The document discusses tendering, contracts, and execution. It defines key concepts like proposals, promises, consideration, agreement, void agreements, communication of offers and acceptances, and revocation. It provides examples to illustrate these concepts. It emphasizes that for a valid contract, there must be an offer, acceptance of the offer, and communication of acceptance. It also notes that acceptance must be absolute and unqualified, and discusses partial acceptance.

1. Tendering, Contract and
Execution
Dr K M SONI, Chief Engineer, CPWD,
Mumbai

2. Tendering and contracts

3. Proposal
• WHEN ONE PERSON SIGNIFIES TO ANOTHER
HIS WILLINGNESS TO DO OR TO ABSTAIN
FROM DOING ANYTHING, WITH A VIEW TO
OBTAINING THE ASSENT OF THAT OTHER TO
SUCH ACT OR ABSTINENCE, HE IS SAID TO
MAKE A PROPOSAL.

4. Promise
• WHEN THE PERSON TO WHOM THE
PROPOSAL IS MADE SIGNIFIES HIS ASSENT
THERETO, THE PROPOSAL IS SAID TO BE
ACCEPTED.
• A PROPOSAL, WHEN ACCEPTED, BECOMES A
PROMISE.

5. Example of Proposal and
Promise
• AN ENGINEER ADVERTISES AN EXPRESSION
OF INTEREST
• A CONTRACTOR SUBMITS HIS BID
(PROPOSAL)
• ENGINEER ACCEPTS THE BID/PROPOSAL
• PROPOSAL/BID BECOMES PROMISE

6. Promisor
• THE PERSON MAKING THE PROPOSAL IS
CALLED THE “PROMISOR”, AND THE PERSON
ACCEPTING THE PROPOSAL IS CALLED THE
“PROMISEE”
• ENGINEER CALLS THE BIDS, A CONTRACTOR
SUBMITS THE BID
• THE CONTRACTOR IS PROMISOR
• ENGINEER IS PROMISEE

7. Consideration
• WHEN, AT THE DESIRE OF THE PROMISOR,
THE PROMISEE OR ANY OTHER PERSON HAS
DONE OR ABSTAINED FROM DOING,
SOMETHING, SUCH ACT OR ABSTINENCE OR
PROMISE IS CALLED A CONSIDERATION FOR
THE PROMISE.

8. Consideration
• IT IS THE PRICE FOR WHICH THE PROMISE OF
THE OTHER IS BOUGHT, AND THE PROMISE
THUS GIVEN FOR VALUE IS ENFORCEABLE

9. Agreement
• EVERY PROMISE AND EVERY SET OF
PROMISES, FORMING THE CONSIDERATION
FOR EACH OTHER, IS AN AGREEMENT.

10. Void Agreement
• AN AGREEMENT NOT ENFORCEABLE BY LAW IS
SAID TO BE VOID
• AGREEMENT IN RESTRAINT OF TRADE IS VOID
• AGREEMENT WITHOUT CONSIDERATION IS VOID
• AGREEMENT IN RESTRAINT OF LEGAL
PROCEEDINGS IS VOID
• AGREEMENT TO DO IMPOSSIBLE ACTS IS VOID
• AGREEMENT IS VOID FOR UNCERTAINTY

11. Void Agreement
• THERE WAS AN AGREEMENT FOR THE SALE
OF TENTAGE WITH A STIPULATION THAT THE
PRICE, DATES OF PAYMENT AND MANNER OF
DELIVERY SHALL BE AGREED UPON FROM
TIME TO TIME. THE AGREEMENT IS VOID
(AGREEMENT TO AGREE IN FUTURE IS VOID
FOR UNCERTAINTY.)

12. Contract
• AN AGREEMENT ENFORCEABLE BY LAW IS A
CONTRACT

13. Voidable Agreement
• AN AGREEMENT WHICH IS ENFORCEABLE BY
LAW AT THE OPTION OF ONE OR MORE OF
THE PARTIES THERETO, BUT NOT AT THE
OPTION OF THE OTHER OR OTHERS, IS A
VOIDABLE CONTRACT

14. Contract
• A CONTRACT COMES INTO EXISTENCE ONLY
WHEN ALL THE TERMS AND CONDITIONS
HAVE BEEN FINALISED.

15. Communication of Acceptance
• AN OFFER IS ACCEPTED WHEN THE
ACCEPTANCE IS COMMUNICATED.
• THE COMMUNICATION MUST BE MADE TO
THE OFFEROR.
• A COMMUNICATION OF ACCEPTANCE MADE
TO A THIRD PERSON CREATES NO CONTRACT.

