DRAFT 4

GENERAL CLAUSES

INTRODUCTION

Source of Funds

National Thermal Power Corporation Ltd.

(herein after called 'NTPC' or 'Employer) intends to finance the Package named in the Bid
Data Sheet (BDS), through external commercial borrowings, internal and other sources.

NTPC intends to make financing arrangements for the subject package by means of Buyers
Credit from International Banks through the Export Credit Agencies of the country concerned
to the extent the goods and services covered in the package are imported from OECO
countries.

For the above purpose the Export Credit Agencies require certain. Procedure formalities to
be completed by the equipment supplier of their country. The bidder shall, in case of award
of contract, facilitate completion of such formalities as may be required by the respective
export credit agency to enable NTPC to avail Buyers Credit for funding eligible goods and
services covered in the package.

The aforesaid option of funding is also intended to be availed by NTPC for supply of goods
and services from OECD countries by the sub-vendors/sub-contractor of the bidder. The
bidder shall make similar compliance in respect of its sub-vendors/ sub- contractors to the
extent the goods are imported from concerned OECD country.
ELIGIBLE PLANT, EQUIPMENT AND SERVICES

For the purposes of these bidding documents, the word "facilities" means the plant and
equipment to be supplied and installed, together with the services to be carried out by the
contractor under the contract. The words "plant and equipment,” "installation services," etc.,
shall be construed in accordance with the respective definitions given to them in the General
Conditions of Contract.

All countries and areas are the eligible source countries for goods and services to be
supplied under this contract and accordingly goods and services to be supplied under this
contract may have their origin in any country and area.

For purposes of this clause, "origin" means the place where the plant and equipment or
component parts thereof are mined, grown, or produced. Plant and equipment are produced
when, through manufacturing, processing or substantial and major assembling of
components, a commercially recognized product results that is substantially different in basic
characteristics or in purpose or utility from its components. The origin of the plant, equipment
and services is distinct from the nationality of the Bidder.
BID PRICES

Unless otherwise specified in the Technical Specifications. Bidders shall quote for the entire
facilities on a "single responsibility" basis such that the total bid price covers all the
Contractor's obligations mentioned in or to be reasonably inferred from the bidding
documents in respect of the design, manufacture, including procurement and subcontracting
(if any), delivery, construction, installation and Completion of the facilities including supply of
mandatory spares (if any).

This includes all requirements under the Contractor's responsibilities for testing, pre-
commissioning and commissioning of the facilities and, where so required by the bidding
documents, the acquisition of all permits, approvals and licenses, etc.; the operation,
maintenance and training services and such other items and services as may be specified in
the bidding documents, all in accordance with the requirements of the General Conditions of
Contract and Technical Specification.

Bidders are required to quote the price for the commercial, contractual and technical
obligations outlined in the bidding documents. If a Bidder wishes to make a deviation to the
provisions of the bidding documents save those listed, such deviations shall be listed in
Attachment 6 of its bid.

Bidders shall give a breakdown of the prices in the manner and detail called for in the
Price Schedules. The Bidders shall present their prices in the following manner:
Separate numbered Schedules shall be used for each of the following elements. The total
amount from each Schedule (1 to 4) shall be summarized in a Grand Summary (Schedule 5)
giving the total bid price (s} to be entered in the Bid Form.

Schedule No. 1

Plant· and Equipment including Type Tests charges and Mandatory Spare Parts supplied
from Abroad.

Schedule No. 2

Plant and Equipment including Type Tests charges and Mandatory Spare Parts to be
manufactured within Employer's Country.

Schedule No. 3

Local Transportation including port handling, port clearance, port charges, Inland transit
Insurance and other local cost incidental to delivery of Plant & Equipment and Mandatory
Spares.

Schedule No. 4

Installation Services including Erection Works, insurance covers other than inland transit
insurance and other services as specified in the bidding document.

Schedule No. 5

Grand Summary (Schedules Nos. 1 to 4)

Schedule No. 6

Recommended Spare Parts.

