Manual

for
Procurement
of Goods
2018

Government of Tripura
Finance Department
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 MANUAL FOR PROCUREMENT OF GOODS 2018
Finance Department,
Government of Tripura

DISCLAIMER

While every care has been taken to ensure that the contents of this Manual are accurate
as on date of publication, the procuring entities are advised to check the precise current
provisions of extant law and other applicable instructions from the original sources. In case
of any conflict between the provisions stipulated in this Manual and in the original source
such as GFR, DFPRT 2017 as adopted to Tripura or the prevailing laws, the provisions
contained in the extant law and the original instructions shall prevail.
Contents
MANUAL FOR PROCUREMENT OF GOODS 2018
F in an ce Dep artmen t, G o vern men t o f T ri p u ra

TABLE OF CONTENTS

Chapter 1: Introduction – Policies and Principles

1.1 Procurement Rules and Regulations; and this Manual 1
1.2 Clarification, Amendments and Revision of this Manual 2
1.3 Applicability of this Manual 2
1.4 Authorities competent to purchase goods and their Purchase Powers 4
1.5 Basic Aims of Procurement – the Five R’s of Procurement 4
1.6 Fundamental Principles of Public Procurement 5
1.7 Standards (Canons) of Financial Propriety 9
1.8 Product Reservation and Preferential/Mandatory Purchase from certain sources 9
1.9 Public procurement policy for local industrial unit 9
1.10 Proactive Information Disclosures 10
1.11 Public Procurement Cycle 10
Chapter 2: Need assessment, formulation of specifications and Procurement
Planning
2.1 Need Assessment 11
2.2 Formulation of Technical specifications (TS) 16
2.3 Obtaining Technical, Administrative and Budgetary Sanctions/ Approvals and
signing 16
of Indents
2.4 Procurement Planning 17
Chapter 3: Supplier Relationship Management
3.1 Supplier Relationship Management 19
3.2 Code of integrity for Public Procurement (ciPP) 19
3.3 Integrity Pact (iP) 23

3.4 Development of new sources and registration of suppliers 25

3.5 Grades of debarment of suppliers 30
Chapter 4: Modes of Procurement and Bidding Systems
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4.1 Modes of Procurement 36

4.2 OpenTender Enquiry (OTE) 36
4.3 Global Tender Enquiry (GTE) 37
4.4 Limited Tender Enquiry (ITe) 39
4.5 Special limited Tender enquiry for Procurements more than Rs.25 (rupees twenty-five)
lakh 39
4.6 Proprietary article certificate 41
4.7 Single Tender Enquiry (STE) without a PAC 41
4.8 Direct Procurement without Quotation 42
4.9 Bidding Systems 43
4.10 Single Stage Bidding System 43
4.11 Two stage bidder – expression of interest tenders – market exploration 46
4.12 Electronic Procurement (e-Procurement) 49
4.13 Electronic reverse action (ra) 49
4.14 One Stop Government e-Marketplace (GeM) by DGS&D 51
Chapter 5: Preparing bid documents, publication, receipt and opening of bids
5.1 Preparation of Bid Documents 55
5.2 Receipt and Custody of Tenders 64
5.3 Procedures to be followed during Bid Opening 67
Chapter 6: Forms of securities, Payment Terms and Price Variations
6.1 Forms of Security 69
6.2 Payment Clause 72
6.3 Terms of Payment for Domestic Goods 74
6.4 Terms of Payment for Imported Goods 75
6.5 Advance Payment 77
6.6 Firm Price vis-à-vis Variable Price 78
6.7 Exchange Rate Variation 81
6.8 Taxes, Duties and Levies 81

6.9 Incoterms Terms of Delivery 82

6.10 e-Payment 83
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6.11 Deduction of Income Tax, GST, and so on, at Source from payments to suppliers 83
6.12 Recovery of Public Money from Supplier’s Bill 83
6.13 Payment against Time Barred Claims 84
Chapter 7: Evaluation of bids and Award of Contract
7.1 Tender Evaluation 85
7.2 Preparation of Comparative Statement 86
7.3 Preliminary Examination 86
7.4 Evaluation of Responsive Bids and Decision on Award of Contract 88
7.5 Deliberations by the Tender Committee for Award of Contract 92
7.6 Award of Contract 101
Chapter 8: Rate Contract and other Procurements with special features
8.1 Rate Contracts 105
8.2 Handling Procurement in urgencies/Emergencies and Disaster Management 111
8.3 Buy Back Offer 111
8.4 Capital Goods/Equipment (Machinery and Plant – M&P) 112
8.5 Turnkey Contract 113
8.6 Annual Maintenance Contract (AMC) 113
Chapter 9: Contract Management

9.1 Contract Management

116

9.2 Amendment to the Contract 117

9.3 Operation of Option Clause 117

9.4 Safeguards for Handing over Procuring Entity Materials/Equipment to Contractors 119

9.5 Payments to the Contractor and Handling of Securities 120

9.6 Monitoring of Supplier Performance 120

9.7 Delays in Performance of Contract 120

9.8 Breach of Contract, Remedies and Termination 127

9.9 Dispute Resolution 128

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9.10 Closure of Contract 129

9.11 Goods Receiving 131

9.12 Quality Assurance and Inspection 133

9.13 Storage and Issue of Inspected Goods 141

9.14 Accounting and Payment of Received Materials 142

Chapter 10: Disposal of scrap Goods 144
10.1 Scrap for Disposal 144
10.2. Classification and categorisation 144

10.3 Survey of Materials for Classifying as Scrap for Disposal 144

10.4 Modes of Disposal 145

10.5 Preparation for Disposal 146

10.6 Conditions of Disposal Applicable to all Modes of Disposal 147

10.7 Disposal through Tender 148

10.8 Disposal through Auction 150

10.9 Disposal at scrap value or by other modes 150

10.10 Delivery of Sold Material 151

10.11 Procedure for Adjustment of Sale Proceeds in the Books of Accounts 153
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ANNEXURE
Annexure 1 Purchase Requisition (Indent) for Goods (Non-stock) 155
Annexure 2 Purchase Requisition Register for Indenters 157
Annexure 3 Purchase Requisition Register for Procuring Entity 158
Annexure 4 Proprietary Article Certificate 159
Annexure 5 Purchase without Quotation Format
160
Annexure 6 Bid Opening Attendance Sheet cum Report 161
Annexure 7 Tender Committee Minutes Format 163
Annexure 8 Invitation and Declaration for Negotiations 165
Annexure 9 Format of Revised Offer in Negotiations 167
Annexure 10 Letter (Notification) of Award (LoA) of Contract 168
Annexure 11 Example of Formula for Price Variation Clause 169
Annexure 12 Progress of Supply Order Register 171
Annexure 13 Proposal for Extension of Delivery Period 172
Annexure 14 Format for Extension of Delivery Period/Performance Notice 174
Annexure 15 Format for Correspondence with Supplier after Expiry of Delivery
Date 177
Annexure 16 No Claim Certificate 178
Annexure 17 Goods Receipt and Inspection Report 179
Annexure 18 Survey Committee’s Report 180
Annexure 19 Sale Account for Goods Disposed 182
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APPENDIX
Appendix 1: Legal Aspects of Public Procurement

1.0 Relevant Provisions of the Constitution of India 182

2.0 Salient Features of the Indian Contract Act 183

3.0 Salient Features of the Sales of Goods Act, 1930 187

4.0 Salient Features of the Indian Arbitration & Conciliation 189

Act 1996
5.0 Salient Features of Competition Act, 2002 relating to 194
Anti-competitive Practices
6.0 Salient Features of the Whistle Blowers Protection Act, 199
2011 and the Whistle Blowers Protection (Amendment)
Act, 2015
Appendix 2 : Electronic Procurement (e-Procurement) and e-Auction

1. 0 Electronic procurement (e-Procurement)

201

2.0 Service Provider 201

3.0 Process 202

4.0 Disposal through e-Auction

204

Appendix 3 : Management of Public Procurement Function

1. 0 Organization of Procurement Function 209

2.0 Management Reporting 209

3.0 Record Keeping 210

Appendix 4 : Templates for Management Reports and KPIs 212

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ABBREVIATIONS AND ACRONYMS

AITB Additional Instructions to Bidders (may in some instances be

called Bid Data Sheet – BDS or Tender Information Sheet -TIS)
AMC Annual Maintenance Contract
BC Bill Currency (selling/buying)
BEE Bureau of Energy Efficiency
BG Bank Guarantee
BIS Bureau of Indian Standards
BOC Bid Opening Committee
BSTC Buyer Specific Terms & Conditions
BSV Balance Sale Value
C&AG Comptroller and Auditor General (of India)
CA Competent Authority
CBI Central Bureau of Investigation
CCI Competition Commission of India
CFR Cost and Freight
CIF Cost Insurance and Freight
CIP Carriage and Insurance Paid
COMPAT Competition Appellate Tribunal
COTS Commercially Off the Shelf (Items)
CPCB Central Pollution Control Board
CPSE Central Public Sector Enterprise
CVC Central Vigilance Commission
CVO Chief Vigilance Officer
DCF Discounted Cash Flow
DDO Direct Demanding Officer (for RCs)
DFPRT Delegation of Financial Power Rules, Tripura
DGS&D Directorate General of Supplies and Disposals
DSC Digital Signature Certificate
eASP E-Auction Service Provider
ECS Electronic Clearing System
EFT Electronic Funds Transfer
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EMD Earnest Money Deposit

EoI Expression of Interest (Tender)

ERV Exchange Rate Variation
EXIM Export Import (Policy)
FA (&CAO) Financial Adviser (and Chief Accounts Officer)
FAS Free Alongside Ship
FC Framework Contract
FEMA Foreign Exchange Management Act
FM Force Majeure
FOB Free On Board
FOR Free On Rail
FOT Free On Truck
GCC General Conditions of Contract
GCS General Conditions of Sale
GeM Government Electronic Market
GFR General and Financial Rules, 2017
GoI Government of India
GRIR Goods Receipt and Inspection Report
GST Goods and services Tax
GTC General Terms & Conditions
GTE Global Tender Enquiry
HOD Head of the Department
IEM Independent External Monitor
INCOTERMS International Commercial Terms
IRDA Insurance Regulatory and Development Authority
ISI Indian Standards Institute
ISO International Organization for Standardization
ITB Instructions to Bidders (may in some instance be called
Instructions to Tenderers - ITT)

ITJ Indian Trade Journal

KPIs Key Performance Indices
L1 Lowest Bidder
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LC Letter of Credit
Life Cycle Costing
LD Liquidated Damages
LoA Letter (Notification) of Award also called Acceptance of Tender (A/T)
LPP Last Purchase Price
M&P Machinery and Plant
MoEF Ministry of Environment and Forests
MRP Maximum Retail Price
MSE Micro and Small Enterprise
MSTC Metal Scrap Trading Corporation
NEFT National Electronic Funds Transfer
NIC National Informatics Centre
NIT Notice Inviting Tender
NSIC National Small Industries Corporation
NTH National Test House
OEM Original Equipment Manufacturer
OPEX Operating Expense (model of acquisition/procurement)
OTE Open Tender Enquiry
PAC Proprietary Article Certificate
PBG Performance Bank Guarantee, also see SD
PR Purchase Requisition/Indent
PSU Public Sector Undertaking
PVC Price Variation Clause
QA Quality Assurance
RBI Reserve Bank of India
RC Rate Contract (or Framework Contract FC)
(S)RfP (Standard) Request for Proposals (Document)
RTGS Real Time Gross Settlement
RTI Right to Information
SBD Standard Bidding Document
SC Survey Committee
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STE Single Tender Enquiry

TC Tender Committee also called Tender Purchase or Evaluation
Committee (TPC/ TEC)
TCO Total Cost of Ownership
TCS Tax Collected at Source
TDS Tax Deducted at Source
ToR Terms of Reference
TS Technical Specification
UCP 600 The Uniform Customs and Practice for Documentary
Credits
(UCPDC or simply UCP)
UNCITRAL United Nations Commission on
International Trade LawURDG 758
Uniform Rules for Demand Guarantees

VfM (Best) Value for Money

WOL Whole of Life (Cost) or Total Cost of Ownership TCO
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PROCUREMENT GLOSSARY

In this Manual and in the ‘Procurement Guidelines’, unless the context otherwise
requires:
i) “Bid” (including the term ‘tender’, ‘offer’, ‘quotation’ or ‘proposal’ in
certain contexts) means an offer to supply goods, services or execution
of works made in accordance with the terms and conditions set out in a
document inviting such offers;

ii) “Bidder” (including the term ‘tenderer’, ‘consultant’ or ‘service

provider’ in certain contexts) means any eligible person or firm or
company, including a consortium (that is an association of several
persons, or firms or companies), participating in a procurement
process with a Procuring Entity;
iii) “(Standard) Bid(ding) documents” (including the term ‘tender
(enquiry) documents’ or ‘Request for Proposal Documents’ – RfP
documents in certain contexts) means a document issued by the
Procuring Entity, including any amendment thereto, that sets out
the terms and conditions of the given procurement and includes the
invitation to bid. A Standard (Model) Bidding Document is the
standardised template to be used for preparing Bidding Documents
after making suitable changes for specific procurement;
iv) “Bid security” (including the term ‘Earnest Money Deposit’(EMD), in
certain contexts) means a security from a bidder securing obligations
resulting from a prospective contract award with the intention to
avoid: the withdrawal or modification of an offer within the validity of
the bid, after the deadline for submission of such documents; failure
to sign the contract or failure to provide the required security for the
performance of the contract after an offer has been accepted; or failure
to comply with any other condition precedent to signing the contract
specified in the solicitation documents.;

v) “Competent authority” means the officer(s) who finally approves the decision.

vi) “Consultancy services” means a one-off (that is, not repetitive and not
routine) services, involving project specific intellectual and
procedural processes using established technologies and
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methodologies but the outcomes – which are primarily of non-physical

nature – may not be standardised and would vary from one consultant to
another. It may include small works or supply of goods which are
incidental or consequential to such services;

vii) “e-Procurement” means the use of information and communication

technology (specially the internet) by the Procuring Entity in conducting its
procurement processes with bidders for the acquisition of goods (supplies),
works and services with the aim of open,non- discriminatory and efficient
procurement through transparent procedures;

viii) Goods includes all articles, material, commodity, livestock,

medicines furniture, fixtures, raw material, consumables,
spare parts, instruments, machinery, equipment, industrial plant,
vehicles, aircrafts, ships, railway rolling stock assemblies, sub-
assemblies, accessories, a group of machines comprising an
integrated production process or such other categories of
goods or intangible, products like technology transfer,
licenses, patents or other intellectual properties (but excludes
books, publications, periodicals, etc., for a library), procured or
otherwise acquired by a Procuring Entity. Procurement of goods
may include certain small work or some services, which are
incidental or con sequential to the supply of such goods, such as
transportation, insurance, installation, commissioning, training and
maintenance;

ix) “Government undertaking” means Government companies under the

companies Act 1956, statutory corporations, co-operative and other
societies and all other autonomous bodies fully or partly financed or
otherwise assisted by the State Government.
x) “Indenter” ( or the term ‘User (Department)’ in certain contexts)
means the entity and its officials initiating a procurement indent,
that is, a request to the Procuring Entity to procure goods, works
or services specified therein;
xi) “Inventory” means any material, component or product that is
held for use at a later time;

xii) “Invitation to register” (wherever applicable) means a document

including any amendment thereto published b y the Procuring
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Entity inviting offers for bidder registration from prospective

bidders;
xiii) “Non-consultancy services” includes services of physical and
procedural nature and are bid and contracted on the basis
of performance of a measurable physical output, and for
which performance standards can be clearly identified and
consistently applied such as drilling, aerial photography, satellite
imagery, mapping and similar operations. It may include small
works or supply of goods which are incidental or consequential to
such services;
xiv) “ Notice inviting tenders” (including the term ‘Invitation to bid’ or
‘request for proposals’ in certain contexts) means a document and
any amendment thereto published or notified by the Procuring
Entity, which informs the potential bidders that it intends to
procure goods, services and/or works.;

Partnership projects, by a Procuring Entity, whether directly or through

an agency with which a contract for procurement services is entered into,
but does not include any acquisition of goods, works or services without
consideration, and the term “procure” or “procured” shall be construed
accordingly;

xvi) “Procurement contract” (including the terms ‘Purchase Order’ or

‘Supply Order’ or ‘Withdrawal Order’ or ‘Work Order’ or
‘Consultancy Contract’ or ‘Contract for Services’ under certain
contexts), means a formal legal agreement in writing relating to the
subject matter of procurement, entered into between the Procuring
Entity and the supplier, service provider or contractor on mutually
acceptable terms and conditions and which are in compliance with
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all the relevant provisions of the laws of the country. The term
“contract” will also include “rate contract’ and “framework contract”;

xvii) ‘(Public) Procurement Guidelines” means guidelines applicable to

Public Procurement, consisting of under relevant context a set of – i)
Statutory Provisions (The Constitution of India; Indian Contract Act,
1872; Sales of Goods Act, 1930; and other laws as relevant to the
context); ii) Rules & Regulations (General Financial Rules, 2017;
Delegation of Financial Power Rules and any other regulation
so declared by the Government); iii) Manuals of Policies and
Procedures for Procurement (of Goods; Works; Consultancy
Services or any for other category) promulgated by the Ministry
of Finance and iv) Procuring Entity’s Documents relevant to the
context (Codes, Manuals and Standard/Model Bidding
Documents);
xviii) “Procurement process” means the process of procurement extending
from the assessment of need; issue of invitation to pre-qualify or to
register or to bid, as the case may be; the award of the procurement
contract; execution of contract till closure of the contract;
xix) “Procuring authority” means the officer who finally approves as well
as those officials and committee members who submit the
notes/reports for the approval for any decision.
xx) “Procuring Entity” means any Department of the State Government or
a unit thereof or its attached or subordinate office to which powers
of procurement have been delegated;
xxi) “Prospective bidder” means anyone likely or desirous to be a bidder
xxii) Public Private Partnership” means an arrangement between the central,
a statutory entity or any other Government-owned entity, on one
side, and a private sector entity, on the other, for the provision of public
assets or public services or both, or a combination thereof, through
investments being made or management being undertaken by the
private sector entity, for a specified period of time, where there is
predefined allocation of risk between the private sector and the
public entity and the private entity receives performance- linked
payments that conform (or are benchmarked) to specified and
predetermined performance standards, deliverables or Service
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Level agreements measurable by the public entity or its

representative;

xxiii) “Service” means any subject matter of procurement other than

goods or works, except those incidental or consequential to the
service, and includes physical, maintenance, professional,
intellectual, training, consultancy and advisory services or any other
service classified or declared as such by a Procuring Entity but does
not include appointment of an individual made under any law, rules,
regulations or order issued in this behalf;
xxiv) “Subject matter of procurement” means any item of procurement
whether in the form of goods, services or works or a combination
thereof.
xxv) “Works” refer to any activity, sufficient in itself to fulfil an economic or technical
function, involving construction, fabrication, repair, overhaul, renovation,
decoration, installation, erection, excavation, dredging, and so on, which make
use of a combination of one or more of engineering design, architectural
design, material and technology, labour, machinery and equipment. Supply of
some materials or certain services may be incidental or consequential to and part of
such works. The term “Works” includes (i) civil works for the purposes of roads,
railway, airports, shipping-ports, bridges, buildings, irrigation systems, water
supply, sewerage facilities, dams, tunnels and earthworks; and so on, and (ii)
mechanical and electrical works involving fabrication, installation, erection,
repair and maintenance of a mechanical or electrical nature relating to
machinery and plants.
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Chapter-1
INTRODUCTION- POLICIES AND PRINCIPLES

1.1 Procurement rules and regulations and this manual

Various Departments, attached and subordinate offices, local urban bodies, public
sector enterprises and other Government (including autonomous) bodies (hereinafter
referred as ‘Procuring Entities’) spend a sizeable amount of their budget on
procurement of goods, works and services to discharge the duties and
responsibilities assigned to them.

The Departments have been delegated powers to make their own arrangements for
procurement of goods under the Delegation of Financial Power Rules, which have to be
exercised in conformity with the delegated powers to make their own arrangements for
procurement of goods under the Delegation of Financial Power Rules, which have to be
exercised in conformity with the ‘Procurement Guidelines’ described below.

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, there are statutory provisions, rules, financial, vigilance, security, safety,
counter- trade and other regulations; orders and guidelines of the Government on the
subject of public procurement (hereinafter referred as ‘Procurement Guidelines’)
which provide framework for the public procurement system.

At the apex of the Statutory framework governing public procurement is Article 299 of the
Constitution of India, which stipulates that contracts legally binding on the Government
have to be executed in writing by officers specifically authorized to do so. The
Constitution also enshrines Fundamental Rights (In particular Article 19 (1) (g) – Right to
carry on a Profession) which have implications for Public Procurement. Further, the
Indian Contract Act, 1872 and the Sale of Goods Act, 1930 are major legislations
governing contracts of sale/purchase of goods in general. There are other mercantile
laws (Arbitration and Conciliation Act, 1996; Competition Act, 2002; Information
Technology Act, 2000 etc), which may be attracted in Public Procurement Transactions.
There is no law exclusively governing public procurement.

However, comprehensive Rules and Regulations in this regard are available in the
General Financial Rules (GFR), 2017, Delegation of Financial Powers Rules Tripura

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(DFPRT,2017); Government orders regarding product reservations if any or

procurement preference or other facilities to local industrial units, Pharmaceutical
State Public Sector Enterprises if applicable, Khadi/Handlooms goods if applicable
etc. and the guidelines issued by the State Vigilance Commission to increase
transparency and objectivity in public procurement.

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 and
draw attention to basic norms and practices governing public procurement.

1.2 Clarification, Amendments and Revision of this Manual

For revision, interpretation, clarification and issues relating to this manual, the
Finance Department, Government of Tripura would be the nodal authority.

1.3 Applicability of this Manual

The term ‘goods’ used in this manual includes all articles, material, commodity,
livestock, medicines, furniture, fixtures, raw material, consumables, spare parts,
instruments, machinery, equipment, industrial plants, vehicles, aircraft, ships, railway
rolling stock, assemblies, sub- assemblies, accessories, a group of machines
comprising an integrated production process or such other goods (but excludes
books, publications, periodicals, and so on, for a library), or intangible products like
software, technology transfer, licenses, patents or other intellectual properties
procured or otherwise acquired by a Procuring Entity. Procurement of goods may
include certain small work or some services, which are incidental or consequential to
the supply of such goods, such as transportation, insurance, installation,

commissioning, training and maintenance (Rule 143 of GFR 2017). What is unique
about procurement of goods (as compared to services and works) is the ability to
precisely describe the technical specification of the requirement.

The ‘Procurement Entities’ who can benefit from this manual include Departments, or a
unit thereof, or an attached or subordinate offices/units; state Public Sector Enterprises
or Government undertakings; any other body (including autonomous bodies)
substantially owned or controlled by or receiving substantial financial assistance from the
state Government. These procurement guidelines would continue to apply if these
procurement entities outsource the procurement process or bundle the procurement
process with other contractual arrangements or utilise the services of procurement
support agency or procurement agents to carry out the procurement on their behalf. But
these procurement guidelines would not apply to procurements by these procuring

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entities for their own use (but not for purpose of trading/sale) from their subsidiary
companies including Joint Ventures in which they have controlling share.

However by a general or special notification, the Government may permit certain

‘Procuring Entities’ mentioned in sub-para 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 aspects
but conform with all other essential aspects of ‘Procurement Guidelines’.

This Manual is to be taken as generic guidelines, which have to be necessarily broad in

nature. Subject to the observance of these generic guidelines, the initiation,
authorization, procurement and execution of Goods Contracts undertaken by a particular
Department shall be regulated by detailed rules and orders contained in the respective
Departmental regulations and by other special orders applicable to them. Departments
are advised to supplement these manuals to suit local/specialized needs, by issuing their
own detailed Manuals (including customized formats); Standard Bidding Documents;
Schedule of Procurement Powers and Checklists to serve as practical instructions for
their officers and to ensure completeness of examination of cases.

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For procurements financed by loans/Grants extended by international agencies:

The Articles of Agreement with the International Agencies, like the World Bank, Asian
Development Bank etc. stipulate specific procurement procedures to be followed by
the borrowers. The procurement procedures, as finalized and incorporated in the
Agreements after consideration and approval of the concerned Department are to be
followed accordingly.

1.4 Authorities competent to purchase goods and their Purchase Powers

A Competent authority who is competent to incur expenditure may sanction the purchase of
goods required for use in public service in accordance with the Delegation of Financial Powers
Rules, Tripura,2017 by following the ‘Procurement Guidelines’ described in this Manual (Rule
145 of GFR 2017) .

1.5 Basic Aims of Procurement – the Five R’s of Procurement

In every procurement, public or private, the basic aim is to achieve just the right balance
between costs and requirements concerning the following five parameters called the Five R’s
of procurement. The entire process of procurement (from the time the need for an item, facility
or services is identified till the need is satisfied) is designed to achieve such a right balance.
The word ‘right’ is used in the sense of ‘optimal balance’.
i. Right Quality
Procurement aims to buy just the right quality that will suit the needs – no more and no
less – with clear specification of the Procuring Entity’s requirements, proper
understanding of functional value and cost, 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 (Please refer to para 1.6 below). For the Right Quality,
Technical Specification is the most vital ingredient. In public procurement, it is essential
to give due consideration to Value for Money while benchmarking the specification.

ii. Right Quantity

There are extra costs and systemic overheads involved with both procuring a
requirement too frequently in small quantities or with buying large quantities for
prolonged use. Hence, the right quantity should be procured (in appropriate size of
contract) which balances extra costs associated with larger and smaller quantities.

iii. Right Price

It is not correct to aim at the cheapest materials/facilities/services available. The price
should be just right for the quality, quantity and other factors involved (or should not be
abnormally low for a facilities/works/services which could lead to a situation of non-
performance or failure of contract). The concept of price can be refined further to take
into account not only the initial price paid for the requirement but also other costs such
as maintenance costs, operational costs and disposal costs
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iv. Right Time and Place

If the material (or facility or services) is needed by an organisation in three months’
time, it will be costly to procure it too late or too early. Similarly, if the vendor delivers
the materials/facilities/services in another city, extra time and money would be involved
in logistics. An unrealistic time schedule for completion of a facility may lead to delays,
claims and disputes.
v. Right source
Similarly, the source of delivery of Goods, Works and Services of the requirement
must have just right financial capacity and technical capability for our needs
(demonstrated through satisfactory past performance of contracts of same or similar
nature). 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 very large, buying
such requirements through dealers or middlemen may also not be right.

1.6 Fundamental Principles of Public Procurement

General Financial Rules, 2017 (Rule 144) 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,
which all procuring authorities must abide by and be accountable for:

i) Transparency Principle
All procuring authorities are responsible and accountable to ensure transparency, fairness,
equality, competition and appeal rights. This involves simultaneous, symmetric and unrestricted
dissemination of information to all likely bidders, sufficient for them to know and understand the
availability of bidding opportunities and actual means, processes and time-limits prescribed for
completion of registration of bidders, bidding, evaluation, grievance redressal, award and
management of contracts. It implies that such officers must ensure that there is consistency
(absence of subjectivity), predictability (absence of arbitrariness), clarity, openness (absence of
secretiveness), equal opportunities (absence of discrimination) in processes. In essence
Transparency Principle also enjoins upon the Procuring Authorities’ to do only that which it
had professed to do as pre-declared in the
relevant published documents and not to do anything that had not been so declared’. As part
of this principle, all procuring entities should ensure that offers should be invited following a
fair and transparent procedure and also ensure publication of all relevant information on the
Public Procurement Portal .

ii) Professionalism Principle

As per these synergic attributes, the procuring authorities have a responsibility and accountability
to ensure professionalism, economy, efficiency, effectiveness and integrity in the procurement
process. They must avoid wasteful, dilatory and improper practices violating the Code of integrity
for Public Procurement (CIPP) mentioned in Chapter 3 of this manual. They should, at the same
time, ensure that the methodology adopted for procurement should not only be reasonable and
appropriate for the cost and complexity but should also effectively achieve the

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planned objective of the procurement. As part of this principle, the Government may prescribe
professional standards and specify suitable training and certification requirements for officials
dealing with procurement matters.
In reference to the above two principles - Transparency and Professionalism Principle, It may
be useful to refer to the following provisions in the General Financial Rules, 2017:

Rule 144. Fundamental principles of public buying (for all procurements including
procurement of works). Every authority delegated with the financial powers of procuring
goods in public interest shall have the responsibility and accountability to bring efficiency,
economy, and transparency in matters relating to public procurement and for fair and
equitable treatment of suppliers and promotion of competition in public procurement.

The procedure to be followed in making public procurement must conform to the following
yard sticks:-
a) The description of the subject matter of procurement to the extent practicable should –
1. be objective, functional, generic and measurable and specify technical,
qualitative and performance characteristics;

2. not indicate a requirement for a particular trade mark, trade name or brand.

b) The specifications in terms of quality, type etc., as also quantity of goods to be

procured, should be clearly spelt out keeping in view the specific needs of the procuring
organisations. The specifications so worked out should meet the basic needs of the
organisation without including superfluous and non-essential features, which may result in
unwarranted expenditure;

c) Where applicable, the technical specifications shall, to the extent practicable, be based
on the national technical regulations or recognized national standards or building codes,
wherever such standards exist, and in their absence, be based on the relevant
international standards. In case of Government of India funded projects abroad, the
technical specifications may be framed based on requirements and standards of the host
beneficiary Government, where such standards exist. Provided that a Procuring Entity
may, for reasons to be recorded in writing, adopt any other technical specification;

d) Care should also be taken to avoid purchasing quantities in excess of requirement to

avoid inventory carrying costs;

e) offers should be invited following a fair, transparent and reasonable procedure

f) the procuring authority should be satisfied that the selected offer adequately meets the
requirement in all respects;

g) the procuring authority should satisfy itself that the price of the selected offer is
reasonable and consistent with the quality required;
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h) at each stage of procurement the concerned procuring authority must place on record,
in precise terms, the considerations which weighed with it while taking the
procurement decision;

i) a complete schedule of procurement cycle from date of issuing the tender to date of
issuing the contract should be published when the tender is issued;

j) All Departments shall prepare broad Annual Procurement Plan before the
commencement of the year and the same may be placed on the their website.

iii) Broader Obligations Principle

Over and above transparency and professionalism, the procuring authorities have also the
responsibility and accountability to conduct public procurement in a manner to facilitate
achievement of the broader objectives of the Government - to the extent these are specifically
included in the ‘Procurement Guidelines’:

a) Preferential procurement from backward regions, weaker sections and local industrial
unit, locally manufactured goods or services, to the extent specifically included in the
‘Procurement Guidelines’;

b) Reservation of procurement of specified class of goods if any from or through certain

nominated CPSEs or Government Organisations, to the extent specifically included in the
‘Procurement Guidelines’;
c) Support to broader social policy and programme objectives of the Government (for
example, economic growth, strengthening of local industry - make-in-India, Ease of
Doing Business, job and employment creation, and so on, to the ex tent specifically
included in the ‘Procurement Guidelines’);

d) Facilitating admi nistrative goals of other Departments of Government (for example,

ensuring tax or environmental compliance by participants, Energy Conservation,
accessibility for People With Disabilities etc. to the extent specifically included in the
‘Procurement Guidelines’);

e) Procurement policies and procedures must comply with accessibility criteria which may
be mandated by the Government from time to time.

iv) Extended Legal Responsibilities Principle

Procuring authorities must fulfil additional legal obligations in public procurement, over and
above mere conformity to the mercantile laws (which even private sector procurements have
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to comply with). The Constitution of India has certain provisions regarding fundamental rights
and public procurement. Courts have, over a time, taking a broader view of Public
Procurement as a function of ‘State’, interpreted these to extend the responsibility and
accountability of public procurement authorities. Courts in India as well as State thus exercise
additional judicial review (beyond contractual issues) over public procurement in relation to the
manner of decision making in respect of fundamental rights, fair play and legality. Similarly,
procuring authorities have also the responsibility and accountability to comply with the laws
relating to Governance Issues like Right to Information (RTI) Act and Prevention of Corruption
Act, and so on. Details of such extended legal obligations are given in Appendix 2.

v) Public Accountability Principle

Procuring authorities are accountable for all the above principles to several statutory and
official bodies in the Country – the State Legislature and its Committees, State Vigilance
Commission, Comptroller and Auditor General of India and so on– in addition to administrative
accountability. As a result, each individual public procurement transaction is liable to be
scrutinised independently, in isolation, besides judging the overall outcomes of procurement
process over a period of time. Procuring authorities thus have responsibility and accountability
for compliance of rules and procedures in each individual procurement transaction besides the
achievement of overall procurement outcomes. The procuring authority, at each stage of
procurement, must therefore place on record, in precise terms, the considerations which
weighed with it while making the procurement decision from need assessment to fulfilment of
need. Such records must be preserved, retained in easily retrievable form and made available
to such oversight agencies. 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 will be stored in an identified place and retrievable for scrutiny
whenever needed without wastage of time. The documents and record will include:
a) documents pertaining to determination of need for procurement;
b) description of the subject matter of the procurement;
c) statement of the justification for choice of a procurement method other than open
competitive bidding;
d) documents relating to pre-qualification and registration of bidders, if applicable;
e) particulars of issue, receipt, opening of the bids and the participating bidders at each stage;
f) requests for clarifications and any reply thereof including the clarifications given during
pre-bid conferences;
g) bids evaluated, and documents relating to their evaluation;
h) contracts and Contract Amendments; and
i) complaint handling, correspondences with clients, consultants, banks.

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1.7 Standards (canons) of Financial Propriety

Public Procurement like any other expenditure in Government must conform to the Standards
(also called Canons) of Financial Propriety. It may be useful to refer to the relevant provisions in
the General Financial Rules, 2017

Rule 21. Standards of financial propriety: Every officer incurring or authorizing expenditure from
public moneys should be guided by high standards of financial propriety. Every officer should
also enforce financial order and strict economy 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:-

a) 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.
b) The expenditure should not be prima facie more than the occasion demands.
c) No authority should exercise its powers of sanctioning expenditure to pass an order
which will be directly or indirectly to its own advantage.
d) Expenditure from public moneys should not be incurred for the benefit of a particular
person or a section of the people, unless –
i. a claim for the amount could be enforced in a Court of Law, or
ii. the expenditure is in pursuance of a recognized policy or custom.
e) 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.
f) While discharging the duties of financial concurrence of any public expenditure, such
authorities subsequent to such decision, shall not be involved in any future financial/
audit/payment responsibilities which may create conflict of interest.

1.8 Product reservation if any and Preferential / Mandatory Purchase from certain sources

The state 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.
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 (ITB).

1.9 Public Procurement Policy for local industrial unit:-

Procurement policy for local industrial unit should be as per TIIPS. EMD / SD exemption for local
industrial unit will also be as per TIIPS.

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1.10 Proactive information Disclosures

Section 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 to enhance transparency and also to reduce the need for filing individual RTI
applications. The Department of Personnel & Training, Ministry of Personnel, Public Grievances
& Pensions, Government of India, has issued “Guidelines on suo motu disclosure under Section
4 of the RTI Act” vide their OM No.1/6/2011-IR dated 15th April, 2013.. The relevant guidelines
relating to information disclosure relating to procurement are reproduced below:
“Information relating to procurement made by public authorities 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 should be disclosed. All information disclosable as per Department 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 State 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. In case of procurements made through DGS&D Rate Contracts or through
nominated Government agencies, only award details need to be published....”

1.11 Public Procurement Cycle

The procurement process for goods, works and/or services typically involves the following cycle
of activities, undertaken in the order stated below.

i) Need Assessment: Need assessment, formulation of Specifications

and Procurement Planning;
ii) Bid Invitation: Preparing bid documents, publication, receipt and opening
of bids;
iii) Bid Evaluation: Evaluation of bids and award of contract; and
iv) Contract Execution: Contract management and closure;
v) Disposal of Scrap: Disposal of Scrap through various modes of disposal.

Details and procedures of various stages of the procurement cycle would be described in
subsequent Chapters of the manuals.

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Chapter-2
NEED ASSESSMENT, FORMULATION OF SPECIFICATIONS AND
PROCUREMENT PLANNING

2.1 Need Assessment

2.1.1 Procurements should be initiated only based on yearly requirement except under
special circumstances / indent of the implementing agencies. The authority initiating the
requirement for procurement shall first determine the need (including anticipated requirement
and pending liabilities) for the subject matter of the procurement. Description and
specification of need assessment is of fundamental importance in ensuring transparency,
competition and level playing field in procurement. The Department shall maintain all
documents relating to the determination of the need for procurement. During need
assessments, the following matters are decided to comply with the ‘Procurement
Guidelines’:

i. The expression/ description of the need is to ensure wide competition. Therefore to

the extent practicable it should be:

a) Unambiguous, complete, using common terminology prevalent in relevant trade;

b) In accordance with the guidelines prescribed if any in this regard;
c) Except in case of proprietary purchase from a selected single source, reference to brand
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”.

ii. The quantity of the subject matter of procurement, commensurate with economy:
a) Care should be taken not to make unnecessary procurements much in advance of actual
requirements, if such procurement is likely to be unprofitable to the Government, coupled
with unwarranted inventory-carrying cost. Where sales, consumption or usage limits of
requirements have been laid down by the Competent Authority (CA), the officer signing
the indent / requirement should also certify that the prescribed scales or limits are not
exceeded. The authority preparing the indent shall neither package nor divide its
procurement or take any other action so as to limit competition among potential bidders or to
avoid its obligations under ‘Procurement Guidelines’. Provided that in the interest of
efficiency, economy, timely completion or supply, wider competition or access to local
industrial unit, a indenting or procuring authority may, for reasons to be recorded in writing,
divide its procurement into appropriate packages, or club requirements of other users for

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procurement. Some requirements e.g. IT Systems may have elements of Goods, Works
and Services. It could be either sliced into of Goods, Works and Services elements or
combined into a package. It is also necessary to round off the calculated quantity to the
nearest wagon load/truck load/package to economize on transportation; and

b) Units of quantity are a very important parameter. Some items may be manufactured in
metric tons but may be used in units of numbers or units of lengths (for example, steel
sheets/structural). For the sake of transparency, it is important to buy an item in units of
manufacture. For example, it is better to buy steel/structural 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 – but should be standardised.

c) Time-schedule and place Need assessment and generation of indent / requirement

for procurement should be done sufficiently in advance of the time when goods are
required. Delays in need assessment have adverse impact on the transparency. Great
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
establishment lead times. In urgent cases, the Procuring Entity may entertain indents /
requirement providing shorter periods but such urgencies should be approved by the
authority empowered to grant administrative approval for the indent and must be
accompanied by proper justification.

d) Formulation of specification to ensure transparency and ensuring widest competition.

This is further detailed in subsequent para.

e) Estimation of cost:

1) The estimated cost / Financial involvement in the indent is a vital element in various
procurement processes, approvals and establishing reasonableness of prices at the time
of evaluation of the bids. Therefore, it should be worked out in a realistic and objective
manner. The prevailing market price ascertained through a market survey or budgetary
quotations from one or more prospective suppliers or published catalogues/ Maximum
Retail Price (MRP) printed on the item is the main source for establishing the estimated
cost of items for which there no historic data available. It may be noted that MRPs
usually include significant margins for distributors, wholesalers and retailers;
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2) In addition, wherever they are available Directorate General of Supplies and Disposals
(DGS&D) rates / GeM should be considered. Likewise rates should be compared with
recent orders/purchases of similar equipment by other states/ Departments. Other
methods for establishing the estimated cost in the indent/ requirement and tender
evaluation are:
a) Estimated rate in past indents of the same goods;
b) Last purchase price of this or similar or nearly equivalent requirements;
c) Costing analysis based on costs of various components/raw materials of the item;
d) Rough assessment from the price of the assembly/machine of which the item is a part or
vice versa;
e) Through the internal or external expert costing agencies; and

iii. These methods are not mutually exclusive and 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 case
of foreign currencies, the rate should be reduced to a common denomination of Indian
Rupees. Price indices can be obtained from the following websites. Some may require
prior free registration and some paid subscription:

a) For price indices of indigenous items: http://www.eaindustry.nic.in/home.asp.in (Ministry

of Industry);
b) For metals and other minerals: http://www.mmronline.com/or http://www.
metalprices.com/index.asp or http://www.asianmetal.com/;
c) For price trends of nonferrous details; London Metal Exchange - https://www.lme.
com/gives price trends of nonferrous details, which often show volatile trends;
d) Other useful sites: http://www.tradeintelligence.com/and http://www.cmie. com/. (Centre
for Monitoring Indian Economy);
e) For price trends of different countries: http://www.imf.org/external/pubs/ft/
weo/2015/01/(International Monetary Fund); and
f) For organisation/chambers of commerce such as the (Indian Electrical and
Electronics Manufacturer’s Association): www.ieema.org;

2.2 Formulation of Technical specifications (Ts)

2.2.1 The procuring authority should ensure that specifications are developed to ensure wide
competition in procurement (Rule 173 (ix) of GFR 2017). The 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 the preparation of
responsive bids by bidders as well as examination, evaluation and comparison of the bids by
the Procuring Entity. It would also help in ensuring the quality of the supplied

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goods. The procuring authority should ensure that the specification should:

i. Ensures the widest competition;

ii. Be unambiguous, precise, objective, functional, broad based/generic,
standardized (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;
iii. Set out the required technical, qualitative and performance characteristics to
meet just the bare essential needs of the Procuring Entity without including superfluous
and non-essential features, which may result in unwarranted expenditure;
iv. Normally be based on standards set by the Bureau of Indian Standards (BIS),
wherever such standards exist. Preference should be given to procure the goods which carry the
BIS mark. In the absence of BIS standards, TS may be based on the relevant International
standards. 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 CA. 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 to
be complied for a particular end use;
v. All dimensions incorporated in the specifications shall be indicated in metric
units. If due to some unavoidable reasons, dimensions in FPS units are to be mentioned,
the corresponding equivalents in the metric system must also be indicated;
vi. 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;
vii. Make use of best practices. examples of specifications from successful similar
procurements in the other organizations or sector may provide a sound basis for drafting
the TS;
viii. Should have emphasis on factors such as efficiency, optimum fuel/ power consumption, use
of environmental-friendly materials, reduced noise and emission levels, low maintenance
cost, and so on. Government of India has set up the Bureau of Energy Efficiency (BEE)
(http://www.bee-india.nic.in) on 01st 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 & Labeling Programme for equipment
and appliances in 2006 to provide the consumer an informed choice about the energy saving
and thereby the cost saving potential of the relevant marketed product. The scheme is
invoked for 21 equipment/appliances, i.e. Room Air Conditioners, RAC(Cassette, Floor
Standing Tower, Ceiling, Corner AC), Tubular Fluorescent Tube Lights, Frost Free
Refrigerators, Distribution Transformers, Direct Cool Refrigerator, Electric storage type
geyser, Color TVs, Induction Motors, Ceiling fans, Agricultural pump sets, LPG

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stoves, Washing machine, Laptops, Ballast, Office automation products, Solid State
Inverter, Diesel Engine Driven Monoset Pumps for Agricultural Purposes, Diesel
Generator, Inverter AC and LED Lamps. Of which the first 8 products have been notified
under mandatory labelling since 7th January, 2010. The other appliances are presently
under voluntary labelling phase. The energy efficiency labelling programs under BEE are
intended to reduce the energy consumption of appliance without diminishing the services
it provides to consumers. More the stars higher the efficient is the appliance. The
threshold ratings prescribed by the Department of Finance are:

Appliance Threshold Star Rating

Split Air conditioners 5 Star (under normal conditions where annual usages
are expected to be more than 1000 Hrs)
Star (where usage of AC is limited e.g. in
conference rooms)
Frost Free Refrigerators 4 Star
Ceiling Fans 5 Star
Water Heaters 5 Star
We should try to build either the BEE Star rating where applicable and minimum energy
efficiency where such star ratings are not yet available, into the TS (in accordance with
Rule 173 (xvii) of GFR 2017). Such benchmarking illustrates use of neutral and
dependable benchmarking in procurement of sustainable environmentally favourable
goods by way of appropriately formulated Technical Specifications. In a similar fashion,
other Type III Eco-labels as per ISO 14020 or voluntary Environmental Standard can be
used for specifying environmental sustainability criteria.
ix. Discourage procurement involving evaluation of samples: According to the existing
guidelines on public procurement of goods, purchase in accordance with a sample should
not be usually undertaken. Calling for a sample along with the tender and deciding on the
basis of evaluation of the sample may NOT be done. 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 and workmanship, and so on. In
some specifications, there may not be a sample clause but such indeterminable
characteristics are left to be agreed to 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, supply must be in conformity
with an agreed reference sample in such respects only, whereas for the remaining
characteristics it must be in conformity with the laid down drawings/ specifications.
Procurement of such items should be decided on the basis of detailed specifications/
drawings and no sample should be called for or evaluated along with the bids. If desired, a
purchaser’s reference sample may be displayed for prospective tenderers to illustrate the

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desired indeterminable characteristics, which final supplies from successful bidder(s) will
have to meet in addition to the specifications/ drawings. 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 successful bidder(s) may be stipulated for
indeterminable characteristics, before giving clearance for bulk production of the supply.
The Indent for items which are to be procured in accordance with a sample must be
accompanied with three sealed samples as far as possible;

2.2.2 Essential Technical particulars

The essential Technical particulars to be specified in the tender document shall include
the following to the extent applicable for a particular purchase:
i. Scope of supply and, also, end use of the required goods;
ii. All essential technical, qualitative, functional, environmental and performance
characteristics and requirements (such as material composition, physical, dimensions and
tolerances, workmanship and manufacturing process wherever applicable; test schedule; if
any), including guaranteed or acceptable maximum or minimum values, as appropriate.
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;
iii. Drawings;
iv. Requirement of the BIS mark, where applicable, mentioning all parameters where such
a specification provides options;
v. Requirement of an advance sample, if any, at the post contract stage before bulk
production;
vi. Special requirements of preservation, packing and marking, if any;
vii. Inspection procedure for goods ordered and criteria of conformity;
viii. Requirements of special tests or type test certificate or type approval for compliance of
statutory requirements with reference to pollution, emission, noise, if any;
ix. 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;
x. Warranty requirements;
xi. Qualification criteria of the bidders, if any; and
xii. Any other aspects peculiar to the goods in question such as shelf life of the equipment,
and so on.

2.3 Obtaining Technical, administrative and budgetary sanctions / approvals and

signing of indents

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For technical, administrative and budgetary approval concerned DFPRT,2017 should be

followed. The indenting authority may submit an indent in form of a Purchase
Requisition (Annexure 1) to the Procuring Entity, giving it adequate time for
procurement. Indenters should monitor the progress of the Indents submitted by them.
For this purpose, a register may be maintained in the format provided in Annexure 2 by
indenters. Progress of such Indents may be monitored for which a register may be
maintained in the format provided in Annexure 3 by procuring authority .