16. Exposure of Goods
• THE EXPOSURE OF GOODS BY A SHOPKEEPER DOES
NOT AMOUNT TO AN OFFER TO SELL. ON PICKING THE
GOODS, IT IS AN OFFER BY THE CUSTOMER TO BUY,
AND THE SALE IS NOT AFFECTED UNTIL THE BUYER’S
OFFER PRICE IS ACCEPTED BY THE SHOPKEEPER.
• SIMILARLY, MERE EXPRESSION OF INTEREST BY AN
ORGANIZATION IS NOT ANY OFFER. WHEN A BIDDER
SUBMITS THE BID IN RESPONSE TO THE EXPRESSION
OF INTEREST, IT IS AN OFFER AND WHEN THE
ORGANIZATION ACCEPTS THE BID, CONTRACT IS
FORMED.

17. Offer to the Whole World
• THOUGH AN OFFER CAN BE MADE TO THE
WHOLE WORLD, A CONTRACT CAN ARISE
ONLY BY ACCEPTANCE OF THE OFFER. HENCE
KNOWLEDGE OF THE TERMS OF THE OFFER IS
ESSENTIAL FOR ACCEPTANCE.

18. Unaccepted Offer
• A MERE MAKING OF AN OFFER DOES NOT FORM
PART OF THE CAUSE OF ACTION FOR DAMAGES
FOR BREACH OF CONTRACT WHICH HAS
RESULTED FROM THE ACCEPTANCE OF THE
OFFER. ORDINARILY IT IS THE ACCEPTANCE OF
THE OFFER AND INTIMATION OF THAT
ACCEPTANCE WHICH RESULTS IN A CONTRACT.
• UNACCEPTED OFFER CREATES NO RIGHT OR
OBLIGATION.

19. Communication when
Complete
• THE COMMUNICATION OF A PROPOSAL IS COMPLETE
WHEN IT COMES TO THE KNOWLEDGE OF THE PERSON TO
WHOM IT IS MADE.
• THE COMMUNICATION OF AN ACCEPTANCE IS COMPLETE
AS AGAINST THE PROPOSER, WHEN IT IS PUT IN A COURSE
OF TRANSMISSION TO HIM SO AS TO BE OUT OF THE
POWER OF THE ACCEPTOR.
• THE COMMUNICATION OF A REVOCATION IS COMPLETE
AS AGAINST THE PERSON WHO MAKES IT, WHEN IS PUT
INTO A COURSE OF TRANSMISSION TO THE PERSON TO
WHOM IT IS MADE, SO AS TO BE OUT OF THE PERSON TO
WHOM IT IS MADE, WHEN IT COMES TO HIS KNOWLEDGE.

20. Communication
• “A” PROPOSES, BY LETTER, TO SELL A HOUSE TO
“B” AT A CERTAIN PRICE.
THE COMMUNICATION OF THE PROPOSAL IS
COMPLETE WHEN “B” RECEIVES THE LETTER.
• “B” ACCEPTS PROPOSAL OF “A” BY A LETTER
SENT BY POST.
– THE COMMUNICATION OF THE ACCEPTANCE IS
COMPLETE,
– AS AGAINST “A” WHEN THE LETTER IS POSTED;
– AS AGAINST “B”, WHEN THE LETTER IS RECEIVED BY
“A”.

21. Communication
• “A” REVOKES HIS PROPOSAL BY TELEGRAM.
• THE REVOCATION IS COMPLETE AS AGAINST “A”
WHEN THE TELEGRAM IS DISPATCHED.
• IT IS COMPLETE AS AGAINST “B” WHEN “B”
RECEIVES IT.
• “B” REVOKES HIS ACCEPTANCE BY TELEGRAM.
• REVOCATION OF “B” IS COMPLETE AS AGAINST
“B” WHEN THE TELEGRAM IS DISPATCHED, AND
AS AGAINST “A” WHEN IT REACHES HIM.

22. Communication of Proposal
and Acceptance
• THE ADVERTISEMENT BY ENGINEER FOR
TENDERS IS AN INVITATION TO MAKE AN OFFER.
• THE TENDERS WHEN SUBMITTED TO THE
ENGINEER WERE “PROPOSALS” OR “OFFERS”.
• THE COMMUNICATION OF PROPOSAL/OFFER
WAS COMPLETE WHEN RECEIVED BY THE
ENGINEER.
• THE ACCEPTANCE OF PROPOSAL/OFFER IS
COMPLETE WHEN IT IS SENT EITHER BY POST OR
OTHER COMMUNICATION SO AS TO BE OUT OF
THE POWER OF THE ENGINEER.

23. Acceptance
• THE ENGINEER DID NOT MAKE ANY
COMMUNICATION TO ACCEPT THE OFFER.
• THE ACCEPTANCE WAS NOT COMPLETE AS IT
WAS NEVER MADE AND NEVER PUT TO
TRANSMISSION.
• THE OFFERS ON TENDERS WERE REVOKED
BEFORE IT WAS ACCEPTED. THERE WAS NO
CONTRACT.

