Percentage Rate\/ Piece Work\/ EPC\/ PPP)<\/td><td>W only<\/td><\/tr><tr><td>32<\/td><td>Land availability & statutory clearances in procurement planning<\/td><td>W only<\/td><\/tr><tr><td>33<\/td><td>Annual Procurement Plan \u2014 express 30-day-from-budget-approval mandate<\/td><td>W, C, NC<\/strong> (G<\/strong> states the publication obligation under Rule 144(x) but not the 30-day deadline)<\/td><\/tr><tr><td>34<\/td><td>Strategising Large Procurement (market research parameters)<\/td><td>G + W only<\/td><\/tr><tr><td>35<\/td><td>\"Pricing Trends \/ seasonality\" as a market parameter<\/td><td>G only<\/td><\/tr><tr><td>36<\/td><td>Procurement Planning \u2014 Risks and Mitigations table<\/td><td>G + NC only<\/td><\/tr><tr><td>37<\/td><td>Need Assessment \u2014 Risks and Mitigations table<\/td><td>G, C, NC \u2014 absent from W<\/td><\/tr><tr><td>38<\/td><td>Subjectivity-of-samples risk row in the risk table<\/td><td>G only<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 2<\/p>\n<aside class=\"note\">Next:<\/strong> Chapter 3 \u2014 Vendor Governance: Supplier\/ Contractor Relationship Management, Participation of Bidders, Code of Integrity, Integrity Pact, Grievance Redressal, Registration\/ Enlistment, Debarment and Indian Agents<\/em> (merging Goods Ch. 3, Works Ch. 8<\/strong>, Consultancy Ch. 3 and Non-Consultancy Ch. 3).<\/p><\/aside><\/div><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch3\">Chapter 3<\/p><h1>Participation of Bidders, Vendor Relationship Management and Governance Issues<\/h1><\/header>\nMerging: Goods Ch. 3 (Supplier Relationship Management) \u00b7 Works Ch. 8<\/strong> (Registration\/ Enlistment of Contractors and Governance Issues) \u00b7 Consultancy Ch. 3 (Participation of Bidders and Governance Issues) \u00b7 Non-Consultancy Ch. 3 (Participation of Bidders and Governance Issues)<\/em><\/p><h2>Structural Warning for Students<\/span><\/h2>\nThis block of subject matter is CHAPTER 3 in the Goods, Consultancy and Non-Consultancy Manuals \u2014 but CHAPTER 8 in the Works Manual.<\/p>\nThe Works Manual moves the entire vendor-governance block to the END<\/strong> of the Manual (after Contract Execution), whereas the other three place it before Bidding Design<\/strong>. The content<\/em> is substantially the same; only the location<\/em> differs. Any exam question citing \"para 8.2\" of Works corresponds to \"para 3.2\" of Goods.<\/p>\n<h2>Concordance for Chapter 3<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>Goods<\/th><th>Works<\/th><th>CS<\/th><th>NCS<\/th><\/tr><\/thead><tbody><tr><td>3.1<\/td><td>Supplier\/ Contractor Relationship Management<\/td><td>3.1<\/td><td>8.1<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>3.2<\/td><td>Eligibility Criteria for Participation in Tender Process<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>3.1<\/td><td>3.1<\/td><\/tr><tr><td>3.3<\/td><td>Legal Status of Bidders<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>3.2<\/td><td>3.2<\/td><\/tr><tr><td>3.4<\/td><td>Governance Issues \u2014 Canons of Financial Propriety; RTI<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>3.3.1, 3.3.2<\/td><td>3.3.1, 3.3.2<\/td><\/tr><tr><td>3.5<\/td><td>Code of Integrity for Public Procurement (CIPP)<\/td><td>3.2<\/td><td>8.2<\/td><td>3.3.3<\/td><td>3.3.3<\/td><\/tr><tr><td>3.6<\/td><td>Integrity Pact (IP)<\/td><td>3.3<\/td><td>8.3<\/td><td>3.4<\/td><td>3.4<\/td><\/tr><tr><td>3.7<\/td><td>Grievances and its Redressal<\/td><td>3.4<\/td><td>8.4<\/td><td>3.5<\/td><td>3.5<\/td><\/tr><tr><td>3.8<\/td><td>Conduct of Public Servants \u2014 Risks and Mitigations<\/td><td>3.5<\/td><td>8.5<\/td><td>3.6<\/td><td>3.6<\/td><\/tr><tr><td>3.9<\/td><td>Development of New Sources and Registration\/ Empanelment\/ Enlistment\/ Pre-qualification<\/td><td>3.6<\/td><td>8.6<\/td><td>3.7<\/td><td>3.7<\/td><\/tr><tr><td>3.10<\/td><td>Debarment<\/td><td>3.7<\/td><td>8.7<\/td><td>3.8<\/td><td>3.8<\/td><\/tr><tr><td>3.11<\/td><td>Enlistment of Indian Agents<\/td><td>3.8<\/td><td>8.8<\/td><td>3.9<\/td><td>3.9<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Note on the order of the last four topics: In all four Manuals, the sequence Development of New Sources\/ Registration \u2192 Debarment \u2192 Enlistment of Indian Agents appears in the same relative order as the closing sections of the chapter. This is a reliable memory anchor.<\/p><\/aside>\n<h2 class=\"src-multi\">3.1<\/span>Supplier\/ Contractor Relationship Management<\/span>G<\/span>W<\/span><\/h2><div class=\"srcblock src-multi\">\nSupplier Relationship Management G<\/span> \/ Contractor Relationship Management W<\/span> comprises the following three functions:<\/p>\n<ol class=\"lst\"><li>Ensuring COMPLIANCE of suppliers\/ contractors to the Code of Integrity for Public Procurement and Integrity Pact (CIPP), if stipulated in Tender\/ Bid Documents;<\/li><li>REMOVAL from the list of registered\/ enlisted suppliers\/ contractors, and DEBARMENT of firms;<\/li><li>Development of new sources and registration\/ enlistment of suppliers\/ contractors.<\/li><\/ol>\n<aside class=\"note\">C<\/span>NC<\/span> do not<\/strong> carry a corresponding \"Relationship Management\" heading. They instead open the chapter with Eligibility Criteria<\/strong> and Legal Status of Bidders<\/strong> (paras 3.2 and 3.3 below), which have no counterpart in the Goods or Works Manuals in this chapter<\/strong>.<\/p><\/aside>\n<\/div><h2 class=\"src-multi\">3.2<\/span>Eligibility Criteria for Participation in Tender Process<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\">\n1.<\/strong>Normally, participation in the Tender Process should be open to all bidders.<\/strong> However, the procuring entity should lay down 'Eligibility<\/strong>' criteria, based on the requirement of the procurement and Government Policies.<\/p>\n<aside class=\"note\">The critical distinction:<\/p>\n'ELIGIBILITY' and 'QUALIFICATION' criteria (Experience; Performance and Financial Capabilities) are entirely different criteria and should not be mixed up.<\/p>\n<ul class=\"lst\"><li>'ELIGIBILITY' criteria regulate the participation of bidders in the Tender process.<\/li><li>'QUALIFICATION' criteria are for EVALUATION of bidders for award of the contract.<\/li><\/ul><\/aside>\nTiming rule: The bidder should meet the eligibility criteria as of the date of his bid submission \u2014 AND should continue to meet these till the award of the contract. Otherwise, his bid would be rejected as non-responsive and would not be evaluated for award of contract.<\/p>\nThe bidder shall be required to DECLARE FULFILMENT of Eligibility Criteria in his bid document.<\/p>\nSome of the eligibility criteria relate to the following issues (for details refer to the relevant Model Tender Documents)<\/em>:<\/p>\na) Legal status of the bidder:<\/strong> a natural person<\/strong>, or a private entity<\/strong>, or a public entity<\/strong> (State-owned enterprise or institution), or a Joint Venture\/ Consortium<\/strong> (an association of several persons, firms, or companies \u2014 hereinafter JV\/C<\/strong>).<\/p>\n<aside class=\"note\">NC<\/span> adds a restriction:<\/strong>JV\/C may be permitted to participate in the procurement of Non-consultancy services only in specific situations where the credentials required are not likely to be available with an individual bidder.<\/strong>Participation of JV\/C is SPECIFICALLY DISCOURAGED in the case of quality Oriented Procurement (QOP) with QCBS evaluation.<\/p><\/aside>\nb) Participation of demerged entities [NC only]: (by virtue of a corporate restructuring exercise etc.) Tender documents must clearly mention if \u2014 and under what conditions \u2014 the demerged entity will be permitted to use the credentials of the original\/ parent entity (for the initial five years from the incorporation of the demerged entities) to satisfy the eligibility criteria, or not, in the specific tender.<\/p>\n<aside class=\"note\">Footnote NC<\/span>:<\/em> As per DoE's OM No. F.8\/78\/2023-PPD dated 12.10.2023, in suitable cases the procuring entity may consider the credentials based on the merit and circumstances of the case \u2014 like type of procurement, nature of demerger, number of eligible bidders available, etc.<\/p><\/aside>\nc) Requirement of various REGISTRATIONS\/ LICENCES from various statutory authorities required for the subject matter of procurement: GSTIN, PAN, EPF, ESI, labour, Private Security Agencies (PASARA), etc.<\/p>\nd) Submission of requisite BID SECURITY (or Bid Security Declaration, if allowed) or proof of exemption therefrom.<\/p>\nE) free from financial insolvency, debarment or convictions.<\/p>\nF) a consistent history of litigation or arbitration by the bidder May result in disqualification.<\/p>\ng) Free from 'conflict of interest' with other bidders, which may affect fair competition.<\/p>\nh) Restriction on participation as per Government Policies:<\/p>\n<ul class=\"lst\"><li>i) For Class-II Local Suppliers and Non-Local bidders as per the Make-in-India policy;<\/li><li>ii) Any bidder from a country sharing a land border with India (but not in development partnership with India), or any bidder (INCLUDING INDIAN) with a Specified Transfer of Technology (ToT) arrangement with such a country, shall be eligible subject to certain conditions.<\/li><\/ul>\n<\/div><h2 class=\"src-multi\">3.3<\/span>Legal Status of Bidders<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\"><h3>3.3.1<\/span>Individual Persons<\/span><\/h3>\n1. Individual consultants C<\/span> \/ Individual service providers NC<\/span>:<\/p>\nIndividual consultants\/ service providers are recruited for similar activities as Consultancy firms\/ Service providing firms when a full team is not considered necessary.<\/p>\nThey may be:<\/p>\n<ul class=\"lst\"><li>independent experts not permanently associated with any particular firm, or<\/li><li>employees of a firm recruited on an INDIVIDUAL basis, or<\/li><li>employees of an agency, institution, or university.<\/li><\/ul>\nThey are normally recruited for:<\/p>\n<aside class=\"note\">project implementation supervision \u00b7 training \u00b7 provision of specific expert advice on a highly technical subject \u00b7 policy guidance \u00b7 special studies \u00b7 compliance supervision \u00b7 implementation monitoring<\/p><\/aside>\nThey are not normally recruited for PROJECT PREPARATION, unless the proposed project is simple and, generally, a repeat of an already established and successful project.<\/p>\n<aside class=\"note\">If more than three experts are required, then the assignment should normally be undertaken by a team from a firm.<\/p><\/aside>\nAs with firms, individual consultants\/ service providers are classed as either INTERNATIONAL or NATIONAL, depending on their level of EXPERTISE and their international experience and exposure.<\/p>\n2. Retired Government Servants:<\/p>\nC<\/span> \u2014 the GFR bar:<\/strong>Rule 177 of GFR, 2017 says that <\/strong>consulting services do not include direct engagement of retired Government servants.<\/strong>They should not be engaged as consultants against regular vacant posts under this rule. Such engagements should be handled as a PERSONNEL MATTER.<\/p>\nC<\/span>NC<\/span> \u2014 the permitted mode: As Consultants\/ Service Providers, <\/strong>retired Government servants CAN be hired\/ engaged only:<\/p>\n<ul class=\"lst\"><li>for a SPECIFIC TASK, and<\/li><li>for a specific duration.<\/li><\/ul>\nThey should be assigned clear output-related goals.<\/p>\nRemuneration:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Type of engagement<\/th><th>Remuneration<\/th><\/tr><\/thead><tbody><tr><td>Full-TIME basis (when they are not allowed to concurrently do any other assignment), on a monthly basis<\/td><td>Last pay drawn minus pension, as per extant DOPT guidelines<\/td><\/tr><tr><td>PART-TIME, NON-EXCLUSIVE engagements<\/td><td>The Procuring Ministry\/ Department may fix remuneration on a per day\/ month or lump-sum basis<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h3>3.3.2<\/span>Private and Public Entities<\/span><\/h3>\n1. Consultancy Firms C<\/span> \/ Service Providing Firms NC<\/span>: The MAIN SOURCE of consultants\/ service providers is firms of diverse specialisations that provide consultancy\/ non-consultancy services. Such firms are normally classified as either:<\/p>\n<ul class=\"lst\"><li>INTERNATIONAL \u2014 firms that have international experience and are capable of undertaking work at international level at international rates; or<\/li><li>NATIONAL \u2014 firms that may not have international exposure and normally undertake assignments only within that country, usually at significantly lower rates.<\/li><\/ul>\n2. Non-Governmental Organisations (NGO): There may be a DISTINCT ADVANTAGE in the use of NGOs in Projects which emphasise experience in community participation and in-depth local knowledge \u2014 for example, Projects related to Corporate Social Responsibility (CSR) or Government Social Initiatives like 'Swachh Bharat Abhiyan', etc.<\/p>\n3. Specialised Agencies and Institutions:<\/strong> Specialised agencies or institutions \u2014 including Government\/ Semi-Government agencies, universities, research and professional institutions<\/strong> \u2014 may also from time to time be recruited to provide Consultancy\/ Non-consultancy services.<\/p>\nThese services may be provided by INDIVIDUALS (as discussed above) or by TEAMS. Nonetheless, there are at times DISTINCT ADVANTAGES to using such agencies. Experts and teams from such agencies and institutions may undertake a variety of roles across the whole field of possible services \u2014 these may range from PROJECT PREPARATION through PROJECT SUPERVISION and POLICY ADVICE to project benefit monitoring and evaluation.<\/p>\n<h3>3.3.3<\/span>Association of Several Bidders<\/span><\/h3><h4>1.<\/span>Sub-contracting<\/span><\/h4>\nA bidder who is capable of being selected for award of contract on his own credentials may propose to sub-contract a PART of the contract for SPECIALISED ITEMS of services, as a financial or technical strategy.<\/p>\n<ul class=\"lst\"><li>The names and details of the sub-contracts are to be clearly stated in the bid submitted by the Bidder.<\/li><li>Provided further that such sub-contractor should not circumvent the eligibility criteria.<\/li><li>Qualifications of these sub-contractors shall not be considered in evaluation of qualification criteria for the bid.<\/li><li>DESPITE any approval granted by the Procuring Entity for such arrangements, the bidder\/ contractor shall be solely and directly responsible for executing sub-contracted portions of the contract.<\/li><li>The total VALUE of the sub-contracting portion of services must not exceed the per cent of the contract price as specified in the Tender Document\/ Contract \u2014 if not so specified, 25 (twenty-five) per cent.<\/li><li>Sub-contracting by the contractor without the approval of the Procuring Entity shall be a breach of contract.<\/li><\/ul>\n<h4 class=\"src-NC\">2.<\/span>Consortium of Consultants C<\/span> \/ Consortium of Service Providers<\/span>NC<\/span><\/h4><div class=\"srcblock src-NC\">\na) Why consortia form: In large and complex assignments, consultants\/ service providers may associate with each other to form a consortium:<\/p>\n<ul class=\"lst\"><li>to COMPLEMENT their respective areas of expertise,<\/li><li>to INCREASE the technical responsiveness of their proposal, and<\/li><li>to make larger pools of experts available, or for other reasons.<\/li><\/ul>\nSuch an association may be for the LONG TERM (independent of any particular assignment) or for a SPECIFIC assignment.<\/p>\nb) Legal character:<\/strong> Such associations are called Consortium or Joint Ventures (JVs)<\/strong> for the purpose of this Manual.<\/p>\n<ul class=\"lst\"><li>In case of consortium or JVs, all members shall sign the contract and shall be jointly and severally liable for the entire assignment.<\/li><\/ul>\n<aside class=\"note\">(NC<\/span> phrasing: \"The consortium may take the form of a Joint Venture (JV) \u2014 in which case, all members of the JV shall sign the contract and shall be jointly and severally liable for the entire assignment.\")<\/em><\/p><\/aside>\n<ul class=\"lst\"><li>HOWEVER, the Procuring Entity only deals with the lead member of consortiums\/ JVs for all purposes.<\/li><li>After the short list is finalised and the Request for Proposal (RfP) is issued, any association in the form of a consortium\/ JV or sub-consultancy among the short-listed firms shall be PERMISSIBLE in accordance with provisions stated in the RfP. Under such circumstance, one of the shortlisted consultants must become the lead member of the consortium\/ JV.<\/li><\/ul>\nc) What the bid document must specify: Bid documents should clearly specify whether consortiums\/ JVs are ALLOWED to bid \u2014 in the case of complex and large assignments, say above certain values (say Rs. 5 crore).<\/p>\n<ul class=\"lst\"><li>Maximum number of partners in a consortium\/ JV shall be LIMITED (say \u2014 three).<\/li><li>In case consortiums\/ JVs are permitted to bid, it should be clarified:<\/li><li>WHAT qualifications are to be met COLLECTIVELY (clubbed together)<\/strong> by the consortium\/ JV partners \u2014 say, experience of similar consultancy\/ non-consultancy service<\/em>; and<\/li><li>WHAT each partner has to meet individually and separately \u2014 say, financial capacity<\/em>.<\/li><li>In the case of each member meeting credentials individually, it should also be specified that:<\/li><\/ul>\n<aside class=\"note\">Each PARTNER should meet AT least 25%, and the lead partner at least 50%, out of the qualifying limit (say financial capacity\/ turnover).<\/p><\/aside>\nd) Ensuring the consortium actually performs: If consortiums\/ JVs are allowed, measures should be taken to ensure that all the consortium\/ JV partners are present and deliver services all through the contract period.<\/p>\n<ul class=\"lst\"><li>An IMPLEMENTATION BOARD with participation of all consortium\/ JV partners may be provided for, wherein the project Manager from the Procuring Entity shall also be ALLOWED AUDIENCE when required.<\/li><li>MEETING of consortium\/ JV partners with the project executing authority for quarterly progress review may be made a criterion linked to achievement of key dates or even payment.<\/li><\/ul>\n<\/div><\/div><h2 class=\"src-multi\">3.4<\/span>Governance Issues in Procurement \u2014 Financial Propriety and RTI<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\">\n<aside class=\"note\">C<\/span>NC<\/span> open their governance section by re-stating two topics that the Goods and Works Manuals place in CHAPTER 1<\/strong> \u2014 see paras 1.9<\/strong> and 1.16<\/strong> of this Unified Manual.<\/p><\/aside>\n<h3>3.4.1<\/span>Standards (Canons) of Financial Propriety<\/span><\/h3>\nPublic Procurement, like any other expenditure in Government, must conform to the Standards (also called Canons) of Financial Propriety \u2014 Rule 21 of GFR, 2017.<\/p>\n<aside class=\"note\">The four principles reproduced in the CS and NC Manuals are (i) to (iv):<\/p>\ni) Every officer is expected to exercise the same vigilance in respect of expenditure incurred from public moneys as a person of ordinary prudence would exercise in respect of expenditure of his own money.<\/p>\nii) The expenditure should not be prima facie more than the occasion demands.<\/p>\niii) No authority should exercise its powers of sanctioning expenditure to pass an order which will be directly or indirectly to its own advantage.<\/p>\niv) Expenditure from public moneys should not be incurred for the benefit of a particular person or a section of the people, unless \u2014 (a) a claim for the amount could be enforced in a Court of Law, or (b) the expenditure is in pursuance of a recognised policy or custom.<\/p>\nCross-reference:<\/strong> The Works Manual (para 1.9) additionally reproduces clause (v)<\/strong> \u2014 the amount of allowances granted to meet expenditure of a particular type should be so regulated that the allowances are not, on the whole, a source of profit to the recipients<\/em>. Neither the Goods Manual (para 1.9) nor the CS\/NC Manuals (para 3.3.1) reproduce clause (v).<\/strong><\/p><\/aside>\n<h3>3.4.2<\/span>Right to Information and Proactive Information Disclosures<\/span><\/h3>\nSection 4(1)(b) of the RTI Act lays down the information to be disclosed by public authorities on a suo-motu or proactive basis, and Section 4(2) and Section 4(3) prescribe the method of its dissemination \u2014 to enhance transparency and to reduce the need for filing individual RTI applications.<\/p>\nThe DoPT has issued \"Guidelines on suo motu disclosure under Section 4 of the RTI Act\" vide OM No. 1\/6\/2011-IR dated April 15, 2013. The relevant guideline relating to procurement:<\/p>\n<aside class=\"note\">\"Information relating to procurement made by public authorities \u2014 including publication of notice\/ tender enquiries, corrigenda thereon, and details of bid awards detailing the name of the Vendor\/ Contractor of goods\/ services being procured or the works contracts entered, or any such combination of these, and the rate and total amount at which such procurement or works contract is to be done \u2014 should be disclosed. All information disclosable as per Ministry of Finance, Department of Expenditure's O.M. No. 10\/1\/2011-PPC dated 30th November 2011 (and 05th March 2012) on Mandatory Publication of Tender Enquiries on the Central Public Procurement Portal, and O.M. No. 10\/3\/2012-PPC dated 09th January 2014 on implementation of comprehensive end-to-end e-procurement, should be disclosed under Section 4 of the Right to Information Act.\"<\/p>\nPlacement note: This appears at para 1.12 in the Goods Manual and at para 3.3.2 in the CS and NC Manuals. It does not appear in the Works Manual at all.<\/p><\/aside>\n<\/div><h2>3.5<\/span>Code of Integrity for Public Procurement (CIPP)<\/span><\/h2>\n(Rule 175 of GFR 2017)<\/em><\/p>\n<h3>3.5.1<\/span>Introduction<\/span><\/h3>\nPublic Procurement is perceived to be prone to corruption and ethical risks. To mitigate this, the officials of Procuring Entities involved in procurement AND the bidders\/ suppliers\/ contractors\/ consultants\/ service providers must abide by the following Code of Integrity for Public Procurement (CIPP).<\/p>\nDeclarations by officials: All Procuring officials May be asked to sign declarations to this effect PERIODICALLY and in various procurement decisions.<\/p>\n<ul class=\"lst\"><li>[G, C, NC] \u2014 including Need Assessment<\/em><\/li><li>W<\/span> \u2014 including Preparation of Estimates<\/strong><\/em><\/li><\/ul>\nDeclarations by bidders:<\/strong> The bidders\/ suppliers\/ contractors\/ consultants\/ service providers should be asked to sign a declaration about abiding by the CIPP<\/strong> \u2014 W<\/span> adds: including sub-contractors engaged by them<\/em> \u2014 <\/strong>in registration\/ enlistment applications AND in tender\/ bid documents, with a <\/strong>WARNING that, in case of any transgression of this code:<\/p>\n<ul class=\"lst\"><li>G<\/span> \u2014 it would be liable for punitive actions as detailed below<\/em>;<\/li><li>W<\/span> \u2014 its name is not only liable to be removed from the list of enlisted contractors, but it would be liable for other punitive actions such as cancellation of contracts, debarment or action in Competition Commission of India<\/strong>, and so on<\/em>;<\/li><li>C<\/span>NC<\/span> \u2014 its name is not only liable to be removed from the list of registered suppliers\/ contractors\/ service providers, but it would be liable for other punitive actions as detailed below<\/em>.<\/li><\/ul>\n<h3>3.5.2<\/span>The Code \u2014 Seven Prohibited Practices<\/span><\/h3>\nProcuring authorities, as well as bidders, suppliers, contractors, consultants and service providers, should observe the highest standard of ethics and should not INDULGE in the following PROHIBITED PRACTICES \u2014 either directly or indirectly \u2014 at any stage during the procurement process or the execution of resultant contracts:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Practice<\/th><th>Definition<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>\"CORRUPT practice\"<\/td><td>making offers, solicitation or acceptance of a BRIBE, REWARDS or GIFTS or any material benefit, either directly or indirectly, in exchange for an unfair advantage in the procurement process, or to otherwise INFLUENCE the procurement process or contract execution<\/td><\/tr><tr><td>ii<\/td><td>\"FRAUDULENT practice\"<\/td><td>any OMISSION or MISREPRESENTATION that may mislead or attempt to mislead so that financial or other benefits may be obtained, or an obligation avoided. This includes making FALSE DECLARATIONS or providing FALSE INFORMATION for participation in a procurement process, or to secure a contract, or in the execution of the contract<\/td><\/tr><tr><td>iii<\/td><td>\"ANTI-COMPETITIVE practice\"<\/td><td>any collusion, bid rigging or anti-competitive arrangement, or any other practice coming under the purview of the Competition Act, 2002, between two or more bidders \u2014 with or without the knowledge of the procuring entity \u2014 that may IMPAIR the transparency, fairness and progress of the procurement process, or to establish bid prices at artificial, non-competitive levels<\/td><\/tr><tr><td>iv<\/td><td>\"COERCIVE practice\"<\/td><td>any COERCION or any threat to impair or harm, directly or indirectly, any party or its property, to influence the procurement process or affect the execution of a contract<\/td><\/tr><tr><td>v<\/td><td>\"Conflict of interest\" (coi)<\/td><td>any PERSONAL, FINANCIAL, or BUSINESS RELATIONSHIP between the BIDDER and any personnel of the Procuring Entity who are directly or indirectly related to the procurement or execution process of the contract, which can affect the decision of the procuring entity directly or indirectly<\/td><\/tr><tr><td>vi<\/td><td>\"Undue advantage\"<\/td><td>Improper use of information obtained by the bidder from the procuring entity with an intent to gain an unfair advantage in the procurement process or for personal gain. This also includes if the bidder (or his allied firm) provided services for the need assessment\/ procurement planning of the tender process in which he is participating<\/td><\/tr><tr><td>vii<\/td><td>\"OBSTRUCTIVE practice\"<\/td><td>MATERIALLY IMPEDE the procuring entity's INVESTIGATION of a procurement process \u2014 either by deliberately destroying, falsifying, altering; or by concealing evidence material to the investigation; or by making false statements; or by THREATENING, HARASSING or intimidating any party to prevent it from disclosing its knowledge of matters relevant to such investigation or from pursuing the investigation; or by impeding the Procuring Entity's rights of audit or access to information<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Footnote on \"Undue Advantage\": \"Need assessment\/ procurement planning\" here means, inter alia<\/em>, need assessment, preparation of feasibility\/ cost estimates\/ Detailed Project Report (DPR), design\/ technical specifications, terms of reference (ToR)\/ Activity Schedule\/ schedule of requirements, or the Tender Document, etc. For \"allied firm\", see the Procurement Glossary.<\/p><\/aside>\n<h3>3.5.3<\/span>Obligations for Proactive Disclosures<\/span><\/h3>\nWhether asked or not, in a tender document:<\/p>\na) Declaration of Conflict of Interest: Procuring authorities, as well as bidders, suppliers, contractors, consultants and service providers, should suo-moto proactively declare any conflict of interest as per item (v) above \u2014 PRE-EXISTING or as soon as these arise at any STAGE in any procurement process or execution of a contract.<\/p>\nb) Declaration of previous transgressions: Bidders must DECLARE any PREVIOUS TRANSGRESSIONS with respect to the prohibited practices above with any entity in any country during the last three years, or of being debarred by any other Procuring Entity.<\/p>\nc) Declaration of commissions\/ fees to agents: The bidder\/ contractor must disclose any commissions or fees that may have been paid or are to be paid to AGENTS, REPRESENTATIVES, or COMMISSION AGENTS concerning the selection process or execution of the Contract. The information disclosed must INCLUDE:<\/p>\n<ul class=\"lst\"><li>the name and address<\/strong> of the agent, representative or commission agent,<\/li><li>the AMOUNT and CURRENCY, and<\/li><li>the purpose<\/strong> of the commission or fee<\/li><\/ul>\n \u2014 in a format given in the tender document.<\/p>\n<aside class=\"note\">IMPORTANT FOOTNOTE (in all four Manuals): To encourage voluntary disclosures, such declarations would not mean automatic disqualification for the bidder making such declarations. The declared conflict of interest May be evaluated, and MITIGATION STEPS, if possible, may be taken by the procuring entity. Similarly, voluntary reporting of previous transgressions of the Code of Integrity elsewhere may be evaluated, and \u2014 barring cases of debarment \u2014 an alert watch May be kept on the bidder's actions in the tender and subsequent contract.<\/p><\/aside>\n<h3>3.5.4<\/span>Professionalism and Unfair Competitive Advantage [C ONLY]<\/span><\/h3>\n<aside class=\"note\">This sub-section appears only in the Consultancy Services Manual. It has no counterpart in the Goods, Works or Non-Consultancy Manuals.<\/p><\/aside>\nA) professionalism: The consultant is required to provide professional, objective, and impartial advice \u2014 at all times holding the Procuring Entity's interest paramount above his\/ its own corporate interests and above any consideration for future work \u2014 strictly avoiding any conflicts of interest.<\/p>\nb) Unfair Competitive Advantage: Fairness and transparency in the selection process require that the consultants or their affiliates competing for a specific assignment do not derive an unfair competitive advantage from having provided consultancy services related to the assignment in question.<\/p>\nSuch unfair competitive advantage is BEST AVOIDED by full TRANSPARENCY and by providing equal opportunity, so that all firms or individuals interested or involved have full INFORMATION about a service assignment and its NATURE, SCOPE, and background information. To that end, the request for proposals and all information should be made available to all short-listed consultants simultaneously.<\/p>\nc) The three disqualification rules: Therefore, without limitation on the generality of the foregoing, and unless stated otherwise in the RfP document, Consultants (including their experts and sub-consultants) or their allied firm shall not be eligible for any assignment that:<\/p>\n<ul class=\"lst\"><li>i) by its NATURE, may be in conflict with another assignment of the consultant or its allied firm \u2014 for the same or for another procuring Entity;<\/li><li>ii) a consultant or any of its affiliates\/ allied firms that has been engaged by the client to provide goods, works, or non-consultancy services for a project, shall be disqualified from providing consultancy service resulting from or directly related to those goods, works, or non-consultancy services;<\/li><li>iii) conversely, a consultant or any of its affiliates\/ allied firms hired to provide consultancy services for the preparation or implementation of a project shall be disqualified from subsequently providing goods or works or non-consultancy services resulting from or directly related to the consultancy services for such preparation or implementation.<\/li><\/ul>\n<h3>3.5.5<\/span>Punitive Provisions<\/span><\/h3>\n(Rule 175(2) of GFR, 2017)<\/em><\/p>\nWithout prejudice to \u2014 and in addition to \u2014 the rights of the procuring entity to other penal provisions as per the tender\/ bid documents or contract, IF the procuring entity CONCLUDES that a (prospective) bidder\/ supplier\/ contractor\/ consultant\/ service provider, directly or through an agent, has violated this code of integrity in COMPETING FOR the contract or in EXECUTING a contract, the procuring entity May take appropriate measures including one or more of the following:<\/p>\n<h4>1.<\/span>If his bids are UNDER CONSIDERATION in any procurement<\/span><\/h4>\n<ol class=\"lst\"><li>Forfeiture and\/ or encashment of Bid Security;<\/li><li>Calling off of any pre-contract negotiations; And<\/li><li>REJECTION and EXCLUSION of the bidder from the procurement process.<\/li><\/ol>\n<h4>2.<\/span>If a contract has ALREADY BEEN AWARDED<\/span><\/h4>\n<ol class=\"lst\"><li>CANCELLATION of the relevant contract and recovery of compensation for loss incurred by the procuring entity;<\/li><li>FORFEITURE and\/ or ENCASHMENT of any other security or bond relating to the procurement;<\/li><li>Recovery of payments \u2014 including advance payments, if any \u2014 made by the procuring entity, along with interest thereon at the prevailing rate.<\/li><\/ol>\n<aside class=\"note\">(C<\/span> omits the words \"including advance payments\" in this clause.)<\/em><\/p><\/aside>\n<h4>3.<\/span>Provisions IN ADDITION to the above<\/span><\/h4>\n<ol class=\"lst\"><li>REMOVAL from the list of registered suppliers\/ enlisted contractors and\/ or DEBARMENT of the bidder from participation in FUTURE PROCUREMENTS of the procuring entity:<\/li><li>[G, W, NC] \u2014 for a period not less than six months;<\/li><li>C<\/span> \u2014 for a period not exceeding two years.<\/strong><\/li><\/ol>\n<aside class=\"note\">Note the divergence:<\/strong> the Consultancy Manual states a ceiling<\/strong> (not exceeding two years), whereas the other three state a FLOOR<\/strong> (not less than six months).<\/p><\/aside>\n<ol class=\"lst\"><li>In case of ANTI-COMPETITIVE PRACTICES, information for further processing May be filed with the Competition Commission of India:<\/li><li>[G, W, NC] \u2014 under the signature of a joint Secretary level officer;<\/li><li>C<\/span> \u2014 by the Competent Authority.<\/strong><\/li><li>Initiation of suitable disciplinary or criminal proceedings against any individual or staff found responsible.<\/li><\/ol>\n<h2>3.6<\/span>Integrity Pact (IP)<\/span><\/h2>\n1. What it is: The pre-bid Integrity Pact is a tool to help governments, businesses, and civil society fight corruption in public contracting.<\/p>\nIt binds both buyers and sellers to ethical conduct and transparency in all activities \u2014 from:<\/p>\n<aside class=\"note\">pre-selection of bidders \u2192 bidding \u2192 contracting \u2192 implementation \u2192 completion \u2192 operation related to the contract.<\/p><\/aside>\nThis removes the insecurity of bidders that, while they themselves May abjure bribery, their competitors May resort to it and win contracts by unfair means.<\/p>\n2. Who must incorporate it, and at what threshold: Ministries\/ Departments and their attached\/ subordinate offices (including autonomous bodies) should incorporate the Integrity Pact (OM No. 14(12)\/2008-E-II(A) dated 19th July 2011)<\/em> in the procurements\/ contracts:<\/p>\n<ul class=\"lst\"><li>of the NATURE and of a THRESHOLD VALUE,<\/li><li>decided by the ministries\/ departments,<\/li><li>with the approval of the minister in charge.<\/li><\/ul>\n<aside class=\"note\">As guidance, the threshold should cover the bulk \u2014 80\u201390% (eighty to ninety per cent) by value \u2014 of its annual procurement expenditure.<\/p><\/aside>\nFormat and customisation:<\/p>\n<ul class=\"lst\"><li>[G, W] \u2014 The procuring entities May make suitable changes in the format, wherever required, based on the specific situation in which the pact is to be used. The pact May also be updated, wherever necessary, to incorporate latest procurement instructions.<\/li><li>[C, NC] \u2014 Ministries\/ Departments including their attached\/ subordinate offices AND CPSEs may use this format of Integrity Pact, with the suitable changes specific to the situations in which the pact is to be used.<\/li><\/ul>\n<aside class=\"note\">Annexure references for the IP Format:<\/strong>G<\/span> Annexure 30 \u00b7 W<\/span> Annexure 14 \u00b7 C<\/span> Annexure 18 \u00b7 NC<\/span> Annexure 12.<\/p><\/aside>\n3. Extension to PSBs, PSICs and FIs: CVC issued a revised standard operating procedure (CVC Circular No. 04\/06\/23 \u2014 015\/VGL\/091 dated 14.06.2023)<\/em> and has further stated (CVC Circular No. 06\/05\/21 \u2014 015\/VGL\/091 dated 03.06.2021)<\/em> That, in view of the increasing procurement activities of public sector banks (PSBs), public sector insurance companies (PSICs) and public sector financial institutions (FIs), they shall also adopt and implement the suggested format of Integrity Pact.<\/p>\n<aside class=\"note\">C<\/span> \u2014 additional provision found only in the consultancy Manual:<\/p>\nIn the case of sub-contractors, the Integrity Pact shall be a tri-partite arrangement, to be signed by (1) the organisation, (2) the contractor, and (3) the sub-contractor.<\/p>\nSee Annex-2 to the Integrity Pact Annexure for details.<\/strong>(Note: G<\/span> titles Annex-2 as \"Extract of Standard Operating Procedure\"; W<\/span>, C<\/span>, NC<\/span> title it \"Appointment and Role of IEMs\".)<\/em><\/p><\/aside>\n<h2>3.7<\/span>Grievances and its Redressal<\/span><\/h2>\n1. Procuring Entities shall provide a suitable clause in their tender documents for the redressal of grievances of bidders. The following is a suggested mechanism of redressal.<\/p>\n2. Who may apply, and within what time:<\/p>\nAny supplier, contractor, or consultant that claims to have suffered or is likely to suffer loss or injury as a result of a decision\/ action\/ omission of the Procurement Entity May make an application for its review:<\/p>\n<ul class=\"lst\"><li>Within a period of five (5) days from its date,<\/li><li>to the DESIGNATED OFFICER named in the tender documents in this regard (or the head of the Procuring Entity, if not so specified),<\/li><li>specifying the ground(s) and the relevant clauses of the tender documents.<\/li><\/ul>\nDe-briefing: Unsuccessful bidders May seek de-briefing regarding the rejection of their bid \u2014 in writing or electronically \u2014 within five (5) days of the declaration of techno-commercial or financial evaluation results.<\/p>\n3. Only a directly affected bidder can represent:<\/p>\n<ol class=\"lst\"><li>Only a bidder who has participated in the concerned procurement process \u2014 i.e., pre-qualification, bidder registration or bidding, as the case may be \u2014 can make such representation.<\/li><li>In case the PRE-QUALIFICATION bid has been evaluated before the bidding of Technical\/ financial bids, an application for review in relation to the technical\/ financial bid may be filed only by a bidder who has qualified in the pre-qualification bid.<\/li><li>In case the TECHNICAL bid has been evaluated before the opening of the FINANCIAL bid, an application for review in relation to the financial bid may be filed only by a bidder whose technical bid is found to be acceptable.<\/li><\/ol>\nD) decisions not subject to review:<\/strong> The following decisions of the procuring entity, in accordance with the provisions of internal guidelines, shall not be subject to review:<\/strong><\/p>\n<ul class=\"lst\"><li>i) determination of the need for procurement;<\/li><li>ii) selection of the mode of procurement or tendering system;<\/li><li>iii) choice of selection procedure;<\/li><li>iv) complaints against specifications \u2014 except under the premise that they are either VAGUE or too specific to limit competition, which may be permissible;<\/li><li>v) provisions limiting the participation of bidders in the procurement process in terms of government policies;<\/li><li>vi) provisions regarding purchase preferences to specific categories of bidders in terms of policies of the Government;<\/li><li>vii) the decision to enter into negotiations with the L1 bidder;<\/li><li>viii) cancellation of the procurement process \u2014 except where it is intended to SUBSEQUENTLY RE-TENDER the same requirements;<\/li><li>ix) issues related to ambiguity in contract terms shall not be taken up after a contract has been signed; all such issues should be HIGHLIGHTED before the vendor\/ contractor consummates the contract.<\/li><\/ul>\n<aside class=\"note\">(In the Works Manual this is numbered as a separate para 4, not as a sub-item of the \"not subject to review\" list.)<\/em><\/p><\/aside>\n4. This grievance redressal is BESIDE the avenue of complaints to the vigilance Department of the procuring organisation.<\/p>\n5. If received DURING the processing of the tender: The designated officer shall FORWARD the application to the tC\/ convener of TC for its examination on merits and action as considered necessary.<\/p>\n<ul class=\"lst\"><li>An interim reply May be sent that the application will be kept in view in the tender evaluation, and a final response shall be given only after the declaration of the award of the contract.<\/li><li>The Tender Committee shall place the application on record \u2014 including its analysis and action taken thereon \u2014 in the TC minutes\/ report to the Competent Authority.<\/li><li>After the award, the TC convener shall respond to the aggrieved party.<\/li><\/ul>\n6. If received after the declaration of the award of the contract: The designated officer shall FORWARD the application to the COMPETENT AUTHORITY of the tender for his examination on merits and action as considered necessary.<\/p>\n<aside class=\"note\">Such post-award grievance must be redressed and closed within 30 days of receipt of the grievance.<\/p><\/aside>\nIf the Competent Authority finds the complaint to have substance, appropriate and feasible remedial measures should be initiated.<\/p>\n7. If the grievance is resolved, or if the grievance is found to be unwarranted, the aggrieved party shall be informed by the TC convener of the final decision \u2014 without disclosing confidential details.<\/p>\n8. Remedial actions available: Based on such representation, if the Competent Authority is satisfied that there has been a contravention of procurement guidelines in the case, he May initiate such action as, in his opinion, is necessary to rectify the contravention \u2014 INCLUDING:<\/p>\n<ol class=\"lst\"><li>If the grievance is due to inadequacy of procurement guidelines or a lack of understanding of the staff \u2014 remedial action to address such lacunae May be initiated without repercussions to the concerned staff;<\/li><li>Annulment or reconsideration of the procurement proceedings;<\/li><li>Cancellation of the resultant procurement contract, if legally feasible;<\/li><li>In case any individual staff is found responsible \u2014 suitable disciplinary proceedings should be initiated against such staff under the conduct Rules;<\/li><li>In case the complicity of any bidder is proved:<\/li><li>i) REMOVAL of the concerned firm from the list of registered firms;<\/li><li>ii) DEBARMENT of the bidders, if warranted;<\/li><li>iii) reporting the matter to the Competition Commission of India (CCI) in case of anti-competitive actions by the bidder;<\/li><li>Handing over the case to the CVO if there are aspects that require INVESTIGATIONS.<\/li><\/ol>\n<h2>3.8<\/span>Conduct of Public Servants in Public Procurement \u2014 Risks and Mitigations<\/span><\/h2>\n<aside class=\"note\">(Notified vide OM No. F.11\/13\/2017-PPD<\/strong> issued by Department of Expenditure dated 24.10.2017<\/strong>.)<\/em><\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>HOSPITALITY: Hospitality \u2014 including facilitation of travel, lodging, boarding and ENTERTAINMENT during official or unofficial programs \u2014 from suppliers\/ contractors may tend to cross the limits of ethical\/ occasional\/ routine\/ modest\/ normal business practice. Officials sent to the firm's premises for INSPECTIONS\/ MEETINGS may mistakenly presume entitlement to hospitality from the firm, even if other arrangements are available at the location.<\/td><td>Hospitality must never be solicited, directly or indirectly. The frequency, scale and number of officials availing hospitality should not be allowed to identify the recipient in a public way with any particular contractor, supplier or service provider, or raise doubts about its neutrality. It should not involve significant travel, overnight accommodation, or trips abroad. Particular care should be taken in relation to offers of hospitality from firms (say, participating in current or imminent tenders or their execution) who stand to derive a personal or commercial benefit from their relationship with the recipient.<\/td><\/tr><tr><td>2<\/td><td>GIFTS: Gifts from suppliers\/ contractors may tend to cross the limits of ethical\/ occasional\/ routine\/ modest\/ normal business practice \u2014 especially during the festive season. Since the VALUE of the gift May not be known to the recipient, it may cause an inadvertent violation of conduct Rules.<\/td><td>Gifts must never be solicited, directly or indirectly. An official should not accept and retain gifts that are more valuable than the limit as laid down in the conduct Rules. Cash, gift cheques or any vouchers that May be exchanged for cash May not be accepted, regardless of the amount. Particular care should be taken in relation to gifts from firms (say, participating in current or imminent tenders or their execution) who stand to derive a personal or commercial benefit from their relationship with the recipient. Any gift received inadvertently in violation of the above must immediately either be returned, or else reported and deposited in toshakhana\/ treasury.<\/td><\/tr><tr><td>3<\/td><td>Private purchases from official suppliers: Procuring Officials may mistakenly consider it innocuous to seek discounts in private procurements from suppliers\/ contractors having OFFICIAL DEALINGS or its ALLIED FIRMS \u2014 G<\/span> adds: especially from rate Contract holders.<\/td><td>Officials involved in Public Procurement must never indulge in any non-official pecuniary transaction with the contractors, suppliers, or service providers with whom they have official dealings \u2014 including seeking or accepting special facilities or discounts on private purchases (G<\/span> adds: particularly the same items that are being ordered officially on rate contracts)<\/em>.<\/td><\/tr><tr><td>4<\/td><td>sponsorship of events: Procuring officials May mistakenly consider it innocuous to seek financial favours \u2014 donations, advertisements for souvenirs, and contributions in cash or kind \u2014 in relation to sponsoring cultural, social, charitable, religious, or sporting events, in the false belief that, since they are personally not benefitted, it would not be a violation of CIPP.<\/td><td>Officials involved in Public Procurement must never indulge in any non-official pecuniary transaction with the contractors, suppliers, or service providers with whom they have official dealings \u2014 including soliciting of sponsorship for unofficial and private cultural, social, sporting, religious, charitable, or similar organisations or events.<\/td><\/tr><tr><td>5<\/td><td>conflict of interest (coi):<\/strong> The CIPP defines COI as \"\u2026any personal, financial, or business relationship between the bidder and any personnel of the procuring entity who are directly or indirectly related to procurement or execution process of the contract, which can affect the decision of the procuring entity directly or indirectly\u2026\u2026\"<\/em>There may be DILEMMAS regarding which officers are 'RELATED' to the tender or execution process, and even in respect of minor, routine transactions.<\/strong><\/td><td>(See detailed mitigation below the table.)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<h3>3.8.1<\/span>Detailed Mitigation for Conflict of Interest<\/span><\/h3>\n<aside class=\"note\">interpretation of conflict of interest would depend on the organisational structure and its unique circumstances and cannot be laid down universally. However, some illustrative examples are given below to provide context.<\/p><\/aside>\na) which OFFICERS are 'related' to the tender or execution process: This would depend on the ORGANISATIONAL STRUCTURE and the sensitivity of their role in procurement. It may cover KEY OFFICIALS (and any external consultants\/ advisors) involved in:<\/p>\n<ul class=\"lst\"><li>making a RECOMMENDATION,<\/li><li>various APPROVALS, or<\/li><li>making a MAJOR DECISION<\/li><\/ul>\nat any STAGE in procurement \u2014 i.e., during:<\/p>\n<aside class=\"note\">need determination\/ indenting \u2192 Tender Document preparation\/ preparation of comparative tabulation \u2192 Technical and Financial evaluation of Bids \u2192 negotiation\/ signing of Contract \u2192 execution of the contract \u2192 payments to the contractor.<\/p><\/aside>\nB) illustration \u2014 coi (actual, potential, or perceived) can arise if such officers (or his close family) have:<\/p>\n<ul class=\"lst\"><li>i) substantial business interests in the firm \u2014 e.g., shares more than 0.1% of market cap \u2014 or have taken a loan or other FINANCIAL OBLIGATION (say DISCOUNTS) from the firm or its personnel, etc.;<\/li><li>ii) business relationships with the firm \u2014 say, previously worked for the firm, or availed hospitality\/ gifts beyond the limits laid down in the Code of Conduct of the organisation, etc.;<\/li><li>iii) FAMILIAL RELATIONSHIP with the personnel of the firm;<\/li><li>iv) close personal friendships or REGULAR (say, more than once in a quarter) social interactions \u2014 e.g., clubs, games, social associations \u2014 with the Firm's personnel, etc.<\/li><\/ul>\n<aside class=\"note\">DEFINITIONAL FOOTNOTE (in all four Manuals): For the purpose of COI \u2014 <\/p>\n<ul class=\"lst\"><li>\"Firm\" includes its allied firms also.<\/li><li>\"FIRM'S PERSONNEL\" for this purpose shall mean SENIOR EXECUTIVES (or the team handling the bidding) at the bidding firm.<\/li><li>\"CLOSE FAMILY\" for this purpose shall be the officer's spouse, parents, children, and their families.<\/li><li>As far as extended family \u2014 siblings\/ uncles\/ aunts\/ cousins and their families \u2014 is concerned, the situation would depend on the closeness of relationships and whether the officer would in normal course be aware of their activities.<\/li><\/ul><\/aside>\nC) resolution of coi:<\/p>\nIt shall be the responsibility of such officials to declare coi \u2014 to the extent he is aware of it in normal course \u2014 with reference to a procurement process, to the Competent Authority\/ next higher officer.<\/p>\nThe competent officer may EVALUATE:<\/p>\n<ul class=\"lst\"><li>the level of coi, and<\/li><li>the sensitivity of the function assigned to the official.<\/li><\/ul>\nHe may then EITHER DETERMINE:<\/p>\n<ul class=\"lst\"><li>I) that the coi is insignificant enough to influence the type of function performed by the official \u2014 and ask the officer to continue his function; Or<\/li><li>ii) that if the coi or the type of function is significant \u2014 nominate any alternative officer to perform the function (partly or fully) of this official in that procurement process.<\/li><\/ul>\n<h2>3.9<\/span>Development of New Sources and Registration\/ Empanelment\/ Enlistment\/ Pre-qualification<\/span><\/h2>\n(Rule 150 of GFR 2017)<\/em><\/p>\n<aside class=\"note\">Section titles: G<\/span>Development of New Sources and Registration\/ Empanelment\/ Pre-qualification of Suppliers \u00b7 W<\/span> *Development of New Sources and Registration\/ Enlistment of Contractors<\/strong> \u00b7 C<\/span>NC<\/span><\/em>Development of New Sources and Registration\/ Empanelment\/ Pre-qualification of Firms*<\/p><\/aside>\n<h3>3.9.1<\/span>The Three (or Two) Concepts Distinguished<\/span><\/h3><h4 class=\"src-multi\">A. The Goods\/ CS\/ NC formulation \u2014 THREE concepts<\/span>G<\/span>C<\/span>NC<\/span><\/h4><div class=\"srcblock src-multi\">\nNormally, in open tendering, there should be no restriction of prior registration. Entities may provide for registration after selection in unrestricted open tendering.<\/p>\nDifferences may be noted between REGISTRATION, EMPANELMENT and PRE-QUALIFICATION:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Concept<\/th><th>Purpose<\/th><\/tr><\/thead><tbody><tr><td>A) registration<\/td><td>To establish GENUINE IDENTIFICATION of the firm \u2014 e.g., for e-procurement portals, preferential procurement, and so on<\/td><\/tr><tr><td>b) empanelment<\/td><td>To establish PRIMA-FACIE CAPABILITY for RESTRICTED TENDERING (not open tendering) \u2014 e.g., limited tendering panels (C<\/span>NC<\/span> add: also useful in special limited tenders)<\/em>. (It means maintaining a CLASSIFIED LIST of firms based on their EXPERIENCE, usually required in case of limited tenders.)<\/em><\/td><\/tr><tr><td>c) pre-qualification<\/td><td>wherever the nature of the requirement dictates competition only among prequalified bidders (without vitiation of prices offered by unqualified bidders), prequalification May be done with open tendering in the prequalification bidding stage<\/td><\/tr><tr><td>d) approved list\/ multi-use list<\/td><td>If there are FREQUENT REQUIREMENTS of such nature, prequalification may be done through an OPEN PROCESS with an EXTENDED VALIDITY of the Shortlist of Qualified Bidders \u2014 called the List of Approved Sources in some organisations (e.g., Ministry of Railways) \u2014 for example, one year or longer. The use of a List of Qualified Bidders is also known as a MULTI-USE LIST in many countries \u2014 as distinct from empanelment (e.g., Limited Tender Panel, which does not undergo a formal open tender pre-qualification\/ EoI process). In such long-term multi-use lists or approved lists, if any competent bidder applies for inclusion at any time, it should be examined as per the criteria of the original multi-use list.<\/td><\/tr><\/tbody><\/table><\/div>\nHowever, since in common parlance \"registration\" is a word used interchangeably by most departments for all the above three concepts, this usage is being retained \u2014 though the distinction would be clear from the context of usage.<\/p>\n<\/div><h4 class=\"src-W\">B. The Works formulation \u2014 TWO concepts<\/span>W<\/span><\/h4><div class=\"srcblock src-W\">\nThe terms 'ENLISTMENT' and 'REGISTRATION' may be differentiated as follows:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Term<\/th><th>Meaning<\/th><\/tr><\/thead><tbody><tr><td>A) registration<\/td><td>simply registering the contractor, without any verification<\/td><\/tr><tr><td>b) enlistment<\/td><td>including the name of the contractor in the list after verification of credentials<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h3>3.9.2<\/span>Registration \u2014 General Provisions<\/span><\/h3>\na) Who may register, and why G<\/span>C<\/span>NC<\/span>: For goods and services not available on GeM, and for Works, the head of Ministry\/ Department May periodically register suppliers of goods and services that the Department or Office SPECIFICALLY REQUIRES.<\/p>\nEnsuring an up-to-date and current list of registered, capable and competent suppliers\/ consultants\/ service providers facilitates efficiency, economy, and promotion of competition in public procurement \u2014 especially while floating a limited tender\/ local purchase\/ direct contracting.<\/p>\nFor such tenders, it May be possible to skip bidder qualification, to avoid unnecessary repetition\/ duplication of efforts \u2014 thereby saving time, especially in the case of emergency procurement.<\/p>\nRegistration of the supplier\/ consultant\/ service provider should be done following a fair, transparent, and reasonable procedure and after giving due publicity.<\/p>\nSuch registered suppliers should be on-boarded on GeM as and when the item or service gets listed on GeM (Amended vide DoE OM No. F.1\/26\/2018-PPD dated 02.04.2019)<\/em>.<\/p>\nThe list of registered firms for the subject matter of procurement should be exhibited on the websites of the Procuring Entity\/ their e-procurement portals.<\/p>\nb) Registration on e-procurement portals W<\/span>: All the Ministries\/ Departments shall register the prospective contractors on their e-procurement portal or in the CPPP (in case they do not have their own e-procurement portal) before submitting their bids.<\/p>\nThe contractor May be an individual, sole proprietorship firm, partnership firm, limited liability partnership, private or public limited company.<\/p>\nFor registration, the Ministries\/ Departments\/ CPSUs shall capture at least: a) Name of contractor; b) Address and Contact details; c) Permanent Account Number (PAN); d) Details of Digital Signature Certificate (DSC); and e) GSTIN.<\/p>\nDepending on the requirement of the respective procurement portal, the Ministries\/ Departments can capture any other information as may be considered necessary.<\/p>\nc) Enlistment practice in works departments W<\/span>: Some departments \u2014 such as the Central Public Works Department (CPWD) and Military Engineering Services (MES) \u2014 are enlisting the contractors after verification of their credentials.<\/p>\n<ul class=\"lst\"><li>Public authorities May empanel\/ register contractors of those specific types of work which are required by them regularly.<\/li><li>PERFORMANCE of such empanelled contractors should be reviewed periodically.<\/li><li>The list of empanelled\/ registered contractors shall be updated on a regular basis.<\/li><li>The category\/ Class of contractors May be upgraded\/ downgraded, or contractors May be de-listed, based on their performance.<\/li><li>Empanelment of contractors shall be done in a fair and equitable manner, preferably online, after giving due publicity.<\/li><li>The practice of inviting bids for works tenders only from empanelled contractors May be confined to tenders up to a certain threshold value (say Rs 20 crore), as decided by the project executing authorities.<\/li><li>It is expected that ministries\/ departments will also develop their own enlistment process \u2014 as has been done by CPWD, Ministry of railways (MoR) and Ministry of road transport & highways (MoRTH) \u2014 to reduce the time required for verification of credentials of the contractors after opening of the bids.<\/li><li>The lists of such enlisted contractors can be used by any Ministry\/ Department\/ cpsu.<\/li><\/ul>\nd) Sharing of information through CPPP W<\/span>: The ministries\/ departments will also share the information of registered and enlisted contractors with each other through the Central Public Procurement Portal (CPPP).<\/p>\n<ul class=\"lst\"><li>They will also ensure that whenever a contractor is debarred, the information regarding the same is made available immediately to all the ministries\/ departments through the CPPP.<\/li><li>The reasons for the debarment and the order of such debarment May also be displayed on the CPPP.<\/li><li>NIC\/ MeitY shall make appropriate changes in the CPPP so that each contractor can be uniquely identified by PAN.<\/li><li>All the Ministries\/ Departments May take cognizance of the information regarding debarment of contractors and use it as an input for the decision-making process as per their own procurement policies.<\/li><\/ul>\ne) Entities with their own policies: Ministries\/ Departments with a significant volume of procurements May follow their own policies and procedures for registration\/ enlistment of vendors\/ contractors, if they already exist. The policies and procedures described below are for the non-mandatory generic guidance of Ministries\/ Departments that DO not have their own policies\/ procedures.<\/p>\nThe Ministry\/ Department shall notify the authorities competent to deal with the applications and grant registrations\/ enlistments, along with their jurisdictions.<\/p>\nThe appellate authority shall be at least one level above the registering authority, or as designated by the Ministry\/ Department.<\/p>\nf) Cross-use of lists and EMD exemption: All Ministries\/ Departments May use such lists prepared by other ministries\/ departments as and when necessary.<\/p>\nRegistered suppliers\/ firms are ordinarily exempted from furnishing earnest money deposit\/ Bid Security with their tenders for items and monetary limits for which they are registered.<\/p>\n<aside class=\"note\">(NC<\/span> phrases this as: \"empanelled<\/strong> Firms are ordinarily exempted \u2026 for items and Monetary Limits for which they are empanelled<\/strong>.\")<\/em><\/p><\/aside>\n<h3>3.9.3<\/span>Categories for Registration\/ Enlistment<\/span><\/h3><h4>G<\/span> \u2014 Categories for Registration of Suppliers of Goods<\/span><\/h4>\nIn case of procurement of goods, the Administrative Department shall register firms as suppliers of goods in different trade groups of goods in the following BROAD CATEGORIES: a) MANUFACTURERS who supply INDIGENOUS items; b) AGENTS\/ DISTRIBUTORS of such manufacturers who desire to market their production only through their agents; c) FOREIGN MANUFACTURERS with\/ without their accredited agent in India; d) stockists of imported spares or other specified items; e) suppliers of imported goods having REGULAR ARRANGEMENTS with foreign manufacturers.<\/p>\n<h4>W<\/span> \u2014 Categories for Enlistment of Contractors<\/span><\/h4>\nIn case of procurement of works, the Administrative Department shall enlist firms as contractors in different types\/ categories of works \u2014 civil, electrical, horticulture, nursery, etc.<\/p>\nThe contractor may be a private, partnership, pvt ltd, corporate, PSU or a JOINT VENTURE company.<\/p>\n<h3 class=\"src-G\">3.9.4<\/span>Registration of Manufacturers<\/span>G<\/span><\/h3><div class=\"srcblock src-G\">\nOne of the main prerequisites for registration as a manufacturer is that the firm should possess its own in-house testing facilities.<\/p>\n<aside class=\"note\">MSE relaxation: In the case of MSE units, the firm does not need its own testing facilities, but regular arrangements with other reputed Government or government-approved or private agencies in its area for product testing.<\/p><\/aside>\nBefore the manufacturer is included in the list of registered suppliers, the Procuring Entity shall verify the bona fides and standing of the firm. The procuring Entity May also seek assistance from the inspection wing of other inspecting agencies.<\/p>\nIso-certified firms: In the case of firms that have an established quality maintenance system with ISO 9001-2000 certification (latest version) from authorised agencies, the Procuring Entity May consider the registration of such firms without carrying out a capacity assessment.<\/p>\n<aside class=\"note\">Even in the case of firms that have an established quality maintenance system with ISO 9001-2000 certification from authorised agencies, it is necessary for the Procuring Entity to verify the quality processes put in place.<\/p><\/aside>\n<\/div><h3>3.9.5<\/span>Grades\/ Classes (Monetary\/ Tendering Limits)<\/span><\/h3>\nRegistration\/ enlistment should be done by grading the firms (grade a, b, and so on) based on their capability to execute contracts\/ orders of different monetary limits in the relevant category of requirements.<\/p>\nThe monetary limits should be carefully fixed while keeping in view:<\/p>\n<ul class=\"lst\"><li>The banker's reports,<\/li><li>the capacity and capability of the firm, and<\/li><li>other FINANCIAL INFORMATION indicated in the BALANCE SHEETS, such as profit and loss statements.<\/li><\/ul>\n<h4>G<\/span> \u2014 Example of gradation for Goods (NOT mandatory)<\/span><\/h4>\n<div class=\"tblwrap\"><table><thead><tr><th>Grade<\/th><th>Monetary Limit<\/th><\/tr><\/thead><tbody><tr><td>Grade A<\/td><td>Rs. 25 (Rupees twenty-five) lakh AND above<\/td><\/tr><tr><td>Grade B<\/td><td>Rupees five lakh to Rs. 25 (Rupees twenty-five) lakh<\/td><\/tr><tr><td>Grade C<\/td><td>Rupees one lakh and up to Rupees five lakh<\/td><\/tr><\/tbody><\/table><\/div>\nAdditional rule G<\/span>: The firms that are registered for the supply of orders valued above rupees five lakh should invariably be manufacturers or their authorised agents.<\/p>\nWherever practical, the Procuring Entity shall register the manufacturers and not agents or intermediaries.<\/p>\nA sole selling agent\/ authorised agent could be considered for registration, subject to the conditions that:<\/p>\n<ul class=\"lst\"><li>The Procuring Entity is satisfied that he is the sole selling agent of the manufacturers;<\/li><li>The Procuring Entity ascertains the financial and technical capabilities of the manufacturers;<\/li><li>The availability of a suitable arrangement with the sole selling agent for after-sales service shall also be ensured; And<\/li><li>the Procuring Entity shall also satisfy itself that a valid legal agreement exists between the applicant unit and its sole selling agent during the period for which he is registered.<\/li><\/ul>\n<h4>W<\/span> \u2014 Class of Enlistment (Tendering Limits) for Works<\/span><\/h4>\n(A sample classification \u2014 Source: Rules for Enlistment of Contractors in CPWD, 2024)<\/em><\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Class<\/th><th>Tendering Limit<\/th><th>Class<\/th><th>Tendering Limit<\/th><\/tr><\/thead><tbody><tr><td>Class-I (Super)<\/td><td>Rs 650 crore<\/td><td>Class-II<\/td><td>Rs 15 crore<\/td><\/tr><tr><td>Class-I (AAA)<\/td><td>Rs 260 crore<\/td><td>Class-III<\/td><td>Rs 4 crore<\/td><\/tr><tr><td>Class-I (AA)<\/td><td>Rs 130 crore<\/td><td>Class-IV<\/td><td>Rs 1.30 crore<\/td><\/tr><tr><td>Class-I (A)<\/td><td>Rs 75 crore<\/td><td>Class-V<\/td><td>Rs 40 lakh<\/td><\/tr><tr><td>Class-I<\/td><td>Rs 50 crore<\/td><td><\/td><td><\/td><\/tr><\/tbody><\/table><\/div>\n<h3>3.9.6<\/span>Procedure for Registration\/ Enlistment<\/span><\/h3>\na) Fair procedure and publicity: Registration\/ enlistment of the suppliers\/ contractors should be done following a fair, transparent, and reasonable procedure and after giving due publicity.<\/p>\n<aside class=\"note\">W<\/span> adds: Enlistment should be done by any Ministry\/ Department in case it desires to enlist contractors for works <\/strong>which are exclusively needed by it, by keeping <\/strong>Fundamental principles of Public Procurement in view \u2014 especially the transparency principle (transparency, fairness, equality, competition and appeal rights) \u2014 <\/strong>with the approval of the CA, after carefully assessing and verifying credentials, capability, quality control systems, past performance, after-sales service facilities, financial background, and so on.<\/p><\/aside>\nDetails of the procedure for registration\/ enlistment of new firms May be uploaded on the website and published in the form of a booklet for information of the suppliers\/ contractors. Timeframes and criteria for registration\/ enlistment of new suppliers\/ contractors May be clearly indicated.<\/p>\nb) Identifying possible sources:<\/strong> Possible sources for any category\/ group of requirements can be identified based on internal and external references.<\/strong> Data on new suppliers\/ contractors can be obtained from:<\/p>\n<aside class=\"note\">the response received from suppliers\/ contractors \u00b7 open tender advertisements \u00b7 pre-qualification bids \u00b7 Expression of Interest (EoI) \u00b7 various enquiries on the website \u00b7 dedicated websites \u00b7 exhibitions \u00b7 buyer-seller meets \u00b7 various publications of NSIC G<\/span>, the Development Commissioner of the Small Industries Service Institute G<\/span>, BIS \u00b7 trade journals, and so on.<\/p><\/aside>\nThe e-procurement and GeM portals pre-register suppliers online. Such data can be a source of information on prospective suppliers\/ contractors.<\/p>\nc) Updating the list and inviting EoI: The list of registered\/ enlisted contractors shall be updated on a regular basis (ANNUALLY) G<\/span>. New supplier(s)\/ contractor(s) May be considered for registration\/ enlistment at any time, provided they fulfil all the required conditions.<\/p>\nFor any larger-scale or critical registration or development of new suppliers\/ contractors, the Procuring Entity should call for eoI by publicising its need for the development of sources.<\/p>\nD) CIPP undertaking: While registering the firms, an undertaking May be obtained from them that they will abide by the CIPP enclosed with the application, with a clear warning that, in case of transgression of the Code of Integrity, their names are likely to be deleted from the list of registered suppliers\/ enlisted contractors \u2014 besides any other penalty or more severe action as deemed fit.<\/p>\nE) GCC undertaking: Along with the new\/ renewal application for registration\/ enlistment, the suppliers\/ contractors should also be asked to declare that, if awarded a contract in any LTE in which they participate, they bind themselves to abide by the Procuring Entity's general conditions of contract (GCC). Such GCC should be part of the application.<\/p>\nF) the participation Rule: Registered vendors\/ enlisted contractors must participate in relevant limited tenders. In case they do not respond to at least three (3) tenders in a year on being invited to do so \u2014 if there were at least 6 invitations to them \u2014 they May be removed from the list of registered vendors\/ enlisted contractors.<\/p>\ng) Eligibility for registration\/ enlistment:<\/p>\n<ul class=\"lst\"><li>i) any firm situated in India or abroad that is in the business of providing goods\/ works\/ services of specified categories of interest shall be eligible for registration\/ enlistment;<\/li><li>ii) G<\/span><\/strong>where registration is granted based on partly outsourced arrangements\/ agreements, it shall always be the responsibility of the registered unit to keep such arrangements\/ agreements renewed\/ alive, and to keep their registration valid for the period for which it has been granted.<\/strong>Any failure in this regard May make the registration null and void\/ ineffective retrospectively from any such dates which the registering authority considers appropriate;<\/li><li>iii) Suppliers\/ contractors should possess a valid digital signature certificate (DSC) Class III with the company name at the time of registration\/ enlistment\/ renewal, to enable them to participate in e-PROCUREMENTS;<\/li><li>iv) the firm should also have good internal governance \u2014 such as a whistleblower policy, commitment to esg (environmental, social, and governance) code of conduct, code of business ethics, etc.;<\/li><li>V) the firm against whom punitive action has been taken shall not be eligible for re-registration\/ re-enlistment during the currency of the punitive action. Registration\/ enlistment requests May not be entertained from firms (or their allied firms) who are de-registered\/ banned (W<\/span> Phrasing: \"From such firms, stakeholders of whom have any interest in de-enlisted\/ banned firms\")<\/em>.<\/li><\/ul>\nH) assessment of capacity and capability: The application form, complete in all respects and accompanied by the requisite processing fee and prescribed documents, shall be submitted by the firms to the registering\/ enlisting authority.<\/p>\nThe application form, duly filled in, when received from the firms, shall be scrutinised carefully to assess the capacity and capability of the firms \u2014 INCLUDING:<\/p>\n<aside class=\"note\">credentials \u00b7 manufacturing capability G<\/span>\/ capability W<\/span> \u00b7 quality control system \u00b7 past performance \u00b7 after-sales service facilities G<\/span> \u00b7 financial background, and so on, of the applicant.<\/p><\/aside>\n<ul class=\"lst\"><li>References shall be made to other firms of the standing of whom the applicant firm claims to be a supplier\/ contractor.<\/li><li>Likewise, the applicant firm's bankers May also be requested to advise about the firm's financial standing.<\/li><\/ul>\ni) If registration cannot be granted: In cases where the firm is not considered capable and registration\/ enlistment cannot be granted, the concerned authority shall communicate the deficiencies and shortcomings directly to the firms, under intimation to the appellate authority.<\/p>\nWhere a request for re-verification and review is made by the firm \u2014 along with any fee as prescribed and within the period prescribed by the Department \u2014 a review shall be undertaken.<\/p>\n<aside class=\"note\">Timing variant:<\/strong>C<\/span>NC<\/span> expressly add that such a request can be made only after six months<\/strong>. W<\/span> says the period is \"say, within six months<\/strong>\". G<\/span> does not specify the period.<\/p><\/aside>\nRequests for re-verification after the expiry of the said period would be treated as a fresh application, and a processing fee, if any is prescribed, charged accordingly.<\/p>\nj) Grant of registration\/ enlistment: If considered to be CAPABLE after carefully assessing and verifying credentials, the firm May be granted registration\/ enlistment with the approval of the ca.<\/p>\nk) Scope of registration:<\/p>\n<ul class=\"lst\"><li>G<\/span> Registration should be for specific trade groups of goods\/ works\/ services. For this purpose, all goods\/ works\/ services should be divided into trade groups, and the information published on the relevant portals\/ websites.<\/li><li>W<\/span> Enlistment should be for a specific category of works.<\/li><\/ul>\nl) Validity period and provisional status:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>G<\/span> \u2014 Goods<\/th><th>W<\/span> \u2014 Works<\/th><\/tr><\/thead><tbody><tr><td>Validity<\/td><td>a specified period (one to three years)<\/td><td>A specified period (say three years), and would be considered for EXTENSION (on application by the contractor\/ service provider) based on satisfactory performance of the firm<\/td><\/tr><tr><td>Renewal<\/td><td>At the end of this period, the registered supplier(s) willing to continue with registration is to apply afresh for renewal of registration<\/td><td> \u2014 <\/td><\/tr><tr><td>Provisional status<\/td><td>the registration would be initially treated as provisional, and it would be treated as confirmed only after the firm has satisfactorily executed one order of the relevant category and value from the Procuring Entity<\/td><td>Same rule, but \"one CONTRACT of the relevant category and value\"<\/td><\/tr><tr><td>Extension not a right<\/td><td>the extension of validity of registration is not a matter of right, and the Procuring Entity reserves the right not to extend such registration without assigning any reason<\/td><td>(same)<\/em><\/td><\/tr><tr><td>New entrants<\/td><td>New supplier(s) May also be considered for registration at any time, provided they fulfil all the required conditions<\/td><td> \u2014 <\/td><\/tr><\/tbody><\/table><\/div>\nm) Unique number and website display: All registered suppliers\/ enlisted contractors should be allocated a unique registration\/ enlistment number.<\/p>\nThe list of registered suppliers\/ enlisted contractors \u2014 indicating the names and addresses with details of the requirements and monetary value they will supply\/ execute, as well as the VALIDITY PERIOD, and so on, for which they are registered\/ enlisted \u2014 shall be exhibited on the websites of the Procuring Entity.<\/p>\nn) EMD exemption and its limits G<\/span>: Within the monetary limits so prescribed, and also for the category of registration, the registered firm May be exempted from depositing the earnest money deposit (EMD).<\/p>\nIn other categories and higher monetary limits, the supplier would be treated as any unregistered supplier and not be entitled to the privileges of a registered supplier.<\/p>\n<aside class=\"note\">However: The monetary limit or category so laid down does not debar a firm from getting orders more than the monetary limit or for other categories \u2014 provided the Procuring Entity is satisfied with the capacity and capability of the firm \u2014 but a requisite Security Deposit should be obtained, as is being done in the case of unregistered firms.<\/p><\/aside>\nO) monitoring performance and removal: The performance and conduct of every registered supplier\/ enlisted contractor are to be monitored\/ watched by the relevant Department.<\/p>\nThe Procuring Entity should also reserve the right to remove firms who do not perform satisfactorily \u2014 even during the validity of registration\/ enlistment (after giving due opportunity to the supplier\/ contractor to make a representation) \u2014 if they:<\/p>\n<ul class=\"lst\"><li>Fail to abide by the terms and conditions of the registration\/ enlistment, or<\/li><li>fail to execute contracts on time, or<\/li><li>supply substandard goods G<\/span> \/ do substandard work W<\/span>, or<\/li><li>make any false declaration to any Government agency, or<\/li><li>G<\/span> For on public interest considerations \/ W<\/span> For any ground which, in the opinion of the Government, is not in public interest.<\/li><\/ul>\nP) right of reassessment: The Procuring Entity shall retain its option to reassess firms already registered\/ enlisted at any later date, to satisfy itself with:<\/p>\n<ul class=\"lst\"><li>The current financial soundness\/ creditworthiness,<\/li><li>facilities available, and so on.<\/li><\/ul>\nThereafter, the Procuring Entity May decide to retain them as registered suppliers for the requirements and monetary limit that were earlier considered, or with necessary changes as deemed fit.<\/p>\nIn case of adverse reports from the team of Procuring Entity officers who reassess the firm, the Procuring Entity shall:<\/p>\n<ul class=\"lst\"><li>G<\/span>W<\/span> \u2014 DELETE such firm from the registered suppliers'\/ enlisted contractors' list<\/strong>;<\/li><li>C<\/span>NC<\/span> \u2014 delete or downgrade such firm from the registered suppliers'\/ service providers' list.<\/li><\/ul>\n<aside class=\"note\">Cross-reference note C<\/span>NC<\/span>:<\/strong>\"Further details about the procedure for registration are given in para 3.6 of the Manual for Procurement of Goods, 2024<\/strong>.\"<\/em> \u2014 i.e., the Consultancy and Non-Consultancy Manuals reproduce only paras (a), (f) and (i)\u2013(p) above, and cross-refer to the Goods Manual for the full procedure<\/strong>.<\/p><\/aside>\n<h2>3.10<\/span>Debarment<\/span><\/h2>\n(Rule 151 of GFR 2017)<\/em><\/p>\n<aside class=\"note\">Section titles: G<\/span>Debarment of Suppliers \u00b7 W<\/span> *Debarment of Contractors<\/strong> \u00b7 C<\/span><\/em>Debarment of Suppliers *(an apparent carry-over from the Goods Manual \u2014 the CS Manual's subject is consultants)* \u00b7 NC<\/span> *Debarment of Service Providers<\/strong><\/p><\/aside>\n<h3>3.10.1<\/span>GFR Provisions<\/span><\/h3>\nRegistration of suppliers\/ contractors\/ consultants\/ service providers AND their eligibility to participate in a Procuring Entity's procurements is subject to:<\/p>\n<ul class=\"lst\"><li>Compliance with the Code of Integrity for Public Procurement, and<\/li><li>satisfactory performance in contracts.<\/li><\/ul>\nRule 151 of GFR, 2017 states the following regarding 'debarment from bidding':<\/p>\n<aside class=\"note\">A) a bidder shall be debarred if he has been convicted of an offence:<\/p>\n<ul class=\"lst\"><li>i) under the prevention of Corruption Act, 1988; or<\/li><li>ii) the Indian Penal Code (IPC), 1860 \u2014 (G<\/span> footnote: this law has been replaced by the bharatiya Nyaya Sanhita (BNS), 2023 from 1st July 2024; W<\/span>, C<\/span>, NC<\/span> cite the BNS directly)<\/em> \u2014 or any other law for the time being in force, for causing any loss of life or property, or causing a threat to public health, as part of the execution of a Public Procurement contract.<\/li><\/ul>\nB) a bidder debarred under sub-section (a), or any successor of the bidder, shall not be eligible to participate in a procurement process of ANY<\/em> Procuring Entity for a period not exceeding three years, commencing from the date of debarment.<\/p>\n<aside class=\"note\">W<\/span> footnote: *\"<\/strong>Now two years is applicable as mentioned below in para 8.7.2-3-a).\"*<\/p><\/aside>\nc) a Procuring Entity May debar a bidder or any of its successors from participating in any procurement process undertaken by it for a period not exceeding two years, if it determines that the bidder has breached the Code of Integrity.<\/p>\n<aside class=\"note\">W<\/span>NC<\/span> add: *\"<\/strong>The Ministry\/ Department will maintain such list, which will also be displayed on their website.\"*<\/p><\/aside>\nd) the bidder shall not be debarred unless such bidder has been given a reasonable opportunity to represent against such debarment.<\/p><\/aside>\n<h3>3.10.2<\/span>Current Guidelines on Debarment<\/span><\/h3>\n1. Origin: PPD, DoE did consultations on the issue of Debarment with major procuring Ministries\/ Departments and issued the following 'debarment guidelines' in supersession of all earlier instructions on this subject (Notified vide OM No. F.1\/20\/2018-PPD issued by Department of Expenditure dated 02.11.2021)<\/em>.<\/p>\nPublic Procurement organisations who have existing guidelines for debarment (by any name) should revise their guideline in conformity with these guidelines issued by PPD, DoE.<\/p>\n2. Two types of debarment:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Type<\/th><th>Who issues the order<\/th><\/tr><\/thead><tbody><tr><td>I) debarment limited to a single Ministry<\/td><td>The Ministry itself can issue the appropriate Orders, thereby banning all its business dealing with the debarred firm<\/td><\/tr><tr><td>ii) Debarment EXTENDING beyond the jurisdiction of the Ministry \u2014 i.e., covering all Central ministries\/ departments<\/td><td>the requisite orders shall be issued by the Department of Expenditure (DoE), Ministry of Finance (MoF)<\/td><\/tr><\/tbody><\/table><\/div>\n3. Definitions:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Term<\/th><th>Definition<\/th><\/tr><\/thead><tbody><tr><td>\"Firm\" \/ \"bidder\"<\/td><td>have the same meaning for the purpose of these guidelines, which includes an individual or person, a company, a cooperative society, a hindu undivided family, and an association or body of persons \u2014 whether incorporated or not \u2014 engaged in trade or business<\/td><\/tr><tr><td>\"Allied firm\"<\/td><td>All concerns which come within the sphere of effective influence of the debarred firms shall be treated as allied firms. In determining this, the factors listed in its definition in the 'Procurement Glossary' section may be kept in view<\/td><\/tr><tr><td>\"Banning of a firm\", \"suspension\", \"black-listing\"<\/td><td>convey the same meaning as \"debarment\"<\/td><\/tr><\/tbody><\/table><\/div>\n4. Alignment obligation: All ministries\/ departments must align their existing debarment guidelines with these guidelines. Further, tender\/ bidding documents must also be suitably amended, if required.<\/p>\n<h3>3.10.3<\/span>Debarment by a SINGLE Ministry\/ Department<\/span><\/h3>\nOrders for Debarment of a firm(s) shall be passed by a Ministry\/ Department, keeping in view the following:<\/p>\na) Grounds and duration: A bidder (including its successors\/ allied firms) May be debarred from participating in any procurement process for a period not exceeding two years (along with such other actions as may be permissible under law) for the following reasons:<\/p>\n<ul class=\"lst\"><li>i) If it is determined that the bidder has breached the Code of Integrity as per Rule 175 of GFRs 2017.<\/li><li>ii) false declaration of local content by Class-I\/ Class-II local suppliers under the Public Procurement (Preference to Make in India) Order 2017, dated 16\/09\/2020 or later \u2014 shall also be treated as a breach of the Code of Integrity. A supplier who has been debarred by any procuring entity as per this sub-para:<\/li><li>The fact and duration of debarment for this reason by any procuring entity must be promptly brought to the notice of the member-convenor of the standing committee (joint Secretary, DPIIT, under the Make in India order) and the Department of Expenditure, through the concerned Ministry\/ Department or in some other manner;<\/li><li>The standing committee shall consolidate such cases, and a centralised list or decentralised list of such suppliers with the period of debarment must be maintained on a periodical basis and displayed on the website(s);<\/li><li>Such suppliers \u2014 though debarred by a single Ministry\/ Department \u2014 shall not be eligible for preference under the Make in India order for procurement by any other<\/em> Procuring Entity for the duration of the debarment. This shall be effective from the date of uploading such debarment to the website(s).<\/li><li>iii) for any other actions or omissions by the firm that, in the opinion of the Ministry\/ Department, warrants debarment.<\/li><\/ul>\n<aside class=\"note\">Footnote \u2014 the illustrative list of \"other actions or omissions\" (given in all four Manuals):<\/p>\n<ul class=\"lst\"><li>Supply of substandard material;<\/li><li>NON-SUPPLY of material;<\/li><li>Abandonment of works;<\/li><li>Substandard quality of works;<\/li><li>Failure to abide by \"bid securing declaration\";<\/li><li>Conviction under the Prevention of Corruption Act, 1988;<\/li><li>CONVICTION under any law for causing any loss of life or property, or causing a threat to public health, as part of executing a public procurement contract;<\/li><li>Employs a Government servant who has been dismissed or removed on account of corruption;<\/li><li>Employs a non-official convicted for an offence involving corruption or abetment of such an offence, in a position where he could corrupt Government servants; Or<\/li><li>employs a Government officer within one year of his retirement who has had business dealings with him in an official capacity before retirement.<\/li><\/ul><\/aside>\nB) jurisdiction of the order: The debarment order shall not be circulated to other ministries\/ departments. It will only be applicable to all the attached\/ subordinate offices, autonomous bodies, Central public sector undertakings (CPSEs), etc., of the Ministry\/ Department issuing the debarment order.<\/p>\n<aside class=\"note\">(Format of Debarment Order \u2014 G<\/span> Annexure 38 \u00b7 W<\/span> Annexure 16 \u00b7 C<\/span> Annexure 28 \u00b7 NC<\/span> Annexure 24.)<\/em><\/p><\/aside>\nc) Reasonable opportunity: The concerned Ministry\/ Department, before ISSUING the debarment order against a firm, must ensure that reasonable opportunity has been given to the concerned firm to represent against such debarment \u2014 including a personal hearing if requested by the firm.<\/p>\n<aside class=\"note\">(Format of Show-cause Notice for Debarment \u2014 G<\/span> Annexure 37 \u00b7 W<\/span> Annexure 15 \u00b7 C<\/span> Annexure 27 \u00b7 NC<\/span> Annexure 23.)<\/em><\/p><\/aside>\nd) Competent Authority: The Secretary of the Ministry\/ Department May nominate an officer at the rank of Joint Secretary\/ Additional Secretary as Competent Authority (ca) to debar the firms.<\/p>\ne) List maintenance: The Ministry\/ Department will maintain a list of such debarred firms, which will also be displayed on its website. Such a list on the website shall be automatically binding on the departments, subordinate and attached offices, autonomous bodies, and CPSEs under the Ministry \u2014 but in case of doubt, it can be confirmed by the issuing authority.<\/p>\nF) concurrent debarments: More than one Ministry\/ Department May concurrently debar the same firm.<\/p>\nG) not a vigilance function: Debarment is an executive function and should not be allocated to the vigilance Department.<\/p>\nH) timeline for the debarment process: The period of debarment starts from the date of issue of the debarment order; Therefore, the process of debarment should be conducted expeditiously.<\/p>\nConsidering the QUASI-JUDICIAL NATURE of such proceedings and the need to afford a fair hearing to the firm, the following timeline is SUGGESTED \u2014 which May be suitably modified considering the specifics of an organisation:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>Activity<\/th><th>Time<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>Noticing of delinquency of the firm by the Procuring Entity<\/td><td>zero-day<\/td><\/tr><tr><td>ii<\/td><td>Evaluation of evidence and proposal to ca for debarment of the firm<\/td><td>2 WEEKS<\/td><\/tr><tr><td>iii<\/td><td>Issue of show cause notice to the firm, calling for written and oral submission<\/td><td>1 WEEK<\/td><\/tr><tr><td>iv<\/td><td>time for submission, including reminders, etc.<\/td><td>3 WEEKS<\/td><\/tr><tr><td>v<\/td><td>evaluation of firm's submission and giving oral hearing to the firm<\/td><td>3 WEEKS<\/td><\/tr><tr><td>vi<\/td><td>Final ORDER, indicating an opportunity to the firm \u2014 2 weeks \u2014 to appeal to the Secretary of the Ministry\/ Department as APPELLATE AUTHORITY<\/td><td>2 WEEKS<\/td><\/tr><tr><td><\/td><td>total from zero-day, after which the debarment period starts<\/td><td>12 WEEKS<\/td><\/tr><tr><td>vii<\/td><td>receipt of appeal and disposal of the same by the appellate authority<\/td><td>4 WEEKS<\/td><\/tr><\/tbody><\/table><\/div>\n<h3>3.10.4<\/span>Debarment by CPSEs, Attached Offices\/ Autonomous Bodies, and GeM<\/span><\/h3>\nministries\/ departments, at their option, May also delegate powers to debar bidders to their CPSEs, attached offices\/ autonomous bodies, etc.<\/p>\nIn such cases, the broad principles for debarment in para 3.10.3(a) to (h) above are to be kept in mind.<\/p>\nDebarments by such bodies shall be applicable only to the procurements made by such bodies.<\/p>\nSimilarly, the Government E-marketplace (GeM) can also debar bidders for up to two years on its portal.<\/p>\n<h3>3.10.5<\/span>Debarment ACROSS ALL Ministries\/ Departments<\/span><\/h3>\nIn the following situations, the Ministry\/ Department May consider debarring the firm from taking part in any tendering procedure floated by ALL<\/em> The Central Government ministries\/ departments:<\/p>\na) Ground \u2014 conviction (Rule 151(i) of GFRs, 2017), for debarment up to three years:<\/p>\n<ul class=\"lst\"><li>i) under the prevention of Corruption Act, 1988; or<\/li><li>ii) the IPC, 1860\/ Bharatiya Nyaya Sanhita, 2023, or any other law for the time being in force, for causing any loss of life or property, or causing a threat to public health, as part of the execution of a Public Procurement contract.<\/li><\/ul>\nB) the reference to DoE: The Ministry\/ Department concerned should, after obtaining the approval of the Secretary concerned, forward to DoE a self-contained note setting out all the facts of the case and the justification for the proposed debarment, along with all the relevant papers and documents.<\/p>\nC) prior opportunity is mandatory: The Ministry\/ Department, before forwarding the proposal to DoE, must ensure that reasonable opportunity has been given to the concerned firm to represent against such debarment \u2014 including a personal hearing if requested by the firm.<\/p>\n<aside class=\"note\">If DoE realises that sufficient opportunity has not been given to the firm to represent against the debarment, such debarment requests received from ministries\/ departments shall be rejected.<\/p><\/aside>\nD) interim debarment: The firm shall remain debarred during the interim period till the final decision is taken by DoE \u2014 only in the Ministry\/ Department forwarding such proposal<\/em>.<\/p>\nFor this purpose, the proposing Ministry shall issue an interim order debarring the firm from taking part in tendering procedures floated by their Ministry\/ Department, following the procedure laid down in para 3.10.3 above.<\/p>\nSuch order inter alia must mention that the Government reserves its right to further debar the firm from taking part in any tendering procedure floated across all the Central Government ministries\/ departments, following due procedure.<\/p>\nE) doe's powers and timeline: DoE can also give additional opportunity, at their option, to the firm to represent against proposed debarment. DoE can also take suo-moto<\/em> Action to debar the firms in certain circumstances.<\/p>\nDoE shall complete the process of debarment within 12 weeks after receiving the proposal from the concerned Ministry\/ Department.<\/p>\nF) doe's order: DoE will issue the necessary orders for debarment for a period not exceeding three years for offences mentioned in Rule 151(i) of gfrs, 2017 \u2014 after satisfying itself that the proposed debarment across all the ministries\/ departments is in accordance with the said Rule. This scrutiny is intended to ensure uniformity of treatment in all cases.<\/p>\nG) the Central list: DoE will maintain a list of such debarred firms, which will be displayed on the gem-Central Public Procurement Portal (CPPP). This list on CPPP shall be applicable to all ministries\/ departments, attached and subordinate offices, CPSEs, and autonomous bodies \u2014 but in case of doubt, they May confirm it from the issuing authority.<\/p>\nH) absolute bar: No contract of any kind whatsoever shall be placed on the firm debarred by DoE \u2014 including its allied firms \u2014 during the period of debarment, by any Ministry\/ Department\/ attached\/ subordinate offices of the Government of India, including autonomous bodies, CPSEs, etc., after the issue of a debarment order.<\/p>\n<h3>3.10.6<\/span>Review and Revocation of Orders<\/span><\/h3>\nA) automatic revocation on expiry: An order for debarment passed shall be deemed to have been automatically revoked on the expiry of the period of debarment specified therein \u2014 and it will not be necessary to issue a specific formal order of revocation.<\/p>\nb) Early review\/ revocation: The AUTHORISED ENTITY (DoE, Ministry\/ Department, or CPSEs, Attached Offices\/ Autonomous Bodies, GeM, etc.) that ISSUED the order of debarment can review or revoke the debarment order before the period of debarment is over:<\/p>\n<ul class=\"lst\"><li>Suo-moto (based on new facts that come to light), or<\/li><li>on an appeal by the debarred bidder.<\/li><\/ul>\nAfter a review, an order for modification of the period of debarment or revocation of debarment \u2014 if there is adequate justification for the same \u2014 can be issued.<\/p>\nApproval levels:<\/p>\n<ul class=\"lst\"><li>Ordinarily, such modification\/ revocation of the Order should be done with the approval of the Secretary concerned of doE or the Ministry\/ Department that issued such orders.<\/li><li>In case of debarments done by CPSEs, attached offices\/ autonomous bodies, GeM, etc., such modification\/ revocation of the debarment orders should be done only with the approval of at least a board-level officer.<\/li><\/ul>\n<h3>3.10.7<\/span>Other Provisions (Common to BOTH Types of Debarment)<\/span><\/h3>\na) Contents of the order: The debarment order shall MENTION:<\/p>\n<ul class=\"lst\"><li>The reason(s) in brief that led to the debarment of the firm,<\/li><li>The jurisdictional extent to which the order shall be applicable, and<\/li><li>The validity period of debarment.<\/li><\/ul>\nB) the bar on contracts, and the two cut-off dates: No contract of any kind whatsoever shall be placed with a debarred firm \u2014 including its allied firms \u2014 after the issue of a debarment order by the entities in the jurisdiction mentioned in the order.<\/p>\nBids from only such firms shall be considered for placement of contract which are:<\/p>\n<ul class=\"lst\"><li>Neither debarred on the date of opening of tender<\/strong> \u2014 opening of the first bid, normally called the technical bid, in case of two-packet\/ two-stage tendering<\/em> \u2014 <\/li><li>nor debarred on the date of contract<\/strong> \u2014 i.e., date of issue of the Letter of Acceptance<\/em>.<\/li><\/ul>\nEven in the cases of risk purchase, no contract should be placed on such debarred firms.<\/p>\nC) treatment of a debarred firm's bid: If any debarred firm submits the bid, it will be ignored. In case such firm is lowest (L-1), the next lowest firm shall be considered as L-1. Bid Security submitted by such debarred firms shall be returned to them.<\/p>\nd) No retrospective effect on existing contracts: Contracts concluded before the issue of the debarment order shall not be affected by the debarment orders.<\/p>\nE) automatic extension to allied firms and JV partners: The debarment shall be automatically extended to all its allied firms. In case a joint venture\/ consortium is debarred, all partners will also stand debarred for the period specified in the debarment order. The names of partners should be clearly specified in the \"debarment order\".<\/p>\nF) no impact on other legal rights: Debarment in any manner does not impact any other contractual or other legal rights of the procuring entities.<\/p>\ng) Commencement \u2014 two different dates:<\/p>\n<ul class=\"lst\"><li>For the issuing entity: The period of debarment shall start from the date of issue of the debarment order.<\/li><li>For other procuring entities: The debarment takes effect prospectively from the date of uploading on the website(s), in such a manner that ongoing procurements are not disrupted.<\/li><\/ul>\nH) minimum period: Ordinarily, the period of debarment should not be less than six months.<\/p>\ni) GeM Suspension under the Incidence Management Policy [W + C + NC \u2014 not in G]:<\/p>\nThe GeM portal also has a provision for suspension<\/em> \u2014 debarring vendors'\/ service providers' participation in procurements of ALL<\/em> The buyers \u2014 under its incidence management policy.<\/p>\n<aside class=\"note\">(Reference: https:\/\/assets-bg.gem.gov.in\/resources\/pdf\/incident_management_policy_v12.1.pdf)<\/em><\/p><\/aside>\nthe reasons and periods for suspension are different than in the provisions mentioned above.<\/p>\nHowever, if a Procuring Entity feels that the period of suspension by GeM is not adequate, it May also debar the firm as per the procedure mentioned in this section for a more appropriate period \u2014 but such debarment shall be applicable ONLY<\/em> To procurements by that Procuring Entity.<\/p>\nj) Undertakings from bidders on debarment status [G \u2014 not in W\/C\/NC]:<\/p>\nIt is noticed that many procuring entities take undertakings from the bidders with respect to their debarment status\/ period. Such undertakings, if taken, must be in conformity with the debarment guidelines, as above, to avoid any possible confusion.<\/p>\nk) Alignment obligation W<\/span>C<\/span>NC<\/span>: All ministries\/ departments must align their existing debarment guidelines in conformity with these guidelines. Further, bidding documents must also be suitably amended, if required.<\/p>\n<h3>3.10.8<\/span>Safeguarding the Procuring Entity's Interests during Debarment<\/span><\/h3>\n<aside class=\"note\">This is the closing caution of the debarment section in all four manuals.<\/p><\/aside>\nSuppliers\/ contractors\/ consultants\/ service providers are important assets for the procuring entities, and punishing delinquent suppliers should be the last resort<\/em>.<\/p>\n<ul class=\"lst\"><li>It takes a lot of time and effort to develop, register and mature a new supplier.<\/li><li>In case of a shortage of suppliers in a particular group of materials\/ equipment\/ services, such punishment May also hurt the interest of the Procuring Entity<\/em>.<\/li><\/ul>\nTherefore:<\/p>\n<ol class=\"lst\"><li>The Procuring Entity May always seek the views of the concerned Department regarding the repercussions of such punitive action on the continuity of procurements.<\/li><li>The Procuring Entity May give due weightage to the past performance of the supplier\/ consultant\/ service provider.<\/li><li>In case of a shortage of suppliers and in cases of less serious misdemeanours, the Procuring Entity May:<\/li><li>Pragmatically analyse the circumstances,<\/li><li>reform the supplier, and<\/li><li>get a written commitment from the supplier that his performance will improve.<\/li><li>If this fails, efforts should be made to see if:<\/li><li>[G, c, nc] \u2014 a shorter period of debarment can serve the purpose;<\/li><li>W<\/span> \u2014 A temporary<\/em> Debarment can serve the purpose.<\/li><\/ol>\n<h2>3.11<\/span>Enlistment of Indian Agents<\/span><\/h2>\n(Rule 152 of GFR 2017)<\/em><\/p>\nministries\/ departments, if they so require, May enlist Indian agents who desire to quote directly on behalf of their foreign principals.<\/p>\n<aside class=\"note\">Footnote in all four Manuals:<\/em> Rule 152 of GFR, 2017 amended vide OM No. F.26\/2\/2016-PPD issued by Department of Expenditure dated 25.07.2017.<\/p>\n(The Goods and Consultancy Manuals print this footnote as \"Rule 52\" \u2014 an evident typographical error for Rule 152<\/strong>, which is correctly printed in the Works and Non-Consultancy Manuals.)<\/em><\/p><\/aside>\nDetailed guidelines on Indian Agents of foreign suppliers are contained in Annex-1 to the Integrity Pact Annexure of each Manual \u2014 \"Guidelines for Indian Agents of Foreign Suppliers\"<\/em>.<\/p>\n<h1>Appendix to Chapter 3 \u2014 Points of Difference Between the Four Manuals<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Chapter number<\/td><td>G\/C\/NC: Chapter 3<\/strong> (before Bidding Design) \u00b7 w: Chapter 8<\/strong> (after Contract Execution)<\/td><\/tr><tr><td>2<\/td><td>Chapter title<\/td><td>G:<\/strong>Supplier Relationship Management<\/em> \u00b7 W:<\/strong>Registration\/ Enlistment of Contractors and Governance Issues<\/em> \u00b7 C\/NC:<\/strong>Participation of Bidders and Governance Issues<\/em><\/td><\/tr><tr><td>3<\/td><td>Relationship Management section<\/td><td>G (3.1) + W (8.1) only \u2014 absent in C\/NC<\/td><\/tr><tr><td>4<\/td><td>Eligibility Criteria for Participation<\/td><td>C (3.1) + NC (3.1) only \u2014 absent in G\/W<\/td><\/tr><tr><td>5<\/td><td>Legal Status of Bidders<\/strong> (individuals, firms, NGOs, specialised agencies, sub-contracting, consortium\/ JV)<\/td><td>C (3.2) + NC (3.2) only<\/td><\/tr><tr><td>6<\/td><td>JV\/C discouraged in QCBS\/ QOP procurement<\/td><td>NC only<\/td><\/tr><tr><td>7<\/td><td>Demerged entities \u2014 five-year use of parent credentials (DoE OM F.8\/78\/2023-PPD dated 12.10.2023)<\/td><td>NC only<\/td><\/tr><tr><td>8<\/td><td>Rule 177 GFR bar on direct engagement of retired Government servants as consultants<\/td><td>C only<\/strong> (NC states the substance without citing Rule 177)<\/td><\/tr><tr><td>9<\/td><td>Canons of Financial Propriety re-stated in this chapter<\/td><td>C (3.3.1) + NC (3.3.1)<\/strong> \u2014 in G\/W<\/strong> it is at para 1.9<\/td><\/tr><tr><td>10<\/td><td>RTI and Proactive Disclosures re-stated in this chapter<\/td><td>C (3.3.2) + NC (3.3.2) \u2014 in G it is at para 1.12; absent from W entirely<\/td><\/tr><tr><td>11<\/td><td>CIPP broken into four numbered sub-sections<\/strong> (Introduction; the Code; Proactive Disclosures; Punitive Provisions)<\/td><td>W only<\/strong> (8.2.1\u20138.2.4)<\/td><\/tr><tr><td>12<\/td><td>CIPP declaration signed at \"Need Assessment\" vs \"Preparation of Estimates\"<\/td><td>G\/C\/NC: Need Assessment \u00b7 W: Preparation of Estimates<\/td><\/tr><tr><td>13<\/td><td>CIPP declaration expressly extended to SUB-CONTRACTORS engaged by the bidder<\/td><td>W only<\/td><\/tr><tr><td>14<\/td><td>Professionalism and Unfair Competitive Advantage; the three consultancy disqualification rules<\/td><td>C only<\/td><\/tr><tr><td>15<\/td><td>Punitive debarment period under CIPP<\/td><td>G\/w\/nc: Not less than six months (a floor) \u00b7 c: Not exceeding two years (a ceiling)<\/td><\/tr><tr><td>16<\/td><td>CCI reference filed by whom<\/td><td>G\/W\/NC: Joint Secretary level officer \u00b7 C: the Competent Authority<\/td><\/tr><tr><td>17<\/td><td>\"Recovery of payments including advance payments\"<\/td><td>G, W, NC \u2014 C omits \"including advance payments\"<\/td><\/tr><tr><td>18<\/td><td>Integrity Pact \u2014 tri-partite arrangement with sub-contractors<\/td><td>C only<\/td><\/tr><tr><td>19<\/td><td>IP format may be updated to incorporate latest procurement instructions<\/td><td>G + W<\/strong> \u00b7 C\/NC<\/strong> instead say Ministries and CPSEs<\/strong> may use the format with suitable changes<\/td><\/tr><tr><td>20<\/td><td>Annex-2 to Integrity Pact<\/td><td>G:<\/strong>Extract of Standard Operating Procedure<\/em> \u00b7 W\/C\/NC:<\/strong>Appointment and Role of IEMs<\/em><\/td><\/tr><tr><td>21<\/td><td>Grievance redressal \u2014 \"ambiguity in contract terms\" placed as a separate paragraph<\/td><td>W<\/strong> (para 4) \u00b7 G\/C\/NC<\/strong> place it as item (ix) within the \"not subject to review\" list<\/td><\/tr><tr><td>22<\/td><td>Rate Contract holders named in the \"private purchases\" risk row<\/td><td>G only<\/td><\/tr><tr><td>23<\/td><td>Registration\/ Empanelment\/ Pre-qualification \u2014 three concepts distinguished<\/td><td>G, C, NC<\/td><\/tr><tr><td>24<\/td><td>Registration vs Enlistment \u2014 two concepts distinguished<\/td><td>W only<\/td><\/tr><tr><td>25<\/td><td>Mandatory pre-bid registration on e-procurement portal\/ CPPP with five data fields (Name, Address, PAN, DSC, GSTIN)<\/td><td>W only<\/td><\/tr><tr><td>26<\/td><td>CPWD\/ MES enlistment practice; MoR and MoRTH cited; Rs 20 crore ceiling on empanelled-only tendering<\/td><td>W only<\/td><\/tr><tr><td>27<\/td><td>Sharing of registered\/ enlisted\/ debarred contractor data through CPPP; unique identification by PAN by NIC\/ MeitY<\/td><td>W only<\/td><\/tr><tr><td>28<\/td><td>Five categories for registration of suppliers of goods (manufacturers, agents, foreign manufacturers, stockists, importers)<\/td><td>G only<\/td><\/tr><tr><td>29<\/td><td>Categories of works for enlistment (Civil, Electrical, Horticulture, Nursery)<\/td><td>W only<\/td><\/tr><tr><td>30<\/td><td>In-house testing facility prerequisite; MSE relaxation; ISO 9001-2000 treatment<\/td><td>G only<\/td><\/tr><tr><td>31<\/td><td>Grade A\/B\/C monetary limits (Rs 25 lakh \/ Rs 5\u201325 lakh \/ Rs 1\u20135 lakh)<\/td><td>G only<\/td><\/tr><tr><td>32<\/td><td>CPWD Class-I(Super) to Class-V tendering limits (Rs 650 crore down to Rs 40 lakh)<\/td><td>W only<\/td><\/tr><tr><td>33<\/td><td>Sole selling agent registration conditions; above-Rs-5-lakh manufacturers-or-authorised-agents rule<\/td><td>G only<\/td><\/tr><tr><td>34<\/td><td>Partly outsourced arrangements \u2014 registration void retrospectively<\/td><td>G only<\/td><\/tr><tr><td>35<\/td><td>Re-verification request permitted only after six MONTHS<\/td><td>C + NC<\/strong> state it expressly \u00b7 W<\/strong> says \"say, within six months\" \u00b7 G<\/strong> silent<\/td><\/tr><tr><td>36<\/td><td>Validity of registration<\/td><td>G: one to three years<\/strong>, apply afresh for renewal \u00b7 W: say three years<\/strong>, extension on application based on satisfactory performance<\/td><\/tr><tr><td>37<\/td><td>EMD exemption within monetary limit; treated as unregistered beyond it; security deposit instead<\/td><td>G only<\/td><\/tr><tr><td>38<\/td><td>Adverse reassessment consequence<\/td><td>G\/W: DELETE from list \u00b7 C\/NC: DELETE or downgrade<\/em><\/td><\/tr><tr><td>39<\/td><td>Full registration procedure reproduced<\/td><td>G (16 sub-paras) + W (17 paras) \u00b7 C\/NC reproduce an abridged version and cross-refer to para 3.6 of the Goods Manual<\/td><\/tr><tr><td>40<\/td><td>Debarment section title<\/td><td>G: Suppliers \u00b7 W: Contractors \u00b7 C: \"Suppliers\" (apparent template carry-over) \u00b7 NC: Service Providers<\/td><\/tr><tr><td>41<\/td><td>Rule 151(a)(ii) statute cited<\/td><td>G: IPC 1860 (with BNS footnote) \u00b7 W\/C\/NC: Bharatiya Nyaya Sanhita directly<\/td><\/tr><tr><td>42<\/td><td>\"Ministry\/ Department will maintain such list \u2026 displayed on their website\" added to Rule 151(c)<\/td><td>W + NC<\/td><\/tr><tr><td>43<\/td><td>Footnote that \"now two years is applicable\" against the three-year period in Rule 151(b)<\/td><td>W only<\/td><\/tr><tr><td>44<\/td><td>GeM Suspension under Incidence Management Policy<\/td><td>W + C + NC \u2014 absent from G<\/td><\/tr><tr><td>45<\/td><td>Undertakings from bidders regarding debarment status must conform to the Guidelines<\/td><td>G only<\/td><\/tr><tr><td>46<\/td><td>Closing safeguard \u2014 remedy if reform fails<\/td><td>G\/C\/NC: a SHORTER PERIOD of debarment \u00b7 W: a TEMPORARY debarment<\/td><\/tr><tr><td>47<\/td><td>Rule number cited for Indian Agents footnote<\/td><td>G + C print \"Rule 52\" (evident typo) \u00b7 W + NC correctly print \"Rule 152\"<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 3<\/p>\n<aside class=\"note\">Next:<\/strong> Chapter 4 \u2014 Bidding Design: Modes of Procurement, Types of Contracts, Systems of Selection, Tendering Systems and Channels of Procurement<\/em> (merging Goods Ch. 4<\/strong>, Works Ch. 3<\/strong>, Consultancy Ch. 4<\/strong> and Non-Consultancy Ch. 4<\/strong>).<\/p>\nAnother numbering trap ahead:<\/strong> this block is Chapter 4<\/strong> in Goods, Consultancy and Non-Consultancy, but Chapter 3<\/strong> in Works.<\/p><\/aside><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch4\">Chapter 4 \u2014 Part a<\/p><h1>Bidding Design<\/h1><\/header>Part I<\/span>Contracts, Selection Systems and Channels<\/em><\/p>\n<h3>Agency for Procurement \u00b7 Admeasurement \u00b7 Types of Contracts \u00b7 Systems of Selection \u00b7 Tendering Systems \u00b7 Channels of Procurement<\/span><\/h3>\nMerging: Goods Ch. 4<\/strong> (Modes of Procurement and Tendering Systems) \u00b7 Works Ch. 3<\/strong> (Bidding Design for Works) \u00b7 Consultancy Ch. 4<\/strong> (Bidding Design for Consultancy Services) \u00b7 Non-Consultancy Ch. 4<\/strong> (Bidding Design for Non-Consultancy Services)<\/em><\/p><h2>Structural Warning for Students<\/span><\/h2>\nThis block is CHAPTER 4 in Goods, Consultancy and Non-Consultancy \u2014 but CHAPTER 3 in Works.<\/p>\n(The reverse of the trap in the previous chapter, where governance was Ch. 3 in three Manuals but Ch. 8 in Works.)<\/em><\/p>\nThis is also the chapter of greatest substantive divergence between the four Manuals. Three whole apparatus exist in only one Manual each:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Apparatus<\/th><th>Exists only in<\/th><\/tr><\/thead><tbody><tr><td>Agency for Procurement (pWO\/ PSU\/ works Committee)<\/td><td>Works<\/td><\/tr><tr><td>Admeasurement of Services (input vs output)<\/td><td>Non-Consultancy<\/td><\/tr><tr><td>Rate Contract \/ Framework Agreement, Approved Vendor List, Proprietary Article Certificate, Direct Procurement<\/td><td>Goods<\/strong>(covered in Part B)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nAnd \"Types of Contracts\" does not exist at all in the Goods Manual<\/strong> \u2014 goods procurement has no contract-type taxonomy, because it uses Rate Contracts and supply orders instead.<\/p>\nBecause of the volume, this chapter is issued in two parts<\/strong>:<\/p>\n<ul class=\"lst\"><li>PART A (this document)<\/strong> \u2014 Agency, Admeasurement, Types of Contracts, Systems of Selection, Tendering Systems, Channels of Procurement.<\/li><li>PART B<\/strong> \u2014 Modes of Procurement (OTE, GTE, rc\/fa, eRA, PQB, AVL, LTE, SLTE, PAC, STE, direct Procurement, Quotations, Stalled Contracts).<\/li><\/ul>\n<h2>Concordance for Chapter 4 \u2014 Part A<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>Goods<\/th><th>Works<\/th><th>CS<\/th><th>NCS<\/th><\/tr><\/thead><tbody><tr><td>4.1<\/td><td>Agency for Procurement<\/td><td> \u2014 <\/td><td>3.1<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>4.2<\/td><td>Admeasurement of Services<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>4.1<\/td><\/tr><tr><td>4.3<\/td><td>Types of Contracts<\/td><td> \u2014 (none)<\/td><td>3.2<\/td><td>4.1<\/td><td>4.2<\/td><\/tr><tr><td>4.4<\/td><td>Systems of Selection<\/td><td> \u2014 (none)<\/td><td>3.3<\/td><td>4.2<\/td><td>4.3<\/td><\/tr><tr><td>4.5<\/td><td>Tendering Systems<\/td><td>4.14\u20134.16<\/td><td>3.4<\/td><td>4.4<\/td><td>4.5<\/td><\/tr><tr><td>4.6<\/td><td>Channels of Procurement<\/td><td>4.17<\/td><td>3.5<\/td><td>4.5<\/td><td>4.6<\/td><\/tr><tr><td>Part B<\/em><\/td><td>Modes of Procurement<\/td><td>4.1\u20134.13<\/td><td>3.6\u20133.14<\/td><td>4.3<\/td><td>4.4<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.1<\/span>Agency for Procurement [W ONLY]<\/span><\/h2>\n1. The three routes (Rule 133 of GFR, 2017)<\/em>: Rule 133 permits Ministries\/ Departments at its discretion to assign execution of their original and repair works as follows: a) directly by the Ministry\/ Department; b) public works organisations (PWO); c) public sector undertaking (PSU)\/ Organisations set up to execute Works.<\/p>\n2. Directly by the Ministry\/ Department: A Ministry or Department at its discretion May directly execute repair works estimated to cost up to rupees sixty (60) LAKH, after following the due procedure 'laid down for Execution of Works' (Rules 139, 159 and 160 of GFR 2017)<\/em>.<\/p>\n<h3>4.1.1<\/span>Public Works Organisations (PWO)<\/span><\/h3>\nA Ministry or Department May, at its discretion, assign:<\/p>\n<ul class=\"lst\"><li>REPAIR WORKS estimated to cost above Rupees SIXTY (60) LAKH, and<\/li><li>original\/ minor works of any value<\/li><\/ul>\nto any public Works Organisation (PWO) such as:<\/p>\n<aside class=\"note\">Central Public Works Department (CPWD) \u00b7 State Public Works Department \u00b7 other Central Government organisations authorised to carry out civil or electrical works such as Military Engineering Service (MES), Border Roads Organisation (BRO), etc. \u00b7 or the Ministry\/ Department's construction wings of the Ministries of Railways, Defence, Environment & Forests, Information & Broadcasting, and the Departments of Posts and Space, etc.<\/p><\/aside>\n<h3>4.1.2<\/span>Public Works PSU\/ Organisations<\/span><\/h3>\nAs an alternative, a Ministry or Department May assign repair works estimated to cost above rupees sixty (60) lakh and original works of any value to: A) any public sector undertaking (PSU) set up by the Central or State Government to carry out civil or electrical works; Or b) to any other Central\/ State Government organisation\/ PSU which May be notified by the Ministry of housing and urban affairs (MoHUA) for such purpose, after evaluating their financial strength and technical competence.<\/p>\n<h3>4.1.3<\/span>Procedure for Assigning Work to PWO or PSU\/ Organisations<\/span><\/h3>\n1. Competition among PSUs \u2014 and the PMC characterisation: For the assignment of work to PSUs, the Ministry\/ Department shall ensure competition among all such eligible PSUs\/ ORGANISATIONS.<\/p>\nThis competition shall be essentially on the lump sum service charges to be claimed for execution of work.<\/p>\nThe award of work to a PSU should be taken as project management consultancy (pmc), and the concerned PSU shall be treated as a consultancy firm. Relevant methods (QCBS, LCS etc.) for procurement of consultancy will be applicable.<\/p>\n<aside class=\"note\">For better understanding of the selection methodology of consultant(s), Rule 192 to Rule 194 of GFR 2017<\/strong> and the Manual for Procurement of Consultancy Services, 2025<\/strong> may be referred.<\/em><\/p><\/aside>\n2. Nomination basis: In exceptional cases, for assignment of work on nomination basis to a PSU, the conditions for nomination basis would apply. The work under these circumstances shall also be assigned only on a lump sum basis.<\/p>\n3. Sanctions and execution<\/strong>(Rule 140, GFR 2017)<\/em>: For original works and repair works entrusted under paras 4.1.1 and 4.1.2 above, the administrative approval and expenditure sanction shall be accorded and funds allotted by the concerned authority<\/strong> in accordance with the sanctioning sequence of Chapter 2.<\/p>\nThe PWO or the PSU or any organisation allotted work shall then execute the work entrusted to it in accordance with the Rules and procedures prescribed in their own organisation.<\/p>\n4. Memorandum of Understanding (MoU): An MoU May be drawn with the PWO or the PSU for proper execution of work.<\/p>\nThe MoU should spell out:<\/p>\n<ul class=\"lst\"><li>the OBLIGATIONS on the part of the PWO or PSU regarding execution of works as per proper specifications, and<\/li><li>for maintaining proper quality and speed of execution of works;<\/li><li>Different stages at which funds shall be released to the PWO should also be clearly spelt out.<\/li><\/ul>\nSuch MoU would normally be for a specific standalone work, but could also be for a project consisting of a collection of related works.<\/p>\n5. Long-term framework MoU: In case of MoU with PWOs, it could also be a long-term framework moU.<\/p>\n<aside class=\"note\">A Sample MoU delineating the complete procedure of assignment of work to PWO\/ PSUs and its monitoring is at Annexure 10 of the Works Manual. The Procuring entity may CHANGE the MoU format to suit their requirement, and if felt necessary May also get the moU document vetted from the Ministry of law or its own legal cell.<\/p><\/aside>\n6. The Works Committee: For execution of any work under Paras 4.1.1 and 4.1.2 above, the Ministry\/ Department shall constitute a \"Works Committee\" \u2014 whether on an ad hoc or standing basis \u2014 comprising:<\/p>\n<ul class=\"lst\"><li>representatives of the ADMINISTRATIVE WING,<\/li><li>representatives of the FINANCE WING, and<\/li><li>an officer possessing technical skills and experience of framing estimates and execution of works.<\/li><\/ul>\nIf need be, members May be co-opted from: the User Department; CPWD\/ PWOs\/ PSUs; or any technically sound Government agency such as a relevant National Institute of Technology (NIT)\/ Indian Institute of Technology (IIT) or a relevant National Research Institute, etc.<\/p>\nThe Works Committee shall:<\/p>\n<ul class=\"lst\"><li>Ensure observance of due process in the planning and execution of works;<\/li><li>Check the reasonability of the estimates and other technical details; And<\/li><li>monitor the execution of the works.<\/li><\/ul>\n<h2>4.2<\/span>Admeasurement of Services [NC ONLY]<\/span><\/h2>\nNon-consultancy services are bid and contracted on the total price (UNIT RATE \u00d7 quantum) of the delivered services (of requisite performance standards) \u2014 much like procurement of goods and works.<\/p>\nThe QUANTUM of services can be ascertained by EITHER:<\/p>\n<ul class=\"lst\"><li>measuring the INPUTS DEPLOYED by the service provider \u2192 INPUT ADMEASUREMENT; or<\/li><li>measuring the output of services delivered \u2192 output admeasurement.<\/li><\/ul>\n<h3>4.2.1<\/span>Input Admeasurement<\/span><\/h3>\n1. The quantum of services can be ascertained by measurement of the inputs \u2014 personnel, equipment, materials, and miscellaneous inputs \u2014 deployed during a period (say per month) by the service provider.<\/p>\n2. What the contract specifies:<\/p>\n<ul class=\"lst\"><li>the UNIT RATE, and<\/li><li>the ESTIMATED QUANTUM (per period \u2014 say per day\/ month) of various inputs<\/strong> required to be deployed to deliver the required quantum of services of requisite performance standards.<\/li><li>The contract would also specify the SERVICE CHARGES (including profits, overheads, etc.) and taxes over and above such input unit rates.<\/li><\/ul>\nFinancial evaluation is based on the total price of the indicated quantum of various inputs at the contracted unit rate, plus service charges and taxes.<\/p>\n3. The monitoring burden: Input admeasurement requires more vigilant and constant monitoring of inputs deployed. The Procuring Entity must also monitor the performance standards, methodology employed and productivity of inputs to ensure Value for Money.<\/p>\n4. Where used: Input admeasurement is frequently used in time-based and indefinite delivery types of contracts for Services like:<\/p>\n<aside class=\"note\">upkeep and maintenance of office\/ buildings\/ estates (other than Civil & Electrical Works, etc.) \u00b7 Security Services \u00b7 Horticultural Services \u00b7 Janitor\/ Cooking\/ Catering\/ Management Services for Hostels and Guest Houses \u00b7 Cleaning\/ Housekeeping Services \u00b7 Errand\/ Messenger Services, etc.<\/p><\/aside>\n5. Input Admeasured Contracts \u2014 Risks and Mitigations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>a) The quality and scope of the Output\/ deliverables is not linked to the payment. There may be a tendency for the service provider to IGNORE the quality and scope of the services. Disputes may arise due to different possible interpretations of quality and scope of contract.<\/td><td>The contract should include provision for evaluation of quality, methodology and scope of deliverables, and a certificate for its acceptability may be recorded. Payments should be released only against such certificates. Therefore, the service Level Agreement (SLA) becomes very important in such contracts.<\/td><\/tr><tr><td>b) productivity of inputs deployed is not linked to the payment. There may be a tendency for the service provider to use paid staff in a dilatory and un-productive manner. This may lead to time and cost over-runs.<\/td><td>Such contracts need to be closely monitored and administered by the Procuring Entity to ensure that the progress of the contract is commensurate with the time spent, and that the resources for which payment is claimed have actually efficiently and productively been deployed on the contract during the period. It may be worthwhile to lay down productivity linkage between the quantum of the output of services and input deployed in a period (say, cleaning of a quantum of area per day per cleaner deployed) as part of Performance Standards. A system of MONTHLY REPORTING of payouts and the quantum of work achieved by the service provider to the CA should be instituted to enable supervision. Such contracts should include an upper limit of total payments to be made to the service providers, to safeguard against excessive prolonging of time and payments. After this limit is reached \u2014 or the period of completion is exceeded \u2014 the ca should review the justification for the extension of the contract.<\/td><\/tr><\/tbody><\/table><\/div>\n<h3>4.2.2<\/span>Output-Admeasurement<\/span><\/h3>\n1. Alternatively, the quantum of services can be ascertained by measurement of the quantum of outputs delivered of the required performance standards \u2014 numbers, length, area, volume, weight, value, etc., or a combination thereof \u2014 say, the area of office cleaned, or tonne-kilometre of transportation, or value of goods inspected.<\/p>\n<aside class=\"note\">Since contracts based on Output admeasurement specify the unit rate of service output, they are also referred to as unit-rate contracts.<\/p><\/aside>\n2. Financial evaluation: The contract specifies a unit rate of the output of services, and the financial evaluation is done based on the total price of the indicated quantum of service at the contracted unit rate plus taxes.<\/p>\n<aside class=\"note\">In actual practice, this could be more complex \u2014 as in taxi hiring for 8 hours with a maximum of 250 km included in the price, but every additional km\/ hour May be charged extra. There May also be additional charges for night duty, etc.<\/p><\/aside>\n3. Why it is preferred: Output admeasurement contracts are simpler to administer, since the Procuring Entity will only ascertain performance standards and the quantum. It need not monitor the inputs deployed and the methodology employed. Therefore, wherever feasible, output admeasurement should be the preferred choice.<\/p>\n4. However, in many services, it May be part of the quality assurance plan and SLA to ensure that a specified quantum of inputs is deployed for the services \u2014 although payments are still based on output admeasurement.<\/p>\n5. Where used: Depending on the situation, output admeasurement may be suitable mainly for lump-sum and percentage-based types of contracts, and in special circumstances for time-based and indefinite delivery types.<\/p>\nSuitable for Services like:<\/p>\n<aside class=\"note\">transport services \u00b7 logistics \u00b7 clearing and forwarding \u00b7 courier services \u00b7 drilling \u00b7 aerial photography \u00b7 satellite imagery \u00b7 mapping, and similar operations.<\/p><\/aside>\n6. Output Admeasurement Contracts \u2014 Risks and Mitigations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>a) insufficient deployment of resources: Service Provider may not deploy sufficient resources, which may lead to POOR QUALITY and TIME OVER-RUN.<\/td><td>Stipulate in the tender document that the quantum of input deployments (personnel, equipment, materials, etc.) shall also be quoted \u2014 but shall be used only to monitor performance standards.<\/td><\/tr><tr><td>b) The QUALITY of the Output\/ deliverables is not linked to the payment.<\/strong> There may be a tendency for the service provider to Cut corners on quality of the output\/ deliverables by saving on resources employed.<\/strong> Disputes may arise due to different possible interpretations of quality and scope of Output\/ deliverables.<\/td><td>Such contracts should be used mainly for contracts in which the quality and scope of the required output are clearly defined and are measurable. The contract should include provision for evaluation of quality and scope of deliverables, and a certificate for its acceptability may be recorded. Payment should be made only against certificate of acceptance of deliverables. It's important to include a service Level Agreement in such contracts.<\/td><\/tr><tr><td>c) time and cost over-run: As time is not linked to the payment, there may be a tendency for the service provider to save on deployment of resources, which may result in time-over-run.<\/td><td>While the payments are not linked to time, the contract should be monitored per month to ensure that the output per month is in line with planned and estimated time-line. This type of contract should include an upper limit of total payments to safeguard against excessive prolonging of time and payments. After this limit is reached, or the period of completion is exceeded, the CA should review the justification for the extension of the contract.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.3<\/span>Types of Contracts<\/span><\/h2>\n<aside class=\"note\">The goods Manual has no \"types of contracts\" SECTION. Goods procurement instead uses Rate Contract\/ Framework Agreement, Approved Vendor List and Proprietary Article Certificate \u2014 treated as modes of procurement<\/em> in Part B.<\/p><\/aside>\n<h3 class=\"src-multi\">4.3.1<\/span>The Common Opening Proposition<\/span>W<\/span>C<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\">\n1. There are various alternative bases for linking payments to the performance of a contract (called types of contracts) \u2014 each having different risks and mitigation measures.<\/p>\n<ul class=\"lst\"><li>Bids are called and evaluated based on the type of contract.<\/li><li>C<\/span>NC<\/span> add:<\/strong>The BOQ of the financial bid is designed specifically for each type of contract.<\/li><li>The choice of the type of contract should be based on value-for-money (VfM), with due regard to the nature of work\/ requirement.<\/li><li>Adoption of an inappropriate type of contract could lead to a situation of lack of competition, contractual disputes and non-performance\/ failure of the contract.<\/li><li>W<\/span> adds:<\/strong>Standard forms for all the types of contracts mentioned below are available with public works organisations like CPWD, and the same May be used for calling the tenders.<\/li><\/ul>\n<\/div><h3>4.3.2<\/span>The Three Taxonomies Compared<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>W<\/span> \u2014 WORKS (7 types)<\/th><th>C<\/span> \u2014 CONSULTANCY (5 types)<\/th><th>NC<\/span> \u2014 NON-CONSULTANCY (4 types)<\/th><\/tr><\/thead><tbody><tr><td>a) Lump sum (Firm Fixed Price) contract<\/td><td>a) Lump sum (Firm Fixed Price) contract<\/td><td>a) Lump sum (Firm Fixed Price) contract<\/td><\/tr><tr><td>b) Item Rate (Unit Rate) contract<\/td><td>b) Time based (Retainer-ship) contract<\/td><td>b) Time based contract<\/td><\/tr><tr><td>c) Percentage Rate contract<\/td><td>c) Percentage (Success Fee) contract<\/td><td>c) Percentage (Success Fee) contract<\/td><\/tr><tr><td>d) Piece Work contract<\/td><td>d) Retainer-ship cum Success fee-based contract<\/td><td>d) Indefinite delivery contract<\/td><\/tr><tr><td>e) Engineering, Procurement and Construction (EPC) contract<\/td><td>e) Indefinite delivery contract<\/td><td><\/td><\/tr><tr><td>f) Public Private Partnership (PPP)<\/td><td><\/td><td><\/td><\/tr><\/tbody><\/table><\/div>\n<h3 class=\"src-W\">4.3.3<\/span>WORKS \u2014 the Seven Types<\/span>W<\/span><\/h3><div class=\"srcblock src-W\"><h4>A. Lump Sum (Fixed Price) Contract<\/span><\/h4>\n1. In this type of contract, bidders are required to quote a lump sum fixed price figure for completing the works in accordance with the given designs, specifications and functional requirements.<\/p>\n<ul class=\"lst\"><li>Bidder's price is deemed to include all elements of cost \u2014 no arithmetical correction or price adjustments are allowed during evaluation and execution.<\/li><li>Lump sum contracts are easy to administer because it is a fixed price for a fixed scope, and payments are linked to clearly specified outputs\/ milestones.<\/li><\/ul>\n2. Quality risk: There may be a tendency for the Contractor to cut corners on quality and scope of work by saving on resources employed. Disputes may arise due to different possible interpretations of quality and scope of work. The contract should include provision for evaluation of quality and scope of work, and a certificate for its acceptability May be recorded.<\/p>\n3. Time risk: As time is not linked to the payment, there may be a tendency for the Contractor to save on deployment of resources, which may result in time over-run. While the payments are not linked to time, the assignment should be monitored per month to ensure that the progress of work per month is in line with the planned and estimated timeline.<\/p>\n4. Where suitable: Lump sum service contracts should be used mainly for assignments in which the quality, scope and timing of the work are clearly defined.<\/p>\nLump sum contracts May be used where the works can be defined in their full physical and qualitative characteristics, and risk for change in quantity or specification, and unforeseen difficulties and site conditions (for example, hidden foundation problems) are minimal.<\/p>\nThus suitable for:<\/p>\n<aside class=\"note\">stereotype\/ repetitive residential buildings or other structures for which STANDARD DRAWINGS are normally available; also for minor bridge works, chimneys, bins\/ silos, overhead tanks, etc. \u2014 whether on the Department's design or that of the contractor.<\/p><\/aside>\nIn the latter case, the Department shall spell out the requirements in detail to enable the contractor to prepare his designs and drawings accordingly and submit them to the Procuring Entity for check and approval before construction.<\/p>\n5. Schedule of Rates still relevant: A Schedule of Rates (sor) May still be specified in order to regulate the amounts to be added to or deducted from the fixed sum on account of additions and alterations to drawings, designs and specifications not covered by the contract.<\/p>\n6. Payment: The contractor shall be paid from time to time as per the Schedule specified in the contract, or the full amount on completion of the work. The billing Schedule shall be commensurate with the actual work done, and the risk of front-loading strictly guarded against.<\/p>\n7. Measurements: Detailed measurements of work done in a lump sum contract are not required to be recorded \u2014 except in respect of additions and omissions. No reference is made in the contract to the departmental estimate of the work, prevailing sor, or the quantities of work to be done. Payment of additions and omissions is regulated by the prevailing sor as agreed upon while approving the tender or the rates.<\/p>\n<h4>B. Item Rate (Unit Rate) Contract<\/span><\/h4>\n1. For item rate tenders, contractors are required to quote a rate for each individual item (detailed sub-activity) comprising a work, on the basis of the Bill of Quantities (BOQ) provided by the Procuring Entity in the bid documents.<\/p>\nThis is the most commonly used contract type for civil works.<\/p>\n2. Payment and variations: The payment is made at the rate set out in the contract for the measured quantity.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Extent of variation in BOQ quantities<\/th><th>Treatment<\/th><\/tr><\/thead><tbody><tr><td>REASONABLE variations \u2014 typically \u00b110% to \u00b115%<\/td><td>Can be allowed during the execution in terms of the contract<\/td><\/tr><tr><td>SLIGHTLY LARGER variation \u2014 typically \u00b125% to \u00b130%<\/td><td>competent Authority's sanction is required<\/td><\/tr><tr><td>Where the variation exceeds the prescribed limit<\/td><td>The contract generally provides that either (a) the Procuring Entity May revise the rate with mutual agreement (often based on analysis of current market rates), or (b) the work beyond the limit May be treated as a new item, requiring approval at appropriate levels<\/td><\/tr><\/tbody><\/table><\/div>\n3. Where suitable: Suitable for all types of major works such as buildings, bridges, culverts, roads, sewer lines, irrigation works \u2014 and carries the least risk of uncertainty for the parties.<\/p>\n4. Prerequisite: Specifications, design, drawings and contract conditions \u2014 including availability of land, forest clearance, social and environmental impact assessment, where applicable \u2014 have to be critically appraised before the initiation of the procurement process, in order to minimise the incidence of internal inconsistencies, variations, and situations of claims\/ disputes or contract failure.<\/p>\n<h4>C. Percentage Rate Contract<\/span><\/h4>\n1. For percentage Rate Contract, the contractors are required to quote a rate as an overall percentage above or below the total estimated cost.<\/p>\n2. Where suitable: This type works best when the work does not involve major design process and directions, and simple drawings are sufficient for execution. It saves on the time and effort of detailed design before the procurement process.<\/p>\nCan be used for:<\/p>\n<aside class=\"note\">Small and routine types of original works for which estimates can be made based on available Schedule of Rates, and all repair works \u2014 e.g. levelling and development works, including storm water drainage, water supply and sewer lines.<\/p><\/aside>\n3. Billing: Bills for percentage rate contracts shall be prepared at the estimated rates for individual items only, and the percentage excess or less shall be added or subtracted from the gross amount of the bill. The payment is made for the measured quantity.<\/p>\nContract provisions are made to determine the price of the items not included in sor. In the absence of a standard Schedule of Rates, a project-specific Schedule of items and their rates is drawn.<\/p>\n<aside class=\"note\">Note: Percentage rate contracts should not be confused with lump-sum contracts, since the pricing structure in both cases is fundamentally different.<\/p><\/aside>\n<h4>D. Piece Work Agreement<\/span><\/h4>\n1. In a piece work agreement, bidders quote and are paid for each piece (or unit) of a work element \u2014 neither the complete work as in lump-sum contract, nor as granular a work element as in item Rate Contract \u2014 without necessarily providing detailed quantities upfront.<\/p>\nThe Procuring Entity has flexibility to put an end to the piece work agreement at his option at any time. It incentivises productivity of the contractor and cost control for the Procuring Entity.<\/p>\n2. Two main uses:<\/p>\nA) anticipatory work commencement: In cases where it is necessary to start the work in anticipation of formal acceptance of a detailed contract, a piece work agreement May be drawn \u2014 and the agreement May be cancelled as soon as the regular contract is signed.<\/p>\nb) for ongoing requirements: For ongoing requirements \u2014 i.e., pipes, laying of sewerage, maintenance of colonies\/ facilities etc. \u2014 quotations are called periodically, and a running piece work agreement is drawn up as a result of those quotations, usually for a period of one year. The agreement provides for payment of stipulated rates only when it refers to such quantity of time, and also stipulates that the Procuring Entity May put an end to the agreement at his option at any time.<\/p>\n3. Important provisions of such contracts:<\/p>\nA) quality assurance: Contractor might prioritise speed over quality to maximise earnings. Therefore, the contract must clearly define the quality standards each unit of work must meet to be acceptable. Implement processes for inspecting and approving completed work before payment. Define the scope of work meticulously to prevent misunderstandings. Maintain open lines of communication with contractors to address issues promptly. Establish KPIs to monitor progress and quality.<\/p>\nB) payment terms: Specify the payment rate per unit of work and any conditions that might affect this rate. Outline when payments will be made (e.g., upon completion of each unit, weekly, monthly).<\/p>\nC) termination clauses: Include a clause that allows the Procuring Entity to terminate the contract at their option at any time. Specify any notice period required and obligations upon termination.<\/p>\nD) labour laws: There's a potential for unfair labour practices if not properly managed. Therefore, the contract must stipulate strict compliance with local labour regulations, including minimum wage requirements and worker protections.<\/p>\nE) documentation: Keep thorough records of work completed and payments made for transparency and legal purposes.<\/p>\n<h4>E. Engineering, Procurement and Construction (EPC) Contracts<\/span><\/h4>\n1. What it is: The EPC approach \u2014 also called 'design & build' contracts \u2014 relies on assigning the responsibility for investigations, design and construction to the contractor for a lump sum price determined through competitive bidding.<\/p>\nThe objective is to ensure implementation of the project to specified standards with a fair degree of certainty relating to costs and time, while transferring the construction risks to the contractor.<\/p>\n2. Policy push: On the recommendations of niti aayog, the cabinet committee on economic affairs (ccea) has recommended that item rate contracts May be substituted by EPC contracts wherever appropriate (NITI Aayog OM No. N-14070\/14\/2016-PPPAU dated September 05, 2016)<\/em>.<\/p>\n3. Output specifications, not construction specifications: Unlike the normal practice of construction specifications, the technical parameters in the EPC agreement are based mainly on output specifications\/ performance standards.<\/p>\nThe Procuring Entity specifies only the core requirements of design and construction that have a bearing on the quality, durability, reliability, maintainability and safety of assets \u2014 and enough room is left for the contractor to add value. The contractor has full freedom to design and plan the construction Schedule using best practices.<\/p>\n4. Risk allocation:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Risk<\/th><th>Borne by<\/th><\/tr><\/thead><tbody><tr><td>Soil conditions and weather; Commercial and technical risks relating to design and construction<\/td><td>the contractor<\/td><\/tr><tr><td>delays in handing over the land \u00b7 approvals from local authorities \u00b7 environment clearances \u00b7 shifting of utilities \u00b7 approvals in respect of engineering plans<\/td><td>the Procuring Entity<\/td><\/tr><\/tbody><\/table><\/div>\n5. Selection, price and the 10% variation ceiling: Selection of the contractor is based on open competitive bidding. All project parameters \u2014 contract period, price adjustments and technical parameters \u2014 are to be clearly stated upfront, and short-listed bidders are required to specify only the lump sum price for the project. The bidder who seeks the lowest payment is awarded the contract.<\/p>\nThe contract price is subject to adjustment on account of price variation during the contract period as per a specified formula.<\/p>\nIt also lays down a ceiling of 10 (ten) per cent of contract price to cater for any changes in the scope of project, the cost of which the Procuring Entity will bear.<\/p>\n<ul class=\"lst\"><li>Once this ceiling is reached, no further variations shall be issued under the existing contract.<\/li><li>Any additional requirement beyond this limit must be procured separately through a competitive bidding process, so as to preserve transparency, fairness, and Value for Money.<\/li><li>In exceptional cases where continuity of work demands that the existing contractor execute such additional scope, this shall be permitted only through a formally approved supplemental agreement, with revised price and timelines duly concurred by the Competent Authority and finance.<\/li><li>The original contractor shall, however, be required to extend reasonable cooperation to ensure coordination with any other agency engaged for excess works.<\/li><\/ul>\nSuggested eligibility criteria for EPC tenders:<\/p>\nA) technical capacity: The bidder has received payments for construction of eligible projects over the past five financial years preceding the bid due date. The payment amounts should be at least:<\/p>\n<ul class=\"lst\"><li>i) 60% of the estimated project cost from one eligible project; or<\/li><li>ii) 40% of the estimated project cost from each of two eligible projects; or<\/li><li>iii) 30% of the estimated project cost from each of three eligible projects.<\/li><\/ul>\nb) financial capacity: The bidder should possess a minimum net worth of at least 15% of the estimated project cost at the close of the preceding financial year. If the bid due date falls within three months of the closing of the latest financial year, that year can be ignored for calculation purposes.<\/p>\nC) eligible works for EPC tenders specifically refer to construction projects directly awarded by either a Government Ministry or Department, or by a public listed company. The latter should be listed on major Indian stock exchanges, such as the nse or the bse.<\/p>\nIn the case of awards from public listed companies, the tender documents need to clearly outline specific financial requirements. This includes detailing the average annual turnover of the company over a defined period \u2014 typically the past three or five years. Additionally, the tender should specify a minimum duration for which the company must have been registered \u2014 for example, a period of five years. This stipulation is aimed at ensuring that the awards considered for eligibility come from established and financially sound entities.