Schedule No. 7

Taxes and Duties not included in Bid Price

Schedule No. 8A

Break up of type test charges quoted in Schedule -1

Schedule No. 8B

Break up of type test charges quoted in Schedule -2.

BID SECURITY

The bidder shall furnish, as part of its bid, a bid security in a separate sealed envelope in the

amount and currency as stipulated in the Bid Data Sheet.

The bid security shall, at the Bidder's option, be in the form of a Banker's cheque irrevocable
letter of credit or a bank guarantee. In case of domestic bidders the Bank Guarantee shall be
from- a Bank as specified in the Bid Data Sheets.

In case of foreign bidders, the Bank Guarantee can be from any other bank also in addition
to the banks specified in Bid Data Sheet and if the Bank Guarantee is from a Bank not
specified in the Bid Data Sheet, then the Bank Guarantee shall be confined by any such
Bank as specified in the Bid Data Sheet.

The format of the bank guarantee or letter of credit shall be in accordance with the' form of
bid security included in the bidding documents. Bid security shall remain valid for a period of.
forty five (45) days.

The bid security shall be furnished in a separate sealed envelope. Any bid not accompanied
by an acceptable bid security, in a separate sealed envelope, shall be rejected by the
employer as being non-responsive and returned to the Bidder without being opened.
The bid security of a joint venture must be in the name of all the partners in the joint venture
submitting the bid.

The bid securities of unsuccessful bidders will be returned as promptly as possible, but not

later than twenty-eight (28) days after the expiration of the bid Validity period.

THE BID SECURITY MAY BE FORFEITED

(a) If the Bidder withdraws its bid during the period of bid validity specified by the Bidder in
the Bid Form.

(b) If the Bidder does not accept the correction of its Bid Price pursuant.

(c) If the Bidder does not withdraw any deviations listed in Anachment-6 at the cost of
withdrawal indicated by him

(d) If the Bidder refuses to withdraw, without any cost to the Employer, Any deviation not
listed in Attachment 6 but found else...where in the bid.

In case of successful bidder, if the bidder fails within the specified time limit

To sign the contract agreement, in accordance with ITB.

To furnish the required performance security in accordance with ITB.

CONVERSION TO SINGLE CURRENCY

To facilitate evaluation and comparison, the Employer will convert all bid prices expressed in
the amounts in various currencies in which the bid price is payable to a single currency. The
currency selected for converting bid prices to a common base for the purpose of evaluation,
along with the source and date of the exchange rate.

TECHNICAL EVALUATION

The Employer will carry out a detailed evaluation of the bids previously determined to be
substantially responsive in order to determine whether the technical aspects are in
accordance with the requirements set forth in the bidding documents. In order to reach such
a determination, the Employer will examine and compare the technical aspects of the bids on
the basis of the information supplied by the bidders, taking into account the following factors:

a) Overall completeness and compliance with the Technical Specifications

And Drawings; deviations from the Technical Specifications as identified in Attachment
6 to the bid; suitability of the facilities offered in relation to the environmental and climatic
conditions prevailing at the site; and quality, function and operation of any process control
concept included in the bid. The bid that does not meet minimum acceptable standards of
completeness, consistency and detail will be rejected for non-responsiveness.

Achievement of specified performance criteria by the facilities.

(b) Type, quantity and long-term availability of mandatory and recommended Spare
parts and maintenance services.

(c) Any other relevant factors, if any, listed in the Bid Data Sheet, or that the Employer
deems necessary or prudent to take into consideration.

COMMERCIAL EVALUATION

The comparison shall be of the EXW price of domestically manufactured plant and
equipment including Type Test charges and mandatory spares (within the Employer's
country), such price to include all costs as well as duties and taxes paid or payable on
components and raw materials incorporated or to be incorporated in the plant and equipment
including mandatory spares plus the CIF (Indian port-of-entry) price of the plant and
equipment including Type Test charges and mandatory spares named port of destination
offered from outside the Employer's country, plus the cost of local transportation, insurance
covers, installation and other services required under the contract. The Employer's
comparison will also include the costs resulting from application of the evaluation
procedures.