2.3 Procurement Planning

2.4.1.After receipt of the Indent / consolidated requirement, the Procuring Entity should
take following decisions to initiate procurement, to ensure conformity to the
Procurement Guidelines:

i. Within 10 (Ten) working days of receipt of the indent / requirement from the
implementing agency, the procuring authorities should critically review the description
and TS enclosed with the indent for approvals of floating of tender and seek
clarifications from the indenting officer, if needed, before initiating such procurement;
ii. Reassessment of the quantity and appropriate aggregation of quantities of various
users: The procuring authority shall normally neither package nor divide its
procurement or take any other action so as to limit competition among bidders or to avoid
the necessity of obtaining the sanction of higher authority required with reference to the
estimated value of the total demand (Rule 157 of GFR 2017). Provided that in the
interest of efficiency, economy, timely completion or supply, wider competition or access
to local industrial units, 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. Packaging of the contract and procurement planning should be done
keeping in view the availability and possibility of eliciting the interest of the qualified firms;
effective competition for the type and size of the contract; and access to local industrial
units. 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 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 contracts for each category of procurement. In all
such situations, the dominant aspect of the requirement and 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.
iii. Determine and declare in documents, any limitation on participation of bidders as per the
Government’s procurement policy regarding preference to certain sections of industry, if any.
The Procuring Entity shall not establish any requireme nt aimed at limiting participation of

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bidders in the procurement process that discri minates against or amongst bidders or
against any category thereof except to lay down a reasonable and justifiable eligibility or
pre-qualification criteria for the bidders;
iv. Selection of a system of bidding (single/two stage; single/two bids; suitability for e-
Procurement or reverse auction);
v. Select the mode of procurement (open tenders, limited tenders, single tenders, rate
contracts, and so on)
vi. Decisions on the time frame for completing various stages of procurement, which should
be declared in the bidding documents. The Procuring Entity should endeavour to adhere
to the time limit so decided and record reasons for any modification of such limits; and
vii. Integrated procurement plan should be prepared for goods, works and services for the
ensuing financial year based on the latest cost estimates, and realistic time schedule for
procurement activities and contract implementation and thus schedule and stagger the
procurements over the year with a view to ensure an even load on the Procuring Entity
and the market and also to co-ordinate matching procurements of Goods, Works and
Services for a project.

2.4.2 The Procuring Entity may publish information regarding the planned procurement
activities for the forthcoming year or years on the website of concerned Department / state e-
Procurement portal used by the Procuring Entity with a caveat that such publication shall not
be construed as initiation of a procurement process and cast any obligation on the Procuring
Entity to issue the bidding document or confer any right on prospective bidders.

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Chapter-3

Supplier Relationship Management

3.1 Supplier relationship management
Supplier Relationship Management comprises the following functions:
i) Ensuring compliance of suppliers to the Code of Integrity for Public Procurement
and Integrity Pact (CIPP) if stipulated in Bid Documents;
ii) Holiday listing; removal from the list of registered suppliers and
banning/debarment of firms; and
iii) Development of new sources and registration of suppliers.

3.2 Code of integrity for Public Procurement (ciPP)

3.2.1 Public 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 must abide

by the following Code of Integrity for Public Procurement (CIPP). All Procuring officials may be
asked to sign declarations to this effect periodically and in various Procurement decisions
(including Need Assessment). The bidders/suppliers should be asked to sign a declaration
about abiding by a Code of Integrity for Public Procurement in registration applications and in
bid documents, with a warning that, in case of any transgression of this code, its name is
not only liable to be removed from the list ofregistered suppliers, but it would be liable
forother
punitive actions such as cancellation of contracts, banning and blacklisting oraction in
Competition Commission of India, and so on. (Rule 175 of GFR 2017)

3.2.2 code of integrity for Public Procurement: Procuring authorities as well as bidders,
suppliers, contractors and consultants should observe the highest standard of ethics and
should not indulge in the following prohibited practices, either directly or indirectly, at any
stage during the procurement process or during execution of resultant contracts:
i) “corrupt practice”: making offers, solicitation or acceptance of bribe, rewards or
gifts or any material benefit, in exchange for an unfair advantage in the
procurement process or to otherwise influence the procurement process or
contract execution;
ii) “Fraudulent practice”: 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 declaration or providing false information for
participation in a tender process or to secure a contract or in execution of the contract;

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iii) “anti-competitive practice”: 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, with or without the knowledge of the
Procuring Entity, that may impair the transparency, fairness and the progress of the
procurement process or to establish bid prices at artificial, non-competitive levels;
iv) “coercive practice”: harming or threatening to harm, persons or their property to
influence their participation in the procurement process or affect the execution of
a contract;
v) “conflict of interest”: participation by a bidding firm or any of its affiliates that are
either involved in the consultancy contract to which this procurement is linked; or
if they are part of more than one bid in the procurement; or if the bidding firm or
their personnel have relationships or financial or business transactions with any
official of Procuring Entity who are directly or indirectly related to tender or
execution process of contract; or improper use of information obtained by the
(prospective) bidder from the Procuring Entity with an intent to gain unfair
advantage in the procurement process or for personal gain;
vi) “obstructive practice”: materially impede the Procuring Entity’s investigation into
allegations of one or more of the above mentioned prohibited practices either by
deliberately destroying, falsifying, altering; or by concealing of evidence material to
the investigation; or by making false statements to investigators and/or by
threatening, harassing or intimidating any party to prevent it from disclosing its
knowledge of matters relevant to the investigation or from pursuing the
investigation; or by impeding the Procuring Entity’s rights of audit or access to
information;

3 Obligations for Proactive disclosures

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i) Procuring authorities as well as bidders, suppliers, contractors and consultants, are

obliged under Code of Integrity for Public Procurement to suo-moto proactively
declare any conflicts of interest (coming under the definition mentioned above – pre-
existing or as and as soon as these arise at any stage) in any procurement process or
execution of contract. Failure to do so would amount to violation of this code of
integrity; and

ii) Any bidder must declare, whether asked or not in a bid document, any previous
transgressions of such a code of integrity with any entity in any country during the
last three years or of being debarred by any other Procuring Entity. Failure to do so
would amount to violation of this code of integrity;
iii) 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 Code of
Integrity elsewhere may be evaluated and barring cases of various grades of
debarment, an alert watch may be kept on the bidder’s actions in the tender and
subsequent contract.
3.2.4 Punitive Provisions

Without prejudice to and in addition to the rights of the Procuring Entity to other penal
provisions as per the bid documents or contract, if the Procuring Entity comes to a
conclusion that a (prospective) bidder/supplier, 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:
i) if his bids are under consideration in any procurement
a) Forfeiture or encashment of bid security;
b) calling off of any pre-contract negotiations; and
c) rejection and exclusion of the bidder from the procurement process.

ii) if a contract has already been awarded

a) Cancellation of the relevant contract and recovery of compensation for loss
incurred by the Procuring Entity;
b) Forfeiture or encashment of any other security or bond relating to the procurement;
c) Recovery of payments including advance payments, if any, made by the
Procuring Entity along with interest thereon at the prevailing rate.

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iii) Provisions in addition to above:

a) Removal from the list of registered suppliers and banning/debarment of the
bidder from participation in future procurements of the Procuring Entity for
a period not less than one year;
b) In case of anti-competitive practices, information for further processing may
be filed under a signature of the Joint Secretary level officer, with the
Competition Commission of India;
c) Initiation of suitable disciplinary or criminal proceedings against any
individual or staff found responsible.

3.2.5 Conduct of Public servants in Public Procurement - risks and mitigations

Risk Mitigation
Hospitality: Hospitality (including Hospitality must never be solicited, directly or
facilitation of travel, lodging, boarding and indirectly. The frequency, scale and number
entertainment during official or unofficial of officials availing hospitality should not be
programs) from suppliers may tend to allowed to identify the recipient in a public
cross the limits of ethical/occasional/ way with any particular contractor, supplier
routine/modest/normal business practice. or service provider or raise doubts about its
Officials sent to firm’s premises for neutrality. It should not involve significant
inspections/meetings may mistakenly travel, overnight accommodation or trips
presume entitlement to hospitality from abroad. Particular care should be taken in
the firm, even if other arrangements are relation to offers of hospitality from firms (say
participating in current or imminent tenders
available at the location. or
its execution) who stand to derive a personal
or commercial benefit from their relationship
with the recipient.
Gifts: Gifts from suppliers may tend to Gifts must never be solicited, directly or
cross the limits of ethical/occasional/ indirectly. An official should not accept and
routine/modest/normal business practice, retain gifts more valuable than the limit as laid
especially on festive season. Since the down in the conduct rules. Cash, gift cheques
value of the gift may not be known to or any vouchers that may be exchanged for
the recipient, it may cause inadvertent cash may not be accepted regardless of the
violation of Conduct rules. amount. Particular care should be taken in
relation to gifts from firms (say participating
in current or imminent tenders or its execution)
who stand to derive a personal or commercial
benefit from their relationship with the recipient.
Any gift received inadvertently in violation of
above, must immediately either be returned or
else reported and deposited in Toshakhana/
Treasury.

Risk Mitigation

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Private Purchases from Official Suppliers: Officials involved in Public Procurement must
Procuring Officials may mistakenly never indulge in any non-official pecuniary
consider it innocuous to seek discounts in transaction with the contractors, suppliers or
private procurements from suppliers having service providers with whom they have official
official dealings or its associates(especially dealings; including seeking or accepting
from Rate Contract holders). special facilities or discounts on private
purchases (particularly same items which are
being ordered officially on rate contracts).
Sponsorship of Events: Procuring Officials Officials involved in Public Procurement must
may mistakenly consider it innocuous never indulge in any non-official pecuniary
to seek financial favours (donations, transaction with the contractors, suppliers or
advertisements for souvenirs, and service providers with whom they have official
contributions in cash or kind) in relation to dealings; including soliciting of sponsorship for
sponsoring of cultural, social, charitable, unofficial and private cultural, social, sporting,
religious, or sporting events, in the false religious, charitable or similar organisations or
belief that since he/she is personally not events.
benefitted, it would not be a violation of
CIPP.

3.3 Integrity Pact (iP)

The Pre-bid Integrity Pact is a tool to help Governments, businesses and civil society to
fight corruption in public contracting. It binds both buyers and sellers to ethical conduct
and transparency in all activities from pre-selection of bidders, bidding and contracting,
implementation, completion and operation related to the contract. This removes
insecurity of bidders, that while they themselves may abjure bribery, but their
competitors may resort to it and win contract by unfair means.
18
Department of Finance have mandated

Departments and their attached/subordinate offices (including autonomous bodies) to

incorporate Integrity Pact by, depending on the nature of procurements/contracts
above a threshold value. The nature of procurement and threshold of value is to be
decided by the Departments with approval of the Minister in charge. As guidance, the
threshold should be such as to cover bulk (80-90% - eighty to ninety percent by value)
of its procurement expenditure.

The pact essentially envisages an agreement between the prospective vendors/bidders

and the buyer, committing the persons/officials of both sides, not to resort to any
corrupt practices in any aspect/stage of the contract. Only those vendors/bidders, who
commit themselves to such a Pact with the buyer, would be considered competent to
participate in the bidding process. In other words, entering into this Pact would be a

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preliminary qualification. The essential ingredients of the Pact include:

i)Promise on the part of the Procuring Entity to treat all bidders with equity and reason
and not to seek or accept any benefit, which is not legally available;

ii) Promise on the part of bidders not to offer any benefit to the employees of the
Procuring Entity not available legally and also not to commit any offence under
Prevention of Corruption Act, 1988 or Indian Penal Code 1860;
iii) Promise on the part of bidders not to enter into any undisclosed
agreement or understanding with other bidders with respect to prices, specifications,
certifications, subsidiary contracts; etc.
iv)Undertaking (as part of Fall Clause) by the bidders that they have not
and will not sell the same material/equipment at prices lower than the bid price;
v)Foreign bidders to disclose the name and address of agents and
representatives in India and Indian Bidders to disclose their foreign
principals or associates;
vi)Bidders to disclose the payments to be made by
them to agents/brokers or any other intermediary;
vii)Bidders to disclose any past transgressions committed over the specified period with
any
other company in India or Abroad that may impinge on the anti corruption
principle; viii)Integrity Pact lays down the punitive actions for any
violation.

ix) integrity Pact (iP) would be implemented through a single independent

external Monitor (IeMs) for all the departments : Shall be appointed by the state
government in consultation with State Vigilance Organization. Names and contact
details of the Independent External Monitor(s) should be listed in Notice Inviting
Tender (NIT). The IEM would review independently and objectively, whether and to
what extent parties have complied with their obligations under the Pact. S t a te
Government if desirous of implementing Integrity Pact is required to select at most
three persons (below the age of 70 (seventy) years) of high integrity and reputation
as Independent External Monitors (IEM) after due diligence and forward to the SVO
for its approval. Only those officers of State Government, who have retired from top
management positions, would be considered for appointment as IEM, provided
they are neither serving or retired from the same organization. Eminent persons,
retired judges of High/Supreme Courts, executives of private sector of considerable
eminence could also be considered for functioning as Independent External

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Monitors. The appointment of Independent External Monitors would be for an initial

period of three years and could be extended for another term of two years
(maximum tenure of five years). Names and contact details of the Independent
External Monitor(s) should be listed in DNIT / Bid Documents.

in tenders meeting the criteria of threshold value/nature of procurement:

Integrity Pact clause and format should be included in the Bid Documents.
Each page of such Integrity pact proforma would be duly signed by Purchaser’s
competent signatory. All pages of the Integrity Pact are to be returned by the
bidder (along with the technical bid) duly signed by the same signatory who
signed the bid, i.e. who is duly authorized to sign the bid and to make binding
commitments on behalf of his company. Any bid not accompanied by Integrity
Pact duly signed by the bidder shall be considered to be a non-responsive bid
and shall be rejected straightway.

Role/Functions of iems: The Monitors would not be subject to instructions by the

representatives of the parties and should perform their functions neutrally and independently.
They would review independently and objectively, whether and to what extent parties have
complied with their obligations under the Integrity Pact. For this purpose, they would have
access to all contract documents/books of accounts of the bidders in case of any allegation
of violation of any provisions of the Integrity Pact Ideally IEM of the state should meet once
every two months to take stock of ongoing tendering process. The IEM would examine all
complaints received by them and give their recommendations/views to the designated officer
of the Procuring Entity, at the earliest. The Monitor would also inform the Procuring Entity, if
they notice or have reason to believe, a violation of the Integrity Pact. They may also send
their report directly to the State Vigilance Organization, in case of suspicion of serious
irregularities requiring legal/administrative action. IEM would be invariably cited in the NIT.
However for ensuring the desired transparency and objectivity in dealing with the complaints
arising out of any tendering process, the matter should be examined in detail by the IEM, who
would look into the records, conduct an investigation, and submit their joint
recommendations. The recommendations of IEM would be in the nature of advice and would
not be legally binding. IEM may not be equated with consultants in the Procuring Entity. Their
role is independent in nature and the advice once tendered would not be subject to review.
A matter being examined by the IEM can be separately investigated by the SVO, if a complaint
is received by SVO.

3.4. Development of new sources and registration of suppliers

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3.4.1 Ensuring an up-to-date and current list of registered, capable and competent suppliers
facilitates efficiency, economy and promotion of competition in public procurement,
especially where open tendering is not resorted to. The list may be referred to while floating
a limited tender/local purchase/direct contracting. For such tenders, it may be possible to
skip bidder qualification so as to avoid unnecessary repetition/duplication of records thereby
saving time, especially in the case of emergency procurement. The Central Purchase
Organization (e.g. DGS&D) will prepare and maintain item-wise lists of eligible and qualified
(i.e., capable) suppliers known as “Registered Suppliers” for various types of common user
goods. Relevant details in this regard are available in DGS&D’s website (http://dgsnd.gov.in).

State Government/Departments with a significant volume of procurements may

follow their own policies and procedures for registration of vendors, if already
existing. The policies and procedures for registration described below is for
guidance of State Government/Departments, who do not have their own laid
down policies/procedures for registration. The State Government/Department
shall notify the authorities competent to deal with the applications and grant
registrations, along with their jurisdictions. The appellate authority shall be at least
one level above the registering authority or as designated by the State
Government/Department.

3.4.3 State Government/Department may use such lists prepared by DGS&D or by

other State Government/Departments as and when necessary. Registered suppliers
are ordinarily exempted from furnishing earnest money deposit/bid security with their
tenders in tenders for items, and Monetary Limits for which they are registered. The
list of registered suppliers for
the subject matter of procurement be exhibited on the State Public
Procurement Portal and websites of the Procuring Entity/e-Procurement
portals.

3.4.4 Categories for registration

In case of procurement of goods, the Administrative Department shall register

firms as suppliers of goods in different trade groups of goods in the following

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broad categories:
i) Manufacturers, who supply indigenous items;
ii) Agents/distributors of such manufacturers, who desire to market their
production only through their agents;
iii) Foreign manufacturers with/without their accredited agent in India;
iv) Stockists of imported spares or other specified items; and
v) Suppliers of imported goods as are having regular arrangement with
foreign manufacturers.

3.4.5 One of the main prerequisites for registration as a manufacturer is that the firm should
possess its own in-house testing facilities. In case of MSE units, the firm need not have its
own testing facilities but regular arrangements with other reputed Government or
Government-approved or private agencies in its area for testing of products. Before the
manufacturer is included in the list of registered suppliers, Procuring Entity shall verify the
bona fides and standing of the firm. Procuring Entity may also seek assistance from the
inspection wing of DGS&D or other inspecting agencies. In case of firms having an
established quality maintenance system with ISO 9001- 2000 certification (latest version) by
authorised agencies, Procuring Entity may consider registration of such firms without
carrying out capacity assessment.

3.4.6 Grades (monetary limits) for registration

Registration should be done by grading the firms (Grade A, B, and so on) on their capability
for executing contract orders of different monetary limits in the relevant category of
requirements. The monetary limits should be carefully fixed keeping in view the banker’s
reports, capacity and capability of the firm and other financial information indicated in the
balance sheets, profit and loss statements:
i) Grade A: Rs. 25 (Rupees Twenty-five) lakh and above;
ii) Grade B: Rupees Five lakh to Rs. 25 (Rupees Fwenty-Five) lakh; and
iii) Grade C: Rupees One lakh and up to Rupees Five lakh

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3.4.7 The firms that are registered for supply of orders valued above Rupees Five lakh should
invariably be manufacturers or their authorised agents. Procuring Entity shall register the
manufacturers and not agents or middlemen. A sole selling agent/authorised agent could be
considered for registration, subject to the condition that Procuring Entity is satisfied that he is
the sole selling agent of manufacturers, and financial and technical capabilities of the
manufacturers are ascertained by Procuring Entity. The availability of a suitable arrangement
with the sole selling agent for after-sales service shall also be ensured and 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.

Procedure for registration: The procedure to be adopted in this regard by the Central
Purchase Organization or by the State Government/Department in case it desires to register
suppliers of goods which are exclusively needed by it. Registration of suppliers should be done
ensuring fundamental principles of public procurement in view (especially the transparency
principle - transparency, fairness, equality, competition and appeal rights) with the approval of
CA after carefully assessing and verifying credentials, capability, quality control
systems, past performance, after-sales service facilities, financial background, and so on, of
the supplier/ contractor/service provider(s):
Registration of the suppliers should be done following a fair, transparent and
reasonable procedure and after giving due publicity. Details of the procedure for
registration of new firms may be uploaded on the website and also published in
the form of a booklet for information of the suppliers. Timeframes and criteria for
registration of new suppliers may be clearly indicated;

i) Possible sources for any category/group of requirements can be identified based

on internal and external references. Data of new suppliers can be obtained from
the response received from suppliers, open tender advertisements, pre-
qualification bids, Expression of Interest (EoI), against various enquiries on the
website, dedi cated websites, exhibitions, buyer-seller meets, various publications
of NSIC , DGS&D, Development Commissioner of the Small Industries Service
Institute, BIS, trade journals, and so on. The e-Procurement portal does pre-
registration of suppliers online. Such data can be a source of information on
prospective suppliers;
ii) New supplier(s) may be considered for registration at any time, provided they fulfil
all the required conditions. For any larger scale or critical registration or
development of new suppliers, Procuring Entity should call for EoI by publicising its
need for development of sources. The stages to be followed together with the
applicable guidelines for EoI have been detailed in Chapter 5;
iii) While registering the firms, an undertaking may be obtained from them that they will abide

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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, besides any other penalty or more severe action as deemed fit; and

iv) Along with the new/renewal application for registration, the suppliers 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.
v) Eligibility
a) Any firm, situated in India or abroad, which is in the business of providing
goods/ works/services of specified categories of interest, shall be eligible for
registration;

b) Where registration is granted based on partly outsourced arrangements/

agreements, it shall be the responsibility of the registered unit, to keep such
arrangements/agreements renewed/alive at all times, to keep their registration
valid for the period for which it has been granted. Any failure in this regard may
make the registration null and void ineffective retrospectively from any such
dates which the registering authority considers appropriate;

c) Suppliers should possess valid Digital Signature Certificate (DSCs) Class III with the
company name at the time of registration/renewal, so as to enable them to
participate in e-Procurements;
d) Firm, against whom punitive action has been taken, shall not be eligible for re-
registration during the currency of punitive action. Registration requests may not
be entertained from such firms, stakeholders of whom have any interest in
deregistered/banned firms;

e) The application form, complete in all respects and accompanied with the
requisite processing fee and prescribed documents shall be submitted by the
firms to the registering authority. The registration application form, duly filled-in,
when received from the firms shall be scrutinised carefully for assessing the
capacity and capability of the firms including credentials, manufacturing
capability, quality control system, past performance, after-sales service facilities,
financial background, and so on, of the applicant. References shall be made to
other firms of standing of whom the applicant firm claims to be a
supplier/contractor. Likewise, the applicant firm’s bankers may also be requested
to advice about the financial standing of the firm. Registration of suppliers should
be done with the approval of CA;

f) In cases where the firm is not considered capable and registration

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cannot be granted, the concerned authority shall communicate the

deficiencies and shortcomings direct to the firms under intimation to the
appellate authority. Where a request for re- verification and review is made
by the firm, along with any fee as prescribed and within the period
prescribed by the Department, review shall be undertaken. Requests for re-
verification after expiry of the said period would be treated as a fresh
application and processing fee, if any prescribed, charged accordingly;
g) 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;
h) It should be mentioned in the letter of registration that the
registration is valid for a period of one to three years and would be
considered for extension based (on application by the
supplier/contractor/service provider) on satisfactory performance of the firm.
However, 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 Procuring Entity. The
extension of validity of registration is not a matter of right and Procuring
Entity reserves the right not to extend such registration without
assigning any reason. New supplier(s) may also be considered for
registration at any time, provided they fulfil all the required conditions;
i) All registered suppliers should be allocated a unique registration
number. Once the firms are registered, a circular shall be issued by the
registration authority indicating the names and addresses of the
registered suppliers with details of the requirements and monetary value
they will supply as well as the validity period, and so on, for which they
are registered. The list of registered suppliers for the subject matter of
procurement be exhibited on the State Public Procurement Portal and
websites of the Procuring Entity/e-Procurement/portals;

j) Within the monetary limits so prescribed, as also for the category

of registration, the registered firm may be exempted from depositing
the Earnest Money Deposit (EMD). In 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.
The monetary limit or category, so laid down, does not, however, debar
a firm from getting orders in excess of the monetary limit or for other
categories, provided the Procuring Entity is satisfied about the capacity
and capability of the firm but a requisite security deposit should be

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obtained, as is being done in the case of unregistered firms;

k) Performance and conduct of every registered supplier is to be

watched by the concerned Department. Procuring Entity should also
reserve the right to remove firms who do not perform satisfactorily, even
during the validity of registration (after giving due opportunity to the
supplier to make a representation) if they fail to abide by the terms and
conditions of the registration or fail to execute contracts on time or supply
substandard goods or make any false declaration to any Government
agency or for any ground which, in the opinion of the Government, is not
in public interest;

l) Procuring Entity shall retain its option to reassess firms already

registered, at any later date, to satisfy itself about the current financial
soundness/credit worthiness, facilities available, and so on. Thereafter,
Procuring Entity may decide to retain them as registered suppliers for the
requirements and monetary limit earlier considered or with necessary
changes as deemed fit. In case of adverse reports from the team of
Procuring Entity officers who reassess the firm, Procuring Entity shall delete
such firm from the registered suppliers list (Rule 150 of GFR 2017).

3.5 Grades of debarment of suppliers

3.5.1 Registration of suppliers and their eligibility to participate in Procurement Entity’s

procurements is subject to compliance with Code of Integrity for Public Procurement and
good performance in contracts. Following grades of debarment from registration and
participation in Procuring Entity’s can be considered against delinquent bidders/suppliers:

i) Holiday listing (Temporary debarment or suspension): In less serious cases, a

supplier (including their related entities) may be temporary debarred from the
Procuring Entity’s procurements for short periods up to 12 (twelve) months, without
the firm’s name being removed from the list of registered vendors;
ii) removal from list of registered vendors: Debarment of a delinquent supplier
(including their related entities) for a period of time (one to two years) from the
Procuring Entity’s procurements with the removal of name from the list of registered
vendors, due to severe deficiencies in performance or other serious transgressions; and

iii) banning from State Government/Department-wide procurements: For serious

transgression of Publicprocurement, a delinquent supplier (including their related entities)
may be banned/debarred from participation in a procurement process of any Procuring
Entity for a period not exceeding three years commencing from the date of debarment.

The list of all the debarred suppliers should be displayed on the website of Procuring Entity
as well as on State Procurement Portal. In case of country wide debarment, Department

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of Commerce (DGS&D) shall maintain such list which will also be displayed on the website
of DGS&D and on StatePublic Procurement Portal. All procuring entities after checking the
status of the participating bidder(s) from the above mentioned lists may take the
appropriate action accordingly.

2 Holiday listing (Temporary debarment - suspension)

Whenever a supplier is found lacking in performance, in case of less frequent and less
serious misdemeanours, the suppliers may be put on a holiday listing (temporary
debarment) for a period upto 12 (twelve) months after following the debarment
procedures mentioned in para 3.5.5 below. When a supplier is on the holiday listing, he
is neither invited to bid nor are his bids considered for evaluation during the period of
the holiday. The supplier is, however, not removed from the list of registered suppliers.
The supplier automatically stands removed from the holiday listing on expiry of the
holiday period. Performance issues which may justify holiday listing of the vendor are:
i) Vendors who have not responded to requests for quotation/tenders consecutively three
times without furnishing valid reasons or as decided by the functional manager with
the approval of competent authority;
ii) Repeated non-performance or performance below specified standards (including
after sales services and maintenance services);
iii) Suppliers undergoing process for Removal from Registration or banning/debarment
may also be put on a holiday listing during such proceedings, if so recommended
by the competent authority.

3.5.3 removal from list of registered suppliers

In cases of deficiencies in any of performance issues listed below, such suppliers may be removed
from the list of registered suppliers after following due process as per para 3.5.5 below. The
vendors removed from the list of registered vendors are neither invited to bid nor are their bids
considered for evaluation. Whenever a firm is removed from the list of registered suppliers, its
registration stands cancelled but the supplier data should not be deleted from the (computer)
system. Suppliers removed from the list of registered vendors or their related entities may be
allowed to apply afresh for registration after the expiry of the period of removal. Performance
issues which may justify removal of the supplier from the list of registered suppliers are:

i) The supplier fails to abide by the terms and conditions or to maintain the required
technical/operational staff/equipment or there is change in its production/service
line affecting its performance adversely, or fails to cooperate or qualify in the review
for registration;

ii) If the firm ceases to exist or is acquired by or merged with another firm, or ceases
to operate in the category of requirements for which it is registered;

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Finance Department, Government of Tripura

iii) Bankruptcy or insolvency on the part of the supplier as declared by a court of law;
or
iv) Banning by State Government/Department or any other Government agency;
v) Other than in situations of force majeure, after opening of financial bids, the
supplier withdraws from the procurement process or after being declared as
successful bidder: (i) withdraws from the process; (ii) fails to enter into a
procurement contract; or (iii) fails to provide performance security or any other
document or security required in terms of the bidding documents;
vi) If the SVC/C&AG or Vigilance Department of Procuring Entity or any other investigating
agency recommends such a course in respect of a case under investigation;
vii) Employs a Government servant within two years of his retirement, who has had
business dealings with him in an official capacity before retirement; or
viii) any other ground, based on which the registering authority considers, that
continuation of registration is not in public interest.
3.5.4 banning of Firms

When the misconduct and moral turpitude of a firm goes beyond mere performance issues,
imposition of a ban on business relations with the firm may be done for a specified period of time
(not exceeding three years), after following the debarment procedures mentioned in para 3.5.5
below. Departments should ensure that, before sending the proposal for banning of business, the
name of the defaulting firm is removed from its list of registered vendors. An order for banning
passed for a certain specified period shall be deemed to have been automatically revoked on the
expiry of that specified period and it will not be necessary to issue a specific formal order of
revocation, except that an order of banning passed on account of doubtful loyalty to the country
or national security considerations shall continue to remain in force until it is specifically revoked.
However the firm would have to apply afresh for registration with the procuring entities. Firms or
individuals and any of their successors should be banned or debarred for under mentioned periods,
if the firm or its partners/directors/agents/representatives/employees with the knowledge of the
firm or without it, indulge in following misdemeanours:

i) country-wide debarment: Debarment from participating in a procurement

process of any Procuring Entity of State Government , for a period not exceeding
three years, if the proprietor of the firm, its employee, partner or representative:
a) is convicted of any offence by a court under the Prevention of Corruption
Act, 1988;
b) is convicted of any offence by a court under the Indian Penal Code 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 or to any other legal liability to The
Procuring Entity as part of execution of a public procurement contract;

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Finance Department, Government of Tripura

c) Issuspected to have doubtful loyaltytothestate or state security

considerations as determined by competent authority of the state
government;
any other ground, based on which the state government,
considers that banning is in public interest.

ii) debarment from concerned Procuring entity debarment from concerned

Procuring entity:
Debarment from participating in any procurement process undertaken by the
concerned Procuring Entity, for a period not exceeding two years, if there is strong
justification for believing that the proprietor or employee or representative of the
firm has been guilty of violation of the Code of Integrity for Public Procurement
or Integrity Pact, evasion or habitual default in payment of any tax levied by law;
etc. The State Government./Department will maintain such list which will also be
displayed on their website.

3.5.5 debarment Procedures

Punitive actions of various grades of debarment against the suppliers should

be examined by a Committee and approved by competent authority at the
level of the Deputy HOD in case of holiday listing; HOD in case of removal;
and nominated Additional Secretary of the Department in case of banning.
Due to principles of natural justice, it should be treated as a quasi-judicial
function following principles of natural justice, on lines akin to disciplinary
proceedings. The Departments will furnish lists of such suppliers who have
committed misdemeanours listed in paras above to the Supplier Discipline
Committee for considering various grades of debarment. On receipt of
information from Departments or suo moto, the Committee should take
action to issue a show cause notice to such firms. The Committee may also
order an interim
debarment (Holiday Listing) during the process considering the severity
of demeanour. The supplier should be given adequate opportunity
(including an oral hearing by the competent authority) to make
representations. If the response to the show cause notice is not
satisfactory or not acceptable, such firms should be put on suitable grade
of debarment, depending on the severity of the misdemeanour. Appeals
would lie at a level higher than the competent authority. In case of
Debarment from concerned Procuring Entity, the concerned Department
will maintain such list which will also be displayed on their website as well
as state portal and all other departments must be informed .
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Finance Department, Government of Tripura

3.5.6 safeguarding Procuring entity’s interests during debarment of suppliers:

Suppliers are important assets for the procuring entities and punishing delinquent suppliers
should be the last resort. It takes lot of time and effort to develop, register and mature a new
supplier. In case of shortage of suppliers in a particular group of materials/equipment, such
punishment may also hurt the interest of Procuring Entity. Therefore, views of the concerned
Department may always be sought about the repercussions of such punitive action on the
continuity of procurements. Past records of performance of the supplier may also be given
due weightage. In case of shortage of suppliers and in cases of less serious misdemeanours,
the endeavour should be to pragmatically analyse the circumstances, reform the supplier and
get a written commitment from the supplier that his performance will improve. If this fails,
efforts should be to see if a temporary debarment can serve the purpose.
(Rule 151 of GFR 2017)

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Chapter-4
MODES OF PROCUREMENT AND BIDDING SYSTEMS

4.1 Modes of Procurement

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
one hand, and complexity of the procedure, on the other hand. Different modes of
procurement and bidding systems are used to suit various procurement circumstances to
achieve this balance. There are laid down procedures for delegation of powers of
procurement to various appropriate authorities under different modes as shown in
DFPRT,2017. All public procurement should be made as per provisions laid in the DFPRT
2017.

4.2 Open Tender Enquiry (OTE)

4.2.1 In OTE, an attempt is made to attract the widest possible competition by publishing
the NIT simultaneously on the designated websites. This 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. OTE procedures through e-Procurement or through traditional
tendering should be adopted in the following situations:
i. All common use requirements with clear technical specifications;
ii. For requirements that are ordinarily available in the open market but it is necessary
to evaluate competitive offers to decide the most suitable and economical option
available; and
iii. When requirements are not available from known sources or sources are presently
limited and need to be broad based.
4.2.2 Terms and conditions
i. Advertisement in such cases should be given on Public Procurement Portal, local
newspaper & national newspaper through ICA department. An organisation having
its own web site should also publish all its advertised tender enquiries on the web
site. The Procuring Entity should also post the complete bidding document in its web

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 Chapter-4

site and on website to enable prospective bidders to make use of the document by
downloading from the web site. The advertisements for invitation of tenders should
give the complete web address from where the bidding documents can be
downloaded. Cost of tender document to be submitted by all bidders. However
SAIL / BSNL and other Government undertakings may be exempted to deposit cost
of tender document.
ii. The sale/ availability for downloading of tender documents against NIT should not
be restricted and should be available freely. Tender documents should preferably be
available for download upto the date of opening of tenders;

iii. The tender documents should be prepared on the basis of the relevant approved
SBD for the category of procurement. Further details on preparing tender
documents are provided in Chapter 4;
iv. The Procuring Entity shall maintain proper records about the number of tender
documents sold, list of parties to whom sold, details of the amount received through
sale and, also, the number of unsold tender documents, which are to be cancelled
after the opening of the tenders

4.3 Global Tender Enquiry (GTE)

4.3.1 GTE is similar to 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 foreign firms. Development of local industry also needs to be
kept in mind.Hence, it may be viable only in following situations:
i. Where Goods of required specifications/quality are not available within the
country and alternatives available in the country are not suitable for the purpose;
ii. Non-existence of importer of the global principal of the manufacturer/vendors/
contractors;
iii. Requirement for compliance to specific international standards in technical
specifications; and

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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.

4.3.2 Terms and conditions

i) Advertisement in such cases should be given on State Public Procurement Portal ,
website of concerned department, www.tripuratenders.gov.in /
www.tenders.gov.in . An organisation having its own web site should also publish
all its advertised tender enquiries on the web site. The Procuring Entity should also
post the complete bidding document in its web site and on PPP to enable prospective
bidders to make use of the document by downloading from the web site. The
advertisements for invitation of tenders should give the complete web address from
where the bidding documents can be downloaded. Cost of tender document to be
submitted by all bidders. However SAIL / BSNL and other Government
undertakings may be exempted to deposit cost of tender document.

ii) The sale/availablity for downloading of tender documents against NIT should not be
restricted and should be available freely. Tender documents should preferably be
available for download upto the date of opening of tenders;
iii) The tender documents, shall be priced minimally keeping in view the value of the
tender as also the cost of preparation and publicity of the tender documents;
iv) GTE tender documents must be in English and the price should be asked in Indian
Rupees or US Dollars or Euros or Pound Sterling or Yen or in currencies under the Reserve
Bank of India’s notified basket of currencies;
v) GTE tender documents must contain technical specifications which are in accordance
with national requirements or else based on an international trade standard;
vi) In such cases e-Procurement may not be mandatorily insisted upon;
vii) The due date fixed for opening of the tender shall be minimum four weeks from
the date of advertisement which may vary taking into account the nature of material
called for as well as the time required to prepare the bids. The due date may be
subsequently extended with the approval of the CA only to promote better

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competition and also considering account delivery requirement;

4.4Limited Tender enquiry (lTe)

4.4.1.LTE is a restricted competition procurement, where a preselected list of
vendors is directly approached for bidding; bids from uninvited bidders are treated
as unsolicited and are normally not entertained, except in special circumstances.
This mode provides a short and simple procedure, but may not provide as good a
VfM as in case of open tendering – still a good balance for procurements below a
threshold. LTE procedures should be default mode of procurement when the
estimated value of procurement is between Rs. 2.5 lakh to Rs. 25 lakh (Rupees Two
and a half lakh to Twenty-Five lakh). The bidding documents should be simple
normally consisting a single page with terms and conditions printed overleaf. (Rule
162 of GFR 2017)
4.4.2 Terms and conditions i) Copies of the bidding documents should be sent free
of cost (except in case of priced specifications/drawings) directly by speed
post/courier/e-mail to firms which are registered vendors/contractors. Further,
Procuring Entity should also mandatorily publish its limited tender enquiries on
State Public Procurement Portal (CPPP). Apart from CPPP, the organisations should
publish the tender enquiries on the Departments or State Govt’s web site.
ii) A simplified single Page Bid Document (Annexure 5) should be used, instead of
a detailed Bid Document. The minimum number of bidders to whom LTE should be
sent is more than three. In case less than three approved vendors/contractors are
available, LTE may be sent to the available approved vendors/contractors with
approval of the CA, duly recording the reasons. The requirement should then be
marked for development of more sources by the Supplier Registration section.

4.5 Special limited Tender enquiry for Procurements more than Rs. 25 (rupees
twenty-five) lakh
4.5.1.LTE mode, even for values higher than Rs. 25 lakh (Rupees Twenty-Five lakh)
(Rule 162 of GFR 2017),where normally OTE should have been done, is permissible
in certain special circumstances as follows. Powers to sanction procurement on LTE

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 Chapter-4

basis in such special cases may be laid down in SoPP based on a certificate of
urgency signed by the indenter. This mode has the merit of being quicker but VfM
obtained may be less than in case of OTE; hence it should be restricted to rare
situations:
i) The competent authority in the State Govt./Department certifies that there is an
existing or prospective urgency for operational or technical requirements and any
additional expenditure involved by not procuring through advertised tender
enquiry is justified in view of urgency. The State Govt./Department should also put
on record the nature of the urgency and reasons why the procurement could not
be anticipated earlier;
ii) There are sufficient reasons, to be recorded in writing by the competent authority,
indicating that it will not be in public interest to procure the goods through
advertised tender enquiry;
iii) The sources of supply are definitely known and possibility of fresh source(s)
beyond those being tapped is remote;
iv) Nature of items to be procured is such that pre-verification of competence of
firm is essential, hence requires registration of firms; and
iii) Government policy designates procurement from specific agencies.

4.5.2. Terms and conditions

i) The tendering process would be same as in the case of a normal LTE described
above. However, the bidding documents are more detailed as in the case of OTE;
and
ii) The indenter should certify that there is an existing or prospective urgency for
operational or technical requirements and any additional expenditure involved by
not procuring through an advertised tender enquiry is justified in view of urgency.
The indenter should also put on record the nature of the urgency and reasons
why the procurement could not be anticipated.

4.6 Proprietary article certificate

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4.6.1 In 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 (Annexure 4) signed by the
competent authority.
4.6.2 Terms and Conditions
i. Users should enclose, with their Indent, a PAC certificate indicating the justification
and approval at the appropriate level as per DFPRT,2017 for sourcing an item from
OEM or PAC firms or their authorised agents;
ii. Proprietary items shall be purchased only from a nominated manufacturer or its
authorized dealer as recorded in the PAC certificate;
iii. In certain unavoidable cases, the procuring authority may have no alternative but
to waive payment of EMD/SD for procurement on a proprietary basis;
iv. To the extent feasible, the firm may be asked to certify that the rates quoted by
them are the same and not higher than those quoted with other Government, public
sector or private organizations;
v. In case of PAC/single tender procurements:
a) Reports relating to such awards should be submitted to the Department every
quarter;
b) Internal audit may be required to check at least 10 (ten) per cent of such cases;
and
c) Details of such contracts should be published on the website of the
Procuring Entity.

4.7 Single Tender Enquiry (STE) without a PAC

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4.7.1 A tender invitation to one firm only without a PAC certificate is called a single tender. This
mode may be shortest but since it may provide lesser VfM as compared to LTE/OTE and may
also strain the transparency principle, it should be resorted to only under following
conditions:
i. In a case of existing or prospective emergency relating to operational or technical
requirements to be certified by the indenter, the required goods are necessarily to
be purchased from a particular source subject to the reason for such decision being
recorded and approval of the competent authority obtained.
For standardization of machinery or components or spare parts to be compatible to the
existing sets of machinery/equipment (on the advice of a competent technical expert and
approved by the competent authority), the required goods are to be purchased only from a
selected firm. (Rule 166 of GFR 2017)
4.7.2 Terms and conditions
i. The reasons for a STE and selection of a particular firm must be recorded and
approved by the CA as per the delegation of powers laid down at in DFPRT,2017
prior to single tendering. Unlike in PAC, powers of procurement of STE are more
restricted; and
ii. Other terms and conditions of PAC procurement mentioned above would also apply
in this case.

4.8. Direct Procurement without Quotation

4.8.1 Direct procurement of goods without formal quotations is normally done for the smallest
value procurements. This is also called petty purchase. It should be used for off-the-shelf
goods of simple and standard specifications. it is suitable only in very low value, urgent
and simple requirements in the following situations:

i. Procurements do not exceed the threshold (for each requirement) of Rs. 25,000 (Rupees
Twenty-Five thousand) for each case;
ii. The requirement is urgent but was not covered in the procurement plan; and
iii. The requirement is for off-the-shelf goods of simple and standard specifications.

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Examples of procurement are day-to-day needs of the office and field units, and so
on.(Rule 154 of GFR 2017)

4.8.2 Terms and conditions

i. The competent officer of the Procuring Entity can initiate and complete this purchase
after diligent enquiries from the market and filling the certificate prescribed
(Annexure 5). Such powers to a limited extent can also be given to various user sections
for operational needs;
ii. In a summary form, records should be kept of the vendors/contractors approached
and prices indicated by them;
iii. Selection of seller by diligent market enquiry is of essence of this mode of
procurement;
iv. In larger cities, the presence of reputed Shopping Malls may also be included in the
market survey. Reputed internet shopping portals may also be explored.

4.9 Bidding Systems

Bidding systems are designed to achieve an appropriate balance between the countervailing
needs for Right Quality, Right Source and the Right Price under different complexities/
criticality of Technical requirements and value of procurements. Depending on the
complexity and criticality Technical of requirement, Criticality of capability of Source and
value of procurement, following types of bidding systems may be used.
4.10 Single Stage Bidding System

In single stage bidding, all bids are invited together in a single envelope or in multiple
envelops system. This bidding system is suitable where technical requirements are simple or
moderate; capability of source of supply is not too crucial and the value of procurement is
not too high;

4.10.1 Single stage single envelop system:

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Where qualitative requirements and technical specifications are clear, capability of source of
supply isn’t critical and value of procurement is low or moderate, the single envelop system,
where eligibility, technical/commercial and financial details are submitted together in the
same envelop may be followed. This is the simplest and the quickest bidding system and
should be the default system of bidding. The lowest responsive priced bid that meets the
eligibility criteria, technical and commercial requirements laid down in the bid documents is
declared as successful.

4.10.2 Single stage Two envelops system (Two bid system) (Rule 163 of GFR 2017):
In technically complex requirements but where capability of source of supply is still not crucial
and value of procurement is not low, a two envelop system may to be followed.
i)The tenderers should be asked to bifurcate their quotations in two envelops. The first
envelop, called the techno-commercial bid, 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. In the second envelop, called the
financial bid, the price quotation along with other financial details are submitted. Both the
envelops are to be submitted together in a sealed outer envelope;
ii)If required, Technical specification and techno-commercial conditions should be modified, in
a pre-bid conference in the two envelop tender .
iii)The techno-commercial bids are to be opened in the first instance on the bid opening date
a nd time, and scrutinised and evaluated with reference to parameters prescribed in the
tender documents and responsive, eligib le and technically compliant bidders are decided;

iv)Thereafter, in the second instance , the financial bids of only the techno-commercially
compliant offers (as decided in t he first instance above) are to be opened on a pre-
announced date and time for further scrutiny, evaluation, ranking and placement of
contract. 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. In e-Procurement, financial bids of technically non-
compliant offers would not get opened.

4.10.3 Single stage Two envelops system (Two bid system) for critical items:

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In complex technical requirements where capability of source of supply is crucial (for

example in procurement of complex machinery, equipments, critical & highly valued
product erc), for the successful performance of the contract, besides considering techno-
commercial suitability, it is necessary to ensure that competition is only among bidders
with requisite capabilities matching the challenges of the task. In case bidders with
inadequate capability are allowed to compete, the better qualified bidders would be
eliminated since their bid price is likely to be higher commensurate with their higher
capability infrastructure. Such situations a clear-cut, fail-pass criteria to be considered during
technical bid. Supporting documents required need to be clearly mentioned. An example
is shown in Table 1. However, appropriate criteria have to be designed, keeping in mind the
specific objectives of the tendered store.

Table- An example is given below

Criteria Sub-criteria Weightage* Break-up of

Weightage
Past experience of the firm with A*
similar requirements
Financial strength of the vendor B*
Turnover figures of B1*
the last three years
Net profit figures of B2*
the last three years
Quality accreditations, licensing C*
requirements
Manufacturing capabilities/tie-ups D*

After-sales support infrastructure E*

Product support F*

*Weightage (out of 100) should be pre-decided and declared in tender documents. The
marking/grading scheme for allotting marks (out of 100) for various parameters should also
be laid down. The bidder must secure at least 75% (seventy five percent) marks during
technical evaluation to become eligible for financial bid.

