Tenders & Contracts

Introduction to Tendering
System
Tender system is an efficient method
adopted by an organisation

by calling

Tenders ( offer letters) from contracting

agencies for the purpose of
execution of works or
supply of materials or
providing services

What is a Tender Process ?

A Tender Process is a method by which
contractors/ suppliers are selected for the
execution of works or for supply of
material to an organization.

Purpose of Tender System

In order to obtain very economical
and competitive rates, the tender
system is adopted.
Therefore, very careful and serious
consideration shall be made
while adopting the tender system.

Once it is decided to execute the

work through a contracting agency
by calling tenders, the following
conditions should be fulfilled.
that the railway is in a position to
handover the site of work and plan to the
contractor.
that the railway should be ready with full
knowledge of the nature and scope of
work

 the railway is ready with design of

work, detailed drawings, schedule of
quantities etc.

As per practice in vogue on Railways,

tender notice should be given in leading

newspapers.
Publicity should also be given at
Railway stations and rly. offices of
other divisions apart from the division
from where
tender
invitation
is
issued.

What is a TENDER?
A

tender is a bid or offer made by a

contractor in response to a tender notice given by

an organisation (like Railways) for the execution of
a work or supply of materials.
It consists of an estimate of costs for the said
work or supply.

Tender Notice
A

Tender Notice is an

purchaser

invitation

(an organization or an individual)

by a
to all

contracting

agencies calling their offers

(Tenders) for

supply of some materials

or for execution of a work (s).

Tender Procedure

Issue of Tender notice

Sale of Tender Forms
Receiving of sealed tender quotations/bids
Opening of Tenders
Recording details in Tender Register
Award of contract to the successful bidder
Letter of Acceptance from bidder
Collection of Performance/ Security deposit
Signing agreement by both parties

Issue of
Tender Notice

The Tender notice should be issued

not be less than
one month before in normal
conditions or
21 days before in case of
emergency
- with prior finance concurrence &
approval of DRM / PHOD / HOD.

Tender Documents
The tender documents for sale
through office and on internet (etendering) should be ready from
the date notified.
The tender forms supplied on the
payment of specified amount.
These forms should contain details
regarding -

1) Description of work and

approximate value

its

2) Places from where tender forms

& documents can be obtained
3) The place where the filled up
tender forms to be submitted
4) The date, time and place for
closing & opening of tenders.

5) The amounts of EMD & SD

required to be paid
The following amounts (as a percentage
of tender value) to be paid at the time of
submission of tender forms
Earnest
Money
Deposit
2%

Security
Deposit
5%

Performance
guarantee if
any
5%

6) The eligibility criteria for

participation in tender.
7) The cost of tender documents.

Cost of Tender Forms

The following are general costs of TFs
S.No

Value of Tender
for works costing upto 5 lakhs

Rs.
2000

Above Rs.5lakhs & upto Rs.20

lakhs
Above 20lakhs & upto 50 lakhs

Above 50 lakhs & upto 2 Crores

5000

Above 2 Crores & upto 50 Crores

10000

Above 50 Crores

25000

1
2

1000

3000

Classes of Tenders
1) Open tender:- Invitation to all by
public advertisement

2) Limited Tender:- Direct invitation to

a Limited no. of firms

3) Single Tender:- Invitation to one

firm only

Open Tenders:
As a general rule, the invitation (Issue
of Tender Notice) for open tenders should
be given through advertisements in
the most open & public manner
possible.
(Note: In limited tenders & single tender
the tender notice is not issued)

Open Tender
Open Tender
system is chosen if
estimated cost is more than Rs.3 Lakhs .
To be advertised in regional/national news
papers.

Minimum Notice period is 30 days

NP can be reduced to 21 days if
necessary.

Pre-vetting of small value( up to 2 lakhs)

open line Zonal and Revenue works is not
required

Limited Tender:In the public interest, when it is considered

not practical or advantageous to call for
an open tender, limited tender may be
invited with the finance concurrence of
FA&CAO and approval of competent
authority.
The reasons for inviting LT should be kept on
record while
concurrence.

approaching

finance

for

Limited tenders should be invited from the

contractors borne on the approved list only.

Limited Tender
Maximum limit up to 5 crore.

21 days notice period.

Pre-vetting is not required for Zonal works
and Revenue works of open line upto 2
lakhs

While exercising the powers to

call limited tender, the following
conditions should be fulfilled:
The min. no. of contractors on the
approved list should not be less
than 10.
The approved list shall be updated
annually, without fail.

The SOP for calling limited tenders:

Officers who can
approve calling of
Limited Tenders
(a) PHOD
(b) HOD
(c) DRM/ADRM/CWM
(d) JAG

SOP
Upto
Upto
Upto
Upto

Rs.5 Crore
Rs.1 Crores
Rs.1 Crore
Rs.25 lakhs

Notwithstanding
the
provisions
above, the railway may invite open
tender in the following circumstances:
In the event of insufficient response to the tender
from the contractors borne on the approved list.
When the work is of a special nature and
contractors with requisite experience are not
available on the approved list, and
When ring formation is suspected.