<\/p>\n6. Design review process: The selected Contractor carries out survey and investigations and also develops designs and drawings in conformity with the specifications and standards laid down in the Agreement.<\/p>\nThe Procuring Entity's engineer (also called owner's engineer) reviews the design and drawings to ensure that these conform to the scope of the project, design standards and specifications.<\/p>\nAny comments by the Procuring Entity on the design proposals submitted by the contractor are to be communicated in totality once, in a time-bound manner as indicated in the Schedule. The contractor is free to proceed with construction after the expiry of the specified period, in case no remarks\/ clearances are given by the Procuring Entity.<\/p>\n7. Shifting of utilities: The contractor is also responsible for shifting of any utility (electric lines, water pipes, telephone cables etc.) to an appropriate location or alignment \u2014 if the utilities are under the purview of the Procuring Entity and adversely affect or infringe the execution of works.<\/p>\nThis requirement should be part of the tender document, so as to avoid such a requirement at a later stage that May lead to amending the scope of work.<\/p>\nFor utilities not owned by the Procuring Entity, the concerned organisation under whose ambit such utilities fall shall be intimated by the Procuring Entity for shifting, and the price of shifting shall be paid to the organisation by the Procuring Entity. If there is delay in shifting of the utilities for which the contractor is not accountable, reasonable time extension May be given to the contractor.<\/p>\n8. Liquidated Damages and bonus: The contractor is liable to pay Liquidated Damages (LD) for each day of delay beyond the specified date of completion \u2014 subject to the total amount of damages not exceeding 10 (ten) per cent of the contract price.<\/p>\nHowever, the contractor is entitled to time extension arising out of delays on account of change of scope and Force Majeure, or delays caused by or attributable to the Procuring Entity.<\/p>\nIf so provided in the Bid Document, the Procuring Entity is also liable to pay a bonus (normally should not exceed ten per cent) to the Contractor for completion of the project before the scheduled completion date.<\/p>\nIf delays have happened in achieving the individual milestones but the overall project completion is within time, then LD deducted should be refunded (without any interest).<\/p>\n9. Supervision: Monitoring and supervision of construction are undertaken through the Procuring Entity's engineer \u2014 a qualified firm selected through a transparent process \u2014 acting as a single window for coordination with the contractor.<\/p>\n10. Staged payment, defects liability and grace period: Each item of work is further sub-divided into stages, and payment based on output specifications and performance standard is to be made for each completed stage of work.<\/p>\n<ul class=\"lst\"><li>A defects liability period of two years May be specified in the agreement<\/strong> in order to provide additional comfort to the Procuring Entity.<\/li><li>A grace period of say 30 days for achieving the individual project milestones as per payment schedule May be provided in the tender document, so that any unavoidable delay may be covered during the grace period. The applicability of Liquidated Damages would be beyond the grace period.<\/li><\/ul>\n11. Model documents: FIDIC (F\u00e9d\u00e9ration Internationale Des Ing\u00e9nieurs-Conseils \u2014 an International Federation of Consulting Engineers, known by its French acronym) has also published such contractual frameworks.<\/p>\nModel EPC contract documents have been developed for highways and railways and published by the erstwhile planning commission. NHAI has already adopted these documents, and all construction contracts are currently being structured on this model. The Ministry of railways has also started using such documents. Model bidding documents and Model EPC contracts, suitably revisited or modified wherever required to suit the requirements of particular sectors, may be adopted.<\/p>\n12. Capability of the Owner's Engineer: The selected Procuring Entity's Engineer (Consultant) has to have good experience in design, project supervision and works management.<\/p>\nThe Procuring Entity organisation must have an experienced team (Works Committee) to super-check the quality of supervision exercised by the owner's engineer \u2014 including quality of design review, site supervision, quality audits, etc. Periodic audits of the Procuring Entity's engineer's functioning are desirable.<\/p>\n13. Third-party consultant: In complex projects, a third-party consultant be deployed for specific tasks like design audit, quality audits, safety audits, etc., to cross-check the Procuring Entity's engineer's diligence in the process.<\/p>\n14. Change of Scope and the right to match: The tender document should consist of provisions of change of scope in terms of specifications, omission of any work from the Scope of the Project, or any additional work. However, the total value of all change of scope orders should be limited (SAY 10%) of the contract price.<\/p>\nIn the event the parties are unable to agree to the proposed change of scope, the Procuring Entity May award such works or services to any other party \u2014 preferably on the basis of open competitive bidding.<\/p>\nThe contractor should have the option of matching the first-ranked bid in terms of the selection criteria, subject to payment of a certain percentage (say 2%) of the bid amount to the Procuring Entity. Such an option is possible when the contractor also participated in the bidding process and its bid did not exceed the first-ranked bid by more than 10%.<\/p>\n15. Sub-contracting: Sub-contracting by the EPC contractor must be limited and should not exceed 50% of the contract price. Any work to be sub-contracted by the main contractor must be brought to the notice of the Procuring Entity.<\/p>\n16. Qualification of sub-contractor: Preceding 3 years, at least one work of a similar nature with a contract value exceeding 40% of the value of the sub-contract to be awarded, and received payments in respect thereof for an amount equal to at least 80% of such contract.<\/p>\nProvided, however, that in any event the contractor shall communicate the name and particulars to the Procuring Entity for any sub-contract, including the relevant experience, prior to entering into any such sub-contract. Overall responsibility of all works lies on the contractor.<\/p>\n17. General Instructions on Procurement and Project Management on EPC (OM No. F.1\/1\/2021-PPD dated 29.10.2021)<\/em>:<\/p>\n<ol class=\"lst\"><li>In EPC contracts, since primary responsibility to execute the work lies with the EPC contractor, success of the project also depends upon the quality of the tender document \u2014 wherein enough clarity on the broad framework for execution of the work and the obligations of the contractor needs to be built in.<\/li><li>Milestones for payment to the contractor should be fixed in a manner that facilitates smooth cash flow for the contractor as well as for progress of the work. Milestones fixed should avoid excessive front loading or back loading \u2014 i.e., amount of payment should be commensurate with stage-wise quantum of work\/ cost incurred. Milestones for payment should also be linked with the deliverables.<\/li><li>In case of EPC contracts, only general arrangement drawings and architectural control parameters should be part of the EPC tender document. Timelines for submission of drawings by the contractors and approval thereof by the Competent Authority should be clearly prescribed in the tender document, wherein damages for non-adherence of such timelines May also be incorporated.<\/li><li>EPC contracts shall specify broad technical specification and key output parameters. Over-specification of design May lead to increase in cost. Technical specifications shall be framed in such a manner as to allow sufficient freedom to the contractor to optimise design. Provisions on the following should be included in commercial conditions:<\/li><li>i) limitation of liability for procuring entity as well as contractor;<\/li><li>ii) deviation limits and procedure for change of scope;<\/li><li>iii) contract closing timelines and procedure to ensure timely closing of contract;<\/li><li>iv) performance parameters and Liquidated Damages for shortfall in performance;<\/li><li>v) RISK MATRIX and RESPONSIBILITIES of the contractor and the procuring entity.<\/li><li>In addition, a latent defect period beyond the defect liability period May be included to protect the procuring entity and public authority interest in case of any design\/ engineering defect after the defect liability period is over, wherever appropriate.<\/li><li>To mitigate the risk involved in the methodology proposed by the contractor, the project executing authority shall either have an in-house engineering, quality assurance and project management expert, or alternatively hire an experienced engineer to intensively examine the proposal submitted by the contractor. Project executing authorities are to ensure that optimal technological solutions are provided by the contractor.<\/li><li>To ensure quality, regular inspection and quality checks must be carried out. The project executing authority shall carry out stage inspections in manufacturing of critical equipment\/ critical activities of the project.<\/li><\/ol>\n<aside class=\"note\">Note: In this sub-para 17, instructions containing \"shall\" are mandatory; Any deviation from these instructions shall require relaxation from the Ministry of Finance (for ministries\/ departments etc.) or from the board of directors (for CPSEs).<\/p><\/aside>\n<h4>F. Public Private Partnership (PPP)<\/span><\/h4>\nPPP means an arrangement between:<\/p>\n<ul class=\"lst\"><li>A Government\/ statutory entity\/ government-owned entity on one side \u2014 the Sponsoring (PPP) Authority, or simply the Authority<\/em>; and<\/li><li>A private sector entity on the other \u2014 a legal entity in which 51% or more of equity is with the private partner\/s \u2014 the concessionaire<\/em><\/li><\/ul>\n \u2014 for the creation and\/ or management of public assets and\/ or public services, through investments being made and\/ or management being undertaken by the concessionaire, for a specified period of time (concession period) on commercial terms, where:<\/p>\n<ul class=\"lst\"><li>there is a well-defined allocation of risk between the concessionaire and the Authority; and<\/li><li>the concessionaire \u2014 who is chosen on the basis of a transparent and open competitive bidding \u2014 receives performance-linked payments that conform (or are benchmarked) to specified and pre-determined performance standards, measurable by the authority or its representative.<\/li><\/ul>\n<aside class=\"note\">For further information, PPP instructions issued by the Department of economic affairs (DEA), Ministry of Finance, from time to time, may be referred. The provisions contained within this Manual are also applicable to works procurement carried out under PPP mode.<\/p><\/aside>\n<h4 class=\"src-W\">G. Comparison of Types of Contracts<\/span>W<\/span><\/h4><div class=\"srcblock src-W\">\n<div class=\"tblwrap\"><table><thead><tr><th>Contract Type<\/th><th>Payment Structure<\/th><th>Scope Flexibility<\/th><th>Risk to Contractor<\/th><th>Common Use Cases<\/th><\/tr><\/thead><tbody><tr><td>Lump Sum Contract<\/td><td>Fixed price for the entire project<\/td><td>Low<\/td><td>High<\/strong> (if costs are underestimated)<\/td><td>Simple, well-defined projects<\/td><\/tr><tr><td>Item Rate Contract<\/td><td>Payment based on rates for units of work\/ materials<\/td><td>High<\/td><td>Medium<\/td><td>Projects with variable quantities<\/td><\/tr><tr><td>Percentage Rate Contract<\/td><td>Payment based on a percentage of a standard schedule<\/td><td>Medium<\/td><td>Medium<\/td><td>Projects with standardised rates<\/td><\/tr><tr><td>Piece Work Contract<\/td><td>Fixed rate per unit of work completed<\/td><td>Medium<\/td><td>Depends on productivity<\/td><td>Discrete unit work, as in repair works<\/td><\/tr><tr><td>EPC Contract<\/td><td>Payment for design, procurement, and construction<\/td><td>Low<\/strong> (complete facility delivery)<\/td><td>High<\/strong> (responsible for entire project)<\/td><td>Large, complex projects<\/td><\/tr><tr><td>PPP Contract<\/td><td>Payment based on performance and availability of services<\/td><td>Medium<\/td><td>Shared between public and private entities<\/td><td>Infrastructure projects, public services<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><\/div><h3 class=\"src-multi\">4.3.4<\/span>CONSULTANCY and NON-CONSULTANCY \u2014 the Service Contract Types<\/span>C<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\"><h4>A. Lump Sum (Firm Fixed Price) Contract<\/span><\/h4>\n1. The lump sum (firm fixed price) contract is the simplest\/ simpler form of contract, and wherever feasible the Procuring Entity shall use this form of contract.<\/p>\nConsultants\/ service providers are required to quote a lump sum fixed price figure for completing the services in accordance with:<\/p>\n<ul class=\"lst\"><li>C<\/span> the given Terms of Reference<\/strong>;<\/li><li>NC<\/span> the given activity and services Schedule<\/strong>.<\/li><\/ul>\nThe proposal is deemed to include all prices \u2014 no arithmetical correction or price adjustments are allowed during evaluation.<\/p>\n<aside class=\"note\">NC<\/span> adds:<\/strong>This type of contract is based on output admeasurement.<\/p><\/aside>\nThe Terms of Reference\/ Schedule of Requirement shall indicate the scope and quantum of services required.<\/p>\n2. Why easy to administer: Lump sum contracts are easy to administer because there is a fixed price for a fixed scope, and payments are linked to clearly specified outputs\/ milestones\/ deliverables \u2014 C<\/span>such as reports, documents, drawings, bills of quantities, software programs and so on.<\/em><\/p>\nBidders quote a lump sum price for the required quantum of services. They May also be asked to quote a unit rate for the consultancy output\/ service, to be used in case of variation, etc.<\/p>\n3. The Schedule of requirement shall indicate the quantum of the outputs\/ services, its performance standards, and the timeline\/ milestones of its delivery. Contract May specify parts of payments to be released at specified timelines\/ milestones.<\/p>\n4. Where used:<\/p>\n<ul class=\"lst\"><li>C<\/span> Widely used for simple planning and feasibility studies, environmental studies, detailed design of standard or common structures, preparation of data processing systems, and so forth.<\/li><li>NC<\/span> Not many services are amenable to lump-sum type of contracts. Depending on the situation, such contracts may be used for transport services, logistics, clearing and forwarding, courier services, drilling, aerial photography, satellite imagery, mapping, and similar operations.<\/li><\/ul>\n5. Lump Sum Contracts \u2014 Risks and Mitigations C<\/span>(NC<\/span> cross-refers to its Output Admeasurement risk table):<\/em><\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. The quality and scope of the Output\/ deliverables is not linked to the payment.<\/strong> There may be a tendency for the consultant to Cut corners on quality and scope of the output\/ deliverables by saving on resources employed.<\/strong> Disputes may arise due to different possible interpretations of quality and scope of assignment.<\/td><td>Lump sum service contracts should be used mainly for assignments in which the quality, scope, and timing of the required output are clearly defined. The contract should include provision for evaluation of quality and scope of deliverables, and a certificate for its acceptability may be recorded. Payment should be made only against certificate of acceptance of deliverables.<\/td><\/tr><tr><td>2. Time over-run:<\/strong> As time is not linked to the payment, there may be a tendency for the consultant to save on deployment of resources, which may result in time-over-run.<\/strong><\/td><td>While the payments are not linked to time, the assignment should be monitored per month to ensure that the output per month is in line with the planned and estimated timeline.<\/td><\/tr><\/tbody><\/table><\/div>\n<h4 class=\"src-NC\">B. Time-Based Contract \u2014 \"Retainer-ship\" C<\/span> \/ \"Unit-rate\"<\/span>NC<\/span><\/h4><div class=\"srcblock src-NC\">\n1. C<\/span> In <\/strong>Time-based (Retainer-ship) contracts, payments are based on agreed hourly, daily, weekly, or monthly rates for staff (who in consultancy contracts are <\/strong>normally named) <\/strong>and on reimbursable items using actual expenses and\/ or agreed unit prices.<\/p>\n<aside class=\"note\">These are also called RETAINER-SHIP CONTRACTS, since the consultants are retained for a pre-decided contract period.<\/p><\/aside>\nThe rates for staff include: Salary, social costs, overhead, fee (or profit), and \u2014 where appropriate \u2014 special allowances.<\/p>\n1. NC<\/span> In <\/strong>Time-based (unit-rate) contracts, payments are based on agreed unit prices.<\/strong>This type of contract can be based either on input (more often) or output admeasurement.<\/strong>Payments are usually released every month for the quantum of inputs\/ output actually performed.<\/p>\n2. C<\/span> The <\/strong>Schedule of requirement shall indicate the quantum of inputs required \u2014 man-hours of different key and non-key personnel \u2014 qualifications of key personnel, reimbursable items, and the timeline\/ milestones of its deliverables.<\/p>\n3. When to use time-based rather than lump sum \u2014 and the key distinction from Indefinite Delivery C<\/span>:<\/p>\nBoth time-based contracts AND indefinite delivery contracts are used when a lump sum contract is not feasible, due to difficulties in specifying:<\/p>\n<ul class=\"lst\"><li>the SCOPE\/ LENGTH of consultancy services, or<\/li><li>the quantum of individual activities<\/li><\/ul>\n \u2014 either because the inputs required for attaining the objectives of the requirement is difficult to assess, or because the services are tied up to contracts\/ activities by others for which the completion period May vary.<\/p>\n<aside class=\"note\">The distinction:<\/p>\n<ul class=\"lst\"><li>TIME-BASED contracts are suitable for consultancy services that are CONTINUOUSLY NEEDED.<\/li><li>INDEFINITE DELIVERY type of contracts is suitable for services which are infrequently needed, but the consultant needs to be always on beck and call.<\/li><\/ul><\/aside>\n4. Where used C<\/span>: Widely used for complex studies, supervision of construction, advisory services, and most training assignments, etc.<\/p>\n5. Time-Based Contracts \u2014 Risks and Mitigations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. The quality and scope of the Output\/ deliverables \u2014 as in Lump-sum Contracts \u2014 is not linked to the payment. There may be a tendency for the consultant to cut corners on quality, scope, and timing of the output\/ deliverables by saving on resources employed.<\/td><td>The contract should include provision for evaluation of quality and scope of deliverables, and a certificate for its acceptability may be recorded. Payments should be released only against such certificates.<\/td><\/tr><tr><td>2. Performance in each time period is not linked to the payment. There May be a tendency for the consultant to use paid staff in a dilatory and un-productive manner.<\/td><td>Contracts need to be closely monitored and administered by the Procuring Entity to ensure that the progress of assignment is commensurate with the time spent, and that the resources for which payment is claimed have actually efficiently and productively been deployed on the assignment during the period. A system of MONTHLY REPORTING of payouts and quantum of work achieved by the consultant to the CA should be instituted to enable supervision.<\/td><\/tr><tr><td>3. Time and cost over-run is a major risk in Time-based contracts, as the payment is based on time, and delay May result in unanticipated benefit to the consultant and the assignment may get delayed.<\/td><td>This type of contract should include an upper limit of total payments to be made to the consultants for the assignment, to safeguard against excessive prolonging of time and payments. After this limit is reached, or the period of completion is exceeded, the ca should review justification for extension of the contract.<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h4>C. Percentage (Success\/ Contingency Fee) Contract<\/span><\/h4>\n1. Percentage (success\/ contingency fee) contracts directly relate the fees paid to the consultant\/ service provider to the estimated or actual project cost, or actual value of assets\/ transactions to be handled \u2014 e.g., project cost, or the cost of the goods procured or inspected.<\/p>\n<aside class=\"note\">Since the payment is made after the successful realisation of objectives, it is also called a success (or contingency) fee contract.<\/p><\/aside>\nThe payment is made based on the value of assets\/ transactions handled during the period.<\/p>\n2. The Schedule of Requirement shall indicate the estimated value of assets\/ transactions to be handled, as well as the contract period (one year, unless otherwise stipulated) over which such volume shall be availed.<\/p>\nHowever, there shall be no firm commitment to avail the entire value of transactions within the contract period.<\/p>\nThe final selection is made among the technically qualified consultants who have quoted the lowest percentage, while the notional value of assets is fixed.<\/p>\n3. Where used C<\/span>: Commonly used for appropriate architectural services; Procurement and inspection agents.<\/p>\n4. Percentage Contracts \u2014 Risks and Mitigations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>Quality and Scope not linked to payment (as in Lump-sum)<\/em><\/td><td>Contract should include provision for evaluation of quality, scope and the timing of deliverables, and certificate for its acceptability may be recorded. Payment should be made only against certificate of acceptance of deliverables.<\/td><\/tr><tr><td>Time over-run<\/strong> \u2014 time not linked to payment<\/td><td>Assignment should be monitored per month to ensure output per month is in line with planned and estimated timeline.<\/td><\/tr><tr><td>Bias against economic solutions: Since the percentage payment is linked to the total cost of the project, in the case of architectural or engineering services, percentage contracts implicitly lack incentive for economic design and are hence discouraged.<\/td><td>Therefore, the use of such a contract for architectural services is recommended only if it is based on a fixed target cost and covers precisely defined services.<\/td><\/tr><\/tbody><\/table><\/div>\n<h4>D. Retainer and Success (Contingency) Fee Contract [C ONLY]<\/span><\/h4>\n1.<\/strong> In Retainer and Success (Contingency) fee contracts, the remuneration of the consultant includes:<\/strong><\/p>\n<ul class=\"lst\"><li>A retainer (time-based, monthly payment), and<\/li><li>a success fee (percentage-based) \u2014 the latter being normally expressed as a percentage of the estimated or actual project cost.<\/li><\/ul>\n<aside class=\"note\">Thus, this type of contract is a combination of time-based and percentage contracts.<\/p><\/aside>\n2. Where used: Widely used when consultants (banks or financial firms) are preparing companies for sales or mergers of firms \u2014 notably in privatisation operations. It can also be used for assignments related to organisational restructuring\/ change.<\/p>\n3. Risks and Mitigations: All RISKS as applicable to both Percentage Contracts AND Time-Based contracts are encountered in this case. The same mitigation strategies as in both Percentage and Time-Based contracts may be adopted.<\/p>\n<h4>E. Indefinite Delivery Contract (Price Agreement)<\/span><\/h4>\n1. These contracts are used when the Procuring Entity needs to have \"on call\" specialised services, the extent and timing of which cannot be defined in advance.<\/p>\n<aside class=\"note\">This is akin to the system of 'rate contracts' or framework contracts in the procurement of goods.<\/p><\/aside>\nC<\/span> adds:<\/strong>There is no commitment from the Procuring Entity for the quantum of work that May be assigned to the consultant.<\/p>\nThe Procuring Entity and the firm agree on the unit rates to be paid, and payments are made periodically on the basis of the time\/ quantum of service actually used during the period.<\/p>\nNC<\/span> adds:<\/strong>This type of contract can be based either on input (more often) or output admeasurement.<\/p>\n2. Schedule of requirement: Shall indicate only a tentative estimate of the volume of required service\/ outputs\/ inputs, as well as the contract period (one year, unless otherwise stipulated) over which such volume is likely to be availed.<\/p>\nThe services shall be availed on-call, as and when needed by the Procuring Entity, without any commitment regarding the volume of services.<\/p>\nThe consultant\/ service provider shall be selected based on the total price (unit rate multiplied by indicative volume) of such services\/ inputs \u2014 including service charges and taxes \u2014 over the period of contract.<\/p>\n3. NC<\/span> \u2014 the cross-monitoring rule: In case of OUTPUT ADMEASUREMENT contracts, if expressly STIPULATED in the Tender Document, the quantum of input deployments (Personnel, equipment etc.) shall also be called for \u2014 but shall be used only to monitor performance standards.<\/p>\nSimilarly, in case of input admeasurement contracts, the quantum of services to be delivered per quantum of inputs deployed per day\/ month May also be called for, to evaluate the quality and productivity of deployed inputs.<\/p>\n4. Where used: Commonly used to RETAIN \"ADVISERS\" or avail services 'ON-CALL' \u2014 for example:<\/p>\n<aside class=\"note\">expert adjudicators for dispute resolution panels \u00b7 institutional reforms C<\/span> \u00b7 procurement advice \u00b7 technical troubleshooting \u00b7 Document Management \u00b7 Taxi Services C<\/span> \u00b7 Temporary Manpower Deployment C<\/span>, and so forth \u2014 normally over a period of a year or more.<\/p><\/aside>\n5. Indefinite Delivery Contracts \u2014 Risks and Mitigations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. Quality and Scope of the Output\/ deliverables not linked to payment<\/td><td>Contract should include provision for evaluation of quality and scope of deliverables, with certificate for acceptability; Payments released only against such certificates.<\/td><\/tr><tr><td>2. Performance in each time period not linked to payment<\/strong> \u2014 tendency to use resources in a dilatory and un-productive manner<\/td><td>Close monitoring and administration; Monthly reporting of payouts and quantum of work achieved to the CA.<\/td><\/tr><tr><td>3. Time and cost over-run is a major risk<\/strong>, as the output may not be achieved in the estimated time<\/td><td>Upper limit of total payments; after the limit is reached or the period exceeded, CA should review justification for extension.<\/td><\/tr><tr><td>4. Risk of over-utilisation C<\/span>: Indefinite Delivery Contracts are at risk of being over-utilised in excess of actual need, since the scrutiny of service need May not be as intense as in case of other types of contracts.<\/td><td>The need assessment of utilised services should be subject to some scrutiny, to ensure that there is no abnormal unexplainable trend in utilisation. Such contracts need to be closely monitored to ensure that there is no indiscriminate or unwarranted usage, and a maximum contract value May be laid down to keep control over usage, with approval of ca obtained to extend beyond such limit. A system of MONTHLY REPORTING to CA should be instituted. In the report, a monthly payout benchmark May be kept, above which the report May be required to be sent to a level above ca.<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h2>4.4<\/span>Systems of Selection<\/span><\/h2>\n<aside class=\"note\">The goods Manual has no \"systems of selection\" SECTION. Goods procurement is price-based by default (L1 among technically responsive offers), so no lCS\/ QCBS\/ FBS\/ SSS taxonomy is required. The taxonomy exists in Works, Consultancy and Non-Consultancy only.<\/p><\/aside>\n<h3 class=\"src-multi\">4.4.1<\/span>The Common Rationale<\/span>W<\/span>C<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\">\n1. Why different systems exist: The relative importance of quality and price aspects May vary from contractor to contractor\/ assignment to assignment, depending on:<\/p>\n<ul class=\"lst\"><li>The complexities\/ criticality of quality requirements;<\/li><li>The internal capability of the Procuring Entity to engage and supervise the contract; As well as<\/li><li>the value of procurements.<\/li><\/ul>\nHence different systems of selection are designed to achieve appropriate relative importance (weightage) of quality and price aspects.<\/p>\nThe decision on the system of selection is normally preceded by an assessment of the capacity of the user to engage and supervise the implementation of the proposed contract. The selection method chosen depends to some extent on this assessment. Selection of the system of selection should also consider the likely field of bidders.<\/p>\n2. The four systems:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>W<\/span> \u2014 Works<\/th><th>C<\/span> \u2014 Consultancy<\/th><th>NC<\/span> \u2014 Non-Consultancy<\/th><\/tr><\/thead><tbody><tr><td>a)<\/td><td>Price based System \u2014 Least Cost Selection (LCS)<\/td><td>Price based System \u2014 LCS<\/td><td>Price based System \u2014 LCS<\/td><\/tr><tr><td>b)<\/td><td>Quality and Cost Based Selection (QCBS)<\/td><td>QCBS<\/td><td>QCBS<\/td><\/tr><tr><td>c)<\/td><td> \u2014 <\/td><td>Fixed Budget based Selection (FBS) (C only)<\/em><\/td><td> \u2014 <\/td><\/tr><tr><td>d)<\/td><td>Direct Selection: Single Source Selection (SSS)<\/td><td>Direct Selection: SSS<\/td><td>Direct Selection: SSS<\/td><\/tr><\/tbody><\/table><\/div>\n3. The default rule \u2014 and it differs by category:<\/p>\n<ul class=\"lst\"><li>W<\/span> In the procurement of WORKS, the NORMAL system of selection used is PRICE-BASED \u2014 least Cost Selection (L1) \u2014 as in the procurement of Goods, for technically responsive offers. Under VERY SPECIAL circumstances, Single Source Selection may also be used. HOWEVER, the QCBS method has been ALLOWED to be used for procurement of Works for highly technically complex and critical assignments where it is justifiable to pay appropriately higher prices for a higher quality proposal.<\/li><li>C<\/span> \u2014 the two-stage rule:<\/strong>Since the quality and scope of a consultancy assignment are not tangibly identifiable and consistently measurable, the technical and financial capability of consultants becomes an important \u2014 though indirect \u2014 determinant for quality and scope of performance. In such a situation, <\/strong>value for Money is achieved by encouraging wide and open competition among equally competent consultants.<\/li><\/ul>\nThus, selection of consultants is normally done in a two-stage process:<\/p>\n<ul class=\"lst\"><li>First stage: Likely capable sources are shortlisted, on the basis of qualification and experience requirements for the given assignment \u2014 if need be, through an 'Expression of Interest' (EoI) through advertisement.<\/li><\/ul>\n<aside class=\"note\">The shortlist should include a sufficient number \u2014 not fewer than three (3) and not more than eight (8) eligible firms. In rare cases where fewer than three consultants become eligible as per short-listing criteria, and the criteria cannot be relaxed, procurement May be continued with the approval of the Competent Authority.<\/p><\/aside>\n<ul class=\"lst\"><li>Second stage: The shortlisted consultants are invited to submit their technical and financial (RfP) proposals, generally in separate sealed envelopes. Evaluation of the technical proposal is carried out by evaluators without access to the financial part of the proposal. Financial proposals are opened after evaluation of quality.<\/li><\/ul>\n<\/div><h3>4.4.2<\/span>Price Based System \u2014 Least Cost Selection (LCS)<\/span><\/h3>\n(Rule 193 of GFR 2017)<\/em><\/p>\n1. How it works: In this method of selection, bidders submit both a technical proposal and a financial proposal at the same time.<\/p>\n<ul class=\"lst\"><li>Minimum qualifying marks for the quality of the technical proposal are prescribed as a benchmark \u2014 normally 75 (seventy-five) out of a maximum of 100 (hundred) \u2014 and indicated in the tender document\/ RfP, along with a scheme for allotting marks for various technical criteria\/ attributes.<\/li><li>Alternatively \u2014 since in LCS selection, technical offers do not require to be ranked (or to have weighted technical score added to financial score, as in QCBS) \u2014 it would suffice in appropriately simple cases if the evaluation criteria is only a fail\/ pass criteria prescribing only the minimum qualifying benchmark.<\/li><\/ul>\n<aside class=\"note\">Thus, in LCS, simplified evaluation criteria May also be used, where instead of a marking scheme, a minimum fail\/ pass benchmark of technical evaluation may be prescribed \u2014 e.g., must have completed at least two similar assignments; must have a turnover of at least rs 10 (Rupees Ten) CRORE<\/strong>, etc. Any bidder that passes these benchmarks is declared as technically qualified for the opening of their financial bids.<\/p><\/aside>\n<ul class=\"lst\"><li>The technical proposals are opened first and evaluated, and the offers that qualify as per these technical evaluation criteria will only be considered as technically responsive; the rest will be considered technically non-responsive and will be dropped from the list.<\/li><li>Financial proposals are then opened for only eligible and responsive offers (financial bids of other unresponsive bidders remain unopened) and ranked.<\/li><li>The L-1 offer out of the responsive offers is selected on price criteria alone, without giving any additional weightage to marks\/ ranking of the technical proposal.<\/li><\/ul>\nThis system of selection is roughly the same as the price-based selection of an l-1 OFFER (among the technically responsive offers) in the procurement of goods\/ works.<\/p>\n2. Where suitable W<\/span>: LCS is considered suitable for engaging contractors in most works procurement assignments that are of a standard or routine nature \u2014 such as construction works or non-complex engineering projects \u2014 where well-established practices and standards exist.<\/p>\n3. The default Rule: It is the simplest and the quickest system of selection, and under normal circumstances this method of evaluation shall be used as default, since it allows for minimum satisfactory technical efficiency with economy. Justification must be provided if a selection method other than LCS is to be used.<\/p>\n4. LCS \u2014 Risks and Mitigations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>a) technical criteria May not be relevant to the realisation of the quality of the assignment.<\/td><td>Technical criteria selected should be relevant and proportional to the requirement of quality of the assignment, and the selection process should be rigorous enough to ensure that \u2014 on the one hand \u2014 no technically unsatisfactory bids should be able to get past a loose criterion, and \u2014 on the other hand \u2014 no technically satisfactory offer should get ruled out by tight criteria.<\/td><\/tr><tr><td>b) marking subjectivity: The scheme of marking or its application may be subjective.<\/td><td>It is important to lay down as objective a scheme of marking as possible. Cases where subjectivity is unavoidable (as in evaluation of methodology etc.) \u2014 a system of grading responses and their marking May be laid down in the bidding documents. The Procuring Entity should also have a system of conciliation and moderation of widely disparate markings by different members of the evaluation committee. W<\/span> adds: *As mentioned above, in most works procurement a fail\/ pass criteria is sufficient, and it avoids subjectivity.*<\/td><\/tr><\/tbody><\/table><\/div>\n<h3>4.4.3<\/span>Quality and Cost Based Selection (QCBS)<\/span><\/h3>\n(Rule 192 of GFR 2017)<\/em><\/p>\n1. What it is: In the QCBS system of selection, both the quality of the proposal and the cost are considered as deciding factors. This approach is employed when the quality of deliverables is crucial, but the cost of service or work cannot be ignored.<\/p>\n2. The mechanics:<\/p>\n<ul class=\"lst\"><li>Quality\/ technical scores are assigned to proposals based on specified quality criteria.<\/li><li>Minimum qualifying marks \u2014 normally 70\u201380 (seventy to eighty) out of a maximum of 100 (hundred) marks \u2014 as a benchmark for the quality of the technical proposal is prescribed, and proposals below this benchmark are not considered for financial evaluation.<\/li><li>The financial proposals are also given a cost-score based on the relative ranking of prices \u2014 with 100 (hundred) marks for the lowest and pro-rated lower marks for higher-priced offers.<\/li><li>The total score shall be obtained by weighting the quality and cost scores and adding them.<\/li><li>The proposed weightings for quality and cost shall be specified in the RfP\/ tender document.<\/li><li>The firm obtaining the highest total score shall be selected.<\/li><li>It May be noted that, theoretically, a QCBS system with a weight of 100% (hundred percent) for the 'cost' approximates the price-based LCS system.<\/li><li>This method of selection shall be used for highly technically complex and critical assignments where it is justifiable to pay an appropriately higher price for a higher quality of proposal.<\/li><\/ul>\n<aside class=\"note\">The Single Most Important Numerical Divergence in this Chapter<\/p>\nthe weightage ratio is inverted between consultancy on the one hand and works\/ non-consultancy on the other:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>Cost weightage<\/th><th>Technical\/ Quality weightage<\/th><th>Ceiling on non-financial parameters<\/th><\/tr><\/thead><tbody><tr><td>C<\/span> Consultancy<\/td><td>30%<\/strong> (example)<\/td><td>70% \u2014 but should never be more than 80%<\/td><td>(quality-dominant)<\/em><\/td><\/tr><tr><td>W<\/span> WORKS<\/td><td>80%<\/strong> (example)<\/td><td>20% \u2014 but should never be more than 30%<\/td><td>the maximum weight of the non-financial parameters shall in no case exceed 30%<\/td><\/tr><tr><td>NC<\/span> Non-consultancy<\/td><td>80%<\/strong> (example)<\/td><td>20% \u2014 but should never be more than 30%<\/td><td>shall in no case exceed 30%<\/td><\/tr><\/tbody><\/table><\/div>\nC<\/span> further permits: *The ratio of weightages for cost and Technical score <\/strong>Could also be 40:60 (forty: sixty) OR 50:50 (fifty: fifty), etc. <\/strong>However, the weight for the \"COST\" shall be chosen, considering the complexity of the assignment and the relative importance of quality.*<\/p>\nW<\/span> and NC<\/span> state the converse: However, the weight for the \"QUALITY\" shall be chosen, considering the complexity of the assignment and the relative importance of quality.<\/strong><\/p><\/aside>\n3. The suggestive weighting table [C only]:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Description<\/th><th>Remarks<\/th><th>Quality\/ Cost Score Weighting (%)<\/th><\/tr><\/thead><tbody><tr><td>Highly complex\/ downstream consequences\/ specialised assignments<\/td><td>Use QCBS with higher technical weightage<\/td><td>80\/20<\/td><\/tr><tr><td>Moderate complexity<\/td><td>Majority of cases will follow this range<\/td><td>75\u201365 \/ 25\u201335<\/td><\/tr><tr><td>Assignments of a standard or routine nature, such as auditors\/ procurement agents handling the procurement<\/td><td>Use of LCS is appropriate<\/td><td>60\u201350 \/ 40\u201350<\/td><\/tr><\/tbody><\/table><\/div>\n<h3 class=\"src-multi\">4.4.4<\/span>The Quality Oriented Procurement (QOP) Framework<\/span>W<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\">\n<aside class=\"note\">This apparatus \u2014 QOP declaration, Competent Authority, and the Special Technical Committee \u2014 exists in the WORKS and NON-CONSULTANCY Manuals only. It does not exist in the Consultancy Manual (where QCBS is the norm, not the exception) nor in the Goods Manual.<\/p>\nIn this section, instructions containing \"shall\" are mandatory; Any deviation shall require relaxation from the Ministry of Finance (for ministries\/ departments etc.) or from the board of directors (for CPSEs).<\/p>\n(Source: General Instructions on Procurement and Project Management \u2014 DoE's OM No. F.1\/1\/2021-PPD dated 29.10.2021.)<\/em><\/p><\/aside>\n<h4>A. When QCBS may be used<\/span><\/h4>\nProcuring entities are ALLOWED to use QCBS for procurement of works and non-consultancy services in the following cases:<\/p>\nA) where the procurement has been declared to be a Quality Oriented Procurement (QOP) by the Competent Authority; Or<\/p>\nb) [NC only \u2014 the value route]: For procurement of non-consulting services, where the estimated value of procurement (including all taxes and option clause) does not exceed rs 10 CRORE \u2014 this method of selection shall be used for highly technically complex and critical assignments where it is justifiable to pay an appropriately higher price for higher quality of proposal.<\/p>\nC) the prohibitions: QCBS shall not be used in procurements planned to be done:<\/p>\n<ul class=\"lst\"><li>W<\/span>through two-STAGE BIDDING<\/strong>(where the Procuring Entity is unable to define the technical specifications or performance parameters with adequate clarity)<\/em>, or through REVERSE AUCTION, or through LIMITED TENDERS<\/strong>;<\/li><li>NC<\/span> through REVERSE AUCTION or through LIMITED TENDERS.<\/li><\/ul>\n<aside class=\"note\">NC<\/span> \u2014 the CROSSING-Rs-10-CRORE Rule: In cases where the <\/strong>estimated value was less than rs 10 crore, but on tendering \u2014 following the QCBS process \u2014 it is proposed to place a contract for more than rs 10 crore, the following procedure shall be adopted:<\/p>\n<ul class=\"lst\"><li>i) In case the DIFFERENCE between estimated value (including taxes etc.) and value of the proposed contract (including taxes etc.) is less THAN 10% of the estimated value \u2014 there will be no bar on placement of contract.<\/li><li>ii) in all other cases, the procurement process is to be scrapped and restarted \u2014 either as QOP or on a non-qcbs basis.<\/li><\/ul><\/aside>\nThe PRINCIPLES of QCBS shall be as provided in RULE 192(i), (ii), and (iii) of the GFR. (Refer to the Manual for Procurement of Consultancy Services for such principles.)<\/em> However, the maximum weight of the non-financial parameters shall in no case exceed 30%.<\/p>\n<h4>B. The Competent Authority for allowing QCBS<\/span><\/h4>\nA) for declaring a procurement as QOP:<\/p>\ni) Where the procuring entity\/ project executing authority is covered by RULE 1 OF GFR (as amended by OM No. F.1\/1\/2021-PPD dated 08.03.2024)<\/em>:<\/p>\n<ol class=\"lst\"><li>Secretary of the Ministry\/ Department to which the procuring entity belongs; or<\/li><li>Secretary of the public authority, with the concurrence of the Procuring Entity\/ project executing authority;<\/li><\/ol>\n<aside class=\"note\">Note: The Procuring entity\/ project executing authority will themselves decide the level at which such concurrence is to be given. Such concurrence need not be obtained at the level of Secretary in charge of the Procuring entity\/ project executing authority.<\/p><\/aside>\n<ol class=\"lst\"><li>Where the public authority is any Indian Institute of Technology (IIT) or Indian Institute of Science (IISc) \u2014 the director of such IIT\/ IISc. (This provision is applicable for procurement declared as QOP on or before 31.03.2027 and will be reviewed thereafter.)<\/em><\/li><\/ol>\nii) where the Procuring Entity is a CPSE \u2014 the board of directors of the CPSE.<\/p>\niii) in case the authority to approve procurement on a nomination basis is lower than the Secretary of the Ministry\/ Department (or board of directors in case of CPSEs), such authority will also be competent to approve the procurement as QOP.<\/p>\nB) [nc only] for non-consulting services not exceeding Rs. 10 crore in value:<\/strong> where the procuring entity\/ project executing authority is covered by Rule 1 of GFR<\/strong>(i.e., Central Government Ministries\/ Departments, attached\/ subordinate bodies, and Autonomous Bodies \u2014 except those Autonomous Bodies with separate Financial Rules approved by the Government)<\/em> \u2014 by the officer or authority so designated.<\/strong><\/p>\n<aside class=\"note\">DEFINITIONS used in this framework W<\/span>NC<\/span>:<\/p>\n<ul class=\"lst\"><li>\"Public authority\"<\/strong> means the client organisation<\/strong>, which may be asking a \"Procuring Entity\"\/ \"Project Executing Authority\"\/ \"Project Executing Agency\" to execute a project or work on their behalf. For example, if a university executes works through CPWD, then the university is the public authority, and CPWD is the Procuring Entity<\/strong>. (The public authority and the project executing authority may also be the same.)<\/em><\/li><li>\"PROCURING ENTITY\"\/ \"project executing authority\"\/ \"project executing agency\" means Central Government Ministries\/ Departments, Attached\/ Subordinate bodies including Autonomous Bodies, or CPSEs (etc.) executing projects\/ works.<\/li><\/ul><\/aside>\n<h4>C. The Special Technical Committee (STC)<\/span><\/h4>\na) Composition \u2014 in all cases of QOP, an STC shall be constituted with the following composition:<\/p>\n<ul class=\"lst\"><li>I) two or more persons who have expert knowledge and\/ or long experience relevant to the procurement in question;<\/li><li>ii) one or more persons with extensive experience in handling public projects and\/ or public finance in the Government or State\/ Central public sector;<\/li><li>iii) one or more persons with experience in financial management\/ financial administration\/ audit\/ accountancy;<\/li><li>iv) not more than one member representing the Procuring Entity, who May inter alia provide administrative support to the committee;<\/li><li>V) any person who is a member of the STC shall not associate himself in any manner with any bidder for the procurement concerned.<\/li><\/ul>\nB) appointment: The names of members of the STC shall be decided either by the Competent Authority specified above, or by any other authority to whom such power is delegated by the Competent Authority. However, powers shall not be delegated to the officer or authority competent to finalise the particular procurement.<\/p>\nSitting fee May be paid to the members of the STC. Incidental costs, including travel, shall be paid by the Procuring Entity.<\/p>\nC) mandate \u2014 the STC shall make specific recommendations on the following matters:<\/p>\n<ul class=\"lst\"><li>I) the weight to be given to non-financial parameters (not exceeding 30%).<\/strong> However, the weight for the \"technical\" shall be chosen considering the complexity of the assignment and the relative importance of quality. The proposed weightings for quality and cost shall be specified in the Tender Document.<\/strong><\/li><li>ii) the specific quality\/ technical parameters, their weights, their scoring methodology, the minimum qualification score, etc., and other relevant criteria necessary for ensuring fair and transparent quality\/ technical evaluation of the bids.<\/li><\/ul>\nD) binding force: The recommendations of the STC shall be followed, except where there are special grounds in public interest for deviating from them. However, every case of deviation from the recommendations of the STC shall require approval of the Competent Authority who approved the declaration of the procurement as QOP.<\/p>\n<h4>D. Grounds for Declaring a Procurement to be QOP<\/span><\/h4>\nA procurement should be declared as a QOP only if there is enough justification in terms of:<\/p>\n<ul class=\"lst\"><li>Value addition, or<\/li><li>enhancement of delivery, or<\/li><li>paramount importance of quality.<\/li><\/ul>\nReasons for not adopting two-cover\/ pre-qualification-based\/ least-cost system shall be documented.<\/p>\n<h4>E. Tender Documents \u2014 Fixing\/ Selection of the Evaluation\/ Qualification Criteria<\/span><\/h4>\nTo ensure quality, some of the criteria used in marking May be made mandatory \u2014 and if a bidder does not meet those, then bids shall not be evaluated further.<\/p>\nWeightage May also be given for the timely completion of past projects of a similar nature by the bidder.<\/p>\n<h4>F. Pre-bid Meeting<\/span><\/h4>\nIn all cases of QOP, a pre-bid meeting shall be held, in which the technical criteria \u2014 including the marking scheme \u2014 shall be discussed with the potential bidders.<\/p>\nIf any changes in the criteria are necessitated by such consultation, such changes shall require the recommendation of the STC.<\/p>\n<h4>G. Fixing of Scoring\/ Marking Criteria<\/span><\/h4>\nA) objectivity: The scoring should not be a variable that relies on the subjective opinion of the evaluating panel. The marking scheme should enable the achievement of almost similar scores irrespective of the persons\/ experts involved in the evaluation process. When the outcomes are consistent with the available information, the QCBS parameters are more reliable. Unambiguous descriptions and criteria help to avoid grey areas, so as to ensure that there is only one possible score for the item. As far as possible, the criteria should be so specific and clear that bidders can self-mark their own bids.<\/p>\nB) the minimum threshold and why it must be set high: It is better to specify minimum marks for meeting the qualifying criteria specified. In QCBS selection, minimum qualifying marks (normally 70\u201380 out of a maximum of 100 marks) as a qualifying benchmark shall be prescribed and indicated in the tender document, along with a scheme for allotting marks for various technical criteria\/ attributes. Bids scoring less than the minimum threshold shall not be considered for further evaluation.<\/p>\n<aside class=\"note\">Since the weightage of the cost element adopted is as high as 70 (seventy) per cent, financial considerations would dominate the selection \u2014 though to a lower extent as compared to LCS. In such cases, it is essential to ensure that the minimum qualifying benchmark in the technical evaluation is set sufficiently high to weed out low-quality bids with low prices.<\/p><\/aside>\nC) fixed vs relative parameters: Examples of fixed quality parameters that ought not to be considered for relative scoring include organisations' ISO\/ standards' accreditation, etc. These are required to establish the credentials of the contractor but cannot be used for relative comparison between various bidders.<\/p>\nD) past performance: Bidders should be asked to produce certificates for past performance. A format May be given in the tender itself outlining the contract details, completion, sustainability etc., and bidders May be asked to fill it and give evidence to that effect.<\/p>\nE) presentations: Bidders May be asked to submit a detailed presentation on their proposals in the form of a soft copy along with the bid, so as to facilitate better understanding of their proposal and to ensure commitment.<\/p>\nF) KPIs: Besides the BOQ output criteria for payment, key performance indicators (KPIs) May be specified with minimum achievement levels for payment, so as to ensure quality compliance.<\/p>\n<h4 class=\"src-multi\">H. Caution against Joint Ventures\/ Consortium in QCBS Procurements<\/span>W<\/span>C<\/span>NC<\/span><\/h4><div class=\"srcblock src-multi\">\nA) since quality is given weightage in the evaluation itself, in QCBS procurement, therefore, JVs May be avoided as far as possible. JVs could, however, become necessary in high technology or innovative projects where a single entity May not be able to execute the work alone.<\/p>\nB) if JVs are allowed, measures should be taken to ensure that all the JV partners are present and execute work all through the contract period. An implementation board with the participation of all JV partners May be provided for, wherein the Project Manager from the Procuring Entity shall also be allowed an audience when required. Meeting of JV partners with the project executing authority for quarterly progress review May be made a criterion linked to the achievement of key dates or even payment.<\/p>\n<\/div><h4>I. QCBS \u2014 Risks and Mitigations<\/span><\/h4>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>A) inappropriate selection of QCBS:<\/strong> There is a possibility that the QCBS system is selected where LCS or other systems would have been more appropriate<\/strong>, considering the quality requirements or the capability of the Procuring Entity to monitor the assignment.<\/td><td>The selection of QCBS should be justified and applied only under the circumstances mentioned above.<\/td><\/tr><tr><td>b) weightage of technical: Cost may not be proportional to quality requirements.<\/td><td>Weightage different from 70:30 (seventy: Thirty) should be adequately examined and justified.<\/td><\/tr><tr><td>c) technical criteria May not be relevant to the realisation of the quality of the assignment.<\/td><td>Technical criteria selected should be relevant and proportional to the requirement of quality of assignment, and the selection process should be rigorous enough to ensure that no technically unsatisfactory bids get past a loose criterion, and no technically satisfactory offer gets ruled out by tight criteria.<\/td><\/tr><tr><td>D) marking subjectivity:<\/strong> The scheme of marking or its application may be subjective.<\/td><td>Lay down as objective a scheme of marking as possible. Where subjectivity is unavoidable (as in evaluation of methodology etc.), a system of grading responses and their marking may be laid down in the bidding documents. The Procuring Entity should also have a system of conciliation and moderation of widely disparate markings by different members of the evaluation committee.<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h3>4.4.5<\/span>Fixed Budget based Selection (FBS) [C ONLY]<\/span><\/h3>\n1. Its status: GFR 2017 provides three methods for selection\/ evaluation of consultancy proposals \u2014 viz. QCBS, LCS and SSS. The Fixed Budget Based Selection (FBS) method is now also allowed for selection of consultants (General Instructions on Procurement and Project Management \u2014 DoE's OM No. F.1\/1\/2021-PPD dated 29 October 2021)<\/em>.<\/p>\n2. How it works: In FBS, the selection process considers both the quality of proposals and the cost. FBS is a competitive method, encouraging consultants to provide high-quality services within the defined budget constraints:<\/p>\nA) fixed budget: In the Request for Proposal (RfP) document, a specific fixed budget is specified. Consultants must adhere to this budget, and their proposed cost cannot exceed it.<\/p>\nb) quality assessment: Consultants submit their proposals, and the evaluation considers the quality of these proposals. The proposal that scores the highest in quality \u2014 and is within the specified budget \u2014 is selected for award of contract. This assessment ensures that the selected consultant meets the project's requirements effectively, within the stipulated budget.<\/p>\n3. FBS May be used when: A) the type of consulting services required is simple and\/ or repetitive and can be precisely defined; And b) the budget can be reasonably estimated, and set based on credible cost estimates and\/ or previous selections which have been successfully executed; And c) the budget is sufficient for the consultant to perform the assignment.<\/p>\n<h3>4.4.6<\/span>Direct Selection: Single Source Selection (SSS)<\/span><\/h3>\n(Rule 194 of GFR 2017)<\/em><\/p>\n1. When permissible: Under some special circumstances, it May become necessary to select a particular contractor\/ consultant\/ service provider where adequate justification is available for such single-source selection, in the context of the overall interest of the Procuring Entity.<\/p>\n<aside class=\"note\">Direct selection is also called the nomination mode of procurement.<\/p><\/aside>\nThe selection by SSS\/ nomination is permissible under exceptional circumstances such as:<\/p>\n<ol class=\"lst\"><li>Tasks that represent a natural continuation of previous work carried out by the firm;<\/li><li>In case of an emergency situation; Situations arising after natural disasters; Situations where timely completion of the assignment is of utmost importance;<\/li><li>Situations where execution of the assignment May involve the use of proprietary techniques, or only one contractor\/ consultant has the requisite expertise;<\/li><li>At times, other PSUs or Government organisations are used to provide technical expertise. It is possible to use the expertise of such institutions on an SSS basis;<\/li><li>Under some special circumstances, it may become necessary to select a particular contractor\/ consultant where adequate justification is available in the context of the overall interest of the Ministry or Department. Full justification for Single Source Selection should be recorded in the file, and approval of the Competent Authority obtained before resorting to such single-source selection.<\/strong><\/li><\/ol>\n2. Safeguards: The Procuring Entity shall ensure fairness and equity, and shall have a procedure in place to ensure that: A) the prices are reasonable and consistent with market rates for tasks of a similar nature; And b) the required work\/ services are not split into smaller-sized procurement.<\/p>\n3. Mandatory reporting of nomination awards: All works\/ purchase\/ consultancy\/ non-consultancy contracts awarded on a nomination basis should be brought to the notice of the following authorities for information: a) THE SECRETARY, in the case of Ministries\/ Departments; b) the board of directors or equivalent managing body, in case of Public Sector Undertakings, Public Sector Banks, Insurance companies, etc.; c) the chief executive of the organisation where such a managing body is not in existence.<\/p>\n<ul class=\"lst\"><li>I) the report relating to such awards on a nomination basis shall be submitted to the Secretary\/ board\/ chief executive\/ equivalent managing body every quarter.<\/li><li>ii) the audit committee or similar unit in the organisation May be required to check at least 10% of such cases.<\/li><\/ul>\n4. SSS \u2014 Risks and Mitigations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>a) inappropriate selection of SSS: There is a possibility that the SSS system is selected where LCS or other systems would have been more appropriate, considering the quality requirements or the capability of the Procuring Entity to monitor the assignment. The assignment May be split into parcels to avoid competitive selection systems, or to avoid obtaining higher-level approvals for SSS.<\/td><td>Full JUSTIFICATION for single source selection should be recorded in the file, and approval of the Competent Authority obtained \u2014 the Schedule of Procurement Powers (SoPP) should severely restrict powers for SSS selection. In direct selection, the Procuring Entity should ensure fairness and equity, and the required work\/ services are not split into smaller-sized procurement to avoid competitive processes.<\/td><\/tr><tr><td>b) cost May be unreasonably high: The single contractor\/ consultant is likely to charge unreasonably high prices.<\/td><td>The Procuring Entity must have a procedure in place to ensure that the prices are reasonable and consistent with market rates for tasks of a similar nature. If necessary, negotiations May be held with the contractors\/ consultants to examine reasonableness of quoted price.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.5<\/span>Tendering Systems<\/span><\/h2><h3>4.5.1<\/span>The Common Rationale<\/span><\/h3>\nTendering systems are designed to achieve an appropriate balance between the countervailing needs for the 'right quality' and the 'RIGHT PRICE' \u2014 while the mode of procurement addresses the 'RIGHT SOURCE', and the TENDER DOCUMENT addresses the 'RIGHT QUANTITY' and 'right time and place' \u2014 under different complexities\/ criticality of Technical requirements and value of procurements.<\/p>\n<aside class=\"note\">C<\/span> variant of the same proposition: *Tendering systems are designed to achieve an appropriate balance between the countervailing needs for <\/strong>Right Quality, Right Source, AND the Right Price\u2026 <\/strong>In certain critical and complex requirements, the technical and financial capability of the source of supply becomes an important determinant for Value for Money.*<\/p><\/aside>\nplease note that the selection of a tendering system has to be based on the two factors mentioned above; Hence, just a value threshold for their use is discouraged. Selection should be based on professional judgement of the two factors mentioned above. (Stated expressly in G<\/span>, W<\/span> and NC<\/span>.)<\/em><\/p>\n<h3>4.5.2<\/span>The Systems Listed<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>G<\/span> Goods<\/th><th>W<\/span> Works<\/th><th>C<\/span> Consultancy<\/th><th>NC<\/span> Non-Consultancy<\/th><\/tr><\/thead><tbody><tr><td>1. Single-Stage Tendering System<\/td><td><\/td><td><\/td><td><\/td><td><\/td><\/tr><tr><td> \u2014 a) Single Stage Single Envelope System<\/td><td><\/td><td><\/td><td><\/td><td><\/td><\/tr><tr><td> \u2014 b) Single Stage Two Envelopes System (Two Bid System) (Rule 163 of GFR 2017)<\/em><\/td><td><\/td><td><\/td><td><\/td><td><\/td><\/tr><tr><td> \u2014 c) Single Stage Two Envelopes System with PRE-QUALIFICATION<\/td><td><\/td><td><\/td><td>[C ONLY]<\/td><td><\/td><\/tr><tr><td>2. Two Stage Bidding \u2014 Expression of Interest Tenders \u2014 Market Exploration\/ Short-listing (Rule 164 of GFR 2017)<\/em><\/td><td><\/td><td><\/td><td><\/td><td><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Cross-reference note: The WORKS, CONSULTANCY and NON-CONSULTANCY Manuals all state expressly: \"Details of these Bidding Systems are explained in CHAPTER 4 of the Manual for procurement of goods, 2024, which may be referred to. For the sake of brevity, these are not repeated here.\"<\/em><\/p>\nThe full text below is therefore drawn from the GOODS Manual and applies to all four categories.<\/p>\nC<\/span> adds: *For guidance on the preparation of the <\/strong>Request for Expression of Interest (REoI) document for the procurement of consultancy services, please refer to para 5.2 of the Consultancy Manual.*<\/p><\/aside>\n<h3>4.5.3<\/span>Single-Stage Tendering System<\/span><\/h3>\nIn single-stage tendering, bids are invited at a single stage of submission. The bids can be stipulated to be either in a single envelope or in multiple envelopes.<\/p>\n<h4>A. Single Stage Single Envelope System<\/span><\/h4>\n1. In a single-stage single-envelope system, eligibility, technical\/ commercial details, and financial details are submitted together in the same envelope.<\/p>\nEvaluation is in the sequence of evaluated responsive prices (from L1 onwards), and their technical\/ commercial compliance is checked.<\/p>\nThe lowest-priced bid that meets the eligibility\/ qualification criteria, technical and commercial conditions laid down in the tender documents is declared as successful.<\/p>\n2. Where suitable: This tendering system is SUITABLE where:<\/p>\n<ul class=\"lst\"><li>The technical requirement is simple or moderately complex;<\/li><li>The capability of the source of supply is not too crucial; And<\/li><li>the value of procurement is not too high.<\/li><\/ul>\nThis is the simplest and the quickest tendering system and should be the default system of tendering.<\/p>\n<h4>B. Single Stage Two Envelopes System (Two Bid System)<\/span><\/h4>\n(Rule 163 of GFR 2017)<\/em><\/p>\n1. When used: In technically complex requirements \u2014 but where the capability of the source of supply is still not critical, and the value of procurement is not high \u2014 a Single-stage two-envelopes system may be followed.<\/p>\n2. Composition of the two envelopes (off-line tenders): Bidders should be asked to bifurcate their quotations into two separately sealed envelopes:<\/p>\n<ul class=\"lst\"><li>The first envelope \u2014 called the techno-commercial bid \u2014 contains the eligibility, technical quality and performance aspects, commercial terms and conditions and documents sought in the tender, except the price and relevant financial details<\/em>.<\/li><li>The second envelope \u2014 called the financial bid \u2014 contains the price quotation along with other financial details.<\/li><li>Both the envelopes are to be submitted together in a sealed outer envelope.<\/li><li>In e-procurement, the bidder would be asked to upload two files, mutatis mutandis<\/em>.<\/li><\/ul>\n3. First opening: The techno-commercial bids are to be opened in the first instance on the pre-announced bid opening date and time, and scrutinised and evaluated by the TC with reference to parameters prescribed in the tender documents; And responsive, eligible, and technically compliant bidders are decided.<\/p>\n4. Second opening: Thereafter, the financial bids of ONLY<\/em> The techno-commercially compliant offers are to be opened on a pre-announced date and time for further scrutiny, evaluation, ranking and placement of the contract.<\/p>\n<ul class=\"lst\"><li>In e-procurement, financial bids of technically non-compliant offers would remain encrypted and unopened.<\/li><li>In off-line tenders, the financial bids of technically non-compliant bidders should be returned unopened to the respective bidders by registered acknowledgement due\/ reliable courier, or any other mode with proof of delivery.<\/li><\/ul>\n<h3>4.5.4<\/span>Two-Stage Bidding \u2014 Expression of Interest (EoI) Tenders \u2014 Market Exploration<\/span><\/h3>\n(Rule 164 of GFR 2017)<\/em><\/p>\n1. The problem it solves: In the case of green-field\/ blue-sky projects, where the equipment\/ plant to be procured is COMPLEX, the procuring organisation May not possess the full knowledge of either the various technical solutions available or the likely sources for such products in the market.<\/p>\nTo meet the desired objectives of a transparent procurement that ensures value for money and simultaneously ensures the upgradation of technology & CAPACITY BUILDING, it would be prudent to invite an Expression of Interest (EoI) bids as a first stage of the two-stage tendering system \u2014 to explore the market and finalise specifications based on technical discussions\/ presentations with the experienced manufacturers\/ suppliers in a transparent manner.<\/p>\n<aside class=\"note\">In less complex cases, a market consultation through a pre-nit conference May suffice instead of two-stage tendering.<\/p><\/aside>\n2. The four situations in which EoI bids May be invited: A) it is not feasible for the Procuring Entity to formulate detailed specifications or identify specific characteristics for the subject matter of procurement without receiving inputs regarding its technical aspects from bidders; B) the character of the subject matter of procurement is subject to rapid technological advances, market fluctuations, or both; C) the Procuring Entity seeks to enter into a contract for research, experiment, study, or development \u2014 except where the contract includes the production of requirements in quantities sufficient to establish their commercial viability or to recover research and development costs; Or d) the bidder is expected to carry out a detailed survey or investigation and undertake a comprehensive assessment of risks, costs and obligations associated with the particular procurement.<\/p>\n<h4>A. The Procedure of Two-Stage Bidding<\/span><\/h4>\n1. First stage: The Procuring Entity shall invite EoI bids containing the broad objectives, technical and financial qualification criteria, terms and conditions of the proposed procurement, etc. \u2014 without a bid price<\/em>.<\/p>\nOn receipt of the Expressions of Interest, manufacturers\/ suppliers which are prima facie<\/em> Considered technically and financially capable of supplying the material or executing the proposed work shall be shortlisted.<\/p>\n2. Technical discussions: Thereafter, technical discussions\/ presentations May be held with the short-listed manufacturers\/ suppliers \u2014 giving equal opportunity to all such bidders to participate in the discussions.<\/p>\nDuring these technical discussions, the procurement agency May also add other stakeholders who could add value to the decision-making on the various technical aspects and evaluation criteria.<\/p>\nA proper record of discussions\/ presentations and the process of decision-making should be kept.<\/p>\n3. Framing specifications: Based on the discussions\/ presentations so held, one or more acceptable technical solutions could be decided upon \u2014 by laying down detailed technical specifications for each acceptable technical solution, quality benchmarks, warranty requirements, delivery milestones, etc. \u2014 in a manner consistent with the objectives of transparent procurement.<\/p>\nAt the same time, care should be taken to make the specifications generic in nature, to provide equitable opportunities to the prospective bidders.<\/p>\n4. The limit on revision:<\/strong> In revising the relevant terms and conditions of the procurement, if found necessary because of discussions with the shortlisted bidders, the Procuring Entity shall not modify the fundamental nature<\/em> Of the procurement itself.<\/strong><\/p>\n5. Second stage: The Procuring Entity shall invite only those bidders whose bids at the first stage were not rejected, to participate in a two-envelope tendering in response to a revised set of terms and conditions of the procurement.<\/p>\n6. Right of withdrawal without penalty: Any bidder invited to bid but not in a position to supply the subject matter of procurement due to modification in the specifications or terms and conditions May withdraw from the tendering proceedings without forfeiting any Bid Security<\/em> That he May have been required to provide, or being penalised in any way \u2014 by declaring his intention to withdraw from the procurement proceedings with adequate justification.<\/p>\n7. 'Non-committal' EoI: If the Procuring Entity is of the view that after the EoI stage there is a likelihood of further participation by many more bidders \u2014 and to avoid getting trapped into a legacy technology \u2014 the second-stage tendering May not be restricted only to the shortlisted bidders of the EoI stage, and it May be so declared in the EoI document ab initio<\/em>.<\/p>\nThereafter, in the second stage, normal OTE\/ GTE tendering May be performed. Such a variant of EoI is called a 'non-committal' EoI.<\/p>\nInstances of 'non-committal EoI' should be rare, since it May de-incentivise the participants from giving a diligent\/ sincere EoI. There should not be any bid-security requirement in such non-committal EoI.<\/p>\n<h4>B. Invitation of EoI Tenders<\/span><\/h4>\nIn EoI tenders, an advertisement inviting Expression of Interest should be published. The invitation to the EoI document should contain: a) a copy of the advertisement; b) objectives and scope of the requirement \u2014 a brief description of objectives and the broad scope of the requirement; it may also include the validity period of empanelment; c) instructions to the bidders \u2014 including the nature of supply, fees for empanelment (if EoI is for empanelment), last date of submission, place of submission and any other related instructions; d) formats for submission \u2014 the format in which the bidders are expected to submit their EoI; e) QUALIFICATION CRITERIA \u2014 the invitation to EoI should clearly lay down the qualification criteria that should be applied for shortlisting. The required supporting documents need to be clearly mentioned.<\/p>\n<h4>C. Evaluation of EoI<\/span><\/h4>\nThe bidders should be evaluated for shortlisting \u2014 inter alia<\/em> \u2014 based on their past experience of performance in a similar context, financial strength, and technical capabilities, among others.<\/p>\nEach bidder should be assigned scores based on the sum of marks obtained for each parameter multiplied by the weightage assigned to that parameter.<\/p>\nAll bidders who secure the minimum required marks (normally 60 (sixty) per cent) should be shortlisted. The minimum qualifying marks should be specified in the EoI document.<\/p>\nALTERNATIVELY, instead of weighted evaluation, the EoI document May specify a 'FAIL-PASS CRITERIA' with the minimum qualifying requirement for each of the criteria \u2014 such as minimum years of experience, minimum number of assignments executed and minimum turnover. Under such circumstances, all bidders who meet the minimum requirement as specified should be shortlisted.<\/p>\nThe shortlist should normally comprise at least four firms.<\/p>\n<aside class=\"note\">(Contrast C<\/span> at para 4.4.1-3 above, where the consultancy shortlist is not fewer than three and not more than eight<\/strong>.)<\/em><\/p><\/aside>\nAn example of EoI Qualification criteria G<\/span>:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Criteria<\/th><th>Sub-criteria<\/th><th>Weightage*<\/th><th>Break-up of Weightage<\/th><\/tr><\/thead><tbody><tr><td>Past experience of the firm with similar requirements<\/td><td><\/td><td>A\\*<\/td><td><\/td><\/tr><tr><td>Financial strength of the vendor<\/td><td><\/td><td>B\\*<\/td><td><\/td><\/tr><tr><td><\/td><td>Turnover figures for the last three years<\/td><td><\/td><td>B1\\*<\/td><\/tr><tr><td><\/td><td>Net profit figures for the last three years<\/td><td><\/td><td>B2\\*<\/td><\/tr><tr><td>Quality accreditations, licensing requirements<\/td><td><\/td><td>C\\*<\/td><td><\/td><\/tr><tr><td>Manufacturing capabilities\/ tie-ups<\/td><td><\/td><td>D\\*<\/td><td><\/td><\/tr><tr><td>After-sales support infrastructure<\/td><td><\/td><td>E\\*<\/td><td><\/td><\/tr><tr><td>Product support<\/td><td><\/td><td>F\\*<\/td><td><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">\\* weightage (out of 100) should be pre-decided and declared in EoI documents by the ca, based on an assessment of the required profiles of the potential bidders. The marking\/ grading scheme for allotting marks (out of 100) for various parameters should also be laid down.<\/p><\/aside>\n<h2>4.6<\/span>Channels of Procurement<\/span><\/h2>\nPublic Procurement can be performed\/ channelled by way of:<\/p>\n<aside class=\"note\">Manual bids \u00b7 e-procurement platforms \u00b7 GeM portal \u00b7 or through third-party agencies.<\/p>\nPlacement note: Electronic Reverse Auction (eRA) appears under CHANNELS in the Works (3.5.2) and Non-Consultancy (4.6.2) Manuals, but under modes of procurement in the Goods Manual (4.5). It is absent from the Consultancy Manual. eRA is covered in PART B of this chapter with the modes of procurement.<\/p><\/aside>\n<h3>4.6.1<\/span>Electronic Procurement (e-Procurement)<\/span><\/h3>\n(Rule 160 of GFR 2017)<\/em><\/p>\n1. What it is: Electronic procurement (e-procurement) is the use of information and communication technology (especially the internet) by the buyer (through a third-party e-procurement portal) in conducting procurement processes with the vendors\/ contractors for the acquisition of goods (supplies), works and services \u2014 aimed at open, non-discriminatory, and efficient procurement through transparent procedures.<\/p>\n<aside class=\"note\">A generic description of how e-Procurement is conducted is detailed in 'Appendix 3: Electronic Procurement (e-Procurement) and e-Auction' of the Manual for Procurement of Goods, 2024.<\/em><\/p><\/aside>\n2. The mandate \u2014 and its two exceptions: It is mandatory for ministries\/ departments to receive all bids through e-procurement portals that are gcqe compliant<\/em>, for all procurements.<\/p>\nThis condition will NOT<\/em> Be applicable for:<\/p>\n<ul class=\"lst\"><li>the procurement made without QUOTATION (under RULE 154 of GFR, 2017); or<\/li><li>through PURCHASE COMMITTEE (under RULE 155 of GFR, 2017).<\/li><\/ul>\n<aside class=\"note\">GCQE = Guidelines for Compliance to Quality Requirements of eProcurement, JULY 2021, issued by the Standardisation Testing and Quality Certification (STQC) Directorate \u2014 an attached office of MeitY.<\/p><\/aside>\n3. No mixing of Manual and electronic bids: Normally, in e-procurement, no physical\/ off-line tender documents are provided, nor are any Manual bids accepted. It is not a good practice to call both electronic and Manual bids in the same tender.<\/p>\n4. Exemption \u2014 Global Tender Enquiry: In Global Tender Enquiry (by any mode \u2014 open tender, limited tender or single tender), e-procurement May not be mandatorily insisted upon. However, e-publishing would still be mandatory.<\/p>\n5. Exemption \u2014 national security and missions abroad: In individual cases where national security and strategic considerations demand confidentiality, ministries\/ departments May exempt such cases from e-procurement \u2014 after seeking the approval of the concerned Secretary and with the concurrence of financial advisers.<\/p>\nIn case of tenders floated by Indian missions and CPSE units abroad, the Competent Authority for deciding the tender May exempt such cases from e-procurement.<\/p>\n6. The portals: Note the different names used by the four Manuals for the NIC portal:<\/p>\n<ul class=\"lst\"><li>G<\/span>\"The National Informatics Centre (NIC) has an e-Procurement portal called Government e-procurement of NIC (gepnic)<\/strong>.\"<\/em><\/li><li>C<\/span>\"National Informatics Centre (NIC) has an eProcurement portal called the Central Public Procurement Portal (CPPP)<\/strong>.\"<\/em><\/li><\/ul>\nThere are other service providers in the public sector (e.g., MSTC) and private sector that can be utilised for e-PROCUREMENT. Details about the process of e-procurement are available from the service providers.<\/p>\n7. Which portal a Ministry should use: Ministries\/ departments that do not have a large volume of procurement, or carry out procurements required only for the day-to-day running of offices, and have not initiated e-procurement through any other solution so far \u2014 May use the e-procurement solution developed by NIC.<\/p>\nOther ministries\/ departments May either use the e-procurement solution developed by NIC, or engage any other service provider \u2014 G<\/span> adds: (Gcqe compliant)<\/em> \u2014 following due process.<\/p>\n8. These instructions will not apply to procurements made by ministries\/ departments through Government E-marketplace (GeM).<\/p>\n<h3>4.6.2<\/span>Mandatory Procurement of Goods and Services through GeM<\/span><\/h3>\n(Rule 149 of GFR 2017)<\/em><\/p>\n1. What an online marketplace is: An online marketplace (or e-commerce marketplace) is a type of e-commerce site where several sellers offer products or services, and all the buyers can select the product\/ services offered by any one of the sellers based on his own criteria.<\/p>\nIn an online marketplace, the purchaser's transactions are processed by the marketplace operator, and then products\/ services are delivered and fulfilled directly by the participating retailers. Other capabilities might include auctioning (forward or reverse), catalogues, ordering, posting requirements by purchasers, payment gateways, etc.<\/p>\nIn general, because online marketplaces aggregate products from a wide array of providers, selection is usually wider, availability is higher, and prices are more competitive than in vendor-specific online retail stores.<\/p>\n2. The mandate: The Government of India has established the Government E-marketplace (GeM) for common-use goods and services. The procurement process on GeM is end-to-end \u2014 from placement of contract orders to payment to suppliers. This is to ensure better transparency and higher efficiency. All the processes will be electronic and online.<\/p>\nThe procurement of goods and services through the GeM portal by ministries\/ departments (including attached\/ subordinate offices), CPSEs, and autonomous bodies is mandatory<\/em> for goods or services available therein, as per Rule 149 of GFR, 2017.<\/p>\n3. Supplier registration: Products and services are listed on GeM by various suppliers, as on other e-commerce portals. Supplier registration on geM is online and automatic, based on:<\/p>\n<aside class=\"note\">PAN Card \u00b7 Aadhaar Card \u00b7 GST Certification \u00b7 Bank Account and Financial Information \u00b7 Corporate Registration Documents (Udyam registration for MSEs) \u00b7 VAT or TIN Number \u00b7 Proof of Address \u00b7 Contact Details, etc.<\/p><\/aside>\n4. Demand aggregation: The best prices for a user can be available if the same requirements and demands of various organisations are aggregated. This Acts as an incentive for the supplier to quote their best price. For the same products, the demand of various Government departments can be clubbed together, and Reverse Auction can be done based on aggregate demand, which will provide the best prices to the Government.<\/p>\n5. The GeM monetary thresholds \u2014 Rule 149 of GFR, 2017:<\/p>\n<aside class=\"note\">\"Government e-Market Place (GeM): GeM SPV (Special Purpose Vehicle) will ensure adequate publicity, including periodic advertisement of the items to be procured through GeM for the prospective suppliers. Suppliers' credentials on GeM shall be certified by GeM SPV. The GeM portal shall be utilised by the Government buyers for direct online purchases as follows:<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>Value<\/th><th>Procedure<\/th><\/tr><\/thead><tbody><tr><td>a) UP TO Rs. 50,000\/-<\/td><td>through any of the available suppliers on the GeM, meeting the requisite quality, specification, and delivery period. Note 1: In the case of automobiles, direct procurement under this sub-para is permitted without any ceiling limit<\/em>. Note 2: In case the item is available on GeM, it is not permitted<\/em> To purchase the same under Rule 154 of the GFR, 2017.<\/td><\/tr><tr><td>B) above Rs. 50,000\/- and up to Rs. 10,00,000\/-<\/td><td>through the GeM seller having the lowest price amongst the available sellers, of at least three different manufacturers<\/em>, ON GeM \u2014 meeting the requisite quality, specification, and delivery period. The tools for online bidding and online Reverse Auction available on GeM can be used by the buyer even for procurements less than Rs. 10,00,000\/-. Note 1: In case the item is available on GeM, it is not permitted<\/em> To purchase the same under Rule 155 of the GFR, 2017.<\/td><\/tr><tr><td>c) above Rs. 10,00,000\/-<\/td><td>through the supplier having the lowest price meeting the requisite quality, specification, and delivery period \u2014 after mandatorily<\/em> Obtaining bids, using online bidding or Reverse Auction tool provided on GeM.<\/td><\/tr><\/tbody><\/table><\/div>\nD) the invitation for the online e-bidding\/ Reverse Auction will be available to all the existing sellers or other sellers registered on the portal who have offered their goods\/ services under the particular product\/ service category, as per the terms and conditions of GeM.<\/p>\nE) the above-mentioned monetary ceiling is applicable ONLY<\/em> for purchases made through GeM. For purchases, if any, outside GeM, relevant GFR Rules shall apply.<\/p>\nF) the ministries\/ departments shall work out their procurement requirements of goods and services on either \"opex\" model or \"capex\" model as per their requirement\/ suitability at the time of preparation of budget estimates (be), and shall project their annual procurement plan of goods and services on GeM portal within 30 (thirty) days of budget approval.<\/p>\ng) it is the responsibility of the Procuring Entity to do due diligence to ensure the reasonableness of rates. The government buyers may ascertain the reasonableness of prices before placing an order using the BUSINESS ANALYTICS (ba) tools available on geM \u2014 including the last purchase price on geM, the department's own last purchase price, etc.<\/p>\nH) demand for goods shall not be divided into small quantities to make piecemeal purchases, to avoid procurement through L-1 buying\/ bidding\/ Reverse Auction on GeM, or the necessity of obtaining the sanction of higher authorities required with reference to the estimated value of the total demand.\"<\/p>\n6. GeM Portal: https:\/\/gem.gov.in \u2014 Detailed instructions for user organisation registration, supplier registration, listing of products, terms and conditions, online bidding, Reverse Auction, demand aggregation, call centre, etc., are available on this portal.<\/p>\n7. Uploading of non-availability report \u2014 gemar&pts: It is mandatory for a buyer to generate a \"GeM availability report and past transaction summary\" (gemar&pts) with a unique id on the GeM portal using his login credentials, for procurement outside<\/em> GeM (for example, for procurement through the Central Public Procurement Portal)<\/em>(Notified vide OM No. F.6.18.2019-PPD dated 11th June 2021)<\/em>.<\/p>\nThe past transaction summary will be provided, where available.<\/p>\n\"Gemar&pts\" shall be a pre-requisite for arriving at a decision by the Competent Authority for procurement of required goods and services by floating a bid outside GeM, and its unique id would be required to be furnished on the publishing portal along with the tender proposed to be published.<\/p>\n8. Interaction with Rules 154 and 155:<\/p>\n<ul class=\"lst\"><li>Purchase of goods without quotation<\/em> Can be resorted to for value up to Rs. 50,000\/- only on each occasion \u2014 without inviting quotations or bids \u2014 based on a certificate to be recorded by the Competent Authority, only when the required goods are not available on GeM<\/em>.<\/li><li>In case a certain item is not available on the GeM portal, purchase of goods costing above Rs. 50,000\/- and up to Rs. 5,00,000\/- on each occasion May be made on the recommendations of a duly constituted local Purchase Committee<\/em>.<\/li><\/ul>\n9. Buying outside GeM when the item is on GeM: Where an item is available on GeM, and the Ministry\/ Department\/ organisation wants to buy outside the GeM in view of any compelling circumstances, the approval of the standing committee of GeM (SCoGeM)<\/em> And the Secretary concerned<\/em> Shall be required (OM No. F.6\/15\/2018-PPD dated 05.02.2020)<\/em>.<\/p>\n10. Receipt of Materials and Payment Procedures:<\/strong> Further details are given in Annexure 36<\/strong> of the Goods Manual.<\/p>\n11. Push Button Procurement (PBP) on GeM<\/strong>(Notified vide OM No. F.6\/7\/2022-PPD dated 06.09.2022)<\/em>:<\/p>\na) The rationale: As per Rule 144(vii) and Rule 149 of GFR, 2017, the procuring entity should satisfy itself that the price of the selected offer is reasonable. SOMETIMES \u2014 ESPECIALLY INFREQUENTLY \u2014 Government buyers find it difficult to certify the reasonableness of rates. Such users normally do not possess the requisite skills to make procurement decisions. It delays the procurement process.<\/p>\nAt the same time, for typically low-value procurements, efforts expended in assessing the reasonability of rates May be disproportionate. Additionally, with developments in technology and e-procurement becoming the norm, the availability of market activities and the capability to analyse them artificially have provided an opportunity to automate decision-making activities, such as the assessment of the reasonability of rates in such cases.<\/p>\nb) The seven conditions of PBP:<\/p>\n<ul class=\"lst\"><li>I) PBP will be made only on GeM through bidding<\/em> \u2014 PBP through direct purchase, L-1, custom-bid, etc., are not permitted<\/em>.<\/li><li>ii) the total procurement value of the specific case is permitted up to rupees five (5) lakh, inclusive of all taxes.<\/li><li>iii) this will be an additional<\/em> Method of procurement, and procuring entities are free to use or not to use this additional method.<\/li><li>iv) this method can be used only if at least five bids<\/em> Are received. In case fewer than five bids are received, the procurement is to restart using the usual procurement modes. However, buyers will have a choice to extend the PBP date once by three (3) days<\/em> At the time of preparation of the tender document, in case of lesser participation.<\/li><li>V) no splitting of requirements is to be done to bring procurement under this method.<\/li><li>vi) once a bid is invited on GeM, the contract will be placed directly by GeM without any human intervention<\/em> [provided condition (iv) above is complied with].<\/li><li>vii) GeM will permit this method only for such categories where at least ten sources<\/em> Are listed.<\/li><\/ul>\nc) GeM has published a Manual on PBP for buyers on its website.<\/p>\n<h3>4.6.3<\/span>Procurement through Centralised Agencies or other Organisations<\/span><\/h3>\nDepartments\/ Organisations that have not built up their own capability for procurement May engage procurement agents \u2014 for individual procurement or as outsourcing of service \u2014 with the approval of the Competent Authority.<\/p>\nMany canalised agencies authorised by the Government, and some CPSEs, provide end-to-end procurement services \u2014 i.e., framing procurement documents, bidding process, evaluation, and contract management.<\/p>\nPossibilities of other ministries\/ departments or their attached and subsidiary offices undertaking such procurement may also be explored.<\/p>\n<h1>Appendix to Chapter 4 \u2014 Part a: Points of Difference<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Chapter number<\/td><td>G\/C\/NC: Chapter 4 \u00b7 W: CHAPTER 3<\/td><\/tr><tr><td>2<\/td><td>Chapter title<\/td><td>G:<\/strong>Modes of Procurement and Tendering Systems<\/em> \u00b7 W\/C\/NC:<\/strong>Bidding Design for \u2026<\/em><\/td><\/tr><tr><td>3<\/td><td>Agency for Procurement (PWO \/ PSU \/ MoHUA notification \/ Works Committee \/ Sample MoU)<\/td><td>W ONLY<\/td><\/tr><tr><td>4<\/td><td>Rs 60 lakh direct-execution ceiling for repair works<\/td><td>W ONLY<\/td><\/tr><tr><td>5<\/td><td>Award to a PSU treated as project management consultancy; competition on lump sum service charges<\/td><td>W ONLY<\/td><\/tr><tr><td>6<\/td><td>Admeasurement of Services \u2014 input vs output<\/td><td>nc only<\/td><\/tr><tr><td>7<\/td><td>\"Types of Contracts\" section<\/td><td>absent from goods entirely<\/strong>; W has 7, C has 5, NC has 4<\/td><\/tr><tr><td>8<\/td><td>Item Rate, Percentage Rate, Piece Work, EPC, PPP<\/td><td>W ONLY<\/td><\/tr><tr><td>9<\/td><td>BOQ variation bands (\u00b110\u201315% allowed; \u00b125\u201330% needs CA sanction)<\/td><td>W ONLY<\/td><\/tr><tr><td>10<\/td><td>EPC 10% change-of-scope ceiling; LD capped at 10%; bonus \u226410%; 2-year defects liability; 30-day grace period; sub-contracting \u226450%<\/td><td>W ONLY<\/td><\/tr><tr><td>11<\/td><td>EPC technical capacity thresholds (60% one project \/ 40% two \/ 30% three); net worth 15%<\/td><td>W ONLY<\/td><\/tr><tr><td>12<\/td><td>Right of the EPC contractor to MATCH the first-ranked bid on payment of ~2%<\/td><td>W ONLY<\/td><\/tr><tr><td>13<\/td><td>Retainer-ship cum Success (Contingency) Fee Contract<\/td><td>C ONLY<\/td><\/tr><tr><td>14<\/td><td>\"Risk of over-utilisation\" as a fourth risk row in Indefinite Delivery contracts<\/td><td>C ONLY<\/td><\/tr><tr><td>15<\/td><td>Consultancy staff \"normally NAMED\" in Time-Based contracts<\/td><td>C ONLY<\/td><\/tr><tr><td>16<\/td><td>Percentage contract discouraged for architectural services unless on fixed target cost<\/td><td>C<\/strong> (NC carries the type but not this caution in the same terms)<\/td><\/tr><tr><td>17<\/td><td>\"Systems of Selection\" section<\/td><td>absent from goods entirely<\/td><\/tr><tr><td>18<\/td><td>QCBS weightage \u2014 inverted<\/td><td>C: Technical 70% \/ Cost 30%, technical never more than 80% \u00b7 W & NC: Cost 80% \/ Technical 20%, non-financial never EXCEEDING 30%<\/td><\/tr><tr><td>19<\/td><td>QCBS suggestive weighting table (80\/20 \u00b7 75-65\/25-35 \u00b7 60-50\/40-50)<\/td><td>C ONLY<\/td><\/tr><tr><td>20<\/td><td>Fixed Budget based Selection (FBS)<\/td><td>C ONLY<\/td><\/tr><tr><td>21<\/td><td>Quality Oriented Procurement (QOP) declaration framework<\/td><td>w + nc only<\/td><\/tr><tr><td>22<\/td><td>Special Technical Committee (STC) \u2014 composition, appointment, mandate, binding force<\/td><td>w + nc only<\/td><\/tr><tr><td>23<\/td><td>IIT\/ IISc Director as Competent Authority for QOP, valid up to 31.03.2027<\/td><td>w + nc only<\/td><\/tr><tr><td>24<\/td><td>Rs 10 crore value route to QCBS for NC Services, and the \"crossing Rs 10 crore\" 10% rule<\/td><td>nc only<\/td><\/tr><tr><td>25<\/td><td>QCBS prohibited in two-STAGE BIDDING<\/td><td>W ONLY<\/strong> (NC prohibits only Reverse Auction and Limited Tenders)<\/td><\/tr><tr><td>26<\/td><td>Mandatory pre-bid meeting in all QOP cases; changes to criteria need STC recommendation<\/td><td>w + nc only<\/td><\/tr><tr><td>27<\/td><td>Consultancy shortlist: Not fewer than 3, not more than 8<\/td><td>C ONLY<\/td><\/tr><tr><td>28<\/td><td>EoI shortlist should normally comprise at least four firms; minimum 60% marks<\/td><td>G<\/strong> (applied by cross-reference to W\/C\/NC)<\/td><\/tr><tr><td>29<\/td><td>\"Single Stage Two Envelopes System with PRE-QUALIFICATION\" listed as a distinct tendering system<\/td><td>C ONLY<\/td><\/tr><tr><td>30<\/td><td>Full text of the tendering systems<\/td><td>G ONLY<\/strong> \u2014 W, C and NC all expressly cross-refer to Goods Ch. 4 \"for the sake of brevity\"<\/td><\/tr><tr><td>31<\/td><td>NIC portal named<\/td><td>g: Gepnic \u00b7 c: CPPP<\/td><\/tr><tr><td>32<\/td><td>eRA placed under CHANNELS<\/td><td>W (3.5.2) + NC (4.6.2) \u00b7 G places it under MODES (4.5) \u00b7 absent from c<\/td><\/tr><tr><td>33<\/td><td>GeM monetary thresholds, GeMAR&PTS, SCoGeM approval, Push Button Procurement<\/td><td>G ONLY<\/strong> in full (C\/NC reproduce parts; W does not)<\/td><\/tr><tr><td>34<\/td><td>Automobiles exempt from the Rs 50,000 direct-purchase ceiling on GeM<\/td><td>G ONLY<\/td><\/tr><tr><td>35<\/td><td>PBP conditions \u2014 Rs 5 lakh cap, at least 5 bids, one 3-day extension, at least 10 listed sources, no human intervention<\/td><td>G ONLY<\/td><\/tr><tr><td>36<\/td><td>Nomination awards reported QUARTERLY; audit committee to check AT least 10% of such cases<\/td><td>W + C + NC<\/strong> (common)<\/td><\/tr><tr><td>37<\/td><td>\"Justification must be provided if a selection method other than LCS is used\"<\/td><td>W<\/strong> (states it as an express default rule)<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 4 \u2014 part a<\/p>\n<aside class=\"note\">Next:<\/strong>Chapter 4 \u2014 part b: Modes of procurement<\/strong> \u2014 Open Tender Enquiry \u00b7 Global Tender Enquiry and the Rs 200 crore restriction \u00b7 Rate Contract\/ Framework Agreement \u00b7 Electronic Reverse Auction \u00b7 Pre-qualification Bidding \u00b7 Approved Vendor List \u00b7 Limited Tender Enquiry \u00b7 Special Limited Tender Enquiry (Rs 50 lakh in Goods vs Rs 10 lakh in Works)<\/strong> \u00b7 Proprietary Article Certificate \u00b7 Single Tender Enquiry\/ Selection by Nomination \u00b7 Direct Procurement without Quotation \u00b7 Direct Procurement by Purchase Committee \u00b7 Award of Work through Quotations \u00b7 Award of works in stalled contracts.<\/p><\/aside>Part II<\/span>Modes of Procurement<\/em><\/p>\nMerging: Goods Ch. 4<\/strong> paras 4.1\u20134.13 \u00b7 Works Ch. 3<\/strong> paras 3.6\u20133.14 \u00b7 Consultancy Ch. 4<\/strong> para 4.3 \u00b7 Non-Consultancy Ch. 4<\/strong> para 4.4<\/em><\/p><h2>The Most Important Caution in this Chapter<\/span><\/h2>\n<aside class=\"note\">the works, consultancy and non-consultancy Manuals all carry the following sentence, word for word:<\/p>\n\"Applicability, Terms and Conditions, Risks, and mitigations of these modes of procurement (including restrictions regarding GTE mode for procurements below Rs 200 Crore) are detailed in CHAPTER 4 of the Manual for procurement of goods, 2024, which may be referred to. For the sake of brevity, these are not repeated here.\"<\/em><\/p>\nConsequently, the detailed text of every mode of procurement below is drawn from the GOODS Manual and applies mutatis mutandis<\/em> to Works, Consultancy and Non-Consultancy \u2014 except where the Works Manual has chosen to reproduce and vary the text (OTE, GTE, PQB, LTE, SLTE, STE), and except for the two modes that exist only in the Works Manual (Award of Work through Quotations; Award of works in stalled contracts).<\/p>\nA student who reads only the Works\/ CS\/ NC Manuals will not find the text of Rate Contract, AVL, PAC, eRA, Direct Procurement or the GTE exemptions at all. It is reproduced here in full so that this Unified Manual is self-sufficient.<\/p><\/aside>\n<h2>The Threshold Divergence Table \u2014 the Single Most Examinable Page in this Chapter<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Threshold<\/th><th>G<\/span> GOODS<\/th><th>W<\/span> WORKS<\/th><th>C<\/span> CONSULTANCY<\/th><th>NC<\/span> NON-CONSULTANCY<\/th><\/tr><\/thead><tbody><tr><td>OTE (Open Tender Enquiry) applies above<\/td><td>Rs. 50 lakh<\/td><td>Rs. 10 lakh<\/td><td>Rs. 50 lakh<\/td><td>Rs. 50 lakh<\/td><\/tr><tr><td>LTE (Limited Tender Enquiry) is the default up to<\/td><td>Rs. 5 lakh to Rs. 50 lakh<\/td><td>up to Rs. 10 lakh<\/td><td>up to Rs. 50 lakh<\/td><td>up to Rs. 50 lakh<\/td><\/tr><tr><td>SLTE (Special LTE) applies for procurements more THAN<\/td><td>Rs. 50 LAKH<\/td><td>Rs. 10 LAKH<\/td><td>Rs. 50 lakh<\/td><td>Rs. 50 lakh<\/td><\/tr><tr><td>Rule cited for the LTE\/SLTE threshold<\/td><td>Rule 162<\/td><td>Rule 139(v) AND Rule 162<\/td><td>Rule 162<\/td><td>Rule 162<\/td><\/tr><tr><td>GTE restriction<\/td><td>No GTE up to Rs. 200 crore<\/td><td>Same \u2014 Rs. 200 crore<\/td><td>Same<\/td><td>Same<\/td><\/tr><tr><td>Direct Procurement without Quotation<\/td><td>up to Rs. 50,000<\/strong>(Rs. 1,00,000 for Scientific Ministries)<\/em><\/td><td>(subsumed in \"Award of Work through Quotations\")<\/em><\/td><td>up to Rs. 50,000<\/td><td>up to Rs. 50,000<\/td><\/tr><tr><td>Direct Procurement by Purchase Committee<\/td><td>above Rs. 50,000 and up to Rs. 5,00,000<\/strong>(up to Rs. 10 lakh for Scientific Ministries)<\/em><\/td><td>(not carried)<\/em><\/td><td>up to Rs. 5 lakh<\/td><td>up to Rs. 5 lakh<\/td><\/tr><tr><td>Award of Work through Quotations<\/td><td>(not carried)<\/em><\/td><td>up to Rs. 5 lakh \u2014 works only<\/td><td>(not carried)<\/em><\/td><td>(not carried)<\/em><\/td><\/tr><tr><td>Rate Contract viability threshold<\/td><td>aggregate requirement more than Rs. 50 lakh p.a.<\/td><td>(cross-refers)<\/em><\/td><td>(cross-refers)<\/em><\/td><td>(cross-refers)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Footnote common to all four Manuals: \"Various thresholds for these Modes of procurements have been REVISED UPWARDS vide PPD's OM No. F.1\/3\/2014-PPD dated 10.07.2024.\"<\/em><\/p><\/aside>\n<h2>Concordance for Chapter 4 \u2014 Part B<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Mode<\/th><th>Goods<\/th><th>Works<\/th><th>CS<\/th><th>NCS<\/th><\/tr><\/thead><tbody><tr><td>4.7<\/td><td>Modes of Procurement \u2014 the taxonomy<\/td><td>4.1<\/td><td>3.6<\/td><td>4.3<\/td><td>4.4<\/td><\/tr><tr><td>4.8<\/td><td>Open Tender Enquiry (OTE)<\/td><td>4.2<\/td><td>3.7<\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><\/tr><tr><td>4.9<\/td><td>Global Tender Enquiry (GTE) + Rs 200 crore restriction<\/td><td>4.3<\/td><td>3.8<\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><\/tr><tr><td>4.10<\/td><td>Rate Contract (RC)\/ Framework Agreement (FA)<\/td><td>4.4<\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><\/tr><tr><td>4.11<\/td><td>Electronic Reverse Auction (eRA)<\/td><td>4.5<\/td><td>3.5.2 (under Channels)<\/em><\/td><td>absent<\/td><td>4.4-3-a)-iii + 4.6.2<\/td><\/tr><tr><td>4.12<\/td><td>Pre-qualification Modes \u2014 PQB<\/td><td>4.6<\/td><td>3.9<\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><\/tr><tr><td>4.13<\/td><td>Approved Vendor List (AVL)<\/td><td>4.7<\/td><td>(cross-ref only)<\/em><\/td><td>(cross-ref only)<\/em><\/td><td>(cross-ref only)<\/em><\/td><\/tr><tr><td>4.14<\/td><td>Limited Tender Enquiry (LTE)<\/td><td>4.8<\/td><td>3.10<\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><\/tr><tr><td>4.15<\/td><td>Special Limited Tender Enquiry (SLTE)<\/td><td>4.9<\/td><td>3.11<\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><\/tr><tr><td>4.16<\/td><td>Proprietary Article Certificate (PAC)<\/td><td>4.10<\/td><td>absent<\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><\/tr><tr><td>4.17<\/td><td>Single Tender Enquiry (STE)\/ Selection by Nomination<\/td><td>4.11<\/td><td>3.12<\/td><td>(listed only)<\/em><\/td><td>(listed only)<\/em><\/td><\/tr><tr><td>4.18<\/td><td>Direct Procurement without Quotation<\/td><td>4.12<\/td><td><\/td><td>(listed only)<\/em><\/td><td>4.4-7<\/td><\/tr><tr><td>4.19<\/td><td>Direct Procurement by Purchase Committee<\/td><td>4.13<\/td><td><\/td><td>(listed only)<\/em><\/td><td>4.4-7<\/td><\/tr><tr><td>4.20<\/td><td>Award of Work through Quotations<\/td><td><\/td><td>3.13<\/td><td><\/td><td><\/td><\/tr><tr><td>4.21<\/td><td>Award of works in stalled contracts<\/td><td><\/td><td>3.14<\/td><td><\/td><td><\/td><\/tr><tr><td>4.22<\/td><td>Mode selection by value \u2014 Non-Consultancy Services<\/td><td><\/td><td><\/td><td><\/td><td>4.4-5 to 4.4-7<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.7<\/span>Modes of Procurement \u2014 the Taxonomy<\/span><\/h2>\n1. The balance to be struck: Offers from prospective bidders in Public Procurement must be invited according to a procedure that achieves a balance between the need for the widest competition, on the one hand, and the complexity \u2014 G<\/span>NC<\/span> Add: Time, effort, and cost \u2014 of the procedure, on the other hand.<\/p>\nDifferent modes of procurement (W<\/span>, C<\/span>, NC<\/span> add: and tendering systems)<\/em> are used to suit various procurement circumstances to achieve this balance. Various modes of procurement vary the extent of competition (width and specificity of catchment area of bidders) to suit different procurement situations.<\/p>\nMode of procurement addresses the 'right source' of the 5Rs.<\/p>\n2. Delegation:<\/strong>There are laid-down delegations of powers to approve different modes of procurement to various competent authorities as shown in DFPR<\/strong>(G<\/span> Annexures 2 and 3 \u00b7 W<\/span>, C<\/span>, NC<\/span> Annexure 1)<\/em>. Each Procuring Entity May also publish its own Schedule of Procurement Powers (SoPP) delegating such powers within the entity<\/strong>(G<\/span> Annexure 4 \u00b7 W<\/span>, C<\/span>, NC<\/span> Annexure 2)<\/em>.<\/p>\n<h3>4.7.1<\/span>The Five (or Six) Families of Modes \u2014 Compared Across the Four Manuals<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>Family<\/th><th>G<\/span> GOODS<\/th><th>W<\/span> WORKS<\/th><th>C<\/span> CONSULTANCY<\/th><th>NC<\/span> NON-CONSULTANCY<\/th><\/tr><\/thead><tbody><tr><td>A) advertised modes<\/strong>(widest possible competition through wide publicity \u2014 Rule 161)<\/em><\/td><td>OTE \u00b7 GTE \u00b7 Rate Contracts<\/strong> \u00b7 eRA<\/strong><\/td><td>OTE \u00b7 GTE<\/td><td>OTE (above Rs 50 lakh)<\/em> \u00b7 GTE (restricted below Rs 200 cr)<\/em><\/td><td>OTE (above Rs 50 lakh)<\/em> \u00b7 GTE \u00b7 eRA<\/strong><\/td><\/tr><tr><td>b) pre-qualification modes<\/strong>(restricted to shortlisted pre-qualified bidders; shortlisting itself through wide publicity akin to advertised tenders)<\/em><\/td><td>PQB \u00b7 AVL<\/td><td>PQB \u00b7 AVL (cross-ref to Goods para 4.7)<\/em><\/td><td>PQB \u00b7 AVL (cross-ref)<\/em><\/td><td>PQB \u00b7 AVL (cross-ref)<\/em><\/td><\/tr><tr><td>c) restricted modes<\/strong>(restricted to known, selected bidders; shortlisting based on less rigorous checks of capability and past experience \u2014 Rule 162)<\/em><\/td><td>LTE (up to Rs 50 lakh<\/strong>)<\/em> \u00b7 SLTE (above Rs 50 lakh<\/strong>)<\/em><\/td><td>LTE (up to Rs 10 lakh<\/strong>)<\/em> \u00b7 SLTE (above Rs 10 lakh<\/strong>)<\/em><\/td><td>LTE (up to Rs 50 lakh)<\/em> \u00b7 SLTE (above Rs 50 lakh)<\/em><\/td><td>LTE (up to Rs 50 lakh)<\/em> \u00b7 SLTE (above Rs 50 lakh)<\/em><\/td><\/tr><tr><td>d) nomination modes<\/strong>(from a single source in special circumstances \u2014 Rule 166)<\/em><\/td><td>PAC<\/strong> \u00b7 STE without PAC<\/td><td>STE or Selection by Nomination only \u2014 NO PAC<\/td><td>PAC \u00b7 STE without PAC<\/td><td>PAC \u00b7 STE without PAC (NC cites RULE 204 GFR, not Rule 166)<\/em><\/td><\/tr><tr><td>e) shopping modes<\/strong>(without tendering or calling for formal bids, for small-value procurements \u2014 Rules 154, 155)<\/em><\/td><td>Direct Procurement without Quotation \u00b7 Direct Procurement by Purchase Committee<\/td><td>\"Award of Work through Quotations\/ Shopping Modes\" \u2014 Procurement of Works through Quotations<\/td><td>Direct Procurement without Quotation \u00b7 by Purchase Committee<\/td><td>Direct Procurement without Quotation \u00b7 by Purchase Committee<\/td><\/tr><tr><td>f) framework agreements\/ rate contracts<\/strong>(listed as a SEPARATE family)<\/em><\/td><td>(RC is under Advertised Modes)<\/em><\/td><td>listed separately as family (f)<\/td><td>listed separately as family (f)<\/td><td>listed separately as family (f)<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">note the three structural differences:<\/p>\n<ol class=\"lst\"><li>Goods<\/strong> places Rate Contract and eRA inside the ADVERTISED family<\/strong>; Works, CS and NC<\/strong> create a separate sixth family<\/strong> called Framework Agreements\/ Rate Contracts<\/em> and do not list eRA as an advertised mode (NC lists eRA as advertised mode (a)(iii))<\/em>.<\/li><li>Works has NO Proprietary Article Certificate (PAC) mode at all<\/strong> \u2014 its nomination family contains only STE or Selection by Nomination<\/em>.<\/li><li>NC cites Rule 204 of GFR for its Nomination mode with an additional sentence not found elsewhere: \"If, in an exceptional situation, it becomes necessary to procure a non-consulting service from a specifically chosen contractor, the Competent Authority in the Ministry or Department May do so in consultation with the Financial Adviser. In such cases, detailed justification, the circumstances leading to the selection, and the special interest or purpose served by this procurement must form an integral part of the proposal.\"<\/em><\/li><\/ol><\/aside>\nW<\/span> additional footnote: *\"<\/strong>Please also refer to RULE 139 of GFR 2017 regarding the thresholds for modes of procurement pertaining to Works.\"*<\/p>\nW<\/span> descriptions of AVL and Framework Agreements:<\/p>\n<ul class=\"lst\"><li>AVL: \"Procurement is restricted to contractors who have been pre-approved and included on a long-term multi-use list based on their demonstrated ability to meet the required standards.\"<\/em><\/li><li>Framework Agreements: \"Also known as RATE CONTRACTS, are agreements with contractors to execute works at pre-agreed rates during a specified validity period.\"<\/em><\/li><\/ul>\n<h2>4.8<\/span>Open Tender Enquiry (OTE)<\/span><\/h2>\n(Rule 161 of GFR 2017)<\/em><\/p>\n1. What it is: In Open Tender Enquiry (OTE) \u2014 also known as national competitive bidding (ncb), or simply advertised tender enquiry, but this Manual would stick to OTE \u2014 an attempt is made to attract the widest possible competition by publishing the NIT simultaneously on the designated websites.<\/p>\nThis is the default mode of procurement and gives the best Value for Money, but the procedure is relatively complex and prolonged. The systemic cost of this procedure May be high enough to be unviable for smaller-value procurements.<\/p>\n2. When OTE procedures \u2014 through e-procurement or through traditional tendering \u2014 should be adopted:<\/p>\na) Procurements exceeding the threshold of:<\/p>\n<ul class=\"lst\"><li>[G, C, NC] \u2014 Rs. 50 lakh (Rupees Fifty Lakh);<\/li><li>W<\/span> \u2014 Rs. 10 lakh (Rupees Ten Lakh) in works procurement;<\/li><\/ul>\nB) all requirements with clear technical specifications;<\/p>\nc)<\/strong>G<\/span> For requirements that are ordinarily available in the open market<\/strong>, it is necessary to evaluate competitive offers to decide the most suitable and economical option available;<\/p>\nW<\/span> For requirements that can ordinarily be fulfilled by the players available in the open market<\/strong>, it is necessary to evaluate competitive offers to decide the most suitable and economical option available;<\/p>\nd) G<\/span> When requirements are not available from known sources, or sources are presently limited and need to be made broad-based. In such situations, even for procurements below Rs. 50 lakh, the OTE mode May be used if warranted.<\/p>\nW<\/span> When the requirement cannot be fulfilled from known contractors, or contractors are presently limited and the requirement is to be made broad-based. In such situations, even for procurements below Rs. 10 lakh, the OTE mode May be used if warranted.<\/p>\n<h3>4.8.1<\/span>Terms and Conditions<\/span><\/h3>\n1. No restriction on participation:<\/p>\n<ul class=\"lst\"><li>G<\/span> There should be no restriction on participation by prospective bidders who meet the eligibility criteria. Especially, prior registration with the Procuring Entity should not be insisted upon. However, bidders who are already registered are also free to participate.<\/li><li>W<\/span> Participation should not be restricted to only bidders enlisted with the Procuring Entity. Bidders already enlisted are also free to participate. However, a requirement that successful un-enlisted bidders May have to get enlisted with the Procuring Entity before the contract is placed on them<\/em> May be mentioned in the tender document.<\/li><\/ul>\n2. Advertisement:<\/p>\n<ul class=\"lst\"><li>G<\/span> Advertisements in such cases should be given on the GOVERNMENT e-MARKETPLACE (GeM) as well as<\/em> ON GeM-Central Public Procurement Portal (CPPP) at www.eprocure.gov.in.<\/li><li>W<\/span> Advertisements in such cases should be given on the GeM-Central Public Procurement Portal (GeM-CPPP) at www.eprocure.gov.in. (no separate GeM mention)<\/em><\/li><\/ul>\nan organisation that has its own website should also publish all its advertised tender enquiries on the website. The Procuring Entity should also post the complete tender document on its website and gem-cppp to enable prospective bidders to make use of the document by downloading it. The advertisements for the tender invitations should give the complete web address from which the tender documents can be downloaded.<\/p>\nWhile it is no longer mandatory to issue advertisements in newspapers, there is no bar to issuing such advertisements if the procuring entities consider them necessary.<\/p>\nTo promote wider participation and ease of bidding, no cost of tender documents May be charged<\/em> for the tender documents downloaded by the bidders.<\/p>\n3. Free availability: The sale\/ availability for downloading of tender documents against NIT should not be restricted and should be available freely. Tender documents should preferably be sold\/ made available for download up to the date of tender opening (W<\/span>: \"up to the tender closing date and time\")<\/em>.<\/p>\n4. Model Tender Document:<\/strong> The tender documents should be prepared based on the relevant approved Model Tender Document (MTD) for the procurement category.<\/strong>(Further details on preparing tender documents are provided in G<\/span> Chapter 5 \u00b7 W<\/span> Chapter 4.)<\/em><\/p>\n5. Records in off-line tenders: The Procuring Entity shall maintain proper records about the number of tender documents sold, the list of parties to whom sold, details of the amount received through sale, and the number of unsold tender documents \u2014 which are to be cancelled after the opening of the tenders.<\/p>\n6. Currency: In domestic tenders, bids can be submitted only in INR, and any bid in foreign currency should be summarily rejected. Foreign bidders can also participate if they submit a bid in INR. However, purchase preference for local content as per the PPP-MII shall apply.<\/p>\n7. Consortium bidding in domestic open tenders: In the case of a domestic open tender for projects (including turnkey projects) allowing consortium bidding, a foreign bidder can be a consortium member \u2014 subject to the condition that the consortium as a whole<\/em> Meets the minimum local content criteria, as per the Make in India order, 2017.<\/p>\nThe leader of the consortium can be a foreign party, and the bids are to be solicited in Indian rupee only \u2014 i.e., no payment can be made in foreign currency to the foreign consortium member.<\/p>\n<h3>4.8.2<\/span>OTE \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. The crux of this mode is attracting bids from all possible prospective bidders. The risk is that this May not be achieved, even after incurring the extra cost of open tendering. This could be due to: a) Insufficient publicity; b) Hindrances in the availability of tender documents; c) Insufficient time for bid preparation; or d) Due to the onerous cost of tender documents or EMD<\/td><td>it should be ensured that the NIT on the website is easily searchable and visible, not hidden under layers of clicks. The matter should not be left entirely to the website or media publicity alone. Due diligence should be done to locate likely bidders. All registered vendors\/ contractors \u2014 in particular past successful vendors\/ contractors \u2014 should be given intimation about forthcoming tenders via sms\/ mail\/ email. Further, a limited or open tender that results in only one effective offer<\/em> Shall be treated as a Single Tender Enquiry situation, with relevant powers of approval, etc. It should also be ensured that there is no impediment to the issue\/ access of tender documents. Ordinarily, the due date fixed for the opening of the tender shall be a minimum of 21 (twenty-one) days from the date of advertisement, which may vary considering the nature of the material called for and delivery requirements. The due date may be subsequently extended with the approval of the ca only if it is felt necessary to have better competition. The tender documents shall be priced minimally (if at all priced), keeping in view the value of the tender as well as the cost of preparation and publicity of the tender documents. EMD should be sufficient to ensure that bidders honour their bids but, at the same time, should not be large enough to reduce competition.<\/td><\/tr><tr><td>2. Lack of clarity in description\/ specification of requirement, or undue stringency in qualifying criteria or other conditions<\/td><td>Mitigations of such risks can be addressed at the time of need assessment and procurement planning (please refer to Chapter 2) to attract adequate competition.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.9<\/span>Global Tender Enquiry (GTE)<\/span><\/h2>\n(Rule 161 of GFR 2017)<\/em><\/p>\n1. What it is: GTE \u2014 also known as international competitive bidding (icb), but this Manual would stick to GTE \u2014 is like OTE, but through appropriate advertising and provision for payment in foreign currencies through Letter of Credit, it is aimed at inviting the participation of inter alia<\/em> Foreign firms.<\/p>\nBids in foreign currency in any other mode of procurement shall be summarily rejected.<\/p>\nSubject to restriction on GTE (Para 4.9.2 below), GTE can ALSO<\/em> Be in SLTE, LTE or STE mode if justified with proper approvals as per SoPP.<\/p>\nThe point of balance between VfM and the cost\/ complexity of the procedure is further aggravated as compared to OTE. The development of local industry also needs to be kept in mind.<\/p>\n2. Hence, GTE may be viable only in the following situations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>G<\/span> GOODS<\/th><th>W<\/span> WORKS<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>Where goods of required specifications\/ quality May not be available within the country, and alternatives available in the country are not suitable for the purpose, it is necessary to also look for suitable competitive offers from abroad<\/td><td>Where required technology\/ specifications\/ quality are not available within the country and alternatives available in the country are not suitable for the purpose<\/td><\/tr><tr><td>b<\/td><td>non-existence of a local branch of the global principal of the manufacturer\/ vendors\/ contractors<\/td><td>non-existence of a local branch of the global principal of the contractors<\/td><\/tr><tr><td>c<\/td><td>requirement for compliance with specific international standards in technical specifications<\/td><td>requirement for compliance with specific international standards in technical specifications<\/td><\/tr><tr><td>d<\/td><td>absence of a sufficient number of competent domestic bidders likely to comply with the required technical specifications, and in case of suspected cartel formation among indigenous bidders<\/em><\/td><td>in case the requirement cannot be executed by indigenous contractors at reasonable rates<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<h3 class=\"src-G\">4.9.1<\/span>Terms and Conditions<\/span>G<\/span>reproduced in abridged form in W<\/span><\/h3><div class=\"srcblock src-G\">\n1. Advertisement<\/strong> \u2014 as in OTE (see para 4.8.1-2 above)<\/em>.<\/p>\n2. Free availability of documents \u2014 as in OTE.<\/p>\n3. Pricing of documents \u2014 the tender documents shall be priced minimally (if at all priced), keeping in view the value of the tender as also the cost of preparation and publicity of the tender documents.<\/p>\n4. Language and standards: GTE tender documents must be in english and must contain technical specifications that are in accordance with national requirements or else based on an international trade standard.<\/p>\n5. E-procurement: In Global Tender Enquiry, e-procurement May not be mandatorily insisted upon. (But e-publishing remains mandatory \u2014 see Part A, para 4.6.1-4.)<\/em><\/p>\n6. Notice period: The due date fixed for the opening of the tender shall be a minimum of four weeks<\/em> From the date of advertisement \u2014 which may vary considering the nature of the material called for and the time required to prepare the bids. The due date may be subsequently extended with the approval of the CA to promote better competition and also considering the delivery requirement.<\/p>\n<aside class=\"note\">(Contrast OTE: minimum 21 days.)<\/em><\/p><\/aside>\n7. Incoterms: Relevant INCOTERMS (presently 2020 version) should be included in the tender.<\/p>\n8. Currency of Bidding G<\/span>: In GTE, foreign bidders have the flexibility to quote prices and receive payments in either<\/em> Indian rupees OR<\/em> Freely convertible currencies such as US dollars, euros, pound sterling, yen, other relevant currencies, or a combination thereof.<\/p>\nHowever, prices for goods, works, or services (including agency commission) performed or sourced in India<\/em> Must be quoted and paid for in Indian rupees.<\/p>\nIndian bidders are required to quote in INR only. During the evaluation, all quoted prices are converted into Indian Rupees.<\/p>\n<aside class=\"note\">Footnote: The Central Board of Indirect Taxes and Customs (CBIC)<\/strong> issues an Exchange Rate Notification under the Customs Act, 1962<\/strong>, which lists currencies and exchange rates for imported goods in Schedule I<\/strong> \u2014 which may indicate relevant currencies.<\/em><\/p><\/aside>\n9. Agency Commission G<\/span>: The amount of agency commission \u2014 normally not exceeding five per cent<\/em> \u2014 payable to the Indian agent (who shall provide self-attested documentary evidence about their identity and business details to establish that they are a bona fide business and conform to regulations) should not be more than what is specified in the agency agreement (a certified copy should be submitted along with the financial bid) between the bidder and the Indian Agent.<\/p>\nAgency commission shall be paid by the Procuring Entity in India in equivalent Indian rupees<\/em> On satisfactory completion of the project or supplies of goods and spares.<\/p>\nThe Indian agent will be required to submit a certificate along with their agency commission bill, confirming that the amount claimed as agency commission in the bill has been spent\/ will be spent strictly to render services to the foreign principal, in terms of the agency agreement.<\/p>\nThe Procuring Entity or their authorised agencies and\/ or any other authority of the Government of India shall have rights to examine the books of the Indian agent, and defects or misrepresentations in respect of the afore-indicated confirmation coming to light during such examinations will make the foreign principal (i.e., the contractor) AND<\/em> Their Indian agent liable to be debarred from having business dealings with the purchaser, following laid-down procedures for such debarment.<\/p>\n10. Delivery Terms G<\/span>: The delivery terms are to be expressed in terms of INCOTERMS.<\/p>\nAs per the revised policy of the Government<\/strong>(Ministry of Shipping's No. SC-18013\/1\/2013-ASO-I dated 08.09.2015)<\/em>:<\/p>\n<ul class=\"lst\"><li>All Public Procurement import contracts involving ocean freight of dry or liquid bulk cargoes<\/em> Are to be finalised only on a FOB (free on board)\/ FAS (free alongside ship)<\/em> BASIS, and in case of any departure therefrom, prior approval of the concerned administrative Ministry\/ Department May be obtained.<\/li><li>However, imports involving ocean freight of general liner cargoes, project cargoes, heavy lift, container, break bulk cargoes<\/em>, etc., can now be made on FOB\/ FAS\/ CFR (cost & freight)\/ CIF (cost, insurance & freight)\/ DDP (delivery duty paid at named place)<\/em> BASIS.<\/li><li>All importing Government departments\/ pses can now make their own shipping arrangements without needing to route their requirements through the chartering wing of the Ministry of shipping<\/em>.<\/li><li>As per the extant directive of the Government, airlifting of imported goods from abroad will be done only through an Indian carrier<\/em>, wherever applicable.<\/li><\/ul>\n11. Insurance G<\/span>: Wherever necessary, the goods supplied under the contract shall be fully insured in a freely convertible currency against loss or damage incidental to manufacture or acquisition, transportation, storage and delivery as specified in the contract.<\/p>\n<ul class=\"lst\"><li>If considered necessary, the insurance may be done for coverage on an \"all RISKS\" basis, including war risks and strike clauses.<\/li><li>The amount covered under insurance should be sufficient to cover the overall expenditure incurred by the purchaser for receiving the goods at the destination.<\/li><li>Insurance for imported goods\/ equipment would need to be arranged very carefully and only for cases where the value of individual shipments is expected to be more than rupees five crore<\/em>.<\/li><li>Procuring entities with substantial import contracts May arrange \"open cover (all risk)\" annual insurance for all imports during the year with insurance companies, instead of insurance for each import separately.<\/li><li>Where delivery of imported goods is required by the purchaser on CIF\/ CIP\/ DDP<\/em> Basis, the supplier shall arrange and pay for marine\/ air insurance, making the purchaser the beneficiary.<\/li><li>Where delivery is on a FOB\/ FAS<\/em> Basis, marine\/ air insurance shall be the purchaser's responsibility.<\/li><\/ul>\n12. Taxes on imports G<\/span>: Import of goods or services or both attracts integrated tax (IGST). The IGST rate and GST cess shall be applicable on the 'customs assessable value' PLUS<\/em> The 'basic customs duty applicable thereon'.<\/p>\nForeign bidders shall indicate the break-up of prices for: Freight, insurance, customs duty, port handling charges, clearing agency charges, related ITC (hs) code, IGST\/ GST cess, and related HSN code, as relevant to the quoted price basis.<\/p>\n<\/div><h3>4.9.2<\/span>Restrictions on Global Tenders up to Rs. 200 Crore<\/span><\/h3>\n1. The bar: No Global Tender Enquiry (GTE) shall be invited up to Rs. 200 crore, or any limit as May be prescribed by the Department of Expenditure from time to time.<\/p>\n2. The relaxation route: In exceptional cases where the Ministry or Department feels that there are special reasons for inviting GTE for tenders below such limit \u2014 including those in SLTE\/ LTE mode or on a single tender basis<\/em> \u2014 it May record its detailed justification and seek prior approval for relaxation<\/em> From the Competent Authority specified by the Department of Expenditure.<\/p>\na) The GTE Portal: The agencies\/ subordinate offices under the administrative control of a Ministry\/ Department that require to float a GTE for procurement of certain products\/ items\/ services shall submit their applications and comments online<\/em> Through the GTE portal under the e-samiksha platform via https:\/\/esamiksha.gov.in\/GTE_NFEProposalForm.aspx<\/em> OR https:\/\/cabsec.gov.in\/more\/globaltenderenquiryproposal\/<\/em> \u2014 starting from 5TH May 2022. No physical application will be received.<\/p>\nb) 'GTE portal', a user-friendly IT application under the e-Samiksha platform, was developed by the cabinet secretariat (ID No. 213\/2\/1\/2021-C.A.IV dated 02.05.2022)<\/em>. For more details, refer to GTE Guidelines on the eSamiksha portal.<\/p>\n3. The two mandatory pre-conditions before sending a GTE proposal:<\/p>\nA) a domestic open tender MUST<\/em> Be floated first<\/strong> to identify the domestic manufacturers\/ service providers for the items\/ services for which approval is being sought for issuance of Global Tenders.<\/p>\n<aside class=\"note\">If the Ministry\/ Department has not floated a domestic open tender after 15.05.2020<\/em> for the items to be procured through GTE, such proposals will not be entertained<\/em>.<\/p><\/aside>\nThe proposal must contain the details of domestic open tenders issued after 15.05.2020, covering:<\/p>\n<aside class=\"note\">Tender number \u00b7 date of opening \u00b7 number of offers received \u00b7 details of offers received \u00b7 reasons why domestic suppliers were not considered, etc.<\/p><\/aside>\nB) the proposal must contain details of deliberations with DPIIT\/ relevant industrial bodies regarding the identification of domestic manufacturers\/ service providers.<\/p>\n4. The eight exemptions from the Rs. 200 crore restriction:<\/p>\n<aside class=\"note\">It is emphasised that these exemptions are only from restrictions on GTE<\/em>, and the local content preferences and other features of MII policy would still be applicable<\/em>.<\/p><\/aside>\na) specialised research equipment: For procurement of specialised equipment required for research purposes, and spares and consumables for such equipment, for the use of educational and research institutes \u2014 the Secretary of the Ministry\/ Department concerned shall be the Competent Authority to approve the issue of GTEs, subject to fulfilment of conditions in sub-para 5 below. The equipment should be of a specialised nature and required for research purposes, not the routine equipment used in offices<\/em>. (OM No. 4\/1\/2021-PPD dated 11.06.2021)<\/em><\/p>\nb) ICT items: Gtes for procurement of ICT items, software and hardware such as blade servers, SAN storage, LAN switches, mobile testing devices, cloud orchestration & system software, network & web apts, mobile testing tools, integrated backup system (ibs), etc. Can be issued with the approval of the Secretary concerned, instead of Secretary (coordination)<\/em>, until further orders. (OM No. F.4\/1\/2022-PPD dated 29.08.2022)<\/em><\/p>\nc) nomination-basis procurements<\/strong>(as no competitive tenders are invited)<\/em>, inter alia<\/em> including:<\/p>\n<ul class=\"lst\"><li>I) procurement of spare parts of the equipment\/ plants & machinery, etc., on a nomination basis from original equipment manufacturers (OEMs) or original equipment suppliers (OES) or original part manufacturers (opms). (For this purpose, 'Spares' shall be taken to include CONSUMABLES for such equipment.)<\/em>(OM No. 12\/17\/2019-PPD dated 29.10.2020)<\/em><\/li><li>ii) procurement of services like Annual Maintenance Contract (AMC) and auxiliary\/ add-on components for existing equipment\/ plant & machinery, etc., which are procured from OEM\/ OES\/ OPM on a nomination basis. (OM No. F.4\/1\/2021-PPD dated 01.09.2021)<\/em><\/li><\/ul>\nd) PRE-15.05.2020 contractual commitments: Where procuring entities need to issue GTEs to fulfil contractual commitments\/ obligations entered by them before 15.05.2020 \u2014 i.e., a bid has been submitted by them to their clients before 15.05.2020. Similarly, where procuring entities need to issue GTEs in view of existing collaboration agreements they entered with foreign suppliers before 15.05.2020. (OM No. 4\/1\/2021-PPD dated 12.03.2021)<\/em><\/p>\ne) medical devices and drugs: Based on the reference received from the Ministry of Health & Family Welfare (MoH&fw), GTE can be floated for 354 medical devices<\/em> AND 120 DRUGS<\/em> (placed in Annexure 31 of the Goods Manual). These exemptions for medical devices and drugs are provided UP TO 31.03.2027<\/em> Till further orders. It is further clarified that:<\/p>\n<ul class=\"lst\"><li>I) the machine system includes spare parts and accessories, which May be procured by procuring entities together or separately.<\/li><li>ii) the Procuring Entity concerned May frame the detailed technical specifications for the above devices as per their requirement. (OM No. 4\/1\/2023-PPD(pt.) dated 28.06.2024 for devices; OM No. F.4\/1\/2023-PPD(pt) dated 07.06.2024 for drugs)<\/em><\/li><\/ul>\nf) mdb\/ bfa-funded projects: Projects funded by multilateral development banks (MDBs like The World Bank, Asian Development Bank, etc.)\/ bilateral funding agencies (BFAs), where the procurement is governed by the conditions negotiated in the loan agreement, and where the project executing agencies from time to time further award works to various Autonomous Bodies\/ CPSEs etc. \u2014 the Secretary of the Ministry\/ Department responsible for execution of such project shall be the Competent Authority for approval for issuance of GTEs by such autonomous bodies\/ CPSEs. (OM No. F.7\/12\/2021-PPD-I dated 27.07.2021)<\/em><\/p>\ng) semiconductor equipment: Procurement of SEMI-CONDUCTOR EQUIPMENT for the purpose of MANUFACTURING ELECTRONICS, and procurements by public-funded semiconductor and display fab facilities (including such facilities in institutes of high learning) \u2014 UP TO 31.03.2025. (OM No. F.4\/1\/2022-PPD-II dated 01.04.2022 and OM No. F.4\/1\/2023-PPD dated 23.03.2023)<\/em><\/p>\nh) procurement abroad for use abroad: GTE restriction up to Rs. 200 crore is not applicable<\/em> for bona-fide procurements done outside India for use outside India<\/em>, by CPSEs having international operations or by Indian missions abroad. Such entities should ensure that the bulk of procurement is done in India (and exported for their use abroad), as far as feasible \u2014 so as not only to promote Make in India but also to improve export performance.<\/p>\n5. The seven conditions attached to exemption 4(a) \u2014 Educational and Research Institutions<\/p>\nEducational, Research institutions, and other units will make full efforts towards reducing imports in the following manner. This will result in substantial effects both within the institutions and through impact on the eco-system:<\/p>\n<ol class=\"lst\"><li>Efforts should be made to promote technology transfer through agreements, or to encourage technological collaboration with foreign manufacturing in India with the start-ups set up in research parks.<\/li><li>Sharing and updating information about the availability of research equipment across various Indian institutes on a single portal \u2014 the I-STEM<\/em> portal has been developed for this purpose \u2014 so that the needy institutes can utilise those.<\/li><li>Without compromising quality, institutes should indicate alternative\/ equivalent technical specifications that could suit their requirement, so that there are more chances for local manufacturers to participate in the tender process.<\/li><li>Regular interaction between academia and Indian industry organisations at the level of the institution about the requirement of equipment of foreign origin and for encouraging domestic manufacturing.<\/li><li>Regular requirements of proprietary\/ non-proprietary research consumables May be assessed, and domestic alternatives May be explored for use.<\/li><li>The office of psa initiates a national-level programme for indigenous development of scientific equipment.<\/li><li>Without compromising quality, institutes should be flexible with specifications so that domestic manufacturers are encouraged to meet requirements.<\/li><\/ol>\n6. Guidelines for resorting to GTE (research institutions): a) market assessment should be done by the concerned institution, as certified by the head of the institution. Only after no Indian manufacturer is found<\/em> Should a GTE be issued. B) in case no Indian manufacturer\/ suppliers are found, procurement May be done through GTE, subject to compliance with provisions of GFR and the requirement of procurement through GeM. C) dean (r&d) or an appropriate authority within the institute will issue certificates as per sub-para 7 below before inviting GTE<\/em>. As a reporting matter in the board of governors, such certificates should be tabled and shared with the office of the psa, DPIIT, and the concerned administrative Ministry. d) The information about the procurement of equipment should be shared across various educational and research institutes through the i-stem portal. This will allow the equipment to be used by other institutions for research purposes too. e) analyse the equipment being procured time and again from abroad and help develop them in India by identifying potential manufacturers and providing them with technical assistance and expertise. This programme will be coordinated by the empowered technology group (constituted by Cabinet and chaired by the principal scientific adviser \u2014 psa). Half-yearly reports on this action are to be shared by the institutes with the office of the psa, DPIIT, and concerned administrative Ministry. f) preference for local suppliers over foreign suppliers, as per the existing Government of India guidelines, should be observed as applicable.<\/p>\n7. The three certificates to be issued: A) certification that locally available alternatives with equivalent specifications are not suitable for research purposes. B) the non-availability of such equipment for research purposes with nearby research institutes or within the institute. C) certification of the requirement of proprietary items of foreign origin for research purposes (where applicable).<\/p>\n<h3>4.9.3<\/span>GTE \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>Risks are the same as in OTE<\/td><td>the same mitigation as in the case of OTE also applies here.<\/td><\/tr><tr><td>The involvement of foreign bidder agents in GTE procurements is also a major risk area.<\/td><td>Procurements should preferably be made directly from the manufacturers<\/em>. Either the agent on behalf of the foreign principal OR<\/em> The foreign principal directly could bid in a tender \u2014 but not both<\/em>. Further, in cases where agents participate in a tender on behalf of one manufacturer, they should NOT<\/em> Be allowed to quote on behalf of another manufacturer along with the first manufacturer. Commissions and scope of services to\/ by the agents should be explicit and transparent in the bids\/ contracts.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2 class=\"src-G\">4.10<\/span>Rate Contract (RC)\/ Framework Agreement (FA)<\/span>G<\/span>text; W\/C\/NC list it as a separate family and cross-refer<\/span><\/h2><div class=\"srcblock src-G\"><h3>4.10.1<\/span>Definition<\/span><\/h3>\nA Rate Contract (commonly known as rc) is an agreement between the purchaser and the supplier for the supply of specified goods (and allied services, if any) at a set price and terms & conditions (as incorporated in the agreement) during the period covered by the Rate Contract.<\/p>\n<aside class=\"note\">Rc is most frequently used in the procurement of goods but can also be used mutatis mutandis<\/em> In works, services, and consultancy \u2014 where it is commonly known as a framework Agreement (fa)<\/em>.<\/p><\/aside>\nNo quantity is mentioned, nor is any minimum drawable quantity guaranteed in the Rate Contract.<\/p>\nThe Rate Contract is a standing offer<\/em> From the supplier firm. The firm and\/or the purchaser are entitled to withdraw\/ cancel the Rate Contract by serving an appropriate notice on each other, giving suitable notice (say thirty days).<\/p>\nHowever, once a supply order (also called withdrawal order<\/em>) is placed in terms of the Rate Contract, during the validity period of the Rate Contract, on the supplier for the supply of a definite quantity \u2014 that supply order becomes a valid and binding contract<\/em>.<\/p>\n<h3>4.10.2<\/span>The Nine Items Amenable to Rate Contract<\/span><\/h3>\nThe following types of items can be advantageously procured through Rate Contracts:<\/p>\n<ol class=\"lst\"><li>Goods that are regularly or repetitively required by more than one Procuring Entity\/ organisation.<\/li><li>The quantities required cannot be accurately forecast.<\/li><li>Individual requirements of procuring entities may be small, but the total aggregate requirements of all the procuring entities are more than rs. 50 lakh per annum.<\/li><li>The item has detailed specifications, drawings, and descriptions.<\/li><li>Prices of the items are stable \u2014 or, if prices are variable, they can be determined through a Price Variation Clause.<\/li><li>Items are not scarce\/ critical\/ 'perpetually in short supply' goods or services.<\/li><li>Demand for the item is not seasonal<\/em>, since Rate Contract holders May shy away from supplying the item during high seasonal demands and dump supplies during low demand season.<\/li><li>Spares used for maintenance of expensive equipment\/ machines, from OEMs, to facilitate uninterrupted supply of genuine spares.<\/li><li>Consumables used by advanced research, development and scientific institutes\/ organisations of the Government of India<\/strong>(e.g., glass wares, plastic wares, chemicals, bio-chemicals etc. \u2014 the examples are illustrative, not exhaustive).<\/em><\/li><\/ol>\n<h3>4.10.3<\/span>Merits of Rate Contract<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>a) Benefits to USERS<\/th><th>b) Benefits to SUPPLIERS<\/th><\/tr><\/thead><tbody><tr><td>I) competitive and economical price due to aggregation of demands<\/td><td>i) reduces marketing costs and efforts<\/td><\/tr><tr><td>ii) saves time, effort, person-hours, and related costs involved in the time-consuming and repetitive tender process \u2014 thus reduces lead time for procurement<\/td><td>ii) eliminates repetitive tendering and follow-up actions with multiple authorities<\/td><\/tr><tr><td>iii) availability of quality goods with full quality assurance backup<\/td><td>iii) provides single-point contact for govt. Supplies<\/td><\/tr><tr><td>iv) enables procurement as and when required \u2014 thus reduces inventory carrying cost<\/td><td>iv) aggregation of govt. Demand leads to economic production<\/td><\/tr><tr><td>V) advantageous even to small users and those located in remote areas<\/td><td>V) improves the credentials of the company<\/td><\/tr><tr><td>vi) provides one single point of contact to procure such items<\/td><td>vi) promotes quality discipline<\/td><\/tr><\/tbody><\/table><\/div>\n<h3>4.10.4<\/span>Terms and Conditions<\/span><\/h3><h4>1.<\/span>Conclusion of Rate Contracts, including Parallel Rate Contracts<\/span><\/h4>\na) any organisation can enter a Rate Contract for items amenable to the Rate Contract for its procuring entities' use (e.g., in different geographical regions\/ subsidiaries). A Central purchase organisation can also enter a Rate Contract for several organisations that require the subject goods. No indents are required to enter a Rate Contract; Only an estimate of the annual requirements<\/em> Of different ultimate users is needed.<\/p>\nInspection and testing of such goods or services, wherever required, may be arranged by the agency entering into the rate contract.<\/p>\nThe agency entering the Rate Contract should post the descriptions, specifications, prices and other salient details of the entire rate-contracted goods or services, appropriately updated, on its website for use by the procuring entities.<\/p>\nB) mode: Rate Contract enquiries should preferably<\/em> BE THROUGH e-procurement or Open Tender Enquiry \u2014 but Limited Tender Enquiry\/ Single Tender Enquiry can also be used if justified by the nature of the requirement. Specific special terms and conditions for the Rate Contract should be added to the Tender Documents.<\/p>\nC) past performance review: Performance against earlier\/ current rate contracts of past\/ current Rate Contract holders shall be critically reviewed<\/em> Before they are considered for award of new rate contracts. Specific performance and achievement criteria as on a selected cut-off date are to be evolved for this purpose and incorporated in the tender enquiry document. The tenderers will be asked to furnish the relevant details (along with their bids) to enable the purchaser to judge their performance and achievement against the past\/ current rate contracts.<\/p>\nd) Evaluation: Procedures stipulated for evaluation of bids and award of contract shall be applicable mutatis mutandis<\/em> In the finalisation of Rate Contract \u2014 including provisions for negotiations\/ counter-offer and splitting of contracts (parallel contracts).