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4.11. Two stage bidding - expression of interest Tenders – market exploration

4.11.1 There are instances where the equipment/plant to be procured is of complex nature
and the procuring organization may not possess the full knowledge of either the various
technical solutions available or the likely sources for such products in the market. To meet
the desired objectives of a transparent procurement that ensures value for money
simultaneously ensuring upgradation of technology & capacity building- it would be
prudent to invite a two-stage Expression of Interest (EoI) Bids and proceed to explore the
market and to finalise specifications based on technical discussions/presentations with the
experienced manufacturers/suppliers in a transparent manner.
Expression of Interest (EoI) bids may be invited in following situations:
i)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;
ii) The character of the subject matter of procurement is subject to rapid technological
advances or market fluctuations or both;
iii) The Procuring Entity seeks to enter into a contract for the purpose of research,
experiment, study or development, 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
iv) 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. (Rule 164 of GFR 2017

4.11.2.The procedure for two stage bidding shall include the following, namely:
i) In the first stage of the bidding process, the Procuring Entity shall invite EoI bids
containing the broad objectives, technical and financial eligibility criteria, terms and
conditions of the proposed procurement etc without a bid price. On receipt of the
Expressions of Interest, technical discussions/presentations may be held with the short-
listed manufacturers/ suppliers, which are prima facie considered technically and financially
capable of supplying the material or executing the proposed work, giving equal

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opportunity to all such bidders to participate in the discussions. During these technical
discussions stage the procurement agency may also add those other stakeholders in the
discussions who could add value to the decision making on the various technical aspects
and evaluation criteria. Based on the discussions/presentations so held, one or more
acceptable technical solutions could be decided upon laying down detailed technical
specifications for each acceptable technical solution, quality benchmarks, warranty
requirements, delivery milestones etc., in a manner that is consistent with the objectives of
the transparent procurement. At the same time care should be taken to make the
specifications generic in nature so as to provide equitable opportunities to the prospective
bidders. Proper record of discussions/presentations and the process of decision making
should be kept;
ii)In revising the relevant terms and conditions of the procurement, if found necessary as
a result of discussions with the shortlisted bidders, the Procuring Entity shall not modify
the fundamental nature of the procurement itself;
iii) In the second stage of the bidding process, the Procuring Entity shall invite bids from
all those bidders whose bids at the first stage were not rejected, to present final bid with
bid prices in response to a revised set of terms and conditions of the procurement;
iv) 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 bidding proceedings without forfeiting any bid security that he may
have been required to provide or being penalised in any way, by declaring his intention to
withdraw from the procurement proceedings with adequate justification;
v) If the Procuring Entity is of the view that after EoI stage, there is likelihood of further
participation by many more bidders and to avoid getting trapped into a legacy technology,
the second stage bidding may not be restricted only to the shortlisted bidders of EoI stage
and it may be so declared in the EoI document abinitio. Thereafter in the second stage,
normal OTE/GTE bidding may be done. Such variant of EoI is called ‘Non-committal’ EoI.
Short listing.
Supporting documents required need to be clearly mentioned. An example of EoI eligibility
criteria is shown in Table 1. However, appropriate eligibility criteria have to be designed,
keeping in mind the specific objectives of the EoI.

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Table 1: An example of EoI eligibility criteria

Table 1: An example of EoI eligibility criteria

Criteria Sub-criteria Weightage* Break-up

o
Past experience of the firm with A*
f Weightage
similar requirements
Financial strength of the vendor B*
Turnover figures of
the last three years

Net profit figures of

the last three years

Quality accreditations, licensing C*

requirements

Manufacturing capabilities/tie- D*
ups

After-sales support infrastructure E*

Product support F*

*Weightage (out of 100) should be pre-decided and declared in EoI documents by the
CA based on 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.
4.11.3.evaluation of eoI: The bidders should be evaluated for short listing, inter-alia, based
on their past experience of performance in a similar context, financial strength and
technical capabilities, among others. Each bidder should be assigned scores based on the
sum of marks obtained for each parameter multiplied by the weightage assigned to that
parameter. All bidders who secure the minimum required marks (normally 60 (sixty) per

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cent) should be shortlisted. The minimum qualifying marks should be specified in the EoI
document. Alternatively, instead of weighted evaluation, the EoI document may specify a
‘fail-pass criteria’ with the minimum qualifying requirement for each of the criteria, 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. The short list should normally comprise at least four firms.
4.12 electronic Procurement (e-Procurement)
It is mandatory for State Government/Departments to receive all bids through
e-Procurement portals in respect of all procurements. State
Government/Departments which do not have a large volume of procurement
or carry out procurements required only for day-to-day running of offices and
also have not initiated e-Procurement through any other solution provided so far
may use e-Procurement solution developed by NIC. Other State
Government/Departments may either use e-Procurement solution developed
by NIC or engage any other service provider following due process. These
instructions will not apply to procurements made by State
Government/Departments through DGS&D rate contracts. In individual cases
where national security and strategic considerations demands confidentiality,
State Government/Departments may exempt such cases from e-Procurement after
seeking approval of concerned Secretary and with concurrence of Financial
Advisers. In case of tenders floated by Indian Missions Abroad, Competent
Authority to decide the tender may exempt such case from e-Procurement.
National Informatics Centre (NIC) has an e-Procurement portal called
Government e-Procurement of NIC (GePNIC). There are other service providers in
Public Sector (e.g. MSTC) and Private sector which can be utilized for e-
Procurement. Details about the process of e-Procurement are available from the
service providers. Appendix 3 also gives such generic details of the e-
Procurement process. (Rule 160 of GFR 2017)

4.13. electronic reverse auction (ra)

Electronic Reverse Auction is a type of auction (classified as dynamic procurement

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 Chapter-4

method) where the starting price, bid decrement, duration of auction, maximum
number of automatic extensions are announced before start of online reverse
auction. If required, RA may be preceded by an e-Procurement stage of
eligibility/PQB to shortlist competent bidders who would be allowed to
participate in the RA. The shortlisted bidders can after the start of RA start
bidding online in an iterative process wherein the lowest bidder at any given
moment can be displaced by an even lower bid of a competing bidder, within
the duration of the RA. If a new lower bid is received within last few minutes
(say two minutes) of closing time, the closing time may get automatically
extended by few minutes (say five minutes) for others to respond. Maximum
number of such extensions may be stipulated (say five). The most favourable bid
at the end of stipulated/extended time is declared as successful. While permitting
use of RA, CVC has asked the Departments/organisations to themselves decide
on reverse auction for purchases or sales and work out the detailed procedure
in this regard21. It has, however, to be ensured that the entire process is
conducted in a transparent and fair manner. A Procuring Entity may choose to
procure a subject matter of procurement by the electronic reverse auction
method, if:
i) Items for Reverse Auction may be selected carefully. Items of strategic,
critical and vital nature, items in short supply in market and where there
are only a few suppliers are not good candidates for reverse auction. Items
in the nature of commodities, Commercially- off-the-shelf items, items
having large number of suppliers and high value procurements may be
more amenable to reverse auction;
ii) It is feasible for the Procuring Entity to formulate a detailed description
of the subject matter of the procurement;
iii) There is a competitive market of bidders anticipated to be qualified to
participate in the
electronic reverse auction, so that effective competition is ensured;
iv) The criteria to be used by the Procuring Entity in determining the successful
bid are

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 Chapter-4

quantifiable and can be expressed in monetary terms;

v) In cases where pre-qualification of bidders is considered necessary, reverse
auction may be carried out after a separate PQB (electronic or otherwise)
among the successful bidders only.

4.14 One stop Government e-Marketplace (Gem) by DGS&D

4.14.1 An online marketplace (or e-commerce marketplace) is a type of e-commerce site where
product or services are offered by a number of sellers and all the buyers can select the product/
services offered by any one of the seller, based on his own criteria. In an online marketplace,
Purchaser’s transactions are processed by the marketplace operator and then product/services
are delivered and fulfilled directly by the participating retailers. Other capabilities might
include auctioning (forward or reverse), catalogues, ordering, posting of requirements by
Purchasers, Payment gateways etc. In 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.
4.14.2 DGS&D has developed an online Government e-Market Place for common use goods
and services. The procurement process on GeM is end to end from placement of supply order
to payment to suppliers. This is to ensure better transparency and higher efficiency. All
the process will be electronic and online. The Procurement of Goods and Services by State
Govt. or Departments will be optional for Goods or Services available on GeM.

4.14.3 Products and services are listed on Gem by various suppliers as on other
e-commerce portals:
The registration of suppliers on GeM is online and automatic based on PAN, MCA-21,
Aadhar authentication etc. The suppliers will offer their products on GeM and the
Government buyer will be able to view all the products as well as compare them. Tools of
reverse bidding and e-auction are also available which can be utilised for the procurement
of bulk quantities.

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 Chapter-4

4.14.4 Demand Aggregation:

The best prices to a user can be available if same requirement demands of various
organizations are aggregated. This acts as an incentive for the supplier to quote their best
price. For the same products, the demand of various Govt. Departments can be clubbed
together and reverse auction done on the basis of aggregated demand which will provide
the best prices to the Govt. Department.

4.14.5 Authority of procurement through Gem:

Procurement through GeM has been authorised as per GFR, 2017 Rule 149:-
Government e-Market Place (GeM): DGS&D or any other agency authorized by the
Government will host an online Government e-Marketplace (GeM) for common use Goods
and Services. DGS&D will ensure adequate publicity including periodic advertisement of the
items to be procured through GeM for the prospective suppliers. The Procurement of
Goods and Services by State Govt. or Departments
will be optional for Goods or Services available on GeM. The credentials of suppliers
on GeM shall be certified by DGS&D. The procuring authorities will certify the
reasonability of rates. The GeM portal shall be utilized by the Government buyers for direct
on-line purchases as under:-
i. Up to Rs.50,000/- (Rupees Fifty thousand) through any of the available suppliers on the
GeM, meeting the requisite quality, specification and delivery period;
ii. Above Rs.50,000/- (Rupees Fifty thousand) and up to Rs.30,00,000/- (Rupees thirty
lakh) through the GeM Seller having lowest price amongst the available sellers, of
at least three different manufacturers, on GeM, 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 if decided by the competent
authority

iii. Above Rs.30,00,000/- (Rupees Thirty Lakh) through the supplier having lowest price
meeting the requisite quality, specification and delivery period after mandatorily
obtaining bids, using online bidding or reverse auction tool provided on GeM;

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 Chapter-4

iv. The invitation for the online e-bidding/reverse auction will be available to all the
existing Sellers or other Sellers registered on the portal and who have offered
their goods/ services under the particular product/service category, as per terms
and conditions of GeM;
v. The above mentioned monetary ceiling is applicable only for purchases made through
GeM. For purchases, if any, outside GeM, relevant GFR,2017 Rules shall apply;
vi. The Government Buyers may ascertain the reasonableness of prices before placement
of order using the Business Analytics (BA) tools available on GeM including the Last
Purchase Price on GeM, Department’s own Last Purchase Price; etc.
vii. A 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
viii. GeM or the necessity of obtaining the sanction of higher authorities required with
reference to the estimated value of the total demand.

It may be noted that unlike Rate Contracts, the responsibility of reasonableness of rate
for procurements from GeM portal does not lie with DGS&D. It is the responsibility of the
Procuring Entity to do due diligence for ensuring reasonableness of rates. Further for
procurement through GeM, all formalities as per DFPRT,2017 to be followed.
4.14.6 Gem Portal: https://gem.gov.in. Detailed instructions for user organization
registration, supplier registration, listing of products, terms and conditions, online bidding,
reverse auction, demand aggregation, call centre, etc. are available on this portal.

4.14.7 Payment Procedure in Gem: The payment procedure in GeM is governed by O.M.
No. F.26/4/2016-PPD dated 26th May, 2016 issued by D/o. Expenditure, M/o. Finance,
New Delhi. The salient feature of this O.M. is that it is obligatory to make payments without
any delay for purchases made on GeM. The consignee is required to issue an online digitally
signed consignee receipt and acceptance certificate after receipt of goods within ten days.
Thereafter, the payments are to be released maximum within ten days. The timelines after
Consignee Receipt and Acceptance Certificate (CRAC) issued online and digitally signed by
consignee will be two (2) working days for Buyer, one (1) working day for concerned DDO and

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 Chapter-4

two (2) working days for concerned PAO for triggering payment through
PFMS/Government Financial System/Banks for crediting to the supplier’s account. Any matter
needing a resolution will be escalated to the next higher level in each agency (Buyer, DDO
and PAO) where the matter should be resolved within 24 (Twenty-Four) hours in the entire
process, payments should not exceed ten days including holidays.

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 Chapter-5

PREPARING BID DOCUMENTS, PUBLICATION, RECEIPT

AND OPENING OF BIDS

5.1 Preparation of Bid Documents

5.1.1 The text of the bid document should be self-contained and comprehensive without any
ambiguity
. All essential information, which a bidder needs for sending responsive bid, should be
clearly spelt out in the bidding document in simple language. This will also enable the
prospective bidders to formulate and send their competitive bids with confidence. A
carefully prepared tender document avoids delays and complaints. Hence, it is worth
spending time and effort on this even in cases of urgency.

Bid documents should be based on Standard Bidding Documents (SBDs) relevant for the value
range and the category of procurement. SBD for e-Procurement would be slightly different
from the traditional SBD. To ensure uniformity, the standard provisions in most sections of the
SBD/ SRfPD (Standard Request for Proposal Document) may be used unaltered. Any
modification to suit a unique requirement of the specific procurement in these documents is
to be done through variable sections such as Special Instructions to Bidders or special
conditions of contract (these variable sections may have different nomenclatures in some
organisations).

While SBDs would be complete in themselves and may be slightly different for various
categories of procurements, these must necessarily address the following essential aspects:
i. Description of the subject matter of procurement, its specifications including the
nature, quantity, time and place or places of delivery;
ii. Limitation or preference for participation by bidders in terms of the Government
policies;
iii. The criteria for eligibility and qualification (wherever applicable) to be met by the
bidder (the eligibility criteria should take care of the supplier’s eligibility to receive
such a Government contract. The qualification criteria (wherever applicable) should
take care of the supplier’s past performance, experience, technical competence and
production capacity of the subject goods, financial strength to handle the contract

55
 successfully, compliance with environmental protection regulations/ Environment
iv. Management System and so on);
v. There are no such qualifications for the bidders that would be advantageous to
the Foreign manufactured goods at the cost of domestically manufactured goods;
vi. The procedure as well as date, time and place for obtaining, submitting and opening
of the bids;
vii. Terms of delivery/completion;
viii. Suitable provisions for enabling a bidder to question the bidding conditions,
bidding process and/or rejection of its bid. These provisions should include a time
frame in which Procuring Entity will address the bidder’s questions; (Rule 173 (iv) of GFR
2017).
ix. Criteria for determining the responsiveness of bids, criteria as well as factors to be taken
into account for evaluating the bids on a common platform and the criteria for
awarding the contract to the responsive, most advantageous (lowest/ highest as
the case may be) bidder should be clearly indicated in the bidding documents. SBDs
should include a clause that “if a firm quotes NIL charges/consideration, the bid
shall be treated as unresponsive and will not be considered”;
x. Suitable provision for settlement of disputes, if any, emanating from the resultant
contract, should be kept in the bidding document; (Rule 173 (v) of GFR 2017) and
xi. Essential terms of the procurement contract including a suitable clause mentioning
that the resultant contract will be interpreted under Indian laws (Rule 173 (vi) of GFR
2017)

5.1.2 Contents of Tender Documents (Rule 168 of GFR 017) The main sections of the SBD
are:

i. Notice Inviting Tender (NIT);

ii. Instructions to Bidders (ITB);
iii. Appendix to Instructions to Bidders (AITB) (instead of modifying ITB, it is better to have
information specific to a procurement as a separate section);
iv. Eligibility and qualification criteria;
v. Schedule of requirements;
vi. Technical specifications (including Drawings) and Quality Assurance (Inspections and
Tests);
vii. General Conditions of Contract (GCC);
viii. Special Conditions of Contract (SCC) (instead of modifying GCC every time, it is better
to have it as a separate section); and
ix. Standard formats, including Bid Cover letter, C heck lis t, Decla ra tion, price
schedules, bank guarantees and contract format.A reading of the sections of the
tender document will make the purpose and instructions clear. However, some broad

56
 guidelines for preparing bid documents are provided in the subsequent paragraphs.

5.1.3 Notice Inviting Tender

The model NIT format in SBD should be used for publishing the tender notice. To ensure
competition, attention of all likely tenderers, for example, past suppliers and other known
potential suppliers, should be invited to the NIT through email/SMSs/letters. In e-
Procurement, the website may be programmed to generate these alerts automatically.

The Notice Inviting Tender (NIT) is crucial for attracting wide competition in the tender.
The model NIT format in SBD should be used for publishing the tender notice. The NIT
should be brief but must contain sufficient detail for a prospective bidder to decide whether
to participate in the tender or not and, if he decides to participate, how to go about it. NIT
should be published as per the current policy of state Government / Procuring Entity in this
regard (Please refer to chapter 4 for details).

Printouts of the tenders published on the website should be collected and kept on record as
a proof of publicity. The complete details of the dates, on which advertisements actually
appeared on the website, should be indicated while sending cases to higher authorities.

5.1.4 Information to Bidders (ITB) and AITB

ITB contain all relevant information as well as guidance to the prospective tenderers regarding
all aspects of obtaining tender documents, and preparing and submitting a responsive bid.
It also mentions the process of establishing the eligibility of the tenderer as well as evaluation
and comparison of tenders and award of contract. ITB should not contain information on
processes after the announcement of the award which should be covered in GCC, for
example, the arbitration clause, resolution of disputes, and so on. Instead of modifying ITB
every time, any changes warranted by special circumstances may be indicated with the prior
approval of CA on a separate Appendix to ITB (AITB) and ITB may be included unchanged
in every tender document. It should also to be indicated therein that the provisions in the
AITB will supersede the corresponding provisions in the ITB.

Important clauses of ITB/AITB which may require attention and action are:

i. Purchase Preference Policies

If the purchaser intends to give a purchase preference in line with current Government
policies, this fact must be declared in the ITB/AITB and in NIT as well.

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ii. Clarification of Tender Documents

A prospective bidder requiring clarification on the tender documents may notify

to Procuring Entity in writing, well before the due date of submission of bids, and
a response will be sent in writing to the clarifications sought prior to the date of
opening of the tenders. Copies of the query and clarification shall be sent to all
prospective bidders who have received the tender documents.

iii. Amendment of Tender Documents (Rule 173 (iii) of GFR 2017)

At any time prior to the date of submission of bids, the purchaser may, whether at
his own initiative or in response to a clarification sought by a prospective bidder,
amend bid documents by issuing a corrigendum. The corrigendum shall be notified
in writing by registered post/ speed post/ courier/email to all known prospective
bidders. Copies of such amendments are also to be prominently attached in the unsold
sets of the tender documents (which are available for sale), including the tender
documents uploaded on the website. When the amendment/modification changes
the requirement significantly and /or when there is not much time left for the tenderers
to respond to such amendments, and prepare a revised tender, the time and date of
submission of tenders are also to be extended suitably, along with suitable changes
in the corresponding timeframes for receipt of the tender, tender validity period,
and so on, and validity period of the corresponding EMD/bid security. Depending
on the situation, such an amendment may also need fresh publication adopting
the same procedure as for publication of the original tender enquiry.

iv. Bid Validity

A bid shall remain valid for the period mentioned in the ITB/AITB (normally 90 (ninety)
days). In exceptional circumstances, the consent of the bidder may be requested in
writing for an extension to the period of bid validity. Such requests should preferably
be made much before the expiry of the bid validity. The bid security provided shall
also be suitably extended. A bidder accepting the request and granting extension
shall not be permitted to modify his bid.

v. Sealing and Marking of Tenders

Address of the tendering authority & bidder, technical / financial bid (in case of two
bid system), and the tender reference number must be mentioned on the envelopes by
bidder. Further, the sentence ‘’NOT TO BE OPENED” before (due date and time of

58
 tender opening) is also to be printed on these envelopes. The inner envelopes are
then to be put inside a bigger outer envelope, which will also be duly sealed marked,
and so on, as above. If the outer envelope is not sealed and marked properly as above,
the purchaser will not assume any responsibility for its misplacement, premature
opening, late opening, and so on. All the above instructions are to be suitably
incorporated in the tender documents.

vi. Withdrawal, Substitution and Modification of Tenders

The tenderer, after submitting the tender, is permitted to withdraw, substitute or

modify the tenders in writing without forfeiture of Bid Security/EMD, provided these
are received duly sealed and marked like the original tender, up to the date and
time of receipt of the tender. Any such request received after the prescribed date
and time of receipt of tenders will not be considered. No bid may be withdrawn in
the interval between the deadline for submission of bids and expiration of the period
of bid validity. Withdrawal of a bid during this period will result in forfeiture of the
bidder’s bid security (EMD) and other sanctions.

vii. Eligibility / Evaluation/Qualification criteria

If it is intended to use eligibility/ evaluation/ qualification criteria to evaluate a

tender and determine whether a tenderer has the required qualifications, this point
may be clearly specified in NIT, ITB/AITB or as a separate section of the tender
document. The bidder has to ensure that he provides convincing proof of having
fulfilled these criteria. Any criteria not specified in the tender cannot be used for
evaluation or qualification.
The condition of prior turnover and prior experience may be relaxed for Startups
(as defined by Department of Industrial Policy and Promotion) subject to meeting of
quality & technical specifications and making suitable provisions in the bidding
document (Rule 173 (i) of GFR 2017)

viii. OEM / Authorised Dealer/Agents of supplier

Except in case of Commercially-Off-the-Shelf (COTS) items, when a firm sends

quotation for an item manufactured by some different company, the firm is also
required to attach, in its quotation, the manufacturer’s authorisation certificate and
also manufacturer’s confirmation of extending the required warranty for that
product as per formats given in SBD. This is necessary to ensure quotation from a
responsible party offering genuine product, also backed by a warranty obligation
from the concerned manufacturer. In the tender, either the manufacturer or its

59
 authorised dealer can be considered as valid bidders.

In case of large contracts, especially capital equipment, the manufacturer’s

authorisation must be insisted upon on a tender specific basis, not general
authorisation/ dealership, by so declaring in the bid documents clearly.

In cases where the manufacturer has submitted the bid, the bids of its authorised dealer
will not be considered and EMD will be returned.
And in case of violations, both infringing bids will be rejected.

ix. Conflict of interest among Bidders/agents

A bidder shall not have conflict of interest with other bidders. Such conflict of interest
can lead to anti-competitive practices to the detriment of Procuring Entity’s interests.
The bidder found to have a conflict of interest shall be disqualified. A bidder may
be considered to have a conflict of interest with one or more parties in this bidding
process, if:

a) they have controlling partner (s) in common; or

b) they receive or have received any direct or indirect subsidy/financial stake
from any of them; or
c) they have the same legal representative/agent for purposes of this bid; or
d) they have relationship with each other, directly or through common third
parties, that puts them in a position to have access to information about or
influence on the bid of another bidder; or

e) bidder participates in more than one bid in this bidding process.

Participation by a bidder in more than one Bid will result in the
disqualification of all bids in which the parties are involved. However, this
does not limit the inclusion of the omponents/sub-assembly/assemblies from
one bidding manufacturer in more than one bid.
f) in cases of agents quoting in offshore procurements, on behalf of their principal
manufacturers, one agent cannot represent two manufacturers or quote on
their behalf in a particular tender enquiry. One manufacturer can also
authorise only one agent/dealer. There can be only one bid from the
following:

1) The principal manufacturer directly or through one Indian agent on

60
 his behalf; and
2) Indian/foreign agent on behalf of only one principal.
g) a Bidder or any of its affiliates participated as a consultant in the preparation
of the design or technical specifications of the contract that is the subject of the
Bid;

h) in case of a holding company having more than one independently

manufacturing units, or more than one unit having common business
ownership/management, only one unit should quote. Similar restrictions
would apply to closely related sister companies. Bidders must proactively
declare such sister/common business/ management units in same/similar line
of business.

x. Schedule of Requirements

This section comprises the list of goods and delivery schedule. If there is no separate
TS, then TS, quality assurance and inspections may also be included here. If the tender
contains a number of schedules of requirements, it must be clarified, whether
evaluation of eligibility/qualifications/financial bids would be on a schedule by
schedule basis or on the basis of a total of all schedules put together.

xi. Quotation received from dealers/agents for items not manufactured by

Them

When a firm sends a quotation for an item manufactured by a different company,

the firm is also required to attach in its quotation that manufacturer’s authorisation
certificate and also manufacturer’s confirmation of extending the required warranty
for that product (in addition to the tenderers’ confirmation to the required
warranty). If the firm is an authorised agent/dealer of that manufacturer, certified
documentary evidence to this effect is to be attached along with the quotation. This
is necessary to ensure a quotation from a responsible party offering the genuine
product, also backed by a warranty obligation from the concerned manufacturer.

xii. Special Conditions in GTE Procurements

a. Currency of B idding: In GTE tenders, the Foreign Bidders are allowed

to quote price (and get paid) in RBI’s notified basket of foreign currencies - US
Dollar or Euro or Pound Sterling or Yen etc., in addition to the Indian Rupees -
except for expenditure incurred in India (including agency commission if any)
which should be stated in Indian Rupees. Indian Bidders are to quote in INR

61
 only.

b. Agency Commission: The amount of Agency Commission, (normally not

exceeding five percent) payable to the Indian Agent should not be more
than what is specified in the Agency agreement (a certified copy should be
submitted along with the bid) between the bidder and the Indian Agent. The
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. The Purchaser or their authorized
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 their Indian Agent liable to be banned/ suspended from
having business dealings with the Purchaser, following laid down procedures for
such banning/suspension of business dealings.

c. Delivery Terms: The delivery terms are to be expressed in terms of Incoterms.

As per the revised policy of the Government, State Public Procurement import
contracts involving (ocean freight of dry or liquid bulk cargoes) are to be
finalized only on FOB (Free on Board)/FAS(Free Alongside Ship) basis and
in case of any departure there-from, prior approval of the concerned
administrative State Government/ Department may be obtained. However
imports involving ocean freight of general liner: cargoes, project cargoes,
heavy lift, container, break bulk cargoes etc. can now be made on FOB
(Free on Board)/FAS (Free Alongside Ship) or CFR (Cost & Freight)/CIF (Cost,
Insurance & Freight) basis. All importing State Government Departments/PSUs
are now allowed to make their own shipping arrangements without needing
to route their requirements through Chartering Wing of Department of
Shipping. As per the extant directive of the Government, airlifting of imported
goods from abroad will be done only through the national carrier, that is,
Air India, wherever applicable. However, before processing any contract
involving import of goods through air, contemporary instructions in this
regard may be ascertained and followed; and

a) Insurance: 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

62
 in the manner specified in the contract. If considered necessary, the
insurance may be done for coverage on an “all risks” basis including war
risks and strike clauses. The amount to be covered under insurance should
be sufficient to take care of the overall expenditure to be incurred by the
purchaser for receiving the goods at the destination. Insurance of imported
goods/equipment would need to be arranged on a very selective basis and
only for cases where the value of individual shipment is expected to be in
excess of Rupees Five crore. Procuring Entities who are entering into large
number of imports contracts, may enter into annual Insurance arrangements
for all imports during the year with Insurance Companies, instead of insurance
for each individual imports separately on the basis of “Open Cover (all Risk)”.
Where delivery of imported goods is required by the purchaser on Cost
Insurance and Freight/Carriage and Insurance Paid (CIF/CIP) basis, the
supplier shall arrange and pay for marine/air insurance, making the purchaser
the beneficiary. Where delivery is on Free On Board/Free Alongside Ship (FOB/
FAS) basis, marine/air insurance shall be the responsibility of the purchaser.
Delivery point (go-down / worksite) must be written in the tender document.

5.1.5 General and special conditions of the contract

The GCC to be used for contracting for procurement are provided in Procuring Entity’s SBD.
GCC covers all information on aspects after the announcement of the tender award till the
closure of the contract and dispute resolution. It should not cover any aspect up to
announcement of award. Instead of modifying the GCC every time, any changes warranted by
special circumstances may be indicated in a separate SCC with the prior approval of the CA
and GCC may be included unchanged in every tender document. It is also to be indicated
therein that the provisions in the SCC will supersede the corresponding provisions in the GCC.

5.1.6 Submission Formats

This section contains the relevant forms for tender submission: various declarations by
tenderer, formats for the bank guarantee, price schedule forms, exception and deviation
forms, contract forms and manufacture’s authorisation form, and so on.

5.1.7 Mandatory e-Publishing of Tenders (Rule 159 of GFR 2017)

It is mandatory for all Departments of the state Government, their attached and
subordinate offices and autonomous/statutory bodies to publish their tender enquiries,
corrigenda thereon and details of bid awards on the state e-Procurement Portal. These
instructions apply to all Tender Enquiries, Requests for Proposals, or any other notice inviting

63
bids or proposals in any form whether they are advertised. These instructions would not
apply to Purchase of goods without quotations.

Individual cases where confidentiality is required, for reasons of national security, would be
exempted from the mandatory e-publishing requirement. The decisions to exempt any
case on the said grounds should be approved by the administrative Department . In the
case of autonomous bodies and Statutory bodies’ approval of the head of the body with
the concurrence of the head of the finance should be obtained in each such case. Statistical
information on the number of cases in which exemption was granted and the value of the
concerned contract may be intimated on a Quarterly basis to the Finance Department,
Government of Tripura.

5.2 Receipt and Custody of Tenders

5.2.1 Cost and Availability of Tender documents

Tender documents should preferably be available for download up to date of opening of
tender. Last date of selling of tender document should be clearly indicated in the tender
documents. The organisation should also Post the complete tender document in the website
and permit prospective tenderers to make use of the document downloaded from the website.
The tender document fee should be as low as possible considering the cost/effort of
preparing documents. Cost of tender document to be submitted by all bidders. However

SAIL / BSNL and other Government undertakings may be exempted to deposit cost of
tender document. The Procuring Entity may decide not to take any charges for the tender

documents, in view of prevalence of e-publishing/downloading of tender documents.

The cost of the tender document is to be submitted to the authority nominated therein

by the prospective tenderer in the form of a demand draft /banker’s cheque/pay order.
Firms that are eligible for exemption from the tender document fee have to submit/upload
scanned copy of documents in support of this exemption.

5.2.2 Pre-bid Conference (Rule 173 (x) of GFR 2017)

In case of turnkey contract (s) and facilities of a special nature for procurement of sophisticated
and costly equipment, large works and complex consultancy assignments, a suitable provision
is to be kept in the bidding documents for pre-bid conference for clarifying issues/ clearing

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doubts, if any, about the specifications and other allied technical/commercial details of the
plant, equipment and machinery projected in the bidding document and for ensuring that
the technical requirements provide a level playing field. The date, time and place of the
pre-bid conference should be indicated in the tender enquiry document. Bidders should
be asked to submit written queries in advance of the conference. After the conference, the
techno- commercial requirements may be revised if considered necessary by way of issue of
a formal corrigendum (mere minutes of the meeting of pre-bid conference would not suffice)
and shared with all the bidders who purchase or have purchased the bid documents.

5.2.3 Extension of Tender Opening Date

Sometimes, situations may arise necessitating modification of the tender documents already
put on sale. Also, after receiving the documents, a tenderer may point out some genuine
mistakes necessitating amendment in the tender documents. In such situations, it is necessary
to amend/modify the tender documents suitably prior to the date of submission of bids. In
case of OTE, the copies of such amendment/modification are to be simultaneously
dispatched, free of cost, by registered/speed post/courier/e-mail, to all the parties who have
already purchased the tender documents and copies of such amendments are also to be
prominently attached in the unsold sets of the tender documents (which are available for
sale), including the tender documents for downloading put on the public procurement
website and Procuring Entity’s own website.

When the amendment/modification changes the requirement significantly and/or when

there is not much time left for the tenderers to respond to such amendments, and prepare
revised tender, the time and date of submission of tenders are also to be extended suitably,
along with suitable changes in the corresponding time-frames for receipt of tender, tender
validity period etc and validity period of the corresponding EMD/bid security. Depending
on the situation, such an amendment may also need fresh publication adopting the same
procedure as for publication of the original tender enquiry.

5.2.4 Submission, receipt and custody of Tenders

In e-Procurement, all tenders uploaded by tenderers are received, safeguarded and opened
online on the portal. In offline tenders, receipt and custody of bids shall be done in a
transparent manner to maintain the credibility of the process. The following guidelines
should be adhered to for receipt and custody of bids:

i. The Procuring Entity shall maintain tender boxes for receiving the bids at suitable
locations which would facilitate security and easy access to bidders. The tender box

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 may have two locks. Key of one lock will be with the head of the office and the other
key with the official nominated by him;

ii. Bids received by courier shall be deposited in the tender box by the Dispatch Section
till the date and time of bid opening. Bids sent by e-mail, telex, cable or facsimile are
to be ignored and rejected.; and

iii. For bulky/oversized bids which cannot be dropped into tender boxes, the officials
authorised to receive such bids shall maintain proper records and provide a signed
receipt with date and time to the bearer of the bid. He will also sign on the cover,
duly indicating the date and time of receipt of the tender(s). Names and designations
of at least two such authorised officers should be mentioned in the bid documents

5.2.5 Withdraw/ Amendments/ Modifications to B ids by Bidders

The tenderer, after submitting its tender, is permitted to withdraw/alter/modify its tender so
long such withdrawal/alterations/modifications are received duly sealed and marked like
original tender, upto the date & time of receipt of tender. Any withdrawal/
amendment/modification received after the prescribed date & time of receipt of tenders are
not to be considered.

5.3 Procedures to be followed during bid opening

Immediately after the deadline for bid submission, Procuring Entity shall proceed to the bid
opening. In e-Procurement, bids are opened online as detailed in Appendix 3.

i. The authorised representatives of bidders, who intend to attend the tender

opening are to bring with them letters of authority from the corresponding bidder.
The prescribed format for the letter of authority for attending the bid opening
should be given in the bidding document. All bid-opening activities should be
carried out demonstrably before such a gathering. The prescribed format for the
bid opening attendance sheet and report are given at Annexure 6; Bid opening
register also to be maintained where name of bidder, address of bidder, details of
cost of tender fee, details of EMD along with signature of bidder present during
opening, signature of officers present during opening to be recorded.

ii. At a prescheduled date and time, the tendering authority / BOC of the day should
get the particular tender box opened, after ensuring and demonstrating that the
seal on the box has not been tampered with. All bids should be collected from the

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 tender box. Bids for tenders not opening on that day should be put back into the box
and the box resealed. Sometimes, there would be tenders dropped wrongly into this
tender box. Such wrongly dropped tenders with appropriate endorsement should
be put into the appropriate box or sent to the tendering authority / Tender
Committee (TC) concerned, if the date of opening is over. The bids for different
tenders opening on the day (including oversized bids, which were submitted to
designated officers) should be sorted, and a count for each tender should be
announced and recorded, particularly noting any modifying/altering/withdrawal of
bids. Tendering authority / BOC should ensure and demonstrate that bid envelopes
are duly sealed and untampered. Late bids should be separately counted but kept
aside and not opened. Late bids (that is, bids received after the specified date and
time for receipt of bids) should not be considered (Rule 165 of GFR 2017);

iii. After opening, every tender shall be numbered serially (say 3/14 – if it is the third
bid out of 14 total), initialled, and dated on the first page by the tendering
authority / BOC. Each page of the price schedule or letter attached to it shall also
be similarly initialled, particularly the prices, delivery period, and so on, which shall
also be circled and initialled along with the date. Any other page containing
significant information should also be dealt with similarly. Blank tenders, if any,
should be marked accordingly by the tendering authority / BOC.

iv. Erasure/cutting/overwriting/use of whitener/columns left unfilled in tenders, if any,

shall be initialled along with date and time and numbered by the officials opening the
tenders and total number of such noticed alterations (or the absence of any
alteration)should be explicitly marked on the first page of the bid. Wherever
quantity/amount is written only in figures, the tendering authority / BOC should write
them in words. All rebates/discounts should be similarly circled, numbered and
signed. In the absence of any alteration/overwriting/whitener/ blanks, the remark
“no corrections noted” should be written. Similarly, the absence of discounts should
be marked with “no discounts noted;”

v. The tendering authority / BOC is to announce the salient features of the

tenders 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 special feature of the tender for the information of the representatives
attending the tender opening. No clarifications by tenderers should be entertained
or allowed to be recorded during the bid opening.
vi. Proper sealing and codification need to be done on samples as well for samples which
accompany the bid. These should be kept for reference under lock and key. Details

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 should be recorded in the sample register maintained in the opening section.
Documents related to money should be noted in the bid opening report/register
and handed over to the account Section for safe custody and monitoring; and

Vii) A bid opening report / register containing the names of the tenderers (serial number

wise), salient features of the tenders, as read out during the public opening of tenders, will be

prepared by the tender opening officers, and duly signed by them along with the date
and time.

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Chapter-6
FORMS OF SECURITIES, PAYMENT TERMS AND PRICE VARIATIONS

6.1. Forms of security

6.1.1 Bid Security / EMD (Rule 170 of GFR 2017)

To safeguard against a bidder’s withdrawing or altering its/his bid during the bid validity
period, Bid Security (also known as Earnest Money Deposit (EMD)) is to be obtained from
the bidders along with their bids except from bidders who are exempted from paying Bid
Security. The amount of Bid Security should generally be between two to five per cent of the
estimated value of the goods to be procured. The exact amount of Bid Security, rounded off to
the nearest thousands of Rupees, as determined by the Procuring Entity, is to be indicated
in the bidding documents. The Bid Security may be obtained in the form of an account payee
demand draft, fixed deposit receipt, or banker’s cheque. However, in case the Bid Security is
more than a threshold (Rupees five lakh) and in case of foreign bidders in GTE tenders it may
also be allowed in the form of a bank guarantee (in equivalent Foreign Exchange amount, in
case of GTE) issued/confirmed from any of the scheduled commercial bank in India in an
acceptable form, and so on, safe guarding the purchaser’s interest in all respects. The Bid
Security is normally to remain valid for a period of 45 ( Forty-Five) days beyond the final bid
validity period.

SAIL/BSNL and other Government undertakings may be exempted to deposit EMD and
SD.
Local industrials unit are exempted to deposit part amount of EMD / SD as per TIIPS
(TripuraIndustrial Investment Promotion Incentives Scheme). Local industrials unit should
submit/ upload such exemption certificate along with tender.

A bidder’s Bid Security will be forfeited if the bidder withdraws or amends its/his tender or
impairs or derogates from the tender in any respect within the period of validity of the tender
or if the successful bidder fails to furnish the required Performance Security within the specified
period.

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Bid securities of the unsuccessful bidders should be returned to them at the earliest after
expiry of the final bid validity period and latest by the 30th day after the award of the
contract. Bid Security should be refunded to the successful bidder on receipt of a
performance security.

6.1.2 Performance Security / SD (Rule 171 of GFR 2017)

To ensure due performance of the contract, performance security (or Performance Bank
Guarantee (PBG) or Security Deposit (SD)) is to be obtained from the successful bidder
awarded the contract. Unlike contracts of Works and Plants, in case of contracts for Goods,
the need for the Performance Security depends on the market conditions and commercial
practice for the particular kind of goods. Performance Security should be for an amount
of five to ten per cent of the value of the contract as specified in the bid documents.
Performance Security may be furnished in the form of an account payee demand draft,
fixed deposit receipt from a commercial bank, bank guarantee issued/confirmed from any
of the commercial bank in India in an acceptable form, safeguarding the purchaser’s interest
in all respects. In case of GTE tenders, the performance security should be in the same
currency as the contract and must conform to Uniform Rules for Demand Guarantees
(URDG 758) – an international convention regulating international securities. Unlike,
Procurement of Works, in Procurement of Goods, the concept of taking part of Performance
Guarantee as money retained from first or progressive bills of the supplier is not acceptable.
Submission of Performance Security is not necessary for a contract value upto Rupees 1
(One) lakh.

Performance Security is to be furnished by a specified date (generally 14(fourteen) days

after notification of the award) and it should remain valid for a period of 60 (sixty) days
beyond the date of completion of all contractual obligations of the supplier, including
warranty obligations.
The Performance Security will be forfeited and credited to the Procuring Entity’s account in
the event of a breach of contract by the contractor. It should be refunded to the contractor
without interest, after he duly performs and completes the contract in all respects but not
later than 60(sixty) days of completion of all such obligations including the warranty under
the contract. Return of Bid/Performance Securities should be monitored by the senior
officers and delays should be avoided. If feasible, the details of these securities may be listed
in the e-Procurement portal, to make the process transparent and visible.

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6.1.3 Warranty Bank Guarantee

In case of works and capital equipment, there is usually a defect liability/warranty clause
against defects arising from design, material, workmanship or any omission on part of the
vendor/ contractor during a specified period of months from the date of commissioning or
from the date of dispatch in case of goods – whichever is earlier. In such cases, the
Performance Guarantee is to be valid upto 60 (sixty) days beyond the warranty period. It is
normally permissible in such a situation to allow Performance Guarantee to be valid upto
60 (sixty) days beyond delivery/ commissioning period and the contractor may be allowed
to submit a fresh Warranty Bank Guarantee of 10 (ten) per cent of the value of the goods
in the currency of the contract valid upto 60 (sixty) days beyond the Warranty period. In such
cases, the Performance Guarantee is to be returned only after satisfactory
delivery/commissioning and receipt of such a Warranty Bank Guarantee. In procurement
of other than Capital Equipment Goods (and in case of low value Capital Goods – say upto
Rupees one Lakh), Warranty Clause is not called for.

6.1.4 Verification of bank Guarantees

Bank guarantees submitted by the tenderers/suppliers as EMD/Performance securities

need to be immediately verified from the issuing bank before acceptance. There may not
be any need to get the Bank Guarantee vetted from legal/finance authority if it is in the
specified format. Guidelines for verification of BGs submitted by the bidders/contractors
against EMD/ performance security/advance payments and for various other purposes are
as follows:

i. BG shall be as per the prescribed formats;

ii. The BG contains the name, designation and code number of the Bank officer(s)
signing the guarantee(s);

iii. The address and other details (including telephone no.) of the controlling officer of
the bank are obtained from the branch of the bank issuing the BG (this should be
included in all BGs);

iv. The confirmation from the issuing branch of the bank is obtained in writing through
registered post/speed post/courier. The bank should be advised to confirm the
issuance of the BGs specifically quoting the letter of Procurement Entity on the
printed official letterhead of the bank indicating address and other details (including
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telephone nos.) of the bank and the name, designation and code number of the officer(s)
confirming the issuance of the BG;

v. Pending receipt of confirmation as above, confirmation can also be obtained with

the help of responsible officer at the field office, which is close to the issuing branch
of the bank, who should personally obtain the confirmation from issuing branch of
the bank and forward the confirmation report to the concerned procurement entity.

6.1.5 Safe custody and monitoring of EMDs, Performance securities and other
instruments

A suitable mechanism for safe custody and monitoring of EMDs and performance securities
and other instruments should be evolved and implemented by each Department. The
Departments shall also make institutional arrangements for taking all necessary actions on
time for extension or encashment or refund of EMDs and Performance securities, as the
case may be. Monitoring should also include a monthly review of all bank guarantees and
other instruments expiring in next three months, along with a review of the progress of the
corresponding contracts. Extension of bank guarantees and other instruments, where
warranted, should be sought immediately and implemented within their validity period. Bank
Guarantee should never be handed over to the supplier for propose of extension of validity.
Such a system of monitoring of securities and other instruments may be considered to be
computerised with automatic alerts about lapse of validity etc.

6.2. Payment Clause

The elements of price included in the quotation / tender of a tenderer depend on the nature of
the goods to be supplied and the allied services to be performed, location of the supplier,
location of the user, terms of delivery, extant rules and regulations about taxes, duties, and
so on, of the seller’s country and the buyer’s country.

In case of both indigenous and imported goods, rate should be quoted including all taxes and
charges upto to destination (go-down/ worksite which will be mentioned in the tender
document). Further, depending on the nature of the goods (whether domestic or imported),
there may be cost elements towards installation and commissioning, operator’s training, and
so on as per terms and conditions of tender documents.

It is, therefore, necessary that, to enable the tenderers to frame their quotations properly in
a meaningful manner, the tender documents should clearly specify the desired terms of
delivery and also the duties and responsibilities to be performed by the supplier in addition
to supply of goods.

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While claiming the payment, the supplier should also certify in the bill that the payment being
claimed is strictly in terms of the contract and all obligations on the part of the supplier for
claiming this payment have been fulfilled as required under the contract. There should also be
a suitable provision for verification of the authenticity of the person signing the invoice, and so
on, to claim the payment.

i. Elements of Price:
Where the price has several components
such as the price of the goods, cost of installation and commissioning, operators’
training, and so on, 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.
The payment schedule and terms will be linked to this cost break-up.
ii. Currency:
The tender documents are to specify the currency (currencies) in which the tenders
are to be priced. As a general rule, domestic tenderers are to quote and accept their
payment in Indian currency; Indian agents of foreign suppliers are to receive their
agency commission in Indian
currency; costs of imported goods, which are directly imported against the contract,
may be quoted in foreign currency (currencies) and paid accordingly in that currency;
and the portion of the allied work and services, which are to be undertaken in India
(like installation and commissioning of equipment) are to be quoted and paid in
Indian currency.

iii. Payment to Suppliers:

In a supply contract, delivery of goods is the essence of the contract for the
purchaser. Similarly, receiving timely payment for the supplies is the essence of the
contract for the seller. A 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. It should be ensured that all payments due to
the firm, including release of the performance security, are made on a priority basis
without avoidable delay as per the tender/contract conditions :

a) Running bill may be entertained. But in no circumstance, reason of delay to supply

ordered stores be attributed by the supplier to non-receipt of payment against
supplied stores.
b) Prompt and timely provision of statutory certificates to the seller for taxes deducted at

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source, are as much a part of payment as the amount actually released. A detailed
payment advice showing the calculations and reasons for the amounts disallowed
and taxes deducted may be issued to the supplier along with payment. As so on as
possible, but not later than the date of submission of Tax returns, th e Procuring
Entity must provide the statutory certificates for the taxes deducted to the Supplier,
so that he is able to claim set-offs and refunds from the concerned authorities;
c) Release of payment and settlement of the final bill should be processed through the
Associated/integrated Finance section as per the terms and conditions of the contract;
d) No payments to contractors by way of compensation or otherwise outside the strict
terms of the contract or in excess of the contract rates should be allowed.

iv. Before the payment is made, the invoice should be cross-checked with the actual
receipt of material/assets/services to ensure that the payment matches the actual
performance;
v. While claiming the payment, the contractor must certify on the bill that the payment
being claimed is strictly within terms of the contract and all the obligations on his part
for claiming this payment have been fulfilled as required under the contract. There
should also be a suitable provision for verification of the authenticity of the person
signing the invoice, and so on, to claim the payment.

6.3. Terms of Payment for domestic Goods

Where the terms of delivery are FOR dispatching station, the payment terms, depending on
the value and nature of the goods, mode of transportation, and so on, may be 60 to 90
(sixty to ninety) per cent on proof of dispatch and other related documents and balance on
receipt at site and acceptance by the consignee.

Where the terms of delivery is FOR destination/delivery at site, the usual payment term is
100 (hundred) per cent on receipt and acceptance of goods by the consignee and on
production of all required documents by the supplier.

Where goods to be supplied also need installation and commissioning by the supplier, the
payment terms are generally:

i. For a contract with terms of delivery as FOR dispatching station -- 60 (sixty) per cent
on proof of dispatch along with other specified documents, 30 (thirty) per cent on
receipt of the goods at site by the consignee and balance 10 (ten) per cent on
successful installation and commissioning and acceptance by the consignee; and
ii. For a contract with terms of delivery as FOR destination/delivery at site -- 75

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iii. (seventy five) per cent on receipt and acceptance of goods by the consignee at
destination and on production of all required documents by the supplier and balance
25 (twenty five) per cent on successful installation and commissioning and
acceptance by the consignee.

Note: Generally (especially for goods requiring installation and commissioning at site by the
supplier), the desirable terms of delivery are FOR destination/delivery at site, so that the
supplier remains responsible for safe arrival of the ordered goods at the site.