However, the Price of recommended spare parts quoted in Price Schedule No. 6 shall not be
considered for evaluation of Bids.
The Employer's evaluation of a bid will take into account, in addition to the bid prices
indicated in Price Schedules Nos.1 through 4 (with summary in Schedule No.5) along with
the corrections pursuant to ITB, the following costs and factors that will be added to each
Bidder's bid price in the evaluation using pricing information available to the Employer.

(a) The cost of all quantifiable deviations and omissions from contractual and commercial
conditions and the Technical Specifications as identified in Attachment 6 to the Bid.

(b) Compliance with the time schedule to the Form of Contract Agreement and evidenced as
needed in a milestone schedule provided in the bid

(c) The functional guarantees of the facilities offered.

(d) The extra cost of work, services, facilities etc., required to be provided by the Employer or
third parties.

(e) Price Preference.

FUNCTIONAL GUARANTEES OF THE FACILITIES

(1) Bidders shall state the functional guarantees (e.g. performance,

Efficiency, consumption) of the proposed facilities in response to the Technical

Specifications. In case a minimum (or a maximum, as the case may be) level of functional

guarantees is specified in the Technical Specifications for the bids to be considered

responsive, bids offering plant and equipment with such functional guarantees less (or more)

than the minimum (or maximum) specified shall be rejected.

2) For the purpose of evaluation, the adjustment specified in the Bid Data Sheet will be
added to the bid price for each drop (or excess) in the responsive functional guarantees
offered by the Bidder, below (or above) either a norm of 100 or the value committed in the
responsive bid with the most performing functional guarantees, as specified in the Bid Data
Sheet. The Adjustment Factors shall be converted to such currency as specified in Bid Data
Sheet.

PRICE PREFERENCE

Any adjustments in price that result from the above procedures shall be added, for

purposes of comparative evaluation only, to arrive at an "Evaluated Bid Price." Bid prices

quoted by Bidders shall remain unaltered.

The method of evaluation is illustrated below.

ILLUSTRATIVE METHOD OF EVALUATION

(a) Quoted Bid Price without taxes

& Duties (after considering
Arithmetical errors)

ClF price including Type Test charges N1

+ Inland transportation including inland transit
Insurance for equipment and mandatory spares

(b) Ex-works price including

Type Test charges + in- N2
land transportation including
inland transit insurance for
equipment and mandatory spares
(c) Price for Installation Services N3

(d) Total price N=N1+N2+N3

Cost compensation
- Technical R

Cost compensation
- Commercial T

Deficiency in mandatory spares V

Adjustment works of Functional

Guarantee X

Additional work of employer Z1

Price preference PP= 0.15 x CIF

CIF value of import content of ex-work price quoted in schedule -2, shall be the value
of import content declared by Bidder in Attachment -9 to bid in respect of plant and
equipment including mandatory spares to be manufactured or fabricated within the
Employer’s country and quoted on Ex-works (India) basis.

Evaluated Bid Price EP1= (N+R+T+V+X+Z1+PP).

For granting price preference, the bid price of all bidders shall be increased by fifteen
percent

(15%) of the CIF component contained in the bid.

Bidders seeking qualification on the basis of collaboration with manufacturer(s) of particular

equipment (s) are required to quote the price of such equipment(s) including spares on CIF
(Indian port-of-entry) basis, if the items are to be imported by the manufacturer or the bidder.

In case, such equipment and spares are not quoted by the bidder on ClF basis, then
Employer shall assess the CIF (Indian port-of-entry) price of such equipment and mandatory
spares for the purpose of evaluation and the total bid price will be increased by 15% of such
assessed CIF price also for the purpose of granting price preference.

PERFORMANCE SECURITY

Within twenty-eight (28) days after receipt of the notification of award, the successful Bidder
shall furnish. The performance security for ten percent 10% of the Contract Price and in the
form provided in the section -Forms and Procedures of the bidding documents or in another
form acceptable to the Employer.
In case Joint Deed(s) of Undertaking by the Contractor along with his
associate(s)/collaborator(s) form part of the Contract, then, unconditional Bank Guarantee(s)
from such associate(s)/collaborator(s) for amount(s) specified in Sid Data Sheets shall be
furnished within twenty eight (28) days after Notification of Award.