Single Tender:
Single tender can be awarded in emergent
situations such as :a) During Accidents, breaches involving
dislocation to traffic.
b) Works of specialized nature to be
personally approved by the GM/CAO(C)
with prior concurrence of the FA&CAO.
c) Any other situation where GM
personally considers it inescapable to
call for single tenders.

d) ST is also permissible for small orders

and nonproprietary articles, the value
of which is prescribed by competent
authority from time to time.

e) In the event of an emergent situation

affecting repair, maintenance, out of
turn, operation etc., which should be
recorded in writing, the purchase of
NPA may be made on single tender.

Single Tender
f) AMC for equipment can be placed on ST
basis on authorised dealers with approval
of AGM

In case of single tender, Tender

Committee and the accepting authority
should be one step above those in case
of OT/LT except where GM is the
accepting authority.

In addition to the above 3- types,

the following TWO are also in use
Special Limited Tender:

It is a limited Tender invited under certain

conditions with the prior concurrence of the
FA&CAO and approval of GM.

No. of firms should preferably be

more than six but not less than four.

Special Limited Tenders

Called for specialized nature of works only.
With prior concurrence of accounts and approval
from GM.
Used where there is no approved list of
contractors.
If approved list is available need not be
restricted only to the list.
But should include all the contractors in the
approve list.

Global Tender:

This is essentially an Open Tender

adopted only by Railway Board or the
Govt. of India for inviting tenders from
the global market.

Direct Quotations:
Direct Quotations can be called for
small works, which are urgent in nature
and costing upto Rs.2 lakhs duly
without calling for Tenders.
These powers shall be exercised with
finance concurrence as per item No:6
(c) of SOP Part 'A'.

Financial limits of officers

acceptance of direct quotations.
Rank of
Officers
SA Grade
JA Grade
Sr.Scale
holding the
independent
charge

for

Cost upto

Ceiling limit

Rs.2 lakhs
Rs.1 lakh
Rs.50,000/-

Rs.10 lakhs
Rs.5 lakhs
Rs.2 lakhs

While accepting quotations as

empowered above, the following
guidelines may be strictly followed:

1. Quotations should not be for items

which can be executed through the
existing
contracts
including
Zonal
contracts.
2. Quotations should not be for fancy
items (expensive but low utility) items.

3.

Quotations should only be for works

which are urgent in nature.

4. The work should not be split up for

the purpose of bringing it within the
ambit of this dispensation.
5. Accepting
authority
must
take
precautions to see that their quotations
are from genuine firms, and

6. A register showing full particulars of

works authorized will be maintained by
each officer and this should be open to
verification by Accounts while passing
the bills.

7. DRM and ADRM should have a

monthly review as a matter of control.

Types of Railway contracts

Works contracts
Supply contracts
Service contracts
Sale through Auction

Works Contracts
These are mostly civil engineering works
like, construction of
Bridges
Buildings
Railway Lines etc.

These are governed by standardised

General Conditions of Contract (GCC)

Classification of works
Zone Works: - Works of ordinary Repairs &
maintenance and others of petty nature in a
zone or area

Special Works:- Construction of Bridge,

Formation of an embankment etc.

Supplies of Building/ Track Materials:Bricks, Tiles, Lime, doors, Windows, Ballast,

Boulders, Moorum, Stone chips etc.

Works Contracts - Types

Lumpsum contract.
Schedule contract
Piece-work contracts.

Lumpsum Contracts
The Lumpsum Contract is a contract
under which the contractor engages to
carry out a work or effect supply as
specified and within a given period for
a fixed total sum.

Schedule Contrac
The schedule contract is a contract under which
the contractor engages to carry out a work or
effect supply as specified and within a given
period, at fixed unit rates or prices for each of
the various items comprising such work or
supply, the sum he is to receive depending on
the actual quantities and kinds of work done or
materials supplied in completing the work or
supply to specification and time.

Piece Work Contract

This means a contract under which
only unit rates or prices for various
kinds of work or materials are agreed
upon, without reference either to the
total quantity of work to be done or
material supplied.

Supply Contracts
Railways procure lot of material for laying
and upkeep of track, manufacture &
maintenance of Rolling Stock i.e.
Locomotives , Coaches & Wagons.
These procurements are channelised
through Stores Dept., headed by COS.
The supply contracts are:
Rate Contract
Running Contract
One-Delivery Contract

Rate Contracts
Rate Contract is a contract under which,
during the period of its currency, the
contractor engages to supply materials as
demanded , irrespective of quantity, at
fixed unit rates or prices, within a given
period of receipt of such demand.

Running Contracts
The Running Contract is one under which,
during the period of its currency, the
contractor engages to supply, a specified
quantity of
materials, as and when
ordered, at fixed unit rates or prices, within
a given period of receipt of such order.

One-Time- Supply Contract

For procuring metals like copper , tin etc
whose prices are likely to fluctuate
frequently
this type of
contract
agreement is entered into. As per this the
material is supplied in required quantity at
a fixed price on a fixed date during the
period of its validity.