<\/p>\nE) parallel rate contracts: Depending on the anticipated demand of the item, location of the users, capacity of the responsive bidders, reasonableness of the prices quoted, etc. \u2014 parallel rate contracts May be awarded to more than one (preferably at least three<\/em>) supplier. For transparency and to avoid criticism, all such parallel rate contracts are to be issued simultaneously<\/em>, as far as feasible.<\/p>\n<h4>2.<\/span>Period of Rate Contract<\/span><\/h4>\nA Rate Contract should typically be for one year<\/em> for stable technology products. However, in exceptional cases, a shorter or longer period of not more than two years<\/em> May be considered.<\/p>\nAs far as possible, the validity period of rate contracts should be fixed in such a way as to ensure that new budgetary levies would not affect the price<\/em> And thereby frustrate the contracts.<\/p>\nAttempts should also be made to stagger<\/em> The period of rate contracts for different items throughout the year.<\/p>\n<h4>3.<\/span>The Nine Special Conditions Applicable for Rate Contract<\/span><\/h4>\n<aside class=\"note\">Some conditions of rate contracts differ from the usual conditions suitable for ad hoc contracts.<\/p><\/aside>\nA) the Procuring Entity May prescribe the amount of Bid Security in the tender document.<\/p>\nB) no quantity is mentioned in the Schedule of requirement; Only the anticipated drawable quantity is mentioned without commitment<\/em>.<\/p>\nC) the purchaser reserves the right to conclude one or more than one Rate Contract for the same item.<\/p>\nD) the purchaser and the supplier May short-close<\/em> The Rate Contract by serving suitable notice to each other. The prescribed notice period is generally fifteen to thirty days<\/em>.<\/p>\ne) Re-negotiation and repeat bidding: The purchaser can re-negotiate the price with the Rate Contract holders even during the validity<\/em> If market conditions change significantly \u2014 or undertake repeat competitive bidding through open\/ advertised tenders on the same terms and conditions, including specifications, during the validity period of existing valid r\/cs. In such cases, the existing r\/c holders can bid, apart from the new eligible bidders, and equal and fair opportunity would be provided. If the prices received are found lower than the existing r\/c prices, new r\/cs May be awarded at reduced prices, and existing r\/cs at higher prices May be short-closed \u2014 giving adequate notice \u2014 if they do not match such reduction in prices under the fall clause.<\/p>\nF) in an emergency, the purchaser May purchase the same item through an ad hoc contract with a new supplier.<\/p>\nG) the purchaser and the authorised users of the Rate Contract are entitled to place supply orders up to the last day of the validity<\/em> Of the Rate Contract \u2014 and though supplies against such supply orders will be delivered beyond<\/em> The validity period of the Rate Contract, the terms & conditions of the Rate Contract will guide all such supplies.<\/p>\nh) the fall clause \u2014 the price safety mechanism in rate contracts:<\/p>\nThe fall clause provides that if the Rate Contract holder reduces its price, or sells, or even offers to sell<\/em> The rate-contracted goods or services (following conditions of sale similar to those of the rate contract) at a price lower than the Rate Contract price, to any person or organisation<\/em> During the currency of the Rate Contract \u2014 the Rate Contract price will be automatically reduced with effect from that date<\/em> for all subsequent supplies under the Rate Contract, and the Rate Contract amended accordingly.<\/p>\nOther parallel Rate Contract holders, if any, are also to be allowed to reduce their price by notifying the reduced price to them, giving 07 (seven) days<\/em> To intimate their revised prices, if they so desire, in a sealed cover to be opened in public on the specified date and time, and further action taken as per standard practice.<\/p>\n<aside class=\"note\">The abuse warning: On many occasions, the parallel Rate Contract holders attempt to grab more orders by unethical means<\/em> By announcing a price reduction (after getting the Rate Contract) under the guise of the fall clause. This situation must be handled similarly. It is, however, very much necessary that the purchase organisations keep a particular watch on the performance of such Rate Contract holders who reduce their prices on one pretext or another. If their performances are not up to the mark, appropriately severe action should be taken against them \u2014 including deregistering<\/em> THEM, suspending business deals<\/em> With them, debarring them for up to two years<\/em> From participating in the tender enquiry floated by the concerned purchase organisation, etc.<\/p><\/aside>\nThe four exceptions \u2014 the provisions of the fall clause will NOT<\/em> Apply to:<\/p>\n<ul class=\"lst\"><li>I) export\/ deemed export by the supplier;<\/li><li>ii) sale of goods or services as original equipment<\/em> At prices lower than the price charged for routine replacement<\/em>;<\/li><li>iii) sale of goods (such as drugs) which have expiry dates<\/em>;<\/li><li>iv) sale of goods or services at lower prices \u2014 <\/li><li>1) on or after the date of completion of placement of order of goods by the Procuring Entity, under the existing or previous rate contracts;<\/li><li>2) under any previous contracts entered with the Central or State Government departments, including new undertakings (excluding joint sector companies and\/ or private parties<\/em>) and bodies.<\/li><\/ul>\nI) the fall clause certificate: The Rate Contract holder shall furnish the following certificate to the concerned paying authority along with each bill<\/em> for payment of supplies made:<\/p>\n<aside class=\"note\">\"I\/We certify that there has been no reduction in the sale price of the goods of description identical to the goods supplied under this contract, and such goods have not been offered\/ sold by me\/ us to any person\/ organisation \u2014 including the purchaser or any department of Central Government or any [State Government\/ PSU], as the case may be \u2014 up to the date of bill\/ the date of completion of supplies against all supply orders placed during the currency of the Rate contract, at a price lower than the price charged under the contract.\"<\/em><\/p><\/aside>\n<h4>4.<\/span>Performance Security<\/span><\/h4>\nDepending on the anticipated overall drawable annual quantity against a rate contract, and the anticipated number of parallel rate contracts to be issued for an item \u2014 the Department May consider obtaining Performance Security @ 3% to 5% of the value of supply order<\/em> In the supply orders issued against rate contracts on the Rate Contract holder.<\/p>\n<h4>5.<\/span>Placement of Supply Orders<\/span><\/h4>\na) Who may place them: Procuring entities nominated (CALLED direct demanding officers \u2014 DDO<\/em>) in the Rate Contract can place supply\/ withdrawal orders in terms of the rate contract during the validity period of the rate contract on the Supplier for the supply of definite quantities. An indent with required administrative and financial approvals is required before<\/em> A supply order can be placed.<\/p>\nAlternatively, the organisation managing the Rate Contract can centrally administer the placement of withdrawal orders against indents from the constituents.<\/p>\nb) The mandatory-use rule and its small-value escape: Once a Rate Contract is available, all nominated procuring entities (DDOs) must mandatorily<\/em> Procure the item only through supply orders on the Rate Contract holders.<\/p>\nIn case of an emergency, if a Procuring Entity directly procures rate-contracted goods or services from the suppliers \u2014 the prices to be paid for such goods or services shall not exceed<\/em> Those stipulated in the Rate Contract, and the other salient terms and conditions of the purchase should be in line with those specified in the Rate Contract. However, they May be permitted to procure a small value of their requirements directly \u2014 say up to Rs. One lakh at one time and not more than Rs. 5 lakh annually<\/em> \u2014 following relevant procedures.<\/p>\nC) upper threshold on supply orders: The Procuring Entity May stipulate an upper threshold of value for supply orders received against the Rate Contract by the rc holder. Except with prior approval of the Procuring Entity, the contractor shall not comply<\/em> With the supply orders received from the ddos exceeding such threshold amount.<\/p>\nD) the five criteria for choosing among parallel rc holders: All parallel rcs for an item \u2014 even at differential rates<\/em> \u2014 are assumed to be at reasonable rates. The Procuring Entity can select any rc holder, following transparent and equitable criteria. The following factors May be kept in view:<\/p>\n<ul class=\"lst\"><li>I) the Rate Contract price.<\/li><li>ii) the past performance of firms with reference to their capacity, quality of supplies, as well as timely delivery of the goods.<\/strong>Procuring Entities should maintain suitable records for past performance with respect to timely delivery and quality.<\/em><\/li><li>iii) there is a need for reputed brands in the case of sensitive, critical, and vital requirements.<\/li><li>iv) the proximity of the Rate Contract holder, where proximity is considered crucial for timely delivery, ease of progressing, and from the point of view of logistics and contract management, etc.<\/li><li>v) the delivery dates committed by various Rate Contract holders with respect to the delivery requirements of the Procuring Entities.<\/li><\/ul>\nE) the delivery-time problem in rate contracts: In rate contracts, if the time FOR delivery is not fixed by mutual agreement<\/em>, IT IS not the essence of the contract<\/em> AND IS not binding<\/em> On the supplier. Therefore, no Liquidated Damages can be levied<\/em> for non-supply or delay in supply against such orders.<\/p>\nThat being so, under section 46 of the contract Act, the goods are only to be delivered within a \"Reasonable time\"<\/em> \u2014 which is a rather vague concept.<\/p>\nBut where there has been an unreasonable delay in delivery, the direct demanding officer (DDO) has the right to give the contractor notice, fixing a reasonable time FOR delivery of the goods and stipulating that delivery within the time specified shall be the essence of the contract<\/em>. If the goods are not delivered within this period, the supply order can be cancelled by the agency that finalised the Rate Contract<\/em> (Since he alone, not the DDO<\/em>, is a party to the Rate Contract), and deficient performance is noted for future rate contracts.<\/p>\nf) The cure \u2014 obtaining a prior delivery commitment: However, in cases where the delivery date stipulated in the relevant order has been expressly agreed to by the supplier in writing before placing the relevant order<\/em> \u2014 Liquidated Damages CAN<\/em> Be recovered (by the agency that entered into the Rate Contract) from the supplier on account of delay in delivery beyond the stipulated delivery date \u2014 provided the agency that finalised the Rate Contract has not in any way interfered with the supplier's discretion to meet the said supply order by directing the supplier to give priority to some other supply orders. Therefore, it is advisable that, before placing the supply order<\/em> On a Rate Contract holder, a commitment is obtained from him for the delivery period.<\/p>\ng) Approval before ordering: Before creating the supply order, approval of the ca (depending on the value of procurement) May be taken by submitting information about all the available parallel rcs<\/em> And justifying the selection of a particular rc holder.<\/p>\nh) The ten essential details of a supply order:<\/p>\n<aside class=\"note\">i) Rate Contract No. and date; ii) QUANTITY (where there is more than one consignee, the quantity to be despatched to each consignee is to be indicated)<\/em>; iii) Price; iv) date of delivery by which supplies are required (a definite delivery date based on the delivery period stipulated in the rate contract is to be provided)<\/em>; v) Full address of the purchase organisation along with telephone no., fax no., and e-mail address; vi) Complete and correct designation and full postal address of the consignee(s)\/ goods receiving officer(s) along with telephone no., fax no., and e-mail address; vii) nearest railway siding (NRS) of the consignee(s), if applicable; viii) Despatch instructions; ix) Designation and address of the INSPECTING OFFICER, if any; x) Designation and address of the PAYING AUTHORITY to which the Supplier will raise the bills. Copies of supply orders are to be endorsed to all concerned.<\/strong><\/p><\/aside>\n<h4>6.<\/span>Renewal of Rate Contracts<\/span><\/h4>\nIt should be ensured that new rate contracts are made operative right after the expiry of the existing rate contracts without any gap<\/em> for all rate-contracted items.<\/p>\nIn case it is not possible to conclude new rate contracts for some special reasons, timely steps are to be taken to extend the existing rate contracts with the same terms, conditions, etc., for a suitable period, with the consent of the Rate Contract holders<\/em>.<\/p>\nRate contracts of the firms who do not agree<\/em> To such extension are to be left out.<\/p>\nAlso, while extending the existing rate contracts, it shall be ensured that the price trend is not lower<\/em>.<\/p>\n<h3>4.10.5<\/span>RC \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. A Rate Contract is not the right mode<\/em> For critical, strategic, and vital requirements, since the buyer-seller relationship is TRIPARTITE, and the timely supply of requirements and penalties thereof cannot be strictly enforced as in other modes. In situations where items have inadequate annual or seasonal capacities in the market, the rc holders May dump material<\/em> On the Procuring Entity during the wrong seasons and starve<\/em> Them during working seasons. This happens in, say, CEMENT \u2014 where government buyers are likely to be saddled with huge supplies during the rainy season, but RC holders may divert the bulk of supplies to the private market during the working season.<\/em> RC Purchase is not SUITABLE for requirements of dynamic technological and price changes \u2014 e.g., PCs, laptops, tablets, servers, and mobile phones \u2014 where the price of older models may crash as soon as a new model is announced. RC holders may slow down supplies initially but dump supplies when prices crash in the market.<\/td><td>Rcs May be avoided for critical\/ strategic and vital requirements. For seasonal and short-supply items, procuring entities May monitor and provide clauses to prevent dumping and starving of supplies. In technologically fast-changing products, the Procuring Entity May keep an eye on market prices and re-negotiate them as soon as market prices fall significantly due to new arrivals.<\/td><\/tr><tr><td>2. The existence of rcs May not be adequately made known to possible users. Moreover, the reverse risk is that many different offices May keep procuring the same item independently \u2014 thus missing the potential benefits of bulk prices and simplified processes if such items were brought under an rc.<\/td><td>The descriptions, specifications, and other salient details of all rcs should be appropriately updated and made available on the Procuring Entity website as well as the e-procurement portal. The e-procurement system should be able to offer alerts<\/em> About the availability of rc if an attempt is made to float a tender for the same item. To derive benefit from bulk prices in rc, all offices should furnish to the rc agency their annual requirement of items to enable the finalising of RCs after inviting quotations.<\/td><\/tr><tr><td>3. Rc procurements are at risk of being ordered more than actual requirements<\/em>, since the procurement scrutiny may not be as intense as in the case of other modes of procurement.<\/td><td>The quantity being ordered should be subject to the same level of scrutiny<\/em> As in other modes of procurement, to ensure that there is no abnormal, unexplainable trend in procurement.<\/td><\/tr><tr><td>4. Wherever there are PARALLEL RCs for the same item from several firms, there May be intense and often unhealthy lobbying (including corrupt practices) from them to seek orders.<\/td><td>1. Procuring entities must put in place adequate guidelines to handle rc procurements \u2014 including a transparent system of choosing the rc holders by rotation<\/em> In a transparent manner in case of parallel rcs. (Suggested criteria at para 4.10.4-5-d.)<\/em> The delegation of powers in this regard should also be restricted, keeping these risks in view. 2. The Procuring Entity should maintain suitable records of rc firms for past performance with respect to timely delivery and quality. 3. Wherever there are FAILURES against the rate contract in terms of timely delivery and quality of goods, such failures should be reported to the agency that entered the Rate Contract, and direct alternate procurement action May be taken to ensure the timely availability of quality materials to meet the needs of the Procuring Entity.<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h2>4.11<\/span>Dynamic Price Discovery \u2014 Electronic Reverse Auction (eRA)<\/span><\/h2>\n(Rule 167 of GFR 2017)<\/em><\/p>\n<aside class=\"note\">PLACEMENT NOTE: eRA appears as a mode of procurement in the Goods Manual (4.5), as a channel of procurement in the Works Manual (3.5.2), as both an advertised mode and a channel in the Non-Consultancy Manual (4.4-3-a-iii and 4.6.2), and is entirely absent from the consultancy Manual.<\/p>\nNC<\/span> states expressly: *\"<\/strong>electronic Reverse Auction (era): Not appropriate where QCBS system of evaluation is used in the procurement of non-consultancy services.\"*<\/p><\/aside>\n<h3>4.11.1<\/span>What eRA Is<\/span><\/h3>\nElectronic Reverse Auction (eRA \u2014 a type of auction classified as a dynamic procurement mode<\/em>) is an online real-time purchasing technique used to select a successful bid.<\/p>\neRA IS AN iterative process with automatic evaluation of bids<\/em>, where bidders can offer successively more favourable bids to displace the lowest bid at any given moment within the duration of the era.<\/p>\nThe following four parameters are announced before the start<\/em> Of the online Reverse Auction:<\/p>\n<aside class=\"note\">1. The starting price \u00b7 2. Minimum bid decrement \u00b7 3. Duration of the auction \u00b7 4. The maximum number of automatic extensions<\/p><\/aside>\nif a new lower bid is received within the last few minutes (pre-announced, say five minutes<\/em>) of closing time, the closing time May get automatically extended by a few minutes (pre-announced, say ten minutes<\/em>) for others to respond. A maximum number of such extensions May be pre-announced (say 50<\/em>).<\/p>\nThe most favourable bid at the end of the stipulated\/ extended time is declared as successful. It has, however, to be ensured that the entire process is conducted transparently and fairly.<\/p>\n<h3>4.11.2<\/span>The Four Reasons Why Caution Is Advised<\/span><\/h3>\nElectronic reverse auctions can be a powerful tool for procuring goods and services, but they also come with potential risks and drawbacks:<\/p>\nA) quality and supplier relationships: In an era, the focus is on price, and suppliers May be forced to cut corners<\/em> To win bids \u2014 affecting the overall quality of the product or service. Additionally, aggressive bidding can strain supplier relationships<\/em>, leading to long-term negative effects.<\/p>\nb) value for Money: While reverse auctions can drive down immediate costs, THEY may not optimise Value for Money<\/em>. Factors like Total Cost of Ownership, lifecycle costs, innovation, reliability, sustainability, and strategic alignment May get overlooked.<\/p>\nC) lack of technology development: Suppliers May hesitate to invest in innovation or process improvements if they are constantly pressured to lower prices. This can hinder long-term competitiveness and limit the introduction of new technologies or ideas in hi-tech goods and services.<\/p>\nD) risk of supplier dropouts: Aggressive bidding can lead to suppliers dropping out of the market segment<\/em>, reducing competition. If critical suppliers exit, it can disrupt the supply chain and impact availability.<\/p>\n<aside class=\"note\">Thus, while electronic reverse auctions can drive cost savings, they should be used judiciously<\/em>, considering the broader implications beyond price alone. Therefore, era should not be used indiscriminately or as a default mode of procurement<\/em>.<\/p><\/aside>\n<h3>4.11.3<\/span>Where eRA Is Appropriate, Where Caution Is Needed, and Where It Is Inappropriate<\/span><\/h3><h4>A) a Reverse Auction Would Be Appropriate Where:<\/span><\/h4>\n<ul class=\"lst\"><li>I) items are commodities, commercially-off-the-shelf items;<\/li><li>ii) it is feasible to formulate a detailed description of the subject matter of the procurement;<\/li><li>iii) there is a competitive market of bidders (say more than five<\/em>) anticipated to be qualified to participate in the era, so that effective competition is ensured;<\/li><li>iv) the criteria to be used by the Procuring Entity in determining the successful bid are quantifiable and can be expressed in monetary terms<\/em>.<\/li><\/ul>\n<h4>B) Where Caution is Needed in Using Reverse Auction:<\/span><\/h4>\n<ul class=\"lst\"><li>i) In the case of repetitive\/ regularly procured items, future procurements May be affected, as there may not be the same type of price reduction in future procurements as in the first Reverse Auction. Procuring entities May face a situation of not being able to justify the higher rates received subsequently<\/em>.<\/li><li>ii) where it is proposed to issue parallel orders by splitting the total order quantity among more than one supplier, a Reverse Auction May be avoided. However, in such a case, if the Reverse Auction is resorted to, then there should be adequate suppliers available \u2014 i.e., if the quantity is to be split into n parts, then suppliers available should be at least N+3<\/em>.<\/li><\/ul>\n<h4>C) Reverse Auction Would NOT<\/em> Be Appropriate For:<\/span><\/h4>\n<ul class=\"lst\"><li>I) the requirement is not of high enough value to generate competitive pressures on bidders;<\/li><li>ii) items of strategic\/ critical\/ vital\/ high technically complex nature; Items that are in short supply in the market;<\/li><li>iii)<\/strong>where the QCBS<\/em> System of selection is used<\/strong>(wherever permissible in case of Consultancy, Non-consultancy Services or Works)<\/em>;<\/li><li>iv) where FBS (Fixed Budget Based Selection)<\/em> System of selection is used in consultancy services, wherein the only parameter for evaluation is quality\/ technical criteria;<\/li><li>V) in engineered products having complexity in design;<\/li><li>vi) EPC contracts and complex works contracts;<\/li><li>vii) items where there are only a few suppliers.<\/li><\/ul>\n<h3>4.11.4<\/span>Terms and Conditions<\/span><\/h3><h4>A. The Procedure<\/span><\/h4>\ni) STAND-ALONE eRA: The procuring entity shall solicit bids through an invitation to the electronic Reverse Auction<\/em>, to be published or communicated in accordance with provisions like e-procurement. The invitation shall, in addition to the information as specified in e-procurement, include details relating to:<\/p>\n<aside class=\"note\">1) access to and registration for the auction; 2) opening and closing of the auction; 3) norms for the conduct of the auction; 4) any other information that May be relevant to the method of procurement.<\/p><\/aside>\nii) era preceded by PQB: If the consideration of quality requires competition only among qualified bidders, era May be preceded by a stage of PQB (on the same platform as era) to shortlist qualified bidders, who would only be allowed to participate in the era process that follows.<\/p>\niii) tender-cum-e-Reverse Auction (the combined procedure): Procuring entities May combine a full two-envelope e-procurement process with Reverse Auction. Then, after an e-procurement process, the e-Reverse Auction process is mandatorily conducted<\/em>, taking the L1 price as the benchmark (upper limit)<\/em>, after the financial bid opening (declaration of L-1 landed price\/s) \u2014 provided the number of valid bidders is not less than a stipulated number (3 if not specified)<\/em>.<\/p>\niv) the shortlisting formula for the combined procedure: Unless otherwise stipulated, the following procedure shall be followed for elimination\/ shortlisting of bidders (from among those qualified in the preceding e-Procurement process) eligible to participate in e-Reverse Auction:<\/p>\n1) the bids disallowed from participating in the Reverse Auction shall be the highest bidder(s)<\/em> In the tabulation of prices in the financial bid. If the highest bidders quote the same rate<\/em>, the price offer received LAST<\/em>, as per the time log of the portal, shall be removed first \u2014 on the principle of last in, first out<\/em> By the system.<\/p>\n2) the three bands:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Number of valid bidders<\/th><th>Consequence<\/th><\/tr><\/thead><tbody><tr><td>Less THAN the minimum stipulated number (or 3 if not specified)<\/td><td>a Reverse Auction shall NOT<\/em> Be conducted, and the financial bids from the e-procurement process shall be evaluated and finalised<\/td><\/tr><tr><td>4 TO 6 valid bidders<\/td><td>THE lowest three (3)<\/em> Bidders shall be allowed to participate in the Reverse Auction<\/td><\/tr><tr><td>More THAN 6 valid bidders<\/td><td>ONLY 50% of the bidders<\/em> (Rounded up to the next integer) shall be allowed to participate<\/td><\/tr><\/tbody><\/table><\/div>\n3) the preference override: However, if MSE bidders or class-i local suppliers<\/em> Under the Make in India policy do not meet the above criteria, but their prices in financial bids are within the policy's margin of preference<\/em>, they shall be allowed to participate. Such bidders would be over and above<\/em> The shortlist mentioned above.<\/p>\n<h4>B. The e-Reverse Auction Process (e-RAP)<\/span><\/h4>\n<aside class=\"note\">If the portal e-rap process is different from the one described below for the combined procedure, the portal provisions shall prevail<\/em>.<\/p><\/aside>\nI) there shall be no participation fees<\/em> for the e-Reverse Auction.<\/p>\nii) where pre-qualification precedes the era, an electronic invitation shall be issued, giving sufficient notice period<\/em> To the successful bidders, so that they can formulate pricing strategies. The starting price shall be decided by the Procuring Entity.<\/p>\niii) in case of the combined procedure, upon opening the financial bids, a Reverse Auction platform shall be created. The Reverse Auction shall start within the specified period (two hours if not specified<\/em>) of the bid. Unless modified by the Procuring Entity, THE L-1 landed price<\/em> In the financial bid (as per the calculation schema based on the Tender Document evaluation criteria) shall be the start bid price<\/em> On which the auction shall be initiated.<\/p>\niv) the decrement value: The Procuring Entity shall specify the decrement value before starting<\/em> THE e-Reverse Auction \u2014 or, if not specified, 0.5% of the start bid price<\/em>, rounded off to the next unit, tens, hundreds, thousands, etc., with a minimum of Rs. 1<\/em>. The reduction in bids shall have to be made as per decrement value or in multiples thereof.<\/p>\n<aside class=\"note\">A bid decrement that is too small<\/em> May prolong the auction, and a decrement that is too large<\/em> May restrict competition.<\/p><\/aside>\nV) the timing parameters and their defaults:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Parameter<\/th><th>Default if not specified<\/th><\/tr><\/thead><tbody><tr><td>Initial period of the reverse auction<\/td><td>two hours<\/td><\/tr><tr><td>Last-minute-bidding period<\/td><td>five minutes<\/strong> before the auction closing time<\/td><\/tr><tr><td>Auto-extension period<\/td><td>ten minutes<\/td><\/tr><tr><td>Maximum number of auto-extensions<\/td><td>50<\/td><\/tr><\/tbody><\/table><\/div>\nall times and periods are as per the server time stamp<\/em>.<\/p>\n<aside class=\"note\">The design cautions: The last-minute-bidding period should not be so small<\/em> That unscrupulous bidders May catch others off guard, preventing competitive responses. The auto-extension period should be sufficient to allow bidders to consider their next move<\/em>. The number of auto-extensions should not be too large<\/em> To prolong the auction, leading to bidder fatigue<\/em>.<\/p><\/aside>\nvi) service disruption: In case of service disruption at the service provider's end during the Reverse Auction, the Reverse Auction process shall start all over again<\/em>, with the last recorded lowest price of the prematurely ended e-rap as the 'start bid' price<\/em>.<\/p>\nThe prices quoted in the prematurely ended e-rap shall be binding on all the bidders<\/em> for consideration if the restarted process does not trigger within the stipulated time (or by 5.00 pm on the same day, if not stipulated<\/em>).<\/p>\nDisruption and restarting of e-rap shall be intimated to all the bidders through system\/ sms\/ e-mail through the e-procurement portal.<\/p>\nvii) What is displayed: Bidders must submit only the landed price<\/em> In the Reverse Auction, and only the item-wise L-1 price shall be displayed<\/em>, without disclosing the number of bids and names of the bidders. The landed price would not be the same for two bidders<\/em>, even if any bidder makes such an attempt.<\/p>\nWhile evaluating the bids, the exchange rate captured by the e-procurement system shall be considered for converting foreign currency into Indian rupees.<\/p>\nviii) Post-closure publication: After the auction's closing time, the bid history<\/em> Showing all the last valid bids offered, along with the names of the bidders<\/em>, shall be published. All bidders shall have the facility to see and get a print of the same for their records.<\/p>\nix) binding force: All electronic bids submitted during the Reverse Auction process shall be legally binding<\/em> On the bidder. Only the chronologically last bid<\/em> Submitted by a bidder until the end of the auction shall be considered the valid financial bid of that bidder, and consideration of the same for entering into a contract by the Procuring Entity shall be binding on the bidder.<\/p>\nX) non-participation in the combined procedure: If a bidder does NOT<\/em> Submit his bid in the Reverse Auction, the price quoted in the financial bid in the preceding e-procurement shall be considered the valid price of that bidder. The status of the bidder (L-1, L-2, etc.) shall be evaluated considering either the bid price submitted in the Reverse Auction, or the price quoted in the financial bid \u2014 whichever is lower<\/em>.<\/p>\nxi) purchase preference: Short-listed MSE or class-i local suppliers, eligible for any purchase preference policy as per the tender document, shall get an opportunity to match the L-1 prices concluded after the Reverse Auction<\/em>, if their final prices in the Reverse Auction fall within the permitted percentage.<\/p>\nxii) there shall NOT<\/em> Be any negotiation after the e-Reverse Auction process is closed.<\/p>\nxiii) the breakup of landed price: The successful L-1 bidder, after the Reverse Auction, must upload within a stipulated period (within 2 working days, if not specified<\/em>) THE breakup of landed prices<\/em> In the shortfall documents, at which the contract shall be awarded.<\/p>\nWhile giving the breakup, the bidder shall include the same taxes and duties<\/em> As quoted while submitting the financial bid. If the L-1 bidder FAILS<\/em> To submit the breakup of the landed price within the stipulated period, the Procuring Entity shall place an order based on the breakup of the financial bid submitted by the bidder<\/em>, and the same shall be binding on the bidder.<\/p>\nxiv) Monitoring for abuse: The Procuring Entity shall monitor whether there is improper use<\/em> Of the Reverse Auction \u2014 including, for example, evidence of predatory pricing, collusion, interference with the proper operation of the technology<\/em>, etc. Bidders (including their subsidiaries<\/em>) found to have engaged in collusive activities or other improper practices will be treated in accordance with the cartel\/ pool-rate provisions of the evaluation Chapter.<\/p>\n<h2>4.12<\/span>Pre-qualification Modes of Procurement<\/span><\/h2><h3>4.12.1<\/span>Why Pre-qualification Modes Exist<\/span><\/h3>\nWhere the procurement is significantly complex<\/em>, and the capability of the source of supply is crucial<\/em> for the successful performance of the contract, it May be necessary to ensure that:<\/p>\n<ul class=\"lst\"><li>There is competition only among bidders equally capable<\/em> Of performing the contract, and<\/li><li>incapable bidders don't queer the pitch<\/em> By their low-quality\/ low-price bids.<\/li><\/ul>\nIn such a situation, a pre-qualification of bidders May be required to shortlist bidders who are equally capable of performing the contract. Evaluation of techno-commercial and financial bids is restricted to this shortlist only.<\/p>\n<h3>4.12.2<\/span>Pre-qualification Bidding (PQB)<\/span><\/h3>\n1. What it is: In the situations mentioned above, where THE time, effort and money required from the bidder<\/em> To participate in a tender is high, a two-phase pre-qualification bidding<\/em> May be considered.<\/p>\nPre-qualification Bids (PQBs) should meet the norms of transparency, fairness, and maintenance of competition<\/em>.<\/p>\n<aside class=\"note\">Although there is a separate phase of PQB bidding, it is not semantically counted as a two-stage bidding<\/em>.<\/p><\/aside>\n2. The two phases:<\/p>\n<ul class=\"lst\"><li>In the first PQB phase, competent, qualified bidders are shortlisted by using a pre-qualification criterion (PQC), covering:<\/li><\/ul>\n<aside class=\"note\">I) past experience of similar contracts \u00b7 ii) performance capability \u00b7 iii) financial strength<\/p><\/aside>\nno techno-commercial or financial details are asked for in the first phase of PQB.<\/p>\n<ul class=\"lst\"><li>In the second phase, tender documents (techno-commercial and financial) are issued as usual through e-procurement\/ e-publishing; Bids only from shortlisted qualified bidders<\/em> Are evaluated, and others are rejected.<\/li><\/ul>\n3. Where PQB is NOT<\/em> Desirable:<\/p>\nSince the two-phase PQB system May strain the transparency principle<\/em>, and there is a heightened risk of anti-competitive practices<\/em>, two-phase PQB should be done only as an exception<\/em> Under specified circumstances.<\/p>\nHence, the procuring entities May lay down restricted powers to approve such modes at sufficiently high levels in SoPP<\/em>. It should NOT<\/em> Be a routine\/ normal mode of procurement, and qualification criteria as part of a single\/ two\/ multiple envelopes system should suffice in such situations.<\/p>\nPQB bidding as a separate phase is contraindicated<\/em> In the following circumstances:<\/p>\n<ul class=\"lst\"><li>A) where procurement is being done through limited tender enquiries<\/em>;<\/li><li>B) where the requirement is technically and commercially not complex enough<\/em> That pre-qualification of the bidder is not crucial for the performance of the contract \u2014 for example, commercial off-the-shelf (cots) requirements;<\/li><li>C) where the procurement is significantly complex and the time, effort and money required from the bidder to participate in a tender is not significant<\/em> \u2014 clear-cut, fail-pass pre-qualification criteria can be specified in single-stage tendering<\/em> (Instead of two-phase tendering).<\/li><\/ul>\n4. Pre-qualification criteria (PQC) \u2014 the two-sided test:<\/p>\n<aside class=\"note\">PQC should be unrestrictive enough not to leave out even one capable vendor\/ contractor<\/em> \u2014 otherwise, it can lead to higher procurement\/ works\/ services prices.<\/p>\nHowever, on the other hand, these criteria should be restrictive enough so as not to allow even one incapable vendor\/ contractor<\/em> And thus vitiate fair competition for capable vendors\/ contractors, to the detriment of the buyer's objectives. A misjudgement in either direction<\/em> May be detrimental.<\/p><\/aside>\n(A sample PQC is given in Annexure 12<\/strong> of the Goods Manual.)<\/em><\/p>\nDue consideration should be given while framing PQC to its effect on the adequacy of competition.<\/p>\nPQC should NOT<\/em> Result in unreasonable exclusion of 'class-i local supplier'\/ 'class-ii local supplier' who would otherwise be eligible, beyond what is essential for ensuring the quality or creditworthiness of the supplier.<\/p>\nTo encourage MSEs, local bidders and past successful bidders, a call May be taken as to whether PQC should apply to full quantity\/ packages<\/em> OR BE proportional to part quantity\/ package quoted<\/em> By a bidder.<\/p>\nIn case the requirement is suddenly multiple times the past procurements<\/em>, blind adoption of past pqcs (fractions\/ percentages) May lead to the disqualification of successful past vendors<\/em>, leading to inadequate competition.<\/p>\nPQC should, therefore, be carefully decided for each procurement<\/em> With the approval of ca for acceptance of the tender.<\/p>\nIt should be clarified in the PQB documents that bidders have to submit authenticated documents<\/em> In support of eligibility criteria.<\/p>\n5. Advertisement and Notification \u2014 and the notice periods:<\/p>\nThe invitation for the first-phase PQB shall be processed (advertised, tender document preparation, publicity, evaluation, and so on) in the same manner as a normal GTE or OTE<\/em> (As the situation calls for) tender, ensuring the widest possible coverage.<\/p>\nThe PQC and evaluation criteria should be clearly noted in the PQB documents<\/em>.<\/p>\nThe PQB documents should also indicate a complete Schedule of requirements<\/em> for which this PQB is being done, including approximate likely quantities<\/em> Of requirements.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Situation<\/th><th>Minimum period for submission of PQBs<\/th><\/tr><\/thead><tbody><tr><td>Normal (domestic)<\/td><td>3 WEEKS<\/td><\/tr><tr><td>Where FOREIGN BIDDERS are also involved<\/td><td>4 WEEKS<\/td><\/tr><tr><td>in case of urgency duly approved by ca<\/td><td>may be reduced to 10 (ten) DAYS<\/td><\/tr><\/tbody><\/table><\/div>\n6. Evaluation: At least in high-value and critical procurements, the credentials regarding experience and past performance submitted by the successful bidder May be verified as per PQC \u2014 as far as reasonably feasible \u2014 from the parties for whom work has been claimed to be done<\/em>.<\/p>\nThe procuring entity shall evaluate the qualifications of bidders only in accordance with the PQC specified<\/em>, and shall give due publicity to the particulars of the bidders that are qualified<\/em> On the relevant portals\/ websites.<\/p>\n7. Subsequent Procurement Tender \u2014 the single-use and six-month rules:<\/p>\nThe pre-qualification shortlist shall be for a single subsequent procurement<\/em>.<\/p>\nIn this subsequent procurement, bids are invited from these qualified bidders only, and all other bids May be treated as unsolicited offers, which are normally rejected<\/em>.<\/p>\nThis second phase of the procurement process is handled as a normal two-envelope tender.<\/p>\nThe time gap between the pre-qualification approval and the floating of the linked main procurement tender should normally be less than six months<\/em>.<\/p>\n<h3>4.12.3<\/span>Single Stage Pre-qualification<\/span><\/h3>\n1. When to use it instead: In the situation described above \u2014 i.e., significantly complex procurement; the capability of the source of supply is crucial; the necessity to ensure competition only among equally capable bidders \u2014 but where the time, effort and money required from the bidder to participate in a tender is not very high<\/em>:<\/p>\nInstead of a separate phase of pre-qualification bidding, a clear-cut, fail-pass pre-qualification criteria (PQC)<\/em> Can be asked to be submitted as the first (additional) envelope in a single-stage three-envelopes system<\/em>, so that a bidder's risk of having his bid rejected on the grounds of qualifications is remote if he exercises due diligence<\/em>.<\/p>\nIn e-procurement, separate files shall be uploaded by the bidder, mutatis mutandis<\/em>.<\/p>\n2. The terminological point: Strictly SPEAKING, this is not a pre-qualification but a post-qualification<\/em> Of bidders (i.e., after the techno-commercial and financial bids have been received).<\/p>\nIn respect of pre-qualification, in the first instance on the pre-announced bid opening date, only the PQB envelopes<\/em> (Also containing the EMD and other eligibility documents<\/em>) are opened and evaluated to shortlist the responsive bidders who pass the pre-qualification.<\/p>\n3. The rest of the procedure: The rest of the procedure is the same as the two-envelope system (techno-commercial and financial bids) for only qualified bidders.<\/p>\n<ul class=\"lst\"><li>In e-procurement, the other two envelopes of unqualified<\/em> Bidders would remain encrypted and unopened<\/em>.<\/li><li>In off-line tenders, the other two envelopes of unqualified bidders are returned unopened<\/em> To the respective bidders by registered acknowledgement due\/ reliable courier, or any other mode with proof of delivery.<\/li><\/ul>\n<h3>4.12.4<\/span>PQB Tendering \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. Pre-qualification criteria: PQB has the potential of getting misused or being applied without considering the restrictive nature of competition<\/em>. PQC should be relevant to the quality requirements, and neither very stringent nor very lax in restricting\/ facilitating the entry of bidders. These criteria should be clear, unambiguous, exhaustive, and yet specific. Also, there should be FAIR COMPETITION.<\/td><td>Lay down criteria for when prequalification in single-stage or two-stage tendering is warranted. Also, model PQC criteria for diverse types of procurements should be laid down<\/em> on the lines of Annexure 12.<\/td><\/tr><tr><td>2. Dangers of anti-competitive bidding: Since in a two-stage PQB, shortlisted bidders are announced<\/em>, there is a heightened possibility of these bidders forming a cartel and quoting anti-competitive prices<\/em> In the second stage of tendering.<\/td><td>Two-stage PQB should be done only in appropriately justified situations<\/em>. Alternatively, a single-stage multiple-envelope system<\/em> May be used for prequalification \u2014 in which the chances of anti-competitive behaviour and cycle time<\/em> Are significantly lower.<\/td><\/tr><tr><td>3. Two-phase PQB is a time-consuming process.<\/td><td>(as above)<\/em><\/td><\/tr><tr><td>4. Contentious and disputes: Both the successful and unsuccessful bidders tend to view the PQB process as a means for creating rights\/ privileges\/ entitlement<\/em> for them \u2014 by way of hair-splitting, contentious or viciously legalistic interpretations of PQC criteria<\/em>, disregarding the very rationale of the PQB and PQC.<\/td><td>In the PQC, a caveat against such tendencies<\/em> May be included \u2014 asserting the right of the procuring agency to interpret the PQC on common usage of terminologies and phrases in Public Procurement<\/em>, instead of legalistic and hair-splitting judgements \u2014 and that their decision in this regard would be final<\/em>.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2 class=\"src-G\">4.13<\/span>Approved Vendor List (AVL)<\/span>G<\/span>text; W\/C\/NC list it and cross-refer to Goods para 4.7<\/span><\/h2><div class=\"srcblock src-G\"><h3>4.13.1<\/span>Strategic, Safety and Security Requirements \u2014 the Justification<\/span><\/h3>\nMany organisations have regular and continuous<\/em> Requirements of tailor-made items<\/em> (for which the Procuring Entity is the monopoly buyer<\/em>), which are critical for the safety and security of its operations<\/em>, and where large investments and gestation periods<\/em> Are needed for developing manufacturing and quality control infrastructure\/ processes for its production.<\/p>\nIn view of heavy investments, vendors need regular and sustained offtake for financial viability<\/em>.<\/p>\nSuch procurement needs to be done over an extended period of time only from vendors who have undergone rigorous pre-qualification<\/em>.<\/p>\nThe firms are assessed for requisite infrastructure to produce consistent quality goods up to the assessed production capacity, with regular monitoring of the quality assurance system.<\/p>\nIt May even involve, if required, extended field trials of products and inspection of manufacturing\/ quality assurance facilities and processes<\/em>. Such time-consuming pre-qualification would not be feasible for each individual procurement<\/em>.<\/p>\n<aside class=\"note\">Examples given in the Manual: Railway signalling equipment \u00b7 locomotive assemblies \u00b7 track fittings. A quality glitch in these would be disastrous<\/em>.<\/p><\/aside>\n<h3>4.13.2<\/span>What an AVL Is<\/span><\/h3>\nIn such situations, a separate phase of PQB tendering is done with a much more stringent PQC<\/em> \u2014 but the resultant shortlist of qualified vendors is kept valid for an extended period (say 2 to 5 years)<\/em> As stipulated in the PQB documents.<\/p>\nThese are called approved vendor lists (AVL)<\/em>. In some countries, these May be referred to as multi-use lists<\/em>.<\/p>\n<h3>4.13.3<\/span>The Two Categories of Approved Vendors<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Basis of approval<\/th><th>Upgrade path<\/th><\/tr><\/thead><tbody><tr><td>\"Developmental vendors\" (may be named 'Temporarily or Provisionally Approved Vendors' in some organisations)<\/em><\/td><td>Approval is granted based on an assessment of infrastructure facilities available and satisfactory production of samples as per specification \u2014 but their capability to consistently produce the quality material giving satisfactory service life in the field<\/em> Is yet to be established<\/td><td>after these development vendors demonstrate a capability to produce consistent quality goods with required service life over a period (say 2 years)<\/em>, they are upgraded<\/td><\/tr><tr><td>\"Approved vendors\"<\/strong>(the regular category)<\/em><\/td><td>Demonstrated consistent quality over the qualifying period<\/td><td> \u2014 <\/td><\/tr><\/tbody><\/table><\/div>\n<h3>4.13.4<\/span>Procurement Restricted to AVL \u2014 and the 20:80 Split<\/span><\/h3>\nin all subsequent procurements, eligibility criteria restrict participation to the \"Approved Vendor List\" (regular and developmental)<\/em>, and all other bids are treated as unsolicited offers, which are normally rejected<\/em>.<\/p>\nOnly a part \u2014 say not more than 20%<\/em> \u2014 of the total tendered quantity is distributed among development vendors<\/em>, provided they quote lower than<\/em> The regular approved vendors.<\/p>\nThe rest of the quantity (say 80% or more<\/em>) is awarded to 'approved vendors'.<\/p>\nThis ensures that development vendors are able to demonstrate their capabilities for upgradation to the regular approved vendor category.<\/p>\nThus, it should be ensured that development orders are for a viable quantity<\/em> for production and for the purpose of proving their capability.<\/p>\n<h3>4.13.5<\/span>Benefits of AVL<\/span><\/h3>\nAn AVL is a powerful tool that contributes to cost control, reliability, and overall efficiency<\/em> In procurement for strategic, safety and security goods.<\/p>\nIt ensures that vendors have undergone rigorous vetting<\/em> And have demonstrated stability and reliability<\/em>.<\/p>\nWorking with approved vendors instils confidence in the quality<\/em> Of materials and components purchased and reduces the chances of defects<\/em>. Downtime due to failures and repairs is also minimised.<\/p>\n<h3>4.13.6<\/span>Monitoring and Updation<\/span><\/h3>\nAn AVL is a dynamic tool<\/em>, and its effectiveness depends on proactive management and adaptability<\/em>. Updating an AVL over time is crucial to maintain its effectiveness and relevance.<\/p>\n<ul class=\"lst\"><li>If a new vendor applies for inclusion in AVL, it May be added to AVL if it meets the PQC in the original PQB<\/em>.<\/li><li>Key performance indicators (KPIs) for vendors should be part of the PQB document \u2014 including on-time delivery, product quality, and responsiveness<\/em>.<\/li><li>These metrics May be used to conduct periodic reviews of the AVL (e.g., annually or biannually)<\/em>, and vendors who consistently fail to meet standards or demonstrate poor performance May be downgraded or removed<\/em> From the AVL.<\/li><li>Audits of existing vendors May be conducted to assess financial stability, production capabilities, and adherence to contractual terms<\/em>.<\/li><li>The procuring Entity should MONITOR industry trends, technological advancements, and new suppliers<\/em>.<\/li><li>Feedback May be gathered from stakeholders who use or maintain the goods<\/em>. Their insights can highlight areas for improvement or identify potential issues with specific vendors.<\/li><li>Vendors May be given support to enhance their capabilities and training, share best practices, and encourage continuous improvement<\/em>.<\/li><\/ul>\n<h3>4.13.7<\/span>Where AVL Is Not<\/em> Desirable<\/span><\/h3>\nThe same contra-indications as in PQB are much more accentuated<\/em> In the case of AVL, as the list is used over prolonged periods.<\/p>\nHence, the AVL mode for an item should be approved at the highest level<\/em> In the procuring organisation.<\/p>\nSince the AVL system strains the transparency principle<\/em> And there is a heightened risk of cartelisation and collusion<\/em>, AVL should NOT<\/em> Be a routine\/ normal mode of procurement and should be done only as an exception \u2014 otherwise, PQB modes of procurement May be used.<\/p>\nAVL is contraindicated in the following seven circumstances: A) where the requirement is not related to strategic, safety or security<\/em>. B) where the item is not tailor-made<\/em>, nor is the Procuring Entity a monopoly buyer<\/em>. C) where the item is not regularly and continuously procured<\/em>. D) where the requirement is technically and commercially not complex enough<\/em>. e) where large investment and prolonged gestation period are not required<\/em> In developing manufacturing\/ quality assurance facilities\/ processes. F) where the technology is not stable<\/em> And is evolving\/ changing at a fast pace. G) where procurement can be done through limited tender enquiries<\/em>.<\/p>\n<h3>4.13.8<\/span>AVL \u2014 Risks and Mitigations<\/span><\/h3>\n<aside class=\"note\">The same risks and mitigations as in PQB apply in this case to a deeper level<\/em>.<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. Dependency on vendors: It can shift the balance of power to the hands of the vendor \u2014 leading to many disadvantages: 1.1 anti-competitive practices: These approved vendors can easily form a cartel and indulge in anti-competitive practices. This includes a significant risk of collusion due to power in the hands of the procurement entity's personnel who inspect\/ monitor the facilities\/ quality. 1.2 cost escalation: Over time, vendor costs May increase, affecting overall procurement expenses. 1.3 supplier ethics and compliance: Approved vendors May engage in unethical practices or violate compliance standards.<\/td><td>1. Diversify the AVL by including multiple reliable vendors for critical goods. Maintain a backup list of development vendors<\/em> To mitigate sudden disruptions. Regularly monitor and update the AVL. 1.1 be alert about cartel\/ pool rates. Include a cartel clause<\/em> And take mitigation measures. The personnel in such jobs May be rotated frequently<\/em> And should not be allowed to be in the same position for more than 3 years<\/em>. If the same personnel who created<\/em> The AVL are also given the task of monitoring<\/em> it, it May create a conflict of interest<\/em>. So, personnel for these two tasks should be different<\/em>. The KPIs and PQC should be objectively measurable<\/em>. Every three years, a fresh PQB<\/em> May be done for new vendors. 1.2 benchmark costs periodically against market trends. Negotiate long-term contracts with price stability clauses<\/em>. 1.3 conduct due diligence on vendors' ethical practices<\/em>. Include compliance clauses for the Code of Integrity<\/em> In contracts and monitor adherence.<\/td><\/tr><tr><td>2. Lack of monitoring and updation: AVL is a dynamic tool that needs constant monitoring and updating. 2.1 complacency: Once vendors are approved, complacency May set in, leading to reduced performance. 2.2 quality fluctuations: Even approved vendors May occasionally deliver subpar quality due to production issues or changes in their processes.<\/td><td>2. Monitor and update the AVL lists. 2.1 continuously engage with vendors, encourage innovation, and set improvement targets. 2.2 regularly audit vendors to ensure consistent quality.<\/td><\/tr><tr><td>3. Market dynamics: Market dynamics (e.g., price fluctuations and technological advancements) impact vendor capabilities and competitiveness. 3.1 innovation gap: Sticking to the same vendors May hinder access to innovative solutions. A non-approved vendor offers an innovative solution that could significantly improve operations.<\/em><\/td><td>3. Stay informed about industry trends and adjust the AVL accordingly. 3.1 encourage vendors to propose new technologies or approaches. Consider adding emerging vendors to the AVL. Evaluate the benefits and risks. Seek approval for a temporary exception<\/em>, or consider adding the vendor to the AVL.<\/td><\/tr><tr><td>4. Inadequate or too-many vendors on AVL: Both an inadequate number of vendors AND too many vendors on AVL may be detrimental to the intended benefits. Too many vendors May force vendors to cartelise for survival<\/em> \u2014 having invested heavily in creating infrastructure. Too few vendors May create supply chain disruption and increased prices<\/em>.<\/td><td>Such situations may be specially monitored. In the PQB document, an upper limit May be indicated for the maximum number of suppliers to be taken on AVL<\/em>. A large number of vendors getting cleared for AVL is an indication that this item is not a fit case for AVL mode<\/em>. In case of inadequate numbers on AVL, a repeat PQB<\/em> May be done, and efforts May be made to induce new vendors with technological and preferential help in setting up infrastructure<\/em>.<\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h2>4.14<\/span>Limited Tender Enquiry (LTE)<\/span><\/h2>\n(Rule 162 of GFR 2017)<\/em><\/p>\n<h3>4.14.1<\/span>What LTE Is<\/span><\/h3>\nLTE is a restricted competition procurement<\/em>, where a pre-selected panel of vendors is directly approached<\/em> for bidding.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>G<\/span> GOODS<\/th><th>W<\/span> WORKS<\/th><\/tr><\/thead><tbody><tr><td>Who is on the panel<\/td><td>vendors on the list of registered suppliers<\/em> For the subject matter of procurement \u2014 for goods and services not available on the GeM portal<\/em><\/td><td>bidders enlisted with the Procuring Entity<\/em>, along with those enlisted with other public works organisations\/ works PSUs<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nbids from uninvited bidders are treated as unsolicited<\/em> And are not entertained, except in exceptional circumstances.<\/p>\nHowever, ministries\/ departments should evolve a system by which requests for registration\/ enlistment of interested\/ unsolicited firms should be decided before the bid in the next round of tendering<\/em>.<\/p>\nThis mode provides a short and simple procedure<\/em> But May not provide as good a VfM as in the case of open tendering \u2014 but it is still a good balance for procurements below a threshold.<\/p>\n<h3>4.14.2<\/span>When LTE Is the Default Mode \u2014 THE THRESHOLD DIVERGENCE<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Threshold<\/th><\/tr><\/thead><tbody><tr><td>G<\/span> GOODS<\/td><td>LTE procedures should be the default mode<\/em> Of procurement when the estimated value of procurement is between Rs. 5 lakh to Rs. 50 lakh<\/em> (Rupees Five Lakh to Fifty Lakh)<\/td><\/tr><tr><td>W<\/span> WORKS<\/td><td>LTE procedures should be the default mode of procurement when the estimated value of procurement is up to Rs. 10 lakh<\/em> (Rupees Ten Lakh) \u2014 OR when limited numbers of tenderers are known to possess requisite skills, technology and resources, by reason of their highly complex or specialised nature<\/em>, OR FOR works of a secret nature<\/em><\/td><\/tr><tr><td>C<\/span> Consultancy \/ NC<\/span> Non-consultancy<\/td><td>Used for procurements up to Rs. 50 lakh<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">NOTE:<\/strong> The Works Manual adds two additional, NON-MONETARY grounds<\/strong> for using LTE which do not appear in the Goods Manual \u2014 high complexity\/ specialised nature<\/strong> and works of a secret nature<\/strong>.<\/p><\/aside>\n<h3>4.14.3<\/span>Terms and Conditions<\/span><\/h3>\n1. Prior approval of the panel: The shortlist of vendors\/ contractors from the list of registered suppliers\/ enlisted contractors for the subject matter of procurement, to whom it is proposed to send tender documents, shall be approved by the Competent Authority before floating the tender<\/em>.<\/p>\n2. Rotation where the panel is large: In case the number of registered\/ enlisted bidders for an item\/ work is large and unwieldy<\/em>, A transparent system of rotation of invitation to bid<\/em> May be used to keep the invited shortlist to a manageable number (SAY 8 TO 12<\/em>).<\/p>\n3. Despatch and mandatory publication: In off-line tendering, copies of the tender documents should be sent free of cost<\/em> (Except in case of priced specifications\/ drawings) directly by speed post\/ courier\/ e-mail<\/em> To the panel.<\/p>\nFurther, the Procuring Entity should also mandatorily publish its limited tender enquiries<\/em>:<\/p>\n<ul class=\"lst\"><li>G<\/span> \u2014 ON GeM as well as<\/em> ON GeM-CPPP<\/strong>;<\/li><li>W<\/span> \u2014 ON GeM-CPPP<\/strong>.<\/li><\/ul>\nApart from that, the organisations should publish the tender enquiries on its own\/ the department's or ministry's website.<\/p>\n4. The minimum number Rule: The minimum number of bidders to whom LTE should be sent is more than three<\/em>.<\/p>\nIn case less than three<\/em> Approved vendors\/ contractors are available, LTE May be sent to the available approved vendors\/ contractors with the approval of the ca, duly recording the reasons<\/em>.<\/p>\nEfforts should then be made to identify a higher number of approved suppliers\/ contractors<\/em> By the supplier registration\/ enlistment section, to obtain more responsive bids on a competitive basis.<\/p>\n5. Simplified tender document:<\/strong>A simplified tender document with brief terms and conditions<\/em> Should be used, instead of a detailed tender document.<\/strong>(G<\/span> Annexure 8 \u2014 Limited Tender Form \u00b7 C<\/span> Annexure 15 \u00b7 NC<\/span> Annexure 9.)<\/em><\/p>\nin any case, all registered vendors\/ contractors who are normally invited to quote in such limited tenders have already acknowledged acceptance of the \"general conditions of contract\" as part of the registration application<\/em>, which is applicable to such procurements \u2014 in addition to these brief \"terms and conditions\" in the LTE tender form.<\/p>\nIf necessary, specifications and drawings or any other document<\/em> May be enclosed with the limited tender form.<\/p>\n6. Currency: In domestic tenders, any bid in foreign currency should be summarily rejected<\/em>.<\/p>\n7. The security exemption: Since selected bidders are normally registered\/ enlisted with the Procuring Entity, bid Security (EMD) and Performance Security are normally not taken in LTE<\/em>.<\/p>\n<aside class=\"note\">(Contrast SLTE<\/strong> at para 4.15.2-4 below, where both ARE taken<\/strong>.)<\/em><\/p><\/aside>\n<h3>4.14.4<\/span>LTE \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. A major risk in this mode is that the demand May be artificially split to avoid OTE or higher-level approvals<\/em>.<\/td><td>The e-procurement portal May be programmed to raise an alert<\/em> If the same item is repeatedly attempted to be procured through LTE.<\/td><\/tr><tr><td>2. There is a risk that LTE May not attract enough bids<\/em>, and sometimes there May be a single acceptable offer<\/em>. It could be due to tender documents not reaching the targeted bidders \u2014 intentionally or otherwise<\/em>. It could also be due to bidders not getting adequate time to submit bids. This could also be due to an insufficient database of registered\/ known vendors<\/em>.<\/td><td>To ensure sufficient response, in addition to mails\/ emails to selected vendors, web-based publicity should be given for limited tenders<\/em> \u2014 with suitable clarifications that unsolicited bids shall not be considered<\/em>. Sufficient time should be allowed for the submission of bids \u2014 say two weeks<\/em>. A shorter or longer period, if considered sufficient, could be allowed if justified according to the urgency\/ complexity of the requirement. Further, a limited or open tender that results in only one effective offer<\/em> Shall be treated as a single Tender Enquiry situation<\/em>, with relevant powers of approval, etc.<\/td><\/tr><tr><td>3. There is also a risk that the selection of vendors May not be transparent<\/em>. At the evaluation stage, some invited bidders May be passed over on the grounds of being ineligible\/ unreliable<\/em>. On the other hand, unsolicited bidders May also quote<\/em>, causing a dilemma of transparency regarding the consideration of such offers.<\/td><td>Maintenance of a panel of registered suppliers for each subject matter of procurement is a sine qua non<\/em> for LTE (Rule 150 GFR 2017). Such panels of vendors should be reviewed every year<\/em> To ensure an adequate number of registered suppliers. The panel should not be changed after the LTE tender has been published<\/em>. ALL past successful vendors\/ bidders should invariably be invited<\/em>. In case it is proposed to exclude any registered\/ approved vendor\/ contractor from being shortlisted for inviting LTE, detailed reasons \u2014 such as failure in supply \u2014 should be duly recorded, and approval of the ca should be taken before exclusion<\/em>. Bidders should be selected with due diligence to ensure that bidders who do not meet eligibility criteria are not shortlisted. At the evaluation stage, in LTE, passing over of a duly shortlisted bidder on grounds of poor past performance or eligibility May raise questions about transparency<\/em>.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.15<\/span>Special Limited Tender Enquiry (SLTE)<\/span><\/h2>\n<aside class=\"note\">The Headline Divergence<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>G<\/span> GOODS<\/th><th>W<\/span> WORKS<\/th><th>C<\/span> \/ NC<\/span><\/th><\/tr><\/thead><tbody><tr><td>Section title<\/td><td>SLTE for Procurements more than Rs. 50 (Rupees Fifty) Lakh<\/strong><\/em><\/td><td>SLTE for Procurements more than Rs. 10 (Rupees Ten) Lakh<\/strong><\/em><\/td><td>SLTE \u2014 above Rs. Fifty lakh<\/strong> in exceptional circumstances<\/em><\/td><\/tr><tr><td>Rule cited<\/td><td>Rule 162 of GFR 2017<\/td><td>Rule 139(v) AND Rule 162 of GFR 2017<\/td><td>Rule 162<\/td><\/tr><\/tbody><\/table><\/div><\/aside>\n<h3>4.15.1<\/span>What SLTE Is and When It May Be Used<\/span><\/h3>\nLTE\/ SLTE mode is permissible in certain special circumstances for values higher than the LTE threshold, where normally OTE should have been done<\/em>.<\/p>\nPowers to sanction procurement on an LTE\/ SLTE basis in such exceptional cases May be laid down in SoPP, based on a certificate of urgency signed by the indentor<\/em>.<\/p>\nThis mode has the merit of being quicker<\/em>, but the VfM obtained May be less than in the case of OTE<\/em>; Hence, it should be restricted to the following four situations:<\/p>\n1. Urgency: The Competent Authority in the Ministry\/ Department certifies<\/em> That there is an existing or prospective urgency for operational or technical requirements<\/em>, and any additional expenditure involved by not procuring through advertised tender enquiry is justified in view of urgency<\/em>. The Ministry\/ Department should also put on record the nature of the urgency and reasons why the procurement could not be anticipated earlier<\/em>.<\/p>\n2. Public interest: There are sufficient reasons to be recorded in writing by the Competent Authority, indicating that it will not be in the public interest<\/em> To procure the goods\/ works through advertised tender enquiry.<\/p>\n3. Known sources: The sources of supply are definitely known<\/em>, and the possibility of fresh source(s) beyond those being tapped is remote<\/em>.<\/p>\n4. Policy: Government policy designates procurement from specific agencies<\/em>.<\/p>\n<h3>4.15.2<\/span>Terms and Conditions<\/span><\/h3>\n1. The tender process would be the same as in the case of a normal LTE<\/em> Described above. However, the tender documents are more detailed, as in the case of OTE<\/em>.<\/p>\n2. The indentor's certificate: The indentor should certify that there is an existing or prospective urgency for operational or technical requirements, and that any additional expenditure involved by not procuring through an advertised tender enquiry is justified in view of urgency. The indentor should also put on record the nature of the urgency and reasons why the procurement could not be anticipated.<\/p>\n3. Currency: In domestic tenders, any bid in foreign currency should be summarily rejected.<\/p>\n4. The security Rule \u2014 the opposite of LTE: Unlike LTE, bid Security and Performance Security are taken in SLTE, as in OTE tenders<\/em>.<\/p>\n<h3>4.15.3<\/span>SLTE \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>Risks as applicable in both LTE and OTE<\/em> Are also applicable here. In addition, there is a risk that this mode May be used unjustifiably to avoid open tendering (OTE)<\/em>.<\/td><td>All mitigation strategies of LTE and OTE shall also apply here. In addition, the checks and balances systems should be tighter<\/em> By way of enhanced and severely restricted delegation of powers for certification of urgency and approval of this mode of procurement<\/em>. A system of reports from the authority signing the urgency certificate<\/em>, AND post facto review of utilisation of received goods\/ works\/ services to tackle the expressed urgency<\/em>, May be laid down.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.16<\/span>Proprietary Article Certificate (PAC) Procurement<\/span><\/h2>\n(Rule 166(i) and (iii) of GFR 2017)<\/em><\/p>\n<aside class=\"note\">PAC exists in the goods, consultancy and non-consultancy Manuals \u2014 but is entirely absent from the works Manual<\/em>, whose nomination family contains only STE or selection by nomination<\/em>.<\/p><\/aside>\n<h3>4.16.1<\/span>When PAC May Be Certified<\/span><\/h3>\nIn the procurement of goods, certain items are procured only from original equipment manufacturers (OEMs) or manufacturers having proprietary rights (or their authorised dealers\/ stockists) against a PAC certificate<\/em>. (Format at Annexure 9 of the Goods Manual.)<\/em><\/p>\nthis mode May be the shortest<\/em>, but since it May provide lesser VfM than LTE\/ OTE<\/em> AND strains the transparency principle<\/em>, it should be used only in justifiable situations.<\/p>\nSuch situations may arise on the following three grounds where a PAC can be certified:<\/p>\n1. Sole manufacturer: It is in the user department's knowledge that only a particular firm is the manufacturer<\/em> Of the required goods.<\/p>\n2. Standardisation and warranty: For standardisation of machinery or components or spare parts to be compatible with the existing sets of machinery\/ equipment<\/em> (On the advice of a competent technical expert), or if it is a condition of the manufacturer's warranty that only OEM spares are to be used during the warranty period<\/em> \u2014 the required goods are to be purchased only from a selected firm duly approved by the Competent Authority.<\/p>\n3. Research continuity: In case of advanced educational, research, development and scientific institutes\/ organisations of national importance<\/em>, specialised equipment and their spares\/ consumables May have to be procured from the same original vendor<\/em> \u2014 on the advice of a competent technical expert and approved by the project in-charge \u2014 to maintain consistency\/ reproducibility\/ continuity of established\/ standardised methods\/ protocols to attain objectives of such projects<\/em>.<\/p>\n<h3>4.16.2<\/span>Terms and Conditions<\/span><\/h3>\n1. The certificate and its effect on powers: Users should enclose, with their indent, a PAC certificate signed by the appropriate authority as per DFPR\/ SoPP, with the concurrence of associated finance<\/em>, for sourcing an item from OEM or PAC firms or their authorised agents.<\/p>\nOnce a PAC is thus signed, the powers of procurement are the same as in normal conditions<\/em> As per the delegation of powers.<\/p>\n<aside class=\"note\">(Contrast STE<\/strong> at para 4.17.2-1 below, where powers are more restricted<\/strong>.)<\/em><\/p><\/aside>\n2. Proprietary items shall be purchased only from a nominated manufacturer, or its authorised dealer as recorded in the PAC certificate<\/em>.<\/p>\n3. In certain unavoidable cases, the procuring authority May have no alternative but to waive payment of EMD\/ SD<\/em> for procurement on a proprietary basis.<\/p>\n<h3>4.16.3<\/span>PAC \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. There is a risk that this mode May get used unjustifiably to restrict competition<\/em>. Such risks get aggravated in case of secrecy about such procedures<\/em>, as alternative vendors\/ contractors may not even come to know about such opportunities.<\/td><td>The delegation of powers should be restricted for signing the PAC<\/em>. Even in PAC procurements, the NIT and the award of contract should be put on gem-cppp and Procuring Entity websites<\/em>.<\/td><\/tr><tr><td>2. Once approved, there is a risk of a nexus getting developed<\/em>, and the mode May continue to be used for many years without fresh application of mind<\/em>.<\/td><td>No item should be procured on a PAC basis for more than three years<\/em>, after which a mandatory OTE mode May be used to test the market<\/em>. The procuring entity may also keep an eye on the GeM portal for other vendors<\/em> Who can supply such items.<\/td><\/tr><tr><td>3. The bidder May charge a price higher than the market<\/em>.<\/td><td>To the extent feasible, the PAC firm should be asked to accept a \"Fall clause\"<\/em> \u2014 undertaking that if it supplies or quotes a lower rate to other governments, the public sector, or private organisations, it shall reimburse the excess<\/em>. If the price offered is not acceptable, negotiation May be held with the PAC firm<\/em>.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.17<\/span>Single Tender Enquiry (STE) \/ Selection by Nomination<\/span><\/h2>\n(Rule 166 of GFR 2017 \u00b7 NC<\/span> cites Rule 204)<\/em><\/p>\n<h3>4.17.1<\/span>What STE Is and When It May Be Used<\/span><\/h3>\nG<\/span> A tender invitation to one firm only without a PAC certificate<\/em> is called a single tender.<\/p>\nW<\/span> The selection by direct negotiation\/ nomination<\/em> is called a single tender.<\/p>\nThis mode May be the shortest, but since it May provide lesser VfM as compared to LTE\/ OTE<\/em> And May also strain the transparency principle<\/em>, it should be resorted to only under the following conditions:<\/p>\n<h4>G<\/span> GOODS \u2014 ONE ground only (where a PAC cannot be certified)<\/em><\/span><\/h4>\n1. In the case of an existing or prospective emergency relating to operational or technical requirements to be certified by the indentor<\/em>, the required goods are necessary to be purchased from a particular source \u2014 subject to the reason for such decision being recorded and approval of the Competent Authority obtained<\/em>.<\/p>\n<h4>W<\/span> WORKS \u2014 SIX grounds<\/span><\/h4>\n1. Unforeseeable urgency: There is an urgent need for the work<\/em>, and engaging in a competitive tendering process would therefore be impractical<\/em> \u2014 provided that the circumstances giving rise to the urgency were neither foreseeable by the Procuring Entity nor the result of dilatory conduct on its part<\/em>.<\/p>\n2. Natural continuation \u2014 and the 25% cap: Works that represent a natural continuation of previous work carried out by the firm<\/em>, when \u2014 considering the limited size of the additional work in relation to the original procurement<\/em> And the reasonableness of the price<\/em> \u2014 it will be cost-effective to resort to single-source procurement.<\/p>\n<aside class=\"note\">However, the incremental work should not be more than 25 (twenty-five) per cent of the original contract value<\/em>.<\/p><\/aside>\n3. Emergency\/ disaster: In case of an emergency situation, situations arising after natural disasters, situations where timely completion of the work is of utmost importance<\/em> \u2014 subject to the reason for such decision being recorded and approval of the Competent Authority obtained.<\/p>\n4. Proprietary techniques\/ sole expertise: Situations where execution of the work May involve use of proprietary techniques<\/em>, OR only one contractor has the requisite expertise<\/em>.<\/p>\n5. National defence\/ security: The procurement entity engages in procurement involving national defence or national security<\/em> And determines that single-source procurement is the most appropriate method of procurement.<\/p>\n6. Overall interest: Under some special circumstances, it May become necessary to select a particular agency where adequate justification is available for such single-source selection in the context of the overall interest of the Ministry or Department<\/em>.<\/p>\n<h3>4.17.2<\/span>Terms and Conditions<\/span><\/h3>\n1. The restricted-powers Rule: The reasons for an STE AND<\/em> The selection of a particular firm must be recorded and approved by the ca<\/em> As per the delegation of powers laid down in DFPR\/ SoPP \u2014 prior to single tendering<\/em>. Unlike in PAC, the powers of procurement of STE are more restricted<\/em>.<\/p>\n2. G<\/span><\/strong>other terms and conditions of PAC procurement mentioned above would also apply in this case.<\/p>\n2. W<\/span> \u2014 Fairness and no-splitting: The Procuring Entity shall ensure fairness and equity<\/em> And shall have a procedure in place to ensure that:<\/p>\n<ul class=\"lst\"><li>The prices are reasonable and consistent with market rates<\/em> for work of a similar nature; And<\/li><li>the required work is not split into smaller-sized procurements<\/em>.<\/li><\/ul>\n3. The mandatory quarterly reporting of nomination awards W<\/span>C<\/span>NC<\/span>:<\/p>\nIn case of single tender procurements:<\/p>\nA) a report relating to such awards on a nomination basis shall be submitted every quarter<\/em> TO:<\/p>\n<ul class=\"lst\"><li>i) THE SECRETARY, in case of Ministries\/ Departments;<\/li><li>ii) the board of directors or equivalent managing body, in case of Public Sector Undertakings, Public Sector Banks, Insurance companies, etc.;<\/li><li>iii) the chief executive of the organisation where such a managing body is not in existence.<\/li><\/ul>\nb) THE audit committee or similar unit<\/em> In the organisation May be required to check at least 10% of such cases<\/em>.<\/p>\n<aside class=\"note\">Note:<\/strong> This reporting requirement appears in the Works, Consultancy and Non-Consultancy<\/strong> Manuals in the Modes\/ SSS sections. The Goods Manual carries it in the context of nomination-basis awards generally.<\/p><\/aside>\n<h3>4.17.3<\/span>STE \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>G<\/span><\/td><td>THE same but more heightened risks than PAC<\/em> Are present in this mode. The selection of a single vendor May be non-transparent and unjustified<\/em>.<\/td><td>The same mitigation strategies as in the case of PAC should apply. Procurements on an STE basis should be made from reputed firms after determining the reasonableness of rates<\/em>. The procurement powers for STE should be severely restricted<\/em>.<\/td><\/tr><tr><td>W<\/span><\/td><td>risks as applicable in both LTE and OTE are also applicable here. In addition, there is a risk that this mode May be used unjustifiably to avoid open tendering (OTE)<\/em>, thereby making the selection of the contractor non-transparent and unjustified<\/em>.<\/td><td>All mitigation strategies of LTE and OTE would apply here also. In addition, the systems of checks and balances should be tighter by way of enhanced and severely restricted delegation of powers in this regard for certification of urgency<\/em> And approval of this mode. A system of reports from the authority signing the urgency certificate, and post facto review of utilisation of executed works and receipt of incidental goods\/ services<\/em> To tackle the expressed urgency, May be laid down. Audit should take up the bulk of such cases<\/em> for review to judge the genuineness of urgency certification<\/em>.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.18<\/span>Direct Procurement without Quotation<\/span><\/h2>\n(Rule 154 of GFR 2017)<\/em><\/p>\n<h3>4.18.1<\/span>What It Is and When It May Be Used<\/span><\/h3>\ndirect procurement of goods without formal quotations is normally done for the smallest value procurements<\/em>. This is also called petty purchase<\/em>.<\/p>\nIt should be used for off-the-shelf goods with simple and standard specifications<\/em>, and when the required goods (of required specification or within the required delivery period, etc.) are not available on GeM<\/em>.<\/p>\nHowever, for procurement outside GeM, it is mandatory<\/em> for a buyer to generate a \"GeM availability report and past transaction summary\" (gemar&pts) with a unique id on the GeM portal using his login credentials.<\/p>\nThe procedure is the simplest and quickest<\/em>, BUT VfM May be poor<\/em>; Hence, it is suitable only for low-value, urgent and simple requirements<\/em> In the following three situations:<\/p>\n1. The value threshold and the scientific-ministry enhancement:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Limit per case\/ occasion<\/th><\/tr><\/thead><tbody><tr><td>General<\/td><td>Rs. 50,000 (Rupees Fifty Thousand) for each requirement\/ case<\/td><\/tr><tr><td>scientific ministries\/ departments \u2014 for scientific equipment and computers<\/td><td>ENHANCED to Rs. 1,00,000\/- (Rupees One Lakh) on each occasion (OM No. F.20\/42\/2021-PPD dated 20.05.2024)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">which ministries\/ departments count as \"scientific\" for this purpose:<\/p>\n(i) Department of Science and Technology \u00b7 Department of Biotechnology \u00b7 Department of Scientific & Industrial Research \u00b7 Department of Atomic Energy \u00b7 Department of Space \u00b7 Ministry of Earth Sciences \u00b7 Defence Research & Development Organisation \u00b7 Indian Council of Agricultural Research (ICAR), including its affiliated institutions and Universities \u00b7 Department of Health Research (DHR), including Indian Council of Medical Research (including all Autonomous Bodies under these Ministries\/ Departments)<\/em><\/p>\n(ii) Educational and Research Institutes conducting post-graduate\/ doctoral level courses or research, under any Ministry\/ Department.<\/p>\n(iii) it is also clarified that gfrs are not applicable to the projects executed by state-level institutions or by private universities\/ institutions\/ organisations \u2014 even if they are funded by the ministries\/ departments\/ organisations mentioned above<\/em>.<\/p>\n(iv) in such cases, it is for the Ministry\/ Department\/ organisation to put in appropriate financial controls<\/em> To achieve the intended purpose.<\/p><\/aside>\n2. The requirement is urgent but was not covered in the procurement plan<\/em>.<\/p>\n3. The requirement is for off-the-shelf goods of simple and standard specifications<\/em>. Examples of procurement are the day-to-day needs of the office and field units, and so on.<\/em><\/p>\n<h3>4.18.2<\/span>Terms and Conditions<\/span><\/h3>\n1. Who does it and the certificate: The competent officer of the Procuring Entity can initiate and complete this purchase after diligent enquiries from the market<\/em> And filling out the certificate prescribed (G<\/span> Annexure 10 \u00b7 C<\/span> Annexure 13 \u00b7 NC<\/span> Annexure 7)<\/em>.<\/p>\nSuch powers, to a limited extent, can also be given to various user sections for operational needs<\/em>.<\/p>\n2. The imprest system: Normally, an imprest amount (with facilities for cheque payments) sufficient for two months' estimated procurements<\/em> Can be sanctioned, so that officers can handle such procurements. The imprest amount can be recouped on a monthly basis by submission of expense vouchers<\/em>.<\/p>\n3. Records: IN A summary form<\/em>, records should be kept of the vendors\/ contractors approached and the prices they indicate<\/em>.<\/p>\n4. The essence of the mode: Selection of sellers by diligent market enquiry<\/em> is of the essence of this mode of procurement.<\/p>\n5. Where to survey: In larger cities, reputed shopping malls<\/em> May also be included in the market survey. Reputed internet shopping portals<\/em> May also be explored.<\/p>\n<h3>4.18.3<\/span>Direct Procurement without Quotations \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. The main risk is the splitting of demand to avoid higher approvals or higher modes of procurement<\/em>.<\/td><td>Supervisors should carry out periodic reviews<\/em> Of such procurements to ensure that the demand is not split into small quantities for the sole purpose of avoiding the necessity of getting approval from the higher authority, or for avoiding LTE or OTE mode. AN annual review<\/em> Of such procurements shall be carried out to ensure that future anticipated requirements are clubbed and procured through LTE\/ OTE\/ rc<\/em>. To keep better control, an annual ceiling May be fixed for each office<\/em> for such a mode of procurement \u2014 say, rupees five lakh for each office per year<\/em>. Each office should maintain records to monitor such limits.<\/td><\/tr><tr><td>2. Over a period, intentionally or otherwise, the due diligence of enquiries from the market May degenerate into a mechanical obtaining of quotations<\/em>, leading to the development of nexus and crony suppliers<\/em>. Vendor selection May be manipulated with fake supporting vouchers<\/em>. Since such small-value materials do not undergo accounting and inventory control<\/em>, there is a risk of the development of a nexus, leakages, and fake procurements and payments<\/em>. The same set of vendors May get patronised repeatedly for a wide variety of requirements. Since only cursory visual inspections<\/em> Are done, quality May be at risk.<\/td><td>Supervisors should cross-check a percentage of cases in the market<\/em> for prices, fake vouchers, and so on. Supervisors should also check that the same vendor(s) is not being patronised repeatedly<\/em>. for the sake of transparency, payments should be made by cheque or through electronic clearance service<\/em> \u2014 except that cash payment May be allowed up to Rs. 5,000 (rupees five thousand)<\/em>. Staff involved with such procurements should not continue in the same role for long and should be rotated frequently<\/em>.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.19<\/span>Direct Procurement by Purchase Committee<\/span><\/h2>\n(Rule 155 of GFR 2017)<\/em><\/p>\n<h3>4.19.1<\/span>What It Is and When It May Be Used<\/span><\/h3>\nthis mode of procurement is made by a local Purchase Committee consisting of three members of an appropriate level, constituted by hod<\/em>.<\/p>\nThis procedure is slightly more complex<\/em> And is likely to provide BETTER VfM<\/em> Than direct procurement without quotation; Hence, it is suitable for marginally higher thresholds<\/em>.<\/p>\nIt is used in the following conditions:<\/p>\n1. The value band and the scientific-ministry enhancement:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Limit per occasion<\/th><\/tr><\/thead><tbody><tr><td>General<\/td><td>Above Rs. 50,000\/- and up to rs. 5,00,000\/- (Rupees Five Lakh) only, on each occasion<\/td><\/tr><tr><td>scientific ministries\/ departments<\/td><td>ENHANCED to Rs. Ten LAKH (above Rs. 1 lakh, as in para 4.18.1-1 above) on each occasion (same OM and same list of qualifying Ministries as at para 4.18.1)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n2. GeM condition: Only in case when a certain item is not available on the GeM portal<\/em> (of required specification or within the required delivery period, etc.). However, for procurement outside geM, it is mandatory for a buyer to generate a GeMAR&PTS<\/em> With a unique id on the GeM portal.<\/p>\n3. Extension to small works and services: This mode of procurement is described in the parlance of procurement of goods; However, in principle, it is equally applicable to contingency expenditure on small works\/ services<\/em>.<\/p>\n<h3>4.19.2<\/span>Terms and Conditions<\/span><\/h3>\n1. The controlling Ministry May lay down an annual ceiling value per office\/ unit<\/em> for such procurements.<\/p>\n2. In case of emergency procurement<\/em>, the facility for withdrawing the requisite advance cash amount and its subsequent account<\/em> May also be considered.<\/p>\n3. This is intended to be a fast-track, simple mode<\/em> Of procurement. The committee will survey the market<\/em> To ascertain the reasonableness of rate, quality and specifications<\/em> And identify the appropriate supplier.<\/p>\n4. The essence \u2014 market survey, NOT<\/em> A mini-lte: The selection of suitable products and suppliers by actual market survey (not by calling tenders like a mini-lte)<\/em> is the essence of this mode.<\/p>\nTherefore, there is no question of obtaining quotations by email or otherwise<\/em>.<\/p>\nThe committee shall survey the market to ascertain the reasonableness of rate, quality and specifications and identify the appropriate supplier. The survey May include online internet shopping portals<\/em>, besides physical local market surveys.<\/p>\nFor organisations in smaller towns\/ hinterlands, surveys in nearby bigger cities\/ metros May also be included<\/em> As part of the survey, depending on the ease of logistics.<\/p>\n5. The certificate:<\/strong>Before recommending the placement of the purchase order, members of the committee will jointly record the certificate prescribed<\/strong><\/em>(G<\/span> Annexure 11 \u00b7 C<\/span> Annexure 14 \u00b7 NC<\/span> Annexure 8)<\/em>.<\/p>\n6. The committee shall survey the market to ascertain the reasonableness of rate, quality, and specifications; Identify the appropriate supplier; And jointly record a certificate before placing the purchase order<\/em>.<\/p>\n<h3>4.19.3<\/span>Direct Procurement by Purchase Committee \u2014 Risks and Mitigations<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>Risks are the same as in the case of direct procurement without quotation mentioned above \u2014 with mitigation due to the involvement of three members<\/em>. Over a period, intentionally or otherwise, the due diligence of enquiries from the market May degenerate into a system of floating and obtaining limited tenders<\/em> \u2014 leading to delays and the development of nexus and crony suppliers<\/em>.<\/td><td>Mitigation strategies are also the same as in direct procurement without quotation.<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>4.20<\/span>Award of Work through Quotations [W ONLY]<\/span><\/h2>\n<aside class=\"note\">This mode exists only in the works Manual<\/em>. It is the Works analogue of the Goods \"Shopping Modes\", but it is structured differently \u2014 it uses quotations from at least three contractors<\/em>, whereas the Goods Purchase Committee mode expressly forbids obtaining quotations.<\/p><\/aside>\n1. The threshold and the permitted works: Use of quotations up to Rs. Five lakh in each instance<\/em> Shall be adopted for procurement of minor civil works<\/em> LIKE:<\/p>\n<aside class=\"note\">Construction of boundary walls \u00b7 installation of safety barriers or guardrails \u00b7 repairing\/ maintenance\/ plumbing works, etc.<\/p><\/aside>\n \u2014 for which there is an established market<\/em>.<\/p>\nProcuring Entity shall not divide its procurement into separate contracts to bring the amount less than the amount set forth for such purpose<\/em>.<\/p>\n2. The minimum of three: Procuring Entity shall request quotations from as many contractors as practicable, but positively from at least three contractors<\/em>.<\/p>\nEach contractor from whom a quotation is requested shall be informed whether any elements other than the charges for the works to be executed \u2014 such as transportation and insurance charges, duties and taxes \u2014 are to be included in the price<\/em>.<\/p>\n3. One quotation only, no revision: Each contractor is permitted to give only one price quotation<\/em> AND IS not permitted to change its quotation<\/em>.<\/p>\n4. Emergent cases only: Award of work through quotations shall be resorted to only in emergent cases<\/em>, AND suitable reasons shall be recorded<\/em>.<\/p>\n<h2>4.21<\/span>Award of Works in Stalled Contracts [W ONLY]<\/span><\/h2>\n<aside class=\"note\">This provision exists only in the works Manual<\/em> And has no counterpart in any other category.<\/p><\/aside>\n1. The problem: Where a contractor abandons or stops the work mid-way<\/em> \u2014 either due to insolvency or a dispute or other reason<\/em> \u2014 engagement of the new contractor takes considerable time<\/em>, and in the meanwhile:<\/p>\n<ul class=\"lst\"><li>Public money is locked up in assets which cannot be utilised<\/em>,<\/li><li>apart from inconvenience and loss of amenities to the general public<\/em> Due to such half-completed works.<\/li><\/ul>\n2. The solution \u2014 and its two conditions: Notwithstanding anything in the GFR or the Manual, procuring entities should devise methods (including limited\/ single tenders) to deal with part-completed contracts<\/em>, wherever the work is abandoned by the contractor mid-way.<\/p>\nHowever, for issuance of limited\/ single tenders in such cases:<\/p>\n<ul class=\"lst\"><li>Condition 1 \u2014 the 20% billing test: At least 20% of work should have been billed<\/em> By the contractor who has abandoned the work.<\/li><li>Condition 2 \u2014 elevated approval: Procurement approval of such limited\/ single tender should be at the next higher level<\/em>, or such level as May be prescribed.<\/li><\/ul>\n<h2>4.22<\/span>Mode Selection by Value \u2014 Non-Consultancy Services [NC ONLY]<\/span><\/h2>\n<aside class=\"note\">The Non-Consultancy Manual alone adds three paragraphs mapping the modes onto value bands.<\/p><\/aside>\n<h3>4.22.1<\/span>Higher Value Non-consultancy Services<\/span><\/h3>\n(Rule 201(ii) of GFR, 2017)<\/em><\/p>\nin procurements of non-consultancy services above Rs. 50 (rupees fifty) lakh<\/em>, it should normally be by an advertised mode (i.e., OTE)<\/em>.<\/p>\nServices which are available on GeM have to be mandatorily procured through that portal<\/em>.<\/p>\n<h3>4.22.2<\/span>Lower Value Non-consultancy Services<\/span><\/h3>\n(Rules 199 and 201(i) of GFR 2017)<\/em><\/p>\nfor procurement below Rs. 50 (rupees fifty) lakh<\/em>, LTE can be issued to a selected shortlist of likely service providers<\/em>.<\/p>\nThe three-step shortlisting procedure:<\/p>\n1. The long list: To start with, preparation of a long list of potential service providers<\/em> May be done on the basis of formal or informal enquiries<\/em> FROM:<\/p>\n<aside class=\"note\">Other ministries or departments or organisations involved in similar activities \u00b7 chambers of commerce & industry \u00b7 association of non-consultancy firms, etc.<\/p><\/aside>\n2. The moderated long list: The Procuring Entity should scrutinise the preliminary long list<\/em> Of likely service providers as identified above, and shortlist the prima facie eligible and capable service providers<\/em> From the long list.<\/p>\nThe number of service providers in this moderated long-list should be more than three<\/em>.<\/p>\n3. The standing panel: To smoothen this shortlisting of service providers, procuring entities who do frequent procurement<\/em> OF non-consultancy services May consider the preparation of a panel of qualified service providers, after evaluation of their credentials \u2014 on the lines of registration of vendors in the procurement of goods<\/em>.<\/p>\nServices that are available on GeM have to be mandatorily procured through that portal.<\/p>\n<h3>4.22.3<\/span>Small Value Non-consultancy Services<\/span><\/h3>\nThe rationale: In small-value procurement of non-consultancy services, the service provider May neither be capable of handling the bidding process<\/em>, nor May procurement be done by shopping mode of procurement.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Value<\/th><th>Mode to be used<\/th><\/tr><\/thead><tbody><tr><td>UP TO Rs. 50,000 (Fifty thousand)<\/td><td>THE 'Direct procurement without quotation'<\/em> Mode of procurement used in procurement of goods May very well be utilised in such cases (certificate at Annexure 7)<\/em><\/td><\/tr><tr><td>UP TO Rs. 5 (Rupees Five) LAKH<\/td><td>THE 'Direct procurement by a Purchase Committee'<\/em> Mode, as used in procurement of goods, May be utilised (certificate at Annexure 8)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nin all such modes of procurement, the procedure prescribed in the Manual for procurement of goods, 2024, May be followed<\/em>.<\/p>\n<h1>Appendix to Chapter 4 \u2014 Part B: Points of Difference<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>SLTE threshold<\/td><td>G\/C\/NC: above Rs. 50 LAKH \u00b7 W: above Rs. 10 LAKH<\/td><\/tr><tr><td>2<\/td><td>OTE threshold<\/td><td>G\/C\/NC: above Rs. 50 lakh \u00b7 W: above Rs. 10 lakh<\/td><\/tr><tr><td>3<\/td><td>LTE default band<\/td><td>G: Rs. 5 lakh to Rs. 50 lakh \u00b7 W: up to Rs. 10 lakh \u00b7 C\/NC: up to Rs. 50 lakh<\/td><\/tr><tr><td>4<\/td><td>Rule cited for LTE\/ SLTE threshold<\/td><td>G\/C\/NC: Rule 162 \u00b7 W: Rule 139(v) AND Rule 162<\/td><\/tr><tr><td>5<\/td><td>Additional non-monetary grounds for LTE (high complexity\/ specialised nature; works of a SECRET nature)<\/td><td>W ONLY<\/td><\/tr><tr><td>6<\/td><td>LTE panel drawn also from OTHER Public Works Organisations\/ Works PSUs<\/td><td>W ONLY<\/td><\/tr><tr><td>7<\/td><td>proprietary Article Certificate (PAC) as a mode<\/td><td>g, c, nc \u2014 absent from works entirely<\/td><\/tr><tr><td>8<\/td><td>STE grounds<\/td><td>G: One ground (emergency, indentor-certified)<\/strong> \u00b7 W: Six grounds<\/strong> including national defence\/ security and natural continuation<\/td><\/tr><tr><td>9<\/td><td>25% cap on incremental work under \"natural continuation\" STE<\/td><td>W ONLY<\/td><\/tr><tr><td>10<\/td><td>Rule cited for Nomination modes<\/td><td>G\/W\/C: Rule 166 \u00b7 NC: Rule 204, with an added requirement of consultation with the Financial Adviser and detailed justification forming an integral part of the proposal<\/td><\/tr><tr><td>11<\/td><td>Award of work through quotations (up to Rs. 5 lakh, at least 3 contractors, one quotation each, emergent cases only)<\/td><td>W ONLY<\/td><\/tr><tr><td>12<\/td><td>Award of works in stalled contracts (20% billing test; next-higher-level approval)<\/td><td>W ONLY<\/td><\/tr><tr><td>13<\/td><td>Direct Procurement without Quotation \/ by Purchase Committee<\/td><td>G (full text), C, NC \u2014 not in Works<\/td><\/tr><tr><td>14<\/td><td>Scientific Ministries enhancement (Rs. 1 lakh \/ Rs. 10 lakh) with the four-part qualifying list<\/td><td>G ONLY<\/td><\/tr><tr><td>15<\/td><td>RATE CONTRACT full text \u2014 items amenable, merits, fall clause, parallel RCs, DDO, renewal<\/td><td>G ONLY<\/strong> (W\/C\/NC list \"Framework Agreements\/ Rate Contracts\" as a separate sixth family and cross-refer)<\/td><\/tr><tr><td>16<\/td><td>Rate Contract listed under ADVERTISED modes vs as a SEPARATE FAMILY<\/td><td>G: under Advertised \u00b7 W\/C\/NC: separate family (f)<\/td><\/tr><tr><td>17<\/td><td>Approved Vendor List full text \u2014 Developmental vs Approved Vendors, 20:80 split, 3-year rotation rule, fresh PQB every three years<\/td><td>G ONLY<\/strong> (W\/C\/NC cross-refer to Goods para 4.7)<\/td><\/tr><tr><td>18<\/td><td>eRA \u2014 placement<\/td><td>g: A mode (4.5) \u00b7 w: A channel (3.5.2) \u00b7 nc: Both (4.4-3-a-iii and 4.6.2) \u00b7 c: Absent entirely<\/td><\/tr><tr><td>19<\/td><td>eRA expressly stated as inappropriate where QCBS is used in NC services<\/td><td>nc only<\/strong> (the general eRA text in G also excludes QCBS and FBS)<\/td><\/tr><tr><td>20<\/td><td>GTE viability ground (d)<\/td><td>G: absence of sufficient competent domestic bidders AND *suspected cartel formation \u00b7 W: requirement cannot be executed by indigenous contractors *at reasonable rates<\/strong><\/td><\/tr><tr><td>21<\/td><td>GTE Terms \u2014 Currency of Bidding, Agency Commission (5%), Delivery Terms\/ Incoterms, Insurance (Rs. 5 crore threshold, Open Cover), IGST break-up<\/td><td>G ONLY<\/td><\/tr><tr><td>22<\/td><td>The eight GTE exemptions (research equipment, ICT items, nomination-basis spares\/AMC, pre-15.05.2020 commitments, 354 medical devices + 120 drugs to 31.03.2027, MDB\/BFA projects, semiconductor to 31.03.2025, procurement abroad for use abroad)<\/td><td>G ONLY<\/td><\/tr><tr><td>23<\/td><td>The seven conditions + six guidelines + three certificates for research-institution GTE<\/td><td>G ONLY<\/td><\/tr><tr><td>24<\/td><td>Advertisement portals in OTE\/ LTE<\/td><td>G: GeM AND<\/em> GeM-CPPP \u00b7 W: GeM-CPPP only<\/td><\/tr><tr><td>25<\/td><td>Requirement that successful un-enlisted bidders get enlisted before contract placement<\/td><td>W ONLY<\/td><\/tr><tr><td>26<\/td><td>PQB\/ Single-Stage Pre-qualification full text \u2014 PQC two-sided test, 3\/4-week and 10-day notice, single-use shortlist, six-month gap<\/td><td>G ONLY<\/td><\/tr><tr><td>27<\/td><td>Mode selection by value bands for NC Services (above Rs 50 lakh \u2192 OTE; below \u2192 LTE with 3-step shortlisting; small value \u2192 Goods shopping modes)<\/td><td>nc only<\/td><\/tr><tr><td>28<\/td><td>\"More than three\" in the moderated long-list of NC service providers<\/td><td>nc only<\/td><\/tr><tr><td>29<\/td><td>Quarterly reporting of nomination awards + audit committee to check at least 10% of cases<\/td><td>W, C, NC<\/strong> state it in the modes\/ SSS sections<\/td><\/tr><tr><td>30<\/td><td>Common footnote: thresholds revised upwards vide PPD's OM No. F.1\/3\/2014-PPD dated 10.07.2024<\/td><td>all four<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 4 \u2014 part b (and of Chapter 4)<\/p>\n<aside class=\"note\">Next:<\/strong>Chapter 5 \u2014 bid invitation process<\/strong>(Goods Ch. 5 \u00b7 Works Ch. 4<\/strong> \u00b7 Consultancy Ch. 5 \u00b7 Non-Consultancy Ch. 5)<\/em> \u2014 one of only two chapters whose title is word-for-word identical in all four Manuals<\/strong>. Note that Works again runs one chapter number behind, and that Consultancy alone splits the tender document into REoI<\/strong> and RfP<\/strong> as separate sections.<\/p><\/aside><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch5\">Chapter 5<\/p><h1>Bid Invitation Process<\/h1><\/header>\nMerging: Goods Ch. 5 \u00b7 Works Ch. 4 \u00b7 Consultancy Ch. 5 \u00b7 Non-Consultancy Ch. 5<\/em><\/p><h2>Structural Notes for Students<\/span><\/h2>\n1. This is one of only two chapters whose title is word-for-word identical in all four Manuals (the other being Chapter 6, Forms of Securities\u2026)<\/em>. BUT the Works Manual numbers it CHAPTER 4, not Chapter 5.<\/p>\n2. Four common anchors run through all four Manuals, in the same order:<\/p>\n<aside class=\"note\">Preparation\/ Floating of Tender Documents \u2192 Obtaining Tender Documents and Submitting Bids \u2192 Opening of Bids \u2192 Transparency and Protecting Third-Party Rights of Bidders \u2192 Risks and Mitigations<\/p><\/aside>\n3. But the four Manuals organise the material very differently:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>Number of sections<\/th><th>Distinctive feature<\/th><\/tr><\/thead><tbody><tr><td>G<\/span> Goods<\/td><td>5<\/td><td>The base text; leanest treatment<\/td><\/tr><tr><td>W<\/span> Works<\/td><td>15<\/strong>the most granular<\/em><\/td><td>Promotes each sub-topic to a full section; adds fixed NIT\/ opening days, accessibility standards, entry window for sub-contractors<\/td><\/tr><tr><td>C<\/span> Consultancy<\/td><td>8<\/td><td>ALONE splits the tender document into two separate documents \u2014 REoI (5.2) and RfP (5.3)<\/td><\/tr><tr><td>NC<\/span> Non-Consultancy<\/td><td>5<\/td><td>Places the entire document-composition detail inside<\/em> 5.1 as sub-paras 5.1.3 to 5.1.12; adds Performance Standards\/ Method Statement<\/strong> and minimum-wage restrictions<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>Concordance for Chapter 5<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>Goods<\/th><th>Works<\/th><th>CS<\/th><th>NCS<\/th><\/tr><\/thead><tbody><tr><td>5.1<\/td><td>Model Tender Documents<\/td><td>5.1.1<\/td><td>(in 4.2)<\/em><\/td><td>5.1.1<\/td><td>5.1.1<\/td><\/tr><tr><td>5.2<\/td><td>Tender Documents \u2014 the fundamental document<\/td><td>5.1.2<\/td><td>4.1<\/td><td>5.1.2<\/td><td>5.1.2<\/td><\/tr><tr><td>5.3<\/td><td>Contents\/ Sections of Tender Documents<\/td><td>5.1.3<\/td><td>4.2<\/td><td>(see 5.4, 5.5)<\/em><\/td><td>5.1.3<\/td><\/tr><tr><td>5.3.1<\/td><td>Notice Inviting Tender (NIT)<\/td><td>5.1.3-2<\/td><td>4.2.1<\/td><td>(RFPL \u2014 5.3.2-2)<\/em><\/td><td>5.1.4<\/td><\/tr><tr><td>5.3.2<\/td><td>Instructions to Bidders (ITB) and AITB<\/td><td>5.1.3-3<\/td><td>4.2.2<\/td><td>(ITC \u2014 5.3.2-3)<\/em><\/td><td>5.1.5<\/td><\/tr><tr><td>5.3.3<\/td><td>General and Special Conditions of Contract<\/td><td>5.1.3-4<\/td><td>4.2.3<\/td><td>5.3.2-4<\/td><td>5.1.6<\/td><\/tr><tr><td>5.3.4<\/td><td>Schedule of Requirements<\/td><td>5.1.3-5<\/td><td>4.2.4<\/td><td>(ToR)<\/em><\/td><td>5.1.7<\/td><\/tr><tr><td>5.3.5<\/td><td>Technical Specifications\/ Drawings\/ QA<\/td><td>5.1.3-6<\/td><td>4.2.5<\/td><td> \u2014 <\/td><td>5.1.8<\/td><\/tr><tr><td>5.3.6<\/td><td>Qualification Criteria<\/td><td>5.1.3-7<\/td><td>4.2.6<\/td><td>5.2.2-6<\/td><td>5.1.9<\/td><\/tr><tr><td>5.3.7<\/td><td>Evaluation Criteria<\/td><td>5.1.2-6<\/td><td>4.2.7<\/td><td>5.3.2-6<\/td><td>(within 5.1.12)<\/em><\/td><\/tr><tr><td>5.3.8<\/td><td>Submission Forms and Formats<\/td><td>5.1.3-8<\/td><td>4.2.8<\/td><td>5.3.3<\/td><td>5.1.11<\/td><\/tr><tr><td>5.3.9<\/td><td>Financial Bid (BOQ Excel Sheet)<\/td><td>5.1.3-8-b<\/td><td>4.2.9<\/td><td>5.3.3-2<\/td><td>5.1.10<\/td><\/tr><tr><td>5.4<\/td><td>REoI Document<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>5.2<\/td><td> \u2014 <\/td><\/tr><tr><td>5.5<\/td><td>RfP Document<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>5.3<\/td><td> \u2014 <\/td><\/tr><tr><td>5.6<\/td><td>Mandatory e-Publishing<\/td><td>5.1.4<\/td><td>4.3<\/td><td>5.4<\/td><td>5.1.13<\/td><\/tr><tr><td>5.7<\/td><td>Amendment of Tender Documents<\/td><td>5.1.5<\/td><td>4.4<\/td><td>5.4.2<\/td><td>5.1.14<\/td><\/tr><tr><td>5.8<\/td><td>Extension of Deadline of Bid Submission<\/td><td>5.1.6<\/td><td>4.5<\/td><td>5.4.3<\/td><td>5.1.15<\/td><\/tr><tr><td>5.9<\/td><td>Availability and Cost of Tender Documents<\/td><td>5.2.1<\/td><td>4.6.1<\/td><td>5.5.1<\/td><td>5.2.1<\/td><\/tr><tr><td>5.10<\/td><td>Participation of Bidders \u2014 Eligibility<\/td><td>5.2.2<\/td><td>4.6.2<\/td><td>5.5.2<\/td><td>5.2.2<\/td><\/tr><tr><td>5.11<\/td><td>Pre-NIT and Pre-bid Conferences<\/td><td>5.2.3<\/td><td>4.7<\/td><td>5.5.3<\/td><td>5.2.3<\/td><\/tr><tr><td>5.12<\/td><td>Site Visit<\/td><td> \u2014 <\/td><td>4.7-3<\/td><td>5.5.4<\/td><td>5.2.4<\/td><\/tr><tr><td>5.13<\/td><td>Clarification of Tender Documents<\/td><td>5.2.4<\/td><td>4.8<\/td><td>5.5.5<\/td><td>5.2.5<\/td><\/tr><tr><td>5.14<\/td><td>Withdrawal\/ Amendment\/ Modification by Bidders<\/td><td>5.2.5<\/td><td>4.9<\/td><td>5.5.6<\/td><td>5.2.6<\/td><\/tr><tr><td>5.15<\/td><td>Sealing\/ Marking of Bids in off-line Tenders<\/td><td>5.2.6<\/td><td>4.10<\/td><td>5.5.7<\/td><td>5.2.7<\/td><\/tr><tr><td>5.16<\/td><td>Uploading\/ Submission of Bids<\/td><td>5.2.7<\/td><td>4.11<\/td><td>5.5.8<\/td><td>5.2.8<\/td><\/tr><tr><td>5.17<\/td><td>Bid Validity<\/td><td>5.2.8<\/td><td>4.12<\/td><td>5.5.9<\/td><td>5.2.9<\/td><\/tr><tr><td>5.18<\/td><td>Opening of Bids<\/td><td>5.3<\/td><td>4.13<\/td><td>5.6<\/td><td>5.3<\/td><\/tr><tr><td>5.19<\/td><td>Transparency and Third-Party Rights<\/td><td>5.4<\/td><td>4.14<\/td><td>5.7<\/td><td>5.4<\/td><\/tr><tr><td>5.20<\/td><td>Risks and Mitigations<\/td><td>5.5<\/td><td>4.15<\/td><td>5.8<\/td><td>5.5<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>5.1<\/span>Model Tender Documents<\/span><\/h2>\nthe Department of Expenditure (DoE), Ministry of Finance, Government of India, has issued model tender documents (MTD) for:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Date of issue<\/th><\/tr><\/thead><tbody><tr><td>Procurement of GOODS<\/td><td>October 2021<\/td><\/tr><tr><td>Procurement of NON-CONSULTANCY SERVICES<\/td><td>October 2021<\/td><\/tr><tr><td>Procurement of CONSULTANCY SERVICES<\/td><td>April 2023<\/strong>(includes a Model REoI<\/strong>)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nprocuring entities are URGED<\/em> To customise the relevant MTD to prepare tender documents for their procurements. Guidance notes annexed to the MTDs<\/em> Detail the process of customisation of MTD for an organisation and for each procurement.<\/p>\n<aside class=\"note\">W<\/span> \u2014 the Works position is different: The Works Manual does <\/strong>not refer to a DoE Model Tender Document. Instead: *\"<\/strong>The bid documents must be based on relevant standard bidding documents (SBD) FOR \u2014 the type of contract (Lump Sum, Item Rate etc.); Estimated value range; Bidding system (Single Envelope\/ Two Envelope\/ PQB) etc.*<\/p>\nSBD for e-procurement would be slightly different from the traditional SBD.<\/strong>To ensure uniformity, the standard provisions in most sections of the SBD are to be used unaltered. Any modification to suit a unique requirement of the specific procurement is to be done through variable sections \u2014 such as Appendix to instructions to bidders or special conditions of contract<\/strong> (these variable sections may have different nomenclatures in some organisations). Normally, if the organisation does not have its own SBD, it May follow those of other public works organisations like CPWD.<\/strong><\/p>\nBefore floating the tender, the bid document should be got approved by the Competent Authority.<\/strong>\"<\/p><\/aside>\n<h2>5.2<\/span>Tender Documents \u2014 the Fundamental Document<\/span><\/h2>\n1. Why it matters: The tender document is the fundamental document<\/em> In the Public Procurement process, as \u2014 after the award of the contract \u2014 it becomes part of the contract agreement<\/em>.<\/p>\nA carefully prepared tender document avoids delays and complaints<\/em>. This will also attract more bidders to formulate and submit their competitive bids with confidence<\/em>.<\/p>\nHence, it is worth spending time and effort on this \u2014 even in cases of urgency<\/em>.<\/p>\n<aside class=\"note\">W<\/span> adds two important sentences not in the other three:<\/p>\na) \"all necessary provisions governing the contract should be clearly provided in the tender document. Examples are technical specifications, drawings, commercial terms and conditions including payment terms, obligations of the procuring entity and the contractor, timeframe\/ milestones for execution of the project, tax implications, compliance framework for statutory and other norms, reporting on progress\/ quality of the work, dispute resolution.\"<\/em><\/p>\nb) \"Comprehensive survey & soil investigation report, area grading & mapping of underground facilities \u2014 where the project is to be executed \u2014 May be made available and made part of the tender document.\"<\/em><\/p><\/aside>\n2. Clarity requirement: Provisions\/ clauses in the tender document should be clear, self-contained, and comprehensive without any ambiguity<\/em> \u2014 to avoid differences in interpretation and possible disputes, time overrun, cost overrun and quality compromises<\/em>.<\/p>\n<h3>5.2.1<\/span>The Essential Aspects Every Tender Document Must Address<\/span><\/h3>\n(Rule 173 of GFR 2017)<\/em><\/p>\nWhile tender documents should be complete in themselves and may be slightly different for various categories of procurement, these must necessarily address the essential aspects below. Model Tender Documents issued by the DoE \u2014 which comply with all these requirements \u2014 may be used, with due customisation:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>Requirement<\/th><\/tr><\/thead><tbody><tr><td>a)<\/td><td>description of the subject matter of procurement, its specifications\/ drawings including the quality\/ nature\/ quality assurance, quantity, time and place or places of delivery\/ completion W<\/span> Variant: *\u2026Quantity, time and location where the construction is to be effective, any incidental services to be performed*<\/td><\/tr><tr><td>a-bis)<\/td><td>W<\/span> Only: The facilities and the inputs which will be provided to the contractor by the Ministry\/ Department<\/td><\/tr><tr><td>b)<\/td><td>limitation or preference for participation by bidders in terms of Government policies<\/td><\/tr><tr><td>c)<\/td><td>the procedure, as well as the date, time, and place for obtaining, submitting, and opening of the bids<\/td><\/tr><tr><td>d)<\/td><td>suitable provisions for enabling a bidder to question (W<\/span>: \"Seek clarification\/ question\")<\/em> The bidding conditions, bidding process and\/ or rejection of its bid. These provisions should include a time frame in which the Procuring Entity will address the bidder's questions<\/em><\/td><\/tr><tr><td>e)<\/td><td>criteria for determining the responsiveness<\/em> Of bids; Criteria as well as factors to be considered for evaluating the bids on a common platform<\/em>; And the criteria for awarding the contract to the responsive, most advantageous (lowest\/ highest as the case May be) bidder \u2014 should be clearly indicated<\/strong> W<\/span> Footnote on \"highest\":\"<\/strong>Highest, here, refers to the selection of the contractor using the quality and Cost Based Selection (QCBS) methodology \u2014 wherein the contractor securing the HIGHEST MARKS by combining the technical and financial evaluation scores is identified as the <\/em>Highest scorer or the h1 BIDDER*, and is eligible for award of contract.\"*<\/td><\/tr><tr><td>f)<\/td><td>THE eligibility<\/em> Criteria should take care of the supplier's\/ contractor's eligibility to participate in the tender process (W<\/span>: \"to receive such a government contract\")<\/em><\/td><\/tr><tr><td>f-bis)<\/td><td>W<\/span> Only: Requirements as to documentary evidence<\/em>, which must be submitted by contractors to demonstrate their qualifications<\/td><\/tr><tr><td>g)<\/td><td>THE qualification<\/em> Criteria should consider their capability to perform the resultant contract successfully, balancing considerations of quality, time, and cost<\/strong><\/em> W<\/span> variant: *\u2026should take care of the contractor's <\/strong>past performance, experience, technical competence, financial strength to handle the contract successfully, <\/strong>compliance with environmental protection regulations\/ environment management system and so on*<\/td><\/tr><tr><td>h)<\/td><td>commercial terms and conditions \u2014 e.g., payment terms, tax implications, respective obligations of the Procuring Entity and the suppliers, and compliance framework for statutory and other norms. The provision of price variation<\/em>, wherever considered appropriate, and the methodology for calculation<\/em>, shall be clearly stipulated<\/td><\/tr><tr><td>i)<\/td><td>the tender document should include a clause that \"If a firm quotes nil charges\/ consideration, the bid shall be treated as unresponsive and will not be considered.\"<\/em><\/td><\/tr><tr><td>j)<\/td><td>procedures for redressal of grievances or complaints from aggrieved bidders<\/td><\/tr><tr><td>k)<\/td><td>if applicable, the integrity Pact clause and format<\/em> To be signed shall be included<\/td><\/tr><tr><td>l)<\/td><td>suitable provision for settlement of disputes<\/em>, if any, emanating from the resultant contract<\/td><\/tr><tr><td>m)<\/td><td>essential terms of the procurement contract, including a suitable clause mentioning that the resultant contract will be interpreted under Indian laws<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<h3>5.2.2<\/span>Delegation, Eligibility vs Qualification vs Evaluation, and Time<\/span><\/h3>\n3. Delegation: Procuring entities May issue instructions regarding the appropriate delegation of authority for approval of the tender documents before these are floated\/ uploaded<\/em>.<\/p>\n4. The three-filter structure \u2014 the single most important conceptual point in this chapter:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Filter<\/th><th>Function<\/th><\/tr><\/thead><tbody><tr><td>Eligibility criteria<\/td><td>specify the criteria that a bidder should meet to be considered a responsive bid<\/em> To be evaluated further, beyond the preliminary evaluation\/ screening of bids<\/td><\/tr><tr><td>qualification criteria<\/td><td>determine the capability of bidders (who have passed the eligibility criteria) to perform the contract<\/em>. Only those bidders who meet the qualification criteria go to the next step of evaluation for award of contract<\/td><\/tr><tr><td>evaluation criteria<\/td><td>THE final filter<\/em> Used to select the bidders (who have passed the qualification criteria) for the award of the contract<\/td><\/tr><\/tbody><\/table><\/div>\n5. Qualification Criteria \u2014 the broad-basing rule: Qualification criteria should be clear and fair<\/em> in regard to the specific circumstances of the procurement. Public authorities should also keep the experience, technical and financial criteria broad-based<\/em>, so that bidders with experience in items\/ goods of a similar nature (W<\/span>: \"in execution of works of a similar nature\")<\/em> Can participate.<\/p>\nAppropriate parameters should be prescribed to enable the selection of the right type of bidders in the public interest<\/em>, balancing considerations of quality, time, and cost.<\/p>\n6. Evaluation Criteria \u2014 the permitted additional criteria:<\/strong> Depending on the requirement and VfM considerations, the Procuring Entity may consider including, besides price<\/strong>, one or more additional criteria:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>G<\/span> GOODS<\/th><th>W<\/span> WORKS<\/th><\/tr><\/thead><tbody><tr><td>Quality \u00b7 technical merit \u00b7 aesthetic and functional characteristics \u00b7 environmental characteristics \u00b7 running costs \u00b7 cost-effectiveness \u00b7 after-sales service and technical assistance \u00b7 delivery date and delivery period or period of completion<\/td><td>quality of workmanship \u00b7 technical merit \u00b7 aesthetic and functional characteristics \u00b7 environmental characteristics \u00b7 period of completion<\/td><\/tr><\/tbody><\/table><\/div>\nno criteria shall be used for the evaluation of tenders that cannot be verified<\/em>.<\/p>\n7. Default method: Open online tendering should be the default method<\/em> To ensure efficiency of procurement.<\/p>\n8. The time-allowed Rule: The Procuring Entity should allow enough time to the bidders to prepare their proposals<\/em>. The time allowed shall depend on the assignment, but:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Situation<\/th><th>Minimum period<\/th><\/tr><\/thead><tbody><tr><td>Normally<\/td><td>not less than three weeks<\/td><\/tr><tr><td>Where participation of INTERNATIONAL service providers\/ contractors is contemplated<\/td><td>not less than four weeks<\/td><\/tr><\/tbody><\/table><\/div>\n9. The four reserved rights: Tender documents should invariably<\/em> Reserve the Procuring Entity's right \u2014 without assigning any reason<\/em> \u2014 to: A) reject any or all of the bids; Or b) cancel the tender process; Or c) abandon the procurement of the goods\/ works\/ services; Or d) issue another tender for identical or similar goods\/ works\/ services.<\/p>\n<h2>5.3<\/span>Contents\/ Sections of the Tender Document<\/span><\/h2>\n(Rule 168 of GFR 2017)<\/em><\/p>\n<h3>5.3.0<\/span>The Section Structure<\/span><\/h3>\n<aside class=\"note\">G<\/span> and W<\/span> use the same ten sections \u2014 but note the ORDER of the last two is REVERSED.<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>Section<\/th><th>G<\/span> GOODS<\/th><th>W<\/span> WORKS<\/th><\/tr><\/thead><tbody><tr><td>I<\/td><td>Notice Inviting Tender (NIT) and its Appendix: Tender Information Summary (TIS)<\/td><td>(same)<\/em><\/td><\/tr><tr><td>II<\/td><td>Instructions to Bidders (ITB)<\/td><td>(same)<\/em><\/td><\/tr><tr><td>III<\/td><td>Appendix to Instructions to Bidders (AITB)<\/td><td>(same)<\/em><\/td><\/tr><tr><td>IV<\/td><td>General Conditions of Contract (GCC)<\/td><td>(same)<\/em><\/td><\/tr><tr><td>V<\/td><td>Special Conditions of Contract (SCC)<\/td><td>(same)<\/em><\/td><\/tr><tr><td>VI<\/td><td>Schedule of Requirements<\/td><td>(same)<\/em><\/td><\/tr><tr><td>VII<\/td><td>Technical Specifications and Quality Assurance<\/td><td>DRAWING, Technical Specifications and Quality Assurance<\/td><\/tr><tr><td>VIII<\/td><td>Qualification and Evaluation Criteria<\/td><td>(same)<\/em><\/td><\/tr><tr><td>IX \/ X<\/td><td>(i) Financial Bid (BOQ Excel Sheet) then (j) Submission forms and formats<\/td><td>(i) Submission forms and formats then (j) Financial Bid (BOQ Excel Sheet) \u2014 order reversed<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">W<\/span> caveat: *\"<\/strong>The contents of Bid Documents would therefore VARY, but will GENERALLY comprise the following (some of these sections May be named or organised differently in some organisations).\"*<\/p><\/aside>\n<h3>5.3.1<\/span>Notice Inviting Tender (NIT)<\/span><\/h3>\n1. Legal importance: NIT is of legal importance<\/em>, since it is this part of the tender document that solicits offers from the bidders<\/em>. G<\/span> adds: *The model NIT format in MTD should be used to publish the tender notice.*<\/p>\n2. Function and alerts: THE NIT (and its Appendix TIS) must contain sufficient information in brief<\/em> for a prospective bidder to decide whether to participate<\/em> In the tender and, if he decides to participate, how to go about it<\/em>.<\/p>\nTo ensure competition, the attention of all likely bidders<\/em> \u2014 for example, registered vendors\/ contractors, past suppliers\/ contractors, and other known potential suppliers\/ contractors \u2014 should be invited to the NIT through email\/ smss\/ letters<\/em>.<\/p>\nIn e-procurement, the website May be programmed to generate these alerts automatically<\/em>.<\/p>\n3. The mandatory note for limited tenders: In case of procurement through a limited tender, the NIT May be uploaded on geM (Goods only)<\/em> As well as on gem-cppp and the Procuring Entity's website, with a note saying<\/em>:<\/p>\n<aside class=\"note\">\"This notice is being published for information only and is not an open invitation to quote in this limited tender. Participation in this tender is by invitation only and is limited to the selected Procuring Entity's registered suppliers\/ contractors. Unsolicited offers are liable to be ignored. However, suppliers\/ contractors who desire to participate in such tenders in future May apply for registration with Procuring Entity as per procedure.\"<\/em><\/p><\/aside>\n4. Audit trails: Time-stamped audit trails for the e-publication shall be maintained by the procurement portal. Printouts May be taken only in case of off-line tenders<\/em>, if required \u2014 apart from ensuring maintenance of time-stamped audit trail of e-publication. The complete details of the dates on which advertisements appeared on the website should be indicated when sending cases to higher authorities.<\/p>\n<h3>5.3.2<\/span>Instructions to Bidders (ITB) and its Appendix (AITB)<\/span><\/h3>\nITB contains all relevant information as well as guidance to the prospective bidders regarding:<\/p>\n<aside class=\"note\">Obtaining tender documents \u00b7 preparing and submitting a response \u00b7 the process of establishing the eligibility\/ qualification credentials of the bidders \u00b7 as well as evaluation and comparison of tenders and award of contract<\/p>\nW<\/span> and C<\/span> add to this list:<\/strong>Code of Integrity in Public Procurement (CIPP) \u00b7 the process of grievance redressal *(and C<\/span> further adds: <\/strong>Declaration of results)*<\/p><\/aside>\nITB should NOT<\/em> Contain information on processes after the announcement of the award<\/em>, which should be covered in GCC \u2014 for example, the arbitration clause, resolution of disputes, and so on.<\/p>\nITB also contains an introduction\/ overview of the contents of the tender document.<\/p>\n<aside class=\"note\">W<\/span> adds: *\"<\/strong>it mentions the type of entities that May participate, specifically if consortium\/ JV are permitted to participate. It also excludes insolvent, bankrupt, debarred, and convicted firms with conflict of interest from participation. Restriction of participation of bidders from certain countries with land borders with India is also applicable.\"*<\/p><\/aside>\nthe AITB device: Instead of modifying ITB every time<\/em>, any changes warranted by exceptional circumstances May be indicated \u2014 with the prior approval of ca<\/em> \u2014 in a separate Appendix to ITB (AITB), and ITB May be included unchanged in every tender document<\/em>.<\/p>\nIt should also be indicated therein that the provisions in the AITB shall supersede the corresponding provisions in the ITB<\/em>.<\/p>\n<h3>5.3.3<\/span>General and Special Conditions of Contract (GCC and SCC)<\/span><\/h3>\nThe general conditions of contract (GCC) details the terms and conditions that would govern the resultant contract.<\/p>\nGCC covers all information on aspects after the announcement of the tender award till the closure of the contract and dispute resolution<\/em>. It should NOT<\/em> Cover any aspect up to the announcement of the award.<\/p>\nThe SCC device: Instead of modifying the GCC every time, any changes warranted by exceptional circumstances May be indicated in a separate section \u2014 special conditions of contract (SCC)<\/em> \u2014 with the prior approval of the ca, and GCC May be included unchanged in every tender document.<\/p>\nIt is also to be indicated therein that the provisions in the SCC will supersede the corresponding provisions in the GCC<\/em>.<\/p>\n<aside class=\"note\">W<\/span> Only \u2014 the four circumstances warranting an SCC clause: \"Conditions in SCC shall be need-based and specific, and the circumstances warranting them shall be duly considered, including but not limited to the following:\"<\/em><\/p>\na) where the wording in GCC specifically requires<\/em> That further information is to be included in SCC, and the conditions would not be complete without that information<\/em>;<\/p>\nB) where the wording in GCC indicates that supplementary<\/em> Information May be included in SCC, but the conditions would still be complete without that information<\/em>;<\/p>\nc) where THE type, circumstances or locality of the works<\/em> Requires additional clauses or sub-clauses; And<\/p>\nd) where the laws of the country, or exceptional circumstances<\/em>, necessitate alterations in GCC. Such alterations are effected by stating in SCC that a particular clause, or part of a clause in GCC, is deleted, and giving the substitute clause or part<\/em>, as applicable.<\/p><\/aside>\n<h3>5.3.4<\/span>Schedule of Requirements<\/span><\/h3><h4>G<\/span> Goods<\/span><\/h4>\nThis section describes the list of goods required, quantities, delivery requirements, destination, and scope of supply<\/em> (Concomitant accessories, spare parts, and incidental works\/ services).<\/p>\nIf there is no separate section on technical specifications (TS) and quality assurance (QA), then TS and QA May also be included here.<\/p>\nIt must be clarified whether the evaluation of eligibility\/ qualifications\/ financial bids would be done item-by-item in a Schedule<\/em> OR on the total of all items in a Schedule<\/em> \u2014 and, if there is more than one Schedule, whether the same would be done on a schedule-by-schedule basis<\/em> Or on the total of all schedules put together<\/em>.<\/p>\n<h4>W<\/span> Works<\/span><\/h4>\n1. For works procurement, this section should detail the scope of work, including the description of the works to be undertaken, quantities, quality standards, site location, and delivery requirements\/ milestones<\/em>. If there are no separate sections on TS and QA, these details should be incorporated here, specifying the standards and methodologies to be employed.<\/p>\n2. It should be clarified how the evaluation will be conducted \u2014 whether item-by-item, by lot, or for the entire scope of work<\/em>. Additionally, if the procurement involves multiple lots or sections of work<\/em>, it should be stated whether evaluations will be done on a lot-by-lot basis<\/em> Or based on the total of all lots or sections combined<\/em>.<\/p>\n3. This ensures transparency and clarity<\/em>, enabling bidders to understand the scope fully and submit their bids accordingly.<\/p>\n4. Identification of milestones<\/em> May be done in an optimal and sequential manner<\/em>, and the same May be stipulated in the tender document along with enabling provisions<\/em>.<\/p>\n<h4>NC<\/span> NON-CONSULTANCY \u2014 Schedule of Requirements and Services and Activities Schedule<\/span><\/h4>\nSchedule of Requirements and its sub-schedule \u2014 Service and Activities Schedule<\/em> \u2014 describes the background, purpose\/ objectives, description\/ scope, deliverables\/ outcomes, quantum, timelines of services required, etc.<\/p>\nThe requirements May consist of more than one Schedule<\/em>. Each Schedule May contain more than one service<\/em>.<\/p>\nIn case of multiple schedules of requirement in a tender of services, it should be clarified how bids for multiple schedules would be evaluated for award of contract \u2014 either Schedule by Schedule or in total<\/em>.<\/p>\nBidders must fill up compliance<\/em> Regarding these schedules.<\/p>\n<h3>5.3.5<\/span>Technical Specifications, Drawings and Quality Assurance<\/span><\/h3><h4>G<\/span> Goods<\/span><\/h4>\nTechnical specifications and quality assurance lays down the technical specifications and quality assurance requirements of the goods required. It would also stipulate, if required, any compliance required by Central and State pollution control boards<\/em>.<\/p>\n<h4>W<\/span> Works \u2014 and the Accessibility Mandate<\/span><\/h4>\n1. Construction drawings, technical specifications and quality assurance plan<\/em> Lay down the technical specifications and quality assurance requirements of the works to be executed. It would also stipulate, if required, any compliance required by Central and State Pollution Control Boards.<\/p>\n2. The mandatory accessibility clause \u2014 W<\/span> ONLY: \"The bidder shall ensure that all products, services, platforms, infrastructure, and other deliverables under contract must comply with applicable accessibility standards and guidelines as notified under the <\/em>rights of persons with disabilities Act, 2016, and the <\/em>rights of persons with disabilities Rules, 2017 As amended \u2014 including but not limited to:\"<\/em><\/p>\na) harmonised guidelines and standards for universal accessibility in India, issued by the Ministry of housing and urban affairs<\/em>.<\/p>\nb) IS 17802 (PART 1):2021 \u2014 Accessibility for ICT Products and Services Part I: Requirements<\/em>; and IS 17802 (PART 2):2022 \u2014 Accessibility for ICT Products and Services Part 2: Determination of Conformance<\/em> \u2014 issued by the bureau of Indian Standards<\/em>; and<\/p>\nc) any other relevant guidelines, notifications, or instructions from time to time by the Department of empowerment of persons with disabilities, Ministry of social justice and empowerment<\/em>, Government of India.<\/p>\n<h4>NC<\/span> NON-CONSULTANCY \u2014 Performance Standards and Quality Assurance; Method Statement; Work Plan; Critical Material Schedule<\/span><\/h4>\n1. Performance Standards and Quality Assurance STIPULATES THE quantitative\/ qualitative parameters\/ limits\/ thresholds for performance standards\/ service levels and functional\/ technical specifications<\/em> To which the service must be performed.<\/p>\nIt shall stipulate procedures for the measurement, reporting and monitoring<\/em> Of performance parameters \u2014 including institutional or third-party arrangements<\/em> for this purpose.<\/p>\nIt shall also stipulate the procedure for resolution and escalation in case of deficiency<\/em> In performance\/ quality\/ service levels.<\/p>\nIn the case of long-term and complex services<\/em>, it May stipulate a service-level agreement (SLA)<\/em> Which must be complied with during delivery of services.<\/p>\nPerformance standards shall also include statutory compliance required for occupational safety, health and working conditions<\/em> Requirements during delivery of services.<\/p>\n2. Procuring Entity May, if considered necessary, specify sub-schedules: Method statement, work plan, and critical material schedules<\/em> Required for the performance of services to desired quality and standards. Otherwise, these May be left to be quoted by the bidder<\/em>.<\/p>\n3. Bidders must fill up the relevant forms regarding this Schedule.<\/p>\n<h3>5.3.6<\/span>Qualification Criteria<\/span><\/h3>\n1. The general Rule (all four): If it is intended to use qualification criteria to evaluate a tender and determine whether a bidder has the required qualifications to perform the contract successfully, this point May be clearly specified in ITB\/ AITB or as a separate section<\/em> OF THE tender document.<\/p>\nThe bidder must ensure that he provides convincing proof<\/em> Of having fulfilled these criteria.<\/p>\nAny criteria not specified in the tender<\/em> Cannot be used for evaluation or qualification.<\/p>\n2. The content of Pre\/ Post Qualification Criteria: PQC shall be based entirely upon the capability and resources required to perform the particular contract satisfactorily<\/em>, considering:<\/p>\n<aside class=\"note\">Bidders' experience and past performance \u00b7 capabilities with respect to personnel, equipment and manufacturing facilities \u00b7 financial standing \u00b7 and relevant compliance with environmental protection regulations\/ environment management system<\/p><\/aside>\nTHE quantity, delivery, and value<\/em> Of the procurement shall be kept in view while the pre\/ post qualification criteria are fixed.<\/p>\nThere should be NO<\/em> Pre\/ post qualification criteria that would be advantageous to foreign manufactured goods at the cost of domestically manufactured goods<\/em>. (C<\/span> variant: \"advantageous to FOREIGN CONSULTANTS at the cost of domestically delivered services\".)<\/em><\/p>\n3. Relaxation for start-ups (all four)<\/em>: The condition of prior turnover and prior experience<\/em> May be relaxed for start-ups \u2014 only to start-ups recognised by DPIIT<\/em> \u2014 subject to meeting quality & technical specifications<\/em> And making suitable provisions in the tender document (Rule 173(i) of GFR 2017; OM No. F.20\/2\/2014-PPD (Pt.) dated 20.09.2016)<\/em>.<\/p>\nStart-ups May be MSMEs\/ MSEs or otherwise. Such relaxation can be provided in the case of procurement of works as well.<\/p>\nIt is further clarified that such relaxation is not optional but has to be ensured<\/em> \u2014 except in case of procurement of items related to public safety, health, critical security operations and equipment<\/em>, etc., where adequate justification exists for the Procuring Entity not to relax such criteria.<\/p>\n4. Demerged entities \u2014 W<\/span>, C<\/span>, NC<\/span> ONLY (DoE's OM No. F.8\/78\/2023-PPD dated 12.10.2023)<\/em>:<\/p>\nW<\/span> formulation:<\/strong>Demerged entities (by virtue of a corporate restructuring exercise etc.) May be permitted<\/em> To participate in the tender by using the credentials of the original\/ parent entity to satisfy the eligibility criteria \u2014 at least for the initial five years from the incorporation of the demerged entities<\/em>.<\/p>\nProcuring entities may, in suitable cases, consider the credentials based on the merit and circumstances of the cases<\/em> \u2014 like type of procurement, nature of demerger, number of eligible bidders available, etc.<\/p>\nTender documents must clearly mention<\/em> If the credentials of the demerged entity will be considered or not in the specific tender, and May give the conditions under which demerged entities May become eligible.<\/p>\n5. Entry window for sub-contractors in smaller contracts \u2014 W<\/span> ONLY:<\/p>\n<aside class=\"note\">It is of utmost importance<\/em> To develop new contractors and also to provide avenues to sub-contractors, since they May not get opportunities to accumulate the required credentials to compete in normal tenders<\/em>.<\/p>\nTo enable a window of entry for such sub-contractors, in small value contracts (e.g., repair contracts up to Rs. 60 lakh)<\/em>, the requirements regarding general construction experience, particular construction experience and available bid capacity<\/em> MAY not be insisted upon<\/em> \u2014 provided the bidders fulfil other criteria regarding financial\/ personnel\/ equipment capabilities<\/em>.<\/p>\nHowever, to avoid overstretching of their resources, no such contractors May be allowed to hold more than 2 contracts under relaxed credentials, at any given time<\/em>.<\/p><\/aside>\n6. The non-consultancy qualification criteria \u2014 NC<\/span> Only, with its three numbered criteria and worked example:<\/p>\nUnless otherwise stipulated, the Qualification Criteria shall include:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Criterion<\/th><th>Content<\/th><\/tr><\/thead><tbody><tr><td>Criteria 1: Experience and past performance<\/td><td>i) Experience of providing similar services ii) VOLUME of similar services: (1) 3 services > each 40% of the estimated cost; OR (2) 2 services > each 50% of the estimated cost; OR (3) 1 service > 80% of the estimated cost<\/td><\/tr><tr><td>Criteria 2: PERFORMANCE CAPABILITY \u2014 Managerial and Equipment<\/td><td>i) CONTRACT MANAGER \u2014 5 years' experience (3 as a manager) ii) Ownership\/ proposals for acquisition\/ hiring the essential equipment<\/td><\/tr><tr><td>criteria 3: Financial capability<\/td><td>i) Avg annual turnover AT least 3\u20137 TIMES the estimated cost ii) Financial Liquidity<\/td><\/tr><\/tbody><\/table><\/div>\nthe worked example given in the nc Manual:<\/p>\na) Past Experience:<\/p>\n<ul class=\"lst\"><li>i) The bidder must have at least three years' experience<\/em> (Ending month of March prior to the bid opening) of providing similar types of services to Central\/ State Government\/ PSUs\/ nationalised banks\/ reputed organisations<\/em>. Services rendered with a list of such organisations, with duration of service, shall be furnished.<\/li><li>ii) the bidder must have successfully executed\/ completed similar services (the definition of \"similar services\" should be clearly DEFINED)<\/em> Over the last seven financial years<\/em> Previous to the current financial year:<\/li><li>(1) three similar completed services with annualised value not less than 40% (forty per cent) of the estimated annualised cost; OR<\/li><li>(2) two similar completed services with annualised value not less than 50% (fifty per cent) of the estimated annualised cost; OR<\/li><li>(3) one similar completed service with annualised value not less than 80% (eighty per cent) of the estimated annualised cost.<\/li><\/ul>\nb) Performance Capability:<\/p>\n<ul class=\"lst\"><li>I) managerial capability: A contract Manager with five years' experience<\/em> In services of an equivalent nature and volume, including no less than three years as manager<\/em>.<\/li><li>ii) equipment capability: Ownership\/ proposals for the timely acquisition (own, lease, hire, etc.) of the essential equipment listed in the tender information summary (TIS)<\/em>.<\/li><\/ul>\nc) Financial Capability:<\/p>\n<ul class=\"lst\"><li>I) average annual gross billing during the last three years, ending 31ST March of the previous financial year, should be at least 3 times (for 1\u20133 year contracts) to 7 times (for contracts longer than 3 years)<\/em> The estimated annual cost \u2014 as far as feasible based on the nature of service and market condition.<\/li><\/ul>\n<aside class=\"note\">The reason given: \"Generally, the financial capability required in non-consultancy services as a multiple of annual tender value should be <\/em>higher than the multiple in works, because the service provider has to <\/em>sustain the services over a long period of time. That is why a multiple of 3 to 7 is mentioned above.\"<\/em><\/p><\/aside>\n<ul class=\"lst\"><li>ii) liquid assets and\/ or credit facilities \u2014 net of other contractual commitments and exclusive of any advance payments<\/em> Which May be made under the contract \u2014 of no less than the amount specified in the tender document.<\/li><\/ul>\nThe upper-cap Rule NC<\/span>: In higher-value procurements, the minimum annual turnover should not be blindly a multiplier<\/em> Of the assignment value \u2014 but there May be an upper cap on demanded turnover<\/em>, so as not to restrict competition only to the big or foreign firms.<\/p>\n<h3 class=\"src-W\">5.3.7<\/span>Evaluation Criteria \u2014 the Works elaboration<\/span>W<\/span><\/h3><div class=\"srcblock src-W\">\n1.<\/strong> These criteria can include:<\/p>\n<aside class=\"note\">The quality of work \u00b7 cost considerations \u00b7 technical excellence \u00b7 aesthetic and functional attributes of the proposed construction, aligning with the project's overall goals \u00b7 environmental considerations (reflecting the commitment to sustainability) \u00b7 running costs \u00b7 cost-effectiveness<\/p><\/aside>\nand \u2014 critically in safeguarding the Procuring Entity's interests:<\/p>\n<aside class=\"note\">Defect liability period (DLP) \u00b7 warranty period post-installation and commissioning \u00b7 long-term service agreements<\/p><\/aside>\n \u2014 ensuring that any defects identified within a specified period post-completion are rectified at the contractor's expense<\/em>, and that the project's integrity is maintained over time.<\/p>\nIt's crucial that the evaluation criteria \u2014 including those for the defect liability and warranty periods as well as long-term service commitments \u2014 are tangible and verifiable<\/em>. This ensures a transparent, equitable, and objective assessment process, enabling a holistic evaluation that considers not only the initial project execution but also its long-term sustainability, operational efficiency, and maintenance.<\/p>\nThe inclusion of the projected delivery date and completion timeline<\/em> Ensures the project adheres to strategic planning and timelines.<\/p>\n2. Conditional discounts \u2014 W<\/span> Only: Conditional discounts, or discounts offered post tender opening<\/em>, if any, shall not be considered during evaluation<\/em>. However, such discounts shall be availed if the bidder becomes otherwise eligible for award of contract<\/em>.<\/p>\n<\/div><h3>5.3.8<\/span>Submission Forms and Formats<\/span><\/h3>\nThis section contains the relevant forms for tender submission:<\/p>\n<aside class=\"note\">Various declarations by the bidder \u00b7 formats for the Bank Guarantee \u00b7 financial bid forms (BOQ excel sheet) \u00b7 exception and deviation forms \u00b7 contract forms and manufacturer's authorisation form \u00b7 Integrity Pact (if applicable), and so on.<\/p><\/aside>\n<h3>5.3.9<\/span>Financial Bid (BOQ Excel Sheet)<\/span><\/h3>\n1. Preparation by the Procuring Entity: The Procuring Entity should select an appropriate format of BOQ from the e-procurement portal<\/em> And upload it after filling up the entries for the complete Schedule of requirements and various price components (W<\/span> Adds: \"\/ Schedule of Rates\")<\/em> \u2014 to enable the system to automatically calculate the all-inclusive price of a bid and generate a comparative tabulation of all bids<\/em>.<\/p>\n<aside class=\"note\">W<\/span> footnote: *For reference, <\/strong>CPWD Schedule of Rates (SOR) can be referred, which serves as a comprehensive reference for construction projects. This schedule includes <\/strong>both BASIC RATES and FINISHED RATES for various items of work.*<\/p>\nC<\/span> and NC<\/span> add: \"Any procurement portal that does not have a facility for financial bids to be uploaded in excel format (providing detailed break-up in line with the type of contract and system of selection) should <\/em>endeavour to build such functionality \u2014 which is crucial for non-consultancy and consultancy services.\"<\/em><\/p><\/aside>\n2. The \"not entered = not paid\" Rule \u2014 C<\/span> and NC<\/span> Only: The bidder should fill in rates and prices for ALL<\/em> Items described in the excel sheet\/ services and activities Schedule.