24. Communication
• THE COMMUNICATION OF ACCEPTANCE OF
THE BID IS NECESSARY FOR COMPLETED
CONTRACT.

25. Concluded Contract
• WITHOUT COMMUNICATION, CONTRACT IS
NOT CONCLUDED. INTERNAL NOTE SHEETS
AND NOTINGS HAVE NO FACE VALUE.

26. Revocation
• A PROPOSAL MAY BE REVOKED AT ANY TIME
BEFORE THE COMMUNICATION OF ITS
ACCEPTANCE IS COMPLETE AS AGAINST THE
PROPOSER , BUT NOT AFTERWARDS.
• AN ACCEPTANCE MAY BE REVOKED AT ANY
TIME BEFORE THE COMMUNICATION OF THE
ACCEPTANCE IS COMPLETE AS AGAINST THE
ACCEPTOR, BUT NOT AFTERWARDS.

27. Revocation
• “A” PROPOSES, BY A BID SENT BY POST, TO SELL THE
COMPUTERS TO “B”.
• “B” ACCEPTS THE PROPOSAL BY A LETTER SENT BY
POST.
• “A” MAY REVOKE HIS PROPOSAL AT ANY TIME BEFORE
OR AT THE MOMENT WHEN “B” POSTS HIS LETTER OF
ACCEPTANCE BUT NOT AFTERWARDS.
• “B” MAY REVOKE HIS ACCEPTANCE AT ANY TIME
BEFORE OR AT THE MOMENT WHEN THE LETTER
COMMUNICATING IT REACHES “A”, BUT NOT
AFTERWARDS.

28. Revocation
• WHEN AN OFFER GIVES THE OFFEROR AN
OPTION TO ACCEPT WITHIN A FIXED PERIOD,
IT MAY BE WITHDRAWN EVEN BEFORE THE
EXPIRY OF THAT PERIOD UNLESS THERE IS
SOME CONSIDERATION FOR KEEPING IT
OPEN.

29. Revocation how made
A PROPOSAL IS REVOKED-
BY THE COMMUNICATION OF NOTICE OF REVOCATION
BY THE PROPOSER TO THE OTHER PARTY;
BY THE LAPSE OF THE TIME PRESCRIBED IN SUCH
PROPOSAL FOR ITS ACCEPTANCE, OR, IF NO TIME IS
SO PRESCRIBED, BY THE LAPSE OF A REASONABLE
TIME, WITHOUT COMMUNICATION OF THE
ACCEPTANCE.
BY THE FAILURE OF THE ACCEPTOR TO FULFILL A
CONDITION PRECEDENT TO ACCEPTANCE
BY THE DEATH OR INSANITY OF THE PROPOSER’ IF THE
FACT OF HIS DEATH OR INSANITY COMES TO THE
KNOWLEDGE OF THE ACCEPTOR BEFORE
ACCEPTANCE.

30. Acceptance
• ACCEPTANCE MUST BE ABSOLUTE AND
UNQUALIFIED
• BE EXPRESSED IN SOME USUAL AND
REASONABLE MANNER, UNLESS THE
PROPOSAL PRESCRIBES THE MANNER IN
WHICH IT IS TO BE ACCEPTED.

31. Acceptance must be unqualified and
without condition
• OFFER AND ACCEPTANCE MUST BE BASED ON
THREE COMPONENTS;
– CERTAINTY
– COMMITMENT AND
– COMMUNICATION
FOR A VALID CONTRACT

32. Acceptance
• IF A NEW CONDITION IS PUT WHILE
ACCEPTING THE BID, CONTRACT ALREADY
SIGNED BY THE PROPOSER IS NOT COMPLETE
– UNTIL THE PROPOSER ACCEPTS THE CONDITION

33. Acceptance
• AN ACCEPTANCE WITH A VARIATION IS NO
ACCEPTANCE; IT IS SIMPLY COUNTER
PROPOSAL WHICH MUST BE ACCEPTED BY
THE ORIGINAL PROPOSER BEFORE A
CONTRACT IS MADE.

34. PERFORMANCE OF THE CONDITIONS
OF A PROPOSAL, OR THE ACCEPTANCE
OF ANY CONSIDERATION FOR A
RECIPROCAL PROMISE WHICH MAY BE
OFFERED WITH A PROPOSAL, IS AN
ACCEPTANCE OF THE PROPOSAL.

35. Agreements and Contracts
• ALL AGREEMENTS ARE CONTRACTS IF THEY
ARE MADE BY THE FREE CONSENT OF PARTIES
COMPETENT TO CONTRACT, FOR A LAWFUL
CONSIDERATION AND WITH A LAWFUL
OBJECT, AND ARE NOT HEREBY EXPRESSLY
DECLARED TO BE VOID.