These Bank Guarantees shall be furnished in the form provided in the section "Forms and
Procedures· of the bidding documents and shall be valid till such period as specified in the
corresponding format for Deed of Joint Undertaking.

In case of a successful foreign bidder, if the Employer accepts to enter into the Second
Contract and I or Third Contract with the Assignee, pursuant to ITS Sub-Clause 28.4 above,
then, within twenty eight (28) days after Notification of Award, assignee shall furnish
additional performance security for ten percent (10%) of the value of the Contract entered
into with assignee and the form provided in the section "Forms and Procedures· of the
bidding documents.

SPARE PARTS PROCUREMENT

Most or the NTPC procurements are related to equipment. On an average the average
economic life of a NTPC owned plant is considered to be 25 years and depreciation is taken
into account considering these 25 years.
Hence during the life lime of the equipment it will definitely require spares as well as some
consumables. Hence NTPC has incorporated a clause in the Bid Documents issued to the
bidders called SPARE PARTS.

This clause has three sub clauses that take care of different types of spare pans required
during the lifetime of the plant.

If NTPC finds -that certain spare parts are mandatory for the plant operation, it specifies so in
the Technical specification. In such cases, the item wise price breakdown of such spares on
a ClF (India Port)/Ex Work's (India) basis is to be included in the bid by the bidder. However
these prices will be free form escalation and should be indicated separately.

The prices of spare parts shall also come into picture while evaluating the bid. During the six
months starting from signing the contract, NTPC will have the right to increase or decrease
the number of spare parts to be procured.

In addition, the bidder may by his own experience provide a complete list of recommended
spare parts for an operational period of three (3) years for the equipment supplied. "The list
should be complete providing the details of how many of the suggested spare parts are
present in the equipment supplied as well as their expected operational life.

The bidder shall further indicate item wise price break-up on for site basis. The prices
quoted in the list shall be valid without any escalation for a period of not less than six (6)
months after the placement of order for Power Plant Turnkey Equipment Basis. But this
additional recommended spare parts list will not be taken into consideration while evaluating
the bid. However a specific clause in the General Condition of Contract makes the supplier
provide a list of addresses of all he sub- suppliers who provide the spare parts. The clause is
"The Contractor will provide the Owner with all the addresses and particulars of his sub-
suppliers while placing the order on vendors for items/components/equipment covered under
the Contract and will further ensure with his vendors that the owner, if so desires, will have
the right to place orders for spares directly on them on mutually agreed terms based on
offers of such vendors.
In addition, to cater to any exigency arising during the start-up and initial Operation stages
up to the satisfactory completion of Trial Operations due to enfant mortality of
items/components/consumable hardware, the bidder shall at his own cost shall arrange and
maintain an inventory of such items so as not to have any major interruptions during the
period from start up to Trial Operations.

PROCUREMENT OF FOREIGN SPARE PARTS

Many of the plants of NTPC are manufactured by foreign manufacturer. Hence during the
lifetime of the equipment, it may require many spares parts and consumables. But to acquire
these spare parts .there is no specific method followed by NTPC. However in such a case
the list of authorized agents of manufacturer producing the parts is obtained from the
manufacturer itself. If the listed dealer is only supplier of manufacturer, the procurement is
made through single tender .Else a normal procurement procedure is followed.

For example a plant monitoring equipment was in need of batteries and a connecting cable.
Both the items were proprietary in nature and the firm had only one authorized dealer
providing the required material.