<\/p>\nItems for which no rate or price is entered<\/em> By the bidder will not be paid for<\/em> By the Procuring Entity when executed, and shall be deemed covered by the other rates and prices<\/em>.<\/p>\nThe priced schedule contains sections on remuneration for staff deployed, reimbursable expenses and miscellaneous expenses<\/em>.<\/p>\nAll duties, taxes, and other levies payable by the consultant\/ service provider under the contract \u2014 or for any other cause \u2014 as in the month prior to the month of the deadline for submission of bids<\/em> \u2014 should be included in the total bid price.<\/p>\nEven in tenders for lump-sum contracts<\/em>, for the purpose of determining the remuneration due for additional elements of work\/ additional services during the contract<\/em>, the bidder shall provide a breakdown of the lump-sum price<\/em>.<\/p>\nC<\/span> adds: *Bidding Documents should include a clause that \"<\/strong>if a firm quotes NIL service charges\/ consideration, the bid shall be treated as unresponsive and will not be considered\".*<\/p>\n3. Uploading discipline (all four): Bidders are to upload only the downloaded BOQ (in excel format)<\/em> After entering the relevant fields \u2014 without any alteration\/ deletion\/ modification of other portions of the excel sheet<\/em>.<\/p>\nThe quoted price shall be considered to include all relevant financial implications \u2014 including inter alia<\/em>:<\/p>\n<aside class=\"note\">The scope of the goods\/ works\/ services \u00b7 location of the bidder \u00b7 location of the consignee(s)\/ Procuring Entity \u00b7 terms of delivery \u00b7 extant Rules and regulations relating to taxes, duties, customs, transportation, environment, labour of the bidder's country and in India<\/p>\n(W<\/span> variant: applicable taxes, duties, permits, transportation, environment, and labour costs in accordance with the prevailing market rates and relevant regulations of India.)<\/em><\/p><\/aside>\n4. Restrictions regarding personnel deployed \u2014 NC<\/span> ONLY:<\/p>\nA) the minimum wage floor: The quoted rates shall not be less than the minimum wage fixed\/ notified by the Central\/ State Government (whichever is higher)<\/em> \u2014 where the service is performed \u2014 and shall include all statutory obligations and service charges\/ margin (including transaction charges) over such minimum wage<\/em>.<\/p>\nB) the 'nil' price Rule: Bids without any element of cost over and above such minimum wage<\/em> Shall be treated as 'Nil' price quotations and would be rejected<\/em>.<\/p>\nC) LCS for manpower outsourcing: Least cost system (LCS) should be considered for procurement of manpower outsourcing service<\/em>, wherever appropriate \u2014 especially in high-value cases<\/em>.<\/p>\nD) liability and character verification: The service provider shall be liable for all kinds of dues payable in respect of all personnel<\/em> Provided under the contract, and the Procuring Entity shall not be liable for any dues<\/em> for availing the services of the personnel. The service provider should ensure that the persons to be deployed are not alcoholics or drug addicts<\/em> And do not indulge in any activity prejudicial to the interest of the Procuring Entity. The service provider shall ensure to get the police verification for all the manpower deployed<\/em> By them, and the contractor should ensure that the manpower deputed should bear good moral character<\/em>.<\/p>\n<h2>5.4<\/span>Preparation of the Request for Expression of Interest (REoI) Document [C ONLY]<\/span><\/h2>\n<aside class=\"note\">This entire section exists only in the consultancy services Manual<\/em>. There is no counterpart in Goods, Works or Non-Consultancy.<\/p><\/aside>\n<h3>5.4.1<\/span>Basic Considerations<\/span><\/h3>\n1. DoE has issued Model Tender Documents for Procurement of Consultancy Services, which includes a MODEL REoI<\/em>.<\/p>\n2. Why two stages: It is important to hire consultants who have a reputation for relevant quality and competence<\/em>; hence Procurement of Consultancy is done in a two-stage process<\/em>:<\/p>\n<ul class=\"lst\"><li>The first stage (expression of Interest<\/em> Stage) \u2014 to shortlist such qualified consultants in a transparent and open<\/em> Manner.<\/li><li>In the next stage (RfP<\/em> Stage) \u2014 there is competition only among qualified shortlisted firms or individuals<\/em>, in which selection is based on the quality of the proposal<\/em> And, where appropriate, on the cost of services<\/em> To be provided.<\/li><\/ul>\n3. Therefore, the process of shortlisting is one of the most difficult and time-consuming tasks<\/em> In the selection process of a consultant. This could be eased by writing a clear description of service (objectives and scope) and shortlisting criteria<\/em>.<\/p>\n<h3>5.4.2<\/span>Contents of the REoI<\/span><\/h3>\nThe EoI document shall contain the following sections:<\/p>\nPart i: REoI process<\/p>\n<ul class=\"lst\"><li>Section I: Request for Expression of Interest (REoI)<\/li><li>Section II: Appendix<\/li><li>Section III: Qualification Criteria<\/li><\/ul>\npart II: Schedule of requirements<\/p>\n<ul class=\"lst\"><li>Section IV: Terms of Reference<\/li><\/ul>\npart III: EoI submission formats<\/p>\n<ul class=\"lst\"><li>Form 1: EoI Form (Covering Letter)<\/strong> \u2014 Form 1.1: Consultant Information \u00b7 Form 1.2: Eligibility Declarations<\/em><\/li><li>Form 2: Qualification Criteria \u2013 Compliance<\/strong> \u2014 Form 2.1: Performance Capability Statement \u00b7 Form 2.2: Financial Capability Statements \u00b7 Form 2.2.1: Financial Statement \u00b7 Form 2.2.2: Average Annual Turnover<\/em><\/li><li>Form 3: Checklist for Consultants<\/li><li>Other Annexures:<\/strong>Annexure 1: Authorisation to Attend Pre-EoI Conference \u00b7 Annexure 2: Code of Integrity<\/em><\/li><\/ul>\nSection-wise description:<\/p>\n<ul class=\"lst\"><li>Section I \u2014 REoI: A formal invitation<\/em> for Expression of Interest from interested bidders.<\/li><li>Section II \u2014 Appendix: Where variable parameters and information related to this specific REoI process<\/em> Are summarised.<\/li><\/ul>\nSection III \u2014 qualification criteria:<\/p>\na)<\/strong> This section lays down the qualification criteria which shall be applied by the Procuring Entity for shortlisting the consultants. The REoI should ask for sufficient information<\/em> So that the Procuring Entity May evaluate the consultant's capabilities and eligibility<\/em> To undertake the assignment.<\/strong> The Consultants must be asked:<\/p>\n<ul class=\"lst\"><li>I) requisite experience during a specified period (say 5 years) with volume of assignments similar in nature in general and specific sectors relevant to the subject assignment<\/em>;<\/li><li>ii) financial capability: Turnover (overall and from consultancy services)<\/em>.<\/li><\/ul>\nb) Relaxation for Start-ups<\/strong> \u2014 (as at para 5.3.6-3 above)<\/em>.<\/p>\nc) Qualification Criteria shall be based entirely upon capability and resources; there should be no qualification criteria advantageous to FOREIGN CONSULTANTS at the cost of domestically delivered services.<\/p>\nd) Qualification of demerged entities<\/strong> \u2014 (as at para 5.3.6-4 above)<\/em>.<\/p>\nE) what the REoI must NOT<\/em> ASK FOR \u2014 a critical restriction:<\/p>\n<aside class=\"note\">In addition, the consultants should indicate information relating to their eligibility and any conflict of interest<\/em> that they know may impact objective performance and impartial advice. CONSULTANTS should NOT<\/em> Be asked about their approach to the services<\/em>, or to submit any curricula vitae of key personnel<\/em> \u2014 because these documents will be dealt with in the RfP<\/em>. No legal documents \u2014 such as certificates of incorporation of the firm, powers of attorney, financial statements, or translations of standard brochures<\/em> \u2014 should be requested.<\/p>\nGiven the often-large number of submissions, the advertisement should stress the importance of brevity<\/em> Of the information to be sent. It may indicate the extent of dispensation, if any, allowed for start-ups.<\/p>\nUnless otherwise stated in Section II: Appendix, consultants May associate with other firms to enhance their qualifications \u2014 BUT should indicate clearly whether the association is in the form of a joint venture\/ consortium (JV\/C) and\/ or a sub-consultancy<\/em>.<\/p><\/aside>\nSection IV \u2014 terms of Reference (ToR): This section describes the background, purpose\/ objectives, description\/ scope of work, deliverables\/ outcomes, inputs to be provided by the Procuring Entity, and timelines of Consultancy Services (hereinafter called the 'Service') required.<\/p>\nThe 'service' May include incidental goods, works, and other services<\/em> If so indicated therein. Any generic reference to the 'Service' shall be deemed to include such incidental Goods, Works, and other Services. This may also include the place of execution of the assignment.<\/p>\n<h3>5.4.3<\/span>Important Provisions of the REoI<\/span><\/h3>\n1.<\/strong> REoI contains all relevant information and guidance regarding \u2014 obtaining tender documents, preparing and submitting a responsive bid, the process of establishing eligibility\/ qualification credentials, evaluation and comparison of tenders, code of Integrity in Public Procurement (CIPP), the process of grievance redressal, and declaration of results.<\/strong><\/p>\n2. Eligibility Criteria:<\/strong> Provisions relating to eligibility criteria, conflict of interest and applicable preferential policies<\/strong> regulate the participation of bidders of various categories and their agents.<\/p>\n<ul class=\"lst\"><li>It mentions the type of entities which may participate, specifically if JV\/C are permitted<\/em> to participate.<\/li><li>It shall also mention that the consulting company should be registered under the applicable Act with registered offices in India<\/em>.<\/li><li>It also excludes insolvent, bankrupt, debarred, convicted firms, and firms with conflict of interest from participation.<\/strong> Restriction of participation of bidders from certain countries having land borders with India also applies.<\/li><li>In case jv\/cs are permitted, it should be made clear if the experience of the bidders as a member of JV\/C would be considered or not<\/em>. If yes, then the manner of aggregating qualifications<\/em> Of members of JV\/C \u2014 say, only pro-rata experience proportionate to his percentage share declared in JV\/C MoU<\/em> \u2014 May be mentioned.<\/li><\/ul>\n3. Preferential Procurement Policies: applicable policies are mentioned (MSEs, Start-ups, Make in India etc.).<\/p>\n4. EoI validity: Eois shall remain valid for a period not less than 60 (sixty) days<\/em> From the deadline for the EoI submission.<\/p>\n<aside class=\"note\">(Contrast RfP validity: not less than 90 days<\/strong> \u2014 para 5.5.4-5 below.)<\/em><\/p><\/aside>\n5. Qualification Criteria:<\/strong> the qualification criteria for shortlisting the bidders and its scoring\/ marking scheme<\/strong> is detailed. It also specifies, if JV\/C are permitted, how credentials of members would be considered in evaluation.<\/p>\n6. ToR at the eoI STAGE \u2014 the \"not yet ready\" rule: At the EoI stage, ToR is relevant for bidders to decide whether they are interested in bidding<\/em> for this assignment. It is also relevant to decide the specific sector of experience required in the qualification criteria<\/em>.<\/p>\nNormally, ToR should be ready before REoI is floated<\/em>. However, if a detailed ToR is not ready<\/em>, at least the following should be included in the REoI: Description\/ scope of work, deliverables\/ outcomes, inputs to be provided by the Procuring Entity, and timelines<\/em> Of the required 'service'.<\/p>\nREoI should contain a clause retaining the right to make minor adjustments to ToR at the RfP stage<\/em>.<\/p>\n<h2>5.5<\/span>Preparation of the Request for Proposals (RfP) Document [C ONLY]<\/span><\/h2>\n(Rule 186 of GFR 2017)<\/em><\/p>\n<h3>5.5.1<\/span>What the RfP Is<\/span><\/h3>\nthe request for proposals (RfP) is the bidding document in which the technical and financial proposals from the consultants are obtained<\/em>.<\/p>\nFor procurement of consultancy services, the RfP is sent only to the short-listed consultants<\/em>.<\/p>\nIt contains the following sections:<\/p>\n<ul class=\"lst\"><li>Section I: Request for Proposal Letter (RFPL) and its Appendix: Tender Information Summary (TIS)<\/li><li>Section II: Instructions to Consultants (ITC)<\/li><li>Section III: Appendix to Instructions to Consultants (AITC)<\/li><li>Section IV: General Conditions of Contract (GCC)<\/li><li>Section V: Special Conditions of Contract (SCC)<\/li><li>Section VI: Terms of Reference (ToR)<\/strong> \u2014 Section VI-A: List of Key Experts and Required Qualifications<\/em><\/li><li>Section VII: Evaluation\/ Scoring Criteria<\/li><\/ul>\n<h3>5.5.2<\/span>Section-by-Section<\/span><\/h3>\n1. Section I \u2014 RFPL and TIS: Provides a synopsis of information relevant for a consultant to decide on participating in the RfP. RFPL states the intention of the Procuring Entity to enter into a contract<\/em> for the provision of consultancy services, details of the Procuring Entity, and date, time, and address for submission of proposals<\/em>.<\/p>\nIt plays the role played by NIT<\/em> In procurement of goods and services.<\/p>\n2. Section II \u2014 ITC and Section III \u2014 AITC:<\/strong> Contains all necessary information that would help the consultants prepare responsive proposals.<\/p>\nIt shall bring in as much transparency as possible<\/em> To the selection procedure by providing information on the evaluation process<\/em>, and by indicating the evaluation criteria and factors and their respective weights and minimum passing quality score<\/em>.<\/p>\nStandard information includes clauses relating to the procedure of bid submission, pre-bid meeting, seeking clarifications<\/em>, and so on \u2014 BUT should NOT<\/em> Contain information on processes after the announcement of the award, which should be covered in GCC.<\/p>\nThe assignment\/ job-specific information in AITC includes: Date and time of bid submission, contact address, qualification criteria, method of selection, evaluation process, factors of evaluation and their respective weights<\/em>, and so on.<\/p>\nThe ITC shall specify the proposal validity period \u2014 normally 90 (ninety) days<\/em>.<\/p>\n3. Sections IV and V \u2014 GCC and SCC: (as at para 5.3.3 above)<\/em>.<\/p>\n4. Section VI \u2014 ToR and Section VI-A \u2014 List of Key Experts:<\/p>\nA) ToR describes the background, purpose\/ objectives, description\/ scope, deliverables\/ outcomes, timelines, Procuring Entity's inputs and counterpart personnel, statutory requirements of services required, etc.<\/p>\nB) the budget-disclosure Rule: Since cost is part of the selection criterion, the ITC shall not indicate the budget<\/em> \u2014 except in case of fixed budget system of selection<\/em> \u2014 but shall indicate the expected input of key professionals (staff time)<\/em>.<\/p>\nSection VI-A: 'List of Key Experts and Required Qualifications' describes the team composition, expertise, experience, and professional qualifications required for each key expert<\/em>. Consultants, however, shall be free to prepare their own estimates of staff time<\/em> Necessary to carry out the assignment.<\/p>\nC) consultants May be encouraged to provide comments and suggestions<\/em> On ToR, counterpart staff, key experts and facilities to be provided by the Procuring Entity.<\/p>\nD) simplified technical proposal (stp) vs full technical proposal (ftp):<\/p>\n<aside class=\"note\">In the LCS<\/em> system of evaluation \u2014 since the technical scores are not ranked or weighted and added to financial scores<\/em> \u2014 it would suffice if, instead of a detailed marking scheme for the criteria\/ sub-criteria, minimum fail-pass qualifying benchmarks<\/em> Are laid down for each criteria\/ sub-criteria.<\/p>\nFor such an assignment, technical evaluation can be carried out by following a simplified procedure<\/em>, and only a simplified technical proposal (stp)<\/em> \u2014 instead of a full technical proposal (ftp)<\/em> \u2014 May be called for and indicated in the data sheet of the RfP document.<\/p>\nStp should be used when the assignment is:<\/p>\n<ul class=\"lst\"><li>I) unlikely to have significant downstream impact<\/em>;<\/li><li>ii) OF A routine nature<\/em>, where ToR already defines details of tasks to be performed and required output, and approach, methodology, organisation, and staffing could be evaluated without use of sub-criteria<\/em>; and<\/li><li>iii) that characteristics of work do not require further detailed evaluation of the consultant's experience<\/em> (e.g., engagement of accountants, auditors, consultant engineers etc.).<\/li><\/ul>\nSTP reduces the time and cost required to prepare the proposal<\/em> And could be evaluated faster<\/em> By the evaluation committee. For example, the following parameters can be used:<\/p>\n<ul class=\"lst\"><li>I) minimum experience, including number of assignments handled by the firm similar to the area of assignment;<\/li><li>ii) turnover and other financial parameters of the firm, if required;<\/li><li>iii) minimum educational qualifications of each of the key professionals;<\/li><li>iv) minimum requirement of experience of the key professionals in an area similar to the proposed assignment;<\/li><li>V) all the firms which meet the minimum qualifying standards\/ criteria so prescribed will stand technically qualified for consideration of their financial bids<\/em>.<\/li><\/ul><\/aside>\n5. Section VII \u2014 Evaluation\/ Scoring Criteria: Stipulates the scoring scheme for evaluating various technical criteria. These may cover scoring of criteria relating to:<\/p>\n<aside class=\"note\">The consultant's experience \u00b7 technical approach and methodology \u00b7 understanding of requirements \u00b7 qualification and experience of key experts (key experts need not be a permanent employee of the consultant)<\/em> \u00b7 transfer of knowledge, etc.<\/p><\/aside>\nIt may also lay down a minimum technical score to qualify for the next stage of financial evaluation<\/em>. In a specific evaluation scheme, instead of a scheme of scoring, a scheme may be laid down to evaluate criteria on a pass\/ fail basis<\/em>.<\/p>\n<h3 class=\"src-C\">5.5.3<\/span>Standard Formats for Technical and Financial Proposals<\/span>C<\/span><\/h3><div class=\"srcblock src-C\">\n1. Technical proposal forms:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Form<\/th><th>Content<\/th><\/tr><\/thead><tbody><tr><td>T-1<\/td><td>Proposal Form<\/strong> \u2014 to serve as a covering letter to BOTH<\/strong> the Techno-commercial and Financial Proposals<\/em> \u2014 (T-1A: Consultant's Commercial Information)<\/em><\/td><\/tr><tr><td>T-2<\/td><td>Consultant's Organisation and Experience<\/td><\/tr><tr><td>T-3<\/td><td>Comments and Suggestions on Terms of Reference, Counterpart Staff, and Inputs to be Provided by the Procuring Entity<\/td><\/tr><tr><td>T-4<\/td><td>Description of Approach, Methodology and Work Plan in Responding to the Terms of Reference<\/td><\/tr><tr><td>T-5<\/td><td>Work Schedule and Planning for Deliverables<\/td><\/tr><tr><td>T-6<\/td><td>Team Composition, Assignment, and Key Experts' Inputs<\/strong> \u2014 (Annex to T-6: Key Experts' Curriculum Vitae \u2014 CV)<\/em><\/td><\/tr><tr><td>T-7<\/td><td>Terms and Conditions \u2013 Compliance<\/td><\/tr><tr><td>T-8<\/td><td>Checklist for Consultants<\/td><\/tr><tr><td>T-9<\/td><td>Bank Guarantee Format for Earnest Money Deposit<\/td><\/tr><tr><td>T-10<\/td><td>Integrity Pact<\/td><\/tr><\/tbody><\/table><\/div>\n2. Financial proposal (BOQ excel sheet) \u2014 (see para 5.3.9 above)<\/em>.<\/p>\n3. OTHER FORMATS \u2014 Contract Form and its Appendices:<\/p>\n<aside class=\"note\">Appendix A: Terms of Reference \u00b7 Appendix B: Key Experts \u00b7 Appendix C: Remuneration Cost Estimates \u00b7 Annex to Appendix C: Breakdown of Agreed Fixed Rates in Consultant's Contract \u00b7 Appendix D: Reimbursable Expenses Cost Estimates \u00b7 Appendix E-1: Bank Guarantee Format for Performance Security \u00b7 Appendix E-2: Bank Guarantee Format for Advance Payment<\/p>\nPlus: Authorisation to Attend Pre-Proposal Conference<\/strong>(to be filled up, if required, by the Consultant)<\/em>.<\/p><\/aside>\n<\/div><h3 class=\"src-C\">5.5.4<\/span>Important Provisions of the ITC<\/span>C<\/span><\/h3><div class=\"srcblock src-C\">\n2. Eligibility to participate \u2014 the closed-list rule: As the RfP follows the earlier EoI shortlisting process, this invitation is open only to consultants who have been shortlisted therein or are specifically invited to participate<\/em>.<\/p>\nIT IS not permissible<\/em> for the shortlisted consultants to transfer this RfP to any other firm<\/em> Without the permission of the Procuring Entity.<\/p>\nProposals from consultants who have not been shortlisted shall not be entertained<\/em>.<\/p>\nThe shortlisted consultant must continue to meet the eligibility criteria prescribed in the EoI document<\/em> (based inter alia on which they were shortlisted) \u2014 including restrictions on consultants from specified countries \u2014 as of the date of his proposal submission<\/em>, and should continue to meet these till the award of the contract<\/em>. Consultants must provide evidence of their continued eligibility if requested.<\/p>\n3. Association among shortlisted consultants \u2014 and the 14-day approval rule:<\/p>\nUnless otherwise stipulated in TIS\/ AITC, if a shortlisted Consultant considers that it may enhance its expertise by associating with other consultants in the form of a joint venture or as sub-consultants<\/em>, it may do so with either:<\/p>\n<ul class=\"lst\"><li>(a) NON-SHORTLISTED Consultant(s), or<\/li><li>(b) SHORTLISTED Consultants<\/li><\/ul>\n \u2014 without vitiating the shortlisting criteria of the REoI.<\/p>\nThe lead member Rule:<\/p>\n<ul class=\"lst\"><li>The shortlisted consultant shall be the lead member<\/em> When associating with non-shortlisted<\/em> Firms as a joint venture.<\/li><li>IF shortlisted<\/em> Consultants associate with each other<\/em>, any of them can be a lead member<\/em>.<\/li><\/ul>\nA shortlisted consultant must obtain the Procuring Entity's written approval not later than 14 days before the RfP submission deadline<\/em>, in all such cases.<\/p>\nSuch approval shall be denied<\/em> IF:<\/p>\n<ul class=\"lst\"><li>(i) a shortlisted consultant proposes to associate with an ineligible consultant<\/em> \u2014 or, in case of an ineligible joint venture, any of its members<\/em>;<\/li><li>(ii) because of the change, the consultant no longer substantially meets the qualification criteria<\/em> Outlined in the REoI document; Or<\/li><li>(iii) if, in the opinion of the Procuring Entity, a substantial reduction in competition May result<\/em>.<\/li><\/ul>\n4. Preferential Procurement Policies:<\/strong> applicable policies are mentioned (MSEs, Start-ups, Make in India etc.).<\/p>\n5. RfP validity: RfP shall remain valid for a period not less than 90 (ninety) days<\/em> From the deadline for the RfP submission.<\/p>\n6. Evaluation\/ scoring criteria \u2014 the three heads, and the presentation rule:<\/p>\nEvaluation shall, inter alia, consider the Consultant's:<\/p>\n<ul class=\"lst\"><li>(i) \"specific experience of the consultant (as a firm) relevant to the assignment\";<\/li><li>(ii) \"adequacy and quality of the proposed methodology, and work plan\";<\/li><li>(iii) \"key experts' qualifications and competence for the assignment\".<\/li><\/ul>\nIt also specifies, if JV\/C are permitted, how credentials of members of JV\/C would be considered.<\/p>\nThe presentation Rule: The Procuring Entity May ask all shortlisted consultants<\/em> To deliver a presentation on their technical proposals.<\/p>\n<ul class=\"lst\"><li>This presentation shall only cover contents of the technical proposals already submitted<\/em> By the consultant.<\/li><li>Unless otherwise provided, no marks shall be assigned to the presentation<\/em>.<\/li><li>Opportunities for such presentations shall be provided in a manner to provide a level playing field<\/em> To all shortlisted consultants \u2014 including time limits<\/em> for such presentations.<\/li><\/ul>\n<\/div><h2>5.6<\/span>Uploading of Tender Documents: Mandatory e-Publishing<\/span><\/h2>\n(Rule 159 of GFR 2017)<\/em><\/p>\n1. The mandate and its reach: IT IS mandatory<\/em> for all ministries\/ departments of the Central Government, their attached and subordinate offices, and autonomous\/ statutory bodies to publish their tender enquiries, corrigenda thereof, and details of bid awards<\/em> Online on the gem-Central Public Procurement Portal (CPPP) \u2014 and also on their own website.<\/p>\nThese instructions apply to ALL<\/em> Of the following \u2014 whether they are advertised, issued to a limited number of parties, or to a single party:<\/p>\n<aside class=\"note\">Tender enquiries \u00b7 requests for proposals \u00b7 requests for expressions of interest \u00b7 notice for pre-qualification\/ registration \u00b7 or any other notice inviting bids or proposals in any form<\/p><\/aside>\nthe exclusions differ by Manual:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>These instructions would NOT apply to<\/th><\/tr><\/thead><tbody><tr><td>G<\/span>, C<\/span>, NC<\/span><\/td><td>the purchase of goods without quotations<\/em>, or the purchase of goods by the purchase Committee<\/em><\/td><\/tr><tr><td>W<\/span><\/td><td>works procurement through quotation<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n2. The national security exemption \u2014 and its quarterly reporting obligation:<\/p>\nIndividual cases where confidentiality is required for reasons of national security<\/em> Would be exempted from the mandatory e-publishing requirement.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Body<\/th><th>Who approves the exemption<\/th><\/tr><\/thead><tbody><tr><td>Ministry\/ Department<\/td><td>THE Secretary<\/em> Of the Ministry\/ Department, with the concurrence of the concerned Financial Adviser<\/em><\/td><\/tr><tr><td>Autonomous and Statutory bodies<\/td><td>THE head of the body<\/em>, with the concurrence of the head of the finance<\/em> \u2014 in each such case<\/td><\/tr><\/tbody><\/table><\/div>\nstatistical information on the number of cases in which exemption was granted and the value of the concerned contract<\/em> Should be intimated on a quarterly basis<\/em> To the Ministry of Finance, Department of Expenditure.<\/p>\n3. Fixed days for issuance of NIT and tender opening \u2014 W<\/span> ONLY:<\/p>\n<aside class=\"note\">In order to increase certainty in the procurement process<\/em>, all ministries\/ departments shall fix days in every month<\/em> for issuance of notice inviting tender (NIT), and tender opening, across various locations, divisions or levels.<\/p>\nExample given: The tenders may be released by the Ministries\/ Departments three times a month \u2014 i.e., on the 10th, 20th and 30th of every month \u2014 and the bid submission dates are so determined that bids are opened only on fixed scheduled dates, viz., the 7th, 17th and 27th of every month.<\/em><\/p>\nIn case there are practical difficulties due to large volume of tenders<\/em> In having fixed days across the whole organisation, the ministries\/ departments\/ cpsus May decide to have region-wise, zone-wise, or division-wise<\/em> Fixed days.<\/p>\nFor procurement of highly technological and complex works<\/em>, tender submission dates May be extended in order to reply to queries in the pre-bid meetings or any other justifiable reason.<\/p><\/aside>\nExample 1 \u2014 fixation of days by CPWD:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Region<\/th><th>Days for Issuance of NITs<\/th><th>Days for Tender Opening<\/th><\/tr><\/thead><tbody><tr><td>Delhi<\/td><td>Monday<\/td><td>Monday<\/td><\/tr><tr><td>Northern<\/td><td>Tuesday<\/td><td>Tuesday<\/td><\/tr><tr><td>Southern<\/td><td>Wednesday<\/td><td>Wednesday<\/td><\/tr><tr><td>Eastern<\/td><td>Thursday<\/td><td>Thursday<\/td><\/tr><tr><td>Western<\/td><td>Friday<\/td><td>Friday<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Note 1: One WEEK in the case of works with estimated cost put to tender up to Rs. 2 crore<\/em>, and two WEEKS in the case of works with estimated cost more than Rs. 2 crore<\/em>. If there is a holiday on a particular day, the day of inviting\/ uploading NIT May be proposed to an earlier day, and opening of tender May be postponed to the next day.<\/p>\nNote 2: However, in case of exigencies of work<\/em>, THE chief engineer\/ chief Project Manager or equivalent<\/em> Can allow to call and open tenders on another day instead of specific fixed days.<\/p><\/aside>\n<h2>5.7<\/span>Amendment of Tender Documents<\/span><\/h2>\n(Rule 173(iii) of GFR 2017)<\/em><\/p>\n1. At any time prior to the date of submission of bids<\/em>, the Procuring Entity May \u2014 suo motu<\/em> Or in response to a clarification sought by a prospective bidder (directly or in a pre-bid conference) \u2014 amend tender documents by issuing a corrigendum<\/em>.<\/p>\nCopies of such amendment\/ modification should be uploaded on the e-publishing portal and the Procuring Entity's own website<\/em>.<\/p>\nIn case of off-line tenders<\/em>, the copies of such amendment\/ modification are to be simultaneously despatched, free of cost, by registered\/ speed post\/ courier\/ e-mail<\/em>, to all the parties who have already purchased the tender documents \u2014 and copies of such amendments are also to be prominently attached in the unsold sets<\/em> Of the tender documents.<\/p>\nWhen the amendment\/ modification changes the requirement significantly<\/em> And\/ or when there is not much time left<\/em> for the bidders to respond and prepare a revised tender, the time and date of submission of tenders are also to be suitably extended (not less than 3 days)<\/em>.<\/p>\n2. The 21-DAY re-publication Rule \u2014 W<\/span> ONLY:<\/p>\n<aside class=\"note\">When the proposed amendment\/ modification substantially changes the procurement requirements originally envisaged<\/em>, and\/ or when insufficient time remains<\/em> for the tenderers to respond \u2014 the time and date of submission of tenders should also be extended suitably.<\/p>\nNormally, the extended time duration shall be 21 DAYS<\/em>, or consistent with the original bid submission duration.<\/p>\nDepending on the circumstances, such an amendment May also need fresh publication of the revised tender document<\/em>, following the same procedure as the original tender publication.<\/p>\nThis is crucial as the amendment May enable a new bidder to meet the qualifying criteria<\/em>, AND TO ensure a level playing field<\/em>.<\/p><\/aside>\n<h2>5.8<\/span>Extension of Deadline of Bid Submission<\/span><\/h2>\n1. Ordinary extension: To give sufficient time to bidders to prepare and submit their bids, the Procuring Entity may \u2014 suo motu<\/em>, or based on a justifiable request of bidder(s)<\/em>, or due to significant modification of tender documents<\/em> \u2014 extend the time and date of submission of tenders suitably (not less than three (3) days<\/em>), along with suitable changes in the corresponding time-frames for:<\/p>\n<aside class=\"note\">Receipt of tender \u00b7 bid validity period \u00b7 and validity period of the corresponding EMD\/ Bid Security<\/p><\/aside>\nDepending on the situation, such an amendment May also need fresh publication<\/em>, adopting the same procedure as for publication of the original tender enquiry.<\/p>\n2. Auto-extension of bids in case of lack of response \u2014 an important and easily-missed provision:<\/p>\nA) the information blackout: The e-procurement portal\/ GeM should not provide anybody \u2014 including the Procuring Entity \u2014 with the bid count before the tender opening time, even at their request<\/em>.<\/p>\nb) The set-up: The e-Procurement portal\/ GeM May facilitate the Procuring Entity in specifying, at the time of tender upload<\/em>:<\/p>\n<ul class=\"lst\"><li>THE minimum number of bids<\/em> Considered sufficient; And<\/li><li>THE pre-specified number of days for automatic extension<\/em> Of bid opening (not less than 7 days<\/em>).<\/li><\/ul>\nC) the declaration: The system shall declare in the tender details that in case of low competition (without specifying the number)<\/em>, the tender closing time shall be automatically extended by the specified number of days.<\/p>\nD) the operation: If bids received till the bid opening time are less than the specified minimum bids<\/em>, the system should automatically extend<\/em> The tender opening by the specified number of days \u2014 without seeking any input from or sharing any information with anyone, including the Procuring Entity<\/em>.<\/p>\nPurchasers and bidders shall only be informed<\/em> That \"due to less competition, the tender closing time has been extended up to (date and time).\"<\/p>\ne) ONCE only \u2014 G<\/span> Only: However, this automatic extension of bid opening shall be done only once, not repeatedly<\/em>.<\/p>\n<aside class=\"note\">(The Goods Manual states this twice \u2014 \"the system should automatically extend (only ONCE)\" and again in this sentence. The Works Manual omits the \"only once\" restriction entirely.)<\/em><\/p><\/aside>\nf) the 'one' device: If a Procuring Entity wants to go ahead even with low competition<\/em> (E.g., due to urgency), they May mention 'ONE'<\/em> As the minimum bid \u2014 so that if no bid is received, the tender is automatically extended; Otherwise, it is not<\/em>.<\/p>\nG) GeM and e-procurement portals shall update their systems accordingly<\/em>.<\/p>\n<h2>5.9<\/span>Availability and Cost of Tender Documents<\/span><\/h2>\n(Rule 161(v) of GFR 2017)<\/em><\/p>\n1. Availability window: Tender documents should preferably be sold or available for download after the date and time of the start of availability till the deadline for availability<\/em> As mentioned in the tender document (say up to the date of opening of tenders<\/em>) \u2014 and this should be clearly indicated in the documents<\/em>.<\/p>\nThe organisation should also post the complete tender document on the website<\/em> (W<\/span> adds: \"and on GeM-CPPP\") AND permit prospective bidders to make use of the document downloaded from the website<\/em>.<\/p>\nW<\/span> adds: *The advertisement for invitation of tenders should <\/strong>give the complete web-address from where bid documents can be downloaded.*<\/p>\n2. The cost Rule: Normally, no tender document fee should be charged<\/em>.<\/p>\nIn exceptional cases, a Procuring Entity May fix a bare minimum cost<\/em> Of tender documents to defray the expenses\/ effort of preparing documents, drawings<\/em>, ETC.<\/p>\nThe cost of the tender document is to be submitted to the authority nominated therein by the prospective bidder in the form of a demand draft\/ banker's cheque\/ pay order\/ online payment gateway<\/em>.<\/p>\n3. Who is exempt from the tender document cost \u2014 the two Manuals differ:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Firms eligible for exemption<\/th><\/tr><\/thead><tbody><tr><td>G<\/span> GOODS<\/td><td>MSEs AND<\/em> The Procuring Entity's registered units<\/strong>(for relevant items and monetary limit)<\/em><\/td><\/tr><tr><td>W<\/span> WORKS<\/td><td>only the Procuring Entity's registered units (for relevant grades of work and monetary limit)<\/em> \u2014 MSEs are not named<\/td><\/tr><\/tbody><\/table><\/div>\nSuch firms HAVE TO submit\/ upload scanned copies of documents in support of this exemption<\/em>.<\/p>\n<h2>5.10<\/span>Participation of Bidders \u2014 Eligibility Criteria<\/span><\/h2>\n1. The general rule: The tender document May lay down eligibility criteria<\/em> For participating in the tender process \u2014 e.g., restrictions on participation by bidders relating to:<\/p>\n<aside class=\"note\">Type of commercial entity (G<\/span> adds: e.g., the bidders must be a private or public registered entity)<\/em> \u00b7 insolvency \u00b7 ineligibility\/ debarment\/ convictions\/ conflict of interest \u00b7 Class of bidders (as per Make in India order) \u00b7 bidders from countries having land borders with India, etc.<\/p><\/aside>\nExcept for the eligibility criteria, participation shall be open to all bidders in open\/ global tender enquiries<\/em>.<\/p>\nIn the case of the second stage<\/em> (Of two-stage bidding or PQB) or limited tenders<\/em>, participation shall be open only to such bidders who have been previously shortlisted or specifically invited<\/em>.<\/p>\n2. Purchase preference policies: The Procuring Entity May reserve its right to grant preferences to eligible bidders under various Government policies\/ directives (policies relating to Make in India, MSME, Start-ups, etc.)<\/em>.<\/p>\n3. The additional works eligibility heads \u2014 W<\/span> ONLY (not in the Goods list)<\/em>:<\/p>\nA) legal status of the bidder: Individual bidder \u2014 a natural person, or a private entity, or a public entity (state-owned enterprise or institution), or a joint venture\/ consortium (JV\/C).<\/p>\nB) the Rs. 10 crore JV threshold: For package size exceeding certain values [say \u2014 Rs. 10 (ten) crore]<\/em>, JV\/C May be permitted to participate in the procurement of works in specific situations where the credentials required are not likely to be available with an individual bidder<\/em>.<\/p>\n<ul class=\"lst\"><li>Maximum number of partners in JV shall be limited (say \u2014 three)<\/em>.<\/li><li>In case of JV, all the partners shall be jointly and severally liable<\/em> for the successful completion of the work.<\/li><li>Participation of JV\/C is specifically discouraged<\/em> In the case of quality Oriented Procurement (QOP) with QCBS evaluation<\/em>.<\/li><\/ul>\nC) registrations\/ licences: GSTIN, PAN, EPF, ESI, labour, Private Security Agencies (PASARA), etc.<\/p>\nD) submission of requisite bid Security<\/em> (Or Bid Security declaration, if allowed) or proof of exemption therefrom.<\/p>\ne) FREE FROM financial insolvency, debarment, or convictions<\/em>.<\/p>\nf) A consistent history of litigation or arbitration<\/em> By the bidder May result in disqualification.<\/p>\nG) restriction as per Government policies:<\/strong> for Class-II Local Suppliers and Non-Local bidders under Make-in-India; and bidders from land-border countries or with a Specified ToT arrangement.<\/p>\n4. Conflict of interest \u2014 the four (or three) situations:<\/p>\nBidders having a conflict of interest shall not be eligible to participate<\/em> In the tender process \u2014 unless the conflict stemming from such relationship has been resolved in a manner acceptable to the Procuring Entity<\/em> Throughout the tender process and execution of the contract.<\/p>\n<aside class=\"note\">W<\/span> adds: *\"<\/strong>Such conflict of interest can lead to anti-competitive practices to the detriment of the Procuring Entity's interests.\"*<\/p><\/aside>\nThe bidder shall be considered to have a conflict of interest in the following situations:<\/p>\nA) personnel relationship: If its personnel have a close personal, financial, or business relationship<\/em> With any personnel of the Procuring Entity who are directly or indirectly related to the procurement or execution process of the contract, which can affect the decision of the Procuring Entity directly or indirectly.<\/p>\nB) prior involvement: The bidder (or his allied firm<\/em>) provided services for the need assessment\/ procurement planning<\/em> Of the tender process in which it is participating.<\/p>\n<aside class=\"note\">Footnote (all Manuals): \"need assessment\/ procurement planning\" means, inter alia, need assessment, preparation of feasibility\/ cost estimates\/ Detailed Project Report (DPR), design\/ technical specifications, terms of reference (ToR)\/ Activity Schedule\/ schedule of requirements or the Tender Document, etc.<\/em><\/p><\/aside>\nC) the agency Rule \u2014 G<\/span> Only: A principal can authorise only one agent<\/em>, and an agent should not represent or quote on behalf of more than one principal<\/em>. However, this shall not debar more than one authorised distributor<\/em> (With or without the OEM) from quoting equipment manufactured by an OEM in procurements under a Proprietary Article Certificate<\/em>.<\/p>\nD) multiple bids \u2014 and the two Manuals differ on the consequence:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>Consequence of participating in more than one bid<\/th><\/tr><\/thead><tbody><tr><td>G<\/span> GOODS<\/td><td>participation in any capacity by a bidder (including as a partner\/ JV member or sub-contractor in another bid or vice versa) in more than one bid shall result in the disqualification of all bids in which he is a party<\/em><\/td><\/tr><tr><td>W<\/span> WORKS<\/td><td>\u2026Shall result in the *disqualification of <\/strong>the bid in which he is a main\/ principal\/ lead bidder*<\/td><\/tr><\/tbody><\/table><\/div>\nHOWEVER (both Manuals): This DOES NOT<\/em> Limit the participation of an entity as a sub-contractor in more than one bid<\/em>, if he is not bidding independently in his own name or as a member of a JV\/ consortium<\/em>.<\/p>\n5. OEM\/ agents of supplier \u2014 G<\/span> ONLY:<\/p>\nA) the manufacturer's authorisation requirement: Except in the case of commercially-off-the-shelf (cots)<\/em> Items, when a firm sends a quotation for an item manufactured by some different company<\/em>, the firm is also required to attach, in its quotation:<\/p>\n<ul class=\"lst\"><li>THE manufacturer's authorisation certificate<\/em>; and<\/li><li>THE manufacturer's confirmation of extending the required warranty support<\/em> for that product<\/strong>(in addition to the bidder's own confirmation of the required warranty)<\/em>, as per formats given in Tender Documents.<\/li><\/ul>\nThis is necessary to ensure a quotation from a responsible party offering a genuine product backed by a warranty obligation from the concerned manufacturer<\/em>.<\/p>\nB) tender-specific authorisation for large contracts: In the case of large contracts, especially capital equipment<\/em>, the manufacturer's authorisation must be insisted upon on a tender-specific basis \u2014 not general authorisation\/ dealership<\/em> \u2014 by clearly declaring it in the tender documents.<\/p>\n<h2>5.11<\/span>Pre-NIT and Pre-bid Conferences<\/span><\/h2>\n(Rule 173(x) of GFR 2017)<\/em><\/p>\n<h3>5.11.1<\/span>Pre-Notice Inviting Tender (NIT) Conference \u2014 Market Consultation<\/span><\/h3>\nIN complex and innovative procurement cases<\/em>, or where the Procuring Entity May not have the required knowledge to formulate tender provisions<\/em>, A pre-nit conference (before finalising\/ publishing NIT)<\/em> May help the Procuring Entity in obtaining inputs from the industry<\/em>.<\/p>\nSuch conferences should be widely publicised<\/em> So that different potential suppliers\/ contractors can attend (DoE's OM No. F.1\/1\/2021-PPD dated 29.10.2021, para 9.2)<\/em>.<\/p>\nAll inputs received from the probable bidders in such a conference shall be compiled\/ minuted<\/em>, and requirements finalised (with the approval of the technical committee, if formed, by the Competent Authority<\/em>).<\/p>\nIn a more complex, large, and green-field\/ blue-sky project, two-stage tendering (with EoI) would be more appropriate and transparent<\/em>.<\/p>\n<h3>5.11.2<\/span>Pre-bid Conference<\/span><\/h3>\nWhen it must be provided for:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Trigger<\/th><\/tr><\/thead><tbody><tr><td>G<\/span> GOODS<\/td><td>in case of turnkey contract(s) and sophisticated and costly equipment, large works and complex consultancy assignments<\/em><\/td><\/tr><tr><td>W<\/span> WORKS<\/td><td>in case of turnkey contract(s) or contract(s) of special nature<\/em> for procurement of sophisticated and costly work\/ services\/ equipment<\/em> \u2014 or wherever felt necessary'<\/td><\/tr><\/tbody><\/table><\/div>\na suitable provision shall be kept in the tender documents for one or more pre-bid conferences (after the NIT and tender documents have been published)<\/em> \u2014 FOR clarifying issues\/ clearing doubts<\/em>, if any, and for ensuring a level playing field<\/em>, relating to the specifications and other allied technical\/ commercial details.<\/p>\nA) who May attend, and the deemed-no-issue Rule:<\/p>\n<ul class=\"lst\"><li>G<\/span> Participation in the pre-bid conference May be restricted to prospective bidders who have downloaded the tender document<\/em>.<\/li><li>Participation is not mandatory<\/em>.<\/li><li>However, if a bidder chooses not to (or fails to) participate in the pre-bid conference or does not submit a written query, it shall be assumed that they have no issues regarding the techno\/ commercial conditions<\/em>.<\/li><\/ul>\nB) the timing Rules:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Event<\/th><th>Timing<\/th><\/tr><\/thead><tbody><tr><td>Date of the pre-bid meeting<\/td><td>normally after 15 to 21 (fifteen to twenty-one) days<\/em> Of the issue of the tender document \u2014 and should be specified therein<\/em><\/td><\/tr><tr><td>Last date for written queries and for registration for participation<\/td><td>mentioned in the tender document \u2014 7 days before the date of the conference, if not specified<\/em><\/td><\/tr><tr><td>Mode<\/td><td>the pre-bid conference May also be held online<\/em> At the discretion of the Procuring Entity<\/td><\/tr><\/tbody><\/table><\/div>\nc) Timelines to be declared: Timelines for response to the pre-bid conference \u2014 E.G., replies to questions, issue of minutes of the pre-bid conference, corrigenda<\/em>, etc. \u2014 should be mandatorily mentioned in the tender document and complied with<\/em>.<\/p>\nD) identity requirement: Delegates participating in the pre-bid conference must provide a photo identity and an authorisation letter as per the specified format from their company\/ principals<\/em> \u2014 otherwise, they shall not be allowed to participate<\/em>.<\/p>\nE) the seven-day minutes Rule: After the pre-bid conference, minutes of the pre-bid conference shall be published on the Procuring Entity's portal within seven days of the conference<\/em>.<\/p>\nIf required, a clarification letter and corrigendum<\/em> To the tender document shall be issued, containing amendments to various provisions \u2014 which shall form part of the tender document<\/em>.<\/p>\nTo give reasonable time to the prospective bidders to take such clarifications into account in preparing their bids, the Procuring Entity May suitably extend, as necessary, the deadline for the bid submission<\/em>.<\/p>\n<h2 class=\"src-multi\">5.12<\/span>Site Visit<\/span>W<\/span>C<\/span>NC<\/span>NOT in Goods<\/span><\/h2><div class=\"srcblock src-multi\">\nThe bidder\/ consultant, at its own cost, responsibility and risk<\/em>, MAY visit and examine the site of work\/ required services and its surroundings<\/em>, and obtain all information that May be necessary for preparing the bid and entering into a contract<\/em> for the works\/ services.<\/p>\n<aside class=\"note\">This provision does not appear in the Goods Manual \u2014 a site visit has no analogue in a supply contract.<\/p><\/aside>\n<\/div><h2>5.13<\/span>Clarification of Tender Documents<\/span><\/h2>\nA prospective bidder requiring clarification on the tender documents May ask questions in writing\/ electronically<\/em> From the office\/ contact person as mentioned in the tender document.<\/p>\nThe three time limits:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>Time limit<\/th><\/tr><\/thead><tbody><tr><td>Questions must be raised<\/td><td>before the clarification end date<\/em> Mentioned in the tender document \u2014 or, if not mentioned, before 7 days of the deadline for the bid submission<\/em><\/td><\/tr><tr><td>Holiday rule<\/td><td>this deadline shall not be extended in case of any intervening holidays<\/em><\/td><\/tr><tr><td>Response by the Procuring Entity<\/td><td>a response will be sent in writing\/ digitally at least 5 days prior to the date of opening of the tenders<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nONLY material queries and their responses<\/em> Shall be uploaded on the website \u2014 without revealing the identity of the bidder making the query<\/em>.<\/p>\nWhen the response to clarification changes the requirement significantly<\/em> And\/ or when there is not much time left<\/em> for the bidders to respond, the time and date of submission of tenders May also be suitably extended (not less than 3 days)<\/em>.<\/p>\n<h2>5.14<\/span>Withdrawal\/ Amendments\/ Modifications to Bids by Bidders<\/span><\/h2>\n1. What is permitted before the deadline: The bidder, after submitting its bid, is permitted to substitute\/ alter\/ modify it, superseding the earlier bid<\/em> \u2014 so long as such revised bid is uploaded\/ received duly sealed and marked like the original bid, up to the deadline of submission of bids<\/em>.<\/p>\nResubmission of a bid shall require uploading all documents, including the financial bid, afresh<\/em>.<\/p>\nThe system shall consider only the last bid submitted<\/em> As a valid bid.<\/p>\nThe bidder May withdraw his bid before the bid submission deadline<\/em> \u2014 and it shall be marked as withdrawn and shall not be opened<\/em> During the bid opening.<\/p>\n2. What is prohibited after the deadline \u2014 and the penalty:<\/p>\nAny such action after the bid-submission deadline is not permitted<\/em>.<\/p>\nWithdrawal\/ amendment\/ modification\/ alteration\/ impairment\/ derogation of a bid, in any respect<\/em>, by its bidder between the deadline for submission of bids and the expiration of the period of bid validity<\/em> \u2014 his Bid Security\/ EMD shall be forfeited<\/em>, besides imposition of any other punitive remedy available to the Procuring Entity.<\/p>\nIn such cases, tender evaluation shall be proceeded with in terms of the evaluation chapter.<\/p>\n<h2>5.15<\/span>Sealing\/ Marking of Bids in Off-line Tenders<\/span><\/h2>\n1. The tender document should indicate the manner of submission\/ uploading of bids<\/em>.<\/p>\n2. The double-envelope discipline: In the case of off-line tenders, the total number of bid copies<\/em> (for example, duplicate or triplicate, and so on) required to be submitted should be specified.<\/p>\nThe bidder is to:<\/p>\n<ul class=\"lst\"><li>Seal the original and each copy<\/em> Of the bid in separate envelopes<\/em>, duly marking the same as \"original<\/em>\", \"duplicate<\/em>\", and so on;<\/li><li>Print the address of the purchasing office and the tender reference number<\/em> On the envelopes;<\/li><li>Further, the sentence \"Not to be opened before (the due date and time of tender opening)\"<\/em> is also to be printed on these envelopes;<\/li><li>The inner envelopes are then to be put inside a bigger outer envelope<\/em>, which will also be duly sealed, marked, and so on, as above.<\/li><\/ul>\nIf the outer envelope is not sealed and marked properly<\/em> As above, the Procuring Entity does not assume any responsibility for its misplacement, premature opening, late opening<\/em>, and so on.<\/p>\n<h2>5.16<\/span>Uploading\/ Submission of Bids<\/span><\/h2><h3>5.16.1<\/span>Uploading Bids in e-Procurement<\/span><\/h3>\n<aside class=\"note\">Different e-Procurement portals may have different provisions, but the following is the generic description. (Portals must be GCQE-compliant<\/strong> \u2014 Guidelines for Compliance to Quality Requirements of eProcurement, July 2021, STQC Directorate, MeitY.)<\/em><\/p><\/aside>\na) the Procuring Entity is neither a party nor a principal<\/em> In the relationship between the bidder and the organisation hosting the e-procurement portal (hereinafter called the portal).<\/p>\nBidders must acquaint and train themselves<\/em> With the Rules, regulations, procedures, and implied conditions\/ agreements of the portal. Bidders intending to participate shall be required to register with the portal, and must comply with its conditions \u2014 including registration and a compatible digital signature certificate (DSC). In the case of downloaded documents, the bidder must not make any changes to the contents of the documents while uploading<\/em> \u2014 except for filling in the required information.<\/p>\nB) any query\/ clarification\/ complaint regarding downloading tender documents and uploading bids on the e-procurement portal May be addressed to the portal's help desk<\/em>.<\/p>\nC) the primacy Rule: In case of conflict between the provisions of the portal and the tender document<\/em>, provisions of the portal shall prevail<\/em>.<\/p>\nD) no extension for office closure: Bids must be uploaded by the submission deadline. If the office happens to be closed on the deadline to submit the bids, this deadline shall not be extended<\/em>.<\/p>\ne) ONLY one copy<\/em> Of the bid can be uploaded, and the bidder shall digitally sign all statements, documents, and certificates<\/em> Uploaded by him \u2014 owning sole and complete responsibility for their correctness\/ authenticity<\/em> As per the provisions of the IT ACT 2000<\/em>, as amended.<\/p>\nf) The protected Price Schedule: The Bidder shall write his name in the space provided in the specified location only<\/em>. Bidder shall type rates in figure only<\/em> in the rate column of respective item(s) \u2014 without any blank cell or zero values in the rate column<\/em>, and without any alteration\/ deletion\/ modification of other portions of the excel sheet. If space is inadequate, the Bidder may upload additional documents under \"Additional Documents\" in the \"bid Cover Content\".<\/p>\nG) the server clock Rule: The date and time of the e-procurement server clock<\/em> \u2014 which is also displayed on the bidders' dashboard \u2014 shall be used as the reference time<\/em> for deciding the closing time of bid submission. No request on the account that the server clock was not showing the correct time, and that a particular bidder could not submit their bid because of this, shall be entertained. Failure or defects on the internet, or heavy traffic at the server, shall not be accepted as a reason for a complaint<\/em>. The Procuring Entity shall not be responsible for any failure, malfunction or breakdown of the electronic system<\/em> Used during the e-tender process.<\/p>\nh) Encryption: The bidder should ensure the correctness of the bid before uploading, and take a printout of the system-generated submission summary to confirm the successful bid upload<\/em>. All bids uploaded by the bidder to the portal shall be automatically encrypted<\/em>. The encrypted bid can only be decrypted\/ opened by the authorised persons on or after the due date and time<\/em>.<\/p>\ni) Scanned documents: Bidder must upload scanned copies of originals<\/em> (or self-attested copies of originals \u2014 as specified), and should ensure the clarity\/ legibility<\/em> of the scanned documents. The Procuring Entity reserves its right to call for verification of originals<\/em> Of all such self-certified documents from the bidders at any stage of evaluation<\/em> \u2014 especially from the successful bidder(s) before the issue of Letter of Award (LoA)<\/em>.<\/p>\nj) physical submission of originals \u2014 the one case where the deadline DOES extend: If so specified in the tender document, originals (or self-attested copies) of specified scanned, uploaded documents must be physically submitted before the deadline specified for it (before the bid submission deadline, if not so specified<\/em>), sealed in double cover, and acknowledgement must be obtained.<\/p>\nFailure to do so is likely to result in the bid being rejected<\/em>. If the office is closed on the deadline for the physical submission of originals<\/em>, IT shall stand extended to the next working day<\/em> At the same time and venue.<\/p>\n<aside class=\"note\">(Contrast sub-para (d) above \u2014 for electronic<\/strong> submission, office closure does NOT<\/strong> extend the deadline.)<\/em><\/p><\/aside>\nk)<\/strong>no Manual bids shall be made available or accepted for submission in e-procurement<\/strong>(except for originals of scanned copies as per sub-para (j) above)<\/em>.<\/p>\n<h3>5.16.2<\/span>Submission of Bids in the Offline Tender Process<\/span><\/h3>\n<aside class=\"note\">In offline tenders, receipt and custody of bids shall be done transparently to maintain the credibility of the process<\/em>.<\/p><\/aside>\nA) the technical and financial proposals shall be submitted at the same time<\/em>. To safeguard the integrity of the process, the technical and financial proposals shall be submitted in separate sealed envelopes and kept in an outer sealed envelope<\/em>.<\/p>\nb) the tender box and its two locks: The procuring entity shall maintain tender boxes<\/em> for receiving the bids at suitable locations, which would facilitate security and easy access for bidders<\/em>.<\/p>\nIf required, tender boxes should be separate for each day of the week of tender opening<\/em>, and should be sealed by the Bid Opening Committee (boc) of the day<\/em>. The tender box shall have two locks<\/em>. The key of one lock will be with the head of the office<\/em>, and the other key with the official nominated by him<\/em>.<\/p>\nc) Courier and prohibited modes: Bids received by courier<\/em> Shall be deposited in the tender box by the despatch section<\/em> Till the date and time of bid opening. Bids sent by telex, cable or facsimile are to be ignored and rejected<\/em>.<\/p>\nD) bulky\/ oversized bids: For bulky\/ oversized bids that cannot be dropped into tender boxes<\/em>, the officials authorised to receive such bids shall maintain proper records and provide a signed receipt with the date and time<\/em> To the bearer of the bid. He will also sign on the cover, duly indicating the date and time of receipt<\/em>. Names and designations of at least two such authorised officers<\/em> Should be mentioned in the tender documents.<\/p>\n<h3>5.16.3<\/span>Bid Security<\/span><\/h3>\nA self-attested scan of the original Bid Security\/ BSD<\/em> Should be uploaded along with bids. Bids not complying with these provisions shall be rejected<\/em>.<\/p>\nIn off-line tenders, bid Security or \u2014 if permitted \u2014 bid securing declaration (BSD) must accompany the bid<\/em> As per instructions in the tender document.<\/p>\n<h2>5.17<\/span>Bid Validity<\/span><\/h2>\nA bid shall remain valid for the period mentioned in the tender document \u2014 90 days if not so specified<\/em>.<\/p>\nA bid that is valid for a shorter period shall be rejected as non-responsive<\/em>.<\/p>\nIn case the day up to which the bids are to remain valid falls on \u2014 or is subsequently declared \u2014 a holiday\/ closed day<\/em> for the Procuring Entity, the bid validity shall automatically be deemed to be extended up to the next working day<\/em>.<\/p>\nThe validity period should not be unreasonably long<\/em>, as keeping the tender unconditionally valid for acceptance for a longer period entails the risk of getting higher prices from the bidders<\/em>.<\/p>\n<aside class=\"note\">C<\/span> comparison: EoI validity <\/strong>not less than 60 days; RfP validity <\/strong>not less than 90 days.<\/p><\/aside>\n<h2>5.18<\/span>Opening of Bids<\/span><\/h2>\n1. Timing and the holiday Rule: Immediately after the deadline for bid submission, the Procuring Entity shall proceed to the bid opening.<\/p>\nIf the specified date of bid opening falls on \u2014 or is subsequently declared \u2014 a holiday or closed day<\/em> for the Procuring Entity, the bids shall be opened at the appointed time on the next working day<\/em>.<\/p>\nComposition of the Bid Opening Committee (boc): In offline tenders, the boc shall comprise one officer each from the Procuring Entity and associated\/ integrated finance<\/em>.<\/p>\n2. E-procurement: All tenders uploaded by bidders are received, safeguarded, and opened online on the portal<\/em>.<\/p>\n3. The offline bid-opening procedure \u2014 ten steps:<\/p>\nA) letters of authority: The authorised representatives of bidders who intend to attend the tender opening in OTE\/ GTE\/ SLTE<\/em> ARE TO bring letters of authority<\/em> From the corresponding bidder with them. The prescribed format should be given in the tender document. All bid-opening activities should be carried out demonstrably before such a gathering<\/em>.<\/p>\n(Bid Opening Attendance Sheet cum Report \u2014 G<\/span> Annexure 13 \u00b7 W<\/span> Annexure 3 \u00b7 C<\/span> Annexure 5 \u00b7 NC<\/span> Annexure 5.)<\/em><\/p>\nb) opening the tender box \u2014 and the treatment of LATE and WRONGLY-DROPPED bids:<\/p>\n<ul class=\"lst\"><li>At a prescheduled date and time, the BOC of the day should get the tender box opened after ensuring and demonstrating that the seal on the box has not been tampered with<\/em>.<\/li><li>All bids should be collected from the tender box. Bids for tenders not opening on that day should be put back into the box and the box resealed<\/em>.<\/li><li>Sometimes, tenders are dropped wrongly<\/em> Into this tender box. Such wrongly dropped tenders, with appropriate endorsement<\/em>, should be put into the appropriate box<\/em> \u2014 OR sent to the Tender Committee (TC) concerned if the date of opening is over<\/em>.<\/li><li>The bids for different tenders opening on the day (including oversized bids, which were submitted to designated officers<\/em>) should be sorted, and a count for each tender should be announced and recorded<\/em> \u2014 particularly noting any modifying\/ altering\/ withdrawal of bids<\/em>.<\/li><li>Boc should ensure and demonstrate that bid envelopes are duly sealed and untampered<\/em>.<\/li><li>Late bids should be separately counted but kept aside and not opened<\/em>. In the case of an advertised tender enquiry or Limited Tender Enquiry, late bids (i.e., bids received after the specified date and time for receipt of bids) should not be considered<\/em> \u2014 Rule 165 of GFR 2017.<\/li><\/ul>\nC) the two-stage opening: The technical bids will be opened on the pre-announced date, and the financial proposals shall remain sealed and shall be opened publicly in due course of time only for those firms that have technically qualified<\/em>.<\/p>\nD) serial numbering and initialling: After opening, every tender shall be numbered serially<\/em> (say 3\/14 \u2014 if it is the third bid out of 14 total), initialled, and dated on the first page<\/em> By the boc.<\/p>\n<ul class=\"lst\"><li>Each page of the price Schedule or letter attached to it shall also be similarly initialled \u2014 particularly the prices, delivery period, and so on, which shall also be circled and initialled along with the date<\/em>.<\/li><li>Any other page containing significant information should also be dealt with similarly.<\/li><li>Blank pages, if any, should be crossed out across and marked accordingly<\/em> By the boc.<\/li><li>The original (and duplicate, if any) copies in a tender set are to be marked accordingly by the boc.<\/li><\/ul>\ne) the alterations protocol \u2014 one of the most detailed procedural rules in the Manuals:<\/p>\n<ul class=\"lst\"><li>Erasure\/ cutting\/ overwriting\/ use of whitener\/ columns left unfilled in tenders, if any, shall be initialled along with the date and time and numbered<\/em> By the officials opening the tenders.<\/li><li>THE total number of such noticed alterations (or the absence of any alteration) should be explicitly marked on the first page of the bid<\/em>.<\/li><li>Wherever quantity\/ amount is written only in figures<\/em>, the boc should write them in words<\/em>.<\/li><li>ALL rebates\/ discounts<\/em> Should be similarly circled, numbered, and signed<\/em>.<\/li><li>In the absence of any alteration\/ overwriting\/ whitener\/ blanks, the remark \"no corrections noted\"<\/em> Should be written. Similarly, the absence of discounts should be marked with \"no discounts noted\"<\/em>.<\/li><\/ul>\nF) what the boc announces \u2014 and what it May not do: The boc is to announce the salient features of the tenders<\/em> \u2014 such as description and specification of the goods, quoted price, terms of delivery, delivery period, discount (if any), whether EMD furnished or not, and any other distinctive feature<\/em> \u2014 for the information of the representatives attending the tender opening. Clarifications by the bidders shall not be allowed or recorded<\/em> During the bid opening. The boc has no authority to reject any tender at the tender opening stage<\/em>.<\/p>\ng) Samples: PROPER sealing and codification<\/em> Needs to be done on reference samples, as well as for samples that accompany the bid. These should be kept for reference under lock and key<\/em>. Details should be recorded in the sample register<\/em> Maintained in the opening section.<\/p>\n<aside class=\"note\">Footnote (in both G and W): Please note that calling for a sample along with the bid for evaluation is strictly discouraged.<\/em><\/p><\/aside>\nh) Financial instruments: Should BE noted in the bid opening report\/ register and handed over to the finance section for safe custody and monitoring<\/em>.<\/p>\ni) The Bid Opening Report: A bid opening report containing the names of the bidders (serial number wise) and salient features of the tenders, as read out during the public opening<\/em>, will be prepared by the tender opening officers and duly signed by them along with the date and time<\/em>.<\/p>\nThe tenders that have been opened, the list of the representatives attending<\/em> The tender opening, and the bid opening report are to be handed over to the nominated procuring officer \u2014 and an acknowledgement shall be obtained from him<\/em>.<\/p>\nj) A similar procedure shall later be followed during financial bid opening<\/em> In case of multiple-envelope bidding.<\/p>\n<h2>5.19<\/span>Transparency and Protecting Third-Party Rights of Bidders<\/span><\/h2>\n1. The public interest: Objectives of transparency in e-PROCUREMENT ARE amply served if data relating to the tender and award of contract are accessible to the public<\/em>.<\/p>\n2. The participating bidders' interest: As far as the bidders who have participated in a tender (participating bidders<\/em>) are concerned \u2014 for transparency, a comparative summary of technical (compliance details) and of financial bids (including QCBS calculations, wherever applicable)<\/em> Should also be accessible to them.<\/p>\nBUT not necessarily to the public at large<\/em> \u2014 unless sought and if permissible under the RTI Act<\/em>.<\/p>\n3. The trade-secrets concern: Bidders May have genuine concerns about techno-commercial and operational trade secrets<\/em> If their full technical and financial bids are accessible to their competitors or the public at large.<\/p>\nThis concern May get aggravated in complicated EPC\/ PPP\/ consultancy procurements<\/em>.<\/p>\nTechnical\/ financial bids should not be made accessible to the public at large<\/em>, AND a call needs to be taken based on the sensitivity of details in the bids to restrict access of even participating bidders to full technical\/ financial bids of their competitors<\/em>.<\/p>\nThe decision of the Procuring Entity to share or not share the full technical bids with other participating bidders should be clearly brought out in the tender documents<\/em>.<\/p>\n4. The reserved right: However, a clause May be added to the tender documents reserving the right of the Procuring Entity and the e-procurement portal to provide access to bidders' technical\/ financial bids to other participating bidders<\/em> \u2014 in addition to the comparative summary of technical and financial bids of all participating bidders.<\/p>\n<h2>5.20<\/span>Bid Invitation Process \u2014 Risks and Mitigations<\/span><\/h2>\n<aside class=\"note\">This five-row table is reproduced in essentially identical terms in all four Manuals.<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>exceptions to an open tender process are abused<\/em>, leading to single-source processes<\/em>.<\/td><td>Rigorously follow the conditions under which open tendering can be dispensed with.<\/td><\/tr><tr><td>2<\/td><td>WHEN short-lists<\/em> Are used, the process of preparation of short-lists May be non-transparent<\/em>, AND all eligible firms May not be included, and some ineligible firms May get included<\/em>.<\/td><td>Registration of bidders\/ contractors: All major procuring departments must keep a list of registered bidders for use in restricted tendering<\/em>. Publicise even restricted bids<\/em> On your website. Bidders for LTE\/ SLTE May be transparently selected with the approval of ca<\/em>.<\/td><\/tr><tr><td>3<\/td><td>pre-qualification criteria: PQB has the potential of getting misused or being applied without considering the restrictive nature of competition<\/em>. PQC should be relevant to the quality requirements, and neither very stringent nor very lax in restricting\/ facilitating the entry of bidders. These criteria should be clear, unambiguous, exhaustive, and yet specific. Also, there should be FAIR COMPETITION.<\/td><td>G<\/span>:<\/strong>Lay down criteria when PQB tendering<\/em> is warranted. Also, model PQC criteria for diverse types of procurements should be laid down<\/em>. W<\/span> variant:<\/strong>Lay down criteria when two-stage tendering<\/em> is warranted. Also lay down model PQC criteria for diverse types of procurements.<\/strong><\/td><\/tr><tr><td>4<\/td><td>invitation to tender (an open bid) is not well publicised or gives insufficient time<\/em> \u2014 thereby restricting the number of bidders that participate<\/em>.<\/td><td>Publicity and adequate time for bid submission must be ensured. Higher-level approval should be obtained for a shorter bid submission period<\/em>.<\/td><\/tr><tr><td>5<\/td><td>evaluation criteria are not set from the beginning<\/em>, OR ARE not objective<\/em>, OR not clearly stated<\/em> In the tender documents \u2014 thereby making them prone to being abused<\/em>.<\/td><td>Objective, relevant and clearly stated evaluation criteria must be specified in the tender document<\/em>.<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>Appendix to Chapter 5 \u2014 Points of Difference Between the Four Manuals<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Chapter number<\/td><td>G\/C\/NC: Chapter 5 \u00b7 W: CHAPTER 4<\/td><\/tr><tr><td>2<\/td><td>Chapter title<\/td><td>IDENTICAL in all four \u2014 one of only two such chapters<\/strong>(W spells its risk section \"Bidding<\/strong> Invitation Process\", as do C and NC; G says \"Bid<\/strong> Invitation Process\")<\/em><\/td><\/tr><tr><td>3<\/td><td>Number of sections<\/td><td>G: 5 \u00b7 W: 15 (most granular) \u00b7 C: 8 \u00b7 NC: 5<\/td><\/tr><tr><td>4<\/td><td>Model Tender Documents<\/td><td>G\/C\/NC cite DoE MTDs (Goods & NCS Oct 2021; Consultancy April 2023)<\/em> \u00b7 W refers instead to \"relevant standard bidding documents\" and says to follow CPWD's if the organisation has none<\/td><\/tr><tr><td>5<\/td><td>Survey & soil investigation report, area grading, mapping of underground facilities to be part of the tender document<\/td><td>W ONLY<\/td><\/tr><tr><td>6<\/td><td>\"Facilities and inputs which will be provided to the contractor by the Ministry\/ Department\" as an essential aspect<\/td><td>W ONLY<\/td><\/tr><tr><td>7<\/td><td>\"Requirements as to documentary evidence\" as an essential aspect<\/td><td>W ONLY<\/td><\/tr><tr><td>8<\/td><td>Footnote defining \"HIGHEST\" bidder as the H1 QCBS scorer<\/td><td>W ONLY<\/td><\/tr><tr><td>9<\/td><td>Order of the last two tender-document sections<\/td><td>G: Financial Bid then Submission Forms \u00b7 W: Submission Forms then Financial Bid<\/td><\/tr><tr><td>10<\/td><td>Section VII titled \"DRAWING, Technical Specifications and Quality Assurance\"<\/td><td>W<\/strong> (G omits \"Drawing\")<\/td><\/tr><tr><td>11<\/td><td>The four circumstances warranting an SCC clause<\/td><td>W ONLY<\/td><\/tr><tr><td>12<\/td><td>Evaluation by item\/ lot\/ entire scope; milestone identification \"in an optimal and sequential manner\"<\/td><td>W ONLY<\/td><\/tr><tr><td>13<\/td><td>ACCESSIBILITY MANDATE \u2014 RPwD Act 2016 & Rules 2017; Harmonised Guidelines (MoHUA); IS 17802 Parts 1 & 2<\/td><td>W ONLY<\/td><\/tr><tr><td>14<\/td><td>Performance Standards & QA; Method Statement; Work Plan; Critical Material Schedule; SLA; Occupational Safety, Health and Working Conditions<\/td><td>nc only<\/td><\/tr><tr><td>15<\/td><td>The three NC Qualification Criteria and the 3\u00d740% \/ 2\u00d750% \/ 1\u00d780% volume test<\/td><td>nc only<\/td><\/tr><tr><td>16<\/td><td>Contract Manager \u2014 5 years' experience, 3 as manager<\/td><td>nc only<\/td><\/tr><tr><td>17<\/td><td>Turnover multiple of 3\u20137 times, with the stated reason that NC needs a higher multiple than Works<\/td><td>nc only<\/td><\/tr><tr><td>18<\/td><td>Upper cap on demanded turnover in higher-value procurements<\/td><td>nc only<\/td><\/tr><tr><td>19<\/td><td>Entry window for sub-contractors \u2014 repair contracts up to Rs. 60 lakh; no more than 2 contracts under relaxed credentials<\/td><td>W ONLY<\/td><\/tr><tr><td>20<\/td><td>Demerged entities \u2014 five-year use of parent credentials<\/td><td>W, C, NC<\/strong> \u2014 not in Goods<\/em><\/td><\/tr><tr><td>21<\/td><td>Conditional discounts not considered at evaluation but availed if bidder otherwise eligible<\/td><td>W ONLY<\/td><\/tr><tr><td>22<\/td><td>REoI DOCUMENT \u2014 contents, forms, EoI validity 60 days, \"do not ask for CVs or approach at EoI stage\", right to make minor ToR adjustments at RfP stage<\/td><td>C ONLY<\/td><\/tr><tr><td>23<\/td><td>RfP DOCUMENT \u2014 rFPL\/ ITC\/ AITC, rfP validity 90 days, budget not to be disclosed except in FBS, STP vs FTP, 14-day association approval, presentation carries no marks<\/td><td>C ONLY<\/td><\/tr><tr><td>24<\/td><td>\"Any procurement portal without Excel BOQ facility should endeavour to build it\"<\/td><td>C + NC<\/td><\/tr><tr><td>25<\/td><td>\"Items for which no rate is entered will not be paid for and are deemed covered\"; lump-sum breakdown requirement<\/td><td>C + NC<\/td><\/tr><tr><td>26<\/td><td>Minimum wage floor; 'NIL' price rejection; LCS for Manpower Outsourcing; police verification and good moral character of deployed manpower<\/td><td>nc only<\/td><\/tr><tr><td>27<\/td><td>e-Publishing exclusion<\/td><td>G\/C\/NC: purchase without quotation & by purchase committee \u00b7 W: works procurement through quotation<\/td><\/tr><tr><td>28<\/td><td>Fixed days for NIT issuance and tender opening; CPWD region-wise table; Rs. 2 crore one-week\/ two-week rule<\/td><td>W ONLY<\/td><\/tr><tr><td>29<\/td><td>21-day extension norm and fresh publication where amendment substantially changes requirements<\/td><td>W ONLY<\/td><\/tr><tr><td>30<\/td><td>Auto-extension \"only ONCE, not repeatedly\"<\/td><td>G states it twice; W OMITS the restriction<\/td><\/tr><tr><td>31<\/td><td>Exemption from tender document cost<\/td><td>G: MSEs and<\/em> registered units \u00b7 W: registered units only (for relevant grades of work)<\/td><\/tr><tr><td>32<\/td><td>Legal status of bidder; Rs. 10 crore JV threshold; max 3 JV partners; JV discouraged in QOP\/QCBS; PASARA and other licences; litigation history disqualification<\/td><td>W ONLY<\/strong>(in this chapter)<\/em><\/td><\/tr><tr><td>33<\/td><td>Consequence of participating in more than one bid<\/td><td>g: Disqualification of ALL<\/em> BIDS in which he is a party \u00b7 W: disqualification of the bid in which he is main\/ principal\/ lead bidder<\/td><\/tr><tr><td>34<\/td><td>One-Principal-one-agent rule and the PAC exception for multiple authorised distributors<\/td><td>G ONLY<\/td><\/tr><tr><td>35<\/td><td>OEM authorisation certificate + warranty confirmation; tender-specific authorisation for capital equipment<\/td><td>G ONLY<\/td><\/tr><tr><td>36<\/td><td>Pre-bid conference trigger<\/td><td>G: turnkey, sophisticated\/ costly equipment, large works, complex consultancy \u00b7 W: adds \"or wherever felt necessary\"<\/td><\/tr><tr><td>37<\/td><td>Participation restricted to those who downloaded the Tender Document<\/td><td>G<\/strong> (W does not state this restriction)<\/td><\/tr><tr><td>38<\/td><td>site visit<\/td><td>W, C, NC \u2014 absent from Goods<\/td><\/tr><tr><td>39<\/td><td>Bid Opening Committee = one officer each from Procuring Entity and Integrated Finance<\/td><td>stated in G<\/strong><\/td><\/tr><tr><td>40<\/td><td>Risk table row 3 mitigation<\/td><td>G: \"when PQB tendering<\/em> is warranted\" \u00b7 W: \"when Two-STAGE tendering<\/em> is warranted\"<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 5<\/p>\n<aside class=\"note\">next: Chapter 6 \u2014 forms of securities, prices, payment terms and price variations (Goods Ch. 6 \u00b7 Works Ch. 5 \u00b7 Consultancy Ch. 6 \u00b7 Non-Consultancy Ch. 6)<\/em> \u2014 the second and last chapter whose title is word-for-word identical in all four Manuals, though its contents diverge sharply: Goods alone carries Incoterms 2020 and Exchange Rate Variation; Works alone carries Mobilisation and Secured Advances and the six-fold breakdown of securities; CS and NC carry the leanest version.<\/p><\/aside><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch6\">Chapter 6<\/p><h1>Forms of Securities, Prices, Payment Terms and Price Variations<\/h1><\/header>\nMerging: Goods Ch. 6 \u00b7 Works Ch. 5 \u00b7 Consultancy Ch. 6 \u00b7 Non-Consultancy Ch. 6<\/em><\/p><h2>Structural Notes<\/span><\/h2>\n1. This is the second and last chapter whose title is WORD-FOR-WORD IDENTICAL in all four Manuals. BUT the Works Manual numbers it CHAPTER 5, not Chapter 6.<\/p>\n2. Despite the identical title, this chapter has the sharpest content divergence of any \"common\" chapter. Three whole bodies of material exist in one Manual only:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Body of material<\/th><th>Exists only in<\/th><\/tr><\/thead><tbody><tr><td>Terms of Payment for Domestic Goods \u00b7 Terms of Payment for IMPORTED Goods \u00b7 Letter of Credit \u00b7 Air Freight Charges \u00b7 Exchange Rate Variation (ERV) \u00b7 INCOTERMS 2020 \u00b7 Customs Duty \u00b7 Insurance Surety Bond and e-BG (full text) \u00b7 Warranty Bank Guarantee<\/td><td>GOODS<\/td><\/tr><tr><td>Security Deposit\/ Retention Money \u00b7 Insurances and Indemnities \u00b7 Variations and Measurement Books \u00b7 Interim Payment Certificates \u00b7 MOBILISATION ADVANCE \u00b7 Plant\/ Machinery\/ Shuttering Advance \u00b7 SECURED ADVANCE against material at site<\/td><td>WORKS<\/td><\/tr><tr><td>The multi-year performance-security reduction rule for SERVICE contracts (5\u20137 years)<\/td><td>CS + NC<\/td><\/tr><\/tbody><\/table><\/div>\n3. The seven common anchors<\/strong>, present in all four in the same order:<\/p>\n<aside class=\"note\">Forms of Security \u2192 Payment Clause \u2192 Advance Payment \u2192 Firm\/ Variable Price \u2192 Statutory Taxes\/ Duties\/ Levies \u2192 Recovery of Public Money from the bill \u2192 Payment against Time-Barred Claims<\/p><\/aside>\n<h2>Concordance for Chapter 6<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>Goods<\/th><th>Works<\/th><th>CS<\/th><th>NCS<\/th><\/tr><\/thead><tbody><tr><td>6.1<\/td><td>Bid Security\/ EMD<\/td><td>6.1.1<\/td><td>5.1.1<\/td><td>6.1.1<\/td><td>6.1.1<\/td><\/tr><tr><td>6.2<\/td><td>Performance Security\/ Guarantee<\/td><td>6.1.2<\/td><td>5.1.2<\/td><td>6.1.2<\/td><td>6.1.2<\/td><\/tr><tr><td>6.3<\/td><td>Security Deposit\/ Retention Money<\/td><td> \u2014 <\/td><td>5.1.3<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>6.4<\/td><td>Insurance Surety Bond (ISB)<\/td><td>6.1.3<\/td><td>(cross-ref)<\/em><\/td><td>(cross-ref)<\/em><\/td><td>(cross-ref)<\/em><\/td><\/tr><tr><td>6.5<\/td><td>Electronic Bank Guarantee (e-BG)<\/td><td>6.1.4<\/td><td>(cross-ref)<\/em><\/td><td>(cross-ref)<\/em><\/td><td>(cross-ref)<\/em><\/td><\/tr><tr><td>6.6<\/td><td>Warranty Bank Guarantee<\/td><td>6.1.5<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>6.7<\/td><td>Verification of Bank Guarantees<\/td><td>6.1.6<\/td><td>5.1.4<\/td><td>6.1.3<\/td><td>6.1.3<\/td><\/tr><tr><td>6.8<\/td><td>Safe Custody and Monitoring<\/td><td>6.1.7<\/td><td>5.1.5<\/td><td>6.1.4<\/td><td>6.1.4<\/td><\/tr><tr><td>6.9<\/td><td>Insurances and Indemnities<\/td><td> \u2014 <\/td><td>5.1.6<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>6.10<\/td><td>Payment Clause \/ Payment Terms<\/td><td>6.2<\/td><td>5.2<\/td><td>6.2<\/td><td>6.2<\/td><\/tr><tr><td>6.11<\/td><td>Terms of Payment \u2014 Domestic Goods<\/td><td>6.3<\/td><td> \u2014 <\/td><td>6.3 (generic)<\/em><\/td><td>6.3 (generic)<\/em><\/td><\/tr><tr><td>6.12<\/td><td>Terms of Payment \u2014 Imported Goods; LC<\/td><td>6.4<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>6.13<\/td><td>Advance Payment<\/td><td>6.5<\/td><td>5.3<\/td><td>6.4<\/td><td>6.4<\/td><\/tr><tr><td>6.14<\/td><td>Prices, Firm Price and Variable Price<\/td><td>6.6<\/td><td>5.4<\/td><td>6.5<\/td><td>6.5<\/td><\/tr><tr><td>6.15<\/td><td>Exchange Rate Variation (ERV)<\/td><td>6.7<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>6.16<\/td><td>Statutory Taxes\/ Duties\/ Levies<\/td><td>6.8<\/td><td>5.5<\/td><td>6.6<\/td><td>6.6<\/td><\/tr><tr><td>6.17<\/td><td>Incoterms 2020<\/td><td>6.9<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>6.18<\/td><td>Recovery of Public Money from the bill<\/td><td>6.10<\/td><td>5.6<\/td><td>6.7<\/td><td>6.7<\/td><\/tr><tr><td>6.19<\/td><td>Payment against Time-Barred Claims<\/td><td>6.11<\/td><td>5.7<\/td><td>6.8<\/td><td>6.8<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>6.1<\/span>Bid Security \/ Earnest Money Deposit (EMD)<\/span><\/h2>\n(Rule 170 of GFR 2017)<\/em><\/p>\n1. Purpose and when taken: To safeguard against a bidder's withdrawing or altering its\/ his bid during the bid validity period<\/em> \u2014 in the case of advertised (OTE and GTE) tenders or Special Limited Tender Enquiry<\/em> \u2014 Bid Security (also known as earnest money deposit \u2014 EMD<\/em>) is to be obtained from the bidders along with their bids<\/em>.<\/p>\n2. The amount: The amount of Bid Security should ordinarily range between two (2) to five (5) per cent of the estimated value<\/em> Of the goods\/ works to be procured.<\/p>\nThe amount, rounded off to the nearest thousands of rupees<\/em>, as determined by the Procuring Entity, is to be indicated in the tender documents<\/em>.<\/p>\n<aside class=\"note\">W<\/span> Adds an upper ceiling provision: \"The Procuring Entity May, if considered justified, stipulate an upper ceiling on the Bid Security amount, in larger tenders \u2014 so as not to restrict competition.\"<\/em><\/p><\/aside>\n3. Forms of Bid Security \u2014 and the issuing-bank divergence:<\/p>\nBid security may be obtained in the form of:<\/p>\n<aside class=\"note\">Insurance surety bonds \u00b7 account payee demand draft \u00b7 banker's cheque \u00b7 Bank Guarantee (including e-Bank Guarantee) \u00b7 or payment online in an acceptable form<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Which banks may issue<\/th><\/tr><\/thead><tbody><tr><td>G<\/span> GOODS<\/td><td>from any of the commercial banks<\/em><\/td><\/tr><tr><td>W<\/span> WORKS<\/td><td>issued\/ CONFIRMED by any of the scheduled banks<\/em> (as defined in <\/strong>section 2(e) of the RBI Act 1934)<\/strong> W<\/span> Footnote: \"a Bank Guarantee merely advised by a scheduled bank is not acceptable, in lieu of being confirmed.<\/em>\"<\/td><\/tr><\/tbody><\/table><\/div>\nthe Rs. 5 lakh threshold: In case the Bid Security is more than a threshold (rupees five lakh)<\/em>, and in case of foreign bidders in GTE tenders<\/em>, it May be in the form of a bank Guarantee<\/em> (In equivalent foreign exchange amount, in case of GTE) issued\/ confirmed from any of the commercial\/ scheduled banks in India in an acceptable form.<\/p>\n4. Validity: The Bid Security is normally to remain valid for a period of 45 (forty-five) days beyond the final bid validity period<\/em>.<\/p>\n5. Bid securing declaration (BSD) \u2014 and the divergence in consequence:<\/p>\nIn place of a Bid Security, procuring entities \u2014 after seeking approval from the Competent Authority<\/em> \u2014 May consider asking bidders to submit a bid securing declaration (BSD)<\/em>, accepting that:<\/p>\n<ul class=\"lst\"><li>If they withdraw or modify their bids during the period of validity<\/em>; or<\/li><li>if they are awarded the contract and they fail to submit Performance Security, or to sign the contract<\/em>, before the deadline defined in the tender documents<\/li><\/ul>\n \u2014 it shall be considered as a violation of the Code of Integrity<\/em>, and they shall be:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Consequence<\/th><\/tr><\/thead><tbody><tr><td>G<\/span>, C<\/span>, NC<\/span><\/td><td>\"\u2026Shall be suspended<\/strong> for the time period specified in the BSD\"<\/td><\/tr><tr><td>W<\/span> WORKS<\/td><td>\"\u2026Shall be debarred<\/strong> for the time period specified in the BSD\"<\/td><\/tr><\/tbody><\/table><\/div>\n \u2014 from being eligible to submit bids\/ proposals for contracts with the Procuring Entity.<\/p>\n6. Exemptions from Bid Security \u2014 and the MSE divergence:<\/p>\nIn appropriate cases, submission of the bid security may be exempted with the Competent Authority's (ca's) approval<\/em> \u2014 especially in the case of:<\/p>\n<aside class=\"note\">Indigenisation\/ development tenders \u00b7 limited tenders \u00b7 G<\/span> Procurements directly from the manufacturer or authorised agents \u00b7 bidders that are currently registered, and will also continue to remain registered during the bid validity period<\/em> With the concerned Ministry\/ Department\/ Procuring Entity<\/p><\/aside>\nthe statutory exemptions:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Who is exempt from payment of EMD<\/th><\/tr><\/thead><tbody><tr><td>G<\/span> GOODS<\/td><td>BOTH \u2014 micro and Small Enterprises (MSEs)<\/em> as defined in the MSE Procurement Policy, AND<\/strong>registered startups<\/em> as recognised by DPIIT<\/td><\/tr><tr><td>W<\/span> WORKS<\/td><td>ONLY \u2014 registered startups<\/em> as recognised by DPIIT (MSEs are not named)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nIn case the bidder falls into these categories, the bidder should furnish a certified copy of its valid registration details<\/em>.<\/p>\nThe scope of the registered-bidder exemption:<\/p>\n<ul class=\"lst\"><li>G<\/span>:<\/strong>\"except for MSEs<\/em>, this exemption is valid for the trade group and monetary value<\/strong> Of registration only.\"<\/li><li>W<\/span>:<\/strong>\"This exemption is valid for the monetary value<\/strong> Of registration only.\"<\/li><\/ul>\n7. Forfeiture: A bidder's Bid Security shall be forfeited<\/em> IF:<\/p>\n<ul class=\"lst\"><li>The bidder withdraws or amends its bid<\/em>, OR impairs or derogates from the tender in any respect<\/em>, within the period of validity of the tender; Or<\/li><li>THE successful bidder fails to furnish the required Performance Security or to sign the contract<\/em> Within the specified period.<\/li><\/ul>\n8. Return of bid securities \u2014 the three timelines:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Situation<\/th><th>When returned<\/th><\/tr><\/thead><tbody><tr><td>UNSUCCESSFUL bidders<\/td><td>as soon as possible after the expiry of the final bid validity period \u2014 and, at the latest, by the 30TH day after the award of the contract<\/em><\/td><\/tr><tr><td>SUCCESSFUL bidder<\/td><td>UPON receipt of Performance Security<\/em><\/td><\/tr><tr><td>In two-packet or two-stage tendering \u2014 unsuccessful bidders of the first stage<\/td><td>within 30 days of declaration of the result of the first stage<\/em> (i.e., technical evaluation, etc.) (OM No. F.1\/2\/2022-PPD dated 01.04.2022)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>6.2<\/span>Performance Security \/ Performance Guarantee<\/span><\/h2>\n(Rule 171 of GFR 2017)<\/em><\/p>\n1. Purpose: TO ENSURE due performance of the contract<\/em>, Performance Security (or performance Bank Guarantee \u2014 PBG<\/em>, OR security Deposit \u2014 SD<\/em>) is to be obtained from the successful bidder awarded the contract.<\/p>\n<aside class=\"note\">G<\/span> \u2014 the goods-specific caveat: \"Unlike contracts of works and plants, in the case of contracts for goods, the need for Performance Security <\/em>depends on the market conditions and commercial practice for the particular kind of goods.\"<\/em><\/p><\/aside>\n2. The quantum \u2014 the key numerical divergence<\/strong>(OM No. F.1\/2\/2023-PPD dated 01.01.2024)<\/em>:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Performance Security<\/th><\/tr><\/thead><tbody><tr><td>GOODS<\/td><td>Three (3) TO five (5) PER CENT of the value of the contract<\/td><\/tr><tr><td>WORKS<\/td><td>Three (3) TO ten (10) PER CENT of the value of the contract<\/td><\/tr><tr><td>non-consultancy services<\/td><td>Three (3) TO five (5) PER CENT of the contract value<\/strong>(the NC Manual expressly notes \"3 to 10% for Works\")<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">W<\/span> \u2014 the high-value moderation Rule:\"<\/strong>to ensure competition, in <\/em>higher-value tenders (say > Rs. 50 crore), Performance Security amount May be based on an <\/em>appropriate lower percentage from the band of 3% to 10%*.\"*<\/p><\/aside>\n3. The upper ceiling \u2014 the illustrative example given in G<\/span> and NC<\/span>:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Tender value<\/th><th>Illustrative ceiling on Performance Security<\/th><\/tr><\/thead><tbody><tr><td>Up to Rs. 50 crore<\/td><td>Rs. 75 LAKH<\/td><\/tr><tr><td>above Rs. 50 crore but below Rs. 300 crore<\/td><td>Rs. 3 CRORE<\/td><\/tr><tr><td>higher than Rs. 300 crore<\/td><td>The Procuring Entity may decide the amount \u2014 but not less than Rs. 3 crore<\/em> mentioned above<\/td><\/tr><\/tbody><\/table><\/div>\nhowever, procuring entities are free to decide their own upper limits\/ quantum<\/em> for Performance Security (NC<\/span> Adds: \"Or dispense with it\")<\/em> \u2014 with the approval of Competent Authority and finance concurrence, based on their perception of performance risks vis-\u00e0-vis need for competition<\/em>.<\/p>\n4. Forms of Security:<\/strong> Performance security may be furnished in the form of:<\/p>\n<aside class=\"note\">Insurance Surety Bond \u00b7 account payee demand draft \u00b7 Bank Guarantee (including e-Bank Guarantee) issued\/ confirmed from any of the commercial\/ scheduled banks in India \u00b7 or online payment in an acceptable form<\/p><\/aside>\n \u2014 safeguarding the purchaser's\/ Procuring Entity's interest in all respects.<\/p>\n5. GTE contracts and URDG 758: In the case of GTE tenders, the Performance Security should be in the same currency as the contract<\/em> And must conform to the uniform Rules for demand guarantees (URDG 758)<\/em> \u2014 an international convention regulating international securities.<\/p>\n<aside class=\"note\">Footnote (all Manuals): A set of rules developed by the International Chamber of Commerce<\/strong>, first adopted in 1992<\/strong>. The latest version URDG 758<\/strong> provides a framework for harmonising international trading practices and establishes agreed-upon rules for independent guarantees and counter-guarantees among trading partners.<\/em><\/p><\/aside>\n6. Joint ventures \u2014 W<\/span> and NC<\/span>: In case of a JV, the BG towards Performance Security shall be provided by all partners in proportion to their participation in the project<\/em>.<\/p>\n7. The no-retention Rule for goods \u2014 G<\/span> Only: Unlike the procurement of works, in the procurement of goods, the concept of taking part of the performance guarantee as money retained from the first or progressive bills of the supplier is not acceptable<\/em>.<\/p>\n8. The value threshold below which Performance Security is not needed:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Provision<\/th><\/tr><\/thead><tbody><tr><td>G<\/span> GOODS<\/td><td>\"Submission of Performance Security is not necessary<\/strong> for a tender value up to rupees 50 lakh.\"<\/strong> (The Goods Manual prints \"Rupees 50 (twenty-five) lakh\" \u2014 an evident typographical inconsistency<\/strong> between the figure and the word.)<\/em><\/td><\/tr><tr><td>NC<\/span> Non-consultancy<\/td><td>\"Submission of Performance Security May not be insisted upon<\/strong> In lower-valued contracts (say up to rupees 50 (fifty) lakh).\"<\/td><\/tr><tr><td>W<\/span> WORKS<\/td><td>(no such threshold stated)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n9. Exemption from submission of Performance Security:<\/p>\nProcuring Entity may EXEMPT the following entities (on their specific requests or otherwise<\/em>): A) govt. Ministries, departments, attached and subordinate offices, autonomous bodies<\/p>\n<aside class=\"note\">Footnote in all Manuals: \"there is no bar from taking Performance Security from CPSEs.<\/em>\"<\/p><\/aside>\n<ol class=\"lst\"><li>G<\/span> and NC<\/span> ONLY:<\/strong>THE OEM in whose favour PAC<\/em> is issued, in tenders issued against PAC.<\/li><\/ol>\n<aside class=\"note\">(Absent from Works \u2014 consistent with the fact that Works has no PAC mode at all<\/strong> \u2014 see Chapter 4 Part B.)<\/em><\/p><\/aside>\n10. When furnished and how long valid:<\/p>\nPerformance Security is to be furnished by a specified date \u2014 generally 14 (fourteen) to 28 (twenty-eight) days after notification of the award<\/em>(G<\/span> and NC<\/span> add: \"depending on the amount\")<\/em>.<\/p>\nIt should remain valid for a period of 60 (sixty) days<\/em> \u2014 or any other period mentioned in the tender documents \u2014 beyond the date of completion of all contractual obligations<\/em>, including:<\/p>\n<ul class=\"lst\"><li>G<\/span>, NC<\/span>:<\/strong>Warranty obligations;<\/li><li>W<\/span>:<\/strong>Defect liability period (DLP)\/ warranty period.<\/li><\/ul>\n11. Multi-year contracts \u2014 the proportionate-reduction Rule, and its two versions:<\/p>\nG<\/span> \u2014 GOODS version:<\/strong>In the case of goods contracts (e.g., rate contracts and other long-term contracts<\/em>) spanning over multiple years, procuring entities May consider proportionately reducing Performance Security in proportion to the balance contract period<\/em>, wherever feasible \u2014 instead of retaining the full Performance Security over the complete contract period, which May be of 2\u20133 years or more<\/em>.<\/p>\nC<\/span> + NC<\/span> \u2014 the SERVICES version, with its stated rationale:<\/p>\n<aside class=\"note\">In the case of service contracts spanning over multiple years, care needs to be taken to decide on the amount of Performance Security being sought along with the duration<\/em>.<\/p>\nIt has been observed that procuring entities retain the Performance Security over the complete service contract period, which May be of 5\u20137 years or more<\/em>. This practice puts the service provider in a difficult situation, as they have to block a substantial amount of their working capital as security for the entire duration of the contract<\/em>.<\/p>\nIn such cases the following is suggested:<\/p>\nA) the balance to be struck: The right quantum of Performance Security has to strike a balance between protecting the Procuring Entity's interest in case of default in performance<\/em> VS. Avoiding increase in tendered price and\/ or reduced competition<\/em>.<\/p>\nIf the security is LOW<\/em>, the Procuring Entity May be adversely affected if and when default occurs<\/em>. If it is HIGH<\/em>, THE extra financial cost of furnishing such security will be factored in by bidders when quoting prices, and hence the cost May increase<\/em>.<\/p>\nB) sufficient flexibility is already available in the GFR<\/em> To design the Performance Security for procurement of services \u2014 both value and duration<\/em> \u2014 duly considering the market conditions and commercial practice for the particular kind of service.<\/p>\nC) procuring entities May consider proportionately reducing Performance Security in proportion to the balance service period<\/em>, wherever feasible. Wherever it is decided to take lower or proportionally reducing ps<\/em>, tender conditions May be suitably modified for the future cases<\/em>.<\/p><\/aside>\n12. Replacement of existing securities \u2014 W<\/span> and NC<\/span>: Securities in the existing<\/em> Contracts in the form of Bank Guarantee May be permitted by the Procuring Entity to be replaced by the contractors with insurance surety bonds or e-Bank Guarantee<\/em>. Adequate safeguards \u2014 such as requiring prior submission of new forms of security before releasing the original forms of security<\/em> \u2014 should be ensured.<\/p>\n13. Forfeiture and refund \u2014 and the \"partial execution\" rule:<\/p>\nThe Performance Security will be forfeited and credited to the Procuring Entity's account in the event of a breach of contract<\/em> By the contractor.<\/p>\nIt should be refunded to the contractor without interest<\/em> After he duly performs and completes the contract in all respects\u2026<\/p>\n<aside class=\"note\">G<\/span> Only \u2014 the parenthesis that matters: *\"\u2026(<\/strong>full Performance Security should be forfeited, even if the contractor has partially executed the work)\u2026\"*<\/p><\/aside>\n\u2026BUT not later than 60 (sixty) days<\/em> Of completion of all such obligations including the warranty (W<\/span>: \"of completion of the Defect Liability Period (DLP)\/ warranty period\")<\/em> Under the contract.<\/p>\n14. Monitoring and transparency: The senior officers should monitor the return of bid\/ performance securities<\/em>, and delays should be avoided. If feasible, the details of these securities May be listed in the e-procurement portal\/ website of the Procuring Entity to make the process transparent and visible<\/em>.<\/p>\n<h2>6.3<\/span>Security Deposit \/ Retention Money [W ONLY]<\/span><\/h2>\n<aside class=\"note\">This instrument exists only in the works Manual<\/em>. Note that the Goods Manual expressly says the retention concept is \"not ACCEPTABLE\" in goods procurement (para 6.2-7 above).<\/p><\/aside>\nIN addition<\/em> To Performance Security, contracts for works usually provide for a percentage \u2014 usually five per cent \u2014 of each running bill (periodic\/ interim payment) to be withheld as Security Deposit\/ retention money until final acceptance<\/em>.<\/p>\nThe earnest money, instead of being released, May form part of the Security Deposit<\/em>.<\/p>\nThe contractor's option to replace retention money \u2014 at two stages:<\/p>\nThe contractor may, at his option<\/em>, replace the retention amount with an unconditional BG\/ Insurance Surety Bond<\/em> From a bank acceptable to the Procuring Entity at the following stages:<\/p>\nA) after the amount reaches half the value of the limit<\/em> Of retention money; And<\/p>\nb) after the amount reaches the maximum limit<\/em> Of retention money.<\/p>\nThe two-halves release Rule:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Half<\/th><th>When released<\/th><\/tr><\/thead><tbody><tr><td>One-HALF of the retention money (or BG which replaced it)<\/td><td>shall be released on the issue of the taking-over certificate<\/em>. If the taking-over certificates (TOCs) are issued in parts<\/em>, then in such proportions as the engineer May determine<\/em>, having regard to the value of such part or section<\/td><\/tr><tr><td>the other half<\/td><td>shall be released upon expiration of 60 (sixty) days<\/em> \u2014 or any other period mentioned in the tender document \u2014 after the DLP\/ warranty period of the works, or final payment, whichever is earlier<\/em> \u2014 ON certification by the engineer<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nin the event of different defect liability periods\/ warranty periods being applicable to different sections or parts or equipment incidental to works<\/em>, the expiration of defect liability period\/ warranty period shall be the latest of such periods<\/em>.<\/p>\n<h2 class=\"src-G\">6.4<\/span>Insurance Surety Bond (ISB)<\/span>G<\/span>text; W\/C\/NC cross-refer to Goods para 6.1.3<\/span><\/h2><div class=\"srcblock src-G\">\nAn Insurance Surety Bond (isb) is a three-party agreement<\/em> That provides financial assurance to one party (the beneficiary) by another party (the surety or bonding company) on behalf of a third party (the principal).<\/p>\nIsb ensures that the principal fulfils their contractual obligations<\/em>.<\/p>\n<aside class=\"note\">The key distinction from a Bank Guarantee: Unlike a Bank Guarantee, it is a type of premium-based insurance product<\/em> AND does not require a deposit of a collateral amount by the principal with the surety<\/em>.<\/p><\/aside>\nThe three parties:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Party<\/th><th>Who it is<\/th><\/tr><\/thead><tbody><tr><td>1. Principal<\/td><td>The party that obtains<\/em> the surety bond \u2014 typically the contractor or service provider<\/em> who provides the Bid\/ performance security to the Procuring Entity<\/td><\/tr><tr><td>2. Beneficiary<\/td><td>The party (procuring Entity<\/em>) that requires<\/em> the Insurance surety bond. The beneficiary seeks financial protection in case the principal fails to meet their obligations<\/td><\/tr><tr><td>3. Surety insurer<\/td><td>The bond-issuing entity (bank or insurance company)<\/em>. They act as a guarantor<\/em>, assuring the beneficiary that the principal will perform as promised<\/td><\/tr><\/tbody><\/table><\/div>\nthe default procedure and its two timelines:<\/p>\nIf the principal defaults, the surety insurer assesses the extent of default and determines the amount payable<\/em> Under the bond. If the principal does not pay within 14 DAYS<\/em>, the surety insurer pays within 45 calendar days<\/em> Of receiving the necessary documentation.<\/p>\n<\/div><h2 class=\"src-G\">6.5<\/span>Electronic Bank Guarantee (e-BG)<\/span>G<\/span>text; W\/C\/NC cross-refer to Goods para 6.1.4<\/span><\/h2><div class=\"srcblock src-G\">\n1. What it is: Electronic Bank Guarantee is a dematerialised Bank Guarantee processed on national e-governance services limited (NeSL)<\/em> \u2014 AN information utility registered with the insolvency and bankruptcy board of India<\/em>, under the aegis of the insolvency and bankruptcy code.<\/p>\nIt handles all lifecycle events of e-bg<\/em> \u2014 execution by the issuing bank, intimation to and verification by the beneficiary, amendment, invocation or release by the beneficiary, cancellation, etc.<\/p>\nThe facility is available 24\/7, including non-working days<\/em>. Beneficiaries and banks can continue to use their own BG templates<\/em>.<\/p>\nAll bidders May be encouraged to submit e-bgs instead of traditional paper-based bank guarantees<\/em>.<\/p>\n2. Creation of e-BG: The procuring Entity should ensure that the bidder\/ contractor is informed (in the tender documents) of its unique identity number (UIN \u2014 which can be allotted by its bank) and email id<\/em>.<\/p>\nA clause regarding e-bgs May be included in the tender<\/em>, acknowledging and accepting the use of e-bgs as a valid form of Bank Guarantee for the tender process. The Procuring Entity May reserve the right to verify the authenticity of e-bgs<\/em> And take necessary actions in case of discrepancies.<\/p>\nThe UIN and email id of the beneficiary are specified by the issuing bank when creating the e-bg on the NeSL portal<\/em>, upon being approached by the bidder\/ contractor. On creation of e-bg, it is stored on the NeSL portal<\/em>.<\/p>\n3. Intimation to Beneficiary: NeSL shall send a notification to the email id of the beneficiary provided by the issuing bank<\/em> (As well as the beneficiary's registered email id) during issuance or subsequent event of e-bg (amendment\/ invocation, release\/ cancellation, etc.).<\/p>\nThe Procuring Entity can receive the email notification without registration<\/em> \u2014 BUT such an email shall not have the e-bg document attachment<\/em>.<\/p>\nThe issuing Bank can also arrange to forward the e-bg to the beneficiary through the applicant or any other mechanism<\/em>.<\/p>\n4. Registration and login: Beneficiaries and their authorised representatives must register with NeSL using UIN and email id<\/em>. They must log in to the NeSL portal using the same details to view, download, verify, or release\/ invoke<\/em> THE e-BG.<\/p>\nIntegration with Government procurement portals (CPPP, GeM, State govt procurement portals<\/em>) IS being explored<\/em> To facilitate e-bg access without needing to log into the NeSL portal.<\/p>\n5. EASY VERIFICATION \u2014 the significant benefit: Verification of the e-BG stored in NeSL is sufficient<\/em>, AND verification with the issuing bank is not required<\/em>. This is a significant benefit for procuring entities<\/em>.<\/p>\n6. Invocation and release: The e-bg process through NeSL facilitates beneficiaries submitting requests for invocation or any other consents through digitally signed submission in the NeSL portal \u2014 without the need to approach the issuing bank<\/em>.<\/p>\n<\/div><h2>6.6<\/span>Warranty Bank Guarantee [G ONLY]<\/span><\/h2>\nIn the case of works and capital equipment<\/em>, there is usually a defect liability\/ warranty clause<\/em> Against defects arising from design, material, workmanship, or any omission on the part of the vendor\/ contractor<\/em> During a specified period of months from the date of commissioning or the date of dispatch in case of goods \u2014 whichever is earlier<\/em>.<\/p>\nThe general Rule: In such cases, the performance guarantee is to be valid up to 60 (sixty) days beyond the warranty period<\/em>.<\/p>\nThe permitted alternative \u2014 the swap:<\/p>\nIt is normally permissible in such a situation to allow:<\/p>\n<ul class=\"lst\"><li>THE performance guarantee<\/em> To be valid up to 60 (sixty) days beyond the delivery\/ commissioning period<\/em>; AND<\/li><li>the contractor to submit a fresh warranty Bank Guarantee of 10 (ten) per cent of the value of the goods<\/em>, in the currency of the contract, valid up to 60 (sixty) days beyond the warranty period<\/em>.<\/li><\/ul>\nIn such cases, the performance guarantee is to be returned only after satisfactory delivery\/ commissioning and receipt of such a warranty Bank Guarantee<\/em>.<\/p>\nWhen no warranty clause is called for: In the procurement of goods other than capital equipment<\/em> \u2014 and in the case of low-value capital goods, say up to rupees one lakh<\/em> \u2014 a warranty clause is not called for<\/em>.<\/p>\n<h2>6.7<\/span>Verification of Bank Guarantees<\/span><\/h2>\n1. The general Rule: Bank guarantees submitted by the bidders\/ suppliers\/ contractors\/ consultants\/ service providers as EMD\/ performance securities need to be immediately verified from the issuing bank before acceptance<\/em>.<\/p>\nThere May not be any need to get the Bank Guarantee vetted by legal\/ finance authority if it is in the specified format<\/em>.<\/p>\n The five verification guidelines<\/strong>(for BGs against EMD\/ performance security\/ advance payments and for various other purposes)<\/em>:<\/p>\nA) BG shall be as per the prescribed formats<\/em>.<\/p>\nB) the BG contains the name, designation and code number of the bank officer(s) signing the guarantee(s)<\/em>.<\/p>\nc) THE address and other details (including telephone no.) of the controlling officer of the bank<\/em> Are obtained from the branch of the bank issuing the BG \u2014 this should be included in all bgs<\/em>.<\/p>\nd) the confirmation channels \u2014 and the Works addition:<\/p>\nThe confirmation from the issuing branch of the bank is obtained in writing<\/em> Through:<\/p>\n<aside class=\"note\">G<\/span>:<\/strong>Registered post\/ speed post\/ courier\/ SFMS<\/em> On the official portal of the Procuring Entity<\/p>\nW<\/span>:<\/strong>Registered post\/ speed post\/ courier\/ official email-id of the bank<\/em>\/ SFMS on the official portal of the Procuring Entity<\/p><\/aside>\nthe bank should be advised to confirm the issuance of the bgs \u2014 specifically quoting the letter of the Procuring Entity \u2014 on the printed official letterhead of the bank<\/em>, indicating the address and other details (including telephone nos.) of the bank and the name, designation and code number of the officer(s) confirming the issuance<\/em>.<\/p>\nE) the interim route: Pending receipt of confirmation as above, confirmation can also be obtained with the help of the responsible officer at the field office which is close to the issuing branch of the bank<\/em> \u2014 who should personally obtain the confirmation<\/em> From the issuing branch and forward the confirmation report<\/em> To the concerned Procuring Entity.<\/p>\n2. Genuineness: BANK GUARANTEES \u2014 either received in physical form or electronic form<\/em> \u2014 should be verified for their genuineness following the prescribed method<\/em>, and the organisations should do due diligence on the genuineness of the bank guarantees before acceptance<\/em>.<\/p>\n3. What is not acceptable: Corporate guarantee or indemnity bond shall NOT<\/em> Be accepted for bid Security (EMD) or Performance Security, or in lieu of any other Bank Guarantee<\/em> (e.g., for advance payment\/ warranty obligations).<\/p>\n4. Please note the ease with which an e-bg can be verified<\/em> (para 6.5-5 above).<\/p>\n<h2>6.8<\/span>Safe Custody and Monitoring of EMDs, Performance Securities and Other Instruments<\/span><\/h2>\n1. The mechanism: A suitable mechanism for safe custody and monitoring<\/em> Of emds, performance securities, and other instruments should be developed and implemented by each Procuring Entity<\/em>.<\/p>\nThe ministries\/ departments shall also make institutional arrangements for taking all necessary actions on time<\/em> FOR:<\/p>\n<aside class=\"note\">Extension \u00b7 G<\/span> Forfeiture\/ encashment \u00b7 W<\/span> Encashment \u00b7 or refund of emds and performance securities, as the case May be.<\/p><\/aside>\n2. The monthly review Rule: Monitoring should also include a monthly review of all bank guarantees and other instruments expiring in the next three months<\/em> \u2014 along with a review of the progress of the corresponding contracts<\/em>.<\/p>\n3. The extension Rule and the absolute prohibition: Extension of bank guarantees and other instruments, where warranted, should be sought immediately and implemented within their validity period<\/em>.<\/p>\n<aside class=\"note\">\"bank Guarantee should never be handed over to the supplier\/ contractor for the purpose of extension of validity<\/strong>.\"<\/p><\/aside>\nsuch a system of monitoring of securities and other instruments May be computerised with automatic alerts about lapse of validity<\/em>, ETC.<\/p>\n<h2>6.9<\/span>Insurances and Indemnities [W ONLY]<\/span><\/h2><h3>6.9.1<\/span>Insurances<\/span><\/h3>\nIN works and services contracts<\/em>, the contractor must take insurances against vicarious liabilities that May arise for the Procuring Entity<\/em> \u2014 i.e., under labour laws and workmen compensation<\/em>.<\/p>\n<aside class=\"note\">(This connects directly to the Law of Agency<\/strong> at para 1.15 of this Unified Manual \u2014 the Procuring Entity is vicariously liable for the acts of its agent.)<\/em><\/p><\/aside>\n<h3>6.9.2<\/span>Indemnity\/ Indenture Bonds<\/span><\/h3>\na) why they are needed: The Procuring Entity is potentially liable for injury, damage, or loss relating to a third party due to actions by the contractor during execution of the contract<\/em>.<\/p>\nViolation of laws and regulations (e.g., environmental issues<\/em>) also May result in liabilities for the Procuring Entity.<\/p>\nThe Procuring Entity also needs to be protected against damage to its assets during contract execution<\/em>. For such potential liabilities, instead of insurance, an indemnity bond May suffice<\/em>.<\/p>\nB) the statutory definition: Indemnity bonds are defined under section 124 of the Indian Contract Act<\/em>:<\/p>\n<aside class=\"note\">\"A contract by which one party promises to indemnify the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person, is called a contract of indemnity.\"<\/em><\/p><\/aside>\nit is also called an indenture bond<\/em> \u2014 especially in the context of secured advance payments in works contracts<\/em>.<\/p>\nAn indemnity bond is a bond intended to provide financial reimbursement to the holder for any actual or claimed harm\/ loss caused by the issuer's conduct or another person's conduct<\/em>.<\/p>\nIn many cases this could be an alternative to a BG \u2014 especially where the financial implication of default cannot be estimated<\/em>.<\/p>\nSome government departments (forest, mines, geology, environment, traffic<\/em>) may also ask for such bonds to allow a Contractor to carry out work related to their jurisdiction.<\/p>\nC) the three parties:<\/p>\n<ul class=\"lst\"><li>i) ISSUER<\/strong> \u2014 is legally required to obtain<\/em> a bond.<\/li><li>ii) HOLDER<\/strong> \u2014 is the party that imposes the bonding<\/em>. In some cases, as an added confidence, a third party 'surety provider' (usually a bank) is added<\/em>.<\/li><li>iii) SURETY (say a bank or the holding company of the issuer)<\/em> \u2014 guarantees the financial compensation if the issuer dithers or fails to guarantee.<\/li><\/ul>\nd) the critical weakness \u2014 why a BG is safer:<\/p>\nWhen getting indemnity bonds, the issuer signs an indemnity agreement with the surety provider, naming the holder as the beneficiary<\/em>, and submits it to the holder. It states that the full financial responsibility in case of bond claims belongs to the issuer rather than the surety<\/em>.<\/p>\nIn case the issuer does not perform his obligations and dithers or fails to compensate<\/em> The holder as per the indemnity bond, the only recourse is a civil case in the courts<\/em>.<\/p>\nSince this is a long-drawn and expensive proposition<\/em>, a BG is considered a safer option than an indemnity bond<\/strong>.<\/p>\n<h2>6.10<\/span>Payment Clause \/ Payment Terms<\/span><\/h2><h3>6.10.1<\/span>Elements of Price<\/span><\/h3>\n1. What determines the elements: The elements of price included in the quotation of a bidder depend on:<\/p>\n<aside class=\"note\">THE nature of the goods to be supplied\/ services to be performed<\/em> And the allied services \u00b7 the location of the supplier\/ consultant<\/em> \u00b7 THE location of the user<\/em> \u00b7 terms of delivery<\/em> \u00b7 extant Rules and regulations about taxes, duties<\/em> And so on, of the seller's country and the buyer's country<\/p><\/aside>\n2. The category-specific elements:<\/p>\nG<\/span> GOODS:<\/p>\n<ul class=\"lst\"><li>Indigenous goods: The main elements May include raw material, production cost, overhead, packing and forwarding charges, margin of profit, transit insurance, excise duty and other taxes and duties as applicable.<\/li><li>Imported goods:<\/strong> in addition to elements similar to the above (other than excise duty and taxes<\/em>), there may be customs duty, import duty, landing and clearing charges, and commission to Indian agents<\/strong>.<\/li><li>Further, depending on the nature of the goods, there may be cost elements towards installation and commissioning, operator's training<\/em>, and so on.<\/li><\/ul>\nNC<\/span> Non-consultancy \u2014 the admeasurement-driven price structure (unique to nc):<\/p>\n<aside class=\"note\">In case of non-consultancy services, the elements of price would depend on whether it is an input or output admeasurement contract<\/em>:<\/p>\n<ul class=\"lst\"><li>In case of input admeasurement<\/em> \u2014 unit price of each element, service charges and taxes thereon<\/em> Shall be the elements of the price Schedule. There May be miscellaneous costs also, other than inputs<\/em>.<\/li><li>In case of output admeasurement<\/em> \u2014 unit price of services delivered and taxes thereon<\/em> Shall be the elements of the price Schedule.<\/li><\/ul><\/aside>\n3. C<\/span> + NC<\/span> \u2014 the necessity of specifying delivery terms: It is therefore necessary that \u2014 to enable the bidders to frame their quotations properly in a meaningful manner<\/em> \u2014 the tender documents should clearly specify the desired terms of delivery and also the respective duties and responsibilities to be performed by the consultant\/ service provider and the Procuring Entity<\/em>.<\/p>\n4. Cost break-up (all four): Where the price has several components \u2014 such as the price of the goods, cost of installation and commissioning, operators' training<\/em>, and so on \u2014 bidders should be asked to furnish a cost break-up indicating the applicable prices and taxes for each of such components along with the overall price<\/em>. THE payment Schedule and terms will be linked to this cost break-up<\/em>.<\/p>\n5. CURRENCY \u2014 the general rule (all four):<\/p>\nThe tender documents are to specify the currency (currencies) in which the tenders are to be priced<\/em>.<\/p>\nAs a general Rule:<\/p>\n<ul class=\"lst\"><li>Domestic bidders are to quote and accept their payment in Indian currency<\/em>;<\/li><li>Indian agents of foreign suppliers\/ consultants\/ service providers are to receive their agency commission in Indian currency<\/em>;<\/li><li>Costs of imported goods\/ services directly imported against the contract<\/em> MAY BE quoted in foreign currency (currencies) and paid accordingly in that currency<\/em>;<\/li><\/ul>\n<aside class=\"note\">(NC<\/span> phrases this as: \"costs of services which are delivered from abroad or by foreign nationals against the contract\")<\/em><\/p><\/aside>\n<ul class=\"lst\"><li>the portion of the allied work and services to be undertaken in India<\/em> (like installation and commissioning of equipment) are to be quoted and paid in Indian currency<\/em>.<\/li><\/ul>\nG<\/span> \u2014 the additional GTE currency Rule: For domestic bidding<\/em>, regardless of whether the bidder is foreign or Indian, the currency of the bid and payment should be entirely in Indian rupees<\/em>. In GTE, foreign bidders have flexibility to quote in INR or freely convertible currencies<\/em> \u2014 but prices for goods, works or services (including agency commission) performed or sourced in India must be quoted and paid for in Indian rupees<\/em>. Indian bidders are required to quote in INR only<\/em>.<\/p>\n<h3 class=\"src-G\">6.10.2<\/span>Payment to Suppliers \u2014 the Ten Obligations<\/span>G<\/span><\/h3><div class=\"srcblock src-G\">\nThe governing principle: In a supply contract, the delivery of goods is the essence of the contract for the purchaser<\/em>. Similarly, receiving timely payment for the supplies is the essence of the seller's contract<\/em>.<\/p>\nA healthy buyer-supplier relationship is based on the twin foundation of timely and quality supply on the one hand, and prompt and full payment to the supplier on the other<\/em>.<\/p>\nIt should be ensured that all payments due to the firm \u2014 including the release of the Performance Security \u2014 are made on a priority basis without avoidable delay<\/em> As per the tender\/ contract conditions:<\/p>\nA) as far as possible, the payment terms and time Schedule should be given in the contract and must be adhered to<\/em>. Any foreseeable payment delays should be communicated to the suppliers in advance<\/em>.<\/p>\nB) the tax certificate obligation: Prompt and timely provision of statutory certificates to the seller for taxes deducted at source is as much a part of the payment as the amount actually released<\/em>.<\/p>\nA detailed payment advice showing the calculations and reasons for the amounts disallowed and taxes deducted must be issued to the supplier along with payment<\/em>. As soon as possible \u2014 but not later than the date of submission of tax returns<\/em> \u2014 the Procuring Entity must provide the statutory certificates for the taxes deducted, so that he can claim set-offs and refunds<\/em> From the concerned authorities. As far as MSME suppliers<\/em> Are concerned, the MSME Act 2006<\/em> Has provisions for timely payments within 45 days<\/em>, AND A levy of penal interest for delayed payment<\/em>, AND arbitration\/ conciliation for related complaints by Micro and Small Enterprises facilitation councils<\/em>.<\/p>\nC) release of payment and settlement of the final bill should be processed through the associated\/ integrated finance<\/em> As per the terms and conditions of the contract.<\/p>\nD) the absolute bar: No payments to contractors by way of compensation or otherwise \u2014 outside the strict terms of the contract or more than the contract rates \u2014 should be allowed<\/em>.<\/p>\nE) before the payment is made, the invoice should be cross-checked with the actual receipt of material\/ assets\/ services<\/em>, to ensure that the payment matches the actual performance<\/em>.<\/p>\nF) the contractor's certificate: While claiming the payment, the contractor must certify on the bill that the payment being claimed is strictly within the terms of the contract, and that all the obligations on his part for claiming this payment have been fulfilled<\/em>.<\/p>\nThere should also be a suitable provision for verification of the authenticity of the person signing the invoice<\/em>, and so on, to claim the payment.<\/p>\n<\/div><h3>6.10.3<\/span>Payment Terms in WORKS [W ONLY]<\/span><\/h3>\n<aside class=\"note\">The Works Manual replaces the \"Payment Clause\" with a six-part \"Payment Terms\" section built around the construction cycle.<\/p><\/aside>\n1. Variations in works contract:<\/p>\nVariations can include:<\/p>\n<aside class=\"note\">Changes in the quantity, character, quality, or kind of work<\/em> \u00b7 changes in levels, lines, positions, and dimensions<\/em> \u00b7 additional work necessary for completion<\/em> \u00b7 and changes in the sequence or timing<\/em> Of construction<\/p><\/aside>\nA written procedure must be part of the contract for issuing variation instructions<\/em>.<\/p>\nThe engineer needs prior approval from the Procuring Entity before instructing a variation<\/em> \u2014 except in certain situations specified in the SCC.<\/p>\nVariations are tracked using a variations register<\/em>. The register is updated monthly and summarised<\/em> To keep all involved agencies informed.<\/p>\nThe engineer must balance the risks of quick finalisation against the costs of delays<\/em>.<\/p>\nVariations involving extra costs are valued as per the contract's relevant clauses<\/em>. The engineer consults with the Procuring Entity and contractor to agree on suitable rates for items beyond the sor<\/em>.<\/p>\nThe financial implications of variations are kept up to date<\/em>, AND any significant cost and time overruns due to deviations must be reported to the Procuring Entity<\/em>.<\/p>\n2. Measurement and payment \u2014 the Measurement Book regime:<\/p>\nAll items with financial value shall be recorded in Measurement Books (mb) or level field books<\/em>, to maintain a complete record of the work performed<\/em> Under the contract.<\/p>\nMeasurements and levels are taken and signed jointly by the designated official and the contractor<\/em>.<\/p>\nThe contractor shall \u2014 without extra charge<\/em> \u2014 provide all assistance with every appliance, labour and other things necessary for measurements and recording levels<\/em>.<\/p>\nThe contractor shall not cover (or place it beyond reach) the work without written consent from the Procuring Entity<\/em> \u2014 otherwise the contractor shall have to uncover it at their own expense, or they will not be paid for that work<\/em>.<\/p>\nOrganisations are encouraged to implement electronic Measurement Books (e-mbs) and integrate them with it-based project monitoring systems<\/em>.<\/p>\n3. Interim payments and the Interim Payment Certificate (IPC):<\/p>\nPayment provisions \u2014 including amounts to be paid, Schedule of payments, and payment procedures<\/em> \u2014 shall be indicated in the tender document and also in the contract.<\/p>\nPayment terms prescribed in the tender document should be such that the payment made to contractors at every stage is commensurate with the quantum of work done<\/em> \u2014 subject to any requirements for initial mobilisation.<\/p>\nEach month, the contractor submits a statement showing the amounts they consider themselves entitled to<\/em>.<\/p>\nThe engineer issues an interim Payment Certificate (IPC)<\/em> AFTER:<\/p>\n<aside class=\"note\">Verifying the quantity of work completed<\/em> \u00b7 reconciling field measurements<\/em> \u00b7 reviewing claims for extra work<\/em> \u00b7 checking retention amounts<\/em> \u00b7 AND making price adjustments<\/em><\/p><\/aside>\ninterim monthly payments are made based on the IPC \u2014 net of retentions, recovery of advances, and statutory deductions<\/em>.<\/p>\n<aside class=\"note\">The critical saving clause: \"recording of measurements of any item of work in the Measurement Book and\/ or its payment in the interim, on account or final bill, shall not relieve the contractor from liabilities from any over-measurement or defects noticed till completion of the defects liability period \u2014 and IPC or final completion certificates issued are subject to modification in this regard<\/strong>.\"<\/p><\/aside>\n4. Delay in payments to contractors \u2014 the four hard timelines:<\/p>\nDelays in eligible payments to contractors can lead to project delays, cost overruns, and disputes<\/em>.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>Timeline<\/th><\/tr><\/thead><tbody><tr><td>Ad-hoc payment of at least 75%<\/em> of the eligible running account bill<\/td><td>must be made within 10 working days<\/em> Of bill submission<\/td><\/tr><tr><td>The REMAINING payment<\/td><td>should be made within 28 working days<\/em><\/td><\/tr><tr><td>if payments are delayed beyond 10 working days<\/td><td>A written explanation must be submitted to the next higher authority within three working days<\/em><\/td><\/tr><tr><td>if bills are delayed by more than 30 working days<\/td><td>public authorities May include a provision for interest payments \u2014 at the rate of interest in general provident fund<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n5. Final bills: The final bill must be submitted by the contractor in the same manner as interim bills<\/em>, within a specified time after the physical completion of work and the issuance of the final certificate of completion (FCC)<\/em> By the Department\/ Ministry.<\/p>\nPayment is made after verifying the bill on the personal certificate of the officer-in-charge<\/em>, who confirms that the work has been executed as per the contract specifications and industry standards<\/em>.<\/p>\nFinal payment should be paid to the contractor within three months after completion of work<\/em>.<\/p>\n<h3>6.10.4<\/span>Modes of Payment (common to all four)<\/em><\/span><\/h3>\nA) electronic by default: Procuring entities should make payments through the electronic clearance system (ECS)<\/em> \u2014 e.g., real-time gross settlement systems (RTGS), national electronic funds transfer (NEFT), or electronic payment gateways<\/em>.<\/p>\nAs per RBI guidelines, the ECS mandate in rbi's format May be obtained at the time of supplier\/ contractor\/ consultant\/ service provider registration and in the tender document<\/em>. The Format is available with all Banks.<\/p>\nb) The exception: HOWEVER, if ECS payments are not feasible<\/em>, payments May be made in exceptional circumstances by cheque\/ demand draft drawn on a Government treasury or branch of RBI, or any scheduled bank authorised by RBI for transacting Government business<\/em>.<\/p>\nC) payment to the supplier's bank \u2014 G<\/span> Only: Such payment can also be made to the supplier's bank<\/em>, if the bills are endorsed in favour of the bank with a pre-receipt embossed on the bills with the words \"received payment\"<\/em>, and the supplier authenticates both the endorsement and pre-receipt<\/em>. In addition, an irrevocable power of attorney is to be granted by the supplier in favour of the bank<\/em>.<\/p>\nD) TReDS (all four): Trade receivables discounting system (TReDS) is an electronic platform for facilitating the financing\/ discounting of trade receivables of MSMEs through multiple financiers<\/em>.<\/p>\nThese receivables can be due from corporates and other buyers, including Government departments and PSUs<\/em>.<\/p>\nPayments can also be made through this platform to MSE suppliers\/ contractors\/ consultants\/ service providers<\/em>.<\/p>\n<h2>6.11<\/span>Terms of Payment<\/span><\/h2><h3 class=\"src-G\">6.11.1<\/span>Terms of Payment for DOMESTIC GOODS<\/span>G<\/span><\/h3><div class=\"srcblock src-G\">\n1. The governing consideration: Terms of payment May be decided by the Procuring Entity safeguarding its interest<\/em>, based on the terms of delivery, nature of goods, type of inspection, mode of transport and risks<\/em> In such situations.<\/p>\n2. The four standard payment patterns:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Terms of delivery<\/th><th>Payment term<\/th><\/tr><\/thead><tbody><tr><td>FOR destination\/ delivery at site (no installation)<\/em><\/td><td>100% on receipt and acceptance of goods by the consignee and on the production of all required documents by the supplier<\/td><\/tr><tr><td>fOR dispatching station<\/strong>(no installation)<\/em><\/td><td>60 TO 90% ON proof of dispatch<\/em> And other related documents; Balance on receipt at site and acceptance by the consignee<\/em>(depending on the value and nature of the goods, mode of transportation, and so on)<\/em><\/td><\/tr><tr><td>fOR dispatching station<\/strong>(with installation and commissioning)<\/em><\/td><td>60% on proof of dispatch along with other specified documents \u00b7 30% on receipt of the goods at the site by the consignee \u00b7 balance 10% on successful installation and commissioning and acceptance by the consignee<\/em><\/td><\/tr><tr><td>fOR destination\/ delivery at site<\/strong>(with installation and commissioning)<\/em><\/td><td>90% on receipt and acceptance of goods by the consignee at destination and on production of all required documents \u00b7 balance 10% on successful installation and commissioning and acceptance<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">the note that matters: \"generally \u2014 especially for goods requiring installation and commissioning at the site by the supplier \u2014 the desirable terms of delivery are FOR destination\/ delivery at the site, so that the supplier remains responsible for the safe arrival of the ordered goods at the site. Therefore, unless otherwise decided, ex-works or FOR dispatching station terms should be avoided<\/strong>.\"<\/p><\/aside>\n3. The six documents for payment for domestic goods:<\/p>\n<ol class=\"lst\"><li>Supplier's invoice<\/strong>indicating, inter alia, description and specification of the goods, quantity, unit price, total value<\/em>;<\/li><li>Packing list;<\/li><li>Insurance certificate;<\/li><li>Proof of dispatch: Railway receipt\/ consignment note;<\/li><li>Quality assurance certificates:<\/strong>(a) manufacturer's guarantee certificate or in-house inspection certificate; Or (b) inspection certificate issued by purchaser's inspector<\/em>;<\/li><li>Any other document(s) as and if required in terms of the contract.<\/li><\/ol>\n<\/div><h3 class=\"src-multi\">6.11.2<\/span>Terms of Payment for SERVICES<\/span>C<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\">\n1. The standard term:<\/p>\n<ul class=\"lst\"><li>C<\/span> Consultancy:<\/strong>The usual payment term is 100 (hundred) per cent on receipt and acceptance of deliverables by the Procuring Entity<\/strong><\/em>, and on production of all required documents by the consultant.<\/li><li>NC<\/span> Non-consultancy:<\/strong>The usual payment term is 100 (hundred) per cent on acceptance of delivered services by the ultimate user<\/strong><\/em>, and on production of all required documents by the service provider.<\/li><\/ul>\n<aside class=\"note\">Note the divergence: acceptance by the procuring Entity<\/em> (C) vs. by the ultimate user<\/em> (NC).<\/p><\/aside>\n2. Payment provisions \u2014 including amounts to be paid, Schedule of payments, and payment procedures<\/em> \u2014 shall be indicated in the RfP\/ tender document and also in the contract<\/em>.<\/p>\nPayments May be made at regular intervals (as under time-based contracts)<\/em> OR for agreed outputs (as under lump sum contracts)<\/em>.<\/p>\n<\/div><h2>6.12<\/span>Terms of Payment for IMPORTED GOODS, and the Letter of Credit [G ONLY]<\/span><\/h2><h3>6.12.1<\/span>Terms of Payment<\/span><\/h3>\nUsual payment terms, unless otherwise directed by ca<\/em>:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Situation<\/th><th>Payment<\/th><\/tr><\/thead><tbody><tr><td>Installation, erection, and commissioning are NOT<\/em> the responsibility of the supplier<\/td><td>100% net price is to be paid against the production of stipulated documents<\/em><\/td><\/tr><tr><td>Installation, erection and commissioning ARE<\/em> the responsibility of the supplier<\/td><td>80\u201390% of the net price against production of stipulated documents; Balance within 21\u201330 (twenty-one to thirty) days of successful installation and commissioning at the consignee's premises and acceptance by the consignee<\/em><\/td><\/tr><tr><td>agency commission<\/td><td>THE entire 100% agency commission is paid (in equivalent non-convertible Indian rupees based on bc selling rate of exchange) after all other payments have been made to the supplier in terms of the contract<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<h3>6.12.2<\/span>Modes of Payment for Imported Goods<\/span><\/h3>\n1. Statutory compliance: It should be ensured that the imports into India conform with the export-import policy in force<\/em>; FEMA; FEMA (current account transactions) Rules, 2000; And directions issued by RBI under FEMA from time to time<\/em>.<\/p>\n2. The LC route: For imported goods, payment usually happens through the letter of Credit (LC)<\/em> Opened by the State bank of India or any other commercial bank<\/em> As decided by the Procuring Entity.<\/p>\nThe amount of LC should be equal to the total payable amount<\/em> And be released as per the clauses mentioned above. If the LC is not opened, payment can also be made to the seller through a direct bank transfer<\/em> \u2014 for which the buyer has to ensure that payment is released only after the receipt of prescribed documents<\/em>.<\/p>\n3. LC for domestic bidders too: To have uniform payment clauses in GTE tenders for foreign and domestic bidders<\/em>, the Procuring Entity May include a provision in its tender conditions \u2014 on the merits of the case, especially high-value contracts for sophisticated equipment\/ machinery<\/em> \u2014 allowing payment through LC to domestic bidders also<\/em>.<\/p>\n<h3>6.12.3<\/span>Documents for Payment for Imported Goods<\/span><\/h3>\nThe documents needed from the supplier are to be clearly specified in the contract<\/em>. The paying authority also verifies the documents received from the supplier with corresponding stipulations made in the contract before releasing the payment<\/em>. Documents are specified in the Letter of Credit but usually are:<\/p>\n<ol class=\"lst\"><li>Supplier's original invoice<\/strong> giving full details of the goods, including quantity, value, and so on;<\/li><li>Packing list;<\/li><li>Certificate of country of origin<\/em> Of the goods<\/strong> \u2014 to be given by the seller, or a recognised chamber of commerce, or another agency designated by the local Government<\/em> for this purpose;<\/li><li>Quality assurance certificates:<\/strong>(a) certificate of pre-dispatch inspection by the purchaser's representative; Or (b) manufacturer's test certificate and guarantee<\/em>;<\/li><li>Certificate of insurance;<\/li><li>Bill of Lading\/ airway bill\/ rail receipt<\/strong> or any other dispatch document issued by a Government agency (like the Department of Posts) or a duly authorised agency, indicating:<\/li><\/ol>\n<aside class=\"note\">A) name of the vessel\/ carrier \u00b7 b) Bill of Lading\/ airway bill \u00b7 c) port of loading \u00b7 d) date of shipment \u00b7 e) port of discharge and expected date of arrival of goods \u00b7 f) any other document(s) as required<\/p><\/aside>\n<h3>6.12.4<\/span>Air Freight Charges and Air Freight Consolidators<\/span><\/h3>\ngoods that are required to be airlifted are to be dispatched on a 'charge forward basis'<\/em>. All air freight charges shown on the relevant consignment note as chargeable to the consignee<\/em> Are to be paid to the airline in rupees<\/em>.<\/p>\nThe consolidator device: Some organisations need to import sophisticated instruments, tools, and kindred goods<\/em>. These are small in size and very delicate\/ fragile in nature<\/em>. Such goods invariably need to be airlifted<\/em> \u2014 but, quite naturally, form a small part of the air cargo carried by aircraft<\/em>.<\/p>\nFor such imports, procuring entities May engage air freight consolidators<\/em>, WHO consolidate the small air cargo of different customers and airlift them from one airport to another<\/em>.<\/p>\nThe hiring of airfreight consolidators' services should be done transparently, following standard principles of Public Procurement<\/em>.<\/p>\n<h3>6.12.5<\/span>Letter of Credit (LC)<\/span><\/h3>\n1. The four parties to the LC:<\/p>\nThe purchaser forwards a request to its bank (called the issuing bank<\/em>) in their prescribed format, along with all relevant details, including an authenticated copy of the contract<\/em>.<\/p>\nBased on this, the issuing bank opens the LC \u2014 promising to pay the specified amount to the supplier's (beneficiary's) bank <\/strong>based solely on the documents presented by the supplier as specified in the LC conditions, without physically ascertaining the shipment of goods<\/em>.<\/strong><\/p>\nThe issuing bank arranges with a bank in the supplier's region (called the advising bank<\/em>) to notify the supplier and his bank of the availability of the LC<\/em>.<\/p>\nSince the supplier May not be comfortable with the issuing bank<\/em>, it May ask a bank he trusts (called the confirming bank<\/em>) TO add a guarantee to ensure payments by the issuing bank<\/em>.<\/p>\n2. The five risks involved:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Risk<\/th><th>Description<\/th><\/tr><\/thead><tbody><tr><td>A) commercial risk<\/td><td>non-payment due to buyer's financial distress<\/em><\/td><\/tr><tr><td>b) global risk<\/td><td>political instability \u00b7 currency fluctuations \u00b7 import\/ export restrictions \u00b7 disruptions in international logistics<\/td><\/tr><tr><td>c) documentary risk<\/td><td>discrepancies in submitted documents, or interpretation of documents and LC conditions by various parties involved<\/em><\/td><\/tr><tr><td>d) BANK RISK<\/td><td>BANK insolvency or non-performance<\/em><\/td><\/tr><tr><td>e) FRAUD<\/td><td>shipment May not be physically dispatched<\/em>, OR dispatched in damaged condition or with inadequate packaging<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n3. The four precautions:<\/p>\nA) care should be taken to ensure that all details in the LC<\/em> \u2014 such as product description, quantity, payment terms, documents to be produced, LD clause, and shipping terms<\/em> \u2014 ARE accurate and identical to those shown in the contract, to avoid discrepancies<\/em>.<\/p>\nB) frequent amendments can lead to delays and complications<\/em>. Suppliers May use their own delays in supplies by asking for unnecessary amendments to LC (or contract)<\/em>.<\/p>\nC) provisions of uniform customs and practices for documentary credits (UCP 600)<\/em> Should be adhered to while opening the LC for import into India.<\/p>\n<aside class=\"note\">Footnote: The Uniform Customs and Practice for Documentary Credits (UCPDC or simply UCP)<\/strong> is a set of rules regarding techniques and methods for handling LCs in international trade finance, standardised by the International Chamber of Commerce<\/strong> \u2014 the current version being UCP 600<\/strong>.<\/em><\/p><\/aside>\nD) the seller must present documents in time within the tenure of the LC<\/em> To receive payment, and the documents submitted must match the LC requirements<\/em>.<\/p>\n4. The six charges and who bears them:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Charge<\/th><th>Borne by<\/th><\/tr><\/thead><tbody><tr><td>A) opening charges<\/strong>(including commitment fees<\/strong> \u2014 charged for the LC's validity period \u2014 and usance fees<\/strong>, if the LC allows deferred payment)<\/em><\/td><td>the Procuring Entity<\/td><\/tr><tr><td>b) advising fee<\/td><td>paid by the issuing bank to the advising bank \u2014 and is included in charges to the Procuring Entity<\/em><\/td><\/tr><tr><td>c) confirming bank's fee (if applicable)<\/em><\/td><td>paid to the confirming bank by the supplier<\/em><\/td><\/tr><tr><td>d) extension\/ amendment fee<\/strong>(when an LC needs to be extended or amended due to changes in delivery dates, terms, or other conditions)<\/em><\/td><td>THE party requesting<\/em> The extension or amendment (purchaser or seller)<\/td><\/tr><tr><td>e) retirement charges<\/td><td>levied by the supplier's (beneficiary's) bank on the supplier<\/em> To handle payment from the issuing bank<\/td><\/tr><tr><td>f) other charges<\/td><td>reimbursements for foreign trade law-related obligations<\/em>, if any, to be borne by the party of that country<\/em>.<\/strong>For example, if there are specific legal requirements related to foreign exchange regulations or documentation in the exporting country, the Seller<\/strong> may need to cover these. If there are specific taxes for foreign exchange remittances<\/strong>, then the purchaser<\/strong> may bear such charges.