36. Who are competent to make
Contract
• EVERY PERSON IS COMPETENT TO CONTRACT
WHO IS OF THE AGE OF MAJORITY
ACCORDING TO THE LAW TO WHICH HE IS
SUBJECT, AND WHO IS OF SOUND MIND AND
IS NOT DISQUALIFIED FROM CONTRACTING
BY ANY LAW TO WHICH HE IS SUBJECT.

37. Free Consent
• CONSENT IS SAID TO BE FREE WHEN IT IS NOT
CAUSED BY;
– COERCION
– UNDUE INFLUENCE
– FRAUD
– MISREPRESENTATION
– MISTAKE, SUBJECT TO CERTAIN PROVISIONS

38. Offer cannot impose burden of
refusal
• THE OFFEROR CANNOT SAY THAT IF NO
ANSWER IS RECEIVED WITHIN A CERTAIN
TIME, THE SAME SHALL BE DEEMED TO HAVE
BEEN ACCEPTED.

39. Communication by Acceptor
himself
• THERE MUST BE NOTICE OF ACCEPTANCE
FROM THE CONTRACTING PARTY IN SOME
WAY. INFORMATION BY AN UNAUTHORIZED
PERSON IS AS INSUFFICIENT AS
OVERHEARING FROM BEHIND THE DOOR.

40. Partial Acceptance
• ACCEPTANCE SHOULD BE OF THE WHOLE OF
THE OFFER. THE OFFEREE CANNOT ACCEPT A
PART OF ITS TERMS WHICH ARE FAVOURABLE TO
HIM AND REJECT THE REST.
• SUCH AN ACCEPTANCE IS ANOTHER KIND OF
COUNTER PROPOSAL. AND DOES NOT BIND THE
OFFEROR UNLESS HE AGREES TO THE QUALIFIED
ACCEPTANCE.
• A MERE INQUIRY INTO THE TERMS OF A
PROPOSAL IS NOT THE SAME THING AS A
COUNTER PROPOSAL.

41. CONTRACT

42. Tender and Contract
• TENDER WHEN ACCEPTED (AND
COMMUNICATED) IS CONTRACT

43. Tenders
• ITEM RATE TENDER
• PERCENTAGE RATE TENDER
• EPC OR TURN KEY TENDER
• LUMP SUM TENDER

44. Tender Documents
• PRESS NOTICE/EXPRESSION OF INTEREST
• NOTICE INVITING TENDER
• INSTRUCTIONS TO BIDDERS
• CONDITIONS OF CONTRACT
• BILL OF QUANTITIES
• GENERAL/SPECIAL CONDITIONS
• DRAWINGS

45. Press Notice should include;
• NAME OF WORK
• AUTHORITY INVITING TENDERS
• PRESCRIBED TIME OF PUBLICITY
• TYPE OF TENDER DOCUMENT ON WHICH TENDERS
INVITED
• TIME AND PLACE OF SALE AND PURCHASE OF
TENDERS
• ELIGIBILITY CRITERION IF ANY
• DATE OF RECEIPT AND OPENING OF TENDERS
• OTHER MAJOR CONDITIONS
• REFERENCE WHERE DETAILS CAN BE SEEN

46. Tender Application
• TIME GAP BETWEEN RECEIPT OF
APPLICATION AND OPENING OF TENDERS
• TENDERS IN DOWNLOADABLE FORM
• E TENDERING

47. No. OFF-1-CTE-1(Pt) V
Government of India
Central Vigilance Commission
*****
Satarkta Bhawan, Block ‘A’,
GPO Complex, INA,
New Delhi- 110 023
Dated the 24th March 2005
Office Order No. 15/3/05
Subject: Notice inviting tenders – regarding.
The Commission has observed that some of the Notice Inviting Tenders (NITs) have a clause that
the tender applications could be rejected without assigning any reason. This clause is apparently
incorporated in tender enquiries to safeguard the interest of the organisation in exceptional
circumstance and to avoid any legal dispute, in such cases.
2. The Commission has discussed the issue and it is emphasized that the above clause in the bid
document does not mean that the tender accepting authority is free to take decision in an
arbitrary manner. He is bound to record clear, logical reasons for any such action of
rejection/recall of tenders on the file.
3. This should be noted for compliance by all tender accepting
authorities.
Sd/-
(Anjana Dube)
Deputy Secretary
All Chief Vigilance Officers

48. Discrepancies in Tenders
TENDER DOCUMENT SHOULD CLEARLY SPECIFY
PROVISIONS FOR DISCREPANCIES;
• IN RATES IN FIGURES, WORDS AND AMOUNT
WORKED OUT
• NO RATES QUOTED FOR ANY PARTICULAR
ITEM (S)
• RATES QUOTED IN PERCENTAGE FOR ITEM
RATE TENDERS AND QUOTED FOR EACH ITEM
FOR PERCENTAGE TENDERS