Modes of Payment for Domestic Goods

Payments to domestic suppliers are usually made by cheque/demand draft drawn on a
branch of RBI or any Scheduled Commercial Bank authorised by RBI for transacting
Government business. However procuring entities should switch over to more transparent
electronic payment systems like Electronic Clearance System (ECS), Real-Time Gross
Settlement Systems (RTGS) National Electronic Funds Transfer (NEFT) or Electronic Payment
Gateways.

6.3.1. Documents for Payment for Domestic Goods

i. Supplier’s Invoice indicating, inter alia description and specification of the goods,
quantity, unit price, total value;
ii. Packing list;
iii. Railway receipt/consignment note;
iv. Manufacturer’s guarantee certificate and in-house inspection certificate;
v. Inspection certificate issued by purchaser’s inspector; and
vi. Any other document(s) as and if required in terms of the contract.

6.4. Terms of Payment for imported Goods

6.4.1 Usual payment terms, unless otherwise directed by CA, are indicated below:
i. Cases where installation, erection and commissioning (if applicable) are not
the responsibility of the supplier -- 100 (Hundred) per cent net price after
receipt of materials in the destination is to be paid on receipt of bill along with
invoice, shipping documents, inspection certificate (where applicable),
manufacturers’ test certificate, and so on;
i. Cases where installation, erection and commissioning are the responsibility of the
supplier -- 75 (seventy five) per cent price after receipt of materials in the
destination on receipt of bill against the invoice, inspection certificate (where

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ii. applicable), shipping documents, and so on, and balance within 30 (thirty) days
of successful installation and commissioning at the consignee’s premises and

acceptance by the consignee; and

iv. Payment of agency commission, if payable, as per contract – the entire 100
(Hundred) per cent agency commission is generally paid (in non-convertible
Indian Rupees on the basis of BC selling rate of exchange) after all other
payments have been made to the supplier in terms of the contract.

6.4.2 Modes of Payment for Imported Goods

It should be ensured that the imports into India are in conformity with the export-import
policy in force: FEMA; FEMA (Current Account Transactions) Rules, 2000 framed by
Procuring Entity; and directions issued by RBI under FEMA from time to time.

For imported goods, payment usually happens through the Letter of Credit (LC) opened by
the State Bank of India or any other scheduled/authorised bank as decided by the Procuring
Entity. The amount of LC should be equal to the total payable amount, and be released as
per the clauses mentioned above. Provisions of Uniform Customs and Practices for
Documentary Credits should be adhered to while opening the LC for import into India. If
the LC is not opened, payment can also be made to the seller through a direct bank transfer
for which the buyer has to ensure that payment is released only after the receipt of prescribed
documents.

6.4.3 Documents for Payment for Imported Goods

The documents, which are needed from the supplier for release of payment, are to be
clearly specified in the contract. The paying authority is also to verify the documents received
from the supplier with corresponding stipulations made in the contract before releasing the
payment. Documents, which the supplier is to furnish while claiming payment, are specified
in the Letter of Credit, but usually are:
i. Supplier’s original invoice giving full details of the goods including quantity, value,
and so on;
i. Packing list;
ii. Certificate of country of origin of the goods to be given by the seller or a recognised
chamber of commerce or another agency designated by the local Government for
this purpose;
iv. Certificate of pre-dispatch inspection by the purchaser’s representative;
v. Manufacturer’s test certificate and guarantee;
vi. Certificate of insurance;
vii. Bill of lading/airway bill/rail receipt or any other dispatch do
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viii. cument, issued by a Government agency (like the Department of Posts) or an

agency duly authorised by the concerned State Government/Department,
indicating:

a) Name of the vessel/carrier;

b) Bill of lading/airway bill;
c) Port of loading;
d) Date of shipment;
e) Port of discharge and expected date of arrival of goods; and

Any other document(s) as and if required in terms of the contract.

6.4.4 Air Freight Charges

Goods that are required to be airlifted are to be dispatched on a ‘charge forward basis’.
All air freight charges, which are shown on the relevant consignment note as chargeable to
the consignee, are to be paid to the Airline in Rupees. Some organizations need to import
sophisticated instruments, tools and kindred goods. These are usually small in size and
very delicate/fragile in nature. Such goods, invariably, need to be airlifted. But, quite
naturally, form a small part of the Air Cargo carried by an Aircraft. For such imports,
procuring entities may engage Air Freight Consolidators who consolidate the small Air
Cargos of different customers, to be airlifted from one Airport to another. Hiring of services
of Airfreight Consolidators should be done in a transparent manner, following standard
principles of Public Procurement.

6.4.5 Letter of Credit (LC)

Two banks are involved in payment to the supplier by LC, the purchaser’s bank and
supplier’s bank. The purchaser is to forward the request to its bank in the prescribed format
as formulated by the Bank, along with all relevant details including an authenticated copy
of the contract. Based on this, the purchaser’s bank opens the LC on behalf of the
purchaser for transacting payment to the supplier through the supplier’s bank. Care should
be taken to ensure that the payment terms and documents to be produced for receiving
payments through LC are identical with those shown in the contract. Generally, the
irrevocable LC is opened so that the supplier is fully assured of his payment on fulfilling his
obligations in terms of the contract. In case the delivery date of the contract is extended to
take care of delay in supply, for which the supplier is responsible, the tenure of the LC is also
to be extended, but the expense incurred for such an extension (of LC) is to be borne by the
supplier. Provisions of Uniform Customs and Practices for Documentary Credits (UCP 600)
should be adhered to the while opening the LC for import into India.

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6.5. Advance Payment

6.5.1 Ordinarily, payments for services rendered or supplies made should be released only
after the services have been rendered or supplies made. However, it may become necessary
to make advance payments in the following types of cases:

i. Advance payment demanded by firms holding maintenance contracts for servicing

of air-conditioners, computers, other costly equipment; etc.

i. Advance payment demanded by firms against fabrication contracts, turn-key

contracts; and so on; Such advance payments should not exceed the following limits
except in case of procurement of arms an d ammuni tions fro m ordin ance factor ies:
a) Ten per cent of the co ntr act v alu e to private firms;
b) Forty per cent (as deem fit by department) of the contract value to a state Government
agency or PSU; or
c) In case of the maintenance contract, the amount should not exceed the amount
payable for six months under the contract;
6.5.2 Documents for Advance Payments
Documents, needed from the supplier for release of payment, are to be clearly specified in
the contract. The paying authority should also verify the documents received from the
supplier with corresponding stipulations made in the contract before releasing the payment.

6.5.3 Insurance
In every case where advance payment or payment against dispatch documents is to be
made or LC is to be opened, the condition of insurance should invariably be incorporated
in the terms and conditions. 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 in the manner specified in
the contract. If considered necessary, insurance may cover “all risks” including war risks and
strike clauses. The amount to be covered under insurance should be sufficient to take care
of the overall expenditure to be incurred by the Procuring Entity for receiving the goods at
the destination. Where delivery of imported goods is required by the purchaser on CIF/CIP
basis, the supplier shall arrange and pay for marine/air insurance, making the purchaser
the beneficiary. Where delivery is on FOB/FAS basis, marine/air insurance shall be the
responsibility of the purchaser. (Rule 172 of GFR 2017)

6.6 Firm Price vis-à-vis Variable Price

Short-term contracts where the delivery period does not extend beyond 18 (eighteen) months should
normally be concluded with a firm and price fixed by inviting tenders accordingly. However, even for
shorter deliveries, the Price Variation Clause (PVC) may be stipulated for items with non-ferrous
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and other raw materials prone to short-term price volatility - especially for critical or high value items
– otherwise there is a possibility of the contract failing or the purchaser having to pay a higher price
if prices fall. For high value (more than Rupees three crore) tenders with deliveries longer than 18
(eighteen) months, PVC may be provided to protect the purchaser’s interests also.

Where it is decided to conclude the contract with a variable price, an appropriate clause
incorporating, inter-alia, a suitable price variation formula should also be provided in the
tender documents, to calculate the price variation between the base level and scheduled
delivery date.
It is best to proactively provide our own PVC in the tender document to discourage different
bidders quoting different formulae and different base dates, which may lead to problems on
bringing their prices on a common comparable footing.
The variations are to be calculated periodically by using indices published by Governments/
chambers of commerce/London Metal Exchange/any other neutral and fair source of
indices. Suitable weights are to be assigned to the applicable elements, that is, fixed
overheads and profits, material and labour in the price variation formula. If the production
of goods needs more than one raw material, the input cost of material may be further sub-
divided for different categories of material, for which cost indices are published. The following
are important elements of PVC:e price agreed upon should specify the base date, that is,
the month and year to which the price is linked to enable variations being calculated with
reference to the price indices prevailing in that month and year. The raw materials used in
manufacture are procured some weeks before the goods’ submission for inspection. This
period is called the time lag for price variation. It applies both for base date and date of
supply. This time lag at both ends must be specified;
i. 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 (for
example, 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);
ii. The price variation clause should provide for a ceiling on price variations, particularly
where escalations are involved. It could be a percentage per annum or an overall
ceiling or both;
iii. Where advance or stage payments are made 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;
iv. Where deliveries are accepted beyond the scheduled delivery date subject to levy of
liquidated damages as provided in the contract. The LD (if a percentage of the price) will
be applicable on the price as varied by the operation of the PVC;
v. No upward price variation will be admissible beyond the original sche

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vi. duled delivery date for defaults on the part of the supplier. However, a downward
price variation would be availed by the purchaser as per the denial clause in the
letter of extension of the delivery period;
vii. Price variation may be allowed beyond the original scheduled delivery date, by
specific alteration of that date through an amendment to the contract in cases of
force majeure or defaults by Government;

viii. Where contracts are for supply of equipment, goods, and so on, imported (subject
to customs duty and foreign exchange fluctuations) and/or locally manufactured
(subject to GST and other duties and taxes), 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;
ix. The clause should also contain the mode and terms of payment of the price
variation admissible; and
x. 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;
xi. An illustrative PVC clause is available in Annexure 11;
xii. Care should be exercised in contracts providing for price variation to finalise the price
before final payment is made, after obtaining data and documents in support of claims
for escalation, if any. Where no such claims are submitted by the suppliers, an
examination of whether there has been a downward trend in the cost, which the
contractor may not bring out, is required. At any rate, an undertaking should be
obtained from the contractor to the following effect in case it becomes necessary to
make the final payment before he has submitted the required data/documents related
to the PVC:
“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.”
xiii. Notwithstanding the above formalities, it should be appreciated that it is in the interest
of the purchaser to be vigilant about downward variation 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.

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6.7 Exchange rate Variation

.In case of a contract involving substantial import content(s) and having a long delivery period
(exceeding one year from the date of contract), an appropriate Foreign Exchange Variation clause
may be formulated by the Procuring Entity in consultation with its Associated/ integrated Finance,
as needed, and incorporated in the tender enquiry document. In that clause, the tenderers are to be
asked to indicate import content(s) and the currency (ies) used for calculating the value of import
content(s) in their total quoted price, which (that is, the total quoted price) will be in Indian Rupees.
The tenderers may be asked to indicate the Base Exchange rate for each such foreign currency used
for converting the foreign exchange content into Indian Rupees and the extent of foreign Exchange
Rate Variation (ERV) risk they are willing to bear.
To work out the variation due to changes (if any) in the exchange rate(s), the base date for this
purpose will be the due date of opening of tenders/seven days prior to the due date of opening of
tenders (the purchase organisation is to decide and adopt a suitable date). The variation may be
allowed between the above base date and date of remittance to the foreign principal/ mid-point of
manufacture of the foreign component (the purchase organization is to choose the appropriate date).
The applicable exchange rates as above will be according to the TT selling rates of exchange as
quoted by authorised exchange bankers approved by RBI on the dates in question. 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 per cent.
Any increase or decrease in the customs duty by reason of the variation in the rate of exchange in
terms of the contract will be to the buyer’s account. In case the delivery period is revised/ extended,
ERV will not be admissible, if this is due to the supplier’s default; however, ERV benefits arising out
of downward trends should be passed on to Procuring Entity. The Procuring Entity may formulate an
appropriate ERV clause on similar lines as above in consultation with their Finance Wing.

6.7.2 Documents for claiming ERV

i. A bill of ERV claim enclosing the working sheet;

ii. Banker’s certificate/debit advice detailing the foreign exchange paid and
exchange rate;
iii. Copies of the import order placed on the supplier; and
iv. Supplier’s invoice for the relevant import order.

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6.8 Taxes, Duties and Levies

Prevailing rules of state Government will be in force

6.9 Incoterms Terms of delivery

Incoterms rules mainly describe the tasks, costs and risks involved in the delivery of goods
from the seller to the buyer. 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 of time. This may be
different from actual physical possession of such goods. Normally, 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). The terms of delivery, therefore, specify
when the ownership and title of goods pass from the seller to buyer, along with the
associated risks. Incoterms as described by the International Chamber of Commerce are
an internationally accepted interpretation of the terms of delivery. These terms of delivery
allocate responsibilities to the buyer and seller, with respect to:
Table: Incoterms and their applications

INCOTERMS Options Applicable to

Ex-Group of Terms Buyer takes full responsibility from point
of departure
EXW – Ex-Works Any mode of transport
Free Group of Terms freight is not paid by the seller
FCA – Free Carrier Any mode of transport
FAS – Free Alongside Ship Sea and inland waterway transport
FOB – Free On Board only
C Group of Terms Freight is paid by the seller
CPT – Carriage Paid To Any mode of transport
CIP – Carriage and Insurance Paid to Any mode of transport

CFR – Cost and Freight Sea and inland waterway transport

CIF – Cost, Insurance and Freight only

Delivered Group of Terms Seller takes responsibility from an

intermediate point onwards
DAT – Delivered At Terminal Any mode of transport
DAP – Delivered At Place Any mode of transport
DDP – Delivered Duty Paid Any mode of transport

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i. Control and care of the goods while in transit;

ii. Carrier selection, transfers and related issues;
iii. Costs of freight, insurance, taxes, duties and forwarding fees; and
iv. Documentation, problem resolution and other related issues.

In use since 1936, Incoterms have been revised in 2010. Out of the 11 Incoterms options,
seven apply to all modes of transportation whereas four apply only to water transportation.

The options range from one extreme – the buyer takes full responsibility from point of departure
– to the other extreme: the seller is responsible all the way through delivery to the buyer’s
location. It is easiest to understand terms as per their nomenclature groupings: ‘ex’ group of
terms where the buyer takes full responsibility from point of departure; ‘free’ group of terms
in which the freight is not paid by the seller; ‘C’ group of terms in which the freight is paid
by the seller; and ‘delivered’ group of terms where the seller takes full responsibility from an
intermediate point to an arrival point (Annexure 16).

Within national transportation, certain terms have assumed acceptance due to usage.
FOR has two versions: FOR/dispatching and FOR/destination (the buyer is responsible
from the nominated point mentioned till arrival point, as in Delivery at Terminal).
Infrequently, it is also used in road transport as FOT.

6.10 e-Payment

e -Banking and e-payments are now used by various banks by adopting Electronic Clearing
System (ECS) and Electronic Fund Transfer (NEFT/RTGS) procedure. Payments to suppliers
may be made through such mechanism where such facilities are available. As per RBI
guidelines, ECS mandate in RBI’s format may be obtained at the time of registration of
suppliers and in the bid document. The Format is available with all Banks.

6.11 Deduction of Income Tax, GST, and so on, at source from Payments to suppliers

This will be done as per the prevailing rate which will be in force during the currency of the
contract.

6.12 Recovery of Public Money from supplier’s bill

Sometimes, requests are received from a different Department for withholding some
payment of a supplier out of the payment due to it against a contract. Such requests are to

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be examined by the Department (which has received the request) on the

merits of the case for further action. It will, however, be the responsibility
of the Department asking for withholding of payment to defend the
Government against any legal procedure arising out of such withholding
as also for payment of any interest thereof.

6.13 Payment against Time Barred Claims

Ordinarily, all claims against the Government are time barred after a
period of three years calculated from the date when the payment falls
due unless the payment claim has been under correspondence.
However, the limitation is saved if there is an admission of liability to pay,
and fresh period of limitation starts from the time such admission is
made. The drill to be followed while dealing with time barred claims will
be decided by the Department concerned in consultation with the paying
authority. The paying authority is to ensure that no payment against such
time barred claim is made till a decision has been taken in this regard by
the CA

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Chapter-7

EVALUATION OF BIDS AND AWARD OF CONTRACT

7.1 Tender Evaluation
The evaluation of tenders is one of the most significant areas of purchase management
and the process must be transparent. All tenders are to be evaluated strictly on the basis
of the terms and conditions incorporated in the tender document and those stipulated by
the tenderers in their tenders. 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 etc. No criteria shall be used for
evaluation of tenders that cannot be verified. No hearsay information or hitherto
undeclared condition should be brought in while evaluating the tenders. Care should be
taken that preferences provided to any category of bidders on certain specified grounds
should not result in single vendor selection. Similarly, no tender enquiry condition
(especially the significant/essential ones) should be overlooked/relaxed while evaluating
the tenders. The aim should be ensure that no tenderer gets undue advantage at the cost
of other tenderers and/or at the cost of Procuring Entity . Tender committee may be
comprised including officials of other department if deem fit by the department.
Information relating to evaluation of tenders and the Tender Committee’s (TC’s)
deliberations should be confidential and not be shared with persons not officially
connected with the process. TC should normally comprise of three members including
Financial Adviser or his representative and a representative of the user in order to carry
out evaluation of the tenders. TC should not be very large as it may slow down the
evaluation process. However, suitable domain/technical experts may be included in the
committee to render assistance in evaluation of the bids. There is no need to constitute
any other committee for technical evaluation, preliminary evaluation, etc. The
representative of the user Department will work as a convenor of the TC. As per Rule 173
(xxii) of GFR 2017 no member of the tender committee should be reporting directly to
any other member of such committee in case estimated value of the procurement
exceeds Rs. 25 lakh. Though the GFR ,2017 stipulates this provision only when the estimated
value of procurement exceeds Rs 25 lakh, it is desirable that the same provision should
be followed in the constitution of all purchase committees irrespective of the value of

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procurement. The process of tender evaluation proceeds is described in the subsequent

paras.

7.2 Preparation of Comparative Statement

The Procuring Entity should prepare a comparative statement of quotations received in
the order in which tenders were opened. In case of techno-commercial bid comparative
statement will have information about deciding responsiveness and eligibility of bids
and evaluation of technical suitability of offers. In case of Financial bid it would have
information about rates quoted (including GST or otherwise),
discount, if any, and any other information having implications on ranking of bids etc.
The comparative statement so prepared should be signed by the concerned officers.

7.3 Preliminary examination

7.3.1 Unresponsive Tenders

Tenders that do not meet the basic requirements specified in the bid documents are
to be treated as unresponsive and ignored. All tenders received will first be scrutinised
by the TC to see whether the tenders meet the basic requirements as incorporated in the
Bid document and to identify unresponsive tenders, if any. Some important points on the
basis of which a tender may be declared as unresponsive and be ignored during the
initial scrutiny are:

i. The tender is not in the prescribed format or is unsigned or not signed as

per the stipulations in the bid document;
ii. The required EMD has not been provided or exemption
from EMD is claimed without acceptable proof of
exemption;
iii. The bidder is not eligible to participate in the bid as per laid down eligibility
criteria
iv. The tenderer has quoted for goods manufactured by a different firm without the
required
v. authority letter from the proposed manufacturer;
The bid departs from the essential requirements specified in the bidding document (for example, the
tenderer has not agreed to give the required performance security); or

Against a schedule in the list of requirements in the tender enquiry, the tenderer
has not quoted for the entire requirement as specified in that schedule (example: in
a schedule, it has been stipulated that the tenderer will supply the equipment, install
and commission it and also train the purchaser’s operators for operating the
equipment. The tenderer has, however, quoted only for supply of the equipment).

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7.3.2 Non-conformities between Figures and words

Sometimes, non-conformities/errors are also observed in responsive tenders between the
quoted prices in figures and in words. This situation normally does not arise in case of e-
Procurement. This should be taken care of in the manner indicated below:
i. If, in the price structure quoted for the required goods, there is discrepancy
between the unit price and total price (which is obtained by multiplying the unit
price by the quantity), the unit price shall prevail and the total price corrected
accordingly;

ii. If there is an error in a total corresponding to the addition or subtraction of sub-

totals, the sub-totals shall prevail and the total shall be corrected; and
iii. If there is a discrepancy between words and figures, the amount in words shall
prevail;
iv. Such a discrepancy in an offer should be conveyed to the tenderer asking him to
respond by a target date and if the tenderer does not agree to Procuring Entity’s
observation, the tender is liable to be rejected.

7.3.3 Discrepancies between Original and Scanned Copies of a Tender

In e-Procurement there could be discrepancies between the uploaded scanned copies

and the Originals submitted by the bidder. However normally no submission of original
documents in physical format (other than Cost of Bid Documents,
Bid Security) should be asked for in e-Procurement

7.3.4 Minor I nfirmity/ Irregularity/Non-conformity

During the preliminary examination, some minor infirmity and/or irregularity and/or non-
conformity may also be found in some tenders. Such minor issues could be a missing pages/
attachment or illegibility in a submitted document; non-submission of requisite number of copies of a
document. There have been also cases where the bidder submitted the amendment Bank Guarantee,
but omitted to submit the main portion of Bid Document. The court ruled that this is a minor
irregularity. Such minor issues may be waived provided they do not constitute any material deviation
(please refer to Para 7.4.1 (iv)) and financial impact and, also, do not prejudice or affect the
ranking order of the tenderers. Wherever necessary, observations on such ‘minor’ issues (as
mentioned above) may be conveyed to the tenderer by registered

letter/ speed post, and so on, asking him to respond by a specified date also mentioning
therein that, if the tenderer does not conform Procuring Entity’s view or respond by that
specified date, his tender will be liable to be rejected. Depending on the outcome, such
tenders are to be ignored or considered further.

7.3.5 Clarification of Bids/ Shortfall Documents

During evaluation and comparison of bids, the purchaser may, at his discretion, ask the

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bidder for clarifications on the bid. The request for clarification shall be given in writing
by registered/ speed post, asking the tenderer to respond by a specified date, and also
mentioning therein that, if the tenderer does not comply or respond by the date, his
tender will be liable to be rejected. Depending on the outcome, such tenders are to
be ignored or considered further. No change in prices or substance of the bid shall
be sought, offered or permitted. No post- bid clarification at the initiative of the bidder
shall be entertained. The shortfall information/ documents should be sought only in case
of historical documents which pre-existed at the time of the tender opening and which
have not undergone change since then. These should be called only on basis of the
recommendations of the TC. (Example: if the Permanent Account Number, registration
with GST has been asked to be submitted and the tenderer has not provided them,
these documents may be asked for with a target date as above). So far as the submission
of documents is concerned with regard to qualification criteria, after submission of the
tender, only related shortfall documents should be asked for and considered. For example,
if the bidder has submitted a supply order without its completion/performance
certificate, the certificate can be asked for and considered. However, no new supply
order should be asked for so as to qualify the bidder.

7.4 Evaluation of Responsive Bids and Decision on Award of Contract

All responsive bids are evaluated by the TC with a view to select the lowest (L1)
bidder who meets the qualification criteria and techno-commercial aspects. In case of
Single Stage Single Envelop Bidding, the evaluation of qualification of bidders,
technical, commercial and financial aspect is done simultaneously. In Single Stage
Multiple Envelops, initially only the techno-commercial bids would be opened and
evaluated for bids which successfully meet the qualification criteria and techno-
commercial aspects. Financial bids of such successful bidders only would be opened for
selecting the L1 bidder among these and in case of manual tenders, financial bids of
unsuccessful bidders would be returned unopened to them. Evaluation of techno-
commercial and financial aspects are, however, discussed separately below. 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 envelop, which may be dated, sealed and signed (including by some of the
bidders present), to show that none of the bids were accessed during the custody.

7.4.1 Evaluation of Techno-commercial Bid

In evaluation of the techno-commercial bid, conformity of the eligibility/qualification,

technical and commercial conditions of the offered goods to those in the bid document
is ascertained. Additional factors, if any, incorporated in the tender documents may also
be considered in the manner indicated therein. Evaluation has to be based only on the
conditions included in the tender document and any other condition should not form
the basis of this evaluation.

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i. Evaluation of eligibility/ qualification Criteria: Procuring Entity will determine,

to its satisfaction, whether the tenderers are eligible, qualified and capable in
all respects to perform the contract satisfactorily. Tenders that do

not meet the required eligibility/ qualification criteria prescribed will be treated
as unresponsive and not considered further. This determination will, inter-alia,
take into account the tenderer’s financial, technical and production capabilities
for satisfying all of Procuring Entity’s requirements as incorporated in the tender
document. Such determination will be based upon scrutiny and examination of all
relevant data and details submitted by the tenderer in its/his tender as well as
such other allied information as deemed appropriate by Procuring Entity.

ii. Evaluation of Technical Suitability: The description, specifications, drawings

and other technical terms and conditions are examined by TC in general and a
technical member of the TC in particular. Nobody outside the TC should be
allowed to determine this evaluation. The tender document should clearly state
whether alternative offers/ makes/models would be considered or not and, in the
absence of an express statement to the effect, these should not be allowed. An
important document is the exceptions/ deviation form submitted by the tenderer.
It is important to judge whether an exception/ deviation is minor or major. Minor
exceptions/deviations may be waived provided they do not constitute any
material deviation and do not have significant financial impact and, also, would
not prejudice or affect the ranking order of the price bid. Exceptions/ deviations
should not grant the tenderer any undue advantage vis-à-vis other tenders and
Procuring Entity.

iii. Evaluation of Commercial Conditions:

The TC will also evaluate the commercial conditions quoted by the tenderer
to confirm that all terms and conditions specified in the GCC/SCC have been
accepted without reservations by the tenderer. Only minor deviations may be
accepted/allowed, provided these do not constitute material deviations without
financial impact and do not grant the tenderer any undue advantage vis-à-vis
other tenders and Procuring Entity.

iv. Considering Minor Deviations:

Court has consistently taken a view that Procuring Entity is entitled to consider
and allow minor deviations, which do not amount to material deviations. A material
deviation, reservation, or omission which should not be waived are those that:
a) Affects, in any substantial way, the scope, quality or performance of the goods
and related services specified in the contract;

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b) Limits, in any substantial way, inconsistent with the tendering documents, the
Procuring Entity’s rights or the tenderer’s obligations under the contract; or
c) If rectified, would unfairly affect the competitive position of other tenderers quoting
substantially responsive tenders.

v. Declaration of Successful Bidders:

If it is a multiple envelop tender, then the TC prepares a recommendation of

techno-commercial bid (Annexure 7) to declare successful bidders. In such cases,
after the approval of CA, the results of the Techno- commercial bid evaluation are
to be announced (including informing the failed Bidders). Price bids are opened
in the presence of technically suitable bidders, who are willing to attend the bid
opening, at a pre-publicised date, time and place or on the portal in case of e-
Procurement. In single envelop/cover tender, TC proceeds to evaluate the price
aspects without a reference to CA at this stage.

7.4.2 Right of Bidder to question rejection at Techno-Commercial stage

A tenderer shall have the right to be heard in case he feels that a proper procurement
process is not being followed and/or his techno-commercial bid has been rejected
wrongly. The tenderer is to be permitted to send his representation in writing. On receipt
of representation it may be decided whether to withhold opening of the financial bids
and bidder may be expeditiously replied. Certain decisions of the Procuring Entity in
accordance with the provision of internal guidelines shall not be subject to review as
mentioned in para 7.6.3 below.

7.4.3 Evaluation of Financial bids and Ranking of Tenders in general:

i. If the price bid is ambiguous so that it may very well lead to two equally valid total
price amounts, then the bid should be treated as unresponsive;

ii. Sometime certain bidders offer suo motu discounts and rebates after opening
of the tender (techno-commercial or financial). Such rebates/discounts should not
be considered for the purpose of ranking the offer but if such a firm does
become L1 at its original offer, such suo motu rebates can be incorporated in the
contracts. This also applies to conditional rebates, for example, rebate for faster
payments, and so on;

iii. Unless announced beforehand explicitly in the tender documents, the quoted price
should not be loaded on the basis of deviations in the commercial conditions. If
it is decided to incorporate such clauses, these should be unambiguous and clear
– and thereafter there should be no relaxation during evaluation. Moreover,
sometimes, while purchasing sophisticated and costly equipment, machinery,

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and so on, the Procuring Entity also gives special importance to factors such as
high quality performance, environmental- friendly features, low running cost, low
maintenance cost, and so on. To take care of this, relevant details are to be
incorporated in the bid document and the criteria adopted to assess
the benefit of such features while evaluating the offers are also to be clearly
stipulated in the tender enquiry document so that the tenderers are aware of
it and quote accordingly. While evaluating such offers, these aspects are also
to be taken into account. Such details, whenever considered necessary, should
be evolved by the competent technical authority for incorporation in the tender
document, so that there is no ambiguity and/or vagueness in them;

iv. Normally,The comparison of rate of the responsive tenders shall be on the

basis of total rate including transportation charge & all taxes and charges upto
delivery point.

v. Procurement preference policy to local industrial unit as per prevailing policy of

state Government should be taken into consideration while preparing
comparative statement.

vi. In case the list of requirements contains more than one schedule, the responsive,
technically suitable tenders will be evaluated and compared separately for each
schedule. The tender for a schedule will not be considered if the complete
requirements prescribed in that schedule are not included in the tender. However,
tenderers have the option to quote for any one or more schedules and offer
discounts for combined schedules. Such discounts, wherever applicable, will be
taken into account to for deciding the lowest evaluated cost for Procuring Entity
in deciding the successful tenderer for each schedule,subject to that tenderer(s)
being responsive

GTE Tenders

Special aspects of evaluation of the financial offer in GTE tenders are:

i. Currency of Tender
In GTE tenders, the price in the quotation could be in US Dollar or Euro or Pound
Sterling or Yen or in currencies under the RBI’s notified basket of currencies, in
addition to the Indian Rupees, except for expenditure incurred in India (including
agency commission if any) which should be stated in Indian Rupees. All offers are
to be converted to Indian Rupees based on the “Bill currency selling” exchange rate
on the date of tender opening (Techno-commercial offer) from a source as
specified in the tender document.
ii. Currency of Payment
The contract price will be normally paid in the currency/currencies in which the

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price is stated in the contract.

iii. Evaluation of Offers

As per Government policy, State Government/Departments/Public Sector Undertakings

(PSUs) should ensure imports on FOB/FAS basis failing which a No Objection
Certificate (NOC) should be obtained from the Department of Surface Transport
(Chartering Wing).

The foreign bidders are normally asked, in the bid documents, to quote both on FAS/FOB
basis and also on Cost and Freight (CFR)/CIF basis duly indicating the break-up of prices
for freight, insurance, and so on, with purchasers reserving the right to order on either
basis. They should also to indicate the custom tariff number and custom duty applicable
in India. In the case of FAS/FOB offers, the freight and insurance shall be (after
ascertaining, if not quoted) added to make up the CIF cost. To arrive at the Free On Rail
(FOR) cost, one per cent shall be added over and above CIF as port handling charges,
custom duty, countervailing duty and surcharges, as applicable on the date of opening
of the tender, as well as clearing agency charges, inland freight and Octroi/entry tax, as
assessed, may be added to make it a FOR/Free On Truck (FOT) destination. The FOR/FOT
destination price for domestic offers may be calculated as in OTE tenders. For bids with
Letter of Credit (LC) payment, the likely LC charges (as ascertained from Procuring Entity’s
bankers) should also be loaded.

In case both Indian and foreign bidders have quoted in the tender, the comparison
of the offers would be done on the basis of FOR/FOT destination including all applicable
taxes and duties (on the principle of the total outgo from Procuring Entity’s pockets). In
case there are no domestic bidders, a comparison of offers can be made on the basis of
CIF/landed costs since the rest of costs would be same for all bidders.

7.5 Deliberations by the Tender Committee for Award of Contract

7.5.1 Timely Processing of Tenders (Rule 174 (i) of GFR 2017)

Delays in finalising procurement deprive the public of the intended benefits and
results in lost revenues and cost over-run. To enable timely decision making, complete
Time schedule of finalising the Tender process from the date of issuing the tender to date
of issuing the contract, should be published in the Bid Documents. Every official in
the chain of the procurement operation is accountable for taking action 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 system of Management Reporting
(Appendix 4 and 5). As a check, the proposed schedule of tender process may be
printed on the inside cover of the Procurement File, where actual date of completion
of various stages may be recorded. The suggestive time schedule in Table 2 is a

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guideline for finalising contracts against various modes of procurements.

Table - Indicative time schedule

SL No. Mode of Procurement Indigenous Imported

1 Open tender/(e-tendering) 45days 60 days

2 Proprietary basis/nomination 21days 30 days

basis

This time schedule is only indicative and the schedule shall be subject to change based on
the nature of requirements, sourcing, sample evaluation, site visit/pre-bid meeting with
prospective bidders and Government, guidelines, and so on.

7.5.2 Extension of Tender Validity Period

The entire process of scrutiny and evaluation of tenders, preparation of ranking statement
and notification of award must be done expeditiously and within the original tender
validity period (Rule 174 (iv) of GFR 2017). The validity period should not be unreasonably
long as keeping the tender unconditionally valid for acceptance for a longer period
entails the risk of getting higher prices from the tenderers.

If, however, due to some exceptional and unforeseen reasons, the purchase organisation
is unable to decide on the placement of the contract within the original validity period,
it may preferably request, before expiry of the original validity period, all the responsive
tenderers to extend their tenders up to a specified period. While asking for such
extension, the tenderers are also to be asked to extend their offers as it is, without any
changes therein. They may also be told to extend the validity of the EMD for the
corresponding additional period (which is to be specified in the request). A tenderer
may not agree to such a request and this will not be tantamount to forfeiture of its EMD.
But the tenderers, who agree to extend the validity, are to do so without changing any
terms, conditions, and so on, of their original tenders.

7.5.3 Variation of Quantities at the Time of award

At the time of awarding the contract, the quantity to be procured must be re-judged
based on the current data, since the ground situation may have very well changed. The
tendered quantity can be increased or decreased by 25 (Twenty-Five) per cent for
ordering, if so warranted. This may be mentioned in the tender documents. Any larger
variation may throw up issues about transparency.

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7.5.4 Option clause

In case of long running, yearly procurements, to take care of any change in the
requirement during the currency of the contract, a plus/minus option clause

(normally 25 (Twenty-Five) per cent) is incorporated in the tender document, reserving

purchaser’s right to increase or decrease the quantity of the required goods up to that
limit without any change in the terms and conditions and prices quoted by the tenderers.
Higher the option limit more is the uncertainty for the tenderers in formulating their prices
and more is the chance of loading on the prices quoted to take care of such uncertainties.

7.5.5 Splitting of Contracts/Parallel Contracts

After due processing, if it is discovered that the quantity to be ordered is far more
than what L1 alone is capable of supplying and there was no prior
decision/declaration in the bidding documents to split the quantities, then the
quantity being finally ordered may be distributed among the other bidders by
counter offering the L1 rate in a manner that is fair, transparent and equitable
based on objective data available in the bids e.g. eligibility data,
quantity/delivery etc.

However, in case of critical/vital/safety/security nature of the item, large quantity

under procurement, urgent delivery requirements and inadequate vendor capacity it
may be advantageous to decide in advance to have more than one source of supply. In
such cases a parallel contract clause should be added to the bid documents, clearly
stating that Procuring Entity reserves the right to split the contract quantity between
suppliers. The manner of deciding the relative share of lowest bidder (L1) contractor
and the rest of the contractors/tenderers should be clearly defined, along with the
minimum number of suppliers sought for the contract. In case of splitting in two and
three, the ratio of 70:30; 50:30:20 respectively may be used or a different ratio as deem
fit by the concerned Department may also be justified as per approved rate.

The following guidelines are to be considered while opting for parallel contracts:
i. L1 should be awarded at least the percentage mentioned above or his spare
supply capacity, whichever is lower; and
ii. For the rest of the contract quantity, the lowest rate accepted will be counter
offered to the L2 party. On acceptance of the counter offer, the order will be
placed on L2 for the respective percentage or the spare supply capacity of the L2
bidder, whichever is lower, and so on, to other tenderers. In case of non-
acceptance of the counter offer by the L2 party, a similar offer shall be made to
L3 and L4, and so on. If approved rate is not accepted by L2 / L3 and other
bidders participated in tender, supply order for 100% quantity will be placed to
L1 bidder (it should also be mentioned in terms and conditions).

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7.5.6 Reasonableness of Prices

In every recommendation of the purchase committee for award of contract, it must be

declared that the rates recommended are reasonable.

(For more details on judging reasonableness of prices, please see in Chapter 2 above).

Where there is no estimated cost, a comparison with Last Purchase Price (LPP - the price paid
in the latest successful contract) is the basis for judging reasonableness of rates. The following
points may be kept in mind before LPP is relied upon as a basis for justifying rate reasonableness:

i. The basic price, taxes, duties, transportation charges, Packing and Forwarding charges
should be indicated separately;
ii. Where the firm holding the LPP contract has defaulted, the fact should be
highlighted and the price paid against the latest contract placed prior to the defaulting
LPP contract, where supplies have been completed, should be used;
iii. Where the supply against the LPP contract is yet to commence, that is, delivery is not yet
due, it should be taken as LPP with caution, especially if the supplier is new, the price
paid against the previous contract may also be kept in view;
iv. Where the price indicated in the LPP is subject to variation or if it is more than a year
old, the updated price may also be indicated;
v. In the case of wholly imported stores, the comparison of the last purchase rate should
be made with the net CIF value at the current foreign exchange rate;
vi. 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, terms of the contract, these may be kept in view;
and
vii. 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”.

7.5.7 Consideration of Abnormally Low Bids

An Abnormally Low Bid 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. Procuring Entity may in such cases seek written
clarifications from the bidder, including detailed price analyses of its bid price in relation
to scope, schedule, allocation of risks and responsibilities, and any other requirements of the
bids document. If, after evaluating the price analyses, Procuring Entity determines that the
bidder has substantially failed to demonstrate its capability to deliver the contract at the

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offered price, the Procuring Entity may reject the bid/proposal. However it would not be
advisable to fix a normative percentage below the estimated cost, which would be
automatically be considered as an abnormally low bid. Due care should be taken while
formulating the specifications at the time of preparation of bid
document so as to have a safeguard against the submission of
abnormally low bid from the bidder.

7.5.8 Cartel Formation/ Pool Rates

It is possible that sometimes a group of bidders quote the same rate against a tender. Such
pool/ cartel formation is against the basic principle of competitive bidding and defeats
the very purpose of an open and competitive tendering system. Such and similar tactics to
avoid/ control true competition in a tender leading to “Appreciable Adverse Effect on
Competition” (AAEC) have been declared as an offence under the Competition Act, 2002,
as amended by the Competition (Amendment) Act, 2007. Such practices should be severely
discouraged with strong measures. In case of evidence of cartel formation, detailed cost
analysis may be done by associating experts if necessary. Besides, suitable administrative
actions can be resorted to, such as rejecting the offers, reporting the matter to trade
associations, the Competition Commission or NSIC, etc., and requesting them, inter-alia, to
take suitable strong actions against such firms. New firms may also be encouraged to get
themselves registered for the subject goods to break the monopolistic attitude of the firms
forming a cartel. Changes in the mode of procurement (GTE instead of OTE) and
packaging/slicing of the tendered quantity and items may also be tried. A warning clause
may also be included in the bid documents to discourage the bidders from indulging in
such practices.

7.5.9 Negotiations
Post tender negotiations should not be done with lowest bidder / tenderer (L1) 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 cartel formation. The justification and details of such negotiations should be duly

recorded and documented without any loss of time. If negotiation with L1 seems
unavoidable, then convincing reasons must be recorded in writing by the authority

recommending negotiation. In addition, Department will mention as a clause in the tender

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document that negotiation will not be done with the lowest bidder / tenderer except in
circumstance mentioned above.

After the CA has decided to call a specific bidder for negotiation, the following procedure
should be adopted:
a) 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, wherever
necessary, before negotiations;
b) The tenderer to be called in for negotiations should be addressed as per the
format of letter laid down in Annexure 8, so that the rates originally quoted by him
shall remain open for acceptance in the event of failure of the contemplated
negotiation;

c) A negotiations meeting should be started only after obtaining a signed declaration

from the negotiating supplier as per Annexure 8; and

d) Revised bids should be obtained in writing from the selected tenderers at the end of the
negotiations in the format of letter laid down in Annexure 9. The revised bids so
obtained should be read out to the tenderers or their representatives present,
immediately after completing the negotiations. If necessary, the negotiating party may
be given some time to submit its revised offer. In case, however, the selected bidder
prefers to send a revised bid instead of being present at the negotiation, the offer
should be taken into account. In case a bidder does not submit the revised bid,
its original bid shall be considered.

7.5.10 Consideration of Lack of Competition in OTE/GTE (Rule 173 (xix) and (xxi) of GFR
2017)

Sometimes, against advertised tender cases, the Procuring Entity may not receive a
sufficient number of bids and/or after analysing the bids, ends up with only one responsive
bid – a situation referred to as ‘Single Offer’. As per Rule 23 of DFPRT, 2017 (explanation
sub-para), such situation of ‘Single Offer’ is to be treated as Single Tender. Even when only
one Bid is submitted, the process may be considered valid provided following conditions are
satisfied:

i. The procurement was satisfactorily advertised and sufficient time was given for
submission of bids;

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ii. The qualification criteria were not unduly restrictive; and

iii. Prices are reasonable in comparison to market values.

However restricted powers of Single tender mode of procurement would apply. In case of
price not being reasonable retender may be considered as justifiable.

7.5.11 Cancellation of Procurement Process/rejection of all bids/re-tender (Rule

173 (xix) of GFR 2017)

i. The Procuring Entity may cancel the process of procurement or rejecting all bids at any
time before intimating acceptance of successful bid under circumstances mentioned
below. In case where responsive bids are available, the aim should be to finalise the
tender by taking mitigating measures even in the conditions described below. If it is
decided to rebid the tender, the justification should balance the perceived risks in
finalisation of tender (marginally higher rates) against the certainty of resultant delays,
cost escalations, loss of transparency in re-invited tender. After such decision, all
participating bidders would be informed and bids if not opened would not be
opened and in case of manual tenders be returned unopened:

a) If the quantity and quality of requirements have changed substantially or there is an

un-rectifiable infirmity in the bidding process;

b) When none of the tenders is substantially responsive to the requirements of the

Procurement Documents;

c) None of the technical Proposals meets the minimum technical qualifying score;

d) If effective competition is lacking. However lack of competition shall not be

determined solely on the basis of the number of Bidders. (Please refer to para above
also regarding receipt of a single offer);

e) The Bids’/Proposals’ prices are substantially higher than the updated cost estimate or
available budget;

f) If the bidder, whose bid has been found to be the lowest evaluated bid withdraws or
whose bid has been accepted, fails to sign the procurement contract as may be
required, or fails to provide the security as may be required for the performance of the
contract or otherwise withdraws from the procurement process, the Procuring Entity

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shall cancel the procurement process. Provided that the Procuring Entity, on being
satisfied that it is not a case of cartelization and the integrity of the procurement
process has been maintained, may, for cogent reasons to be recorded in writing, offer
the next successful bidder an opportunity to match the financial bid of the first
successful bidder, and if the offer is accepted, award the contract to the next
successful bidder at the price bid of the first successful bidder.

ii. Approval for re-tendering should be accorded by the CA after recording the
reasons/ proper justification in writing. The decision of the Procuring Entity to cancel the
procurement and reasons for such a decision shall be immediately communicated
to all bidders that participated in the procurement process. Before retendering, the
Procuring Entity is first to check whether, while floating/issuing the enquiry, all
necessary requirements and formalities such as standard conditions, industry friendly
qualification criteria, and technical and commercial terms, wide publicity, sufficient
time for bidding, and so on, were fulfilled. If not, a fresh enquiry is to be issued after
rectifying the deficiencies.

7.5.12 Handling Dissent among Tender Committee

Tender Committee duties are to be discharged personally by the nominated officers. They
may take help of their subordinate officers by way of reports/evaluations, but they would
still be answerable for such decisions. TC members cannot co-opt or nominate others to
attend deliberations on their behalf. TC deliberations are best held across the table and not
through circulation of notes.

All members of the TC should resolve their differences through personal discussions instead
of making to and fro references in writing. In cases where it is not possible to come to a
consensus and differences persist amongst TC members, the reasons for dissent of a member
should be recorded in a balanced manner along with the majority’s views on the dissent
note. The final recommendations should be that of the majority view. However, such
situations should be rare. The Competent Authority (CA) can overrule such dissent notes after
recording reasons for doing so clearly. His decision would be final.

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. However, if the TC, after considering the
views of the CA, sticks to its own earlier recommendations, the CA can finally decide as
deemed fit, duly recording detailed reasons. He will be responsible for such decisions.
However, such situations should be rare.

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7.5.13 Independence, Impartiality, confidentiality and ‘no conflict of interest’ at all

stages of evaluation of bids

All technical, commercial and finance officials who have contributed to the techno-
commercial or financial evaluation of bids, even though they may not be part of the TC

should deal with the procurement in an independent, impartial manner and should have no
conflict of interest with any of the bidder involved in the procurement. They should also
maintain confidentiality of the information processed during the evaluation process and not
allow it to reach any unauthorised person. They should sign a declaration at the end of their
reports/notings stating that, “I declare that I have no conflict of interest with any of the bidder
in this tender”. TC members may make such a declaration at the end of their reports.

7.5.14 Tender committee recommendations/report

All formalities as per DFPRT,2017 to be followed prior to placement of proposal before
purchase committee for recommendation of rates. Following points to be considered for
placement of any proposal before purchase committee.

i. Offers have been invited after observing all codal formalities and after following
fair and reasonable procedures in prevailing circumstances;
ii. Selected offer will adequately meet the requirement for which it is being procured;
iii. The price of the offer is reasonable and consistent with the quality required; and
iv. The accepted offer is the most appropriate taking all relevant factors into account
in keeping with the standards of financial propriety.

After recommendation of rates, terms & conditions, the tender to be accepted by the
respective authority as per DFPRT,2017.

7.6 Award of Contract

7.6.1 LoA / supply order / acknowledgement to Successful Bidder

Prior to the expiry of the period of bid validity, the successful bidder will be notified
(briefly indicating therein relevant details such as quantity, specification of the goods
ordered, prices, and so on) in writing by a registered letter or any other acknowledgeable and

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full proof method that his bid has been accepted. Legally communication of acceptance of
offer is considered complete as soon as it is submitted to Postal authorities (please refer to
Para 2.9.1 of Appendix 2). A template for the Letter of Acceptance (or Notice of Award, or
Acceptance of Tender) is given in Annexure 10. In the same communication, the successful
tenderer is to be instructed to furnish the required performance security within a specified
period (generally 14 (Fourteen) days). However after approval of rate procuring entity may
also communicate to the approved bidder regarding acceptance of bid and LoA / supply
order may be issued later on.