<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n5. The seven types of LC:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Type<\/th><th>Meaning<\/th><\/tr><\/thead><tbody><tr><td>A) revocable LC<\/td><td>CAN BE modified or cancelled without notice<\/em><\/td><\/tr><tr><td>b) irrevocable LC<\/td><td>cannot be amended, modified, or cancelled after issue without agreement and notice to the seller<\/em>. Generally, the irrevocable LC is opened<\/em>, so that the supplier is fully assured of his payment on fulfilling his obligations<\/td><\/tr><tr><td>c) confirmed LC<\/td><td>an intermediate bank in the supplier's country (confirming bank<\/em>) adds its confirmation at the request of the seller \u2014 guaranteeing that payment would be made as per LC conditions, even if the issuing bank or seller's bank demurs<\/em><\/td><\/tr><tr><td>d) unconfirmed LC<\/td><td>there is no additional confirmation beyond the issuing bank<\/em><\/td><\/tr><tr><td>e) transferable LC<\/td><td>the seller can transfer part of the LC to another party<\/em> (e.g., as a payment to his supply chain)<\/td><\/tr><tr><td>f) back-to-back LC<\/td><td>AN intermediary (second beneficiary)<\/em> is involved in this<\/td><\/tr><tr><td>g) revolving LC<\/td><td>covers multiple transactions over an extended period<\/em>. Specifically used for repeated shipments of the same product between the same buyer (importer) and seller (exporter)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n6. Deduction of Liquidated Damages (LD) under the LC:<\/p>\nTHE delivery Schedule and LD clause (including the amount of LD) are part of the LC conditions<\/em>.<\/p>\nIf the documents submitted (inspection certificate and dispatch documents<\/em>) show that these conditions of LC are violated, LD as per the LC conditions is deducted from the payment made to the supplier<\/em>.<\/p>\nIn case the delivery date of the contract is extended to take care of a delay in supply for which the supplier is responsible<\/em>, THE tenure of the LC is also to be extended<\/em> \u2014 BUT the expense incurred for such an extension (of LC) is to be borne by the supplier<\/em>.<\/p>\n<h2>6.13<\/span>Advance Payment<\/span><\/h2>\n(Rule 172(1) of GFR 2017)<\/em><\/p>\n<h3 class=\"src-multi\">6.13.1<\/span>The Common Conditions<\/span>G<\/span>C<\/span>NC<\/span><\/h3><div class=\"srcblock src-multi\">\n1. The governing principle and its economic rationale:<\/p>\nOrdinarily, payments for services rendered or supplies made should be released only after the services have been rendered or supplies made<\/em>.<\/p>\nHowever, in exceptional situations where substantial funds are to be sunk by the contractor before payment becomes due<\/em> \u2014 considering the lower cost of funds for the Government entity as compared to the higher cost of funds for the bidder<\/strong> \u2014 advance payment with safeguards (BG or Insurance Surety Bond or Letter of Credit)<\/em> May be considered.<\/p>\nG<\/span> \u2014 the two permitted situations: A) advance payment demanded by firms holding maintenance contracts for servicing of air-conditioners, computers, other costly equipment<\/em>, etc.; B) advance payment demanded by firms against fabrication contracts, turn-key contracts, or supply of complicated tailor-made goods<\/em>, and so on.<\/p>\n2. The quantum \u2014 the three ceilings:<\/p>\nThe quantum of such advance payments should not exceed the quantum of funds to be sunk by the contractor before payment becomes due in the contract<\/em>. The quantum should not generally exceed the following limits:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Recipient<\/th><th>Ceiling<\/th><\/tr><\/thead><tbody><tr><td>Private firms<\/td><td>thirty (30) per cent of the contract value<\/td><\/tr><tr><td>a State or Central Government agency or pse<\/td><td>forty (40) per cent of the contract value<\/td><\/tr><tr><td>In the case of a MAINTENANCE CONTRACT<\/td><td>the amount should not exceed the amount payable for six months<\/em> Under the contract<\/td><\/tr><\/tbody><\/table><\/div>\nin exceptional cases, the competent Authority May relax the ceilings<\/em> Mentioned above, with prior concurrence of the associated\/ integrated finance<\/em>.<\/p>\n3. INTEREST-FREE ADVANCE \u2014 and the default penalty:<\/p>\nSince the provision of advance payment leverages the difference in interest rate<\/em> As argued above, and considering the additional cost of Bank Guarantee for advances for the bidder<\/em> \u2014 interest-free advance payments May be considered with the approval of Competent Authority and finance concurrence<\/em>.<\/p>\nWhere an interest-free advance is permitted, a clause in the tender enquiry and the contract May be stipulated that \u2014 if the contract is terminated due to default of the contractor<\/em> \u2014 the advance payment would be deemed as an interest-bearing advance at the interest rate prevailing on the date of release of advance payment (e.g., the general provident fund \u2014 GPF \u2014 rate), plus 2%, to be compounded quarterly<\/strong>.<\/p>\nIn appropriate cases, the competent authority may stipulate advance payments with suitable interest rates (e.g., the GPF rate) to be recovered along with the instalments of recovery of advance payment<\/em>.<\/p>\n4. INSTALMENTS \u2014 the minimum-two rule: The advance payment should not be made in less than two instalments<\/em>, as per the expected infusion of funds required in the contract \u2014 except in exceptional circumstances, for the reasons to be recorded<\/em>. This will keep a check on contractor mis-utilisation of full advance when the contract is delayed considerably<\/em>.<\/p>\n5. RECOVERY \u2014 the \"whichever is earlier\" rule: ADVANCE PAYMENTS \u2014 especially interest-free advances<\/em> \u2014 should be recovered (from either running bills or from the performance\/ advance payment bank guarantees<\/em>) in instalments linked to milestones or specified periods \u2014 whichever is earlier<\/em>.<\/p>\nThis would ensure that even if the contractor is not executing the work or executing it at a slow pace, recovery of advance could commence \u2014 and the scope for misuse of such advance could be reduced<\/em>.<\/p>\n6. BANK GUARANTEE \u2014 the 110% rule and its exemptions:<\/p>\nWhile making any advance payment, adequate safeguards in the form of a Bank Guarantee (or e-Bank Guarantee) of at least 110% of the advance should be obtained from the firm<\/em>.<\/p>\nIn case the advances are to be paid\/ recovered in instalments, an equal number of part bgs (with proportionate amount and validity) May be taken instead of a lumpsum BG<\/em> \u2014 WITH each BG released after a related recovery is made<\/em>.<\/p>\nAN indemnity bond is not to be considered in place of a Bank Guarantee<\/em>.<\/p>\nThe two exemptions from the BG requirement:<\/p>\n<ul class=\"lst\"><li>No Bank Guarantee should be insisted on in case advance is being given to Central Ministry\/ Department, their attached\/ subordinate offices, or the autonomous bodies attached with them<\/em>;<\/li><li>The BG May also not be taken wherever a contract has been placed on a CPSE on nomination basis<\/em>.<\/li><\/ul>\n7. What is NOT<\/em> An advance payment \u2014 an important distinction:<\/p>\n\"milestone\/ stage payments or part payments against proof of dispatch documents should not be considered as advance payments for the purpose of this Para \u2014 as these payments are made after the sinking of funds by the contractor for achieving these milestones\/ stages\/ dispatches<\/strong>.\" (Rule 172(2) GFR 2017)<\/em><\/p>\nthese should be provisioned in the tender document\/ contract<\/em>, including Bank Guarantee to be taken, if any, in case of milestone\/ stage payments.<\/p>\n8. The pre-declaration Rule: Provision of advance payment should be anticipated at the procurement planning stage<\/em>.<\/p>\nTHE quantum of advance payment and related conditions should be declared in the tender documents<\/em> \u2014 with the approval of Competent Authority and concurrence of associated\/ integrated finance.<\/p>\nIF not so declared<\/em>, the condition of advance payment for a particular bid should not be agreed to<\/em>.<\/p>\n9. Documents for advance payments: Documents needed from the supplier for advance payment release are to be clearly specified in the contract<\/em>. The paying authority should also verify the documents received from the supplier with corresponding stipulations made in the contract before releasing the payment<\/em>.<\/p>\n10. Insurance \u2014 G<\/span> ONLY:<\/p>\nIN every case where advance payment or payment against dispatch documents is to be made, or LC is to be opened<\/em>, THE condition of insurance should invariably be incorporated in the terms and conditions<\/em>.<\/p>\nWherever necessary, the goods supplied under the contract shall be fully insured in a freely convertible currency against loss or damage incidental to manufacture or acquisition, transportation, storage and delivery<\/em>.<\/p>\nIf considered necessary, insurance may cover \"All risks\", including war risks and strike clauses<\/em>. The amount covered should be sufficient to cover the overall expenditure incurred by the Procuring Entity for receiving the goods at the destination<\/em>.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Delivery basis<\/th><th>Who arranges and pays for marine\/ air insurance<\/th><\/tr><\/thead><tbody><tr><td>CIF\/ CIP\/ DDP<\/td><td>the supplier shall arrange and pay \u2014 making the purchaser the beneficiary<\/em><\/td><\/tr><tr><td>FOB\/ FAS<\/td><td>marine\/ air insurance shall be the purchaser's responsibility<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h3>6.13.2<\/span>Advance Payments in Works \u2014 the Three Distinct Advances [W ONLY]<\/span><\/h3>\n<aside class=\"note\">The Works Manual replaces the general advance-payment regime with three separate, purpose-specific advances. None of these exist in the Goods, Consultancy or Non-Consultancy Manuals.<\/p><\/aside>\n<h4>A. Mobilisation Advance<\/span><\/h4>\n1. The 10% Rule: If considered justified in certain specialised and capital-intensive works<\/em>, the contract May provide for an interest-bearing mobilisation advance<\/em> To be paid to the contractor exclusively for the costs of mobilisation, at 10 (ten) per cent of the contract price<\/strong>, on the provision by the contractor of an unconditional BG<\/em>.<\/p>\nSuch bgs shall remain effective until the advance payment has been fully repaid<\/em> \u2014 but the amount thereof shall be progressively reduced by the amount repaid by the contractor<\/em>, as indicated in the interim payment certificates.<\/p>\n2. The two instalments of 5% each:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Instalment<\/th><th>When paid<\/th><\/tr><\/thead><tbody><tr><td>FIRST 5%<\/td><td>ON commencement of the work<\/em> And provision by the contractor of the unconditional BG in respect of the advance<\/td><\/tr><tr><td>second 5%<\/td><td>ON certification by the engineer of the contractor's having achieved a financial progress of 10 (ten) per cent of the contract price<\/em> \u2014 as also provision of a BG by the contractor for this part of the advance<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">what mobilisation expenditure does NOT<\/em> Include: \"mobilisation expenditure mentioned herein shall not include the margin money and bank commission, and so on, paid by the contractor for procurement of bgs against Performance Security and mobilisation advance<\/strong>.\"<\/p><\/aside>\n3. Need-based: Provision of mobilisation advance should essentially be need-based<\/em>. Suitable delegation of authority May be done in the organisation<\/em> To take the decision for grant of the mobilisation advance \u2014 whether interest-free or interest-bearing<\/em>.<\/p>\n4. Interest-free mobilisation advance and the time-based recovery Rule:<\/p>\nInterest-free mobilisation advance May also be given wherever the situation warrants in specific cases<\/em> \u2014 BUT it should be clearly stipulated in the tender document<\/em>.<\/p>\nAND its recovery should be time-based, not linked with progress of work<\/strong>.<\/p>\nThis would ensure that even if the contractor is not executing the work or executing it at a slow pace, recovery of advance could commence, and scope for misuse of such advance could be reduced<\/em>.<\/p>\n5. Part bank guarantees \u2014 one per instalment: Part 'bank guarantees' (bgs) against the mobilisation advance should be taken in as many numbers as the proposed recovery instalments<\/em>, and should be equivalent to the amount of each instalment<\/em>.<\/p>\nThis would ensure that \u2014 at any point of time, even if the contractor's money on account of work done is not available with the organisation<\/em> \u2014 recovery of such advance could be ensured by encashing the BG for the work supposed to be completed within a particular period of time<\/em>.<\/p>\n6. There should be a clear stipulation of interest to be charged on delayed recoveries<\/em> \u2014 either due to the late submission of bill by the contractor or any other reason<\/em>, besides the reason giving rise to the encashment of BG.<\/p>\n7. THE amount of mobilisation advance, interest to be charged (if any), its recovery Schedule, and any other relevant detail should be explicitly stipulated in the tender document upfront<\/em>.<\/p>\n8. Relevant format for BG should be provided in the tender document<\/em>, which should be enforced strictly<\/em> \u2014 and the authenticity of such bgs should also be invariably verified from the issuing bank, confidentially and independently by the organisation<\/em>.<\/p>\n9. In case of 'Machinery and equipment advance'<\/em>, insurance and hypothecation to the employer should be ensured<\/em>.<\/p>\n10. The utilisation certificate Rule: Utilisation certificate from the contractor for the mobilisation advance should be obtained<\/em>. Preferably, mobilisation advance should be given in instalments<\/em> \u2014 AND subsequent instalments should be released only after getting a satisfactory utilisation certificate from the contractor for the earlier instalment<\/em>.<\/p>\n<h4>B. Plant, Machinery and Shuttering Material Advance<\/span><\/h4>\n1. The 5% advance and its five conditions:<\/p>\nAnother interest-bearing advance of five (5) per cent of the contract price<\/em> \u2014 depending on the merits of the case \u2014 May be paid against the new key construction equipment purchased for the work and brought to the site<\/strong>, if so provided in the bid documents and so requested by the contractor.<\/p>\nThe advance should normally not be more than 50 (fifty) per cent of the depreciated cost<\/em> Of such plant and machinery, which should be hypothecated to the govt. Before the payment of advance is released<\/em>.<\/p>\nThis advance shall be subject to the following conditions:<\/p>\n<ul class=\"lst\"><li>(i) the contractor shall produce satisfactory proof of payment<\/em>;<\/li><li>(ii) such equipment is considered necessary by the engineer for the works<\/em>;<\/li><li>(iii) the equipment has been verified to have been brought to site<\/em>;<\/li><li>(iv)<\/strong>the contractor gives an undertaking on stamp paper that the equipment will work <\/strong>only on that job And will <\/strong>not be removed from the site without obtaining written approval from the engineer<\/em>; and<\/strong><\/li><li>(v) the contractor furnishes a BG to cover the advance<\/em>.<\/li><\/ul>\nNo advance shall be admissible on equipment purchased under a hire-purchase scheme\/ financing arrangement, or on hired equipment<\/em>.<\/p>\n2. Rate of interest: The rate of interest shall be stipulated in the bid documents (say 10 (ten) per cent per annum)<\/em>, or as May be notified by the procuring agency from time to time.<\/p>\n3. Repayment: The repayment of advances shall be done through proportionate percentage deductions from running bill (periodic\/ interim payment)<\/em>. THE time of commencement of repayment, rate of deductions from interim payments, and time by which the advance should be fully repaid<\/em> Will be as specified in the contract.<\/p>\n4. The misappropriation consequence: All advances shall be used by the contractor exclusively for mobilisation expenditure, including the acquisition of construction-related plant and equipment<\/em>.<\/p>\nShould the contractor misappropriate any portion of the advance<\/em>, it shall become due and payable immediately, and no further advance will be made to the contractor thereafter<\/strong>. In such cases, the contractor shall also be liable for appropriate action under the contract<\/em>.<\/p>\n<h4>C. Secured Advance Against Material Brought to Site<\/span><\/h4>\n1. The 75% Rule and the 90-DAY condition:<\/p>\nSecured advance on the security of materials \u2014 which are not combustible, fragile or perishable in nature<\/strong> \u2014 brought to the site but not yet incorporated in the works<\/em> Will be made up to:<\/p>\n<aside class=\"note\">75 (seventy-five) per cent of invoice value<\/strong>, OR<\/strong>75 (seventy-five) per cent of the corresponding value of the materials determined on the basis of BOQ rates<\/strong> \u2014 whichever is less<\/strong><\/p><\/aside>\n \u2014 subject to the condition that their quantities are not excessive and shall be used within a period of 90 (ninety) days<\/em>, and subject to other stipulations in the contract.<\/p>\nThe safeguards:<\/p>\n<ul class=\"lst\"><li>The contractor will be required to sign an indenture bond, hypothecating the goods to the Procuring Entity<\/em>, and also be responsible for their safe custody<\/em>.<\/li><li>Before the advance is released, the Procuring Entity May inspect the site to ensure that the contractor has safeguarded the materials against pilferage and deterioration<\/em>.<\/li><li>It May be ensured that the contractor has not taken any loan\/ limit from banks against hypothecation of the materials against which the secured advance is claimed<\/em>. AN undertaking in this regard May also be taken from the contractor<\/em>.<\/li><\/ul>\n2. The \"paid stock only\" Rule:<\/p>\nGenerally, as per the provisions of the contracts, the contractors are required to submit proof of cost of materials and the delivery of material at site<\/em> while claiming such advances.<\/p>\nTHE stock register should be maintained from the commencement of the contract<\/em> And \u2014 unless otherwise prescribed in the contracts \u2014 the stock so considered for advance should generally be only paid stock (and not brought on credit)<\/strong>.<\/p>\nWhere the materials are supplied from a captive source of the contractor<\/em>, THE reasonableness of the valuation of such materials May be ensured<\/em>.<\/p>\n3. The 120-DAY absolute recovery Rule:<\/p>\nThe advance will be repaid from each succeeding running bill (periodic\/ interim payment) to the extent materials for which advance has been previously paid have been incorporated into the works<\/em>.<\/p>\n<aside class=\"note\">\"in all cases, the repayment of the advance will be effected after expiry of a period of 120 days since payment of advance \u2014 whether the material is consumed in the work or not<\/strong>.\"<\/p><\/aside>\n<h2>6.14<\/span>Prices, Firm Price and Variable Price<\/span><\/h2><h3>6.14.1<\/span>Prices and the Bar on Undue Profiteering [G ONLY]<\/span><\/h3>\n1. Independent pricing: The prices should be arrived at independently \u2014 without restricting competition, any consultation, communication, or agreement with any other bidder or competitor<\/em>.<\/p>\n2. Without undue profiteering \u2014 the price ceilings:<\/p>\nA) the price quoted by the bidder shall not be higher than the controlled price fixed by law<\/em> for the goods, if any.<\/p>\nWhere there is no controlled price, it shall not exceed the prices or contravene the norms for fixation of prices, if any, laid down by Government<\/em>.<\/p>\nWhere the Government has fixed no such prices or norms, it shall not exceed the price appearing in any agreement, if any, relating to price regulation by any industry<\/em>.<\/p>\n<aside class=\"note\">In any case \u2014 save for special reasons stated in the bid, if any<\/em> \u2014 the price charged shall not be higher than the maximum retail price (MRP)<\/strong>.<\/p><\/aside>\nB) the disclosure obligation and its consequence: If the price quoted is higher than the controlled price<\/em>, the bidder shall specifically mention this fact in his bid, giving reasons for quoting a higher price(s)<\/em>. IF HE fails to do so or makes any misstatement<\/em>, it shall be lawful for the Procuring Entity either<\/em>:<\/p>\n<ul class=\"lst\"><li>TO revise the price at any stage to bring it in conformity with the sub-clause above<\/em>; or*<\/li><li>TO terminate the contract for default<\/em> As per the contract, and avail all the remedies available therein \u2014 in addition to other punitive actions for violation of Code of Integrity<\/em>.<\/li><\/ul>\n3. Price Components: The price Schedule should show all the specified components of prices<\/em>. The price components for goods offered from India<\/em> And those offered from abroad should be indicated separately<\/em> In the applicable price schedules.<\/p>\n<ul class=\"lst\"><li>The components should include, as applicable: GST, transportation, insurance, and price of incidental works\/ services<\/em> as mentioned in the Schedule of Requirements.<\/li><li>For goods offered from abroad<\/em>, the price components (indicating the currency, in the case of GTE<\/em>) should include: Customs duty, marine insurance, freight, and agency commission<\/em>, as applicable.<\/li><\/ul>\n<h3>6.14.2<\/span>Fixed Price \u2014 the Threshold Divergence<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Rule<\/th><\/tr><\/thead><tbody><tr><td>G<\/span> GOODS \u00b7 C<\/span> Consultancy \u00b7 NC<\/span> Non-consultancy<\/td><td>short-term contracts where the delivery period does not extend beyond 12 (twelve) months<\/em> Should normally be concluded on a firm and fixed price<\/em> (and not subject to variation on any account) by inviting tenders accordingly<\/td><\/tr><tr><td>W<\/span> WORKS<\/td><td>short-term contracts where the delivery\/ completion period does not extend beyond 18 (eighteen) months<\/em> Should normally be concluded with a firm and fixed price<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">W<\/span> states the corollary expressly: *\"<\/strong>provision of price variation \u2026 shall not be applicable in the contracts where period of completion is eighteen months or less.\"*<\/p><\/aside>\n<h3>6.14.3<\/span>Variable Price and the Price Variation Clause (PVC)<\/span><\/h3>\n1. When a PVC May be provided:<\/p>\nG<\/span>, C<\/span>, NC<\/span>:<\/strong>In tenders with deliveries longer than 12 (twelve) months<\/em>, a Price Variation Clause (PVC) May be provided to protect the purchaser's interests \u2014 particularly for high-value (more than rupees three crore) procurements<\/em>.<\/p>\nHowever, even for shorter deliveries or lower value<\/em>, the PVC May be stipulated for items with inputs (raw material, labour<\/em>, ETC.) prone to short-term price volatility<\/strong> \u2014 especially for critical or high-value items\/ services<\/em>.<\/p>\n<aside class=\"note\">The two-sided reason: \"otherwise, there is a possibility of the contract failing [if prices rise], or the purchaser having to pay a higher price if market prices fall<\/strong>.\"<\/p><\/aside>\nW<\/span> adds the competitive rationale: *\"<\/strong>provision of price variation \u2026 will deal with rise and fall of the prices in construction materials, labour and other key inputs. \u2026 the provision of price variation clauses enables contractors to factor this reduced risk and quote more competitive prices.\"*<\/p>\n2. The \"provide your own formula\" Rule: Where it is decided to conclude the contract with a variable price, an appropriate clause incorporating a suitable price variation formula<\/em> (to take care of the changes in the input cost of labour, material, and fuel\/ power<\/em> Components) should be provided in the tender documents.<\/p>\n<aside class=\"note\">\"it is best to proactively provide our own PVC formula and base dates of indices in the tender document \u2014 to discourage different bidders from quoting different formulae and different base dates, which May lead to problems in bringing their prices on a common comparable footing<\/strong>.\"<\/p><\/aside>\n3. Sources of indices and weighting: The variations are to be calculated periodically (usually quarterly)<\/em> By using indices published by:<\/p>\n<aside class=\"note\">Governments \u00b7 chambers of commerce \u00b7 London metal exchange \u00b7 any other neutral and fair source of indices<\/em><\/p><\/aside>\nsuitable weights are to be assigned to the applicable elements \u2014 i.e., Fixed overheads and various applicable inputs (material\/ fuel\/ labour \u2014 for which reliable indices are available)<\/em>.<\/p>\nIf the production of goods\/ delivery of services\/ works needs more than one raw material<\/em>, the input cost of material May be further sub-divided into various categories of material, for which cost indices are published<\/em>.<\/p>\n<aside class=\"note\">W<\/span> adds:\"<\/strong>indices shall be appropriate for their purpose and shall relate to the contractor's proposed source of supply of inputs, on the basis of which his contract price shall have been computed.\"<\/em>W<\/span> also assigns weightages specifically to material\/ labour\/ petroleum, oils and lubricants (pol)<\/em> and cost indices\/ base prices.<\/strong><\/p><\/aside>\n4. The twelve essential elements of a PVC<\/strong>(common to all four, with minor wording variations)<\/em>:<\/p>\nI) base date & time lag: The price agreed upon should specify the base date \u2014 that is, the month and year to which the contract\/ bid price is linked<\/em> \u2014 to enable variations to be calculated with reference to the price indices prevailing in that month and year. This base date should be a few weeks\/ months (the period is called time-lag) prior to the last date of submission of bids, when the last published price indices would be available<\/em>. Time lag applies both for the base date and the date of supply\/ delivery date<\/em>, AND must be specified in the tender documents<\/em>.<\/p>\nii) ignorable variation: The price variation formula must also stipulate a minimum percentage of variation of the contract price, only above which the price variation will be admissible<\/em>.<\/p>\n<aside class=\"note\">For example \u2014 where the resultant increase is lower than, say, two per cent of the contract price, no price adjustment will be made in favour of the supplier\/ contractor.<\/em><\/p><\/aside>\niii) inordinate variation \u2014 the ceiling and the frustration route:<\/p>\nIn rare cases, prices May go up to such an extent that it May render the contract unviable for either party, thus frustrating the contract<\/em>. Therefore, the Price Variation Clause should provide for a ceiling \u2014 a percentage per annum, or an overall ceiling, or both (say 20%\/ 25% of the original price)<\/strong> \u2014 on price variations, beyond which the price variation would be capped at this level<\/em>. As soon as it comes to light that price variations are likely to go beyond this ceiling \u2014 and if the supplier\/ contractor is not agreeable to the price variation being capped<\/em> \u2014 HE MAY notify the purchaser under 'frustration of contract' provisions in the tender document\/ clause, for short-closing the contract<\/em>.<\/p>\n<aside class=\"note\">G<\/span> cross-reference: A provision for this exists in the Model Tender Document for Procurement of Goods \u2014 clause 12.2.2.<\/em>G<\/span> and C<\/span> add the escape valve: \"However, if the short-closing is not in the interest of the Procuring Entity, the Competent Authority \u2014 with the concurrence of associated\/ integrated finance \u2014 May allow the continuation of the contract by relaxing\/ removing the cap on the price variation.\"<\/em><\/p><\/aside>\niv) no PVC on advance\/ stage payments: Where advance or stage payments are made<\/em>, there should be a further stipulation that no price variations will be admissible on such portions of the price, after the dates of such payment<\/strong>.<\/p>\nV) LD is calculated on the varied price: Where deliveries are accepted beyond the scheduled delivery date, subject to levy of Liquidated Damages as provided in the contract \u2014 the LD (if a percentage of the price) will be recoverable on the price as varied by the operation of the PVC<\/strong>.<\/p>\nvi) the asymmetric default Rule \u2014 the single most important PVC provision:<\/p>\n<aside class=\"note\">No upward price variation will be admissible beyond the original scheduled delivery date for defaults on the part of the supplier\/ contractor<\/strong> (e.g., when an extension of the delivery date is with LD).<\/p>\nHowever, a downward price variation would be availed by the purchaser, as per the Denial Clause in the letter of extension of the delivery period.<\/strong><\/p><\/aside>\nvii) price variation May be allowed beyond the original scheduled delivery date<\/em> \u2014 BY specific alteration of that date through an amendment to the contract<\/em> \u2014 in cases of force Majeure or defaults by Government<\/strong>.<\/p>\nviii) import\/ duty disclosure \u2014 W<\/span> Only: Where contract execution depends on imported (subject to customs duty and foreign exchange fluctuations) and\/ or locally sourced and\/ or locally manufactured (subject to excise duty and other duties and taxes)<\/em> Goods\/ works\/ services \u2014 the percentage and element of duties and taxes included in the price should be specifically stated, along with the selling rate of foreign exchange element taken into account in the calculation of the price of the imported item<\/em>.<\/p>\nix) the clause should also contain the mode and terms of payment of the price variation admissible<\/em>.<\/p>\nX) the downward-benefit provision: The buyer should ensure a provision in the contract for the benefit of any reduction in the price in terms of the PVC being passed on to him<\/strong>.<\/p>\nxi) An illustrative PVC clause is available at:<\/strong>G<\/span> Annexure 18 \u00b7 W<\/span> Annexure 5 \u00b7 C<\/span> Annexure 16 \u00b7 NC<\/span> Annexure 10.<\/p>\nxii) the final-payment certificate \u2014 W<\/span> ONLY:<\/p>\n<aside class=\"note\">Care should be exercised in contracts providing for price variation to finalise the price before final payment is made<\/em>, after obtaining data and documents in support of claims for escalation, if any. Where no such claims are submitted by the suppliers<\/em>, AN examination of whether there has been a downward trend in the cost \u2014 which the contractor May not bring out \u2014 is required<\/em>.<\/p>\nAt any rate, an undertaking should be obtained from the contractor<\/em> To the following effect, in case it becomes necessary to make the final payment before he has submitted the required data\/ documents:<\/p>\n<aside class=\"note\">\"It is certified that there has been no decrease in the price of price variation indices and, in the event of any decrease of such indices during the currency of this contract, we shall promptly notify this to the purchaser and offer the requisite reduction in the contract rate.\"<\/em><\/p><\/aside>\nnotwithstanding the above formalities, it should be appreciated that it is in the interest of the purchaser to be vigilant about downward variation \u2014 and it is, therefore, the basic responsibility of the purchase officers to make sure that the benefits of downward variation, wherever it occurs, are fully availed of<\/strong>.<\/p><\/aside>\n5. The statutory-regulation adjustment \u2014 W<\/span> ONLY:<\/p>\n<ul class=\"lst\"><li>To the extent that full compensation for any rise or fall in costs to the contractor is not covered by the provisions of the contract<\/em>, THE unit rates and prices included in the contract shall be deemed to include amounts to cover the contingencies of such uncovered portion of rise or fall of costs<\/em>.<\/li><li>IF any statutory regulations or bye-laws come into force after submission of the bids<\/em>, which cause additional or reduced cost to the contractor<\/em> In the execution of the contract \u2014 such statutory additional or reduced cost (except which are covered in cost indices<\/strong>) shall be added to or deducted from the contract price<\/em>.<\/li><\/ul>\n<h2>6.15<\/span>Exchange Rate Variation (ERV) [G ONLY]<\/span><\/h2>\n<aside class=\"note\">This entire section exists only in the goods Manual. It has no counterpart in Works, Consultancy or Non-Consultancy \u2014 because only goods procurement routinely involves a domestic contract with a substantial imported component.<\/p><\/aside>\n1. The two triggers:<\/p>\nIn case of domestic tender contracts<\/strong> Involving:<\/p>\n<ul class=\"lst\"><li>Substantial import content (say > 25% of the total price)<\/strong>, AND<\/strong><\/li><li>a long delivery period (exceeding one year from the date of the contract)<\/strong><\/li><\/ul>\n \u2014 an appropriate exchange Rate Variation (ERV) clause<\/em> May be formulated by the Procuring Entity in consultation with its associated\/ integrated finance<\/em>, as needed, and incorporated in the tender enquiry document<\/em>.<\/p>\nIn that clause, the bidders are to be asked to indicate:<\/p>\n<ul class=\"lst\"><li>THE import content and the currency(ies) used for calculating the value of import content(s)<\/em> In their total quoted price;<\/li><li>THE base exchange rate for each such foreign currency<\/em> Used for converting the foreign exchange content into Indian rupees; And<\/li><li>THE extent of foreign Exchange Rate Variation (ERV) risk they are willing to bear<\/em>.<\/li><\/ul>\n2. The base date, the variation window, and the 2.5% band:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Element<\/th><th>Rule<\/th><\/tr><\/thead><tbody><tr><td>Base date<\/td><td>THE deadline of bid submission<\/em> \u2014 OR seven days prior to it<\/em> (the purchase organisation is to adopt a suitable date)<\/td><\/tr><tr><td>variation window<\/td><td>between the above base date and the date of remittance to the foreign principal<\/em>, OR the mid-point of manufacture of the foreign component<\/em> (the purchase organisation is to choose the appropriate date)<\/td><\/tr><tr><td>applicable exchange rate<\/td><td>according to the \"Bill currency selling\"<\/strong> Exchange rate as quoted by a source as specified \u2014 if not specified, authorised exchange bankers approved by RBI<\/em> \u2014 in the tender document on the dates in question<\/td><\/tr><tr><td>the dead band<\/td><td>no variation in price in this regard will be allowed if the variation in the rate of exchange remains within the limit of plus\/ minus 2.5 per cent<\/strong> (or any other percentage fixed by the Procuring Entity)<\/td><\/tr><\/tbody><\/table><\/div>\nERV shall be applicable only for components used to manufacture supplied goods imported after the contract date<\/em>.<\/p>\n3. Who bears it \u2014 and the asymmetric default Rule:<\/p>\nANY increase or decrease in the landed price of import content (including customs duty)<\/em> By reason of the variation in the rate of exchange shall be charged to the buyer's account during the original delivery period<\/em>.<\/p>\n<aside class=\"note\">\"in case the delivery period is revised\/ extended, ERV will not be admissible if this is due to the supplier's default \u2014 however, ERV benefits arising out of downward trends should be passed on to the Procuring Entity<\/strong>.\"<\/p>\n(Note the parallel with the PVC denial rule at para 6.14.3-4-vi above.)<\/em><\/p><\/aside>\n4. The four documents for claiming ERV: A) a bill of ERV claim enclosing the working sheet<\/em>; B) banker's certificate\/ debit advice detailing the foreign exchange paid and exchange rate<\/em>; C) copies of the import order placed on the supplier<\/em>; D) supplier's invoice for the relevant import order<\/em>.<\/p>\n<h2>6.16<\/span>Statutory Taxes \/ Duties \/ Levies<\/span><\/h2><h3>6.16.1<\/span>Goods and Services Tax (GST)<\/span><\/h3>\n1. GST registration status and GSTIN (the 15-digit registration number) \u2014 the nine rules:<\/p>\nA) all bidders should ensure that they are GST compliant<\/em>, and that their quoted tax structure\/ rates are as per the GST Act\/ Rules<\/em>.<\/p>\nB) bidder should be registered under GST<\/em> And furnish their GSTIN number and GST registration certificate<\/em> In their offer \u2014 unless they are specifically exempted from registration<\/em> Under a specific notification\/ circular\/ section\/ Rule issued by statutory authorities.<\/p>\nC) multiple verticals: If the bidder has multiple business verticals in a State and has separate registrations for each vertical<\/em>, THE GSTIN of each vertical concerned with the supply and service involved \u2014 as per the scope of the Schedule of requirements and price Schedule \u2014 shall be quoted<\/em>.<\/p>\nD) multiple states: If the supply\/ service is from multiple states<\/em>, the bidder should mention GST registration numbers for each State separately<\/em>.<\/p>\nE) composition scheme: If the bidder has opted for a composition levy under section 10 of CGST<\/em>, he should declare the fact while bidding, along with GSTIN and GST registration certificate<\/em>.<\/p>\nf) exemption from registration \u2014 and the Reverse Charge Mechanism:<\/p>\nIf a bidder is not liable to take GST registration<\/em> (i.e., having turnover below threshold<\/em>), he shall submit an undertaking\/ indemnification against tax liability<\/em>. The bidder claiming exemption shall submit a valid certificate from a practising chartered accountant (ca)\/ cost accountant with the unique document identification number (din)<\/em>, to the effect that the bidder fulfils all conditions prescribed in the notification exempting him from registration<\/em>.<\/p>\nSuch bidder\/ dealer shall not charge any GST and\/ or GST cess in the bill\/ invoice<\/em>. In such a case, applicable GST shall be deposited under reverse charge mechanism (rcm)<\/em> \u2014 or otherwise as per GST Act \u2014 by the Procuring Entity directly to concerned authorities<\/em>. Bidder should note that his offer would be loaded with the payable GST under the rcm<\/em>. Further, the bidder should notify and submit to the Procuring Entity within 15 days of becoming liable for registration under GST<\/em>.<\/p>\nG) bidders must also consider the benefits of input tax credit<\/em> Under the GST legislation, as amended from time to time, on input goods\/ capital goods\/ input services<\/em> While quoting the prices.<\/p>\nH) the jurisdictional assessing officer Rule: In their bids, the bidders shall indicate the details of their GST jurisdictional assessing officers (designation, address, email id)<\/em>. In case of a contract award, the purchaser shall immediately forward a copy of the loa\/ purchase order to the jurisdictional assessing officer<\/em> Mentioned in the bidder's bid.<\/p>\nI) the Procuring Entity's state-wise gstins shall be indicated in tender documents<\/em>.<\/p>\n2. HSN code and GST rate \u2014 the four rules:<\/p>\na)<\/strong>if provided in the tender document, the HSN (harmonized system of nomenclature) code for the goods is <\/strong>only indicative. <\/strong>The bidder shall be responsible for ensuring that they quote the correct HSN code and corresponding GST rate<\/em>.<\/strong><\/p>\nB) the separate-disclosure Rule: As per the GST Act, the bid and contract must show the GST tax rates (and GST cess if applicable) and GST amount explicitly and separately from the bid\/ contract price (exclusive of GST)<\/em>.<\/p>\nSo, if a bidder asks for GST (and GST Cess if applicable) to be paid extra, the rate and nature of such applicable taxes should be shown separately<\/em>.<\/p>\nBidders should quote 'GST' if payable extra on the total basic rate of each cost element<\/em>, AND quote GST in '%' inclusive of cess<\/em>.<\/p>\nC) if the price is stated to include<\/em> GST, the bidder must declare the current GST rate (and GST cess, as applicable) included in the price<\/em>.<\/p>\nD) the blank-column Rule \u2014 a trap for bidders: If GST, other taxes, or duties are not specified, or the column is left blank<\/em> In the price Schedule, it shall be presumed that no such tax\/ levy is applicable or payable by the Procuring Entity. No Statutory Variation in GST shall be paid in such a case<\/strong>.<\/p>\n3. Refund from supplier: Sometimes, the supplier \u2014 after claiming and receiving reimbursements for GST from the purchaser<\/em> \u2014 applies to the concerned authorities for refunds, on genuine grounds, of certain portions of such duties and taxes paid by it, and receives the allowable refunds<\/em>. Such refunds contain the purchaser's share also<\/strong> (Out of the payments already made by the purchaser to that supplier). The tender enquiry document and the contract are to contain suitable provisions for obtaining such refunds from the supplier<\/em>.<\/p>\n4. The three statutory duties\/ taxes\/ levies to be entirely borne by the bidder \u2014 including any statutory variations thereon, for which the Procuring Entity would not be responsible:<\/p>\nA) personal and corporate tax: Bidder shall bear all personal\/ corporate taxes imposed on owners\/ company\/ joint venture\/ subcontractors or their employees<\/em>.<\/p>\nB) taxes on sub-contractors, vendors: Bidder shall bear all taxes \u2014 including GST<\/em> \u2014 as May be imposed on the contractor or supply-chain (sub-contractors, vendors, etc.)<\/em>.<\/p>\nC) duties\/ taxes on raw materials: The Procuring Entity is not liable for any claim from the contractor on account of fresh imposition and\/ or increase (including statutory increase) of GST, customs duty, or other duties on raw materials and\/ or components used directly in the manufacture of the contracted goods, taking place during the pendency of the contract<\/strong> \u2014 unless such liability is expressly agreed to in terms of the contract<\/em>.<\/p>\n5. Applicability to imported goods\/ services: Following the implementation of GST, the import of commodities shall not be subject to erstwhile applicable duties<\/em> LIKE safeguard duty, education cess, basic customs duty, anti-dumping duty<\/em>, ETC. All these supplementary customs duties are subsumed under GST<\/strong>.<\/p>\nIf imported into India, the supply of commodities, services, or both shall be considered as supply under inter-state commerce\/ trade, and shall attract integrated tax (IGST)<\/em>. THE IGST rate and GST cess shall be applicable on the 'customs assessable value' plus the 'basic customs duty applicable thereon'<\/em>.<\/p>\n<h3>6.16.2<\/span>Customs Duty on Imported Goods [G ONLY]<\/span><\/h3>\n1. The disclosure and the import-in-whose-name Rule: Regarding imported goods, the bidder shall specify the rate and the total amount of customs duty payable thereon<\/em>. Bidder shall also indicate the corresponding Indian tariff classification (ITC-HS)<\/em> Applicable for the goods. Any material imported directly from the supplier or manufacturer should be under the name of the Procuring Entity<\/em>. In this regard, all formalities will be completed by the Procuring Entity by engaging a customs house agent (CHA) and bearing the cost thereof<\/em>.<\/p>\n2. The three customs-duty exemptions: The Government has allowed exemption from payment of customs duty on certain types of goods for use by the following organisations: a) scientific and technical instruments imported by research institutes<\/em>; B) hospital equipment imported by Government hospitals<\/em>; C) consumable goods imported by a public-funded research institution or a university<\/em>.<\/p>\n3. The two certificates required: However, to avail of such exemptions, the organisations are required to produce \u2014 at the appropriate time<\/em> \u2014 :<\/p>\n<aside class=\"note\">A \"Customs Duty Exemption\" certificate<\/strong><\/strong>AND A \"Not Manufactured in India\" certificate<\/strong><\/p><\/aside>\n4. The MOOWR scheme 2019:<\/p>\nTHE manufacturing and other operations in a warehouse regulations (MOOWR) scheme 2019<\/em> Was introduced by the Central board of indirect taxes and customs (CBIC)<\/em> TO promote India as a global manufacturing hub and bolster the \"Make in India\" initiative<\/em>.<\/p>\nThis scheme allows importers to bring raw materials and capital goods into the country without paying customs duties<\/em>.<\/p>\n<aside class=\"note\">Notably, the MOOWR scheme is unique in that it is delinked from export obligations<\/strong> \u2014 extending benefits even to importers who intend to use goods for sale within the domestic market<\/em>.<\/p><\/aside>\nThese imported materials can then be utilised for manufacturing and other operations within private bonded warehouses<\/em>. Under the MOOWR Scheme: a) import duty is deferred<\/strong> When raw materials and capital goods are imported into India; B) if these materials are used for exports<\/strong>, THE deferred duty is exempt<\/strong>; C) if the inputs are utilised for goods sold in the domestic market (i.e., domestic tariff area)<\/strong>, import duty for such inputs used for domestic clearance must be paid<\/em>; D) import duty on capital goods<\/strong> is paid if they are cleared for the domestic market<\/em>.<\/p>\n5. THE relevant contemporary instructions covering these aspects should be incorporated in the tender enquiry document and the resultant contract<\/em>.<\/p>\n<h3>6.16.3<\/span>Deduction of Income Tax, etc., from Payments<\/span><\/h3>\nIf applicable under relevant tax laws and Rules, the Procuring Entity shall deduct from all payments and deposit required taxes to respective authorities<\/em>.<\/p>\n<h3>6.16.4<\/span>Statutory Variation Clause<\/span><\/h3>\n<aside class=\"note\">The Goods and Works Manuals cross-refer to their contract-management chapters. The Consultancy and Non-Consultancy Manuals set out the clause in full \u2014 reproduced here.<\/p><\/aside>\nUnless otherwise stated in the contract, statutory Variation in applicable GST rate<\/strong> \u2014 only during the period from the date of submission of the tender to the date of acceptance of the tender (that is, placement of the contract), and during the original\/ re-fixed delivery period of the contract<\/strong> \u2014 shall be borne by the Procuring Entity<\/strong>.<\/p>\nThe benefit of any reduction in the GST rate must be passed on to the Procuring Entity during the original and extended delivery period<\/em>.<\/p>\n<aside class=\"note\">(Note the asymmetry: increases are borne by the Procuring Entity only during the original\/ re-fixed<\/strong> period, but reductions must be passed on during the original AND extended<\/strong> period.)<\/em><\/p><\/aside>\nhowever, GST rate amendments shall be considered for the quoted HSN code only<\/strong>, against documentary evidence<\/em> \u2014 provided such an increase in GST rates is after the tender submission date<\/em>.<\/p>\nHowever, the statutory Variation shall not be applicable for any misquotation of the HSN number or incorrect GST rate by the bidder<\/strong>.<\/p>\n<aside class=\"note\">Note on \"re-fixed delivery period\": \"Re-fixed delivery period means the fresh delivery period which is arrived at by recasting the original contractual delivery period, after taking care of the lost period for which the supplier\/ service provider was not responsible.\"<\/em><\/p><\/aside>\n<h2>6.17<\/span>Incoterms 2020 \u2014 Terms of Delivery [G ONLY]<\/span><\/h2>\n<aside class=\"note\">This section exists only in the goods Manual. Incoterms govern the passing of title and risk in a sale of goods; they have no analogue in works or services contracts.<\/p><\/aside>\n1. The eleven INCOTERMS \u2014 seven for any mode, four for sea\/ inland waterway:<\/p>\n<h3>A. Rules for Any Mode of Transport (Seven)<\/em><\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>Incoterm<\/th><th>Applicable to<\/th><\/tr><\/thead><tbody><tr><td>EXW \u2014 ex-works<\/strong>(named place of delivery)<\/em><\/td><td>the seller makes the goods available at their premises or another named place<\/em><\/td><\/tr><tr><td>FCA \u2014 free carrier<\/strong>(named place of delivery)<\/em><\/td><td>the seller delivers the goods \u2014 cleared for export<\/em> \u2014 at a named place to a carrier or to another party nominated by the buyer<\/em><\/td><\/tr><tr><td>CPT \u2014 carriage paid to<\/strong>(named place of delivery)<\/em> \u2014 earlier C&F \u2014 Cost and Freight<\/strong><\/em><\/td><td>the seller is responsible for export clearance and freight costs for carriage to the named place of destination<\/em><\/td><\/tr><tr><td>CIP \u2014 carriage and insurance paid to (named place of delivery)<\/em><\/td><td>in addition to CPT responsibilities, the seller is required to obtain *insurance for the goods while in transit for 110% of the contract value under institute cargo clauses (a) of the institute of London underwriters\u200c<\/td><\/tr><tr><td>DAP \u2014 delivered at place<\/strong>(named place of delivery)<\/em><\/td><td>the seller delivers the goods \u2014 ready for unloading<\/strong> \u2014 at the named place of destination<\/td><\/tr><tr><td>DPU \u2014 delivered at place unloaded (named place of delivery)<\/em> \u2014 earlier DAT \u2014 Delivered At Terminal<\/em><\/td><td>in addition to DAP responsibilities, the seller is required to unload the goods<\/strong> At the named place of destination<\/td><\/tr><tr><td>DDP \u2014 delivered duty paid<\/strong>(named place of delivery)<\/em><\/td><td>in addition to DAP responsibilities, the seller is required to clear the goods through customs and pay import duties and taxes<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h3>B. Rules for Sea and Inland Waterway Transport (Four)<\/em><\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>Incoterm<\/th><th>Applicable to<\/th><\/tr><\/thead><tbody><tr><td>FAS \u2014 free alongside ship<\/td><td>alongside the buyer's vessel at the named port of shipment, the seller is to clear the goods for export<\/em>. However, if the parties wish the buyer<\/em> To clear the goods for export, explicit wording should be added to the contract<\/strong><\/td><\/tr><tr><td>FOB \u2014 free on-board<\/td><td>seller to arrange for export clearance and deliver goods on board a vessel that is to be designated by the buyer<\/em><\/td><\/tr><tr><td>CFR \u2014 cost and freight<\/td><td>in addition to FOB responsibilities, the seller pays for the carriage of the goods up to the named port of destination<\/em><\/td><\/tr><tr><td>CIF \u2014 cost, insurance and freight<\/td><td>in addition to CFR responsibilities, the seller is required to obtain *insurance for the goods while in transit for 110% of the contract value under institute cargo clauses (a)*<\/td><\/tr><\/tbody><\/table><\/div>\n2. History and the title-of-goods principle:<\/p>\nIN USE SINCE 1936<\/em>, INCOTERMS have been last revised in 2020<\/em>. Out of the 11 INCOTERMS options, seven apply to all modes of transportation, whereas four apply only to sea and inland waterway transportation<\/em>.<\/p>\nIncoterms rules describe the tasks, costs and risks involved in the delivery of goods from the seller to the buyer<\/em>.<\/p>\n<aside class=\"note\">The governing principle: \"the risk to goods (damage, loss, shortage, and so on) is the responsibility of the person who holds the 'title of goods' at that point in time. This May be different from the actual physical possession of such goods<\/strong>.\"<\/p><\/aside>\nnormally, unless otherwise defined, the title of goods passes from the supplier to the purchaser in accordance with the terms of delivery (for, CFR, among others)<\/em>. The terms of delivery, therefore, specify when the ownership and title of goods pass from the seller to the buyer, along with the associated risks<\/em>.<\/p>\nThe four allocations made by terms of delivery: A) control and care of the goods while in transit<\/em>; B) carrier selection, transfers, and related issues; C) costs of freight, insurance, taxes, duties and forwarding fees<\/em>; D) documentation, problem resolution and other related issues.<\/p>\n3. The spectrum: The options range from one extreme \u2014 the buyer takes full responsibility from the point of departure (EXW)<\/strong> \u2014 to the other extreme \u2014 the seller is responsible all the way through delivery to the buyer's location (DDP)<\/strong>(Annexure 19 of the Goods Manual)<\/em>.<\/p>\n4. The four special definitions within INCOTERMS:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Term<\/th><th>Special meaning<\/th><\/tr><\/thead><tbody><tr><td>Delivery<\/td><td>THE point in the transaction where the risk of loss or damage to the goods is transferred from the seller to the buyer<\/em><\/td><\/tr><tr><td>FREE<\/td><td>seller has an obligation to deliver the goods to a named place for transfer to a carrier<\/em><\/td><\/tr><tr><td>carrier<\/td><td>any person who, in a contract of carriage, is nominated by seller\/ buyer for transport by any mode<\/em><\/td><\/tr><tr><td>to clear for export<\/td><td>TO file the shipper's export declaration and get an export permit<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n5. The Indian national-transport terms: Within national transportation, certain terms have assumed acceptance due to usage<\/em>:<\/p>\n<ul class=\"lst\"><li>Free on rail (for)* has two versions: *For\/ dispatching* and *for\/ destination<\/strong>(the buyer is responsible from the nominated point mentioned till arrival point, as in DAP above<\/strong>)<\/em>;<\/li><li>On similar lines, infrequently, free on truck (fot) is also used in road transport<\/em>.<\/li><\/ul>\n<h2>6.18<\/span>Recovery of Public Money from the Supplier's\/ Contractor's\/ Consultant's\/ Service Provider's Bill<\/span><\/h2>\n<aside class=\"note\">Section titles: G<\/span>\u2026from Suppliers' Bill<\/em> \u00b7 W<\/span>\u2026from Contractor's Bill<\/em> \u00b7 C<\/span>\u2026from Consultant's Bill<\/em> \u00b7 NC<\/span>\u2026from Service Provider's Bill<\/em>.<\/p><\/aside>\nSometimes, requests are received from a different Ministry\/ Department<\/em> FOR withholding some payment from a supplier\/ contractor out of the payment or securities due to it against a contract<\/strong>.<\/p>\nSuch requests are to be examined by the Procuring Entity (which has received the request) on the merits of the case for further action<\/em>.<\/p>\n<aside class=\"note\">The liability Rule: \"it will, however, be the responsibility of the Ministry\/ Department asking for withholding of payment to defend the Government against any legal procedure arising out of such withholding, and for payment of any interest thereof<\/strong>.\"<\/p><\/aside>\n<h2>6.19<\/span>Payment against Time-Barred Claims<\/span><\/h2>\n1. The three-year Rule: Ordinarily, all claims against the Government are time-barred after a period of three years, calculated from the date when the payment falls due<\/em> \u2014 unless the payment claim has been under correspondence<\/strong>.<\/p>\n2. The admission-of-liability exception: However, the limitation is saved if there is an admission of liability to pay \u2014 and a fresh period of limitation starts from the time such admission is made<\/strong>.<\/p>\n3. The procedure: THE drill to be followed while dealing with time-barred claims will be decided by the Procuring Entity concerned, in consultation with the paying authority<\/em>.<\/p>\n4. The absolute bar on the paying authority: The paying authority is to ensure that no payment against such a time-barred claim is made till a decision has been taken in this regard by the ca<\/strong>.<\/p>\n<h1>Appendix to Chapter 6 \u2014 Points of Difference Between the Four Manuals<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Chapter number<\/td><td>G\/C\/NC: Chapter 6 \u00b7 W: CHAPTER 5<\/td><\/tr><tr><td>2<\/td><td>Chapter title<\/td><td>IDENTICAL in all four \u2014 the second and last such chapter<\/td><\/tr><tr><td>3<\/td><td>Issuing banks for Bid Security<\/td><td>g: *Commercial banks \u00b7 W: *SCHEDULED BANKS* (s.2(e) RBI Act 1934), with the footnote that a BG *MERELY ADVISED* is not acceptable in lieu of being *CONFIRMED<\/strong><\/td><\/tr><tr><td>4<\/td><td>Consequence under a Bid Securing Declaration<\/td><td>G\/C\/NC: bidder shall be *SUSPENDED \u00b7 W: bidder shall be *DEBARRED<\/strong><\/td><\/tr><tr><td>5<\/td><td>Who is EXEMPT from EMD<\/td><td>G: *MSEs <\/strong>AND DPIIT-recognised Start-ups \u00b7 W: *only DPIIT-recognised Start-ups<\/strong><\/td><\/tr><tr><td>6<\/td><td>Scope of the registered-bidder EMD exemption<\/td><td>G: valid for trade group and monetary value<\/em> \u00b7 W: valid for monetary value<\/em> only<\/td><\/tr><tr><td>7<\/td><td>Upper ceiling on Bid Security in larger tenders<\/td><td>W ONLY<\/td><\/tr><tr><td>8<\/td><td>performance Security quantum<\/td><td>G: 3\u20135%<\/strong> \u00b7 W: 3\u201310%<\/strong> \u00b7 NC: 3\u20135%<\/strong>(NC expressly notes \"3 to 10% for Works\")<\/em><\/td><\/tr><tr><td>9<\/td><td>Lower percentage from the 3\u201310% band for tenders > Rs 50 crore<\/td><td>W ONLY<\/td><\/tr><tr><td>10<\/td><td>Rs 75 lakh \/ Rs 3 crore illustrative ceiling table<\/td><td>G + NC<\/td><\/tr><tr><td>11<\/td><td>\"\u2026or dispense with it\" \u2014 power to waive performance security entirely<\/td><td>nc only<\/td><\/tr><tr><td>12<\/td><td>Threshold below which Performance Security not needed<\/td><td>G: Not necessary up to Rs 50 lakh (printed as \"Rs. 50 (twenty-five) lakh\" \u2014 a source typo)<\/em> \u00b7 nc: May not be insisted upon up to Rs 50 lakh \u00b7 W: no threshold<\/td><\/tr><tr><td>13<\/td><td>OEM in whose favour PAC issued \u2014 exempt from Performance Security<\/td><td>G + NC<\/strong>(absent from W, consistent with Works having no PAC mode)<\/em><\/td><\/tr><tr><td>14<\/td><td>Validity beyond completion of obligations<\/td><td>G\/NC: including warranty<\/em> obligations \u00b7 W: including defect liability period (DLP)\/ warranty<\/em><\/td><\/tr><tr><td>15<\/td><td>\"Full performance security should be forfeited even IF the Contractor has PARTIALLY EXECUTED the work\"<\/td><td>G ONLY<\/td><\/tr><tr><td>16<\/td><td>Retention of part of Performance Guarantee from progressive bills<\/td><td>G: expressly \"not acceptable<\/em>\" for goods \u00b7 W: this IS the Security Deposit\/ Retention Money regime<\/td><\/tr><tr><td>17<\/td><td>Multi-year proportionate reduction of Performance Security<\/td><td>G: framed for Rate Contracts, 2\u20133 years<\/em> \u00b7 C\/NC: framed for service contracts of 5\u20137 years or more<\/em>, with the working-capital rationale<\/td><\/tr><tr><td>18<\/td><td>JV \u2014 BG in proportion to participation<\/td><td>W + NC<\/td><\/tr><tr><td>19<\/td><td>Replacement of existing BGs with ISB\/ e-BG<\/td><td>W + NC<\/td><\/tr><tr><td>20<\/td><td>Security Deposit\/ retention money (5% of each running bill; two-stage replacement; two-halves release)<\/td><td>W ONLY<\/td><\/tr><tr><td>21<\/td><td>Insurance Surety Bond full text (three parties; 14-day\/ 45-day rule)<\/td><td>G ONLY<\/strong>(others cross-refer)<\/em><\/td><\/tr><tr><td>22<\/td><td>Electronic Bank Guarantee full text (NeSL, UIN, 24\/7, verification without issuing bank)<\/td><td>G ONLY<\/strong>(others cross-refer)<\/em><\/td><\/tr><tr><td>23<\/td><td>Warranty Bank Guarantee (10% of value; no warranty clause for non-capital goods or capital goods up to Rs 1 lakh)<\/td><td>G ONLY<\/td><\/tr><tr><td>24<\/td><td>BG confirmation channel includes the official email-id of the bank<\/em><\/td><td>W ONLY<\/td><\/tr><tr><td>25<\/td><td>Insurances and indemnities; Indemnity Bond under s.124 Contract Act; \"a BG is safer than an indemnity bond\"<\/td><td>W ONLY<\/td><\/tr><tr><td>26<\/td><td>Price elements driven by INPUT vs OUTPUT admeasurement<\/td><td>nc only<\/td><\/tr><tr><td>27<\/td><td>Payment to the supplier's bank on endorsement + irrevocable power of attorney<\/td><td>G ONLY<\/td><\/tr><tr><td>28<\/td><td>Ten payment obligations incl. MSME 45-day rule and statutory tax certificates<\/td><td>G ONLY<\/td><\/tr><tr><td>29<\/td><td>VARIATIONS; variations register; MEASUREMENT BOOKS and e-MBs; Interim Payment Certificate<\/td><td>W ONLY<\/td><\/tr><tr><td>30<\/td><td>DELAY-IN-PAYMENT TIMELINES \u2014 75% within 10 working days; balance within 28; explanation within 3; interest at GPF rate beyond 30 working days; final payment within 3 months<\/td><td>W ONLY<\/td><\/tr><tr><td>31<\/td><td>Acceptance for payment of services<\/td><td>c: By the *Procuring Entity \u00b7 nc: By the *ultimate user<\/strong><\/td><\/tr><tr><td>32<\/td><td>Terms of Payment for DOMESTIC GOODS (the four patterns) and for imported goods; LC; Air Freight Consolidators<\/td><td>G ONLY<\/td><\/tr><tr><td>33<\/td><td>Advance payment ceilings \u2014 30% private \/ 40% Govt agency or PSE \/ 6 months for maintenance contracts; 110% BG; two-instalment rule; GPF+2% compounded quarterly on default<\/td><td>G + C + NC<\/td><\/tr><tr><td>34<\/td><td>MOBILISATION ADVANCE (10% in two 5% instalments; time-based recovery if interest-free; part BGs per instalment; utilisation certificates)<\/td><td>W ONLY<\/td><\/tr><tr><td>35<\/td><td>Plant, machinery and shuttering advance (5%; not more than 50% of depreciated cost; five conditions; stamp-paper undertaking; no advance on hired\/ hire-purchase equipment)<\/td><td>W ONLY<\/td><\/tr><tr><td>36<\/td><td>Secured advance against material at site (75% of invoice or BOQ value whichever less; 90-day use; indenture bond; Paid stock only; 120-day absolute recovery)<\/td><td>W ONLY<\/td><\/tr><tr><td>37<\/td><td>fixed-price threshold<\/td><td>g\/c\/nc: *12 months \u00b7 w: *18 months<\/strong><\/td><\/tr><tr><td>38<\/td><td>Undue profiteering \/ MRP ceiling \/ controlled price disclosure<\/td><td>G ONLY<\/td><\/tr><tr><td>39<\/td><td>PVC weightages include POL (Petroleum, Oils and Lubricants)<\/em><\/td><td>W ONLY<\/td><\/tr><tr><td>40<\/td><td>PVC element on import\/ excise duty disclosure and FX selling rate<\/td><td>W ONLY<\/td><\/tr><tr><td>41<\/td><td>The final-payment \"no decrease in indices\" undertaking and the vigilance-about-downward-variation duty<\/td><td>W ONLY<\/td><\/tr><tr><td>42<\/td><td>Relaxing the PVC cap where short-closing is not in the Procuring Entity's interest<\/td><td>G + C<\/td><\/tr><tr><td>43<\/td><td>Exchange Rate Variation (ERV) \u2014 25% import content, >1 year delivery, \u00b12.5% dead band, four claim documents<\/td><td>G ONLY<\/td><\/tr><tr><td>44<\/td><td>GST \u2014 full nine-rule registration regime, HSN\/ rate rules, refund-from-supplier, three bidder-borne taxes<\/td><td>G<\/strong>(fullest); C\/W\/NC carry shorter versions<\/em><\/td><\/tr><tr><td>45<\/td><td>CUSTOMS DUTY, the three exemptions, the two certificates, and the MOOWR Scheme 2019<\/td><td>G ONLY<\/td><\/tr><tr><td>46<\/td><td>Statutory Variation Clause reproduced in full with the \"re-fixed delivery period\" note<\/td><td>C + NC<\/strong>(G and W cross-refer to their contract-management chapters)<\/em><\/td><\/tr><tr><td>47<\/td><td>INCOTERMS 2020 \u2014 all eleven terms, the title-of-goods principle, the four special definitions, FOR\/ FOT<\/td><td>G ONLY<\/td><\/tr><tr><td>48<\/td><td>Recovery of Public Money \u2014 section title<\/td><td>G: Suppliers' \u00b7 W: Contractor's \u00b7 C: Consultant's \u00b7 NC: Service Provider's<\/td><\/tr><tr><td>49<\/td><td>Payment against Time-Barred Claims \u2014 three-year rule, admission-of-liability exception, no payment till CA decides<\/td><td>COMMON to all four \u2014 and the closing section of the chapter in every Manual<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 6<\/p>\n<aside class=\"note\">Next:<\/strong>Chapter 7 \u2014 bid evaluation and award of contract<\/strong>(Goods Ch. 7 \u00b7 Works Ch. 6<\/strong> \u2014 <\/em>Evaluation of Bids and Award of Work \u00b7 Consultancy Ch. 8 \u2014 <\/strong>RfP<\/strong> Evaluation and Award of Contract \u00b7 Non-Consultancy Ch. 7)<\/em>.<\/p>\nTwo traps ahead:<\/strong> the Consultancy Manual places this at Chapter 8<\/strong> (because it inserts a whole Chapter 7 on Shortlisting\/ EoI<\/strong> first), and it alone uses a Consultancy Evaluation Committee (CEC)<\/strong> rather than a Tender Committee. The Works evaluation chapter is by far the most elaborate, carrying Abnormally Low Bids, Cartel Formation\/ Pool Rates, Handling Dissent among the Tender Committee, and Audit Trails<\/strong> \u2014 none of which appear in the others in the same form.<\/p><\/aside><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch7\">Chapter 7 \u2014 Part a<\/p><h1>Shortlisting, the Evaluation Committee, and Preliminary Examination<\/h1><\/header>Part I<\/span>Shortlisting, Committees and Preliminary Examination<\/em><\/p>\nMerging: Goods Ch. 7<\/strong> (Bid Evaluation and Award of Contract) \u00b7 Works Ch. 6<\/strong> (Evaluation of Bids and Award of Work) \u00b7 Consultancy Ch. 7<\/strong> (Shortlisting of Consultants, EoI) and Ch. 8<\/strong> (RfP Evaluation and Award of Contract) \u00b7 Non-Consultancy Ch. 7<\/strong> (Bid Evaluation and Award of Contract)<\/em><\/p><h2>Structural Warnings for Students<\/span><\/h2>\n1. Three different Chapter numbers for the same block:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Chapter<\/th><th>Title<\/th><\/tr><\/thead><tbody><tr><td>G<\/span> Goods<\/td><td>Chapter 7<\/td><td>Bid Evaluation and Award of Contract<\/em><\/td><\/tr><tr><td>W<\/span> Works<\/td><td>Chapter 6<\/td><td>Evaluation of Bids and Award of Work<\/strong><\/em><\/td><\/tr><tr><td>C<\/span> Consultancy<\/td><td>Chapter 8<\/td><td>RfP<\/strong> Evaluation and Award of Contract<\/em><\/td><\/tr><tr><td>NC<\/span> Non-Consultancy<\/td><td>Chapter 7<\/td><td>Bid Evaluation and Award of Contract<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nWhy consultancy is one Chapter ahead: The Consultancy Manual inserts an entire Chapter 7 \u2014 shortlisting of consultants, Expression of Interest (EoI)<\/em> before its evaluation chapter. That chapter has NO counterpart in any other Manual and is reproduced in full at para 7.1 below.<\/p>\n2. The committee is different in consultancy:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Evaluating body<\/th><\/tr><\/thead><tbody><tr><td>G<\/span>, W<\/span>, NC<\/span><\/td><td>tender Committee (TC)<\/strong> \u2014 also called Tender Evaluation Committee (TEC)<\/em> in some organisations<\/td><\/tr><tr><td>C<\/span><\/td><td>consultancy Evaluation Committee (CEC)<\/td><\/tr><\/tbody><\/table><\/div>\n3. Because of the volume (423 KB across the four Manuals), this chapter is issued in two parts:<\/p>\n<ul class=\"lst\"><li>PART A (this document)<\/strong> \u2014 Shortlisting\/ EoI \u00b7 Bid Evaluation Process \u00b7 Composition and Role of the Committee \u00b7 Dissent, Independence and Confidentiality \u00b7 Timely Processing \u00b7 Extension of Bid Validity \u00b7 Lack of Competition \u00b7 Committee Report \u00b7 Preliminary Examination.<\/li><li>PART B<\/strong> \u2014 Techno-commercial Evaluation \u00b7 Evaluation of Quality (Technical Proposals) \u00b7 Financial Evaluation \u00b7 lCS\/ QCBS\/ SSS\/ FBS \u00b7 Reasonableness of Prices \u00b7 Abnormally Low Bids \u00b7 Cartel Formation \u00b7 Negotiations \u00b7 Cancellation and Re-tender \u00b7 Award of Contract \u00b7 Audit Trails \u00b7 Risks and Mitigations.<\/li><\/ul>\n<h2>Concordance for Chapter 7 \u2014 Part A<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>Goods<\/th><th>Works<\/th><th>CS<\/th><th>NCS<\/th><\/tr><\/thead><tbody><tr><td>7.1<\/td><td>Shortlisting of Consultants \u2014 EoI<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>Ch. 7 entire<\/td><td> \u2014 <\/td><\/tr><tr><td>7.2<\/td><td>Bid Evaluation Process \u2014 importance<\/td><td>7.1-1<\/td><td>6.1.1<\/td><td>8.1.1<\/td><td>7.1.1<\/td><\/tr><tr><td>7.3<\/td><td>Evaluation in Different Tendering Systems<\/td><td>(in 7.1)<\/em><\/td><td>6.1.2<\/td><td>8.1.2<\/td><td>7.1.2<\/td><\/tr><tr><td>7.4<\/td><td>Preparation and Vetting of Comparative Statement<\/td><td>7.2<\/td><td>6.1.3<\/td><td>8.1.3<\/td><td>7.1.3<\/td><\/tr><tr><td>7.5<\/td><td>The Stages of Evaluation<\/td><td> \u2014 <\/td><td>6.1.4<\/td><td>8.1.4<\/td><td>7.1.4<\/td><\/tr><tr><td>7.6<\/td><td>Contacting Procuring Entity during evaluation<\/td><td>7.3.6<\/td><td>6.1.5<\/td><td>8.1.5<\/td><td>7.1.5<\/td><\/tr><tr><td>7.7<\/td><td>Composition of the Committee; SoPP<\/td><td>7.1-2, 7.1-3<\/td><td>6.2.1<\/td><td>8.2.1<\/td><td>7.2.1<\/td><\/tr><tr><td>7.8<\/td><td>Role of the Committee<\/td><td>7.1-2-c<\/td><td>6.2.2<\/td><td>8.2.2<\/td><td>7.2.2<\/td><\/tr><tr><td>7.9<\/td><td>Handling Dissent among the Committee<\/td><td>7.6.12<\/td><td>6.2.3<\/td><td>8.2.3<\/td><td>7.2.3<\/td><\/tr><tr><td>7.10<\/td><td>Independence, Impartiality, Confidentiality, No COI<\/td><td>7.6.13<\/td><td>6.2.4<\/td><td>8.2.4<\/td><td>7.2.4<\/td><\/tr><tr><td>7.11<\/td><td>Timely Processing of Tenders<\/td><td>7.6.1<\/td><td>6.2.5<\/td><td>8.2.5<\/td><td>7.2.5<\/td><\/tr><tr><td>7.12<\/td><td>Extension of Bid\/ Tender Validity Period<\/td><td>7.6.2<\/td><td>6.2.6<\/td><td>8.2.6<\/td><td>7.2.6<\/td><\/tr><tr><td>7.13<\/td><td>Consideration of Lack of Competition<\/td><td>7.6.10<\/td><td>6.2.7<\/td><td>8.2.7<\/td><td>7.2.7<\/td><\/tr><tr><td>7.14<\/td><td>Committee Recommendations\/ Report<\/td><td>7.6.14<\/td><td>6.2.8<\/td><td>8.2.8<\/td><td>7.2.8<\/td><\/tr><tr><td>7.15<\/td><td>Preliminary Examination<\/td><td>7.3<\/td><td>6.3<\/td><td>8.3<\/td><td>7.3.1<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>7.1 Shortlisting of Consultants \u2014 Expression of Interest (EoI) [C ONLY]<\/span><\/h1>\n<aside class=\"note\">this entire section is the consultancy manual's Chapter 7. It has no counterpart in the goods, works or non-consultancy Manuals.<\/p><\/aside>\n<h2>7.1.1<\/span>Basic Considerations<\/span><\/h2>\n1. Why two stages are necessary: Due to the inherent complexities of evaluation of physically non-measurable scope and quality standards of consultancy proposals<\/em>, IT IS too time-consuming and expensive<\/em> for the Procuring Entity to invite \u2014 as well as for the consultancy firms to prepare \u2014 and evaluate proposals from all consultants who want to compete<\/em>.<\/p>\nTherefore, procurement of consultancy is done in a two-stage process<\/em>.<\/p>\n2. The first stage: The qualified firms with requisite experience, technical and financial capabilities<\/em> \u2014 who can be trusted to deliver the required services at the desired level of quality<\/em> \u2014 ARE shortlisted transparently<\/em>. This shortlisting is done through the expression of Interest (EoI) process<\/em>.<\/p>\n<aside class=\"note\">The caution: \"care should be taken to avoid stipulation of shortlisting qualification criteria disproportionate to the requirement of the services, that May lead to restricted shortlist and lack of competition in the second stage<\/strong>.\"<\/p><\/aside>\nadequate time should be allowed for getting responses from interested consultants. The Procuring Entity shall make available copies of the EoI document to the interested consultants on its website and e-procurement portal (GeM\/ CPPP)<\/em>.<\/p>\n3. The second stage: In the second stage \u2014 request for proposals (RfP)<\/em> \u2014 proposals containing technical and financial bids<\/em> Are invited from such shortlisted bidders<\/em>. Selection of the winning bidder is based on the quality of the proposal and, where appropriate, on the cost of services<\/em> To be provided.<\/p>\n<h2>7.1.2<\/span>The Four Modes of EoI<\/span><\/h2><h3>A. Open Tender Enquiry (OTE) \u2014 Rule 183(ii) of GFR 2017<\/em><\/span><\/h3>\nFor procurement above Rs. 50 (rupees fifty) lakh<\/em>, shortlisting is done in an openly advertised competitive (OTE mode) shortlisting process called Expression of Interest (EoI)<\/em> \u2014 giving equal opportunity to all interested bidders<\/em> To be considered for shortlisting.<\/p>\nUnder EoI, the \"Request for Expression of Interest\" (REoI)<\/em> is advertised on the Central Public Procurement Portal (CPPP)<\/em> at www.eprocure.gov.in AND ON Government E-marketplace (GeM)<\/em>.<\/p>\nAn organisation having its own website should also publish all its advertised tender enquiries on the website<\/em>. The advertisements should give the complete web address from where the bidding documents can be downloaded<\/em>.<\/p>\nA complete ToR should be ready before requesting EoI.<\/strong><\/p>\nAttention of known reputed consultants May also be separately drawn<\/em> Wherever possible.<\/p>\nThe advertisement must include, among other things:<\/p>\n<aside class=\"note\">THE last date of submission of EoI<\/em> \u00b7 how to get\/ download a copy of the EoI document including ToR<\/em> \u00b7 contact information of the Procuring Entity with the name of contact person<\/em>, and so on<\/p><\/aside>\n<h3>B. Global Tender Enquiry (GTE)<\/span><\/h3>\nin case it is felt that likely consultants May not be available in India<\/em>, the EoI process May be done on global Tender Enquiry (GTE) process<\/em> \u2014 BY sending REoI notice to foreign embassies in India and Indian embassies in relevant countries<\/em>.<\/p>\n<aside class=\"note\">Subject to the restriction on GTE for tenders below Rs. 200 Crore<\/strong> \u2014 see Chapter 4 Part B, para 4.9.2.<\/em><\/p><\/aside>\n<h3>C. Limited Tender Enquiry (LTE) \u2014 Rule 183(i) of GFR 2017<\/em><\/span><\/h3>\nIn procurements of consultancy services below Rs. 50 (rupees fifty) lakh<\/em>, shortlisting is done without a formal published Expression of Interest<\/strong> \u2014 akin to a limited Tender Enquiry (LTE) process<\/em>.<\/p>\nThe three-step procedure:<\/p>\n<ol class=\"lst\"><li>To start with, the preparation of a long list of potential consultants<\/em> May be done on the basis of formal or informal enquiries<\/em> FROM: Other ministries or departments or organisations involved in similar activities \u00b7 chambers of commerce & industry \u00b7 association of consultancy firms<\/em>, etc.<\/li><li>The Procuring Entity should scrutinise the preliminary long list<\/em> AND shortlist the prima facie eligible and capable contractors<\/em> From the long list.<\/li><li>The number of consultants in this moderated long-list should not be less than three<\/em>. In case sufficient consultants cannot be located, then the responses May be called from a lesser number of consultants \u2014 but not less than three in any case, after taking ca's approval<\/strong>.<\/li><\/ol>\nThe panel device: To smoothen this shortlisting for projects below Rs. 50 lakh, procuring entities who do frequent procurement of consultancy services<\/em> May consider preparation of a panel of qualified consultants, after evaluation of their credentials \u2014 on the lines of registration of vendors in procurement of goods<\/em>.<\/p>\nIF THE complexity of the project so justifies<\/em>, A formal EoI May be advertised even for procurements below Rs. 50 lakh, with the approval of ca<\/strong>.<\/p>\n<h3>D. Special Limited Tender Enquiry (SLTE) \u2014 Rule 162 of GFR 2017<\/em><\/span><\/h3>\nLTE mode for EoI \u2014 even for values higher than Rs. 50 lakh<\/em>, where normally OTE should have been done \u2014 is permissible in certain exceptional circumstances<\/em>.<\/p>\nPowers to sanction procurement on LTE basis in such exceptional cases May be laid down in SoPP, based on a certificate of urgency signed by the indentor<\/em>.<\/p>\nThis mode has the merit of being quicker, but VfM obtained May be less than in case of OTE<\/em>; Hence it should be restricted to the following four situations: A) the Competent Authority certifies that there is an existing or prospective urgency for operational or technical requirements<\/em>, and any additional expenditure involved by not procuring through advertised tender enquiry is justified in view of urgency. The Ministry\/ Department should also put on record the nature of the urgency and reasons why the procurement could not be anticipated earlier<\/em>. b) THE sources of supply are definitely known<\/em>, and the possibility of fresh source(s) beyond those being tapped is remote<\/em>. c) THERE ARE sufficient reasons, to be recorded in writing by the Competent Authority<\/em>, indicating that it will not be in public interest<\/em> To procure the services through advertised tender enquiry. D) Government policy designates procurement from specific agencies<\/em>.<\/p>\n<h2>7.1.3<\/span>Evaluation of the REoI<\/span><\/h2><h3>A. General Norms<\/span><\/h3>\n<aside class=\"note\">For the role of the evaluation committee, general norms of evaluation, preliminary examination of bids, and evaluation of qualifications<\/em>, the provisions of paras 7.2 to 7.15 of this Unified Manual (CS paras 8.1\u20138.4) apply mutatis mutandis<\/em>.<\/p><\/aside>\n<h3>B. Evaluation of Responsiveness and Eligibility<\/span><\/h3>\n1. ONLY substantively responsive eois<\/em> Shall be evaluated for shortlisting. A substantively responsive EoI is complete and conforms to the REoI document's essential terms and conditions<\/em>.<\/p>\n2. The pass\/ fail Rule: The Procuring Entity shall determine whether the consultants are eligible as per laid-down eligibility criteria. The eligibility evaluation shall be on a \"pass\" or \"fail\" basis. A consultant must achieve a \"pass\" on all the criteria to proceed to the next step. Any consultant not achieving a 'pass' in any of the eligibility criteria shall be rejected as non-responsive<\/strong>.<\/p>\n<h3>C. Evaluation of Qualification \u2014 the Nine Rules<\/span><\/h3>\n1. The Procuring Entity shall evaluate the consultants for shortlisting, inter alia<\/em>, based on their past experience of handling general and similar consultancy assignments, and financial capability of the firm<\/em>.<\/p>\n2. No borrowed credentials: The determination shall not consider the qualifications of other firms \u2014 such as the consultant's subsidiaries, parent entities, affiliates, or any other entity different from the consultant<\/strong>. Assignments completed by the consultant's individual experts working privately or through other consulting firms<\/em>cannot be claimed as the relevant experience of the consultant, or that of the consultant's partners or sub-consultants<\/strong>.<\/p>\n3. The Procuring Entity reserves the right to waive minor deviations in the qualification criteria<\/em>, if they do not materially affect the capability of a consultant to perform the contract<\/em>.<\/p>\n4. Key experts are not evaluated at EoI stage \u2014 and the reason: The qualification and experience of key experts are not included in the shortlisting criteria but shall be evaluated at the RfP stage<\/em>.<\/p>\n<aside class=\"note\">Since the bidders who meet the REoI qualification can well manage to attract the right key experts during RfP.<\/strong><\/p><\/aside>\n5. In case a particular certification\/ licence is required<\/em> To perform the assignment, that May also be included in eligibility or qualification criteria<\/em>.<\/p>\n6. The suggested qualification criteria table and weightages:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Criteria \/ Sub-criteria<\/th><th>Suggested Values<\/th><th>Sub-criteria weight<\/th><th>Criteria weight<\/th><\/tr><\/thead><tbody><tr><td>Criteria 1 \u2014 general and similar experience<\/strong>(Bidders providing Consultancy services for at least the specified period and having completed the specified volume of general and similar consultancy assignments during the specified period)<\/em><\/td><td><\/td><td><\/td><td>70%<\/td><\/tr><tr><td>Similar assignments<\/em><\/td><td>define based on value, general and specific sector of work, region, key activities\/ methodologies\/ technologies<\/em> etc.<\/td><td><\/td><td><\/td><\/tr><tr><td>Consultants must have at least \u03b1 years' experience in Consultancy Services<\/td><td>\u03b1 = 7<\/td><td>20%<\/td><td><\/td><\/tr><tr><td>During the last \u03b1 years, Consultancy Assignments completed or substantially completed (at least \u03b3 payments received)<\/em> should be at least \u03b2<\/td><td>\u03b1 = 7 \u00b7 \u03b3 = 80% \u00b7 \u03b2 = 7<\/td><td>50%<\/td><td><\/td><\/tr><tr><td>Out of the Consultancy Assignments mentioned above, \u03b4 should be similar<\/em> assignments<\/td><td>\u03b4 = 2<\/td><td>30%<\/td><td><\/td><\/tr><tr><td>criteria 2 \u2014 financial capability<\/strong>(Overall financial strength of the consultant in terms of turnover, profitability, and cash flow \u2014 liquid assets \u2014 situation)<\/em><\/td><td><\/td><td><\/td><td>30%<\/td><\/tr><tr><td>turnover:<\/strong>Minimum average annual turnover of at least Rs. \u03b8 Crores, at least \u03ba of which should be from Consultancy Service Contracts (total payments received for contracts in progress or completed) within the last \u03b1 years<\/em><\/td><td>\u03b8 = 200% of the value of assignment \u00b7 \u03ba = 50% \u00b7 \u03b1 = 7<\/td><td>70%<\/td><td><\/td><\/tr><tr><td>financial viability \u2014 net worth: The Net Worth of the Bidder firm should not be negative on 'The Relevant Date' and should not have eroded by more than \u03be in the last 3 YEARS<\/em><\/td><td>\u03be = 30%<\/td><td>30%<\/td><td><\/td><\/tr><tr><td>relaxation for start-ups:<\/strong>Qualification criteria can be relaxed up to \u03bb% for start-ups, subject to meeting the quality and technical specifications during the RfP<\/em><\/td><td>\u03bb = 20% (twenty per cent)<\/td><td><\/td><td><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">note on evidence: \"during the RfP process, the consultant shall be asked to furnish documentary evidence to demonstrate his compliance to criteria 1 and criteria 2<\/strong>.\"<\/p>\nthe \"relevant date\" when the specified period ends:<\/p>\n<ol class=\"lst\"><li>For all annual reports<\/em> \u2014 periods mentioned are ending with the financial year of the company<\/em> [say 2023-24];<\/li><li>FOR other statements<\/em> \u2014 THE latest statement available on the last date of bid submission<\/em>.<\/li><\/ol><\/aside>\n7. Qualification criteria shall be based entirely upon the capability and resources required to perform the particular contract satisfactorily<\/em>, considering bidders' experience and past performance, capabilities with respect to personnel, equipment and manufacturing facilities, financial standing and relevant compliance with environmental protection regulations<\/em>. There should be no qualification criteria that would be advantageous to foreign consultants at the cost of domestically provided consultancy<\/em>.<\/p>\n8. Demerged entities: Tender documents must clearly mention if (and under what conditions) the demerged entity will be permitted to use credentials of original\/ parent entity (for initial five years from the incorporation of the demerged entities)<\/em> To satisfy the qualification criteria or not.<\/p>\n9. The turnover-multiple caution \u2014 an express criticism of prevailing practice:<\/p>\n<aside class=\"note\">\"it is also noted that, while shortlisting\/ selecting consultants, some procuring entities are keeping the minimum qualifying financial turnover at the level of 5\u201310 times of the estimated cost of the consultancy work. This, prima facie, appears high<\/strong>.\"<\/p>\n\"higher qualification criteria increase the likelihood of adequate experience\/ capacity but reduce the competition; If set unduly high, they May increase the cost without any improvement in quality<\/strong>.\"<\/strong>(DoE OM No. F.18\/13\/2020-PPD dated 13.07.2020)<\/em><\/p>\nit is suggested that the criteria should be fixed on a reasonable basis while drafting tender documents<\/em>, and such higher minimum qualifying turnover should be kept only if adequately justified<\/em>.<\/p>\n\"in higher-value procurements, the minimum annual turnover should not be blindly a multiplier of the assignment value \u2014 but there May be an upper cap on demanded turnover, so as not to restrict competition only to the big four or five consultancy firms<\/strong>.\"<\/p><\/aside>\n<h3>D. Simplified vs Marking-Scheme Evaluation at EoI<\/span><\/h3>\n10. The default \u2014 simplified criteria: In EoI, simplified evaluation criteria should be used, instead of marking schemes<\/em>. A fail-pass, minimum benchmark in each criteria\/ sub-criteria<\/em> Can be specified.<\/p>\n<aside class=\"note\">e.g., must have past experience of at least two similar projects; firm must have a turnover of at least Rs 10 (Rupees Ten) Crores, and so on. Any firm which passes these benchmarks is declared as qualified.<\/em><\/p><\/aside>\n11. The complex-case alternative \u2014 with a worked example: However, in a complex situation, marks\/ scores May be assigned to the response of each consultant based on weightages assigned to each of the criteria in the EoI<\/em>.<\/p>\n<aside class=\"note\">Worked example given in the Manual \u2014 in case of number of assignments in last 7 years<\/em>, out of a maximum of 35 marks for the sub-criteria, scoring can be: a) 3 marks per assignment up to 7 ASSIGNMENTS (BENCHMARK); and b) 3.5 marks for additional assignments, subject to a maximum of 35.<\/p><\/aside>\n12. The purpose of scoring \u2014 not merely disqualification: \"this exercise of scoring is not merely for disqualification of firms below a threshold, but to establish the relative strengths and weaknesses of the applicants \u2014 in order to arrive at a robust short list of qualified consultants who have the required experience and qualifications to deliver the required services at the desired level of quality<\/strong>.\"<\/p>\n13. The 75% threshold: The Procuring Entity shall shortlist all the consultants who secure the minimum required marks \u2014 normally 75% (seventy-five per cent)<\/em>. THE minimum qualifying requirement shall be specified in the EoI document<\/em>.<\/p>\n<h2>7.1.4<\/span>The EoI Evaluation Report<\/span><\/h2>\n1. The shortlist size Rule \u2014 minimum three, maximum eight:<\/p>\nThe short list of firms is required for the selection of consultancy services in a competitive process with:<\/p>\n<aside class=\"note\">A minimum of three (Rule 184 of GFR 2017)<\/strong> AND generally not more than eight<\/strong> \u2014 to avoid inordinate delays in evaluation of the subsequent RfP<\/em>.<\/p><\/aside>\nIf there are a larger number of consultants meeting the evaluation criteria<\/em>, the shortlist shall be restricted to a specified number of consultants<\/em> \u2014 if not specified, eight (8) consultants<\/strong> \u2014 based on higher average turnover<\/strong> (or any other criteria, if so stipulated therein).<\/p>\n2. National-only shortlists: The short list May comprise only national consultants<\/em> (firms registered or incorporated in the country and having registered office in India<\/em>) FOR small assignments<\/em> \u2014 AND indicated in the EoI<\/em>.<\/p>\nThis situation is applicable where:<\/p>\n<ul class=\"lst\"><li>Qualified national firms are available at a competitive cost; Or<\/li><li>the nature of the assignment is such that a foreign consultant's inclusion is not justified<\/em>(for example, a training or outreach to be carried out in local language)<\/em>; or<\/li><li>foreign consultants have not expressed any interest<\/em>.<\/li><\/ul>\n3. CONCURRENT ASSIGNMENTS \u2014 the capacity check: IF THE same firm is considered for concurrent assignments *(for example, a construction supervision consultant for different stretches\/ packages of rehabilitation\/ reconstruction of a road contract)*, the Procuring Entity shall *assess the firm's overall capacity to perform multiple contracts before including it in more than one short list*. HOWEVER, <\/strong>this needs to be pre-declared in the EoI documents<\/em>.<\/p>\n4. The evaluation committee May submit its EoI evaluation report to ca for approval<\/em>. THE tender Committee format at Annexure 6<\/em> Can be used mutatis mutandis<\/em> for this purpose.<\/p>\n<h2>7.1.5<\/span>Declaration of Shortlist and Issue of RfP<\/span><\/h2>\n1. Provisional shortlisting: Eois of consultants that succeed in the above evaluation shall be shortlisted. Provisionally shortlisted consultants will be informed of the condition(s) that must be met before submitting their proposal in the RfP process<\/em>.<\/p>\n2. Validity of the shortlist \u2014 the six-month rule: Only shortlisted (including provisionally shortlisted) consultants shall be invited to participate in the following RfP process<\/em>.<\/p>\nSuch shortlisting shall remain valid for a period specified in the REoI \u2014 six months from the date of declaration, if not so specified<\/strong>.<\/p>\n<aside class=\"note\">\"it's important that the RfP is issued as early as possible after shortlisting \u2014 since the qualification data on which shortlisting is based May tend to become outdated. In case such delay is more than 6 months, it would be better to re-invite EoI<\/strong>.\"<\/p><\/aside>\n3. Publication and the advertising bar: After the EoI evaluation report is accepted by the Competent Authority, the name and address of the shortlisted consultant(s) shall be published in the portal and notice board\/ bulletin\/ website of the Procuring Entity<\/em>.<\/p>\nAll consultants shall be advised about shortlisting of their eois or otherwise<\/em> \u2014 without disclosing the comparative position of their eois with that of others<\/strong>.<\/p>\nShortlisted consultants must not advertise or publish the same in any form without the prior written consent of the Procuring Entity.<\/strong><\/p>\n4. Shortlisting confers no rights: \"shortlisting a consultant is an administrative process and does not confer any legal or contractual rights on the shortlisted bidder. Since original documents\/ certificates are not being called for and examined at this stage, all shortlisting shall be conditional upon final verification of such documents\/ certificates during the RfP process<\/strong>.\"<\/p>\n<h2 class=\"src-C\">7.1.6<\/span>Shortlisting \u2014 Risks and Mitigation<\/span>C<\/span><\/h2><div class=\"srcblock src-C\">\n<div class=\"tblwrap\"><table><thead><tr><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1. Conflict of interest situations: It is possible that conflict of interest situations are not reported or declared by the participating consultants<\/em> \u2014 or sometimes by members of the evaluation committee<\/em>.<\/td><td>These situations need to be dealt with by signing declarations in specified formats<\/em> \u2014 both at the EoI bid stage as also in the technical proposal<\/strong> \u2014 AND by CEC members before undertaking the evaluation of proposals<\/strong>.<\/td><\/tr><tr><td>2. \"Qualifications leasing\":<\/strong>Local bidders with insufficient qualifications May show association with well-qualified (foreign or local) consultants \u2014 <\/strong>just to use their qualification documents to get the contract. These well-qualified consultants <\/strong>lease their qualification \u2014 but do not, or only minimally, contribute experience or key personnel at the execution stage<\/em>.<\/strong><\/td><td>This issue needs to be dealt with from the EoI stage<\/strong> BY: \u2022 very clearly identifying the qualified applicant<\/em>; and \u2022 putting on record\/ contract the guaranteed contribution from the partner with qualification<\/em>.<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>7.2 Bid Evaluation Process \u2014 the Governing Principle<\/span><\/h1>\nThe evaluation of bids is one of the most significant processes of procurement and must be transparent<\/em>.<\/p>\nAll bids are to be evaluated strictly based on the terms and conditions incorporated in the tender document and those stipulated by the bidders in their bids<\/strong>.<\/p>\nNo hearsay information or hitherto undeclared condition should be brought in while evaluating the bids.<\/strong><\/p>\nSimilarly, no tender enquiry condition (especially the significant\/ essential ones) should be overlooked\/ relaxed while evaluating the bids<\/strong>.<\/p>\n<aside class=\"note\">The aim: \"the aim should be to ensure that no bidder gets undue advantage at the cost of other bidders and\/ or at the cost of the Procuring Entity<\/strong>.\"<\/p><\/aside>\nG<\/span> \u2014 the single-vendor caution on preferences: \"care should be taken to ensure that preferences provided to any category of bidders on certain specified grounds do not result in a single vendor selection<\/strong>.\"<\/p>\nW<\/span> \u2014 the permitted evaluation factors: The Contracting Authority may include quality, price, technical merit, aesthetic and functional characteristics, environmental characteristics, running costs, cost-effectiveness, after-sales service and technical assistance, delivery date and delivery period or period of completion<\/em>, etc. \"no criteria shall be used for evaluation of tenders that cannot be verified or [are] not stated in the contract \u2014 with the exception of provisions of laws in force<\/strong>.\"<\/p>\n<h1>7.3 Evaluation in Different Tendering Systems<\/span>W<\/span>C<\/span>NC<\/span><\/h1>\n1. Single-stage single-envelope tendering: The evaluation of eligibility\/ qualification of bidders, technical, commercial, and financial aspects is done simultaneously<\/em>.<\/p>\nTHE lowest-priced bid that meets the eligibility\/ qualification criteria and technical and commercial conditions<\/em> Laid down in the tender documents is declared as successful<\/em>.<\/p>\n2. Single-stage two-envelope tendering \u2014 and the sanctity of the sealed financial bid:<\/p>\nInitially, only the techno-commercial bids would be opened and evaluated<\/em> for bids which successfully meet the eligibility\/ qualification criteria and techno-commercial aspects.<\/p>\nFinancial bids of such successful bidders only<\/em> Would be opened. The TC shall evaluate financial bids with a view to select the lowest (L1) bidder<\/em> Who meets the eligibility\/ qualification criteria and techno-commercial aspects.<\/p>\nEvaluators of technical proposals shall not have access to the financial proposals until the technical evaluation is concluded.<\/strong><\/p>\n<aside class=\"note\">The custody safeguard \u2014 an important practical instruction: \"it is of utmost importance that the authenticity, integrity, and sanctity of unopened financial bids must be ensured before their opening. All the financial bids May preferably be put in a large envelope, which May be dated, sealed, and signed (including by some of the bidders present) \u2014 to show that none of the bids were accessed during the custody<\/strong>.\"<\/p><\/aside>\n3. Two-stage bids: In two-stage bids, the PQB\/ EoI stage would have already been evaluated<\/em>, AND this second stage is for evaluation of responses to the second-stage two envelopes from the shortlisted qualified bidders<\/em>, following the procedure described in sub-para 2 above.<\/p>\n<h1>7.4 Preparation and Vetting of Comparative Statement<\/span><\/h1>\nExcept in cases up to Rs. 50 lakh (rupees fifty lakh)<\/strong>, the Procuring Entity should prepare a comparative statement of quotations (technical and financial) received in the order in which bids were opened<\/em>.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Type of bid<\/th><th>What the comparative statement contains<\/th><\/tr><\/thead><tbody><tr><td>Techno-commercial bid<\/td><td>information about deciding the responsiveness and eligibility of bids<\/em>, AND evaluating the technical suitability of offers<\/em><\/td><\/tr><tr><td>financial bid<\/td><td>information about rates quoted (including taxes), discounts if any<\/em>, AND any other information that has implications on the ranking of bids<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nthe concerned officers should sign the comparative statement<\/em> So prepared. It May also be vetted by the associated\/ integrated finance for veracity of information<\/em>.<\/p>\n<aside class=\"note\">W<\/span> \u2014 the e-procurement exemption:<\/strong>\"however, in case the comparative statement is prepared by the e-procurement portal, vetting by associated\/ integrated finance is not required<\/strong>.\"<\/p><\/aside>\n<h1>7.5 The Stages of Evaluation<\/span>W<\/span>C<\/span>NC<\/span><\/h1>\nthe evaluation of the bids shall be carried out in two stages<\/strong>:<\/p>\nAT THE first stage<\/em>, evaluation of responsiveness and technical bids<\/em> is taken up.<\/p>\nEvaluators of technical bids shall not have access to the financial bids until the technical evaluation is concluded<\/em> \u2014 AS THE envelope containing the financial bid is not opened till the technical evaluation is complete<\/em>.<\/p>\nThe financial bid of only such bidders will be opened which obtain minimum qualifying marks\/ standards prescribed for the technical bid<\/strong>.<\/p>\nThe evaluation shall be carried out in full conformity with the provisions of the tender document<\/strong>.<\/p>\n<h1>7.6 Contacting the Procuring Entity during the Evaluation<\/span><\/h1>\nFrom the time of bid submission to awarding the contract<\/em>, no bidder shall contact the Procuring Entity on any matter relating to the submitted bid<\/strong>.<\/p>\nIf a bidder needs to contact<\/em> The Procuring Entity for any reason relating to this tender and\/ or its bid, it should do so only in writing or electronically<\/strong>.<\/p>\n<aside class=\"note\">G<\/span> adds: \"The Procuring Entity shall keep these communications in view during the evaluation of bids, but is not expected to respond until the evaluation is complete.\"<\/em><\/p><\/aside>\nany effort by a bidder to influence the Procuring Entity during the processing of bids, evaluation, bid comparison or award decisions<\/strong> Shall be construed as a violation of the Code of Integrity<\/strong> \u2014 and the bid shall be liable to be rejected as non-responsive, in addition to other punitive actions<\/strong> for violation of the Code of Integrity as per the tender document.<\/p>\n<h1>7.7 Composition of the Tender Committee (TC)\/ Consultancy Evaluation Committee (CEC), and the SoPP<\/span><\/h1>\n<\/div><h2>7.7.1<\/span>The Direct Acceptance Threshold<\/span><\/h2>\nThere are delegations up to a threshold value \u2014 called the direct acceptance threshold<\/strong> \u2014 below which the evaluation of the bids May be entrusted solely and directly to the individual Competent Authority, without the involvement of a Tender Committee or any evaluation report<\/em>.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>The threshold<\/th><\/tr><\/thead><tbody><tr><td>G<\/span> GOODS<\/td><td>Tender Committee required for all cases having financial implications of more than Rs. 50 (rupees fifty) lakh<\/strong><\/td><\/tr><tr><td>W<\/span> WORKS<\/td><td>\"\u2026direct acceptance threshold \u2014 normally LTE threshold of Rs 50 lakhs<\/strong>\"<\/td><\/tr><tr><td>C<\/span> Consultancy<\/td><td>CEC required for all cases having financial implications of more than Rs. 50 lakh<\/strong> *(including SLTE or Nomination Basis)*; for cases less than Rs. 50 lakh<\/strong>, direct acceptance<\/td><\/tr><tr><td>NC<\/span><\/td><td>(same as Goods)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nhe would carry out all the steps in the evaluation described in this Chapter, instead of the TC\/ CEC<\/em>, AND directly record reasons and decisions in the file itself<\/em> (or online, where such systems exist).<\/p>\nHe May ask for a technical suitability report from user departments if needed<\/strong>.<\/p>\nIn procurements above such a threshold \u2014 including nomination and SLTE modes<\/em> \u2014 evaluation is to be done by a Tender Committee\/ CEC.<\/p>\n<h2>7.7.2<\/span>Composition<\/span><\/h2>\n1. The three-member norm: TC\/ CEC should normally comprise three members, including<\/em>:<\/p>\n<ul class=\"lst\"><li>A finance member<\/strong>(nominated by the Financial Adviser)<\/em> \u2014 C<\/span>: \"Financial Adviser or his representative\"<\/em>; and<\/li><li>A representative of the user<\/strong><\/li><\/ul>\n \u2014 as per soPP.<\/p>\n2. SIZE: \"TC\/ CEC should not be large\/ very large, as it May slow down the evaluation process<\/strong>.\"<\/p>\nhowever, suitable domain\/ technical experts May be included in the committee to render assistance in the evaluation of the bids<\/em>(W<\/span> adds: \"from the user department (or otherwise)\")<\/em>.<\/p>\n<aside class=\"note\">The no-second-committee Rule (in all four): \"there is no need to constitute any other committee for technical evaluation, preliminary evaluation, etc<\/strong>.\"<\/p><\/aside>\n3. The two independence Rules under Rule 173(xxii) of GFR 2017:<\/p>\n<aside class=\"note\">\"no member of the Tender Committee should be reporting directly to any other member of such committee, in case the estimated value of the procurement exceeds Rs. 50 lakhs<\/strong>.\"<\/p>\nW<\/span> and C<\/span> extend this to the accepting authority<\/em> as well: \"no member of the tender committee (or the accepting authority<\/strong>) should be reporting directly to any other member\u2026\"<\/p>\nG<\/span> and C<\/span> both urge extension below the threshold:<\/p>\n<ul class=\"lst\"><li>G<\/span>: *\"<\/strong>this provision should be ensured in the constitution of all purchase committees, irrespective of the value of procurement.\"*<\/li><li>C<\/span>: *\"<\/strong>Though the GFR stipulates this provision only when the estimated value of procurement exceeds Rs 50 lakh, it is desirable that the same provision should be followed in the constitution of all purchase committees irrespective of the value of procurement.\"*<\/li><\/ul>\nthe second Rule \u2014 recommending authority \u2260 accepting authority: \"the Tender Committee to consider bids May be so constituted that an authority holding powers for recommending the bids by virtue of his position as a member of the Tender Committee shall not also be the accepting authority for such tenders<\/strong>.\"<\/p><\/aside>\n4. The convenor: THE representative of the Procuring Entity will work as the convenor (member Secretary)<\/em> Of the TC\/ CEC.<\/p>\n5. Constitution at one level higher, and pre-nomination: \"tender committees May be constituted with the approval of one level higher than the Competent Authority<\/strong>.\"<\/p>\n\"it is advantageous for organisations doing procurements regularly to have pre-nominated (by designation) tender committees for various categories and value-slabs of procurements, included in the SoPP<\/strong>.\"<\/p>\n6. C<\/span> \u2014 the convenor's additional duty at the outset: \"he shall distribute the RfP to the CEC members and request them to familiarise themselves with the characteristics and requirements of the assignment, the selection procedures, and the evaluation criteria and sub-criteria. The convenor of the CEC should also call a meeting of the CEC members to review any questions they May have on the evaluation principles, procedures, and objectives<\/strong>.\"<\/p>\n<h2>7.7.3<\/span>The Schedule of Procurement Powers (SoPP) \u2014 the Six Approval Stages<\/span><\/h2>\nthe Competent Authority's written approval must be taken at various stages of procurement, before proceeding ahead<\/strong> \u2014 e.g.:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Stage requiring CA's written approval<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>administrative\/ financial sanctions\/ issue of tender (G<\/span> adds: including Tender Documents)<\/em><\/td><\/tr><tr><td>ii<\/td><td>approval of techno-commercial evaluation and opening of price bids<\/em> In case of a two-packet system (G<\/span> adds: and similar approvals in case of PQB modes and Two-Stage Tendering)<\/em><\/td><\/tr><tr><td>iii<\/td><td>price negotiations, if permitted under specified circumstances<\/em><\/td><\/tr><tr><td>iv<\/td><td>approval of financial evaluation and award of contract<\/em> To the selected bidder(s)<\/td><\/tr><tr><td>v<\/td><td>cancellation of procurement and re-tendering<\/td><\/tr><tr><td>vi<\/td><td>in some particular decisions during contract execution<\/em> \u2014 e.g., the exercise of the option clause or any variation beyond the laid-down percentage \u00b7 forfeiture\/ release of performance securities \u00b7 premature termination\/ foreclosure of contract<\/em>, etc.<\/td><\/tr><\/tbody><\/table><\/div>\nThe minister\/ board-level simplification (in all four):<\/p>\n<aside class=\"note\">\"wherever such Competent Authority is a minister of the Central Government (or board of directors in a CPSE), obtaining approvals at so many stages May delay the process and unnecessarily overburden them. Therefore, in such cases, their approval May only be obtained at the \"approval of financial evaluation and award of contract\". Powers for approvals at intermediate stages May be delegated to appropriate levels in such cases<\/strong>.\"<\/p><\/aside>\nthe Procuring Entity should lay down a Schedule of Procurement Powers (SoPP) detailing such thresholds<\/em>. It can also lay down the powers, jurisdiction, and composition of various levels of the Tender Committee and corresponding Competent Authority<\/em> for various categories of procurement and different threshold values.<\/p>\n<aside class=\"note\">(Suggested SoPP format \u2014 G<\/span> Annexure 4 \u00b7 W<\/span>, C<\/span>, NC<\/span> Annexure 2. The exact values of thresholds must be decided by the Procuring Entity in conformity with DFPR.<\/strong>)<\/em><\/p><\/aside>\n<h1>7.8 Role of the Tender Committee\/ CEC<\/span><\/h1>\n1. Custody: The member Secretary of the TC\/ CEC<\/strong> (OR THE competent Authority, in direct acceptance cases<\/em>) SHALL:<\/p>\n<ul class=\"lst\"><li>Receive the bids opened, along with other documents, from the Bid Opening Committee\/ tender opening officials<\/em>; and<\/li><li>BE responsible for the safe custody of the documents and for the processing involved at all steps in finalising the procurement<\/strong>.<\/li><\/ul>\n2. Scope of responsibility \u2014 and note how much wider the CEC's is:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>The Committee shall be responsible for<\/th><\/tr><\/thead><tbody><tr><td>G<\/span><\/td><td>ALL aspects and stages of the tender evaluation<\/em><\/td><\/tr><tr><td>W<\/span>, NC<\/span><\/td><td>all aspects and stages of the evaluation of technical and financial proposals, negotiations, and final award of contract<\/em><\/td><\/tr><tr><td>C<\/span><\/td><td>all aspects and stages of the consultant selection<\/strong> \u2014 that is: Evaluation of EoI \u00b7 shortlisting of consultants \u00b7 deciding tors \u00b7 issuance of RfP \u00b7 evaluation of technical and financial proposals \u00b7 negotiations \u00b7 and final selection of the consultant<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n3. The personal-discharge Rule \u2014 one of the most important governance provisions in the chapter:<\/p>\n<aside class=\"note\">\"TC\/ CEC duties are to be discharged personally by the nominated officers. They May take help of their subordinate officers by way of reports\/ evaluations \u2014 but they would still be answerable for such decisions.<\/strong><\/p>\n TC\/ CEC members cannot co-opt or nominate others to attend deliberations on their behalf.<\/strong><\/p>\n TC\/ CEC deliberations are best held across the table \u2014 and not through circulation of notes<\/strong>.\"<\/p><\/aside>\n4. The four pre-evaluation checks: After the proposals have been opened, the evaluation process can begin. Before starting the evaluation<\/strong>, the TC\/ CEC members should ensure that they: A) have no conflict of interest<\/strong>(W<\/span> adds: \"as defined in the tender document\")<\/em>; B) understand the evaluation criteria<\/strong> \u2014 C<\/span>: \"understand the rating and scoring system\"<\/em>; C) have been provided with evaluation worksheets<\/strong>; and d) AGREE ON how to evaluate the proposals<\/strong>.<\/p>\n<h1>7.9 Handling Dissent among the Tender Committee\/ CEC<\/span><\/h1>\n<aside class=\"note\">NOTE: The Consultancy Manual heads this section \"Handling Dissent among Tender Committee<\/em>\" \u2014 an apparent carry-over, since its committee is the CEC.<\/p><\/aside>\n1. Resolve by discussion, not by correspondence:<\/p>\n<aside class=\"note\">\"all members of the TC should resolve their differences through personal discussions \u2014 instead of making to-and-fro references in writing<\/strong>.\"<\/p><\/aside>\nin cases where it is not possible to come to a consensus<\/em> And differences persist amongst TC members:<\/p>\n<ul class=\"lst\"><li>THE reasons for dissent of a member should be recorded in a balanced manner, along with the majority's views on the dissent note<\/strong>;<\/li><li>THE final recommendations should be that of the majority view<\/strong>.<\/li><li>\"however, such situations should be rare.<\/strong>\"<\/li><li>the Competent Authority (ca) can overrule such dissent notes after recording reasons for doing so clearly. His decision would be final<\/strong>.<\/li><\/ul>\n2. Where the ca disagrees with the committee \u2014 the send-back procedure:<\/p>\n<aside class=\"note\">\"in cases where the ca does not agree with the majority or unanimous recommendations of the TC, he should record his views and, if possible, firstly send it back to TC to reconsider along the lines of the tender accepting authority's views.<\/strong><\/p>\nHowever, if the TC \u2014 after considering the views of the ca \u2014 sticks to its own earlier recommendations, the ca can finally decide as deemed fit, duly recording detailed reasons.<\/strong><\/p>\n He will be responsible for such decisions. However, such situations should be rare<\/strong>.\"<\/p><\/aside>\n<h1>7.10 Independence, Impartiality, Confidentiality and 'No Conflict of Interest' at All Stages of Evaluation of Bids<\/span><\/h1>\n1. No communication with bidders: Members of the TC\/ CEC should not have any conflict of interest, and should not directly engage in any communication with bidders \u2014 from the date of their appointment to the date on which the contract is awarded<\/strong>.<\/p>\n2. Confidentiality and its one exception:<\/p>\nInformation relating to the evaluation of bids and the committee's deliberations<\/em> Should be confidential, and not be shared with persons not officially connected with the process \u2014 until the award of the contract is notified to the successful firm<\/strong>.<\/p>\n<aside class=\"note\">The exception: \"\u2026Except that after technical evaluation, the list of successful bidders May be published, as required in the tender document.\"<\/em><\/p>\nthe absolute bar: \"under no circumstances should the tender file or confidential information contained therein be provided for scrutiny or for decision to any person\/ office who is not involved in decision-making<\/strong>.\"<\/p><\/aside>\n3. The declaration requirement \u2014 extended to non-members:<\/p>\n\"all technical, commercial and finance officials who have contributed to the techno-commercial or financial evaluation of bids \u2014 even though they May not be part of the TC \u2014 should:<\/strong><\/p>\n<ul class=\"lst\"><li>Deal with the procurement in an independent, impartial manner<\/strong>;<\/li><li>Have no conflict of interest with any of the bidders involved;<\/strong><\/li><li>Maintain confidentiality of the information processed during the evaluation process and not allow it to reach any unauthorised person<\/strong>.\"<\/li><\/ul>\nthey should sign a declaration at the end of their reports\/ notings<\/strong> Stating that:<\/p>\n<aside class=\"note\">\"I declare that i have no conflict of interest with any of the bidders in this tender.\"<\/strong><\/p><\/aside>\nTC members May also make such a declaration at the end of their reports.<\/em><\/p>\n4. Handling external references, grievances and directives during processing:<\/p>\n<aside class=\"note\">\"during the processing of the tender, all references\/ grievances\/ complaints\/ directives\/ requests for information from any sources \u2014 including higher-level officials\/ authorities within the Ministry or from outside \u2014 May be forwarded to the TC\/ convener of TC for its examination on merits and action as considered necessary \u2014 maintaining independence, impartiality, confidentiality and 'no conflict of interest'.<\/strong><\/p>\n An interim reply May be provided that the tender is still under consideration, and that a final response would be given after the declaration of the award of contract<\/strong>.\"<\/p><\/aside>\n<h1>7.11 Timely Processing of Tenders<\/span><\/h1>\n(Rule 174(i) of GFR 2017)<\/em><\/p>\n1. The 90 \u2192 60 \u2192 75 day Rule:<\/p>\n<aside class=\"note\">\"delays in finalising procurement deprive the public of the intended benefits and result in lost revenues and cost over-run.<\/strong><\/p>\nCurrently, the ministries\/ departments are generally awarding the contracts in 90 days from the date of tender opening \u2014 for which the ministries\/ departments are asking for a validity of offer by the contractors for 90 days.<\/strong><\/p>\n In order to further shorten the period for award of contract, the ministries\/ departments should try to shorten the procurement decision period to 60 days from the date of opening of the tenders in most of the cases.<\/strong><\/p>\n Only in exceptional cases \u2014 like two-packet\/ two-stage bidding \u2014 the period May be extended. However, in no case should this time period exceed 75 days<\/strong>.\"<\/p><\/aside>\n2. The CPWD example \u2014 maximum days for award of contract W<\/span>:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Procuring Officer<\/th><th>Limit of procurement (Rs. crore)<\/th><th>Maximum days for decision for award of contract<\/th><\/tr><\/thead><tbody><tr><td>Assistant Engineer<\/td><td>0.06<\/td><td>10 DAYS<\/td><\/tr><tr><td>Executive Engineer<\/td><td>1.00<\/td><td>15 DAYS<\/td><\/tr><tr><td>Superintending Engineer<\/td><td>10.00<\/td><td>30 DAYS<\/td><\/tr><tr><td>Chief Engineer<\/td><td>30.00<\/td><td>45 DAYS<\/td><\/tr><tr><td>Additional Director General and above<\/td><td>More than 30.00<\/td><td>60 DAYS<\/td><\/tr><\/tbody><\/table><\/div>\n3. The published Schedule and the accountability Rule:<\/p>\n\"the complete time Schedule of finalising the tender process \u2014 from the date of issuing the tender to the date of issuing the contract \u2014 should be published in the bid documents<\/strong>.\"<\/p>\n<aside class=\"note\">\"every official in the chain of the procurement operation is accountable for acting in a specified time, so that the tender is finalised on time. Any deviation from the Schedule May be monitored and explained, by way of a system of management reporting<\/strong>.\"<\/strong>(Appendices 4 and 5 of the Goods Manual.)<\/em><\/p>\na simple practical device: \"as a check, the proposed Schedule of tender process May be printed on the inside cover of the procurement file \u2014 where the actual date of completion of various stages May be recorded<\/strong>.\"<\/p><\/aside>\n4. The fixed weekly TC meeting day:<\/p>\n<aside class=\"note\">\"it has been also noted that delay in decision-making after opening of certain tenders is taking place because the tender committees are not meeting frequently.<\/strong><\/p>\nIn order to ensure that most of the tenders are decided as per the new timelines, it has been decided that the ministries\/ departments May notify at least one day of every week for the meeting of TC.<\/strong><\/p>\n Instructions May be issued by the concerned organisation that on such pre-fixed days, no member of the TC shall normally take leave or proceed on tour, etc<\/strong>.\"<\/p><\/aside>\n<h1>7.12 Extension of Bid\/ Tender Validity Period<\/span><\/h1>\n(Rule 174(iii) of GFR 2017)<\/em><\/p>\n1. The primary obligation: The entire process of scrutiny and evaluation of tenders, preparation of ranking statement and notification of award<\/em>must be done expeditiously and within the original tender validity period<\/strong>.<\/p>\n2. The extension procedure and its five Rules:<\/p>\nIf, due to some exceptional and unforeseen reasons<\/em>, the purchase organisation is unable to decide on the placement of the contract within the original validity period, it May:<\/p>\n<ul class=\"lst\"><li>Preferably request \u2014 before expiry of the original validity period<\/strong> \u2014 all the responsive tenderers<\/strong> To extend their tenders up to a specified period;<\/li><li>While asking for such extension, the tenderers are also to be asked to extend their offers \"as it is\", without any changes therein<\/strong>;<\/li><li>They May also be requested to extend the validity of the EMD for the corresponding additional period<\/strong> (which is to be specified in the request);<\/li><li>\"a tenderer May not agree to such a request \u2014 and this will not lead to forfeiture of its EMD<\/strong>\";<\/li><li>But the tenderers who do agree to extend the validity are to do so without changing any terms, conditions, and so on, of their original tenders<\/strong>;<\/li><li>Reasons for seeking extension of bid validity should be recorded by the procuring officers<\/strong>.<\/li><\/ul>\n3. TREATMENT OF \"not-EXTENDED\" AND \"WITHDRAWN\" BIDS \u2014 the three scenarios:<\/p>\n<aside class=\"note\">Definitions used:<\/strong>\"not-extended bids<\/em>\" = <\/strong>refusal by tenderer(s) to extend validity. <\/strong>\"withdrawn bids<\/em>\" = <\/strong>withdrawal of offer within validity.<\/p><\/aside>\nA) if it happens before completion of the techno-commercial evaluation<\/strong>:<\/p>\n<aside class=\"note\">Then the techno-commercial evaluation (including the not-extended and withdrawn bids) shall be completed<\/strong>. If a not-extended or withdrawn bid qualifies in techno-commercial evaluation<\/em>, the financial bid(s) of such bidders shall also be opened<\/strong>, and action shall be taken as per sub-para (b) below.<\/p><\/aside>\nB) if it happens after techno-commercial evaluation but before completion of financial bid evaluation<\/strong>:<\/p>\n<aside class=\"note\">Financial bid evaluation (including not-extended and withdrawn bids<\/strong>) shall be completed.<\/p>\n<ul class=\"lst\"><li>i) IF A withdrawn bid happens to be the L-1 bidder<\/strong> \u2014 (the lowest acceptable bidder, who is techno-commercially qualified for the supply of a bulk quantity, and would have been awarded a contract but for his refusal to extend validity)<\/em> \u2014 the tender must be re-tendered<\/strong>.<\/li><li>ii) since this May take some time, the Procuring Entity May cover their immediate short-term needs through an appropriate mode of procurement<\/strong>.<\/li><li>iii) the critical Rule: \"however, such L1 price of the not-extended or withdrawn bids shall not be taken as precedence for determining price estimates or reasonableness<\/strong>.\"<\/li><\/ul><\/aside>\nc) in case of QCBS<\/strong> System of evaluation:<\/p>\n<aside class=\"note\">The proposal obtaining the highest total combined score<\/strong> In evaluation of quality and cost is identified, which is ranked as H-1<\/strong>. If a not-extended or withdrawn bid happens to be the H-1 bidder, the tender must be re-tendered<\/strong>.<\/p><\/aside>\n<h1>7.13 Consideration of Lack of Competition in OTE\/ GTE and LTE<\/span><\/h1>\n(Rule 173(xx) and (xxi) of GFR 2017)<\/em><\/p>\n1. What counts as adequate competition:<\/p>\n\"the number of bids received which can indicate adequate competition depends on the parameters of procurement (value, specification, mode of procurement, tendering system, etc.) and the market situation. This has to be judged by the Tender Committee<\/strong>.\"<\/p>\n<aside class=\"note\">the benchmark: \"however, less than three independent bids (without suspicion of the cartel) May indicate a lack of competition<\/strong>.\"<\/p>\nthe mandatory paragraph: \"TC must record a paragraph in its report about the adequacy or otherwise of competition in the tender<\/strong>.\"<\/p><\/aside>\n2. THE 'single offer' situation \u2014 and the express criticism of routine re-tendering:<\/p>\nSometimes, against advertised\/ limited tender cases, the Procuring Entity May not receive a sufficient number of bids<\/em> And\/ or \u2014 after analysing the bids \u2014 ends up with only one responsive bid \u2014 a situation referred to as <\/strong>'Single offer'<\/em>.<\/p>\n<aside class=\"note\">AS PER Rule 173(xxi) of GFR 2017<\/em>, such a situation of 'single offer' is to be treated as single tender<\/strong>. The contract May be placed on the 'single offer' bidder, provided the quoted price is reasonable<\/strong>. However, restricted powers of single tender mode of procurement would apply<\/strong>.<\/p><\/aside>\nThe pre-retender check: \"before re-tendering, the Procuring Entity is first to check whether \u2014 while floating\/ issuing the enquiry \u2014 all necessary requirements and formalities such as standard conditions, industry-friendly specification, wide publicity, sufficient time for bidding, and so on, were fulfilled. If not, a fresh enquiry is to be issued after rectifying the deficiencies<\/strong>.\"<\/p>\n<aside class=\"note\">The express criticism \u2014 a passage worth memorising:<\/p>\n\"it has become a practice among some procuring entities to routinely assume that open tenders which result in single bids are not acceptable, and to go for re-tender as a safe course of action. This is not correct.<\/strong><\/p>\nRe-bidding has costs:<\/strong><\/p>\nFirstly, the actual costs of re-tendering;<\/strong><\/p>\nSecondly, the delay in execution of the work, with consequent delay in the attainment of the purpose for which the procurement is being done; And<\/strong><\/p>\nthirdly, the possibility that the re-bid May result in a higher bid.<\/strong><\/p>\n Lack of competition shall not be determined solely on the basis of the number of bidders<\/strong>.\"<\/p><\/aside>\nthe three conditions under which a single-bid process is valid:<\/p>\n<aside class=\"note\">\"even when only one bid is submitted, the process May be considered valid provided the following conditions are satisfied:<\/strong><\/p>\nA) the procurement was satisfactorily advertised, and sufficient time was given for submission of bids<\/strong>;<\/p>\nb) THE qualification criteria were not unduly restrictive<\/strong>; and<\/p>\nc) prices are reasonable in comparison to market values<\/strong>.\"<\/p><\/aside>\n3. The powers and the fallback: However, as far as delegation\/ Schedule of Procurement Powers<\/em> is concerned, the Competent Authority would be as in single tender mode<\/strong>. In case of price not being reasonable, negotiations (being L1) or re-tender May be considered as justifiable<\/strong>.<\/p>\n4. Unsolicited offers against LTEs \u2014 the general rule and its three exceptions:<\/p>\n\"unsolicited offers against ltes should be ignored; However, ministries\/ departments should evolve a system by which interested firms can enlist and bid in the next round of tendering.<\/strong>\"<\/p>\nhowever, under the following exceptional circumstances, these May be considered for acceptance at the next higher level of competency<\/strong>: A) inadequate competition; B) non-availability of suitable quotations from registered contractors; C) urgent demand, and capacity\/ capability of the firm offering the unsolicited [offer] being known<\/em>, etc.<\/p>\n<h1>7.14 Tender Committee\/ CEC Recommendations and Report<\/span><\/h1>\n1. What the committee must recommend:<\/p>\nThe TC has to make formal recommendations<\/strong> for the award of the contract to the bidder:<\/p>\n<ul class=\"lst\"><li>Whose bid has been determined to be substantially responsive<\/strong>; and<\/li><li>THE lowest evaluated bid<\/strong>;<\/li><li>Provided further that the bidder is determined to be qualified to perform the contract satisfactorily, and his credentials have been verified<\/strong>.<\/li><\/ul>\n<aside class=\"note\">(TC Minutes Format \u2014 G<\/span> Annexure 14 \u00b7 W<\/span> Annexure 4 \u00b7 C<\/span> Annexure 6 (CEC) \u00b7 NC<\/span> Annexure 6.)<\/em><\/p><\/aside>\n2. The good-practice Rule on deviations:<\/p>\n\"it is a good practice that TC should spell out salient terms and conditions of the offer(s) recommended for acceptance.<\/strong><\/p>\n<aside class=\"note\">It should also be ensured by the TC that any deviation\/ variation quoted by the contractor in his bid are not left un-deliberated and ruled upon in the TC \u2014 otherwise, there May be delay in acceptance of the contract by the contractor<\/strong>.\"<\/p><\/aside>\nthese recommendations are submitted for approval to the tender accepting authority<\/strong>.<\/p>\n3. No separate fa consultation \u2014 and the four-fold responsibility of the ca:<\/p>\n<aside class=\"note\">\"since a nominee of the Financial Adviser of the Department is usually a member of the Tender Committee, there is no need for the ca to consult the fa of the Department before accepting the TC recommendations.<\/strong><\/p>\n In any purchase decision, the responsibility of the ca is not discharged merely by selecting the cheapest offer or accepting TC recommendations \u2014 but [by] ensuring whether:<\/strong><\/p>\nA) offers have been invited in accordance with this Manual, and after following fair and reasonable procedures in prevailing circumstances;<\/strong><\/p>\nB) he is satisfied that the selected offer will adequately meet the requirement for which it is being procured;<\/strong><\/p>\nC) the price of the offer is reasonable and consistent with the quality required; And<\/strong><\/p>\nd) the accepted offer is the most appropriate, taking all relevant factors into account, in keeping with the standards of financial propriety<\/strong>.\"<\/p><\/aside>\n4. After the acceptance of these recommendations by the tender accepting authority, the letter (notification) of award (LoA) can be issued<\/strong>.<\/p>\n<h1>7.15 Preliminary Examination<\/span><\/h1>\n<h2>7.15.1<\/span>Unresponsive Bids<\/span><\/h2>\nThe definition: \"a substantively responsive bid is complete and conforms to the tender document's essential terms, conditions, and requirements \u2014 without substantive deviation, reservation, or omission<\/strong>.\"<\/p>\n\"only substantively responsive bids shall be considered for further evaluation. Other bids shall be treated as unresponsive and ignored. All bids received shall first be scrutinised to identify unresponsive bids, if any<\/strong>.\"<\/p>\nthe nine grounds on which a bid May be declared unresponsive:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Ground<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>the bid is not in the prescribed format<\/em>, OR IS unsigned<\/em>, OR not signed as per the stipulations<\/em> In the tender document<\/td><\/tr><tr><td>2<\/td><td>the required EMD has not been provided<\/em>, OR exemption from EMD is claimed without acceptable proof of exemption<\/em><\/td><\/tr><tr><td>3<\/td><td>the bidder is not eligible to participate<\/em> As per the eligibility criteria laid down (including conflict of interest and other provisions of CIPP<\/em>).<\/strong> In case procurement is on a limited tender basis<\/em>, or where procurement is restricted to pre-approved vendors<\/em>, it should be especially ensured that there is no conflict of interest<\/strong><\/td><\/tr><tr><td>4<\/strong>G<\/span> ONLY<\/td><td>the bidder has *quoted for goods manufactured by a different firm, <\/strong>without the required authority letter from the proposed manufacturer<\/td><\/tr><tr><td>5<\/td><td>the bid departs from the essential requirements<\/em> Specified in the tender document (for example, the bidder has not agreed to give the required performance security)<\/em><\/td><\/tr><tr><td>6<\/td><td>against a Schedule in the list of requirements, the bidder has not quoted for the entire requirement as specified in that Schedule<\/strong>. Worked example: \"in a schedule, it has been stipulated that the bidder will SUPPLY the equipment, INSTALL and COMMISSION it, and also TRAIN the purchaser's operators for operating the equipment. The bidder has, however, quoted only for the supply of the equipment.\"<\/em><\/td><\/tr><tr><td>7<\/td><td>bidder has quoted conditional bids, or more than one bid, or alternative bids<\/strong> \u2014 unless permitted explicitly in the tender document<\/em><\/td><\/tr><tr><td>8<\/td><td>THE bid validity is shorter than the required period<\/strong>. However, in case of STE\/ PAC procurement<\/strong> *(NC<\/span>: \"in case of STE procurement\")*, shorter bid validity May be accepted<\/strong><\/td><\/tr><tr><td>9<\/td><td>non-submission, or submission of illegible scanned copies<\/strong> Of stipulated documents\/ declarations<\/strong>(G<\/span> adds: \"if so stipulated in the Tender Document\")<\/em><\/td><\/tr><tr><td>10<\/strong>NC<\/span> ONLY<\/td><td>the bid has unresolved substantive deviations<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>7.15.2<\/span>Non-conformities between Figures and Words \u2014 the Four Correction Rules<\/span><\/h2>\n\"sometimes, non-conformities\/ errors are also observed in responsive tenders between the quoted prices in figures and words. This situation normally does not arise in the case of e-procurement.<\/strong>\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Discrepancy<\/th><th>Which prevails<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>between the unit price<\/em> And the total price<\/strong><\/em>(the total obtained by multiplying the unit price by the quantity)<\/em><\/td><td>THE unit price shall prevail<\/strong>, and the total price corrected accordingly<\/strong><\/td><\/tr><tr><td>2<\/td><td>an error in a TOTAL<\/em> Corresponding to the addition or subtraction of sub-totals<\/em><\/td><td>THE sub-totals shall prevail<\/strong>, and the total shall be corrected<\/strong><\/td><\/tr><tr><td>3<\/td><td>between WORDS<\/em> AND figures<\/em><\/td><td>THE amount in words shall prevail<\/strong><\/td><\/tr><tr><td>4<\/td><td>The procedural consequence<\/td><td>such a discrepancy in an offer should be conveyed to the bidder, asking him to respond by a target date<\/strong>. If the bidder does not agree to the Procuring Entity's observation, the bid is liable to be rejected<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>7.15.3<\/span>Discrepancies between Original and Additional\/ Scanned Copies of a Bid<\/span><\/h2>\n\"normally, as far as feasible, no submission of original documents in physical format should be asked for in e-procurement \u2014 other than: Cost of tender documents (if any), Bid Security, and statutory certificates (if any)<\/strong>.\"<\/p>\nin e-procurement, there could be discrepancies between the uploaded scanned copies and the originals submitted by the bidder<\/em>. In off-line tenders, discrepancies May be observed between the original copy and other copies of the responsive bids<\/em>.<\/p>\n<aside class=\"note\">The Rule: \"if discrepancies exist between the uploaded scanned or other copies and the originals submitted by the bidder, the original copy's text, etc., shall prevail<\/strong>.\"<\/p><\/aside>\nthis issue is also to be addressed with the bidder in the same manner as above<\/em>, and subsequent actions shall be taken accordingly.<\/p>\n<aside class=\"note\">The integrity consequence: \"any substantive discrepancy shall be construed as a violation of the Code of Integrity \u2014 and the bid shall be liable to be rejected as non-responsive, in addition to other punitive actions under the tender document<\/strong>.\"<\/p><\/aside>\n<h2>7.15.4<\/span>Deviations, Reservations and Omissions \u2014 Substantive or Minor<\/span><\/h2>\n1. The three definitions:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Term<\/th><th>Definition<\/th><\/tr><\/thead><tbody><tr><td>\"Deviation\"<\/td><td>IS A departure from the requirements<\/strong> Specified in the tender document<\/td><\/tr><tr><td>\"Reservation\"<\/td><td>IS THE setting of limiting conditions, or withholding from complete acceptance<\/strong> Of the requirements specified in the tender document<\/td><\/tr><tr><td>\"Omission\"<\/td><td>IS THE failure to submit part, or all, of the information or documentation<\/strong> Required in the tender document<\/td><\/tr><\/tbody><\/table><\/div>\n2. The three-limb test for a substantive<\/em> Deviation:<\/p>\n<aside class=\"note\">\"a deviation\/ reservation\/ omission from the requirements of the tender document shall be considered a substantive deviation as per the following norm \u2014 and the rest shall be considered a minor deviation:<\/strong><\/p>\nA) which affects in any substantive way the scope, quality, or performance of the product;<\/strong><\/p>\nB) which limits in any substantive way \u2014 inconsistent with the tender document \u2014 the Procuring Entity's rights, or the bidder's obligations under the contract; Or<\/strong><\/p>\nc) whose rectification would unfairly affect the competitive position of other bidders presenting substantively responsive bids<\/strong>.\"<\/p><\/aside>\n3. The consequence and its one exception: \"the decision of the Procuring Entity shall be final in this regard. Bids with substantive deviations shall be rejected as non-responsive.<\/strong>\"<\/p>\n<aside class=\"note\">the exception: \"however, bids with deviations May [be] accepted in case of STE\/ PAC procurement \u2014 with approval of competent financial authority, with reasons recorded for accepting such deviations<\/strong>.\"<\/p><\/aside>\n4. THE \"better than asked for\" RULE \u2014 a provision often missed:<\/p>\n<aside class=\"note\">\"variations and deviations and other offered benefits (techno-commercial or financial) above the scope\/ quantum of the goods specified in the tender document shall not influence evaluation of bids.<\/strong><\/p>\n [But] if the bid is otherwise successful, the Procuring Entity shall avail of such benefits \u2014 and these will become part of the contract<\/strong>.\"<\/p><\/aside>\n5. Examples of minor issues: During the preliminary examination, some minor infirmity and\/ or irregularity and\/ or non-conformity<\/em> May also be found in some bids. Such minor issues could be:<\/p>\n<aside class=\"note\">Missing pages\/ attachments \u00b7 illegibility in a submitted document \u00b7 or non-submission of the requisite number of copies of a document<\/strong><\/p><\/aside>\n6. Considering minor deviations \u2014 and the judicial precedent cited:<\/p>\n<aside class=\"note\">\"there have also been cases where the bidder submitted the amendment Bank Guarantee but omitted to submit the main portion of the document. The court ruled that this was a minor irregularity.<\/strong><\/p>\nThe court has consistently taken the view that the Procuring Entity is entitled to consider and allow minor deviations that do not amount to substantive deviations.<\/strong>\"<\/p><\/aside>\nthe four-fold test for accepting a minor deviation: \"the Procuring Entity reserves the right to accept bids with such minor issues \u2014 provided they:<\/strong><\/p>\n<ul class=\"lst\"><li>Do not constitute any substantive deviation;<\/strong><\/li><li>Do not have a fiscal impact;<\/strong><\/li><li>Do not prejudice, or affect the ranking order of the bidders; And<\/strong><\/li><li>do not grant the bidder any undue advantage vis-\u00e0-vis other bidders and the Procuring Entity<\/strong>.\"<\/li><\/ul>\nwherever necessary, the Procuring Entity shall convey its observation on such 'minor' issues to the bidder<\/em>. If the bidder does not reply by the specified date, or gives an evasive reply without clarifying the point at issue in clear terms \u2014 that bid shall be liable to be rejected as non-responsive<\/strong>.<\/p>\n<h2>7.15.5<\/span>Clarification of Bids \/ Shortfall Documents<\/span><\/h2>\n1. The clarification procedure and its three absolute bars:<\/p>\nDuring the evaluation and comparison of bids, the purchaser May \u2014 at his discretion<\/strong> \u2014 ask the bidder for clarifications on the bid<\/em>.<\/p>\nThe request for clarification shall be given in writing by registered\/ speed post\/ courier\/ email<\/strong>, asking the bidder to respond by a specified date \u2014 mentioning therein that if the bidder does not comply or respond by the date, his tender will be liable to be rejected<\/strong>.<\/p>\n<aside class=\"note\">The three bars:<\/p>\n<ul class=\"lst\"><li>\"no change in prices or substance of the bid, which May grant any undue advantage to such bidder, shall be sought, offered, or permitted.<\/strong>\"<\/li><li>\"no post-bid clarification at the initiative of the bidder shall be entertained.<\/strong>\"<\/li><\/ul><\/aside>\n2. The shortfall-documents Rule \u2014 the \"historical documents\" test:<\/p>\n<aside class=\"note\">\"the Procuring Entity reserves its right to \u2014 but without any obligation to do so \u2014 seek any shortfall information\/ documents:<\/strong><\/p>\n\u2022 only in case of historical documents that pre-existed at the time of the bid opening; And<\/strong><\/p>\n\u2022 which have not undergone change since then; And<\/strong><\/p>\n\u2022 which does not grant any undue advantage to any bidder.<\/strong>\"<\/p><\/aside>\nprovision May be made by e-procurement portals for requesting shortfall documents from the bidders. The system May further allow shortfall documents to be taken from any bidders only once after the technical bid opening<\/strong>.<\/p>\n<aside class=\"note\">Worked example: \"If the permanent account number or registration with GST has been asked to be submitted, and the bidder has not provided them \u2014 these documents may be asked for with a target date as above.\"<\/em><\/p><\/aside>\nThe qualification-documents Rule \u2014 and the crucial worked example:<\/p>\n<aside class=\"note\">\"as far as the submission of documents is concerned regarding qualification criteria \u2014 after submission of the bid, only related shortfall documents should be asked for and considered.<\/strong><\/p>\n for example: If the bidder has submitted a supply order without its completion\/ performance certificate, the certificate can be asked for and considered.<\/strong><\/p>\n However, no new supply order should be asked for to qualify the bidder<\/strong>.\"<\/p><\/aside>\n<h2>7.15.6<\/span>Evaluation of Eligibility<\/span><\/h2>\nthe Procuring Entity shall determine \u2014 to its satisfaction<\/strong> \u2014 whether the bidders are eligible as per the eligibility criteria in the tender document<\/strong> To participate in the tender process.<\/p>\nTenders that do not meet the required eligibility criteria prescribed shall be rejected as unresponsive.<\/strong><\/p>\n<h1>Appendix to Chapter 7 \u2014 Part a: Points of Difference<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Chapter number<\/td><td>G: Ch. 7 \u00b7 W: Ch. 6 \u00b7 C: Ch. 8 \u00b7 NC: Ch. 7<\/td><\/tr><tr><td>2<\/td><td>Chapter title<\/td><td>G\/NC: *Bid Evaluation and Award of Contract \u00b7 W: *Evaluation of Bids and Award of Worksuffix<\/strong> \u00b7 C: RfP Evaluation and Award of Contract<\/strong><\/td><\/tr><tr><td>3<\/td><td>Whole additional Chapter \u2014 Shortlisting of Consultants, EoI<\/td><td>C only (its Chapter 7)<\/td><\/tr><tr><td>4<\/td><td>the evaluating body<\/td><td>g\/w\/nc: *Tender Committee (TC) \u00b7 c: *Consultancy Evaluation Committee (CEC)<\/strong><\/td><\/tr><tr><td>5<\/td><td>Scope of the Committee's responsibility<\/td><td>G: all aspects of tender evaluation \u00b7 W\/NC: adds negotiations and final award \u00b7 C: adds evaluation of EoI, shortlisting, deciding ToRs, and issuance of RfP<\/em><\/td><\/tr><tr><td>6<\/td><td>EoI shortlist size<\/td><td>C only: minimum three (Rule 184 GFR) and generally not more than eight; if more qualify, restrict to eight based on higher Average Turnover<\/td><\/tr><tr><td>7<\/td><td>EoI shortlist validity<\/td><td>C only: Six months if not specified; beyond 6 months, better to re-invite EoI<\/td><\/tr><tr><td>8<\/td><td>EoI minimum qualifying marks<\/td><td>C only: normally 75%<\/td><\/tr><tr><td>9<\/td><td>Start-up relaxation at EoI<\/td><td>C only: up to \u03bb = 20%<\/td><\/tr><tr><td>10<\/td><td>The turnover-multiple criticism (5\u201310 times \"appears high\"); upper cap so as not to restrict competition to \"the big four or five Consultancy Firms\"<\/td><td>C ONLY<\/td><\/tr><tr><td>11<\/td><td>Key Experts not evaluated at EoI stage<\/td><td>C ONLY<\/td><\/tr><tr><td>12<\/td><td>\"Qualifications leasing\" risk<\/td><td>C ONLY<\/td><\/tr><tr><td>13<\/td><td>Direct acceptance threshold<\/td><td>G\/C\/NC: Rs 50 lakh \u00b7 W: \"normally LTE threshold of Rs 50 lakhs<\/em>\"<\/td><\/tr><tr><td>14<\/td><td>Rule 173(xxii) extended to the ACCEPTING AUTHORITY<\/td><td>W + C<\/strong>(G states it only for committee members)<\/em><\/td><\/tr><tr><td>15<\/td><td>Express urging to apply Rule 173(xxii) below the threshold too<\/td><td>G + C<\/td><\/tr><tr><td>16<\/td><td>Convenor's duty to distribute the RfP and call a familiarisation meeting<\/td><td>C ONLY<\/td><\/tr><tr><td>17<\/td><td>\"Understand the evaluation criteria\" vs \"understand the rating and scoring system\"<\/td><td>G\/W\/NC vs C<\/td><\/tr><tr><td>18<\/td><td>The large-envelope custody safeguard for unopened financial bids<\/td><td>W + C + NC<\/td><\/tr><tr><td>19<\/td><td>Comparative statement \u2014 vetting by Finance not required if prepared by the e-Procurement portal<\/td><td>W ONLY<\/td><\/tr><tr><td>20<\/td><td>The permitted evaluation factors list, and \"no criteria that cannot be verified OR are not stated in the contract\"<\/td><td>W ONLY<\/td><\/tr><tr><td>21<\/td><td>Caution that preferences must not result in single-vendor selection<\/td><td>G ONLY<\/td><\/tr><tr><td>22<\/td><td>CPWD table of maximum days for award (10\/15\/30\/45\/60 days)<\/td><td>W ONLY<\/td><\/tr><tr><td>23<\/td><td>\"Notify at least one day every week for TC meeting; no leave or tour on such days\"<\/td><td>W<\/strong>(also in C\/NC in similar terms)<\/em><\/td><\/tr><tr><td>24<\/td><td>Print the tender schedule on the inside cover of the Procurement File<\/td><td>W<\/td><\/tr><tr><td>25<\/td><td>Withdrawn L-1 bid \u2192 must re-tender; and such L1 price not to be taken as precedence for price estimates or reasonableness<\/td><td>Common \u2014 but the QCBS\/H-1 variant is in W, C, NC<\/td><\/tr><tr><td>26<\/td><td>Withdrawn\/ not-extended H-1 bid in QCBS \u2192 must re-tender<\/td><td>W + C + NC<\/strong>(no QCBS in Goods)<\/em><\/td><\/tr><tr><td>27<\/td><td>Ground 4 for unresponsiveness \u2014 quoting for goods of a different manufacturer without authority letter<\/td><td>G ONLY<\/td><\/tr><tr><td>28<\/td><td>Ground 10 \u2014 \"unresolved substantive deviations\"<\/td><td>nc only<\/td><\/tr><tr><td>29<\/td><td>Shorter bid validity acceptable in STE\/ PAC<\/em><\/td><td>G<\/strong> \u00b7 NC says only \"STE\"<\/strong>(consistent with Works and NC treatment of PAC)<\/em><\/td><\/tr><tr><td>30<\/td><td>Bids with deviations may be accepted in STE\/ PAC with CFA approval<\/td><td>G<\/td><\/tr><tr><td>31<\/td><td>The amendment-Bank-Guarantee judicial precedent on minor irregularity<\/td><td>G + W + NC<\/td><\/tr><tr><td>32<\/td><td>Shortfall documents may be taken only ONCE after technical bid opening<\/td><td>G<\/strong>(stated expressly)<\/em><\/td><\/tr><tr><td>33<\/td><td>\"No new supply order should be asked for to qualify the bidder\"<\/td><td>G + W<\/td><\/tr><tr><td>34<\/td><td>Unsolicited offers against LTE \u2014 three exceptional circumstances for acceptance at next higher level<\/td><td>W<\/strong>(fullest statement)<\/em><\/td><\/tr><tr><td>35<\/td><td>The express criticism of routine re-tendering on single bids, and the three validity conditions<\/td><td>W<\/strong>(fullest); echoed in G\/C\/NC<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 7 \u2014 part a<\/p>\n<aside class=\"note\">Next:<\/strong>Chapter 7 \u2014 part b: Techno-commercial evaluation, financial evaluation and award of contract<\/strong> \u2014 Evaluation of Eligible Techno-commercial Bids \u00b7 Evaluation of the Quality \u2013 Technical Proposals (C only, with its rating\/grading schemes to mitigate subjectivity)<\/strong> \u00b7 Ranking of Financial Bids \u00b7 LCS \u00b7 QCBS \u00b7 SSS \u00b7 FBS \u00b7 GTE evaluation \u00b7 Rate Contract evaluation \u00b7 Reasonableness of Prices \u00b7 Abnormally Low Bids<\/strong> \u00b7 Cartel Formation\/ Pool Rates\/ Bid Rigging<\/strong> \u00b7 Negotiations for Reduction of Prices \u00b7 Variation of Quantities and the Option Clause \u00b7 Splitting\/ Parallel Contracts \u00b7 Cancellation and Re-tender \u00b7 Negotiations to Freeze Description of Service (C only)<\/strong> \u00b7 LoA \u00b7 Publication of Award \u00b7 Framing of Contract \u00b7 Audit Trails<\/strong> \u00b7 Risks and Mitigations.