49. Qualification Criteria
• QUALIFICATION CRITERIA SHOULD NOT BE
VAGUE
• QUALIFICATION CRITERIA SHOULD BE
MENTIONED IN TENDER DOCUMENT AND
SHOULD NOT BE LEFT ON TECHNICAL
EVALUATION COMMITTEE
• “SIMILAR WORK” SHOULD BE PROPERLY
DEFINED

50. No. 98/ORD/1
Government of India
Central Vigilance Commission
******
Satarkata Bhavan, Block - 'A',
GPO Complex, INA,
New Delhi - 110 023
Dated 04.09.2003
Office Order No.44/9/03
To
All Chief Vigilance Officers
Sub: Irregularities in the award of contracts.
Sir/Madam,
While dealing with the case of a PSU, the Commission has observed that the
qualification criteria incorporated in the bid documents was vague and no evaluation
criterion was incorporated therein. It is also seen that the category-wise anticipated TEUs
were not specified in the bid documents and the same was left for assumptions by Tender
Evaluation Committee for comparative evaluation of financial bids, which led to
comparative evaluation of bids on surmises and conjectures. Further, it was also provided
as a condition in the tender bid that the tenderer should have previous experience in
undertaking handling of similar work and/or transportation works preferably of ISO
containers, however, no definition of 'similar works' was, indicated in the bid documents.

51. 2. It should be ensured that pre-qualification criteria, performance criteria and
evaluation criteria are incorporated in the bid documents in clear and unambiguous
terms as these criterion very important to evaluate bids in a transparent manner.
Whenever required the departments/organisations should have follow two-bid system,
i.e. technical bid and price bid. The price bids should be opened only of those vendors
who were technically qualified by the Deptt./ Organisation. The Commission would
therefore advise that the Deptt./ Organisation may issue necessary guidelines in this regard
for future tenders.
3. It has also observed that the orders were allegedly split in order to bring it within the
powers of junior officers and that the proper records of machine breakdown were not being
kept. It is therefore, decided that in the matters of petty purchase in emergency items all
departments/organisations must keep proper records of all machine breakdown etc.
4. All CVOs may bring this to the notice of all concerned.
Yours faithfully,
Sd/-
(Anjana Dube)
Deputy Secretary

54. Consultants
• Framework of Govt/CVC instructions
• Accountability of Employer/client and
consultant
• Conflict of interest
• Maximum possible of internal resources

56. Bank Guarantee
• Follow IT enabled confirmation system
– Through digitally signed secured e mails
– On line verification of company’s portal portal
followed by second stage authentication system
generating OTP
– E mail followed by second stage authentication
system

58. SHORTCOMINGS IN TENDER/BID
DOCUMENT

59. No.98/ORD/1
Government of India
Central Vigilance Commission
(CTE’s Organization)
Satarkta Bhavan, Block ‘A’
G.P.O. Complex, I.N.A.,
New Delhi– 110 023
Dated the 9th July, 2003
Office Order No. 33/7/03
To
All the Chief Vigilance Officers
Subject:- Short-comings in bid documents.
Sir/Madam,
The Commission has observed that in the award of contracts for goods and services, the detailed
evaluation/exclusion criteria are not being stipulated in the bid document and at times is decided after
the tender opening. This system is prone to criticism and complaints as it not only leads to a non-
transparent and subjective system of evaluation of tenders but also vitiates the sanctity of the tender
system.
2. The Commission would reiterate that whatever pre-qualification, evaluation/exclusion criteria, etc.
which the organization wants to adopt should be made explicit at the time of inviting tenders so that basic
concept of transparency and interests of equity and fairness are satisfied. The acceptance/rejection of any
bid should not be arbitrary but on justified grounds as per the laid down specifications,
evaluation/exclusion criteria leaving no room for complaints as after all, the bidders spend a lot of time
and energy besides financial cost initially in preparing the bids and, thereafter, in following up with the
organizations for submitting various clarifications and presentations.
3. This is issued for strict compliance by all concerned.
Yours faithfully,
Sd/-
(Mange Lal)

60. No. 12-02-1-CTE-6
Government of India
Central Vigilance Commission
(CTE’s Organisation)
Satarkata Bhavan,
Block A, GPO Complex,
INA, New Delhi – 110 023.
Dated the 17th December 2002.
OFFICE MEMORANDUM
Subject : - Prequalification criteria (PQ).
The Commission has received complaints regarding discriminatory prequalification criteria incorporated in
the tender documents by various Deptts./Organisations. It has also been observed during intensive
examination of various works/contracts by CTEO that the prequalification criteria is either not clearly
specified or made very stringent/very lax to restrict/facilitate the entry of
bidders.
2. The prequalification criteria is a yardstick to allow or disallow the firms to participate in the bids. A
vaguely defined PQ criteria results in stalling the process of finalizing the contract or award of the contract
in a non-transparent manner. It has been noticed that organizations, at times pick up the PQ criteria from
some similar work executed in the past, without appropriately amending the
different parameters according to the requirements of the present work. Very often it is seen that only
contractors known to the officials of the organization and to the Architects are placed on the select list.
This system gives considerable scope for malpractices, favouritism and corruption. It is, therefore,
necessary to fix in advance the minimum qualification, experience and number of similar works of a
minimum magnitude satisfactorily executed in terms of quality and period of
execution. vendors including a PSU.