Hence the dealer was issued a single tender for supplying the required spares. Similarly in
case of a Diesel Generator Set which was manufactured by a US firm had only one
authorized service provider in the locality and hence a price list for the components used in
the DG Set was acquired from the manufacturer and the contract was awarded to the sole
service provider. In case of bigger value spare parts a three year supply of the spare parts is
guaranteed by the supplier at the time of supplying the equipment and for further
requirement of the spares the vendor may be contacted or a global tender may be issued
high value spares not manufactured by any Indian firm or being imported by an Indian firm.
However the payments for both the types of spares will be made in following manner,

Upon dispatch and against invoices and shipping documents :75%

On receipt and storage at Site on physical verification by the engineer: 25%

PAYMENTS:

Payment is the most important term for any contract. Hence the General Condition of
Contract deals the terms of payment. There arc various sub clauses to this clause. The first
clause deals with the currency of payment.

The clause specifically mentions that “the Contract Price shall be paid in the currency or
currencies in which the various price components have been stated and as incorporated in
the Contract”. Once the currency is settled and accepted by both parties, the due date for the
payment must be decided in advance.

The payment is generally made in parts. Once the contract is awarded, an Initial Advance
payment is made to the Contractor and afterwards payments against dispatch, progressive
completion of works and then a final payment is made to the contractor. Whenever a
payment has to be made it is divided into two parts (if applicable), the Indian Rupee
component and foreign currency component.

The due date for initial foreign currency component for the advance payment is 60 days from
the award of the contract and 30 days for the Indian rupee component. The Initial Advance
payment is done automatically however the payments against dispatch and payments
against partial work completion are made after the contractor applies for it.

Once the contractor applies for payments, the validity of the application is checked and the
invoices or completion report by the engineer is sought. This report is known as Interim
Payment Certificate and it certifies the value of the contract executed till the date of
completion. However if any part of the work completed docs not comply with the Contract or
has been done prematurely according to the master schedule provided at the time of the
contract, the NTPC shall not pay for that part of the work.

MODE OF PAYMENT:
All the payment on the dispatch will be made in form of Letter Of Credit (L/C) in favor of the
contractor. The issue of Letter of Credit shall be valid for a period of three months from the
date of issue.

The utilization of this L/C however is sole responsibility of the contractor. Once the good is
received at the site and possession is taken by NTPC only then the payment will be made to
contractor’s Banker through Owner’s bank.

The payment for advance, Taxes and duties inland transportation, insurance and erection

portion of works and Type test charges (if any) will be directly made to contractor.

PART PAYMENT: -

When NTPC agrees to pay the contractor in part with each additional phase of plant
completion, or each new lot of equipments/ material received follows a payment schedule
and regulation to make the payment.

This schedule is arrived at by analyzing the various component required in the delivery of the
equipment / material received or dispatched or it may issue at advance made to contractors
supplies for the procurement of the equipment/material.

ESCALATION FACTORS:
Escalation factors or Contract Price Adjustment is an Endeavor to protect the interest of the
contractor as well as that of NTPC. The escalation factor is a derived value by which the
prices of materials vary or may vary on some date in future. The clause is a very detailed.
Clause and covers every aspect of the price.

For the price adjustment purposes, only following components will be considered.

Ex-factory price for the equipment / material for the Indian origin and FOB price component
for the equipment / material of non-Indian origin (excluding spares) subject to ceiling of 20%.

In case of Indian contractor, for any equipment / material etc. imported by him for the
purpose of performance of the contract, which is dispatched directly from the port of
disembarkation to the site the words “ ex-factory price” shall be deemed to mean the price of
equipment / material as it is dispatched from the port of disembarkation to the project site.

ERECTION COMPONENT

For the escalation of price in case of equipment / material, all the ex-factory prices will be
fragmented as Fixed Portion of price and the variable portion of the price .The variable
portion of price, assume to fluctuate with the changing labor and material indices. The
indices are obtained from the list of industrial Indices published by the Ministry of Industries,
Ministry of Labor and the Office of the Economic Adviser, Govt. of India.

Labour Bureau, Simla, publishes the labour index or Consumer Price Index for Industrial
Workers whereas the Economic Adviser of the Govt. of India publishes the Material Index, or
Index no of wholesale price under group "All Commodities".
ARBITRATION
Despite all the care taken and all the irregularities avoided there are times when the
relationship between the supplier and purchaser becomes bitter. In that case to avoid any
legal complications a set of arbitration rules are laid down and agreed upon in advance.
These rules are indisputable and are accepted by both the parties. Some of the important
arbitration clauses are mentioned here.