7.6.2 Publication of Tender results and return of EMD of Unsuccessful Bidder

(Rule 173 (xviii) of GFR 2017)

The details of award of contract and name of the successful tenderer should be mentioned
mandatorily on the public procurement portal and also in the notice board/bulletin/website of
the concerned Department. In case publication of such information is sensitive from
commercial or security aspects, dispensation may be sought from publishing of such results
by obtaining sanction from the administrative Department. Upon the successful bidder
furnishing the signed agreement and performance security, each unsuccessful bidder will be
promptly notified and their bid security be returned without interest within 30 (thirty) days
of notice of award of contract. The successful supplier’s bid security shall be adjusted
against the SD or returned as per the terms of the tender documents.

7.6.3 Bidder’s right to question rejection at this stage

A tenderer shall have the right to be heard in case he feels that a proper procurement process
is not being followed and/or his tender has been rejected wrongly. The tenderer is to be
permitted to send his representation in writing. Bidding documents should explicitly
mention the name, designation and contact details of officers nominated to receive
representations in this regard. But, such representation has to be sent within 10(ten) days from
the date of LoA. The Procuring Entity should ensure a decision within 15 (fifteen) days of the
receipt of the representation. Only a directly affected bidder can represent in this regard:

i. Only a bidder who has participated in the concerned procurement process can
make such representation;

ii. In case 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.
iii. Following decisions of the Procuring Entity in accordance with the provision of internal
guidelines shall not be subject to review:

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a) Determination of the need for procurement;

b) Selection of the mode of procurement or bidding system;
c) Choice of selection procedure;
d) The decision to enter into negotiations with the L1 bidder;
e) Cancellation of the procurement process
f) Issues related to ambiguity in contract terms may not be taken up after a contract has
been signed, all such issues should be highlighted before consummation of the
contract by the vendor/contractor; and

g) Complaints against specifications except under the premise that they are either
vague or too specific so as to limit competition may be permissible.

7.6.4 Performance Security

The supplier receiving the LoA / supply order is required to furnish the required performance
security, if it is part of tender conditions, in the prescribed form by the specified date; failing
this necessary action including forfeiture of EMD will be taken against the supplier.

7.6.5 Acknowledgement of Contract by Successful Bidder and Execution

After the successful bidder is notified that his bid has been accepted, he will be asked to deposit
security money and to sign agreement with the procuring entity within 14 days from the
date of issue of supply order. It should also be made known to the successful tenderer that in
case he does not furnish the required performance security or fails to sign agreement within
the stipulated target dates, such non-compliance will constitute sufficient ground for
forfeiture of its EMD and processing the case for further action against it (the successful
tenderer).

All contracts shall be signed and entered into after receipt and verification of the requisite
performance security, by an authority empowered to do so by or under the orders of
the Governor of Tripura. The words “for and on behalf of the Governor of Tripura should
follow the designation appended below the signature of the officer authorised on this
behalf. The various classes of contracts and assurances of property, which may be executed
by different authorities, are specified in the DFPRT, 2017.

7.6.6 Framing of contract

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The following general principles should be observed while entering into contracts:

i. Any agreement shall be signed strictly as per recommendations of purchase

committee and subsequent acceptance of CA as per DFPRT,2017. The terms of
contract must be precise, definite and without any ambiguities.
ii. All contracts shall contain a provision for
a) Recovery of liquidated damages (LD) for delay in performance of the contract on the
part of the contractor;

b) A warranty clause/defect liability clause should be incorporated in contracts for plant

and machinery, above a threshold value, requiring the contractor to, without charge,
replace, repair or rectify defective goods/works/services;
iii. All contracts for supply of goods should reserve the right of the Government to
reject goods which do not conform to the specifications;

iv. Payment of all applicable taxes by the contractor or supplier; and

v. When a contract is likely to endure for a period of more than two years, it should,
wherever feasible, include a provision for an unconditional power of revocation
or cancellation by the Government at any time on the expiry of six months’ notice
to that effect.
vi. Standard forms of contracts should be invariably adopted, except in cases where
standard forms of contracts are not used or where modifications in standard forms are
considered necessary in respect of individual contracts, legal and financial advice
should be taken in drafting the clauses in the contract and approval of CAs is to be
obtained.

7.6.7 Procurement Records

The Procurement file should start with the Indent and related documents. All subsequent
documents relating to procurement planning; Copy of Bid Document and documents
relating to its and formulation, publishing and issue/uploading; Bid Opening; Bids
received; Correspondence and documents (including Technical Evaluation and TC
report)relating to pre-qualification, evaluation, Award of Contract; and finally the Contract
copy, should be kept on the file. In case of bulky Bids received, all bids received may be
kept in a separate volume, with a copy of accepted bids later being put on the main
volume. To maintain integrity of the records relating to Procurement, these files should be
kept secure and for contract management a new volume of file may be opened to obviate
frequent exposure of sensitive procurement file. In contract management volume, copies of
successful bid, Tender Committee Report, Contract may also be kept for ready reference,

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besides correspondence and documents relating to Contract Management and its closure.

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Chapter-8
RATE CONTRACT AND OTHER PROCUREMENTS WITH SPECIAL FEATURES
8. Rate contracts.
8.1.1 Definition: A Rate Contract (commonly known as RC) is an agreement between the
purchaser and the supplier for supply of specified goods (and allied services, if any) at
specified price and terms & conditions (as incorporated in the agreement) during the
period covered by the Rate Contract. No quantity is mentioned nor is any minimum drawl
guaranteed in the Rate Contract. The Rate Contract is in the nature of a standing offer
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 15 (fifteen) days’ time
However, once a supply order is placed on the supplier for supply of a definite quantity in
terms of the rate contract during the validity period of the rate contract, that supply order
becomes a valid and binding contract. In view of Government e Marketplace coming into
operation, Rate Contract will be applicable for specialized and engineering items. Rate
Contract is not required to be executed for common use items like computers, printers,
photocopiers, paper and stationary, other office items like furniture, bottled water etc.,
which are being placed on GeM.

8.1.2 Merits of rate contract

The Rate Contract system provides various benefits to both
the Purchaser (i.e. user) and the Supplier and the same are indicated below:
i) Benefit to users:
a) Competitive and economical price due to aggregation of demands.
b) Saves time, efforts, man-hours and related costs involved in time consuming as well as
repetitive tendering process. It thus reduces lead time for procurement.
c) Availability of quality goods with full quality assurance back-up.
d) Enables procurement as and when required and thus reduces inventory carrying cost.
e) Advantageous even to small users and those located in remote areas.
f) Provides one single point of contact to procure such items.
ii) Benefit to suppliers:
a) Reduces marketing cost and efforts.
b) Eliminates repetitive tendering and follow-up actions with multiple authorities.
c) Provides single point contact for Govt. supplies.
d) Aggregation of Govt. demand leads to economic production.
e) Lends credibility.
f) Promotes quality discipline.

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8.1.3. Rate contracts concluded by Departments

The Department/Organization shall conclude rate contracts after inviting online/offline tenders.
The Department/Organization shall conclude rate contracts with registered suppliers for
specialized items with eligible suppliers obtaining registry as registration or the suppliers having
green channel status or BIS licences for the items, in addition to meeting the other requirements
specified in the tender enquiry.

8.1.4 The goods or services for which Rate Contracts are to be concluded by concerned
Departments
i) Specialized and /or heavy engineering goods.
ii) For which prices are likely to be stable or where Rate Contracts could be finalized with
provision of price variations to account for fluctuation of market rates of raw materials etc;
iii) For which Rate Contract is convenient to operate and annual drawals are economical, say
above Rs. 25 (Rupees twenty-five) lakh. NB: i) In case of goods or services of low value and
which are required by the users in very small quantities, rate contracts may not be
concluded. ii) Rate Contract may not be concluded for the scarce/critical/perpetually short
supply goods or services.

8.1.5 Conclusion of rate contracts for automobiles, sophisticated equipment, machinery etc. on the
basis of discounts on net dealer Price. The Department will conclude rate contracts for
Automobiles, Machine Tools,Information Technology Products, OEM & Ancillary Spares and similar
other such products where the design feature, performance parameters etc. of such
products/goods or services differ significantly among the products of different manufacturers and
even between different models of the same manufacturer and where equitable comparison of
prices of such products or services is not feasible. Such Rate Contracts are to be concluded on
discount on Net Dealer Price (NDP) or MRP basis, generally known as Catalogue basis.

8.1.6 Period of rate contract: The period of a Rate Contract should normally be one year for stable
technology products. However, in special cases, shorter or longer period not more than two years
may be considered. As far as possible, validity period of rate contracts should be fixed in such a
way as to ensure that budgetary levies would not affect the price and thereby frustrate the
contracts. Attempts should also be made to suitably stagger the period of rate contracts
throughout the year.

8.1.7 Criteria for award of rate contract:

i) The Rate Contracts shall be awarded after inviting online/offline tenders;
ii) The Rate Contracts shall be awarded to the suppliers registered for broad category of
items/products or services with eligible suppliers obtaining registry as registration or the
suppliers having green channel status or BIS licences for the tendered items and fulfil the
laid down eligibility and qualification criteria including availability of ISI mark, etc. Suitable

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stipulations are to be incorporated in the tender enquiry documents to this effect. In respect
of new items being brought on rate contract for the first time where there is no registered
supplier (for the subject items), the requirement of registration can be relaxed with the
approval of competent authority.
The award of such rate contracts will, however, be subject to the suppliers’ satisfactory
technical and financial capability;
iii) Some of the tenderers (who are otherwise registered) may also be holding current rate
contracts and/or held past rate contracts for the required goods. Their performance against
such earlier/current rate contracts shall be critically reviewed before they are considered
for award of new rate contracts. Specific performance and achievement criteria as on a
selected cut-off date is 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 tenders) to enable the purchaser to judge their performance and achievement against
the past/current rate contracts. These criteria are to be evolved and decided by the
purchase organization during procurement planning stage for incorporation in the
corresponding tender enquiry documents.

8.1.8 Special conditions applicable for rate contract- Some conditions of rate contract differ from
the usual conditions applicable for ad hoc contracts. Some such important special conditions of
rate contract are given below:

i) Earnest Money Deposit (EMD) is to be furnished by unregistered bidders only.

Theamount of EMD should be fixed by the purchase organizations concerned;
ii) In the Schedule of Requirement, no quantity is mentioned; only the anticipated
drawl is mentioned without any commitment;
iii) The purchaser reserves the right to conclude one or more than one rate contract
for the same item;
iv) The purchaser as well as the supplier may withdraw the rate contract by serving
suitable notice to each other. The prescribed notice period is generally fifteen days.
v) The purchaser has the option to renegotiate the price with the rate contract holders;
vi) In case of emergency, the purchaser may purchase the same item through ad hoc
contract with a new supplier;
vii) The terms of delivery in rate contracts are free delivery at consignee’s site.
viii) Online/offline supply orders, incorporating definite quantity of goods to be
supplied along with all other required conditions following the rate contract terms,
are to be issued for obtaining supplies through the rate contract;
ix) The purchaser and the authorized users of the rate contract are entitled to place
online/offline supply orders up to the last day of the validity of the rate contract
and, though supplies against such supply orders will be effected beyond the validity

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period of the rate contract, all such supplies will be guided by the terms &
conditions of the rate contract,
x) The rate contract will be guided by “Fall Clause” (as described later in this chapter).

8.1.9 Parallel rate contracts: Since, the rate contracts concluded are to take care of the demands
of various Departments and Organizations, PSUs, Autonomous Organizations etc. spread all over
the State, generally a single supplier does not have enough capacity to cater to the entire demand
of an item. Therefore, the rate contracts are concluded with different suppliers for the same item.
Such rate contracts are known as Parallel Rate Contracts.

8.1.10 Conclusion of rate contracts including Parallel rate contracts: Techniques for conclusion of
rate contract is basically identical to that of ad hoc contract (as discussed in Chapter 7 of the
Manual). Identical tender documents may be utilized for conclusion of rate contracts subject to
inclusion therein the special terms & conditions as applicable for rate contracts. In the first instance,
the rate contract is to be awarded to the lowest responsive tenderer (L1). However, depending on
the anticipated demand of the item, location of the users, capacity of the responsive bidders,
reasonableness of the prices quoted by the responsive bidders, etc. it may become necessary to
award parallel rate contracts also. Efforts should be made to conclude parallel rate contracts with
suppliers located in different parts of the State. For the sake of transparency and to avoid any
criticism, all such parallel rate contracts are to be issued simultaneously.

8.1.11 Price negotiation/counter-offer: Price Negotiation with the tenderers should be severely
discouraged. However, in case the price quoted by the lowest responsive tenderer (L1) is not
reasonable and un-acceptable, the price may be negotiated with L1 only and, if it reduces the price
to the desired level, rate contract may be concluded with L1. There may be a situation, where
parallel rate contracts are needed, though the price of L1 is reasonable. To take care of such
situation, special permission may be taken to resort to negotiation and counter offering as
indicated below: To start with, the rate contract may be awarded to L1 tenderer. Then the price of
L1 is to be counter offered to the higher quoting responsive tenderers under intimation to L1 asking
them to send their revised tenders in sealed covers/through fax or email or online on e-bidding
platform to be opened in public at a specified place, date and time (as per the standard procedure).
L1 may be specifically informed that it may, if it so desires, reduce its price and send its revised
tender accordingly as above. The tenderers, who accept the counter offered rate or rate lower than
that, are to be awarded parallel rate contracts. If L1 lowers its rate in its revised offer, same may
also be accepted with effect from that date and its rate contract amended accordingly. There may
also be a situation where parallel rate contracts are necessary, but even the price of the lowest
responsive tenderer (L1) is not reasonable. In that case, price negotiation may be conducted with
L1 in the first instance. If L1 agrees to bring down the price to the desired level, rate contract may
be concluded with it and that price counter offered to other responsive tenderers under intimation
to L1 for further action in identical manner as indicated in the above paragraph. If, however, L1

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does not agree to reduce its price in the first instance itself, then the price, which has been decided
as reasonable may be counter offered to all the higher quoting responsive tenderers (including L1)
for further action on above lines. In respect of items where single bid has been received, the same
may be re-tendered, i.e. if consequent to invitation of tender/bid only one bid/tender is received
or consequent to technical evaluation if only one bid/tender is found eligible, such bid/tender shall
be termed as single bid in respect of that item

8.1.12 Cartel Formation/Pool rates/bid rigging/collusive bidding etc.: Quoting of pool rates/Cartel
formation, bid rigging/collusive bidding is against the basic principle of competitive bidding and
defeats the very purpose of open and competitive tendering system. Such practices should be
severely discouraged with strong measures. Suitable administrative actions like rejecting the offers,
reporting the matter to Competition Commission of India, Registering Authority e.g.
DGS&D/DGQA/NSIC etc. should be initiated against such firms, on case to case basis, as decided
by the competent authority. Departments/Organizations may also bring such unhealthy practice
to the notice of the concerned trade associations like FICCI, ASSOCHAM, NSIC, etc. requesting
them, inter alia, to take suitable strong actions against such firms. The Departments/Organizations
may also encourage new firms to get themselves registered to break the monopolistic attitude of
the firms giving pool rate/forming cartel. Purchaser may also debar the tenderers indulging in
cartel formation/collusive bidding/bid rigging for a period of two years from participation in the
tenders of the Purchaser.

8.1.13 Fall clause: Fall clause is a price safety mechanism in rate contracts. The fall clause provides
that if the rate contract holder reduces its price or sells or even offers to sell 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 organization during the currency of the rate contract,
the rate contract price will be automatically reduced with effect from that date for all the
subsequent supplies under the rate contract and the rate contract amended accordingly. Other
parallel rate contract holders, if any, are also to be given opportunity to reduce their price as well,
by notifying the reduced price to them and giving them 07 (Seven) days time to intimate their
revised prices, if they so desire, in sealed cover to be opened inpublic on the specified date and
time and further action taken as per standard practice. On many occasions, the parallel rate
contract holders attempt to grab more orders by unethical means by announcing reduction of
their price (after getting the rate contract) under the guise of Fall Clause. This situation is also to
be dealt with in similar manner as mentioned in the preceding paragraph. It is however, very much
necessary that the purchase organizations keep special watch on the performance of such rate
contract holders who reduce their prices on one pretext or other. If their performances are not up
to the mark, appropriately severe action should be taken against them including deregistering
them, suspending business deals with them, debarring them for two years from participating
against the tender enquiry floated by concerned purchase organization etc.
The provisions of fall clause will however not apply to the following:

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i) Export/Deemed Export by the supplier;

ii) Sale of goods or services as original equipment prices lower than the price charged for
normal replacement;
iii) Sale of goods such as drugs, which have expiry date;
iv) Sale of goods or services at lower price on or after the date of completion of sale/
placement of order of goods or services by the authority concerned, under the
existing or previous Rate Contracts as also under any previous contracts entered into
with State Government Departments including undertakings.

8.1.14 Performance security: Depending on the anticipated overall drawal against a rate contract
and, also, anticipated number of parallel rate contracts to be issued for an item, the Department
shall consider obtaining Performance Security @ 5% (Five percent) of the value of supply order in
the supply orders issued against rate contracts on the rate contract holder.

8.1.15 Renewal of rate contracts: It should be ensured that new rate contracts are made operative
right after the expiry of the existing rate contracts without any gap for all rate contracted items. In
case, however, it is not possible to conclude new rate contracts due to some special reasons, timely
steps are to be taken to extend the existing rate contracts with same terms, conditions etc. for a
suitable period, with the consent of the rate contract holders. Rate contracts of the firms, who do
not agree to such extension, are to be left out. Also, while extending the existing rate contracts, it
shall be ensured that the price trend is not lower.

8.1.16 Placement of online/offline supply orders: Supplies are to be obtained against a rate
contract by placing on the rate contracted firm online/offline supply order containing the quantity
of the goods to be supplied and incorporating the prices and other relevant terms and conditions
of the rate contract. The officials placing such online supply orders should be duly competent and
authorized to do so. An online/offline supply order should generally contain the following
important details:

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);

iii) Price;

iv) Date of Delivery by which supplies are required. (In the supply order, a definite
deliverydate based on the delivery period stipulated in the rate contract is to be
provided),

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v) Full address of the purchase organization along with telephone. No., Fax No. and E.
mail address;

vi) Complete and correct designation and full postal address of the
consignee(s)/goodsreceiving 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 bills are to be raised by
the supplier Copies of supply order are to be endorsed to all concerned.

8.2 Handling Procurement in urgencies/emergencies and disaster management

There are sufficient fast track procurement modalities to tackle procurements in urgent/emergent
and Disaster Management situations. Enhanced delegations of procurement powers in DFPRT,2017
may be considered to handle such situations. Use of following modes of procurements may be
utilised in order of speed(under Disaster Management situations, threshold limits of modes of
procurement may be increased for higher level of officers, with the sanction of Secretary of the
Department):
i) Direct Procurement Without Quotation
ii) Direct Procurement by Purchase Committee
iii) SLTE/Limited/Single Tender Enquiry, with reduced time for submission of Bids
To speed up procurement, advance cash may be drawn for direct procurement modes and made
available to the Committees/officer, with accounts and vouchers to be submitted after purchase.

8.3 Buy back offer

When it is decided to replace an existing old item(s) with a new/better version, the Department
may trade the existing old item while purchasing the new one by issuing suitable bidding
documents for this purpose. The condition of the old item, its location and the mode of its handing
over to the successful bidder are also to be incorporated in the bidding document. Further, the
bidder should be asked to quote the prices for the item (to be offered by them) with rebate for the
old item and also, without any rebate (in case they do not want to lift the old item). This will enable
the Department either to trade or not to trade the old item while purchasing the new one. (Relevant
rules of GFR)

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8.4 Capital Goods/equipment (Machinery and Plant – M&P)

Capital goods are Machinery and Plant (M&P) which create new Fixed Assets/utility/functionality
or benefit to the organisation and has a long useful life. Special features of procurement of Capital
Goods are:
i) Since the cost is generally high, there are detailed procedures for approval of technical,
administrative and budgetary provisions–before an indent is generated. 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. 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 in the Capital Block of the Organization. However these features
may not apply to Capital goods procurement of smaller threshold values;
ii) There are also alternative to outright purchasing/owning such equipment like hiring/
hire-purchase/leasing or acquiring the functionality as a service;
iii) The procurement involves elements of Works and Services like Installation,
Commissioning, Training, prolonged trials, Warranty, After Sales Services like post-
warranty Maintenance and assured availability of spares. All such elements have costs
may be quoted explicitly or implicitly. A suitable warranty clause should indicate the
period of warranty and service levels as well as penalties for delays in restoration of
defects. Clauses for including essential initial spares for two years’ maintenance to be
supplied along with equipment may be provided. If necessary appropriate number of
years’ (say three to five or more years depending on the lifespan of the equipment)
AMC may be included in the procurement detailing its conditions;
iv) The cost of operations, maintenance and disposal of the equipment over its life cycle
may far outweigh the initial procurement cost over the life cycle of the capital
equipment. Hence value for money becomes an important consideration – which can
be addressed in Public Procurement by way of appropriate Description, specification,
Contract conditions like inclusion of cost of supply of initial essential spares and total
present value (as per DCF technique) of Annual Maintenance Contracts (AMC) for
specified number of years within the estimated cost and also the evaluation criteria of
procurement contract;
v) In case the Plant and Equipment consists of a number of machines which work in
tandem or if it includes services/works to be done by third party, an all-encompassing
Turnkey contract may be better alternative;
vi) Because of complexity of specification evaluation of Technical suitability of offers in
procurement of Capital Goods involves complex issues about acceptance of
alternatives, deviations and compliance with various particulars of specification.
Acceptance or otherwise of alternatives should be made explicit. A statement of
deviation including detailed justification for the deviations from each clause of
specification should be asked for from the bidder in the Bid documents. A schedule of

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Guaranteed Particulars of specification indicating the values of each parameter may be

included in the Specification, where the bidder can quote the offered value of the
Parameters. In complex cases Pre- bid conference may help in reducing disputes and
complexity at the time of evaluation;
vii) Past experience, Capacity and Financial strength of a supplier is an important
determinant of quality, after sales support of the Capital Goods; such procurements are
a fit case for Pre-Qualification bidding.

8.5 Turnkey contract

In the context of procurement of goods, a turnkey contract may include the manufacture, supply,
assembly, installation/commissioning of equipment (or a group of plant and machines working in
tandem – even though some of the machines may not be manufactured by the supplier himself)
and some incidental works or services. Generally, in the tender enquiry documents for a turnkey
contract, the purchase organization specifies the performance and output required from the plant
proposed to be set up and broadly outlines the various parameters it visualizes for the desired
plant. The inputs and other facilities, which the purchase organization will provide to the contractor,
are also indicated in the tender enquiry document. The contractor is to design the plant and quote
accordingly. The responsibility of the contractor will include supplying the required goods,
machinery, equipment etc. needed for the plant; assembling, installing and erecting the same at
site as needed; commissioning the plant to meet the required output etc., as specified in the tender
enquiry documents.

8.6 Annual Maintenance Contract (AMC)

i) Some goods, especially sophisticated equipment and machinery need proper

maintenance for trouble-free service. For this purpose, the purchase organisation may
enter into a maintenance contract. It must, however, be kept in mind that maintenance
contract is to start after the expiry of the warranty period, during which period the
goods are to be maintained free of cost by the supplier;
ii) The maintenance contract may be entered into either with the manufacturer/supplier
of the goods or with a competent and eligible firm, not necessarily the manufacturer/
supplier of the goods in question. The purchase organisation should decide this aspect
on case to case basis on merit;
iii) If the maintenance contract is to be entered into with the supplier of the goods, then
suitable clauses for this purpose are to be incorporated in the tender enquiry document
itself and while evaluating the offers, the cost component towards maintenance of the
goods for specified number of years is also to be added in the evaluated tender value
on overall basis to decide the inter se ranking of the responsive tenderers. Equipment
with a lower quoted price may carry a higher maintenance liability. Therefore, the total

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cost on purchase and maintenance of the equipment over the period of the
maintenance contract should be assessed to consider its suitability for purchase. While
evaluating the tenderers for maintenance of goods covering a longer period (say, three
to five or more years depending on the life-span of the equipment), the quoted prices
pertaining to maintenance in future years are to be discounted (as per DCF technique)
to the net present value as appropriate for comparing the tenders on an equitable basis
and deciding the lowest evaluated responsive tender;

iv) However, 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 for this
purpose and tenders evaluated and ranked accordingly for placement of the
maintenance contract. Here, the supplier of the goods may also quote and his
quotation, if received, is to be considered along with other quotations received;

v) The details of the services required for maintenance of the goods, the required period
of maintenance and other relevant terms and conditions, including payment terms, are
to be incorporated in the tender enquiry document. 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;

vi) A Service Level Agreement (SLA) may be incorporated in complex and large
maintenance contracts. SLA should indicate guaranteed levels of service parameters
like - %age uptime to be ensured; Performance output levels to be ensured from the
equipment; channel of registering service request; response time for resolving the
request, Channel for escalation of service request in case of delay or unsatisfactory
resolution of request, monitoring of Service Levels etc. This would include provision of
help lines, complaint registration and escalation procedures, response time, percentage
of uptime and availability of equipment, non-degradation in performance levels after
maintenance, maintenance of an inventory of common spares, use of genuine spares,
and so on. The maintenance contract may also include penalties (liquidated Damages)
for unacceptable delays in responses and degradation in performance output of
machines, including provisions for terminations;

vii) It should be indicated in the bid documents, whether the maintenance charges would
be inclusive of visiting charges, price of spares (many times, consumables such as
rubber gasket, bulbs, and so on, are not included, even though major parts may be
included), price of consumables (fuel, lubricants, cartridges, and so on). If costs of spares
are to be borne by the Procuring Entity, then a guaranteed price list should be asked

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for along with the bids. It should also be clarified, whether room/space, electricity, water
connection, and so on, would be provided free of cost to the contractor. The bidding
document should also lay down a service level agreement to ensure proper service
during the maintenance period;

viii) A suitable provision should be incorporated in the tender enquiry document and in 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;
ix) If the goods to be maintained are sophisticated and costly, the tender enquiry
document should also have a provision for obtaining performance security. The amount
of performance security will depend on the nature of the goods, period of
maintenance,and so on. It generally varies from two and a half to fiveper cent of the
value of theequipment to be maintained;

x) Sometimes, the maintenance contractor may have to take the goods or some
components of the goods to his factory for repair, and so on. On such occasions, before
handing over the goods or components, valuing more than Rupees one Lakh, a suitable
bank guarantee is to be obtained from the firm to safeguard the purchaser’s interest;
xi) Sometimes, during the tenure of a maintenance contract, especially with a longer
tenure, it may become necessary for the purchase organisation to withdraw the
maintenance contract due to some unforeseen reasons. To take care of this, there
should be a suitable provision in the tender document and in the resultant contract.
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. A model clause to this effect is provided below:

“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”. (Relevant rule of GFR)

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Chapter-9

CONTRACT MANAGEMENT

9.1 Contract Management

9.1.1 The Purpose of contract management

The purpose of contract management is to ensure that the contract delivers the desired
outcomes as per the terms and conditions of the contract. It also ensures that the payments
made to the contractor match the performance. Implementation of the contract should be
strictly monitored and notices issued promptly whenever a breach of provisions occurs.
Monitoring should ensure that contractor adhere to contract terms, performance
expectations are achieved (such as timely deliveries, quality of goods supplied, adherence to
proper procedure for submitting invoices, and so on) and any problems are identified and
resolved in a timely manner. Without a sound monitoring process, there can be no assurance
that “we get what we pay and contract for and pay for only for what we get”. Normally, the
following issues are handled during this phase:

i. Amendments to the contract;

ii. Operation of the option clause;
iii. Safeguards for handing over Procuring Entity materials/equipment to contractors;
iv. Payments to the contractor and handling of securities;
v. Monitoring of supplier performance;
vi. Delays in performance of the contract;
vii. Breach of contract, remedies and termination of contract;
viii. Dispute resolution;
ix. Contract closure upon completion;
x. Goods receiving;
xi. Quality assurance;
xii. Accountal and payment of bills; and
xiii. Storage and issue of inspected goods.

9.1.2 Costs of delay in contract management decisions: Delays

Payments and decisions in contract management requested by the suppliers should be made
within a reasonable time. An atmosphere of lackadaisical dilatory functioning in such matters
is liable to lead to bidders quoting higher prices in future bids, besides delays in supplies and
disputes in the contract.

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9.2 Amendment to the contract

Once a contract has been concluded, the terms and conditions thereof should not be varied.
No amendment to the contract should be made that can lead to a vitiation
of the original tender decision or bestow an undue advantage on the contractor. However,
due to various reasons, changes and modifications are needed in the contract. Where it
becomes necessary/ inescapable, any modification will be carried out with the prior
approval of the CA.

Requests for such changes and modifications mostly emanate from the supplier. Any
amendment to the contract may have, inter alia, financial/technical/legal implications. The
indenter may be consulted regarding the technical implications. Financial concurrence should
be obtained before issuing any amendment that has financial implications/repercussions.
Further, if considered necessary, legal opinion may also be sought.

An amendment can concern any of the clauses of the contract but, in supply contracts,
amendments often relate to the following:

i. Increase or decrease in the quantity required, exercise of quantity option clause;

ii. Changes in schedule of deliveries and terms of delivery;
iii. Changes in inspection arrangements;
iv. Changes in terms of payments and statutory levies; and
v. Change due to any other situation not anticipated.

Post contract variation carried out in the form of an amendment shall be published by
the purchaser on the same e-Procurement portals/Websites that were used for publication
of the original tender enquiry. No change in the price quoted shall be permitted after the
purchase order has been issued.

9.3 Operation of option clause

9.3.1 Option clause

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 at the same rate and
terms of the contract, during the currency of the contract. This clause and percentage should

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be part of the Bid Document and the contract and ideally should not exceed 25-30%.
Approval should be taken from the CA (who originally approved the tender decision) to
exercise the option clause based on the value of the contract with the increased quantity. In
case the recalculated value of the contract goes beyond the delegation of powers of the
original CA, approval of the CA for the enhanced value may be taken.

Normally, for raw materials/consumables of regular and year-on-year recurrent

requirements, all tenders of value above Rs. 50 (Rupees Fifty) lakh should invariably
include this clause. However, the CA may approve the inclusion of such a
clause in lower denomination tenders if such items have a history of frequent disruptions in
continuity of supplies. The clause may be framed along following lines:

“The purchaser reserves the right to increase/decrease the ordered quantity by up to 25 (Twenty
Five) per cent at any time, till final delivery date (or the extended delivery date of the contract),
by giving reasonable notice even though the quantity ordered initially has been supplied in
full before the last date of the delivery period (or the extended delivery period).”

9.3.2 Conditions Governing operation of option clause

Additional demands should be available for coverage and over-provisioning may be

avoided by keeping the officers concerned with provisioning/tender evaluation for the
next cycle of procurement informed. The following points must be kept in mind while
operating the option clause:

i. In case of decrease in the ordered quantity, it would be fair to allow the firm to
supply
ii. work-in-progress or goods already put up for inspection;
iii. There should be no declining trend in the price of the stores as evidenced from 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 – even if not finalised;
iv. If the option clause exists, during provisioning of the next cycle and during tender
evaluation in the next cycle of procurement, application of the option clause must
be positively taken into account. The contract management authority must also keep a
watch on delivery against contract, if other conditions are satisfied, the option clause
must be exercised;
v. The option clause is normally exercised after receipt of 50 (Fifty) per cent quantity but
if the delivery period is going to expire and other conditions are fulfilled, it can
be exercised even earlier;
vi. The option clause shall be exercised during the currency of the contract such that
the contractor has reasonable time/notice for executing such an increase and

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can be exercised even if the original ordered quantity 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. This will satisfy the requirement of giving reasonable notice to the
supplier to exercise the option clause;
vii. 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;
viii. There should be no option clause in development orders;

ix. This provision can also be exercised in case of PAC/single supplier OEM cases; and

x. However, where parallel contracts on multiple suppliers are available, 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.

9.4 Safeguards for Handing over Procuring entity materials/equipment to contractors

For performance of certain contracts, 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. In certain situations, the contractor may also be supplied
electricity, water, cranes, and weighing facilities on payment/hire basis. As a measure of
transparency, the possibility of provision of such resources by 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. Whenever stores or prototypes or sub-assemblies are
required to be issued to the firm/ contractor for guidance in fabrication, these should be
issued against an appropriate bank guarantee. In addition to the bank guarantee,
appropriate insurance may be asked for if it is considered necessary. Before the final
payment or release of PBG/SD, a certificate may be taken from the concerned Department
that the contractor has returned all documents, drawings, protective gear, material,
equipment, facilities and assets loaned, including all ID cards and gate passes, and so on,
in good condition. 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.
For low value items of less than Rs. 1,00,000 (Rupees One lakh), or for sending spares for
repairs to the OEMs, this stipulation of the bank guarantee may be waived and, if feasible,
an indemnity bond may be taken.

9.5 Payments to the contractor and Handling of securities

It should be ensured that all payments due to the firm, including release of the Performance

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Security, are made on a priority basis without avoidable delay as per the tender/contract
conditions. Before the payment is made, the invoice should be cross-checked with the actual
receipt of material to ensure that the payment matches the actual performance.
Proper procedures for safe custody, monitoring and return of Bank Guarantees and other
instruments may be followed. Chapter 6 has more details in this regard. Before making
a final payment or before releasing the performance bank guarantee, a ‘No Claim
Certificate’ (Annexure 16) may be insisted upon from the
supplier to prevent future claims. Whenever a bank guarantee is released following due
procedure and safeguards, acknowledgement thereof should also be taken from the
contractor.

9.6 Monitoring of supplier Performance

As soon as the order is issued, entry shall be made in the progress of supply order register
(Annexure 12) recording therein the name of the supplier, items, rate, quantity, amount,
delivery schedule, and so on. Monitoring should ensure that suppliers adhere to contract
terms, performance expectations are achieved (such as timely deliveries, quality of goods
supplied, and adherence to proper procedure for submitting invoices, and so on) and
any problems are identified and resolved in a timely manner. Without a sound monitoring
process, there can be no assurance that the buyer has received what was contracted. A
sound system for monitoring the performance of the suppliers in a contract would also be
useful in selecting a good supplier in future procurement of the same or similar materials.
Purchase order-wise data will be maintained in this register regarding execution by and
performance of the supplier. The register shall form the basis for the Management
Information System report on unexecuted purchase orders beyond scheduled deliveries,
reports on performance of suppliers, and so on.

9.7 Delays in Performance of contract

9.7.1 Delivery Period

The period for delivery of the ordered goods and completion of any allied service(s) thereof
(such as installation and commissioning of the equipment, operators’ training, and so on) are
to be properly specified in the contract with definite dates and these shall be deemed to
be the essence of the contract. The delivery period stipulated in contracts should be specific
and practical. Vague and ambiguous terms such as 1,000 – 5,000 (One to Five thousand)
numbers per month, 2 to 16 (Two to Sixteen) weeks from the date of receipt of order,
‘immediate’, ‘ex- stock’, ‘as early as possible’, ‘off the shelf’, ‘approximately’ and the like should
be scrupulously avoided as these will not be legally binding.

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In case of items such as raw material which is delivered throughout the year, a delivery schedule
of the monthly rate of supply should be specified. It is usual in such cases that there is a slight
deviation from such monthly rate of supply. It should be clarified in such cases that the variation
in the periodic rate of supply beyond +/- 10 (Ten) per cent in any calendar month; or +/-
seven per cent cumulative in any calendar quarter; or +/- five per cent cumulative in any
calendar year would be considered as delay in delivery attracting imposition of LD.

Unless otherwise agreed, the buyer of goods is not bound to accept the delivery thereof
in instalments.

9.7.2 Terms of delivery

Destination (go-down, worksite) / delivery point should be clearly mentioned in the supply
order. Materials to be supplied at the required destinations as per terms and conditions of
supply order. 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.

9.7.3 Severable and entire delivery contracts

Such contracts, where instalments are not specified or not intended, are known as entire
contracts. In such cases, even non-delivery of a part quantity can lead to a breach of contract.
However, a short supply of maximum three per cent of the contract quantity is usually
exempted in the contract conditions with valid ground. In the case of an entire contract,
even if providing a delivery schedule, it is not necessary to grant an extension in the delivery
period in the case of delay in intermediate instalments. Such extension would be necessary
only in case of a delay beyond the final date for the completion of the delivery.

Contracts with clearly laid out instalment deliveries mentioning the exact dates and where
each instalment is paid for separately are known as severable contracts. In effect, each of
such instalments is a separate independent contract by itself. In severable contracts, delay or
breach of one instalment does not affect other instalments, since each instalment is considered
as a separate contract. In the case of severable contracts, extension in the delivery period is
necessary for each instalment separately.

The legal position, however, is not very straightforward, since the mere mention of monthly/
quarterly rate of delivery, called delivery schedule, is not sufficient to make it a severable
contract. However, instalments specifying exact dates, e.g. 310 (Three Hundred and Ten)

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numbers by June 20, 2016 would be amounting to a severable contract.

The delivery cannot be re-fixed to make a contract a ‘severable’ contract without the specific
agreement of the supplier, if the delivery originally stipulated in the contract was in the form
of an ‘entire’ contract.

9.7.4 Extension of delivery

Suppliers shall be required to adhere to the delivery schedule specified in the purchase order
and, if there is delay in supplies, LD shall be levied wherever there is failure by the party.
Extension of the delivery date amounts to amendment of the
contract. Such an extension can be only done with the consent of both parties (that is, the
purchaser and supplier). No extension of the delivery date is to be granted suo motu unless
the supplier specifically asks for it. However, in a few cases, it may be necessary to grant an
extension of the delivery period 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.

No correspondence should be entered into with the supplier after expiry of the contract
delivery period or towards the end of it, which has the legal effect of condoning the
delay/breach of contract. When it is necessary to obtain certain information regarding past
supplies, it should be made clear that calling for such information is not intended to keep
the contract alive and that it does not waive the breach and that it is without prejudice to
the rights and remedies available to the purchaser under the terms of the contract. The last
line of such a communication should therefore be: “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.”

If at any time during the currency of the contract, the supplier encounters conditions
hindering timely delivery of goods, he shall promptly inform the concerned officer in
writing. He should mention its likely duration and make a request for extension of the
schedule accordingly. On receiving the supplier’s communication, the Procuring Entity shall
examine the proposal (refer to Annexure 13) and, on approval from the CA, may agree to
extend the delivery schedule, with or without LD and with or without the denial clause (as
defined in Para 9.7.8 below), for completion of the contractor’s contractual obligations,
provided:

i) That a higher rate in the original tender was not accepted against other lower quotations in
consideration of the earlier delivery; and

ii)That there is no falling trend in prices for this item as evidenced from the fact that, in the

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intervening period, neither orders have been placed at rates lower than this contract nor any
tender been opened where such rates have been received even though the tender is not yet
decided. In cases of certain raw material supplies, where prices are linked to the PVC,
extension may be granted even in case of a falling trend in price indices, since the purchaser’s
interests are protected by the price variation mechanism. However, in such cases it should be
ensured that extensions are done with the denial clause.
When it is decided to extend the delivery period subject to recovery of LD for delay in supplies,
contractors must be given a warning to this effect in writing at the time of
granting extensions. It is not correct to grant extensions without any mention of the LD if
it is proposed to recover such charges eventually. It 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” as 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 and would
not amount to exercise of the option to recover LD. To take care of complex legalities
brought out above, extension of the delivery period when granted should only be done
in writing in the laid down format given in Annexure 14.

9.7.5 Delay in supplies for which supplier is not responsible

Normally, in the following circumstances, the contractual delivery period needs to be re-fixed
to take care of the lost period, without imposing any penalty to the supplier:
i. Cases where the manufacture of stores is dependent on the approval of the advance
sample and delay occurs in approving the sample though submitted by the supplier
in time;
ii. Where extension in the delivery period is granted on account of some omission on
the part of the purchaser which affects the due performance of the contract by the
supplier; and
iii. Cases where the purchaser controls the entire production.

9.7.6 Performance notice

A situation may arise where the supply/services has not been completed within the stipulated
period due to negligence/fault of the supplier; however, the supplier has not made any
request for extension of the delivery period but the contracted goods/services are still
required by the purchaser and the purchaser does not want to cancel the contract at that
stage. In such a case, a performance notice (also known as notice-cum-extension letter) may
be issued to the supplier by suitably extending the delivery date and by imposing LD with
denial clauses, and so on, along identical lines as in para 9.7.4 above. The supplier’s
acceptance of the performance notice and further action thereof should also be processed

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in the same manner as mentioned above. The text of the performance notice will be on
similar lines to the Annexure 14.

9.7.7 Force majeure clause

A Force Majeure (FM) means extraordinary events or circumstance beyond human control such
as an event described as an act of God (like a natural calamity) or events such as a war,
strike, riots, crimes (but not including negligence or wrong-doing, predictable/seasonal
rain and any other events specifically excluded in the
clause). An FM clause in the contract frees both parties from contractual liability or obligation
when prevented by such events from fulfilling their obligations under the contract. An FM
clause does not excuse a party’s non-performance entirely, but only suspends it for the
duration of the FM. The firm has to give notice of FM as soon as it occurs and it cannot be
claimed ex-post facto. There may be a 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. If
the performance in whole or in part or any obligation under this contract is prevented or
delayed by any reason of FM for a period exceeding 90 (Ninety) days, either party may at
its option terminate the contract without any financial repercussion on either side.
Notwithstanding the punitive provisions contained in the contract for delay or breach of
contract, 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.

9.7.8 Denial clause

Since delay in delivery is a default by the seller, the buyer should protect himself against extra
expenditure during the extended period by stipulating a denial clause (over and above levy
of LD) in the letter informing the supplier of extension of the delivery period. In the denial
clause, any increase in statutory duties and/or upward rise in prices due to the PVC clause
and/or any adverse fluctuation in foreign exchange are to be borne by the seller during the
extended delivery period, while the purchaser reserves his right to get any benefit of a
downward revisions in statutory duties, PVC and foreign exchange rate. Thus, PVC, other
variations and foreign exchange clauses operate only during the original delivery period.
The format of the denial clause is available in Annexure14.

9.7.9 Liquidated damages

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loss is pre-estimated and mutually agreed to is termed as LD. Law allows recovery of pre-
estimated loss provided such a term is included in the contract and there is no need to establish
actual loss due to late supply .

9.7.10 Quantum of LD

While granting extension of the delivery period, where the delivery of stores or any instalment
thereof is accepted after expiry of the original delivery period, the CA may recover from
the contractor, liquidated damage @ 0.5% to 1% of valuation of undelivered quantity per
day subject to maximum 10% will be imposed and after
imposition of maximum LD ( 10%) if still the bidder fails to complete the full quantity ,
then other penalty to be imposed. The total damages shall not exceed 10 (Ten) per cent
of the value of delayed goods. The LD cannot exceed the amount stipulated in the contract
.

In contracts governed by any type of variation (PVC, ERV or statutory variations), LDs (if a
percentage of the price) will be applicable on the price as varied by the operation of the PVC.
LDs accrue only in case of delayed supplies. Where or in so far as no supplies have been made
under a contract, upon cancellation, recovery of only the loss occasioned thereby can be made,
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.

Government establishments/Departments, as distinct from PSUs, that execute contract work

should not be dealt with as ordinary contractors and not generally be penalised for late
delivery and claims for loss on risk-purchase should not be enforced against them. Serious
cases of defaults should, however, be brought to the notice of the HOD or the Government
Department concerned.

Relaxations allowed to Government establishments/Departments, as above, will not apply

to PSUs as a matter of course. Each case should be decided on merits and the decision to
waive the recovery of LDs or risk purchase expenditure should be taken on merit.

In the case of development/ indigenisation contracts, LDs are not levied. However, the nature
of such contracts should be declared at the time of placing them.

In case of entire (non-severable) contracts, even where staggered deliveries have been indicated,
it may happen that supplies are not received according to the delivery schedule. In such cases,
keeping in mind the fact that the deliveries indicated under the contract are non-severable,

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no question of LDs or enforcement of risk purchase would arise so long as there has been no
delay in the completion of supplies with reference to the total delivery period.

9.7.11 Waiver of LD

There should normally be no system of waiver of LDs for delayed supplies in supply contracts
and it may be strictly be an exception rather than a rule. For an extension of the delivery date
with waiver of LD, approval of the CA may be taken and justifications recorded.

9.7.12 Handling deliveries after the expiry of delivery Period

As per law, if stores are accepted after expiry of the delivery date of a particular instalment
without extension in delivery period having being given, duly reserving our rights to levy
LD, it amounts to voluntary abrogation of our legal rights under the contract to claim LDs
or other remedies.

If the contractor makes supplies locally after the expiry of delivery period, the supplies may
be provisionally retained under a franking clause reserving rights 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.

“Please note that materials have been supplied after the expiry of contracted delivery date
and its provisional retention does not acquiesce or condone the late delivery and 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 Tripura under the terms
and conditions of the contract.”

As regards supplies coming from outside contractors, if the contractor dispatches the stores
after expiry of the delivery period, the consignee should, after the receipt of the railway receipt
or lorry receipt or goods consignment note or airway bill, send an intimation to the
contractor stating that the action taken by him in dispatching the goods after expiry of
delivery date is at his own risk and responsibility, and that the consignee is not liable for
any demurrage, wharfage and deterioration of goods at the destination station and, in
his own interest, the contractor should get an extension of the delivery period from the
purchasers. A copy of the communication sent to the contractor should also be sent to the
purchaser.

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In case of imports, the contractor must not dispatch the consignment after expiry of the
delivery period without taking prior extension of the delivery period. In any case, the terms of
LC should be such that if there are dispatches beyond the delivery period, payment should
be denied without levy of full LD and without formal extension of the delivery period by the
purchaser.

9.8 Breach of contract, remedies and termination

In case the contractor is unable to honour important stipulations of the contract, or gives
notice of his intention of not honouring or his inability to honour 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 supply the required quantity or quality.
It could also be due to breach of ethical standards or any other stipulation that affects
Procuring Entity seriously.

The purchaser or its authorised representative is not to enter into correspondence after expiry
of the delivery date stipulated in the contract because such a correspondence will keep
the contract alive and would amount to abrogation of the purchaser’s right and remedies for
delays by the contractor. This situation will not allow the purchaser to cancel the contract
straight away without first serving a performance notice to the supplier. However, even
after expiry of the delivery period of the contract, the purchaser may obtain information
regarding past supplies, and so on, from the supplier, simultaneously making it clear to the
supplier that calling of such information is not intended to keep the contract valid and it
does not amount to waiving the breach and that it is without prejudice to the rights and
remedies available to the purchaser under the terms of the contract. A model communication
which may be issued by the purchaser to ascertain the supply position after expiry of the
delivery period is given at Annexure 15. As soon as a breach of contract is noticed, a show
cause notice should be issued to the contractor reserving the right to implement contractual
remedies. If there is an unsatisfactory resolution, remedial action may be taken immediately.
The CA may terminate a contract in the following cases.