61. 3. Some of the common irregularities/lapses observed in this regard are
highlighted as under: -
i) For a work with an estimated cost of Rs.15 crores to be completed in
two years, the criteria for average turnover in the last 5 years was kept
as Rs.15 crores although the amount of work to be executed in one
year was only Rs.7.5 crores. The above resulted in prequalification of
a single firm.
ii) One organization for purchase of Computer hardware kept the criteria
for financial annual turnover of Rs.100 crores although the value of
purchase was less than Rs.10 crores, resulting in disqualification of
reputed computer firms.
iii) In one case of purchase of Computer hardware, the prequalification
criteria stipulated was that the firms should have made profit in the last
two years and should possess ISO Certification. It resulted in
disqualification of reputed firm.

62. iv) In a work for supply and installation of A.C. Plant, retendering was resorted to with diluted
prequalification criteria without adequate justification, to favour selection of a particular firm.
v) An organization invited tenders for hiring of D.G. Sets with eligibility of having 3 years
experience in supplying D.G. Sets. The cut off dates regarding work experience were not clearly
indicated. The above resulted in qualification of firms which had conducted such business for 3
years, some 20 years back. On account of this vague condition, some firms that were currently
not even in the business were also qualified.
vi) In many cases, “Similar works” is not clearly defined in the tender documents. In one such
case, the supply and installation of A.C. ducting and the work of installation of false ceiling were
combined together. Such works are normally not executed together as A.C. ducting work is
normally executed as a part of A.C. work while false ceiling work is a part of civil construction or
interior design works. Therefore, no firm can possibly qualify for such work with experience of
similar work. The above resulted in qualification of A.C. Contractors
without having any experience of false ceiling work although the major portion of the work
constituted false ceiling work.
4. The above list is illustrative and not exhaustive. While framing the prequalification criteria, the
end purpose of doing so should be kept in view. The purpose of any selection procedure is to
attract the participation of reputed and capable firms with proper track records. The PQ
conditions should be exhaustive, yet specific. The factors that may be kept in view while framing
the PQ Criteria includes the scope and nature of work, experience of firms in the same field and
financial soundness of firms.
5. The following points must be kept in view while fixing the eligibility criteria:-
Contd….

63. -: 3 :-
A) For Civil/Electrical Works
i) Average Annual financial turnover during the last 3 years, ending 31st March of the previous financial year,
should be at least 30% of the estimated cost.
ii) Experience of having successfully completed similar works during last 7 years ending last day of month
previous to the one in which applications are invited should be either of the following: -
a. Three similar completed works costing not less than the amount equal to 40% of the estimated cost.
or
b. Two similar completed works costing not less than the amount equal to 50% of the estimated cost.
or
c. One similar completed work costing not less than the amount equal to 80% of the estimated cost.
iii) Definition of “similar work” should be clearly defined.
In addition to above, the criteria regarding satisfactory performance of works, personnel, stablishment,
plant, equipment etc. may be incorporated according to the requirement of the Project.
B) For Store/Purchase Contracts
Prequalification/Post Qualification shall be based entirely upon the capability and resources of prospective
bidders to perform the particular contract satisfactorily, taking into account their (i) experience and past
performance on similar contracts for last 2 years (ii) capabilities with respect to personnel, equipment and
manufacturing facilities (iii) financial standing through latest I.T.C.C., Annual report (balance sheet and Profit
& Loss Account) of last 3 years. The quantity, delivery and value requirement shall be kept in view, while
fixing the PQ criteria. No bidder should be denied prequalification/post qualification for reasons unrelated to
its capability and resources to successfully perform the contract.
6. It is suggested that these instructions may be circulated amongst the concerned officials of your
organization for guidance in fixing prequalification criteria. These instructions are also available on CVC’s
website, http://cvc.nic.in.
(M.P. Juneja)
Chief Technical Examiner
To

64. Reasonability of Rates
• JUSTIFICATION STATEMENT TO BE PREPARED
TO WORK OUT REASONABILITY OF RATES OF
THE LOWEST TENDER

65. Negotiation of Tender
• IN GENERAL POST NEGOTIATION SHOULD
NOT BE CARRIED OUT
• IN CASE NEGOTIATION IS CARRIED OUT,
REASONS SHOULD BE RECORDED ON THE
NOTE SHEET