<\/p><\/aside>Part II<\/span>Evaluation, Negotiation and Award<\/em><\/p>\nMerging: Goods Ch. 7<\/strong> (paras 7.4\u20137.8) \u00b7 Works Ch. 6<\/strong> (paras 6.4\u20136.6) \u00b7 Consultancy Ch. 8<\/strong> (paras 8.4\u20138.8) \u00b7 Non-Consultancy Ch. 7<\/strong> (paras 7.3.4\u20137.6)<\/em><\/p><h2>Concordance for Chapter 7 \u2014 Part B<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>Goods<\/th><th>Works<\/th><th>CS<\/th><th>NCS<\/th><\/tr><\/thead><tbody><tr><td>7.16<\/td><td>Evaluation of Eligible Techno-commercial Bids<\/td><td>7.4.2<\/td><td>6.4.1<\/td><td>8.3<\/td><td>7.3.4<\/td><\/tr><tr><td>7.17<\/td><td>Evaluation of the Quality \u2014 Technical Proposals<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.4<\/td><td> \u2014 <\/td><\/tr><tr><td>7.18<\/td><td>General Norms for Ranking of Financial Bids<\/td><td>7.5<\/td><td>6.4.2<\/td><td>8.5.1<\/td><td>7.4.1<\/td><\/tr><tr><td>7.19<\/td><td>Least Cost Selection (LCS)<\/td><td>(the default)<\/em><\/td><td>6.4.3<\/td><td>8.5.2<\/td><td>7.4.2<\/td><\/tr><tr><td>7.20<\/td><td>Quality and Cost Based Selection (QCBS)<\/td><td> \u2014 <\/td><td>6.4.5<\/td><td>8.5.3<\/td><td>7.4.4<\/td><\/tr><tr><td>7.21<\/td><td>Single Source Selection (SSS)<\/td><td> \u2014 <\/td><td>6.4.4<\/td><td>8.5.4<\/td><td>7.4.3<\/td><\/tr><tr><td>7.22<\/td><td>Fixed Budget Selection (FBS)<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.5.5<\/td><td> \u2014 <\/td><\/tr><tr><td>7.23<\/td><td>GTE Tenders \u2014 evaluation<\/td><td>7.5.2<\/td><td>6.4.6<\/td><td>8.5.6<\/td><td>7.4.5<\/td><\/tr><tr><td>7.24<\/td><td>Concurrent Application of MSE and MII Policies<\/td><td>7.5.1<\/td><td> \u2014 <\/td><td>8.5.8<\/td><td>7.4.6<\/td><\/tr><tr><td>7.25<\/td><td>Evaluation in Rate Contracts<\/td><td>7.5.3<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>7.26<\/td><td>Variation of Quantities at the Time of Award<\/td><td>7.6.3<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>7.27<\/td><td>Option Clause<\/td><td>7.6.4<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>7.28<\/td><td>Splitting of Contracts\/ Parallel Contracts<\/td><td>7.6.5<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>7.29<\/td><td>Reasonableness of Prices<\/td><td>7.6.6<\/td><td>6.4.7<\/td><td> \u2014 <\/td><td>7.4.7<\/td><\/tr><tr><td>7.30<\/td><td>Consideration of Abnormally Low Bids<\/td><td>7.6.7<\/td><td>6.4.8<\/td><td>8.5.7<\/td><td>7.4.8<\/td><\/tr><tr><td>7.31<\/td><td>Cartel Formation\/ Pool Rates\/ Bid Rigging<\/td><td>7.6.8<\/td><td>6.4.9<\/td><td>8.5.7<\/td><td>7.4.9<\/td><\/tr><tr><td>7.32<\/td><td>Negotiations for Reduction of Prices<\/td><td>7.6.9<\/td><td>6.4.10<\/td><td>8.5.7<\/td><td>7.4.10<\/td><\/tr><tr><td>7.33<\/td><td>Negotiations to Freeze Description of Service<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.6<\/td><td> \u2014 <\/td><\/tr><tr><td>7.34<\/td><td>Cancellation of Procurement\/ Rejection of All Bids\/ Re-tender<\/td><td>7.6.11<\/td><td>6.4.11<\/td><td>8.5.9<\/td><td>7.4.11<\/td><\/tr><tr><td>7.35<\/td><td>LoA to Successful Bidder<\/td><td>7.7.1<\/td><td>6.5.1<\/td><td>8.7.1<\/td><td>7.5.1<\/td><\/tr><tr><td>7.36<\/td><td>Publication of Award; Return of EMD<\/td><td>7.7.2<\/td><td>6.5.2<\/td><td>8.7.2<\/td><td>7.5.2<\/td><\/tr><tr><td>7.37<\/td><td>Performance Security<\/td><td>7.7.3<\/td><td>6.5.3<\/td><td> \u2014 <\/td><td>7.5.3<\/td><\/tr><tr><td>7.38<\/td><td>Acknowledgement and Execution of Contract<\/td><td>7.7.4<\/td><td>6.5.4<\/td><td> \u2014 <\/td><td>7.5.4<\/td><\/tr><tr><td>7.39<\/td><td>Framing of Contract<\/td><td>7.7.5<\/td><td>6.5.5<\/td><td> \u2014 <\/td><td>7.5.5<\/td><\/tr><tr><td>7.40<\/td><td>Audit Trails \u2014 Procurement Records<\/td><td>7.7.6<\/td><td>6.5.6<\/td><td> \u2014 <\/td><td>7.5.6<\/td><\/tr><tr><td>7.41<\/td><td>Risks and Mitigations<\/td><td>7.8<\/td><td>6.6<\/td><td>8.8<\/td><td>7.6<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>7.16 Evaluation of Eligible Techno-commercial Bids<\/span><\/h1>\n<h2>7.16.1<\/span>Evaluation of Qualification Criteria<\/span><\/h2>\n1. What is ascertained: In evaluating the techno-commercial bid, conformity to the eligibility\/ qualification criteria, technical specifications, and quality assurance; And commercial conditions of the offered goods to those in the tender document<\/strong> is ascertained.<\/p>\nAdditional factors incorporated in the tender document shall also be considered in the manner indicated therein<\/em>.<\/p>\nThis determination will, inter alia<\/em>, consider the bidder's financial, technical, and production capabilities<\/strong> To satisfy all the Procuring Entity's requirements as incorporated in the tender document.<\/p>\nSuch determination shall be based upon scrutiny and examination of all relevant data and details submitted by the bidder in its bid<\/strong>, as well as such other allied information as deemed appropriate by the Procuring Entity<\/em>.<\/p>\n<aside class=\"note\">The no-borrowed-credentials Rule: \"the determination shall not consider the qualifications of other firms \u2014 such as the bidder's subsidiaries, parent entities, allied firms, subcontractors (*other than specialised subcontractors, if permitted in the bidding document*), or any other firm(s) different from the bidder<\/strong>.\"<\/p><\/aside>\n2. Start-up relaxation: The condition of prior turnover and prior experience May be relaxed for start-ups<\/em> (Only to start-ups recognised by DPIIT), subject to meeting quality & technical specifications and making suitable provisions in the tender document (Rule 173(i) of GFR 2017)<\/em>. Such relaxation is not optional but has to be ensured<\/strong> \u2014 except for items related to public safety, health, critical security operations and equipment<\/em>, where adequate justification exists.<\/p>\n<h2>7.16.2<\/span>Evaluation of Technical Suitability<\/span><\/h2>\nTHE description, specifications, drawings, and other technical terms and conditions<\/strong> Are examined by the TC in general, and by a technical member of the TC in particular<\/strong>.<\/p>\n<aside class=\"note\">The absolute bar: \"nobody outside the TC should be allowed to determine this evaluation<\/strong>.\"<\/p><\/aside>\nthe alternative-offers Rule: \"the tender document should clearly State whether alternative offers\/ makes\/ models would be considered or not \u2014 and, in the absence of an express statement to the effect, these should not be allowed<\/strong>.\"<\/p>\nan important document is the exceptions\/ deviation form submitted by the bidder<\/strong>. It is important to judge whether an exception\/ deviation is minor or major<\/strong>. Minor exceptions\/ deviations May be waived following the criteria in part a, Para 7.15.4-6.<\/p>\n<h2 class=\"src-G\">7.16.3<\/span>Evaluation of Bids involving Samples\/ Demos<\/span>G<\/span><\/h2><div class=\"srcblock src-G\">\n<aside class=\"note\">Cross-reference: calling for a sample along with the bid for evaluation is strictly DISCOURAGED \u2014 see Chapter 2, para 2.4.3.<\/em><\/p><\/aside>\n\"evaluation of techno-commercial bids should not be done based on the evaluation of samples or demos \u2014 in view of the subjectivity involved<\/strong>.\"<\/p>\nThe permitted alternative \u2014 the reference-sample route:<\/p>\n<ul class=\"lst\"><li>IF A purchaser's reference sample has been displayed<\/em> for prospective bidders to illustrate the desired indeterminable characteristics<\/em>, the contract should mention that final supplies must meet such characteristics of the reference sample, in addition to the specifications\/ drawings<\/strong>.<\/li><li>If required, a provision for the submission of a pre-production sample matching the purchaser's reference sample by the successful bidder(s) May be stipulated before giving clearance for bulk production<\/strong>.<\/li><\/ul>\nThere should be a time limit for submission and approval of the pre-production sample<\/strong>.<\/p>\n<aside class=\"note\">The exit provision: \"in case the contractor is not able to come up with a satisfactory pre-production sample matching the purchaser's reference sample within the stipulated time-limit or a reasonable extension thereof \u2014 a provision should be provided for cancellation of the contract without repercussion on either side<\/strong>.\"<\/p><\/aside>\n<\/div><h2>7.16.4<\/span>Evaluation of Commercial Conditions \u2014 and the SEVEN \"CRITICAL PROVISIONS\"<\/span><\/h2>\nbidder must comply with all the commercial and other clauses<\/em> Of the tender document.<\/p>\nThe Procuring Entity shall evaluate the commercial conditions quoted by the bidder to confirm that all terms and conditions stipulated in the tender document have been accepted without substantive omissions\/ reservations\/ exception\/ deviation<\/strong>.<\/p>\n<aside class=\"note\">The deeming provision: \"deviations from, or objections or reservations to, critical provisions identified in the tender documents will be deemed to be a material deviation.<\/strong><\/p>\n If critical provisions are not explicitly stated in the tender document, then these shall be taken to be:<\/strong><\/p>\n1. Governing laws and jurisdiction<\/strong><\/p>\n2. Contractor's obligations and restrictions of its rights<\/strong><\/p>\n3. Performance bond\/ security<\/strong><\/p>\n4. Force Majeure<\/strong><\/p>\n5. Taxes & duties<\/strong><\/p>\n6. Code of Integrity<\/strong>\"<\/p><\/aside>\nONLY minor deviations May be accepted\/ allowed \u2014 provided these do not constitute substantive deviations<\/strong>.<\/p>\n<h2>7.16.5<\/span>Declaration of Successful Bidders<\/span><\/h2>\n1. Single-envelope tenders: In a single envelope\/ cover tender, TC proceeds to evaluate the price aspects without a reference to ca at this stage<\/strong>.<\/p>\n2. Multiple-envelope tenders \u2014 the technical evaluation report:<\/p>\nThe TC prepares a recommendation for a techno-commercial bid to declare successful bidders<\/strong>.<\/p>\n\"for each proposal, the report also should substantiate the results of the evaluation and indicate technical weaknesses or deviations from the terms set out in the tender documents \u2014 and comment on their acceptability<\/strong>.\"<\/p>\n<aside class=\"note\">the critical limit on the ca's power: \"the ca May ask the TC to explain the report \u2014 but should not request that evaluation be changed<\/strong>.\"<\/p><\/aside>\nit should review the tc's evaluation of each proposal<\/em> (On technical, contractual, and other aspects).<\/p>\nThe ca should decide how any acceptable deviation in each proposal should be handled during contract formulation, in case that proposal is ranked first<\/strong>.<\/p>\n<aside class=\"note\">Confidentiality and retention: \"the technical evaluation report is a confidential document, and its contents shall not be disclosed. All records relating to the evaluation shall be retained until completion of the project and its audit<\/strong>.\"<\/p><\/aside>\n3. Announcement and the two timelines:<\/p>\nAfter the approval of ca, the results of the techno-commercial bid evaluation are to be announced (including informing the failed bidders)<\/strong>.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Event<\/th><th>Timeline<\/th><\/tr><\/thead><tbody><tr><td>Return of Bid securities of unsuccessful bidders of the first stage<\/td><td>within 30 days of declaration of result of the first stage<\/strong> (i.e., technical evaluation)<\/td><\/tr><tr><td>Opening of FINANCIAL BIDS<\/td><td>Date\/ time and place (or on the portal in e-procurement) ANNOUNCED, in the presence of technically suitable bidders who are willing to attend<\/strong>. Such a date should be two to five (5) days after the announcement<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h1>7.17 Evaluation of the Quality \u2014 Technical Proposals [C ONLY]<\/span><\/h1>\n<aside class=\"note\">This entire section exists only in the consultancy Manual. It is the apparatus that gives effect to QCBS in consultancy, and it has NO counterpart in Goods, Works or Non-Consultancy.<\/p><\/aside>\n<h2>7.17.1<\/span>Responsiveness to the ToR<\/span><\/h2>\nThe CEC shall evaluate each proposal on the basis of its responsiveness to the ToR<\/strong>.<\/p>\nProposals not responding to the ToR fully and properly will be summarily rejected as being non-responsive<\/strong> \u2014 before taking up the appraisal of the technical proposal for evaluation of quality<\/strong>.<\/p>\n<aside class=\"note\">The price-leakage Rule: \"a technical proposal pre-disclosing any material pricing information shall also be rejected<\/strong>.\"<\/p><\/aside>\n<h2>7.17.2<\/span>Criteria and Sub-criteria \u2014 the Four Heads and the Absolute-Grading Rule<\/span><\/h2>\n1. The four criteria, totalling 100 marks: CEC shall evaluate the quality of the technical proposal by awarding marks so as to make the total maximum technical score of 100 (one hundred)<\/strong>, FOR:<\/p>\nA) the consultant's relevant experience<\/strong> for the assignment;<\/p>\nb) THE quality of the methodology<\/strong> Proposed;<\/p>\nc) THE qualifications of the key staff<\/strong> PROPOSED; and<\/p>\nd) capability for transfer of knowledge<\/strong> (if relevant).<\/p>\n<aside class=\"note\">The absolute-grading Rule \u2014 one of the most important principles in the chapter:<\/p>\n\"each proposal should be judged on its own merits and assigned an absolute \u2014 not comparative \u2014 grade against predefined criteria and sub-criteria.<\/strong><\/p>\nA comparative evaluation would single out the best proposal on a relative scale \u2014 but still could leave the Procuring Entity with a poor proposal<\/strong>.\"<\/p><\/aside>\n2. The model scheme of maximum\/ minimum marks:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Rated Criteria<\/th><th>Range of Percentage for Score<\/th><\/tr><\/thead><tbody><tr><td>1. Consultancy firm's experience relevant to assignment<\/td><td>5\u201310%<\/td><\/tr><tr><td>2. Proposed approach, methodology, work plan, and understanding of requirements<\/td><td>20\u201350%<\/td><\/tr><tr><td>3. Qualification and adequacy of experience of key staff<\/td><td>30\u201360%<\/td><\/tr><tr><td>4. Transfer of knowledge, if relevant\\*<\/td><td>0\u201310%<\/td><\/tr><tr><td>overall<\/td><td>100%<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">\\ If this criterion is not required, the marks can be <\/em>adjusted against some other criteria*.<\/p><\/aside>\nThe four explanatory Rules:<\/p>\n<ul class=\"lst\"><li>\"the weight given to the firm's experience can be relatively modest \u2014 since this criterion has already been considered when short-listing the consultant<\/strong>.\"<\/li><li>\"more weight shall be given to the methodology in the case of more complex assignments<\/strong> (for example, <\/strong>multidisciplinary feasibility or management studies).\"<\/strong><\/li><li>\"evaluation of only the key personnel is recommended. Since key personnel ultimately determine the quality of performance, more weight shall be assigned to this criterion if the proposed assignment is complex<\/strong>.\"<\/li><li>\"the CEC shall review the qualifications and experience of proposed key personnel in their curricula vitae \u2014 which must be accurate, complete, and signed by an authorised official of the consultant *and* the individual proposed<\/strong>.\"<\/li><li>\"the experience criteria mentioned in point 1 above holds true for a consultancy firm and not for an individual consultant<\/strong>.\"<\/li><\/ul>\n3. SUB-CRITERIA \u2014 kept to the minimum, with worked examples:<\/p>\n\"the CEC shall normally divide the above criteria into sub-criteria. However, the number of sub-criteria should be kept to the minimum that is considered essential<\/strong>.\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Criterion<\/th><th>Suggested sub-criteria and weights<\/th><\/tr><\/thead><tbody><tr><td>methodology<\/td><td>a) understanding of ToR \u2014 30% weightage b) acceptability and detailing of methodology and work plan \u2014 *50% weight<\/strong> <\/strong>c) innovation, if it is important \u2014 <\/em>20% weightage*<\/td><\/tr><tr><td>suitability of the key professionals<\/td><td>a) EDUCATIONAL QUALIFICATIONS \u2014 *20% weightage b) professional experience in the required area of assignment \u2014 *80% weight<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nthe simplified alternative: \"similar to in LCS and EoI, a simplified evaluation criteria laying down minimum qualifying fail-pass benchmarks for each criteria\/ sub-criteria (instead of marking schemes) May also be used in appropriate cases. All offers that pass the qualifying benchmarks are declared as technically qualified and their financial bids are opened<\/strong>.\"<\/p>\n<h2>7.17.3<\/span>Rating\/ Grading Schemes to Mitigate Subjectivity<\/span><\/h2>\n1. The problem stated:<\/p>\n<aside class=\"note\">\"technical proposals for consultancy services are an intellectual product. Their evaluation must be based on individual professional judgement of competent evaluators \u2014 and should not be reduced to a purely arithmetical exercise.<\/strong><\/p>\n The difficulty is to ensure that this judgement is not exercised in an unreasonable or arbitrary manner. It is important that subjectivity \u2014 implicit to any individual professional judgement \u2014 be complemented by transparency, consistency, and fairness.<\/strong><\/p>\n The individual evaluator entrusted with the evaluation, when required, should be able to explain \u2014 to the satisfaction of a qualified reviewer from the higher authority, or to enforcement agencies \u2014 the reason for his\/ her scoring and recommendation<\/strong>.\"<\/p><\/aside>\n2. Why slabs rather than a full range:<\/p>\n\"precise and exact markings of criteria and sub-criteria specified in technical evaluation \u2014 especially of unquantifiable criteria, e.g., evaluation of methodology \u2014 May neither be feasible nor warranted, especially when there is bound to be variation among marks by different members of CEC.<\/strong><\/p>\n<aside class=\"note\"> Instead of assigning marks over the full range of attributes, it is more appropriate to divide the range into 4\u20135 slabs of ratings<\/strong>.\"<\/p><\/aside>\n3. The five-grade rating scale \u2014 reproduced in full:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Rating<\/th><th>Assessment<\/th><th>Detailed Evaluation (in case of unquantifiable Criteria)<\/th><th>Marks<\/th><\/tr><\/thead><tbody><tr><td>A<\/td><td>very good<\/td><td>The consultants have outstanding, advanced expertise in specific problem areas<\/em> of the assignment, that can promise an excellent execution<\/em> of the assignment. The consultants' staff includes top experts in the field<\/em>. The consultants are considered world-class specialists<\/em> in the approaches and methodologies dealing with specific issues in the assignment. The consultants operate according to well-established quality management (ISO 9002 etc.) procedures<\/em>.<\/td><td>Full marks<\/td><\/tr><tr><td>B<\/td><td>GOOD<\/td><td>The consultants have extensive experience in the field<\/em> of the assignment, and have worked in regions and sectors with similar physical and institutional conditions, including similar critical issues<\/em>. Permanent staff are adequate and highly qualified<\/em>. The consultants have experience with advanced approaches and methodologies<\/em>.<\/td><td>80% of full marks<\/td><\/tr><tr><td>C<\/td><td>satisfactory<\/td><td>The consultants have experience in the field of assignments similar to the one being considered \u2014 but have not dealt with critical issues specific to it<\/em>(such as, for instance, delicate social or environmental issues)<\/em>. The consultants are experienced in the use of standard approaches and methodologies<\/em>. The consultants' permanent staff are adequate<\/em>.<\/td><td>60% of full marks<\/td><\/tr><tr><td>D<\/td><td>unsatisfactory<\/td><td>The consultant has experience which is not considered adequate for the quality needed by the project<\/em>.<\/td><td>30% of full marks<\/td><\/tr><tr><td>E<\/td><td>not relevant<\/td><td>The consultant's experience has no, or little, relevance to the project under consideration<\/em>.<\/td><td>10% of full marks<\/td><\/tr><\/tbody><\/table><\/div>\n4. The first reading \u2014 without scoring:<\/p>\n<aside class=\"note\">\"each member of the CEC should first read all proposals, without scoring them.<\/strong><\/p>\nThis first review helps determine whether the proposals are free of significant omissions or deviations from the ToR; It also allows CEC members to assess the overall clarity of the proposals and identify elements that will require special attention in the evaluation<\/strong>.\"<\/p><\/aside>\n5. The grading system must be defined before<\/em> The proposals are opened:<\/p>\nAfter the review, the CEC meets to define the grades of the rating system to be adopted<\/strong> (if not detailed in the RfP), according to the criteria and sub-criteria set out in the rfP.<\/p>\n\"to discourage subjectivity and avoid the use of points and fractions of points, the rating system provides a few grades (from three to four) for each criterion and sub-criterion<\/strong>.\"<\/p>\n\"minimum qualifying marks or relative qualifying method for quality of the technical proposal will be prescribed and indicated in the RfP<\/strong>.\"<\/p>\n<aside class=\"note\">the anti-bias Rule: \"the grading system must be defined before the technical proposals are opened \u2014 to prevent bias (or perceived bias) occurring because of the cec's knowledge of the opened proposal contents.<\/strong><\/p>\nIt is recommended that the evaluation and scoring of technical proposals be carried out only after defining the grading system<\/strong>.\"<\/p><\/aside>\nthe three reasons why undefined grading distorts evaluation:<\/p>\na) \"evaluators May differ, even widely, in their definition, understanding, or interpretation of the same criterion \u2014 and also because of their subjective experience and understanding of the ToR<\/strong>\";<\/p>\nb) \"disparities in evaluators' relative generosity or severity in judgment and ratings can easily be magnified by the lack of common definitions of the requirements to be considered for each criterion and sub-criterion<\/strong>\";<\/p>\nc) \"large differences in scores caused by inadequate understanding of the ToR or improper use of the evaluation criteria and sub-criteria are difficult to reconcile and explain<\/strong>.\"<\/p>\n<h2>7.17.4<\/span>Individual Scoring of Proposals<\/span><\/h2>\n\"CEC members should carry out the evaluation independently and score the proposal based on the rating criteria.<\/strong><\/p>\n The CEC evaluation should be based on the proposal as submitted. Under no circumstances can the CEC request information or clarifications that May change the proposals. Issues to be clarified with the selected consultant will have to be discussed during negotiations.<\/strong><\/p>\nIndividual evaluators' results are recorded on pre-established worksheets.<\/strong><\/p>\n After each member has independently rated all criteria and sub-criteria, it is good practice to read each proposal again \u2014 to ensure that scores reliably reflect the quality of the proposal<\/strong>.\"<\/p>\n<h2>7.17.5<\/span>Joint Review and Mitigation<\/span><\/h2>\n1. The reconciliation procedure:<\/p>\n<aside class=\"note\">\"the CEC should conduct a joint review and discuss the merits of individual evaluations and scores.<\/strong><\/p>\n Some evaluators tend to be generous while others will be rigid in their judgment and ratings. Such disparity does not matter \u2014 provided each evaluator is consistent and differences in scores are not too large.<\/strong><\/p>\n Large differences should be reviewed and explained \u2014 because they often are caused by improper or inaccurate use of the rating system.<\/strong><\/p>\nReconciling differences that are considered too large by the CEC May result in members revising some of their ratings and scores. As such, any changes should be recorded.<\/strong><\/p>\n If a discussion is needed to reach a final decision, an independent party should prepare minutes.<\/strong><\/p>\nFinally, the scores given by different members May be averaged out.<\/strong><\/p>\nDuring the meeting, the CEC should also comment on the strengths and weaknesses of all proposals that have met the minimum technical score indicated in the RfP. This will help identify any elements in the winning proposal that should be clarified during negotiations<\/strong>.\"<\/p><\/aside>\n2. The minimum qualifying mark and the debriefing duty:<\/p>\n\"eventually, for each of the technical proposals, the CEC should calculate the average of the scores allocated to each criterion by all members, establish the technical ranking of the proposals, identify the best, and propose it for award.<\/strong><\/p>\n The evaluation also establishes whether a proposal passes the minimum qualifying mark (or technical score \u2014 normally 75 (seventy-five)) provided for in the RfP.<\/strong><\/p>\n If one or more proposals fail to meet the minimum qualifying mark, both individual and joint assessments must be carefully reviewed and justified.<\/strong><\/p>\n Short-listed consultants are usually discouraged when their proposals are rejected \u2014 particularly when they are only a few points below the minimum mark; Therefore, the Procuring Entity should be prepared to debrief consultants to explain the evaluation of their proposals<\/strong>.\"<\/p>\n<h1>7.18 General Norms for Ranking of Financial Bids<\/span><\/h1>\n1. The basis \u2014 total outgo from the buyer's pocket:<\/p>\nUnless otherwise stipulated, evaluation of the financial bids shall be on the price criteria only<\/strong>. Financial bids of all techno-commercially suitable bids are evaluated and ranked to determine the lowest-priced bidder, based on the total outgo from the buyer's pocket<\/strong> \u2014 including:<\/p>\n<aside class=\"note\">GST \u00b7 transportation \u00b7 insurance \u00b7 price of incidental works\/ services \u00b7 customs duty \u00b7 marine insurance and freight \u00b7 agency commission, as applicable.<\/p>\nG<\/span> \u2014 the CPSE input tax credit Rule:<\/strong>\"for CPSEs availing input tax credit, the price shall be \"net of GST\" \u2014 considering the input tax credit on the GST portion to be availed by the CPSE<\/strong>.\"<\/p><\/aside>\n2. Evaluation of multiple schedules\/ items\/ destinations \u2014 the three cases G<\/span>:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Case<\/th><th>How ranking is done<\/th><\/tr><\/thead><tbody><tr><td>a) The list of requirements contains more than one Schedule\/ package<\/em><\/td><td>responsive, technically suitable bids shall be evaluated and compared separately for each Schedule<\/strong>. <\/strong>The bid for a Schedule will not be considered if the complete list of goods in that Schedule is not included in the bid<\/strong>. However, bidders have the option to quote for any one or more schedules<\/em>, and to offer *unconditional discounts for individual schedules*<\/td><\/tr><tr><td>b) There is only a list of items without grouping into schedules<\/em><\/td><td>ranking shall be done for each item separately<\/strong>. Bidder has the option to quote for any one or more items and to offer unconditional discounts for individual items. HOWEVER, bidder shall quote for all the destinations included in an item quoted<\/strong><\/td><\/tr><tr><td>c) There is only one item with several destinations<\/em><\/td><td>ranking shall be done separately for each destination<\/strong> included in that item; the Bidder has the option to quote for any one or more destinations, and to offer unconditional discounts for individual destinations<\/td><\/tr><\/tbody><\/table><\/div>\ndiscounts as above shall be considered for deciding the lowest evaluated bid. However, any conditional discounts are not considered for the ranking<\/strong>.<\/p>\n3. No loading unless pre-announced: \"unless explicitly announced beforehand in the tender documents, the quoted price should not be loaded based on deviations in commercial conditions. If it is decided to incorporate such clauses, these should be unambiguous and clear \u2014 and thereafter, there should be no relaxation during evaluation<\/strong>.\"<\/p>\nAdditionally, while purchasing sophisticated and costly equipment, machinery<\/em>, and so on, the procuring entity also gives special importance to factors such as high-quality performance, environmentally friendly features, low running cost, low maintenance cost. To take care of this, relevant details, and the criteria adopted to assess the benefit of such features, are to be clearly stipulated in the tender document, so that the bidders are aware of it and quote accordingly<\/em>.<\/p>\n4. The comparison basis: Unless otherwise stipulated, the comparison of the responsive bids shall be on total outgo from the Procuring Entity's pocket \u2014 to be paid to the supplier or any third party, including all elements of costs<\/strong> As per the terms of the proposed contract.<\/p>\nTherefore, it should normally be on a CIF\/ FOR destination basis, duly delivered, commissioned<\/strong>, as the case May be: A) goods manufactured in India, or goods of foreign origin already located in India \u2014 GST and any other duties\/ levies contractually payable (to the bidder) are to be added<\/em>; B) goods of foreign origin offered from abroad \u2014 customs duty and other similar import duties\/ taxes contractually payable are to be added<\/em>.<\/p>\n5. Purchase preferences: As per policies of the Government from time to time, the purchaser reserves his option to give price\/ purchase preferences as indicated in the tender document<\/em>.<\/p>\n6. VARIABLE-PRICE BIDS \u2014 the \"as on deadline\" rule: If the bids have been invited on a variable price basis<\/em>, they will be evaluated, compared, and ranked based on the position prevailing on the deadline of bid submission \u2014 and not based on any future date<\/strong>. If a bidder submits a firm price quotation against the requirement of a variable price quotation, that bid shall be prima facie acceptable and considered further \u2014 taking the price variation asked for by the bidder as nil<\/strong>.<\/p>\n7. Tie at the l-1 POSITION \u2014 the four-step tie-breaker G<\/span>:<\/p>\n\"rarely, there May be a tie at the lowest bid (L-1) position between two or more start-up\/ non-start-up bidders.<\/strong><\/p>\n it must be first determined whether it is a case of cartel formation or anti-competitive practices \u2014 and if so, it shall be dealt with accordingly.<\/strong><\/p>\nIf this is not a case of cartel formation, the decision will be taken in the following manner:<\/strong>\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>Rule<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>if one of the L1 bidders is an MSE owned by sc\/st or a woman entrepreneur<\/strong>, then the 25% quantity order reserved for MSEs will be placed on that MSE<\/strong>, subject to fulfilment of other tender conditions<\/td><\/tr><tr><td>ii<\/td><td>if one of the L1 bidders is an MSE, other than an MSE owned by sc\/st or a woman entrepreneur<\/strong>, then an order shall be placed on such MSE bidders<\/td><\/tr><tr><td>iii<\/td><td>in all other scenarios, the order shall be placed on the L1 bidder having a higher turnover in the previous financial year<\/strong>.<\/strong> In case there is a tie at L-1 between only start-up bidders and none of them has past turnover<\/strong>, the order will be placed on the start-up that was registered earlier with DPIIT<\/strong><\/td><\/tr><tr><td>iv<\/td><td>for tenders issued through the GeM PORTAL<\/strong>: THE tie-breaker methodology available on the GeM portal is to be followed<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n8. Ambiguous price bids: \"if the price bid is ambiguous, so that it May very well lead to two equally valid total price amounts \u2014 then the bid should be treated as unresponsive<\/strong>.\"<\/p>\n9. Suo motu and conditional discounts after bid opening \u2014 the two-limbed Rule:<\/p>\n<aside class=\"note\">\"sometimes, certain bidders offer suo motu discounts\/ rebates after the opening of the tender (techno-commercial or financial).<\/strong><\/p>\n Such discounts\/ rebates should not be considered for ranking the offer \u2014 but if such a firm does become L1 at its original offer, such suo motu discounts\/ rebates must be incorporated in the contracts.<\/strong><\/p>\nThis also applies to conditional rebates \u2014 for example, rebates for faster payments<\/strong>.\"<\/p><\/aside>\n10. C<\/span> \u2014 additional financial-opening Rules for consultancy:<\/p>\n<ul class=\"lst\"><li>The financial proposals shall be opened publicly in the presence of representatives of the technically qualified consultants who choose to attend<\/strong>. The evaluation committee demonstrably verifies that the financial proposals have remained sealed<\/strong> And then opens them.<\/li><li>THE name of the consultant, quality scores, and proposed prices shall be read aloud and recorded<\/strong>. No modification to financial proposals is permitted<\/strong>. When electronic submission is used, this information shall be posted online<\/strong>.<\/li><li>The arithmetic-correction Rule differs by contract type:<\/li><\/ul>\n<div class=\"tblwrap\"><table><thead><tr><th>Contract type<\/th><th>Rule<\/th><\/tr><\/thead><tbody><tr><td>Time-based contract<\/td><td>ANY arithmetical errors shall be corrected, and prices shall be adjusted if they fail to reflect all inputs<\/strong> That are included in the respective technical proposals<\/td><\/tr><tr><td>lump-sum contract<\/td><td>the consultant is deemed to have included all prices<\/strong> In its financial proposal \u2014 so neither arithmetical correction nor any other price adjustment shall be made<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<ul class=\"lst\"><li>for the purpose of evaluation, the total cost shall include all taxes and duties for which the Procuring Entity makes payments to the consultant, and other reimbursable expenses \u2014 such as travel, translation, report printing, or secretarial expenses<\/strong>.<\/li><li>THE GST misclassification Rule<\/strong>: \"the offers shall be evaluated based on the GST rate quoted by each bidder\u2026 the Procuring Entity shall not be responsible for any misclassification of HSN number or incorrect GST rate if quoted by the bidder. Any increase in GST rate due to misclassification of HSN number shall have to be absorbed by the consultant<\/strong>.\"<\/li><li>if GST is quoted extra, but with the provision that it shall be charged as applicable at the time of delivery<\/strong>, the offer shall be evaluated for comparison purposes by loading the maximum existing rate of GST for the product\/ HSN code<\/strong>.<\/li><\/ul>\n<h1>7.19 Least Cost Selection (LCS)<\/span><\/h1>\nUnder the LCS procedures, the financial proposals will be ranked in terms of their total evaluated cost<\/strong>.<\/p>\nTHE least cost proposal will be ranked as L-1<\/strong>, and the next higher and so on will be ranked as L-2, L-3<\/strong>, etc.<\/p>\nTHE least cost proposal (L-1) will be considered for award of contract<\/strong>.<\/p>\nC<\/span>:<\/strong>The CEC will put up a report on financial evaluation of the technically qualified consultants to the competent finance authority<\/strong>, along with the recommendation that the least cost proposal (L-1) can be approved\/ invited for negotiation and for final award of contract<\/strong>.<\/p>\n<aside class=\"note\">In the <\/strong>GOODS Manual, LCS is not named as a system \u2014 <\/strong>L1 selection among technically responsive bids is simply the default.<\/strong><\/p><\/aside>\n<h1>7.20 Quality and Cost Based Selection (QCBS)<\/span><\/h1>\n(Rule 192 of GFR 2017)<\/em><\/p>\n<aside class=\"note\">The Inverted Weightage \u2014 the Single Most Examinable Point in this Chapter<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>Technical\/ Quality weightage<\/th><th>Cost weightage<\/th><th>Ceiling<\/th><\/tr><\/thead><tbody><tr><td>C<\/span> Consultancy<\/td><td>70%<\/td><td>30%<\/td><td>\"or any other respective weightages as declared in the RfP (Example, 60:40, 50:50 \u2014 but not greater than 80%<\/strong>)\"<\/em><\/td><\/tr><tr><td>W<\/span> WORKS \u00b7 NC<\/span> Non-consultancy<\/td><td>not more than 30%<\/td><td>70% or more<\/td><td>the maximum weight of non-financial parameters shall in no case exceed 30%<\/strong><\/em><\/td><\/tr><\/tbody><\/table><\/div>\nnote the identical sentence appearing in both \u2014 pointing in opposite directions:<\/p>\nC<\/span>:\"<\/strong>since the weightage of the cost element adopted in consultancy services is as high as 70 (seventy) per cent, financial considerations would dominate the selection\u2026\"<\/em> *(an evident <\/strong>internal inconsistency in the CS Manual, since it has just stated that technical carries 70% and cost 30%)*<\/p>\nNC<\/span>: *\"<\/strong>since the weightage of the cost element adopted in nc services is as high as 70 (seventy) per cent, financial considerations would dominate the selection\u2026\"<\/em>(consistent with NC's own 70% cost weighting)*<\/p><\/aside>\n<h2>7.20.1<\/span>The Qualifying Benchmark<\/span><\/h2>\nin QCBS selection, minimum qualifying marks \u2014 normally 70\u201380 (seventy to eighty) out of a maximum of 100 marks<\/strong> \u2014 as a qualifying benchmark for quality of the technical proposal shall be prescribed and indicated in the tender document<\/strong>, along with a scheme for allotting marks for various technical criteria\/ attributes<\/strong>.<\/p>\nBids scoring less than the minimum threshold shall not be considered for further evaluation<\/strong>.<\/p>\n<aside class=\"note\">The reason the benchmark must be set high: \"since the weightage of the cost element adopted is as high as 70 per cent, financial considerations would dominate the selection \u2014 though to a lower extent as compared to LCS. In such cases, it is essential to ensure that the minimum qualifying marks in the evaluation is set sufficiently high \u2014 to weed out low-quality bids with low prices<\/strong>.\"<\/p><\/aside>\n<h2>7.20.2<\/span>The Two Scores and the Weighted Total<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Score<\/th><th>How computed<\/th><\/tr><\/thead><tbody><tr><td>technical\/ quality score<\/td><td>the proposal with the highest technical marks shall be given a score of 100<\/strong>, and other proposals given technical scores proportional to their marks w.r.t. The highest technical marks<\/strong><\/td><\/tr><tr><td>financial score<\/td><td>the proposal with the lowest cost May be given a financial score of 100<\/strong>, and other proposals given financial scores inversely proportional to their prices w.r.t. The lowest offer<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nTHE total score shall be obtained by weighing the quality and cost scores and adding them up<\/strong>.<\/p>\nThe proposal obtaining the highest total combined score will be ranked as H-1<\/strong>, followed by H-2, H-3<\/strong>, etc. THE H-1 proposal shall be recommended for award of contract<\/strong>(C<\/span> adds: \"will be invited for negotiations, if required\")<\/em>.<\/p>\n<aside class=\"note\">The tie-breaker: \"in the event two or more bids have the same score in final ranking \u2014 the bid with the higher technical score will be H-1<\/strong>.\"<\/p><\/aside>\n<h2>7.20.3<\/span>The QCBS Formula<\/span><\/h2>\nAN evaluated bid score (b)<\/strong> Will be calculated for each responsive bid using the following formula \u2014 which permits a comprehensive assessment of the bid price and the technical merits of each bid<\/strong>:<\/p>\n<aside class=\"note\">B = (C_low \/ C) \u00d7 X + (T \/ T_high) \u00d7 (1 \u2212 X)<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>Symbol<\/th><th>Meaning<\/th><\/tr><\/thead><tbody><tr><td>C<\/td><td>evaluated bid price<\/td><\/tr><tr><td>C_low<\/td><td>THE lowest<\/strong> Of all evaluated bid prices among responsive bids<\/td><\/tr><tr><td>T<\/td><td>THE total technical score<\/strong> Awarded to the bid<\/td><\/tr><tr><td>T_high<\/td><td>the technical score achieved by the bid that was scored best<\/strong> Among all responsive bids<\/td><\/tr><tr><td>X<\/td><td>THE weightage for the price<\/strong> As specified in the bds\/ tender document<\/td><\/tr><\/tbody><\/table><\/div>\nthe bid with the best evaluated bid score (b) among responsive bids shall be the most advantageous bid<\/strong>.<\/p>\n<h2>7.20.4<\/span>the Worked Examples \u2014 and How the Same Numbers Produce Different Winners<\/span><\/h2>\n<aside class=\"note\">This is the clearest demonstration of why the inverted weightage matters. The Consultancy and Non-Consultancy Manuals use identical input data<\/strong> \u2014 and reach different answers<\/strong>.<\/p><\/aside>\n<h3 class=\"src-C\">A. THE CONSULTANCY EXAMPLE \u2014 weightage 70 technical: 30 cost<\/span>C<\/span><\/h3><div class=\"srcblock src-C\">\nMinimum qualifying marks for technical qualification: 75<\/strong>. Three proposals A, B, C received.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>A<\/th><th>B<\/th><th>C<\/th><\/tr><\/thead><tbody><tr><td>Technical marks awarded<\/td><td>75<\/td><td>80<\/td><td>90<\/td><\/tr><tr><td>Technical points (T\/T_high)<\/td><td>75\/90 = 83<\/strong><\/td><td>80\/90 = 89<\/strong><\/td><td>90\/90 = 100<\/strong><\/td><\/tr><tr><td>Quoted price<\/td><td>Rs. 100<\/td><td>Rs. 104<\/td><td>Rs. 106<\/td><\/tr><tr><td>Financial points (C_low\/C)<\/td><td>100\/100 = 100<\/strong><\/td><td>100\/104 = 96<\/strong><\/td><td>100\/106 = 94<\/strong><\/td><\/tr><tr><td>Combined score (Tech \u00d7 0.70 + Fin \u00d7 0.30)<\/td><td>83\u00d70.70 + 100\u00d70.30 = 88.10<\/strong><\/td><td>89\u00d70.70 + 96\u00d70.30 = 91.10<\/strong><\/td><td>100\u00d70.70 + 94\u00d70.30 = 98.20<\/strong><\/td><\/tr><tr><td>RANK<\/td><td>H-3<\/td><td>H-2<\/td><td>H-1<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">the result: \"proposal c, at the evaluated cost of Rs. 106 (the highest-priced bid), was therefore declared as winner and recommended for negotiations\/ approval<\/strong>.\"<\/p><\/aside>\n<\/div><h3 class=\"src-NC\">B. THE NON-CONSULTANCY EXAMPLE \u2014 same data, weightage 30 technical: 70 cost<\/span>NC<\/span><\/h3><div class=\"srcblock src-NC\">\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>A<\/th><th>B<\/th><th>C<\/th><\/tr><\/thead><tbody><tr><td>Technical marks awarded<\/td><td>75<\/td><td>80<\/td><td>90<\/td><\/tr><tr><td>Technical points<\/td><td>83<\/td><td>89<\/td><td>100<\/td><\/tr><tr><td>Quoted price<\/td><td>Rs. 100<\/td><td>Rs. 104<\/td><td>Rs. 106<\/td><\/tr><tr><td>Financial points<\/td><td>100<\/td><td>96<\/td><td>94<\/td><\/tr><tr><td>Combined score (Tech \u00d7 0.30 + Fin \u00d7 0.70)<\/td><td>83\u00d70.30 + 100\u00d70.70 = 95<\/strong><\/td><td>89\u00d70.30 + 96\u00d70.70 = 94<\/strong><\/td><td>100\u00d70.30 + 94\u00d70.70 = 96<\/strong><\/td><\/tr><tr><td>RANK<\/td><td>H-2<\/td><td>H-3<\/td><td>H-1<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Note how the inversion completely re-orders B and A \u2014 B falls from H-2 to H-3, and A rises from H-3 to H-2.<\/p><\/aside>\n<\/div><h3 class=\"src-W\">C. THE WORKS EXAMPLE \u2014 weightage 30 technical: 70 cost, with different data<\/span>W<\/span><\/h3><div class=\"srcblock src-W\">\nMinimum qualifying marks: 75<\/strong>.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>A<\/th><th>B<\/th><th>C<\/th><\/tr><\/thead><tbody><tr><td>Technical marks awarded<\/td><td>80<\/td><td>75<\/td><td>90<\/td><\/tr><tr><td>Normalised technical score<\/td><td>80\u00d7100\/90 = 88.89<\/strong><\/td><td>75\u00d7100\/90 = 83.33<\/strong><\/td><td>90\u00d7100\/90 = 100.00<\/strong><\/td><\/tr><tr><td>Quoted price<\/td><td>Rs. 120<\/td><td>Rs. 100<\/td><td>Rs. 105<\/td><\/tr><tr><td>Normalised financial score<\/td><td>100\u00d7100\/120 = 83.33<\/strong><\/td><td>100\u00d7100\/100 = 100.00<\/strong><\/td><td>100\u00d7100\/105 = 95.24<\/strong><\/td><\/tr><tr><td>Combined score (Tech \u00d7 0.30 + Fin \u00d7 0.70)<\/td><td>85.00<\/td><td>95.00<\/td><td>96.67<\/td><\/tr><tr><td>RANK<\/td><td>H-3<\/td><td>H-2<\/td><td>H-1<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">the result: \"bid c at the evaluated cost of Rs. 105 (rupees one hundred and five, the second lowest bid) was therefore declared as winner and recommended for approval<\/strong>.\"<\/p><\/aside>\n<\/div><h2 class=\"src-NC\">7.20.5<\/span>Additional QCBS Rules in Non-Consultancy<\/span>NC<\/span><\/h2><div class=\"srcblock src-NC\">\na) the evaluation committee: \"for evaluation, a suitable committee shall be constituted. However, members of the STC [Special Technical Committee] shall not be involved<\/strong>.\"<\/p>\nb) joint ventures: \"joint ventures May be avoided in general in non-consultancy services \u2014 and particularly in the QCBS system<\/strong>.\"<\/p>\nc) the MII disapplication \u2014 an important consequence:<\/p>\n<aside class=\"note\">\"since the MII order is applicable 'where the bid is evaluated on price alone' \u2014 MII purchase preference would not be applicable where evaluation is based inter alia on non-price criteria \u2014 e.g., QCBS or FBS in services and works<\/strong>.\"<\/p><\/aside>\n<h1>7.21 Single Source Selection (SSS)<\/span><\/h1>\nthe single source in case of SSS selection shall be called for further negotiation, if need be \u2014 after opening and evaluation of its financial proposals<\/strong>.<\/p>\n<h1>7.22 Fixed Budget Selection (FBS) [C ONLY]<\/span><\/h1>\nUnder FBS, the selection of the consultant shall be made by one of the following two methods<\/strong>:<\/p>\nA) the competitive quality-only method: By a competitive selection process, based only on quality<\/strong>, using specific marking criteria for quality in the manner indicated in Rule 192(i) of the GFR<\/strong>.<\/p>\n<aside class=\"note\">\"the proposal with the highest technical score that meets the fixed budget requirement shall be considered for placement of contract<\/strong>.\"<\/p><\/aside>\nb) the empanelment method \u2014 for repetitive or multiple assignments: BY empanelling consultants for a period, using suitable eligibility\/ qualification criteria<\/strong>.<\/p>\n<aside class=\"note\">Thereafter, selection of a specific consultant for a specific assignment from such panel shall be based on overall considerations of public interest \u2014 including timeliness, practicability, number of other assignments already given to that consultant in the past<\/strong>, etc. \"in such cases, the budget for each assignment shall also be fixed by the Procuring Entity<\/strong>.\"<\/p><\/aside>\n<h1>7.23 GTE Tenders \u2014 Special Aspects of Financial Evaluation<\/span>G<\/span>fullest text<\/span><\/h1>\n1. Currency of bid and conversion:<\/p>\nIn GTE, foreign bidders have the flexibility to quote prices and receive payments in either Indian rupees or freely convertible currencies<\/strong> (US Dollars, Euros, Pound Sterling, Yen, other relevant currencies, or a combination).<\/p>\nHowever, prices for goods, works, or services (including agency commission) performed or sourced in India must be quoted and paid for in Indian rupees<\/strong>. Indian bidders are required to quote in INR only<\/strong>.<\/p>\n<aside class=\"note\">The conversion Rule: \"all offers are to be converted to Indian rupees based on the \"bill currency selling\" exchange rate on the deadline of bid submission \u2014 quoted by a source as specified (if not specified, authorised exchange bankers approved by RBI) in the tender document<\/strong>.\"<\/p><\/aside>\n2. The loading sequence to arrive at DDP\/ FOR destination cost \u2014 a step-by-step calculation:<\/p>\nA) taxes on import: Import of goods or services or both attracts integrated tax (IGST)<\/strong>. The IGST rate and GST cess shall be applicable on the 'Customs assessable value' plus the 'basic customs duty applicable thereon'<\/strong>. The offers would be compared based on the principle of the total outgo from the Procuring Entity's pockets<\/strong>.<\/p>\nB) the dual-quotation requirement: \"the foreign bidders are normally asked, in the tender documents, to quote both on a FAS\/ FOB basis and also on a CFR\/ CIF basis \u2014 duly indicating the break-up of prices for freight, insurance, and so on \u2014 with purchasers reserving the right to order on either basis. They should also indicate the customs tariff number and customs duty applicable in India<\/strong>.\"<\/p>\nthe seven-step loading:<\/p>\n<aside class=\"note\">In the case of FAS\/ FOB<\/em> offers, the freight and insurance shall be (after ascertaining, if not quoted) added to make up the CIF COST.<\/p>\nTo arrive at the DDP\/ for\/ (FOT) destination cost, the following is to be added over and above CIF:<\/p>\n<ol class=\"lst\"><li>One per cent as port handling charges<\/strong>;<\/li><li>Customs duty, countervailing duty, and surcharges \u2014 as applicable on the date of opening of the bid<\/strong>;<\/li><li>Clearing agency charges<\/strong>;<\/li><li>Inland freight<\/strong>; and<\/li><li>GST, as assessed<\/strong>.<\/li><li>For bids with letter of Credit (LC)<\/em> Payment \u2014 the likely LC charges (as ascertained from the Procuring Entity's bankers) should also be loaded<\/strong>.<\/li><\/ol><\/aside>\nc) the comparison basis \u2014 two cases:<\/p>\n<ul class=\"lst\"><li>IF both Indian and foreign bidders have quoted<\/strong>, the comparison would be made based on DDP\/ for\/ FOT destination, including all applicable taxes and duties<\/strong> (on the principle of the total outgo from the Procuring Entity's pockets).<\/li><li>In case there are no domestic bidders<\/strong>, a comparison of offers can be made based on CIF\/ landed costs \u2014 since the rest of the costs would be the same for all bidders<\/strong>.<\/li><\/ul>\n<h1>7.24 Evaluation of Concurrent Application: MSE and Make in India Policies<\/span><\/h1>\n\"the concurrent application of the two procurement preference orders \u2014 i.e., the MSE procurement order of 2012 and the PPP-MII order \u2014 May create confusion for the procuring entities on how to evaluate the bids falling within the purview of both policies.<\/strong><\/p>\nTo bring predictability both to the procuring entities and bidders, DoE has issued guidelines in this regard<\/strong>.\" (OM No. F.1\/4\/2021-PPD dated 18.05.2023.)<\/em><\/p>\n<aside class=\"note\">These guidelines, with worked examples, are at: G<\/span> Annexure 34 and its Annex \u00b7 C<\/span> Annexure 25 \u00b7 NC<\/span> Annexure 21.<\/p><\/aside>\n<h1>7.25 Evaluation in Rate Contracts [G ONLY]<\/span><\/h1>\n1. If stipulated in the tender documents that this is a tender process to enter \"Rate Contract(s)\"<\/strong>, THEN additional clauses (including Performance Security, fall clause, etc.) shall be incorporated therein<\/strong>, and the evaluation would be done accordingly.<\/p>\n2. Procedures stipulated in this Chapter shall be applicable mutatis mutandis<\/strong>. The procedure for negotiations\/ counter-offers and splitting of contracts (parallel contracts) is slightly different in Rate Contract<\/strong>. One-time or standing approval of the Secretary of the Department May be taken for this procedure<\/strong>.<\/p>\n3. The counter-offer procedure for parallel rate contracts:<\/p>\nA) initially, the Rate Contract would be awarded to the L-1 bidder<\/strong>. Then the price of L-1 shall be counter-offered to the higher-quoting responsive bidders (under intimation to L-1)<\/strong> \u2014 asking them to send their revised bids online on the e-procurement portal<\/strong>, to be opened at a specified place, date, and time. The L-1 bidder would be specifically informed that it May, if it desires, reduce its price<\/strong>, and send its revised bid accordingly.<\/p>\nThe bidders who accept the counter-offered rate or a rate lower than that would be awarded parallel rate contracts<\/strong>. If L-1 bidder lowers its rate in its revised offer, the same would also be accepted with effect from that date, and its Rate Contract would be amended accordingly<\/strong>.<\/p>\nB) where L-1'S price is not reasonable: \"price negotiation with the bidders should be severely discouraged. However, in the case where parallel rate contracts are necessary \u2014 even if the lowest responsive bidder (L-1) price is not reasonable \u2014 negotiation May be conducted with the L-1 bidder in the first instance.<\/strong><\/p>\n<aside class=\"note\">If the L1 bidder agrees to bring down the price to the desired level, a Rate Contract would be concluded with it, and parallel rate contracts would be concluded as above.<\/strong><\/p>\n If, however, L1 bidder does not agree to reduce its price in the first instance itself \u2014 then the price which has been decided as reasonable shall be counter-offered to all the higher-quoting responsive bidders (including L-1)<\/strong> for further action on the above lines.\"<\/p><\/aside>\nc) all such parallel rate contracts would be released transparently and simultaneously<\/strong>.<\/p>\n4. The catalogue basis \u2014 for products that cannot be equitably compared:<\/p>\nIf stipulated in the tender document, in the case of:<\/p>\n<aside class=\"note\">Vehicles \u00b7 machine tools \u00b7 information technology products \u00b7 OEM\/ specialised equipment and their spares\/ consumables<\/strong> and similar products<\/p><\/aside>\n \u2014 where the design feature, performance parameters, etc., differ significantly among the products of different manufacturers \u2014 and even between different models of the same manufacturer<\/strong> \u2014 and where equitable comparison of prices is not feasible<\/strong>:<\/p>\n<aside class=\"note\">Rate contracts May be concluded on a percentage rebate on net dealer price (NDP) or MRP basis \u2014 generally known as \"catalogue basis\"<\/strong>.<\/p><\/aside>\n5. Period: A Rate Contract shall be for the period specified in the tender document \u2014 or one year if not so specified<\/strong>.<\/p>\n<h1>7.26 Variation of Quantities at the Time of Award [G ONLY]<\/span><\/h1>\n<aside class=\"note\">\"at the time of awarding the contract, the quantity to be procured must be re-judged based on the current data \u2014 since the ground situation May have very well changed.<\/strong><\/p>\nIf so provided in the tender document, and if warranted, the tendered quantity can be increased or decreased by the percentage specified therein \u2014 15 (fifteen)% if percentage not specified \u2014 for ordering, at the discretion of the Procuring Entity.<\/strong><\/p>\n Any larger variation May throw up issues about transparency<\/strong>.\"<\/p><\/aside>\n<h1>7.27 Option Clause [G ONLY]<\/span><\/h1>\n1. When and at what percentage:<\/p>\nNormally, for raw materials\/ consumables of regular and year-on-year recurrent requirements<\/strong>, all tenders of value above Rs. 50 (rupees fifty) lakh<\/strong> \u2014 to take care of any change in the requirement during the currency of the contract \u2014 a plus\/ minus option clause [normally 25 (twenty-five) per cent]<\/strong> May be incorporated in the tender document.<\/p>\nHowever, the ca May approve the inclusion of such a clause in lower denomination tenders, if such items have a history of frequent disruptions in the continuity of supplies<\/strong>.<\/p>\nThe model clause:<\/p>\n<aside class=\"note\">\"The purchaser reserves the right to increase\/ decrease the ordered quantity by up to [25] per cent at any time, till the final delivery date (or the extended delivery date of the contract), by giving reasonable notice \u2014 even though the quantity ordered initially has been supplied in full before the last date of the delivery period (or the extended delivery period).\"<\/strong><\/p><\/aside>\n2. The hedging caution: \"the higher the option limit, the more uncertainty there is for the bidders in formulating their prices \u2014 and the more chance of hedging the prices quoted to take care of such uncertainties; Hence, the option limit should be carefully considered only in justifiable requirements<\/strong>.\"<\/p>\n3. There should be no option clause in development orders<\/strong>.<\/p>\n4. The ca-determination Rule: \"the quantum of the option clause will be excluded from the value of tenders for the purpose of determining the level of ca in the original tender<\/strong>.\"<\/p>\n<h1>7.28 Splitting of Contracts \/ Parallel Contracts [G ONLY]<\/span><\/h1>\n1. The default: \"unless otherwise stipulated in TIS\/ AITB, there shall be no parallel orders or splitting quantities among more than one bidder<\/strong>.\"<\/p>\n<\/div><h2>7.28.1<\/span>Case A \u2014 Splitting WITHOUT prior declaration<\/span><\/h2>\n\"however, after due processing, if it is discovered that the quantity to be ordered is more than what the L1 bidder alone is capable of supplying, and there was no prior declaration in the tender documents to split the quantities \u2014 then the quantity being finally ordered May be distributed among the other bidders in a manner that is fair, transparent and equitable, based on objective data available in the bids (e.g., eligibility criteria, quantity\/ delivery):<\/strong><\/p>\nA) as far as feasible, counter-offer the L1 rate to such firms;<\/strong><\/p>\nB) if distribution at the counter-offered rate is not feasible, then distribution May be done at the rates quoted by such bidders \u2014 if their rates are still within the zone of reasonableness<\/strong>.\"<\/p>\n<h2>7.28.2<\/span>Case B \u2014 Splitting WITH prior declaration, and the 70:30 \/ 50:30:20 ratios<\/span><\/h2>\nin case of:<\/p>\n<aside class=\"note\">THE critical\/ vital\/ safety\/ security nature of the item<\/strong> \u00b7 large quantity under procurement<\/strong> \u00b7 urgent delivery requirements<\/strong> \u00b7 inadequate vendor capacity<\/strong><\/p><\/aside>\n \u2014 it May be advantageous to decide in advance to have more than one source of supply<\/strong>.<\/p>\nIn such cases, a parallel contract clause should be added to the tender documents<\/strong>, clearly stating that the Procuring Entity reserves the right to split the contract quantity.<\/p>\nTHE manner of deciding the relative share of L1 and the rest should be clearly defined, along with the minimum number of suppliers sought<\/strong>.<\/p>\n<aside class=\"note\">The standard ratios:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Number of sources<\/th><th>Ratio<\/th><\/tr><\/thead><tbody><tr><td>Splitting in two<\/td><td>70: 30<\/td><\/tr><tr><td>Splitting in three<\/td><td>50: 30: 20<\/td><\/tr><\/tbody><\/table><\/div>\n\"A different ratio May also be justified.\"<\/strong><\/p><\/aside>\nthe variation latitude: \"these ratios are approximate, and the Procuring Entity May marginally vary quantities to suit: Capacity\/ past performance of the bidder \u00b7 unit loads of packing or transportation \u00b7 relative ranking of the bids \u00b7 delivery period offered \u00b7 existing load of bidder \u00b7 and other similar factors affecting smooth supplies<\/strong>.\"<\/p>\n<aside class=\"note\">The anti-cartel safeguard \u2014 critically important:<\/p>\n\"since such predefined splitting of quantity can potentially encourage cartel formation \u2014 the Procuring Entity May stipulate that bidders must quote at least for a minimum percentage (say, a minimum of the ratio of distribution \u2014 i.e., 30% or 20% in case of 70:30 and 50:30:20 respectively) of the total tender quantity \u2014 to be considered a responsive bidder<\/strong>.\"<\/p><\/aside>\n<h2>7.28.3<\/span>The Five Allocation Guidelines (applicable in BOTH cases)<\/span><\/h2>\na) L1 should be awarded at least the percentage mentioned above, or his quoted quantity\/ spare supply capacity \u2014 whichever is lower<\/strong>.<\/p>\nB) in case the quantity thus allocated for L1 is less than the prescribed percentage \u2014 higher percentages than those stipulated for L2 (and L3, and so on) May be considered<\/strong> To cover the entire tender quantity.<\/p>\nC) for the rest of the contract quantity, the lowest rate accepted will be counter-offered to the L2 party<\/strong>. On acceptance, the order will be placed on L2 for the respective (or increased) percentage or the quoted quantity\/ spare supply capacity, whichever is lower<\/strong> \u2014 and so on to other higher bidders. In case of non-acceptance by L2, a similar offer shall be made to L3 and L4, and so on.<\/p>\nD) in case of shortfalls, the percentage of allocation of bidders in sequence May be proportionately increased<\/strong> \u2014 and, if unavoidable, more bidders than the minimum number specified May be considered, keeping the sanctity of ranking of bidders<\/strong>.<\/p>\n<aside class=\"note\">\"if it is still not possible to cover the entire tender quantity, there would be no alternative but to re-tender the uncovered quantity<\/strong>.\"<\/p><\/aside>\ne) in case higher-priced bidders do not agree to match the L1 price, action as per case a(b) above May be considered.<\/p>\n<h2>7.28.4<\/span>The Two Pre-conditions Before Splitting<\/span><\/h2>\n\"in either situation, before splitting the quantity, distribution shall be subject to:<\/strong><\/p>\nI) purchase preference to MSME and 'class-i local supplier' (under Make in India order); And<\/strong><\/p>\nii) rates of L1 being considered reasonable \u2014 and if it is not reasonable, negotiation (if permissible) with the L1 party May be carried out before splitting of quantities, with the approval of the ca \u2014 otherwise there would be no alternative but to re-tender the requirement<\/strong>.\"<\/p>\n<h1>7.29 Reasonableness of Prices<\/span><\/h1>\n1. The mandatory declaration: \"in every recommendation of the TC for an award of contract, it must be declared that the rates recommended are reasonable<\/strong>.\"<\/p>\nif the rates received are considered abnormally low or unreasonably high<\/strong>, action May be taken as per Paras 7.30 and 7.32 respectively \u2014 or, as per Para 7.34, reject any or all bids; Abandon\/ cancel the tender process and issue another tender<\/strong>.<\/p>\n2. No blind reliance on the estimate: \"in large-value tenders, blind reliance on the cost estimate is not recommended for assessing reasonableness. More than one method of estimation of cost May be used to triangulate a reasonable price<\/strong>.\"<\/p>\n3. The seven cautions on using last purchase price (lpp):<\/p>\nWhere there is no estimated cost, a comparison with the last purchase price (lpp \u2014 the price paid in the latest successful contract)<\/strong> is the basis for judging reasonableness. The following points May be kept in mind:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Caution<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>THE basic price, taxes, duties, transportation charges, packing and forwarding charges should be indicated separately<\/strong> \u2014 and the comparison should be on basic price<\/strong><\/td><\/tr><tr><td>b<\/td><td>where the firm holding the lpp contract has defaulted<\/strong>, the fact should be highlighted \u2014 and the price paid against the latest contract placed prior to the defaulting lpp contract, where supplies have been completed, should be used<\/strong><\/td><\/tr><tr><td>c<\/td><td>where the supply against the lpp contract is yet to commence<\/strong> (i.e., delivery is not yet due), it should be taken as lpp with caution \u2014 especially if the supplier is new<\/strong>; the price paid against the previous contract may also be kept in view<\/td><\/tr><tr><td>d<\/td><td>where the price indicated in the lpp is subject to variation, or if it is more than a year old<\/strong> \u2014 THE updated basic lpp, as computed in case of the Price Variation Clause (PVC), May also be indicated<\/strong><\/td><\/tr><tr><td>e<\/td><td>in the case of wholly imported stores<\/strong>, the comparison of the last purchase rate should be made with the net CIF value at the current foreign exchange rate<\/strong><\/td><\/tr><tr><td>f<\/td><td>\"it is natural to have marginal differences in prices obtained at different cities\/ offices for the same item, due to their different circumstances. The prices obtained are greatly influenced by quantity, delivery period, and terms of the contract<\/strong>\"<\/td><\/tr><tr><td>g<\/td><td>\"prices paid in emergencies, or prices offered in a distress sale, are not accurate guidelines for future use. Such purchase orders and TC proceedings should indicate that: \"These prices are not valid lpp for comparison in future procurement.\"<\/strong>\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>7.30 Consideration of Abnormally Low Bids (ALB)<\/span><\/h1>\n1. The definition:<\/p>\n<aside class=\"note\">\"an abnormally low bid (alb) is one in which the bid price, in combination with other elements of the bid, appears so low that it raises material concerns as to the capability of the bidder to perform the contract at the offered price<\/strong>.\"<\/p><\/aside>\nthe procedure:<\/p>\n<ul class=\"lst\"><li>The Procuring Entity May seek written clarifications from the bidder \u2014 including detailed price analyses of its bid price in relation to<\/strong>:<\/li><\/ul>\n<aside class=\"note\">Scope \u00b7 Schedule \u00b7 W<\/span>resource mobilisation<\/strong> \u00b7 allocation of risks and responsibilities \u00b7 and any other requirements of the tender document<\/p><\/aside>\n<ul class=\"lst\"><li>if, after evaluating the price analyses, the Procuring Entity determines that the bidder has substantially failed to demonstrate its capability to deliver the contract at the offered price<\/strong> \u2014 the Procuring Entity May reject the bid\/ proposal, and evaluate the next higher bidder (and so on)<\/strong>.<\/li><\/ul>\n<aside class=\"note\">The critical Rule on what rate applies to the next bidder: \"\u2026At his\/ their own quoted rate (if considered reasonable) \u2014 and not by counter-offering the rate of the alb \u2014 for the award of contract<\/strong>.\"<\/p><\/aside>\n2. No normative percentage:<\/p>\n<aside class=\"note\">\"however, it would not be advisable to fix a normative percentage below the estimated cost, which would automatically be considered an abnormally low bid<\/strong>.\"<\/p><\/aside>\n\"due care should be taken while formulating the specifications [W<\/span>: \"preparing the drawings, formulating specifications\"] at the time of preparation of the tender document \u2014 to safeguard against the submission of abnormally low bids<\/strong>.\"<\/p>\n3. Predatory pricing:<\/strong> \"in the case of predatory pricing as well, procuring entities May refer to the above consideration of abnormally low bids to assist themselves in the finalisation of tenders<\/strong>.\" (OM No. F.12\/17\/2019-PPD dated 06.02.2020.)<\/em><\/p>\n4. The additional Security Deposit Rule \u2014 a common misconception corrected:<\/p>\n<aside class=\"note\">\" no provisions should be kept in the tender documents regarding the additional Security Deposit\/ Bank Guarantee (BG) in case of abnormally low bids.<\/strong><\/p>\n Wherever there are compelling circumstances to ask for an additional Security Deposit\/ BG in the case of albs, the same should be taken only with the approval of \u2014 the next higher authority competent to finalise the particular tender, or the Secretary of the Ministry\/ Department \u2014 whichever is lower<\/strong>.\" (OM No. F.9\/4\/2020-PPD dated 12.11.2020.)<\/em><\/p><\/aside>\n<h1>7.31 Cartel Formation \/ Pool Rates \/ Bid Rigging<\/span><\/h1>\n<h2 class=\"src-G\">7.31.1<\/span>The Statutory Definition<\/span>G<\/span><\/h2><div class=\"srcblock src-G\">\n\"the Competition Act defines bid rigging as agreements that have the effect of eliminating or reducing competition, or adversely affecting or manipulating the process of bidding<\/strong>.\"<\/p>\nthe forms of bid rigging:<\/p>\n<aside class=\"note\">Collusive bidding<\/strong>(dividing the market, setting prices, or limiting production \u2014 involves misrepresentation of independent bids<\/strong>)<\/em> \u00b7 bid rotation\/ suppression<\/strong> \u00b7 complementary bidding<\/strong>, etc.<\/p><\/aside>\n<\/div><h2>7.31.2<\/span>The Five Tell-tale Signs of a Cartel<\/span><\/h2>\nSometimes, a cartel of bidders quotes equal\/ marginally different rates (pool rates)<\/strong> Against a tender, whereas possibly:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>G<\/span> GOODS<\/th><th>W<\/span> WORKS<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>rates quoted (and breakup thereof) are equal \u2014 despite their manufacturing\/ logistics costs being different due to their scale of production\/ location<\/strong><\/td><td>quoted prices and scope of works: Prices quoted (and their detailed breakdowns) are suspiciously similar \u2014 despite significant differences in the proposed approach to completing the works<\/strong>. *Look for <\/strong>variations in methodologies, materials, or timelines that could justify price differences*<\/td><\/tr><tr><td>b<\/td><td>the rate manages to be L1<\/strong><\/td><td>the rates quoted by two or more bidders manage to be L1<\/strong><\/td><\/tr><tr><td>c<\/td><td>in a variation, the rates May not be exactly equal, but May be close enough to make the cartel members L1, L2, L3<\/strong>, etc.<\/td><td>(same)<\/em><\/td><\/tr><tr><td>d<\/td><td>respective quoted quantities by these bidders are much less than the tendered quantity \u2014 leaving no option but to distribute quantities among these bids<\/strong><\/td><td> \u2014 <\/td><\/tr><tr><td>e<\/td><td>their bids have other uncanny similarities \u2014 i.e., the same layout or typographical errors<\/strong>. \"bids from the same IP address raise suspicion \u2014 but by itself May not be a strong indicator of a cartel. In such cases, other factors mentioned in this Para should be assessed to judge cartelisation<\/strong>.\"<\/td><td>unexplained similarities in bids: Bids from different contractors exhibit unusual similarities beyond pricing<\/strong> \u2014 including identical typos, grammatical errors, formatting, or even the use of uncommon terminology<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>7.31.3<\/span>Why It Matters Even When Rates Are Reasonable<\/span><\/h2>\n<aside class=\"note\">\"if this rate is unreasonably high, this May be an attempt to force acceptance of higher rates by undermining the negotiating power of the buyer as per Rules.<\/strong><\/p>\n Even when rates are reasonable, this May be an attempt to force the Procuring Entity to distribute quantities as decided by the bidders among them \u2014 even in tenders where splitting of quantities is not envisaged<\/strong>.\"<\/p><\/aside>\nthe evidentiary difficulty G<\/span>:<\/p>\n<aside class=\"note\">\"cartels, by their very nature, are secretive \u2014 and thus it May not be possible to find the direct concrete evidence of their presence.<\/strong><\/p>\n The orders of the Competition Commission of India (CCI) clearly mention reliance on circumstantial evidence \u2014 both economic and conduct-based \u2014 to conclude the existence of a cartel agreement<\/strong>.\"<\/p><\/aside>\nthe legal characterisation: Such cartel formation\/ pool rates abuse the transparency of Public Procurement and are a violation of the Code of Integrity for Public Procurement<\/strong>. Such tactics leading to an \"Appreciable adverse effect on competition\" (AAEC) is an offence under the Competition Act, 2002<\/strong>, as amended by the Competition (Amendment) Act, 2007.<\/p>\n<h2>7.31.4<\/span>The Cartel Formation\/ Pool Rates Clause \u2014 Two Preventive Measures<\/span><\/h2>\nTo discourage such practices, the Procuring Entity May include in all tender documents a cartel formation\/ pool rates clause<\/strong>, reserving its rights to take the following actions without assigning any reasons<\/strong>:<\/p>\nA) the minimum-quantity requirement:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Minimum percentage a bidder must bid for<\/th><\/tr><\/thead><tbody><tr><td>G<\/span> GOODS<\/td><td>\"more than a minimum specified percentage \u2014 say 25% \u2014 of the tendered quantity; Otherwise, their offer shall be rejected<\/strong>\"<\/td><\/tr><tr><td>W<\/span> WORKS<\/td><td>\"for those works procurements where schedules or division of work is possible \u2014 more than a minimum specified percentage, say 20% or 30%<\/strong>\"<\/td><\/tr><\/tbody><\/table><\/div>\nb) the warning: Warn that the Procuring Entity May take any\/ all punitive actions available under the Code of Integrity<\/strong> \u2014 including removal from the list\/ panel of registered sources or debarment<\/strong> \u2014 besides reporting the transgression to the competition commission, and concerned trade associations like FICCI, ASSOCHAM, NSIC<\/strong> for suitable punitive action.<\/p>\nc) the negotiation bar \u2014 reproduced verbatim in the cartel section:<\/p>\n<aside class=\"note\">\"In no case, including where cartel rates are suspected, should negotiations be extended to those who had either not tendered originally, or whose tender was rejected because of unresponsiveness of bid, unsatisfactory credentials, inadequacy of capacity or unworkable rates.\"<\/strong><\/p><\/aside>\n<h2>7.31.5<\/span>The Four Ways to Decide a Tender Where a Cartel Is Suspected<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Permitted action<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>reject all bids from the suspected cartel formation and decide the tender accordingly<\/strong><\/td><\/tr><tr><td>ii<\/td><td>place an order on any one or more firms from among the cartel, for any quantity, with the exclusion of the rest \u2014 with or without negotiation or counter-offering<\/strong> NOTE: \"the selection of firms for this May be based on a transparent logistics parameter \u2014 i.e., quicker delivery, nearer location of source, relatively better past performance, etc<\/strong>.\"<\/td><\/tr><tr><td>iii<\/td><td>whenever a tender is floated for purchase exclusively from an Approved Vendor List<\/strong> [W: pre-qualified\/ approved sources<\/em>], and cartel formation is suspected among all such sources \u2014 the Procuring Entity May place orders on bidders who are not in the Approved Vendor List, for any quantity<\/strong><\/td><\/tr><tr><td>iv<\/td><td>wherever a specified ratio for splitting of quantities among 2\/3 sources<\/strong> is stipulated, and cartel formation is suspected among the lower 2\/3 bidders \u2014 place orders on any number of bids beyond such ratios<\/strong>, or decide the tender as per (i) or (ii) above<\/td><\/tr><\/tbody><\/table><\/div>\nW<\/span> \u2014 the additional remedial measures:<\/p>\n<aside class=\"note\">\"in case of evidence of cartel formation, detailed cost analysis May be done by associating experts if necessary.<\/strong><\/p>\n New firms May also be encouraged to get themselves enlisted for the subject works \u2014 to break the monopolistic attitude of the firms forming a cartel.<\/strong><\/p>\n Changes in the mode of procurement (post-qualification instead of pre-qualification) and packaging\/ slicing of the work May also be tried<\/strong>.\"<\/p><\/aside>\n<h1>7.32 Negotiations for Reduction of Prices<\/span><\/h1>\n(Rule 173(xiv) of GFR 2017)<\/em><\/p>\n<h2>7.32.1<\/span>The General Rule and the Two Absolute Bars<\/span><\/h2>\n<aside class=\"note\">\"negotiation with bidders for price reduction after bid opening must be severely discouraged.<\/strong><\/p>\nHowever, in exceptional circumstances where price negotiation is necessary due to some unavoidable circumstances \u2014 it should be held only with the lowest acceptable bidder (L1) \u2014 who is techno-commercially responsive for the supply of a bulk quantity, and on whom the contract would have been placed but for the decision to negotiate<\/strong>.\"<\/p>\nthe absolute bar: \"in no case \u2014 including where cartel rates are suspected \u2014 should negotiations be extended to those who:<\/strong><\/p>\n\u2022 had either not tendered originally; Or<\/strong><\/p>\n\u2022 whose bid was rejected because of: Unresponsiveness of bid \u00b7 unsatisfactory credentials \u00b7 inadequacy of capacity \u00b7 or unworkable rates<\/strong>.\"<\/p><\/aside>\n<h2>7.32.2<\/span>The Four Exceptional Circumstances<\/span><\/h2>\n\"price negotiations May not be considered except under the following exceptional circumstances:<\/strong>\"<\/p>\na) where THE L1 price is not considered to be reasonable<\/strong>, AND:<\/p>\n<ul class=\"lst\"><li>I) the procurement is done on a nomination basis<\/strong>; or<\/li><li>ii) procurement is from single or limited sources<\/strong>; or<\/li><li>iii) in situations where the requirements are urgent, and the delay in re-tendering for the entire requirement due to the unreasonableness of the quoted rates would jeopardise essential operations, maintenance, and safety<\/strong>:<\/li><\/ul>\n<aside class=\"note\">\"negotiations with L1 bidder(s) May be done for a bare minimum quantum of immediate requirements. The balance bulk requirement should, however, be procured through a re-tender, following the normal tender process<\/strong>.\"<\/p><\/aside>\nb) where there is suspicion of cartel formation \u2014 which should be recorded<\/strong>.<\/p>\n<h2>7.32.3<\/span>Who Decides, and the Recording Duty<\/span><\/h2>\n\"the decision whether to invite fresh tenders or to negotiate (and with whom) should be made by the tender accepting authority, based on the recommendations of the TC.<\/strong><\/p>\n Convincing reasons must be recorded by the authority recommending negotiations.<\/strong><\/p>\n The ca should exercise due diligence while accepting a tender, ordering negotiations, or calling for a re-tender \u2014 and a definite timeframe should be indicated<\/strong>.\"<\/p>\n<h2>7.32.4<\/span>What Counts as a Negotiation \u2014 and What Does Not<\/span><\/h2>\n<aside class=\"note\">\"normally, all counter-offers are considered negotiations by other means, and the principles of negotiations should apply to such counter-offers<\/strong>.\"<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>Situation<\/th><th>Is it a negotiation?<\/th><\/tr><\/thead><tbody><tr><td>a counter-offer TO L1<\/strong> To arrive at an acceptable rate<\/td><td>YES \u2014 shall amount to a negotiation<\/strong><\/td><\/tr><tr><td>A COUNTER-OFFER (at the rates accepted by L1) to L2, L3, and so on, in case of splitting of quantities<\/strong> (and in parallel Rate Contracts)<\/td><td>NO \u2014 shall not be deemed to be a negotiation<\/strong><\/td><\/tr><tr><td>dynamic bids in the reverse Auction<\/strong> Process<\/td><td>NO \u2014 are not to be considered as negotiations<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>7.32.5<\/span>The Four-Step Negotiation Procedure<\/span><\/h2>\nafter the ca has decided to call a specific bidder for negotiation:<\/p>\nA) extend validity first: \"it must be understood that if the period of validity of the original offer expires before the close of negotiations, the original offer will not be available for acceptance. The period of validity of the original offer must, therefore, be extended \u2014 wherever necessary \u2014 before negotiations<\/strong>.\"<\/p>\nb) the invitation letter: The bidder should be addressed as per the prescribed format, so that the rates originally quoted by him shall remain open for acceptance in the event of failure of the contemplated negotiation<\/strong>.<\/p>\n<aside class=\"note\">(Invitation and Declaration for Negotiations \u2014 G<\/span> Annexure 15 \u00b7 W<\/span> Annexure 6 \u00b7 NC<\/span> Annexure 14. Absent from the Consultancy Manual<\/strong> \u2014 see para 7.33.)<\/em><\/p><\/aside>\nc) the signed declaration: \"a negotiation meeting should be started only after obtaining a signed declaration from the negotiating supplier<\/strong>.\"<\/p>\nd) the revised bid \u2014 and the \"price only\" rule:<\/p>\n<aside class=\"note\">\"revised bids should be obtained in writing from the selected bidders at the end of the negotiations in the prescribed format.<\/strong><\/p>\n The bidder should not be permitted to change any other condition of his bid other than lowering the price.<\/strong><\/p>\nThe revised bids so obtained should be read out to the bidders or their representatives present immediately after completing the negotiations. If necessary, the negotiating party May be given some time to submit its revised offer.<\/strong><\/p>\nIn case the selected bidder prefers to send a revised bid instead of being present at the negotiation, the offer should be considered.<\/strong><\/p>\n In case a bidder does not submit the revised bid, decision shall be taken based on its original bid<\/strong>.\"<\/p>\n(Format of Revised Offer in Negotiations \u2014 G<\/span> Annexure 16 \u00b7 W<\/span> Annexure 7 \u00b7 NC<\/span> Annexure 15.)<\/em><\/p><\/aside>\n<h1>7.33 Negotiations to Freeze Description of Service [C ONLY]<\/span><\/h1>\n<aside class=\"note\">This section replaces price negotiation in the Consultancy Manual. It is the reason the Consultancy Manual carries NO \"Invitation and Declaration for Negotiations\" or \"Format of Revised Offer\" annexure \u2014 negotiation in consultancy is about SCOPE, not RATE.<\/p><\/aside>\n1. Why it is called \"negotiation\" at all:<\/p>\n<aside class=\"note\">\"in the consultancy services contract, the accepted ToR and methodology etc. Are laid down in the form of 'description of service'.<\/strong><\/p>\nTherefore, before the contract is finally awarded, discussions May be necessary with the selected bidder to freeze these aspects \u2014 especially when it is discouraged during evaluation of technical proposals to seek clarifications on these matters.<\/strong><\/p>\n However, such technical discussions do not amount to negotiations in the sense the word is used in procurement of goods and works.<\/strong><\/p>\n However, in procurement of consultancy, this discussion is termed as negotiations \u2014 since these discussions May have some financial ramifications, at least for the bidder<\/strong>.\"<\/p><\/aside>\n2. What May be discussed \u2014 and the anti-dilution rule:<\/p>\n\"negotiations are not an essential part of the selection process. In many cases, however, it is felt necessary to conduct negotiations with the selected consultant for discussions of:<\/strong><\/p>\n<aside class=\"note\">The ToR \u00b7 methodology \u00b7 staffing \u00b7 Procuring Entity's inputs \u00b7 and special conditions of the contract<\/strong><\/p>\n\"these discussions shall not substantially alter (or dilute) the original ToR or terms of the offer \u2014 lest the quality of the final product, its cost, and the initial evaluation be vitiated.<\/strong><\/p>\nThe final ToR and the agreed methodology shall be incorporated in \"description of services\" \u2014 which shall form part of the contract<\/strong>.\"<\/p><\/aside>\n3. FINANCIAL NEGOTIATIONS \u2014 the three strict limits:<\/p>\n<aside class=\"note\">\"financial negotiations shall only be carried out if:<\/strong><\/p>\n\u2022 due to negotiations, there is any change in the scope of work which has a financial bearing on the final prices; Or<\/strong><\/p>\n\u2022 if the costs\/ cost elements quoted are not found to be reasonable.<\/strong><\/p>\nIn such negotiations, the selected firm May also be asked to justify and demonstrate that the prices proposed in the contract are not out of line with the rates being charged by the consultant for other similar assignments.<\/strong><\/p>\n However, in no case should such financial negotiation result in an increase in the financial cost as originally quoted by the consultant, and on which basis the consultant has been called for the negotiations.<\/strong><\/p>\n If the negotiations with the selected consultant fail \u2014 the Procuring Entity shall cancel the bidding procedure and re-invite the bids<\/strong>.\"<\/p><\/aside>\n<h1>7.34 Cancellation of Procurement Process \/ Rejection of All Bids \/ Re-tender<\/span><\/h1>\n(Rule 173(xix) of GFR 2017)<\/em><\/p>\n1. The right and its limits:<\/p>\nThe Procuring Entity has the right to cancel the process of procurement or reject all bids at any time before intimating acceptance of a successful bid<\/strong>.<\/p>\n<aside class=\"note\">\"however, such rejections should be well considered, and normally be in cases where all the bids are either:<\/strong><\/p>\n\u2022 substantially in deviation from the specifications; Or<\/strong><\/p>\n\u2022 considered unreasonably high in cost \u2014 and, if in the latter case, the lowest qualified bidder during negotiations fails to reduce the costs to a reasonable level.<\/strong><\/p>\n If it is decided to re-invite the bids, the specifications should be critically reviewed\/ modified \u2014 so as to address the reasons for not receiving any acceptable bid in the earlier invitation<\/strong>.\"<\/p><\/aside>\nthe six grounds for cancellation:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Ground<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>IF THE quantity and quality of requirements have changed substantially<\/strong>, or there is an un-rectifiable infirmity in the tender process<\/strong><\/td><\/tr><tr><td>b<\/td><td>WHEN none of the bids is substantially responsive<\/strong> To the requirements of the procurement documents<\/td><\/tr><tr><td>c<\/td><td>none of the technical proposals meets the minimum technical qualifying score<\/strong><\/td><\/tr><tr><td>d<\/td><td>IF effective competition is lacking<\/strong>. <\/strong>However, lack of competition shall not be determined solely based on the number of bidders<\/strong><\/td><\/tr><tr><td>e<\/td><td>the bids'\/ proposals' prices are substantially higher than the updated cost estimate or available budget<\/strong><\/td><\/tr><tr><td>f<\/td><td>if the bidder whose bid has been found to be the lowest evaluated bid fails to sign the procurement contract, or fails to provide the Performance Security, or otherwise withdraws from the procurement process<\/strong> \u2014 the Procuring Entity shall re-tender the case<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n2. The balancing test \u2014 and the irreversibility Rule:<\/p>\n<aside class=\"note\">\"in cases where responsive bids are available, the aim should be to finalise the tender by taking mitigating measures \u2014 even in the conditions described above.<\/strong><\/p>\nIf it is decided to re-invite the tender, the justification should balance the perceived risks in the finalisation of the tender (marginally higher rates) against the certainty of resultant delays, cost escalations, and loss of transparency in the re-invited tender.<\/strong><\/p>\n it May be noted that once a tender is re-tendered, the bids in the old tender cannot be revived and reconsidered, as per the Indian Contract Act \u2014 even if prices received in the new tender turn out to be higher<\/strong>.\"<\/p><\/aside>\n3. Approval and communication: The ca should accord approval for re-tendering based on the reasons\/ proper justification in writing<\/strong>.<\/p>\nThe decision to cancel shall be immediately communicated to all bidders that participated<\/strong>; Bids, if not opened, would not be opened<\/strong> and, in off-line tenders, be returned unopened<\/strong>. EMD, cost of tender document (if any) etc. Should be promptly returned<\/strong>.<\/p>\n4. The pre-retender check: \"before re-tendering, the Procuring Entity is first to check whether \u2014 while floating\/ issuing the enquiry \u2014 all requirements and formalities such as standard conditions, industry-friendly qualification criteria, technical and commercial terms, wide publicity, sufficient time for tendering, and so on, were fulfilled. If not, a fresh enquiry is to be issued after rectifying the deficiencies<\/strong>.\"<\/p>\n<h1>7.35 Letter of Award (LoA) to the Successful Bidder<\/span><\/h1>\n1. The notification and when the contract is legally formed:<\/p>\nPrior to the expiry of the period of bid validity<\/strong>, the successful bidder will be notified \u2014 briefly indicating relevant details such as quantity, specification of the goods ordered, prices<\/em>, and so on \u2014 in writing by a registered letter or any other acknowledgeable and foolproof method<\/strong> That his bid has been accepted.<\/p>\n<aside class=\"note\">The legal point: \"legal communication of acceptance of the offer is considered complete as soon as it is submitted to postal authorities<\/strong>.\"<\/p><\/aside>\nin the same communication, the successful bidder is to be instructed to furnish the required Performance Security within a specified period (generally 14 to 28 days, depending on the amount)<\/strong>.<\/p>\n<aside class=\"note\">When the LoA itself forms the contract:<\/p>\n\"the Letter of Award (LoA) shall constitute the legal formation of the contract if it is not conditional on submission of Performance Security (as in tenders below Rs 50 lakh).<\/strong><\/p>\n In case Performance Security is stipulated, it would amount to a contract only after the furnishing of Performance Security.<\/strong><\/p>\nThe Procuring Entity, at its discretion, May directly issue the contract \u2014 subject only to the furnishing of Performance Security \u2014 skipping the issue of LoA<\/strong>.\"<\/p><\/aside>\n2. Verification of originals before the LoA:<\/p>\nBefore issuing an LoA, the Procuring Entity May \u2014 at its discretion<\/strong> \u2014 ask the bidder to submit for verification the originals of all such documents whose scanned copies were submitted online<\/strong>.<\/p>\nIf so decided, the photocopies shall be verified and signed by the competent officer and kept in the records as part of the contract agreement<\/strong>.<\/p>\n<aside class=\"note\">The consequence of failure: \"if the bidder fails to provide such originals \u2014 or in case of substantive discrepancies in such documents \u2014 it shall be construed as a violation of the Code of Integrity. Such a bid shall be liable to be rejected as unresponsive, in addition to other punitive actions. The evaluation of responsive bids shall proceed with the subsequent ranked offers<\/strong>.\"<\/p><\/aside>\n3. The value of the contract should include taxes\/ duties\/ levies<\/strong>, IF ANY.<\/p>\n4. The no-third-party Rule \u2014 a point frequently tested:<\/p>\n<aside class=\"note\">\"in some cases, the successful bidder (an OEM or an agent representing a principal firm) requests that the contract be placed on their subsidiary or an authorised dealer.<\/strong><\/p>\n This is legally not acceptable \u2014 as the contract can only be placed on the bidder in whose name the bid has been submitted, not on any third party<\/strong>.\"<\/p><\/aside>\n5. The GeM seller id requirement: \"it shall be mandatory for the successful bidder to register on GeM and obtain a unique GeM seller id \u2014 before the placement of LoA or the contract. This id shall be incorporated into the contract<\/strong>.\"<\/p>\n6. C<\/span> \u2014 the cross-checking duty at RfP stage: \"before a final award is announced, the technical and financial credentials of the selected bidders\/ consultant should be cross-checked to the extent feasible. This is especially important at RfP stage \u2014 since normally such a verification is not done at the EoI stage<\/strong>.\"<\/p>\n<h1>7.36 Publication of Award of Contract and Return of EMD<\/span><\/h1>\n(Rule 173(xviii) of GFR 2017)<\/em><\/p>\n1. Mandatory publication: The details of the award of the contract and the name of the successful bidder should be mentioned mandatorily on the CPPP\/ GeM (as relevant), and in the notice board\/ bulletin\/ website of the concerned Ministry or Department\/ e-procurement portal<\/strong>.<\/p>\n2. THE EXCEPTION \u2014 and the special CPSE six-month rule:<\/p>\n<aside class=\"note\">\"in case publication of such information is sensitive from commercial or security aspects \u2014 dispensation May be sought from publishing of such results, by obtaining sanction from the Secretary of the Department with the concurrence of associated finance.<\/strong><\/p>\n Open, transparent declaration of price, sources, and delivery Schedule of CPSE suppliers as per extant instructions adversely impacts the ability of CPSEs to compete in the highly competitive market. CPSEs are denied a level playing field.<\/strong><\/p>\nAt the time of tender formulation, commercial organisations like CPSEs will disclose whether the subject of procurement is for commercial resale.<\/strong><\/p>\n Contract award details of such cases May be shared on electronic procurement portals such as GeM, CPPP, etc., after six (06) months of finalisation of procurement.<\/strong><\/p>\nSuch a system shall protect the financial data of the CPSEs for a reasonable time, while also complying with the requirement of transparency<\/strong>.\"<\/p><\/aside>\n3. Return of bid securities: Upon the successful bidder furnishing the signed agreement and Performance Security<\/strong>, each unsuccessful bidder will be promptly notified, and their Bid Security shall be returned without interest within 30 (thirty) days of notice of award of contract<\/strong>.<\/p>\nThe successful supplier's Bid Security shall be adjusted against the SD, or returned as per the terms of the tender documents<\/strong>.<\/p>\n<h1>7.37 Performance Security at the Award Stage<\/span><\/h1>\nThe supplier receiving the LoA is required to furnish the required Performance Security (if it is part of tender conditions) in the prescribed form, within the period prescribed in the tender document (generally 14 to 28 days, depending on the amount)<\/strong>.<\/p>\nThe escalation sequence on failure:<\/p>\n<aside class=\"note\">\"in case Performance Security is not submitted within the stipulated time, the Procuring Entity May pursue the contractor up to a reasonable grace period for submission.<\/strong><\/p>\n In case the firm fails to submit the requisite Performance Security even thereafter \u2014 or fails to sign the contract \u2014 it May be treated as a withdrawal of an offer by the L1 bidder, and the tender May be re-invited \u2014 besides taking necessary punitive actions including forfeiture of EMD, deregistration and debarment against such bidders<\/strong>.\"<\/p><\/aside>\n<h1>7.38 Acknowledgement of Contract by the Successful Bidder and Execution<\/span><\/h1>\n1. After the successful bidder is notified, he will be sent an agreement in duplicate for signature and return \u2014 incorporating all agreements between the parties<\/strong>.<\/p>\n2. The acknowledgement timelines and exemptions:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Situation<\/th><th>Timeline<\/th><\/tr><\/thead><tbody><tr><td>OTE<\/td><td>acknowledge and unconditionally accept, sign, date and return the agreement within 14 (fourteen) days<\/strong> From the date of issue of the contract<\/td><\/tr><tr><td>GTE<\/td><td>within 28 (twenty-eight) days<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nwhen acknowledgement is not required:<\/p>\n<ul class=\"lst\"><li>IN low-value contracts below rupees two and a half lakh<\/strong>;<\/li><li>When the bidder's offer has been accepted in its entirety without any modifications<\/strong>;<\/li><li>\"if both parties simultaneously sign the contract across the table \u2014 further acknowledgement from the supplier is not required<\/strong>.\"<\/li><\/ul>\nif the supplier raises issues: \"while acknowledging the contract, the supplier May raise issues and\/ or ask for modifications against some entries; Such aspects shall be immediately investigated for necessary action \u2014 and thereafter, the supplier's unconditional acceptance of the contract must be obtained<\/strong>.\"<\/p>\nit should also be made known that if he does not furnish the required Performance Security or does not sign the contract within the stipulated target dates \u2014 such non-compliance will constitute sufficient ground for punitive actions<\/strong>.<\/p>\n\"the Procuring Entity May also consider getting the contract digitally signed<\/strong>.\"<\/p>\n3. Who May sign: \"all contracts shall be signed and entered into after receipt and verification of the requisite Performance Security \u2014 by an authority empowered to do so by or under the orders of the president<\/strong> [Article 299 of the Constitution].\"<\/p>\n<h1>7.39 Framing of Contract<\/span><\/h1>\nthe contract should be strictly as per the bid conditions and the accepted offer<\/strong>.<\/p>\n<aside class=\"note\">See the Risks table at para 7.41 \u2014 risk row 6 addresses the danger that *\"although there is a standard contract form in the tender documents, the contract may be drafted in a fashion that favours or discourages the successful bidder.\"*<\/p><\/aside>\n<h1>7.40 Audit Trails \u2014 Procurement Records<\/span><\/h1>\n1. The obligation: The Procuring Entity must maintain and retain audit trails, records and documents generated or received during its procurement proceedings \u2014 in chronological order<\/strong>. The files should be stored in an identified place and retrievable for scrutiny whenever needed, without wasting time<\/strong>.<\/p>\n2. The e-procurement dispensation:<\/p>\n<aside class=\"note\">\"however, many organisations now process procurements on their own or e-procurement portals. In such cases, taking printouts and making a physical file just for records May be counter-productive \u2014 provided the portals have provisions for audit trails<\/strong>.\"<\/p><\/aside>\nThe nine categories of documents to be maintained (electronically or physically): a) documents pertaining to the determination of the need<\/strong> for procurement; B) description of the subject matter<\/strong> Of the procurement; C) statement of the justification for the choice of a mode of procurement other than open competitive tendering<\/strong>; D) documents relating to pre-qualification and registration of bidders<\/strong>, if applicable; e) PARTICULARS OF issue, receipt, opening of the bids and the participating bidders at each stage<\/strong>; f) requests for clarifications and any reply thereto \u2014 including the clarifications given during pre-bid conferences<\/strong>; g) bids evaluated and documents relating to their evaluation<\/strong>; h) contracts and contract amendments<\/strong>; i) complaint handling; Correspondence with clients, consultants, and banks<\/strong>.<\/p>\n3. The physical-file structure \u2014 and the two-volume practice:<\/p>\nIn organisations where physical files are still maintained, the procurement file should start with the indent<\/strong> And related documents, followed by:<\/p>\n<aside class=\"note\">Procurement planning \u00b7 copy of tender document and documents relating to its formulation, publishing and issue\/ uploading \u00b7 bid opening \u00b7 bids received \u00b7 correspondence and documents (including technical evaluation and TC report) \u00b7 and finally, the contract copy<\/p><\/aside>\nin case of bulky bids received, all bids May be kept in a separate volume \u2014 with a copy of accepted bids later being put on the main volume<\/strong>.<\/p>\n<aside class=\"note\">The two-volume safeguard: \"to maintain the integrity of the records relating to procurement, these files should be kept secure \u2014 and for contract management, a new volume of files May be opened, to obviate frequent exposure of sensitive procurement files.<\/strong><\/p>\nIn the contract management volume, copies of successful bids, Tender Committee reports, and contract May also be kept for ready reference \u2014 besides correspondence and documents relating to contract management and its closure<\/strong>.\"<\/p><\/aside>\n<h1>7.41 Evaluation of Bids and Award of Contract \u2014 Risks and Mitigations<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>evaluation of bids is subjective, or leaves room for manipulation and biased assessments<\/em>. Some TC members May not be independent or neutral, or May have a conflict of interest (coi)<\/em>.<\/td><td>TC should give an undertaking at the appropriate time that none of the members has any coi<\/strong> With the companies\/ agencies participating. Any member having a coi should refrain from participating in the TC<\/strong>. \"some members of a TC May be subordinate to, or related to, others in a strictly hierarchical organisation \u2014 so that they are not free to express independent views. Such a situation must be avoided when constituting the TC<\/strong>.\"<\/td><\/tr><tr><td>2<\/td><td>discriminating against a best value bid<\/em>: \"in case a bidder's bid (not in the good books of the Procuring Entity) becomes the best value bid as per the evaluation criteria, some of the following actions May have risks of misuse. There is also a reverse risk in these actions if a favourite becomes the best value bid<\/strong>.\"<\/td><td>(Mitigation for each type is at rows 3\u20136 below.)<\/em><\/td><\/tr><tr><td>3<\/td><td>unwarranted re-tendering: Rejecting all bids and calling for re-tendering on the pretext of prices being high, change of specifications, budget not being available<\/em>, and so on.<\/td><td>Refer to para 7.34 for safeguards. <\/strong>\"in case a procurement is re-bid more than once, approval of one level above the ca May be taken<\/strong>.\" Also see the complaint mechanism.<\/td><\/tr><tr><td>4<\/td><td>sudden quantity reduction\/ increase or splitting of quantity\/ work at the time of award<\/em>. \"many organisations have provisions for change\/ splitting in the bid quantity at the time of award. Some organisations vary quantity even without such provisions<\/strong>.\"<\/td><td>bid conditions must specify a limit beyond which the originally announced quantity\/ scope cannot be reduced\/ increased<\/strong>. <\/strong>If parallel contracts are envisaged, clear criteria for the splitting May be specified in the tender documents beforehand<\/strong>.<\/td><\/tr><tr><td>5<\/td><td>unwarranted negotiations: Negotiations are called without justification. Sometimes, a counter-offer is made to discourage the lowest acceptable bidder<\/em>.<\/td><td>Normally, there should be no post-tender negotiations<\/strong>. In certain exceptional situations \u2014 procurement of proprietary items \u00b7 items with limited sources of supply \u00b7 items where there is suspicion of a cartel formation<\/em> \u2014 negotiations May be held with L-1<\/strong>. In case of L-1 backing out, there should be re-tendering<\/strong>.<\/td><\/tr><tr><td>6<\/td><td>unwarranted delays in finalising or varying the terms of the contract agreement: \"even after the TC recommendations are accepted, the signing of the contract is delayed on one pretext or the other. Although there is a standard contract form in the tender documents, the contract May be drafted in a fashion that favours or discourages the successful bidder<\/strong>.\"<\/td><td>A target timeline for the finalisation of procurement should be laid down<\/strong>. <\/strong>Delays and reasons thereof should be brought out before the ca on the file at the time of tc's acceptance or contract signing<\/strong>. \"the contract should be strictly as per the bid conditions and accepted offer<\/strong>.\"<\/td><\/tr><tr><td>7<\/td><td>anti-competitive practices: \"bidders which would otherwise be expected to compete, secretly conspire to frustrate the buyer's attempts to get VfM in a tender process. Anti-competitive conspiracies can take many forms. Sometimes, the officers involved in procurement May be part of such collusion<\/strong>.\" (The five named forms are set out below the table.)<\/em><\/td><td>\"these strategies, in turn, May result in patterns that procurement officials can detect \u2014 and steps can be taken to thwart such attempts.<\/strong>\" <\/strong>\"such anti-competitive activities come under the purview of competition law, which provides stringent penalties.<\/strong>\" \"regular training should be held for officers involved in procurement \u2014 to detect and mitigate such practices, and also to use the competition law against such bidders<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h2 class=\"src-G\">The Five Named Forms of Anti-Competitive Conduct<\/span>G<\/span><\/h2><div class=\"srcblock src-G\">\n<div class=\"tblwrap\"><table><thead><tr><th>Form<\/th><th>Definition<\/th><\/tr><\/thead><tbody><tr><td>1. Bid coordination<\/td><td>\"the bidders collude to quote the same or similar rates that are much higher than the reasonable price \u2014 to force the buyer to settle the procurement at exorbitant prices<\/strong>.\"<\/td><\/tr><tr><td>2. Cover bidding<\/td><td>\"cover bidding is designed to give the appearance of genuine competition, by way of supporting bids for the leading bid-rigger<\/strong>.\"<\/td><\/tr><tr><td>3. Bid suppression<\/td><td>\"bid suppression means that a company does not submit a bid for final consideration, in support of the leading bid-rigger<\/strong>.\"<\/td><\/tr><tr><td>4. Bid rotation<\/td><td>\"in bid-rotation schemes, conspiring firms continue to bid \u2014 but they agree to take turns being the winning (i.e., lowest qualifying) bidder in a group of tenders of a similar nature<\/strong>.\"<\/td><\/tr><tr><td>5. Market allocation<\/td><td>\"competitors carve up the market and agree not to give competitive bids for certain customers, or in certain geographic areas<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>Appendix to Chapter 7 \u2014 Part B: Points of Difference<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>QCBS weightage \u2014 inverted<\/td><td>C: Technical 70% \/ Cost 30% \u00b7 W & NC: Technical \u226430% \/ Cost \u226570%<\/td><\/tr><tr><td>2<\/td><td>The identical sentence \"since the weightage of the COST element \u2026 is as high as 70 per cent\" appears in both C and NC<\/td><td>An evident internal inconsistency in the CS Manual<\/em>, which has just assigned 70% to TECHNICAL<\/td><\/tr><tr><td>3<\/td><td>QCBS worked example \u2014 the winner<\/td><td>C: Proposal C at Rs. 106, the HIGHEST-priced<\/em> bid \u00b7 W: Bid C at Rs. 105, the second-lowest<\/em> bid \u00b7 NC: same data as C but H-1\/H-2\/H-3 order changes<\/td><\/tr><tr><td>4<\/td><td>QCBS tie-breaker<\/td><td>Common: the bid with the higher TECHNICAL score becomes H-1<\/em><\/td><\/tr><tr><td>5<\/td><td>evaluation of the quality \u2014 technical proposals<\/strong>(four criteria; absolute-not-comparative grading; 5-grade A\u2013E rating scale at 100\/80\/60\/30\/10%; first reading without scoring; grading defined before opening; individual scoring; joint review and averaging; 75 minimum qualifying mark; debriefing duty)<\/em><\/td><td>C ONLY<\/td><\/tr><tr><td>6<\/td><td>The model marks scheme (5\u201310% \/ 20\u201350% \/ 30\u201360% \/ 0\u201310%)<\/td><td>C ONLY<\/td><\/tr><tr><td>7<\/td><td>Methodology sub-criteria (30\/50\/20) and Key Professionals sub-criteria (20\/80)<\/td><td>C ONLY<\/td><\/tr><tr><td>8<\/td><td>Fixed budget selection (FBS) \u2014 the two methods<\/td><td>C ONLY<\/td><\/tr><tr><td>9<\/td><td>negotiations to freeze description of service<\/strong>(and the consequent absence of negotiation annexures in CS)<\/em><\/td><td>C ONLY<\/td><\/tr><tr><td>10<\/td><td>\"In no case should financial negotiation result in an INCREASE in the financial cost as originally quoted\"<\/td><td>C ONLY<\/td><\/tr><tr><td>11<\/td><td>Arithmetic correction permitted in TIME-BASED contracts but not in LUMP-SUM contracts<\/td><td>C ONLY<\/td><\/tr><tr><td>12<\/td><td>\"A technical proposal pre-disclosing any material pricing information shall also be rejected\"<\/td><td>C ONLY<\/td><\/tr><tr><td>13<\/td><td>MII purchase preference not applicable where evaluation uses QCBS or FBS<\/td><td>NC<\/strong>(stated expressly)<\/em><\/td><\/tr><tr><td>14<\/td><td>\"Members of the STC shall not be involved\" in the QCBS evaluation committee<\/td><td>nc only<\/td><\/tr><tr><td>15<\/td><td>evaluation in rate contracts<\/strong>(counter-offer procedure for parallel RCs; Catalogue basis on NDP\/MRP; one-year default period)<\/em><\/td><td>G ONLY<\/td><\/tr><tr><td>16<\/td><td>variation of quantities at award \u2014 15% default<\/td><td>G ONLY<\/td><\/tr><tr><td>17<\/td><td>OPTION CLAUSE \u2014 25%, above Rs 50 lakh, none in development orders, excluded from CA determination<\/td><td>G ONLY<\/td><\/tr><tr><td>18<\/td><td>Splitting\/ parallel contracts \u2014 70:30 and 50:30:20 ratios; the minimum-quote anti-cartel safeguard; five allocation guidelines<\/td><td>G ONLY<\/td><\/tr><tr><td>19<\/td><td>Tie at l-1 \u2014 the four-step tie-breaker (SC\/ST or Women MSE \u2192 other MSE \u2192 higher turnover \u2192 earlier DPIIT registration; GeM methodology on GeM)<\/td><td>G ONLY<\/td><\/tr><tr><td>20<\/td><td>Evaluation of multiple schedules\/ items\/ destinations \u2014 the three cases<\/td><td>G ONLY<\/td><\/tr><tr><td>21<\/td><td>\"Net of GST\" for CPSEs availing Input Tax Credit<\/td><td>G ONLY<\/td><\/tr><tr><td>22<\/td><td>GTE loading sequence \u2014 1% port handling, customs\/CVD\/surcharges, clearing agency, inland freight, GST, LC charges; CIF comparison where no domestic bidders<\/td><td>G ONLY<\/td><\/tr><tr><td>23<\/td><td>Evaluation of bids involving samples\/ demos; pre-production sample; cancellation without repercussion<\/td><td>G ONLY<\/td><\/tr><tr><td>24<\/td><td>The six \"critical provisions\" deemed material if deviated from<\/td><td>G<\/strong>(fullest statement)<\/em><\/td><\/tr><tr><td>25<\/td><td>\"The CA may ask the TC to explain the report but should not request that evaluation be changed\"<\/td><td>G<\/td><\/tr><tr><td>26<\/td><td>Financial bid opening to be 2\u20135 days after announcement of techno-commercial results<\/td><td>G<\/td><\/tr><tr><td>27<\/td><td>Abnormally Low Bids \u2014 \"resource mobilisation\" included in the price-analysis heads<\/td><td>W<\/strong>(G omits it)<\/em><\/td><\/tr><tr><td>28<\/td><td>ALB \u2014 \"due care while preparing the drawings, formulating specifications\"<\/td><td>W<\/strong>(G says only \"formulating the specifications\")<\/em><\/td><\/tr><tr><td>29<\/td><td>Cartel sign \u2014 \"quoted quantities much less than tendered quantity\" and \"same IP address raises suspicion but is not by itself a strong indicator\"<\/td><td>G ONLY<\/td><\/tr><tr><td>30<\/td><td>Cartel sign \u2014 \"prices suspiciously similar despite significant differences in the proposed approach\"<\/td><td>W ONLY<\/td><\/tr><tr><td>31<\/td><td>Minimum quote percentage to defeat cartels<\/td><td>G: say 25% \u00b7 W: say 20% or 30%, where schedules or division of work is possible<\/td><\/tr><tr><td>32<\/td><td>Cartel remedies \u2014 detailed cost analysis by experts; encouraging new firms to enlist; switching to post-qualification; packaging\/ slicing<\/td><td>W ONLY<\/td><\/tr><tr><td>33<\/td><td>Reporting cartels to FICCI, ASSOCHAM, NSIC by name<\/td><td>G ONLY<\/td><\/tr><tr><td>34<\/td><td>Reasonableness \u2014 the seven LPP cautions, incl. \"these prices are not valid LPP for comparison in future procurement\"<\/td><td>G ONLY<\/td><\/tr><tr><td>35<\/td><td>The five named forms of anti-competitive conduct (Bid Coordination, Cover Bidding, Bid Suppression, Bid Rotation, Market Allocation)<\/td><td>G ONLY<\/td><\/tr><tr><td>36<\/td><td>\"Once a Tender is re-tendered, the bids in the old tender cannot be revived, as per the Indian Contract Act\"<\/td><td>G<\/td><\/tr><tr><td>37<\/td><td>\"In case a procurement is re-bid more than once, approval of one level above the ca may be taken\"<\/td><td>G<\/td><\/tr><tr><td>38<\/td><td>LoA constitutes legal formation of contract if not conditional on performance security; acceptance complete on submission to postal authorities<\/td><td>G<\/td><\/tr><tr><td>39<\/td><td>Contract cannot be placed on a subsidiary or authorised dealer \u2014 only on the bidder in whose name the bid was submitted<\/td><td>G<\/td><\/tr><tr><td>40<\/td><td>Mandatory GeM Seller ID before LoA<\/td><td>G<\/td><\/tr><tr><td>41<\/td><td>CPSE commercial-resale disclosure and the six-month deferred publication of award details<\/td><td>G ONLY<\/td><\/tr><tr><td>42<\/td><td>Acknowledgement within 14 days (OTE)\/ 28 days (GTE); exemption below Rs 2.5 lakh<\/td><td>G<\/td><\/tr><tr><td>43<\/td><td>Audit Trails \u2014 the nine document categories and the two-volume file practice<\/td><td>G<\/strong>(also in W and NC)<\/em><\/td><\/tr><tr><td>44<\/td><td>Cross-checking credentials before final award \"especially important at RfP stage since verification is not done at EoI stage\"<\/td><td>C ONLY<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 7 (parts a and b)<\/p>\n<aside class=\"note\">Next:<\/strong>Chapter 8<\/strong> \u2014 but note the divergence: Goods Ch. 8<\/strong> is Procurements with Unique Features<\/em>; Consultancy Ch. 9<\/strong> is Special Types of Engagements<\/em>; Non-Consultancy Ch. 8<\/strong> is Special Types of Non-Consultancy Procurements<\/em>; and the Works Manual has NO such chapter at all<\/strong> \u2014 its Chapter 7 is Execution and Monitoring of Works and Quality Assurance<\/em>, which corresponds to the contract-management chapters of the other three.<\/p><\/aside><\/div><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch8\">Chapter 8<\/p><h1>Special and Unique Types of Procurement<\/h1><\/header>\nMerging: Goods Ch. 8<\/strong> (Procurements with Unique Features) \u00b7 Consultancy Ch. 9<\/strong> (Special Types of Engagements) \u00b7 Non-Consultancy Ch. 8<\/strong> (Special Types of Non-Consultancy Procurements)<\/em><\/p><h2>Structural Warning \u2014 the Works Manual Has No Such Chapter<\/span><\/h2>\nthree of the four Manuals carry a \"special types\" Chapter. The works Manual does not.<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Chapter<\/th><th>Title<\/th><th>Sections<\/th><\/tr><\/thead><tbody><tr><td>G<\/span> Goods<\/td><td>Chapter 8<\/td><td>Procurements with Unique Features<\/em><\/td><td>7<\/td><\/tr><tr><td>W<\/span> Works<\/td><td> \u2014 NONE \u2014 <\/td><td>(its Chapter 7 is Execution and Monitoring of Works and Quality Assurance<\/strong> \u2014 which corresponds to the CONTRACT MANAGEMENT chapters of the other three)<\/em><\/td><td> \u2014 <\/td><\/tr><tr><td>C<\/span> Consultancy<\/td><td>Chapter 9<\/td><td>Special Types of Engagements<\/em><\/td><td>10<\/td><\/tr><tr><td>NC<\/span> Non-Consultancy<\/td><td>Chapter 8<\/td><td>Special Types of Non-Consultancy Procurements<\/em><\/td><td>12<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">why works has none:<\/strong> The Works Manual handles its variations \u2014 EPC, PPP, piece Work, stalled contracts<\/strong> \u2014 inside its Bidding Design chapter (Ch. 3)<\/strong>, covered at Chapter 4 Parts A and B of this Unified Manual. It has no separate \"special engagements\" chapter.<\/p><\/aside>\n<h2>The Three Chapters Barely Overlap<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>GOODS G<\/span><\/th><th>CONSULTANCY C<\/span><\/th><th>NON-CONSULTANCY NC<\/span><\/th><\/tr><\/thead><tbody><tr><td>Organising principle<\/td><td>transaction-structure variants<\/strong>(how the deal is shaped)<\/em><\/td><td>categories of provider<\/strong>(who is engaged)<\/em><\/td><td>categories of provider + named services (who, and for what)<\/em><\/td><\/tr><tr><td>Contents<\/td><td>Emergencies\/ Disaster \u00b7 Buy Back \u00b7 Capital Goods \u00b7 AMC \u00b7 NPV \u00b7 Turnkey \u00b7 Books & Print Media<\/td><td>SSS \u00b7 Individual Consultants \u00b7 Specialised Agencies \u00b7 NGOs \u00b7 Procurement Consultants \u00b7 Financial Advisors \u00b7 Auditors \u00b7 Logo Design Competitions \u00b7 Integrated IT Projects \u00b7 Digital India<\/td><td>EoI Shortlisting \u00b7 SSS \u00b7 Individual Service Providers \u00b7 Specialised Agencies \u00b7 NGOs \u00b7 Procurement Agents \u00b7 Inspection Agents \u00b7 Housekeeping \u00b7 Manpower Outsourcing \u00b7 Private Security \u00b7 Vehicle Hiring \u00b7 HaaS<\/td><\/tr><\/tbody><\/table><\/div>\nthe goods Chapter has ZERO<\/em> Overlap with the other two. Consultancy and non-consultancy share only four topics: SSS \u00b7 Individual providers \u00b7 Specialised Agencies\/ Institutions \u00b7 NGOs.<\/p>\n<h2>Concordance for Chapter 8<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>G<\/th><th>C<\/th><th>NC<\/th><\/tr><\/thead><tbody><tr><td>Part i \u2014 goods-only<\/td><td><\/td><td><\/td><td><\/td><td><\/td><\/tr><tr><td>8.1<\/td><td>Handling Procurement in Emergencies and Disaster Management<\/td><td>8.1<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>8.2<\/td><td>Buy Back Offer<\/td><td>8.2<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>8.3<\/td><td>Capital Goods\/ Equipment (M&P, IT Systems)<\/td><td>8.3<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>8.4<\/td><td>Annual Maintenance Contract (AMC)<\/td><td>8.4<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>8.5<\/td><td>Net Present Value (NPV)<\/td><td>8.5<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>8.6<\/td><td>Turnkey Contract<\/td><td>8.6<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>8.7<\/td><td>Procurement of Books and Print Media<\/td><td>8.7<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>part II \u2014 common to c and nc<\/td><td><\/td><td><\/td><td><\/td><td><\/td><\/tr><tr><td>8.8<\/td><td>EoI for Shortlisting of Service Providers<\/td><td> \u2014 <\/td><td>(Ch. 7)<\/em><\/td><td>8.1<\/td><\/tr><tr><td>8.9<\/td><td>Single Source Selection (SSS)<\/td><td> \u2014 <\/td><td>9.1<\/td><td>8.2<\/td><\/tr><tr><td>8.10<\/td><td>Selection of Individual Consultants\/ Service Providers<\/td><td> \u2014 <\/td><td>9.2<\/td><td>8.3<\/td><\/tr><tr><td>8.11<\/td><td>Selection of Specialised Agencies\/ Institutions<\/td><td> \u2014 <\/td><td>9.3<\/td><td>8.4<\/td><\/tr><tr><td>8.12<\/td><td>Selection of Non-governmental Organisations (NGO)<\/td><td> \u2014 <\/td><td>9.4<\/td><td>8.5<\/td><\/tr><tr><td>8.13<\/td><td>Procurement Consultants\/ Agents<\/td><td> \u2014 <\/td><td>9.5<\/td><td>8.6<\/td><\/tr><tr><td>part III \u2014 consultancy-only<\/td><td><\/td><td><\/td><td><\/td><td><\/td><\/tr><tr><td>8.14<\/td><td>Financial Advisors<\/td><td> \u2014 <\/td><td>9.6<\/td><td> \u2014 <\/td><\/tr><tr><td>8.15<\/td><td>Auditors<\/td><td> \u2014 <\/td><td>9.7<\/td><td> \u2014 <\/td><\/tr><tr><td>8.16<\/td><td>Public Competition for Design of Symbols\/ Logos<\/td><td> \u2014 <\/td><td>9.8<\/td><td> \u2014 <\/td><\/tr><tr><td>8.17<\/td><td>Procurement of Integrated IT Projects<\/td><td> \u2014 <\/td><td>9.9<\/td><td>(8.12.1)<\/em><\/td><\/tr><tr><td>8.18<\/td><td>Hiring Consultants for Digital India Projects<\/td><td> \u2014 <\/td><td>9.10<\/td><td> \u2014 <\/td><\/tr><tr><td>part IV \u2014 non-consultancy-only<\/td><td><\/td><td><\/td><td><\/td><td><\/td><\/tr><tr><td>8.19<\/td><td>Inspection Agents<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.7<\/td><\/tr><tr><td>8.20<\/td><td>Housekeeping Services<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.8<\/td><\/tr><tr><td>8.21<\/td><td>Manpower Outsourcing Services<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.9<\/td><\/tr><tr><td>8.22<\/td><td>Private Security Manpower Services<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.10<\/td><\/tr><tr><td>8.23<\/td><td>Vehicle Hiring for Office Use<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.11<\/td><\/tr><tr><td>8.24<\/td><td>IT Hardware as a Service (HaaS)<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>8.12<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>Part I \u2014 Procurements with Unique Features [GOODS ONLY]<\/span><\/h1>\n<h1>8.1 Handling Procurement in Emergencies and Disaster Management<\/span><\/h1>\n<h2>8.1.1<\/span>Procurements in Emergencies\/ Urgencies<\/span><\/h2>\n\"there are sufficient fast-track procurement modes and flexibilities in the procurement guidelines to tackle procurements in operational emergencies\/ urgencies. Enhanced delegations of procurement powers May be incorporated in SoPP to handle such situations<\/strong>.\"<\/p>\nthe four modes, in order of speed:<\/p>\nA) procurement through the GeM PORTAL<\/strong>;<\/p>\nb) direct procurement without quotation<\/strong>;<\/p>\nc) direct procurement by Purchase Committee<\/strong>;<\/p>\nd) SLTE\/ limited\/ Single Tender Enquiry \u2014 with reduced time for submission of bids<\/strong>.<\/p>\n<h2>8.1.2<\/span>Procurement in Crisis Situations \u2014 Disaster Management\/ Pandemic<\/span><\/h2>\n<aside class=\"note\">\"normal procurement modes, thresholds and bid systems are not tailored for procurement in crises like disaster management\/ pandemic. Hence, during such a situation, the following dispensations May be allowed with the approval of competent authorities<\/strong>.\"<\/p><\/aside>\n1. The declaration order: \"an order May be issued by the Competent Authority \u2014 declaring the crisis, and promulgating the start of procurement procedures under the crisis, with an estimated validity period till which these would apply<\/strong>.\"<\/p>\n2. NEED ASSESSMENT \u2014 the aggregation task: \"the most crucial task is to consolidate and aggregate the requirements from all jurisdictions. Specifications should be rationalised considering the market situation. A centralised list May be prepared containing the quantities (unit-wise) and specifications of each item. Such lists May be preserved for future use<\/strong>.\"<\/p>\n3. Prolonged or endemic crises: \"if a crisis is likely to extend over a prolonged period \u2014 or if such disasters are endemic to the region (floods\/ cyclones) \u2014 rate contracts May be entered into to cater to such situations<\/strong>.\"<\/p>\n4. \"this is not the time for complex methods\" \u2014 the eight dispensations:<\/p>\n<aside class=\"note\">\"this is not the time for complex methods, e.g., Reverse Auction, etc. The use of the following modes of procurement is suggested in order of speed.<\/strong><\/p>\n To speed up procurement, advance cash May be drawn for direct procurement modes and made available to the committees\/ officer \u2014 with accounts and vouchers to be submitted after purchase<\/strong>.\"<\/p><\/aside>\na) procurement through the GeM portal \u2014 which responds to such situations as COVID-19<\/strong>;<\/p>\nB) direct procurement without quotation;<\/p>\nC) direct procurement by Purchase Committee;<\/p>\nD) SLTE\/ limited\/ Single Tender Enquiry, with reduced time for submission of bids;<\/p>\ne) \"other than these, unlisted but fast modes of procurement \u2014 e.g., enhancement of quantity or repeat orders at the same terms in existing contracts \u2014 May be pursued. All contracts May be placed with clauses for quantity enhancements and repeat orders<\/strong>.\";<\/p>\nf) \"all procurement May be done using single-stage, single-envelope tendering systems<\/strong>.\";<\/p>\ng) \"even if pre-qualification is felt necessary, self-declaration in a single envelope May be called for \u2014 instead of a time-consuming pre-qualification bid<\/strong>.\";<\/p>\nh) \"pre-bid conferences May be replaced by informal market research<\/strong>.\"<\/p>\n5. Enhanced delegations: \"enhanced delegations of procurement powers in SoPP May be considered, with the approval of the Secretary of the Department<\/strong>.\"<\/p>\n6. \"deliveries that suit the urgent\/ emergent and disaster management situation May only be allowed<\/strong>.\"<\/p>\n7. Reasonableness of prices in a crisis: \"the reasonableness of prices in such situations May be judged by keeping in mind that prices in such situations May be higher than in normal procurement \u2014 to cater to express deliveries\/ disruptions, etc<\/strong>.\"<\/p>\n8. Model documents disapplied: \"model tender documents or general conditions of contract should not apply to emergency procurements<\/strong>.\"<\/p>\n9. Shortened timelines and alternative bid channels: \"minimum timelines for bid submission May be shortened (say 1\u20133 days). Bids by phone, email, and in-person May also be considered<\/strong>.\"<\/p>\n10. Single offer acceptable, no re-tender: \"norms of minimum bids in a tender May be relaxed \u2014 and even a single offer May be accepted without re-tendering. No tender should normally be allowed to be discharged or re-invited<\/strong>.\"<\/p>\n11. The seven norms that May be dispensed with or relaxed:<\/p>\n<aside class=\"note\">\"in emergency procurements, time-consuming norms for the following May be dispensed with or relaxed:<\/strong><\/p>\n<ol class=\"lst\"><li>Tender document costs<\/strong><\/li><li>earnest money deposit (EMD)<\/strong><\/li><li>security Deposit (SD or performance guarantee)<\/strong><\/li><li>vendor registration fee<\/strong><\/li><li>verification of eligibility\/ qualification \u2014 by putting the onus on the vendors to self-declare his eligibility, qualifications, and capability, with penalties for false declarations<\/strong>*<\/li><li>liquidated Damages (LD) or other penalties<\/strong><\/li><li>negotiations<\/strong><\/li><\/ol>\n Delegation in this regard May be enhanced and delegated to cutting-edge levels<\/strong>.\"<\/p><\/aside>\n12. Minimal documentation: \"documents required for various stages \u2014 bids, qualification, eligibility, inspection, and payment \u2014 must be barely minimum<\/strong>.\"<\/p>\n13. Inspection: \"instead of physical inspections, vendors' self-declaration of quality May be accepted<\/strong>.\"<\/p>\n14. THE GeM exception in a crisis \u2014 a rare permitted departure:<\/p>\n<aside class=\"note\">\"putting GeM at the centre of all such emergency procurement would help in transparency and price monitoring.<\/strong><\/p>\n However, in urgent\/ emergent and disaster management situations, in case of procurement below Rs. 50,000 \u2014 if deliveries are not suitable on GeM, procurement May be done locally as per sub-para 4 above \u2014 even if the items are available on GeM, as an exception to the Rule.<\/strong><\/p>\n Prior or post facto sanction May be taken from the Secretary of the Department<\/strong>.\"<\/p><\/aside>\n15. Ensuring transparency, integrity, and accountability:<\/p>\nA) as far as feasible, procurement May be done on the GeM portal<\/strong>.<\/p>\nB) the separate record-keeping team: \"all procuring agencies should constitute a separate team (without hampering people involved in procurement) to keep a record of justification and quantum of emergency procurements \u2014 for future accountability<\/strong>.\"<\/p>\nc) after the crisis is over \u2014 the four closing actions:<\/p>\n<aside class=\"note\">i) \"the Competent Authority May issue an order signalling the end of the crisis and the emergency procurement procedures<\/strong>.\";<\/p>\nii) \"special time-bound internal and external audits of all emergency procurements should be done with a large sampling size when normalcy returns. If need be, public or private agencies May be hired to assist with this large volume of audits<\/strong>.\";<\/p>\niii) \"any undelivered contract, if any, May be reviewed for cancellation<\/strong>.\";<\/p>\niv) \"unutilised stocks, if any, May be reviewed for gainful use<\/strong>.\"<\/p><\/aside>\n16. Getting ready for future disasters: \"such emergency procurement systems and lists May be formalised for future disasters \u2014 e.g., the enhanced delegations May be integrated into the normal SoPP as delegations in defined crisis<\/strong>.\"<\/p>\n<h1>8.2 Buy Back Offer<\/span>G<\/span><\/h1>\n(Rule 176 of GFR 2017)<\/em><\/p>\nwhen it is decided to replace an existing old item(s) with a new\/ better version<\/strong>, the Department May trade the existing old item while purchasing the new one<\/strong>, by issuing suitable tender documents for this purpose.<\/p>\nWhat the tender document must incorporate:<\/p>\n<aside class=\"note\">THE condition of the old item \u00b7 its location \u00b7 and the mode of its handing over to the successful bidder<\/strong>.<\/p>\nThe two-price requirement \u2014 the key mechanism:<\/p>\n\"further, the bidder should be asked to quote the prices for the item (to be offered by them):<\/strong><\/p>\n\u2022 with a rebate for the old item; And also<\/strong><\/p>\n\u2022 without any rebate (in case they do not want to lift the old item).<\/strong><\/p>\n This will provide an option for the Department to either trade or not trade the old item while purchasing the new one<\/strong>.\"<\/p><\/aside>\n<h1>8.3 Capital Goods\/ Equipment (Machinery and Plant \u2014 M&P, IT Systems, etc.)<\/span>G<\/span><\/h1>\n<h2>8.3.1<\/span>What Counts as Capital Goods<\/span><\/h2>\n\"capital goods are machinery and plants (m&p) which create new fixed assets\/ utility\/ functionality or benefits for the organisation, and have a long and useful life.<\/strong><\/p>\n This also refers to it procurements of IT systems \u2014 comprising one or more of: Hardware \u00b7 networking \u00b7 tailor-made and customised software \u00b7 installation\/ commissioning \u00b7 training \u00b7 AMC\/ CMC \u00b7 cloud services \u00b7 and other services<\/strong>.\"<\/p>\n<h2>8.3.2<\/span>The Seven Distinctive Features<\/span><\/h2>\n1. Investment decision and item-specific budget:<\/p>\n<aside class=\"note\">\"since the cost is generally high, there are detailed procedures for approval of technical, administrative, and budgetary provisions \u2014 before an indent is generated.<\/strong><\/p>\n Unlike consumable items (which are procured if a non-specific budgetary provision is there), capital goods are procured after an item-specific budgetary provision is included in the budget.<\/strong><\/p>\n Thus, the acquisition of capital goods is also an investment decision, and May require some form of investment justification. Some of the higher-value capital goods May be accounted for in the capital block of the organisation. However, these features May not apply to capital goods of smaller values<\/strong>.\"<\/p><\/aside>\n2. The alternatives to outright purchase \u2014 with the staff-car illustration:<\/p>\n<aside class=\"note\">\"there are also alternatives to outright purchasing\/ owning such equipment \u2014 like hiring\/ hire-purchase\/ leasing, or acquiring the functionality as a service.<\/strong><\/p>\nFor example, instead of buying a staff car, a monthly service\/ hiring contract can be entered into to provide vehicles as per requirements. The car can also be wet leased (including maintenance), and a service contract for drivers\/ cleaners can be entered into separately.<\/strong><\/p>\n This can be especially advantageous in equipment that undergo obsolescence quickly \u2014 e.g., IT equipment<\/strong>.\"<\/p><\/aside>\n3. The embedded works and services:<\/p>\nThe procurement involves elements of works and services like:<\/p>\n<aside class=\"note\">Installation \u00b7 commissioning \u00b7 training \u00b7 prolonged trials \u00b7 warranty \u00b7 after-sales services like post-warranty maintenance and assured availability of spares<\/strong><\/p><\/aside>\n\"all such elements have costs that May be quoted explicitly or implicitly.<\/strong><\/p>\nA suitable warranty clause should indicate the period of warranty and service levels, as well as penalties for delays in the restoration of defects.<\/strong><\/p>\n Clauses for including essential initial spares for two years' maintenance, to be supplied along with equipment, May be provided.<\/strong><\/p>\n If necessary, an appropriate number of years \u2014 say three to five or more years, depending on the lifespan of the equipment \u2014 AMC May be included in the procurement, detailing its conditions<\/strong>.\"<\/p>\n4. Total Cost of Ownership:<\/p>\n<aside class=\"note\">\"the cost of operations, maintenance, and disposal of the equipment over its life cycle May far outweigh the initial procurement cost.<\/strong><\/p>\nHence, Total Cost of Ownership (TCO) becomes an important consideration \u2014 which can be addressed in Public Procurement by way of:<\/strong><\/p>\n\u2022 appropriate description, specification, and contract conditions \u2014 like the inclusion of the cost of supply of initial essential spares; And<\/strong><\/p>\n\u2022 Net Present Value (NPV) of annual maintenance contracts (AMC) for a specified number of years \u2014 within the estimated cost and also the evaluation criteria of the procurement contract<\/strong>.\"<\/p><\/aside>\n5. When a turnkey contract is better: \"in case the plant and equipment (or an IT system) consists of several machines\/ components\/ systems that work in tandem \u2014 or if it includes services\/ works to be done by a third party \u2014 an all-encompassing turnkey contract May be a better alternative<\/strong>.\"<\/p>\n6. The evaluation complexity and its three remedies:<\/p>\n<aside class=\"note\">\"because of the complexity of specification evaluation, the technical suitability of offers in the procurement of capital goods involves complex issues about acceptance of alternatives, deviations, and compliance with various particulars of specification.<\/strong><\/p>\n Remedy 1: Acceptance or otherwise of alternatives should be made explicit.<\/strong><\/p>\n Remedy 2: A statement of deviation \u2014 including the detailed justification for the deviations from each clause of specification \u2014 should be requested from the bidder in the tender documents.<\/strong><\/p>\n Remedy 3: A Schedule of guaranteed particulars of specification, indicating the values of each parameter, May be included in the specification \u2014 where the bidder can quote the offered value of the parameters.<\/strong><\/p>\nIn complex cases, a pre-bid conference May help in reducing disputes and complexity at the time of evaluation<\/strong>.\"<\/p><\/aside>\n7. Fit for pre-qualification bidding: \"experience, capacity, and financial strength of a supplier are important determinants of quality and after-sales support for capital goods; Such procurements are a fit for pre-qualification bidding<\/strong>.\"<\/p>\n<h1>8.4 Annual Maintenance Contract (AMC)<\/span>G<\/span><\/h1>\n(Rule 169 of GFR 2017)<\/em><\/p>\n1. When an AMC starts: \"some goods \u2014 especially sophisticated equipment and machinery \u2014 need proper maintenance for trouble-free service. For this purpose, the purchase organisation May enter into a maintenance contract.<\/strong><\/p>\n<aside class=\"note\"> it must, however, be kept in mind that the maintenance contract is to start after the expiry of the warranty period \u2014 during which period the goods are to be maintained free of cost by the supplier<\/strong>.\"<\/p><\/aside>\n2. With whom: \"the maintenance contract May be entered into either with the OEM manufacturer\/ supplier of the goods, or with a competent and eligible firm \u2014 not necessarily the manufacturer\/ supplier of the goods in question. The purchase organisation should decide this aspect on a case-to-case basis on merit<\/strong>.\"<\/p>\n3. AMC as part of the equipment procurement \u2014 the NPV evaluation rule:<\/p>\n<aside class=\"note\">\"if the maintenance contract is to be made a part of the procurement of equipment, then suitable clauses are to be incorporated in the tender enquiry document itself.<\/strong><\/p>\nWhile evaluating the offers, the cost component towards the maintenance of the goods for the specified number of years is also to be added to the evaluated tender value on an overall basis \u2014 to decide the inter se ranking of the responsive bidders.<\/strong><\/p>\n Equipment with a lower quoted price May carry a higher maintenance liability. Therefore, the total cost (all-inclusive, based on total outgo from the pocket) on purchase and maintenance of the equipment over the period of the maintenance contract should be assessed to consider its suitability for purchase.<\/strong><\/p>\n While evaluating the bidders for maintenance of goods covering a longer period (say, three to five or more years, depending on the life span of the equipment) \u2014 the quoted prices pertaining to maintenance in future years are to be discounted to the Net Present Value (NPV) as appropriate, for comparing the tenders on an equitable basis and deciding the lowest evaluated responsive tender<\/strong>.\"<\/p><\/aside>\n4. AMC procured separately \u2014 and the OEM-authorisation rule:<\/p>\n\"if the maintenance contract is to be entered into with a competent and eligible supplier separately, then a separate tender enquiry is to be floated\u2026 here, the OEM supplier of the goods May also quote \u2014 and his quotation, if received, is to be considered along with other quotations received.<\/strong><\/p>\n<aside class=\"note\"> In some situations, OEM manufacturers\/ suppliers of goods authorise certain service providers to provide AMC support. In such cases, the service provider must produce such authorisation\/ letter from the OEM \u2014 confirming technical and spares support to the service provider<\/strong>.\"<\/p><\/aside>\n5. Payment periodicity: \"the terms of payment for the maintenance service will depend on the nature of the goods to be maintained as well as the nature of the services desired. Generally, payment for maintenance is made on a half-yearly or quarterly basis<\/strong>.\"<\/p>\n6. The Service Level Agreement (SLA) \u2014 what it must contain:<\/p>\nA SLA May be incorporated in complex and large maintenance contracts<\/strong>. SLA should indicate guaranteed levels of service parameters<\/strong> LIKE:<\/p>\n<aside class=\"note\">Percentage uptime to be ensured<\/strong> \u00b7 performance output levels to be ensured from the equipment<\/strong> \u00b7 a channel for registering service requests<\/strong> \u00b7 response time for resolving the request<\/strong> \u00b7 channel for escalation of a service request in case of delay or unsatisfactory resolution<\/strong> \u00b7 monitoring of service levels<\/strong><\/p><\/aside>\nthis would also include:<\/p>\n<aside class=\"note\">Provision of helplines \u00b7 complaint registration and escalation procedures \u00b7 response time \u00b7 percentage of uptime and availability of equipment \u00b7 non-degradation in performance levels after maintenance \u00b7 maintenance of an inventory of common spares \u00b7 use of genuine spares<\/strong><\/p><\/aside>\nthe maintenance contract May also include penalties (Liquidated Damages) for unacceptable delays in responses and degradation in the performance output of machines \u2014 including provisions for terminations<\/strong>.<\/p>\n7. What is included in the maintenance charge \u2014 the four ambiguities to resolve:<\/p>\n<aside class=\"note\">\"it should be indicated in the tender documents whether the maintenance charges would be inclusive of:<\/strong><\/p>\n1. Visiting charges<\/strong><\/p>\n2. Price of spares<\/strong> \u2014 (\"Many times, consumables such as rubber gasket, bulbs, and so on, are not included \u2014 even though major parts May be included\")<\/em><\/p>\n3. Price of consumables (fuel, lubricants, cartridges, and so on)<\/strong><\/p>\n If the costs of spares are to be borne by the Procuring Entity, then a guaranteed price list should be asked for along with the bids.<\/strong><\/p>\n4. It should also be clarified whether room\/ space, electricity, water connection, and so on would be provided free of cost to the contractor<\/strong>.\"<\/p><\/aside>\n8. The most-favoured-customer clause: \"a suitable provision should be incorporated in the tender enquiry document and the resultant maintenance contract, indicating that the prices charged by the maintenance contractor should not exceed the prevailing rates charged by him from others for similar services. While claiming payment, the contractor is also to give a certificate to this effect in his bill<\/strong>.\"<\/p>\n9. Performance security: If the goods to be maintained are sophisticated and costly<\/strong>, the tender enquiry document should also have a provision for obtaining Performance Security<\/strong>. The amount will depend on the nature of the goods, the period of maintenance<\/strong>, and so on.<\/p>\n10. Goods taken away for repair \u2014 the Rs 1 lakh BG rule:<\/p>\n<aside class=\"note\">\"sometimes, the maintenance contractor May have to take the goods or some components of the goods to his factory for repair, and so on.<\/strong><\/p>\n On such occasions, before handing over the goods or components valuing more than rupees one lakh \u2014 a suitable Bank Guarantee is to be obtained from the firm to safeguard the purchaser's interest<\/strong>.\"<\/p><\/aside>\n11. Withdrawal of the maintenance contract \u2014 and the model clause:<\/p>\n\"sometimes, during the tenure of a maintenance contract \u2014 especially with a longer tenure \u2014 it May become necessary for the purchase organisation to withdraw the maintenance contract due to some unforeseen reasons.<\/strong><\/p>\n<aside class=\"note\"> Depending on the cost and nature of the goods to be maintained, a suitable notice period (say one to three months) for such cancellation to come into effect is to be provided in the documents<\/strong>.\"<\/p>\nthe model clause:<\/p>\n\"The purchaser reserves its right to terminate the maintenance contract at any time after giving due notice, without assigning any reason. The contractor will not be entitled to claim any compensation against such termination. However, while terminating the contract, if any payment is due to the contractor for maintenance services already performed in terms of the contract, these would be paid to it\/ him as per the contract terms.\"<\/strong><\/p><\/aside>\n<h1>8.5 Net Present Value (NPV)<\/span>G<\/span><\/h1>\n<h2>8.5.1<\/span>The Concept and the Formula<\/span><\/h2>\n\"net Present Value (NPV) \u2014 or net present worth (npw) \u2014 of equipment procurement is the sum of the present values of the net cash flows for all the years of the equipment's economic life.