9.8.1 Cancellation of contract for default

Without prejudice to any other remedy for breach of contract, such as removal from the
list of registered supplier, by written notice of default sent to the supplier, the contract
may be terminated in whole or in part:

i. If the supplier fails to deliver any or all of the stores within the time period(s) specified

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in the contr act, or any extension thereof granted; and

ii. If the supplier fails to perform any other obligation under the contract within the period
specified in the contract or any extension thereof granted.
iii. If the contract is terminated in whole or in part, recourse may be taken to any one or
more of the following actions:
a) Forfeiture of the performance security;
b) Upon such terms and in such manner as it deems appropriate, goods similar to those
undelivered may be procured and the supplier shall be liable for all available actions
against him in terms of the contract (popularly called risk purchase); and
c) However, the supplier shall continue to fulfil the contract to the extent not terminated.

Before cancelling the contract and taking further action, it may be desirable to obtain
legal advice.
9.8.2 Termination of contract for insolvency

If the supplier becomes bankrupt or becomes otherwise insolvent or undergoes liquidation

or loses substantially the technical or financial capability (based on which he was selected
for award of contract), at any time, the contract may be terminated, by giving a written notice
to the supplier, without compensation to the supplier, provided that such termination will not
prejudice or affect any right of action or remedy which has accrued or will accrue thereafter
to Procuring Entity.

9.8.3 Termination of contract for convenience

After placement of the contract, there may be an unforeseen situation compelling

Procuring Entity to cancel the contract. In such a case, a suitable notice has to be sent to the
supplier for cancellation of the contract, in whole or in part, for its (Procuring Entity’s)
convenience, inter alia, indicating the date with effect from which the termination will to
become effective. This is not Procuring Entity’s legal right– the contractor has to be
persuaded to acquiesce. Depending on the merits of the case, the supplier may have to be
suitably compensated on mutually agreed terms for terminating the contract. Suitable
provisions to this effect should be to be incorporated in the tender document as well as in the
resultant contract.

9.9 Dispute resolution

Normally, there should not be any scope for dispute between the purchaser and supplier
after entering into a mutually agreed valid contract. However, due to various unforeseen
reasons, problems may arise during the progress of the contract leading to a disagreement
between the purchaser and supplier. Therefore, the conditions governing the contract should

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contain suitable provisions for settlement of such disputes or differences binding on both
parties. The mode of settlement of such disputes/differences should be through
arbitration. However, when a dispute/difference arises, both the purchaser and supplier
should first try to resolve it amicably by mutual consultation. If the parties fail to resolve the
dispute within 21 (Twenty-One) days, then, depending on the position of the case, either the
purchaser or supplier should give notice to the other party of its intention to commence
arbitration. When the contract is with a domestic supplier, the applicable arbitration
procedure shall be as per the Indian Arbitration and Conciliation Act, 1996. While
processing a case for dispute resolution/litigation/arbitration, the Procuring Entity is to
take legal advice, at appropriate stages.

9.9.1 Arbitration clause

If an amicable settlement is not forthcoming, recourse may be taken to the settlement of
disputes through arbitration as per the Arbitration and Conciliation Act 1996. For this

purpose, when the contract is with a domestic supplier, a standard arbitration clause may
be included in the SBD indicating the arbitration procedure to be followed. The venue of
arbitration should be the place from where the contract has been issued.

9.9.2 Foreign arbitration

The Arbitration and Conciliation Act 1996 along with latest amendments if any has provisions
for international commercial arbitration, which shall be applicable if one of the parties has
its central management and control in any foreign country.

When the contract is with a foreign supplier, the supplier has the option to choose either
the Indian Arbitration and Conciliation Act, 1996 or arbitration in accordance with the
provisions of the United Nations Commission on International Trade Law (UNCITRAL)
arbitration rules.

The arbitration clause with foreign firms should be in the form of self-contained agreements.
This is true especially for large value contracts or those for costly plant and machinery. The
venue of arbitration should be in accordance with UNCITRAL or arbitration rules of India,
whereby it may be in India or in any neutral country.

9.10 Closure of contract

While making the final payment to the contractor and before releasing the PBG, it should
be ensured that there is nothing outstanding from the contractor, because it would be
difficult to retrieve such amounts after releasing the bank guarantee/final payment. Before

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the bank guarantee is released a “No Claim Certificate” may be taken from the contractor
as per the format given in Annexure 16. At least in large contracts (above Rs. 25 (Rupees
Twenty-Five) lakh), it should be ensured that before the release of the bank guarantee
(final payment, if there is no bank guarantee), the following reconciliations should be done
across Departments involved in the execution of the contract:

9.10.1 Materials reconciliation

The stores and/or the indenter should confirm that all materials ordered in the contract
and paid for have been received in good condition and there is no shortfall. Full
reconciliation of all raw material, part, assembly provided to the contractor should be done
including wastages and return of scrap/off-cuts.

9.10.2 Reconciliation with the user department

Besides material reconciliation, 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:

i. Achievement of performance standards of material/equipment supplied;

ii. Installation and commissioning;
iii. Support service during the warranty period which has ended on ;
iv. Training of operators/maintenance staff;
v. Return of all ID cards, gate passes, documents, drawings, protective gear, material,
equipment, facilities and assets loaned to contractor; and
vi. Support during annual maintenance contract (if it was part of the contract) which
has ended on .

9.10.3 Payment reconciliation

The office of the p r o c u r i n g e n t i t y may reconcile payments made to the contractor

to ensure that there is no liability outstanding against the contractor on account of:
i. LD;
ii. Price reduction enforced on account of shortfall in performance of material/
equipment;
iii. Variations/ deviations from the scope of the contract;
iv. Overpayments/ duplicate payments, if any;
v. Services availed from Procuring Entity and vacation thereof such as accommodation,
electricity, water, security, transport, cranes and other machinery, and so on,
vi. Demurrage, insurance premiums or claims, customs duties, and so on;

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vii. Material reconciliation;

viii. Price and exchange rate variations;
ix. Statutory duties paid on behalf of the contractor by Procuring Entity; and
x. Inspection charges or loss of material in testing.

On satisfactory reconciliation and against a “No Claim Certificate” from the contractor,
the bank guarantee may be released and its acknowledgement taken from the contractor.

On completion of all activities against a contract, the purchase file should be preserved
for a period of five years in the record room and then destroyed after expiry of the
applicable mandatory retention period with the approval of the CA. However, Procuring
Entity, at its discretion, may retain important records for future reference.

9.11 Goods receiving

9.11.1 Transportation of Goods

Where critical equipment of high value is involved, suitable special instructions shall be
conveyed to the supplier about the mode of transport, loading, avoidance of transhipment
and, if necessary, provision of escorts. In case of chemicals, powdery materials, liquid
materials, and so on, parties may be advised on proper packaging to avoid spillage en
route, so as to avoid pollution problems and also to conform to the ISO 14001 standard with
amendment if any. In case transport is arranged by Procuring Entity, suitable instructions
may be incorporated in the transportation contract accordingly.

Wherever the items make a full truck load, the suppliers should be advised to dispatch such items
in a full truck direct to the consignee on a door delivery basis to the site. In such cases, Procuring
Entity shall advise the supplier to send a consignee copy of the lorry receipt to the consignee
along with the consignment and the consignment shall be booked to Procuring Entity and
not “self”. The supplier shall be specifically asked to dispatch the consignments to the
designated consignee. All dispatch documents, that is, railway/lorry receipt, goods
consignment note, airway bill, invoices, packing list, freight memos, test certificate, and so
on, 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, all original documents are to be
sent through the designated bank.

9.11.2 Distribution of dispatch documents for clearance/receipt of Goods

The supplier shall send all the relevant dispatch documents well in time to the purchaser
to enable the purchaser to clear or receive (as the case may be) the goods in terms of the

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contract. Necessary instructions for this purpose are to be incorporated in the contract. Within
24 (Twenty- Four) hours of dispatch, the supplier shall notify the purchaser or consignee (others
concerned), the complete details of dispatch and also supply the following documents by
registered post/ speed post/air mail/courier (or as instructed in the contract).

The supplier should submit five copies of his invoice. The invoices must be pre-stamped and
shall indicate the details of the lorry receipt or railway receipt number, as the case may be,
and also the details of the packing list and items dispatched. The invoice must also indicate the
purchase order number and date, unit rate and net total price; the packing list shall include
the total weight of the consignment and items dispatched. All documents are to be duly
signed by the supplier’s representative. Bank charges towards processing of the bills for
payment shall be as per terms and conditions of the purchase order.

9.11.3 Receipt of consignment

In case of departmental inspection of materials, at the time of the delivery at the stores, the
storekeeper should receive the goods on a “subject to inspection” basis and should issue the
preliminary receipt after a preliminary inspection as an acknowledgement of
having received the claimed quantity (not the quality) of consignment.
i. Preliminary inspection on receipt

On opening the packages (if applicable), the storekeeper should initiate preliminary
inspection of the goods received. This should include checks for any obvious damage
in transit and other physical or visual checks specific to the functional characteristics
of the product. The quantity of the goods received should also be verified at this
stage against the purchase order and the supplier’s invoice. When goods are
supplied in boxes, bundles or coils as in the case of tools, rope, canvas, barbed wire,
and so on, each of which is required to contain a specified quantity, a reasonable
number of such packages should be opened up and checked for quantity per
package. 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.

ii. Detailed inspection on receipt

Before accepting the ordered goods, the storekeeper must ensure that the goods
have been manufactured as per the required specifications and are capable of
performing the functions as specified in the contract. To achieve this, the tender
document and the subsequent contract should include references to standards or
specifications that specify the details of inspection and tests to be carried out and

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stages and manner of carrying out these tests.

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, it
may engage competent professionals from other Departments or even outside agencies.

9.12 Quality assurance and inspection

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 laid down
standards of quality and serve the purpose for which it is being procured. QA consists of three
components:

i. Defining quality standards;

ii. Planning assurance of quality; and
iii. Measurement of quality.

The description and TS define the quality standards expected from the product.

Planning for QA is done by way of specifying the qualifications criteria for the suppliers
to ensure that they do have the technical, infrastructure and financial capabilities to meet
the required quality standards. Specifications also lay down quality control requirements to
indicate parameters, target values, tolerances and method of measurement of various
parameters that constitute the standards of quality. This also involves laying down the type of
inspection, agency for inspection.

Measurement of quality is done though a scheme of inspections at the contract

management stage and laying down the actual process of inspection.

9.12.1 inspections – measuring Quality standards

The stages and modes of inspection may vary depending on the nature of the goods, total
value of the contract, location of the supplier, location of the user, and so on. Depending on
the nature of goods being procured, usually, the following types of inspection may be
adopted:

9.12.2 Types of inspection

i. Pre-dispatch inspection

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A pre-dispatch inspection for entire ordered quantity may be conducted either during
various stages of the production process (which is known as stage inspection) or on
production of the finished products, but before dispatch of the goods from the
supplier’s premises. Stage inspection may be used for highly technical goods whose
quality of the manufacturing process is likely to have considerable effect on the final
quality and durability of the goods. Even after pre- dispatch inspections, these
materials should be inspected again on receipt, as a matter of abundant precaution.

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 in accordance with the inspection procedure laid down and incorporated in
the purchase order.

The testing charges should be borne by the supplier. Rate should be quoted including
testing charge of materials. Any special testing involving financial implications shall
be settled prior to placement of the order and such cost should form part of the
evaluation.

In case of offshore supplies, the inspection clause shall be incorporated in the purchase
order wherever required:

a) 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 at its discretion;

b) Alternatively, 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 recording the reasons for it. In that case inspection
charge will be deducted from the bill of supplier.

c) Whenever the inspection is carried out at the supplier’s manufacturing premises, an

inspection on receipt of goods at Procuring Entity shall also be carried out by an
officer of the Indenting Department or a third party inspection agency, as the case
may be, on receipt of the goods.

ii. Inspection of Goods on receipt at consignee/user’s site

Post-delivery inspection is carried out on receipt of goods before accepting them.

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This should be typically done for goods that are available off-the-shelf and are BIS
marked. All final goods that may be directly consumed or utilised on delivery
(excluding machinery installations, and so on) and for which detailed inspection of the
manufacturing process is not required and only a physical inspection regarding their
physical characteristics is required, may be inspected using this method. On receipt
of goods at stores, the storekeeper should immediately notify the officer nominated
for inspection, requesting to schedule an inspection. The inspecting officer should
then fix a date for inspection.
The consignee has the right to reject the goods on receipt during the final inspection
on delivery even though the goods have already been inspected and cleared at the
pre- dispatch stage by Procuring Entity’s inspector. However, such rejection should be
strictly within the contractual terms and conditions and no new condition should
be adopted while rejecting the goods during final inspection.
Goods accepted by the purchaser at the initial and final inspections, in terms of
the contract, shall in no way dilute the purchaser’s right to reject them later, if found
deficient in terms of the warranty clause of the contract.

In case of rejection of goods at this stage, the material rejection advice/rejection memo
should be issued. In case of pre-inspected goods, a joint inspection of the rejected lot
of goods should be held with the pre-inspecting agency and firm. In case of failure
of the firm to associate with a joint inspection, it should be held with the pre-inspecting
agency.

In case of rejection of the pre-inspected supply of goods at the consignee end,

the material rejection advice/rejection memo should be sent to all concerned, which
is, the firm, purchaser, pre-inspecting agency, paying authority, associate bill paying
authority, and so on, without fail. The concerned paying authority as per the contract
and associate bill paying authority should note the rejection advice details in its
recovery register for effecting recovery of payments made, as the case may be. In case
of replacement supply against the rejected lot of goods, the process should remain
exactly the same in terms of sequence of pre-inspection/inspection as laid down in the
contract, prior to acceptance by the consignee. In case of acceptance of the
replacement supply/rejected supply after rectification, the earlier issued material
rejection advice/rejection memo should be withdrawn under advice to all concerned.

iii. Manufacturer’s Quality self-certification

Reputed manufacturers could be relied upon with respect to certain goods for
quality products. These may not be subjected to physical inspection and the
materials may be accepted under the firm’s quality self-certification. The physical

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inspection clause stipulating the inspection authority and inspecting officer in such
cases should not be included in the contracts entered into. Waiver of pre-dispatch
inspection and acceptance of materials under the firm’s quality self-certification may
be considered where:

a) The user Departments indicate, in their indent, that physical inspection is not
necessary and that the materials can be accepted on the firm’s quality self-
certification;

b) The user Department requests for a waiver of inspection to meet urgent requirement and
where the firm is agreeable to 100 (Hundred) per cent payment against the
consignee’s receipt and acceptance. In such cases, the user Departments themselves
should be responsible for ensuring the quality of goods supplied;

c) In case of goods to be imported from abroad, pre-dispatch inspection of goods at

the supplier’s premises involves considerable expenditure to the purchaser. In such a
situation, the purchaser may substitute pre-dispatch inspection by its own inspector
with manufacturer’s in-house inspection report and warranty. However, before
adopting this procedure, the nature and cost of the goods ordered, the reputation
of the supplier, and so on, should also be kept in view and appropriate decision taken.
For checking the reputation and background of the supplier, the purchase
organisation may also request the Indian embassy located in that country for a report
on the technical and financial competence of the firm.

d) However, the right of waiver of inspection may be reserved only for specifi c
requirements. Justification for the waiver should be recorded. Also, a suitable clause
may be incorporated in the conditions of contract.

iv. Inspection on installati on and commissioning

This method is adopted to check the performance and output of equipment or

machinery after it is commissioned and operational at site.

9.12.3 Types of inspection agencies

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Normally, inspection modalities or age ncies for inspec tion s specifi ed i n the contr act should
not be chan ged. In ra re cases, when this becomes inescapable, it should be done with the
approval o f the CA, justifying the rare circumstances, ensuring that no undue benefit acc rues
to t he c ontrac tor .

i. Inter nal inspection aut hor ities

Whe rever the re is tec hnical expertise available in-house, an internal officer of the
Indenting Depart ment is nominated for inspection. The consignee should be the final
authority for acceptance of goods.

ii. External inspecting authorities

In case Procuring Entity does not have technical expertise or for other relevant reasons,
inspection may also be entrusted to a third-party inspection authority. The Procuring
Entity, however, retains the right to reject the consignment, even if it is cleared by third
party inspection authorities.

Sometimes, it becomes necessary to conduct a type test, acceptance test or special test
at external laboratories, when facilities for these tests are not available in-house with the
supplier or carrying out of confirmatory tests is considered desirable before
accepting the goods. The Procuring Entity should
draw up a list of approved laboratories for this purpose, to which the samples drawn
from the lots offered by the supplier can be sent for tests. The list should also contain
approved laboratories, which can be used as referral/ appellate laboratories for retest,
when samples tested at one laboratory are decided to be re-tested. The following
guidelines should apply to such cases:

a) External testing may invariably be done by national accredited or reliable

laboratories, preference being given to National Test House (NTH). For testing the
samples drawn from the lots offered by the supplier, an inspection agent qualified to
conduct random sampling in accordance with Quality Assurance requirements should
do the selection of samples;

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b) Test reports must contain the values obtained in the tests besides fail/pass results. The
laboratory must preserve the sample and test records for a period of three years;

c) The Department should lay down a liability statement for costs expended on tests,
dispatch of samples, transportation costs, test charges, and so on., in respect of
samples tested at outside laboratories as may be applicable;
d) In cases where the samples are to be tested at the supplier’s cost because of non-
availability of his own testing arrangements, the responsibility of depositing the
testing fees would rest with the supplier;

e) Normally unless otherwise intended in the contract, charges of routine testing prior to
dispatch of materials are to be borne by the supplier and charges of testing of
materials after receipt by consignee are to be borne by the procuring agency.
Contract should be clear about responsibility of cost of materials expended in tests
and charges of special tests e.g. type test or tests at external labs. Even where Procuring
Entity is responsible for testing charges, if the material fails in the test, the charges
would become the responsibility of the seller.
iii. Joint Inspection on complaint
In case a written complaint is received from the supplier disputing the rejection of
goods by the Procuring Entity’s inspecting officer, it should be jointly investigated
by a team consisting of an authorised representative of the Procuring Entity, a senior
representative of the inspecting agency who is conversant with the goods and an
authorised representative of the supplier.

9.12.4 Issue of inspection report

After satisfactory inspection and tests, the acceptable goods shall be stamped, labelled, marked
or sealed, in such a way as to make subsequent identification and tally with the inspection
report of accepted lots easy for the consignee/user. The following guidelines should be used
for inspection reports to be issued:

i. Each inspecting officer shall be supplied with acceptance stamps, lead seals, pliers,
rubber stamps, stencils, labels, stickers, holograms, and so on, according to requirements,
for sealing and marking the inspected goods in terms of the contract. He will
be responsible for safekeeping of these articles and shall ensure that they are not
misused by unauthorised persons. Unserviceable seals, pliers, stamps, stickers,
holograms, and so on, shall be returned to the concerned issuing official. The
Procuring Entity shall lay down detailed guidelines covering all these aspects. For

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reasons of security and to avoid irregular or incorrect issue, inspection notebooks

should be machine numbered and, wherever possible, different coloured copies
marked for each user. An account of the inspection notes issued with serial number-
wise details shall be maintained in an appropriate register. Procuring Entity should
also develop a full proof system to avoid any fraudulent and unauthorised use of the
inspection notes;

ii. There should not be any initial provisional acceptance at a lower level. A time limit shall
be fixed for the issue of inspection documents. The inspection note shall also indicate
the validity period, by which period the supplier must dispatch the accepted goods
to the consignee in terms of the contract. The number of copies of the inspection notes
and their distribution for different types of inspections will be as prescribed by the
Procuring Entity/indenter Department;

iii. Inspection reports should be prepared detailing the inspection done, samples
examined, requirements as per the relevant specification/contract and the
observations jointly with the representative of the firm. Each inspection note copy
issued should invariably bear the individual’s name, stamp along with his designation
and code number of the officer authorised to sign and issue inspection documents.
Facsimiles of the inspection stamps and their position should be put on the inspected
material to help identify the inspected goods at the consignee’s end. Inspection note
copies meant for payments should be attested with full signature in ink by the
inspecting officer. The Accounts Department will make payments only against copies
so attested, not against any other copy. Corrections, if any, on the inspection note
should be duly authenticated by the officer issuing it. Similarly, each continuation
sheet,
if attached to the inspection note, should be signed by the inspecting officer at the
relevant places and any correction duly authenticated;

iv. Departmental instructions should invariably prescribe that paying authorities will
keep a record of specimen signatures of authorised inspecting authorities for
verification with the signature in the inspection note while authorising payment;

v. A separate inspection report must be prepared for each consignment. In the case of
large consignments, the issue of the inspection report may not be held up until the
inspection of the full consignment is completed. These must be issued for lots inspected
every day or every two days. If the contract is in terms of ‘sets’ or ‘number’ and
materials are such that they comprise a number of components or accessories, the
inspection report should be issued only when all parts, components and accessories

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forming a set are inspected and accepted. When plant and equipment are ordered
with spares, the inspection report for spares should not be issued before acceptance
of the main equipment. In the case of contracts for imported materials that involve
initial inspection in the country of origin and final inspection in India, the final
inspection note should be issued giving reference of the certificate issued abroad;

vi. In respect of materials which have been rejected by the inspecting officer, the rejection
inspection report should be issued immediately following the completion of inspection.
In case of total rejections, no copies meant for payments or the accounts office should
be issued. All the reasons for rejection and deviations against the governing
specifications, drawings or other particulars should invariably be noted in detail in the
“remarks” column of the rejection inspection note. The rejected material should be
given a yellow paint mark to avoid it being submitted again for inspection or
supplied to other customers. Such copies should be cancelled across by the
inspecting officer with his signature and retained in the inspection file along with the
office copy of the rejection inspection note; and

vii. No ‘certified true copy’ of the lost original payment copies should be issued until a
‘non- payment certificate’ has been received from the accounts officer concerned or
stating that payment has not been made and should not be made against the original
inspection report even if received subsequently. This copy must be endorsed as
“certified copy”. This endorsement should be attested in full in indelible ink by the
officer proving a cross reference to the accounts officer’s non-payment certificate with
the name stamp with the designation and code number of the officer issuing the
duplicate copy.

9.12.5 Material put up for inspection towards the end of delivery

As far as possible, the inspection should be commenced and finished and the inspection
report issued during the validity period of the contract. In cases where the supplier offers
materials for inspection during the last few days of the contract delivery period or even on
the last day of the contract delivery period, efforts should be made by the inspecting officer
to commence the inspection before the expiry of the delivery period.

In cases where it is not possible to commence or conclude the inspection before the expiry
of the delivery period, the inspecting officer should, immediately, on receipt of the
intimation or request for inspection of the materials, bring this to the notice of the supplier
orally as well as in writing. He must mention that the materials have been submitted for
inspection at a very late stage and that it is not possible to commence/conclude the

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inspection before the expiry of the delivery period.

The supplier should also be informed that the goods offered for inspection should, however,
be inspected until the completion of the inspection which can be after the expiry of the
delivery period and that such an inspection continuing after the expiry of the delivery period
is neither intended nor to be construed as condoning the delay or keeping the contract alive.

In such cases, the inspection note, whether accepting or rejecting the goods, should be duly
franked as per the franking clause given below:

9.12.6 Franking clause on acceptance and rejection

“The issue of this inspection/rejection report does not acquiesce or condone the late delivery
and does not intend or amount to an extension of the delivery period or keeping the
contract alive. The goods are being passed/rejected without prejudice to the rights of the
Government of Tripura under the terms and conditions of the contract.”

This clause may also be incorporated in conditions of the contract.

9.12.7 Approval of acceptable deviations

Under no circumstances will the inspecting officer have the authority to modify the
governing specifications, approved drawings or samples during inspection without
reference to the CA that approved the tender. For all cases of acceptance with deviation,
the nature of deviation along with a justification for acceptance against such deviation
should be duly documented. The CA that approved the tender should have the final decision
on deviations.

Deviations from the contract specifications or requirements not affecting price, quality,
performance and other terms of the contract may be allowed at the level of the CA in
consultation with the Department on merits or nature of deviations along with penalty at
the percentage by which deviation will occur with respect to the standard requirement .

In all other cases, the goods should be rejected giving all reasons by issuing a rejection inspection
report. Rejections should not be made in a piecemeal manner.

9.13 Storage and issue of inspected Goods

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After satisfactory inspection and tests, the accepted materials should be stamped, labelled,
marked, or sealed and stored in a systematic manner. This is to facilitate easy retrieval at a later
stage. As all goods needed or procured cannot be consumed at one point of time, storage is
an inevitable process. The storage system forms the key component of any materials
management system. It should be ensured that the goods are stored in such conditions that
they are protected against unauthorised removal and deterioration.
9.14 Accounting and Payment of received materials

9.14.1 Goods receipt and inspection report

If the received material successfully passes the quantity and quality checks, accounting of
material received shall be on the basis of the Goods Receipt and Inspection Report (GRIR)
(Annexure 17) prepared after inspection and acceptance of the material which will be signed
by the concerned officers. This includes cases where payment is made to the supplier on proof
of dispatch, for which inspection at the suppliers’ premises is conducted by an authorised
officer of Procuring Entity prior to dispatch by suppliers. This excludes cases of imported
materials where accounting will be done on completion of certain further formalities as per
regulations and practices. While preliminary receipt is only an acknowledgement of
quantity received, GRIR is an acknowledgement of receipt of the correct quantity as well as
quality of goods. GRIR is a voucher which forms the basis for the supplier to claim payment
as per the contract. It also is a voucher for accountal of the received material in the inventory
accounts. Along with the GRIR, material is handed over to the warehouse where it is to be
stored.

In case the received material fails to pass quantity and quality checks, a rejection GRIR is
issued, noting the reasons for rejection. If feasible, a yellow paint mark should be put on
the rejected material to prevent its resubmission by the supplier. The associated Finance/FA
should be asked to recover any advance payment or freight charges paid for the rejected
quantity. The rejection GRIR contains instructions for the supplier to take back the rejected
goods within a stipulated number of days (usually 21). Such removal should be permitted only
after the advance payment/freight paid is recovered. Lots that are under inspection, accepted,
or rejected should be properly tagged, segregated and identified.

9.14.2 Passing of supplier’s bills

After the GRIR is issued, the invoice is received from the supplier, supported by relevant
documents evidencing award of purchase orders/contracts and receipt of materials/services.
Based on contractual terms where payments are made based on proof of dispatch against

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a purchase order, bills shall be passed and accounted based on the GRIR of approved
materials. The invoice submitted by the supplier will be verified and signed by the indenting
officer, and pay order form (Annexure 23) or any other relevant forms will be prepared by
the Procuring Entity and signed by an officer authorised to sign pay-orders. All
correspondence with the supplier will be handled by Procuring Entity Department.

The documents, which are needed from the supplier for release of payment, are to be clearly
specified in the contract. The paying authority is also to verify the documents received from
the supplier with corresponding stipulations made in the contract before releasing the
payment.
While claiming the payment, the supplier must also certify on the bill that the payment
being claimed is strictly in terms of the contract and all the obligations on his part for
claiming this payment have been fulfilled as required under the contract. There should also
be a suitable provision for verification of the authenticity of the person signing the invoice,
and so on, to claim the payment.
In case of part supply, the payment will be released by deducting 10 (Ten) per cent of the
bill value which will be released once the entire supply is made. Deduction of applicable
taxes at source from payments to suppliers will be done as per the existing law in force
during the currency of the contract.

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 Chapter-10
Disposal of Scrap Goods

10.1 Scrap for disposal

There accumulates, in every organisation, a large quantity of material which is neither usable for
the purpose for which it was originally procured nor of any other operational value. Such material
is generally called “scrap” and should be distinguished from other stores and component parts
which can be utilised after repair or renovation. Occasionally, scrap may consist of second- hand
or in excellent repair even new material which is surplus to the need of the organisation or its sister
organisations and may command a fair price in the market not normally associated with scrap.

10.2 Classification and categorisation

It is very important to categorise the scrapped items under different trade groups based on the
use to which the scrap purchaser can put it for commercial use, for example, melting, re-rolling,
burning, recycling, and so on. Properly grouped and sorted scrap is likely to attract better value
and help in keeping historical data of prices and facilitates fixing of reserve prices.

10.3 Survey of materials for classifying as scrap for disposal

10.3.1 Competent Authority to declare and dispose off Scrap Material may be laid down in the
DFPRT,2017 based on the ‘Book Value’ or 5% (Five percent) of the Original/Market Value of new
goods, if Book value is either not available or has become negligible. Before any item of stores can
be sold as ‘scrap’, it should be declared as such by the Survey Committee (SC) appointed by the
Head of Office and the sanction of the CA obtained for such a sale. The CA may relax this need for
survey by SC, as a standing order, in the case of a list of known items of scrap like Newspapers,
containers etc. of small value (Rs. 5,000 – Rupees Five thousand). Lots of small value may also not
require to be condemned by SC, on which the Head of Office may be given powers to declare such
materials as scrap without survey committee. However, this dispensation is subject to furnishing of
a certificate by the concerned Departmental officer as laid down in the DFPRT,2017 that the items
being offered have been inspected by him personally and found unserviceable and unfit for any
further use.

10.3.2 Survey of Scrap: Generally, items may be identified as scrap in any of the followingcases:
i) Whether the item has completed its expected useful life or not, factors such as norms
for maintenance cost; norms for utilisation of such equipment; usability in the
organisation or any other office must also to be considered before deciding on
scrapping the equipment;

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 ii) The item has a limited shelf life, exists in surplus quantities and there is likely to be no
future use of the item during the remaining period of its useful life;
iii) The reasons for declaring the item surplus or obsolete or unserviceable should be
recorded by the SC. A standard format for SC’s recommendations for disposal of goods
is provided in Annexure 18;

iv) SC may seek the approval of the CA with the concurrence of the Associated/integrated
Finance.

10.4 Modes of disposal

The mode of disposal may be determined by the CA, keeping in view the necessity to avoid
accumulation of such goods, consequent blockage of space and also deterioration in value of
goods to be disposed of. The usual modes of disposal of scrap are:
i) Small value scrap such as waste paper or industrial sweepings, and so on, up to a value of
Rs. 5,000 (Rupees Five thousand) in each case may be sold directly to the local scrap dealers
on a summary quotation basis;
ii) Scrap upto Rupees Two lakh may be sold on a Limited Tender basis to locally known Scrap
Dealers of relevant category;
iii) Sale through the e-auction portal, or a tender for disposal or traditional public auction may
be resorted to for scrap value above Rupees two lakh. E-Auction should be the preferred
mode for such disposals, using the e-Auction platforms of NIC, MSTC, Indian Railways or
any other appropriate portal;
iv) Certain useable machinery/spare may still be useable by the State
Government/Departments/ PSUs; these should be disposed at book value plus 20 (Twenty)
per cent (7.5 (Seven and a half) per cent freight +12.5 (Twelve and a half) per cent handling
charges) directly to the concerned organisation.
v) Sales by Submission of Tenders: Disposal may also be done by submitting bids in response
to public invitations for tenders for supplying materials, whether such invitations are issued
by Government Departments, PSUs or by private bodies. This method of sale is particularly
suitable where it is proposed to dispose of its ‘overstocks’ and surplus stores’ which are in
fit to use condition.
vi) Scrap which is a security or safety risk (stamps, negotiable instruments, money value
documents, security press items) may be destroyed suitably in an eco-friendly manner in
accordance with guidelines of State Pollution Control Board (SPCB) in the presence of a
committee after obtaining CA’s approval. The committee should issue a certificate of having
destroyed these. Video recording may also be done of such disposal.

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 vii) Sale of hazardous waste items would be governed by the following procedures in addition
to guidelines/notifications issued by the State Pollution Control Board/ Department of
Science, technology and Environment and Forest Department from time to time :
a) Sale of old batteries/lead acid batteries will be governed by the Batteries
b) (Management & Handling) Rules, 2001 or as amended from time to time;
c) Sale of other categories of hazardous waste items will be governed by the
Hazardous and Other Wastes (Management and Transboundary Movement) Rules,
2016 or as amended from time to time; Sale of e-waste shall be governed by E-
Waste (Management) Rules, 2016 or as amended from time to time;
d) Bidders must submit a notarized copy of the valid registration certificates issued by
the State Pollution Control Board (SPCB) and produce it at the time of taking
delivery of the materials, failing which their bid will be liable for rejection. In case of
lead acid batteries, used/waste oils and nonferrous metal wastes, in addition to
submitting necessary valid registration from the SPCB, the bidder must also submit
a notarized copy of the valid registration certificate from SPCB; and
e) In case of a sale involving inter-state movement of goods, the buyer shall also
submit an NOC from the concerned SPCB, with whom the buyer is registered, to
the seller before taking delivery, failing which the buyer will be responsible for the
consequences and the seller shall take further decision as may be deemed fit.

10.5 Preparation for disposal

10.5.1 Scrap recommended for disposal should be segregated from other materials into an
identifiable lot. It should be marked as such with a board, indicating the lot number and brief
description. Valuable scrap such as non-ferrous metals should be secured in lockable rooms.

10.5.2 Determining reserve Price

In any mode of disposal, material should not be sold at rates per lot but bids should be registered
by rate per unit (number, length or weight) so that a complete check on the quantity delivered can
be exercised, at any time. The Head of Office holding the stock may determine the reserve price
after approval of CA. In case of large value disposals a Reserve Price Committee may be appointed
to recommend the reserve price. The use of external costing experts, price databases, price indices
and data sharing may be done in the same manner as detailed in Chapter 2 relating to the
reasonableness for procurement prices. Large newspapers and economic dailies have dedicated
sections dealing with rates in the scrap market. The reserve price should be recorded on a page
numbered register in advance of the date of disposal. This register should be sealed immediately
after the reserve prices of all lots are recorded in the register, and kept in safe custody. The sealed
register should be opened just before the e-auction creation/tender opening. Some methods for
determining reserve prices are:

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 i) Book value with depreciation. In case the Book value is not available or has become
insignificant, the reserve price may be based on 5% of the Original or Market cost of
the new item;
ii) Last sale price moderated by quantity, quality, location, market condition, price trend
of various metals, and so on;
iii) Prevailing market price ascertained through a market survey; and
iv) Costing analysis based on costs of various elements of the item (discounted for melting
losses) labour charges and transportation cost; etc.
v) In cases where the reserve price cannot be fixed as per the laid down procedure an
Insurance Regulatory and Development Authority (IRDA)-approved valuer may be
engaged for valuation of such material and the Reserve Price Committee will take into
account the valuation given by the valuer while recommending the reserve price.

10.6 Conditions of Disposal Applicable to all Modes of Disposal

10.6.1 ‘As-Is-Where-Is’ basis

Notwithstanding anything contained in the e-auction or advertisement issued on the description
and particulars of material for sale, the sale is on ‘as-is-where-is’ basis only and the principle of
caveat emptor (let the buyer be aware) will apply. As is where is means that the description/
quality/quantity indicated are approximate and the seller does not give any assurance or guarantee
that the material will strictly adhere to the advertisement or e-auction. All items shall be taken
delivery of from the site by the successful bidders, with its faults and errors in description, if any.
Neither can the sale be invalidated nor the bidder make any claim/ compensation, whatsoever, on
account of any defect in description or deficiency in the quantity and quality. No plea of
misunderstanding or ignorance of conditions put forth subsequent to a confirmation of sale shall
be accepted.

10.6.2 Inspection by Bidders

In view of the ‘as-is-where-is’ condition, bidders are advised to quote rates only after inspection of
items at the site. The bidder or his authorised representative may inspect the materials as per the
inspection schedule mentioned in the auction details, between 11 am to 4 pm (excluding lunch
hours) on any working day at the location specified against each lot with the prior permission from
the contact person, as given in the auction details. The detailed description of all lots, including the
list of spare parts, if any, is available at the site.

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10.6.3 Right To Reject All Bids
The seller reserves the right to accept/reject and cancel any bid, amend the quantity under any lot
or withdraw any lot at any stage before or after acceptance of bid/issue of acceptance letter/sale
order/delivery order/deposit of the full sale value by the bidder, without assigning any reason
thereof and the value of such material, if paid for, shall be refundable. The seller shall not be
responsible for damage/loss to bidders on account of such withdrawal at any stage from the sale.

10.6.4 Excise Duty AndTaxes

Any statutory variations in the rate of taxes/duties are to be borne by the purchaser. GST/ excise
duty rates indicated in the e-auction catalogue or Tender advertisement are only indicative and
the actual GST rates as applicable on the date shall be payable by the successful bidders directly
to the seller at the time of taking delivery of materials. Form ‘C’ will be accepted. In order to avoid
the imposition of penalty, the amount deposited by the successful bidder towards taxes and duties
will be immediately deposited with the concerned tax authorities without waiting for the actual
delivery.

10.7 Disposal through Tender

Disposal through tender could take place through the e-Procurement portal or normal tendering.
In the bidding documents, General Conditions of Sale (GCS, in place of GCC in procurement
tenders) may be laid out.

The broad steps to be adopted for this purpose are:

i) Preparation of bidding documents;
ii) Invitation of tender for the surplus goods to be sold;
iii) Opening of bids;
iv) Analysis and evaluation of bids received;
v) Selection of the highest responsive bidder;
vi) Collection of sale value from the selected bidder;
vii) Issue of sale release order to the selected bidder;
viii) Release of the sold surplus goods to the selected bidder; and
ix) Return of bid security to the unsuccessful bidders;
x) Any special conditions of contract for each lot may also be given. Important aspects to
be kept in view while disposing the goods through an advertised tender are:
a) The basic principle for sale of such goods through an advertised tender is ensuring
transparency, competition, fairness and elimination of discretion. Wide publicity
should be ensured of the sale plan and the goods to be sold;

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b) All required terms and conditions of sale are to be incorporated in the bidding
document comprehensively in plain and simple language. The applicability of taxes,
as relevant, should be clearly stated in the document. The bidding document should
also indicate the location and present condition of the goods to be sold so that the
bidders can inspect the goods before bidding;
c) Bidders should be asked to furnish bid security (EMD) along with their bids. The
amount of bid security should ordinarily be five per cent of the assessed or reserved
price of the goods. The exact bid security amount should be indicated in the bidding
document. The EMD shall be forfeited if the tenderer unilaterally withdraws,
amends, impairs or derogates from his offer in any respect within the period of
validity of his offer;

d) Late bids, that is, bids received after the specified date and time of receipt shouldnot
to be considered;
e) The bid of the highest acceptable responsive bidder should normally be accepted
and an acceptance/sale order be issued. However, if the price offered by that bidder
is not acceptable, a negotiation may be held only with that bidder;
f) In case the selected bidder does not show interest in depositing the balance sale
value or in lifting the goods, the bid security should be forfeited and other actions
initiated including resale of the goods in question at the risk and cost of the
defaulter;
g) In case the total quantity to be disposed cannot be taken up by the highest
acceptable bidder, the remaining quantity may be offered to the next higher
bidder(s) at the price offered by the highest acceptable bidder. The minimum
quantity to be accepted shall be indicated in the tender;
h) If the tenderer’s offer is not accepted, the tenderer’s EMD shall be refunded to him.
No interest shall be payable on such refunds. The EMD deposited by the successful
tenderer shall remain with the disposing Department till payment of the SD money
has been made. It may be adjusted as part of the total SD money at the discretion
of disposing Department;
i) The offer should be examined by the competent level of Tender Committee as per
DFPRT,2017 and TC recommendations should be accepted by the Competent
Authority as per the laid down DFPRT,2017.;
j) The acceptance letter/sale order would be issued to the successful bidder(s)
notifying the amounts and schedule of submission of SD and Balance Sale Value
(BSV);
k) Successful tenderers, herein after referred to as purchasers, shall have to submit a
SD @ 25 (Twenty-Five) per cent of the total sale value of the contract within seven
calendar days of the issue of the acceptance letter/sale order (excluding the date

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 of issue). The SD shall be deposited in the form of bank draft/pay order, drawn on
any of the commercial bank in favour of officer concerned as mentioned in the NIT;
l) BSV: The successful bidder in an e-auction or tender sale may be allowed 15 (Fifteen)
calendar days (including the date of acceptance letter/sale order) for payment of
BSV. The Head of Office (or the Officer delegated by an order as per DFPRT,2017)
after taking into consideration the prevailing market rates and trends, may grant an
extension of time for the payment of BSV with late payment charges@ one per cent
per week or part thereof up to two weeks only and, thereafter, the SD will stand
forfeited without notice. Extensions should not be granted as a matter of routine.
The date of submission of the demand draft in the cash office is the date of payment
for all purposes. No interest will be paid to the purchaser for the amounts paid or
deposited and subsequently found refundable to the purchaser under any of the
conditions of the contract; and
m) Delivery Order: Delivery Order is an essential document required to be produced
to take delivery of the material from the custodian and therefore after depositing
BSV, the Delivery Order should be issued and the delivery should be made to
purchaser or his agent on the strength of the Delivery Order and after verifying
cashier’s receipt.

10.8 Disposal Through Auction

i) The State Government/Department may undertake auction of goods to be disposed of
either directly or through approved auctioneers;
ii) The basic principles to be followed here are similar to those applicable for disposal through
the advertised tender so as to ensure transparency, competition, fairness and elimination
of discretion. The auction plan including details of the goods to be auctioned and their
location, applicable terms and conditions of the sale, and so on, should be given wide
publicity in the same manner as is done in case of the advertised tender;
iii) While starting the auction process, the condition and location of the goods to be auctioned,
applicable terms and conditions of sale, and so on, (as already indicated earlier while giving
wide publicity to it), should be announced again for the benefit of the assembled bidders;
iv) During the auction process, acceptance or rejection of a bid should be announced
immediately on the stroke of the hammer. If a bid is accepted, SD (not less than 25 (Twenty-
Five) per cent of the bid value) should immediately be taken on the spot from the successful
bidder either in cash or in the form of deposit-at-call-receipt, drawn in favour of the FA of
the disposing organisation. The goods should be handed over to the successful bidder only
after receiving the balance payment as in case of sale through tenders;
v) The composition of the auction team will be decided by the CA. The team should preferably
include an officer of the internal finance wing of the Department and a representative of
security staff.

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Disposal at Scrap Value Or By Other Modes
If a Department/Organization is unable to sell any surplus or obsolete or unserviceable item at the
reserve price, in spite of its attempts through an advertised tender or auction, it may dispose it off
at its scrap value with the approval of the CA. In case the Department/Organization is unable to
sell the item even at its scrap value, it may adopt any other mode of disposal including destruction
of the item in an eco-friendly manner.

10.10 Delivery of Sold Material

10.10.1 Free delivery Time and Ground rent

Delivery has to be taken within 30 (Thirty) calendar days (called free delivery period) from the date
of the acceptance letter/sale order (excluding the date of issue of acceptance letter/ sale order).
The delivery of material will be given only after realisation of the demand draft/ pay order. If the
purchaser is not able to lift the material within the free delivery period, he may request for an
extension. Such extensions are generally granted after levying a ground rent @ 1/2 (half) per cent
of the sale value per day. But, in some genuine cases, the levy of ground rent may be waived. An
accounts representative will be responsible for seeing that when the ground rent has become due,
it is recovered by the stock-holder before delivery of the stores. The amount realised as ground
rent should be noted in the issue note by the stock holder and certified by the stock verifier. The
stock-holder will be responsible for remitting the cash to the cashier and obtaining a receipt.

10.10.2 All Risks to the Buyer

The items shall remain, in every aspect, at the risk of the buyer from the time of acceptance of his
offer. The seller will not undertake any liability whatsoever for the safe custody, protection or
preservation after the sale has been confirmed. Lots are put up for sale, subject to change by
nature’s wear and tear. No complaint regarding the quality or description of the materials sold will
be entertained once the bid has been accepted.

10.10.3 Terms of delivery

No picking, choosing, sorting, welding, cutting or breaking of goods or materials sold will be
permitted unless otherwise specified. In used/waste oil, separation of oil and water, and so on, shall
not be allowed at the site. If these actions are allowed, there is possibility of leakages. In mixed lots,
the buyer may take undue advantage by leaving cheaper components behind. If whole machinery
is sold and cutting and breaking is allowed, it would be difficult to ensure that the purchaser is
taking out only his own cut material and not other unsold material or from other scrap lots. If any
foreign materials are found to be mixed in the lot, other than the items included in the auction
catalogue and acceptance letter/sale order, the seller reserves the right to remove them at the

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time of delivery. The buyer shall not be entitled to re-sell an item, lot or part of a lot while the
goods are still lying within the premises of the seller and any such sale or assignment of the buyer’s
right to the material sold in an auction will not be recognised. All documents for releasing materials
will be made out in the name of the buyer only.
The material will be delivered only to the successful bidder or his authorised representatives against
the presentation of the buyer’s identity proof. If the successful bidder desires to authorise a
representative or an agent to accept delivery, the bidder shall produce a suitable power of attorney
or authorisation letter for each lot separately, duly attested, by a notary public authorising his
representative or agent to lift the material from the seller.

10.10.4 Default by Seller

The seller will not be, in any way, responsible for failure to deliver the material due to causes
beyond his control such as a strike, lockout, cessation of work by labourers, shortened hours, act
of God or other causes or other contingencies whatsoever. The buyer shall not be entitled to cancel
the contract and the period of delivery shall automatically be extended proportionately.

10.10.5 Default by Buyer

Materials sold but not removed within the specified date will become the property of the seller and
it will have the right to dispose of such goods in any manner as he deems fit without any notice.

10.10.6 Witnessing Delivery

All materials sold shall be weighed or counted before delivery, this being supervised by the:
i) Stock-holder’s representative;
ii) Accounts representative – stock-verifier;
iii) Representative of the security force of a rank not less than constable; and
iv) Representative of the purchaser (if he wants to be present).

10.10.7 Deliveries of Scrap

At the time of delivery of scrap material to the purchaser, the weighment is to be done in the
presence of the stockholder’s representative, so nominated by the Head of Office. The
stockholder’s representative and accounts representative will sign a joint statement indicating the
type of scrap, name of the party to whom scrap is delivered and quantity as per theweighment
slip. The stock-holder should arrange for the deliveries to be affected according to the agreement
and terms and conditions of sale. He should take every possible step to expedite delivery of the
auctioned materials. The stock verifier should count, measure or weigh each lot or part of a lot
after comparison of the description and quantity shown in the sold lot to ensure that only such
kinds and quantities of materials as have been shown in the sold lot are being issued; he should
sign the gate passes and issue notes in token of such a check. In giving delivery of scrap of non-
ferrous items, the material should be weighed on electronic weighing scales and the weight of
each consignment should be recorded in detail by the stock verifier in his field book. All deliveries

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should be done through Electronic Weigh Bridges. All the Weigh Bridges should have valid
certificate from Weight & Measurement Department of the State Government.

He should sign the issue note after fully satisfying himself that entries made therein agree with
those in the field book. The field book should be attested by the other representatives making
delivery of the goods in token of their having accepted the correctness thereof.

The empty and loaded trucks or carts should be weighed and particulars of the gate pass
issuedrecorded. The issue note and gate pass should be countersigned by the stock verifier.

The loading of the sold materials should be done under the supervision of the stock-holder and
be witnessed by other representatives. The stock-holder will be responsible for realising the loading
charges, if any, from the purchaser.