66. No.005/CRD/012
Government of India
Central Vigilance Commission
*****
Satarkta Bhawan, Block ‘A’,
GPO Complex, INA,
New Delhi- 110 023
Dated the 3rd March, 2007
Circular No. 4/3/07
Sub:- Tendering process - negotiations with L-1.
Reference is invited to the Commission’s circulars of even number, dated 25.10.2005 and
3.10.2006, on the above cited subject. In supersession of the instructions contained therein, the
following consolidated instructions are issued with immediate effect:-
(i) As post tender negotiations could often be a source of corruption, it is directed that there
should be no post-tender negotiations with L-1, except in certain exceptional situations. Such
exceptional situations would include, procurement of proprietary items, items with limited
sources of supply and items where there is suspicion of a cartel
formation. The justification and details of such negotiations should be duly recorded and
documented without any loss of time.
(ii) In cases where a decision is taken to go for re-tendering due to the unreasonableness of the
quoted rates, but the requirements are urgent and a re-tender for the entire requirement
would delay the availability of the item, thus jeopardizing the essential operations, maintenance

67. And safety, negotiations would be permitted with L-1 bidder(s) for the supply of a bare
minimum quantity. The balance quantity should, however, be procured expeditiously through a
re-tender, following the normal tendering process.
(iii) Negotiations should not be allowed to be misused as a tool for bargaining with L-1 with
dubious intentions or lead to delays in decision-making. Convincing reasons must be recorded
by the authority recommending negotiations. Competent authority should
exercise due diligence while accepting a tender or ordering negotiations or calling for a re-
tender and a definite timeframe should be indicated so that the time taken for according
requisite approvals for the entire process of award of tenders does not exceed one month
from the date of submission of recommendations. In cases where the proposal is to be
approved at higher levels, a maximum of 15 days should be assigned for clearance at each level.
In no case should the overall timeframe exceed the validity period of the tender and it should be
ensured that tenders are invariably finalised within their validity period.
(iv) As regards the splitting of quantities, some organisations have expressed apprehension that
pre-disclosing the distribution of quantities in the bid document may not be feasible, as the
capacity of the L-1 firm may not be known in advance. It may be stated that if, after due
processing, it is discovered that the quantity to be ordered is

68. far more than what L-1 alone is capable of supplying and there was no prior decision to split the
quantities, then the quantity being finally ordered should be distributed among the other
bidders in a manner that is fair, transparent and equitable. It is essentially in cases where the
organisations decide in advance to have more than one source of supply (due to critical or vital
nature of the item) that the Commission insists on pre-disclosing the ratio of splitting the supply
in the tender itself. This must be followed scrupulously.
(v) Counter-offers to L-1, in order to arrive at an acceptable price, shall amount to negotiations.
However, any counter-offer thereafter to L-2, L-3, etc., (at the rates accepted by L-1) in case of
splitting of quantities, as pre-disclosed in the tender, shall not be deemed to be a negotiation.
2. It is reiterated that in case L-1 backs-out, there should be a re-tender.
3. These instructions issue with the approval of the Commission and may please
be noted for immediate compliance.
(Vineet Mathur)
Deputy Secretary
All Chief Vigilance Officers

69. No.005/CRD/12
Government of India
Central Vigilance Commission
*****
Satarkta Bhawan, Block ‘A’,
GPO Complex, INA,
New Delhi- 110 023
Dated the 3rd October, 2006
Circular No. 37/10/06
Subject: Tendering process – negotiation with L1.
Reference is invited to Commission’s instructions of even number
dated 25.10.2005 on the above subject. A number of references have been received
in the Commission, asking for clarification on issues pertaining to specific situations.
2. The Commission’s guidelines were framed with a view to ensuring fair
and transparent purchase procedure in the organizations. The guidelines are quite clear and it is
for the organizations to take appropriate decision, keeping these guidelines in view. In case they
want to take action in deviation or modification of the guidelines, to suit their requirements, it is
for them to do so by recording the reasons and obtaining the approval of the competent
authority for the same. However, in no case, should there be any compromise to transparency,
equity or fair treatment to all the participants in a tender.
3. The above instructions may be noted for strict compliance.
(V. Kannan)
Director
All Chief Vigilance Officers