<\/strong><\/p>\nThe net cash flows are discounted to arrive at the NPV of equipment, by applying a predetermined discount rate<\/strong>.\"<\/p>\n<aside class=\"note\">NPV = CF\u2080 + CF\u2081\/(1+r)\u00b9 + CF\u2082\/(1+r)\u00b2 + CF\u2083\/(1+r)\u00b3 + \u2026 + CF\u2099\/(1+r)\u207f<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>Symbol<\/th><th>Meaning<\/th><\/tr><\/thead><tbody><tr><td>r<\/td><td>THE discount rate (in fraction)<\/strong><\/td><\/tr><tr><td>CF\u2080<\/td><td>THE quoted price<\/strong><\/td><\/tr><tr><td>CF\u2081, CF\u2082, CF\u2083 \u2026 CF\u2099<\/td><td>THE Costs in the 1st, 2nd, 3rd \u2026 nth YEARS<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">the suggested discount rate: \"one possible rate to be used is the interest rate of the general provident fund (GPF)<\/strong>.\"<\/p><\/aside>\n<h2>8.5.2<\/span>Two Practical Rules<\/span><\/h2>\n1. Terminal disposal value: \"the terminal disposal value of the equipment is also to be taken as negative expenditure \u2014 but since these are most likely to be the same for all bidders, and there is uncertainty in estimating this \u2014 it is usually not included in calculating NPV in procurement decisions<\/strong>.\"<\/p>\n2. Calculation: \"the above formula for NPV need not be manually calculated; It can be calculated using the NPV function in excel<\/strong>.\"<\/p>\n<h2>8.5.3<\/span>THE SOLVED EXAMPLE \u2014 where the HIGHEST-priced offer becomes L1<\/span><\/h2>\n<aside class=\"note\">\"the discounting rate is taken as 7%. There are three offers against a tender for vehicles at different quoted costs:<\/strong><\/p>\n\u2022 offer 1 (lowest quoted price) incurs the highest operating cost;<\/strong><\/p>\n\u2022 offer 2 (higher quoted price) incurs a somewhat lesser operating cost;<\/strong><\/p>\n\u2022 offer 3 (highest quoted price) incurs the least operating cost.<\/strong><\/p>\nThe free warranty is for 2 years, and the firms have quoted 5 years' AMC after that. In this evaluation, NPV expenditures up to the AMC duration (2-YEAR warranty and 5 years' AMC) were made<\/strong>.\"<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>Row<\/th><th>Expenses<\/th><th>Offer 1<\/th><th>Offer 2<\/th><th>Offer 3<\/th><\/tr><\/thead><tbody><tr><td>2<\/td><td>Initial investment, including costs of initial spares, installation\/ commissioning, Training, etc.<\/td><td>\u20b9 4,00,000<\/td><td>\u20b9 5,00,000<\/td><td>\u20b9 6,00,000<\/td><\/tr><tr><td>3<\/td><td>Annual expenditure on operation (fuel, consumables)<\/td><td>\u20b9 1,50,000<\/td><td>\u20b9 1,00,000<\/td><td>\u20b9 50,000<\/td><\/tr><tr><td>4<\/td><td>Free Warranty \u2014 1st Year<\/td><td>\u20b9 0<\/td><td>\u20b9 0<\/td><td>\u20b9 0<\/td><\/tr><tr><td>5<\/td><td>Free Warranty \u2014 2nd Year<\/td><td>\u20b9 0<\/td><td>\u20b9 0<\/td><td>\u20b9 0<\/td><\/tr><tr><td>6<\/td><td>AMC in 3rd Year<\/td><td>\u20b9 40,000<\/td><td>\u20b9 50,000<\/td><td>\u20b9 60,000<\/td><\/tr><tr><td>7<\/td><td>AMC in 4th Year<\/td><td>\u20b9 40,000<\/td><td>\u20b9 50,000<\/td><td>\u20b9 60,000<\/td><\/tr><tr><td>8<\/td><td>AMC in 5th Year<\/td><td>\u20b9 40,000<\/td><td>\u20b9 50,000<\/td><td>\u20b9 60,000<\/td><\/tr><tr><td>9<\/td><td>AMC in 6th Year<\/td><td>\u20b9 40,000<\/td><td>\u20b9 50,000<\/td><td>\u20b9 60,000<\/td><\/tr><tr><td>10<\/td><td>AMC in 7th Year<\/td><td>\u20b9 40,000<\/td><td>\u20b9 50,000<\/td><td>\u20b9 60,000<\/td><\/tr><tr><td>11<\/td><td>NPV<\/td><td>\u20b9 13,51,644.26<\/td><td>\u20b9 12,17,992.50<\/td><td>\u20b9 10,84,340.74<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">THE RESULT \u2014 the whole point of the exercise:<\/p>\n\"it May be seen that offer 3, with the highest quoted price, has the lowest NPV \u2014 due to low operating costs, despite a higher AMC fee. This offer May, therefore, be considered an L1 offer<\/strong>.\"<\/p><\/aside>\nThe excel formula (for column B; mutatis mutandis<\/em> for C and D):<\/p>\n<aside class=\"note\"><code>NPV = NPV(0.07, (B3+B4), (B3+B5), (B3+B6), (B3+B7), (B3+B8), (B3+B9), (B3+B10)) + B2<\/code><\/p><\/aside>\n<h1>8.6 Turnkey Contract<\/span>G<\/span><\/h1>\n\"in the context of the procurement of goods, a turnkey contract May include:<\/strong><\/p>\n<aside class=\"note\">The manufacture, supply, assembly, installation\/ commissioning of equipment \u2014 *(or a group of plant and machines working in tandem \u2014 even though some of the machines May not be manufactured by the supplier himself)* \u2014 <\/strong>and some incidental works or services*.\"<\/strong><\/p><\/aside>\nwhat the Procuring Entity specifies:<\/p>\n<aside class=\"note\">\"generally, in the tender enquiry documents for a turnkey contract, the purchase organisation specifies the performance and output required from the plant proposed to be set up, and broadly outlines the various parameters it visualises for the desired plant.<\/strong><\/p>\n The inputs and other facilities that the purchase organisation will provide to the contractor are also indicated in the tender document.<\/strong><\/p>\n The contractor will design the plant and provide a quote accordingly<\/strong>.\"<\/p><\/aside>\nthe contractor's four responsibilities:<\/p>\n<ol class=\"lst\"><li>Supplying the required goods, machinery, equipment, etc., needed for the plant<\/strong>;<\/li><li>Assembling, installing, and erecting the same at the site as needed<\/strong>;<\/li><li>Commissioning the plant to meet the required output<\/strong>, etc., as specified in the tender enquiry documents.<\/li><\/ol>\n<h1>8.7 Procurement of Books and Print Media<\/span>G<\/span><\/h1>\n1. The categories and the selection factors:<\/p>\n\"the procurement of print media encompasses various categories such as books, journals, magazines, and newspapers \u2014 each serving distinct purposes like knowledge dissemination and education.<\/strong><\/p>\n<aside class=\"note\"> While books are often acquired for libraries or educational curricula \u2014 newspapers, magazines, etc., have a wider applicability<\/strong>.\"<\/p><\/aside>\nthe six factors for deciding procurement:<\/p>\n<aside class=\"note\">Author \u00b7 publisher \u00b7 subject matter \u00b7 content quality \u00b7 edition \u00b7 market availability<\/strong><\/p><\/aside>\n2. The method \u2014 net discount over published price:<\/p>\n<aside class=\"note\">\"once the category and specifications are determined, quotations May be solicited from vendors in the form of *net discount over the (published) price<\/strong>.*<\/p>\n The vendor offering the most competitive discount \u2014 referred to as L1 \u2014 is typically chosen<\/strong>.\"<\/p><\/aside>\n3. The one-year onboarding and Rate Contract:<\/p>\n<aside class=\"note\">\"additionally, the onboarding of the vendor should be for at least 1 year \u2014 to ensure stability and continuity in the procurement process.<\/strong><\/p>\n Rate contracts can be utilised for these procurements \u2014 providing a framework for consistent pricing and terms over the specified duration.<\/strong><\/p>\nThis process ensures that the Procuring Entity obtains the desired print media at the best possible price \u2014 balancing considerations of quality, content, and vendor stability<\/strong>.\"<\/p><\/aside>\n<h1>Part II \u2014 Common to Consultancy and NON-CONSULTANCY<\/span><\/h1>\n<h1>8.8 Expression of Interest (EoI) for Shortlisting of Service Providers<\/span>NC<\/span><\/h1>\n<aside class=\"note\">In the Consultancy Manual this occupies an entire chapter (Ch. 7 \u2014 reproduced at Chapter 7 Part A, para 7.1 of this Unified Manual). In the Non-Consultancy Manual it is compressed into para 8.1 \u2014 and it is framed as an EXCEPTION, not the norm.<\/p><\/aside>\n<h2>8.8.1<\/span>Why NC Normally Does NOT Use EoI \u2014 and When It Does<\/span><\/h2>\n<aside class=\"note\">\" Unlike procurement of consultancy services, procurement of non-consultancy services is done by a simpler process \u2014 akin to those of procurement of goods and works *(rule 206 of GFR 2017)*. It is normally done in single-stage two-envelope tendering containing technical and financial bids.<\/strong><\/p>\n In highly technical and complex services, where quality is important \u2014 *(say in studies like seismic surveys, airborne data acquisition, etc.)* \u2014 there is a danger of low-quality bids getting selected for award of contract by quoting unsustainably low price.<\/strong><\/p>\nIn such situations, to ensure that competition is not vitiated by low-quality bids \u2014 competition May be restricted only among equally qualified bidders.<\/strong><\/p>\nTherefore, instead of publicly inviting all interested bidders to present their bids \u2014 the EoI shortlisting process (similar to procurement of consultancy services) involves obtaining a limited number of proposals from pre-qualified firms that, in the Procuring Entity's view of experience, are capable and can be trusted to deliver the required services at the desired level of quality<\/strong>.\"<\/p><\/aside>\n<h2>8.8.2<\/span>The Two-Phase Process<\/span><\/h2>\n\"these considerations can be best addressed through competition exclusively between qualified shortlisted firms or individuals \u2014 in which selection is based on the quality of the proposal and, where appropriate, on the cost of services to be provided.<\/strong><\/p>\nSuch procurement needs to be done in a two-phase process:<\/strong><\/p>\n<aside class=\"note\">\u2022 first phase (the EoI stage) \u2014 the qualified firms are shortlisted transparently;<\/strong><\/p>\n\u2022 second phase \u2014 bids (technical and financial) are solicited from such shortlisted bidders to select the winning bidder.<\/strong><\/p><\/aside>\n Care should be taken to avoid formation of unreasonable qualification criteria prior to shortlisting of bidders, that May lead to restricted participation<\/strong>.\"<\/p>\n<h2>8.8.3<\/span>The Modes \u2014 Rule 183(ii) of GFR 2017<\/span><\/h2>\nfor procurement above Rs. 50 (rupees fifty) lakh<\/strong>, shortlisting is done in an openly advertised competitive shortlisting process called Expression of Interest (EoI)<\/strong>.<\/p>\nTHE \"Request for Expression of Interest\" (REoI) is advertised on CPPP and on GeM<\/strong>. An organisation having its own website should also publish all its advertised tender enquiries on the website.<\/p>\n\"a complete services and activities Schedule should be ready before requesting EoI. Attention of known reputed service providers May also be separately drawn wherever possible<\/strong>.\"<\/p>\n GTE route:<\/strong>\"in case it is felt that likely service providers May not be available in India \u2014 the EoI process May be done on Global Tender Enquiry (GTE) process, by sending REoI notice to foreign embassies in India and Indian embassies in relevant countries<\/strong>.\"<\/strong>(Subject to the Rs. 200 crore GTE restriction<\/strong> \u2014 Chapter 4 Part B, para 4.9.2.)<\/em><\/p>\n<h1>8.9 Single Source Selection (SSS)<\/span>C<\/span>NC<\/span><\/h1>\n<h2>8.9.1<\/span>The Three Objections to SSS<\/span><\/h2>\n<aside class=\"note\">\"selection of consultants through direct negotiations:<\/strong><\/p>\n1. Does not provide the benefits of competition in regard to quality and cost;<\/strong><\/p>\n2. Lacks transparency in selection; And<\/strong><\/p>\n3. Could encourage unacceptable practices.<\/strong><\/p>\n The reasons for SSS and the selection of a particular consultant must be recorded and approved by the ca as per the delegation of powers laid down in DFPR\/ SoPP \u2014 prior to single tendering.<\/strong><\/p>\n Powers of procurement of SSS must be severely restricted.<\/strong><\/p>\nTherefore, single-source selection shall be used only in exceptional circumstances, where it is inescapable over competitive selections<\/strong>.\"<\/p><\/aside>\n<h2>8.9.2<\/span>Continuity for Downstream Work \u2014 the pre-declaration rule<\/span><\/h2>\n<aside class=\"note\">\"when, in a project, continuity for downstream work is essential \u2014 the initial RfP shall outline this prospect; And, if practical, the factors used for the selection of the consultant should take the likelihood of continuation into account.<\/strong><\/p>\n Continuity in the technical approach, experience acquired, and continued professional liability of the same consultant May make continuation with the initial consultant preferable to a new competition \u2014 subject to satisfactory performance in the initial assignment.<\/strong><\/p>\nFor such downstream assignments, the Procuring Entity shall ask the initially selected consultant to prepare technical and financial proposals on the basis of ToR furnished by the Procuring Entity \u2014 which shall then be negotiated<\/strong>.\"<\/p><\/aside>\n<h2>8.9.3<\/span>the Two Cases Where SSS is NOT<\/em> Permitted for Downstream Work<\/span><\/h2>\n<aside class=\"note\">\" IF:<\/strong><\/p>\n\u2022 the initial assignment was not awarded on a competitive basis; Or<\/strong><\/p>\n\u2022 the downstream assignment is substantially larger in value;<\/strong><\/p>\n \u2014 a competitive process shall normally be followed, in which the consultant carrying out the initial work is not excluded from consideration if it expresses interest<\/strong>.\"<\/p><\/aside>\n<h2>8.9.4<\/span>The Justification, the Qualification Check and the Monthly Report<\/span><\/h2>\n4. For selecting a consultant under this method, the Procuring Entity should prepare a full justification and take the approval of the Competent Authority as per the SoPP<\/strong>.<\/p>\n5. The shortlisting-criteria test: \"while selecting the consultant under this method, the Procuring Entity shall ensure that the consultant has the requisite qualification and experience to undertake the assignment. Normally the Procuring Entity shall adopt the same short-listing criteria as applied to similar assignments while evaluating the EoI<\/strong>.\"<\/p>\n6. The monthly reporting duty:<\/p>\n<aside class=\"note\">\"it's the cfa's (competent financial authority's) responsibility to ensure that a statement of all selections by nominations, every month, are to be reported to Secretary\/ head of Ministry\/ Department<\/strong>.\"<\/p>\nNote the difference from the QUARTERLY nomination reporting requirement at Chapter 4 Part B, para 4.17.2-3 \u2014 that one goes to the Secretary\/ Board\/ Chief Executive every quarter, with the audit committee checking at least 10% of cases. This SSS provision requires a MONTHLY statement.<\/p><\/aside>\n<h1>8.10 Selection of Individual Consultants \/ Individual Service Providers<\/span>C<\/span>NC<\/span><\/h1>\n<h2>8.10.1<\/span>The Three Conditions for Employing an Individual<\/span><\/h2>\n\"individual consultants are normally employed on assignments for which:<\/strong><\/p>\na) teams of personnel are not required<\/strong>;<\/p>\nb) no additional outside professional support is required<\/strong>; and<\/p>\nc) the experience and qualifications of the individual are the paramount requirement<\/strong>.\"<\/p>\n<h2>8.10.2<\/span>The Selection Process \u2014 Five Steps<\/span><\/h2>\n\"the procedures for selecting individual consultants are similar to, but much simpler than, those for selecting teams of consultants from a firm<\/strong>.\"<\/p>\na) the package: Preparing a consultancy services package including:<\/p>\n<aside class=\"note\">The ToR \u00b7 time frame \u00b7 number of person-months \u00b7 budget \u00b7 EoI short-listing criteria<\/strong> \u2014 AND getting it approved by the ca<\/strong>.<\/p><\/aside>\nB) advertising: Advertisement should be given on CPPP<\/strong> AND ON GeM<\/strong>. An organisation having its own website should also publish all its advertised tender enquiries on the website.<\/p>\nc) method of selection \u2014 comparison of at least three candidates:<\/p>\n<aside class=\"note\">\"they shall be selected through comparison of qualifications of at least three candidates \u2014 among those who have expressed interest in the assignment, or have been approached directly by the Procuring Entity.<\/strong><\/p>\n Capability is judged on the basis of:<\/strong><\/p>\n\u2022 academic background;<\/strong><\/p>\n\u2022 experience; And<\/strong><\/p>\n\u2022 as appropriate, knowledge of the local conditions \u2014 such as local language, culture, administrative system, and Government organisation.<\/strong><\/p>\nSelection will be carried out by the CEC, which will award marks for educational qualifications and experience, and select the most suitable candidate.<\/strong><\/p>\n The CEC May also interview candidates and award marks for their performance in the interview \u2014 and recommend the remuneration to be paid<\/strong>.\"<\/p><\/aside>\nd) DIRECT NEGOTIATION \u2014 the three exceptional cases:<\/p>\n<aside class=\"note\">\"individual consultants May be selected on a direct negotiation basis, with due justification, in exceptional cases such as:<\/strong><\/p>\nA) tasks that are a continuation of previous work that the consultant has carried out, and for which the consultant was selected competitively;<\/strong><\/p>\nB) emergency situations resulting from natural disasters; And<\/strong><\/p>\nc) when the individual is the only consultant qualified for the assignment.<\/strong><\/p>\nIndividual consultants May be (among others): Independent consultants \u00b7 consultants recruited from firms \u00b7 or consultants recruited from academic, Government, or international agencies<\/strong>.\"<\/p><\/aside>\ne) staff or associates of consultancy firms \u2014 the conflict-of-interest extension:<\/p>\n<aside class=\"note\">\"if the candidate is permanent staff or associate of a consultancy firm \u2014 the conflict-of-interest provisions described in these guidelines shall apply to the parent firm<\/strong>.\"<\/p><\/aside>\n<h2>8.10.3<\/span>Retired Government Servants<\/span><\/h2>\na) the GFR bar: \"Rule 177 of GFR, 2017 says that consulting services do not include direct engagement of retired Government servants. They should not be engaged as consultants against regular vacant posts under this Rule. Such engagements should be handled as a personnel matter<\/strong>.\"<\/p>\nb) the governing instruction: \"engagement\/ hiring of retired Government servants should be regulated as per doe's OM f.no. 3-25\/2020-E.IIIA dated 9TH December 2020<\/strong>.\"<\/p>\n<aside class=\"note\">(See also Chapter 3, para 3.3.1-2 of this Unified Manual for the remuneration rules<\/strong> \u2014 full-time engagement at last pay drawn minus pension<\/strong>; part-time non-exclusive engagement on a per day\/ month or lump-sum basis.)<\/em><\/p><\/aside>\n<h1>8.11 Selection of Specialised Agencies \/ Institutions<\/span>C<\/span>NC<\/span><\/h1>\n1. Who they are: \"from time to time, ministries\/ departments May need to recruit a specialised agency or institution to undertake a specific consultancy\/ non-consultancy service, for which it is particularly well suited.<\/strong><\/p>\n<aside class=\"note\">Such agencies May be: Government\/ semi-government agencies \u00b7 universities \u00b7 or professional institutions<\/strong>.\"<\/p><\/aside>\n2. When SSS is worth considering: \"in some cases, the agency or institution has access to special expertise or special back-up and support facilities \u2014 that make it worthwhile considering recruitment on an SSS basis.<\/strong><\/p>\n<aside class=\"note\"> In such cases, there must be full justification that the use of SSS is in the best interests of the Procuring Entity<\/strong>.\"<\/p><\/aside>\n3. The government-agency Rule: \"in cases of Government and semi-government agency, SSS would be an appropriate method of recruitment<\/strong>.\"<\/p>\n4. \"individual consultants recruited from agencies and institutions May be selected in the same way as any other individual consultants<\/strong>.\"<\/p>\n<h1>8.12 Selection of Non-Governmental Organisations (NGO)<\/span>C<\/span>NC<\/span><\/h1>\n1. When an ngo-only shortlist is permitted \u2014 and the mandatory QCBS:<\/p>\n<aside class=\"note\">\"non-governmental organisations (NGOs \u2014 not-for-profit organisations) May be hired for consultancy\/ nc services \u2014 if they express interest and\/ or if the Procuring Entity finds their qualifications satisfactory.<\/strong><\/p>\n Assignments which emphasise experience in and bonding with grassroot historically disadvantaged communities \u2014 e.g., experience in community participation and in-depth local knowledge \u2014 are typically attributed to NGOs, and short lists May comprise NGOs entirely.<\/strong><\/p>\n In this case, QCBS should be followed \u2014 and the evaluation criteria of proposals should reflect the ngo-unique qualifications, such as the following<\/strong>:\"<\/p><\/aside>\nthe five ngo-unique qualification criteria:<\/p>\na) history of work with grassroots communities, and evidence of satisfactory performance<\/strong>;<\/p>\nb) familiarity with participatory development approaches and low-cost technologies<\/strong>;<\/p>\nc) experienced staff conversant with the cultural and socioeconomic dimensions of beneficiaries<\/strong>;<\/p>\nd) committed leadership and adequate management<\/strong>;<\/p>\ne) capacity to co-opt beneficiary participation<\/strong>.<\/p>\n2. When SSS May be used for an NGO \u2014 with the worked illustration:<\/p>\n<aside class=\"note\">\"procuring entities May select NGOs using SSS \u2014 provided the approvals and procedures laid down for the same are followed.<\/strong><\/p>\n for example, SSS May be adopted to hire a local NGO for a very small assignment in a remote area \u2014 where only one NGO is available, and competition is impractical<\/strong>.\"<\/p><\/aside>\n<h1>8.13 Procurement Consultants \/ Procurement Agents<\/span>C<\/span>NC<\/span><\/h1>\n<aside class=\"note\">This is the clearest illustration in the entire Manual family of how the same ENGAGEMENT may be a Consultancy or a Non-Consultancy service depending on its scope. Both Manuals carry near-identical text.<\/p><\/aside>\n<h2>8.13.1<\/span>Consultancy or Non-Consultancy \u2014 THE 30% QUALITY-WEIGHTAGE TEST<\/span><\/h2>\n\"hiring of procurement agents (pas) can either be done as a consultancy service or non-consultancy service \u2014 depending on the objectives and scope of assignment<\/strong>.\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>AS CONSULTANCY<\/th><th>AS NON-CONSULTANCY<\/th><\/tr><\/thead><tbody><tr><td>When<\/td><td>if the role primarily involves intellectual analysis, strategic planning, spend analysis, cost control, and advisory functions<\/strong><\/td><td>if their responsibilities are only outsourcing of routine procedures, without intellectual decision-making<\/strong><\/td><\/tr><tr><td>Illustration<\/td><td>\"when they are asked to design\/ implement a new system, or improve Value for Money, or develop strategic procurement, or carry out market building\/ sourcing<\/strong>\"<\/td><td>\"when they only operate the existing procedures, and crucial decisions are made by the client himself<\/strong>\"<\/td><\/tr><tr><td>the test<\/td><td>WHERE quality weightage of more than 30% is called for<\/strong><\/td><td>WHERE quality weightage can be 30% or less<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>8.13.2<\/span>Procurement of Specific Items<\/span><\/h2>\n\"when procurement consultants are specifically used for handling the procurement of specific items, and generally working from their own offices \u2014 they are paid:<\/strong><\/p>\n<aside class=\"note\">A percentage (either fixed or inversely proportional) of the value of the procurements handled \u2014 or of savings realised \u2014 or a combination of a percentage and a fixed fee<\/strong>.\"<\/p><\/aside>\nC<\/span> \u2014 the cost-weightage cap and its reason:<\/p>\n<aside class=\"note\">\"in such cases, they are selected under QCBS \u2014 with cost being given a weight of less than 50 (fifty) per cent.<\/strong><\/p>\n If the weight of the cost element adopted were as high as 50 per cent \u2014 financial considerations would dominate the selection, creating the risk of an unacceptably lower service quality.<\/strong><\/p>\n In such cases, it is essential to ensure that the quality threshold in the evaluation is set sufficiently high.<\/strong><\/p>\nThey shall be selected following the appropriate procedures for other consultancy assignments \u2014 using QCBS and time-based contracts<\/strong>.\"<\/p><\/aside>\nNC<\/span> \u2014 the shorter version: \"Procurement Agents as outsourcing of Non-consultancy services may be hired\u2026 they are paid a percentage (either fixed or inversely proportional) of the value of the procurements handled, or a combination of a percentage and a fixed fee. In such cases, they may be selected under QCBS.\"<\/em><\/p>\n<h2>8.13.3<\/span>Outsourcing of the Whole Procurement Function<\/span><\/h2>\n<ul class=\"lst\"><li>C<\/span>:<\/strong>\"when procurement agents provide services for procurement for a whole project in a specific unit of the Procuring Entity \u2014 it is usually a non-consultancy service, unless the intellectual-analysis criterion is met<\/strong>.\"<\/li><li>NC<\/span>:<\/strong>\"when pas provide support for a whole project in a specific unit of the Procuring Entity \u2014 they are usually paid based on the staff-months of effort provided, and they shall be selected following the appropriate procedures using QCBS and time-based contracts<\/strong>.\"<\/li><\/ul>\n<h1>Part III \u2014 CONSULTANCY-ONLY Engagements<\/span><\/h1>\n<h1>8.14 Financial Advisors [C ONLY]<\/span><\/h1>\n<h2>8.14.1<\/span>The Two Types of Assignment<\/span><\/h2>\n\"procuring entities May hire financial institutions to implement two main types of assignment:<\/strong><\/p>\na) in the preparation of studies and financial consultancy<\/strong>; or<\/p>\nb) as advisers on financial restructuring, mergers and acquisitions (m&a), or demerger<\/strong>, etc.\"<\/p>\n<h2>8.14.2<\/span>The Two Different Selection Regimes<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Type<\/th><th>Selection method<\/th><\/tr><\/thead><tbody><tr><td>TYPE (a) \u2014 studies and financial consultancy<\/td><td>the advisers can be selected under any of the methods<\/strong> (whichever is considered most suitable, depending on the scope of work)<\/td><\/tr><tr><td>TYPE (b) \u2014 restructuring, M&A, demerger<\/td><td>QCBS SHALL<\/strong> BE ADOPTED \u2014 whereby the RfP specifies technical evaluation criteria similar to those relevant to standard Consultancy assignments<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>8.14.3<\/span>The Two-Part Remuneration \u2014 Retainer plus Success Fee<\/span><\/h2>\nin type (b), the financial proposal would include two distinct forms of remuneration<\/strong>:<\/p>\na) <\/strong>A lump-sum retainer fee \u2014 to reimburse the consultant for services made available<\/strong>; and<\/p>\nb) <\/strong>A success fee \u2014 which is either fixed or, preferably, expressed as a percentage of the value of the privatisation transaction<\/strong>.<\/p>\nThe weighting between them:<\/p>\n<aside class=\"note\">\"depending on the type of activity and the circumstances of the Procuring Entity, the RfP specifies the relative weights assigned in the financial evaluation to the retainer and to the success fee, respectively.<\/strong><\/p>\n In some cases, the Procuring Entity offers a fixed retainer fee \u2014 and the consultant must compete only on the success fee as a percentage of the value of the privatisation transaction.<\/strong><\/p>\n for QCBS (notably for large contracts), cost May be given a weight higher than recommended for standard assignments (such as 30 (thirty) per cent) \u2014 or the selection May be based on LCS selection.<\/strong><\/p>\nThe RfP shall specify clearly how proposals will be presented and how they will be compared<\/strong>.\"<\/p><\/aside>\n<h2>8.14.4<\/span>When a Success Fee Is Appropriate<\/span><\/h2>\n<aside class=\"note\">\"success fees are most appropriate when:<\/strong><\/p>\n\u2022 it is relatively easy to measure results in meeting the Procuring Entity's objective (successful sale of assets); And<\/strong><\/p>\n\u2022 when the success is at least partly related to the efforts of the consultant involved.<\/strong><\/p>\n Therefore, success fees are more likely to be adopted at the transaction stage \u2014 because by that time the Procuring Entity's objective is to maximise revenue<\/strong>.\"<\/p><\/aside>\n<h1>8.15 Auditors [C ONLY]<\/span><\/h1>\n1. The fiduciary rationale:<\/p>\n<aside class=\"note\">\"quality audits of federal or State expenditures are an important accountability mechanism for ensuring financial integrity. Therefore, public organisations have a vital fiduciary responsibility to ensure that their audit is of the highest quality<\/strong>.\"<\/p><\/aside>\n2. What the ToR and the technical qualifications must cover:<\/p>\n\"auditors typically carry out auditing tasks under well-defined ToR and professional standards<\/strong>.\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Element<\/th><th>What it must consider\/ cover<\/th><\/tr><\/thead><tbody><tr><td>THE ToR<\/td><td>applicable statutory, Government, organisational requirements \u00b7 and applicable auditing and accounting standards<\/strong><\/td><\/tr><tr><td>scope of audit<\/td><td>the jurisdiction \u00b7 type of audit \u00b7 contract period \u00b7 and any additional services<\/strong><\/td><\/tr><tr><td>technical qualifications<\/td><td>licensing requirement \u00b7 general and similar experience \u00b7 quality certifications \u00b7 quality and adequacy of staffing \u00b7 financial capability \u00b7 auditing approach \u00b7 and scheduling of the auditor<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">the independence requirement: \"auditors' independence and lack of conflict of interest is also an important requirement<\/strong>.\"<\/p><\/aside>\n\"a presentation or interview also May be part of the RfP process. A pre-proposal conference May also be considered<\/strong>.\"<\/p>\n3. The QCBS recommendation \u2014 with its stated reason:<\/p>\n<aside class=\"note\">\" Since in recent times the quality of audit has been a matter of concern \u2014 selection of auditors May preferably be done as a consultancy service on QCBS basis, with emphasis on weightage of quality<\/strong>.\"<\/p><\/aside>\n<h1>8.16 Public Competition for Design of Symbols\/ Logos [C ONLY]<\/span><\/h1>\n(Rule 196 of GFR 2017)<\/em><\/p>\n1. The three governing principles:<\/p>\n\"certain ministries\/ departments are required to conduct competitions for the design of logos\/ symbols for their use \u2014 which should be conducted in a transparent, fair, and objective manner.<\/strong><\/p>\nThe following guidelines shall be followed by all ministries\/ departments, as well as their attached\/ subordinate offices and the autonomous bodies\/ organisations controlled by them<\/strong>:\"<\/p>\na) design competitions should be conducted in a transparent, fair, and objective manner<\/strong>;<\/p>\nb) wide publicity should be given to the competition \u2014 so as to ensure that the information is accessible to all possible participants<\/strong>. This should include publication on the website of the Ministry\/ Department\/ PSU\/ organisation concerned, as also the Central Public Procurement Portal<\/strong>. THE existing e-publishing module can be utilised<\/strong>;<\/p>\nC) the two statutes to be kept in view: \"Provisions of any applicable laws \u2014 including the official languages Act and the emblems and names (prevention of improper use) Act \u2014 should be kept in view while conducting the competition\"<\/strong>;<\/p>\n2. The eleven contents of the detailed competition notice:<\/p>\n\"a detailed competition notice should be drawn up and made public. The notice should, inter alia, [give] details on the following<\/strong>:\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Content of the Competition Notice<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>THE objectives of the design competition, and the key features expected in the proposed design<\/strong><\/td><\/tr><tr><td>ii<\/td><td>qualification criteria, if any, for participation<\/strong><\/td><\/tr><tr><td>iii<\/td><td>THE process of evaluation and evaluation criteria \u2014 whether it would be single or multi-stage<\/strong>. \"for symbols\/ logos intended to represent a drive\/ project\/ entity of national importance \u2014 it May be decided to have the selection through public voting. If so, the modalities should be clearly specified<\/strong>.\"<\/td><\/tr><tr><td>iv<\/td><td>THE manner of submission of entries, and the format\/ details etc. Expected with the design<\/strong><\/td><\/tr><tr><td>v<\/td><td>whether one participant can submit multiple designs<\/strong><\/td><\/tr><tr><td>vi<\/td><td>THE last date and time for submission<\/strong><\/td><\/tr><tr><td>vii<\/td><td>details of entry fees, if any, and the manner of submission<\/strong><\/td><\/tr><tr><td>viii<\/td><td>expected date for announcement of results, and the manner in which the results will be intimated<\/strong><\/td><\/tr><tr><td>ix<\/td><td>THE number of prizes to be awarded, and the amount payable for the successful design(s)<\/strong><\/td><\/tr><tr><td>x<\/td><td>\"it May be clearly stipulated that the intellectual property rights of the successful design(s) would rest with the sponsoring agency. The status of the unsuccessful designs \u2014 and whether it is intended to return them \u2014 should be indicated clearly<\/strong>.\"<\/td><\/tr><tr><td>xi<\/td><td>if the selection is to be done by a jury of experts nominated for the purpose \u2014 the composition of the jury May also be notified<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n3. After the competition: \"once the competition is over and the winning entry selected \u2014 this again should be notified in the public domain. If the selection has been by a jury of experts nominated for the purpose, the composition of the jury May be notified<\/strong>.\"<\/p>\n4. The customisation caveat: \"it is evident that every competition would have distinct features \u2014 and therefore, the aforesaid guidelines should be used as a general principle while preparing the detailed procedure\/ Rules for each such competition<\/strong>.\"<\/p>\n<h1>8.17 Procurement of Integrated IT Projects [C, with NC cross-reference]<\/span><\/h1>\n<h2>8.17.1<\/span>The Consultancy Characterisation and the Three Types<\/span><\/h2>\n\"procurement of integrated IT projects should normally be carried out as procurement of consultancy services \u2014 as the outcomes\/ deliverables vary from one service provider to another<\/strong>.\"<\/p>\nthe IT projects May include:<\/p>\na) bespoke software development<\/strong>;<\/p>\nb) cloud-based services<\/strong>; and<\/p>\nc) composite IT system integration services<\/strong> \u2014 involving <\/strong>design, development, deployment, commissioning of IT system including supply of hardware, development of software, bandwidth, and operation\/ maintenance of the system for a defined period after go-live, etc.<\/strong><\/p>\n<h2>8.17.2<\/span>QCBS with Quality Weightage up to 80%<\/span><\/h2>\n<aside class=\"note\">C<\/span>:<\/strong>\" Since quality is of prime importance in procurement of IT services \u2014 QCBS selection with due emphasis on quality weightage (even up to 80%, depending on quality requirements) May be used. In cloud services in particular, alternative pricing models May be allowed to be quoted<\/strong>.\"<\/p>\nNC<\/span> \u2014 para 8.12.1, cross-referring:<\/strong>\"procurement of it project\u2026 involve considerable intellectual inputs, hence these should be handled as procurement of consultancy services. Such procurements are done using QCBS selection method with 80%: 20% weightages for quality: Price<\/strong>.\"<\/p><\/aside>\n<h2>8.17.3<\/span>Caution against Restrictive and Discriminatory Qualification Conditions<\/span><\/h2>\n<aside class=\"note\">\"the Ministry of electronics & information technology (MeitY) has cautioned that qualification conditions for cloud service providers should not be restrictive\/ discriminatory \u2014 like insistence on 'gartner's magic quadrant' etc., and very high financial turnover \u2014 which impede the domestic service providers and do not add value to the users.<\/strong>(D.O. No. 10(13)\/2022-EG-II dated 25.08.2022)<\/em><\/p>\n They have also cited that DPIIT has a similar advisory that such discrimination against domestic players is a violation of the Make in India order, which provides purchase preference to local content requirement.<\/strong>(OM No. P-45021\/121\/2018-(B.E.-II) dated 20.06.2019)<\/em><\/p><\/aside>\n<h3>The Three Categories of Restrictive and Discriminatory Conditions \u2014 with Named Examples<\/span><\/h3>\na) restrictive and discriminatory eligibility criteria in tender conditions:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Example cited<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>mandatory presence in gartner magic quadrant<\/strong> \u2014 IT and Telecom Products<\/td><\/tr><tr><td>ii<\/td><td>mandatory USFDA\/ European ce<\/strong> \u2014 Medical Devices<\/td><\/tr><tr><td>iii<\/td><td>excessive turnover requirement \u2014 Rs. 1000 cr for procurement of Rs. 70 cr<\/strong><\/td><\/tr><tr><td>iv<\/td><td>excessive past experience \u2014 10 YEARS<\/strong><\/td><\/tr><tr><td>v<\/td><td>export experience to G8 countries<\/strong><\/td><\/tr><tr><td>vi<\/td><td>additional requirement of bank Guarantee for local supplier<\/strong><\/td><\/tr><tr><td>vii<\/td><td>delayed payment terms to local suppliers<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nb) restrictive and discriminatory specifications \u2014 foreign brands specified:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Brands named in the Manual<\/th><\/tr><\/thead><tbody><tr><td>Telecom products<\/td><td>cisco \u00b7 nec \u00b7 alcatel \u00b7 siemens<\/strong><\/td><\/tr><tr><td>IT products<\/td><td>hp \u00b7 dell \u00b7 lenovo<\/strong><\/td><\/tr><tr><td>LIFTS<\/td><td>otis \u00b7 mitsubishi \u00b7 schindler \u00b7 kone \u00b7 johnson<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nc) restrictive\/ discriminatory specifications or pre-approved foreign brands in works\/ turnkey projects:<\/p>\ni) local manufacturer not included in pre-approved list<\/strong>;<\/p>\nii) specification tailor-made to suit foreign products<\/strong>;<\/p>\niii) foreign technical standards indicated in the specification<\/strong>;<\/p>\niv) technical parameters to favour foreign products<\/strong> \u2014 viz.<\/em> \"(\u2013) 25-DEGREE temperature compatibility \u2014 for EPBX equipment being procured for an airport in Central India<\/strong>.\"<\/p>\n<h2>8.17.4<\/span>Bespoke Software Development<\/span><\/h2>\n\"bespoke software development involves creating customised software solutions tailored to specific organisational needs. Unlike off-the-shelf software, bespoke applications are designed from scratch \u2014 considering unique requirements, workflows, and business processes<\/strong>.\"<\/p>\na) DEFINING REQUIREMENTS \u2014 and the agile mandate: \"engage stakeholders, gather functional and non-functional requirements, and define clear objectives. Stipulate an agile development approach that allows iterative development, frequent feedback, and adaptability. Agile ensures alignment with evolving requirements and minimises risks<\/strong>.\"<\/p>\nb) technical qualifications: Evaluate bidders based on expertise, track record, and ability to deliver custom solutions<\/strong> \u2014 considering technical proficiency, domain knowledge, scalability, security, and support and project management capabilities<\/strong>.<\/p>\n<h2>8.17.5<\/span>Cloud-Based Services<\/span><\/h2>\nA) defining requirements:<\/p>\n<ul class=\"lst\"><li>I) slas and data privacy: Define slas regarding uptime, performance, and support<\/strong>. Address data privacy and compliance requirements \u2014 especially if handling sensitive information<\/strong>.<\/li><li>ii) migration strategy: \"plan the migration process carefully. Assess existing applications for cloud readiness, choose the right migration approach (lift-and-shift, re-architecting, or hybrid), and ensure minimal disruption<\/strong>.\"<\/li><\/ul>\nb) the three cloud service models:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Model<\/th><th>Meaning<\/th><\/tr><\/thead><tbody><tr><td>Software as a service (SaaS)<\/td><td>ready-to-use applications hosted by the provider<\/strong><\/td><\/tr><tr><td>platform as a service (PaaS)<\/td><td>development platforms and tools for building custom applications<\/strong><\/td><\/tr><tr><td>infrastructure as a service (IaaS)<\/td><td>virtualised computing resources (servers, storage, networking)<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nc) technical qualifications: Evaluate cloud providers based on reliability, security, compliance, data sovereignty<\/strong>. Consider well-established cloud services providers<\/strong>.<\/p>\n<h2>8.17.6<\/span>Composite IT System Integration Services<\/span><\/h2>\n\"composite IT system integration involves connecting disparate systems, applications, and data sources to create a cohesive ecosystem<\/strong>.\"<\/p>\na) defining requirement:<\/p>\n<ul class=\"lst\"><li>I) integration strategy: Define the integration scope \u2014 APIs, middleware, and data synchronisation<\/strong>. Consider whether real-time or batch processing is required<\/strong>.<\/li><li>ii) interoperability and scalability: Ensure that integrated components can communicate seamlessly<\/strong>. Scalability is crucial to accommodate future growth and changing business needs<\/strong>.<\/li><li>iii) testing and maintenance: Specify testing requirements \u2014 unit, integration, and end-to-end testing<\/strong>. Also outline ongoing maintenance and support expectations<\/strong>.<\/li><\/ul>\nB) technical qualification: Select vendors with expertise in integrating complex systems<\/strong>. Look for experience in integrating diverse technologies (ERP, CRM, legacy systems)<\/strong>.<\/p>\n<h1>8.18 Hiring Consultants for Digital India Projects [C ONLY]<\/span><\/h1>\n<h2>8.18.1<\/span>Overview and the NeGD Framework<\/span><\/h2>\n<aside class=\"note\">\"the Digital India initiative, under the Ministry of electronics and information technology (MeitY), seeks to transform India into a digitally empowered society and knowledge economy.<\/strong><\/p>\n The hiring of consultants is pivotal for implementing large-scale e-governance and technology projects that support this vision.<\/strong><\/p>\n National E-governance Division (NeGD) \u2014 an autonomous business division within Digital India corporation \u2014 has established a robust framework for hiring consultants through empanelment of qualified consulting organisations<\/strong>.* (F.No. N-22018\/33\/2022-NeGD dated 17.05.2024)<\/em><\/p><\/aside>\n<h2>8.18.2<\/span>Empanelment \u2014 the Three-plus-Two Year Validity<\/span><\/h2>\n<aside class=\"note\">\"NeGD has empanelled consulting organisations through a competitive request for empanelment (rfe) process.<\/strong><\/p>\n This empanelment is valid for three years, extendable by two years.<\/strong><\/p>\nThe empanelment framework simplifies the hiring process \u2014 ensuring quick access to skilled professionals while maintaining cost and quality control.<\/strong><\/p>\nThis ensures the availability of specialised skills, adherence to national standards, and alignment with the programme's vision. Government entities are encouraged to utilise this framework<\/strong>.\"<\/p><\/aside>\n<h2>8.18.3<\/span>The Three Pre-defined Categories<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Category<\/th><th>Scope of services<\/th><\/tr><\/thead><tbody><tr><td>category a \u2014 project\/ programme management and advisory services<\/td><td>i) developing project proposals, roadmaps, and templates<\/strong>; <\/strong>ii) managing e-governance projects \u2014 including agile methodologies, bid processes, and change management<\/strong>; iii) conducting audits (security, performance, and quality) and risk assessments<\/strong><\/td><\/tr><tr><td>category b \u2014 digital ecosystem and architecture development<\/td><td>i) designing digital ecosystem blueprints in line with national standards<\/strong>; <\/strong>ii) preparing implementation plans \u2014 including business requirements, data governance strategies, and technology modernisation approaches<\/strong>; iii) supporting the adoption of scalable and agile solutions<\/strong><\/td><\/tr><tr><td>category c \u2014 technology management and emerging technologies<\/td><td>i) advising on emerging technologies such as AI, blockchain, IoT, and quantum computing<\/strong>; ii) ensuring technology compliance, and managing cybersecurity and GIS solutions<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>8.18.4<\/span>The Hiring Process \u2014 Four Steps<\/span><\/h2>\na) request for proposals or concept notes: \"ministries, departments, and other Government organisations leveraging negd's empanelment notify empanelled agencies about specific assignments. Agencies submit technical proposals or concept notes, which are evaluated on merit<\/strong>.\"<\/p>\nb) selection and deployment: \"selected agencies deploy consultants with expertise relevant to the project. Consultants are required to provide their own equipment, and work collaboratively with Government teams at designated project sites<\/strong>.\"<\/p>\nc) terms of engagement: \"empanelled consultants operate on a time-limited project basis, without implying employment obligations by NeGD. Sub-contracting of services is prohibited<\/strong>.\"<\/p>\nd) compliance and terms \u2014 the four obligations:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Obligation<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>intellectual property rights: \"all intellectual property generated during the project belongs to NeGD or the client organisation<\/strong>.\"<\/td><\/tr><tr><td>ii<\/td><td>performance standards: \"consultants must adhere to timelines and quality benchmarks specified in the work order<\/strong>.\"<\/td><\/tr><tr><td>iii<\/td><td>penalties and termination: \"delays or non-performance can result in penalties up to 10% of the project value \u2014 or termination of the engagement<\/strong>.\"<\/td><\/tr><tr><td>iv<\/td><td>confidentiality: \"consultants must maintain confidentiality of all project-related data<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>Part IV \u2014 NON-CONSULTANCY-ONLY Services<\/span><\/h1>\n<h1>8.19 Inspection Agents [NC ONLY]<\/span><\/h1>\n1. Why it is a non-consultancy service:<\/p>\n<aside class=\"note\">\"hiring of inspection agents (ias) \u2014 to inspect and certify goods before shipment, or on arrival in the Procuring Entity's country \u2014 is generally a non-consultancy service, where their responsibilities are:<\/strong><\/p>\n\u2022 only operational\/ procedural;<\/strong><\/p>\n\u2022 for standardised goods\/ commodities;<\/strong><\/p>\n\u2022 without intellectual decision-making \u2014 i.e., when they only inspect within the established protocols; Repetitive work without intellectual inputs \u2014 <\/strong><\/p>\n Where quality weightage can be 30% or less<\/strong>.\"<\/p><\/aside>\n2. Selection and payment: \"inspection agents May be selected using QCBS. Payment is usually based on a percentage of the value of goods inspected and certified<\/strong>.\"<\/p>\n<h1>8.20 Housekeeping Services [NC ONLY]<\/span><\/h1>\n<aside class=\"note\">\"in the case of housekeeping\/ cleaning services, the GeM platform provides for options based on:<\/strong><\/p>\n(a) floor area-wise cleaning; And<\/strong><\/p>\n(b) MANPOWER.<\/strong><\/p>\n Usually, the floor area-wise cleaning option is more cost-effective.<\/strong><\/p>\n Accordingly, before a tender is floated, an exercise May be undertaken to determine the option which is considered beneficial for the Procuring Entity \u2014 duly recording reasons for such decision on file<\/strong>.\"<\/p><\/aside>\n<h1>8.21 Manpower Outsourcing Services [NC ONLY]<\/span><\/h1>\n(DoE, MoF's OM No. F.6\/1\/2023-PPD dated 06.01.2023)<\/em><\/p>\n<h2>8.21.1<\/span>The Regularisation Caution \u2014 and the I-Card Rule<\/span><\/h2>\n<aside class=\"note\">\" Hiring of manpower through contracts should be avoided \u2014 to ensure no future legal problems, as these employees May demand regularisation afterwards.<\/strong><\/p>\n Even if employed, there should be no direct correspondence with such people.<\/strong><\/p>\n Even i-cards should be issued indicating the person to be representative of the contractor (name of the contractor to be mentioned)<\/strong>.\"<\/p><\/aside>\n<h2>8.21.2<\/span>LCS for High-Value Cases<\/span><\/h2>\n\" Least cost system (LCS) should be considered for procurement of manpower outsourcing service, wherever appropriate \u2014 especially in high-value cases<\/strong>.\"<\/p>\n<h2>8.21.3<\/span>the Minimum and Maximum Service Charges \u2014 3.85% to 7%<\/span><\/h2>\n<aside class=\"note\">\"IN the Procurement of Manpower Outsourcing Service, the Minimum Service Charges (Minimum Floor Price, Inclusive of Transaction Charges) May Be Fixed as 3.85% (Inclusive of GST).<\/em><\/p>\nThe procuring entities can also fix the service charge above 3.85% with proper justification on file, wherever required.<\/strong><\/p>\n However, such charges should not exceed 7% (inclusive of GST) in any case<\/strong>.\" (DoE OM No. 6\/1\/2023-PPD dated 06.01.2023)<\/em><\/p><\/aside>\n<h2>8.21.4<\/span>The Two Clarifications<\/span><\/h2>\n4. No bar on awarding above the minimum:<\/strong>\"there is no bar on award of tenders to the lowest bidder, if he has quoted service charges more than the minimum prescribed service charges in the tender document (i.e., 3.85% to 7%)<\/strong>.\"<\/strong>(DoE OM No. 6\/1\/2023-PPD dated 17.01.2024)<\/em><\/p>\n5. When the floor price applies \u2014 the two limits:<\/p>\n<aside class=\"note\">\"this stipulation of minimum floor price is applicable only:<\/strong><\/p>\n\u2022 if standalone manpower is procured \u2014 not for manpower plus materials contracts; And<\/strong><\/p>\n\u2022 that too on the basis of service charges<\/strong>.\"<\/p><\/aside>\n<h1>8.22 Private Security Manpower Services [NC ONLY]<\/span><\/h1>\n<h2>8.22.1<\/span>What the Service Covers, and the PSARA Licence<\/span><\/h2>\n\"security services offer:<\/strong><\/p>\n<aside class=\"note\">Protection for life and property against theft, pilferage, fire, etc. \u00b7 safety to manpower \u00b7 guiding visitors to the premises \u00b7 regulating entry of unwanted visitors, salesmen \u00b7 and maintenance of visitors register<\/strong>.<\/p><\/aside>\n\" This is one of the most frequently outsourced non-consultancy services.<\/strong><\/p>\n The Private Security Agencies (regulation) Act, 2005 (PSARA) regulates the functioning of Private Security Agencies in India.<\/strong><\/p>\n A PSARA licence and labour licence are required for any person or entity that wants to operate a private security agency in India. The State Government (in which the agency will be operating) issues these licences<\/strong>.\"<\/p>\n<h2>8.22.2<\/span>The Ex-Servicemen (ESM) Resettlement Framework<\/span><\/h2>\n<aside class=\"note\">\"due to operational and administrative reasons, around 60,000 skilled armed forces personnel (skilled to undertake security guard-related duties) are retired (Ex-servicemen \u2014 ESM) every year \u2014 to maintain a youthful profile of the armed forces.<\/strong><\/p>\n Security agencies \u2014 with an ESM officer as proprietor and other ESM as security supervisors\/ guards \u2014 are empanelled for \"provision of security services\" by the directorate general resettlement (DGR), Department of Ex-servicemen welfare (desmw) \u2014 to facilitate resettlement of ESM.<\/strong><\/p>\n These agencies have to employ esms as security guards\/ supervisors in at least 90% of the deployed workforce. DGR monitors these agencies through reports\/ returns<\/strong>.\"<\/p><\/aside>\n<h2>8.22.3<\/span>The DGR Empanelment Certificate \u2014 Five Years or Age Sixty<\/span><\/h2>\n<aside class=\"note\">\"the 'empanelment certificate' by DGR is issued \u2014 only to eligible esms having labour licence and PSARA certification in the relevant State \u2014 for a duration of:<\/strong><\/p>\n Five years (05), *or* up to the date when the ESM proprietor turns sixty (60) years \u2014 whichever is earlier<\/strong>.\"<\/p><\/aside>\n<h2>8.22.4<\/span>The Sponsorship Requirement \u2014 and the Qualification Waiver<\/span><\/h2>\n<aside class=\"note\">\" Dgr-empanelled agencies\/ companies are only eligible through DGR sponsorship.<\/strong><\/p>\n Dgr-empanelled agencies\/ companies are not eligible for participating in the tender enquiry directly \u2014 i.e., without DGR sponsorship.<\/strong><\/p>\n Dgr-sponsored security agencies do not need to fulfil minimum experience, minimum turnover qualifications<\/strong>.\"<\/p><\/aside>\n<h2>8.22.5<\/span>The CPSE Mandate<\/span><\/h2>\n\"security manpower service for CPSEs is governed by orders from the Ministry of defence and the Department of public enterprises (DPE).<\/strong><\/p>\n<aside class=\"note\"> As per these instructions, CPSEs must avail security services only from dgr-empanelled Ex-servicemen (ESM) security service providers<\/strong>.\"<\/p>\n(MoD OM No. 28(3)\/2012-D(Res-1) dated 09.07.2012 and No. 28(75)\/2020-D(Res-1) dated 13 May 2021; DPE OM no. DPE-GM-12\/0001\/2016-GM-FTS-5410 dated 13.09.2018 and 14.02.2019.)<\/em><\/p><\/aside>\n<h2>8.22.6<\/span>The Mandatory GeM Route and the Three-Agency Sponsorship<\/span><\/h2>\n<aside class=\"note\">\" Since these services are available on GeM, procurement of these services through \"security manpower service\" (under the manpower resource outsourcing service) functionality on the GeM portal becomes mandatory.<\/strong><\/p>\nOn this functionality, the Procuring Entity can upload their requirements in the web-based format.<\/strong><\/p>\n DGR issues a sponsorship letter to at least three ESM service agencies, based on their criteria, to participate in such requirements on GeM<\/strong>.\"<\/p><\/aside>\n<h2>8.22.7<\/span>Selection \u2014 the 10% Negotiation Floor and the Seniority Tie-Breaker<\/span><\/h2>\n<aside class=\"note\">\" Selection of a service provider is based on the service charges quoted over the minimum wages.<\/strong><\/p>\n In no case May service charges be negotiated by CPSEs below the rate prescribed by DGR in its guidelines for empanelment of ESM security service agencies from time to time \u2014 which is up to 10% at present.<\/strong><\/p>\n The tie-breaker: In the eventuality of all the dgr-sponsored agencies quoting the same rates \u2014 the Procuring Entity shall award the contract to the senior-most sponsored agency.<\/strong><\/p>\n The order of seniority of sponsored agencies\/ private limited companies\/ corporations has been indicated in the sponsorship letter<\/strong>.\"<\/p><\/aside>\n<h1>8.23 Vehicle Hiring for Office Use [NC ONLY]<\/span><\/h1>\n<h2>8.23.1<\/span>Mode of Procurement and Type of Contract<\/span><\/h2>\n<aside class=\"note\">\" One of the most common outsourcings is hiring of staff cars for use of the executives.<\/strong><\/p>\n The procurement of vehicles for office use on a monthly basis shall be carried out as a Rate Contract through an Open Tender Enquiry (OTE).<\/strong><\/p>\nThis type of contract allows the Procuring Entity to hire vehicles at predetermined rates for a specified period \u2014 ensuring flexibility and cost-effectiveness<\/strong>.\"<\/p><\/aside>\n<h2>8.23.2<\/span>Contract Period<\/span><\/h2>\n<aside class=\"note\">\"the contract will initially be valid for one year \u2014 with the possibility of extension up to two times, contingent on performance and mutual agreement.<\/strong><\/p>\n Include provisions for early termination, due to unsatisfactory performance<\/strong>.\"<\/p><\/aside>\n<h2>8.23.3<\/span>Price Variation Clause (PVC)<\/span><\/h2>\n<aside class=\"note\">\"to account for fluctuations in operational costs \u2014 such as fuel prices and wages \u2014 the contract will include a Price Variation Clause (PVC) based on acceptable indices.<\/strong><\/p>\n This ensures fair compensation for the service provider and continuity of service in case of significant changes<\/strong>.\"<\/p><\/aside>\n<h2>8.23.4<\/span>Bid Design<\/span><\/h2>\n\"appropriate eligibility, qualification, and selection criteria will be defined. Requirements for vehicle quality, technical specifications, and driver standards will also be specified. Different car specifications May be outlined for varying purposes.<\/strong><\/p>\nA Service Level Agreement (SLA) will be included \u2014 which May cover:<\/strong><\/p>\n<aside class=\"note\">Uptime requirements \u00b7 monitoring and reporting \u00b7 complaint response, resolution and escalation \u00b7 penalties for non-compliance \u00b7 and KPIs<\/strong>.\"<\/p><\/aside>\n<h2>8.23.5<\/span>Basis of Payment \u2014 the Daily-Rate Formula<\/span><\/h2>\n<aside class=\"note\">\"payment for hired vehicles will be based on daily rates, which include:<\/strong><\/p>\n\u2022 specified working hours per day (e.g., 10 hours); And<\/strong><\/p>\n\u2022 a set distance (e.g., 100 kilometres per day);<\/strong><\/p>\n\u2022 within an overall monthly limit of 3,000 kilometres.<\/strong><\/p>\nRates for additional overtime hours or kilometres will also be specified. Additional charges \u2014 such as night service fees for specified hours (e.g., 11 pm to 6 am) \u2014 May also be included.<\/strong>\"<\/p><\/aside>\nthe payment periodicity and the quarterly kilometre adjustment:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Item<\/th><th>When paid<\/th><\/tr><\/thead><tbody><tr><td>Basic monthly charges; Overtime\/ night charges<\/td><td>PAID monthly<\/strong><\/td><\/tr><tr><td>payments for extra kilometres<\/td><td>processed on a quarterly basis<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">the carry-forward Rule: \"any net extra kms (after adjusting any shortfall kms) would be paid off at the end of the quarter \u2014 and any net shortfall in kms, if any, during the quarter shall be carried forward to the next quarter<\/strong>.\"<\/p><\/aside>\n<h1>8.24 Procurement of IT Hardware as a Service (HaaS) [NC ONLY]<\/span><\/h1>\n<h2>8.24.1<\/span>The Distinction from an Integrated IT Project<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>Characterisation<\/th><th>Selection method<\/th><\/tr><\/thead><tbody><tr><td>integrated IT project<\/td><td>involves considerable intellectual inputs<\/strong>, hence handled as procurement of consultancy services<\/strong><\/td><td>QCBS with 80%: 20% weightages for quality: Price<\/strong><\/td><\/tr><tr><td>hardware as a service (HaaS)<\/td><td>A non-consultancy service<\/strong> \u2014 hardware on a subscription or lease basis, with slas and maintenance<\/strong><\/td><td>LCS (L1), OR<\/strong> QCBS with e.g. 30% technical and 70% financial<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">\"when procuring IT hardware as a service (HaaS), the salient non-consultancy service tender and evaluation conditions must be clearly defined \u2014 to ensure compliance, competitiveness, and Value for Money.<\/strong><\/p>\n Given that HaaS involves the procurement of hardware on a subscription or lease basis, with service-level agreements (slas) and maintenance \u2014 the tender conditions must address both the hardware and the associated services<\/strong>.\"<\/p><\/aside>\n<h2>8.24.2<\/span>Scope of Services \u2014 the Thirteen Elements<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Element<\/th><th>Content<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>detailed specifications<\/td><td>clearly outline the specific IT hardware (desktops, laptops, servers, networking cabling\/ equipment, ups<\/strong>, etc.) with configurations and performance standards. Specify what software packages (including anti-virus and firewall software) would be included \u2014 and that licence shall be kept valid during the contract period<\/strong><\/td><\/tr><tr><td>b<\/td><td>service components<\/td><td>installation \u00b7 configuration \u00b7 maintenance \u00b7 repair\/ replacement\/ upgradation \u00b7 and dismantling\/ removal at the end of contract period<\/strong><\/td><\/tr><tr><td>c<\/td><td>delivery and deployment<\/td><td>specify timelines FOR delivery, installation, and commissioning of hardware at specified locations<\/strong><\/td><\/tr><tr><td>d<\/td><td>end-to-end support<\/td><td>help desk \u00b7 remote support \u00b7 on-site support \u00b7 and any additional managed services<\/strong><\/td><\/tr><tr><td>e<\/td><td>training and knowledge transfer<\/td><td>train the Procuring Entity's staff on using the hardware, managing configurations, basic troubleshooting and accessing support services<\/strong><\/td><\/tr><tr><td>g<\/td><td>data protection<\/td><td>\"if any data is handled by the hardware or service provider, stringent data protection clauses must be included \u2014 ensuring compliance with relevant Indian regulations such as the information technology Act, 2000 and its associated Rules<\/strong>.\"<\/td><\/tr><tr><td>h<\/td><td>cybersecurity standards<\/td><td>specify the required cybersecurity measures and standards (e.g., iso\/iec 27001 certification)<\/strong><\/td><\/tr><tr><td>i<\/td><td>audit rights<\/td><td>\"include clauses allowing the procuring authority to audit the service provider's performance, data security, and compliance with the contract at regular intervals<\/strong>.\"<\/td><\/tr><tr><td>j<\/td><td>risk management plan<\/td><td>require the bidder to submit a plan to mitigate risks related to hardware failure, service disruptions, or cybersecurity threats<\/strong><\/td><\/tr><tr><td>k<\/td><td>ownership model<\/td><td>\"clarify that the hardware is provided on a service model (HaaS) \u2014 and the ownership and risks remain with the service provider throughout the contract period<\/strong>.\"<\/td><\/tr><tr><td>l<\/td><td>insurance<\/td><td>\"service provider would keep the hardware insured at his cost<\/strong>.\"<\/td><\/tr><tr><td>m<\/td><td>asset tracking<\/td><td>requirements for tracking and monitoring hardware assets \u2014 including provisions for upgrading hardware during the contract period<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>8.24.3<\/span>Contract Period \u2014 and the Ten-Year QCBS Option<\/span><\/h2>\na) tenure: Specify the duration of the contract (e.g., 3 years, 5 years)<\/strong>, indicating whether the contract is renewable and under what conditions<\/strong>.<\/p>\n<aside class=\"note\">\"in case the contract is decided on QCBS basis \u2014 a longer contract period May be considered (say up to 10 years)<\/strong>.\"<\/p><\/aside>\nb) exit clauses: Include provisions for early termination or contract extensions, based on performance<\/strong>.<\/p>\n<h2>8.24.4<\/span>Service Level Agreement (SLA)<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Element<\/th><th>Requirement<\/th><\/tr><\/thead><tbody><tr><td>Uptime requirements<\/td><td>define minimum uptime guarantees (e.g., 99.9% availability) and penalties for breaches<\/strong><\/td><\/tr><tr><td>response and resolution times<\/td><td>set clear expectations (e.g., 4-HOUR response time for critical failures)<\/strong><\/td><\/tr><tr><td>maintenance & support<\/td><td>conditions for periodic preventive maintenance and replacement of faulty hardware at no additional cost<\/strong><\/td><\/tr><tr><td>monitoring and reporting<\/td><td>regular performance reports regarding hardware functionality, uptime, and SLA adherence<\/strong><\/td><\/tr><tr><td>penalties for non-compliance<\/td><td>\"define penalties for failure to meet SLA requirements, delayed delivery, or non-compliance. Penalties could include financial deductions, contract termination, or blacklisting from future tenders<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>8.24.5<\/span>Payment Terms<\/span><\/h2>\na) subscription model: Outline the payment model \u2014 typically on a monthly or quarterly subscription basis<\/strong>, with provisions for penalties in case of non-compliance with slas.<\/p>\nB) cost inclusions: Define the total cost \u2014 including hardware, software, service charges, taxes, transportation, and any other related costs<\/strong>.<\/p>\nC) milestone-based payments: Payment May be linked to delivery \u00b7 installation \u00b7 successful commissioning \u00b7 periodic payment \u00b7 and dismantling\/ removal at end of contract<\/strong>.<\/p>\n<h2>8.24.6<\/span>Qualification and Evaluation Criteria<\/span><\/h2>\nA) technical qualification:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Requirement<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>experience and expertise: Bidders must have prior experience in providing HaaS to Government departments or large enterprises<\/strong>. Minimum of 3 to 5 years' experience in managing similar contracts<\/strong><\/td><\/tr><tr><td>ii<\/td><td>certifications: Relevant certifications such as ISO 9001 (quality management) and ISO 20000 (IT service management)<\/strong> May be required<\/td><\/tr><tr><td>iii<\/td><td>OEM authorisation: \"if the bidder is not the OEM \u2014 an authorisation letter from the OEM must be submitted, to ensure genuine hardware, warranty, and after-sales support<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\nb) technical evaluation criteria:<\/p>\ni) compliance with specifications<\/strong> \u2014 hardware configuration requirements, SLAs, and support service expectations;<\/p>\nii) scalability<\/strong> \u2014 the solution must be capable of accommodating future upgrades or expansions;<\/p>\niii) vendor performance<\/strong> \u2014 past performance, compliance with SLAs, and customer satisfaction reports;<\/p>\niv) demonstrations\/ PoC<\/strong> \u2014 \"<\/strong>proof of concept (PoC) or demonstrations May be required to assess functionality and performance of the proposed solution.\"<\/strong><\/p>\nc) financial qualification: The bidder must demonstrate strong financial health \u2014 with required turnover and profitability over the last 3 to 5 years \u2014 to ensure financial stability for the duration of the contract<\/strong>.<\/p>\nd) financial evaluation criteria \u2014 the TCO basis and the two methods:<\/p>\n<aside class=\"note\">\"the evaluation will focus on the Total Cost of Ownership (TCO) over the contract period \u2014 including hardware subscription fees, service charges, penalties, and other associated costs.<\/strong><\/p>\n The Least Cost Selection (L1) method can be employed \u2014 ensuring all technical qualifications are met first.<\/strong><\/p>\n Alternatively, a QCBS method can be used \u2014 where technical parameters and financial bids are weighted (e.g., 30% technical and 70% financial) to select the best value proposal<\/strong>.\"<\/p><\/aside>\n<h1>Appendix to Chapter 8 \u2014 Points of Difference<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>whether the Chapter exists at all<\/td><td>G: Ch. 8 \u00b7 C: Ch. 9 \u00b7 NC: Ch. 8 \u00b7 W: NONE<\/em><\/td><\/tr><tr><td>2<\/td><td>Chapter title<\/td><td>G: Procurements with Unique Features\u2026<\/em> \u00b7 C: Special Types of Engagements\u2026<\/em> \u00b7 NC: *Special Types of Non-Consultancy Procurements\u2026*<\/td><\/tr><tr><td>3<\/td><td>Number of sections<\/td><td>G: 7 \u00b7 C: 10 \u00b7 NC: 12<\/td><\/tr><tr><td>4<\/td><td>Organising principle<\/td><td>G: Transaction structures<\/em> \u00b7 C and NC: Categories of provider<\/em><\/td><\/tr><tr><td>5<\/td><td>Overlap between G and the other two<\/td><td>ZERO<\/td><\/tr><tr><td>6<\/td><td>Overlap between C and NC<\/td><td>Only four topics: SSS \u00b7 Individual providers \u00b7 Specialised Agencies \u00b7 NGOs<\/td><\/tr><tr><td>7<\/td><td>Emergencies and Disaster Management<\/strong>(the 16 dispensations; crisis declaration order; single offer acceptable without re-tender; Rs 50,000 GeM exception; special time-bound audits after the crisis)<\/em><\/td><td>G ONLY<\/td><\/tr><tr><td>8<\/td><td>Buy Back Offer<\/strong>(the two-price with\/without rebate mechanism)<\/em><\/td><td>G ONLY<\/td><\/tr><tr><td>9<\/td><td>Capital Goods<\/strong>(item-specific budget; wet-lease alternative; TCO; the three evaluation remedies)<\/em><\/td><td>G ONLY<\/td><\/tr><tr><td>10<\/td><td>AMC<\/strong>(starts after warranty; NPV discounting of future AMC; the Rs 1 lakh BG for goods taken to the factory; the model termination clause)<\/em><\/td><td>G ONLY<\/td><\/tr><tr><td>11<\/td><td>net Present Value<\/strong>(the formula, the GPF discount rate, the solved example where the HIGHEST-priced offer becomes L1)<\/em><\/td><td>G ONLY<\/td><\/tr><tr><td>12<\/td><td>Turnkey Contract<\/td><td>G ONLY<\/td><\/tr><tr><td>13<\/td><td>Books and Print Media<\/strong>(Net Discount over Published Price; one-year onboarding; Rate Contract)<\/em><\/td><td>G ONLY<\/td><\/tr><tr><td>14<\/td><td>EoI for shortlisting<\/td><td>C: an entire chapter (Ch. 7) \u00b7 NC: compressed into para 8.1 and framed as an EXCEPTION to its normal single-stage two-envelope process<\/td><\/tr><tr><td>15<\/td><td>The seismic-survey\/ airborne-data-acquisition illustration of when NC needs EoI<\/td><td>nc only<\/td><\/tr><tr><td>16<\/td><td>SSS \u2014 the MONTHLY statement of all nomination selections to the Secretary\/ Head<\/td><td>C<\/strong>(distinct from the QUARTERLY nomination report in Ch. 4)<\/em><\/td><\/tr><tr><td>17<\/td><td>SSS \u2014 downstream continuity must be outlined in the INITIAL RfP; competitive process required if the initial award was non-competitive or the downstream assignment is substantially larger<\/td><td>C + NC<\/td><\/tr><tr><td>18<\/td><td>Individual Consultants \u2014 comparison of at least three candidates; CEC may interview and recommend remuneration; three direct-negotiation exceptions; COI extends to the parent firm<\/td><td>C + NC<\/td><\/tr><tr><td>19<\/td><td>Rule 177 GFR bar on retired Government servants; DoE OM F.No. 3-25\/2020-E.IIIA dated 09.12.2020<\/td><td>C<\/td><\/tr><tr><td>20<\/td><td>NGOs \u2014 QCBS mandatory where the shortlist is all-NGO; the five NGO-unique criteria; SSS permitted for a remote-area single-NGO case<\/td><td>C + NC<\/td><\/tr><tr><td>21<\/td><td>Procurement Consultants\/ Agents \u2014 THE 30% QUALITY-WEIGHTAGE TEST distinguishing Consultancy from Non-Consultancy<\/td><td>C + NC<\/strong>(near-identical text)<\/em><\/td><\/tr><tr><td>22<\/td><td>Cost weight less THAN 50% for procurement consultants handling specific items, with the stated reason<\/td><td>C ONLY<\/strong>(NC omits the 50% cap and its reasoning)<\/em><\/td><\/tr><tr><td>23<\/td><td>Financial Advisors \u2014 retainer plus success fee; QCBS mandatory for M&A\/ restructuring; cost may exceed 30% or LCS for large contracts; when success fees are appropriate<\/td><td>C ONLY<\/td><\/tr><tr><td>24<\/td><td>Auditors \u2014 QCBS preferred \"since in recent times the quality of audit has been a matter of concern\"<\/td><td>C ONLY<\/td><\/tr><tr><td>25<\/td><td>Logo\/ Symbol Design Competitions \u2014 Rule 196; Official Languages Act and Emblems and Names Act; the 11-point Competition Notice; IPR rests with the sponsoring agency; public voting for matters of national importance<\/td><td>C ONLY<\/td><\/tr><tr><td>26<\/td><td>Integrated IT Projects \u2014 quality weightage<\/td><td>C: \"even up to 80%\" \u00b7 NC (8.12.1): \"80%: 20% for Quality: Price\"<\/td><\/tr><tr><td>27<\/td><td>The MeitY\/ DPIIT list of restrictive and discriminatory conditions<\/strong>(Gartner Magic Quadrant; Rs 1000 Cr turnover for a Rs 70 Cr procurement; G8 export experience; named foreign brands; the \u221225\u00b0C EPBX-at-a-Central-India-airport example)<\/em><\/td><td>C ONLY<\/td><\/tr><tr><td>28<\/td><td>Digital India\/ NeGD \u2014 empanelment valid three years extendable by two; Categories A, B, C; sub-contracting PROHIBITED; IPR belongs to NeGD or client; penalties up to 10% of project value<\/td><td>C ONLY<\/td><\/tr><tr><td>29<\/td><td>Inspection Agents \u2014 generally NC because \"they only inspect within the established protocols\"; payment as a percentage of value inspected<\/td><td>nc only<\/td><\/tr><tr><td>30<\/td><td>Housekeeping \u2014 GeM offers floor-area-wise vs manpower-wise; \"usually the floor area wise cleaning option is more cost effective\"; reasons to be recorded on file<\/td><td>nc only<\/td><\/tr><tr><td>31<\/td><td>Manpower Outsourcing \u2014 the regularisation caution; I-cards must name the contractor; LCS for high-value; service charges floor 3.85% and ceiling 7% (both inclusive of GST); floor applies only to standalone manpower<\/td><td>nc only<\/td><\/tr><tr><td>32<\/td><td>Private Security \u2014 PSARA 2005; ~60,000 ESM retire annually; at least 90% ESM workforce; DGR certificate for 5 years or age 60 whichever earlier; DGR sponsorship mandatory; sponsored agencies exempt from minimum experience and turnover; mandatory GeM route; DGR sponsors at least three agencies; no negotiation below DGR rate (up to 10%); seniority tie-breaker<\/td><td>nc only<\/td><\/tr><tr><td>33<\/td><td>Vehicle Hiring \u2014 Rate Contract through OTE; one year extendable twice; PVC on fuel and wages; 10 hours\/ 100 km per day within 3,000 km monthly; night charges 11 PM\u20136 AM; extra km paid quarterly with shortfall carried forward<\/td><td>nc only<\/td><\/tr><tr><td>34<\/td><td>HaaS \u2014 ownership and risk remain with the service provider; provider insures at his own cost; up to 10-year contract if QCBS; ISO 9001 and ISO 20000; TCO-based evaluation via L1 or QCBS 30:70<\/td><td>nc only<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 8<\/p>\n<aside class=\"note\">Next:<\/strong>Chapter 9 \u2014 contract management and monitoring<\/strong>(Goods Ch. 9 \u00b7 Works Ch. 7<\/strong> \u2014 <\/em>Execution and Monitoring of Works and Quality Assurance \u00b7 Consultancy Ch. 10<\/strong> \u00b7 Non-Consultancy Ch. 9)<\/em>.<\/p>\nThe Works chapter here is by far the most elaborate in the entire Manual family \u2014 some 50 sub-sections \u2014 carrying <\/strong>ESHS concerns, Extension of Time, Liquidated Damages, the Denial Clause, Time at Large, Compensation Events, e-Bill processing, Closure of Contract with its four reconciliations, Excepted Matters, Adjudication, Mediation, Foreign Arbitration, and the CPSE dispute-resolution mechanism \u2014 most of which have no counterpart in the other three. Conversely, <\/strong>only Goods carries *Logistics: Transportation, Receiving, Storage and Issue of Goods, and only CS and NC carry *Concluding the Assignment and Post-Contract Review<\/strong>.<\/p><\/aside><\/section><section class=\"chapter\"><header class=\"chap-open\" id=\"upm-ch9\">Chapter 9 \u2014 Part a<\/p><h1>Contract Management, Administration, Scope Control and Quality Assurance<\/h1><\/header>Part I<\/span>Administration, Scope Control and Quality Assurance<\/em><\/p>\nMerging: Goods Ch. 9<\/strong> (Contract Management) \u00b7 Works Ch. 7<\/strong> (Execution and Monitoring of Works and Quality Assurance) \u00b7 Consultancy Ch. 10<\/strong> (Monitoring Consultancy Services Contract) \u00b7 Non-Consultancy Ch. 9<\/strong> (Monitoring Non-consultancy Services Contract)<\/em><\/p><h2>Structural Notes<\/span><\/h2>\n1. Four different Chapter numbers and four different titles:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Chapter<\/th><th>Title<\/th><\/tr><\/thead><tbody><tr><td>G<\/span> Goods<\/td><td>Chapter 9<\/td><td>Contract Management<\/em><\/td><\/tr><tr><td>W<\/span> Works<\/td><td>Chapter 7<\/td><td>Execution and Monitoring of Works and Quality Assurance<\/strong><\/td><\/tr><tr><td>C<\/span> Consultancy<\/td><td>Chapter 10<\/td><td>Monitoring<\/strong> Consultancy Services Contract<\/em><\/td><\/tr><tr><td>NC<\/span> Non-Consultancy<\/td><td>Chapter 9<\/td><td>Monitoring<\/strong> Non-consultancy Services Contract<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n2. This is the largest Chapter in the entire Manual family \u2014 640 kb across the four Manuals.<\/strong> The Works<\/strong> chapter alone runs to some 50 sub-sections<\/strong> and is by far the most elaborate treatment of contract management anywhere in the four Manuals.<\/p>\n3. The three bodies of material that exist in one Manual only:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Body of material<\/th><th>Exists only in<\/th><\/tr><\/thead><tbody><tr><td>Logistics: Transportation, Receiving, Storage and Issue of Goods<\/td><td>GOODS<\/td><\/tr><tr><td>Aligning stakeholder interests \u00b7 Monitoring Team and System \u00b7 Prerequisites to Commencement \u00b7 Commencement of Work \u00b7 Mobilisation \u00b7 Monitoring Resources Deployed \u00b7 Enforcing Contractor's Obligations \u00b7 Safeguarding Assets \u00b7 ESHS \u00b7 Monitoring Variations\/ Extra\/ Substituted Items \u00b7 Revised DPR \u00b7 Compensation Events \u00b7 Time at Large \u00b7 e-Bill \u00b7 Closure of Contract with its four reconciliations<\/td><td>WORKS<\/td><\/tr><tr><td>Contract Monitoring Committee (CMC) \u00b7 Review of Inception Phase \u00b7 Incentives for Excellence in Contract Execution \u00b7 Concluding the Assignment and Post-Contract Review<\/td><td>CS + NC<\/td><\/tr><\/tbody><\/table><\/div>\n4. Because of the volume, this chapter is issued in three parts:<\/p>\n<ul class=\"lst\"><li>PART A (this document)<\/strong> \u2014 Purpose of Contract Management \u00b7 CMC \u00b7 Contract Administration \u00b7 Scope and Quantity Control \u00b7 Quality Assurance and Inspections.<\/li><li>PART B<\/strong> \u2014 Time Control (delays, EOT, Force Majeure, Denial Clause, LD, Performance Notice, Compensation Events, Time at Large) \u00b7 Cost Control (prices, taxes, payments) \u00b7 Logistics \u00b7 Closure of Contract \u00b7 Post-Contract Review.<\/li><li>PART C<\/strong> \u2014 Breach of Contract, Remedies and Termination \u00b7 Dispute Resolution (Excepted Matters, Adjudication, Mediation, Arbitration, Foreign Arbitration, Appointment of Arbitrator, Arbitral Procedure, Challenging Awards, the CPSE mechanism).<\/li><\/ul>\n<h2>Concordance for Chapter 9 \u2014 Part A<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>G<\/th><th>W<\/th><th>C<\/th><th>NC<\/th><\/tr><\/thead><tbody><tr><td>9.1<\/td><td>The Purpose of Contract Management<\/td><td>9.1.1<\/td><td>7.1<\/td><td>10.1.1<\/td><td>9.1.1<\/td><\/tr><tr><td>9.2<\/td><td>Contract Monitoring Committee (CMC)<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>10.1.2<\/td><td>9.1.2<\/td><\/tr><tr><td>9.3<\/td><td>Aligning the Interest of the Stakeholders<\/td><td> \u2014 <\/td><td>7.2.1<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.4<\/td><td>Monitoring Team and System<\/td><td> \u2014 <\/td><td>7.2.2<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.5<\/td><td>Notice to Proceed, Kick-off Meeting and Prerequisites<\/td><td> \u2014 <\/td><td>7.2.3<\/td><td>10.2.1<\/td><td>9.2.1<\/td><\/tr><tr><td>9.6<\/td><td>Commencement of Work<\/td><td> \u2014 <\/td><td>7.2.4<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.7<\/td><td>Mobilisation<\/td><td> \u2014 <\/td><td>7.2.5<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.8<\/td><td>Review of Inception Phase<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>10.2.2<\/td><td>9.2.2<\/td><\/tr><tr><td>9.9<\/td><td>Reporting and Monitoring of Progress<\/td><td> \u2014 <\/td><td>7.2.2-4<\/td><td>10.2.3<\/td><td>9.2.3<\/td><\/tr><tr><td>9.10<\/td><td>Issuing Contract Amendments\/ Variations<\/td><td>9.7.2<\/td><td>7.2.8<\/td><td>10.2.4<\/td><td>9.2.4<\/td><\/tr><tr><td>9.11<\/td><td>Obligations Control \u2014 Deployment of Resources<\/td><td>9.7.5<\/td><td>7.2.6, 7.2.7<\/td><td>10.2.5<\/td><td>9.2.5<\/td><\/tr><tr><td>9.12<\/td><td>Incentives for Excellence in Contract Execution<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>10.2.6<\/td><td>9.2.6<\/td><\/tr><tr><td>9.13<\/td><td>Safeguards for Handing Over Materials\/ Equipment<\/td><td>9.7.3<\/td><td>7.2.9<\/td><td>10.2.7<\/td><td>9.2.7<\/td><\/tr><tr><td>9.14<\/td><td>Environmental, Social, Health and Safety (ESHS)<\/td><td> \u2014 <\/td><td>7.2.10<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.15<\/td><td>Scope and Quantity Control<\/td><td>9.2<\/td><td>7.3.1\u20137.3.3<\/td><td>10.3<\/td><td>9.3<\/td><\/tr><tr><td>9.16<\/td><td>Quality Assurance and Inspections<\/td><td>9.4<\/td><td>7.3.4<\/td><td>10.3.2<\/td><td>9.3.2\u20139.3.3<\/td><\/tr><tr><td>9.17<\/td><td>Warranty Clause<\/td><td>9.4.8<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><\/tbody><\/table><\/div>\n<h1>9.1 The Purpose of Contract Management<\/span><\/h1>\n<h2>9.1.1<\/span>The Governing Proposition \u2014 common to all four<\/span><\/h2>\n<aside class=\"note\">\"the purpose of contract management is to ensure that contractors adhere to contract terms and deliver the desired outcomes as per the terms and conditions of the contract \u2014 such as timely deliveries, quality of goods supplied, adherence to the proper procedure for submitting invoices, and so on \u2014 and any problems are identified and resolved in a timely manner.<\/strong><\/p>\nIt also ensures that the payments made to the contractor match the performance.<\/strong><\/p>\nWithout Sound Contract Management, There Can Be No Assurance That \"WE Get What We Pay and Contract for \u2014 and Pay for Only What We GET.\"<\/em><\/p><\/aside>\nW<\/span>, C<\/span> and NC<\/span> add: \"implementation of the contract should be strictly monitored \u2014 and notices issued promptly whenever a breach of provisions occurs<\/strong>.\"<\/p>\n<h2>9.1.2<\/span>What Is Handled During This Phase \u2014 the four lists compared<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>G<\/span> GOODS (8 heads)<\/th><th>W<\/span> WORKS (7 heads)<\/th><th>C<\/span> CONSULTANCY \/ NC<\/span> NON-CONSULTANCY (5 heads)<\/th><\/tr><\/thead><tbody><tr><td>a) Scope of Supply and Quantity Control<\/td><td>a) Contract Administration<\/td><td>a) Contract Administration<\/td><\/tr><tr><td>b) Time Control \u2013 Monitoring Delays<\/td><td>b) Monitoring Scope of Work and Quality Assurance<\/td><td>b) Scope Control and Quality Assurance<\/td><\/tr><tr><td>c) Quality Assurance and Inspections<\/td><td>c) Time Monitoring<\/td><td>c) Time Control<\/td><\/tr><tr><td>d) Cost Control \u2013 Prices, Taxes and Payments<\/td><td>d) Financial Monitoring<\/td><td>d) Cost Control<\/td><\/tr><tr><td>e) Logistics: Transportation, Receiving, Storage and Issue of Goods<\/td><td>e) Closure of Contract<\/td><td>e) Post-contract evaluation<\/td><\/tr><tr><td>f) Contract Administration<\/strong> \u2014 Performance Security \u00b7 Amendments \u00b7 Safeguards for handing over materials \u00b7 Monitoring Supplier Performance \u00b7 Monitoring Supplier Obligations \u00b7 Contract closure<\/em><\/td><td>f) Resolving Disputes and Conflicts<\/td><td><\/td><\/tr><tr><td>g) Breach of Contract, Remedies and Termination<\/td><td>g) Breach and Termination of Contract<\/td><td><\/td><\/tr><tr><td>h) Dispute resolution<\/td><td><\/td><td><\/td><\/tr><\/tbody><\/table><\/div>\nTHE C<\/span> AND NC<\/span> Sub-heads of contract administration (nine items): I) issuing the notice to proceed<\/strong>; ii) meetings and reviews<\/strong>; iii) amendments\/ variations to the contract<\/strong>; iv) obligations control: Monitoring that key experts and contracted resources are actually employed<\/strong>; v) safeguards for handing over materials\/ equipment<\/strong>; vi) resolving problems faced by consultants<\/strong>; vii) dispute resolution and arbitration<\/strong>; viii) breach of contract, remedies, and termination of services prior to the end of the contract<\/strong>; ix) contract closure upon completion<\/strong>.<\/p>\nTHE C<\/span> AND NC<\/span> Sub-heads of scope control and quality assurance: I) deciding on possible modifications to scope of work and issuing contract variations<\/strong>; ii) monitor that all deliverables are delivered as per contract \u2014 reports including draft final report and the final report<\/strong>; iii) quality assurance: Review quality of outcomes at inception phase, mid-term, and final phase<\/strong>.<\/p>\n<h2 class=\"src-multi\">9.1.3<\/span>Why Services Contracts Need MORE Intense Monitoring<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\">\n<aside class=\"note\">\" Due to lack of physically\/ tangibly measurable outcomes in services contracts \u2014 intense and continuous monitoring of the contract by the Procuring Entity is essential for the success of the assignment.<\/strong><\/p>\n Suitable provision for this should be made in the contracts \u2014 which should also take care of the need to terminate\/ penalise the consultant, or to suspend payments till satisfactory progress has been achieved.<\/strong><\/p>\nThe Procuring Entity shall form a Contract Monitoring Committee (CMC) to monitor the contract.<\/strong><\/p>\n The Procuring Entity should also designate a counterpart Project Manager \u2014 with adequate technical qualification, managerial experience, and power and authority \u2014 as the nodal person to interact with the consultant's team.<\/strong><\/p>\n A system of reporting May be developed, so that a statement covering all ongoing consultancy contracts May be submitted within the Department in detail \u2014 so as to enable management by exception, based on various risk and mitigation strategies pointed out at relevant process milestones in this Manual<\/strong>.\" (Rule 195 of GFR 2017)<\/em><\/p><\/aside>\n<\/div><h2>9.1.4<\/span>Why Poor Contract Management Costs the Nation [W ONLY]<\/span><\/h2>\n<aside class=\"note\">\"poor management of public-funded projects costs the nation in terms of the following \u2014 be it in the owner organisation or in construction firms contracted to build a project<\/strong>:\"<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>The cost<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>additional expenditure burden due to increased costs \u2014 crowding out more deserving schemes and projects<\/strong><\/td><\/tr><tr><td>b<\/td><td>affects viability of projects due to increase in construction [cost] \u2014 causing losses to the CPSE or agency concerned<\/strong><\/td><\/tr><tr><td>c<\/td><td>economic burden, due to delayed return on investments<\/strong><\/td><\/tr><tr><td>d<\/td><td>imposes unnecessary economic burden on affected stakeholders<\/strong><\/td><\/tr><tr><td>e<\/td><td>\"creates a culture of acceptance of delay and avoidable costs \u2014 breeding more cases<\/strong>.\"<\/td><\/tr><tr><td>f<\/td><td>\"increased costs of procurement due to monetisation of higher risks, perceived by contractors, of delays and scope creep associated with public-funded projects<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>9.2 Contract Monitoring Committee (CMC) [C + NC ONLY]<\/span><\/h1>\n(Rule 205 of GFR 2017)<\/em><\/p>\n<h2>9.2.1<\/span>Constitution<\/span><\/h2>\n<aside class=\"note\">\" Rule 205 of GFR 2017 enjoins that the Ministry or Department be involved throughout the conduct of the contract, and continuously monitor the performance of the contractor.<\/strong><\/p>\nThe Procuring Entity shall constitute a CMC comprising at least three members at the appropriate level, including the user's representative \u2014 after the selection procedure is over \u2014 for monitoring the progress of the contract.<\/strong><\/p>\n If considered appropriate, the Procuring Entity May select all or any of the members of CEC as members of CMC.<\/strong><\/p>\n The Procuring Entity May also include individual experts from the Government\/ private sector\/ educational\/ research institute, or an individual consultant, in the CMC. The cost of such members, if any, shall be borne by the Procuring Entity<\/strong>.\"<\/p><\/aside>\n<h2>9.2.2<\/span>The Six Responsibilities of the CMC<\/span><\/h2>\n\"the CMC shall be responsible for<\/strong>:\"<\/p>\n<ol class=\"lst\"><li>monitoring the progress of the assignment<\/strong>;<\/li><li>To oversee that the assignment is carried out as per the contract<\/strong>;<\/li><li>To assess the quality of the deliverables<\/strong>;<\/li><li>To accept\/ reject any part of the assignment<\/strong>;<\/li><li>To levy appropriate Liquidated Damages or penalty \u2014 if the assignment is not carried out as per the contract, and if the quality of services is found inferior<\/strong>;<\/li><li>And for any such deficiency related to the completion of the assignment<\/strong>.<\/li><\/ol>\n<h2>9.2.3<\/span>The Expert-Assistance Provision<\/span><\/h2>\n<aside class=\"note\">\"for the assignments which are overly complex and\/ or are of a highly technical nature \u2014 the Procuring Entity May decide to appoint another qualified consultant to assist the CMC in carrying out its functions<\/strong>.\"<\/p><\/aside>\n<h1>9.3 Aligning the Interest of the Stakeholders [W ONLY]<\/span><\/h1>\n<h2>9.3.1<\/span>The Incentive-Structure Principle<\/span><\/h2>\n<aside class=\"note\">\"the incentive structure for all the key stakeholders of Public Procurement ought to be such that the system itself will ensure timely delivery of the projects\/ works in a qualitative manner within approved cost.<\/strong><\/p>\n A balanced framework and work culture \u2014 where risk and rewards are properly shared amongst stakeholders, and timely completion of quality projects is the common goal \u2014 can be the bedrock of efficient project management.<\/strong><\/p>\n An incentive structure \u2014 which May include pecuniary as well as non-pecuniary aspects (including public recognition) \u2014 linked with measurable parameters of outcome\/ output, can help align the interests of stakeholders.<\/strong><\/p>\n An ethics-based regime, where integrity of all the stakeholders is nurtured, can help increase efficiency in all aspects of project management<\/strong>.\"<\/p><\/aside>\n<h2>9.3.2<\/span>The Recognition Devices \u2014 including naming at work sites<\/span><\/h2>\n<aside class=\"note\">\"public authorities May devise strategies to provide incentives to contractors\/ concessionaires\/ consultants\/ architects\/ other stakeholders by various means \u2014 including bonus, better rating and recognition for early\/ timely\/ quality completion of the projects.<\/strong><\/p>\n Similar strategies May be devised for recognition of engineers\/ officers\/ other team members for early\/ timely and quality completion of the projects.<\/strong><\/p>\n The practice of mentioning the names of the contractor and the project-in-charge publicly at work sites May be implemented.<\/strong><\/p>\n Such recognition May be in a form which has a long shelf life \u2014 so as to associate the contractor and project in-charge with the life of the project<\/strong>.\"<\/p><\/aside>\n<h2>9.3.3<\/span>The Closing Aphorism<\/span><\/h2>\n<aside class=\"note\">\"COMING Together is a Beginning; Keeping Together is Progress; Working Together is SUCCESS.<\/em>\"<\/p>\n\"it is an accepted fact that the success of any project is dependent on a well-coordinated team working towards a common goal. For successful execution of any project within specified time, cost and quality \u2014 the interest of all the stakeholders needs to be aligned.<\/strong><\/p>\n Coordinated efforts of all stakeholders \u2014 such as contractors, consultants, public authority and project executing authority and public representatives \u2014 will bring about the best possible outcome<\/strong>.\"<\/p><\/aside>\n<h1>9.4 Monitoring Team and System [W ONLY]<\/span><\/h1>\n<h2>9.4.1<\/span>The Principle of Proportionality for Contract Management<\/span><\/h2>\n<aside class=\"note\">\"the time and resources applied to manage a contract should be proportional to its size, scope, complexity, duration, risk, and strategic importance. One size does not fit all.<\/strong><\/p>\n for example, [in] low-value [contracts], too many checks and balances can delay decision-making, impede the contractor's payments, and stifle innovation.<\/strong><\/p>\n Too little control can result in an undisciplined crisis management culture.<\/strong><\/p>\n Getting the balance exactly right ensures 'fit-for-purpose' contract management<\/strong>.\"<\/p><\/aside>\n<h2>9.4.2<\/span>Role of Apex and Management Levels<\/span><\/h2>\n\"procurement and contract management require various levels of authorisation or approvals for technical, administrative, and financial decisions. Many of these approvals are at apex\/ managerial levels \u2014 which are responsible for macro management of the contract, but May not be involved in day-to-day contract management. However, their roles are important for efficiency of the contract management process<\/strong>.\"<\/p>\n<h2>9.4.3<\/span>The Contract Manager<\/span><\/h2>\n<aside class=\"note\">\"best practice requires that a nodal person be appointed for management of each specific contract.<\/strong><\/p>\n Such a nodal person May be called differently \u2014 engineer \u00b7 Project Manager \u00b7 Contract Manager \u00b7 supply manager \u00b7 service manager \u00b7 employer's representative \u2014 in different organisations and in different categories of contract. This Manual generically refers to him as 'Contract Manager'.<\/strong><\/p><\/aside>\nThe scale Rule:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Contract type<\/th><th>Who the Contract Manager is<\/th><\/tr><\/thead><tbody><tr><td>Small, routine contracts<\/td><td>A single person, who has a portfolio of contracts to manage<\/strong><\/td><\/tr><tr><td>large, complex, high-value contracts<\/td><td>normally a team or entity<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nthe five attendant requirements:<\/p>\n<ol class=\"lst\"><li>\"a competent project management team should be set up \u2014 including training on project management to the team, if required<\/strong>.\";<\/li><li>\"a system of project monitoring for each work shall be prepared before start of the work \u2014 and the same shall be available at site of work<\/strong>.\";<\/li><li>\"'Deadlines' or 'contractual milestones' should be set up and tabulated to facilitate monitoring of the progress of work<\/strong>.\";<\/li><li>\"the work shall be monitored on a quarterly\/ monthly basis by the Works Committee \u2014 and a status report should be submitted to the Secretary in charge of the concerned Ministry\/ Department<\/strong>.\";<\/li><li>\"execution of the work shall primarily be the responsibility of the nominated Contract Manager. However, for large contracts, senior officers shall also review the progress and quality of the work at various stages of construction<\/strong>.\"<\/li><\/ol>\n<aside class=\"note\">the certification suggestion: \"it May also be useful to stipulate organisational standards and\/ or certifications for project managers\/ staff, in complex projects, as tender conditions \u2014 to minimise risk of cost and time overruns<\/strong>.\"<\/p><\/aside>\n<h2 class=\"src-W\">9.4.4<\/span>Progress Reporting and Review \u2014 the Fourteen-Point MIS Report<\/span>W<\/span><\/h2><div class=\"srcblock src-W\">\n\"there should be a stipulation in the contract for large-value works (magnitude to be specified) \u2014 for the contractor to submit a project-specific monthly progress report of the work in a computerised form (management information system reports \u2014 MIS reports)<\/strong>.\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Content of the Monthly MIS Progress Report<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>project information \u2014 giving the broad features of the contract<\/strong><\/td><\/tr><tr><td>ii<\/td><td>introduction \u2014 giving a brief scope of the work and the broad structural or other details<\/strong><\/td><\/tr><tr><td>iii<\/td><td>construction Schedule of the various components \u2014 through a bar chart for the next three quarters (or as specified) \u2014 showing the milestones, targeted tasks and up-to-date progress<\/strong><\/td><\/tr><tr><td>iv<\/td><td>progress chart of the various components planned and achieved \u2014 for the month as well as cumulative \u2014 with reasons for deviations, if any, in a tabular format<\/strong><\/td><\/tr><tr><td>v<\/td><td>plant and machinery statement \u2014 indicating those deployed in the work, and their working status<\/strong><\/td><\/tr><tr><td>vi<\/td><td>man-power statement \u2014 indicating individually the names of all the staff deployed in the work, along with their designations<\/strong><\/td><\/tr><tr><td>vii<\/td><td>financial statement \u2014 gross value of work done \u00b7 advances taken \u00b7 recoveries effected \u00b7 amounts withheld \u00b7 net payments \u00b7 details of cheque payments received<\/strong><\/td><\/tr><tr><td>viii<\/td><td>a statement showing the extra and substituted items submitted by the contractor and payments received against them \u00b7 broad details of the bank guarantees, indicating clearly their validity periods \u00b7 broad details of the insurance policies \u00b7 advances received and adjusted<\/strong><\/td><\/tr><tr><td>ix<\/td><td>progress photographs, in colour, of the various items\/ components of the work done up to date \u2014 to indicate visually the actual progress<\/strong><\/td><\/tr><tr><td>x<\/td><td>quality assurance and quality control tests conducted during the month, with the results thereof<\/strong><\/td><\/tr><tr><td>xi<\/td><td>any hold-up shall be specified<\/strong><\/td><\/tr><tr><td>xii<\/td><td>dispute, if any, shall also be highlighted<\/strong><\/td><\/tr><tr><td>xiii<\/td><td>monthly or fortnightly progress review by Contract Manager and Procuring Entity with contractor May be necessary \u2014 to ensure that the contractor deploys sufficient resources to meet the deadlines<\/strong><\/td><\/tr><tr><td>xiv<\/td><td>the photograph-and-video system \u2014 see below<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">The photograph and video provision \u2014 worth noting in full:<\/p>\n\"project executing authorities should put in place a system for capturing the photographs and videos of important and critical activities of construction. This May be implemented in projects above a threshold value \u2014 or, if possible, in all projects.<\/strong><\/p>\nSuch photos\/ videos May be uploaded in the it-based project monitoring system \u2014 to facilitate monitoring the progress and quality of work, as well as assessment of delay in execution of work by stakeholders and senior management.<\/strong><\/p>\n Apart from this, photographs and videos May serve as a permanent record of the project for posterity \u2014 in case needed for any eventuality, including litigation or enquiry\/ investigation<\/strong>.\"<\/p><\/aside>\n<\/div><h2 class=\"src-W\">9.4.5<\/span>Project Management Software<\/span>W<\/span><\/h2><div class=\"srcblock src-W\">\n<aside class=\"note\">\"all complex assignments require the use of proper project management tools \u2014 that enable the contract management team (Procuring Entity, Contract Manager, Project Manager, etc.) to collaboratively monitor the actual physical and financial progress of the contract against the planned physical and financial Schedule.<\/strong><\/p>\n The contract May also specify that the contractor engage certified project management professionals to train and monitor project progress (e.g., pmi-certified contract managers).<\/strong><\/p>\nSome of the common software programmes are \u2014 (no endorsements are intended; There are many more such software available):<\/strong><\/p>\n\u2022 microsoft project and portfolio management (ms ppm); And<\/strong><\/p>\n\u2022 oracle primavera P6 professional project management (P6 ppm).<\/strong><\/p>\n Information technology (IT) enabled project management systems can help in improving efficiency, transparency and aid faster decision-making in execution of projects<\/strong>.\"<\/p><\/aside>\n<h1>9.5 Notice to Proceed, Kick-off Meeting, and Ensuring Prerequisites to Commencement<\/span><\/h1>\n<\/div><h2>9.5.1<\/span>Ensuring Prerequisites to Commencement of Work W<\/span> \u2014 the Six Prerequisites<\/span><\/h2>\n1. Land acquisition: \"the process of land acquisition shall be started by the Procuring Entity well ahead, and completed entirely \u2014 or at least substantially \u2014 by the time the contract is awarded<\/strong>.\"<\/p>\n2. PERMITS\/ APPROVALS \u2014 and the delay-claim warning:<\/p>\nThe Procuring Entity shall seek requisite statutory approvals\/ permission\/ clearances\/ certificates<\/strong> From concerned local bodies and statutory authorities \u2014 including:<\/p>\n<aside class=\"note\">District authorities \u00b7 municipal corporation \u00b7 panchayati raj institutions \u00b7 town planning board \u00b7 electricity board\/ fire Department \u00b7 State\/ Central pollution control boards \u00b7 State\/ Central environmental authorities \u00b7 forest and wildlife authorities<\/strong><\/p><\/aside>\nthe illustrative list of what such clearances cover:<\/p>\n<aside class=\"note\">Removal of trees \u00b7 re-locating utilities \u00b7 conversion of railway level crossings \u00b7 laying of railway sidings needed by the project \u00b7 rehabilitation and resettlement of persons affected by the project \u00b7 traffic control \u00b7 mining of earth and stone \u00b7 interfering [with] protected monuments \u00b7 blasting permission \u00b7 environmental\/ forest\/ wildlife clearances \u00b7 and shifting of religious shrines<\/strong><\/p>\nthe warning: \"the Procuring Entity has to be aware that any delay in fulfilling the pre-requisites stipulated in the contract will attract delay claims from the contractor \u2014 besides causing time and cost overruns.<\/strong><\/p>\n Hence, all or most pre-requisites shall be fulfilled before award of the LoA<\/strong>.\"<\/p><\/aside>\nthe contractor's side: \"the contractor shall give all notices and obtain all other necessary permits and approvals as May be required for the construction \u2014 and shall pay for all such permits and approvals<\/strong>.\"<\/p>\n3. Approval of quarries, borrow areas and materials:<\/p>\n<aside class=\"note\">\"the contractor will obtain approval of the Contract Manager for each quarry and borrow area to be used in the project \u2014 prior to commencement of quarrying and\/ or borrow area excavation activities.<\/strong><\/p>\n All materials (whether natural, processed, manufactured, or designed) proposed by the contractor to be used on the works shall be first approved by the Contract Manager, to comply with the requirements of specifications.<\/strong><\/p>\n Contractor May seek Procuring Entity's permission for equivalent brands \u2014 if some brands are mentioned for certain materials in the contract documents<\/strong>.\"<\/p><\/aside>\n4. Safety at work site \u2014 the hazardous substances and the public-protection list:<\/p>\n<aside class=\"note\">\"the contractor must ensure safety of workmen as well as safety for the general public during construction in and around the work-site. He must follow the laws, codes and standards laid down in this regard.<\/strong><\/p>\n The workmen must be trained and provided protective gear, life-saving equipment and appropriate tools for their jobs.<\/strong><\/p>\n Special precautions must be used if hazardous chemicals are used or stored at workplace \u2014 lead, silica, asbestos, and wood\/ stone that will be cut and generate dust; Construction materials containing zinc, cadmium, beryllium and mercury.<\/strong><\/p>\n Besides protection from noise and environmental pollution \u2014 the public must also be safeguarded from:<\/strong><\/p>\nFalling through dug-up area \u00b7 electrocution \u00b7 flooding \u00b7 falling objects \u00b7 bridge-span dropping\/ failures \u00b7 crane falling\/ overturning \u00b7 and damage to building from vibrations\/ cave-ins from construction activities.<\/strong><\/p>\nCONTRACT Manager Must Ensure That Contractor Does not Adopt Any SHORT-CUT in this REGARD.<\/em><\/p><\/aside>\nThe SHE\/ ESHS apparatus: \"most large contracts have a well-defined safety, health & environment (SHE) \u2014 also called environmental, social, health and safety (ESHS, with addition of the social factor) \u2014 guideline embedded in the agreement.<\/strong><\/p>\n<aside class=\"note\"> Appointment of a site safety engineer by the contractor is a mandatory requirement in such cases.<\/strong><\/p>\n The Contract Manager shall engage safety experts to carry out frequent SHE audits and mandate correct measures<\/strong>.\"<\/p><\/aside>\n5. Advance payments: \"to enable mobilisation, advance payment(s) are to be given after the signing of the contract \u2014 if provided in the contract \u2014 on the contractor's submission of an unconditional BG in an acceptable form<\/strong>.\"<\/p>\n6. INSURANCES \u2014 the four checks:<\/p>\n\"insurance provisions are valuable risk management tools. The contracting entity must ensure the following<\/strong>:\"<\/p>\na) the insurance policies are in place in accordance with the contract<\/strong>;<\/p>\nb) the coverages are adequate and within the thresholds specified in the contract<\/strong>;<\/p>\nc) the insurance policies contain the essential information \u2014 such as coverage, duration, applicability<\/strong>;<\/p>\nd) due diligence is applied to checking the authenticity of the insurance document and payment of insurance premiums<\/strong>.<\/p>\n<h2 class=\"src-multi\">9.5.2<\/span>Issuing the Notice to Proceed and the Kick-off Meeting<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\">\nThe Consultancy and Non-Consultancy Manuals frame the same stage as \"Issuing Notice to Proceed, Kick-off Meeting and Pre-requisites\"<\/em> \u2014 the service analogue of the Works \"Work Order\" at para 9.6 below.<\/p>\n<h1>9.6 Commencement of Work [W ONLY]<\/span><\/h1>\n<aside class=\"note\">\"after the contract has been signed between the parties and Performance Security is deposited by the contractor \u2014 he should visit the site along with the Contract Manager, to identify any potential problem in relation to site.<\/strong><\/p>\nAfter reviewing the status of prerequisites, the Contract Manager issues a 'work order' to the contractor to 'commence the works'.<\/strong><\/p>\nWORK Order Should Be Issued Within a Reasonable Period \u2014 Say 2 Weeks, but not Later Than 6 Weeks from the Date of the Loa.<\/em><\/p><\/aside>\nThe contractor's three submissions: \"within the stipulated time, the contractor should submit to the Contract Manager for his consent:<\/strong><\/p>\na) THE work program \u2014 including the measures proposed by him for work zone safety and mitigation of environmental impact<\/strong>;<\/p>\nb) THE methods statement which the contractor proposes to adopt for execution of the works<\/strong>; and<\/p>\nc) THE quality assurance plan<\/strong>.\"<\/p>\n<aside class=\"note\">\"the Contract Manager should, on being satisfied with the contractor's submission, provide to the contractor total or partial possession of the site.<\/strong><\/p>\n The contractor will update the work program at intervals stipulated (usually every month) and submit it to the Contract Manager for approval. The updated program should include all variations ordered by the Contract Manager and their effect, if any, on the program.<\/strong><\/p>\nNO Work Shall Be Commenced Unless the Conditions Precedent as Laid Down in Para 1.17-13 [Of this Unified Manual] Have Been FULFILLED.<\/em><\/p><\/aside>\n<h1>9.7 Mobilisation [W ONLY]<\/span><\/h1>\n<aside class=\"note\">\"the commencement of works normally begins with a mobilisation or pre-construction phase \u2014 during which the site is prepared for construction.<\/strong><\/p>\n The mobilisation period should be carefully managed by the contracting parties, given its significance to the successful execution of a contract.<\/strong><\/p>\nThe mobilisation or pre-construction phase can include major activities such as:<\/strong><\/p>\nLand clearance \u00b7 excavation \u00b7 building of access roads to the site \u00b7 work site establishment \u00b7 and construction of accommodation for the contractor's personnel<\/strong>.\"<\/p><\/aside>\n Mobilisation of key resources:<\/strong>\"the Contract Manager must ensure that the technical [and other key resources are mobilised]<\/strong>\u2026\"<\/strong>(and see para 9.11 below on Monitoring Resources Deployed).<\/em><\/p>\n<h1>9.8 Review of Inception Phase [C + NC ONLY]<\/span><\/h1>\nThe Consultancy and Non-Consultancy Manuals provide for a distinct Review of Inception Phase<\/em> \u2014 the point at which the Procuring Entity satisfies itself, on the strength of the Inception Report (due about six weeks after the commencement date \u2014 see Chapter 2, para 2.6.3(c)), that the assignment can be carried out as planned, and that any major inconsistency in the ToR, staffing problems, or deficiency in the Procuring Entity's assistance has been surfaced early.<\/p>\n<aside class=\"note\">This has no counterpart in the Goods or Works Manuals, where the analogous checkpoint is the Work Order<\/strong> and the approval of the Work Program, Method Statement and Quality Assurance Plan<\/strong> (para 9.6 above).<\/em><\/p><\/aside>\n<h1>9.9 Reporting and Monitoring of Progress [C + NC; and W at para 9.4.4]<\/span><\/h1>\nCommon to all four is the requirement of periodic progress reporting, but the instruments differ:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>The reporting instrument<\/th><\/tr><\/thead><tbody><tr><td>W<\/span> WORKS<\/td><td>The fourteen-point monthly MIS progress report<\/strong> \u2014 see para 9.4.4 above<\/td><\/tr><tr><td>C<\/span> Consultancy<\/td><td>The inception \u00b7 progress \u00b7 interim \u00b7 and final reports<\/strong> \u2014 see Chapter 2, para 2.6.3(c)<\/td><\/tr><tr><td>NC<\/span> Non-consultancy<\/td><td>Reporting against the service Level Agreement (SLA) and key performance indicators<\/strong> \u2014 see para 9.15.4 below<\/td><\/tr><tr><td>G<\/span> GOODS<\/td><td>Monitoring of supplier performance and obligations<\/strong> \u2014 see para 9.11 below<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>9.10 Issuing Contract Amendments \/ Variations<\/span><\/h1>\nAll four Manuals provide for amendment of the contract during execution. The Works treatment is the most detailed, and is set out at Chapter 6, para 6.10.3-1 of this Unified Manual (Variations in Works Contracts, the Variations Register, and the requirement of the Engineer's prior approval from the Procuring Entity).<\/p>\n<aside class=\"note\">The common principle:<\/strong>amendments must be issued <\/strong>in writing, through a formal procedure specified in the contract, and \u2014 in Works \u2014 <\/strong>tracked in a Variations Register updated monthly and summarised to keep all involved agencies informed.<\/strong><\/p><\/aside>\n<h1>9.11 Obligations Control \u2014 Monitoring Resources Deployed and Enforcing Obligations<\/span><\/h1>\n<\/div><h2>9.11.1<\/span>The Common Object<\/span><\/h2>\n\" Monitoring that key experts and contracted resources are actually employed<\/strong>\"<\/strong>(the C<\/span> and NC<\/span> formulation)<\/em> \u2014 corresponding to W<\/span> paras 7.2.6 (Monitoring Resources Deployed by Contractor) and 7.2.7 (Enforcing Contractor's Obligations), and G<\/span> paras 9.7.4 and 9.7.5 (Monitoring Supplier Performance and Obligations)<\/strong>.<\/p>\n<aside class=\"note\">This is the single most important control in a <\/strong>services contract, because \u2014 as the CS and NC Manuals put it at para 9.1.3 above \u2014 there are <\/strong>no physically\/ tangibly measurable outcomes, and the deployment of the promised key personnel is the principal proxy for quality.<\/p><\/aside>\n<h2>9.11.2<\/span>The Works Apparatus<\/span><\/h2>\nThe Works Manual treats this in two distinct sections:<\/p>\n<ul class=\"lst\"><li>7.2.6 \u2014 monitoring resources deployed by contractor<\/strong>(plant, machinery, and manpower \u2014 cross-referenced to the Plant and Machinery Statement<\/strong> and Man-power Statement<\/strong> in the monthly MIS report at para 9.4.4 items (v) and (vi) above)<\/em>;<\/li><li>7.2.7 \u2014 enforcing contractor's obligations.<\/li><\/ul>\n<h1>9.12 Incentives for Excellence in Contract Execution [C + NC ONLY]<\/span><\/h1>\nThe Consultancy and Non-Consultancy Manuals carry a short section providing for incentives for excellence in contract execution \u2014 the services counterpart of the Works provisions on aligning stakeholder interests at para 9.3 above (bonus, better rating, public recognition, and naming at work sites).<\/p>\n<h1>9.13 Safeguards for Handing Over Procuring Entity Materials\/ Equipment to Contractors<\/span><\/h1>\n<aside class=\"note\">This section appears in all four Manuals. The Works text is reproduced below as the fullest version.<\/p><\/aside>\n<h2>9.13.1<\/span>What May Be Handed Over<\/span><\/h2>\n<aside class=\"note\">\"for performance of certain contracts, the Procuring Entity May have to loan stores, drawings, documents, equipment, and assets (such as accommodation, identity cards and gate passes, and so on) to the contractor.<\/strong><\/p>\n In certain situations, the contractor May also be supplied electricity, water, cranes, and weighing facilities on payment\/ hire basis<\/strong>.\"<\/p><\/aside>\n<h2>9.13.2<\/span>The Bank Guarantee Requirement \u2014 and the Rs 1 lakh waiver<\/span><\/h2>\n<aside class=\"note\">\"whenever stores or prototypes or sub-assemblies are required to be issued to the firm\/ contractor for guidance in fabrication \u2014 these should be issued against an appropriate Bank Guarantee.<\/strong><\/p>\n In addition to the Bank Guarantee, appropriate insurance May be asked for if it is considered necessary.<\/strong><\/p>\nFor low-value items of Less Than Rs. 1,00,000 (Rupees One Lakh) \u2014 or for Sending Spares for Repairs to the Oems \u2014 this Stipulation of the Bank Guarantee May Be Waived; and, if Feasible, an Indemnity Bond May Be TAKEN.<\/em><\/p><\/aside>\n<h2>9.13.3<\/span>The Contractor's Obligations in Respect of Loaned Assets<\/span><\/h2>\n<aside class=\"note\">\"the contractor shall use such property for the execution of the contract and no other purpose whatsoever.<\/strong><\/p>\n These assets shall remain the property of the Procuring Entity \u2014 and the contractor shall take all reasonable care of all such assets.<\/strong><\/p>\n The contractor shall be responsible for all damage or loss from whatever cause caused, while such assets are possessed or controlled by the contractor, staff, workers, or agents<\/strong>.\"<\/p><\/aside>\n<h2>9.13.4<\/span>The Transparency Requirement and the Closing Certificate<\/span><\/h2>\n<aside class=\"note\">pre-declaration: \"as a measure of transparency \u2014 the possibility of provision of such resources by the Procuring Entity should have been announced in the tender document, or at least requested by the contractor in the tender, and written in the contract<\/strong>.\"<\/p>\nthe certificate before final payment:<\/p>\n\"before the final payment or release of PBG\/ SD \u2014 a certificate May be taken from the concerned Department that the contractor has returned all:<\/strong><\/p>\nDocuments \u00b7 drawings \u00b7 protective gear \u00b7 material \u00b7 equipment \u00b7 facilities \u00b7 and assets loaned \u2014 including all id cards and gate passes \u2014 in good condition.<\/strong><\/p>\n Further, it should be certified that payment from the contractor has been received for usage of electricity, water, crane, accommodation, weighing facility, and so on<\/strong>.\"<\/p><\/aside>\n<h1>9.14 Environmental, Social, Health, and Safety (ESHS) Concerns [W ONLY]<\/span><\/h1>\n<h2>9.14.1<\/span>The ESHS Obligation and Its Staffing Consequence<\/span><\/h2>\n<aside class=\"note\">\"in works contracts, attention must be paid to environmental, social, health, and safety (ESHS) considerations \u2014 also termed safety, health, and environmental (SHE) in certain contracts.<\/strong><\/p>\n Such considerations must be indicated from the beginning as mandatory skills or experience in the bid documents.<\/strong><\/p>\n The contractor must ensure that he and his sub-contractors comply with legal and regulatory obligations relating to ESHS.<\/strong><\/p>\n it requires professionals with appropriate skills to be part of the contract's team. Such professionals May be required on a part-time or full-time basis \u2014 depending on the nature of the ESHS risks and impacts, and the role they are performing.<\/strong><\/p><\/aside>\n<h2>9.14.2<\/span>What ESHS Monitoring Involves During Implementation<\/span><\/h2>\n<aside class=\"note\">\"during contract implementation, the primary focus is to ensure that the contractual ESHS provisions are continuously adhered to. This will involve:<\/strong><\/p>\n\u2022 the timely preparation and\/ or review of documentation \u2014 such as the contractor's plans and procedures;<\/strong><\/p>\n\u2022 undertaking of inspection, supervision, and\/ or audit;<\/strong><\/p>\n\u2022 attending of progress meetings;<\/strong><\/p>\n\u2022 reporting; And<\/strong><\/p>\n\u2022 resolving issues that May occur<\/strong>.\"<\/p><\/aside>\n<h2>9.14.3<\/span>Safety of the Public and Labour<\/span><\/h2>\n\"the safety of all activities (including traffic safety) in and around the site, and safety of the public and labour, should be ensured by the contractor \u2014 as per prevalent labour laws\/ regulations and the conditions of contract.<\/strong><\/p>\n<aside class=\"note\"> The workmen must be trained and provided protective gear, life-saving equipment, and appropriate tools for their jobs<\/strong>.\"<\/p><\/aside>\nthe hazardous substances: \"special precautions must be used if hazardous chemicals are used or stored at the workplace \u2014 lead, silica, asbestos, and wood\/ stone that will be cut and generate dust; And construction materials containing zinc, cadmium, beryllium, and mercury<\/strong>.\"<\/p>\nthe public-protection list: \"besides protecting the public from noise and environmental pollution \u2014 they must be safeguarded from:<\/strong><\/p>\n<aside class=\"note\">Falls in dug-up areas \u00b7 electrocution \u00b7 flooding \u00b7 falling objects \u00b7 bridge-span dropping\/ failures \u00b7 crane falling\/ overturning \u00b7 and damage to building from vibrations\/ cave-ins from construction activities.<\/strong><\/p>\nTHE Contract Manager Must Ensure That the Contractor Does not Adopt Any Shortcut in this REGARD.<\/em><\/p><\/aside>\n<h1>9.15 Scope and Quantity Control<\/span><\/h1>\n<h2>9.15.1<\/span>Quantity Tolerance \u2014 Minor Short\/ Excess Deliveries [G ONLY]<\/span><\/h2>\n<aside class=\"note\">\"minor shortfall\/ excess deliveries in the last\/ final consignment are unavoidable due to the manufacturing and supply chain vagaries.<\/strong><\/p>\nAlthough to close the contract an amendment May require to be issued \u2014 yet, to simplify the process, the consignee receiving the material can be authorised to treat the contract as completed, provided the deliveries are:<\/strong><\/p>\nSHORT\/ Excess Up to 5 per Cent of the Total Value of the Contract, or Rs. 5 Lakhs \u2014 Whichever is less.<\/em><\/p>\n Payment will be made without the issue of a formal contract amendment, and without reference to the ultimate user\/ indentor. Only the supplied quantity shall be paid for, as per the terms of the contract.<\/strong><\/p>\nThis Shall not Be Applicable to Indivisible Items or Machinery and PLANT.<\/em><\/p><\/aside>\n<h2>9.15.2<\/span>The Option Clause at the Contract Management Stage [G ONLY]<\/span><\/h2>\n1. The right: \"under this clause, the purchaser retains the right to place orders for an additional quantity up to a specified percentage of the originally contracted quantity \u2014 at the same rate and terms of the contract \u2014 during the currency of the contract.<\/strong><\/p>\n<aside class=\"note\"> This clause and percentage should be part of the tender document and the contract, and ideally should not exceed 25\u201330%.<\/strong><\/p>\n Approval should be obtained from the ca (who originally approved the tender decision) to exercise the option clause, based on the value of the contract and the increased quantity.<\/strong><\/p>\n In case the recalculated value of the contract goes beyond the delegation of powers of the original ca \u2014 approval of the ca for the enhanced value May be taken<\/strong>.\"<\/p><\/aside>\n2. The eight conditions governing operation of the option clause:<\/p>\n<aside class=\"note\">\"additional demands should be available for coverage, and over-provisioning May be avoided by keeping informed the officers concerned with provisioning\/ tender evaluation for the next cycle of procurement.<\/strong>\"<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Condition<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>\"if the quantity has been increased under the option clause \u2014 the negative option clause should not be invoked thereafter, or vice versa<\/strong>.\"<\/td><\/tr><tr><td>b<\/td><td>\"in case of a decrease in the ordered quantity \u2014 it would be fair to allow the firm to supply work-in-progress or goods already put up for inspection<\/strong>.\"<\/td><\/tr><tr><td>c<\/td><td>\"there should be no declining trend in the price of the stores \u2014 as evidenced by the fact that no order has since been placed at lower rates, and no tender has been opened since the time offers have been received at lower rates \u2014 even if not finalised<\/strong>.\"<\/td><\/tr><tr><td>d<\/td><td>\"if the option clause exists during the provisioning of the next cycle, and tender evaluation in the next cycle shows an increasing price trend \u2014 the application of the option clause must be positively considered. The contract management authority must also keep an eye on delivery against the contract. If other conditions are satisfied, the option clause must be exercised<\/strong>.\"<\/td><\/tr><tr><td>e<\/td><td>\"the option clause is normally exercised after receipt of 50 (fifty) per cent quantity. If the delivery period is going to expire and other conditions are fulfilled \u2014 it can be exercised even earlier<\/strong>.\"<\/td><\/tr><tr><td>f<\/td><td>\"the option clause shall be exercised during the currency of the contract \u2014 so that the contractor has reasonable time\/ notice for executing such an increase. It can be exercised even if the quantity of the original order is completed before the original last date of delivery. If not already agreed upon, the delivery period shall be fixed for the additional quantity on the lines of the delivery period in the original order \u2014 this will satisfy the requirement of giving reasonable notice to the supplier<\/strong>.\"<\/td><\/tr><tr><td>g<\/td><td>\"this provision can also be exercised in case of PAC\/ single supplier OEM cases<\/strong>.\"<\/td><\/tr><tr><td>h<\/td><td>\"however, where parallel contracts on multiple suppliers are available \u2014 care should be taken in exercising the option clause, so that the original tender decision of splitting quantities and differential pricing is not upset or vitiated. Other things being equal, the supplier with the lower rate should first be considered for the option quantity<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h2 class=\"src-multi\">9.15.3<\/span>Scope of Services<\/span>C<\/span>NC<\/span><\/h2><div class=\"srcblock src-multi\">\n1. The performance obligation:<\/p>\n<aside class=\"note\">\"the contractor must perform\/ deliver services of the description, scope\/ quantum, performance standards and quality outlined in the contract \u2014 during the contract period specified therein.<\/strong><\/p>\n The services shall conform to performance and quality standards as stipulated in the contract \u2014 or as per the best standards in the market, where not so specified.<\/strong><\/p>\n The services shall include all incidental works\/ goods, and such other work-elements not mentioned explicitly in this contract \u2014 but that can be reasonably inferred from the contract as being required for attaining completion of the services<\/strong>.\"<\/p><\/aside>\n2. The standard of performance:<\/p>\n<aside class=\"note\">\"the contractor shall perform the services and its obligations with all due diligence, efficiency, and economy \u2014 observing sound management practices, and employ appropriate advanced technology and safe methods as per the performance standards and quality control parameters stipulated in the contract.<\/strong><\/p>\n for matters where the contract does not specify any standard \u2014 the services delivered shall conform to national\/ international standards, or generally accepted professional techniques and practices<\/strong>.\"<\/p><\/aside>\n<\/div><h2>9.15.4<\/span>Performance Standards and Quality Control C<\/span>NC<\/span> \u2014 and the 0.5% damages<\/span><\/h2>\n1. The notification of defects:<\/p>\n<aside class=\"note\">\"the Procuring Entity shall check the quality of the services and shall inspect the contractor's performance according to the contract.<\/strong><\/p>\n The Procuring Entity shall promptly notify the contractor of any identified defects \u2014 requesting the correction of the notified defect within a reasonable time<\/strong>.\"<\/p><\/aside>\n2. The cost-of-correction deduction:<\/p>\n<aside class=\"note\">\"if the contractor has not corrected the notified defect within the time stipulated in the Procuring Entity's notice \u2014 the Procuring Entity shall assess the cost of having the defect corrected.<\/strong><\/p>\n Without prejudice to any of its other remedies under this contract or applicable law \u2014 the Procuring Entity shall be legally entitled to deduct such cost from the contract's payments \u2014 together with the damages for the shortfall in performance, a sum equivalent to the percentage stipulated in the contract<\/strong>.\"<\/p><\/aside>\n3. Damages for shortfall in performance \u2014 the 0.5% Rule:<\/p>\n<aside class=\"note\">\"THE Procuring Entity Shall \u2014 Without Prejudice to Other Rights and Remedies under the Contract \u2014 Recover as Damages for the Shortfall in Performance, but not as a PENALTY:<\/em><\/p>\n0.5 (Half) per Cent (or Any Other Percentage Prescribed) of the Delivered Price (Including Elements of GST & Freight) of the Defective Services \u2014 Without Having to Prove Actual Loss INCURRED.<\/em><\/p>\nNote the phrase \"but not as a penalty\"<\/em> \u2014 this is the standard formulation for liquidated damages under Indian contract law, distinguishing a genuine pre-estimate of loss from an unenforceable penalty.<\/p><\/aside>\n<h2>9.15.5<\/span>Service Level Agreement (SLA) [NC ONLY]<\/span><\/h2>\nThe Non-Consultancy Manual carries a distinct section on the Service Level Agreement (para 9.3.3), which has no counterpart in the Consultancy Manual's scope-control section \u2014 consistent with the NC emphasis on measurable performance standards and KPIs (see Chapter 2, para 2.7.2(d)).<\/p>\n<h1>9.16 Quality Assurance and Inspections<\/span>G<\/span>fullest text<\/span><\/h1>\n<h2>9.16.1<\/span>The Three Components of Quality Assurance<\/span><\/h2>\n<aside class=\"note\">\"in the context of procurement of goods, the quality assurance (QA) process is needed to provide adequate confidence that a procured product will satisfy the standards of quality and serve the purpose for which it is being procured.<\/strong><\/p>\nQA consists of three components:<\/strong><\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Component<\/th><th>How it is done<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>defining quality standards<\/td><td>\"the description and TS define the quality standards expected from the product<\/strong>.\"<\/td><\/tr><tr><td>b<\/td><td>planning assurance of quality<\/td><td>\"by specifying the qualification criteria for the suppliers \u2014 to ensure that they have the technical, infrastructure and financial capabilities to meet the required quality standards. Specifications also lay down quality control requirements \u2014 to indicate parameters, target values, tolerances, and methods of measurement. This also involves laying down the type of inspection agency for inspection<\/strong>.\"<\/td><\/tr><tr><td>c<\/td><td>measurement of quality<\/td><td>\"done through a scheme of inspections at the contract management stage \u2014 which lays down the actual process of inspection<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>9.16.2<\/span>Inspections \u2014 Measuring Quality Standards<\/span><\/h2>\n\"the stages and modes of inspection May vary depending on:<\/strong><\/p>\n<aside class=\"note\">The nature of the goods \u00b7 the total value of the contract \u00b7 the location of the supplier \u00b7 the location of the user<\/strong>, and so on.\"<\/p><\/aside>\n<h2>9.16.3<\/span>Types of Inspection<\/span><\/h2><h3>A. Pre-dispatch Inspection<\/span><\/h3>\na) stage inspection and its purpose:<\/p>\n<aside class=\"note\">\"a pre-dispatch inspection May be conducted either during various stages of the production process (which is known as stage inspection) \u2014 or on the production of the finished products, but before the dispatch of the goods from the supplier's premises.<\/strong><\/p>\n Stage inspection May be used for highly technical goods \u2014 whose quality of the manufacturing process is likely to have a considerable effect on the final quality and durability of the goods.<\/strong><\/p>\nEven After PRE-DISPATCH Inspections, These Materials Should Be Inspected Again upon Receipt as a Matter of Abundant PRECAUTION.<\/em><\/p><\/aside>\nB) who inspects: \"inspection of the materials before dispatch shall be carried out by the inspection agency nominated in the contract, or by its representative, at the premises of the supplier \u2014 in accordance with the inspection procedure laid down and incorporated in the purchase order<\/strong>.\"<\/p>\nc) who pays for testing: \"the supplier should bear the testing charges for samples \u2014 and this should be made clear at the enquiry stage itself, to avoid claims later or affect his position in the comparative statement of offers. Any special testing involving significant financial implications shall be settled prior to placement of the order \u2014 and such costs should form part of the evaluation<\/strong>.\"<\/p>\nd)\u2013g) offshore supplies and the waiver route:<\/p>\n<ul class=\"lst\"><li>\"the Procuring Entity May depute its representative or a third-party inspection agency to the supplier's manufacturing premises to carry out\/ witness inspection and testing, performance testing \u2014 at its discretion<\/strong>\";<\/li><li>\"alternatively, the Procuring Entity shall retain an option to waive the above and accept the material based on the supplier's internal test report, guarantee and fitment certificate. In this regard, the written approval of the hod of the indenting Department should be obtained, and the reasons for it should be recorded<\/strong>\";<\/li><li>\"whenever the inspection is carried out at the supplier's manufacturing premises \u2014 an inspection on receipt of goods at the Procuring Entity shall also be carried out by an officer of the indenting Department or a third-party inspection agency<\/strong>.\"<\/li><\/ul>\nh) the inspector-hospitality prohibition \u2014 a direct instruction from DoE:<\/p>\n<aside class=\"note\">\"it has been brought to the notice of the Department of Expenditure that the contracts signed with suppliers by some of the ministries\/ departments have clauses of pre-inspection at the firm's premises \u2014 where there is a provision that the suppliers or the vendors will pay for the travel, stay, hospitality and other expenses of the inspecting officials.<\/strong><\/p>\nThis is not in Keeping with the Need to Safeguard the Independence of the Inspecting Teams. Such Provisions in Contracts Need to Be Discouraged, So That Inspections are not COMPROMISED.<\/em><\/p>\n Necessary steps May be taken to avoid such provisions in the contracts with suppliers\/ vendors strictly<\/strong>.\" (See also Chapter 3, para 3.8 \u2014 Conduct of Public Servants, Risk 1 on Hospitality.)<\/em><\/p><\/aside>\n<h3>B. Inspection of Goods on Receipt at Consignee\/ User's Site<\/span><\/h3>\n<aside class=\"note\">\"post-delivery inspection is carried out upon receipt of goods before acceptance.<\/strong><\/p>\n This should be typically done for goods that are available off-the-shelf and are bis-marked \u2014 all final goods that May be directly consumed or utilised on delivery (excluding machinery installations and so on), and for which detailed inspection [is not otherwise warranted]<\/strong>.\"<\/p><\/aside>\n<h2>9.16.4<\/span>Types of Inspection Agencies<\/span><\/h2>\n<aside class=\"note\">the governing Rule on changing the agency:<\/p>\n\"normally, inspection modalities or agencies for inspections specified in the contract should not be changed.<\/strong><\/p>\n In rare cases, when this becomes inescapable \u2014 it should be done with the approval of the ca, justifying the rare circumstances, and ensuring that no undue benefit accrues to the contractor<\/strong>.\"<\/p><\/aside>\n<h3>1.<\/span>Internal Inspection Authorities<\/span><\/h3>\n<aside class=\"note\">\"wherever technical expertise is available in-house \u2014 an internal officer of the indenting Department is nominated for inspection.<\/strong><\/p>\nTHE Consignee Should Be the Final Authority for the Acceptance of GOODS.<\/em><\/p><\/aside>\n<h3>2.<\/span>External Inspecting Authorities<\/span><\/h3>\nA) third-party inspection and the reserved right:<\/p>\n<aside class=\"note\">\"in case the Procuring Entity does not have the technical expertise \u2014 or for other relevant reasons \u2014 the inspection May also be entrusted to a third-party inspection authority.<\/strong><\/p>\nTHE Procuring Entity, However, Retains the Right to Reject the Consignment \u2014 Even if third-PARTY Inspection Authorities Have Cleared IT.<\/em><\/p><\/aside>\nb) external laboratory testing \u2014 the approved list and the five guidelines:<\/p>\n<aside class=\"note\">\"sometimes, it becomes necessary to conduct a type test, acceptance test, or special test at external laboratories \u2014 when facilities for these tests are not available in-house with the supplier, or if carrying out confirmatory tests is considered desirable before accepting the goods.<\/strong><\/p>\n The Procuring Entity should draw up a list of approved laboratories for this purpose \u2014 to which the samples drawn from the lots offered by the supplier can be sent for tests.<\/strong><\/p>\n The list should also contain approved laboratories which can be used as referral\/ appellate laboratories for retesting \u2014 when samples tested at one laboratory are decided to be re-tested<\/strong>.\"<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Guideline<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>\"external testing May invariably be done by nationally accredited or reliable laboratories \u2014 preference being given to the National Test House (NTH). For testing the samples drawn from the lots offered by the supplier \u2014 an inspection agent qualified to conduct random sampling in accordance with quality assurance requirements should make the selection of samples<\/strong>.\"<\/td><\/tr><tr><td>ii<\/td><td>\"test reports must contain the values obtained in the tests \u2014 besides fail\/ pass results. The laboratory must preserve the sample and test records for a period of three years<\/strong>.\"<\/td><\/tr><tr><td>iii<\/td><td>\"the Department should lay down a liability statement for costs expended on tests, dispatch of samples, transportation costs, test charges, and so on<\/strong>.\"<\/td><\/tr><tr><td>iv<\/td><td>\"in cases where the samples are to be tested at the supplier's cost because of the non-availability of his own testing arrangements \u2014 the responsibility of depositing the testing fees would rest with the supplier<\/strong>.\"<\/td><\/tr><tr><td>v<\/td><td>the default cost-allocation Rule and its exception \u2014 see below<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">The Default COST-ALLOCATION Rule:<\/p>\n\"normally, unless otherwise intended in the contract:<\/strong><\/p>\n\u2022 charges of routine testing prior to dispatch of materials are to be borne by the supplier; And<\/strong><\/p>\n\u2022 charges of testing of materials after receipt by the consignee are to be borne by the procuring agency.<\/strong><\/p>\n The contract should clearly State the responsibility for the cost of materials expended in tests, and charges for special tests \u2014 e.g., type tests or tests at external labs.<\/strong><\/p>\nEven Where the Procuring Entity is Responsible for Testing Charges \u2014 if the Material Fails in the Test, the Charges Shall Become the Responsibility of the SELLER.<\/em><\/p><\/aside>\n<h3>3.<\/span>Joint Inspection on Complaint<\/span><\/h3>\n<aside class=\"note\">\"in case a written complaint is received from the supplier disputing the rejection of goods by the Procuring Entity \u2014 it should be jointly investigated by a team consisting of:<\/strong><\/p>\n1. An authorised representative of the Procuring Entity;<\/strong><\/p>\n2. A senior representative of the inspecting agency who is conversant with the goods; And<\/strong><\/p>\n3. An authorised representative of the supplier.<\/strong><\/p>\nIN Case the Firm Fails to Associate with a Joint Inspection \u2014 IT Should Be Held with the PRE-INSPECTING AGENCY.<\/em><\/p><\/aside>\n<h2>9.16.5<\/span>Issue of Inspection Report<\/span><\/h2>\n\"after satisfactory inspection and tests \u2014 the acceptable goods shall be stamped, labelled<\/strong>\u2026\"<\/strong>(and the Inspection Report issued accordingly; see also the Goods Receipt and Inspection Report<\/strong> at Annexure 25 of the Goods Manual.)<\/em><\/p>\n<h2>9.16.6<\/span>Material Put Up for Inspection Towards the End of Delivery<\/span><\/h2>\nA distinct sub-section of the Goods Manual (9.4.6) governs the treatment of material offered for inspection at or near the expiry of the delivery period \u2014 read with para 9.3.11 (Handling Deliveries at the Last Moment or after Expiry of the Delivery Period), covered in Part B of this chapter.<\/p>\n<h2>9.16.7<\/span>Approval of Acceptable Deviations<\/span><\/h2>\nGoods para 9.4.7 provides for the formal approval of acceptable deviations discovered at inspection \u2014 the contract-management counterpart of the minor vs substantive deviation<\/em> test at the evaluation stage (Chapter 7 Part A, para 7.15.4).<\/p>\n<h1>9.17 Warranty Clause [G ONLY]<\/span><\/h1>\n<h2>9.17.1<\/span>The Warranty and Its Survival<\/span><\/h2>\n<aside class=\"note\">\"if included, in the case of works and capital equipment \u2014 the warranty clause in the contract warrants that goods supplied by the contractor would continue to conform to the description and quality during the specified warranty period:<\/strong><\/p>\nUSUALLY, 24 Months After Delivery, or 18 Months from the Date of Placement in Service \u2014 Whichever is SOONER.<\/em><\/p>\n Obligations of the contractor under the warranty clause shall survive \u2014 even though the goods May have been inspected, accepted, installed\/ commissioned, and paid for by the Procuring Entity, or the contract is terminated for any reason whatsoever.<\/strong><\/p>\nWhen no warranty clause is called for: \"in the procurement of goods other than capital equipment \u2014 and in the case of low-value capital goods, say up to rupees one lakh \u2014 a warranty clause is not called for<\/strong>.\"<\/p><\/aside>\n<h2>9.17.2<\/span>Notification of Defect<\/span><\/h2>\n<aside class=\"note\">\"the Procuring Entity shall promptly notify in writing to the contractor, during the period above \u2014 if the said goods\/ stores\/ articles are discovered not to conform to the description and quality, or have deteriorated, otherwise than by fair wear and tear.<\/strong><\/p>\n (The decision of the Procuring Entity in that behalf being final and conclusive.)<\/strong>\"<\/p><\/aside>\n<h2>9.17.3<\/span>The 14-Day Rectification Obligation<\/span><\/h2>\n<aside class=\"note\">\"upon receipt of such notice, the contractor shall \u2014 within 14 days (or within any other period, if stipulated in the contract) \u2014 expeditiously repair or replace the defective goods or parts thereof, free of cost, at the ultimate destination.<\/strong><\/p>\n The contractor shall take over the replaced parts\/ goods after providing their replacements \u2014 and no claim shall lie on the Procuring Entity for such replaced parts\/ goods thereafter<\/strong>.\"<\/p><\/aside>\n<h2>9.17.4<\/span>THE WARRANTY PENALTY REGIME \u2014 0.5% per week, capped at 5%<\/span><\/h2>\n<aside class=\"note\">\"A Penalty of 0.5% (Half per Cent, or as Specified in the Contract) of the Contract Value for Every Week of Delay in Response Time Beyond the Specified Time \u2014 Shall Be Recoverable from the Performance\/ Warranty GUARANTEE.<\/em><\/p>\nTHE Maximum Penalty for Warranty Failure Will Be 5% (Five per Cent) of the Contract Value During the Whole Warranty PERIOD.<\/em><\/p>\n If there is further such delay after reaching this limit \u2014 the Procuring Entity shall be entitled to encashment of the whole of performance\/ warranty guarantee bonds \u2014 besides recording the adverse performance of the contractor for future tenders<\/strong>.\"<\/p><\/aside>\n<h2>9.17.5<\/span>Warranty on Rectified\/ Replaced Goods \u2014 the no-extension rule<\/span><\/h2>\n<aside class=\"note\">\"IN Case of Any Rectification of a Defect or Replacement of Any Defective Goods During the Warranty Period \u2014 the Warranty for the Rectified\/ Replaced Goods Shall Remain Till the Original Warranty PERIOD.<\/em><\/p>\nThat is, replacement does not<\/strong> restart or extend the warranty clock.<\/em><\/p><\/aside>\n<h2>9.17.6<\/span>The 21-Day Breach Trigger<\/span><\/h2>\n<aside class=\"note\">\"IF the Contractor \u2014 Having Been Notified \u2014 Fails to Rectify\/ Replace the DEFECT(S) Within 21 Days (or Within Any Other Period, if Stipulated in the CONTRACT):<\/em><\/p>\nIT Shall Amount to a Breach of Contract for Default \u2014 and the Procuring Entity Shall Avail Any or All Remedial ACTION(S) Thereunder, Including Forfeiture of Warranty\/ Performance Bank GUARANTEE.