10.10.8 Variation in available Quantity :At the time of delivery, the actual quantity may vary from
the quantity mentioned in the delivery order. In case of excess available material, the seller reserves
the right to retain material in excess of quantity in the lot at its discretion. The purchaser may be
allowed to lift the additional quantity after making the requisite additional payment to the seller.
If the quantity in a lot on actual weighment or count is less than the announced quantity, the seller
will not make good the deficiency under any circumstances. The purchaser thereof will be entitled
to obtain a refund for the undelivered quantity at the quoted rate. No interest will be paid on the
amount of short delivered quantity. The reasons for shortfall should be recorded by the stock-
holder and the Head of Office (or any other officer as per DFPRT,2017) should also record his
opinion. Any refund in this regard will be made with the Head of Office’s (or any other officer as
per DFPRT,2017) recommendationand CA’ approval. Copies of the weighment slip will be the base
for determining the refund amount. It may be necessary to look into the ledgers for the total
quantity held by the stock-holder and particularly so in the case of non-ferrous scrap; the item
concerned may have to be processed for special stock verification. In case of a short delivery of
the material, the refund of taxes will be the responsibility of the successful bidder only.

10.10.9 Conclusion of Delivery

The seller’s responsibility ends after the consignment has been loaded and handed over to the
representative of the purchasers. The seller will be no party to any dispute that may arise after the
loading has been completed. At the conclusion of the delivery of the lot or lots, pertaining to the
item of scrap, any stock, left over should be verified by the Accounts Department with the book
balance and any discrepancies adjusted. Such “left over” stock may be transferred to fresh scrap of
similar description. At the conclusion, a report of sale account of goods disposed has to be
submitted to the CA and FA, to show that only the material paid for (and nothing else) has been

153
disposed of and that all payments due (and nothing less) have been credited to the relevant
accounts. A format of the report is shown in Annexure 19.

10.11 Procedure for adjustment of sale Proceeds in the books of accounts

The following procedure may be followed for adjustment of sale proceeds in the books of accounts:
a) If the realised price is more than the book value, the sale proceeds should first be applied
towards the ‘head of account’ in which the book value is lying, and the remaining portion
should be treated as “profit on sale of capital asset”; and
If the realised price is less than the book value, it should be apportioned in the ratio of the
reserve price of the equipment and that of the spares. In this case, the CA’s sanction to write off

the difference between the book value and the realised price would be necessary.

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ANNEXURE
Annexure 1: Purchase requisition (indent) for Goods (non-stock)
(Refer Para 2.3)
Name of Indenting Office

Purchase Requisition for Goods (Non-stock)

(Send in duplicate and separate requisition to be furnished for each Trade Group)

no. Date :
Dept: Office :

Category of stores/ In case of equipment spares

trade group - details of equipment/as-
sembly where fitted:
Goods are required by Consignee and place of
Date delivery

Details of items
S.N. Descrip- Unit Past Consumption Avail- Total Esti- Last Total
tion/Speci- able Qty. mated/ Pur- Esti-
fication/ Stock if Indented Past Pur- chase mat-
Drawing/ Yr-3 Yr-2 Yr-1 any chase Refer- ed
Sample Rate ence Cost

a b c d e f g h i j k

Estimate name/number
Allocation : No Code No
Is proprietary certificate attached: Yes, reference/ No

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It is certified that all

1. Description and technical specification and quantity are in conformity with the guidelines
in this regard in the Procurement Manual for Goods.
2. Technical and financial approvals at appropriate levels as per DFPRT,2017 have been
obtained.
3. Funds are provisioned for, in the budget.
4. The quantity indented does not exceed any sales, consumption or usage limits of require-
ments, if any laid down by competent authority.

Signature Indenting officer Signature Indenting officer

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 Annexure 2: Purchase Requisition Register for Indenters
(Refer Chapter 2 Para 2.3)
(Name of Indenting Office)

Purchase Requisition (PR) Register for Indenters

(To be prepared and maintained by the intending divisions)
Name of Procuring Entity to whom PRs sent

Sr. Description Qty. PR Date of Ascertained from Procuring Entity Date of Remarks
No. No. submission Tender Contract Qty. Name Delivery Receipt of
and No: and Ref & Date of the Date Material
date opening Supplier
date
1 2 3 4 5 6 7 8 9 10

Annexure 4A
Office Superintendent Indenting Officer

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Annexure 3: Purchase requisition register for Procuring entity

Annexure
(Refer Chapter 2 Para 2.3)
Name of the Procuring Entity
Purchase Requisition (PR) Register for Procuring Entity
(To be prepared and maintained by the Procuring Entity)
Sr. No. of
PR No. Date of Tender Date of Contract
Date/ Tender Descrip- Delivery Contract Remarks
and Qty. Receipt Indenter Type/Date Tender Number Supplier Qty.
Sr No File No. tion Date Progress
Date of PR of Floating Opening and Date
Register
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Office Superintendent Procuring Officer

Note:
1) The register will be reviewed and signed by Head of Office every month.
2) A summary will be prepared and submitted to HOD every quarterly.

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Government Annexure
of Tripura 4: Proprietary Article Certificate
Finance Department (Refer Para 3.4.1)
Valid for the Current Financial Year

File Number and Date Reference

1 Description of article
2 Forecast of quantity/annual requirement
3 Approximate estimated value for above
quantity
4 Maker’s name and address
5 Name(s) of authorised dealers/stockists
6 I approve the above purchase on PAC basis and certify that: --
Note- Tick to retain only one out of (b), (c-1) or (c-2) whichever is applicable and cross out
others. Please do confirm (a) by ticking it – without which PAC certificate will be invalid.
6(a) This is the only firm who is manufacturing/ stocking this item.
AND
6(b) A similar article is not manufactured/ sold by any other firm, which could be
used in lieu OR

6 No other make/brand will be suitable for following tangible reasons (like

(c-1) OEM/ warranty spares): OR
............................................................................................................

6(c) No other make/brand will be suitable for following intangible reasons (if PAC
was also given in the last procurement cycle, please also bring out efforts made
since then to locate more sources): OR
............................................................................................................
7 Reference of concurrence of finance wing to
.........................................................
the proposal:
History of PAC purchases of this item for past three years may be given below
Name of the Supplier

Order/Tender Quantity Ordered Basic Rate on Order Adverse

Reference& Date (Rs.) Performance
Reported if Any

Signature of Approving Authority ...............................................................

Date ............................... Designation of Officer .......................................

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Government of Tripura
Annexure
Finance Department 5: Purchase without Quotation Format
(Refer Para 3.6.2)

Ref No:

Place: Date:

“I, , am personally satisfied that the goods

(described below) purchased are of the requisite quality and specification and have been
purchased from a reliable supplier/contractor at a reasonable price.”

Item:

Quantity:

Indenter:

Unit Rate:

Taxes/Duties:
Other Charges:

Total Unit Price:

Total Price:

Purchased from: M/S

Vide Bill No.:

Justification:

Cheque may be drawn

in favour of
Name:

Designation:

Signature:

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Government of Tripura
Finance Department

Annexure 6: Bid opening attendance sheet cum report

(Refer Para 4.3) [Name
of Procuring Entity]
Bid Opening Attendance Sheet cum Report

Attendance Record
Sr Bidder’s Bidder’s Bidder’s Represented Contact Signature of Rep-
No Name Address Authorisation and by No. resentative
Date

Bid Opening Report

Tender Title Date of

No Opening
Offer Bidder’s Bidder’s Submission Submission of Rate Signature of
Documents
No. Name Ref and of Requisite (as per detailed Quoted Representative
Date EMD (Y/N) scrutiny to be and Taxes/
informed later
Duties
--/--- on)

--/--

--/--

Total no. of regular tenders taken out from the tender box to be opened as mentioned above

................................................................................................ (in figures and in words)

Signature, Date and Time Signature, Signature, Date and Time

Name and Designation of Name and Designation of Tender
Tender Opening Officer Opening Officer

Received total regular tenders.................................................. (In figures/words) as above

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Signature, Date and

Government ofTime
Tripura Signature, Signature, Date and Time
NameFinance
and Designation
Department of Name and Designation of Procuring
Procuring Entity Officer Entity Officer

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Government of Tripura
Annexure
Finance Department 7: Tender committee minutes Format
(Refer Para 6..4.1)
(For Techno-Commercial/Financial Bids)
Organisation:

Minutes of Tender Committee

Meeting
(Techno-commercial/Financial Bids)
Section I: Top Sheet

File No: Date:

Description Estimated Cost:-
Tender Published In Date of Publication
Bid Validity Bid Opening Date
Past Procurements
Order
Sr. Supplier Quantity Basic Rate (Rs.) Remarks
Reference &
No
Date
.
Members of the Tender Committee
Sr. Name Designation Sr. No. Name Designation
No1 2
3 4
.
Section II: Salient Feature of the Tender
Review background of indent; technical and financial approvals; estimated cost; budgetary
provisions; urgency of requirement; special technical requirements and other connected
procurements which are part of same package/project
Review mode of bidding; bidding document contents; bid publication; level of competition
obtained; issues if any noticed during bid-opening (bids not opened due to lack/unsatisfactory
EMD, etc.) and any other procurement of this requirement in process (at various stages)
Review special conditions, restriction if any, on participation of bidders; purchase preferences,
requirements prescribed in bid documents (EMD, document submission, etc.)
Section III: Preliminary Evaluation
Review handling of any complaints received

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Government of
Review/confirmation ofTripura
quantity and period of delivery required
Finance Department

Discuss preliminary evaluation for determining substantially responsive bids and for minor
Corrections and clarifications
Section IV: Evaluation of Responsive Bids
Bid-wise deliberation should be recorded
In case of evaluation of Financial Bids
i) Start with review of techno-commercial evaluation
2.Insert a summary table of evaluated price in the order of L1, L2, etc.
3.Deliberations should be in the sequence of L1, L2, etc. Section V: Summary of
Recommendations
Bid-wise recommendation should be recorded
In case of evaluation of financial bids,
a) Give a summary of recommended bids, award value, bid expiry date
and special conditions, if any.
b) Also mention that the rates recommended are considered reasonable (and
basis for such determination).
c) Total value of the recommendations for determining level of acceptance authority.
d) Mention that none of the TC members have any conflict of interest with the parties
recommended for award.
e) Request acceptance of recommendations by competent authority and that it’s
within his powers of acceptance as per SoPP/DFPRT,2017.

Signature Name and Designation of the Members

1 2
Date: Date:
(Name & Designation) (Name & Designation)
3 Date: 4
Date: (Name & Designation)
(Name & Designation)

Remarks by the Accepting Authority:

Signature: Date:

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Government
Name of Tripura
& Designation of Accepting Authority
Finance Department

Annexure 8: Invitation and declaration for negotiations

(Refer Para 6.5.9)
Invitation for Negotiations
(On letterhead of the Procuring Entity)
No: ............................. Datt : .................................
To M/s ............................................................................. Registered A/D
Sub: Tender No .......................... opened on .................... for the supply of .................... Dear Sir,
The rates quoted in your tender are considered high. You are therefore, requested to come for
negotiations of rates, on.............. (date) at........... (time) at............. (venue).
You should, however, come for negotiations only in case you are prepared to furnish before
such date the declaration appended herewith.
A copy of the form in which you may submit your revised offer after negotiations is enclosed.
Yours faithfully,

Enclosure: (Authorised Officer)

1) Form of Declaration
2. Form of Revised Offer

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Government of Tripura
Finance Department

FORM OF DECLARATION
(To be signed and submitted before start of negotiations)
(On company letterhead)
No: .................................... Date : .................................. To
............................................................................................................................... Sub: Tender No
......................... Opened on .................. for the supply of .....................
Ref: Your invitation for negotiations No: dated:
Dear Sir,
I ..................... duly authorised on behalf of M/s. ..................................... do declare that in the
event of failure of the contemplated negotiations relating to Tender No. ..................... opened
on ...................................................... my original tender shall remain open for acceptance on
its original terms and conditions.
Yours faithfully,

Place: ........................................... Signatures of bidder, or officer authorised

to sign the bid documents
Date: ...........................................
on behalf of the bidder

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Annexure 9: Format of revised offer in negotiations

(Refer Para 6.5.9)
Revised Offer in Negotiations
(On company letterhead)
From ...........................................................................................................................
Full address ..................................................................................................................
To ...............................................................................................................................
Sir,
Sub: Tender No .............................. opened on ................. for the supply of ..................
Ref: Your invitation for negotiations no: dated:
i) On further discussions with your representatives on .................................. in response to your
letter no ............................................... dated .........................
We are not prepared to reduce the rates already quoted in the original tender, which will
remain valid up to ....................................................................
Or
i) I/we reduce my/our rates as shown in the enclosed schedule of items.
2. I/we am/are aware that the provisions of the original bidding document remain valid and
binding on me.
3. I/we undertake to execute the contract as per following Schedule .............................
4. I/we agree to abide by this tender on the revised rate quoted by me/us, it is open for acceptance
for a period of 120/180 (one hundred twenty to one hundred eighty) days from this date, i. e., up
to ................................................ and in default of my/our doing so, I/we will forfeit the earnest money
deposited with the original tender/attached herewith. Eligibility as valid tenderers shall be deemed
to be the consideration for the said forfeiture.
Yours faithfully,
Signatures of bidder or officer
authorised to sign the bid documents on
behalf of the bidder

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Annexure 10: Letter (notification) of award (LoA) of contract

(Refer Para 6.6.1)
Name of the Procuring Entity ...........................................................................................
Letter of Award of Contract

Contract No: [Insert date]

Contract Title:
To,
M/s. [Insert name & address]
Sub: Award of contract for contract no: [insert contract number] and contract title: [insert
contract title]
REF. Your offer no. [insert offer number] against our tender no. [insert tender no] opened on
[insert date of opening of tender]
Dear Sir/Madam
I am directed to inform you that after evaluating the bid documents submitted by you on ----[enter
date] ---------[Enter Name of Procuring Entity] is pleased to inform you that you have been selected
as the successful bidder for the supply of [enter description]. The total purchase price shall be
[enter amount] as indicated in your financial bid submitted on [enter date], in accordance with
the procedures intimated in the relevant bid documents.
You/your authorised representative(s) are requested to be personally present at [insert address]
for the signing of the contract by [enter date].
In this respect, we also request you to submit the performance security of [insert amount of
Rupees in words] by [insert date]. Security deposit being 10% (ten percent) of the total cost =
Rs. .............................. .
Please apply for refund of EMD deposited over and above the SD of if any.
You are requested to execute necessary agreement within seven days from the date of issue of
this letter in the enclosed agreement form. Special adhesive stamp of Rs.10 (Rupees Ten) and
revenue stamp of Rupee one shall be affixed on the enclosed agreement form. Treasury receipts of
EMD and SD shall be deposited in office within the stipulated time limit as above.
This notification concludes the legally binding contract between you and the Government of
India, till issue of a formal contract.
Yours truly,
[Authorised Officer]
Enclosure: Agreement Form along with the schedule of delivery

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Annexure 11: Example of Formula for Price Variation clause

(Refer Para 5.6)
(The formula for price variation should ordinarily include a fixed element, a material element and
a labour element. The figures representing the material element and the labour element should
reflect the corresponding proportion of input costs, while the fixed element may range from 10
to 25% (ten to twenty-five percent). That portion of the price represented by the fixed element
and profits and is not subject to variation. The portions of the price represented by the material
element and labour element along will attract price variation.)
The formula for price variation will thus be:-
(F + a (M1/Mo) + b (L1/Lo))
Pa = Po – Po
Where: - 100

Pa is then adjustment amount payable to the supplier (a minus figure will indicate a reduction in
the contract price) on the date of supply.
Po is the contract price on the base date (which is taken as the date on which tender is due to
open).
F is the fixed element (as the percentage of the total price) not subject to price variation.
a is the assigned percentage to the material element in the contract price.
b is the assigned percentage to the labour element in the contract price. (F, a and b being
percentages should total 100)
Lo and L1 are the average wage indices for the quarter before the quarter in which base month falls
and for the quarter before the quarter in which date of supply falls; respectively. For example
for a tender opening on March 17, 2016 (base date), Lo would be average wage index for the
quarter of Oct-Dec 2015.
Mo and M1 are the material prices/indices as average of the month, two month prior to the
month in which base month falls and average of the month, two month prior to the month in
which date of supply falls, respectively. For example, for a tender opening on March 17, 2016 (base
date), Mo would be prices/index as average of the month of January 2016. All material
prices/indices will be basic prices without excise duty and without any other state, local taxes and
duties and Octroi.
If more than one major item of material is involved, the material element can be broken up into
two or three components such as Mx, My, Mz.
The following conditions would be applicable to price adjustment:
 Base dates shall be due dates of opening of bids (technical bid in two or three envelop/
cover system).
 Date of supply shall be the date of calculation/determination of the price variation.

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 No price increase is allowed beyond original delivery period.
 No price adjustment shall be payable on the portion of contract price paid to the seller
as an advance/interim payment after the date of such payment.
 Total adjustment will be subject to maximum ceiling of %.
 No price adjustment shall be payable if this is less than or equal to 2% (two percent) of
Po.
 Payments for each supply would initially be made as per the base price mentioned in the
contract. Price adjustment bill should be submitted only quarterly for the supplies made
during the quarter.
 In GTE tenders extra care should be taken in selecting the price indices. Preferably the
price indices should be from the same country and of same currency as the country and
currency of the bidder. In case price is in a currency of a country where inflation is low
and the indices are from country with much higher inflation rates, (M1/Mo) and (L1/Lo)
should be multiplied by a correction factor of exchange rates, where E0 0is the exchange
rate (Eo/E1) of country of M and L indices with reference to currency of price P. For
example, if M&L are from India and P is in $, then Eo is Number of Rs. in a $ on base
date and E1 is the exchange rate on determination date.
 Even if there is no price adjustment claim, supplier must submit all relevant data to prove
that there is no downward variation. In any case he must submit a declaration as follows;
“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 the same to the purchaser and offer requisite reduction in the contract rate.”

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aaaa

Annexure 12: Progress of supply order register

(Refer Para 9.6)

Progress of Supply Order Register

Sr. Supply Brief Descrip- Name of the Quantity & Quantity & Whether Delay Whether Status of Remarks
No. Order tion of Supplier & Due Date of Actual Date was Attributable Penalty is Security
No. and Mate- rial Registration Delivery of Delivery to the Supplier or Imposed or Deposit
Date No. Procuring Entity? not?
Qty, Date Qty, Date
1 2 3 4 5 6 7 8 9 10 11 12
18

Office Superintendent Procuring Officer

Annexure 17
Note:
1. The register will be reviewed and signed by Head of Office every month.
2. A summary will be prepared and submitted to HOD every quarterly.

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Annexure 13: Proposal for extension of delivery Period

(Refer Para 8.7.4)

Proposal for Extension of Delivery Period

Department Office

Description Contract value

Contract No: Date:

Variations applicable PVC/ERV/Statutor Type of contractor Govt.

y Variations Dept./
PSU/MSE
Contractor & Regn. No.: Quantity on order

Quantity already supplied Quantity remaining

Details of earlier exten- Is it a contract: Development/

sions granted Indigenisation
Reference and date of Reasons cited for
request for extension extension
Original/extended deliv- Proposed extension
ery period/date of period/date

Signature of Procuring Officer Date

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Remarks of Indenter:
Regarding the proposed extension of delivery period/date, the following
remarks are given regarding loss and inconvenience due to delay:
Loss: (strike out options not applicable): No loss would be incurred/loss is incurred but
cannot
be quantified/loss to the extent of Rs. ............................... would be incurred
Inconvenience: (strike out what is not applicable): No inconvenience
would be incurred/ inconvenience would be incurred
Proposed extension in delivery is recommended with above remarks.

Signature of Indenting Officer and Date

Proposal by Procuring Entity

It is certified that:
a) That a higher rate in the original tender was not accepted against other lower
quotations in consideration of the earlier delivery;
b) That there is no falling trend in prices for this item as evidenced from 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 even though tender
is not yet decided.
It is proposed to grant extension of delivery period/date up to ...........................................
(strike out options not applicable) with recovery of liquidated damages/with recovery
of token liquidated damages/without any liquidated damages and with/without
denial clause, in view of justifications recorded below:
..................................................................................................................................
In view of value of the contract and proposal regarding liquidated damages, this would
require approval of ................................................... (competent authority). This
would/would not require financial concurrence.

Signature of Procuring
Officer and Date
Head of Office recommendations/approval
Signature of Superintending Engineer/date

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Annexure 14: Format for extension of delivery Period/

Performance notice
(Refer Para 8.7.4, 8.7.6 and 8.7.8)

Registere
d A/D
or Speed
Post
Name of the Procuring Entity
..........................................................................................
Extension of Delivery Period/Performance
Notice
To M/s (name and address of form)

Sub: Contract No .............................. dated .................. for the supply of

.....................

Ref: Your letter no. ........................................................ dated:

..................................

Dear Sir,
1. You have failed to deliver {the (fill in qty.) of Stores/the entire quantity of
Stores} within the contract delivery period [as last extended up to] (fill in date).
In your letter under reply you have asked for [further] extension of time for
delivery. In view of the circumstances stated in your said letter, the time for
delivery is extended from (fill in date) to (fill in date)
2. Please note that notwithstanding the grant of this extension in terms of
Clause (fill in clause number) of the subject contract an amount equivalent
to ........................ % (............... per cent) of the delivered price of the delayed
goods for each week of delay or part thereof (subject to the ceiling as
provided in the aforesaid clause) beyond the original contract delivery
date/the last unconditionally re-fixed delivery date (as
& if applicable), viz., (fill in date) will be recovered from you as liquidated
damages. You may now tender the Stores for inspection [balance of the
Stores] in terms of this letter. Stores if any already tendered by you for
inspection but not inspected will be now inspected accordingly.
3. You are also required to extend the validity period of the performance
guarantee for the subject contract from (fill in present validity date) to (fill in
required extended date) within 15 (fifteen) days of issue of this amendment

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letter.
4. The above extension of delivery date will also be subject to the following Denial Clause.
i. That no increases in price on account of any statutory increase in or fresh
Imposition of GSTor on account of any other taxes/duty, leviable in respect
of the Stores specified in the said contract which takes place after (insert the
original delivery date) shall be admissible on such of the said Stores, as are
delivered after the said date; and.
ii. That notwithstanding any stipulation in the contract for increase in price on
any other ground including foreign exchange rate variation, no such increase
which takes place after (insert the original delivery date) shall be admissible
on such of the said Stores as are delivered after the said date.

iii. But nevertheless, the purchaser shall be entitled to the benefit of any decrease in price on
account of reduction in or remission of customs duty, excise duty, GST or on account of any
other Tax or duty or on any other ground as stipulated in the price variation clause or
foreign exchange rate variation which takes place after the expiry of the above mentioned date
namely (insert the original delivery date)
5. All other terms and conditions of the contract remain unaltered. This is without any prejudice
to purchasers’ rights under the terms and conditions of the subject contract.
6. Please intimate your unconditional acceptance of this amendment letter within 10 (ten) days of
the issue of this letter failing which the contract will be cancelled at your risk and expense
without any further reference to you.

Yours faithfully,

(Authorised Officer)
Duly authorised, for and on behalf of
The President of India

Note: Select one option within { } brackets; delete portion within [ ] brackets, if not
applicable; fill in ( ) brackets. Brackets and this note are not to be typed.

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Substitute following first para instead of first para in format above, for issuing a
performance
notice.
1. You have failed to deliver {the (fill in qty.) of Stores/the entire quantity
of Stores} within the contract delivery period [as last extended up to]
(fill in date). In spite of the fact that the time of delivery of the goods
stipulated in the contract is deemed to be of the essence of the contract,
it appears that (fill in the outstanding quantity) are still outstanding
even though the date of delivery has expired. Although not bound to
do so, the time for delivery is extended from (fill in date) to (fill in
date) and you are requested to note that in the event of your failure to
deliver the goods within the delivery period as hereby extended, the
contract shall be cancelled for the outstanding goods at your risk and
cost.

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Annexure 15: Format for correspondence with supplier

after expiry of delivery date
(Ref Para 8.8)

Registered Acknowledgement Due

To
M/s ........................................................
...............................................................
...............................................................
Sub : Contract No. ....................................................................... dated ….......…….…..
for supply of ………………………………...................…………………………………………...
Dear Sirs,
The date of delivery of the subject contract expired on ................................... . As
supplies against the same have not yet been completed, there is a breach of the
contract on your part. As information is required regarding past supplies against
this contract, you are requested to send the particulars regarding the quantity
supplied so far and, also, the quantity inspected so far,but not yet dispatched
and the quantity ready but so far not tendered for inspection before the expiry
of the date of delivery.
The above information is required for the purpose of verification of our
records and is not intended to keep the contract alive and does not waive the
breach. This is without prejudice to the rights and remedies available to the
purchaser in terms of the contract and law applicable in this behalf.
Yours faithfully,

(........................)
for………………………

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Annexure 16: No claim certificate

(Refer Para 8.5 and 8.10) (On
company letterhead)

To
(Contract Executing Officer)
Procuring Entity ..............................................

NO CLAIM CERTIFICATE
Sub: Contract Agreement no. ........................... dated ............... for the supply of ..........
We have received the sum of Rs. (Rupees ................................ only) in full and final settlement
of all the payments due to us for the supply of ............................................
....under the abovementioned contract agreement, between us and Government of India.
We here by unconditionally and without any reservation whatsoever, certify that with this
payment, we shall have no claim whatsoever, of any description, on any account, against
Procuring Entity, against afore said contract agreement executed by us. We further declare
unequivocally, that with this payment, we have received all the amounts payable to us, and
have no dispute of any description whatsoever, regarding the amounts worked out as
payable to us and received by us, and that we shall continue to be bound by the terms and
conditions of the contract agreement, as regards performance of the contract.

Yours faithfully

Signatures of contractor or
officer authorised to sign the contract documents
on behalf of the contractor

Date: .........................
Place: .........................

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Annexure 17: Goods receipt and inspection report

(Refer Para 8.14.1)
Purchase Order No. RR/GC No. & Date Procuring Entity ..........................
Name of Supplier M/s. Date of Clearance from Transporter Goods Receipt And Inspection
Report
Indenter. Date of Inspection and Acceptance/Rejec- Acceptance/ Part/Full
tion Rejection Quantity
Materials procured for Earlier GRIR No. for Part Supply GRIR No.
Project/Scheme
Allocation Code No. Date

Nos. Description Code Invoice Qty. as Qty. Qty. Inspected Rate Unit Amount Taxes/ Packing/For- Total
of Materials No. No. per S.O. Recd. Duties warding Amount
Accepted Rejected Rs. Rs. Rs.

Copy To Reason for not accepting the material

A/c Officer
Indenting Officer Inspected by me Received above material of correct quantity and Quality
Procuring Officer sign sign
Book-Keeping inspecting Officer Indenting/Receiving Officer
Inspecting Officer (Not below the Rank of Supervisor)
In case of rejected quantity: replacement required/not required ........................................ Rejected materials of local firms will normally
be delivered at the designated consignee. Firms are required to arrange collection within 14 (fourteen) days from the date of rejection
failing which Procuring Entity’s responsibility will cease and after that time they will remain at supplier’s entire risk and if not removed
before a further period of seven days, Procuring Entity shall have the right to dispose of such stores as deemed fit at the supplier’s risk
and account without further reference to them and to recover thereafter from the supplier’s as ground rent or demurrage at the rate of
Rs. ............ per day for consignments occupying less that 0.2 (point two) cubic meters, or 50 (fifty) kilograms in weight and up to Rs. ........
per day for articles bulkier or heavier than above. Rejected materials of firm from outstation if not removed within 21 (twenty one) days of
the rejection will be dispatched to them by goods train freight to pay at public tariff rate. A/c Officer may please recover any advance
payment or freight charges paid for such rejected quantity.

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Annexure 18: Survey committee’s Report

Annexure
(Refer Para 9.3.2)
Name of the Organisation .............................................................................................
SURVEY COMMITTEES REPORT

Report Reference No: Date:

Sr Code Descrip- Quantity Book Value Total Total User Reason Recommendation Remarks by
No. No. tion of No. Wt. Rate Unit Amount Est Est Dept. of Sur- of Survey Com- the Competent
Stores Scrap Loss vey mittee Authority
1 2 3 4 5 6 7 8 Value
9 10 11 12 13 14

(Signature) (Signature) (Signature)

Committee Member Designation Committee Member Designation Committee Member Designation

Date and Place:

Signature
Competent Authority

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Annexure 19: Sale account for Goods disposed

(Refer Para 9.10.9)
Name of the Organisation .............................................................................................
Sale Accounts for Goods Disposed

Lot No.
Auction Disposal Officer

Particulars of Stores
(Signature)

Quantity/Weight

Name and Full Address of Purchaser

Highest Bid Accepted (Name of bidder &

bid value)

Amount and Date Earnest Money/

Security Deposit Realised
Accounts Representative

Amount & Date on which the Complete

Amount is Realised and Credited with
(Signature)

Cashier and Reference thereof

The Actual Date of Handing over of the

Articles with Quantities with reference of
Issue Notes and Gate pass

Signatures of the Purchaser

eAuction Service Provider’s Commission

Security Staff

and Acknowledgement for its Payment

(Signature)

Book Value

Profit/Loss w.r.t Book Value

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Finance Department
Appendix 1: Legal aspects of Public Procurement

1.0 Relevant Provisions of the constitution of india

1.1 Equality for bidders “Part III - FUNDAMENTAL RIGHTS - Right to
Freedom
Article 19 (1) (g) of the Constitution of India
§19 Protection of certain rights regarding
(under Part III – ‘Fundamental Rights’) grants freedom of speech, etc.
all its citizens the right “to practise any
1. All citizens shall have the right-
profession or to carry out any occupation,
(a) to freedom of speech and
trade or business”. This has been interpreted
expression;
by courts in a way so as to ensure that every
(b) to assemble peaceably and without
citizen of India has a right to get equal arms;
opportunity to bid for and be considered
(c) to form associations or unions;
for a public procurement contract. However,
(d) to move freely throughout the
this provision does permit stipulation of
territory of India;
reasonable eligibility or pre-qualification
(e) to reside and settle in any part of the
criteria for the selection of successful bidders territory of India; [and]
in a public procurement contract. Thus a
(g) to practise any profession, or to carry
public procurement organisation should be on any occupation, trade or
ready to prove in court that no eligible bidder business.”
has been denied reasonable and equal
opportunity under this article to bid and be
considered for the concerned contract.
“Part XII. - Finance, Property, Contracts and
Suits
1.2 Persons authorised to make and
§299 Contracts:
execute contracts on behalf of Governments
All contracts made in the exercise of the
As per Article 299 (Part XII – Finance, Property, executive power of the Union or of a State
Contracts and Suits) of the Constitution of shall be expressed to be made by the
India, all contracts on behalf of the Union President, or by the Governor of the State,
Government or state Governments are to as the case may be, and all such contracts
and all assurances of property made in the
be entered into and executed by authorised
exercise of that power shall be executed on
persons on behalf of the President of India behalf of the President or the Governor by
or Governor of the state, respectively. The such persons and in such manner as he may
President of India, Governor of the state and direct or authorise.
the authorised persons who enter into or
Neither the President nor the Governor shall
execute such contracts are granted immunity be personally liable in respect of any
from personal liability under this article. That contract or assurance made or executed for
is why, above the signatures of such persons, the purposes of this Constitution, or for the
on the contract documents, a legal phrase purposes of any enactment relating to the
“For and on Behalf of the President of India/ Government of India heretofore in force, nor
shall any person making or executing any
the Governor of State” is written to signify
such contract or assurance on behalf of any of
this fact. In a state Government, the persons them be personally liable in respect thereof.”

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who are authorised to do so are listed in the DFPRT,2017.

1.3 Other mercantile laws

A procurement contract besides being a commercial transaction is also a legal transaction. There are
a number of commercial/mercantile laws that are applicable equally to the private sector and
public procurement, such as the Indian Contract Act, Sales of Goods Act, Arbitration and
Conciliation Act, and so on. Although a public procurement professional is expected to have a
working knowledge of the following basic laws relating to procurement, yet he is not expected
to be a legal expert. If standard contract forms are used, the procurement official can discharge his
normal functions without frequent legal help. In case any complex legal issue arises, or a complex
contract beyond the standard contract form is to be drafted, an appropriate legal professional
may be associated with the procurement from an early stage.

Salient features of these mercantile laws relating to Procurement are summarised below.

2.0 Salient Features of the indian contract act

2.1 Legal aspects Governing Public Procurement of Goods – introduction

A public procurement contract, besides being a commercial transaction, is also a legal

transaction. There are a number of 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 following basic laws affecting procurement of goods; however, he or she is
not expected to be a legal expert. Where appropriate in complex cases, legal advice may be
obtained. In other categories of procurement, additional set of laws may be relevant:

i. The Constitution of India;

ii. Indian Contracts Act, 1872;
iii. Sale of Goods Act, 1930;
iv. Arbitration and Conciliation Act, 1996 read with the Arbitration and Conciliation
(Amendment) Act, 2015;
v. Competition Act, 2002 as amended with Competition (Amendment) Act, 2007;
vi. Policy of state Government for local industrial unit.
vii. Information Technology Act, 2000 (IT Act, regarding e-Procurement and e-auction,
popularly called the Cyber Law);
viii. Right to Information (RTI) Act 2005;
ix. Central Vigilance Commission Act, 2003;
x. Delhi Special Police Establishment Act, 1946 (basis of the Central Bureau of Investigation);
xi. Prevention of Corruption Act, 1988;

xii. The Foreign Trade (Development and Regulation) Act, 1992 and the Foreign Trade Policy
(EXIM Policy), 2015; Foreign Exchange Management Act (FEMA), 1999 and FEMA
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(Current Account Transactions) Rules, 2000.

The elements and principles of contract law and the meaning and import of various legal terms
used in connection with the contracts are available in the Indian Contract Act, 1872 read with the
Sale of Goods Act, 1930. Some of the salient principles relating to contracts are set out briefly
in this chapter.
2.2 Elementary legal Practices

2.2.1 What is a contract? The proposal or offer when accepted is a promise, a promise
and every set of promises forming the consideration for each other is an agreement
and an agreement if made with free consent of parties competent to contract, for a
lawful consideration and with a lawful object is a contract.

2.2.2 Proposal or offer: When one person signifies to another his willingness to do or
to abstain from doing anything, with a view to obtaining the assent of the other to
such act or abstinence, he is said to make a proposal or offer. In a sale or purchase by
tender, the tender signed by the tenderer is the proposal. The invitation to tender and
instructions to tenderers do not constitute a proposal.

2.2.3 Acceptance of the Proposal: 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.

2.2.4 What agreements are contracts: An agreement is a contract enforceable by

law when the following are satisfied. A defect affecting any of these renders a contract
un- enforceable
i) Competency of the parties
ii) Freedom of consent of both parties
iii) Lawfulness of consideration
iv) Lawfulness of object

2.3 Competency of Parties

Under law any person who has attained majority and is of sound mind or not debarred by law to
which he is subject, may enter into contracts. It, therefore, follows that minors and persons of
unsound mind cannot enter into contracts nor can insolvent person do so.
2.3.1 Categories of persons and bodies who are parties to the contract may be broadly sub-
divided under the following heads: -
i) Individuals
ii) Partnerships
iii) Limited Companies
iv) Corporations other than limited companies

i) Contracts with individuals: Individuals tender either in their own name or in the

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name and style of their business. If the tender is signed by any person other than the
concerned individual, the authority of the person signing the tender on behalf of another
must be verified and a proper power of attorney authorizing such person should be
insisted on. In case, a tender is submitted in a business name and if it is a concern of an
individual, the constitution of the business and the capacity of the individual must appear on
the face of the contract and the tender signed by the individual himself as proprietor or by
his duly authorized attorney.
ii) Contracts with Partnerships: A partnership is an association of two or more individuals
formed for the purpose of doing business jointly under a business name. It is also called a
firm. It should be noted that a partnership is not a legal entity by itself, apart from the
individuals constituting it. A partner is the implied authority to bind the firm in a contract
coming in the purview of the usual business of the firm. The implied authority of a partner,
however, does not extend to enter into arbitration agreement on behalf of the firm. While
entering into a contract with partnership firm care should be taken to verify the existence
of consent of all the partners to the arbitration agreement.
iii) Contracts with limited companies: Companies are associations of individuals
registered under Companies Act in which the liability of the members comprising the
association is limited to the extent of the shares held by them in such companies. The
company, after its incorporation or registration, is an artificial legal person which has an
existence quite distinct and separate from the members of shareholders comprising the
same. A company is not empowered to enter into a contract for purposes not covered by
its memorandum of association; any such agreement in excess of power entered into the
company is void and cannot be enforced. Therefore, in cases of doubt, the company
must be asked to produce its memorandum for verification or the position may be verified
by an inspection of the memorandum from the office of the Registrar of Companies before
entering into a contract. Normally, any one of the Directors of the company is empowered
to present the company. Where tenders are signed by persons other than Directors or
authorized Managing Agents, it may be necessary to examine if the person signing the tender
is authorized by the company to enter into contracts on its behalf.
iv) Corporation other than limited companies: Associations of individuals incorporated
under statutes such as Trade Union Act, Co- operative Societies Act and Societies
Registration Act are also artificial persons in the eye of law and are entitled to enter into
such contracts as are authorized by their memorandum of association. If any contract has
to be entered into with any one or such corporations or associations, the capacity of such
associations to enter into contract should be verified and also the authority of the person
coming forward to represent the said Association.
2.4 Consent of both Parties

Two or more persons are said to consent when they agree upon the same thing in the same
sense. When two persons dealing with each other have their minds directed to different objects
or attach different meanings to the language which they use, there is no agreement. The
misunderstanding which is incompatible with agreement may occur in the following cases: -
i) When the misunderstanding relates to the identity of the other party to the agreement;

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ii) When it relates to the nature or terms of the transactions;

iii) When it related to the subject matter of the agreement.

2.5 Free consent of both Parties

2.5.1 The consent is said to be free when it is not caused by coercion, undue influence, fraud,
mis-representation or mistake. Consent is said to be so caused when it would not have been given
but for the existence of coercion, undue influence, fraud, mis-representation or mistake. When
consent to an agreement is caused by coercion, undue influence, fraud or misrepresentation,
the agreement is a contract voidable at the option of the party whose consent was caused.
A party to a contract, whose consent was caused by fraud or misrepresentation may, if he
thinks fit, insist that the contract shall be performed, and that he shall be put in the position
in which he would have been if there presentations made had been true.
2.5.2 In case consent to an agreement has been given under a mistake, the position is slightly
different. When both the parties to an agreement are under a mistake as to a matter essential
to the agreement, the agreement is not voidable but void. When the mistake is unilateral on
the part of one party only, the agreement is not void.
2.5.3 Distinction has also to be drawn between a mistake off act and a mistake of law.
A contract is not void because it was caused by a mistake as to any law in force in India
but a mistake as to law not in force in India has the same effect as a mistake of fact.
2.6 Consideration

Consideration is something which is advantageous to the promisor or which is onerous

or disadvantageous to the promisee. Inadequacy of consideration is, however, not a
ground avoiding the contract. But an act, forbearance or promise which is contemplation of
law has no value is no consideration and like wise an act or a promise which is illegal or
impossible has no value.
2.7 Lawfulness of object

The consideration or object of an agreement is lawful, unless it is forbidden by law or is of such

a nature that if permitted, it would defeat the provisions of any law, or is fraudulent or involves
or implies injury to the fraudulent property of another or the court regards it as immoral
or opposed to public policy. In each of these cases the consideration or object of an
agreement is said to be unlawful.
2.8 Communication of an offer or Proposal

The communication of a proposal is complete when it comes to the knowledge of the person
to whom it is made. A time is generally provided in the tender forms for submission of the
tender. Purchaser is not bound to consider a tender, which is received beyond that time.
2.9 Communication of Acceptance
A date is invariably fixed in tender forms upto which tenders are open for acceptance.

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A proposal or offer stands revoked by the lapse of time prescribed in such offer for its
acceptance. If, therefore, in case it is not possible to decide a tender within the period of
validity of the offer as originally made, the consent of the tenderer firm should be obtained
to keep the offer open for further period or periods.
2.9.1 The communication of an acceptance is complete as against the proposer or offerer,
where it is put in the course of transmission to him, so as to be out of the power of the acceptor,
and it is complete as against the acceptor when it comes to the knowledge of the proposer
or offerer. The medium of communication in Government contracts is generally by post and
the acceptance is, therefore, complete as soon as it is posted. So that there might be no
possibility of a dispute regarding the date of communication of acceptance, it should be sent
to the correct address by some authentic fool proof mode like registered post
acknowledgement due, etc.

2.10 Acceptance to be identical with Proposal

If the terms of the tender or the tender, as revised, and modified, are not accepted or if the
terms of the offer and the acceptance are not the same, the acceptance remains a mere
counter offer and there is no concluded contract. It should, therefore, be ensured that the
terms incorporated in the acceptance are not at variance with the offer or the tender and
that none of the terms of the tender are left out. In case, uncertain terms are used by the
tenderers, clarifications should be obtained before such tenders are considered for
acceptance. If it is considered that a counter offer should be made, such counter offer should
be carefully drafted, as a contract is to take effect on acceptance thereof.
If the subject matter of the contract is impossible of fulfilment or is in itself in violation of
law
such contract is void.
2.11 Withdrawal of an offer or Proposal

A tenderer firm, who is the proposer may withdraw its offer at any time before its acceptance,
even though the firm might have offered to keep the offer open for a specified period.
It is equally open to the tenderer to revise or modify his offer before its acceptance. Such
withdrawal, revision or modification must reach the accepting authority before the date and
time of opening of tender.
No legal obligations arise out of such withdrawal or revision or modification of the offer as
a simple offer is without a consideration. Where, however, a tenderer agrees to keep his
offer open for a specified period for a consideration, such offers cannot be withdrawn
before the expiry of the specified date. This would be so where earnest money is deposited by
the tenderer in consideration of his being supplied the subsidiary contract and withdrawal
of offer by the tenderer before the specified period would entitle the purchaser to forfeit the
earnest money.
2.12 Withdrawal of acceptance
An acceptance can be withdrawn before such acceptance comes to the knowledge of
the tenderer. A telegraphic revocation of acceptance, which reaches the tenderer before the
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letter of acceptance, will be a valid revocation.

2.13 Changes in terms of a concluded contract

No variation in the terms of a concluded contract can be made without the consent of
the parties. While granting extensions or making any other variation, the consent of the
contractor must be taken. While extensions are to be granted on an application of the
contractor, the letter and spirit of the application should be kept in view in fixing a time for
delivery.
2.14 Discharge of contracts

A contract is discharged or the parties are normally freed from the obligation of a contract
by due performance of the terms of the contract. A contract may also be discharged: -
i) By mutual agreement: If neither party has performed the contract, no
consideration is required for the release. If a party has performed a part of the
contract and has undergone expenses in arranging to fulfil the contract it is
necessary for the parties to agree to a reasonable value of the work done as
consideration for the value.
ii) By breach: In case a party to a contract breaks some stipulation in the contract which
goes to the root of transaction, or destroys the foundation of the contract or prevents
substantial performance of the contract, it discharges the innocent party to proceed
further with the performance and entitles him to a right of action for damages and
to enforce the remedies for such breach as provided in the contract itself. A breach
of contract may, however, be waived.
iii) By refusal of a party to perform: On a promisor’s refusal to perform the contract
or repudiation there of even before the arrival of the time for performance, the
promisee may at his option treat the repudiation as an immediate breach putting
an end to the contract for the future. In such a case the promisee has a right of
immediate action for damages.
iv) In a contract where there are reciprocal promises: If one party to the contract
prevents the other party from performing the contract, the contract may be put to an
end at the instance of the party so prevented and the contract is thereby discharged.
2.15 Stamping of contracts

Under entry 5 of Schedule I of the Indian Stamp Act, an agreement or memorandum of

agreement for or relating to the sale of goods or merchandise exclusively is exempt from
payment of stamp duty. (A note or memorandum sent by a Broker or Agent to his principal
intimating the purchase or sale on account of such principal is not so exempt from stamp
duty.)
The Stamp Act provides that no Stamp Duty shall be chargeable in respect of any instrument
executed by or on behalf of or in favour of the Government in cases where but for such
exemption Government would be liable to pay the duty chargeable in respect of such
instrument. (Cases in which Government would be liable are set out in Section 29 of the Act).

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2.16 Authority for execution of contracts

As per Clause 1 of Article 299 of the Constitution, the contracts and assurances of property
made in the exercise of the executive power of the Union shall be executed on behalf of the

President. The words “for and on behalf of the President of India” should therefore follow
the
designation appended below the signature of the officer authorized in this behalf.
Note 1: The various classes of contracts and assurances of property, which maybe executed
by different authorities, are specified in the Notifications issued by the Department of Law from
time to time.
Note 2: The powers of various authorities, the conditions under which such powers should
be exercised and the general procedure prescribed with regard to various classes of contracts
and assurances of property are laid down in the Delegation of Financial Powers Rules, Tripura,
2017.

2.17 Contract effective date

The date of commencement of the obligations under the contract on the parties to a contract
is referred as the contract effective date. This date should be invariably indicated in each
contract, as per agreed terms and conditions. The Departments are advised to set the effective
date to be a date after the following:
(i) Date of signing of the contract.
(ii) Furnishing of performance bond in terms of performance security.
(iii) Receipt of Bank Guarantee for advance payment.
(iv) Obtaining Export Licence for supply of stores by seller and confirmation by the
buyer.
(v) Receipt of End User’s Certificate. The supplier shall provide the End User’s Certificate
within 30 (thirty) days of the signing of the contract.

3.0 Salient Features of the sales of Goods act, 1930

3.1 Scope
Agreements for the sale of goods are governed by the general principles of the contract law.
A contract for sale of goods has, however, certain peculiar features such as transfer of
ownership of the goods and quality aspects implied under a contract for sale of goods,
and so on, are not covered in the Contract Act. These peculiarities are the subject matter of

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the provisions of the Sale of Goods Act, 1930. In this act, the two parties to the contract are
called “seller” and “buyer”. This act defines goods, for the purpose of applicability of this
act, as every kind of movable property, including stocks and shares, growing crops, goodwill,
patents, trademarks, electricity, water, gas, and so on—all that can be exchanged for
money but not any kind of immovable property (for example, real estate).

3.2Concept of Transfer of Property (Passing of Title)

Proprietary (ownership) rights and obligations in “goods” are called legally “title to goods”
or “property in goods”. The meaning of property here is different from the common
connotation of the word. At what point of time or stage in a contract does this passing of
title of (property in) goods happen is laid down by this Act. This ownership of goods is
different from ‘possession of goods’ which means the physical custody or control of the
goods. Delivery of goods is only a transfer of ‘possession of goods”; and may or may not
coincide with the passing of title in goods. This distinction is very important in procurement.
The transfer of property in the goods, from the seller to the buyer, is the essence of a
procurement of goods. Therefore, the moment when the property in goods passes from the
seller to the buyer is significant for following reasons:
3.3 Ownership

The moment the property in goods passes, the seller ceases to be their owner and the buyer
acquires the ownership. The buyer can exercise proprietary rights over the goods. For example,
the buyer may sue the seller for non-delivery of the goods or when the seller has resold
the goods, and so on.
3.4 Concept of “Res Prit Domine” -- Risk Follows ownership

This concept simply means that, as a general rule, risk follows the ownership, irrespective of
whether the delivery (or transfer of possession of goods) has been made or not. If the goods
are damaged or destroyed, the loss shall be borne by the person who was the owner of the
goods at that time – irrespective of whosoever is in the “possession of the goods”.
3.5 Action against Third parties

When the goods are, in any way, damaged or destroyed by the action of third parties, it is only
the owner of the goods who can take action (claim, litigation) against them.