70. WORKS AWARDED ON
NOMINATION BASIS

71. No.005/CRD/19
Government of India
Central Vigilance Commission
*****
Satarkta Bhawan, Block ‘A’,
GPO Complex, INA,
New Delhi- 110 023
Dated the 9th May 2006
CIRCULAR No.15/5/06
Subject:- Transparency in Works/Purchase/Consultancy contracts awarded
on nomination basis.
The Commission had, in it’s OM No. 06-03-02-CTE-34 dated 20.10.2003 on back to back tie up by PSUs, desired that the
practice of award of works to PSUs on nomination basis by Govt. of India/PSUs needed to be reviewed forthwith. It is
observed that in a number of cases, Works/Purchase/Consultancy contracts are awarded on nomination basis. There is a
need to bring greater transparency and accountability in award of such contracts. While open tendering is the most
preferred mode of tendering, even in the case of limited tendering, the Commission has been insisting upon transparency in
the preparation of panel.
2. In the circumstances, if sometimes award of contract on nomination basis by the PSUs become inevitable, the
Commission strongly feels that the following points should be strictly observed. (i) All works awarded on nomination basis
should be brought to the notice of the Board of the respective PSUs for scrutiny and vetting post facto.
(ii) The reports relating to such awards will be submitted to the Board every quarter.
(iii) The audit committee may be required to check at least 10% of such cases.
3. This may be noted for strict compliance.
(V. Kannan)
Director
All Chief Vigilance Officers
Copy to:
(i) All Secretaries of Govt. of India
(ii) All CEOs/Head of the organisation

72. TIME BOUND PROCESSING OF
TENDERS

73. No.008NGLl083
Government of India
Central Vigila*n*c**e* Commission
Satarkta Shawan, Siock 'A',
GPO Complex, INA,
New Delhi- 110 023
Dated the 6thNovember 2008
Circular No.31/11/08
Subject: Time bound processing of procurement.
The Commission has observed that at times the processing of tenders is inordinately delayed which may
result in time and cost overruns and also invite criticism from the Trade Sector. It is, therefore, essential that
tenders are finalized and contracts are awarded in a time bound manner within original validity of the
tender, without seeking further extension of validity. While a short validity period
calls for prompt finalization by observing specific time-line for processing, a longer validity period has the
disadvantage of vendors loading their offers in anticipation of likely increase in costs during the period.
Hence, it is important to fix the period of validity with utmost care.
2. The Commission would, therefore, advise the organizations concerned to fix a reasonable time for the
bids to remain valid while issuing tender enquiries, keeping in view the complexity of the tender, time
required for processing the tender and seeking the approval of the Competent Authority, etc., and to ensure
the finalization of tender within the stipulated original validity. Any delay, which is not
due to unforeseen circumstances, should be viewed seriously and prompt action should be initiated against
those found responsible for non-performance.
3. Cases requiring extension of validity should be rare. And in the exceptional situations where the validity
period is sought to be extended, it should be imperative to bring on record in real time, valid and logical
grounds, justifying extension of the said validity.
4. These instructions may please be noted for immediate compliance.
~ (Shalini Darbari)
Director

74. Execution of works

75. Clauses of GCC

76. Clause 1/1A
• Performance Guarantee (Cl-1)
• Recovery of Security Deposit (Cl-1A)

77. Clause 2/2A
• Compensation for delay (CL 2)
• Incentive for early completion (Cl 2A)

78. Clause 3/3A
• When contract can be determined (Cl 3)
• Closure of contract due to non
commencement of work within 1/8th period
of stipulated time (Cl 3A)

79. Clause 4
• Contractor liable to pay compensation even if
action not taken under Cl 3

80. Clause 5
• Time and Extension for Delay

81. Clause 6/6 A
• Measurements of work done (Cl 6)
• Computerised MB (Cl 6A)

82. Clause 7
• Payment on intermediate certificate to be
regarded as advances

83. Clause 8/8A
• Completion Certificate and Completion Plans
(Cl 8)
• Contractor to keep site clean (Cl 8A)
• Completion Plans to be submitted by the
contractor (Cl 8B)

84. Clause 9/9A
• Payment of Final Bill (Cl 9)
• Payment of Contractor’s bill to Banks (Cl 9A)

85. Clause
10/10A/10B/10C/10D
• Materials supplied by the Government (Cl 10)
• Materials to be provided by the contractor (Cl 10A)
• Secured Advance, Mobilisation advance, Plant Machinery
and Shuttering material advance, Interest and recovery (Cl.
10B)
• Payment on account of increase inprices/wages due to
statutory orders (10C)
• Payment due to variation in prices of materials (Cl 10CA)
• Payment of increase/decrease in prices/wages (CL 10CC)
• Dismantled Material Govt property (Cl 10D)

86. Clause 11
• Works to be executed in accordance with
Specifications, Drawings, Orders etc.

87. Clause 12
• Deviations, variations
• Extra items
• Substituted items

88. Clause 13
• Foreclosure of contract due to abandonment
or reduction in scope of work

89. Clause 19
• Labour (Cl 19A-k)

90. Clause 25
• Settlement of Disputes & Arbitration

91. Clause 36
• Employment of technical staff

92. Clause 37
• Taxes payable by the contractor

93. Clause 38
• Reimbursement of taxes/levy if levied after
receipt of tenders

94. Clause 45
• Release of security deposit after labour
clearance

95. And Remember
• Quality
– Follow specifications
• Accounting
– No unauthorised expenditure
• Auditing
– No undue benefit to contractor
– Follow government procedure/CVC guidelines
– No loss to the government

96. Thank You