1) In the event of any query, dispute or difference whatsoever arising under this contract or
in connection with any question relating to existence, meaning and interpretation of [his
contract or any alleged breach thereof, the same will be referred to the sole arbitrator of the
General Manager of the NTPC or to a person appointed by him for the purpose. The
arbitration shall be conducted in accordance will the provisions of Indian Arbitration
Reconciliation Act, 1996

2) It will be no objection that the Arbitrator is an interested person and/or that he had to deal
with the matters to which the contract relates and/or in the course of his duties he expressed
any view on any mutter in dispute. The award of arbitrator shall be final and binding.

3) In the event of Arbitrator dying, neglecting, resigning or being unable to act for any reason
or his award being set aside by the court for any reason, it will lawful for the General
Manager of the NTPC to appoint another Arbitrator in place of the outgoing Arbitrator.

4) It is further terms of this agreement that no person other than the person shall act as an
Arbitrator and that, if for any reason that is not possible, the matter should not be referred to
arbitration at all.

5) The Arbitrator may from time to time, with the consent of nil parties enlarge the time ill

making the award.

6) The cost incidental to the arbitration shall be at the discretion of the Arbitrator; the

arbitration shall be conducted in NEW DELHI or at such other places where arbitrator may

decide.

7) Not withstanding any dispute between the parties Supplier shall not be entitled to withhold
delay or defer his obligation under the contract and same shall be carried out strictly in
accordance with terms and condition of contract.

8) In the event of dispute or difference arising between parties the public sector enterprise

and Government, the provision of BPE office memorandum No BPE/GL001/76/MAN/2110-

75-BPE (GML-1) dated 1st January 1976 shall be applicable.

Practical Work Done during this week:

1. During this week I attended a Bidding Procedure in

the company.

2. The bidding was for HT POWER CABLES.

3. There were seven (7) parties involved in the bidding

procedure.

4. The following were the observations/activities

involved during the bidding process:

• The seven parties bidding for the contract got the

bidding price for the several items NTPC required
and along with it got the BANK GAURANTEE,
BID SECURITY and the BIDDING PRICE for the
contract.

• The seven parties involved were :

1. Sriram Cables
2. Diamond Cables
3. KEI Cables
4. Paramount Cables
5. RPG Cables
6. Poly Cab Cables
7. Havells

• There are 3 members from the company involved for

the bidding procedure: CONTRACT EPRESENTATIVE
FINANCE REPRESENTATIVE and
ENGENEERING REPRESENTATIVE were also present.
 • Firstly, the BANK GAURANTEE and BANK SECURITY
were cross checked and it was seen that all the bank
guarantees were duly filled or not and that all parties have
given their bank securities or not according to the company
or not.

• Secondly, the attachment 6(A) was cross checked for all

the seven companies. This involved going through the
details of the contracts offered by the seven companies to
NTPC i.e. several clauses which the parties involved must
abide.

1. Applicable Law
2. Resolution of Dispute
3. Payment
4. Performance
5. Tax and Duties
6. Time for Commencement and Completion
7. Warranty
8. Patent Right
9. Price Basis

• Thirdly, the attachment 6 was checked for the deviations, if

any offered by any of the seven parties and it was found that no
company / party had deviations.

• Then, the attachment 9 was checked for the CIF prices,

whether it is involved or not and it was found that only one
company had attachment 9 applicable and that was RPG
CABLES with CIF as DOMESTIC.

• Also, the schedules 2, 3 and 4 were read out from

various tendors by the seven parties and the prices
were noted down. Attachment 1 was also checked
and it was found that it was NIL for all the parties.
• Also discount offered by the companies were noted
and it was found that only two (2) companies offered
discount: Sriram CABLES and Poly Cab CABLES.

• After all these activities it was found that the lowest

bid was offered by the Sriram Cables.