3.6 Time at which Property in Goods is Transferred

The property in goods is transferred to the buyer at such time as the parties to the contract
intend this to happen, as recorded in the terms of the contract. This needs neither to coincide
with the point when payment is made nor with the delivery of Goods and not even with the
point of time when the seller dispatches the goods.

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3.7 Document of Title to Goods

These are the voucher, bill, document, receipt, cash memo, bill of lading, lorry receipt, railway
receipt, or any such acknowledgement which proves the ownership of the goods that, in
the ordinary course of business, the buyer may receive. These are called documents of title to
goods.
3.8 Doctrine of caveat emptor

The Sales of Goods Act lays down this important concept that the buyer must act with due
diligence when buying goods; it is not a seller’s duty to point out the defects in goods. This
is

a doctrine which is not in consonance with modern times but, unfortunately, is a legal position.
This, however, does not apply if the buyer’s consent to buy is obtained by the seller by
knowingly concealing the defects which could not have been discovered by the buyer
reasonably at the time of procurement. The caveat emptor is also diluted under some
implied conditions in a contract for sale.
3.9 Provision of the act regarding statutory Variations in Taxes and duties

Statutory variations in the taxes and duties (customs duties, excise duty, tax on the sale or
procurement of goods), after the making of any contract, has to be borne by the buyer even
if there is no such express stipulation in the contract.

4.0 Salient Features of the indian arbitration & conciliation act 1996

Indian Arbitration & Conciliation Act 1996 provides for dispute settlement either by a process
of conciliation and/or by arbitration. This act is based on a ‘United Nation’s Commission
on International Trade Law Model Arbitration Law’ with an object to minimise the supervisory
role of courts in the arbitral process and to provide that every final arbitral award is
enforced in the same manner, as if it was a decree of the court. It covers both international
and domestic arbitration and conciliation.
4.1 Arbitration

Arbitration is one of the oldest methods of settling civil disputes arising out of and in the
course of performance of the contract between two or more persons by reference of the
dispute to an independent and impartial third person called the arbitrator, instead of
litigating the matter in the usual way through the courts. It saves time and expense, avoids
unnecessary technicalities and, at the same time, ensures “substantial justice within limits of
the law”.
4.2 Arbitrator, arbitration and arbitral award

The person or persons appointed to determine differences and disputes are called the

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arbitrator or arbitral tribunal. The proceeding before him is called arbitration proceedings.
The decision is called an Award. For the purpose of Law of Limitations, The Arbitration for a
particular dispute is deemed to have commenced on the date, on which a request for
arbitration is received by the respondent.
4.3 Arbitration agreement

It is an agreement by the parties to submit to arbitration all or certain disputes, which

have arisen or which may arise between them, in respect of a defined legal relationship,
whether contractual or non-contractual. The dispute resolution method of arbitration, as per
the Arbitration and Conciliation Act, can be invoked only if there is an arbitration
agreement (in the form of an arbitration clause or a separate arbitration agreement) in
the contract. If there is such an agreement, courts are barred from directly entertaining
any litigation in respect of such contracts, and are bound instead to refer the parties to
arbitration.

4.4 Appointment and composition of arbitral Tribunal

Both parties can mutually agree on the number of arbitrators (which cannot be an even
number) to be appointed. In case there is no agreement, a single (sole) arbitrator may be
appointed. The parties can mutually agree on a procedure for appointing the arbitrator or
arbitrators, or else in case of arbitration with three arbitrators, each party will appoint one
arbitrator and the two appointed arbitrators will appoint the third arbitrator, who will act
as a presiding arbitrator. If one party fails to appoint an arbitrator within 30 (thirty) days, or
if the two appointed arbitrators fail to agree on the third arbitrator, then the court may
appoint any person or institution as arbitrator. In case of an international commercial
dispute, the application for appointment of arbitrator has to be made to the Chief Justice
of India. In case of other domestic disputes, the application has to be made to the Chief
Justice of the High Court within whose jurisdiction the parties are situated.
4.5 Challenge to appointment of arbitrator

An arbitrator is expected to be independent and impartial. If there are some circumstances due
to which his independence or impartiality can be challenged, he must disclose the circumstances
before his appointment. The appointment of an arbitrator cannot be challenged on any
ground, except when there is justifiable doubt as to the arbitrator’s independence or
impartiality or when he does not possess the qualifications for the arbitrator agreed to by the
parties. The challenge to appointment has to be decided by the arbitrator himself. If he does
not accept the challenge, the arbitration can continue and the arbitrator can make the arbitral
award. However, in such a case, application for setting aside the arbitral award can be made
to the court, after the award is made by the arbitrator. Thus the other party cannot stall
further arbitration proceedings by rushing to court.
4.6 Conduct of arbitral Proceedings

The parties are free to agree on the procedure to be followed for conducting proceedings,
location, language of hearings and written proceedings. Failing any agreement, the arbitral

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tribunal may decide themselves on these aspects. The parties shall be treated with equality
and each party shall be given a full opportunity to present its case. The arbitral tribunal shall
observe the rules of natural justice but is bound neither by Civil Procedure Code 1908 nor by
Indian Evidence Act 1872. Limitation Act, 1963 is applicable from the date of commencement
of arbitral proceedings. Arbitral tribunals have powers to do the following:
i) Determine admissibility, relevance, materiality and weight of any evidence;
ii) Decide on their own jurisdiction;
iii) Decide on interim measures;
iv) Termination of proceedings; and
v) Seek court assistance in taking evidence.
4.7 Arbitral award

The decision of the arbitral tribunal is termed as ‘arbitral award’. The decision of arbitral
tribunal shall be by majority. The arbitral award shall be in writing, mentioning the place and
date, and

signed by the members of the tribunal. It must state the reasons for the award. A copy of
the award should be given to each party. The tribunal can make interim award also. An
arbitral award is enforceable in the same manner as if it were a decree of the court.

4.8 Recourse against arbitral award

Recourse to a court against an arbitration award can be made by an application (within three
months from the date of the arbitral award), only on the grounds specified in the act, that is,
the party was under some incapacity; arbitration agreement was not valid; proper
opportunity was not given to present the case; award deal with disputes not falling within the
terms of reference of arbitrator; composition of the arbitral tribunal is not as per agreement
of parties; subject matter of dispute is not capable of settlement through arbitration under
the law or the arbitral award is in conflict with the public policy.
4.9 Conciliation
This is a new concept added in the Act for settlement of disputes. The party initiating
conciliation shall send a written invitation to the other party to conciliate and proceedings
shall commence when the other party accepts the initiations to conciliation. The parties may
agree on the name of a sole conciliator or each party may appoint one conciliator. The
conciliation shall assist the parties to reach an amicable settlement of their dispute. When
the parties sign the settlement agreement, it shall be final and binding on the parties. The
conciliator shall authenticate the settlement agreement and furnish a copy thereof to each
party. This process has not yet come into a common use.
4.10 Changes introduced by the arbitration and conciliation (amendment) act,

2015

i) Independence, disqualification and obligations of arbitrators at the time

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of appointment
a) Independence, impartiality and accountability of arbitrators: A
fixed fee structure ensures the independence of the arbitral tribunal and also
provides a reasonable cost estimate to the parties entering into arbitration. The
Amendment Act in the Fourth Schedule prescribes the model fees for arbitrators
and the High Courts have been assigned the responsibility of framing the rules
for determination of the fees and the manner of its payment. The model fee varies
from Rs 45,000 to Rs 30 Lakh (Rupees forty-five to rupees thirty lakh) for various
slabs of disputed value from Rupees five Lakh to above Rs 20 (Rupees twenty)
Crore (with a sole arbitrator entitles to 25% (twenty-five percent) extra above
the model fee). However it is clarified that such fees shall not be applicable in
International Commercial Arbitration and in cases where parties have agreed for
determination of fees as per the rules of an arbitral institution.
b) Disqualification from appointment: A long and exhaustive list of specific
circumstances which shall act as a bar against any person from being appointed
as an arbitrator in a dispute, have been enumerated in the seventh schedule.
However, the parties to the dispute have been given the opportunity, after the

dispute has arisen, to waive the applicability of the seventh schedule, by mutual
written agreement, if they so deem fit. Especially of interest in Public Procurement
is disqualification of past or present employees, consultant, advisors or other
related business relationship not only with the Procuring Entity but also with
any affiliated entity thereof. Thus the earlier practice of appointing serving
officers of Procuring Entity as arbitrator is no more legal.
c) Disclosures: An arbitrator who is approached for appointment is
obligated to disclose as per Sixth Schedule of the Act. The declaration as per a
set format removes any ambiguity and ensures uniformity:
1. conflict of Interest the existence either direct or indirect, of any past
or present relationship with or interest in any of the parties or in relation
to the subject matter in dispute, whether financial, business, professional
or other kind, which is likely to give rise to justifiable doubts as to his
independence or impartiality as per fifth schedule to the Act for
arbitrator.
2. Time constraints: An arbitrator shall disclose all circumstances
which may affect his ability to deliver an award within 12
(twelve) months.
ii) Fast-tracking arbitration in india
a) Award within 12 (Twelve) months: The arbitral tribunal is statutorily
obligated to deliver an award within 12 (twelve) months from the date when
arbitral tribunal enters into reference. The arbitral tribunal is said to have entered
upon the reference on the date on which the arbitrator(s) have received notice
of their appointment. The award can be delayed by a maximum period of six

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months only under the special circumstances where all parties give their consent
to such extension of time. Where the award is not made out within the
statutory period the mandate of arbitrators shall automatically terminate. It is
open for the courts to extend the time period for making an award upon
receipt of an application by any of the parties. Such extension is to be granted
only for sufficient cause and the court in its discretion may impose the
following penalties depending on the facts and circumstances of the case:
1. Reduce the fees of arbitrators by up to 5% (five percent)for each month
of
delay.
2. Substitute one or all the arbitrators.
3. Impose actual or exemplary costs on any of the parties.
b) Oral arguments to be held on a day-to-day basis: Oral arguments as
far as possible shall be heard by the arbitral tribunal on a day to day basis and
no adjournments shall be granted without sufficient cause. Provision for
imposition of exemplary cost on the party seeking adjournment without
sufficient cause has also been made.
c) Fast Track Procedure: The parties to arbitration may choose to opt for a
new fast track procedure either before or after the commencement of the
arbitration. The award in fast track arbitration is to be made out within six
months. Where
the Arbitral Tribunal delivers the award within a period of six months
the arbitral tribunal shall be entitled to additional fees. The quantum
of such additional fees shall be determined by the parties. The salient
features of the fast track arbitration are:
1. Dispute is to be decided based on written pleadings only.
2. Arbitral Tribunal shall have the power to call for clarifications
in addition
to the written pleadings where it deems necessary.
3. Oral hearing maybe held only if all the parties make a
request or if the arbitral tribunal considers it necessary.
4. The parties are free to decide the fees of the arbitrator(s).
d) Appointment within 60 (sixty) days: Whenever an application
for appointment of Arbitrator(s) is moved before a court such
application shall be disposed of as expeditiously as possible and
an endeavour shall be made to dispose of the matter within a
period of sixty days from the date of service of notice on the
opposite party. The court while appointing arbitrators shall confine
itself to the examination of the existence of an arbitration agreement.

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iii) Procedural and Jurisprudence simplified

a) Arbitration to commence within 90 (ninety) days of interim
relief: Where the court grants interim relief before the
commencement of arbitration, the arbitration must commence
within 90 (ninety) days from such order of interim relief. The court
however has been given the authority to extend the period within
which the arbitration must commence, if it deems such extension
necessary. The Act prohibits courts from entertaining any
application for interim relief once the arbitration has entered into
reference, unless the court finds that circumstances exist which may
not render the remedy provided under section 17 efficacious.
b) Powers of interim relief in section 9 also to arbitral Tribunal:
The parties to arbitration can now directly approach the arbitral
tribunal for seeking interim relief on the same grounds as were
available to the parties under section 9 of the previous act. Further,
the tribunal has now been granted the powers of a court while
making interim awards in the proceedings before it.
c) Arbitral tribunal not bound to rule in accordance with
terms of the contract: The arbitral tribunal was previously
bound to deliver an award in accordance with the terms of the
agreement and was required to take into consideration the
‘usages of the trade applicable to the transaction’. Vide the
Amendment the arbitral tribunal has been freed of the obligation
to only rule in accordance with the terms of the agreement. The
arbitral tribunal is only required to take the agreement into account
while delivering its award and is free to deviate from the terms of
the agreement if the circumstances so warrant.
d) Act made applicable on International Commercial Arbitration with
even seat outside India: Part I of the act has been made applicable
for limited purpose
(listed below) on International Commercial Arbitrations even in instances where
the seat of the arbitration is outside India, however giving freedom to exclude
the applicability the Act by entering into an agreement to this effect:
1. Seeking interim relief from courts [section 9]
2. Seeking the assistance of the court in taking evidence [section 27]
3. Appealing against the order of a court where the court refuses to refer
the parties to arbitration. [section 37(1) (a)]
4. Restricting the right to second appeal and preserving the right of parties
to approach the Supreme Court in appeal. [section 37 (3)]

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5.0 Salient Features of competition act, 2002 relating to anti-

competitive Practices
i) The Preamble of the competition act, 2002, provides for the establishment of
a Commission keeping in view of the economic development of the country to promote
and sustain competition in markets; prevent practices having adverse effect on
competition; protect consumer interest; and ensure freedom of trade carried on
by participants in Indian markets.
ii) The Act was amended by Competition (Amendment) Act, 2007 and again by
Competition (Amendment Act), 2009.
iii) In India, Competition Commission of India (“CCI”), formulated under the Competition
Act is a quasi-judicial and regulatory body entrusted with the task enforcement of
the Competition Act, 2002. Apart from specific functions under the Competition Act,
2002 the CCI also has extra-territorial jurisdiction, inquiry into anticompetitive conduct,
sector- specific regulatory work, competition advocacy, power of appointment of
professional and experts, and procedure for investigation (in terms of regulating its
own procedure).
iv) Section 8 dealing with composition of Commission provides for a chairperson and
not less than two and not more than six members which are to be appointed by
Central Government. The CCI is vested with inquisitorial, investigative, regulatory,
adjudicatory and also advisory jurisdiction. Vast powers have been given to the
Commission and under Section 64, the Commission can frame regulations.
v) The Competition Appellate Tribunal (COMPAT) is another body entrusted with the
responsibility of hearing and disposing of appeals against any direction or decision
or order of the CCI. It also adjudicates on compensation claims arising from the
findings of the CCI or its own findings on appeals against the CCI orders and passes
orders on the recovery of compensation.
vi) Any person aggrieved by the order or decision of the CCI may prefer an appeal
to the Competition Appellate Tribunal (‘COMPAT’) within 60 (sixty) days from the
date of communication of such order or decision. The second and final appeal under
Section 53T lies before the Supreme Court of India from the orders of the COMPAT
within a period of 60 (sixty) days from the date of communication of the order by the
COMPAT.
vii) CCI may initiate an inquiry:
a) On its own motion on the basis of information and knowledge in its
possession; or
b) On receipt of any information, in such manner and accompanied by
such fee as may be determined by regulations, from any person,
consumer or their association or trade association; or
c) On receipt of a reference from the State Government or a statutory

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authority.
viii) The Act provides for Director General office as a separate investigative wing
to assist the CCI. The DG looks into the complaints received from the CCI
and submits all findings to it. DG is solely responsible for making enquiries,
for examining documents and for making investigations into complaints.
The DG is vested under the Act with powers of summoning of witnesses,
examining them on oath, requiring the discovery and production of
documents, receiving evidence on affidavits, issuing commissions for the
examination of witnesses etc.
ix) The Act in Section 49 (3) lays down the advocacy function of CCI and
lays down that the CCI shall take suitable measures for the promotion of
competition advocacy, creating awareness and imparting training about
competition issues. Section 32 of the Act grants the CCI extra-territorial
jurisdiction over anticompetitive conduct which has an appreciable
adverse effect on competition within India. Any anticompetitive activity
taking place outside India but having an appreciable adverse effect on
competition within India shall be subject to the application of the
Competition Act.
x) Under Section 21 of the Act, any statutory authority can suo motto or on
request of a party in the course of a proceeding before it can make a
reference to CCI. CCI shall give its opinion within sixty days of receipt of
such reference by such statutory authority. Under the provisions of the Act,
the authority which made reference shall consider the opinion of the
Commission and thereafter, give its findings recording reasons on the
issues referred to in the said opinion by CCI. Section 21A in the same
language provides for such reference by CCI to any statutory authority.
xi) The key provisions of the Competition Act include:
a) Section 3 of the Competition Act, 2002 dealing with anti-competitive
agreements;
b) Section 4 of the Competition Act, 2002 which discusses abuse of
dominance;
c) Section 5 and 6 of the Competition Act, 2002 dealing with the
regulation of combinations.
xii) The term ‘agreement’, has been defined broadly in the Competition Act. It
extends to a mere ‘arrangement’, ‘understanding’ or ‘action in concert’,
none of which need be in writing or enforceable by law.
xiii) Section 3(1) of the Competition Act lays down that no enterprise or
association of enterprises or person or association of persons shall enter
into any agreement in respect of production, supply, distribution, storage,
acquisition or control of goods or provision of services, which causes or is
likely to cause an appreciable adverse effect on competition

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within India. The Act prohibits an anti-competitive agreement and declares

that such an agreement shall be void.
xiv) Section 3(3) of the Competition Act deals with the horizontal agreements as it
covers the agreements between entities engaged in identical or similar trade of
goods or provision of services. It also includes cartels. The section covers:
a) Agreement entered into between enterprises or associations of enterprises
or
persons or associations of persons or between any person and enterprise;
b) Practice carried on by any association of enterprises or association of
persons;
c) Decision taken by any association of enterprises or association of persons.
xv) Section 3(3) of the Competition Act enlists four broad classifications of
horizontal agreements which are presumed to cause an appreciable adverse effect
on competition (AAEC) in India:
a) Agreements regarding Prices;
b) Agreements regarding Quantity/Quality;
c) Market Allocation;
d) Bid Rigging.
These four horizontal agreements are not presumed to have appreciable adverse
effect on competition and excluded from the provisions of Section 3(3) of the
Competition Act, 2002 provided they are entered into by way of joint ventures and
increase efficiency in production, supply, distribution, storage, acquisition or
control of goods or provision of services.
Cartels, by their very nature are secretive and thus it is difficult to find the direct
evidence of their presence. The orders of the CCI clearly point that CCI relies on
circumstantial evidence, both economic and conduct-based, to reach its decision
on the existence of a cartel agreement.
The Act provides a definition for bid rigging and it covers agreements having
effect of eliminating or reducing competition for bids or adversely affecting or
manipulating the process for bidding:
a) Collusive bidding: Agreement between firms to divide the market, set
prices or
limit production – involves, kickbacks and misrepresentation of
independence;
b) Bid Rotation;
c) Bid Suppression;
d) Complementary Bidding;

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e) Subcontracting arrangements;
f) Market Allocation.
The Act gives wide discretion to CCI to frame the remedies to overcome the
anticompetitive situation:
1. Declare Anticompetitive Agreements Void;

2. Impose Heavy Penalties:

a) Penalty can be up to 10% (ten percent) of the average turnover for
the last three preceding financial years upon each of such
persons or enterprises which are parties to bid-rigging;
b) Cartel, a penalty of up to three times of its profit for each
year of the continuance of such agreement or 10% (ten percent)
of its turnover for each year of the continuance of such
agreement, whichever is higher.
2. Order the parties to Cease & Desist;
3. Modification of agreements;
4. Remedy Damage to reputation;
5. Fix Individual Liability;
6. Grant Interim orders;
7. Any other order as CCI deems fit.
xvi) Who can file the information: Raising issues regarding anti-competitive
behaviour
for action by CCI under the act is called filing the information:
a) Any person, consumer or their association or trade association can file
information
before the Commission;
b) The State Govt. or a statutory authority can also make a reference to
the Commission for making an inquiry;
c) “Person” includes an individual, HUF, firm, company, local authority,
cooperative or any artificial juridical person.
xvii) What are the issues on which information can be filed?
a) The information can be filed on the issues like anti-competitive
agreements and
abuse of dominant position or a combination;
b) Class of consumers.
xviii) The fee -

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a) Rupees 5000/- (Five thousand only) in case of individual, or Hindu

undivided family (HUF), or Non Government Organisation (NGO), or
Consumer Association, or Co-operative Society, or Trust, duly registered
under the respective Acts;
b) Rupees 20,000/- (Twenty thousand only) in case of firms, companies
having
turnover in the preceding year upto Rupees one Crore; and
c) Rupees 50,000/- (Fifty thousand only) in case not covered under clause
(a) or (b) above.
6.0 Salient Features of the whistle blowers Protection act, 2011 and the
whistle blowers Protection (amendment) act, 2015
i) The Act seeks to protect whistleblowers, i.e. persons making a public interest
disclosure related to an act of corruption, misuse of power, or criminal offence
by a public servant;
ii) Any public servant or any other person including a non-Governmental organization
may make such a disclosure to the designated agencies i.e.State Vigilance Commission.
The Time Limit for making any complaint or disclosure to the Competent Authority is
seven years from the date on which the action complained against is alleged to have taken
place;
iii) The Designated Agency cannot entertain any disclosure relating to any inquiry ordered
under the Public Servants (Inquiries) Act, 1850 and Commissions of Inquiry Act, 1952;
iv) Similarly, the Amendment Act, 2015, The Bill prohibits the reporting of a corruption
related disclosure if it falls under any 10 (ten) categories including information related
to:
a) The sovereignty, strategic, scientific or economic interests of India, or the incitement
of an offence;
b) Records of deliberations of the Council of Ministers;
c) That which is forbidden to be published by a court or if it may result in contempt
of court;
d) A breach of privilege of legislatures;
e) Commercial confidence, trade secrets, intellectual property (if it harms a third
party);
f) That relayed in a fiduciary capacity;
g) That received from a foreign Government;
h) That which could endanger a person’s safety etc.;
i) That which would impede an investigation etc.;
j) Personal matters or invasion of privacy.
However, if information related to (ii), (v), (vi), and (x) is available under the Right to

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Information Act, 2005, then it can be disclosed under the Act.

i) Any public interest disclosure received by a Competent Authority will be referred to a
Government authorised authority if it falls under any of the above prohibited categories.
This authority will take a decision on the matter, which will be binding;
ii) The Identity of the Complainant must be included in the Complaint or the Disclosure.
However the Designated Agency shall conceal the identity of the complainant unless
the complainant himself has revealed his identity to any other office or authority while
making public interest disclosure or in his complaint or otherwise. However, the
Designated Agency can reveal the identity of the complainant in circumstances where
it becomes inevitable or extremely necessary for the purposes of the enquiry;
iii) The Designated Agency may, with the prior written consent of the complainant, reveal
the identity of the complainant to such office or organization where it becomes
necessary to do so. If the complainant does not agree to his name being revealed,
in that case, the complainant shall provide all documentary evidence in support of is
complaint to the Designated Agency;

iv) Any person who negligently or with mala fide reveals the identity of the complainant
shall be punished with imprisonment up to three years and fine not exceeding Rs.
50,000 (Fifty thousand);
v) Similarly any disclosure made with mala fide and knowingly that it was false or
misleading shall be punished with imprisonment up to two years and fine not
exceeding Rs. 30,000 (Thirty thousand);
vi) After receipt of the report or comments relating to the complaint, if the Designated
Agency is of the opinion that such comments or report reveals either wilful misuse
of power or wilful misuse of discretion or substantiates allegations of corruption, it
shall recommend to the public authority to take appropriate corrective measures
such as initiating proceedings against the concerned public servant or other
administrative and corrective steps. However, in case the public authority does not
agree with the recommendation of the Designated Agency, it shall record the reasons
for such disagreement;
vii) While dealing with any such inquiry, the Designated Agency shall have all the powers
of a Civil Court under the Code of Civil Procedure, 1908 in respect of matters like
receiving evidence, issuing commissions, discovery and production of any document
etc. Also, every proceeding before the Designated Agency shall be deemed to be a
judicial proceeding under the Code of Criminal Procedure, 1973 and Indian Penal
Code;
viii) No obligation to maintain secrecy or other restrictions upon the disclosure of
information shall be claimed by any Public Servant in the proceedings before the
Designated Agency;
ix) But, no person is required to furnish any information in the inquiry under this act if
such information falls under the 10 (ten) categories mentioned before;

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x) It shall be the responsibility of the State Government to ensure that no person who has
made a disclosure is victimised on the ground that such person had made a disclosure
under this act;
xi) If any person is victimised or likely to be victimised on the above-mentioned ground,
he may contact the Designated Agency and the Designated Agency may pass
appropriate directions in this respect. The Designated Agency can even restore status
quo ante with respect to the Public Servant who has made a disclosure. Also, the
Designated Agency can pass directions to protect such complainant;
xii) If an offence under this act has been committed by any Head of the Department unless
he proves that the offence was committed without his knowledge or that he exercised
all due diligence in this respect;
xiii) This Act extends to all the Companies as well. When any offence under this act has been
committed by a company, every person who at the time of the offence was responsible
for the conduct of the business of the company shall be deemed to be guilty of
the offence unless he proves that the offence was committed without his knowledge
or that he exercised all due diligence in this respect;
xiv) No court can take cognizance of any offence under this act save on a
complaint made by the Designated Agency. No court inferior to that of a Chief
Metropolitan Magistrate or a Chief Judicial Magistrate shall try any offence under this
act. The High Court shall be the appellate authority in this respect.

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Appendix 2: Electronic Procurement (e-

Procurement) and e-auction
(The details given in this appendix are generic in nature are not prescriptive part of this
Manual of Policies and Procedures. Procuring Entities may settle and decide the details with
the service provider)
1.0 Electronic procurement (e-Procurement) is the use of information and
communication technology (specially the internet) by the buyer in conducting
procurement processes with the vendors/contractors for the acquisition of goods
(supplies), works and services aimed at open, non-discriminatory and efficient
procurement through transparent procedures. The Procurement Policy Division,
Department of Expenditure, MoF, has vide Office Memorandum no: 10/3/2012-PPC
dated 09th January, 2014 prescribed mandatory publishing of tenders through the e-
Procurement mode for tenders valued above Rupees three lakh.
2.0 Service Provider:

A service provider is engaged to provide an e-Procurement system covering the following:

i) All steps involved, starting from hosting of tenders to determination of techno-
commercially acceptable lowest bidder, are covered;
ii) The system archives the information and generates reports required for the
management information system/decision support system;
iii) A helpdesk is available for online and offline support to different stakeholders;
iv) The system arranges and updates the Digital Signature Certificate (DSC) for Departmental
users; and
v) Different documents, formats, and so on, for the e-Procurement systems are available.

3.0 Process:

In e-Procurement, all processes of tendering have the same content as in normal tendering

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and are executed, once the necessary changes have been made, online by using the DSC as
follows:
i) Communications: Wherever traditional procedures refer to written communication
and documents, the corresponding process in e-Procurement would be handled
either fully online by way of uploading/downloading/emails or automatically
generated SMSs or else partly online and partly offline submission. It is advisable to
move to full submissions online. More details would be available from e-
Procurement service provider’s portal. In e-Procurement, the tender fee, EMD and
documents supporting exemption from such payments are submitted in paper form
to the authority nominated in the NIT, but scanned copies are to be uploaded –
without which the bid may not get opened. In future, such payments may be allowed
online also;
ii) Publishing of tenders: Tenders are published on the e-Procurement portal by
authorised executives of Procuring Entity with DSC. After the creation of the tender, a
unique “tender

id” is automatically generated by the system. While creating/publishing the tender,

the “bid openers” are identified – four officers (two from the Procuring Entity and
two from the Associated/integrated Finance) with a provision that tenders may be
opened by any two of the four officers. The downloading of the tender may start
immediately after e-publication of NIT and can continue till the last date and time
of bid submission. The bid submission will start from the next day of e-publication
of NIT. In case of limited and PAC/single tenders, information should also be sent
to target vendors/contractors through SMS/email by the portal;
iii) Registration of bidders on portal: In order to submit the bid, bidders have to
register themselves online, as a one-time activity, on the e-Procurement portal with a
valid DSC. The registration should be in the name of the bidder, whereas DSC
holder may be either the bidder himself or a duly authorised person. The bidders
will have to accept, unconditionally, the online user portal agreement which
contains all the terms and conditions of NIT including commercial and general
terms and conditions and other conditions, if any, along with an online
undertaking in support of the authenticity of the declarations regarding facts,
figures, information and documents furnished by the bidder online;
iv) Bid submission: The bidders will submit their techno-commercial bids and price
bids online. No conditional bid shall be allowed/accepted. Bidders will have to
upload scanned copies of various documents required for eligibility and all other
documents as specified in NIT, techno-commercial bid in cover-I, and price bid in
cover-II. To enable system generated techno-commercial and price comparative
statements, such statements should be asked to be submitted in Excel formats.
The bidder will have to give an undertaking online that if the
information/declaration/scanned documents furnished in respect of eligibility
criteria are found to be wrong or misleading at any stage, they will be liable to

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punitive action. EMD and tender fee (demand draft/banker’s cheque/pay order)
shall be submitted in the electronic format online (by scanning) while uploading the
bid. This submission shall mean that EMD and tender fee are received electronically.
However, for the purpose of realisation, the bidder shall send the demand
draft/banker’s cheque/pay order in original to the designated officer through post
or by hand so as to reach by the time of tender opening. In case of exemption of
EMD, the scanned copy of the document in support of exemption will have to be
uploaded by the bidder during bid submission;
v) Corrigendum, clarifications, modifications and withdrawal of bids: All
these steps are also carried out online mutadis mutandis the normal tendering process;
vi) Bid opening: Both the techno-commercial and price bids are opened online by
the bid openers mentioned at the time of creation of the tender online. Relevant
bidders can simultaneously take part in bid opening online and can see the resultant
bids of all bidders. The system automatically generates a technical scrutiny report and
commercial scrutiny report in case of the techno-commercial bid opening and a
price comparative statement in case of price bid opening which can also be seen by
participating bidders online. Bid openers download the bids and the
reports/statements and sign them for further processing. In case of opening of the
price bid, the date and time of opening is

uploaded on the portal and shortlisted firms are also informed through system
generated
emails and SMS alerts – after shortlisting of the techno-commercially acceptable
bidders;
vii) Shortfall document: Any document not enclosed by the bidder can be asked for,
as in case of the traditional tender, by the purchaser and submitted by the bidder
online, provided it does not vitiate the tendering process;
viii) Evaluation of techno-commercial and price bids: This is done offline in the
same manner as in the normal tendering process, based on system generated reports
and comparative statements;
ix) Award of contract: Award of the contract is done offline and a scanned copy
is uploaded on the portal. More needs to be done in this regard.The information
and the manner of disclosure in this regard must conform to Section 4(1) (b), 4(2)
and 4(3) of the RTI Act to enhance transparency and also to reduce the need for
filing individual RTI applications. Therefore, the award must be published in a
searchable format and be linked to its NIT; and
x) Return of EMD: EMD furnished by all unsuccessful bidders should be returned
through an e-payment system without interest, at the earliest, after the expiry of the
final tender validity period but not later than 30 (thirty) days after conclusion of the
contract. EMD of the successful bidder should be returned after receipt of
performance security as called for in the contract.
4.0 Disposal through e-auction

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4.1 Contractual legal aspects of auction sale of scrap

State Government/Departments should decide the calendar for holding

auctions/tenders for groups of lots. A brief summary of this Auction Schedule is given
publicity in Newspapers and on websites, indicating how to obtain/download
Auction Catalogues. For each Auction a Catalogue is prepared containing details
of Schedule of Lots in the Auction, as well as General and Special Terms and
Conditions of Sale (GTC and STC). In contractual terms, Publishing of an Auction
catalogue in sale of scrap is equivalent to NIT/SBD in Tenders for procurement and
forms the basis of bids by the purchasers. In e-Auction, the General Conditions of
Sale are available on the website and Special Conditions of Sale of each lot is
hyperlinked to the Lot Description. In case of Tender/Physical Auctions Catalogue
contains these in printed format.
In Auction, the bidders keep bidding higher and the highest accepted bid is accepted.
In such a case a Bid-Sheet is immediately signed by the Seller and Bidder’s
representative, which along with the delivery order serves as a legal contract document.
In e-Auction, Bid Sheet is generated with DSCs of Buyer and Seller.
4.2 Legal status of e-auction

e-Auction through E- Auction Service Provider (eASP) is a triangular contract. eASP is

a sub- agent of the seller through a standing contract entered between them, which is
subject to general terms and conditions (GTC) of eASP. eASP is also a sub-agent of the
successful buyer through a standing contract between them which is subject to Buyer
Specific Terms and Conditions (BSTC).

eASP gets a commission of fixed percentage of sale value from the purchaser directly –
which is deducted from the amount payable to the seller. The e-auction sale is
governed by GTC, BSTC and Special Terms and& Conditions (STC) of the e-auction.
In case of conflict or differences among any provisions of GTC, BSTC and STC, the
provisions of STC would prevail. Normally, successful purchasers pay all monies to eASP
who, in turn, transfers it to the seller. But the seller may, if desired, negotiate with eASP
to accept such payments directly from purchaser.

4.3 Creating an auction event: auction catalogue

The seller lists items to be auctioned on a specified date. This list is generally called an
auction catalogue. Besides the list of items, it also contains any special conditions of
contract applicable generally or to specific lots. The following auction details are
provided in this list: Auction Catalogue.
i) Auction number;
ii) Auction Opening date and time,
iii) Auction Closing date and time;

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iv) Type of Auction Ending: Close Ended/Open Ended

v) Max Auto Extensions Allowed (five to ten)/Duration of Auto
Extensions (90 Secs– ninety seconds)
vi) Auction Catalogue Number and Date
vii) Inspection from date;
viii) Inspection closing date;
ix) Seller/Unit name;
x) Address; Contact details;
xi) Details of the contact person;
xii) Details of ED and GST in each Lot and TCS (including Surcharge
and Edu Cess) for all lots;
xiii) Whether Subject to Acceptance (STA) is applicable for bids within
(10% (ten percent) or any other percentage) of the Reserve Price
and
ix) List of lots to be included: (Lot Description is hyper-linked to
relevant details containing special terms of lifting, etc)

Auction Lot Lot ED/(ST/ Custodian Start Close Minimu STA appli-
Sq No: No Desc Quantity GST% / Time Time m cable Y/N
Location Increment

Total Number of Lots =

The fixed reserve price also has to be uploaded on the portal for each lot, which is
kept confidential. It should also be mentioned if bids below the reserve price up to a
percentage can be accepted on an STA basis. The auction details can be posted by eASP
but to maintain the sanctity of the reserve price, it is better for the seller to do so through
his login and password. The bidder’s queries before the auction will reach seller by e-mail
and can be answered online. The seller will not be allowed to edit any item once the auction
starts. To attract bidders to the auction to get a higher price, the seller should describe
items in detail to include information such as condition and size of the item. The more

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information is provided, the more bidders will bid with confidence. A photo can also be
uploaded. Generally, auctions with images have higher sell-through. Many buyers like to
browse through the eASP categories and, therefore, listing the item in the appropriate
category increases the likelihood of interested bidders viewing it.
4.4 Buyer Eligibility

All prospective e-auction sellers and bidders will have to register themselves by filling in
the relevant details online. Bidders have also to pay the specified non-refundable
registration fee (usually Rs.10,000 – Ten thousand) off line. Only registered bidders will be
able to access the auction floor. The auction notification will, however, be seen by all
internet users. If it is found that the bidder is not adhering to the terms and conditions of
the e-auction and also indulging in any malpractices either himself or through his agents,
deputies or observer, such a bidder is liable to be blacklisted and appropriate action will
be taken as deemed fit by the seller. There are various reports available by which seller can
rate a bidder. The seller can restrict or blacklist a buyer from bidding by making a formal
request to eASP.
4.5 Conduct of auction

The seller cannot close/cancel an auction once it starts. It can be cancelled/amended

prior to the starting of the auction by making a request for cancellation. The following
information will be present on the auction floor web-page:
i) Opening date and time,
ii) Closing date and time,
iii) Item number,
iv) Item name, hyper-linked to relevant details containing duties, etc., /special terms of
lifting, etc.;
v) Quantity and unit of measurement;
vi) Location of material/item;
vii) Last bid or basic price, if any;
viii) Bidders’ bid in Rs./unit; and
ix) Bid history.
The closing time of an auction shall automatically be extended by period indicated in
Auction Catalogue for all auctions if bid continues (e.g., in case the closing time is
5.30 pm of any particular date and if a bidder bids at 5.29 pm then the closing time
will be automatically extended). Maximum number of auto extensions are also specified.

Bidders are able to indicate the bid price through their login. A bid, once given, cannot
be retracted. Conditional offers will not be accepted/entertained. Each bidder will have
the option to declare his maximum value of bid (which cannot be viewed by other bidders)
up to which his automatic bidding will continue.

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The seller can monitor auction activity and view the bidding history of the live auctions,
reserve prices (reserve price can only be viewed by seller and no one else), and other
features. However, the seller will get an automated email once the auction ends with
detailed information on the auction (highest bidder, subject to approval items, rejected
items).
The respective items will be marked “sold” after closing of the auction when the highest
bid is greater than the reserve price and an automatic intimation to the concerned buyer
will be sent online to make the payment.
If the bid price matches the limits specified for inclusion in STA, then it shall be shown
under the STA category and the seller will be accordingly informed. In case of STA, the
seller has to convey the acceptability of the bid amount or otherwise of the bid value to
eASP as well as the bidder within three days (excluding holidays) of the close of the auction.
In case of “Sold” or STA a Bid-Sheet is displayed (Annexure 20), indicating the details of
the accepted bid, which is printed and shows digital signatures of Auction Supervising
Officer and the Bidder. As mentioned before this serves the role of legal Contract
document.
If the reserve price has not been met by close of auction, the auction closes without a
winning bidder. On the seller’s request, eASP will arrange for inclusion of the unsold item
in the next auction.
4.6 Earnest money deposit

EMD is payable within seven calendar days from the date of closing of the e-auction
(excluding the date of closing) by the successful bidder. EMD is equivalent to 25 per cent of
material value of the accepted lots and 10 (ten) per cent of the material value for STA lots
in the forms of a demand draft drawn in favour of the authority mentioned in the auction
catalogue. On receipt of the EMD by eASP, an acceptance letter/sale order will be issued
for sold lots. In case of failure to pay the EMD in time, the login of the party will be
deactivated in addition to other actions as deemed fit and the offer will stand withdrawn.
4.7 Payment of balance sale Value (BSV)

In case of sold/accepted lots and lots taken on STA basis, the balance payment has to be made
within 15 (fifteen) calendar days from the date of the acceptance letter/sale order (excluding
the date of issue of the acceptance letter/sale order), by way of a demand draft as per
the following manner:
i) Commission percentage as per STC/GTC/BSTC to be paid in favour of eASP,
by way of demand draft/pay order;
ii) The balance amount (after deducting the EMD and amount payable to
eASP) plus applicable GST, income tax and other charges if any must be
paid in favour of authority mentioned in auction catalogue;

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iii) In case of delay, a late payment charge @ one per cent per week or part thereof will
be charged up to two weeks only and thereafter the EMD will stand forfeited without
any notice; and
iv) Tax Collected at Source (TCS) at the applicable percentage (presently@ one per cent)
of the gross value (material value + excise duty + , etc.) may be deducted by the
purchaser and a TDS certificate may be given. A surcharge of 10% (ten percent) on
TCS and a further Education cess of 3% (three percent) is leviable on the TCS+
Surcharge.

4.8 Delivery order

eASP will hand over, to the successful buyer, a delivery order authorising the Stores
Department to make such a delivery, after getting the requisite material value. The
purchaser will approach the seller with the delivery order to allow him to lift the
material. The validity of the delivery order is 60 (sixty) days from the date of the e-
auction. The delivery order should show the following particulars:
i) Lot number;
ii) Description of material;
iii) Purchaser’s name and address;
iv) Approximate quantity in the lot;
v) Rate at which sold;
vi) Value realised;
vii) Reference to the cash remittance note, under which the value was remitted to
the nominated cashier;
viii) Chief cashier or treasurer’s receipt note and date; and
ix) Amount of loading charges recovered by the store keeper.
Note: Information sought in S. No. i) to viii) shall be filled in by eASP in tabular form
(Columns 1 to 8). Information pertaining to S. No. ix) (Columns 9) shall be filled
by the store keeper.

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Appendix 3: Management of Public Procurement Function

1.0 Organisation of Procurement Function

The procurement function should be so organised that procurement executives get an

opportunity to develop expertise in a particular market segment, and internal customers
may have to deal with only a single point of interface. Thus, work distribution in the
procurement entity may be segmented based on markets, but there may be nodal officers
to provide a single window interface to internal clients.
In a procurement entity, beside procurement activities, there are also ancillary activities. In
a small procurement entity, these ancillary activities may be distributed among various
executives. Ancillary procurement activities are:
i) Administration and management services;
ii) Human resources development and training;
iii) Policy and guidelines;
iv) Procurement performance measurement and management reporting
v) IT systems and master data management;
vi) Advertising, bidding document sale/issue/receipt, tender boxes, tender
opening,
custody of samples;
vii) Direct contracting/local purchase;

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viii) Liaison and progressing;

ix) Supplier relations management and registration; and
x) Legal and arbitration matters.
2.0 Management reporting
2.1 Procurement Key Performance indices and management reporting
As in all management and financial functions, it is possible to measure the pulse of
the procurement function by using certain Procurement Key Performance Indices (KPIs). As
part of management reporting, these KPIs can be devised to reflect the status of workload,
throughput and efficiency of the procurement function. Some KPIs are given in Appendix 5:
Templates for Management Reports and KPIs.

2.2 Management reports for monitoring of Procurement Function

For proper monitoring and control of the procurement function, regular monthly reports
to procurement managers should highlight throughput and stagnation at important
milestones of the procurement process. The milestones where workload, throughput and
stagnation need to be studied in procurement management are:
i) Receipt of indent;
ii) Issue of tenders;
iii) Finalisation of tender decision;
iv) Signing of contracts;
v) Successful performance of the contract; and
vi) Payments for supplies/works/services.
This will highlight stages where urgent intervention is required for efficient procurement
to the management. These reports would be compiled by the Procuring Entity. Templates
for management reports are given in Appendix 5: Templates for Management Reports and
KPIs.
3.0 Record Keeping
3.1 All procurements done by the organisation are subject to post audit by internal audit, statutory audit and
various internal and external vigilance agencies. Hence, all documents related to the procurement should be
filed and kept systematically and safely. Files shall be properly numbered on the notes and correspondence
side. The period of retention of various types of documents should be laid down. The Procuring Entity should
also maintain following basic records (either in manual or electronic form):
i) Item/asset master database: The heart of the procurement system is the item/asset
master database. It contains complete data about an item or asset handled in the past.
It contains: code-number; category; description long/short; specification; drawings;
trade group of vendors; book-rate; estimated annual consumption; replenishment
data; inventory parameters (buffer stock, safety stock levels) – to the extent relevant to
goods, works or services;
ii) Vendor/contractors database: Contains vendor/contractor information such as
name; address ; small scale and minority enterprise categorisation; registration data

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(registration code, trade groups, monetary limits of registration, NSIC or DGS&D

registrations); past performance ratings;
iii) Procurement register: Key information at various stages of procurement
operations, from receipt of indents till the issue of the contract, is recorded (manually or
electronically) in the procurement register. The Procurement register thus enables
ascertaining of status of a particular procurement and also overall monitoring of
efficiency and throughput of procurement operations;
iv) Procurement order Guard register: An indexed register with only machine
numbered stubs of pages (instead of full pages) is used for this purpose. One ink signed
copy of all orders issued by the Procuring Entity is compulsorily pasted in these stubs in
chronological order. This is the most authentic record which is used as a guard and
ultimate reference against any tampering/falsification/misreporting of procurement
orders; and
v) Procurement order Progress register: It contains record of all procurement
orders issued and progress of supplies against these contracts. It contains procurement
order numbers, vendor/contractor name, brief description of procurement, total value
of the order, delivery dates, actual dates of supply, and so on.

Appendix 4: Templates for management reports and KPIs

(Refer Appendix 4, Para 1.3)
1. Delays by more than one month in floating of tenders against indents received
Item/Work Date of
Serial Quantity, Value Date Received in
Code and Floating Remarks
No. Required/Indented Procuring Entity
Description Tenders

2. Delays by more than one month in finalising tenders over ideal time (Chapter 7,
Para 1.2)

Date Indent
Tender Num- Item/Work Delay as Likely Date
Serial Quantity Received in
ber & Code and per Ideal of Contract/
No. & Value Procuring
Open- ing Description Time Remarks
Entity
date

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3. Cases of tenders discharged or proposed for re-tendering

Item/Work Reasons of Is it a Case Actions
Tender No. Quan-
Serial Code and Discharge/ Level of of Repeat Taken to
& Opening tity &
No. Descrip- Retender- Approval Retender- Avoid Rep-
Date Value
tion ing ing? etition

4. Delays by over one month in signing contracts after finalisation of

tender

Tender Num- Item/Work (Likely) Date

Serial Quantity & Date of Finalisa-
ber & Code and of Contract Remarks
No. Value tion of Decision
Open- ing Description Signing
date

5. Delays by over three month in Performance of Contract

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Original De-
Item/Work Contractor Indicative De- Proposed
Po No livery /Perfor- Delay in
Code and Name / livery/Perfor- Action/Re-
& Dt. mance Period/ Weeks
Description Code mance Date marks
Date

6. Delays in payment by over three months from due date

Po No Item/Work Vendor Date of Due Date Date of Likely Proposed
& Dt. Code and Name Perfor- of Pay- Signing Date of Action/
Description / Code mance/ ment as Payment Payment Remarks
Delivery Per Con- Order
tract Voucher

7. Top 10 Contractors during the current year

Number and Value of Orders

Vendor Item/Work
Serial Outstanding Further Value of Sup-
Name Code/De- Remarks
No. as on April Ordered plies since April
/ scription
1, ----- Since Then 1,-----
Code

8. KPIs during last month/quarter/financial year

219
 MANUAL FOR PROCUREMENT OF GOODS 2017
Finance Department, Government of Tripura

Work Load & Throughput Number/Value/Ratio

Number and Value of Indent pending contract placement

Number and value of indents received during the month
Number and value of tenders floated during the month
Number and value of tenders finalised during the month
Number and value of contracts signed during the month
Number and value of payments made for deliveries/performance
during the month
Efficiency of procurement process
Productivity– number and value wise tenders finalised/on hand per
head of staff
Average time taken for award decision for procurement

Proportions of tenders on PAC, STE basis with reference to the total

number/value of tenders
Proportions of tenders on limited/selective bidding with reference to
the total number/value of tenders

Proportion of tenders through e-Procurement with reference to the

total number/value of tenders

220