<\/em><\/p><\/aside>\n<h1>Appendix to Chapter 9 \u2014 Part a: Points of Difference<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Chapter number and title<\/td><td>G: Ch. 9 Contract Management \u00b7 W: Ch. 7 *Execution and Monitoring of Works and Quality Assurance<\/strong> \u00b7 C: Ch. 10 <\/em>Monitoring\u2026 \u00b7 NC: Ch. 9 *Monitoring\u2026<\/strong><\/td><\/tr><tr><td>2<\/td><td>Number of heads under contract management<\/td><td>G: 8 \u00b7 W: 7 \u00b7 C and NC: 5 (with nine sub-heads under Contract Administration)<\/em><\/td><\/tr><tr><td>3<\/td><td>\"Post-contract evaluation\" as a distinct head<\/td><td>c + nc only<\/td><\/tr><tr><td>4<\/td><td>The six ways poor project management \"costs the nation\"<\/strong>(incl. \"creates a culture of acceptance of delay\" and \"monetisation of higher risks perceived by contractors\")<\/em><\/td><td>W ONLY<\/td><\/tr><tr><td>5<\/td><td>Why services contracts need more intense monitoring \u2014 \"lack of physically\/ tangibly measurable outcomes\"; Management by Exception; counterpart Project Manager<\/td><td>c + nc only<\/td><\/tr><tr><td>6<\/td><td>contract Monitoring Committee (CMC)<\/strong> \u2014 Rule 205; at least three members; CEC members may be reused; outside experts at Procuring Entity's cost; six responsibilities incl. power to levy LD<\/strong> and accept\/ reject any part<\/strong><\/td><td>c + nc only<\/td><\/tr><tr><td>7<\/td><td>Appointing another qualified consultant to assist the CMC in complex assignments<\/td><td>c + nc only<\/td><\/tr><tr><td>8<\/td><td>Aligning the interest of the stakeholders<\/strong> \u2014 incentive structure; pecuniary and non-pecuniary; naming the contractor and project-in-charge publicly at work sites<\/strong>; recognition with \"long shelf life\"<\/td><td>W ONLY<\/td><\/tr><tr><td>9<\/td><td>Principle of Proportionality<\/strong> \u2014 \"one size does not fit all\"; too many checks stifle innovation, too little control produces \"an undisciplined crisis management culture\"<\/td><td>W ONLY<\/td><\/tr><tr><td>10<\/td><td>The Contract Manager \u2014 the six alternative titles; single person for small contracts, team for large; quarterly\/ monthly monitoring by the Works Committee with status report to the Secretary<\/td><td>W ONLY<\/td><\/tr><tr><td>11<\/td><td>The fourteen-point monthly MIS Progress Report<\/strong> \u2014 incl. named manpower statement<\/strong>, colour progress photographs, hold-ups and disputes to be highlighted<\/td><td>W ONLY<\/td><\/tr><tr><td>12<\/td><td>The photograph\/ video system as \"a permanent record of the project for posterity\u2026 in case needed for litigation or enquiry\/ investigation\"<\/td><td>W ONLY<\/td><\/tr><tr><td>13<\/td><td>Project management software named \u2014 MS PPM and Oracle Primavera P6; PMI-certified contract managers<\/td><td>W ONLY<\/td><\/tr><tr><td>14<\/td><td>The six prerequisites to commencement<\/strong> \u2014 land acquisition, permits (with the delay-claim warning), quarries and borrow areas, safety at work site, advance payments, insurances<\/td><td>W ONLY<\/td><\/tr><tr><td>15<\/td><td>\"All or most pre-requisites shall be fulfilled before award of the LoA\"<\/td><td>W ONLY<\/td><\/tr><tr><td>16<\/td><td>Commencement of Work<\/strong> \u2014 Work Order within 2 weeks but not later than 6 weeks from LoA<\/strong>; the three contractor submissions (Work Program, Method Statement, QA Plan); possession of site<\/td><td>W ONLY<\/td><\/tr><tr><td>17<\/td><td>Mobilisation as a distinct pre-construction phase<\/td><td>W ONLY<\/td><\/tr><tr><td>18<\/td><td>Review of Inception Phase<\/td><td>c + nc only<\/td><\/tr><tr><td>19<\/td><td>Incentives for Excellence in Contract Execution<\/td><td>c + nc only<\/td><\/tr><tr><td>20<\/td><td>Safeguards for handing over materials \u2014 the Rs 1 lakh BG waiver and indemnity bond alternative; certificate on return of ID cards and gate passes; payment for electricity\/ water\/ crane<\/td><td>Common \u2014 W text fullest<\/td><\/tr><tr><td>21<\/td><td>ESHS\/ SHE<\/strong> \u2014 mandatory skills in Bid Documents; site safety engineer mandatory; frequent SHE audits; the hazardous-substances list; the public-protection list<\/td><td>W ONLY<\/td><\/tr><tr><td>22<\/td><td>Quantity tolerance \u2014 5% of contract value or Rs 5 lakh whichever is less; not applicable to indivisible items or machinery and plant<\/td><td>G ONLY<\/td><\/tr><tr><td>23<\/td><td>The eight conditions governing the Option Clause<\/strong> \u2014 no reverse invocation; exercise normally after 50% receipt; no declining price trend; must be exercised during currency; care with parallel contracts<\/td><td>G ONLY<\/td><\/tr><tr><td>24<\/td><td>Scope of Services \u2014 \"such other work-elements not mentioned explicitly but that can be reasonably inferred\"<\/td><td>c + nc only<\/td><\/tr><tr><td>25<\/td><td>Damages for shortfall in performance \u2014 0.5% of delivered price \"but not as a penalty\", without having to prove actual loss<\/td><td>c + nc only<\/td><\/tr><tr><td>26<\/td><td>Service Level Agreement as a distinct section<\/td><td>nc only<\/td><\/tr><tr><td>27<\/td><td>The three components of Quality Assurance (defining, planning, measuring)<\/td><td>G ONLY<\/td><\/tr><tr><td>28<\/td><td>Stage inspection; \"even after pre-dispatch inspections, materials should be inspected again upon receipt as a matter of abundant precaution\"<\/td><td>G ONLY<\/td><\/tr><tr><td>29<\/td><td>The prohibition on suppliers paying for inspectors' travel, stay and hospitality<\/td><td>G ONLY<\/td><\/tr><tr><td>30<\/td><td>\"The consignee should be the final authority for the acceptance of goods\"<\/td><td>G ONLY<\/td><\/tr><tr><td>31<\/td><td>\"The Procuring Entity retains the right to reject the consignment even if third-party inspection authorities have cleared it\"<\/td><td>G ONLY<\/td><\/tr><tr><td>32<\/td><td>External testing \u2014 preference to the National Test House; test reports must contain values not just fail\/pass; laboratory must preserve sample and records for three YEARS; referral\/ appellate laboratories<\/td><td>G ONLY<\/td><\/tr><tr><td>33<\/td><td>The default testing-cost rule (supplier pre-dispatch, procuring agency post-receipt) \u2014 and the exception that if the material FAILS, the charges become the seller's<\/td><td>G ONLY<\/td><\/tr><tr><td>34<\/td><td>Joint Inspection on Complaint \u2014 the three-member team; if the firm fails to associate, it is held with the pre-inspecting agency<\/td><td>G ONLY<\/td><\/tr><tr><td>35<\/td><td>Warranty Clause \u2014 24 months after delivery or 18 months from placement in service whichever sooner; obligations survive acceptance and even termination; 14-day rectification; 0.5% per week capped at 5%; replacement warranty runs only to the ORIGINAL warranty period; 21-day failure = breach<\/td><td>G ONLY<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 9 \u2014 part a<\/p>\n<aside class=\"note\">Next:<\/strong>Chapter 9 \u2014 part b: Time control, cost control, logistics and closure<\/strong> \u2014 Delivery Period \u00b7 Delays in Delivery\/ Execution \u00b7 Extension of Delivery and Extension of Time (EOT)<\/strong> \u00b7 Performance Notice \u00b7 Force Majeure<\/strong> \u00b7 Denial Clause<\/strong> \u00b7 Liquidated Damages, quantum and waiver<\/strong> \u00b7 Handling deliveries after expiry of the delivery period \u00b7 Compensation Events<\/strong> \u00b7 Time at Large<\/strong> \u00b7 Prices, Taxes and Statutory Variation \u00b7 Passing of bills and Payments \u00b7 Logistics: Transportation, Transfer of Title, Insurance, Receipt of Consignment, Storage and Issue [G only]<\/strong> \u00b7 Closure of Contract and its four reconciliations W<\/span> \u00b7 <\/strong>Concluding the Assignment and Post-Contract Review C<\/span>NC<\/span>.<\/p><\/aside>Part II<\/span>Time Control, Cost Control, Logistics and Closure<\/em><\/p>\nMerging: Goods Ch. 9<\/strong> (paras 9.3, 9.5, 9.6, 9.7.6) \u00b7 Works Ch. 7<\/strong> (paras 7.4, 7.5, 7.6) \u00b7 Consultancy Ch. 10<\/strong> (paras 10.4, 10.5, 10.6) \u00b7 Non-Consultancy Ch. 9<\/strong> (paras 9.4, 9.5, 9.6)<\/em><\/p><h2>Concordance for Chapter 9 \u2014 Part B<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>G<\/th><th>W<\/th><th>C<\/th><th>NC<\/th><\/tr><\/thead><tbody><tr><td>9.18<\/td><td>Delivery Period; Terms of Delivery<\/td><td>9.3.1, 9.3.2<\/td><td>7.4.1, 7.4.2<\/td><td> \u2014 <\/td><td>9.4.1<\/td><\/tr><tr><td>9.19<\/td><td>Delays in Delivery\/ Execution<\/td><td>9.3.3<\/td><td>7.4.5<\/td><td>10.4.1<\/td><td>9.4.2<\/td><\/tr><tr><td>9.20<\/td><td>Extension of Delivery \/ Extension of Time (EOT)<\/td><td>9.3.4<\/td><td>7.4.6<\/td><td>10.4.2<\/td><td>9.4.3<\/td><\/tr><tr><td>9.21<\/td><td>Performance Notice<\/td><td>9.3.5<\/td><td>7.4.9<\/td><td>10.4.3<\/td><td>9.4.4<\/td><\/tr><tr><td>9.22<\/td><td>Force Majeure (FM)<\/td><td>9.3.6<\/td><td>7.4.4<\/td><td>10.4.9<\/td><td>9.4.10<\/td><\/tr><tr><td>9.23<\/td><td>Denial Clause (DC)<\/td><td>9.3.7<\/td><td>7.4.8<\/td><td>10.4.4<\/td><td>9.4.5<\/td><\/tr><tr><td>9.24<\/td><td>Liquidated Damages, Quantum and Waiver<\/td><td>9.3.8\u20139.3.10<\/td><td>7.4.7<\/td><td>10.4.5\u201310.4.8<\/td><td>9.4.6\u20139.4.9<\/td><\/tr><tr><td>9.25<\/td><td>Handling Deliveries at the Last Moment\/ After Expiry<\/td><td>9.3.11<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.26<\/td><td>Compensation Events<\/td><td> \u2014 <\/td><td>7.4.10<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.27<\/td><td>Time At Large<\/td><td> \u2014 <\/td><td>7.4.11<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.28<\/td><td>Cost Control \u2014 Prices, Taxes and Payments<\/td><td>9.5<\/td><td>7.5<\/td><td>10.5<\/td><td>9.5<\/td><\/tr><tr><td>9.29<\/td><td>Electronic Bill (e-Bill) Processing System<\/td><td> \u2014 <\/td><td>7.5.8<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.30<\/td><td>Logistics: Transportation, Receiving, Storage and Issue<\/td><td>9.6<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.31<\/td><td>Closure of Contract<\/td><td>9.7.6<\/td><td>7.6<\/td><td>10.6<\/td><td>9.6<\/td><\/tr><tr><td>9.32<\/td><td>Concluding the Assignment and Post-Contract Review<\/td><td> \u2014 <\/td><td> \u2014 <\/td><td>10.6<\/td><td>9.6<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>9.18 Delivery Period and Terms of Delivery<\/span><\/h1>\n<h2 class=\"src-G\">9.18.1<\/span>The Delivery Period Must Be Specific<\/span>G<\/span><\/h2><div class=\"srcblock src-G\">\n<aside class=\"note\">\"the period FOR delivery of the ordered goods, and completion of any allied service(s) thereof \u2014 such as installation and commissioning of the equipment, operators' training, and so on \u2014 are to be properly specified in the contract with definite dates.<\/strong><\/p>\nAND These Shall Be Deemed to Be the Essence of the CONTRACT.<\/em><\/p>\n The delivery period stipulated in contracts should be specific and practical. Vague and ambiguous terms should be avoided<\/strong>.\"<\/p><\/aside>\n<\/div><h2 class=\"src-G\">9.18.2<\/span>Terms of Delivery Determine When Title Passes<\/span>G<\/span><\/h2><div class=\"srcblock src-G\">\n<aside class=\"note\">\"terms of delivery (for, FOB, CIF, CFR, and so on), inter alia, determine the delivery point of the ordered goods \u2014 from where the purchaser is to receive\/ collect the goods.<\/strong><\/p>\nIT Also Decides the Legally Critical Issue of When the 'Titles of the Goods' Have Passed to the PURCHASER.<\/em><\/p>\n The delivery period is to be read in conjunction with the terms of delivery. Therefore, the delivery is taken to have been made at the time when goods reach the delivery point as per the delivery terms<\/strong>.\"<\/p>\n(See Chapter 6, para 6.17 \u2014 Incoterms 2020<\/strong> \u2014 for the eleven delivery terms and the title-of-goods principle.)<\/em><\/p><\/aside>\n<\/div><h2 class=\"src-W\">9.18.3<\/span>Contract Effective Date and Work Program<\/span>W<\/span><\/h2><div class=\"srcblock src-W\">\nThe Works Manual replaces \"delivery period\" with Contract Effective Date (7.4.1) and the Work Program (7.4.2) \u2014 the latter being the contractor's submission approved by the Contract Manager at the commencement stage (see Part A, para 9.6).<\/p>\n<\/div><h2 class=\"src-NC\">9.18.4<\/span>Contract Period and Options<\/span>NC<\/span><\/h2><div class=\"srcblock src-NC\">\nThe Non-Consultancy Manual carries a distinct opening section on Contract Period and Options (9.4.1) \u2014 governing the initial contract term and the exercise of extension options in service contracts.<\/p>\n<h1>9.19 Delays in Delivery \/ Execution<\/span><\/h1>\n<\/div><h2>9.19.1<\/span>The Governing Principle \u2014 Time is the Essence<\/span><\/h2>\n<aside class=\"note\">\"suppliers shall be required to adhere to the delivery Schedule \u2014 including any instalment thereof, or incidental work\/ services (e.g., installation, commissioning, operator training) \u2014 specified in the purchase order (or as extended).<\/strong><\/p>\nAND, if There is a Delay in Supplies, IT Amounts to Breach of Contract \u2014 Since 'Time is the Essence of the CONTRACT'.<\/em><\/p><\/aside>\nThe two remedies: The Procuring Entity May, without prejudice to his other rights<\/strong>:<\/p>\na) recover from the contractor Liquidated Damages<\/strong>; or<\/p>\nb) treat the delay as a breach of contract and avail all the remedies therein<\/strong>.<\/p>\n<aside class=\"note\">The caution on using (b): \"although it is in the purchaser's interest to resort to this provision only as a last resort \u2014 in case of inordinate delays<\/strong>.\"<\/p><\/aside>\nC<\/span> adds the notification duty: \"the consultant should notify the Procuring Entity and explain the causes of such delays<\/strong>.\"<\/p>\n<h2>9.19.2<\/span>INORDINATE DELAYS \u2014 the 25% test and its consequence<\/span><\/h2>\n<aside class=\"note\">\" Inexcusable Delays of More Than one-FOURTH (25%) of the Total Completion Period Shall Be Treated as Inordinate DELAYS.<\/em><\/p>\n Such inordinate delays May be treated as a breach of contract \u2014 and shall be noted as deficient performance and held against the contractor in future tenders.<\/strong><\/p>\n A show-cause notice shall be issued to the contractor before declaring it a deficient performance.<\/strong><\/p>\nIN Case the Procuring Entity Decides to Allow Performance of Contract After Inordinate Delays \u2014 the Maximum Limit on LD Shall Be 10% (Instead of 5%) of the Total Contract VALUE.<\/em><\/p><\/aside>\n<h2>9.19.3<\/span>Delay for Which the Supplier is NOT Responsible \u2014 the four cases<\/span><\/h2>\n\"in cases where there is a delay for which the supplier is not responsible \u2014 the delivery period needs to be re-fixed without imposing any penalty on the supplier \u2014 i.e., without LD and without a Denial Clause.<\/strong><\/p>\nNormally, in the following circumstances, the supplier May not be considered responsible for the delay<\/strong>:\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Case<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>cases where the supplier is dependent on the approval of the pre-production sample \u2014 and the delay occurs in approving the sample, though submitted by the supplier in time<\/strong><\/td><\/tr><tr><td>ii<\/td><td>where extension is granted on account of some omission on the part of the purchaser, which affects the due performance of the contract by the supplier<\/strong><\/td><\/tr><tr><td>iii<\/td><td>cases where the purchaser controls the entire production Schedule of the supplier<\/strong><\/td><\/tr><tr><td>iv<\/td><td>cases where production and\/ or delivery has been affected by force Majeure, or statutory change, or specific executive instructions issued by govt.<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">The shared-fault Rule: \"there May be delays for which both buyer and supplier May be responsible to a different extent. In such cases, the levy of LD and Denial Clause May be decided on merits<\/strong>.\"<\/p>\nW<\/span> variant: *\"\u2026<\/strong>the procuring entity, with the approval of CA and concurrence of finance, may decide a lower quantum of LD, and consider waiver of Denial Clause on the merit of the case.\"*<\/p><\/aside>\n<h1>9.20 Extension of Delivery \/ Extension of Time (EOT)<\/span><\/h1>\n<h2 class=\"src-W\">9.20.1<\/span>THE TWO DISTINCT CONCEPTS \u2014 Re-fixation vs Extension<\/span>W<\/span>the clearest statement<\/span><\/h2><div class=\"srcblock src-W\">\n<aside class=\"note\">This Distinction is the Single Most Important Point in this Section<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th><\/th><th>RE-FIXATION OF DELIVERY<\/th><th>EXTENSION OF TIME (EOT)<\/th><\/tr><\/thead><tbody><tr><td>When<\/td><td>the delay is not attributable to the contractor<\/strong> (or in case of Force Majeure)<\/td><td>the delay is attributable (fully or partly) to the contractor<\/strong><\/td><\/tr><tr><td>What it is<\/td><td>\"a fresh completion period, treated like the original completion period \u2014 which is arrived at by recasting the original contractual completion period, after taking care of the lost period for which the contractor was not responsible<\/strong>\"<\/td><td>the completion Schedule is extended<\/strong><\/td><\/tr><tr><td>LD<\/td><td>without LD<\/strong><\/td><td>with LD<\/strong><\/td><\/tr><tr><td>Denial Clause<\/td><td>Without the denial clause<\/strong><\/td><td>With the denial clause<\/strong><\/td><\/tr><tr><td>Approval<\/td><td>with the approval of Competent Authority<\/strong><\/td><td>(as above)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h2>9.20.2<\/span>The Contractor's Duty to Give Notice<\/span><\/h2>\n<aside class=\"note\">\"if at any time during the currency of the contract, the contractor encounters conditions hindering the timely delivery\/ completion \u2014 he shall promptly inform the concerned officer in writing.<\/strong><\/p>\n He should mention its likely duration, and request an extension of the Schedule accordingly<\/strong>.\"<\/p>\nW<\/span> \u2014 the \"do not leave it to the end\" Rule:<\/p>\n\" Extension of time (EOT) must not be left to the end; It should be dealt with promptly during the progress of the contract \u2014 and for ongoing critical delay, interim EOT May be awarded.<\/strong><\/p>\n After the final stage of completion is reached (final taking-over certificate issued) \u2014 EOT and LD May be reviewed, if required<\/strong>.\"<\/p><\/aside>\n<h2 class=\"src-G\">9.20.3<\/span>The Two Pre-conditions for Granting Extension<\/span>G<\/span><\/h2><div class=\"srcblock src-G\">\non approval from the ca, the Procuring Entity May agree to extend the delivery Schedule \u2014 with or without LD, and with or without the Denial Clause<\/strong> \u2014 provided:<\/p>\nA) the earlier-delivery test: \"that a higher rate in the original tender was not accepted against other lower quotations in consideration of the earlier delivery<\/strong>.\"<\/p>\nb) the falling-price test: \"in the case of fixed price contracts \u2014 there is no falling trend in prices for this item, as evidenced by the fact that, in the intervening period, neither orders have been placed at rates lower than this contract, nor any tender has been opened where such rates have been received \u2014 even though the tender is not yet decided.<\/strong><\/p>\n<aside class=\"note\"> In cases of certain raw material supplies where prices are linked to the PVC \u2014 extension May be granted even in case of a falling trend in price indices, since the price variation mechanism protects the purchaser's interests. However, in such cases it should be ensured that extensions are done with the Denial Clause<\/strong>.\"<\/p><\/aside>\n<\/div><h2>9.20.4<\/span>Extension Amounts to an Amendment \u2014 and Requires Consent<\/span><\/h2>\n<aside class=\"note\">\"EXTENSION of the Delivery Date Amounts to an Amendment of the Contract. Such an Extension Can Only Be Done with the Consent of Both PARTIES.<\/em><\/p>\nNO Extension of the Delivery Date is to Be Granted Suo Motu \u2014 Unless the Supplier Specifically Asks for IT.<\/em><\/p>\n However, in a few cases it May be necessary to grant an extension suo motu in the interest of the administration. In such cases, it is legally necessary to obtain clear acceptance of the extension letter from the supplier<\/strong>.\"<\/p><\/aside>\n<h2>9.20.5<\/span>EXTENSION AFTER EXPIRY \u2014 Section 63 of the Indian Contract Act [W ONLY]<\/span><\/h2>\n<aside class=\"note\">\" The power to extend the time for performance under section 63 of the Indian Contract Act is not inherently limited to extensions granted before the original deadline. It can be exercised even after the stipulated time has passed \u2014 provided there is consent from both parties.<\/strong><\/p>\n The contract does not automatically terminate upon the expiry of the initial delivery date \u2014 if there is a shared intention to continue the contractual relationship and fulfil the obligations, albeit under a revised timeline.<\/strong><\/p>\nTherefore, such extension\/ re-fixation of time can be done even after expiry of the original period \u2014 provided consent of the contractor is obtained.<\/strong><\/p>\nHOWEVER, IT is Prudent to Formalise the Extension Before the Original Delivery Period Expires \u2014 to Avoid Any Arguments About the CONTRACT'S Validity, or of Extension of Time After the Initial DEADLINE.<\/em><\/p><\/aside>\n<h2>9.20.6<\/span>THE CORRESPONDENCE TRAP \u2014 and the mandatory closing sentence<\/span><\/h2>\n<aside class=\"note\">\" No Correspondence Should Be Entered into with the Supplier After the Expiry of the Contract Delivery Period, or Towards the End of IT \u2014 Which Has the Legal Effect of Condoning the Delay\/ Breach of CONTRACT.<\/em><\/p>\nWhen it is necessary to obtain certain information regarding past supplies \u2014 it should be made clear that calling for such information:<\/strong><\/p>\n\u2022 is not intended to keep the contract alive;<\/strong><\/p>\n\u2022 that it does not waive the breach; And<\/strong><\/p>\n\u2022 that it is without prejudice to the rights and remedies available to the purchaser under the terms of the contract.<\/strong><\/p>\nThe Mandatory Last Line of Such a Communication:<\/p>\n\"This letter is issued without any prejudice to Procuring Entity's rights and remedies under the terms and conditions of the subject contract, and without any commitment or obligation.\"<\/strong><\/p><\/aside>\n<h2>9.20.7<\/span>THE LD WARNING TRAP \u2014 why \"without prejudice\" is NOT enough<\/span><\/h2>\n<aside class=\"note\">\"when it is decided to extend the delivery period subject to recovery of LD for delay in supplies \u2014 contractors must be given a warning to this effect in writing at the time of granting extensions.<\/strong><\/p>\n it is not correct to grant extensions without any mention of the LD \u2014 if it is proposed to recover such charges eventually.<\/strong><\/p>\nIT is Also not Correct to Grant an Extension of the Delivery Period by Merely Stating That the Extension is Granted \"without Prejudice to the Rights of the Purchaser under the Terms and Conditions of the CONTRACT\" \u2014 <\/em><\/p>\n Because this would mean that all the options given in the conditions of the contract would be available to the purchaser on expiry of the extended delivery period \u2014 and would not amount to exercise of the option to recover LD.<\/strong><\/p>\n To take care of the complex legalities brought out above \u2014 an extension of the delivery period, when granted, should only be done in writing in the prescribed [legally vetted] format<\/strong>.\"<\/p>\nW<\/span> adds: *\"<\/strong>Organisations may put in place a graded authority structure, whereby extension of time for [different durations is approved at different levels].\"*<\/p><\/aside>\n<h1>9.21 Performance Notice (Notice-cum-Extension Letter)<\/span><\/h1>\n<aside class=\"note\">The Situation IT Addresses:<\/p>\n\"a situation May arise where:<\/strong><\/p>\n\u2022 the supply\/ services\/ work have not been completed within the stipulated period, due to negligence\/ fault of the supplier;<\/strong><\/p>\n\u2022 however, the supplier has not made any request for an extension of the delivery period;<\/strong><\/p>\n\u2022 but the purchaser still requires the contracted goods\/ services; And<\/strong><\/p>\n\u2022 the purchaser does not want to terminate the contract at that stage.<\/strong><\/p>\nIN Such a Case, a Performance Notice \u2014 Also Known as a NOTICE-CUM-EXTENSION Letter \u2014 May Be Issued to the Supplier: by Suitably Extending the Delivery Date, and by Imposing LD with Denial CLAUSES.<\/em><\/p>\n The supplier's acceptance of the performance notice, and further action thereof, should also be processed in the same manner as an ordinary extension<\/strong>.\"<\/p><\/aside>\n<h1>9.22 Force Majeure Clause (FM)<\/span><\/h1>\n<h2>9.22.1<\/span>The Definition and Its Exclusions<\/span><\/h2>\n<aside class=\"note\">\"a Force Majeure (FM) means extraordinary events or circumstances beyond human control \u2014 such as:<\/strong><\/p>\nAn event described as an Act of god (like a natural calamity) \u00b7 or events such as a war, strike, riots, crimes.<\/strong><\/p>\nBut not including:<\/em><\/p>\n\u2022 negligence or wrong-doing;<\/strong><\/p>\n\u2022 predictable\/ seasonal rain; And<\/strong><\/p>\n\u2022 any other events specifically excluded in the clause.<\/strong><\/p><\/aside>\n<h2>9.22.2<\/span>What the FM Clause Does \u2014 suspension, NOT excuse<\/span><\/h2>\n<aside class=\"note\">\"AN FM Clause in the Contract Frees Both Parties from Contractual Liability and Obligation \u2014 When Prevented by Such Events from Fulfilling Their Obligations under the CONTRACT.<\/em><\/p>\nAN FM Clause Does not Entirely Excuse a PARTY'S NON-PERFORMANCE \u2014 but Only Suspends IT for the Duration of the FM.<\/em><\/p><\/aside>\n<h2>9.22.3<\/span>The Notice Requirement \u2014 14 days, and no ex post facto claim<\/span><\/h2>\n<aside class=\"note\">\"THE Firm Must Give Notice of FM Within a Reasonable Time as the Conditions Permit \u2014 Say, not Later Than 14 Days After its OCCURRENCE.<\/em><\/p>\nAnd it cannot Be Claimed Ex Post FACTO.<\/em><\/p><\/aside>\nFM affecting the purchaser: \"there May be an FM situation affecting the purchase organisation only. In such a situation, the purchase organisation is to communicate with the supplier along similar lines as above for further necessary action<\/strong>.\"<\/p>\n<h2>9.22.4<\/span>the 90-DAY Termination Option<\/span><\/h2>\n<aside class=\"note\">\"IF the Performance \u2014 in Whole or in Part, or Any Obligation under this Contract \u2014 is Prevented or Delayed by Any Reason of FM for a Period Exceeding 90 (Ninety) DAYS:<\/em><\/p>\nEITHER Party May, at its Option, Seek to Terminate the Contract Without Any Financial Repercussion on Either SIDE.<\/em><\/p><\/aside>\n<h2>9.22.5<\/span>The Immunity from Punitive Provisions<\/span><\/h2>\n<aside class=\"note\">\"notwithstanding the punitive provisions contained in the contract for delay or breach of contract \u2014 the supplier would not be liable for imposition of any such sanction, so long as the delay and\/ or failure of the supplier in fulfilling its obligations under the contract is the result of an event covered in the FM clause<\/strong>.\"<\/p><\/aside>\n<h1>9.23 Denial Clause (DC)<\/span><\/h1>\n<h2>9.23.1<\/span>What It Is and Why It Exists<\/span><\/h2>\n<aside class=\"note\">\"the buyer should protect himself against extra expenditure during the extended period \u2014 by stipulating a Denial Clause (over and above the levy of LD) in the letter informing the supplier of the extension of the delivery period.<\/strong><\/p><\/aside>\n<h2>9.23.2<\/span>the Asymmetric Operation of the Denial Clause<\/span><\/h2>\n<aside class=\"note\">\"IN the Denial Clause \u2014 Wherever Delay in Delivery is Due to a Default by the SELLER:<\/em><\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Direction<\/th><th>Who bears\/ benefits<\/th><\/tr><\/thead><tbody><tr><td>ANY increase<\/em> In statutory duties, and\/ or upward rise<\/em> In prices due to the PVC clause, and\/ or any adverse<\/em> Fluctuation in foreign exchange<\/td><td>are to be borne by the seller<\/strong> During the extended delivery period<\/td><\/tr><\/tbody><\/table><\/div><\/aside>\n| ANY downward<\/em> Revision in statutory duties, PVC, and foreign exchange rate | the purchaser reserves his right to get the benefit<\/strong> During such period |<\/p>\n<aside class=\"note\">The Consequence, Stated in One Sentence:<\/p>\n\"Thus, PVC, other variations, and foreign exchange clauses \u2014 in such cases \u2014 operate only during the original delivery period.\"<\/strong><\/p>\n(Compare Chapter 6, para 6.14.3-4-vi and para 6.15-3, where the same asymmetric rule is stated for the PVC and for ERV.)<\/em><\/p><\/aside>\n<h1>9.24 Liquidated Damages (LD) \u2014 Concept, Quantum and Waiver<\/span><\/h1>\n<h2>9.24.1<\/span>The Legal Concept<\/span><\/h2>\n<aside class=\"note\">\"COMPENSATION of Loss on Account of Late Delivery \u2014 Actually Incurred as Well as Notional \u2014 Where Loss is PRE-ESTIMATED and Mutually Agreed to \u2014 is Termed as Liquidated Damages (LD).<\/em><\/p>\nTHE Law Allows Recovery of PRE-ESTIMATED Loss \u2014 Provided Such a Term is Included in the Contract \u2014 and There is No Need to Establish Actual Loss Due to Late SUPPLY.<\/em><\/p>\n However, it would strengthen the Procuring Entity's rights if it were established and kept on record that inconvenience and loss have been caused due to the delay in supplies \u2014 though the loss cannot be exactly quantified \u2014 and hence Liquidated Damages are applicable as a genuine pre-estimate of the loss<\/strong>.\"<\/p><\/aside>\n<h2>9.24.2<\/span>Quantum of LD \u2014 the Rates Compared<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Manual<\/th><th>Rate per week of delay<\/th><th>Maximum<\/th><\/tr><\/thead><tbody><tr><td>G<\/span> GOODS<\/td><td>0.5 (half) per cent of the delivered price (including elements of GST, freight and variations)<\/em> of the delayed Goods and\/ or incidental Works\/ Services \u2014 for each week of delay or part thereof, until actual delivery or performance<\/td><td>5% of the total contract value<\/strong>(or any other percentage if prescribed)<\/em> 10% in case of INORDINATE DELAY<\/strong><\/td><\/tr><tr><td>W<\/span> WORKS \u2014 repair works costing UP TO Rs. 20 LAKH<\/td><td>1 PER CENT (1%) of the contract value<\/strong>(that includes variations, taxes and duties)<\/em>per week<\/strong><\/td><td>5% of contract value 10% in case of inordinate delays<\/td><\/tr><tr><td>W<\/span> Works \u2014 all other works<\/td><td>0.5 PER CENT (0.5%) of the contract value per week of delay<\/td><td>5% of contract value 10% in case of inordinate delays<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Note the works split: repair works up to Rs 20 lakh attract DOUBLE the weekly rate (1% instead of 0.5%).<\/p><\/aside>\n<h2>9.24.3<\/span>LD on the VARIED Price \u2014 and the no-supply rule<\/span><\/h2>\n<aside class=\"note\">\"in contracts governed by any variation (PVC, ERV or statutory variations) \u2014 lds (if a percentage of the price) will be applicable on the price as varied by the operation of the PVC.<\/strong><\/p>\nLds Accrue Only in Case of Delayed SUPPLIES.<\/em><\/p>\n Where \u2014 or as far as \u2014 no supplies have been made under a contract, upon cancellation, recovery of only the loss occasioned thereby can be made \u2014 notwithstanding the fact that, prior to the cancellation, one or more extensions of the delivery period with reservation of the right to LD are granted.<\/strong><\/p><\/aside>\n<h2>9.24.4<\/span>the GST Treatment of LD<\/span><\/h2>\n<aside class=\"note\">\"FOR Purpose of GST, Liquidated Damages Should Be Shown as Deductions on the Invoice Value by the CONTRACTOR.<\/em><\/p><\/aside>\n<h2 class=\"src-W\">9.24.5<\/span>Incentives \/ Bonus for Early Completion<\/span>W<\/span><\/h2><div class=\"srcblock src-W\">\n<aside class=\"note\">\"procuring entities are encouraged to explore strategies (such as offering bonuses, improved ratings, or recognition) that May incentivise contractors, service providers and consultants for early, timely, and quality completion of projects.<\/strong><\/p>\n Provision of incentives for completion of work before Schedule should be after careful assessment of tangible benefits therefrom \u2014 and disclosed in the tender documents in clear monetary terms.<\/strong><\/p>\nThe Illustrative Bonus:<\/p>\n\"Incentives\/ bonus \u2014 e.g., one per cent of the contract value per month, subject to a maximum of five per cent of contract value \u2014 for early completion, and penalties for delay, should be built into the contract very judiciously.\"<\/strong><\/p><\/aside>\nthe seven-day reporting condition: \"to avail of the incentive clause, it shall be mandatory on the part of the contractor to report the actual date of completion to the concerned Contract Manager.<\/strong><\/p>\n<aside class=\"note\"> The Contract Manager shall report the actual date of completion of the works as soon as possible, through fax or email \u2014 so that the report is received within seven days of such completion by the concerned ca<\/strong>.\"<\/p><\/aside>\n<\/div><h2>9.24.6<\/span>WAIVER OF LD \u2014 the three rules<\/span><\/h2>\n1. The general Rule:<\/p>\n<aside class=\"note\">\"THERE Should Normally Be No System of Waiver of Lds for Delayed Supplies in Supply Contracts \u2014 and IT May Strictly Be an Exception Rather Than a RULE.<\/em><\/p>\n for an extension of the delivery date with waiver of LD \u2014 approval of the ca with consultation of associated finance May be taken, and justifications recorded<\/strong>.\"<\/p><\/aside>\n2. GOVERNMENT ESTABLISHMENTS \u2014 the special dispensation:<\/p>\n<aside class=\"note\">\"GOVERNMENT Establishments\/ Departments \u2014 as Distinct from Psus \u2014 Which Execute Contract WORK:<\/em><\/p>\n\u2022 should not be dealt with as ordinary contractors;<\/strong><\/p>\n\u2022 should not generally be penalised for late delivery; And<\/strong><\/p>\n\u2022 claims for loss on risk-purchase should not be enforced against them.<\/strong><\/p>\n Serious cases of defaults should, however, be brought to the notice of the Head of Department or the Government Department concerned<\/strong>.\"<\/p><\/aside>\n3. Development\/ indigenisation contracts:<\/p>\n<aside class=\"note\">\"IN the Case of Development\/ Indigenisation Contracts \u2014 Lds are not LEVIED.<\/em><\/p><\/aside>\n<h1>9.25 Handling Deliveries at the Last Moment or After the Expiry of the Delivery Period [G ONLY]<\/span><\/h1>\n<h2>9.25.1<\/span>the VOLUNTARY-ABROGATION Trap<\/span><\/h2>\n<aside class=\"note\">\"AS per Law \u2014 if Stores are Accepted After the Expiry of the Delivery Date of a Particular Instalment, Without an Extension in the Delivery Period Having Been Given \u2014 Even Duly Reserving Our Rights to Levy LD:<\/em><\/p>\nIT Amounts to Voluntary Abrogation of Our Legal Rights under the Contract to Claim Lds or Other REMEDIES.<\/em><\/p><\/aside>\n<h2>9.25.2<\/span>LOCAL SUPPLIES \u2014 the Franking Clause<\/span><\/h2>\n\"if the contractor makes supplies locally after the expiry of the delivery period \u2014 the supplies May be provisionally retained under a franking clause reserving right \u2014 and the contractor May be asked to obtain an extension of the delivery period from an authorised officer, with or without any LD\/ Denial Clause<\/strong>.\"<\/p>\n<aside class=\"note\">The franking clause \u2014 reproduced in full:<\/p>\n\"Please note that materials have been supplied after the expiry of the contracted delivery date, and its provisional retention does not acquiesce or condone the late delivery. It does not intend or amount to an extension of the delivery period or keeping the contract alive. You May apply for an extension of delivery date from the Procuring Entity. The goods are being retained without prejudice to the rights of the Government of India under the terms and conditions of the contract.\"<\/strong><\/p><\/aside>\n<h2>9.25.3<\/span>Supplies from Outside Contractors \u2014 the consignee's intimation<\/span><\/h2>\n<aside class=\"note\">\"as regards supplies coming from outside contractors \u2014 if the contractor dispatches the stores after the expiry of the delivery period \u2014 the consignee should, after the receipt of the railway receipt, lorry receipt, goods consignment note or airway bill, send an intimation to the contractor stating:<\/strong><\/p>\n\u2022 that the action taken by him in dispatching the goods after expiry of the delivery date is at his own risk and responsibility;<\/strong><\/p>\n\u2022 that the consignee is not liable for any demurrage, wharfage and deterioration of goods at the destination station; And<\/strong><\/p>\n\u2022 that, in his interest, the contractor should get an extension of the delivery period from the purchasers.<\/strong><\/p>\n A copy of the communication sent to the contractor should also be sent to the purchaser<\/strong>.\"<\/p><\/aside>\n<h2>9.25.4<\/span>IMPORTS \u2014 and the Letter of Credit safeguard<\/span><\/h2>\n<aside class=\"note\">\"IN the Case of Imports, the Contractor Must not Dispatch the Consignment After the Expiry of the Delivery Period, Without Taking a Prior Extension of the Delivery PERIOD.<\/em><\/p>\nIN Any Case, the Terms of LC Should Be Such That \u2014 if There are Dispatches Beyond the Delivery Period \u2014 Payment Should Be Denied Without a Levy of Full LD, and Without a Formal Extension of the Delivery Period by the PURCHASER.<\/em><\/p><\/aside>\n<h1>9.26 Compensation Events [W ONLY]<\/span><\/h1>\n<h2>9.26.1<\/span>The Definition and the Four Categories<\/span><\/h2>\n<aside class=\"note\">\"compensation events are those which cause delays in completion of work (beyond a threshold specified in contract) \u2014 and hence financial loss to the contractor \u2014 due to defaults of the contracting entity.<\/strong><\/p><\/aside>\nThese can be due to delays or default by the contracting entity in:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Category<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>providing of encumbrance-free possession or access to site<\/strong><\/td><\/tr><tr><td>b<\/td><td>discharging of obligations by the contracting entity \u2014 drawings \u00b7 specifications \u00b7 instruction \u00b7 encumbrance-free site \u00b7 approving of sub-contractor \u00b7 payment \u00b7 and completion certificates<\/strong><\/td><\/tr><tr><td>c<\/td><td>infructuous additional or tests, works \u00b7 delays due to the contracting entity's orders, default, or risks<\/strong><\/td><\/tr><tr><td>d<\/td><td>unforeseen adverse conditions \u2014 than could reasonably have been assumed after due diligence<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>9.26.2<\/span>THE 'EARLY WARNING' REQUIREMENT \u2014 and the consequence of failure<\/span><\/h2>\n<aside class=\"note\">\"IF a Compensation Event Occurs During the Execution of the Contract \u2014 the Contractor Must Give an 'Early Warning' to the Contracting ENTITY.<\/em><\/p>\nFAILING Which, No Compensation Would Be GRANTED.<\/em><\/p>\n If the contractor proves that a compensation event would delay the completion of work \u2014 the Contract Manager will assess whether, and by how much, the intended completion date should be extended without LD.<\/strong><\/p>\n Proposals for grant of EOT should be considered and approved by the Competent Authority. The contracting entity May finalise the grant of EOT within a maximum period of two months on receipt of such a proposal from the Contract Manager<\/strong>.\"<\/p><\/aside>\n<h2>9.26.3<\/span>Payment May Continue While the EOT Proposal is Pending<\/span><\/h2>\n<aside class=\"note\">\"THE Payment Against Actual Work Done and Claimed in the Monthly Bills by the Contractor, and Recommended for Payment by the Contract Manager \u2014 May Continue to Be Made to the Contractor, Without Recovery of LD \u2014 Where a Proposal Has Been Received from the Contract Manager for Grant of EOT.<\/em><\/p>\nIF the EOT Proposal is Finally Rejected \u2014 LD Must Be RECOVERED.<\/em><\/p>\n Besides EOT, the contractor is entitled to claim compensation for any financial loss due to such events. In each contract, there are specific provisions defining compensation events, how to determine the EOT, and\/ or compensation<\/strong>.\"<\/p><\/aside>\n<h1>9.27 Time at Large [W ONLY]<\/span><\/h1>\n<aside class=\"note\">This is One of the Most Important Legal Concepts in the Entire Works Manual \u2014 and IT Has No Counterpart in the Other Three.<\/p>\n\"When the Procuring Entity Does not Explicitly Express and Reserve its Rights and Remedies under the Contract for Delays in Execution \u2014 IT Legally Forfeits His Right to Such REMEDIES.<\/em><\/p>\nUnder Such Circumstances, Time is Said to Become \"AT LARGE\" \u2014 and the Contractor Gets Freed from His Obligation to Complete Within the Specified TIME.<\/em><\/p><\/aside>\nHow to avoid it \u2014 the four-step prescription:<\/p>\n<aside class=\"note\">\"to avoid such a situation \u2014 before the expiry of the originally stipulated date of completion, the Procuring Entity should:<\/strong><\/p>\n1. Extend the currency of the agreement;<\/strong><\/p>\n2. Set a new time limit for completion;<\/strong><\/p>\n3. Make the extended time the essence of the contract; And<\/strong><\/p>\n4. Stipulate that this is being done without prejudice to his right to recover damages and other remedies as per the contract.<\/strong><\/p>\nRead this together with para 9.20.6 (the correspondence trap) and para 9.20.7 (why \"without prejudice\" alone is insufficient to preserve the LD right) \u2014 the three provisions together form the Manual's treatment of how a Procuring Entity can inadvertently lose its remedies for delay<\/strong>.<\/em><\/p><\/aside>\n<h1>9.28 Cost Control \u2014 Prices, Taxes and Payments<\/span><\/h1>\n<h2 class=\"src-G\">9.28.1<\/span>Prices Must Be Firm and As Quoted<\/span>G<\/span><\/h2><div class=\"srcblock src-G\">\n<aside class=\"note\">\"prices to be charged by the contractor for the supply of goods and provision of incidental works\/ services shall be fixed and firm, and the same as the corresponding prices quoted by the contractor in its bid \u2014 or during negotiations, if any \u2014 and incorporated in the contract.<\/strong><\/p>\n Except for any price adjustment authorised in the contract.<\/strong><\/p><\/aside>\n The controlled-price recovery right:<\/strong>\"if the prices charged are discovered to be higher than any controlled or regulated price \u2014 the Procuring Entity shall have the right to either recover [the excess]<\/strong>\u2026\"<\/strong>(see Chapter 6, para 6.14.1-2 on undue profiteering and the MRP ceiling).<\/em><\/p>\n<\/div><h2>9.28.2<\/span>Payment of Taxes and Duties; Statutory Variation Clause<\/span><\/h2>\nCovered in full at Chapter 6, paras 6.16.1 to 6.16.4 of this Unified Manual \u2014 GST registration and HSN rules, the three bidder-borne taxes, customs duty, and the Statutory Variation Clause with its asymmetric operation (increases borne by the Procuring Entity only during the original\/ re-fixed period; reductions passed on during the original and extended<\/em> period).<\/p>\n<h2 class=\"src-W\">9.28.3<\/span>Financial Monitoring<\/span>W<\/span><\/h2><div class=\"srcblock src-W\">\n<aside class=\"note\">\"besides administering the contract with regard to its quality and completion \u2014 the Contract Manager will regularly assess the financial position and exercise financial control.<\/strong><\/p>\nHE Will Update, on a Quarterly Basis: Cash Flow Projections \u00b7 Cost Estimates \u00b7 and Yearly\/ Quarterly Milestones \u2014 and Submit Them to the Procuring ENTITY.<\/em><\/p><\/aside>\n<\/div><h2>9.28.4<\/span>Payments to Contractors and Handling of Securities<\/span><\/h2>\nThe payment machinery \u2014 <\/strong>Interim Payment Certificates, the Measurement Book regime, the 75%-within-10-working-days rule, and final bills within three months \u2014 is set out at <\/strong>Chapter 6, para 6.10.3 of this Unified Manual.<\/strong><\/p>\n<h1>9.29 Electronic Bill (e-Bill) Processing System [W ONLY]<\/span><\/h1>\nThe Works Manual carries a distinct section (7.5.8) on the e-Bill Processing System \u2014 the electronic submission and processing of contractors' running account bills, integrated with the Public Financial Management System. It has no counterpart in the other three Manuals.<\/p>\n<h1>9.30 Logistics: Transportation, Receiving, Storage and Issue of Goods [G ONLY]<\/span><\/h1>\n<aside class=\"note\">This entire section exists only in the goods Manual \u2014 because only goods procurement involves the physical movement, receipt, custody and issue of stores.<\/p><\/aside>\n<h2>9.30.1<\/span>Special Instructions for Transportation, Packaging and Storage<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Instruction<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>WHERE critical equipment of high value is involved \u2014 suitable special instructions shall be conveyed to the supplier about the mode of transport, loading, avoidance of transhipment \u2014 and, if necessary, provision of escorts<\/strong><\/td><\/tr><tr><td>b<\/td><td>in the case of chemicals, powdery materials, liquid materials<\/strong> \u2014 parties May be advised on proper packaging to avoid spillage en route, pollution problems \u2014 and conforming to the ISO 14001 standard<\/strong><\/td><\/tr><tr><td>c<\/td><td>special attention should be paid to perishable goods, considering their time-sensitive nature<\/strong> \u2014 regarding packaging \u00b7 transportation \u00b7 handling \u00b7 storage (cold storage\/ cold chain) \u00b7 and fifo (first in first out) system of delivery<\/strong><\/td><\/tr><tr><td>d<\/td><td>in case the Procuring Entity arranges transport \u2014 suitable instructions May be incorporated in the transportation contract<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>9.30.2<\/span>Full Truck Loads and the \"Not to Self\" Rule<\/span><\/h2>\n<aside class=\"note\">\"wherever the items make a full truckload \u2014 the suppliers should be advised to dispatch such items in a full truck direct to the designated consignee on a door delivery basis to the site.<\/strong><\/p>\nIn such cases, the Procuring Entity shall advise the supplier to send a consignee copy of the lorry receipt to the consignee along with the consignment.<\/strong><\/p>\nAND the Consignment Shall Be Booked to the Procuring Entity \u2014 and not \"SELF.\"<\/em><\/p>\n All dispatch documents \u2014 railway\/ lorry receipts, goods consignment notes, airway bills, invoices, packing lists, freight memos, test certificates \u2014 shall be sent to the associated\/ integrated finance, which will arrange to make the payment. If the payment is to be made through the bank \u2014 all original documents are to be sent through the designated bank<\/strong>.\"<\/p><\/aside>\n<h2>9.30.3<\/span>Shipping Arrangements \u2014 the six-week notice<\/span><\/h2>\n<aside class=\"note\">\"in the case of FOB\/ FAS contracts \u2014 the Procuring Entity shall make shipping arrangements.<\/strong><\/p>\nTHE Contractor Shall Give Adequate Notice to the Procuring Entity and its Forwarding Agents\/ Nominees About the Readiness of the Cargo \u2014 and at Least Six Weeks' Notice in Advance of the Required Date of Dispatch \u2014 for Finalising the Shipping ARRANGEMENTS.<\/em><\/p>\n In the case of CFR contracts \u2014 the contractor shall arrange the shipment as per the instructions from the Procuring Entity.<\/strong><\/p>\n Should the Procuring Entity intend to airlift all or some of the goods \u2014 the contractor shall pack the goods accordingly upon receiving intimation to that effect. Such deliveries shall be agreed upon well in advance and paid for as May be mutually agreed<\/strong>.\"<\/p><\/aside>\n<h2>9.30.4<\/span>Transfer of Title of Goods<\/span><\/h2>\n1. The intention Rule: \"the title of goods, and resultant rights and liabilities, is transferred to the buyer at such time as the parties to the contract intend this to happen \u2014 as recorded in the terms of the contract<\/strong>.\"<\/p>\n2. The risk Rule \u2014 and the \"notwithstanding\" chain:<\/p>\n<aside class=\"note\">\"Unless Otherwise Stated in the Contract \u2014 notwithstanding:<\/em><\/p>\n\u2022 any inspection and approval by the inspecting officer on the contractor's premises;<\/strong><\/p>\n\u2022 dispatch\/ delivery\/ in-transit; Or<\/strong><\/p>\n\u2022 any payments made to the contractor \u2014 <\/strong><\/p>\nTITLE of Goods Shall Pass on to the Procuring Entity as Specified by the Terms of Delivery and Other Conditions of the CONTRACT.<\/em><\/p>\nTILL Such Time \u2014 the Goods, and Every Constituent Part Thereof (Whether in the Possession or Control of the Contractor, His Agents or Servants or a Carrier, or the Joint Possession of the Contractor and the Procuring Entity) \u2014 Shall Remain in Every Respect at the Risk of the CONTRACTOR.<\/em><\/p>\n And the contractor shall be responsible for all loss, destruction, damage, or deterioration of or to the goods from any cause whatsoever.<\/strong><\/p><\/aside>\n3. Claims against the carrier: \"the contractor shall alone be entitled and responsible for making claims against any carrier \u2014 in respect of non-delivery, short delivery, mis-delivery, loss, destruction, damage, or deterioration of the goods entrusted to such carrier by the contractor for transmission to the ultimate consignee or the interim consignee<\/strong>.\"<\/p>\n<h2>9.30.5<\/span>Insurance in Transit<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Basis<\/th><th>Who insures<\/th><\/tr><\/thead><tbody><tr><td>DOMESTIC GOODS supplied on a CIF\/ FOR destination<\/em> basis<\/td><td>the contractor is responsible until all the goods contracted arrive in good condition at the destination<\/strong>. <\/strong>The contractor May, at its option, cover the transit risk by getting the goods duly insured in his own name at his own cost<\/strong><\/td><\/tr><tr><td>IMPORT of goods on FOB and CFR<\/em> offers<\/td><td>THE procuring Entity shall arrange the insurance<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">The Coordination Duty:<\/p>\n\"however, the contractor must give sufficient notice to the Procuring Entity before the date of shipment \u2014 so that the insurance cover for the shipment can be activated.<\/strong><\/p>\n The contractor must coordinate to ensure that the shipment sails only with insurance cover in place.<\/strong><\/p>\n In the case of the import of goods, the purchaser should proactively take timely and complete action as per the terms of the insurance contract \u2014 to protect the interest of the organisation after the title of the goods has passed to him<\/strong>.\"<\/p><\/aside>\n<h2>9.30.6<\/span>Distribution of Dispatch Documents \u2014 the 24-hour rule<\/span><\/h2>\n<aside class=\"note\">\"the supplier shall send all the relevant dispatch documents to the purchaser in time \u2014 to enable the purchaser to clear or receive (as the case May be) the goods in terms of the contract.<\/strong><\/p>\nWithin 24 (TWENTY-four) Hours of Dispatch \u2014 the Supplier Shall Notify the Purchaser or Consignee (and Others Concerned) of the Complete Details of DISPATCH.<\/em><\/p><\/aside>\n<h2>9.30.7<\/span>Receipt of Consignment<\/span><\/h2><h3>A. Preliminary Inspection and Receipt<\/span><\/h3>\n<aside class=\"note\">\"at the time of the delivery at the stores \u2014 the storekeeper should receive the goods on a \"subject to inspection\" basis, and should issue the preliminary receipt after a preliminary inspection.<\/strong><\/p>\nAS an Acknowledgement of Having Received the Claimed Quantity (not the Quality) of CONSIGNMENT.<\/em><\/p><\/aside>\nWhat the preliminary inspection covers:<\/p>\n<aside class=\"note\">\"when opening the packages, the storekeeper should initiate a preliminary inspection of the goods received. This should include:<\/strong><\/p>\n\u2022 checks for any obvious damage in transit;<\/strong><\/p>\n\u2022 other physical or visual checks specific to the functional characteristics of the product; And<\/strong><\/p>\n\u2022 verification of the quantity against the purchase order and the supplier's invoice.<\/strong><\/p>\nThe package-sampling Rule: \"when goods are supplied in boxes, bundles, or coils \u2014 as in the case of tools, rope, canvas, cables \u2014 each of which is required to contain a specified quantity: A reasonable number of such packages should be opened and checked for quantity per package.<\/strong><\/p>\n The quantity received should also be mentioned in the preliminary receipt to be given to the supplier. Any discrepancies in packages or quantity should be mentioned therein<\/strong>.\"<\/p><\/aside>\n<h3>B. the SHELF-LIFE Rule \u2014 75%<\/span><\/h3>\n<aside class=\"note\">\"FOR Goods with a Limited Shelf Life \u2014 the Contractor Shall Ensure That at Least 75% (or Any Other Percentage Stipulated in the Contract) of Shelf Life Remains as Balance on the Delivery DATE.<\/em><\/p>\nTHE Procuring Entity Reserves its Rights to Reject Expired Products with Less Than Such Specified Shelf LIFE.<\/em><\/p><\/aside>\n<h3>C. Detailed Inspection on Receipt<\/span><\/h3>\n<aside class=\"note\">\"before accepting the ordered goods, the storekeeper must ensure that the goods have been manufactured as per the required specifications, and can perform the functions specified in the contract.<\/strong><\/p>\n The required inspections and tests should be carried out by technically qualified and competent personnel. If the procurement agency does not have such qualified personnel \u2014 it May engage competent professionals from other departments, or even outside agencies<\/strong>.\"<\/p><\/aside>\n<h3>D. CONSIGNEE'S Right of Rejection of PRE-INSPECTED Goods \u2014 the 90-Day Rule<\/span><\/h3>\n<aside class=\"note\">\" Notwithstanding Any Approval Which the Inspecting Officer May Have Given in Respect of the Goods, Materials, Particulars, Work or Workmanship (Whether with or Without Any Test) \u2014 and Notwithstanding Delivery of the Goods, Where So Provided, to the Interim CONSIGNEE:<\/em><\/p>\nIT Shall Be Lawful for the Consignee, on Behalf of the Procuring Entity, to Inspect, Test and \u2014 if Necessary \u2014 Reject the Goods or Any Part, Portion or Consignment Thereof, After the Goods' Arrival at the Final DESTINATION.<\/em><\/p>\nWithin a Reasonable Time \u2014 Usually Within 90 Days of the Original Inspection Report \u2014 After Actual Delivery Thereof to Him at the Place of Destination Stipulated in the CONTRACT.<\/em><\/p>\n If such goods are not in all respects in conformity with the terms and conditions of the contract \u2014 whether on account of any loss, deterioration or damage before despatch or delivery, or during transit, or otherwise howsoever<\/strong>.\"<\/p><\/aside>\n<h2>9.30.8<\/span>Goods Receipt and Inspection Report (GRIR)<\/span><\/h2><h3>A. What a GRIR Is \u2014 and how it differs from a preliminary receipt<\/span><\/h3>\n<aside class=\"note\">\"While a Preliminary Receipt is Only an Acknowledgement of the Quantity Received \u2014 <\/em><\/p>\nGRIR is an Acknowledgement of Receipt of the Correct Quantity <\/em>AS Well as QUALITY of GOODS.<\/em><\/p><\/aside>\nThe two functions of the GRIR:<\/p>\n<aside class=\"note\">\"GRIR is:<\/strong><\/p>\n\u2022 a voucher that forms the basis for the supplier to claim payment as per the contract; And<\/strong><\/p>\n\u2022 a voucher for the amount of material received in the inventory accounts.<\/strong><\/p>\n Along with the GRIR, material is handed over to the warehouse where it is to be stored<\/strong>.\"<\/p><\/aside>\nwhen a GRIR is prepared: \"accounting of the material received shall be based on the GRIR prepared after inspection and acceptance of the material, which the concerned officers will sign.<\/strong><\/p>\n<aside class=\"note\"> This includes cases where payment is made to the supplier on proof of dispatch \u2014 for which inspection at the suppliers' premises is conducted prior to dispatch.<\/strong><\/p>\n This excludes cases of imported materials \u2014 where accounting will be done on completion of certain further formalities as per regulations and practices<\/strong>.\"<\/p><\/aside>\n<h3>B. THE REJECTION GRIR \u2014 and the yellow paint mark<\/span><\/h3>\n<aside class=\"note\">\"in case the received material fails to pass quantity and quality checks \u2014 a rejection GRIR is issued, noting the reasons for rejection.<\/strong><\/p>\nIF Feasible, a Yellow Paint (or Chisel) Mark Should Be Put on the Rejected Material \u2014 to Prevent its Resubmission by the SUPPLIER.<\/em><\/p>\n The associated finance\/ fa should be asked to recover any advance payment or freight charges paid for the rejected quantity.<\/strong><\/p><\/aside>\nThe 21-DAY removal Rule and the risk-and-cost position:<\/p>\n<aside class=\"note\">\"THE Rejection GRIR Contains Instructions for the Supplier to Take Back the Rejected Goods Within a Stipulated Number of Days \u2014 Usually 21.<\/em><\/p>\nDURING Such Time, the Material Lies with the Consignee at the SUPPLIER'S Risk and COST.<\/em><\/p>\nSuch Removal Should Be Permitted Only After the Advance Payment\/ Freight Paid is RECOVERED.<\/em><\/p>\n Lots that are under inspection, accepted, or rejected should be properly tagged, segregated, and identified<\/strong>.\"<\/p><\/aside>\n<h3>C. Ground Rent on Unlifted Rejected Goods<\/span><\/h3>\n<aside class=\"note\">\"IN Case the Supplier Does not Lift the Rejected Goods Within the Stipulated Time \u2014 a Ground Rent [may Be CHARGED], Say at 0.2% to 0.5% per Day of the Value of Goods as per CONTRACT.<\/em><\/p>\n If the supplier does not respond within a reasonable time \u2014 the Procuring Entity May treat the material as [abandoned and dispose of it accordingly]<\/strong>.\"<\/p><\/aside>\n<h2>9.30.9<\/span>Storage and Issue of Inspected Goods<\/span><\/h2>\nGoods para 9.6.7 governs the storage and issue of inspected goods \u2014 the handover to the warehouse against the GRIR, and the subsequent issue of stores to indenting sections.<\/p>\n<h1>9.31 Closure of Contract<\/span><\/h1>\n<h2>9.31.1<\/span>Completion of Construction W<\/span> \u2014 the seven closing steps<\/span><\/h2>\n1. The completion certificate and its two accompanying documents:<\/p>\n<aside class=\"note\">\"when the work has been executed and the assets created commissioned \u2014 the contractor should request the Contract Manager to issue a 'completion certificate'.<\/strong><\/p>\nThe contractor May, if so specified, submit the following along with his request:<\/strong><\/p>\nA) completion drawings of the entire project; And<\/strong><\/p>\nb) videography\/ photographs of the works covering various phases of the project.<\/strong><\/p>\n Reasonable advance information of completion of work should be given to the concerned Ministry\/ Department \u2014 to enable them to plan for taking over<\/strong>.\"<\/p><\/aside>\n2. The joint inspection and \"as built\" drawings:<\/p>\n<aside class=\"note\">\"the Ministry\/ Department May carry out a detailed joint inspection of the commissioned project with the contractor \u2014 to ensure that no deficiencies are there before taking over.<\/strong><\/p>\n \"As built\" drawings of the work shall be got prepared through the contractor or otherwise \u2014 to facilitate proper maintenance of the assets, additions to the assets at subsequent dates, etc. \u2014 and to form part of the records of the Ministry\/ Department<\/strong>.\"<\/p><\/aside>\n3. Occupancy certificates and nocs: \"the contractor\/ PWO\/ PSU would be responsible for obtaining completion\/ occupancy certificates\/ clearances and no-objection-certificates (nocs), if applicable, from the local civic authorities \u2014 for completed work and facilities, before handing over the same to the 'Procuring Entity' for putting them to functional use<\/strong>.\"<\/p>\n4. Restoration of auxiliary services:<\/p>\n<aside class=\"note\">\"Before the Completed Work is Taken over by the Ministry\/ Department \u2014 IT Must Ensure That the Contractor Restores to Original Status the Auxiliary Services\/ FACILITIES:<\/em><\/p>\nRoads \u00b7 sewerage \u00b7 utilities \u2014 including removal of garbage and debris \u2014 affected during the construction process.<\/strong><\/p><\/aside>\n5. What must be handed over: The contractor\/ PWO\/ PSU shall hand over the completed work \u2014 including all services and facilities constructed in accordance with the approved plans and specifications, fulfilling all agreed techno-functional requirements \u2014 along with:<\/p>\n<aside class=\"note\">Inventory \u00b7 as-built drawings \u00b7 maintenance Manual\/ standard operating procedure (sop) for equipments and plants \u00b7 all clearances\/ certificates from statutory authorities, local bodies<\/strong><\/p><\/aside>\n6. The Project Completion Report (PCR) \u2014 and the one-month deadline:<\/p>\n<aside class=\"note\">\"ON Completion of the Work, a Project Completion Report (PCR) Shall Be Submitted by the Contractor\/ PWO\/ PSU \u2014 Duly Bringing OUT:<\/em><\/p>\n\u2022 the final project completion cost;<\/strong><\/p>\n\u2022 the total time period taken to complete the work; And<\/strong><\/p>\n\u2022 the completed project components \u2014 <\/strong><\/p>\n As against the approved cost, time and project components.<\/strong><\/p>\nThe PCR shall Be Submitted Along with Final Project Accounts \u2014 Including Return of Unspent Balance Amount \u2014 to the Ministry\/ Department Within One Month of Settlement of Final BILLS.<\/em><\/p><\/aside>\n7. Record keeping: \"record keeping should be created at every work centre, to facilitate proper stacking of records pertaining to the completed works. The records should be preserved in such a manner that the same can be retrieved whenever required<\/strong>.\"<\/p>\n<h2>9.31.2<\/span>Completion of CONTRACT \u2014 and the single Defects Liability Certificate<\/span><\/h2>\n<aside class=\"note\">\"THE Contract is not to Be Treated as Completed Until a Defects Liability Certificate (DLC) Has Been ISSUED.<\/em><\/p>\nTHERE Will Be Only One DLC. It will Be Issued When the Contractor Has Completed All His Obligations under the CONTRACT.<\/em><\/p>\n While making the final payment to the contractor and before releasing the PBG \u2014 it should be ensured that there is nothing outstanding from the contractor.<\/strong><\/p>\nBecause it would Be Difficult to Retrieve Such Amounts After Releasing the Bank Guarantee\/ Final PAYMENT.<\/em><\/p>\n Before the Bank Guarantee is released, a \"no claim certificate\" May be taken from the contractor<\/strong>.\"<\/p>\nThe Rs 25 Lakh Threshold for the Three Reconciliations:<\/p>\n\"at least in large contracts (above Rs. 25 (twenty-five) lakh) \u2014 it should be ensured that, before the release of the Bank Guarantee (or final payment, if there is no Bank Guarantee) \u2014 the following reconciliations should be done across departments involved in the execution of the contract<\/strong>.\"<\/p><\/aside>\n<h2 class=\"src-W\">9.31.3<\/span>RECONCILIATION 1 \u2014 Material and Works Reconciliation<\/span>W<\/span><\/h2><div class=\"srcblock src-W\">\n<aside class=\"note\">\"the Ministry\/ Department should confirm that all works ordered in the contract and paid for have been taken over in good condition, and there is no shortcoming.<\/strong><\/p>\nFull Reconciliation of All Materials, Machinery and Assets Provided to the Contractor Should Be Done \u2014 Including Wastages and Return of Scrap\/ OFF-CUTS.<\/em><\/p><\/aside>\n<\/div><h2 class=\"src-W\">9.31.4<\/span>RECONCILIATION 2 \u2014 Reconciliation with the User Department<\/span>W<\/span><\/h2><div class=\"srcblock src-W\">\n\"besides works reconciliation \u2014 the user Department should certify in writing that the following activities (wherever applicable) have been completed by the contractor, to the department's satisfaction, as per the contract<\/strong>:\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Item to be certified<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>achievement of performance standards of work<\/strong><\/td><\/tr><tr><td>b<\/td><td>installation and commissioning, if any<\/strong><\/td><\/tr><tr><td>c<\/td><td>support service during the defect liability period \u2014 which has ended on ______<\/strong><\/td><\/tr><tr><td>d<\/td><td>as made drawings<\/strong><\/td><\/tr><tr><td>e<\/td><td>return of all id cards, gate passes, documents, drawings, protective gear, material, equipment, facilities and assets loaned to contractor<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<\/div><h2 class=\"src-W\">9.31.5<\/span>RECONCILIATION 3 \u2014 Payment Reconciliation<\/span>W<\/span><\/h2><div class=\"srcblock src-W\">\n<aside class=\"note\">\"the ministries\/ departments May reconcile payments made to the contractor \u2014 to ensure that there is no liability outstanding against the contractor on account of:<\/strong><\/p>\n\u2022 LD;<\/strong><\/p>\n\u2022 [and the other recoverable heads \u2014 advances, statutory deductions, ground rent, recoveries for materials, and so on].<\/strong><\/p><\/aside>\n<h1>9.32 Concluding the Assignment and Post-Contract Review [C + NC ONLY]<\/span><\/h1>\n<aside class=\"note\">This Section Has No Counterpart in the Goods or Works Manuals.<\/p><\/aside>\nThe Consultancy Manual (para 10.6) and the Non-Consultancy Manual (para 9.6) both carry a section titled \"Concluding the Assignment and Post Contract review\"<\/strong> \u2014 giving effect to the fifth head of contract management in those Manuals, \"Post contract evaluation\"<\/strong> (see Part A, para 9.1.2).<\/p>\nIt governs:<\/p>\n<ul class=\"lst\"><li>THE acceptance of the final deliverables<\/strong> \u2014 including the <\/strong>Final Report, in respect of which (see Chapter 2, para 2.6.3(c)) \"<\/strong>the consultants alone are responsible for their findings; although changes may be suggested in the course of the discussions, consultants should not be forced to make such changes\"<\/em>;<\/strong><\/li><li>THE release of final payment and guarantees (if any), and closing the contract<\/strong>; and<\/li><li>THE post-contract review<\/strong> \u2014 the retrospective evaluation of how the assignment performed, feeding back into future need assessment, ToR drafting and shortlisting criteria.<\/li><\/ul>\n<h1>Appendix to Chapter 9 \u2014 Part B: Points of Difference<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>Delivery Period \"deemed to be the essence of the contract\"; terms of delivery determine when TITLE passes<\/td><td>G ONLY<\/td><\/tr><tr><td>2<\/td><td>Contract Effective Date and Work Program as the opening time-control provisions<\/td><td>W ONLY<\/td><\/tr><tr><td>3<\/td><td>Contract Period and Options as the opening time-control provision<\/td><td>nc only<\/td><\/tr><tr><td>4<\/td><td>INORDINATE DELAY \u2014 the 25% test; show-cause notice; deficient performance recorded for future tenders; LD cap rises from 5% to 10%<\/td><td>G + W<\/td><\/tr><tr><td>5<\/td><td>The four cases where the supplier is not responsible for delay<\/strong>(pre-production sample approval; purchaser's omission; purchaser controls the production schedule; FM\/ statutory change\/ executive instructions)<\/em><\/td><td>G ONLY<\/td><\/tr><tr><td>6<\/td><td>RE-FIXATION (no LD, no denial clause) vs extension of time (with LD, with denial clause)<\/td><td>W states the distinction most clearly; G and C\/NC apply the same substance<\/td><\/tr><tr><td>7<\/td><td>\"EOT must not be left to the end\u2026 interim EOT may be awarded\"; EOT and LD reviewed after the Final Taking-Over Certificate<\/td><td>W ONLY<\/td><\/tr><tr><td>8<\/td><td>The two pre-conditions for extension \u2014 the earlier-delivery test and the falling-price test; PVC-linked raw materials may be extended even on a falling trend but with the denial clause<\/td><td>G ONLY<\/td><\/tr><tr><td>9<\/td><td>Extension after expiry permissible under SECTION 63 of the Indian Contract Act with mutual consent \u2014 \"the contract does not automatically terminate upon expiry\"<\/td><td>W ONLY<\/td><\/tr><tr><td>10<\/td><td>The correspondence trap and the mandatory closing sentence<\/td><td>G + W<\/td><\/tr><tr><td>11<\/td><td>Why \"without prejudice\" alone does not preserve the right to LD<\/td><td>G + W<\/td><\/tr><tr><td>12<\/td><td>Graded authority structure for granting extensions<\/td><td>W ONLY<\/td><\/tr><tr><td>13<\/td><td>Performance Notice (notice-cum-extension letter)<\/td><td>All four<\/td><\/tr><tr><td>14<\/td><td>Force Majeure \u2014 expressly EXCLUDES \"predictable\/ seasonal rain\"; notice within 14 days; cannot be claimed ex post facto; 90-day termination option without financial repercussion<\/td><td>G ONLY<\/strong>(fullest); W, C, NC carry shorter versions<\/em><\/td><\/tr><tr><td>15<\/td><td>The Denial Clause and its asymmetric operation \u2014 \"PVC, other variations and foreign exchange clauses operate only during the ORIGINAL delivery period\"<\/td><td>G + W<\/td><\/tr><tr><td>16<\/td><td>LD quantum<\/td><td>G: 0.5% per week, max 5% (10% if inordinate) \u00b7 W: 1% per week for repair works up to Rs 20 lakh; 0.5% for all other works; max 5% (10% if inordinate)<\/td><\/tr><tr><td>17<\/td><td>LD applies on the price AS VARIED by PVC; LDs accrue only on delayed supplies; on cancellation only the loss occasioned can be recovered<\/td><td>G + W<\/td><\/tr><tr><td>18<\/td><td>For GST, LD to be shown as a DEDUCTION on the invoice value by the contractor<\/td><td>G + W<\/td><\/tr><tr><td>19<\/td><td>Incentive\/ bonus for early completion \u2014 1% of contract value per month, max 5%; actual completion date to reach the CA within seven days<\/td><td>W ONLY<\/td><\/tr><tr><td>20<\/td><td>Waiver of LD \u2014 \"strictly an exception rather than a rule\"; Government establishments as distinct from PSUs not to be penalised and risk-purchase claims not enforced; NO LD in development\/ indigenisation contracts<\/td><td>G ONLY<\/td><\/tr><tr><td>21<\/td><td>Handling deliveries after expiry \u2014 the voluntary-abrogation trap; the FRANKING CLAUSE text; the consignee's intimation on demurrage and wharfage; the LC safeguard for imports<\/td><td>G ONLY<\/td><\/tr><tr><td>22<\/td><td>COMPENSATION EVENTS \u2014 four categories; the 'EARLY WARNING' requirement failing which no compensation; EOT to be finalised within two months; payment continues without LD recovery while the EOT proposal is pending<\/td><td>W ONLY<\/td><\/tr><tr><td>23<\/td><td>Time At Large \u2014 the contractor is freed from his obligation to complete within the specified time; the four-step prescription to avoid it<\/td><td>W ONLY<\/td><\/tr><tr><td>24<\/td><td>Quarterly update of cash flow projections, cost estimates and milestones by the Contract Manager<\/td><td>W ONLY<\/td><\/tr><tr><td>25<\/td><td>Electronic Bill (e-Bill) Processing System<\/td><td>W ONLY<\/td><\/tr><tr><td>26<\/td><td>LOGISTICS \u2014 ISO 14001 packaging for chemicals; FIFO and cold chain for perishables; \"booked to the Procuring Entity and not 'self'\"; six weeks' notice for shipping; 24-hour dispatch notification<\/td><td>G ONLY<\/td><\/tr><tr><td>27<\/td><td>Transfer of title \u2014 risk remains with the contractor notwithstanding inspection, dispatch or payment; contractor alone entitled to claim against the carrier<\/td><td>G ONLY<\/td><\/tr><tr><td>28<\/td><td>The 75% shelf-life rule and the right to reject<\/td><td>G ONLY<\/td><\/tr><tr><td>29<\/td><td>Consignee's right to reject pre-inspected goods within 90 days of the original Inspection Report<\/td><td>G ONLY<\/td><\/tr><tr><td>30<\/td><td>GRIR vs preliminary receipt (quality AND quantity vs quantity only); the yellow paint\/ chisel mark on rejected material; 21 days to lift at supplier's risk and cost; removal only after recovery of advance\/ freight; ground rent 0.2%\u20130.5% per day<\/td><td>G ONLY<\/td><\/tr><tr><td>31<\/td><td>Closure of contract \u2014 completion certificate with completion drawings and videography; restoration of auxiliary services including removal of garbage and debris; Maintenance Manual\/ sop; Project Completion Report within one MONTH of settlement of final bills<\/td><td>W ONLY<\/td><\/tr><tr><td>32<\/td><td>\"There will be only one DLC\"; no-claim certificate before releasing the BG; the Rs 25 lakh threshold for the three reconciliations<\/td><td>W ONLY<\/td><\/tr><tr><td>33<\/td><td>The three reconciliations \u2014 Material and Works \u00b7 User Department \u00b7 Payment<\/td><td>W ONLY<\/td><\/tr><tr><td>34<\/td><td>Concluding the Assignment and POST-CONTRACT REVIEW<\/td><td>c + nc only<\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 9 \u2014 part b<\/p>\n<aside class=\"note\">Next: CHAPTER 9 \u2014 part c: Breach, termination and dispute resolution \u2014 Breach of Contract \u00b7 Termination for Default \u00b7 Determination for Convenience \u00b7 Frustration of Contract \u00b7 Limitation of Liabilities \u00b7 Disputes \u00b7 Excepted Matters \u00b7 Adjudication \u00b7 Mediation \u00b7 Arbitration \u00b7 Foreign Arbitration \u00b7 Notice for and Reference to Arbitration \u00b7 Appointment of Arbitrator \u00b7 The Arbitral Procedure \u00b7 Challenging Arbitration\/ Judicial Awards \u00b7 The Mechanism for Resolution of Commercial Disputes between CPSEs (AMRCD).<\/p>\nNote: the dispute-resolution apparatus is one of the very few blocks that is substantially COMMON to all four Manuals \u2014 running to roughly 800 lines in each \u2014 which makes Part C the most nearly-uniform part of the entire Unified Manual.<\/p><\/aside><\/div>Part III<\/span>Breach, Termination and Dispute Resolution<\/em><\/p>\nMerging: Goods Ch. 9<\/strong> (paras 9.8\u20139.10) \u00b7 Works Ch. 7<\/strong> (paras 7.7\u20137.9) \u00b7 Consultancy Ch. 10<\/strong> (paras 10.7\u201310.9) \u00b7 Non-Consultancy Ch. 9<\/strong> (paras 9.7\u20139.9)<\/em><\/p><h2>A Note on this Part \u2014 the Most NEARLY-UNIFORM Block in the Entire Manual Family<\/span><\/h2>\nUnlike every other chapter, the dispute-resolution apparatus is substantially COMMON to all four Manuals<\/strong>, running to roughly the same 800 lines in each.<\/p>\nThe reason is that it does not derive from the character of the procurement at all. It derives from a single set of statutes and a single set of DoE instructions applying uniformly:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Source<\/th><th>Instrument<\/th><\/tr><\/thead><tbody><tr><td>Statute<\/td><td>Indian Contract Act, 1872 \u00b7 Arbitration and Conciliation Act, 1996 (amended 2015 and 2021)<\/em> \u00b7 Mediation Act, 2023 \u00b7 msmed Act, 2006 \u00b7 Indian evidence Act (replaced by Bhartiya Sakshya Adhiniyam 2023 from 1 July 2024)<\/em><\/td><\/tr><tr><td>DoE instructions<\/td><td>OM No. F.11\/21\/2024-PPD dated 03.06.2024 (the governing instruction on arbitration, mediation and challenging awards)<\/em> \u00b7 OM No. F.1\/1\/2021-PPD dated 29.10.2021 (General Instructions on Procurement and Project Management, incl. Rule 227A of GFR)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nThe only substantial divergences are noted in the Appendix at the end.<\/p>\n<h2>Concordance for Chapter 9 \u2014 Part C<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Unified<\/th><th>Topic<\/th><th>G<\/th><th>W<\/th><th>C<\/th><th>NC<\/th><\/tr><\/thead><tbody><tr><td>9.33<\/td><td>Breach of Contract<\/td><td>9.8.1<\/td><td>7.8.1<\/td><td>10.8.1<\/td><td>9.8.1<\/td><\/tr><tr><td>9.34<\/td><td>Termination of Contract for Default<\/td><td>9.8.2<\/td><td>7.8.2<\/td><td>10.8.2<\/td><td>9.8.2<\/td><\/tr><tr><td>9.35<\/td><td>Determination for Convenience \/ Frustration<\/td><td>9.8.3, 9.8.4<\/td><td>7.8.3<\/td><td>10.8.3<\/td><td>9.8.3<\/td><\/tr><tr><td>9.36<\/td><td>Limitation of Liabilities<\/td><td>9.8.5<\/td><td>7.8.4<\/td><td>10.8.4<\/td><td>9.8.4<\/td><\/tr><tr><td>9.37<\/td><td>Disputes<\/td><td>9.9.1<\/td><td>7.7.1<\/td><td>10.7.1<\/td><td>9.7.1<\/td><\/tr><tr><td>9.38<\/td><td>Excepted Matters<\/td><td>9.9.2<\/td><td>7.7.2<\/td><td>10.7.2<\/td><td>9.7.2<\/td><\/tr><tr><td>9.39<\/td><td>Adjudication<\/td><td>9.9.3<\/td><td>7.7.3<\/td><td>10.7.3<\/td><td>9.7.3<\/td><\/tr><tr><td>9.40<\/td><td>Mediation<\/td><td>9.9.4<\/td><td>7.7.4<\/td><td>10.7.4<\/td><td>9.7.4<\/td><\/tr><tr><td>9.41<\/td><td>Arbitration<\/td><td>9.9.5<\/td><td>7.7.5<\/td><td>10.7.5<\/td><td>9.7.5<\/td><\/tr><tr><td>9.42<\/td><td>Foreign Arbitration<\/td><td>9.9.6<\/td><td>7.7.6<\/td><td>10.7.6<\/td><td>9.7.6<\/td><\/tr><tr><td>9.43<\/td><td>Notice for and Reference to Arbitration<\/td><td>9.9.7, 9.9.8<\/td><td>7.7.7, 7.7.8<\/td><td>10.7.7\u20138<\/td><td>9.7.7\u20138<\/td><\/tr><tr><td>9.44<\/td><td>Appointment of Arbitrator<\/td><td>9.9.9<\/td><td>7.7.9<\/td><td>10.7.9<\/td><td>9.7.9<\/td><\/tr><tr><td>9.45<\/td><td>The Arbitral Procedure<\/td><td>9.9.10<\/td><td>7.7.10<\/td><td>10.7.10<\/td><td>9.7.10<\/td><\/tr><tr><td>9.46<\/td><td>Challenging Arbitration\/ Judicial Awards<\/td><td>9.9.11<\/td><td>7.7.11<\/td><td>10.7.11<\/td><td>9.7.11<\/td><\/tr><tr><td>9.47<\/td><td>AMRCD \u2014 CPSE Disputes Mechanism<\/td><td> \u2014 <\/td><td>7.7.12<\/td><td> \u2014 <\/td><td> \u2014 <\/td><\/tr><tr><td>9.48<\/td><td>Contract Management \u2014 Risks and Mitigations<\/td><td>9.10<\/td><td>7.9<\/td><td>10.9<\/td><td>9.9<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>9.33 Breach of Contract<\/span><\/h1>\n<h2>9.33.1<\/span>What Constitutes a Breach<\/span><\/h2>\n<aside class=\"note\">\"in case the contractor undergoes insolvency or receivership \u00b7 neglects \u00b7 or defaults \u00b7 or expresses inability or disinclination to honour his obligations relating to:<\/strong><\/p>\n\u2022 the performance of the contract; Or<\/strong><\/p>\n\u2022 ethical standards; Or<\/strong><\/p>\n\u2022 any other obligation that substantively affects the Procuring Entity's rights and benefits under the contract \u2014 <\/strong><\/p>\n[these] Amount to a Breach of CONTRACT.<\/em><\/p><\/aside>\nThe three named categories of default:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Category<\/th><th>Content<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>default in performance and obligations<\/td><td>\"if the contractor fails to deliver any or all the goods, or fails to perform any other contractual obligations \u2014 including Code of Integrity, or the obligation to maintain production capability (equipment & manufacturing facilities) based on which the contract was awarded \u2014 within the period stipulated in the contract, or within any extension thereof granted by the Procuring Entity \u2014 it shall be treated as a breach of contract<\/strong>.\"<\/td><\/tr><tr><td>b<\/td><td>insolvency<\/td><td>if the contractor or any partner shall at any time be adjudged insolvent \u00b7 or shall have a receiving order or order for the administration of his estate made against him \u00b7 or shall take any proceeding for composition under any insolvency Act \u00b7 or make any conveyance or assignment of his effects \u00b7 or enter into any assignment or composition with his creditors \u00b7 or suspend payment \u00b7 or if the firm be dissolved under the partnership Act<\/strong> \u2014 the Procuring Entity May consider it as a breach of contract<\/td><\/tr><tr><td>c<\/td><td>liquidation<\/td><td>if the contractor is a company being wound up voluntarily or by order of a court \u00b7 or a receiver, liquidator or manager on behalf of the debenture-holders is appointed \u00b7 or circumstances shall have arisen which entitle the court or debenture-holders to appoint a receiver, liquidator or manager<\/strong> \u2014 the Procuring Entity May consider it as a breach of contract<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">W<\/span> variant of the opening: *\"<\/strong>In case the contractor is unable to honour important stipulations of the contract, or gives notice of his intention of not honouring \u2014 or his inability to honour \u2014 such a stipulation, a breach of contract is said to have occurred. Mostly, such breaches occur in relation to the performance of the contract, in terms of inability to complete the Work within stipulated time.\"*<\/p><\/aside>\n<h2>9.33.2<\/span>THE 'NOTICE OF DEFAULT' \u2014 two weeks, and the withholding of payments<\/span><\/h2>\n<aside class=\"note\">\"AS Soon as a Breach of Contract is Noticed \u2014 a SHOW-CAUSE 'Notice of Default' Shall Be Issued to the Contractor, Giving Two Weeks' Notice, Reserving the Right to Invoke Contractual REMEDIES.<\/em><\/p>\nAfter Such a SHOW-CAUSE Notice \u2014 All Payments to the Contractor Would Be Temporarily Withheld, to Safeguard Needed Recoveries That May Become Due on Invoking Contractual REMEDIES.<\/em><\/p>\n If there is an unsatisfactory resolution \u2014 remedial action May be taken immediately<\/strong>.\"<\/p><\/aside>\n<h1>9.34 Termination of Contract for Default<\/span><\/h1>\n<h2>9.34.1<\/span>The Notice of Termination and the Three Savings<\/span><\/h2>\n<aside class=\"note\">\"in the event of an unsatisfactory resolution of 'notice of default' within two weeks of its issue \u2014 the Procuring Entity, if so decided, shall by written 'notice of termination for default' sent to the contractor \u2014 terminate the contract in whole or in part, without compensation to the contractor.<\/strong><\/p>\nBefore Cancelling the Contract and Taking Further Action \u2014 IT May Be Desirable to Obtain Legal ADVICE.<\/em><\/p><\/aside>\nSuch termination shall not:<\/p>\na) prejudice or affect the rights and remedies which have accrued and\/ or shall accrue to the Procuring Entity after that<\/strong>;<\/p>\nb) affect the performance of the contract to the extent not terminated<\/strong> \u2014 unless otherwise instructed by the Procuring Entity;<\/p>\nc) extinguish warranty obligations of the contractor for the goods already supplied, if any<\/strong>.<\/p>\n<h2>9.34.2<\/span>the Seven Additional Recourses on Termination<\/span><\/h2>\n\"if the contract is terminated in whole or in part \u2014 additionally, recourse May be taken to any one or more of the following actions<\/strong>:\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Recourse<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>temporarily withhold payments due to the contractor \u2014 till recoveries due to invocation of other contractual remedies are complete<\/strong><\/td><\/tr><tr><td>b<\/td><td>call back any loaned property or advances of payment, if any \u2014 with the levy of interest rate (e.g., the interest rate of the general provident fund \u2014 GPF) prevailing on the date of release of advance payment, plus 2%, to be compounded quarterly<\/strong><\/td><\/tr><tr><td>c<\/td><td>recover Liquidated Damages and invoke the Denial Clause for delays<\/strong><\/td><\/tr><tr><td>d<\/td><td>prefer claims against insurance, if any<\/strong><\/td><\/tr><tr><td>e<\/td><td>encash and\/ or forfeit Performance Security<\/strong><\/td><\/tr><tr><td>f<\/td><td>invoke any other contractual securities<\/strong><\/td><\/tr><tr><td>g<\/td><td>initiate proceedings in a court of law \u2014 for the transgression of the law, tort, and loss, which are not addressable by the above means<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Note the identity between recourse (b) and the interest formula applied to interest-free advances on default \u2014 see Chapter 6, para 6.13.1-3.<\/em><\/p><\/aside>\n<h1>9.35 Determination of Contract for Convenience of the Procuring Entity, or Frustration of Contract<\/span><\/h1>\n<h2>9.35.1<\/span>The 'Notice for Determination of Contract'<\/span><\/h2>\n<aside class=\"note\">\"after placement of the contract, there May be an unforeseen situation compelling the Procuring Entity to terminate the contract, in whole or in part, for its own convenience \u2014 by serving a written 'notice for determination of contract' on the contractor at any time during the currency of the contract.<\/strong><\/p>\nThe notice shall indicate, inter alia:<\/strong><\/p>\n\u2022 that the termination is for the convenience of the Procuring Entity, or the frustration of the contract;<\/strong><\/p>\n\u2022 the extent to which the contractor's performance under the contract is terminated; And<\/strong><\/p>\n\u2022 the date with effect from which such termination shall become effective.<\/strong><\/p><\/aside>\nThe three savings:<\/p>\n<ul class=\"lst\"><li>\"such termination shall not prejudice or affect the rights and remedies accrued, and\/ or that shall accrue after that, to the parties<\/strong>\";<\/li><li>\"unless otherwise instructed, the contractor shall continue to perform the contract to the extent not terminated<\/strong>\";<\/li><li>\"all warranty obligations, if any, shall continue to survive despite the termination<\/strong>.\"<\/li><\/ul>\n<h2>9.35.2<\/span>THE CRITICAL LEGAL POINT \u2014 determination for convenience is NOT a legal right<\/span><\/h2>\n<aside class=\"note\">\" Determining the Contract by the Procuring Entity for its Convenience is not its Legal Right \u2014 and the Contractor Must Be Persuaded to ACQUIESCE.<\/em><\/p>\nDEPENDING on the Merits of the Case \u2014 the Supplier May Have to Be Suitably Compensated on Mutually Agreed Terms for Terminating the CONTRACT.<\/em><\/p>\n Suitable provisions to this effect should be incorporated in the tender document as well as in the resultant contract<\/strong>.\"<\/p><\/aside>\n<h2>9.35.3<\/span>The Thirty-Day Rule on Completed Goods<\/span><\/h2>\n<aside class=\"note\">\"the goods and incidental works\/ services that are complete and ready in terms of the contract FOR delivery and performance within thirty days after the contractor's receipt of the [notice] \u2026<\/strong>\"<\/strong>(shall be accepted and paid for at the contract terms and prices).<\/em><\/p><\/aside>\n<h2>9.35.4<\/span>FRUSTRATION OF CONTRACT \u2014 the 60-day mutual-agreement window<\/span><\/h2>\n<aside class=\"note\">\"[On the occurrence of a frustration event, a party shall give a] 'notice of frustration event' to the other party, giving justification.<\/strong><\/p>\nThe parties shall use reasonable efforts to agree to amend the contract as May be necessary to complete its performance.<\/strong><\/p>\nHOWEVER, if the Parties Cannot Reach a Mutual Agreement Within 60 Days of the Initial Notice \u2014 the Procuring Entity Shall Issue a 'Notice for Determining the Contract' and Terminate the Contract Due to its Frustration \u2014 Without Repercussions on Either SIDE.<\/em><\/p><\/aside>\n<h1>9.36 Limitation of Liabilities<\/span><\/h1>\n<h2>9.36.1<\/span>The Aggregate Cap \u2014 and its three exclusions<\/span><\/h2>\n<aside class=\"note\">\"Except in Cases of Criminal Negligence or Wilful Misconduct \u2014 the Aggregate Liability of the Parties, Whether under the Contract, in Tort or Otherwise, Shall not Exceed the Total Contract Price (Less Payments Already Made, in Case of the Procuring ENTITY).<\/em><\/p>\nProvided That this Limitation Shall not Apply TO:<\/em><\/p>\n\u2022 the cost of repairing or replacing defective equipment\/ work under the warranty clause, defect liability clause or otherwise; Or<\/strong><\/p>\n\u2022 any obligation of the contractor to indemnify the Procuring Entity concerning IPR infringement.<\/strong><\/p><\/aside>\n<h2>9.36.2<\/span>The Consequential-Loss Exclusion \u2014 and the LD carve-out<\/span><\/h2>\n<aside class=\"note\">\"NEITHER Party Shall Be Liable to the Other Party \u2014 Whether in Contract, Tort, or Otherwise \u2014 for any:<\/em><\/p>\n\u2022 indirect or consequential loss or damage;<\/strong><\/p>\n\u2022 loss of use;<\/strong><\/p>\n\u2022 loss of production; Or<\/strong><\/p>\n\u2022 loss of profits or interest costs \u2014 <\/strong><\/p>\nwhich the other party May suffer in connection with the contract.<\/strong><\/p>\nProvided That this Exclusion Shall not Apply to Any Obligation of the Contractor to Pay Liquidated Damages to the EMPLOYER.<\/em><\/p><\/aside>\n<h1>9.37 Disputes<\/span><\/h1>\n<h2>9.37.1<\/span>The Definition of a \"Dispute\"<\/span><\/h2>\n<aside class=\"note\">\"normally, there should not be any scope for dispute between the purchaser and supplier after entering a mutually agreed valid contract. However, due to various unforeseen reasons, problems May arise during the contract.<\/strong><\/p>\nTherefore, the conditions governing the contract should contain suitable provisions for the settlement of such disputes or differences, binding on both parties<\/strong>.\"<\/p><\/aside>\nThe formal definition \u2014 note the four elements:<\/p>\n<aside class=\"note\">\"all disputes and differences between the parties:<\/strong><\/p>\n\u2022 as to the construction or operation of the contract, or the respective rights and liabilities of the parties on any matter in question or any other account whatsoever;<\/strong><\/p>\n\u2022 but excluding the Excepted Matters;<\/strong><\/p>\n\u2022 arising out of or in connection with the contract, within thirty (30) days from the aggrieved party notifying the other party of such matters;<\/strong><\/p>\n\u2022 whether before or after the completion\/ termination of the contract;<\/strong><\/p>\n\u2022 that cannot be resolved amicably between the procurement officer and the contractor within thirty (30) days of one party notifying the other \u2014 <\/strong><\/p>\nShall Be Referred to as a \"DISPUTE\".<\/em><\/p><\/aside>\n<h2>9.37.2<\/span>THE DoE DIRECTIVE ON CONTRACTUAL DISPUTES \u2014 a passage worth memorising<\/span><\/h2>\n<aside class=\"note\">\"GOVERNMENT Departments\/ Entities\/ Agencies Should Avoid and\/ or Amicably Settle as Many Disputes as Possible \u2014 Using Mechanisms Available in the CONTRACT.<\/em><\/p>\nDECISIONS Should Be Taken in a Pragmatic Manner, in Overall LONG-TERM Public Interest, Keeping Legal and Practical Realities in View \u2014 Without Shirking or Avoiding Responsibility, or Denying Genuine Claims of the Other PARTY.<\/em><\/p>\n \u2014 OM No. F.11\/21\/2024-PPD dated 03.06.2024, PPD, DoE, MoF<\/em><\/p><\/aside>\n<h2>9.37.3<\/span>THE SEQUENTIAL RULE \u2014 and the three mechanisms<\/span><\/h2>\n<aside class=\"note\">\"the aggrieved party shall give a 'notice of dispute' \u2014 indicating the dispute and claims, citing relevant contractual clauses \u2014 to the designated authority, and requesting to invoke the following dispute resolution mechanisms.<\/strong><\/p>\nThe dispute shall be attempted to be resolved \u2014 as far as feasible, before recourse to courts \u2014 through dispute resolution mechanisms available in the contract, in the sequence as mentioned below.<\/strong><\/p>\nAND the Next Mechanism Shall not Be Invoked Unless the Earlier Mechanism Has Been Invoked, or Has Failed to Resolve IT Within the Deadline Mentioned THEREIN.<\/em><\/p><\/aside>\n<h2>The THREE-STEP Ladder:<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>Mechanism<\/th><th>Governing instrument<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>adjudication<\/td><td>(contractual)<\/em><\/td><\/tr><tr><td>2<\/td><td>mediation<\/td><td>the Mediation Act, 2023<\/td><\/tr><tr><td>3<\/td><td>arbitration<\/td><td>the Arbitration and Conciliation Act, 1996<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">A Critical Footnote Appearing in All Four Manuals:<\/p>\n\"The conciliation part of the Arbitration and Conciliation Act, 1996 has been replaced by mediation by the recent Mediation Act, 2023.\"<\/strong><\/p><\/aside>\nthe legal-advice duty: \"while processing a case for dispute resolution\/ litigation\/ arbitration \u2014 the Procuring Entity is to take legal advice at appropriate stages<\/strong>.\"<\/p>\n<h1>9.38 Excepted Matters<\/span><\/h1>\n<h2>9.38.1<\/span>The Definition and the Reciprocity Exception<\/span><\/h2>\n<aside class=\"note\">\"MATTERS for Which Provision Has Been Made in Any Clause of the Contract Shall Be Deemed as 'Excepted Matters' (Matters not Disputable\/ Arbitrable) \u2014 and Decisions of the Procuring Entity Thereon Shall Be Final and Binding on the CONTRACTOR.<\/em><\/p>\nTHE 'Excepted Matters' Shall Stand Expressly Excluded from the Purview of the Dispute Resolution Mechanism \u2014 Including ARBITRATION.<\/em><\/p>\nHOWEVER \u2014 Where the Procuring Entity Has Raised the Dispute, this SUB-CLAUSE Shall not APPLY.<\/em><\/p>\nThat is, the exclusion operates only against the contractor<\/strong> \u2014 it does not bar the Procuring Entity from raising a dispute on an excepted matter.<\/em><\/p><\/aside>\n<h2>9.38.2<\/span>What Excepted Matters Include<\/span><\/h2>\n\"unless otherwise stipulated in the contract \u2014 Excepted Matters shall include, but not be limited to<\/strong>:\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Excepted matter<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>ANY controversies or claims brought by a third party for bodily injury, death, [or] property [damage]<\/strong><\/td><\/tr><tr><td>\u2026<\/td><td>(and the further heads specified in the contract)<\/em><\/td><\/tr><tr><td>6<\/td><td>provisions incorporated in the contract which are beyond the purview of the Procuring Entity, or are in pursuance of policies of Government<\/strong> \u2014 including but not limited to:<\/td><\/tr><tr><td>6(a)<\/td><td>provisions of restrictions regarding local content and purchase preference to local suppliers<\/strong> In terms of the Make in India policy<\/td><\/tr><tr><td>6(b)<\/td><td>provisions regarding restrictions on entities from countries having land-borders with India<\/strong><\/td><\/tr><tr><td>6(c)<\/td><td>purchase preference policies regarding MSEs and start-ups<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">Why this Matters:<\/p>\nThe effect of head 6 is that a contractor <\/strong>cannot arbitrate against the operation of the Make in India Order, the land-border restrictions, or the MSE\/ Start-up preferences \u2014 because these are Government policy, not matters within the Procuring Entity's discretion.<\/strong><\/p><\/aside>\n<h1>9.39 Adjudication \u2014 Step 1<\/span><\/h1>\n<h2>9.39.1<\/span>The Notice of Adjudication<\/span><\/h2>\n<aside class=\"note\">\"after exhausting efforts to resolve the dispute with the purchasing officer executing the contract on behalf of the Procuring Entity \u2014 the contractor shall give a 'notice of adjudication' specifying:<\/strong><\/p>\n\u2022 the matters which are in question, or subject of the dispute or difference;<\/strong><\/p>\n\u2022 indicating the relevant contractual clause; And<\/strong><\/p>\n\u2022 the amount of claim item-wise \u2014 <\/strong><\/p>\nto the head of procurement, or any other authority mentioned in the contract (hereinafter called the \"adjudicator\")<\/strong>.\"<\/p><\/aside>\n High-value matters:<\/strong>\"where necessary \u2014 e.g., matters of high value \u2014 the Procuring Entity May proceed with adjudication by a high-level committee<\/strong>\"<\/strong>(constituted on the lines of the HLC described at para 9.40.3 below).<\/em><\/p>\n<h2>9.39.2<\/span>The 60-Day Decision and the Stay on Other Proceedings<\/span><\/h2>\n<aside class=\"note\">\"DURING His Adjudication \u2014 the Adjudicator Shall Give the Contractor an Adequate Opportunity to Present His CASE.<\/em><\/p>\nWithin 60 Days After Receiving the Representation \u2014 the Adjudicator Shall Make and Notify Decisions in Writing on All Matters Referred to HIM.<\/em><\/p>\nTHE Parties Shall not Initiate, During the Adjudication Proceedings, Any Conciliation, Arbitral or Judicial Proceedings in Respect of a Dispute That is the Subject Matter of the Adjudication PROCEEDINGS.<\/em><\/p><\/aside>\n<h2>9.39.3<\/span>Escalation to Mediation<\/span><\/h2>\n<aside class=\"note\">\"if not satisfied by the decision in adjudication \u2014 or if the adjudicator fails to notify his decision within the abovementioned time-frame \u2014 the contractor May proceed to invoke the process of mediation<\/strong>.\"<\/p><\/aside>\n<h1>9.40 Mediation \u2014 Step 2<\/span><\/h1>\n(The Mediation Act, 2023)<\/em><\/p>\n<h2>9.40.1<\/span>Invoking Mediation<\/span><\/h2>\n<aside class=\"note\">\"any party May invoke mediation by submitting a \"notice of mediation\" to the head of the procuring organisation. A neutral third party, known as the mediator, facilitates the mediation process.<\/strong><\/p>\nIF the Other Party is not Agreeable to Mediation \u2014 the Aggrieved Party May Invoke Arbitration, if Available in the CONTRACT.<\/em><\/p>\nFootnote in all four Manuals: \"The [Mediation] Act would be fully notified at a later date. Hence some of the provisions \u2014 like registration of mediators, and MSPs\/ MCI \u2014 may get activated later.\"<\/em><\/p><\/aside>\n<h2>9.40.2<\/span>THE DoE GUIDELINES ON MEDIATION \u2014 the High-Level Committee (HLC)<\/span><\/h2>\n\"Government departments\/ entities\/ agencies are encouraged to adopt mediation under the Mediation Act 2023, and\/ or negotiate amicable settlements to resolve disputes.<\/strong>\"<\/p>\na) the HLC and its composition:<\/p>\n<aside class=\"note\">\"Government departments\/ undertakings May \u2014 where they consider appropriate, e.g., in high-value matters \u2014 constitute a high-level committee (HLC) for dispute resolution, which May include the following (this composition is purely indicative and not prescriptive):<\/strong><\/p>\nI) a retired judge;<\/strong><\/p>\nii) a retired high-ranking officer and\/ or technical expert.<\/strong><\/p><\/aside>\nB) the three ways an HLC May be used:<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Mode<\/th><\/tr><\/thead><tbody><tr><td>i<\/td><td>negotiate directly with the other party, and place a tentative proposed solution before the HLC<\/strong><\/td><\/tr><tr><td>ii<\/td><td>conduct mediation through a mediator, and then place the tentative mediated agreement before the HLC<\/strong><\/td><\/tr><tr><td>iii<\/td><td>use the HLC itself as the mediator<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nc) THE RATIONALE \u2014 arm's length scrutiny:<\/p>\n<aside class=\"note\">\"This Will Enable Decisions Taken for Resolving Disputes in Appropriate Matters to Be Scrutinised by a HIGH-RANKING Body at ARM'S Length from the Regular DECISION-MAKING Structure \u2014 Thereby Promoting Fair and Sound Decisions in the Public Interest, with PROBITY.<\/em><\/p><\/aside>\nD) renegotiation in long-duration works contracts:<\/p>\n<aside class=\"note\">\"there May be rare situations in long-duration works contracts where a renegotiation of the terms May best serve public interest, due to unforeseen major events.<\/strong><\/p>\n In such circumstances \u2014 the terms of the tentative re-negotiated contract May be placed before a suitably constituted high-level committee before approval by the Competent Authority<\/strong>.\"<\/p><\/aside>\ne) APPROVAL: \"approval of the appropriate authority will need to be obtained for the final accepted solution. Section 49 of the Mediation Act 2023 is also relevant in this regard<\/strong>.\"<\/p>\nf) the non-routine Rule:<\/p>\n<aside class=\"note\">\"MEDIATION Agreements Need not Be Routinely or Automatically Included in Procurement Contracts\/ TENDERS.<\/em><\/p>\nTHE Absence of a Mediation Agreement in the Contract Does not Preclude PRE-LITIGATION Mediation. Such a Clause May Be Incorporated Where IT is Consciously Decided to Do SO.<\/em><\/p><\/aside>\ng) \"disputes not covered in an arbitration clause \u2014 and where the methods outlined above are unsuccessful \u2014 should be adjudicated by the courts<\/strong>.\"<\/p>\nh) the modification authority: \"general or case-specific modification in the application of the above guidelines May be authorised by:<\/strong><\/p>\n<aside class=\"note\">\u2022 the Secretary concerned (or an officer not below the level of Joint Secretary to whom the authority is delegated by him) \u2014 in respect of Government Ministries\/ Departments, attached\/ subordinate offices and autonomous bodies; or<\/strong><\/p>\n\u2022 the managing director \u2014 in respect of Central Public Sector Enterprises, including Banks and Financial Institutions<\/strong>.\"<\/p><\/aside>\n<h2>9.40.3<\/span>Appointment of Mediator(s)<\/span><\/h2>\n<aside class=\"note\">\"mediators can be of any nationality, and must be:<\/strong><\/p>\n\u2022 registered with the mediation council of India (MCI); Or<\/strong><\/p>\n\u2022 empanelled by a court-annexed mediation centre; Or<\/strong><\/p>\n\u2022 empanelled by an authority constituted under the legal services authorities Act, 1987; Or<\/strong><\/p>\n\u2022 empanelled [by a recognised mediation service provider].<\/strong><\/p><\/aside>\n<h2>9.40.4<\/span>Confidentiality \u2014 and the recording prohibition<\/span><\/h2>\n<aside class=\"note\">\"[MEDIATION Communications Shall not BE] Admissible as Evidence in Any Subsequent Court Proceedings \u2014 Nor Be Asked to Be Disclosed by Any Court\/ TRIBUNAL.<\/em><\/p>\nNO Audio or Video Recording of the Mediation Proceedings Shall Be Made or Maintained by the Parties or the Participants \u2014 Including the Mediator and Mediation Service Provider \u2014 Whether Conducted in Person or ONLINE.<\/em><\/p><\/aside>\nOnline mediation: \"the Act allows parties to opt for online\/ virtual mediation \u2014 which shall be deemed to occur within the jurisdiction of a competent court. The Act also requires online mediation communication mechanisms to ensure confidentiality<\/strong>.\"<\/p>\n<h2>9.40.5<\/span>How the Mediator Works<\/span><\/h2>\n<aside class=\"note\">\"the mediator initially meets the parties separately, and communicates the view of each party to the other \u2014 to the extent agreed upon by them.<\/strong><\/p>\nHe assists them in:<\/strong><\/p>\nIdentifying issues \u00b7 advancing better understanding \u00b7 clarifying priorities \u00b7 exploring areas of the parties' responsibility \u00b7 identifying common interests \u00b7 and encouraging compromise.<\/strong><\/p>\nHe then meets them jointly to encourage a mutually acceptable resolution.<\/strong><\/p>\n At any stage of the mediation proceedings \u2014 at the parties' request, the mediator May suggest a dispute settlement in writing<\/strong>.\"<\/p><\/aside>\n<h2>9.40.6<\/span>Termination of Mediation \u2014 120 Days Plus 60<\/span><\/h2>\n<aside class=\"note\">\"THE Process Must Be Completed Within 120 Days \u2014 Though Parties Can Extend IT by Another 60 Days Through Mutual CONSENT.<\/em><\/p>\nIF Mediation is not Completed Within this Timeline \u2014 the Mediator Shall Prepare a NON-SETTLEMENT Report \u2014 Without Disclosing the Cause of NON-SETTLEMENT, or Any Other Matter or Thing Referring to Their Conduct During MEDIATION.<\/em><\/p>\n Mediation shall also stand terminated:<\/strong><\/p>\n\u2022 on a declaration of the mediator \u2014 after consultation with the parties or otherwise \u2014 that further efforts at mediation are no longer justified; Or<\/strong><\/p>\n\u2022 on communication by a party in writing, addressed to the mediator and the other parties, that they wish to opt out of mediation.<\/strong><\/p>\nOn termination of mediation \u2014 if the dispute is still alive, the aggrieved party shall be free to invoke arbitration<\/strong>.\"<\/p><\/aside>\n<h2>9.40.7<\/span>Mediated Settlement Agreement (MSA)<\/span><\/h2>\na) what it is: \"if the parties resolve the dispute and execute a mediated settlement agreement (\"MSA\") \u2014 then the mediation is successful.<\/strong><\/p>\n<aside class=\"note\">An MSA is a written agreement settling some or all disputes \u2014 and May extend beyond the disputes referred to mediation.<\/strong><\/p>\n it must be valid under the Indian Contract Act, signed by both parties, and duly authenticated by the mediator for the parties or the MSP. The Act provides options for MSA registration<\/strong>.\"<\/p><\/aside>\nb) challenge to MSA \u2014 90 days, four grounds only:<\/p>\n<aside class=\"note\">\"MSA Can Be Challenged Within 90 Days on Limited Grounds OF:<\/em><\/p>\n(a) fraud; (b) corruption; (c) impersonation; And (d) subject matter being unfit for mediation.<\/strong><\/p><\/aside>\nc) EXECUTION \u2014 enforceable as a decree:<\/p>\n<aside class=\"note\">\"IF There is No Challenge \u2014 or a Challenge is Unsuccessful \u2014 the Act Ensures That the MSA is Binding and Enforceable, Akin to a Judgment or DECREE.<\/em><\/p>\nThis means that if one party fails to comply with the MSA \u2014 the non-defaulting party has a right to enforce it through the court<\/strong>.\"<\/p><\/aside>\n<h2>9.40.8<\/span>Costs and the Interest Moratorium<\/span><\/h2>\na) COSTS: \"the parties shall equally bear all costs of mediation \u2014 including the fees of the mediator and the charges of the mediation service provider<\/strong>.\"<\/p>\nb) no claim of interest during mediation:<\/p>\n<aside class=\"note\">\"PARTIES Shall not Claim Any Interest on Claims\/ COUNTER-CLAIMS from the Date of Notice Invoking Mediation Till the Execution of the Settlement Agreement, if So ARRIVED.<\/em><\/p>\nIF Parties Cannot Resolve the Dispute \u2014 Either Party Shall Claim No Interest from the Date of Notice Invoking Mediation Until the Date of Termination of Mediation PROCEEDINGS.<\/em><\/p><\/aside>\nC) the stay on other proceedings: \"the parties shall not initiate, during the mediation proceedings, any arbitral or judicial proceedings in respect of a dispute that is the subject matter of the mediation proceedings<\/strong>.\"<\/p>\n<h1>9.41 Arbitration \u2014 Step 3<\/span><\/h1>\n(The Arbitration and Conciliation Act, 1996 \u2014 amended 2015 and 2021)<\/em><\/p>\n<h2>9.41.1<\/span>The Arbitration Agreement and Its Survival<\/span><\/h2>\n<aside class=\"note\">\"if an amicable settlement is not forthcoming \u2014 recourse May be taken to the settlement of disputes through arbitration as per the Indian Arbitration and Conciliation Act, 1996.<\/strong><\/p>\nFor this purpose, when the contract is with a domestic supplier \u2014 a standard arbitration clause May be included in the tender document, indicating the arbitration procedure to be followed \u2014 based on which the arbitration Act shall become applicable.<\/strong><\/p>\nThis Agreement Shall Continue to Survive Termination, Completion, or Closure of the Contract for 120 Days After that.<\/em><\/p>\nTHE Venue of Arbitration Should Be the Place from Where the Contract Has Been ISSUED.<\/em><\/p><\/aside>\n<h2>9.41.2<\/span>the Msmed Override<\/span><\/h2>\n<aside class=\"note\">\"THE Micro, Small and Medium Enterprises Development (Msmed) Act, 2006 Provides [FOR] Parties to a Dispute \u2014 Where One of the Parties is a Micro or Small Enterprise \u2014 to Be Referred to the Micro and Small Enterprises Facilitation Council, if the Dispute is Regarding Any Amount Due under Section 17 of the Msmed Act, 2006.<\/em><\/p>\nIF a Micro or Small Enterprise, Being a Party to Dispute, Refers to the Provisions in the Msmed Act 2006 \u2014 These Provisions Shall Prevail over this [ARBITRATION] AGREEMENT.<\/em><\/p><\/aside>\n<h2>9.41.3<\/span>the Government Guidelines on Arbitration \u2014 the Rs 10 Crore Rule<\/span><\/h2>\n(OM No. F.11\/21\/2024-PPD dated 03.06.2024)<\/em><\/p>\n\"DoE has issued the following guidelines for arbitration in contracts of domestic procurement by the Government and by its entities and agencies \u2014 including CPSEs, public sector banks (PSBs), and Government companies<\/strong>:\"<\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Guideline<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>## \"arbitration as a method of dispute resolution should not be routinely or automatically included in procurement contracts\/ tenders \u2014 especially in large contracts<\/strong>.\"<\/td><\/tr><tr><td>b<\/td><td>## \"as a norm \u2014 arbitration (if included in contracts) May be restricted to disputes with a value less than Rs. 10 crores.<\/strong> This figure is regarding the value of the dispute \u2014 not the [value of the contract]<\/strong>.\"<\/td><\/tr><tr><td>d<\/td><td>\"*In matters where arbitration is to be resorted to \u2014 institutional arbitration May be given preference (where appropriate, after considering the reasonableness of the cost of arbitration relative to the value involved).\"<\/td><\/tr><tr><td>e<\/td><td>general or case-specific modification May be authorised by the Secretary concerned<\/strong> (or an officer not below Joint Secretary to whom delegated) for Ministries\/ Departments\/ attached and subordinate offices\/ autonomous bodies \u2014 or by the managing director<\/strong> for CPSEs, Banks and Financial Institutions<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>9.42 Foreign Arbitration<\/span><\/h1>\n<aside class=\"note\">\"the Arbitration and Conciliation Act 1996 has provisions for international commercial arbitration \u2014 which shall be applicable if one of the parties has its Central management and control in any foreign country.<\/strong><\/p>\nWhen the Contract is with a Foreign Supplier \u2014 the Supplier Has the Option to Choose EITHER:<\/em><\/p>\n\u2022 the Indian Arbitration and Conciliation Act, 1996; Or<\/strong><\/p>\n\u2022 arbitration in accordance with the provisions of the united nations commission on international trade law (UNCITRAL) arbitration Rules.<\/strong><\/p>\n The arbitration clause with foreign firms should be in the form of self-contained agreements \u2014 especially for large-value contracts, or those for costly plant and machinery.<\/strong><\/p>\nTHE Venue of Arbitration Should Be in Accordance with UNCITRAL or INDIA'S Arbitration Rules \u2014 Whereby IT May Be in India or Any Neutral COUNTRY.<\/em><\/p><\/aside>\n<h1>9.43 Notice for Arbitration and Reference to Arbitration<\/span><\/h1>\n<h2>9.43.1<\/span>The Appointing Authority<\/span><\/h2>\n<aside class=\"note\">\"'The appointing authority' to appoint the arbitrator shall be the head of the procuring organisation named in the contract \u2014 and includes, if there be no such authority, the officer who is for the time being discharging the functions of that authority, whether in addition to other functions or otherwise<\/strong>.\"<\/p><\/aside>\n<h2>9.43.2<\/span>the 60\u2013120 Day Window for the Notice for Arbitration<\/span><\/h2>\n<aside class=\"note\">\"IN the Event of Any Dispute \u2014 if the Adjudicator Fails to Decide Within 60 Days, or the Mediation is Terminated \u2014 Then the Parties to the CONTRACT:<\/em><\/p>\nAfter 60 Days but Within 120 Days of the 'Notice of Dispute' \u2014 Shall Request the Appointing Authority Through a \"NOTICE for ARBITRATION\" in Writing, Requesting That the Dispute or Difference Be Referred to ARBITRATION.<\/em><\/p>\nThe \"notice for arbitration\" shall specify:<\/strong><\/p>\n\u2022 the matters in question, or the subject of the dispute or difference;<\/strong><\/p>\n\u2022 the relevant contractual clause; And<\/strong><\/p>\n\u2022 the amount of claim item-wise.<\/strong><\/p><\/aside>\n<h2>9.43.3<\/span>Reference to Arbitration \u2014 the jurisdictional limit<\/span><\/h2>\n<aside class=\"note\">\"After Appointing ARBITRATOR(S) \u2014 the Appointing Authority Shall Refer the Dispute to THEM.<\/em><\/p>\nOnly Such Dispute or Difference Shall Be Referred to Arbitration Regarding Which the Demand Has Been Made \u2014 Together with COUNTER-CLAIMS or Set OFF.<\/em><\/p>\nOTHER Matters Shall Be Beyond the Jurisdiction of the ARBITRATOR(S).<\/em><\/p><\/aside>\n<h1>9.44 Appointment of Arbitrator<\/span><\/h1>\n<h2>9.44.1<\/span>Qualification of Arbitrators \u2014 the five rules<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Rule<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>RETIRED OFFICERS of the Procuring Organisation: Must HAVE retired in the rank of Senior Administrative Grade (or equivalent)<\/strong> \u00b7 must have retired at least 1 year prior<\/strong> \u00b7 AND must not be over 70 years of age on the date of notice for arbitration<\/strong><\/td><\/tr><tr><td>b<\/td><td>serving officers: Shall not be below ja grade level<\/strong><\/td><\/tr><tr><td>c<\/td><td>## the no-prior-involvement Rule: \"he\/ they shall not have had an opportunity to deal with the matters to which the contract relates \u2014 or who, in the course of his\/ their duties as an officer of the procuring organisation, expressed views on any or all the matters under dispute or differences.<\/strong> *A declaration to this effect shall be taken from the arbitrators.\"<\/td><\/tr><tr><td>d<\/td><td>\"an arbitrator May be appointed notwithstanding the total number of arbitration cases in which he has been appointed in the past<\/strong>.\"<\/td><\/tr><tr><td>e<\/td><td>## \"not be other than the person appointed by the appointing authority \u2014 and if for any reason that is not possible, the matter shall not be referred to arbitration at all<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>9.44.2<\/span>Panel of Arbitrators \u2014 and the two caps<\/span><\/h2>\n<aside class=\"note\">\"the procuring organisation May prepare \u2014 with the approval of the head of the procuring organisation \u2014 a panel of serving and retired officers who are willing and qualified to be empanelled as arbitrators, based on:<\/strong><\/p>\nIntegrity \u00b7 ethics \u00b7 the experience of dealing in contracts\/ tenders \u00b7 temperament of taking fair decisions \u00b7 feedback \u00b7 general image \u00b7 career profile.<\/strong><\/p>\nSuch Persons Should Have Vigilance Clearance \u2014 and Should not Be Working in the Vigilance WING.<\/em><\/p>\n The performance of empanelled arbitrators should be reviewed annually.<\/strong><\/p>\nThe Two Caps:<\/p>\n\u2022 \"the empanelment of a retired officer as arbitrator shall be limited to three procuring entities only.\"<\/strong><\/p>\n\u2022 \"at any given time, a maximum of two arbitration cases shall be assigned to any arbitrator in a Procuring Entity.\"<\/strong><\/p><\/aside>\n<h2>9.44.3<\/span>Replacement of Arbitrators<\/span><\/h2>\n<aside class=\"note\">\"if one or more of the arbitrators: Refuses to Act \u00b7 withdraws from his office \u00b7 dies \u00b7 neglects\/ is unable or unwilling or refuses to Act for any reason \u00b7 his award being set aside by the court for any reason \u00b7 or in the opinion of the appointing authority fails to Act without undue delay \u2014 <\/strong><\/p>\nthe appointing authority shall appoint new arbitrator(s) to Act in his\/ their place in the same manner in which the earlier arbitrator(s) had been appointed.<\/strong><\/p>\nSuch a RE-CONSTITUTED Tribunal May, at its Discretion, Proceed with the Reference from the Stage at Which the Previous ARBITRATOR(S) Left IT.<\/em><\/p><\/aside>\n<h2>9.44.4<\/span>THE FOUR APPOINTMENT REGIMES \u2014 turning on Section 12(5) waiver and value<\/span><\/h2>\n<aside class=\"note\">This is the Most Intricate Table in the Chapter. Note That the Thresholds Differ Depending on Whether Section 12(5) of the Arbitration Act Has Been Waived.<\/p><\/aside>\n<h3>A. Where Section 12(5) Has Been Waived<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>Value of all claims added together<\/th><th>Composition of the Arbitral Tribunal<\/th><\/tr><\/thead><tbody><tr><td>Does not exceed \u20b9 1,00,00,000 (one crore)<\/td><td>A sole arbitrator<\/strong> \u2014 who shall be a serving officer of the procuring organisation, not below Junior Administrative Grade<\/strong>, nominated by the appointing authority. <\/strong>Appointed within 60 days<\/strong> From the day when a written and valid demand for arbitration is received<\/td><\/tr><tr><td>all other cases<\/td><td>a panel of three serving officers not below Junior Administrative Grade<\/strong> \u2014 OR two serving officers not below jag and one retired officer<\/strong> (retired not below the rank of Senior Administrative Grade)<\/td><\/tr><\/tbody><\/table><\/div>\nThe four-name panel procedure (for the three-member tribunal):<\/p>\n<aside class=\"note\">1. The appointing authority shall send a panel of at least four (4) names of officers \u2014 which May also include retired officers empanelled to work as arbitrator \u2014 to the contractor within 60 days of the demand.<\/strong><\/p>\n2. The contractor will be asked to suggest at least 2 names out of the panel for appointment as the contractor's nominee \u2014 within 30 days from the date of dispatch of the request.<\/strong><\/p>\n3. The appointing authority shall appoint at least one out of them as the contractor's nominee \u2014 and shall also simultaneously appoint the balance number of arbitrators, either from the panel or from outside the panel \u2014 duly indicating the 'presiding arbitrator' from amongst the 3 arbitrators so appointed.<\/strong><\/p>\n4. The appointing authority shall complete this exercise within 30 days from the receipt of the names of the contractor's nominees.<\/strong><\/p>\nThe Finance\/ Accounts Requirement:<\/p>\n\"While nominating the arbitrators \u2014 it shall be necessary to ensure that one of them is from the finance\/ accounts Department.<\/strong><\/p>\n (An officer of selection grade of the finance\/ accounts Department shall be considered as of equal status to the officers in Senior Administrative Grade of other departments for appointment of an arbitrator.)\"<\/strong><\/p>\nthe post-retirement continuation Rule: \"the serving officer working in an arbitral tribunal in ongoing arbitration cases can continue as arbitrator in the tribunal even after his retirement<\/strong>.\"<\/p><\/aside>\n<h3>B. Where Section 12(5) Has not Been Waived<\/span><\/h3>\n<div class=\"tblwrap\"><table><thead><tr><th>Value of all claims added together<\/th><th>Composition<\/th><\/tr><\/thead><tbody><tr><td>does not exceed \u20b9 50,00,000 (fifty lakh)<\/td><td>A retired officer<\/strong> \u2014 retired not below the rank of Senior Administrative Grade officer<\/strong> \u2014 as the sole arbitrator<\/strong><\/td><\/tr><tr><td>exceeds \u20b9 50,00,000 (fifty lakh)<\/td><td>a panel of three (3) retired officers<\/strong> \u2014 retired not below the rank of Senior Administrative Grade officer<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\nThe same four-name panel \/ 60-day \/ 30-day \/ 30-day procedure applies, but drawn entirely from RETIRED officers<\/strong>, with their retirement dates duly indicated.<\/p>\n<h2>9.44.5<\/span>FAILURE TO APPOINT \u2014 who designates the institution<\/span><\/h2>\n<aside class=\"note\">\"IF the Appointing Authority Fails to Appoint an Arbitrator \u2014 or Two Appointed Arbitrators Fail to Agree on the Third Arbitrator \u2014 Within 60 (Sixty) Days, Then, Subject to the Survival of this Arbitration AGREEMENT:<\/em><\/p>\n<div class=\"tblwrap\"><table><thead><tr><th>Type of arbitration<\/th><th>Who designates the arbitral institution<\/th><\/tr><\/thead><tbody><tr><td>International commercial arbitration<\/td><td>THE supreme court of India<\/strong> Shall designate the arbitral institution<\/td><\/tr><tr><td>national arbitrations<\/td><td>THE high court<\/strong> Shall designate arbitral institutions<\/td><\/tr><\/tbody><\/table><\/div>\nTHE Arbitration Council of India Must Have Graded These Arbitration INSTITUTIONS.<\/em><\/p>\nThese Arbitral Institutions Must Complete the Selection Process Within Thirty Days of Accepting the Request for the ARBITRATOR'S APPOINTMENT.<\/em><\/p><\/aside>\n<h1>9.45 the Arbitral Procedure<\/span><\/h1>\n<h2>9.45.1<\/span>Effective Date of Entering Reference<\/span><\/h2>\n<aside class=\"note\">\"THE Arbitral Tribunal Shall Be Deemed to Have Entered the Reference on the Date on Which the ARBITRATOR(S) Have Received Notice of Their APPOINTMENT.<\/em><\/p>\nAll Subsequent Time Limits Shall Be Counted from Such DATE.<\/em><\/p><\/aside>\n<h2>9.45.2<\/span>SEAT vs VENUE of Arbitration \u2014 the critical distinction<\/span><\/h2>\n<aside class=\"note\">\"THE Seat of Arbitration Shall Be the Place from Which the Letter of Award or the Contract is ISSUED.<\/em><\/p>\nThe venue of arbitration shall be the same as the seat of arbitration.<\/strong><\/p>\nHOWEVER, in Terms of Section 20 of the Arbitration Act \u2014 the Arbitrator, at His Discretion, May Determine a Venue Other Than the Seat of the Arbitration \u2014 Without in Any Way Affecting the Legal Jurisdictional Issues Linked to the Seat of the ARBITRATION.<\/em><\/p><\/aside>\n<h2>9.45.3<\/span>The Duty to Send Parties Back if Earlier Steps Were Skipped<\/span><\/h2>\n<aside class=\"note\">\"IF the Adjudication and\/ or Mediation Mechanisms Had not Been Exhausted Before Such Reference to Arbitration \u2014 the Arbitrator Should Ask the Aggrieved Party to Approach the Designated Authority for Such Mechanisms Before the Arbitration Proceedings are STARTED.<\/em><\/p><\/aside>\n<h2>9.45.4<\/span>Pleadings \u2014 the 30 \/ 60 \/ six-month timetable<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Step<\/th><th>Time limit<\/th><\/tr><\/thead><tbody><tr><td>CLAIMANT to submit claims<\/strong>(stating the facts supporting the claims, with all relevant documents, and the relief or remedy sought against each claim)<\/em><\/td><td>within 30 DAYS<\/strong> From the date of appointment of the arbitral tribunal \u2014 unless it has granted an extension<\/td><\/tr><tr><td>RESPONDENT to submit defence statement and counter-claim(s), if any<\/td><td>within 60 DAYS<\/strong> Of receipt of the copy of claims \u2014 unless the Tribunal has granted an extension<\/td><\/tr><tr><td>COMPLETION of statements of claims, counter-claims and defence<\/td><td>## within six months<\/strong> From the effective reference date<\/td><\/tr><\/tbody><\/table><\/div>\n<aside class=\"note\">The NO-NEW-CLAIM Rule:<\/p>\n\"no new claim shall be added during proceedings by either party.<\/strong><\/p>\n However, a party May amend or supplement the original claim or defence thereof during arbitration proceedings \u2014 subject to acceptance by the tribunal, having due regard to the delay in making it.\"<\/strong><\/p><\/aside>\n<h2>9.45.5<\/span>Oral Arguments on a Day-to-Day Basis \u2014 and exemplary costs<\/span><\/h2>\n<aside class=\"note\">\"ORAL Arguments \u2014 as Far as Possible \u2014 Shall Be Heard by the Arbitral Tribunal on a DAY-TO-DAY Basis, and No Adjournments Shall Be Granted Without Sufficient CAUSE.<\/em><\/p>\nThe arbitrator(s) may Impose an Exemplary Cost on the Party Seeking Adjournment Without Sufficient CAUSE.<\/em><\/p><\/aside>\n<h2>9.45.6<\/span>AWARD WITHIN 12 MONTHS \u2014 and the extension ladder<\/span><\/h2>\n<aside class=\"note\">\"THE Arbitral Tribunal is Statutorily Bound to Deliver an Award Within 12 (Twelve) Months from the Date When the Arbitral Tribunal Enters REFERENCE.<\/em><\/p>\nTHE Award Can Be Delayed by a Maximum of Six Months Only under Exceptional Circumstances \u2014 Where All Parties Consent to Such Extension of TIME.<\/em><\/p>\nThe court's approval Shall Be Required for Further Extension, if the Award is not Made Out Within Such an Extended PERIOD.<\/em><\/p>\n During the period of an application for an extension of time awaiting before the court \u2014 the arbitrator's proceedings shall continue until the disposal of the application<\/strong>.\"<\/p><\/aside>\n<h2>9.45.7<\/span>Cost of Arbitration and Fees of the Arbitrators<\/span><\/h2>\n<aside class=\"note\">\"the concerned parties shall bear the cost of arbitration in terms of section 31(A) of the arbitration Act. The cost shall inter alia include fees of the arbitrator.<\/strong><\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Fee entitlement<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>A sole arbitrator shall be entitled to a 25% extra fee<\/strong> Over the prescribed fee<\/td><\/tr><tr><td>2<\/td><td>the arbitrator shall be entitled to a 50 per cent extra fee if the award is made within 6 months<\/strong> \u2014 in terms of section 29(A)(2) of the Arbitration Act<\/td><\/tr><tr><td>3<\/td><td>the arbitrator shall also be entitled to this extra fee where the fast track procedure<\/strong> in terms of section 29(B) is followed<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>9.45.8<\/span>FAST TRACK PROCEDURE \u2014 four salient features<\/span><\/h2>\n<aside class=\"note\">\"the parties to arbitration May choose to opt for a fast-track procedure \u2014 either before or after the commencement of the arbitration.<\/strong><\/p>\nTHE Award in FAST-TRACK Arbitration is to Be Made Out Within Six Months \u2014 and the Arbitral Tribunal Shall Be Entitled to Additional FEES.<\/em><\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Feature<\/th><\/tr><\/thead><tbody><tr><td>a<\/td><td>## \"the dispute is to be decided based on written pleadings only. Procuring entities May encourage fast track procedure based on written pleadings only<\/strong>.\"<\/td><\/tr><tr><td>b<\/td><td>\"the arbitral tribunal shall have the power to call for clarifications in addition to the written pleadings where it deems necessary<\/strong>.\"<\/td><\/tr><tr><td>c<\/td><td>\"an oral hearing May be held only if all the parties request, or the arbitral tribunal considers it necessary<\/strong>.\"<\/td><\/tr><tr><td>d<\/td><td>\"the parties are free to decide the fees of the arbitrator(s) for a fast-track procedure<\/strong>.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h2>9.45.9<\/span>Powers of the Arbitral Tribunal to Grant Interim Relief<\/span><\/h2>\n<aside class=\"note\">\"the parties to arbitration May approach the arbitral tribunal to seek interim relief on the grounds available under section 9 of the Act.<\/strong><\/p>\n The tribunal has the powers of a court to make interim awards<\/strong>.\"<\/p><\/aside>\n<h2>9.45.10<\/span>THE AWARD \u2014 reasons, no pre-award interest, and corrections<\/span><\/h2>\n<aside class=\"note\">\"[The award shall State] item-wise the sum and reasons upon which it is based.<\/strong><\/p>\nTHE Analysis and Reasons Shall Be Detailed Enough So That the Award Can Be Inferred from IT.<\/em><\/p>\nThe no-pre-award-interest term:<\/p>\n\"it shall be further a term of this arbitration agreement that \u2014 where the arbitral award is for the payment of money \u2014 no interest shall be payable on the whole or any part of the money for any period till the date on which the award is made \u2014 in terms of section 31(7)(a) of the arbitration Act.\"<\/strong><\/p><\/aside>\nfinality and corrections:<\/p>\n<ul class=\"lst\"><li>\"the award of the arbitrator shall be final and binding on the parties to this contract<\/strong>\";<\/li><li>\"a party May apply for corrections of any computational errors, typographical or clerical errors, or any other error of a similar nature occurring in the award \u2014 or interpretation of a specific point of the award \u2014 to the tribunal within 60 days of receipt of the award<\/strong>\";<\/li><li>\"a party May apply to the tribunal within 60 days of receiving the award to make an additional award \u2014 as to claims presented in the arbitral proceedings but omitted from the arbitral award<\/strong>.\"<\/li><\/ul>\n<h1>9.46 Challenging Arbitration \/ Judicial Awards<\/span><\/h1>\n<aside class=\"note\">This is One of the Most Candid Passages in the Entire Manual Family, and is Reproduced at Length.<\/p><\/aside>\n<h2>9.46.1<\/span>The Non-Routine Rule<\/span><\/h2>\n<aside class=\"note\">\"IN Cases Where There is a Decision Against the Government\/ Public Sector Enterprise \u2014 the Decision to Challenge\/ Appeal Should not Be Taken ROUTINELY.<\/em><\/p>\nBUT Only When the Case Genuinely Merits Going for Challenge\/ Appeal, and There are High Chances of Winning in the Court\/ Higher COURT.<\/em><\/p><\/aside>\n<h2>9.46.2<\/span>the 75% Payment Rule \u2014 Rule 227A of GFR, 2017<\/span><\/h2>\n<aside class=\"note\">\"IN Cases Where the Ministry\/ Department Has Challenged an Arbitral Award \u2014 and, as a Result, the Amount of the Arbitral Award Has not Been PAID:<\/em><\/p>\n75% of the Arbitral Award (Which May Include Interest Up to Date of the Award) Shall Be Paid by the Ministry\/ Department to the Contractor\/ Concessionaire Against a Bank Guarantee (BG).<\/em><\/p>\nThe BG shall Only Be for the Said 75% of the Arbitral Award \u2014 and not for the Interest, Which May Become Payable to the Ministry\/ Department Should the Subsequent Court Order Require a Refund of the Said AMOUNT.<\/em><\/p><\/aside>\n<h2>9.46.3<\/span>the Escrow Account and the Waterfall<\/span><\/h2>\n<aside class=\"note\">\"the payment May be made into a designated escrow account, with the stipulation that the proceeds will be used:<\/strong><\/p>\n1. First \u2014 for payment of lenders' dues;<\/strong><\/p>\n2. Second \u2014 for completion of the project; And<\/strong><\/p>\n3. Then \u2014 for completion of other projects of the same Ministry\/ Department, as mutually agreed\/ decided.<\/strong><\/p>\n Any balance remaining in the escrow account \u2014 after settlement of lenders' dues and completion of projects of the Ministry\/ Department \u2014 May be allowed to be used by the contractor\/ concessionaire, with the prior approval of the lead banker and the Ministry\/ Department.<\/strong><\/p>\n If otherwise eligible, and subject to contractual provisions \u2014 other amounts withheld May also be released against BG<\/strong>.\"<\/p><\/aside>\n<h2>9.46.4<\/span>the Candid Passage on Casual Appeals<\/span><\/h2>\n<aside class=\"note\">\"ARBITRATION\/ Court Awards Should Be Critically Reviewed. in Cases Where There is a Decision Against Government\/ Pse \u2014 the Decision to Appeal Should not Be Taken ROUTINELY.<\/em><\/p>\nTHERE is a Perception That Such Appeals are Sometimes Resorted to in Order to Postpone the Problem and Defer Personal ACCOUNTABILITY.<\/em><\/p>\nCASUAL Appeals in Arbitration\/ Court Cases Have Resulted in the Payment of Heavy Damages\/ Compensation\/ Additional Interest Cost \u2014 Thereby Causing More Harm to the Exchequer, in Addition to Tarnishing the Image of the GOVERNMENT.<\/em><\/p><\/aside>\n<h2>9.46.5<\/span>The Monitoring, Delegation and Board\/ Committee Requirements<\/span><\/h2>\n<aside class=\"note\">\"the organisation should monitor the success rate of appealing against arbitration awards.<\/strong><\/p>\n There should be a clear delegation to empower officials to accept arbitration\/ court orders.<\/strong><\/p>\nA Special Board\/ Committee May Be Set Up to Review the Case Before an Appeal is Filed Against an ORDER.<\/em><\/p>\nArbitration\/ court awards should not be routinely appealed, without due application of mind to all facts and circumstances \u2014 including realistic probability of success.<\/strong><\/p>\nThe Certification the Board\/ Committee Must Make:<\/p>\n\"The board\/ committee or other authority deciding on the matter shall clarify that it has considered both legal merits and the practical chances of success \u2014 and, after considering the cost of (and rising through) litigation\/ appeal\/ further litigation, as the case May be:<\/strong><\/p>\n it is satisfied that such litigation\/ appeal\/ further litigation cost is likely to be financially beneficial compared to accepting the arbitration\/ court award.\"<\/strong><\/p><\/aside>\n<h2>9.46.6<\/span>THE STATISTICAL JUSTIFICATION \u2014 why the 75% risk is worth taking<\/span><\/h2>\n<aside class=\"note\">\"STATISTICS Have Shown That \u2014 in Cases Where the Arbitration Award is Challenged, a Large Majority of Cases are Decided in Favour of the CONTRACTOR.<\/em><\/p>\nIN Such Cases, the Amount Becomes Payable with Interest at a Rate That is Often Far Higher Than the GOVERNMENT'S Cost of Funds. this Results in Huge Financial Losses to the GOVERNMENT.<\/em><\/p>\nHENCE, in the Aggregate \u2014 IT is in the Public Interest to Take the Risk of Paying a Substantial Part of the Award Amount, Subject to the Result of the Litigation \u2014 Even if, in Some Rare Cases of Insolvency Etc., Recovery of the Amount in Case of Success May Become DIFFICULT.<\/em><\/p><\/aside>\n<h2>9.46.7<\/span>the Personal Accountability Provision<\/span><\/h2>\n<aside class=\"note\">\"THE Only Circumstances in Which Such Payment Need not Be Made are When the CONTRACTOR:<\/em><\/p>\n\u2022 declines or is unable to provide the requisite Bank Guarantee; And\/ or<\/strong><\/p>\n\u2022 fails to open an escrow account as required.<\/strong><\/p>\nPERSONS Responsible for not Adhering to this are Liable to Be Held Personally Accountable for the Additional Interest Arising in the Event of the Final Court Order Going Against the Procuring ENTITY.<\/em><\/p>\n \u2014 Rule 227A of GFR, 2017, as notified under paras 16.1 to 16.5 of OM No. F.1\/9\/2021-PPD dated 29.10.2021<\/em><\/p><\/aside>\n<h1>9.47 Mechanism for Resolution of Commercial Disputes Between Cpses and Government Agencies (AMRCD) [W ONLY]<\/span><\/h1>\n<h2>9.47.1<\/span>Introduction \u2014 and what AMRCD superseded<\/span><\/h2>\n<aside class=\"note\">\"to streamline and ensure the effective resolution of commercial disputes between Central public sector enterprises (CPSEs) and Government departments\/ organizations \u2014 the Government of India has established the:<\/strong><\/p>\nADMINISTRATIVE Mechanism for Resolution of Cpses Disputes (AMRCD)<\/em><\/p>\nThis Mechanism \u2014 Effective from May 22, 2018 \u2014 Supersedes the Earlier Permanent Machinery of Arbitration (PMA).<\/em><\/p><\/aside>\nSCOPE \u2014 it applies to all commercial disputes concerning the interpretation and application of provisions in contracts between:<\/p>\na) CPSEs inter se<\/strong>; and<\/p>\nb) CPSEs and Government departments\/ organizations<\/strong> \u2014 <\/p>\n<aside class=\"note\">EXCLUDING Disputes Related to: Railways \u00b7 Income Tax \u00b7 Customs \u00b7 and Excise DEPARTMENTS.<\/em><\/p><\/aside>\n<h2>9.47.2<\/span>the TWO-TIER Structure<\/span><\/h2>\n<div class=\"tblwrap\"><table><thead><tr><th>Tier<\/th><th>Composition \/ Authority<\/th><\/tr><\/thead><tbody><tr><td>First level (tier 1)<\/td><td>disputes are initially referred to a committee comprising<\/strong>: \u2022 THE secretaries of the respective administrative ministries\/ departments involved<\/strong>; AND \u2022 THE Secretary of the Department of legal affairs<\/strong>. THE financial advisors (fas) of the concerned ministries\/ departments represent the issues before this committee<\/strong><\/td><\/tr><tr><td>second level (tier 2)<\/td><td>if the dispute remains unresolved at the first level \u2014 it is escalated to the Cabinet Secretary<\/strong>. ## WHOSE decision is final and binding<\/strong><\/td><\/tr><\/tbody><\/table><\/div>\n<h2>9.47.3<\/span>Procedure \u2014 the three-month and 15-day rules<\/span><\/h2>\n<aside class=\"note\">\"the claiming party must approach the financial advisor of its administrative Ministry\/ Department to initiate the dispute resolution process.<\/strong><\/p>\nMeetings are held to examine and resolve the dispute on its merits.<\/strong><\/p>\nTHE Committee is Expected to Finalize its Decision Within Three Months of Receiving the Dispute NOTICE.<\/em><\/p>\nAN Aggrieved Party Can Appeal the first-LEVEL Decision to the Cabinet Secretary Within 15 DAYS.<\/em><\/p><\/aside>\n<h2>9.47.4<\/span>Inclusion in Contracts \u2014 mandatory, including retrospectively<\/span><\/h2>\n<aside class=\"note\">\"All Cpses Must Include a Specific Clause in Relevant Contracts \u2014 to Ensure That Disputes are Resolved Through the AMRCD as Stipulated in the Dpe O.M..<\/em><\/p>\nONGOING Contracts Should Also Be Amended to Incorporate this CLAUSE.<\/em><\/p><\/aside>\n<h1>9.48 Contract Management \u2014 Risks and Mitigations<\/span><\/h1>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>RISK<\/th><th>MITIGATION<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>advance payments: \"this is an area of risk in Public Procurement with undue and unintended benefits to the contractor \u2014 which vitiates the original selection criteria<\/strong>.\"<\/td><td>any mobilisation or other advance payments should be as per the tender document\/ contract, and only for justifiable cases<\/strong>. Terms of such advances should be expressly stated in the NIT\/ tender documents<\/strong>. The advance payment May be released in not less than two stages<\/strong>, depending upon the progress of the contract. The advance should be progressively adjusted against bills cleared for payment<\/strong>. ## \"interest should be charged on delayed recoveries irrespective of the reason stated<\/strong>.\"<\/td><\/tr><tr><td>2<\/td><td>contract changes and renegotiations: \"this is also a risk area where the Procuring Entity May not get what it contracted and paid for, or May pay for what it has not received. On the other hand, the contractor May not get timely or proper amendments due to changes asked by the procuring entities<\/strong>.\"<\/td><td>## \"contract modifications and renegotiations should not substantially alter the nature of the contract. It should not vitiate the basis of the selection of the contractor. It should not give undue or unintended benefits to the contractor.<\/strong> *However, for any changes caused by the Procuring Entity \u2014 the contractor should be adequately and timely compensated within the contractual terms.\"<\/td><\/tr><tr><td>3<\/td><td>\"supervising agencies\/ individuals are unduly influenced to alter the contents of their reports \u2014 so changes in quality, performance, equipment, and characteristics go unnoticed<\/strong>.\"<\/td><td>A contract management Manual or operating procedure should be prepared for large-value contracts<\/strong>. <\/strong>There should be built-in systems for checks and balances<\/strong><\/td><\/tr><tr><td>4<\/td><td>\"the contractor's claims are false or inaccurate \u2014 and are protected by the person in charge of revising them<\/strong>.\"<\/td><td>## \"all large contracts should be formally reconciled for closure \u2014 to ensure that the scope of the work and warranty\/ defect liability period is completed.<\/strong> *This should include the dispute resolution forum for resolving disputes in a fixed timeframe, with the provision of escalation level.\"<\/td><\/tr><tr><td>5<\/td><td>\"payment to the contractor is delayed intentionally or otherwise<\/strong>.\"<\/td><td>\"all payments\/ recoveries should also be reconciled<\/strong>.\"<\/td><\/tr><tr><td>6<\/td><td>\"the contractor gets the final payment \u2014 but contract closure has not been formally done. As a result, material\/ assets loaned to him are not accounted for<\/strong>.\"<\/td><td>## \"*it should also be ensured that material\/ assets loaned to him \u2014 including security passes \u2014 are accounted for.\"<\/td><\/tr><tr><td>7<\/td><td>## \"every dispute lands up in arbitration or court cases \u2014 since the Procuring Entity is reluctant to grant compensation for its lapses to the contractor<\/strong>.\"<\/td><td>(addressed by the dispute-resolution ladder at paras 9.37\u20139.46, and by the DoE directive at para 9.37.2)<\/em><\/td><\/tr><tr><td>8<\/td><td>\"agents\/ sub-contractors and partners \u2014 chosen in a non-transparent way \u2014 are unaccountable, or are used to channel bribes<\/strong>.\"<\/td><td>\"agents should only be as per the terms of the contract.<\/strong> ## *sub-contracting of the contract should normally not be allowed in the procurement of goods.\"<\/td><\/tr><\/tbody><\/table><\/div>\n<h1>Appendix to Chapter 9 \u2014 Part C: Points of Difference<\/span><\/h1>\n<aside class=\"note\">As noted at the head of this Part, the dispute-resolution block is substantially COMMON to all four Manuals. The divergences below are therefore few \u2014 but correspondingly significant.<\/p><\/aside>\n<div class=\"tblwrap\"><table><thead><tr><th>#<\/th><th>Point of difference<\/th><th>Position<\/th><\/tr><\/thead><tbody><tr><td>1<\/td><td>AMRCD \u2014 the Administrative Mechanism for Resolution of CPSEs Disputes<\/strong>(effective 22 May 2018, superseding the Permanent Machinery of Arbitration; two-tier structure ending with the Cabinet Secretary; three-month decision; 15-day appeal; excludes Railways, Income Tax, Customs and Excise)<\/em><\/td><td>W ONLY<\/td><\/tr><tr><td>2<\/td><td>Definition of breach<\/td><td>G\/C\/NC: framed around insolvency, receivership, neglect, default, or disinclination to honour obligations<\/em> \u2014 expressly including ETHICAL STANDARDS and the obligation to maintain production capability \u00b7 W: framed around *inability to honour important stipulations*, noting that breaches mostly relate to inability to complete the Work within stipulated time<\/strong><\/td><\/tr><tr><td>3<\/td><td>\"Obligation to maintain production capability (equipment & manufacturing facilities) based on which contract was awarded\"<\/td><td>G<\/strong>(a goods-specific default)<\/em><\/td><\/tr><tr><td>4<\/td><td>Warranty obligations survive termination<\/td><td>G<\/strong>(consistent with the Goods-only Warranty Clause at Part A, para 9.17)<\/em><\/td><\/tr><tr><td>5<\/td><td>Sub-contracting \"should normally not be allowed in the procurement of GOODS\"<\/td><td>G<\/strong>(contrast the Works and NC positions permitting sub-contracting subject to limits \u2014 Chapter 3, para 3.3.3 and Chapter 4 Part A, para 4.3.3-E)<\/em><\/td><\/tr><tr><td>6<\/td><td>Excepted matters head 6 \u2014 Make in India, land-border restrictions, MSE and Start-up preferences excluded from arbitration<\/td><td>Common to all four<\/td><\/tr><tr><td>7<\/td><td>The three-step ladder \u2014 Adjudication \u2192 Mediation \u2192 Arbitration, with the sequential rule<\/td><td>Common to all four<\/td><\/tr><tr><td>8<\/td><td>The Mediation Act 2023 replacing the conciliation part of the Arbitration and Conciliation Act 1996<\/td><td>Common footnote in all four<\/td><\/tr><tr><td>9<\/td><td>Rs 10 crore norm restricting arbitration; institutional arbitration preferred; arbitration not to be routinely included<\/td><td>Common to all four<\/strong>(OM dated 03.06.2024)<\/em><\/td><\/tr><tr><td>10<\/td><td>The four appointment regimes turning on Section 12(5) waiver \u2014 Rs 1 crore \/ Rs 50 lakh thresholds; the four-name panel; the Finance\/ Accounts member requirement<\/td><td>Common to all four<\/td><\/tr><tr><td>11<\/td><td>75% payment against BG on challenging an award; the escrow waterfall; personal accountability for non-adherence<\/td><td>Common to all four<\/strong>(Rule 227A of GFR 2017)<\/em><\/td><\/tr><tr><td>12<\/td><td>Risk row 8 mitigation \u2014 \"sub-contracting should normally not be allowed\"<\/td><td>G<\/strong>(the other Manuals' risk tables address agents differently)<\/em><\/td><\/tr><\/tbody><\/table><\/div>\nend of Chapter 9 (parts a, b and c)<\/p>\n<aside class=\"note\">The Unified Manual is Now Complete for Chapters 1 to 9.<\/p>\nWhat remains in the source Manuals beyond this point are the <\/strong>ANNEXURES and APPENDICES \u2014 which differ substantially in numbering between the four Manuals, and which have been cross-referenced throughout this Unified Manual at the point where each is invoked (for example: Integrity Pact \u2014 G Annexure 30 \u00b7 W Annexure 14 \u00b7 C Annexure 18 \u00b7 NC Annexure 12)<\/em>.<\/p>\nA consolidated ANNEXURE CONCORDANCE \u2014 mapping every annexure of all four Manuals to its counterparts \u2014 would be the natural next deliverable.<\/p><\/aside><\/section>\n<\/div><\/main>\n<\/div>\n<button class=\"upm-navbtn\" type=\"button\">Chapters<\/button>\n<button class=\"upm-top\" type=\"button\">Top<\/button>\n<script>\n\/* ===================================================================\n SET YOUR PDF URL HERE \u2014 paste the File URL from Media Library.\n Leave it empty to use the PDF sitting beside this page.\n =================================================================== *\/\nvar UPM_PDF_URL = \"\";\n\/* =================================================================== *\/\n\n(function(){\n var root=document.querySelector('.upm'); 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